As filed with the Securities and Exchange Commission on August 14, 1998.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File No. 0-5890
GCI, INC.
(Exact name of registrant as specified in its charter)
STATE OF ALASKA 91-1820757
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2550 Denali Street
Suite 1000
Anchorage, Alaska 99503
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (907) 265-5600
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
$180,000,000 9.75% Senior Notes due August 2007
1
<PAGE>
<TABLE>
INDEX
GCI, INC.
A Wholly Owned Subsidiary of General Communication, Inc.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
<CAPTION>
PAGE NO
-------
PART I. FINANCIAL INFORMATION
<S> <C>
Item l. Consolidated Financial Statements..........................................3
Consolidated Balance Sheets as of June 30, 1998
(unaudited) and December 31, 1997.......................................3
Consolidated Statements of Operations for the three
and six-month periods ended June 30, 1998 (unaudited)
and 1997 (unaudited)....................................................5
Consolidated Statements of Stockholders' Equity
for the six months ended June 30, 1998
(unaudited) and 1997 (unaudited)........................................6
Consolidated Statements of Cash Flows for the six
months ended June 30, 1998 (unaudited)
and 1997 (unaudited)....................................................7
Notes to Interim Condensed Consolidated Financial
Statements..............................................................8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..........................................................32
Item 6. Exhibits and Reports on Form 8-K...........................................32
SIGNATURES................................................................................................33
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
GCI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Unaudited)
June 30 December 31,
ASSETS 1998 1997
- -------------------------------------------------------------------- ----------------- -----------------
(Amounts in thousands)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 274 3,048
----------------- -----------------
Receivables:
Trade 36,798 29,599
Income taxes 8,870 4,752
Other 385 649
----------------- -----------------
46,053 35,000
Less allowance for doubtful receivables 1,058 1,070
----------------- -----------------
Net receivables 44,995 33,930
Prepaid and other current assets 1,942 2,520
Deferred income taxes, net 3,692 1,675
Inventories 2,857 2,164
Notes receivable 260 897
----------------- -----------------
Total current assets 54,020 44,234
Restricted cash (note 4) --- 39,406
----------------- -----------------
Property and equipment in service, net 176,974 165,993
Construction in progress 98,615 18,513
----------------- -----------------
Net property and equipment 275,589 184,506
----------------- -----------------
Other assets:
Intangible assets, net of amortization 243,839 246,534
Deferred loan and Senior Notes costs, net of amortization 10,325 9,379
Transponder deposit (note 4) 9,100 9,100
Undersea fiber optic cable deposit (note 4) --- 9,094
Notes receivable 1,411 1,331
Other assets, at cost, net of amortization 3,663 1,718
----------------- -----------------
Total other assets 268,338 277,156
----------------- -----------------
Total assets $ 597,947 545,302
================= =================
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.
3 (Continued)
<PAGE>
<TABLE>
GCI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
<CAPTION>
(Unaudited)
June 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997
------------------------------------------------------------------ ----------------- -----------------
(Amounts in thousands)
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt (note 3) $ 1,706 1,634
Current maturities of obligations under capital leases 211 198
Accounts payable 23,319 25,107
Accrued interest 8,449 7,649
Accrued payroll and payroll related obligations 5,945 4,630
Accrued liabilities 6,157 6,019
Subscriber deposits and deferred revenues 4,440 3,898
Accrued income taxes --- 111
----------------- -----------------
Total current liabilities 50,227 49,246
Long-term debt, excluding current maturities (note 3) 299,953 248,450
Obligations under capital leases, including related party
obligations, excluding current maturities 884 990
Deferred income taxes, net of deferred income tax benefit 42,992 38,904
Other liabilities 3,352 3,273
----------------- -----------------
Total liabilities 397,408 340,863
----------------- -----------------
Stockholders' equity:
Common stock (no par):
Class A. Authorized 10,000 shares; issued and outstanding
100 shares at June 30, 1998 and December 31, 1997 206,622 206,622
Paid-in capital 350 ---
Retained deficit (6,433) (2,183)
----------------- -----------------
Total stockholders' equity 200,539 204,439
----------------- -----------------
Commitments and contingencies (note 4)
Total liabilities and stockholders' equity $ 597,947 545,302
================= =================
</TABLE>
See accompanying notes to interim condensed consolidated financial
statements.
4
<PAGE>
<TABLE>
GCI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
(Unaudited) (Unaudited)
(Successor) (Predecessor) (Successor) (Predecessor)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
--------------- ----------------- -------------- -----------------
(Amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues:
Telecommunication services $ 48,900 42,131 92,851 81,356
Cable services 14,041 14,055 28,242 27,711
--------------- ----------------- -------------- -----------------
Total revenues 62,941 56,186 121,093 109,067
Cost of sales and services 29,355 29,778 56,670 56,946
Selling, general and administrative 23,543 18,014 43,877 34,315
Depreciation and amortization 8,596 5,608 16,662 11,728
--------------- ----------------- -------------- -----------------
Operating income 1,447 2,786 3,884 6,078
Interest expense, net 4,767 4,228 9,711 8,177
--------------- ----------------- -------------- -----------------
Net loss before income taxes (3,320) (1,442) (5,827) (2,099)
Income tax benefit 1,254 610 2,145 742
--------------- ----------------- -------------- -----------------
Net loss $ (2,066) (832) (3,682) (1,357)
=============== ================= ============== =================
Basic net loss per common share $ (20,660) (8,320) (36,820) (13,570)
=============== ================= ============== =================
Diluted net loss per common share $ (20,660) (8,320) (36,820) (13,570)
=============== ================= ============== =================
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.
5
<PAGE>
<TABLE>
GCI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
<CAPTION>
Class A
Shares of Common Class A Class B Shares
(Unaudited) Stock Common Common Held in Paid-in Retained
(Amounts in thousands) Class A Class B Stock Stock Treasury Capital Earnings
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Predecessor balances at December 31, 1996 36,587 4,074 $ 113,421 3,432 (1,010) 4,229 29,482
Net loss --- --- --- --- --- --- (1,357)
Tax effect of excess stock compensation
expense for tax purposes over amounts
recognized for financial reporting
purposes --- --- --- --- --- 159 ---
Class B shares converted to Class A 5 (5) --- --- --- --- ---
Shares issued upon conversion of
convertible note 1,538 --- 9,983 --- --- --- ---
Shares purchased and held in Treasury --- --- --- --- (29) --- ---
Shares issued under stock option plan 37 --- 109 --- --- --- ---
--------------------------------------------------------------------------------
Predecessor balances at June 30, 1997 38,167 4,069 $ 123,513 3,432 (1,039) 4,388 28,125
================================================================================
Successor balances at December 31, 1997 100 --- $ 206,622 --- --- --- (2,183)
Net loss --- --- --- --- --- --- (3,682)
Contribution from parent --- --- --- --- --- 350 ---
Dividend to parent --- --- --- --- --- --- (568)
--------------------------------------------------------------------------------
Successor balances at June 30, 1998 100 --- $ 206,622 --- --- 350 (6,433)
================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
<TABLE>
GCI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(Unaudited)
(Successor) (Predecessor)
Six Months Ended
June 30,
1998 1997
---------------- -----------------
(Amounts in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,682) (1,357)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 16,662 11,728
Deferred income tax expense 2,071 2,457
Deferred compensation and compensatory stock
options 90 (111)
Bad debt expense, net of write-offs (12) 308
Other noncash income and expense items 147 168
Change in operating assets and liabilities (note 2) (10,283) (4,636)
---------------- -----------------
Net cash provided by operating activities 4,993 8,557
---------------- -----------------
Cash flows from investing activities:
Purchases of property and equipment (94,853) (21,100)
Restricted cash investment 39,406 ---
Purchases of other assets (2,468) (655)
Notes receivable issued (200) (549)
Payments received on notes receivable 610 5
---------------- -----------------
Net cash used in investing activities (57,505) (22,299)
---------------- -----------------
Cash flows from financing activities:
Long-term borrowings - bank debt and leases 52,382 20,000
Repayments of long-term borrowings and capital lease
obligations (900) (12,462)
Contribution from parent 350 ---
Dividend to parent (568) ---
Payment of debt issuance costs (note 3) (1,526) ---
Purchase of treasury stock --- (29)
---------------- -----------------
Net cash provided by financing activities 49,738 7,618
---------------- -----------------
Net decrease in cash and cash equivalents (2,774) (6,124)
Cash and cash equivalents at beginning of period 3,048 13,349
---------------- -----------------
Cash and cash equivalents at end of period $ 274 7,225
================ =================
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.
7
<PAGE>
GCI, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) General
(a) Basis of Presentation
GCI, Inc. ("Successor") was incorporated in 1997. GCI, Inc., a wholly
owned subsidiary of General Communication, Inc. ("GCI" or
"Predecessor"), received through its initial capitalization all
ownership interests in subsidiaries previously held by GCI. All
assets, liabilities and operating activities of GCI not conducted
through its subsidiaries were transferred to GCI, Inc. effective
January 1, 1998. The accompanying financial statements for the
three-month and six-month periods ended June 30, 1998 include the
operating activities of GCI, Inc. and its subsidiaries. The
accompanying financial statements for the three-month and six-month
periods ended June 30, 1997 include the operating activities of GCI,
Inc.'s predecessor, GCI. The Predecessor's three-month and six-month
periods ended June 30, 1997 operating activities not conducted or
owned through its subsidiaries were not material to GCI, Inc.
(b) Organization
GCI, an Alaska corporation, was incorporated in 1979. GCI, Inc., an
Alaska corporation, was incorporated in 1997 and is a wholly owned
subsidiary of GCI. GCI Holdings, Inc. ("Holdings") is a wholly owned
subsidiary of GCI, Inc. and was incorporated in 1997. GCI
Communication Corp. ("GCC"), an Alaska corporation, is a wholly owned
subsidiary of Holdings and was incorporated in 1990. GCI
Communication Services, Inc. ("Communication Services"), an Alaska
corporation, is a wholly owned subsidiary of Holdings and was
incorporated in 1992. GCI Leasing Co., Inc. ("Leasing Company"), an
Alaska corporation, is a wholly owned subsidiary of Communication
Services and was incorporated in 1992. GCI, GCI, Inc., Holdings and
GCC are engaged in the transmission of interstate and intrastate
private line and switched message long distance telephone service
between Anchorage, Fairbanks, Juneau, and other communities in Alaska
and the remaining United States and foreign countries. GCI, GCI,
Inc., Holdings and GCC also provide northbound services to certain
common carriers terminating traffic in Alaska and sell and service
dedicated communications systems and related equipment. Communication
Services provides private network point-to-point data and voice
transmission services between Alaska, Hawaii and the western
contiguous United States. Leasing Company owns and leases capacity on
an undersea fiber optic cable used in the transmission of interstate
private line and switched message long distance services between
Alaska and the remaining United States and foreign countries.
Cable television services are provided through GCI Cable, Inc. and
its wholly owned subsidiaries GCI Cable/Fairbanks, Inc., and GCI
Cable/Juneau, Inc. (collectively "GCI Cable" or "Cable Companies").
GCI Cable, Inc. and its subsidiaries are Alaska corporations and were
incorporated in 1996. GCI Cable, Inc. is a wholly owned subsidiary of
Holdings.
8 (Continued)
<PAGE>
GCI, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
GCI Transport Co., Inc., Fiber Hold Co., Inc., GCI Fiber Co., Inc.,
and GCI Satellite Co., Inc., all Alaska corporations, were
incorporated in 1997 to finance the acquisition of satellite
transponders and to construct and deploy the fiber optic cable system
further described in note 4. GCI Transport Co., Inc. is a wholly
owned subsidiary of Holdings. Fiber Hold Co., Inc., GCI Fiber Co.,
Inc., and GCI Satellite Co., Inc. are wholly-owned subsidiaries of
GCI Transport Co., Inc. Alaska United Fiber System Partnership
("Alaska United") was organized in 1997 to construct, own and operate
the fiber optic cable system described in note 4. Alaska United is a
partnership wholly owned by the Company through GCI Fiber Co., Inc.
and Fiber Hold Co., Inc.
(c) Net Loss Per Common Share
<TABLE>
Shares used to calculate net loss per common share consist of the
following (amounts in thousands):
<CAPTION>
(Successor) (Predecessor) (Successor) (Predecessor)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Weighted average common shares
outstanding 100 43,474 100 43,418
============== ============= ============== =============
</TABLE>
Common equivalent shares outstanding of 857,000 and 817,000 are
anti-dilutive June 30, 1998 and 1997 and are not included in the
diluted net loss per share calculation.
(c) Other
The accompanying unaudited interim condensed consolidated financial
statements 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. The interim condensed consolidated financial
statements include the consolidated accounts of GCI, Inc. and its
wholly owned subsidiaries (collectively, the "Company") with all
significant intercompany transactions eliminated. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the six-month period ended June 30, 1998 are
not necessarily indicative of the results that may be expected for
the year ended December 31, 1998. For further information, refer to
the financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31,
1997.
9 (Continued)
<PAGE>
GCI, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(2) Consolidated Statements of Cash Flows Supplemental Disclosures
<TABLE>
Changes in operating assets and liabilities consist of:
<CAPTION>
(Successor) (Predecessor)
Six-month periods ended June 30, 1998 1997
-------------------------------- ------------------ ----------------
(Amounts in thousands)
<S> <C> <C>
Increase in receivables $ (11,164) (3,614)
Increase (decrease) in prepaid and other current
assets 578 (487)
Increase in inventory (693) (1,648)
Increase (decrease) in accounts payable (1,788) 1,260
Increase in accrued liabilities 138 1,019
Increase (decrease) in accrued payroll and payroll
related obligations 1,315 (791)
Increase (decrease) in accrued interest 800 (468)
Increase in deferred revenues 542 93
Decrease in other liabilities (11) ---
------------------ ----------------
$ (10,283) (4,636)
================== ================
</TABLE>
The holders of $10 million of convertible subordinated notes
exercised their conversion rights in January 1997 resulting in the
exchange of such notes for 1,538,457 shares of GCI's Class A common
stock.
No income taxes were paid during the six-month periods ended June 30,
1998 and 1997.
Interest paid totaled $12,181,000 and $9,649,000 during the six-month
periods ended June 30, 1998 and 1997, respectively.
10 (Continued)
<PAGE>
GCI, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(3) Long-term Debt
In January 1998, Alaska United closed a $75 million project finance
facility ("Fiber Facility") to construct a fiber optic cable system
connecting Anchorage, Fairbanks, Valdez, Whittier, Juneau and Seattle
as further described in note 4. The Fiber Facility provides up to $75
million in construction financing and will bear interest at either
Libor plus 3.0%, or at the Company's choice, the lender's prime rate
plus 1.75%. The interest rate will decline to Libor plus 2.5%-2.75%,
or at the Company's choice, the lender's prime rate plus 1.25%-1.5%
after the project completion date and when the loan balance is
$60,000,000 or less. Alaska United is required to pay a commitment
fee equal to 0.375% per annum on the unused portion of the
commitment. The Fiber Facility is a 10-year term loan that is
interest only for the first 5 years. The facility can be extended to
a 12 year term loan at any time between the second and fifth
anniversary of closing the facility if the Company can demonstrate
projected revenues from certain capacity commitments will be
sufficient to pay all operating costs, and interest and principal
installments based on the extended maturity.
The Fiber Facility contains, among others, covenants requiring
certain intercompany loans and advances in order to maintain specific
levels of cash flow necessary to pay operating costs, interest and
principal installments. Additional covenants pertain to the timely
completion of certain project construction milestones. The Fiber
Facility also contains a guarantee that requires, among other terms
and conditions, Alaska United complete the project by the completion
date and pay any non-budgeted costs of the project. Alaska United was
in compliance with all covenants during the period commencing January
1998 (date of the Fiber Facility) through June 30, 1998.
All of Alaska United's assets, as well as a pledge of the partnership
interests' owning Alaska United, collateralize the Fiber Facility.
The Company was in compliance with all covenants of its senior notes
and senior credit facility through June 30, 1998.
(4) Commitments and Contingencies
Deferred Compensation Plan
During 1995, the Company adopted a non-qualified, unfunded deferred
compensation plan to provide a means by which certain employees may
elect to defer receipt of designated percentages or amounts of their
compensation and to provide a means for certain other deferrals of
compensation. The Company may, at its discretion, contribute matching
deferrals equal to the rate of matching selected by the Company.
Participants immediately vest in all elective deferrals and all
income and gain attributable thereto. Matching contributions and all
income and gain attributable thereto vest over a six-year period.
11 (Continued)
<PAGE>
GCI, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Participants may elect to be paid in either a single lump sum payment
or annual installments over a period not to exceed 10 years. Vested
balances are payable upon termination of employment, unforeseen
emergencies, death and total disability. Participants are general
creditors of the Company with respect to deferred compensation plan
benefits. Compensation deferred pursuant to the plan totaled
approximately $0 and $89,000 during the six-month periods ended June
30, 1998 and 1997, respectively.
Satellite Transponders
The Company entered into a purchase and lease-purchase option
agreement in August 1995 for the acquisition of satellite
transponders to meet its long-term satellite capacity requirements.
The balance payable upon expected delivery of the transponders during
the third quarter of 1998 in addition to the $9.1 million deposit
previously paid is not expected to exceed $41 million.
Litigation
The Company is from time to time involved in various lawsuits and
legal proceedings that have arisen in the normal course of business.
While the ultimate results of these matters cannot be predicted with
certainty, management does not expect them to have a material adverse
effect on the financial position, results of operations or liquidity
of the Company.
Cable Service Rate Reregulation
Beginning in April 1993, the Federal Communications Commission
("FCC") adopted regulations implementing the Cable Television
Consumer Protection and Competition Act of 1992 ("The Cable Act of
1992"). Included are rules governing rates charged by cable operators
for the basic service tier, the installation, lease and maintenance
of equipment (such as converter boxes and remote control units) used
by subscribers to receive this tier and for cable programming
services other than programming offered on a per-channel or
per-program basis (the "regulated services"). Generally, the
regulations require affected cable systems to charge rates for
regulated services that have been reduced to prescribed benchmark
levels, or alternatively, to support rates using costs-of-service
methodology.
The regulated services rates charged by the Company may be reviewed
by the State of Alaska, operating through the Alaska Public Utilities
Commission ("APUC") for basic service, or by the FCC for cable
programming service. Refund liability for basic service rates is
limited to a one-year period. Refund liability for cable programming
service rates may be calculated from the date a complaint is filed
with the FCC until the rate reduction is implemented.
In order for the State of Alaska to exercise rate regulation
authority over the Company's basic service rates, 25% of a systems'
subscribers must request such regulation by filing a
12 (Continued)
<PAGE>
GCI, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
petition with the APUC. At June 30, 1998, the State of Alaska has
rate regulation authority over the Juneau system's basic service
rates. (The Juneau system serves approximately 8.5% of the Company's
total basic service subscribers at June 30, 1998.) Juneau's current
rates have been approved by the APUC and there are no other pending
filings with the APUC, therefore, there is no refund liability for
basic service at this time.
Complaints by subscribers relating to cable programming service rates
were filed with, and accepted by, the FCC for certain franchise
areas; however, filings made in response to those complaints related
to the period prior to July 15, 1994 were approved by the FCC.
Therefore, the potential liability for cable programming service
refunds would be limited to the period subsequent to July 15, 1994
for these areas. Management of the Company believes that it has
complied in all material respects with the provisions of the FCC
rules and regulations and that the Company is, therefore, not liable
for any refunds. Accordingly, no provision has been made in the
financial statements for any potential refunds. The FCC rules and
regulations are, however, subject to judgmental interpretations, and
the impact of potential rate changes or refunds ordered by the FCC
could cause the Company to make refunds and/or to be in default of
certain debt covenants.
In February 1996, a telecommunications bill was signed into federal
law that impacts the cable industry. Most notably, the bill allows
cable system operators to provide telephony services, allows
telephone companies to offer video services, and provides for
deregulation of cable programming service rates by 1999. Management
of the Company believes the bill will not have a significant adverse
impact on the financial position or results of operations of the
Company.
Undersea Fiber Optic Cable Contract Commitment
The Company signed a contract in July 1997 for construction of the
undersea portion of a $125 million fiber optic cable system
connecting the cities of Anchorage, Juneau, and Seattle via a subsea
route. Subsea and terrestrial connections will extend the fiber optic
cable to Fairbanks via Whittier and Valdez. Subsea construction
efforts will begin during the late summer of 1998 with commercial
services expected to commence in December 1998. Pursuant to the
contract, the Company made progress payments of $9.1 million during
the year ended December 31, 1997 and $66.2 million during the
six-month period ended June 30, 1998. The Company will pay the
remaining balance in installments through December 1998 based on
completion of certain key milestones. Approximately $39.4 million of
proceeds from the senior notes offering, net of the $9.1 million paid
in 1997, were contributed to Alaska United. The use of such proceeds
was restricted to funding the construction and deployment of the
fiber optic cable system and was reported as Restricted Cash in the
accompanying Interim Condensed Consolidated Financial Statements at
December 31, 1997. In January 1998, the Company secured up to $75
million in bank financing to fund the expected remaining cost of
construction and deployment (see note 3), of which $29.4 million has
been borrowed at June 30, 1998.
13 (Continued)
<PAGE>
GCI, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Fiber Capacity Exchange
The Company and Kanas Telecom, Inc. ("Kanas") signed a contract
November 21, 1997 that provides for an exchange of fiber optic cable
capacity between Anchorage and Fairbanks via Valdez. The Company and
Kanas will trade "dark fiber" capacity connecting Fairbanks, Valdez,
Whittier and Anchorage. Each company will provide their own
electronic equipment to place their fiber into service. The Company
will provide Kanas with dark fiber from Valdez to Anchorage. Kanas
will provide the Company with dark fiber between Valdez and
Fairbanks.
<TABLE>
(5) Supplemental financial information
(Amounts in thousands)
<CAPTION>
Six-month period ended June 30, 1998
------------------------------------------------
Long-
(Successor) Distance Cable Local Combined
------------ ----------- --------- -------------
<S> <C> <C> <C> <C>
Revenues:
Telecommunication revenues $ 89,789 --- 3,062 92,851
Cable revenues --- 28,242 --- 28,242
------------ ----------- --------- -------------
Total revenues 89,789 28,242 3,062 121,093
------------ ----------- --------- -------------
Cost of sales and services:
Distribution costs and costs of
services 47,886 --- 2,122 50,008
Programming and copyright costs --- 6,662 --- 6,662
------------ ----------- --------- -------------
Total cost of sales and services 47,886 6,662 2,122 56,670
------------ ----------- --------- -------------
Contribution 41,903 21,580 940 64,423
------------ ----------- --------- -------------
Selling, general and administrative expenses:
Telephony operating and engineering 5,675 --- 775 6,450
Cable television, including
management fees of $408 --- 9,863 --- 9,863
Sales and communications 9,038 --- 534 9,572
General and administrative 12,665 --- 4,079 16,744
Bad debts 1,018 230 --- 1,248
------------ ----------- --------- -------------
Total selling, general and
administrative expenses 28,396 10,093 5,388 43,877
Depreciation and amortization 7,501 7,861 1,300 16,662
============ =========== ========= =============
Operating income (loss) $ 6,006 3,626 (5,748) 3,884
============ =========== ========= =============
</TABLE>
14 (Continued)
<PAGE>
GCI, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
Six-month period ended June 30, 1997
------------------------------------------------
Long-
(Predecessor) Distance Cable Local Combined
------------ ----------- --------- -------------
<S> <C> <C> <C> <C>
Revenues:
Telecommunication revenues $ 81,356 --- --- 81,356
Cable revenues --- 27,711 --- 27,711
------------ ----------- --------- -------------
Total revenues 81,356 27,711 --- 109,067
------------ ----------- --------- -------------
Cost of sales and services:
Distribution costs and costs of
services 50,379 --- 236 50,615
Programming and copyright costs --- 6,331 --- 6,331
------------ ----------- --------- -------------
Total cost of sales and services 50,379 6,331 236 56,946
------------ ----------- --------- -------------
Contribution 30,977 21,380 (236) 52,121
------------ ----------- --------- -------------
Selling, general and administrative
expenses:
Telephony operating and engineering 5,430 --- --- 5,430
Cable television, including
management fees of $271 --- 9,286 --- 9,286
Sales and communications 6,580 --- 229 6,809
General and administrative 10,665 --- 983 11,648
Bad debts 936 206 --- 1,142
------------ ----------- --------- -------------
Total selling, general and
administrative expenses 23,611 9,492 1,212 34,315
Depreciation and amortization 4,918 6,810 --- 11,728
============ =========== ========= =============
Operating income (loss) $ 2,448 5,078 (1,448) 6,078
============ =========== ========= =============
</TABLE>
15
<PAGE>
PART I.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's Interim Condensed Consolidated Financial Statements and the notes
thereto. As used herein, EBITDA consists of earnings before interest (net),
income taxes, depreciation, amortization and other income (expense). EBITDA is a
measure commonly used in the telecommunications and cable television industries
to analyze companies on the basis of operating performance. It is not a measure
of financial performance under generally accepted accounting principles and
should not be considered as an alternative to net income as a measure of
performance nor as an alternative to cash flow as a measure of liquidity.
FACTORS AFFECTING FUTURE PERFORMANCE
AND FORWARD LOOKING STATEMENTS
Certain statements in this quarterly report on Form 10-Q constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1996 ("Securities Reform Act"). These statements may be
preceded by, followed by, or include the words "believes," "expects,"
"anticipates," or similar expressions. For those statements, the Company claims
protection of the safe-harbor for forward-looking statements contained in the
Securities Reform Act. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause the actual
results, performance and achievements of the Company, or industry results, to
differ materially from future results, performance or achievements expressed or
implied by such statements. The reader is cautioned that important factors, such
as the following risks, uncertainties, and other factors, in addition to those
contained elsewhere in this document, could affect future results of the
Company, its long-distance telecommunication services, local access services,
and cable services and could cause those results to differ materially from those
expressed in the forward-looking statements:
- Material adverse changes in the economic conditions in the
markets served by the Company
- Regulatory and competitive environment of the business segments
in which the Company operates
- Uncertainties inherent in new business strategies, new product
launches and development plans, including local access services,
Internet services, PCS services, digital video services, cable
modem services, and transmission services
- Rapid technological changes
- Development and financing of telecommunication, local access,
PCS, and cable networks and services
- Future financial performance, including availability, terms and
deployment of capital
- Availability of qualified personnel
16 (Continued)
<PAGE>
- Changes in, or failure, or inability, to comply with, government
regulations, including, without limitation, regulations of the
Federal Communications Commission, the Alaska Public Utilities
Commission, and adverse outcomes from regulatory proceedings
- Competitor responses to the Company's products and services and
overall market acceptance of such products and services
- The cost of the Company's year 2000 compliance efforts
- Uncertainties in federal military spending levels and military
base closures in markets in which the Company operates
These forward-looking statements (and such risks, uncertainties and other
factors) are made only as of the date of this report and the Company expressly
disclaims any obligation or undertaking to disseminate any updates or revisions
to any forward-looking statement contained in this document to reflect any
change in the Company's expectations with regard to those statements or any
other change in events, conditions or circumstances on which any such statement
is based.
OVERVIEW
GCI, Inc. ("Successor") was incorporated in 1997. GCI, Inc., a wholly
owned subsidiary of General Communication, Inc. ("GCI" or "Predecessor"),
received through its initial capitalization all ownership interests in
subsidiaries previously held by GCI. Shares of GCI's Class A common stock are
traded on the Nasdaq National Market tier of the Nasdaq Stock Market under the
symbol GNCMA. Shares of the GCI's Class B common stock are traded on the
Over-the-Counter market. Proceeds from GCI's August 1, 1997 class A common stock
offering were used in part to capitalize GCI, Inc. The following discussion and
analysis of financial condition and results of operations includes the 1997
operating activities of GCI and its subsidiaries, which operating activities not
conducted or owned through its subsidiaries were not material to GCI, Inc. "The
Company" as used in Management's Discussion and Analysis of Financial Condition
and Results of Operations for 1997 refers to General Communication, Inc., GCI,
Inc. and GCI Inc.'s wholly owned subsidiaries. All assets, liabilities and
operating activities of GCI not conducted through its subsidiaries were
transferred to GCI, Inc. effective January 1, 1998.
Long distance telecommunications services. The Company has historically
reported revenues principally from the provision of interstate and intrastate
long distance telecommunications services to residential, commercial and
governmental customers and to other common carriers (principally MCI
Telecommunications, Inc. ("MCI") and Sprint Corporation ("Sprint")). These
services accounted for approximately 90.0% of the Company's telecommunications
services revenues during the second quarter of 1998. The balance of
telecommunications services revenues have been attributable to corporate network
management contracts, telecommunications equipment sales and service, Internet
services and other miscellaneous revenues (including revenues from prepaid and
debit calling cards, the installation and leasing of customers' very small
aperture terminal ("VSAT") equipment and fees charged to MCI and Sprint for
certain billing services). Factors that have the greatest impact on year-to-year
changes in long distance telecommunications services revenues include the rate
per minute charged to customers and usage volumes, usually expressed as minutes
of use. These factors in turn depend in part upon economic conditions in Alaska.
The economy of Alaska is dependent upon the natural resource industries, in
particular oil production, as well as tourism, fisheries, government and United
States military spending.
17 (Continued)
<PAGE>
The Company's long distance telecommunications cost of sales and services
has consisted principally of the direct costs of providing services, including
local access charges paid to local exchange carriers ("LECs") for the
origination and termination of long distance calls in Alaska, fees paid to other
long distance carriers to carry calls that terminate in areas not served by the
Company's network (principally the lower 49 states, most of which calls are
carried over MCI's network, and international locations, which calls are carried
principally over Sprint's network), and the cost of equipment sold to the
Company's customers. During the second quarter of 1998, local access charges
accounted for 41.2% of telecommunications cost of sales and services, fees paid
to other long distance carriers represented 31.7%, satellite transponder lease
and undersea fiber maintenance costs represented 9.2%, enterprise services and
outsourcing costs represented 5.6%, Internet costs accounted for 7.1%, and
telecommunications equipment costs accounted for 4.4% of telecommunications cost
of sales and services.
The Company's long distance telecommunications selling, general, and
administrative expenses have consisted of operating and engineering, customer
service, sales and communications, management information systems, general and
administrative, and legal and regulatory expenses. Most of these expenses
consist of salaries, wages and benefits of personnel and certain other indirect
costs (such as rent, travel, utilities, insurance and property taxes). A
significant portion of long distance telecommunications selling, general, and
administrative expenses, 38.6% during the second quarter of 1998, represents the
cost of the Company's advertising, promotion and market analysis programs.
Long distance telecommunications services face significant competition
from AT&T Alascom, Inc., long-distance resellers, and from local telephone
companies that have entered the long-distance market as allowed by the 1996
federal Telecommunications Act. The number of active long-distance customers
billed by the Company has decreased approximately 1.1% during the second quarter
of 1998, and has decreased approximately 2.4% during the first two quarters of
1998. Increased usage volumes and traffic carried for other common carriers have
offset usage reductions attributed to decreased active customers billed. The
Company believes its approach to developing, pricing, and providing
long-distance telecommunication services will continue to allow it to be
competitive in providing those services.
Cable services. During the second quarter of 1998, cable revenues and
EBITDA represented 22.3% and 56.7%, respectively, of consolidated revenues and
EBITDA. The cable systems serve 26 communities and areas in Alaska, including
the state's three largest population centers, Anchorage, Fairbanks and Juneau.
The Company generates cable services revenues from three primary sources:
(1) programming services, including monthly basic or premium subscriptions and
pay-per-view movies or other one-time events, such as sporting events; (2)
equipment rentals or installation; and (3) advertising sales. During the second
quarter of 1998 programming services generated 88.2% of total cable services
revenues, equipment rental and installation fees accounted for 7.7% of such
revenues, and advertising sales and other services accounted for the remaining
4.1% of total cable services revenues. The primary factors that contribute to
year-to-year changes in cable services revenues are
18 (Continued)
<PAGE>
average monthly subscription and pay-per-view rates, the mix among basic,
premium and pay-per-view services, and the average number of subscribers during
a given reporting period.
The cable systems' cost of sales and selling, general and administrative
expenses have consisted principally of programming and copyright expenses,
labor, maintenance and repairs, marketing and advertising, rental expense, and
property taxes. During the second quarter of 1998 programming and copyright
expenses represented approximately 39.1% of total cable cost of sales and
selling, general and administrative expenses. Marketing and advertising costs
represented approximately 12.2% of such total expenses.
Cable services face competition from alternative methods of receiving and
distributing television signals and from other sources of news, information and
entertainment. The Company believes its cable television services will continue
to be competitive based on providing, at reasonable prices, a greater variety of
programming and other communication services than are available off-air or
through other alternative delivery sources and upon superior technical
performance and customer service.
Local access services. The Company began offering local exchange services
in Anchorage during late September 1997 and provided service to approximately
24,000 lines at June 30, 1998. Approximately 4,000 additional lines were sold
and awaiting connection at June 30, 1998. Local exchange services revenues
totaled $2.0 million during the second quarter of 1998 representing 3.2% of
total second quarter 1998 revenues.
During the second quarter of 1998 operating and engineering expenses
represented approximately 11.6% of total local access services cost of sales and
selling, general and administrative expenses. Marketing and advertising costs
represented approximately 6.1% of such total expenses, and customer service, and
general and administrative costs represented approximately 54.1% of such total
expenses.
Local exchange services EBITDA totaled ($2.4) million during the second
quarter of 1998. The Company expects that its local exchange services will
continue to generate operating losses and negative EBITDA during 1998 and a
portion of 1999. Factors that have the greatest impact on year-to-year changes
in local access services revenues include the rates charged to customers and the
number of customers served.
The Company's local access services faces significant competition from the
Anchorage Telephone Utility and AT&T Alascom, Inc. The Company believes its
approach to developing, pricing, and providing local access telecommunication
services will continue to allow it to be competitive in providing those
services.
19 (Continued)
<PAGE>
Internet services. The Company's statewide SchoolAccess services (Internet
access and related products and services for Alaska schools) commenced January
1998. SchoolAccess revenues totaled $1.1 million during the second quarter of
1998 representing 1.8% of total revenues. The Company began offering retail
Internet services in April 1998. Factors that have the greatest impact on
year-to-year changes in Internet services revenues include the rates charged to
customers and the number of customers served.
The Company competes with several Internet service providers in its
markets. The Company believes its approach to developing, pricing, and providing
Internet services will continue to allow it to be competitive in providing those
services.
PCS services. The Company began developing plans for PCS wireless
communications service deployment in 1995 and is currently evaluating various
vendors for a proposed PCS network. In 1997 the Company conducted a technical
trial of its candidate technology. The Company currently expects to launch PCS
service in Anchorage in 1999, although it may be deferred beyond that date.
Other expenses and net loss. Depreciation and amortization and interest
expense on a consolidated basis is expected to be higher in 1998 as compared to
1997 resulting primarily from additional depreciation on 1997 and 1998 capital
expenditures and additional outstanding long-term debt. As a result, the Company
expects that it will continue to record net losses in 1998.
20 (Continued)
<PAGE>
RESULTS OF OPERATIONS
<TABLE>
The following table sets forth selected Statement of Operations data as a
percentage of total revenues for the periods indicated and the percentage
changes in such data as compared to the corresponding prior year period:
(Underlying data rounded to the nearest thousands)
<CAPTION>
Percentage Change
----------------------------
Six Months Three Months
Six Months Ended Three Months Ended 1998 vs. Six 1998 vs. Three
June 30, June 30, Months Months
1997 1998 1997 1998 1997 1997
---- ---- ---- ---- ---- ----
(Unaudited) (Predecessor) (Successor) (Predecessor) (Successor)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues
Telecommunications services 74.6% 74.1% 75.0% 74.4% 10.4% 11.2%
Cable services 25.4% 23.3% 25.0% 22.3% 1.9% (0.1)%
Local access services 0.0% 2.6% 0.0% 3.3% NA NA
- ---------------------------------------------------------------------------------------------------------------------------
Total revenues 100.0% 100.0% 100.0% 100.0% 11.0% 12.0%
Cost of sales and services 52.2% 46.8% 53.0% 46.6% (0.5)% (1.4)%
Selling, general and 31.5% 36.2% 32.1% 37.4% 27.9% 30.7%
administrative expenses
Depreciation and amortization 10.8% 13.8% 10.0% 13.7% 42.1% 53.3%
- ---------------------------------------------------------------------------------------------------------------------------
Operating income 5.5% 3.2% 4.9% 2.3% (36.1)% (48.1)%
Net loss before income taxes (1.9)% (4.8)% (2.6)% (5.3)% 177.6% 130.2%
Net loss (1.2)% (3.0)% (1.5)% (3.3)% 171.3% 148.3%
Other Operating Data:
Cable operating income (1) 18.3% 12.8% 18.1% 10.4% (28.6)% (42.9)%
Cable EBITDA (1) 42.9% 40.7% 41.7% 40.5% (3.4)% (2.9)%
Local operating loss (2) NA (187.7)% NA (126.8)% 297.0% 219.0%
Local EBITDA (2) NA (145.3)% NA (115.4)% 207.2% 190.4%
Consolidated EBITDA 16.3% 17.0% 14.9% 16.0% 15.4% 19.6%
<FN>
--------------------------
(1) Computed as a percentage of total cable services revenues.
(2) Computed as a percentage of total local access services revenues.
</FN>
</TABLE>
21 (Continued)
<PAGE>
THREE MONTHS ENDED JUNE 30, 1998 ("1998") COMPARED TO THREE MONTHS ENDED JUNE
30, 1997 ("1997")
REVENUES. Total revenues increased 12.0% from $56.2 million in 1997 to
$62.9 million in 1998. Long distance transmission revenues from commercial,
residential, governmental, and other common carrier customers increased 7.4%
from $39.3 million in 1997 to $42.2 million in 1998. This increase reflected a
9.4% increase in interstate minutes of use to 167.3 million minutes and a 1.6%
increase in intrastate minutes of use to 34.9 million minutes. Long distance
revenue growth in 1998 was largely due to a 26.9% increase in revenues from
other common carriers (principally MCI and Sprint) and private line services,
from $18.2 million in 1997 to $23.1 million in 1998. The Company's average rate
per minute on long distance traffic decreased 5.1% from $0.178 per minute in
1997 to $0.169 per minute in 1998.
Cable revenues remained relatively constant at approximately $14.0 million
in 1997 and 1998. The number of homes passed by the cable systems and basic
subscribers increased approximately 860 and 5,100, respectively, at June 30,
1998 as compared to June 30, 1997. Pay-per-view and premium service revenue
decreases offset increases attributable to subscriber growth. The Company began
offering local access services in Anchorage in September 1997 with second
quarter 1998 revenues totaling $2.0 million. Product sales and network services
revenues increased 52.2% from $2.3 million in 1997 to $3.5 million in 1998,
primarily due to increased network services revenues and SchoolAccess revenues
in 1998 as compared to 1997.
COST OF SALES AND SERVICES. Cost of sales and services totaled $29.8
million in 1997 and $29.4 million in 1998. As a percentage of total revenues,
cost of sales and services decreased from 53.0% in 1997 to 46.6% in 1998. The
decrease in cost of sales and services as a percentage of revenues is primarily
attributed to: 1) reductions in access charges paid by the Company to other
carriers for distribution of its traffic, 2) avoidance of access charges
resulting from the Company's distribution and termination of its traffic on its
own network instead of paying other carriers to distribute and terminate its
traffic, and 3) changes in the Company's product mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 30.7% from $18.0 million in 1997 to $23.5
million in 1998, and, as a percentage of revenues, increased from 32.1% in 1997
to 37.4% in 1998. This increase resulted from:
- Operating, engineering, sales, customer service and
administrative costs totaling $696,000 in 1997 as compared to
$3.2 million in 1998 associated with the Company's local access
services segment which initiated service in September 1997. The
second quarter increase was necessary to provide the operations,
engineering, customer service and support infrastructure
necessary to accommodate the expected growth in the Company's
local access services customer base.
22 (Continued)
<PAGE>
- Increased telecommunication segment operating, engineering,
general and administrative expenses totaling $9.4 million in
1998 as compared to $8.6 million in 1997 due to increased
personnel and other costs in customer service, engineering,
operations, accounting, human resources, legal and regulatory,
and management information services. Cost increases were
associated with the development, introduction, or planned
introduction, and support of new products and services including
rural message and data telephone services, PCS services, digital
video services, cable modem services, and Internet services.
Increased customer service expenses were associated with support
of increased sales volumes and expenditures necessary for
continuing integration of customer service operations across
product lines.
- Increased telecommunication segment sales, advertising and
telemarketing costs totaling $3.7 million in 1997 compared to
$5.9 million in 1998. Increased selling costs were associated
with the introduction of various marketing plans and other
proprietary rate plans and continuing cross promotion of
products and services.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased 53.3% from $5.6 million in 1997 to $8.6 million in 1998. The increase
is attributable to the Company's $64.6 million investment in facilities during
1997 for which a full year of depreciation will be recorded during 1998 and the
1998 facilities investment of $94.9 million through June 30.
INTEREST EXPENSE, NET. Interest expense, net of interest income, increased
14.3% from $4.2 million in 1997 to $4.8 million in 1998. This increase resulted
from increases in the Company's average outstanding indebtedness resulting
primarily from the purchase and construction of new long distance and local
telecommunication equipment and facilities and expansion and upgrades of cable
television facilities.
INCOME TAX BENEFIT. Income tax benefit increased from $610,000 in 1997 to
$1.3 million in 1998 due to an increase in the net loss before income taxes in
1998 as compared to 1997. The Company's effective income tax rate decreased from
42.3% in 1997 to 37.8% in 1998 due to the increased net loss and the
proportional amount of items that are nondeductible for income tax purposes.
23 (Continued)
<PAGE>
SIX MONTHS ENDED JUNE 30, 1998 ("1998") COMPARED TO SIX MONTHS ENDED JUNE 30,
1997 ("1997")
REVENUES. Total revenues increased 11.0% from $109.1 million in 1997 to
$121.1 million in 1998. Long distance transmission revenues from commercial,
residential, governmental, and other common carrier customers increased 7.8%
from $75.6 million in 1997 to $81.5 million in 1998. This increase reflected a
7.6% increase in interstate minutes of use to 325.8 million minutes and a 2.2%
increase in intrastate minutes of use to 67.9 million minutes. Long distance
revenue growth in 1998 was largely due to a 19.6% increase in revenues from
other common carriers (principally MCI and Sprint) and private line services,
from $35.2 million in 1997 to $42.1 million in 1998. The Company's average rate
per minute on long distance traffic decreased 2.8% from $0.176 per minute in
1997 to $0.171 per minute in 1998 primarily due to the introduction of
discounted residential and commercial international calling plans.
Cable revenues increased 1.9% from $27.7 million in 1997 to $28.2 million
in 1998. The number of homes passed by the cable systems and basic subscribers
increased approximately 860 and 5,100, respectively, at June 30, 1998 as
compared to June 30, 1997. Pay-per-view and premium service revenue decreases
partially offset increases attributable to subscriber growth. Local access
services revenues totaled $3.1 million in 1998. Product sales and network
services revenues increased 27.7% from $4.7 million in 1997 to $6.0 million in
1998, primarily due to increased network services revenues and SchoolAccess
revenues in 1998 as compared to 1997.
COST OF SALES AND SERVICES. Cost of sales and services totaled $56.9
million in 1997 and $56.7 million in 1998. As a percentage of total revenues,
cost of sales and services decreased from 52.2% in 1997 to 46.8% in 1998. The
decrease in cost of sales and services as a percentage of revenues is primarily
attributed to: 1) a refund received in the first quarter of 1998 totaling
approximately $1.1 million from a local exchange carrier in respect of its
earnings that exceeded regulatory requirements, 2) reductions in access charges
paid by the Company to other carriers for distribution of its traffic, 3)
avoidance of access charges resulting from the Company's distribution and
termination of its traffic on its own network instead of paying other carriers
to distribute and terminate its traffic, and 4) changes in the Company's product
mix.
24 (Continued)
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 28.0% from $34.3 million in 1997 to $43.9
million in 1998, and, as a percentage of revenues, increased from 31.4% in 1997
to 36.3% in 1998. This increase resulted from:
- Operating, engineering, sales, customer service and
administrative costs totaling $1.2 million in 1997 as compared
to $5.4 million in 1998 associated with the Company's local
access services segment which initiated service in September
1997.
- Increased telecommunication segment operations, engineering,
general and administrative expenses totaling $19.4 million in
1998 as compared to $17.0 million in 1997 due to increased
personnel and other costs in customer service, engineering,
operations, accounting, human resources, legal and regulatory,
and management information services. Cost increases were
associated with the development, introduction, or planned
introduction, and support of new products and services including
rural message and data telephone services, PCS services, digital
video services, cable modem services, and Internet services.
Increased customer service expenses were associated with support
of increased sales volumes and expenditures necessary for
continuing integration of customer service operations across
product lines.
- Increased telecommunication segment sales, advertising and
telemarketing costs totaling $6.6 million in 1997 compared to
$9.0 million in 1998. Increased selling costs were associated
with the introduction of various marketing plans and other
proprietary rate plans and cross promotion of products and
services.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased 42.1% from $11.7 million in 1997 to $16.7 million in 1998. The
increase is attributable to the Company's $64.6 million investment in facilities
during 1997 for which a full year of depreciation will be recorded during 1998
and the 1998 facilities investment of $94.9 million through June 30.
INTEREST EXPENSE, NET. Interest expense, net of interest income, increased
18.3% from $8.2 million in 1997 to $9.7 million in 1998. This increase resulted
from increases in the Company's average outstanding indebtedness resulting
primarily from the purchase and construction of new long distance and local
telecommunication equipment and facilities and expansion and upgrades of cable
television facilities.
INCOME TAX BENEFIT. Income tax benefit increased from $742,000 in 1997 to
$2.1 million in 1998 due to an increase in the net loss before income taxes in
1998 as compared to 1997. The Company's effective income tax rate increased from
35.4% in 1997 to 36.8% in 1998 due to the increased net loss and the
proportional amount of items that are nondeductible for income tax purposes.
25 (Continued)
<PAGE>
As a result of its acquisition of the Cable Companies, the Company has
available net operating loss carryforwards for income tax purposes totaling
$37.6 million at June 30, 1998 which begin to expire in 2004 if not utilized.
The Company's utilization of these carryforwards is subject to certain
limitations pursuant to section 382 of the Internal Revenue Code.
The amount of deferred tax asset considered realizable, however, could be
reduced in the near term if estimates of future taxable income during the
carryforward periods are reduced. The Company estimates that its effective
income tax rate for financial statement purposes will be approximately 38% in
1998. The Company expects that its operations will generate net income before
income taxes during the carryforward periods to allow utilization of loss
carryforwards for which no allowance has been established.
FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
<TABLE>
The following chart provides selected unaudited statement of operations
data from the Company's quarterly results of operations during 1997 and 1998:
<CAPTION>
(Dollars in thousands, except per share amounts)
First Second Third Fourth Total
(Unaudited) Quarter Quarter Quarter Quarter Year
------------------------------------------------------------------------------
1997
(Predecessor)
<S> <C> <C> <C> <C> <C>
Revenues
Telecommunications services $ 39,225 42,131 44,407 42,271 168,034
Cable services 13,656 14,055 13,294 14,160 55,165
Local access services --- --- 255 355 610
------------------------------------------------------------------------------
Total revenues 52,881 56,186 57,956 56,786 223,809
Operating income 3,292 2,786 3,786 5,518 15,382
Extraordinary item, net of income tax
benefit --- --- 433 88 521
Net income (loss) $ (525) (832) (928) 102 (2,183)
==============================================================================
Basic net earnings (loss) per share
$ (0.01) (0.02) (0.02) 0.00 (0.05)
==============================================================================
Diluted net earnings (loss) per share
$ (0.01) (0.02) (0.02) 0.00 (0.05)
==============================================================================
Other financial data:
Cable EBITDA $ 6,025 5,863 5,687 6,168 23,743
==============================================================================
Local EBITDA $ (634) (814) (540) (1,809) (3,797)
==============================================================================
Consolidated EBITDA $ 9,412 8,394 9,553 11,790 39,149
==============================================================================
</TABLE>
26 (Continued)
<PAGE>
<TABLE>
<CAPTION>
(Dollars in thousands, except per share amounts)
First Second Third Fourth Total
(Unaudited) Quarter Quarter Quarter Quarter Year
------------------------------------------------------------------------------
1998
(Successor)
<S> <C> <C> <C>
Revenues
Telecommunications services $ 42,937 46,852 89,789
Cable services 14,201 14,041 28,242
Local access services 1,014 2,048 3,062
------------------------------------------------------------------------------
Total revenues 58,152 62,941 121,093
Operating income 2,437 1,447 3,884
Net loss $ (1,616) (2,066) (3,682)
==============================================================================
Basic net loss per share $ (16,160) (20,660) (36,820)
==============================================================================
Diluted net loss per share $ (16,160) (20,660) (36,820)
==============================================================================
Other financial data:
Cable EBITDA $ 5,795 5,692 11,487
==============================================================================
Local EBITDA $ (2,084) (2,364) (4,448)
==============================================================================
Consolidated EBITDA $ 10,503 10,043 20,546
==============================================================================
</TABLE>
Total revenues for the quarter ended June 30, 1998 were $62.9 million,
representing a 8.1% increase from total revenues in the first quarter of 1998 of
$58.2 million. This increase in total revenues resulted from the following:
- A 6.6% increase in telecommunications services revenues to $46.9
million in the second quarter of 1998 from $44.0 million during
the first quarter of 1998. This increase is attributable in part
to an increase in minutes of traffic carried during the second
quarter of 1998 of approximately 10.8 million minutes as
compared to the first quarter of 1998 (a 5.6% increase).
- An increase in local access services revenues totaling $1.0
million in the second quarter of 1998 as compared to the first
quarter of 1998 (a 102.0% increase)
- These increases were offset, in part, by a reduction in the
average rate per minute billed by the company during the second
quarter of 1998 of approximately $0.004 as compared to the first
quarter of 1998 (a 2.4% decrease).
Cost of sales and services for the quarter ended June 30, 1998 totaled
$29.4 million, representing a 7.7% increase from total cost of sales and
services in the first quarter of 1998 of $27.3 million. Increased cost of sales
resulted primarily from the 8.1% increase in revenues described above, and were
offset, in part, by a refund in the first quarter of 1998 aggregating
approximately $1.1 million from a local exchange carrier in respect of its
earnings that exceeded regulatory requirements.
27 (Continued)
<PAGE>
Long distance revenues have historically been highest in the summer months
as a result of temporary population increases attributable to tourism and
increased seasonal economic activity such as construction, commercial fishing,
and oil and gas activities. Cable television revenues, on the other hand, are
higher in the winter months because consumers spend more time at home and tend
to watch more television during these months. Local service operations are not
expected to exhibit significant seasonality. The Company's ability to implement
construction projects is also reduced during the winter months because of cold
temperatures, snow and short daylight hours.
ACCOUNTING PRONOUNCEMENTS
In June 1997, the Accounting Standards Board issued SFAS No. 131,
"Financial Reporting for Segments of a Business Enterprise" which applies to all
public business enterprises. This new standard requires companies to disclose
segment data based on how management makes decisions about allocating resources
to segments and how it measures segment performance. SFAS 131 requires companies
to disclose a measure of segment profit or loss, segment assets, and
reconciliations to consolidated totals. It also requires entity-wide disclosures
about a company's products and services, its major customers and the material
countries in which it holds assets and reports revenues. Statement 131 is
effective for financial statements for periods beginning after December 15,
1997. Management of the Company expects that adoption of SFAS No. 131 will not
have a material impact on the Company's year-end 1998 financial statement
disclosures.
In February 1998, the Accounting Standards Board issued SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits." SFAS
132 standardizes the disclosure requirements for pensions and postretirement
benefits where practical. It also eliminates certain disclosures and requires
additional information on changes in benefit obligations and fair values of plan
assets. The Company will adopt SFAS 132 in its 1998 year-end financial
statements. SFAS 132 is not expected to have a significant effect on the
Company's pension and postretirement benefit plan disclosures.
In April 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position ("SOP") 98-5, "Reporting on the costs of
Start-Up Activities". SOP 98-5 provides guidance on the financial reporting of
start-up costs and organization costs and requires costs of start-up activities
and organization costs to be expensed as incurred. SOP 98-5 is effective for
financial statements for fiscal years beginning after December 15, 1998.
Management of the Company expects that the adoption of SOP 98-5 will result in a
one-time expense of approximately $375,000 (net of income tax effect) in the
first quarter of 1999 associated with the write-off of unamortized start-up
costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company's first and second quarter 1998 ("1998") cash provided by
operating activities totaled $5.0 million, net of changes in the components of
working capital. Sources of cash during 1998 included long-term borrowings of
$52.4 million. The Company's expenditures for property and equipment, including
construction in progress, totaled $21.1 million and $94.9 million for the
six-month periods ended June 30, 1997 and 1998, respectively. Uses of cash
during 1998 included
28 (Continued)
<PAGE>
repayment of $900,000 of long-term borrowings and capital lease obligations,
payment of deferred debt issuance costs totaling $1.5 million and an increase in
other assets of $2.5 million.
Net receivables increased $11.1 million from December 31, 1997 to June 30,
1998 resulting from increased revenues in 1998 as compared to 1997 and an
increase in refundable income taxes in 1998.
Accounts payable decreased $1.8 million from December 31, 1997 to June 30,
1998 resulting from the Company's payment of amounts accrued at December 31,
1997 during the first quarter of 1998.
Accrued interest increased $800,000 from December 31, 1997 to June 30,
1998 resulting from interest incurred on additional indebtedness outstanding
during 1998 as compared to December 31, 1997.
Working capital at June 30, 1998 totaled $3.8 million, a $8.8 million
increase from the working capital deficit of $5.0 million at December 31, 1997.
The increase in working capital is primarily attributed to 1) payment of
accounts payable at December 31, 1997 with cash generated by operating
activities, 2) payment of amounts accrued for facilities expansion and equipment
at December 31, 1997 with cash generated by operating activities and cash
obtained through the Company's credit agreements, and 3) increases in trade
accounts receivable and refundable income taxes.
On January 27, 1998 Alaska United closed a $75 million project finance
facility ("Fiber Facility") to construct a fiber optic cable system connecting
Anchorage, Fairbanks, Valdez, Whittier, Juneau and Seattle (see notes 3 and 4 to
the accompanying Notes to Interim Condensed Consolidated Financial Statements).
The Fiber Facility provides up to $75 million in construction financing and will
bear interest at either Libor plus 3.0%, or at the Company's choice, the
lender's prime rate plus 1.75%. The interest rate will decline to Libor plus
2.5%-2.75%, or at the Company's choice, the lender's prime rate plus 1.25%-1.5%
after the project completion date and when the loan balance is $60,000,000 or
less. Alaska United is required to pay a commitment fee equal to 0.375% per
annum on the unused portion of the commitment. The Fiber Facility is a 10-year
term loan that is interest only for the first 5 years. The facility can be
extended to a 12 year term loan at any time between the second and fifth
anniversary of closing the facility if the Company can demonstrate projected
revenues from certain capacity commitments will be sufficient to pay all
operating costs, and interest and principal installments based on the extended
maturity. $29.4 million was borrowed under the facility at June 30, 1998.
The Fiber Facility contains, among others, covenants requiring certain
intercompany loans and advances in order to maintain specific levels of cash
flow necessary to pay operating costs, interest and principal installments.
Additional covenants pertain to the timely completion of certain project
construction milestones. The Fiber Facility also contains a guarantee that
requires, among other terms and conditions, Alaska United complete the project
by the completion date and pay any non-budgeted costs of the project. All of
Alaska United's assets, as well as a pledge of the partnership interests' owning
Alaska United, collateralize the Fiber Facility.
29 (Continued)
<PAGE>
The Alaska United project will provide a high capacity fiber optic link
between Fairbanks, Anchorage, Valdez, and Juneau, Alaska, and the lower 48
states through Seattle, Washington. Its initial capacity will be more than five
times the capacity of Alaska's current undersea fiber to the lower 48. After a
preliminary route survey was completed and initial cost components determined, a
detailed sea floor survey was commissioned. On August 1, 1997 the Company issued
a down payment to Tyco Submarine Systems, Inc. to begin construction.
Manufacturing of the cable and its electronics has been underway since that
time. The cable is expected to be laid from late August to October 1998. Testing
will occur after that, and services are expected to commence in December 1998.
The Company was notified in August 1998 that a potential customer for
Alaska United's fiber services (AT&T) has selected another carrier to meet its
immediate needs for additional fiber capacity to and from Alaska. AT&T stated
that it elected to lease a minimum amount of capacity for a short term and that
the Company will have the opportunity to provide fiber capacity in the future.
The other carrier's facilities were under construction at June 30, 1998 with
service expected to commence in late 1998 or 1999. The Company will use half the
capacity of the Alaska United project to carry its own traffic, in addition to
its existing owned and leased facilities. While the Alaska United project would
have received a financial benefit from carrying AT&T's traffic, the project can
be supported solely by the Company's own network capacity requirements. GCI will
continue to pursue opportunities to sell capacity on its system to AT&T and
others.
The Company's expenditures for property and equipment, including
construction in progress, totaled $94.9 million and $21.1 million during the
first two quarters of 1998 and 1997, respectively. The Company anticipates that
its capital expenditures in 1998 may total as much as $225.0 million, including
approximately $40.0 million for satellite transponders and approximately $125.0
million for new undersea fiber optic cable facilities. Planned capital
expenditures over the next five years include $50.0 million to $70.0 million to
fund expansion of long distance facilities, between $120.0 million and $140.0
million to fund development, construction and operating costs of its local
exchange and PCS networks and businesses; and between $55.0 million and $65.0
million to continue to upgrade its cable television plant and to purchase
equipment for new cable services, including digital video services and cable
modem services. Sources of funds for these planned capital expenditures are
expected to include internally generated cash flows and borrowings under the
Company's credit facilities including borrowings under the new $75 million
project financing described above.
The Company's ability to invest in discretionary capital and other
projects will depend upon its future cash flows and access to borrowings under
its credit facilities. Management anticipates that cash flow generated by the
Company and borrowings under its credit facilities will be sufficient to meet
its planned capital expenditures and working capital requirements.
The Company entered into a purchase and lease-purchase option agreement in
August 1995 for the acquisition of satellite transponders to meet its long-term
satellite capacity requirements. The amount payable upon expected delivery of
the transponders during the third quarter of 1998 is not expected to exceed $41
million.
30 (Continued)
<PAGE>
YEAR 2000 COSTS
The "Year 2000" issue affects the Company's installed computer systems,
network elements, software applications, and other business systems that have
time-sensitive programs that may not properly reflect or recognize the year
2000. Because many computers and computer applications define dates by the last
two digits of the year, "00" may not be properly identified as the year 2000.
This error could result in miscalculations or system failures.
The Company has established a year 2000 task force to coordinate the
identification, evaluation, and implementation of changes to financial and
operating computer systems and applications necessary to achieve a year 2000
date conversion with no effect on customers or disruption to business
operations. These actions are necessary to insure that the systems and
applications will recognize and process the year 2000 and beyond. Major areas of
potential business impact have been identified and are being assessed, and
initial conversion efforts are underway using both internal and external
resources.
The Year 2000 issue may also affect the systems and applications of the
Company's customers and vendors. The Company is also contacting others with whom
it conducts business to receive the appropriate warranties and assurances that
those third parties are, or will be, Year 2000 compliant.
The total cost of modifications and conversions is not known at this time.
The Company's management estimates that the incremental cost of compliance over
the cost of normal software upgrades and replacements and its effect on the
Company's future results of operations totals approximately $2 million in 1998
and $4 million in 1999, subject to further review as part of the detailed
conversion planning. The cost of modifications and conversions is being expensed
as incurred. 1998 Costs incurred through June 30 totaled approximately $260,000.
If compliance is not achieved in a timely manner, the Year 2000 issue
could have a material effect on the Company's operations. However, the Company
is focusing on identifying and addressing all aspects of its operations that may
be affected by the Year 2000 issue and is addressing the most critical
applications first. As a result, the Company's management does not believe its
operations will be materially adversely affected.
Funds for year 2000 costs are expected to be provided from the Company's
operating activities and credit facilities. Management must balance the
requirements for funding discretionary capital expenditures with required year
2000 efforts given its limited resources.
INFLATION
The Company does not believe that inflation has a significant effect on
its operations.
31 (Continued)
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Information regarding pending legal proceedings to which the Company
is a party is included in Note 4 of Notes to Interim Condensed
Consolidated Financial Statements and is incorporated herein by
reference.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10.86 - Credit and Security Agreement Dated as of January 27,
1998 among Alaska United Fiber System Partnership as Borrower and
The Lenders Referred to Herein and Credit Lyonnais New York Branch
as Administrative Agent and Nationsbank of Texas, N.A. as
Syndication Agent and TD Securities (USA), Inc. as Documentation
Agent *
Exhibit 27.1 - Financial Data Schedule *
(b)Reports on Form 8-K filed during the quarter ended June 30, 1998
- None
---------------------
* Filed herewith.
32 (Continued)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GCI, INC.
August 12, 1998 By: /s/ Ronald A. Duncan
- --------------------------------- ---------------------------
(Date) Ronald A. Duncan, President
and Director
(Principal Executive
Officer)
August 12, 1998 By: /s/ G. Wilson Hughes
- --------------------------------- ---------------------------
(Date) G. Wilson Hughes, Vice
President and Director
August 12, 1998 By: /s/ John M. Lowber
- --------------------------------- ---------------------------
(Date) John M. Lowber, Secretary,
Treasurer and Director
(Chief Financial and
Accounting Officer)
33
CREDIT AND SECURITY AGREEMENT
Dated as of January 27, 1998
among
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
as Borrower
and
THE LENDERS REFERRED TO HEREIN
and
CREDIT LYONNAIS NEW YORK BRANCH
as Administrative Agent
and
NATIONSBANK OF TEXAS, N.A.
as Syndication Agent
and
TD SECURITIES (USA), INC.
as Documentation Agent
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C> <C>
1. DEFINITIONS 2
2. THE LOANS 24
SECTION 2.1. Construction Loans 24
SECTION 2.2. Term Loan 24
SECTION 2.3. Making of Loans 24
SECTION 2.4. Notes; Repayment of the Term Loan. 27
SECTION 2.5. Interest. 28
SECTION 2.6. Commitment Fees and Other Fees. 29
SECTION 2.7. Mandatory Termination or Reduction of Commitments. 30
SECTION 2.8. Default Interest; Alternate Rate of Interest. 30
SECTION 2.9. Continuation and Conversion of Loans. 31
SECTION 2.10. Prepayment of Loans. 32
SECTION 2.11. Reimbursement of Loss. 34
SECTION 2.12. Change in Circumstances. 35
SECTION 2.13. Change in Legality. 37
SECTION 2.14. Manner of Payments. 38
SECTION 2.15. United States Withholding. 38
SECTION 2.16. Interest Adjustments. 40
SECTION 2.17. Extension of the Final Maturity Date. 40
3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER 41
SECTION 3.1. Existence and Power. 41
SECTION 3.2. Authority and No Violation. 41
SECTION 3.3. Governmental Approval; Permits. 42
SECTION 3.4. Binding Agreements. 42
SECTION 3.5. Financial Statements. 43
SECTION 3.6. No Material Adverse Change. 43
SECTION 3.7. Subsidiaries; Joint Ventures. 43
SECTION 3.8. Copyrights, Patents, Software and Other Rights. 43
SECTION 3.9. Fictitious Names. 43
SECTION 3.10. Title to Properties; Right of Way. 44
SECTION 3.11. Places of Business. 44
SECTION 3.12. Litigation. 44
SECTION 3.13. Federal Reserve Regulations. 45
SECTION 3.14. Investment Company Act. 45
SECTION 3.15. Taxes. 45
SECTION 3.16. Compliance with ERISA. 45
(i)
<PAGE>
SECTION 3.17. Security Interest; Other Security. 45
SECTION 3.18. Disclosure. 46
SECTION 3.19. Agreements. 46
SECTION 3.20. Environmental Liabilities. 47
SECTION 3.21. Compliance with Laws. 47
SECTION 3.22. Projections; Construction Budget; Operating Budget; Plans
and Specifications. 47
SECTION 3.23. Start Date; Project Costs; Project Assets. 48
SECTION 3.24. Sponsor Equity. 49
SECTION 3.25. Bank Accounts. 49
SECTION 3.26. Utility Availability. 49
SECTION 3.27. Operation of the Facility. 49
SECTION 3.28. Nature of Business. 49
4. CONDITIONS OF LENDING 49
SECTION 4.1. Conditions Precedent to Initial Construction Loans. 49
SECTION 4.2. Conditions Precedent to Term Loans. 54
SECTION 4.3. Conditions Precedent to Each Loan. 55
5. AFFIRMATIVE COVENANTS 56
SECTION 5.1. Financial Statements and Reports. 56
SECTION 5.2. Existence; Compliance. 59
SECTION 5.3. Maintenance of Properties. 59
SECTION 5.4. Notice of Material Events. 59
SECTION 5.5. Insurance. 60
SECTION 5.6. Books and Records. 61
SECTION 5.7. Observance of Agreements; Copies of Amendments. 61
SECTION 5.8. Taxes and Charges; Indebtedness in Ordinary Course of Business. 61
SECTION 5.9. Liens. 62
SECTION 5.10. Government Approval. 62
SECTION 5.11. Further Assurances; Security Interests. 62
SECTION 5.12. ERISA Compliance and Reports. 62
SECTION 5.13. Environmental Laws. 63
SECTION 5.14. Construction; Operation. 64
SECTION 5.15. Final Cost Statement; Bank Account Statements 65
SECTION 5.16. Minimum Satisfactory Capacity Agreements. 65
SECTION 5.17. Interest Rate Protection Agreements. 65
SECTION 5.18. Local Bank Account. 65
SECTION 5.19. Use of Proceeds; Use of certain Funds Transferred to the
Local Bank Account 66
SECTION 5.20. Operating Logs; Standby Ship Arrangements. 66
(ii)
<PAGE>
SECTION 5.21. Permits; Right of Way. 66
SECTION 5.22. Survey. 66
SECTION 5.23. Amendments to the Deed of Trust. 67
SECTION 5.24. Title Insurance. 67
SECTION 5.25. Proprietary Rights. 67
6. NEGATIVE COVENANTS 67
SECTION 6.1. Limitations on Indebtedness. 67
SECTION 6.2. Limitations on Liens. 68
SECTION 6.3. Limitations on Investments. 69
SECTION 6.4. Restricted Payments. 69
SECTION 6.5. Consolidation, Merger, Sale or Purchase of Assets, etc. 69
SECTION 6.6. Receivables. 70
SECTION 6.7. Sale and Leaseback. 70
SECTION 6.8. Places of Business; Change of Name. 70
SECTION 6.9. Transactions with Affiliates. 70
SECTION 6.10. Prohibition of Amendments or Waivers. 71
SECTION 6.11. No Change in Business 71
SECTION 6.12. ERISA Compliance. 71
SECTION 6.13. Hazardous Materials. 71
SECTION 6.14. Interest Rate Protection Agreements, etc. 71
SECTION 6.15. Subsidiaries. 71
SECTION 6.16. Prohibition regarding Joint Ventures and Partnerships. 72
SECTION 6.17. Bank Accounts. 72
SECTION 6.18. Capacity Agreements; Sales of Fiber; Non-Disturbance
Agreements. 72
SECTION 6.19. Repairs and Improvements. 72
SECTION 6.20. Change Orders. 72
SECTION 6.21. Location. 72
SECTION 6.22. No Further Negative Pledges. 72
SECTION 6.23. Accounting Practices. 73
SECTION 6.24. Interest Rate Protection Agreements. 73
SECTION 6.25. Use of Proceeds of Loans. 73
SECTION 6.26. The Portion of the System from the Washington landing
station site to the Seattle Distribution Center. 73
7. EVENTS OF DEFAULT 73
8. GRANT OF SECURITY INTEREST; REMEDIES 76
SECTION 8.1. Security Interests. 76
SECTION 8.2. Use of Collateral. 76
(iii)
<PAGE>
SECTION 8.3. Direct Payment to Alaska Depositary Account or
Disbursement Account. 77
SECTION 8.4. Borrower to Hold in Trust. 77
SECTION 8.5. Collections, etc. 77
SECTION 8.6. Possession, Sale of Collateral, etc. 78
SECTION 8.7. Application of Proceeds on Default. 79
SECTION 8.8. Power of Attorney. 79
SECTION 8.9. Financing Statements, Direct Payment, Confirmation of
Receivables. 80
SECTION 8.10. Termination. 80
SECTION 8.11. Remedies Not Exclusive. 80
SECTION 8.12. Quiet Enjoyment. 80
SECTION 8.13. Release of Collateral. 81
SECTION 8.14. Continuation and Reinstatement. 81
SECTION 8.15. Regulatory Approvals. 81
9. CASH COLLATERAL ACCOUNT 82
SECTION 9.1. Cash Collateral Account. 82
SECTION 9.2. Investment of Funds. 82
SECTION 9.3. Grant of Security Interest. 83
SECTION 9.4. Remedies. 83
10. THE ADMINISTRATIVE AGENT 84
SECTION 10.1. Administration by Administrative Agent. 84
SECTION 10.2. Payments. 84
SECTION 10.3. Sharing of Setoffs and Cash Collateral. 85
SECTION 10.4. Notice to the Lenders. 85
SECTION 10.5. Liability of Administrative Agent. 86
SECTION 10.6. Reimbursement and Indemnification. 86
SECTION 10.7. Rights of Administrative Agent. 87
SECTION 10.8. Independent Investigation by Lenders. 87
SECTION 10.9. Agreement of Required Lenders. 87
SECTION 10.10. Notice of Transfer. 87
SECTION 10.11. Successor Administrative Agent 88
11. MISCELLANEOUS 88
SECTION 11.1. Notices. 88
SECTION 11.2. Survival of Agreement, Representations and Warranties, etc. 89
SECTION 11.3. Successors and Assigns; Syndications; Loan Sales; Participations. 89
SECTION 11.4. Expenses; Documentary Taxes. 92
SECTION 11.5. Indemnification of the Administrative Agent and the Lenders. 93
(iv)
<PAGE>
SECTION 11.6. CHOICE OF LAW. 94
SECTION 11.7. WAIVER OF JURY TRIAL. 94
SECTION 11.8. No Waiver. 95
SECTION 11.9. Extension of Payment Date 95
SECTION 11.10. Amendments, etc. 95
SECTION 11.11. Severability. 96
SECTION 11.12. SERVICE OF PROCESS. 96
SECTION 11.13. Headings. 97
SECTION 11.14. Execution in Counterparts. 97
SECTION 11.15. Confidentiality. 97
SECTION 11.16. Entire Agreement. 97
Testimonium 99
Signatures 99
</TABLE>
(v)
<PAGE>
Schedules
1 Schedule of Commitments
1A Description of the Right of Way and a List of Permits
1B Construction Budget
1C Form of Operating Budget
1D Plans and Specifications
3.9 Fictitious Names
3.10 Rights owned on the Closing Date with respect to the Right of
Way
3.11 Chief Executive Office, Location of books and records and
goods included in the
Collateral
3.12 Litigation
3.17 Filing Offices
3.19 Agreements
3.20 Environmental Liabilities
3.22(a) Copy of the Projections
3.22(c) Proposed Operating Budget for first year after the Completion
Date
3.23 Project assets previously owned by Affiliates of GCI
(other than the Borrower)
5.5 Insurance
6.2 Existing Liens
<PAGE>
Exhibits
A-1 Form of Construction Note
A-2 Form of Term Note
B-1 Form of Opinion of Sherman & Howard L.L.C., counsel to the
Borrower, the General Partners and the other Transaction
Parties
B-2 Form of Opinion of Mark R. Moderow, corporate counsel of GCI
B-3 Form of Opinion of Hartig, Rhodes, Norman, Mahoney & Edwards,
P.C., Alaska counsel to the Borrower, the General Partners and
the other Transaction Parties
B-4 Form of Opinion of Foster, Pepper & Shefelman, Washington
counsel to the Borrower, the General Partners and the other
Transaction Parties
B-5 Form of Opinion of Drinker, Biddle & Reath LLP, FCC counsel
to the Borrower and GCI
B-6 Form of Opinion of Guess & Rudd P.C., Alaska counsel to the
Administrative Agent
C Form of Assignment Agreement
D Form of Transport Pledge Agreement
E Form of Fiber Security Agreement
F Form of Subordination Agreement
G Form of Depositary Agreement
H Form of Sponsor Undertaking
I Form of Assignment and Acceptance
J Form of Borrowing Certificate
K Form of Engineer's Certificate
L Form of Transport Keep-Well Agreement
M Form of Holdings Keep-Well Agreement
N Form of Completion Guaranty
O Form of GCI Lease Contract
P Form of Holdings Lease Guaranty Agreement
Q Form of O&M Contract
R Form of Compliance Certificate
S Form of Interest Rate Protection Agreement
T Form of Confidentiality Letter
U Form of GCI Fiber Exchange Agreement
V Form of GCI Construction Contract
W Form of Non-Disturbance Agreement
X Form of GCI Cable Subordination Agreement
Y Form of AU Subordination Agreement
Z Form of Instruction Letter
<PAGE>
CREDIT AND SECURITY AGREEMENT dated as of
January 27, 1998 (as amended, supplemented or
otherwise modified, renewed or replaced from time to
time, the "Credit Agreement"), among (i) ALASKA
UNITED FIBER SYSTEM PARTNERSHIP, an Alaska general
partnership (the "Borrower"), (ii) the Lenders
referred to herein, (iii) CREDIT LYONNAIS NEW YORK
BRANCH, as administrative agent for the Lenders, (iv)
NATIONSBANK OF TEXAS, N.A., as Syndication Agent and
(v) TD SECURITIES (USA), INC., as Documentation
Agent.
INTRODUCTORY STATEMENT
All terms not otherwise defined above or in this Introductory
Statement are as defined in Article 1 hereof or as defined elsewhere herein.
The Borrower has requested that the Lenders provide a
construction and term loan facility in the amount of $75,000,000 which will be
used to finance the development, construction, testing and operation of the
System.
To provide assurance for the repayment of the Loans and all
other Obligations of the Borrower hereunder, the Borrower will, among other
things, provide or cause to be provided to the Administrative Agent, for the
benefit of the Lenders, the following (each as more fully described herein):
(i) a first priority security interest from the Borrower
in the Collateral pursuant to Article 8 hereof;
(ii) a guarantee of Completion (as such term is defined in
the Completion Guaranty) of the Project from Holdings
on the terms set forth in the Completion Guaranty;
(iii) an agreement with respect to payment of the
Obligations from each of GCI Transport and Holdings
pursuant to the Transport Keep-Well Agreement and the
Holdings Keep-Well Agreement respectively;
(iv) a direct assignment of the Borrower's rights under
each Project Agreement;
(v) a first priority pledge by GCI Transport of all of
the issued and outstanding shares of the capital
stock of GCI Fiber and Fiber Hold pursuant to the
Transport Pledge Agreement; and
<PAGE>
(vi) a first priority security interest from GCI Fiber and
Fiber Hold in all of the partnership interests of the
Borrower pursuant to the Fiber Security Agreement.
Subject to the terms and conditions set forth herein, the
Administrative Agent is willing to act as agent for the Lenders and each Lender
is willing to make Loans to the Borrower in an aggregate amount not in excess of
its Construction Commitment or Term Loan Commitment (as applicable) set forth on
the Schedule of Commitments.
Accordingly, the parties hereto hereby agree as follows:
1. DEFINITIONS
For the purposes hereof unless the context otherwise requires,
all Section references herein shall be deemed to correspond with Sections
herein, the following terms shall have the meanings indicated, all accounting
terms not otherwise defined herein shall have the respective meanings accorded
to them under GAAP and all terms defined in the UCC and not otherwise defined
herein shall have the respective meanings accorded to them therein. Unless the
context otherwise requires, any of the following terms may be used in the
singular or the plural, depending on the reference:
"Acceptable Right" shall mean good and marketable title to a
fee simple interest, a valid leasehold interest or a valid easement, right of
way, license or permit; provided that any such interest, easement, right of way
or license acquired from an Alaska Native Corporation (as defined in 43 U.S.C.
ss.1602(m)) shall be acquired only as an interest in fee simple or as a
leasehold interest unless such corporation waives its statutory immunity by
written agreement satisfactory to the Administrative Agent.
"Acceptable Title Company" shall mean (i) for real property
located in the State of Alaska, TransAlaska Summit Title Insurance Agency of
Alaska L.L.C. and (ii) for real property located in the State of Washington,
First American Title Insurance Company.
"Acceptable Title Insurance Policy" shall mean a lenders' paid
policy of title insurance issued by an Acceptable Title Company, in form and
substance satisfactory to the Administrative Agent, with such endorsements and
affirmative coverages as the Administrative Agent shall reasonably deem
appropriate.
"Adequate Coverage" shall be as defined in Section 2.17
hereof.
"Administrative Agent" shall mean Credit Lyonnais New York
Branch, in its capacity as Administrative Agent for the Lenders hereunder, or
such successor Administrative Agent as may be appointed pursuant to Section
10.11 of this Credit Agreement.
-2-
<PAGE>
"Affiliate" shall mean any Person which, directly or
indirectly, is in control of, is controlled by or is under common control with,
another Person. For purposes of this definition, a Person shall be deemed to be
"controlled by" another Person if such latter Person possesses, directly or
indirectly, power either to direct or cause the direction of the management and
policies of such controlled Person whether by contract or otherwise.
"Agents" shall mean the Administrative Agent, NationsBank of
Texas, N.A., in its capacity as Syndication Agent hereunder and TD Securities
(USA) Inc., in its capacity as Documentation Agent hereunder.
"Alaska Depositary Account" shall mean Account No. 1510-562-0
entitled "Alaska Depositary Account" in the name of the Borrower at the office
of The First National Bank of Anchorage, 201 West 36th Avenue, P.O. Box 200628,
Anchorage, Alaska 99520.
"Alaska United Fiber System" shall mean the entire fiber optic
telecommunications cable network comprised of approximately 2,331 statute route
miles connecting PSMS, Glen Alps, Whittier, Valdez, Lena Point, Norma Beach and
SDC, which network shall have an initial equipped capacity of OC-48
(approximately 2.5 gigabits per second data rate). The undersea portion of the
network shall connect landing stations between four sites. The proposed landing
station sites are located at Whittier, Valdez, Lena Point and Norma Beach. An
undersea branching unit shall connect the three undersea fiber cable segments
originating at Whittier, Lena Point and Norma Beach, whereas Valdez is connected
through a separate undersea extension originating at Whittier. The terrestrial
portion of the network shall consist of inland extensions from 1) Whittier to
Glen Alps, 2) Norma Beach to SDC, and 3) Valdez to PSMS. The Alaska United Fiber
System shall be installed along the Right of Way and include (without
limitation) the following: (i) the fiber optic cable, branching unit, optical
amplifiers, and terminal station equipment (whether supplied by the Contractor
or another Person) and included in the network, (ii) all cable ducts or conduits
through which the cable runs, (iii) the associated splice boxes, splice vaults
and other associated concrete structures constructed by or for the Borrower and
used to protect, or provide splicing space for, the cable, together with all
manhole and handhole covers relating thereto, (iv) electrical power facilities,
including electrical distribution panels, lighting, wiring and other related
apparatus attached to or within the cable (excluding any meters owned by other
Persons), (v) heating, ventilating and air conditioning equipment, (vi) metal
enclosures (sometimes referred to as the regeneration stations) containing
certain of the Electronics together with the concrete slabs to which the
enclosures are attached, (vii) all fixtures included in the network and (viii)
auxiliary generators, batteries, battery-charging equipment, telephone equipment
and other related equipment used by the Borrower on the Right of Way (the items
referred to in the foregoing clauses (i) through (viii) are referred to herein
as "Equipment").
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the rate of interest per annum publicly announced by the
Administrative Agent as its prime rate in effect on such day at its principal
office in New York City.
-3-
<PAGE>
"Alternate Base Rate Loan" shall mean a Loan based on the
Alternate Base Rate in accordance with the provisions of Article 2 hereof.
"Applicable Law" shall mean all provisions of statutes, rules,
regulations and orders of the United States or foreign governmental bodies or
regulatory agencies applicable to the Person in question, and all orders and
decrees of all courts and arbitrators in proceedings or actions in which the
Person in question is a party.
"Applicable Margin" shall mean (i) in the case of Alternate
Base Rate Loans, 1.75% per annum, and (ii) in the case of Eurodollar Loans, 3.0%
per annum, in each case, as such margin may be decreased pursuant to, and to the
amounts set forth in, Section 2.5(c) hereof.
"Assignment and Acceptance" shall mean an agreement in the
form of Exhibit I hereto, executed by the assignor, assignee and any other
parties as contemplated thereby.
"Assignment Agreement" shall mean an Assignment Agreement
substantially in the form of Exhibit C hereto or in such other form as may be
satisfactory to the Administrative Agent, as any such agreement may be amended,
supplemented or otherwise modified, renewed or replaced from time to time.
"AU Subordination Agreement" shall mean the Subordination
Agreement substantially in the form of Exhibit Y hereto, among the Borrower, the
Administrative Agent and NationsBank of Texas, N.A., as administrative agent
under the Holdings Credit Agreements, as such agreement may be amended,
supplemented or otherwise modified, renewed or replaced from time to time.
"Authorized Officer" shall mean, with respect to the Borrower,
the President, any Vice President, the Treasurer or the Secretary of a General
Partner.
"Bank Charges" shall mean charges for interest hereunder, the
Commitment Fees, any fees payable pursuant to the Commitment Letter or the Fee
Letter and all other fees and expenses payable by the Borrower pursuant to
Section 11.4 or 11.5 hereof.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrowing" shall mean a group of Loans of a single interest
rate type made by the Lenders on a single date and as to which a single Interest
Period is in effect.
"Borrowing Certificate" shall mean a borrowing certificate,
substantially in the form of Exhibit J hereto, to be delivered by the Borrower
to the Administrative Agent in connection with each Borrowing.
-4-
<PAGE>
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banks are required or permitted to close in the
State of New York; provided, however, 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 on the London Interbank
Market.
"Cable" shall mean the Alaska United Fiber System and the
fiber pairs in the Kanas Cable and the GCI Cable Facility to which the Borrower
has been granted exclusive use pursuant to the Kanas Agreement and the GCI Fiber
Exchange Agreement, respectively.
"Capacity Agreement" shall mean any lease, capacity agreement
or other contract or agreement pursuant to which the Borrower leases, licenses
or otherwise grants to any other Person the right to use the System or any
portion thereof, or sells to any other Person capacity on the System or any
portion thereof, or agrees to provide telecommunications services utilizing the
System or any portion thereof, including, without limitation, any option,
standby or back-up arrangement with respect to any of the foregoing, any
Satisfactory Capacity Agreement, the GCI Lease Contract, the Kanas Agreement and
the GCI Fiber Exchange Agreement.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person.
"Cash Collateral Account" shall have the meaning given such
term in Section 9.1 hereof.
"Cash Equivalents" shall mean (i) marketable securities issued
or directly and fully guaranteed or insured by the United States of America or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (ii) Dollar
denominated time deposits, demand deposits, certificates of deposit,
acceptances, prime commercial paper or repurchase obligations for underlying
securities of the types described in clause (i), in each case, entered into with
a Lender or a commercial bank having a short-term deposit rating of at least A-2
or the equivalent thereof by Standard & Poor's or at least P-2 or the equivalent
thereof by Moody's Investors Service, Inc. and having a maturity of not more
than twelve months from the date of acquisition, or (iii) Dollar denominated
commercial paper with a rating of A-1 or A-2 or the equivalent thereof by
Standard & Poor's or P-1 or P-2 or the equivalent thereof by Moody's Investors
Service, Inc. and maturing within twelve months after the date of acquisition.
"Change in Control" shall mean either (i) the failure for any
reason of GCI and/or AT&T to own directly or indirectly at least 25% of the
aggregate partnership interests of the Borrower or (ii) GCI and/or AT&T ceasing
to have the power to direct or cause the direction of
-5-
<PAGE>
the management and policies of the Borrower whether by reason of GCI and/or AT&T
ceasing to have voting control of more than 50% of the partnership interests of
the Borrower or otherwise.
"Closing Date" shall mean the earliest date on which all
conditions precedent to the making of the initial Construction Loan as set forth
in Section 4.1 hereof have been satisfied or waived by all the Lenders.
"Code" shall mean the Internal Revenue Code of 1986 and the
rules and regulations issued thereunder, as heretofore amended, as codified at
26 U.S.C. ss.1 et seq or any successor provision thereto.
"Collateral" shall mean all of the Borrower's right, title and
interest in and to both real and personal property, tangible and intangible,
wherever located or situated and whether now owned, presently existing or
hereafter acquired or created, including but not limited to, goods, accounts,
intercompany obligations, partnership and joint venture interests, contract
rights, documents, instruments, chattel paper, general intangibles, investment
property, goodwill, equipment, machinery (including, without limitation, any
spare parts), inventory, copyrights, trademarks, trade names, patents, insurance
proceeds, FCC Licenses, Project Agreements, Capacity Agreements, cash and bank
accounts (including, without limitation, the Construction Account, the Alaska
Depositary Account, the Disbursement Account, the Insurance Proceeds Account,
the Holding Account, the Interest Reserve Account, the SSI Cash Collateral
Account, the Local Bank Account and any funds on deposit in any such bank
account at any time) and any proceeds or products of any of the foregoing or
income from any of the foregoing, including, without limitation, the Alaska
United Fiber System and rights under and pursuant to the Kanas Agreement and the
GCI Fiber Exchange Agreement; provided that, Collateral shall not include any
FCC License to the extent the Borrower is prohibited from granting a security
interest therein pursuant to Applicable Law.
"Commencement Date" shall mean the earlier of (i) the date
which is six (6) months after the Closing Date and (ii) the date on which the
first Borrowing is made hereunder.
"Commitment Fees" shall have the meaning given such term in
Section 2.6 hereof.
"Commitment Letter" shall mean that certain letter agreement
dated as of July 3, 1997 between GCI, on the one hand and Credit Lyonnais New
York Branch, NationsBank of Texas, N.A. and TD Securities (USA) Inc., on the
other hand, as such agreement has been amended by those certain letter
agreements dated as of July 8, 1997, August 14, 1997, September 26, 1997,
November 21, 1997 and December 24, 1997.
"Commitments" shall mean the Construction Commitments and the
Term Loan Commitments.
-6-
<PAGE>
"Completed" or "Completion" shall be as defined in the
Completion Guaranty.
"Completion Date" shall mean the earlier of (i) the date on
which the System is Completed and (ii) January 1, 1999; provided, however, that
if such date is not a Business Day, then the Completion Date shall be the next
succeeding Business Day.
"Completion Guaranty" shall mean the Completion Guaranty
substantially in the form of Exhibit N hereto, between Holdings and the
Administrative Agent as such agreement may be amended, supplemented or otherwise
modified, renewed or replaced from time to time.
"Construction Account" shall mean Account No. 0139787000105
entitled "Alaska United Construction Account" at the office of Credit Lyonnais
New York Branch, 1301 Avenue of the Americas, New York, New York 10019.
"Construction Budget" shall mean with respect to the Project,
the construction budget dated January 24, 1998, attached hereto as Schedule 1B
(which budget is satisfactory to all the Lenders), as such budget may be revised
in accordance with the provisions of Section 5.14(a) hereof.
"Construction Commitment" shall mean the commitment of each
Lender to make Construction Loans to the Borrower from the Initial Date
applicable to such Lender to but excluding the Construction Commitment
Termination Date up to an aggregate amount, at any one time, not in excess of
the amount set forth (i) opposite the name of such Lender under the column
entitled "Construction Commitment" in the Schedule of Commitments, or (ii) in
any applicable Assignment and Acceptance(s) to which it may be a party, as the
case may be, as such amount may be reduced from time to time in accordance with
the terms of this Credit Agreement.
"Construction Commitment Termination Date" shall mean the
earlier to occur of (i) the Completion Date and (ii) such earlier date on which
the Construction Commitments shall terminate in accordance with Section 2.7 or
Article 7 hereof.
"Construction Contract" shall mean that certain Supply
Contract dated as of July 11, 1997 between the Borrower (as assignee of GCI
Communication) and the Contractor, as such agreement has been and may be
amended, supplemented or otherwise modified, renewed or replaced from time to
time.
"Construction Loans" shall mean the loans made hereunder in
accordance with the provisions of Section 2.1(a), whether made as a Eurodollar
Loan or an Alternate Base Rate Loan, as permitted hereby.
"Construction Notes" shall have the meaning given such term in
Section 2.4(a) hereof.
-7-
<PAGE>
"Contractor" shall mean Tyco Submarine Systems Ltd. (formerly
known as (Submarine Systems International Ltd.), a Delaware corporation.
"Controlled Group" shall mean all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrower, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code.
"Conversion Date" shall mean the date which occurs on the
fifth anniversary of the Commencement Date.
"Credit Exposure" shall mean, without duplication, with
respect to any Lender, (i) at any time on or prior to the Completion Date, the
sum of such Lender's (A) aggregate outstanding Loans hereunder and (B) the
amount, if any, by which the sum of such Lender's Construction Commitment
exceeds the amount of its outstanding Loans hereunder and (ii) at any time after
the Completion Date, such Lender's aggregate outstanding Loans hereunder.
"Deeds of Trust" shall mean (i) that certain Deed of Trust and
Assignment dated as of January 27, 1998 among the Borrower as Grantor,
TransAlaska Summit Title Insurance Agency of Alaska L.L.C. as Trustee and the
Administrative Agent as Beneficiary, which Deed of Trust and Assignment is to be
recorded in various recording districts in the State of Alaska, as such Deed of
Trust and Assignment may be amended, supplemented or otherwise modified, renewed
or replaced from time to time and (ii) those certain Deeds of Trust and
Assignment dated as of January 27, 1998 among the Borrower as Grantor, First
American Title Insurance Company as Trustee and the Administrative Agent which
Deeds of Trust and Assignment are to be recorded in the office of the Snohomish
County Auditor and the King County Records and Election Office in the State of
Washington, as such Deed of Trust and Assignment may be amended, supplemented or
otherwise modified, renewed or replaced from time to time.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Depositary Agreement" shall mean the Depositary Agreement
substantially in the form of Exhibit G hereto, between the Borrower and the
Administrative Agent, as such agreement may be amended, supplemented or
otherwise modified, renewed or replaced from time to time.
"Disbursement Account" shall mean Account No. 0139787000100
entitled "Alaska United Disbursement Account" at the office of Credit Lyonnais
New York Branch, 1301 Avenue of the Americas, New York, New York 10019.
"Dollars" and "$" shall mean lawful money of the United States
of America.
-8-
<PAGE>
"Electronics" shall mean the transceivers, regenerators,
multiplexers and other electronic equipment, together with all racks to which
the same are affixed, located at the regenerator sites and points of presence on
the Right of Way or at the network operations center, or owned by the Borrower
and located at points of presence along the Kanas Cable or the GCI Cable
Facility, including all equipment replacing any of the foregoing.
"Engineer's Certificate" shall mean a certificate of the
Independent Engineer in the form of Exhibit K hereto, to be delivered by the
Independent Engineer to the Administrative Agent in connection with each
Borrowing.
"Environmental Laws" shall mean any and all federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements of any Governmental Authority regulating,
relating to or imposing liability or standards of conduct concerning any
Hazardous Material or environmental protection or health and safety, as now or
may at any time hereafter be in effect, including without limitation, the Clean
Water Act also known as the Federal Water Pollution Control Act ("FWPCA"), 33
U.S.C. ss. 1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C. ss.ss. 7401 et
seq., the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C.
ss.ss. 136 et seq., the Surface Mining Control and Reclamation Act ("SMCRA"), 30
U.S.C. ss.ss. 1201 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss.9601 et seq., the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), Public Law
99-499, 100 Stat. 1613, the Emergency Planning and Community Right to Know Act
("EPCRKA"), 42 U.S.C. ss.11001 et seq., the Resource Conservation and Recovery
Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the Occupational Safety and Health Act
as amended ("OSHA"), 29 U.S.C. ss. 655 and ss. 657, together, in each case, with
any amendment thereto, and the regulations adopted pursuant thereto.
"Equipment" shall have the meaning given such term in the
definition of "Alaska United Fiber System" set forth herein.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as heretofore and hereafter amended, as codified at 29 U.S.C. ss. 1001
et seq. and the regulations promulgated
thereunder.
"Eurodollar Loan" shall mean a Loan based on the LIBO Rate in
accordance with the provisions of Article 2 hereof.
"Event of Default" shall have the meaning given such term in
Article 7 hereof.
"Event of Loss" shall mean any of the following events or
conditions:
-9-
<PAGE>
(i) all or substantially all of the Cable shall become
destroyed or damaged beyond repair or permanently
rendered unfit for commercial operation, as a
consequence of any event whatsoever;
(ii) any damage to or loss of all or any portion of the
Cable occurring through any cause whatsoever, which
results in the receipt of insurance proceeds with
respect to the Cable on the basis of an actual or
constructive total loss of the Cable; or
(iii) the condemnation, confiscation or seizure of, or
other requisition of title to, or use of, all or
substantially all of the Cable or the Right of Way
(including the taking of title to, or use of, all or
substantially all of the Cable or the Right of Way
under power of eminent domain or by forfeiture
pursuant to any proceeding commenced under any
provision of law provided for escheat) by a
Governmental Authority.
The date of occurrence of any Event of Loss shall be the date
of the casualty or other occurrence specified above giving
rise to such Event of Loss.
"FCC" shall mean the Federal Communications Commission or any
Governmental Authority which succeeds to the powers and functions thereof.
"FCC Licenses" shall mean any license or permit issued by the
FCC, including, without limitation, licenses issued to the Borrower for the
landing and the operation of the Alaska United Fiber System or for the use of
the fiber pairs in the Kanas Cable or the GCI Cable Facility.
"FDC" shall mean GCI Communication's Fairbanks Distribution
Center located at 520 5th Avenue, Suite 407, Fairbanks, Alaska.
"Fee Letter" shall mean that certain letter agreement dated as
of July 3, 1997 between GCI and the Administrative Agent relating to the payment
of certain fees, as such agreement has been amended by those certain letter
agreements dated as of August 14, 1997, September 26, 1997, November 21, 1997
and December 24, 1997.
"Fiber Hold" shall mean Fiber Hold Co., Inc., an Alaska
corporation.
"Fiber Security Agreement" shall mean the Security Agreement
substantially in the form of Exhibit E hereto, between GCI Fiber and Fiber Hold
on the one hand, and the Administrative Agent on the other hand, as such
agreement may be amended, supplemented or otherwise modified, renewed or
replaced from time to time.
-10-
<PAGE>
"Final Construction Loan" shall have the meaning given such
term in Section 2.3(c).
"Final Maturity Date" shall mean the date which is the tenth
anniversary of the Commencement Date provided that such date may be extended by
the Borrower pursuant to, and in accordance with, the provisions of Section 2.17
hereof, to the date which is the twelfth anniversary of the Commencement Date.
"Fundamental Documents" shall mean this Credit Agreement, the
Notes, the Transport Pledge Agreement, the Fiber Security Agreement, the Deeds
of Trust, each Assignment Agreement relating to a Project Agreement, the
Subordination Agreement, the Depositary Agreement, the Intercreditor Agreements,
the Instruction Letter, the Sponsor Undertaking, each of the Project Agreements,
UCC-1 Financing Statements and any other ancillary documentation which is
required to be, or is otherwise, executed by any of the Transaction Parties and
delivered to the Administrative Agent in connection with this Credit Agreement
or any other Fundamental Document.
"GAAP" shall mean generally accepted accounting principles in
the United States of America consistently applied (except for accounting changes
in response to FASB releases, or other authoritative pronouncements).
"GCI" shall mean General Communication, Inc., an Alaska
corporation.
"GCI Cable" shall mean GCI Cable, Inc., an Alaska corporation.
"GCI Cable Facility" shall mean those fiber optic facilities
owned, leased and/or to be constructed by GCI Cable (i) in the Anchorage, Alaska
area, connecting SADC, Glen Alps and AT&T's primary point of presence in
Anchorage which is located at 210 East Bluff Road, Anchorage, Alaska and (ii) in
the Fairbanks, Alaska area, connecting NPMS, FDC and AT&T's primary point of
presence in Fairbanks which is located at 200 Gaffney Road, Fairbanks, Alaska.
"GCI Cable Subordination Agreement" shall mean the
Subordination Agreement substantially in the form of Exhibit X hereto, among GCI
Cable, the Administrative Agent and NationsBank of Texas, N.A., as
administrative agent under the Holdings Credit Agreements, as such agreement may
be amended, supplemented or otherwise modified, renewed or replaced from time to
time.
"GCI Communication" shall mean GCI Communication Corp., an
Alaska corporation.
"GCI Construction Contract" shall mean the General Contractor
Agreement substantially in the form of Exhibit V hereto, between the Borrower
and GCI Communication, as
-11-
<PAGE>
such agreement may be amended, supplemented or otherwise modified, renewed or
replaced from time to time.
"GCI Fiber" shall mean GCI Fiber Co., Inc., an Alaska
corporation.
"GCI Fiber Exchange Agreement" shall mean the Fiber Exchange
Agreement substantially in the form of Exhibit U hereto, among the Borrower, GCI
Cable and GCI Communication, as such agreement may be amended, supplemented or
otherwise modified, renewed or replaced from time to time.
"GCI Lease Contract" shall mean the Lease Agreement
substantially in the form of Exhibit O hereto, between the Borrower, as lessor
and GCI Communication, as lessee, as such agreement may be amended, supplemented
or otherwise modified, renewed or replaced from time to time.
"GCI Transport" shall mean GCI Transport Co., Inc., an Alaska
corporation.
"General Partner" shall mean GCI Fiber and/or Fiber Hold.
"Glen Alps" shall mean GCI Communication's leased location at
Lot 5, Block 1, Tower Estates Subdivision, Anchorage, Alaska.
"Governmental Authority" shall mean any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States or a
foreign jurisdiction.
"Guaranty" shall mean, as to any Person, any direct or
indirect obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, Capital Lease, dividend or other monetary obligation ("primary
obligation") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, by contract, as general partner or otherwise, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (a) for the
purchase or payment of any such primary obligation or (b) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services, in each case, primarily for the purpose of assuring the
performance by the obligor of any such primary obligation or (iv) as a general
partner of a partnership or a joint venturer of a joint venture in respect of
Indebtedness of such partnership or such joint venture which is treated as a
general partnership for purposes of Applicable Law; provided, however, that the
term Guaranty shall not include endorsements for collection or collections for
deposit, in either case, in the ordinary course of business. The amount of any
Guaranty shall be deemed to be an amount equal to the lesser of (x) the maximum
liability under the terms of such Guaranty or (y) the stated or determinable
amount of the primary obligation in respect of which such Guaranty is made or,
if
-12-
<PAGE>
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder).
"Hazardous Materials" shall mean any flammable materials,
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or similar materials defined in any Environmental
Law.
"Holding Account" shall be as defined in the Depositary
Agreement.
"Holdings" shall mean GCI Holdings, Inc., an Alaska
corporation.
"Holdings Bank Credit Facility" shall mean the credit
facilities of Holdings under the Holdings Credit Agreements.
"Holdings Credit Agreements" shall mean the Long Term Holdings
Credit Agreement and the Short Term Holdings Credit Agreement.
"Holdings Keep-Well Agreement" shall mean the Operating
Keep-Well Agreement substantially in the form of Exhibit M hereto, among
Holdings, the Borrower and the Administrative Agent for the benefit of the
Lenders, as such agreement may be amended, supplemented or otherwise modified,
renewed or replaced from time to time.
"Holdings Lease Guaranty Agreement" shall mean the Lease
Guaranty Agreement substantially in the form of Exhibit P hereto, among
Holdings, the Borrower and the Administrative Agent for the benefit of the
Lenders, as such agreement may be amended, supplemented or otherwise modified,
renewed or replaced from time to time.
"Indebtedness" shall mean (without double counting), at any
time and with respect to any Person, (i) indebtedness of such Person for
borrowed money (whether by loan or the issuance and sale of debt securities) or
for the deferred purchase price of property or services purchased (other than
amounts constituting trade payables payable within 120 days and arising in the
ordinary course of business); (ii) obligations of such Person in respect of
letters of credit, acceptance facilities, or drafts or similar instruments
issued or accepted by banks and other financial institutions for the account of
such Person; (iii) obligations of such Person under Capital Leases; (iv)
deferred payment obligations of such Person resulting from the adjudication or
settlement of any litigation to the extent not already reflected as a current
liability on the balance sheet of such Person and (v) Indebtedness of others of
the type described in clauses (i), (ii), (iii) and (iv) hereof which such Person
has (a) directly or indirectly assumed or guaranteed in connection with a
Guaranty or (b) secured by a Lien on the assets of such Person, whether or not
such Person has assumed such indebtedness.
"Independent Engineer" shall mean (i) Arthur D. Little, (ii)
Stone & Webster or (iii) a Person appointed by the Required Lenders who is
engaged in the engineering profession
-13-
<PAGE>
(who shall be duly licensed as an engineer in a State of the United States) and
is familiar with engineering and operational matters relating to the System, the
Cable or facilities similar thereto.
"Initial Date" shall mean (i) in the case of the
Administrative Agent, the date hereof, (ii) in the case of each Lender which is
an original party to this Credit Agreement, the date hereof and (iii) in the
case of any other Lender, the effective date of the Assignment and Acceptance
pursuant to which it became a Lender.
"Instruction Letter" shall mean the letter agreement
substantially in the form of Exhibit Z hereto between the Borrower and The First
National Bank of Anchorage (as accepted by the Administrative Agent), as such
letter agreement may be amended, supplemented or otherwise modified, renewed or
replaced from time to time or such other form as may be satisfactory to the
Administrative Agent.
"Insurance Proceeds Account" shall mean Account No.
0139787000101, entitled "Alaska United Insurance Proceeds Account" at the office
of Credit Lyonnais New York Branch, 1301 Avenue of the Americas, New York, New
York 10019.
"Intercreditor Agreements" shall mean the Non-Disturbance
Agreement, the GCI Cable Subordination Agreement and the AU Subordination
Agreement.
"Interest Deficit" shall have the meaning given such term in
Section 2.16.
"Interest Payment Date" shall mean (i) as to any Eurodollar
Loan having an Interest Period of one, two or three months, the last day of such
Interest Period, (ii) as to any Eurodollar Loan having an Interest Period of
more than three months, the last day of such Interest Period and, in addition,
each date during such Interest Period that would be the last day of an Interest
Period commencing on the same day as the first day of such Interest Period but
having a duration of three months or any integral multiple thereof, (iii) with
respect to Alternate Base Rate Loans, the last Business Day of each March, June,
September and December (commencing the last Business Day of March 1998) and (iv)
with respect to any Loan, the Completion Date.
"Interest Period" shall mean as to any Eurodollar Loan, the
period commencing on the date of such Loan or the last day of the preceding
Interest Period and ending on the numerically corresponding day (or if there is
no corresponding day, the last day) in the calendar month that is one, two,
three, six, nine or twelve months thereafter as the Borrower may elect;
provided, however, that (i) if any Interest Period would end on a day which
shall not be 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, (ii) no Interest Period may be selected which would
end later than the Completion Date (in the case of any Construction Loan) or the
Final Maturity Date (in the case of the Term Loan), (iii) no Interest Period of
nine or
-14-
<PAGE>
twelve months may be selected unless available and consented to by all Lenders
in their sole discretion and (iv) no Interest Period with respect to any portion
of the Term Loan may be selected which would result in the aggregate amount of
Eurodollar Loans having Interest Periods ending after any date on which an
installment of principal of the Term Loan is scheduled to mature being in excess
of the aggregate principal installments scheduled to mature after such date.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, synthetic caps, collars and
floors or other financial agreement or arrangement designed to protect the
Borrower against fluctuations in interest rates.
"Interest Reserve Account" shall be as defined in the
Depositary Agreement.
"Investment" shall mean any stock, evidence of indebtedness or
other securities of any Person, any loan, advance, contribution of capital,
extension of credit or commitment therefor, including without limitation the
guarantee of loans or obligations of others, and any purchase of (i) any
securities of another Person or (ii) any business or undertaking of any Person
or any commitment or option to make any such purchase.
"Kanas" shall mean Kanas Telecom, Inc., an Alaska corporation
or if applicable, any successor thereof or any permitted assignee of Kanas
Telecom, Inc. under the Kanas Agreement.
"Kanas Agreement" shall mean that certain Fiber Exchange
Agreement dated as of November 21, 1997 between Kanas and GCI Communication
(certain rights and obligations under which have been assigned by GCI
Communication to the Borrower), as such agreement may be amended, supplemented
or otherwise modified, renewed or replaced from time to time.
"Kanas Cable" shall mean the fiber optic telecommunications
cable constructed and owned by Kanas between PSMS and NPMS, along the
right-of-way for the Trans-Alaska Pipeline.
"Land Right of Way" shall mean (i) the real property which is
located landward from the seaward limit of the jurisdiction of the State of
Alaska and from the seaward limit of the jurisdiction of the State of Washington
and on which the terrestrial portion Alaska United Fiber System (as described in
the fifth sentence of the definition of "Alaska United Fiber System" set forth
herein) will be located, (ii) the real property on which any Electronics or
Equipment used by the Borrower in the operation of the fiber pairs in the Kanas
Cable or in the GCI Cable Facility are or will be located, and the interests of
the Borrower in or with respect to any such real property, whether by way of fee
ownership, leasehold, easement, license or otherwise, which interests and real
property are more fully described in Schedule 1A hereto.
-15-
<PAGE>
"Lena Point" shall mean the Borrower's cable landing station
at or near 17103 Pt. Lena Loop Road, Juneau, Alaska.
"Lender" and "Lenders" shall mean the financial institutions
whose names appear at the foot hereof as lenders and any assignee of a Lender
pursuant to Section 11.3(b).
"Lending Office" shall mean, with respect to any Lender, the
branch or branches (or affiliate or affiliates) from which such Lender's
Eurodollar Loans or Alternate Base Rate Loans, as the case may be, are made or
maintained and for the account of which all payments of principal of, and
interest on, such Lender's Eurodollar Loans or Alternate Base Rate Loans are
made, as notified to the Administrative Agent from time to time.
"LIBO Rate" shall mean, with respect to the Interest Period
for a Eurodollar Loan, an interest rate per annum equal to the quotient (rounded
upwards to the next 1/100 of 1%) of (A) the average of the rates at which Dollar
deposits approximately equal in principal amount to the Administrative Agent's
portion of such Eurodollar Loan and for a maturity equal to the applicable
Interest Period are offered to the Lending Office of the Administrative Agent in
immediately available funds in the London Interbank Market for Eurodollars at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period divided by (B) one minus the applicable
statutory reserve requirements of the Administrative Agent, expressed as a
decimal (including without duplication or limitation, basic, supplemental,
marginal and emergency reserves), from time to time in effect under Regulation D
or similar regulations of the Board. It is agreed that for purposes of this
definition, Eurodollar Loans made hereunder shall be deemed to constitute
Eurocurrency Liabilities as defined in Regulation D and to be subject to the
reserve requirements of Regulation D.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, lease, easement or charge of any kind whatsoever (including
any conditional sale or other title retention agreement, any lease in the nature
thereof or the agreement to grant a security interest at a future date).
"Loans" shall mean the Construction Loans and the Term Loan.
"Local Bank Account" shall mean Account No. 1511-174-3
established by the Borrower at the office of The First National Bank of
Anchorage, 201 West 36th Avenue, P.O. Box 200628, Anchorage, Alaska 99520.
"Long Term Holdings Credit Agreement" shall mean that certain
Amended and Restated Credit Agreement dated as of November 14, 1997 among
Holdings, the lenders referred to therein, NationsBank of Texas, N.A., as
Administrative Agent, Credit Lyonnais New York Branch, as Documentation Agent
and TD Securities (USA), Inc., as Syndication Agent, which agreement, as of the
Closing Date, provides for a reducing revolving credit facility in an amount
-16-
<PAGE>
up to $200,000,000, as such agreement may be amended, supplemented or otherwise
modified, renewed or replaced from time to time.
"Margin Stock" shall be as defined in Regulation U of the
Board.
"Material Adverse Effect" shall mean any event or condition
that (a) has a material adverse effect on the business, assets, properties,
operations, condition (financial or otherwise) or prospects of the Borrower, (b)
materially impairs the ability of the Borrower or any other Transaction Party to
perform any of their respective obligations under any Fundamental Document to
which it is or will be a party, (c) materially and adversely affects the Lien
granted to the Administrative Agent for the benefit of the Lenders under any
Fundamental Document or materially impairs the validity or enforceability of, or
materially impairs the rights or remedies available to the Lenders under, any
Fundamental Document or (d) materially adversely affects the Project, the use by
the Borrower of the fiber pairs in the Kanas Cable as contemplated by the Kanas
Agreement or the fiber pairs in the GCI Cable Facility as contemplated by the
GCI Fiber Exchange Agreement, any Permit, the Right of Way or any of the
Collateral; provided, however, that any event or condition will be deemed to
have a "Material Adverse Effect", if such event or condition when taken together
with all other events or conditions occurring or in existence at such time
(including all other events and conditions which, but for the fact that any
representation or warranty contained herein is subject to a "Material Adverse
Effect" exception, would cause such representation or warranty to be untrue)
would result in a "Material Adverse Effect", even though, individually, such
event or condition would not do so.
"Multiemployer Plan" shall mean a plan described in Section
4001(a)(3) of ERISA.
"Newly Acquired Right" shall have the meaning given such term
in Section 5.23 hereof.
"Non-Disturbance Agreement" shall mean the Non-Disturbance
Agreement substantially in the form of Exhibit W hereto, between the
Administrative Agent and NationsBank of Texas, N.A., as administrative agent
under the Holdings Credit Agreements, as such agreement may be amended,
supplemented or otherwise modified, renewed or replaced from time to time.
"Norma Beach" shall mean the Borrower's cable landing station
at or near 14725 Norma Beach Road, Edmonds, Washington.
"Notes" shall mean the Construction Notes and the Term Notes.
"NPMS" shall mean Kanas' North Pole Metering Station facility
located at 3624 Frosty Avenue, North Pole, Alaska.
-17-
<PAGE>
"O&M Contract" shall mean the Operation and Maintenance
Contract substantially in the form of Exhibit Q hereto, between the Borrower and
GCI Communication, as such contract may be amended, supplemented or otherwise
modified, renewed or replaced from time to time.
"Obligations" shall mean the obligation of the Borrower to
make due and punctual payment of principal of and interest on the Loans, the
Commitment Fees, and all other monetary obligations of the Borrower owed to the
Administrative Agent or any Lender under this Credit Agreement, the Notes, any
other Fundamental Document, the Commitment Letter or the Fee Letter and all
amounts payable by the Borrower to any Lender under any Interest Rate Protection
Agreement which (i) is in the form of Exhibit S hereto or in such other form as
is acceptable to the Administrative Agent and (ii) as to which the
Administrative Agent shall have received written notice thereof within 10
Business Days after execution of such Interest Rate Protection Agreement.
"Operating Budget" shall mean an annual budget, prepared by
the Borrower and approved by the Administrative Agent, which budget shall (i) be
substantially in the form of Schedule 1C hereto and (ii) specify each principal
item and contain fair and reasonable projections of the projected gross
revenues, projected operating costs and projected debt service for each month of
the applicable year and shall also include a periodic inspection, maintenance
and repair schedule (including provisions for annual maintenance).
"Partnership Agreement" shall mean the Partnership Agreement
dated as of July 29, 1997 by and between GCI Fiber and Fiber Hold, as such
agreement may be amended from time to time.
"Payor" shall mean any Person with the obligation to make any
payment to the Borrower pursuant to a Capacity Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Percentage" shall mean, with respect to any Lender, (i) at
any time before the Completion Date, its ratable share (expressed as a
percentage) equal to the amount obtained by dividing the Construction Commitment
of such Lender by the aggregate Construction Commitments of all the Lenders and
(ii) at any time on or after the Completion Date, its ratable share (expressed
as a percentage) equal to the amount obtained by dividing the aggregate
outstanding principal amount of all Loans owed to such Lender by the aggregate
outstanding principal amount of all Loans owed to all of the Lenders.
"Permits" shall mean the FCC Licenses, and all other
approvals, consents, waivers, notices, filings, recordings, registrations,
exemptions, variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given, made or obtained (as the
-18-
<PAGE>
case may be) by or from any Governmental Authority or any Person that are
necessary or required for the Project.
"Permitted Encumbrances" shall mean Liens permitted under
Section 6.2 hereof.
"Person" shall mean any natural person, corporation,
partnership, limited liability company, trust, joint venture, association,
company, estate, unincorporated organization or government or any agency or
political subdivision thereof.
"Plan" shall mean an employee benefit plan within the meaning
of Section 3(2) of ERISA, other than a Multiemployer Plan, maintained by the
Borrower or any member of the Controlled Group, or to which the Borrower or any
member of the Controlled Group contributes or is required to contribute or any
other plan covered by Title IV of ERISA that cover any employees of the Borrower
or any member of the Controlled Group.
"Plans and Specifications" shall mean the plans and
specifications listed on Schedule 1D hereto.
"Prepayment Date" shall have the meaning given such term in
Section 2.10(h) hereof.
"Project" shall mean the development, construction, testing,
operation and maintenance of the System.
"Project Agreements" shall mean the GCI Lease Contract, the
Holdings Lease Guaranty Agreement, the Kanas Agreement, the Transport Keep-Well
Agreement, the Holdings Keep-Well Agreement, the Construction Contract, the SSI
Cash Collateral Agreement, the Completion Guaranty, the O&M Contract, GCI Fiber
Exchange Agreement, GCI Construction Contract and any other contract to which
the Borrower is a party that provides for aggregate payments of one million
dollars ($1,000,000) or more.
"Project Costs" shall mean (i) all development and
construction costs of the Project and all other amounts included in the
Construction Budget (including, without limitation, $1,000,000 of working
capital and the payment in the amount of $500,000 to Kanas pursuant to the Kanas
Agreement) and (ii) all other payments to be made by the Borrower to the
Lenders, whether or not included in the Construction Budget.
"Projections" shall mean the financial projections of the
Borrower referred to in Section 3.22(a) hereof.
"Proprietary Rights" shall have the meaning given such term in
Section 3.8 hereof.
-19-
<PAGE>
"Pro Rata Share" shall mean, with respect to any Obligation or
other amount, each Lender's pro rata share of such Obligation or other amount
determined in accordance with such Lender's Percentage.
"PSMS" shall mean Kanas' PetroStar Metering Station located at
2.5 Mile Dayville Road, Valdez, Alaska.
"Quiet Enjoyment" shall have the meaning given such term in
Section 8.12 hereof.
"Reportable Event" shall mean any reportable event as defined
in Section 4043(c) of ERISA, other than a reportable event as to which provision
for 30-day notice to the PBGC would be waived under applicable regulations had
the regulations in effect on the Closing Date been in effect on the date of
occurrence of such reportable event.
"Required Lenders" shall mean the Lenders holding 66% or more
of the aggregate Credit Exposure of all Lenders.
"Restricted Payment" shall mean (i) any distribution, dividend
or other direct or indirect payment on account of any partnership interest or
other equity interest in the Borrower, (ii) any redemption or other acquisition,
re-acquisition or retirement by the Borrower of any of its partnership interests
or of any equity interest in any of its Affiliates, now or hereafter
outstanding, (iii) any payment made to retire, or obtain the surrender of any
outstanding warrants, puts or options or other rights to purchase or acquire any
partnership interest in the Borrower, or any equity interest in any of its
Affiliates, now or hereafter outstanding and (iv) any payment by the Borrower of
principal of, premium, if any, or interest on, or any redemption, purchase,
retirement, defeasance, sinking fund or similar payment with respect to, any
Subordinated Debt now or hereafter outstanding.
"Right of Way" shall mean the Land Right of Way and the
Undersea Right Way.
"SADC" shall mean GCI Communication's South Anchorage
Distribution Center located at 6831 Arctic Boulevard, Anchorage, Alaska.
"Satisfactory Capacity Agreement" shall mean (i) the GCI Lease
Contract, (ii) a binding Capacity Agreement between the Borrower and a third
party which is not an Affiliate of the Borrower and whose senior unsecured debt
obligations are rated at least BBB by Standard & Poor's Ratings Group, a
division of McGraw-Hill, or its successor (or the equivalent rating by Moody's
Investors Service) or is otherwise approved in writing by all the Lenders,
pursuant to which fixed minimum payments are required to be made to the Borrower
on or before dates certain, or (iii) a binding Capacity Agreement between the
Borrower and Holdings or a Subsidiary of Holdings pursuant to which fixed
minimum payments are required to be made to the Borrower on or before dates
certain; provided, however, that a Capacity Agreement entered
-20-
<PAGE>
into by the Borrower and a Subsidiary of Holdings shall only be a "Satisfactory
Capacity Agreement" hereunder if all the obligations of such Subsidiary under
such contract are unconditionally guaranteed by Holdings on terms, and pursuant
to documentation, which is satisfactory to the Required Lenders.
"Schedule of Commitments" shall mean the schedule of the
Commitments of the Lenders set forth in Schedule 1 hereto.
"SDC" shall mean GCI Communication's existing Seattle
Distribution Center located at 2001 6th Avenue, Suite 2900, Seattle, Washington
"Short Term Holdings Credit Agreement" shall mean that certain
Amended and Restated Credit Agreement dated as of November 14, 1997 among
Holdings, the lenders referred to therein, NationsBank of Texas, N.A., as
Administrative Agent, Credit Lyonnais New York Branch, as Documentation Agent
and TD Securities (USA), Inc., as Syndication Agent, which agreement, as of the
Closing Date, provides for a revolving credit facility up to a maximum amount of
$50,000,000 (which revolving credit facility may convert to a term loan, subject
to the terms and conditions set forth therein, on the 364th day after the
original closing of such facility), as such agreement may be amended,
supplemented or otherwise modified, renewed or replaced from time to time.
"Significant Permits" shall have the meaning given such term
in Section 5.21 hereof.
"Specified Amount" shall mean $50,000,000.
"Specified Date" shall mean the earlier of (i) the date on
which the Borrower fulfills its obligations under Section 5.21 hereof and (ii)
July 31, 1998.
"Sponsor" shall mean GCI.
"Sponsor Equity Funds" shall mean the $50,000,000 to be
contributed to the Borrower by GCI.
"Sponsor Undertaking" shall mean the undertaking letter from
GCI substantially in the form of Exhibit H hereto, as such undertaking letter
may be amended, supplemented or otherwise modified, renewed or replaced from
time to time in accordance with the terms thereof.
"SSI Cash Collateral Agreement" shall mean that certain Cash
Collateral and Security Agreement dated effective as of December 1, 1997 among
the Borrower, the Contractor, Credit Lyonnais New York Branch and The First
National Bank of Anchorage, as such agreement may be amended, supplemented or
otherwise modified, renewed or replaced from time to time.
-21-
<PAGE>
"SSI Cash Collateral Account" shall mean Account No.
50-1150-00 0180-803-9 in the name of the Contractor and the Borrower at the
office of The First National Bank of Anchorage, 101 West 36th Avenue, Suite 419,
P.O. Box 100720, Anchorage, Alaska 99520 which account is the Cash Collateral
Account referred to in the SSI Cash Collateral Agreement.
"Subordinated Debt" shall mean all Indebtedness and other
obligations of the Borrower owing to Holdings or GCI Transport which is
subordinated to the Obligations pursuant to the Subordination Agreement.
"Subordination Agreement" shall mean the Subordination
Agreement substantially in the form of Exhibit F hereto, among the Borrower,
Holdings, GCI Transport and the Administrative Agent, as such agreement may be
amended, supplemented or otherwise modified, renewed or replaced from time to
time.
"Subsidiary" shall mean with respect to any Person, any
corporation, association, joint venture, partnership or other business entity
(whether now existing or hereafter organized) of which at least a majority of
the voting stock or other ownership interests having ordinary voting power for
the election of directors (or the equivalent) is, at the time as of which any
determination is being made, owned or controlled by such Person or one or more
subsidiaries of such Person or by such Person and one or more subsidiaries of
such Person.
"System" shall mean the SONET OC-48 fiber optic cable network
connecting the cities of Anchorage, Whittier, Valdez, Fairbanks and Lena Point,
Alaska, and Norma Beach and Seattle, Washington, which System shall be comprised
of the Alaska United Fiber System, the Electronics, the fiber pairs in the Kanas
Cable to which the Borrower has been granted exclusive use pursuant to the Kanas
Agreement, the fiber pairs in the GCI Cable Facility to which the Borrower has
been granted exclusive use pursuant to the GCI Fiber Exchange Agreement and all
other equipment or rights necessary to operate the Alaska United Fiber System
and the fiber pairs in the Kanas Cable and the GCI Cable Facility (to which the
Borrower has been granted exclusive use) as an integrated telecommunications
network. The undersea portion of the network shall connect landing stations to
be located at Whittier, Valdez, Lena Point and Norma Beach. An undersea
branching unit shall connect the three undersea fiber cable segments originating
at Whittier, Lena Point and Norma Beach. A separate undersea extension shall
directly connect landing stations at Whittier and Valdez. The terrestrial
portion of the System consists of inland extensions from Whittier to SADC and
AT&T's principal point of presence in Anchorage, from Valdez to FDC and AT&T's
principal point of presence Fairbanks , and from Norma Beach to SDC.
"Term Loan Commitment" shall mean the commitment of each
Lender to make a Term Loan to the Borrower on the Completion Date in an amount
not in excess of the amount set forth (i) opposite its name under the column
entitled "Term Loan Commitment" in the Schedule of Commitments, or (ii) in any
applicable Assignment and Acceptance(s) to which it may be a
-22-
<PAGE>
party, as the case may be, as such amount may be reduced from time to time in
accordance with the terms of this Credit Agreement.
"Term Loan" shall mean the loan made hereunder in accordance
with the provisions of Section 2.2(a), whether made as a Eurodollar Loan or an
Alternate Base Rate Loan, as permitted hereby.
"Term Notes" shall have the meaning given such term in Section
2.4(b) hereof.
"Total Debt" shall mean the amount of all outstanding
Indebtedness of the Borrower less the amount of all outstanding Subordinated
Debt.
"Transaction Party" shall mean each of GCI, Holdings, GCI
Transport, GCI Communication, GCI Cable, GCI Fiber, Fiber Hold and any other
Affiliate of Holdings that becomes a party to a Satisfactory Capacity Agreement
or a Fundamental Document.
"Transport Keep-Well Agreement" shall mean the Operating
Keep-Well Agreement substantially in the form of Exhibit L hereto, among GCI
Transport, the Borrower and the Administrative Agent, as such agreement may be
amended, supplemented or otherwise modified, renewed or replaced from time to
time.
"Transport Pledge Agreement" shall mean the Pledge Agreement
substantially in the form of Exhibit D hereto, between GCI Transport and the
Administrative Agent, as such agreement may be amended, supplemented or
otherwise modified, renewed or replaced from time to time.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York.
"UCC-1 Financing Statements" shall mean a financing statement
on Form UCC-1 which statement is in appropriate form for filing under the
Uniform Commercial Code in effect in the applicable jurisdiction in which such
statement is to be filed.
"Undersea Right of Way" shall mean the real property or sea
bed on or in which the undersea portion of the Alaska United Fiber System (as
described in the second and third sentence of the definition of "Alaska United
Fiber System" set forth herein) is to be built and located, and the rights and
interests of the Borrower which permit such undersea portion of the Alaska
United Fiber System to be so located, which rights and interest are more fully
described in Schedule 1A hereto.
"Valdez" shall mean the Borrower's cable landing station to be
built at or near 200 South Harbor, Valdez, Alaska.
-23-
<PAGE>
"Whittier" shall mean the Borrower's cable landing station at
or near Lot #16, First Addition to the Port of Whittier, Alaska.
2. THE LOANS
SECTION 2.1. Construction Loans. (a). Each Lender, severally
and not jointly, agrees, upon the terms and subject to the conditions hereof, to
make loans to the Borrower, on any Business Day and from time to time from the
Closing Date to but excluding the Construction Commitment Termination Date, for
use in paying Project Costs each in an aggregate principal amount which when
added to the aggregate principal amount of all Construction Loans theretofore
made to the Borrower by such Lender, does not exceed such Lender's Construction
Commitment.
(b) Once repaid, amounts constituting the Construction
Commitments may not be reborrowed and the Construction Commitments shall be
automatically and permanently reduced accordingly.
(c) Subject to Section 2.3, the Loans shall be made at such
times as the Borrower shall request.
(d) Notwithstanding anything to the contrary above, a Lender
shall not be obligated to make any Construction Loan if, as a result thereof,
(i) the aggregate principal amount of all Construction Loans then outstanding
would exceed the aggregate amount of the Construction Commitments then in effect
or (ii) at any time on or prior to the Specified Date, the aggregate amount of
outstanding Obligations would exceed the Specified Amount.
SECTION 2.2 Term Loan. (a) Each Lender, severally and not
jointly, agrees, upon the terms and subject to the conditions hereof, to make a
loan to the Borrower on the Completion Date in the principal amount equal to
such Lender's Pro Rata Share of the aggregate principal amount of all
Construction Loans outstanding on the Completion Date, provided, however, that
in no event shall the amount of any such loan to be made by such Lender exceed
such Lender's Term Loan Commitment.
(b) Once repaid, amounts constituting the Term Loan
Commitments may not be reborrowed.
SECTION 2.3. Making of Loans. (a) Each Loan shall be an
Alternate Base Rate Loan or a Eurodollar Loan as the Borrower may request
subject to, and in accordance with, this Section 2.3.
-24-
<PAGE>
(b) The Borrower shall give the Administrative Agent at least
ten Business Days' prior written, facsimile or telephonic (promptly confirmed in
writing) notice of each Borrowing which is to consist of Eurodollar Loans, and
at least eight Business Days' prior written, facsimile or telephonic (promptly
confirmed in writing) notice of each Borrowing which is to consist of Alternate
Base Rate Loans. Each such notice in order to be effective must be received by
the Administrative Agent not later than 1:00 p.m., New York City time, on the
day required and shall specify the date (which shall be a Business Day) on which
such Loan is to be made, the amount of the requested Borrowing, whether the
Borrowing then being requested is to consist of Alternate Base Rate Loans or
Eurodollar Loans and in the case of Eurodollar Loans, the Interest Period or
Interest Periods with respect thereto. Each such notice shall be irrevocable. If
no election of an Interest Period is specified in any such notice in the case of
a Borrowing consisting of Eurodollar Loans, such notice shall be deemed to be a
request for an Interest Period of one month. If no election is made as to the
type of Loan, such notice shall be deemed a request for a Borrowing consisting
of Alternate Base Rate Loans. No Borrowing shall consist of Eurodollar Loans if
after giving effect thereto an aggregate of more than four (4) separate
Eurodollar Loans would be outstanding hereunder with respect to a Lender (as
determined in accordance with Section 2.9(c) hereof). The Lenders shall not be
required to make Construction Loans hereunder more often than twice each
calendar month. The Borrower hereby agrees that for each Interest Rate
Protection Agreement entered into by the Borrower (whether in order to comply
with the provisions of Section 5.17 hereof or otherwise), it will use its best
efforts to maintain one or more Eurodollar Loans in an aggregate principal
amount equal to the notional amount of such Interest Rate Protection Agreement
which Eurodollar Loans shall have Interest Periods which correspond to the
payment dates set forth in such Interest Rate Protection Agreement.
(c) The Borrower shall not request any Construction Loan
hereunder in an amount greater than the amount of Project Costs incurred and
then due and payable or if such Loan is to fund the working capital item
included in the Construction Budget, greater than $1,000,000; provided, however,
that the Borrower may request a Construction Loan on the Business Day
immediately preceding the Construction Commitment Termination Date in a
principal amount (i) equal to or less than the amount of Project Costs incurred
but not yet due and payable and (ii) which when added to the aggregate principal
amount of all Construction Loans then outstanding, does not exceed the aggregate
Construction Commitments (any such loan shall be referred to herein as the
"Final Construction Loan"). At any time on or prior to the Specified Date, the
Borrower shall not request any Construction Loan in an amount which would cause
the amount of outstanding Obligations to exceed the Specified Amount.
(d) The Administrative Agent shall promptly (but in no event
later than two (2) days prior to the date of any proposed Borrowing which is to
consist of Eurodollar Loans), notify each Lender (by telecopier) of its
proportionate share of each Borrowing under this Section 2.3, the date of such
Borrowing, the type of Loans being requested and the Interest Period or Interest
Periods applicable thereto. On the borrowing date specified in such notice, each
Lender shall make its share of the Borrowing available at the offices of Credit
Lyonnais
-25-
<PAGE>
New York Branch, ABA #026-008073, Attention: Loan Servicing Department, for
credit to Holdover Account No. 01-88179-2145-00 (Reference: Alaska United), no
later than 1:00 p.m. New York City time in Federal or other immediately
available funds. Upon receipt of the funds to be made available by the Lenders
to fund any Construction Loan hereunder to pay Project Costs (other than Bank
Charges), the Administrative Agent shall disburse such funds by depositing the
proceeds of such Loans directly into the Construction Account provided, however,
that with respect to the Final Construction Loan, the Administrative Agent shall
disburse the applicable funds by depositing the proceeds of such Loan into a
segregated account under the sole dominion and control of the Administrative
Agent and upon receipt by the Administrative Agent of a written request from the
Borrower, the Administrative Agent shall arrange for the deposit of such funds
into the Construction Account (provided such request is accompanied by an
Engineer's Certificate) or shall apply such funds to the repayment of the
outstanding principal amount of the Loans in accordance with the terms hereof.
With regard to any Borrowing (or portion thereof) to pay Bank Charges, the
Administrative Agent shall disburse such funds to the Lenders in payment of the
Bank Charges in respect of which such Borrowing is being made.
(e) Each Lender may at its option fulfill its obligation to
make Eurodollar Loans by causing a foreign branch or affiliate to make such
Eurodollar Loans, provided that any exercise of such option shall not affect the
obligation of the Borrower to repay Loans in accordance with the terms hereof
and the relevant Note. Subject to the other provisions of this Section 2.3,
Section 2.8(b) and Section 2.13, Loans of more than one interest rate type may
be outstanding at the same time.
(f) Each Loan requested hereunder on any date shall be made by
each Lender in accordance with its respective Percentage.
(g) On the date requested by the Borrower for the funding of
each Loan, the Administrative Agent shall be authorized (but not obligated) to
advance, for the account of each of the Lenders, the amount of the Loan to be
made by such Lender in accordance with its Percentage hereunder. Each of the
Lenders hereby authorizes and requests the Administrative Agent to advance for
its account, pursuant to the terms hereof, the amount of the Loan to be made by
it, and each of the Lenders agrees forthwith to reimburse the Administrative
Agent in immediately available funds for the amount so advanced on its behalf by
the Administrative Agent. If any such reimbursement is not made in immediately
available funds on the same day on which the Administrative Agent shall have
made any such amount available on behalf of any Lender, such Lender shall pay
interest to the Administrative Agent equal to the Administrative Agent's cost of
obtaining overnight funds in the New York Federal Funds Market. If and to the
extent that any such reimbursement shall not have been made to the
Administrative Agent, the Borrower agrees to repay to the Administrative Agent
forthwith on demand a corresponding amount with interest thereon for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent at the Alternate Base Rate plus the
Applicable Margin for Alternate Base Rate Loans.
-26-
<PAGE>
(h) The amount of any Borrowing of new funds shall be in an
aggregate principal amount of at least $1,000,000 (or if applicable, such lesser
amount as shall equal the available but unused portion of the Construction
Commitments).
(i) Notwithstanding the provisions of clause (b) above and/or
the absence of a request from the Borrower that the Lenders make a Loan, at any
time prior to the Completion Date, the Required Lenders may direct the Lenders
to make Loans and apply the proceeds thereof as follows:
(i) if Holdings shall have taken over construction or
operation of the Project pursuant to the Completion
Guaranty, the Lenders may make Loans for the account
of the Borrower with respect to the construction of
the Project and pay the proceeds thereof directly to
Holdings, as the completion guarantor to be used to
finance the construction and achievement of
Completion of the Project pursuant to the terms of
the Completion Guaranty; and
(ii) if an Event of Default shall have occurred and be
continuing, the Lenders may make Loans for the
account of the Borrower and pay the proceeds thereof
directly to Holdings, as the completion guarantor or
to Persons providing services in connection with the
construction of the Project so as to ensure
Completion of the Project.
SECTION 2.4. Notes; Repayment of the Term Loan. (a) The
Construction Loans made by each Lender hereunder shall be evidenced by a single
promissory note substantially in the form of Exhibit A-1 hereto (each a
"Construction Note" and collectively, the "Construction Notes") in the face
amount of such Lender's Construction Commitment, payable to the order of such
Lender, duly executed by the Borrower and dated as of the date hereof. The
principal amount of the Construction Loans as evidenced by the Construction
Notes shall be payable in full on the Completion Date.
(b) The Term Loan made by each Lender hereunder shall be
evidenced by a single promissory note substantially in the form of Exhibit A-2
hereto (each a "Term Note" and collectively, the "Term Notes") in the face
amount equal to the principal amount of the Term Loan to be made by such Lender
on the Completion Date, payable to the order of such Lender, duly executed by
the Borrower and dated as of the date hereof. The principal amount of the Term
Loan as evidenced by the Term Notes shall be payable in equal installments
payable on the last Business Day of each March, June, September and December
commencing on the first such date occurring after the Conversion Date, with the
last installment due on the Final Maturity Date. The balance of the Term Loans
shall be payable in full on the Final Maturity Date.
(c) Each of the Notes shall bear interest on the outstanding
principal balance thereof as set forth in Section 2.5 hereof. Each Lender and
the Administrative Agent on its
-27-
<PAGE>
behalf is hereby authorized by the Borrower, but not obligated, to enter the
amount of each Loan and the amount of each payment or prepayment of principal or
interest thereon in the appropriate spaces on the reverse of, or on an
attachment to, such Lender's Notes. The entries made on the reverse of, or on an
attachment to, any Note shall be prima facie evidence of the existence and
amount of the Loans evidenced by such Note; provided, however, that the failure
of any Lender or the Administrative Agent to make any such entries shall not in
any manner affect the obligations of the Borrower to repay the Loans in
accordance with terms hereof and the Notes.
SECTION 2.5. Interest. (a) In the case of a Eurodollar Loan,
interest shall be payable by the Borrower to the Lenders at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the LIBO Rate plus the Applicable Margin for Eurodollar Loans.
Interest shall be payable by the Borrower to the Lenders on each Eurodollar Loan
on each applicable Interest Payment Date, at maturity and on the date of a
conversion of such Eurodollar Loan to an Alternate Base Rate Loan. The
Administrative Agent shall determine the applicable LIBO Rate for each Interest
Period as soon as practicable on the date when such determination is to be made
in respect of such Interest Period and shall notify the Borrower and the Lenders
of the applicable interest rate so determined. Such determination shall be
conclusive absent manifest error.
(b) In the case of an Alternate Base Rate Loan, interest shall
be payable by the Borrower to the Lenders at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 365/366 days, as the
case may be) equal to the Alternate Base Rate plus the Applicable Margin for
Alternate Base Rate Loans. Interest shall be payable by the Borrower to the
Lenders in arrears on each Alternate Base Rate Loan on each applicable Interest
Payment Date and at maturity.
(c) The Applicable Margin is subject to reduction at any time
following the Completion Date as follows: in the event that (i) Total Debt of
the Borrower is equal to or less than $60,000,000 and (ii) no Default or Event
of Default shall have occurred and then be continuing, then after and for so
long as such conditions are satisfied, the Applicable Margin for Eurodollar
Loans and for Alternate Base Rate Loans hereunder shall be reduced to the
applicable amounts set forth below under column (b) or column (c) (as
applicable) opposite the category in column (a) which corresponds to the amount
of the Borrower's Total Debt:
-28-
<PAGE>
<TABLE>
<CAPTION>
(a) (b) (c)
Reduced Applicable
Reduced Applicable Margin for Alternate
Total Debt Margin for Eurodollar Loans Base Rate Loans
- ---------------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
greater than $40,000,000 but less than 2.75% 1.50%
or equal to $60,000,000
- ---------------------------------------- ------------------------------------- -------------------------------------
$40,000,000 or less 2.50% 1.25%
- ---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>
Any such reduction in the Applicable Margin shall be prospective and shall take
effect on the fifth Business Day following receipt by the Lenders of a
certificate signed by an Authorized Officer of the Borrower on behalf of the
Borrower demonstrating that Total Debt of the Borrower is less than or equal to
$40,000,000 or $60,000,000 (as applicable) and requesting the Applicable Margin
be reduced in accordance with this Section 2.5(c) to the amount set forth in
such certificate. If during any period when the Borrower is entitled to a
reduced Applicable Margin as provided for in this paragraph, any of the
conditions which were the basis for such eligibility ceases to exist, the
Borrower shall immediately notify the Administrative Agent that such conditions
no longer exist and the Applicable Margin shall increase to the Applicable
Margin which is otherwise applicable as a result of such change in circumstances
in accordance with this paragraph (c). If such increase is the result of a
Default or Event of Default, then such increase shall be effective on the date
of such Default or Event of Default; and if such increase is the result of the
Total Debt of the Borrower exceeding $40,000,000 or $60,000,000 (as the case may
be), then such increase shall be effective on the date on which Total Debt of
the Borrower first exceeded $40,000,000 or $60,000,000 (as the case may be).
(d) Anything in this Credit Agreement or the Notes to the
contrary notwithstanding, the interest rate on the Loans shall in no event be in
excess of the maximum permitted by Applicable Law.
SECTION 2.6. Commitment Fees and Other Fees. (a) The Borrower
agrees to pay to the Administrative Agent for the account of each Lender on the
last Business Day of each March, June, September and December in each year
(commencing on the last Business Day of March 1998) prior to the Construction
Commitment Termination Date and on the Construction Commitment Termination Date,
an aggregate fee (the "Commitment Fees") of 3/8 of 1% per annum, computed on the
basis of the actual number of days elapsed during the preceding period or
quarter over a year of 360 days, on the average daily amount by which such
Lender's Construction Commitment (as such Construction Commitment may be reduced
in accordance with the provisions of this Credit Agreement) exceeds the
principal balance of such Lender's outstanding Construction Loans during the
preceding period or quarter.
-29-
<PAGE>
(b) The Commitment Fees shall commence to accrue on the date
this Credit Agreement is fully executed.
(c) In addition, the Borrower agrees to pay to the
Administrative Agent and any of the other Lenders on the Closing Date any and
all other fees that are then due and payable pursuant to the Commitment Letter
or the Fee Letter.
SECTION 2.7. Mandatory Termination or Reduction of
Commitments. (a) The Term Loan Commitments of all the Lenders shall
automatically terminate at 5:00 p.m., New York City time, on the Completion
Date.
(b) The Construction Commitments shall be permanently reduced
pursuant to, and as provided in, Section 2.1(b).
(c) At any time prior to the Completion Date, the Borrower
may, upon five (5) Business Days' prior written or facsimile notice to the
Administrative Agent, permanently reduce the Construction Commitments by the
minimum aggregate amount of $1,000,000; provided, however, that the Construction
Commitments may not be reduced to an amount less than the aggregate principal
amount of all Construction Loans then outstanding and provided, further, that
the Borrower shall have demonstrated to the satisfaction of the Required Lenders
(which shall be evidenced by a written instrument) that the Borrower will have
sufficient funds (after giving effect to the proposed reduction of the
Construction Commitments) to Complete the System by January 1, 1999. Any
reduction of the Construction Commitments pursuant to this Section 2.7(c) shall
be made among the Lenders ratably in accordance with their respective
Percentages.
(d) The Borrower may at any time prior to the Completion Date,
upon five (5) Business Days' prior written or facsimile notice to the
Administrative Agent, terminate the Construction Commitments in their entirety,
provided that the principal amount of all Construction Loans then outstanding
are repaid in full either prior to, or simultaneously with, such termination.
(e) Simultaneously with each termination or reduction of the
Construction Commitments, the Borrower shall pay to the Administrative Agent for
the benefit of each Lender all accrued and unpaid Commitment Fees on the amount
of the Construction Commitments so terminated or reduced through the date of
such termination or reduction.
SECTION 2.8. Default Interest; Alternate Rate of Interest. (a)
Upon the occurrence and during the continuance of an Event of Default, the
Borrower shall on demand in writing from time to time pay interest, to the
extent permitted by Applicable Law, on all Loans and overdue amounts outstanding
up to the date of actual payment of such amounts (after as well as before
judgment) (i) for the remainder of the then current Interest Period for each
Eurodollar Loan, at 2% in excess of the rate then in effect for each such
Eurodollar Loan and (ii) for all periods subsequent to the then current Interest
Period for each Eurodollar Loan, for all Alternate
-30-
<PAGE>
Base Rate Loans and for all other overdue amounts hereunder, at 2% in excess of
the rate then in effect for Alternate Base Rate Loans.
(b) In the event, and on each occasion, that on or before the
day on which the LIBO Rate for a Eurodollar Loan is to be determined as set
forth herein, (i) the Administrative Agent shall have received notice from any
Lender of such Lender's determination (which determination, absent manifest
error, shall be conclusive) that Dollar deposits in the amount of the principal
amount of such Lender's Eurodollar Loan are not generally available in the
London Interbank Market or that the rate at which such Dollar deposits are being
offered will not adequately and fairly reflect the cost to such Lender of making
or maintaining the principal amount of such Lender's Eurodollar Loan during such
Interest Period or (ii) the Administrative Agent shall have determined that
reasonable means do not exist for ascertaining the applicable LIBO Rate, the
Administrative Agent shall, as soon as practicable thereafter, give written or
facsimile notice of such determination to the Borrower and the Lenders, and any
request by the Borrower for a Eurodollar Loan (or conversion to or continuation
as a Eurodollar Loan pursuant to Section 2.9 hereof), made after receipt of such
notice, shall be deemed to be a request for an Alternate Base Rate Loan. After
such notice shall have been given and until the circumstances giving rise to
such notice no longer exist, each request (or portion thereof, as the case may
be) for a Eurodollar Loan shall be deemed to be a request for an Alternate Base
Rate Loan.
SECTION 2.9. Continuation and Conversion of Loans. The
Borrower shall have the right, at any time, (i) to convert any Eurodollar Loan
or portion thereof to an Alternate Base Rate Loan or to continue such Eurodollar
Loan or a portion thereof for a successive Interest Period, or (ii) to convert
any Alternate Base Rate Loan or a portion thereof to a Eurodollar Loan, subject
to the following:
(a) the Borrower shall give the Administrative Agent prior
written, facsimile or telephonic (promptly confirmed in writing) notice of each
continuation or conversion hereunder of at least three Business Days for
continuation as or conversion to a Eurodollar Loan and at least one Business Day
for conversion to an Alternate Base Rate Loan; such notice shall be irrevocable
and to be effective, must be received by the Administrative Agent on the day
required not later than 1:00 p.m., New York City time;
(b) no Event of Default or Default shall have occurred and be
continuing at the time of any conversion to a Eurodollar Loan or continuation of
any such Eurodollar Loan into a subsequent Interest Period;
(c) no Alternate Base Rate Loan may be converted to a
Eurodollar Loan and no Eurodollar Loan may be continued as a Eurodollar Loan if,
after such conversion or continuance, and after giving effect to any concurrent
prepayment of Loans, an aggregate of more than four (4) separate Eurodollar
Loans would be outstanding hereunder with respect to each Lender (for purposes
of determining the number of such Loans outstanding, Loans with different
Interest Periods shall be counted as different Loans even if made on the same
date);
-31-
<PAGE>
(d) if fewer than all Loans at the time outstanding shall be
continued or converted, such continuation or conversion shall be made pro rata
among the Lenders in accordance with the respective principal amount of such
Loans held by the Lenders immediately prior to such continuation or conversion;
(e) the aggregate principal amount of Loans continued as or
converted to Eurodollar Loans as part of the same Borrowing shall be at least
$1,000,000;
(f) accrued interest on the Eurodollar Loans (or portion
thereof) being continued or converted shall be paid by the Borrower at the time
of continuation or conversion (as applicable);
(g) the Interest Period with respect to a new Eurodollar Loan
effected by a continuation or conversion shall commence on the date of such
continuation or conversion;
(h) if a Eurodollar Loan is converted to an Alternate Base
Rate Loan other than on the last day of the Interest Period with respect
thereto, the amounts required by Section 2.11 shall be paid upon such
conversion; and
(i) each request for a continuation as or conversion to a
Eurodollar Loan which fails to state an applicable Interest Period shall be
deemed to be a request for an Interest Period of one month.
In the event that the Borrower shall not give notice to continue or convert any
Eurodollar Loan as provided above, such Loan (unless repaid) shall automatically
be converted to an Alternate Base Rate Loan at the expiration of the then
current Interest Period. The Administrative Agent shall, after it receives
notice from the Borrower, promptly (but in no event later than two (2) days
prior to the date of any proposed conversion to, or continuation as, a
Eurodollar Loan) give the Lenders notice of any continuation or conversion. The
Borrower shall exercise its rights pursuant to this Section 2.9 in such a manner
so as to comply with its obligations set forth in the last sentence of Section
2.3(b) hereof.
SECTION 2.10. Prepayment of Loans. (a) The Borrower shall have
the right at its option at any time and from time to time to prepay without
penalty or premium except as otherwise provided herein (including, without
limitation, pursuant to Section 2.11 hereof) (i) any Alternate Base Rate Loan,
in whole or in part, upon at least one Business Day's prior written, telephonic
(promptly confirmed in writing) or facsimile notice to the Administrative Agent,
in the minimum principal amount of $500,000 if prepaid in part, or the remaining
balance of such Loan if prepaid in full and (ii) any Eurodollar Loan, in whole
or in part, upon at least three Business Days' prior written, telephonic
(promptly confirmed in writing) or facsimile notice, in the minimum principal
amount of $1,000,000 if prepaid in part, or the remaining balance of such Loan
if prepaid in full. Each notice of prepayment shall specify the prepayment date,
each Loan to be prepaid and the principal amount thereof, shall be irrevocable
and shall commit the
-32-
<PAGE>
Borrower to prepay such Loan in the amount and on the date stated therein. All
prepayments of Eurodollar Loans under this Section 2.10(a) shall be accompanied
by accrued but unpaid interest on the principal amount being prepaid to (but not
including) the date of prepayment.
(b) Outstanding Loans shall be prepaid in accordance with the
other provisions of this Section 2.10 at least once during each calendar quarter
to the extent there are sufficient funds available for such purpose pursuant to,
and in accordance with, the terms of the Depositary Agreement.
(c) The Borrower shall prepay the Loans in an amount equal to
(i) any balance in the Construction Account remaining after all Project Costs
shall have been paid or after the abandonment of the Project and (ii) any funds
released to the Borrower from the SSI Cash Collateral Account in accordance with
the terms of the SSI Cash Collateral Agreement.
(d) Except as explicitly provided in the second sentence of
this Section 2.10(d), the Borrower shall prepay the Loans in an amount equal to
any amount deposited in the Insurance Proceeds Account in accordance with
Section 5.5(d) hereof within sixty (60) days after such amount has been
deposited in such account, unless the Required Lenders consent in writing to the
use of such amount by the Borrower to restore, refurbish, replace or otherwise
repair the System or any portion thereof. So long as no Default or Event of
Default shall have occurred and then be continuing, any amount equal to or less
than $2,000,000 deposited in the Insurance Proceeds Account in accordance with
Section 5.5(d) hereof shall, upon the request of the Borrower, be released by
Credit Lyonnais New York Branch to the Borrower to be used to restore,
refurbish, replace or otherwise repair that portion of the System whose damage,
destruction, loss, condemnation, confiscation, seizure or other requisition gave
rise to the applicable recovery.
(e) The outstanding principal amount of the Construction Loans
shall be repaid immediately to the extent that the aggregate amount thereof
exceeds the aggregate amount of the Construction Commitments then in effect.
(f) All prepayments of Loans shall, as regards interest rate
type, be applied first to Alternate Base Rate Loans and then to Eurodollar Loans
in order of the scheduled expiry of Interest Periods with respect thereto.
(g) All prepayments of Eurodollar Loans shall be accompanied
by accrued but unpaid interest on the principal amount being prepaid to but not
including the date of prepayment.
(h) If on any day on which Loans would otherwise be required
to be repaid or prepaid in accordance with this Credit Agreement, the Depositary
Agreement or any other Fundamental Document, but for the operation of this
Section 2.10(h) (each a "Prepayment Date"), the amount of such required
prepayment exceeds the aggregate principal amount of the
-33-
<PAGE>
then outstanding Alternate Base Rate Loans, and no Default or Event of Default
is then continuing, then on such Prepayment Date and upon the written request of
the Borrower, the Administrative Agent shall transfer Dollars from the
Disbursement Account or otherwise to the Cash Collateral Account in an aggregate
amount equal to such excess. If the Borrower requests that such a transfer be
made by the Administrative Agent then (i) only the outstanding Alternate Base
Rate Loans shall be required to be prepaid on such Prepayment Date and (ii) on
the last day of each Interest Period in effect with respect to a Eurodollar Loan
after such Prepayment Date, the Administrative Agent is irrevocably authorized
and directed to apply funds from the Cash Collateral Account (and liquidate
investments held in the Cash Collateral Account as necessary) to prepay
Eurodollar Loans for which the Interest Period is then ending to the extent
funds are available in the Cash Collateral Account.
SECTION 2.11. Reimbursement of Loss. (a) The Borrower shall
reimburse each Lender on demand for any loss incurred or to be incurred by any
such Lender in the reemployment of the funds released (i) by any prepayment (for
any reason) of any Eurodollar Loan if such Loan is repaid prior to the last day
of the Interest Period for such Loan or (ii) in the event that after the
Borrower delivers a notice of borrowing under Section 2.3(b) or a notice of
continuation or conversion under Section 2.9(a) in respect of Eurodollar Loans,
such Loan is not made, converted to or continued as a Eurodollar Loan on the
first day of the Interest Period specified in such notice for any reason other
than (A) a suspension or limitation under Section 2.8(b) of the right of the
Borrower to select a Eurodollar Loan or (B) a breach by any such Lender of its
obligation to fund such borrowing when it is otherwise required to do so
hereunder. Such loss shall be the amount as reasonably determined by such Lender
as the excess, if any, of (I) the amount of interest which would have accrued to
such Lender on the amount so paid or not borrowed, continued or converted at a
rate of interest equal to the interest rate applicable to such Loan pursuant to
Section 2.5, for the period from the date of such payment or failure to borrow,
continue or convert to the last day (x) in the case of a payment prior to the
last day of the Interest Period for such Loan, of the then current Interest
Period for such Loan or (y) in the case of such failure to borrow, continue or
convert, of the Interest Period for such Loan which would have commenced on the
date of such failure to borrow, continue or convert, over (II) the amount
realized or to be realized by such Lender in reemploying the funds not advanced
or the funds received in prepayment or realized from the Loan not so continued
or converted during the period referred to above. Each Lender shall deliver to
the Borrower from time to time one or more certificates setting forth the amount
of such loss (and in reasonable detail the manner of computation thereof) as
determined by such Lender, which certificates shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amounts shown on any such
certificate within ten (10) days of the Borrower's receipt of such certificate.
(b) In the event the Borrower fails to prepay any Loan on the
date specified in any prepayment notice delivered pursuant to Section 2.10(a),
the Borrower shall pay to the Administrative Agent for the account of the
applicable Lender any amounts required to compensate such Lender for any actual
loss incurred by such Lender as a result of such failure to prepay, including,
without limitation, any loss, cost or expenses incurred by reason of the
-34-
<PAGE>
acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment. Each Lender shall
deliver to the Borrower and the Administrative Agent from time to time one or
more certificates setting forth the amount of such loss (and in reasonable
detail the manner of computation thereof) as determined by such Lender, which
certificates shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amounts shown on any such certificate within ten (10) days of
the Borrower's receipt of such certificate.
SECTION 2.12. Change in Circumstances. (a) In the event that
after the date hereof any change in Applicable Law or in the official
interpretation or administration thereof (including, without limitation, any
request, guideline or policy not having the force of law) by any authority
charged with the administration or interpretation thereof or, with respect to
clause (ii), (iii) or (iv) below any change in conditions, shall occur which
shall:
(i) subject a Lender to, or increase any net tax, levy,
impost, duty, charge, fee, deduction or withholding with
respect to any Eurodollar Loan (other than withholding tax
imposed by the United States of America or any political
subdivision or taxing authority thereof or any other tax,
levy, impost, duty, charge, fee, deduction or withholding (A)
that is measured with respect to the overall net income of
such Lender or of a Lending Office of such Lender, and that is
imposed by the United States of America, or by the
jurisdiction in which such Lender or Lending Office is
incorporated, in which such Lending Office is located, managed
or controlled or in which such Lender has its principal office
(or any political subdivision or taxing authority thereof or
therein), or (B) that is imposed solely by reason of such
Lender failing to make a declaration of, or otherwise to
establish, non-residence, or to make any other claim for
exemption, or otherwise to comply with any certification,
identification, information, documentation or reporting
requirements prescribed under the laws of the relevant
jurisdiction, in those cases where such Lender may properly
make such declaration or claim or so establish non-residence
or otherwise comply); or
(ii) change the basis of taxation of any payment to a
Lender of principal or interest on any Eurodollar Loan or
other fees and amounts payable to such Lender hereunder, or
any combination of the foregoing; other than withholding tax
imposed by the United States of America or any political
subdivision or taxing authority thereof or any other tax,
levy, impost, duty, charge, fee, deduction or withholding that
is measured with respect to the overall net income of such
Lender or of a Lending Office of such Lender, and that is
imposed by the United States of America, or by the
jurisdiction in which such Lender or Lending Office is
incorporated, in which such Lending Office is located, managed
or controlled or in which such Lender has its principal office
(or any political subdivision or taxing authority thereof or
therein); or
-35-
<PAGE>
(iii) impose, modify or deem applicable any reserve,
deposit or similar requirement against any assets held by,
deposits with or for the account of, or loans or commitments
by, an office of a Lender with respect to any Eurodollar Loan;
or
(iv) impose upon a Lender or the London Interbank Market
any other condition with respect to Eurodollar Loans or this
Credit Agreement;
and the result of any of the foregoing shall be to increase the actual cost to
such Lender of making or maintaining any Eurodollar Loan hereunder or to reduce
the amount of any payment (whether of principal, interest or otherwise) received
or receivable by such Lender in connection with any Eurodollar Loan hereunder,
or to require such Lender to make any payment in connection with any Eurodollar
Loan hereunder, in each case by or in an amount which such Lender in its sole
judgment shall deem material, then and in each case, the Borrower shall pay to
the Administrative Agent for the account of such Lender, as provided in
paragraph (c) below, such amounts as shall be necessary to compensate such
Lender for such cost, reduction or payment.
(b) If any Lender shall have determined that the applicability
of any law, rule, regulation or guideline regarding capital adequacy adopted
after the date hereof or any change after the date hereof in any law, rule,
regulation or guideline regarding capital adequacy or in the interpretation or
administration of any of the foregoing by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by such Lender (or any Lending Office of such Lender) or
such Lender's holding company with any request or directive regarding capital
adequacy issued or adopted after the date hereof (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's capital or
on the capital of such Lender's holding company, if any, as a consequence of
this Credit Agreement or the Loans made by such Lender pursuant hereto to a
level below that which such Lender or such Lender's holding company could have
achieved but for such applicability, adoption, change or compliance (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such Lender's
holding company for any such reduction suffered with respect to this Credit
Agreement or the Loans made by such Lender hereunder.
(c) Each Lender shall deliver to the Borrower and the
Administrative Agent from time to time, one or more certificates setting forth
the amounts due to such Lender under paragraphs (a) and (b) above, the changes
as a result of which such amounts are due and the manner of computing such
amounts. Each such certificate shall be conclusive in the absence of manifest
error. The Borrower shall pay to the Administrative Agent for the account of
each such Lender the amounts shown as due on any such certificate within ten
(10) Business Days after its receipt of the same. No failure on the part of any
Lender to demand compensation under
-36-
<PAGE>
paragraph (a) or (b) above on any one occasion shall constitute a waiver of its
rights to demand compensation on any other occasion. The protection of this
Section 2.12 shall be available to each Lender regardless of any possible
contention of the invalidity or inapplicability of any law, regulation or other
condition which shall give rise to any demand by such Lender for compensation
hereunder.
(d) Each Lender agrees that after it becomes aware of the
occurrence of an event or the existence of a condition that (i) would cause it
to incur any increased cost hereunder or render it unable to perform its
agreements hereunder for the reasons specifically set forth in Section 2.8(b) or
this Section 2.12 or Section 2.15 or (ii) would require the Borrower to pay an
increased amount under Section 2.8(b) or this Section 2.12 or Section 2.15, it
will use reasonable efforts to notify the Borrower of such event or condition
and, to the extent not inconsistent with such Lender's internal policies, will
use its reasonable efforts to make, fund or maintain the affected Loans of such
Lender through another Lending Office of such Lender if, as a result thereof,
the additional monies which would otherwise be required to be paid or the
reduction of amounts receivable by such Lender hereunder in respect of such
Loans would be materially reduced, or such inability to perform would cease to
exist, or the increased costs which would otherwise be required to be paid in
respect of such Loans pursuant to Section 2.8(b) or this Section 2.12 or Section
2.15 would be materially reduced or the taxes or other amounts otherwise payable
under Section 2.8(b) or this Section 2.12 or Section 2.15 would be materially
reduced, and if, as determined by such Lender, in its discretion, the making,
funding or maintaining of such Loans through such other Lending Office would not
otherwise materially adversely affect such Loans or such Lender.
SECTION 2.13. Change in Legality. (a) Notwithstanding anything
to the contrary contained elsewhere in this Credit Agreement, if any change
after the date hereof in Applicable Law, guideline or order, or in the
interpretation thereof by any Governmental Authority charged with the
administration thereof, shall make it unlawful for any Lender to make or
maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to a Eurodollar Loan, then, by written notice
to the Borrower and the Administrative Agent, such Lender may (i) declare that
Eurodollar Loans will not thereafter be made by such Lender hereunder and/or
(ii) require that, subject to Section 2.11 hereof, all outstanding Eurodollar
Loans made by it be converted to Alternate Base Rate Loans, whereupon all of
such Eurodollar Loans shall automatically be converted to Alternate Base Rate
Loans, as of the effective date of such notice as provided in paragraph (b)
below. Such Lender's pro rata portion of any subsequent Eurodollar Loan shall,
instead, be an Alternate Base Rate Loan unless such declaration is subsequently
withdrawn.
(b) A notice to the Borrower by any Lender pursuant to
paragraph (a) above shall be effective for purposes of clause (ii) thereof, if
lawful, on the last day of the current Interest Period for each outstanding
Eurodollar Loan; and in all other cases, on the date of receipt of such notice
by the Borrower.
-37-
<PAGE>
SECTION 2.14. Manner of Payments. All payments of principal
and interest by the Borrower in respect of any Loans to it shall be pro rata
among the Lenders holding such Loans in accordance with the then outstanding
principal amounts of such Loans held by them. All payments by the Borrower
hereunder and under the Notes shall be made without offset or counterclaim in
Dollars in Federal or other immediately available funds at the office of Credit
Lyonnais New York Branch, for credit to the Holdover Account No.
01-88179-2145-00 (Reference: Alaska United), no later than 1:00 P.M., New York
City time, on the date on which such payment shall be due. Any payment received
at such office after such time shall be deemed received on the following
Business Day. Interest in respect of any Loan hereunder shall accrue from and
including the date of such Loan to but excluding the date on which such Loan is
paid or converted to a Loan of a different type.
SECTION 2.15. United States Withholding. (a) Prior to the date
of the initial Construction Loan hereunder, and prior to the effective date set
forth in the Assignment and Acceptance with respect to any Lender becoming a
Lender after the date hereof, and from time to time thereafter if requested by
the Borrower or the Administrative Agent or required because, as a result of a
change in law or a change in circumstances or otherwise, a previously delivered
form or statement becomes incomplete or incorrect in any material respect, each
Lender organized under the laws of a jurisdiction outside the United States
shall provide, if applicable, the Administrative Agent and the Borrower with
complete, accurate and duly executed forms or other statements prescribed by the
Internal Revenue Service of the United States certifying such Lender's exemption
from, or entitlement to a reduced rate of, United States withholding taxes
(including backup withholding taxes) with respect to all payments to be made to
such Lender hereunder and under the Notes.
(b) The Borrower and the Administrative Agent shall be
entitled to deduct and withhold any and all present or future taxes or
withholdings, and all liabilities with respect thereto, from payments hereunder
or under the Notes, if and to the extent that the Borrower or the Administrative
Agent in good faith determines that such deduction or withholding is required by
the law of the United States, including, without limitation, any applicable
treaty of the United States. In the event that the Borrower or the
Administrative Agent shall so determine that deduction or withholding of taxes
is required, it shall advise the affected Lender as to the basis of such
determination prior to actually deducting and withholding such taxes. In the
event the Borrower or the Administrative Agent shall so deduct or withhold taxes
from amounts payable hereunder, it (i) shall pay to or deposit with the
appropriate taxing authority in a timely manner the full amount of taxes it has
deducted or withheld; (ii) shall provide evidence of payment of such taxes to,
or the deposit thereof with, the appropriate taxing authority and a statement
setting forth the amount of taxes deducted or withheld, the applicable rate, and
any other information or documentation reasonably requested by the Lender from
whom the taxes were deducted or withheld; and (iii) shall forward to such Lender
any official tax receipts or other documentation with respect to the payment or
deposit of the deducted or withheld taxes as may be issued from time to time by
the appropriate taxing authority. Unless the Borrower and the Administrative
Agent have received forms or other documents satisfactory to them indicating
that payments
-38-
<PAGE>
hereunder or under the Notes are not subject to United States withholding tax or
are subject to such tax at a rate reduced by an applicable tax treaty, the
Borrower or the Administrative Agent may withhold taxes from such payments at
the applicable statutory rate in the case of payments to or for any Lender
organized under the laws of a jurisdiction outside the United States.
(c) Each Lender agrees (i) that as between it and the Borrower
or the Administrative Agent, such Lender shall be the Person to deduct and
withhold taxes, and to the extent required by law it shall deduct and withhold
taxes, on amounts that such Lender may remit to any other Person(s) by reason of
any undisclosed transfer or assignment of an interest in this Credit Agreement
to such other Person(s) pursuant to Section 11.3 and (ii) to indemnify the
Borrower and the Administrative Agent and any officers, directors, agents, or
employees of the Borrower or the Administrative Agent against, and to hold them
harmless from, any tax, interest, additions to tax, penalties, reasonable
counsel and accountants' fees, disbursements or payments arising from the
assertion by any appropriate taxing authority of any claim against them relating
to a failure to withhold taxes as required by law with respect to amounts
described in clause (i) of this paragraph (c) or arising from the reliance by
the Borrower or the Administrative Agent on any form or other document furnished
by such Lender and purporting to establish a basis for not withholding, or for
withholding at a reduced rate, taxes with respect to payments hereunder.
(d) Each assignee of a Lender's interest in this Credit
Agreement in conformity with Section 11.3 shall be bound by this Section 2.15,
so that such assignee will have all of the obligations and provide all of the
forms and statements and all indemnities, representations and warranties
required to be given under this Section 2.15.
(e) Notwithstanding the foregoing, in the event that any
additional withholding taxes shall become payable solely as a result of any
change in any statute, treaty, ruling, determination or regulation occurring
after the date hereof in respect of any sum payable hereunder or under any other
Fundamental Document to any Lender or the Administrative Agent (i) the sum
payable by the Borrower shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.15), such Lender or the Administrative Agent
(as the case may be) receives an amount equal to the sum it would have received
had no such withholding deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with Applicable Law
and (iv) the Borrower shall forward to such Lender or the Administrative Agent
(as the case may be) the official tax receipts or other documentation pursuant
to Section 2.15(b). In addition, the Borrower shall indemnify each Lender and
the Administrative Agent for any additional withholding taxes paid by such
Lender or the Administrative Agent, as the case may be, or any liability
(including penalties and interest) arising therefrom or with respect thereto,
whether or not such additional withholding taxes were correctly or legally
asserted.
(f) In the event that a Lender receives a refund of or credit
for taxes withheld or paid pursuant to clause (e) of this Section 2.15, which
credit or refund is identifiable by such
-39-
<PAGE>
Lender as being a result of taxes withheld in connection with sums payable
hereunder or under any other Fundamental Document, such Lender shall promptly
notify the Administrative Agent and the Borrower and shall remit to the Borrower
the amount of such refund or credit allocable to payments made hereunder or
under the other Fundamental Documents.
SECTION 2.16. Interest Adjustments. If the provisions of this
Credit Agreement or any Note would at any time require payment by the Borrower
to a Lender of any amount of interest in excess of the maximum amount then
permitted by the law applicable to any Loan, the interest payments to that
Lender shall be reduced to the extent necessary so that such Lender shall not
receive interest in excess of such maximum amount. If, as a result of the
foregoing, a Lender shall receive interest payments hereunder or under a Note in
an amount less than the amount otherwise provided hereunder, such deficit
(hereinafter called the "Interest Deficit") will, to the fullest extent
permitted by Applicable Law, cumulate and will be carried forward (without
interest) until the termination of this Credit Agreement. Interest otherwise
payable to a Lender hereunder and under a Note for any subsequent period shall
be increased by the maximum amount of the Interest Deficit that may be so added
without causing such Lender to receive interest in excess of the maximum amount
then permitted by the law applicable to the Loans. The amount of any Interest
Deficit relating to a particular Loan and Note shall be treated as a prepayment
penalty and shall, to the fullest extent permitted by Applicable Law, be paid in
full at the time of any optional prepayment by the Borrower to the Lenders of
all the Loans at that time outstanding pursuant to Section 2.10(a) hereof. The
amount of any Interest Deficit relating to a particular Loan and Note at the
time of any complete payment of the Loans at that time outstanding (other than
an optional prepayment thereof pursuant to Section 2.10(a) hereof) shall be
canceled and not paid.
SECTION 2.17. Extension of the Final Maturity Date. At the
request of the Borrower made at any time during the period from the second
anniversary of the Commencement Date to the fifth anniversary thereof, the
Lenders hereby agree to extend the Final Maturity Date from the date which is
ten (10) years from the Commencement Date to the date which is twelve (12) years
from the Commencement Date provided that on the date of such request, the
Borrower demonstrates to the satisfaction of all of the Lenders that it has
Adequate Coverage (as defined below). As used in this Section 2.17, the term
"Adequate Coverage" shall mean that projected net revenues to be received by the
Borrower during the period commencing on the date of such request by the
Borrower and ending on the extended maturity date solely from Satisfactory
Capacity Agreements, will be sufficient to pay all of the Borrower's anticipated
expenditures during such period (including, without limitation, the payment as
and when due of all operating expenses, interest and scheduled principal
payments (based on the extended amortization schedule) and taking into account
any voluntary loan prepayments actually made prior to the date of such request).
Within 90 days of receipt of the Borrower's request, the Administrative Agent
shall respond to the Borrower in writing as to whether or not all of the Lenders
are satisfied that there is Adequate Coverage. If all the Lenders are satisfied
that there is Adequate Coverage, they agree to consent in writing to (x) the
extension of the Final Maturity Date and (y) to an amendment to the amortization
schedule for the Term Loan in order to provide that the principal
-40-
<PAGE>
amount of the Term Loan outstanding on the date of such consent as evidenced by
the Term Notes, shall be payable in equal installments payable on the last
Business day of each March, June, September and December, with the last
installment due on the extended maturity date. The balance of the Term Loans
shall be payable in full on the extended maturity date. If the Final Maturity
Date is extended pursuant to, and in accordance with, the provisions of this
Section 2.17, the Borrower hereby agrees to deliver to each Lender within five
(5) Business Days after receipt of the Lenders' written consent described in the
preceding sentence, a replacement Term Note payable to the order of such Lender,
in the face amount equal to the then outstanding principal amount of such
Lender's Term Loan, duly executed on behalf of the Borrower, dated as of the
date hereof and substantially in the form of the Term Note then held by such
Lender, but with such changes as may be necessary or appropriate to reflect the
extended Final Maturity Date and the extended amortization schedule.
3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
In order to induce the Administrative Agent and the Lenders to
enter into this Credit Agreement and to make the Loans provided for herein, the
Borrower makes the following representations and warranties to, and agreements
with, the Administrative Agent and the Lenders, all of which shall survive the
execution and delivery of this Credit Agreement, the issuance of the Notes and
the making of the Loans.
SECTION 3.1. Existence and Power. The Borrower is a general
partnership duly organized, validly existing and in good standing under the laws
of the State of Alaska and is duly qualified to do business in the State of
Alaska, the State of Washington and all other jurisdictions where both (i) the
nature of its properties or business so requires and (ii) the failure to be
qualified to do business could cause a Material Adverse Effect. The Borrower's
only general partners are the General Partners. The Borrower has the partnership
power and authority to own its respective properties and to carry on its
respective business as now being conducted and as intended to be conducted, to
execute, deliver and perform, as applicable, its obligations under this Credit
Agreement, the Notes and the other Fundamental Documents and other documents
contemplated hereby and thereby to which it is or will be a party and to grant
to the Administrative Agent for the benefit of the Lenders, a security interest
in the Collateral as contemplated hereby and by the other Fundamental Documents.
SECTION 3.2. Authority and No Violation. The execution,
delivery and performance by the Borrower of this Credit Agreement and the other
Fundamental Documents to which it is a party, the Borrowings hereunder, the
execution and delivery of the Notes and the grant to the Administrative Agent
for the benefit of the Lenders of the security interest in the Collateral as
contemplated hereby and by the other Fundamental Documents (i) have been duly
authorized by all necessary partnership action on the part of the Borrower, (ii)
will not constitute a violation by the Borrower of any provision of Applicable
Law or any order of any court or other agency of the United States or any state
thereof applicable to the Borrower or any of its
-41-
<PAGE>
properties or assets, (iii) will not violate any provision of the Partnership
Agreement or any provision of any indenture, agreement, bond, note or other
similar instrument to which the Borrower is a party or by which the Borrower or
its properties or assets are bound, (iv) will not be in conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under, or create any right to terminate, any such indenture, agreement, bond,
note or other instrument and (v) will not result in the creation or imposition
of any Lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Borrower other than pursuant to this Credit
Agreement or the other Fundamental Documents.
SECTION 3.3. Governmental Approval; Permits. (a) All
authorizations, approvals, registrations or filings with any governmental or
public regulatory body or authority of the United States or any state thereof or
any foreign jurisdiction (other than UCC-1 Financing Statements and the Deeds of
Trust, all of which will be delivered to the Administrative Agent prior to the
making of the initial Construction Loan hereunder, in form suitable for
recording or filing with the appropriate filing office) required for the
execution, delivery and performance by the Borrower of this Credit Agreement and
the other Fundamental Documents to which it is a party, have been duly obtained
or made, or duly applied for and are in full force and effect, and if any such
further authorizations, approvals, registrations or filings should hereafter
become necessary, the Borrower shall obtain or make all such authorizations,
approvals, registrations or filings.
(b) Attached hereto as Schedule 1A is a complete list of all
the Permits. Those Permits listed on Schedule 1A and marked with an asterisk
have been obtained by the Borrower and are in full force and effect on the
Closing Date. All other Permits listed on Schedule 1A will be obtained by the
Borrower no later than July 31, 1998. The Borrower (i) is (or, in the case of
Permits that have not yet been obtained, will be) the sole holder or licensee of
each of the Permits, (ii) except as expressly disclosed in the opinion of Mark
R. Moderow or the opinion of Drinker, Biddle & Reath LLP which opinions were
delivered to the Administrative Agent pursuant to Section 4.1(c) hereof, has no
knowledge of any complaints, objections or appeals filed with the FCC or any
other Governmental Authority with respect to any of the Permits or the Project
or of any other matter which could, if adversely determined, have a Material
Adverse Effect or materially adversely affect the Borrower's authority to
construct, test, operate and maintain the System, or of any action pending or,
to the best knowledge of the Borrower, threatened, orally or in writing, before
or by the FCC, any other Governmental Authority or otherwise, for the
cancellation, modification or nonrenewal of any of the Permits, and (iii) is not
in default in any material respect with respect to any condition, term,
provision, order, rule, regulation, policy, writ or decree of the FCC or any
other agency, court or governmental body with respect to any Permit or the
Borrower's operation of the System.
SECTION 3.4. Binding Agreements. This Credit Agreement and the
other Fundamental Documents to which the Borrower is a party when executed by
the Borrower will constitute the legal, valid and binding obligations of the
Borrower, enforceable in accordance with their respective terms, subject only,
as to the enforcement of remedies, to applicable
-42-
<PAGE>
bankruptcy, insolvency and similar laws affecting creditors' rights and general
principles of equity.
SECTION 3.5. Financial Statements. The unaudited balance sheet
of the Borrower at September 30, 1997, together with the related statements of
income, cash flows and partnership equity and the related notes and supplemental
information for such statements, in the forms which have previously been
provided to the Lenders, have been prepared in accordance with GAAP, except as
otherwise indicated in the notes to such financial statements. All of such
financial statements fairly present in all material respects the financial
condition or the results of operations of the Borrower at the dates or for the
periods indicated, subject to changes resulting from normal year-end and audit
adjustments, and (in the case of balance sheets) reflect (including the notes
thereto) all known liabilities, contingent or otherwise, as of such dates
required in accordance with GAAP to be shown or reserved against, or disclosed
in the notes to the financial statements.
SECTION 3.6. No Material Adverse Change. There has been no
material adverse change with respect to the business, operations, performance,
assets, properties, condition (financial or otherwise) or prospects of the
Borrower since July 29, 1997.
SECTION 3.7. Subsidiaries; Joint Ventures. (a) The Borrower
has no Subsidiaries and does not own, directly or indirectly, any voting stock
or other beneficial interest in any Person.
(b) The Borrower is not a general partner in any partnership
or a joint venturer in any joint venture.
SECTION 3.8. Copyrights, Patents, Software and Other Rights.
(a) On the Closing Date, the Borrower does not possess any patents, patent
rights or licenses, trademarks, trademark rights and licenses, tradenames,
tradename rights, copyrights, copyright rights and licenses, software, rights
and licenses to software and any other similar rights (collectively "Proprietary
Rights") other than Proprietary Rights which are readily available at a nominal
cost or are transferable with the services, products or equipment in respect of
which they are expected to be used.
(b) There is no claim, suit, action or proceeding pending, or
to the Borrower's knowledge, threatened, against the Borrower that involves a
claim of infringement of any Proprietary Right.
SECTION 3.9. Fictitious Names. Except as disclosed on Schedule
3.9, the Borrower is not doing business nor intends to do business other than
under its full partnership name, including, without limitation, under any trade
name or other doing business name.
-43-
<PAGE>
SECTION 3.10. Title to Properties; Right of Way. (a) As of the
Closing Date, the Borrower has good title to each of the properties and assets
reflected on the balance sheet referred to in Section 3.5 and, all such
properties and assets are free and clear of Liens, except Permitted
Encumbrances.
(b) The Alaska United Fiber System and any Electronics and
Equipment used by the Borrower in the operation of the fiber pairs in the Kanas
Cable or the fiber pairs in the GCI Cable Facility will be located on the Right
of Way.
(c) On the Closing Date (i) with respect to land included in
the Right of Way which land is owned by a Governmental Authority, the Borrower
has applied for all necessary rights to such land for the Project except as
otherwise indicated by the underlining in Schedule 1A hereto and (ii) with
respect to land included in the Right of Way which land is owned by a Person
other than a Governmental Authority, the Borrower has good and marketable title
to a fee simple interest in, a valid leasehold interest in, valid easements,
rights of way or licenses with respect to, or a valid option for a lease or
title in fee simple to, such land except as otherwise indicated by the
underlining in Schedule 1A hereto.
(d) Schedule 3.10 hereto sets forth rights with respect to the
Right of Way which the Borrower owns as of the Closing Date.
(e) The Undersea Right of Way will be located outside the area
which lies within twelve (12) nautical miles from the low-waterline along the
coast of Canada (the "Territorial Sea of Canada") but within two hundred (200)
nautical miles from the Territorial Sea of Canada.
SECTION 3.11. Places of Business. The chief executive office
of the Borrower is, on the Closing Date, as set forth on Schedule 3.11 hereto.
All of the places where the Borrower keeps any books and records concerning the
Collateral or any goods included in the Collateral on the Closing Date are also
listed on Schedule 3.11 hereto.
SECTION 3.12. Litigation. Except as set forth on Schedule 3.12
hereto, there are no actions, suits or other proceedings at law or in equity by
or before any arbitrator or arbitration panel, or any Governmental Authority
(including, but not limited to, matters relating to environmental liability) or,
any investigation by any Governmental Authority of the affairs of, or to the
knowledge of the Borrower, any threatened action, suit or other proceedings
against or affecting, the Borrower or of any of its properties or rights which
either (A) if adversely determined, could have a Material Adverse Effect or (B)
involve the Project, the use of the fiber pairs in the Kanas Cable as
contemplated by the Kanas Agreement, the use of the fiber pairs in the GCI Cable
Facility as contemplated by the GCI Fiber Exchange Agreement, this Credit
Agreement, any of the other Fundamental Documents or any of the transactions
contemplated hereby or thereby. The Borrower is not in default with respect to
any order, writ, injunction,
-44-
<PAGE>
decree, rule or regulation of any Governmental Authority binding upon it, which
default could have a Material Adverse Effect.
SECTION 3.13. Federal Reserve Regulations. The Borrower is not
engaged principally or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock. No
part of the proceeds of the Loans will be used, directly or indirectly, whether
immediately, incidentally or ultimately (i) to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock, or (ii) for any other purpose, in each case, violative of or
inconsistent with any of the provisions of any regulation of the Board,
including, without limitation, Regulations G, T, U and X thereto.
SECTION 3.14. Investment Company Act. The Borrower is not, and
will not during the term of this Credit Agreement be, (i) an "investment
company", within the meaning of the Investment Company Act of 1940, as amended,
or (ii) subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act or any foreign, federal or local statute or any
other Applicable Law of the United States of America or any other jurisdiction,
in each case limiting its ability to incur indebtedness for money borrowed as
contemplated hereby or by any other Fundamental Document.
SECTION 3.15. Taxes. The Borrower has filed or caused to be
filed all federal, state, local and foreign tax returns which are required to be
filed with any Governmental Authority, and has paid or has caused to be paid all
taxes as shown on said returns or on any assessment received by it in writing,
to the extent that such taxes have become due, except as permitted by Section
5.8 hereof. The Borrower does not have any knowledge of any material additional
assessments or any basis therefor. The Borrower reasonably believes that the
charges, accrual and reserves on its books in respect of taxes or other
governmental charges are adequate.
SECTION 3.16. Compliance with ERISA. The Borrower is in
compliance in all material respects with the provisions of ERISA and the Code
applicable to Plans, and the regulations and published interpretations
thereunder, if any, which are applicable to it. As of the Closing Date, the
Borrower has not, with respect to any Plan, engaged in a prohibited transaction
which would subject it to a material tax or penalty on prohibited transactions
imposed by ERISA or Section 4975 of the Code. No material liability to the PBGC
has been or is expected to be incurred with respect to the Plans (other than for
premiums not yet due) and there has been no Reportable Event and no other event
or condition that presents a material risk of termination of a Plan by the PBGC.
The Borrower has not engaged in a transaction which would result in the
incurrence by the Borrower of any liability under Section 4069 of ERISA. The
Borrower has not taken any action and no event has occurred with respect to any
Multiemployer Plan which would subject the Borrower to material liability under
either Section 4201 or 4204 of ERISA.
SECTION 3.17. Security Interest; Other Security. This Credit
Agreement and the other Fundamental Documents, when executed and delivered and,
upon the making of the
-45-
<PAGE>
initial Construction Loan hereunder, will create and grant to the Administrative
Agent for the benefit of the Lenders (upon (i) the timely filing of the
appropriate UCC-1 Financing Statements with the filing offices listed on
Schedule 3.17 and (ii) the timely recording of the Deeds of Trust with the
recording offices listed on Schedule 3.17) valid and first priority perfected
security interests in the Collateral subject only to Permitted Encumbrances.
SECTION 3.18. Disclosure. Neither this Credit Agreement nor
any other Fundamental Document nor any agreement, document, certificate or
statement furnished to the Administrative Agent for the benefit of the Lenders
by the Borrower in connection with the transactions contemplated hereby, at the
time it was furnished or delivered, contained any untrue statement of a material
fact regarding the Borrower or omitted to state a material fact necessary, under
the circumstances under which it was made, to make the statements contained
herein or therein not misleading (considered in the context of all other
information provided to the Lenders). There is no fact known to the Borrower,
other than matters relating to general industry conditions, which could now or
in the future cause a Material Adverse Effect to occur, which fact has not been
disclosed to the Lenders in writing.
SECTION 3.19. Agreements. (a) The Borrower is not in breach
of, or default with respect to, the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument (including, without limitation, this Credit Agreement, the other
Fundamental Documents, the Project Agreements, any agreement relating to the
Right of Way and any Capacity Agreement) to which it is a party, and the
Borrower does not have any knowledge of any breach, default or anticipated
breach by any other parties thereto, which breach or default, in either case,
either individually or when aggregated with all other breaches or defaults,
could have a Material Adverse Effect.
(b) Schedule 3.19 is a true and complete listing as of the
Closing Date of (i) all credit agreements, indentures, and other agreements
related to any Indebtedness for borrowed money of the Borrower, other than the
Fundamental Documents, (ii) all Project Agreements, (iii) all agreements
relating to the Right of Way, (iv) all Capacity Agreements and (v) all other
contractual arrangements which are material to the Borrower, including but not
limited to, guarantees and employment agreements. The Borrower has delivered or
made available to the Administrative Agent a true and complete copy of each
agreement described on Schedule 3.19, including all exhibits and schedules.
(c) Based on facts and circumstances existing on the Closing
Date, the services to be performed, the materials to be supplied and the
easements, licenses and other rights granted or to be granted to Borrower
pursuant to the terms of the Project Agreements will provide the Borrower with
all rights and property interests required to enable the Borrower to obtain all
services, materials or rights (including access) required for the design,
construction, startup, operation and maintenance of the System, including the
Borrower's full and prompt performance of its obligations under all Capacity
Agreements, other than those services,
-46-
<PAGE>
materials or rights that reasonably can be expected to be obtainable in a timely
manner in due course at a cost consistent with the Construction Budget and the
Projections.
SECTION 3.20. Environmental Liabilities. (a) Except as set
forth on Schedule 3.20 hereto, the Borrower has not used, stored, treated,
transported, manufactured, refined, handled, produced or disposed of, and does
not expect in the future to use, store, treat, transport, manufacture, refine,
handle, produce or dispose of, any Hazardous Materials on, under, at or from any
of the properties or assets owned, leased or used by the Borrower (including,
without limitation, the Right of Way), in any manner which violated or will
violate any Environmental Law governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials in any respect and to the best of the Borrower's knowledge,
no prior owner of such property or asset or any tenant, subtenant, prior tenant
or prior subtenant thereof has used or will use Hazardous Materials on or
affecting such property or asset, or otherwise, in any manner which violated or
will violate any Environmental Law governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials in any respect.
(b) To the best of the Borrower's knowledge (i) the Borrower
does not have any obligations or liabilities, matured or not matured, absolute
or contingent, assessed or unassessed, and (ii) no claims have been made against
the Borrower and no presently outstanding citations or notices have been issued
against the Borrower, which in either case have been or are imposed by reason of
or based upon any provision of any Environmental Law, including, without
limitation, any such obligations or liabilities relating to or arising out of or
attributable, in whole or in part, to the manufacture, processing, distribution,
use, treatment, storage, disposal, transportation or handling of any Hazardous
Materials by the Borrower, or any of its employees, agents, representatives or
predecessors in interest in connection with or in any way arising from or
relating to the Borrower or any of its owned, leased or used properties, or
relating to or arising from or attributable, in whole or in part, to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation or handling of any such substance, by any other Person at or on
or under any of the real properties owned or used by the Borrower or any other
location.
(c) The Construction of the System in accordance with the
Plans and Specifications and the Project will not violate any provision of any
Environmental Law.
SECTION 3.21. Compliance with Laws. The Borrower is not in
violation of any Applicable Law except for such violations in the aggregate
which could not have a Material Adverse Effect. The Borrowings hereunder and the
intended use of the proceeds of the Loans as contemplated by Section 5.19 will
not violate any Applicable Law.
SECTION 3.22. Projections; Construction Budget; Operating
Budget; Plans and Specifications. (a) The Borrower has delivered to the Lender
the financial projections (together with the appropriate supporting details and
a statement of the underlying assumptions) attached
-47-
<PAGE>
hereto as Schedule 3.22(a). Such projections cover a period commencing January
1, 1998 and ending on December 31, 2013 and are based on good faith estimates
and assumptions believed to be reasonable at the time made and represent the
good faith opinion of the senior management of the Borrower as to the most
probable course of the Borrower's business, it being recognized by the Lenders
that such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such other
projections may differ from the projected results.
(b) The Construction Budget contains reasonable good faith
estimates of all costs necessary in order to develop and construct the System in
accordance with the Plans and Specifications and all other Project Costs to be
incurred through and including the Completion Date, including without
limitation, (i) all payments to be made to the Contractor, Kanas, GCI
Communication and/or GCI Cable, (ii) all Bank Charges, reasonably anticipated to
be payable on or before the Completion Date and (iii) all other expenses
anticipated by Borrower incident to the Construction Loans, the Project and the
design, construction, testing, startup and operation of the System during such
period.
(c) The proposed Operating Budget prepared for each month of
the twelve month period commencing on the anticipated Completion Date, is
attached hereto as Schedule 3.22(c).
(d) Schedule 1D hereto is a true and complete list of all the
plans and specifications relating to the Project or any part thereof. The
Borrower has delivered to the Administrative Agent and the Independent Engineer
a true and complete copy of each of the plans and specifications listed on
Schedule 1D.
SECTION 3.23. Start Date; Project Costs; Project Assets. (a)
As of the date hereof, work has commenced by the Contractor pursuant to the
Construction Contract and by GCI Communication pursuant to the GCI Construction
Contract.
(b) As of January 1, 1998, an aggregate amount of $11,777,068
has been expended or incurred for Project Costs.
(c) As of January 1, 1998 there is $0 on deposit in the
Construction Account, $0 on deposit in the Alaska Depositary Account and
$39,570,412 on deposit in the SSI Cash Collateral Account.
(d) Schedule 3.23 hereto is a true and complete list of all
agreements originally entered into by an Affiliate of GCI (other than the
Borrower) and all assets or other property at any time held or owned by an
Affiliate of GCI (other than the Borrower), which agreements, assets and
property relate to the Project.
-48-
<PAGE>
SECTION 3.24. Sponsor Equity. As of the Closing Date, all of
the Sponsor Equity Funds have been contributed to the Borrower and have been (i)
used to pay Project Costs (including, without limitation, Project Costs owed to
the Contractor), (ii) deposited in the Construction Account or (iii) deposited
in the SSI Cash Collateral Account pursuant to the SSI Cash Collateral
Agreement.
SECTION 3.25. Bank Accounts. The Construction Account, the
Alaska Depositary Account, the Disbursement Account, the Insurance Proceeds
Account, the Holding Account, the Interest Reserve Account and the SSI Cash
Collateral Account and the Local Bank Account, are the only bank accounts held
by the Borrower or in which the Borrower may have any interest.
SECTION 3.26. Utility Availability. Subject only to payment of
fees, costs and expenses to be paid from the Construction Budget, all utilities
required for the construction and operation of the System (including, but not
limited to, electrical facilities) are, or when necessary will be, available for
use in reasonable proximity to the System and satisfactory arrangements will
have been made for the provision when necessary of all such services to the
System.
SECTION 3.27. Operation of the Facility. Assuming due
performance by the parties (other than the Borrower) to the Project Agreements,
to the best of Borrower's knowledge and belief, the System, on and after
Completion, will be able to be operated on a safe basis and in accordance with
sound practices in the telecommunications industry in compliance with all
Project Agreements and currently existing Applicable Law (except where
noncompliance could not have a Material Adverse Effect), so that the Borrower
will be able to (i) duly and punctually meet its material obligations under all
Capacity Agreements and the Fundamental Documents in accordance with the terms
thereof and (ii) maintain System availability (excluding outages due to
earthquake, flood or other natural disaster, war or insurrection, external
aggression, action or inaction by Kanas, or which require deployment of a ship
to make repairs to the undersea portion of the System) of at least 99.95%.
SECTION 3.28. Nature of Business. The Borrower has not engaged
in any business other than the acquisition, development, construction, testing,
operation or maintenance of the System.
4. CONDITIONS OF LENDING
SECTION 4.1. Conditions Precedent to Initial Construction
Loans. The obligation of each Lender to make its initial Construction Loan is
subject to the following conditions precedent:
(a) Partnership and Corporate Documents. The Administrative
Agent shall have received, with copies for each of the Lenders:
-49-
<PAGE>
(i) a certificate of a General Partner, dated the
Closing Date, certifying that attached thereto is a true and
complete copy of the Partnership Agreement;
(ii) a certificate of the Secretary of State (or the
equivalent thereof) of Alaska dated as of a recent date as to
the good standing of the Borrower; provided, however, that
such a certificate shall not be required if the Secretary of
State (or the equivalent thereof) of Alaska does not provide
such a certificate with respect to general partnerships;
(iii) a certificate dated as of a recent date as to
the good standing and/or authority to do business of the
Borrower issued by the Secretary of State (or the equivalent
thereof) of each jurisdiction in which the Borrower is
qualified to do business; provided, however, that such a
certificate shall not be required if the Secretary of State
(or the equivalent thereof) of the applicable jurisdiction
does not provide such a certificate with respect to general
partnerships;
(iv) a copy of the articles or certificate of
incorporation of each General Partner and each Transaction
Party, certified as of a recent date by the Secretary of State
(or the equivalent thereof) of Alaska;
(v) a certificate of such Secretary of State (or the
equivalent thereof) and of the franchise tax entity of Alaska,
if available, dated as of a recent date as to the good
standing of, and payment of taxes by, each General Partner and
each Transaction Party;
(vi) a certificate dated as of a recent date as to
the good standing of each General Partner and each Transaction
Party issued by the Secretary of State (or the equivalent
thereof) of each jurisdiction in which such party is qualified
as a foreign corporation;
(vii) a certificate of the Secretary of each General
Partner and each Transaction Party dated the Closing Date and
certifying (A) that attached thereto is a true and complete
copy of the by-laws of such party as in effect on the date of
such certification, (B) in the case of a General Partner, that
attached thereto is a true and complete copy of resolutions
adopted by the Board of Directors of such General Partner
authorizing the Borrowings by the Borrower hereunder, the
execution, delivery and performance by the Borrower in
accordance with its respective terms of this Credit Agreement,
the Notes, the other Fundamental Documents, and any other
documents required or contemplated hereunder or thereunder and
that such resolutions have not been amended, rescinded or
supplemented and are currently in effect, (C) in the case of
each of the Transaction Parties, that attached thereto is a
true and complete copy of resolutions adopted by the Board of
Directors of such party authorizing the
-50-
<PAGE>
execution, delivery and performance of the Fundamental
Documents to which it is a party and any other documents
required or contemplated hereunder or thereunder and that such
resolutions have not been amended, rescinded or supplemented
and are currently in effect, (D) that attached thereto is a
true and complete copy of the certificate of incorporation of
such party as in effect on the date of such certification and
(E) as to the incumbency and specimen signature of each
officer of such party executing (as applicable) this Credit
Agreement, the Notes, any other Fundamental Document or any
other document delivered by it in connection herewith or
therewith (such certificate to contain a certification by
another officer of such party as to the incumbency and
signature of the officer signing the certificate referred to
in this clause (vii)); and
(viii) such additional supporting documents as the
Administrative Agent or its counsel or any Lender may
reasonably request.
(b) Credit Agreement; Construction Notes. The Administrative
Agent shall have received this Credit Agreement and the Construction Notes, all
duly executed on behalf of the Borrower.
(c) Opinions of Counsel. The Administrative Agent shall have
received the written opinions dated the Closing Date, addressed to the
Administrative Agent and the Lenders and in form and substance satisfactory to
the Agents and their counsel of (i) Sherman & Howard L.L.C., counsel to the
Borrower, the General Partners and the other Transaction Parties, substantially
in the form attached as Exhibit B-1 hereto, (ii) Mark R. Moderow, corporate
counsel of GCI, substantially in the form attached as Exhibit B-2 hereto, (iii)
Hartig, Rhodes, Norman, Mahoney & Edwards, P.C., Alaska counsel to the Borrower,
the General Partners and the other Transaction Parties, substantially in the
form attached as Exhibit B-3 hereto, (iv) Foster, Pepper & Shefelman, Washington
counsel to the Borrower, the General Partners and the other Transaction Parties,
substantially in the form attached as Exhibit B-4 hereto, (v) Drinker, Biddle &
Reath LLP, FCC counsel to the Borrower and GCI, substantially in the form
attached as Exhibit B-5 hereto and (vi) Guess & Rudd P.C., Alaska counsel to the
Administrative Agent, substantially in the form attached as Exhibit B-6 hereto.
(d) No Material Adverse Change. No material adverse change
shall have occurred with respect to the business, operations, performance,
assets, properties, condition (financial or otherwise) or prospects of the
Borrower since July 29, 1997 or any of the Transaction Parties since June 30,
1997; and neither AT&T nor any of its Affiliates shall have entered into a
contract with a Person who is a competitor of the Borrower which contract (i) is
for the lease, license or other acquisition by AT&T or such Affiliate (as
applicable) of the right to use such Person's telecommunications system or
portion thereof or capacity on such system or portion thereof or whereby such
Person agrees to provide telecommunications services to AT&T or such Affiliate
(as applicable) utilizing such Person's system or portion thereof, (ii) provides
-51-
<PAGE>
AT&T or such Affiliate (as applicable) with telecommunications service between
Alaska and the contiguous United States and (iii) has a term of one year or
more.
(e) Insurance. The Borrower shall have furnished the
Administrative Agent with (i) a summary of all existing insurance coverage, (ii)
evidence acceptable to the Administrative Agent that the insurance policies
required by Section 5.5 have been obtained and are in full force and effect and
(iii) Certificates of Insurance with respect to all existing insurance coverage
which certificates shall name Credit Lyonnais New York Branch, as Administrative
Agent, as the Certificate holder and shall evidence the Borrower's compliance
with Section 5.5(c) with respect to all insurance coverage existing as of the
Closing Date.
(f) Security and Other Documentation. On or prior to the
Closing Date, the Administrative Agent shall have received fully executed copies
of (i) an Assignment Agreement with respect to each Project Agreement; (ii)
appropriate UCC-1 Financing Statements relating to the Collateral; (iii) the
Transport Pledge Agreement executed by GCI Transport, together with the
certificates representing the pledged securities referred to therein and
appropriate undated stock powers executed in blank; (iv) the Fiber Security
Agreement executed by GCI Fiber and Fiber Hold, together with appropriate UCC-1
Financing Statements relating to the collateral referred to therein and (v) the
Deeds of Trust.
(g) Security Interests in Collateral. On or prior to the
Closing Date, the Administrative Agent shall have received evidence reasonably
satisfactory to it that the Borrower, GCI Transport, GCI Fiber and Fiber Hold
have sufficient right, title and interest in and to the collateral and other
applicable assets which it purports to own (including appropriate licenses with
respect to Proprietary Rights), as set forth in its financial statements and/or
in the other documents presented to the Lenders to enable each such party to
grant to the Administrative Agent for the benefit of the Lenders the security
interests contemplated by the Fundamental Documents, and that all UCC-1
Financing Statements and other filings under Applicable Law necessary to provide
the Administrative Agent for the benefit of the Lenders with a first priority
perfected security interest in the collateral under any Fundamental Document (in
each case subject to Permitted Encumbrances) have been filed or delivered to the
Administrative Agent in satisfactory form for filing.
(h) Payment of Fees. All fees and expenses then due and
payable by the Borrower or GCI to the Administrative Agent and the Lenders
pursuant to the Commitment Letter or the Fee Letter or otherwise in connection
with the transactions contemplated hereby shall have been paid.
(i) Searches. The Administrative Agent shall have received UCC
and tax liens searches satisfactory to it indicating that no other filings
(other than in connection with Permitted Encumbrances) with regard to any
collateral referred to in any Fundamental Document are of record in any
jurisdiction in which it shall be necessary or desirable for the Administrative
-52-
<PAGE>
Agent to make a UCC filing in order to provide the Administrative Agent (for the
benefit of the Lenders) with a perfected security interest in such collateral.
(j) Financial Statements. The Administrative Agent and the
Lenders shall have received and be satisfied with true and complete copies of
(i) all of the financial statements referred to in Section 3.5 hereof and (ii)
the unaudited balance sheet of each of GCI Fiber, Fiber Hold, GCI Transport, GCI
Communication, Holdings, GCI, Inc., an Alaska corporation and GCI at September
30, 1997, together with the related statements of income, cash flows and
stockholders' equity and the related notes and supplemental information, each of
which shall have been prepared in accordance with GAAP (except as otherwise
indicated in the notes to such financial statements).
(k) Delivery of Project Agreements. The Administrative Agent
shall have received copies of the following executed agreements (certified by
the Borrower) and the Lenders shall be satisfied with the terms and provisions
thereof: (i) the Construction Contract and the assignment thereof by GCI
Communication to the Borrower, (ii) any Capacity Agreement in existence on the
Closing Date, including, without limitation, the GCI Lease Agreement and the
Kanas Agreement (together with the assignment thereof by GCI Communication to
the Borrower), (iii) the O&M Contract, (iv) the GCI Fiber Exchange Agreement,
(v) the GCI Construction Contract and (vi) all other agreements listed on
Schedule 3.19 hereto. The Administrative Agent shall have received a copy of
each of the following agreements, duly executed by all parties thereto and the
Lenders shall be satisfied with the terms and provisions thereof: (1) Transport
Keep-Well Agreement, (2) Holdings Keep-Well Agreement, (3) Holdings Lease
Guaranty Agreement, (4) Subordination Agreement, (5) Sponsor Undertaking, (6)
Completion Guaranty and (7) SSI Cash Collateral Agreement.
(l) Reports/Studies. The Lenders shall have received and be
satisfied with the scope, form and results of the following: (i) a technical
feasibility study of the Project to be performed by Arthur D. Little, (ii) an
environmental review to be conducted by Stone & Webster and (iii) an insurance
report to be delivered by Sedgwick James of Tennessee, Inc.
(m) Depositary Agreement and Intercreditor Agreements. The
Administrative Agent shall have received a fully executed copy of the Depositary
Agreement and the Intercreditor Agreements.
(n) Permits. The Administrative Agent shall have received
copies (certified by the Borrower) of those Permits listed on Schedule 1A and
marked with an asterisk.
(o) Assignment of Assets relating to the Project. Any
agreement originally entered into by an Affiliate of GCI (other than the
Borrower) and any asset or other property at any time held or owned by an
Affiliate of GCI (other than the Borrower), which agreement, asset or property
(as applicable) relates to the Project (including, without limitation, the
Construction Contract and the survey of the undersea route of the Alaska United
Fiber System) shall be
-53-
<PAGE>
unconditionally and irrevocably assigned to the Borrower in a manner and
pursuant to documentation which is satisfactory to the Lenders.
(p) Letter of Credit under the Construction Contract. The
Administrative Agent shall have received the original letter of credit delivered
by the Contractor to GCI Communication or the Borrower (as applicable) pursuant
to the Construction Contract.
(q) Compliance with Laws. The Administrative Agent shall be
satisfied that the transactions contemplated hereby and by the other Fundamental
Documents will not violate any provision of Applicable Law.
(r) Required Consents and Approvals. The Agents shall be
satisfied that all required consents and approvals have been obtained with
respect to the loan transaction contemplated hereby and the transactions
contemplated by the other Fundamental Documents from all Governmental
Authorities with jurisdiction over the business and activities of the
Transaction Parties, and any other entity whose consent or approval the Agents
in their reasonable discretion deem necessary to such transactions.
(s) Holdings Credit Agreements. The Administrative Agent shall
have received a copy of an amendment or consent for each of the Holdings Credit
Agreements to permit the execution, delivery and performance of the Fundamental
Documents, which amendments or consents shall be in form and substance
satisfactory to the Lenders.
(t) Approval of Counsel to the Administrative Agent. All legal
matters incident to this Credit Agreement and the transactions contemplated
hereby shall be reasonably satisfactory to counsel to the Administrative Agent.
(u) Other Documents. The Administrative Agent shall have
received such other documentation as the Administrative Agent may reasonably
request.
SECTION 4.2. Conditions Precedent to Term Loans. The
obligation of the Lenders to make the Term Loan is subject to the following
condition precedent (in addition to those conditions precedent set forth in
Section 4.3):
(a) Term Notes. The Administrative Agent shall have received
the Term Notes, each duly executed on behalf of the Borrower.
(b) Completion. The System shall be Completed.
(c) Opinions. The Administrative Agent shall have received the
written opinion, addressed to the Administrative Agent and the Lenders and in
form and substance satisfactory to the Administrative Agent and its counsel of
(i) Foster, Pepper & Shefelman, Washington counsel to the Borrower, the General
Partners and the other Transaction Parties
-54-
<PAGE>
covering matters in respect of the final Acceptable Rights relating to that
portion of the Right of Way located in the State of Washington as the
Administrative Agent or its counsel shall reasonably request and (ii) either
Hartig, Rhodes, Norman, Mahoney & Edwards, P.C., Alaska counsel to the Borrower,
the General Partners and the other Transaction Parties or Guess & Rudd P.C.,
Alaska counsel to the Administrative Agent covering matters in respect of the
final Acceptable Rights relating to that portion of the Right of Way located in
the State of Alaska as the Administrative Agent or its counsel shall reasonably
request.
SECTION 4.3. Conditions Precedent to Each Loan. The obligation
of the Lenders to make each Loan (including the initial Construction Loan and
the Term Loan) is subject to the following conditions precedent:
(a) Notice. The Administrative Agent shall have received a
notice with respect to such Borrowing as required by Article 2 hereof.
(b) Borrowing Certificate. Except in the case of the initial
Construction Loan, the Administrative Agent shall have received a Borrowing
Certificate with respect to such Borrowing, duly executed by an Authorized
Officer.
(c) Sponsor Equity Funds. The Borrower shall have received the
full amount of the Sponsor Equity Funds and all of such funds shall have been
(i) used for the payment of Project Costs, (including, without limitation,
Project Costs owed to the Contractor) or (ii) deposited in the SSI Cash
Collateral Account pursuant to the SSI Cash Collateral Agreement.
(d) Compliance with Section 5.21. The Borrower shall have
represented and warranted that (i) it has no reason to believe that it will not
be able to fulfill its obligations under Section 5.21 hereof and (ii) the
outstanding Obligations at July 31, 1998 will not exceed the Specified Amount.
(e) Engineer's Certificate. Except in the case of the initial
Construction Loan, the Administrative Agent shall have received an Engineer's
Certificate dated the date of the proposed Borrowing.
(f) Representations and Warranties. The representations and
warranties set forth in Article 3 hereof and in the other Fundamental Documents
shall be true and correct in all material respects on and as of the date of each
Borrowing hereunder (except to the extent that such representations and
warranties expressly relate to an earlier date) with the same effect as if made
on and as of such date.
(g) No Material Adverse Change. No material adverse change
shall have occurred with respect to the business, operations, performance,
assets, properties, condition (financial or otherwise) or prospects of the
Borrower since July 29, 1997 or any of the Transaction Parties since June 30,
1997.
-55-
<PAGE>
(h) No Event of Default. On the date of each Borrowing, the
Borrower and each Transaction Party shall be in compliance with all of the terms
and provisions set forth herein and in the other Fundamental Documents to be
observed or performed by it and no Event of Default or Default shall have
occurred and be continuing.
(i) Additional Documents. The Lenders shall have received from
the Borrower on the date of each Borrowing, such documents and information as
they may reasonably request relating to the satisfaction of the conditions in
this Section 4.3.
Each request for a Borrowing shall be a representation and warranty by the
Borrower on the date of such Borrowing as to the matters specified in paragraphs
(c), (d), (f), (g) and (h) of this Section.
5. AFFIRMATIVE COVENANTS
From the date hereof and for so long as the Commitments shall
be in effect or any amount remains outstanding under the Notes or any
Obligations remain unpaid or unsatisfied, the Borrower agrees that, unless the
Required Lenders shall otherwise consent in writing, it will:
SECTION 5.1. Financial Statements and Reports. Furnish or
cause to be furnished to the Administrative Agent (with sufficient copies for
the Lenders):
(a) Within 120 days after the end of each fiscal year of the
Borrower the audited balance sheet of the Borrower, as at the end of, and the
related statements of income, partnership equity and cash flows for, such year,
and the corresponding figures as at the end of, and for, the preceding fiscal
year, accompanied by an unqualified report and opinion of KPMG Peat Marwick LLP
or such other independent public accountants of recognized standing as shall be
retained by the Borrower and be reasonably satisfactory to the Required Lenders,
which report and opinion shall be prepared in accordance with generally accepted
auditing standards relating to reporting and which report and opinion shall
contain no material exceptions or qualifications except for qualifications
relating to accounting changes (with which such independent public accountants
concur) in response to FASB releases or other authoritative pronouncements;
(b) Within 60 days after the end of each of the first three
fiscal quarters of each of its fiscal years, the unaudited balance sheet of the
Borrower as at the end of, and the related unaudited statements of income,
partnership equity and cash flow for, such quarter, and for the portion of the
fiscal year through the end of such quarter, and the corresponding figures as at
the end of, and for, the corresponding periods in the preceding fiscal year,
together with a certificate signed by an Authorized Officer of the Borrower, on
behalf of the Borrower, to the effect that such financial statements, while not
examined by independent public accountants, reflect, in the opinion of the
Borrower, all adjustments necessary to present fairly the financial position of
the Borrower as at the end of the fiscal quarter and the results of its
operations for the
-56-
<PAGE>
quarter then ended in conformity with GAAP, subject to normal year-end audit
adjustments and the absence of footnotes;
(c) Simultaneously with the delivery of the statements
referred to in paragraphs (a) and (b) of this Section 5.1, a certificate of an
Authorized Officer of the Borrower, on behalf of the Borrower, in substantially
the form of Exhibit R hereto (i) stating that in the course of the performance
of his or her duties, he or she would normally have knowledge of any condition
or event which would constitute a Default or Event of Default and stating
whether or not he or she has knowledge, after due inquiry, of any such condition
or event and, if so, specifying each such condition or event and the nature
thereof, and (ii) setting forth the amount of Total Debt of the Borrower and if
applicable, stating that the Borrower is still entitled to the same reduced
Applicable Margin pursuant to, and in accordance with, Section 2.5(c) hereof;
(d) Together with each set of audited financial statements
required by paragraph (a) above, a certificate from the independent public
accountants rendering the report and opinion thereon (i) stating whether, in
connection with their audit examination, any condition or event, at any time
during or at the end of the accounting period covered by such financial
statements, which constitutes an Event of Default under covenants relating to
accounting matters has come to their attention, and if such a condition or event
has come to their attention, specifying the nature and period, if known, of
existence thereof and (ii) stating that, insofar as they relate to accounting
matters, the matters set forth in the compliance certificate delivered therewith
pursuant to clause (ii) of paragraph (c) above at the end of the fiscal year are
stated in accordance with the terms of this Credit Agreement;
(e) Promptly upon their becoming available, copies of all
audits or reports prepared for or submitted to the Borrower by any outside
professional firm or service, including, without limitation, any comment letter
submitted by the Borrower's accountants to management in connection with such
accountant's annual audit;
(f) Promptly upon their becoming available, copies of (i) all
registration statements, proxy statements, and all reports which the Borrower or
any Transaction Party shall file with the Securities and Exchange Commission or
any successor agency and (ii) all reports, financial statements, press releases
and other information which the Borrower or any Transaction Party shall release,
send or make available to its partners or stockholders generally;
(g) Within 30 days after the end of each calendar month, until
the System is Completed, (i) the budgeted and actual cost of development and
construction of the System and the estimated cost remaining to Complete the
System and the estimated date for the Completion thereof, (ii) a cash flow
summary for the Project, (iii) copies of all periodic financial reports prepared
by or for the Borrower with respect to the Project or any other reports required
by Holdings pursuant to the Completion Guaranty and (iv) a description (in such
form as the Administrative Agent shall reasonably request) of any Permit or
right relating to the Right of
-57-
<PAGE>
Way obtained by the Borrower in such calendar month and a report as to the
status of any Permit and right relating to the Right of Way not yet obtained by
the Borrower;
(h) Simultaneously with the delivery thereof, copies of all
notices, reports and statements (including, without limitation, invoices) sent
by or on behalf of the Borrower to the Contractor, Kanas, GCI Communication or
GCI Cable; and promptly following receipt thereof, copies of all notices,
reports and statements (including, without limitation, invoices) sent by or on
behalf of the Contractor, Kanas, GCI Communication, GCI Cable or any of their
respective Affiliates to the Borrower, in each case whether sent pursuant to the
Construction Contract, the Kanas Agreement, the GCI Construction Contract, the
GCI Fiber Exchange Agreement or otherwise;
(i) Within 30 days after the end of each calendar quarter, (i)
a schedule listing all Capacity Agreements specifying as to each such Capacity
Agreement, the parties to such agreement (other than the Borrower), the date
thereof, the amount of capacity sold, leased or otherwise disposed of pursuant
thereto, a description of any amounts remaining to be paid to the Borrower
thereunder and the expiration date thereof and (ii) a certified copy of any
Capacity Agreement not theretofore delivered to the Lenders;
(j) Promptly upon execution of any Project Agreement after the
date hereof, an Assignment Agreement with respect to such Project Agreement duly
executed by the Borrower and all other Persons party to such Project Agreement;
(k) Within 90 days after the end of each fiscal year of the
Borrower (commencing with the first fiscal year ending after the Completion
Date) financial projections (together with appropriate supporting details and a
statement of underlying assumptions) substantially in the form of the
Projections, which projections shall cover the period commencing on the first
day of the fiscal year in which such projections are being delivered and ending
on the Final Maturity Date, and shall have been prepared in accordance with
GAAP;
(l) Not less than thirty (30) days prior to (i) the Completion
Date and (ii) the commencement of each calendar year occurring after the
Completion Date, the Operating Budget proposed by the Borrower for the calendar
year in which the Completion Date occurs or for such year thereafter (as
applicable);
(m) Within 30 days after the end of each calendar quarter
after the Completion Date, an operating report (in such form and with such
detail as shall be reasonably satisfactory to the Administrative Agent) which
shall contain the following information with respect to such quarter: (i) the
operating performance level of the System, (ii) the availability level on the
System, (iii) the date, time and duration of any outages, (iv) a description of
any equipment repairs or problems and (v) the bit error rate; and
-58-
<PAGE>
(n) From time to time such additional information regarding
the Borrower, the Project, the Cable, the Right of Way, any Permit or any
portion of the Collateral, as any Lender may reasonably request including,
without limitation, copies of any management projections, studies or evaluations
prepared by consultants for or presented to the Borrower.
SECTION 5.2. Existence; Compliance. (a) Do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
existence, rights, licenses, permits and franchises (including, without
limitation, the Permits) for the maximum possible term.
(b) Comply with all (i) applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, any Governmental
Authority, (ii) the terms and conditions of all insurance policies in effect,
and (iii) all operating, repair and maintenance standards as are required to
permit the enforcement of warranty claims against manufacturers, contractors,
suppliers and materialmen with respect to the System or any part thereof.
SECTION 5.3. Maintenance of Properties. Keep the System in
good repair, working order and condition (ordinary wear and tear excepted) and,
from time to time (i) subject to the provisions of Section 6.19 hereof, make all
necessary and proper repairs, renewals, replacements, additions and improvements
thereto and (ii) comply at all times with the provisions of all Capacity
Agreements and other material agreements to which it is a party so as to prevent
any loss or forfeiture thereof or thereunder.
SECTION 5.4. Notice of Material Events. (a) Promptly upon any
executive officer of the Borrower or a General Partner obtaining knowledge of
(i) any Default or Event of Default, (ii) any Event of Loss, (iii) any Material
Adverse Effect, (iv) any material adverse change in the condition or operations
of any Transaction Party, financial or otherwise, (v) the opening of any office
of the Borrower or the change of the executive office or the principal place of
business of the Borrower or of the location of the Borrower's books and records
or any portion of the Collateral, (vi) any change in the name of the Borrower,
(vii) any other event which could materially and adversely impact upon the
amount or collectibility of amounts payable to the Borrower under any Capacity
Agreement or otherwise materially decrease the value of the Collateral, (viii)
any Person giving any notice to the Borrower or taking any other action to
enforce remedies with respect to a claimed default or event or condition of the
type referred to in paragraph (e) of Article 7 or (ix) the inability of the
Borrower to fulfill all of its obligations under Section 5.21 hereof, the
Borrower shall promptly give written notice thereof to the Administrative Agent
specifying the nature and period of existence of any such condition or event, or
specifying the notice given or action taken and the nature of such claimed Event
of Default or condition and what action the Borrower (or such Transaction Party,
if applicable) has taken, is taking and proposes to take with respect thereto.
(b) Promptly upon any executive officer of the Borrower or a
General Partner obtaining knowledge of (i) the institution of, or threat of, any
action, suit, proceeding,
-59-
<PAGE>
investigation or arbitration by any Governmental Authority or other Person
against or affecting the Borrower, a Transaction Party, any of their respective
assets, the Project, the Cable or the Right of Way, or (ii) any material
development in any such action, suit, proceeding, investigation or arbitration
(whether or not previously disclosed to the Administrative Agent), which, in the
case of (i) or (ii), could, if adversely determined, have a materially adverse
effect on the Borrower, a Transaction Party, the Project, the Cable or the Right
of Way, the Borrower shall promptly give notice thereof to the Administrative
Agent and provide such other information as may be available to it to enable the
Lenders to evaluate such matters; and, in addition to the requirements set forth
in clauses (i) and (ii) of this subsection (b), the Borrower upon request shall
promptly give notice of the status of any action, suit, proceeding,
investigation or arbitration covered by a report delivered to the Administrative
Agent pursuant to clause (i) and (ii) above to the Lenders and provide such
other information as may be reasonably available to it to enable the Lenders to
evaluate such matters.
SECTION 5.5. Insurance. (a) Cause its assets which are of an
insurable character (including, without limitation, the System but excluding
buried cable and wet plant) to be insured by financially sound and reputable
insurers (which shall be satisfactory to the Lenders) against loss or damage by
fire, explosion, theft or other hazards, casualties, risks and damages which are
included under extended coverage or which shall be consistent with normal
industry practices (and shall include earthquake and flood coverage) in amounts
not less than the insurable value of the property insured or such lesser
amounts, and with such self-insured retention or deductible levels, as are set
forth in and otherwise in accordance with Schedule 5.5.
(b) Cause to be maintained with financially sound and
reputable carriers, rated A-, IX or higher by A.M. Best rating guide, insurance
against other hazards and risks and liability to Persons and property to the
extent and in the manner set forth in and otherwise in accordance with Schedule
5.5.
(c) Cause all such above-described insurance (excluding
worker's compensation insurance and insurance carried by the Contractor pursuant
to the Construction Contract) to (i) provide for the benefit of the Lenders that
30 days' prior written notice of cancellation, termination, non-renewal or lapse
or material change of coverage shall be given to the Administrative Agent; (ii)
name the Administrative Agent for the benefit of the Lenders as a loss payee
(except for third party liability insurance); and (iii) to the extent that
neither the Administrative Agent nor the Lenders shall be liable for premiums or
calls, name the Administrative Agent (for the benefit of the Lenders) as an
additional insured.
(d) In the event of a recovery of any insurance loss relating
to the Project or any amount relating to an Event of Loss, cause such recovery
or amount to be deposited into the Insurance Proceeds Account for use in
accordance with the terms hereof.
-60-
<PAGE>
(e) Upon the request of the Administrative Agent, the Borrower
will render to the Administrative Agent a statement in such detail as the
Administrative Agent may request as to all such insurance coverage.
SECTION 5.6. Books and Records. (a) Maintain or cause to be
maintained at all times true and complete books and records of its financial
operations and provide the Lenders and their representatives access to such
books and records and to any of its properties or assets (including, without
limitation, the Cable and the Land Right of Way) upon reasonable notice and
during regular business hours in order that a Lender may make such audits and
examinations and make copies and extracts from such books, accounts, records and
other papers pertaining to the Collateral and may discuss the affairs, finances
and accounts with, and be advised as to the same by, officers and upon
notification to the Borrower, independent accountants, all as a Lender may deem
appropriate for the purpose of inspecting the Project, the Cable or the Land
Right of Way, verifying the accuracy of reports delivered by the Borrower to the
Administrative Agent and/or the Lenders pursuant to this Credit Agreement or for
otherwise ascertaining compliance with this Credit Agreement or any other
Fundamental Document.
(b) If, prior to an Event of Default, the Administrative Agent
wishes to confirm with any Payor, the amounts owed to the Borrower by such Payor
pursuant to a Capacity Agreement and the terms of such agreement, the
Administrative Agent will notify the Borrower. The Administrative Agent agrees
to have such confirmation made through the Borrower's auditors. If for any
reason such auditors fail to proceed with the confirmations, the Administrative
Agent may proceed to make such confirmations directly with any Payor. The
Borrower hereby agrees that, upon the occurrence and during the continuance of
an Event of Default, the Administrative Agent shall be entitled to confirm
directly with any Payor the amounts owed to the Borrower and the terms of any
Capacity Agreement.
SECTION 5.7. Observance of Agreements; Copies of Amendments.
(a) Duly observe and perform all terms and conditions of the Depositary
Agreement and all Project Agreements and diligently protect and enforce the
rights of the Borrower under all Project Agreements.
(b) Promptly after execution thereof, provide the
Administrative Agent and the Lenders with a copy of any amendment or waiver of,
or consent relating to, any Project Agreement to which the Administrative Agent
is not a party.
SECTION 5.8. Taxes and Charges; Indebtedness in Ordinary
Course of Business. Duly pay and discharge, or cause to be paid and discharged,
before the same shall become in arrears (after giving effect to applicable
extensions), all taxes, assessments, levies and other governmental charges,
imposed upon the Borrower or its properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies which if unpaid might by law become a Lien upon
any property of the Borrower; provided, however, that any such tax, assessment,
charge, levy or claim need not be paid if the
-61-
<PAGE>
validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and if the Borrower shall have set aside on its books
reserves (the presentation of which is segregated to the extent required by
GAAP) adequate with respect thereto if reserves shall be deemed necessary; and
provided, further, that the Borrower will pay all such taxes, assessments,
charges, levies or claims forthwith upon the commencement of proceedings to
foreclose any Lien which may have attached as security therefor unless fully
bonded or effectively stayed within ten (10) days. The Borrower will promptly
pay when due, or in conformance with customary trade terms, all Indebtedness and
other obligations incident to its operations.
SECTION 5.9. Liens. Defend the Collateral against any and all
Liens, claims and other impediments howsoever arising, other than Permitted
Encumbrances, and in any event defend against any attempted foreclosure.
SECTION 5.10. Government Approval. If any authorizations,
approvals, registrations or filings with any governmental or public regulatory
body or authority of the United States, any state thereof or any other
jurisdiction required in connection with the Project or the performance by the
Borrower of this Credit Agreement or the other Fundamental Documents to which it
is a party should hereafter become necessary, obtain or make all such
authorizations, approvals, registrations or filings.
SECTION 5.11. Further Assurances; Security Interests. (a) Upon
the request of the Administrative Agent, duly execute and deliver, or cause to
be duly executed and delivered, at the cost and expense of the Borrower, such
further instruments as may be necessary in the reasonable judgment of the
Administrative Agent to carry out the provisions and purposes of this Credit
Agreement and the other Fundamental Documents to which the Borrower is a party.
(b) Upon the request of the Administrative Agent, promptly
execute and deliver or cause to be executed and delivered, at the cost and
expense of the Borrower, such further instruments as may be appropriate in the
reasonable judgment of the Administrative Agent, to provide the Administrative
Agent (for the benefit of the Lenders) a first perfected Lien in the Collateral
and any and all documents (including, without limitation, the execution,
amendment or supplementation of any financing statement, continuation statement
or other statement) for filing under the provisions of the uniform commercial
code of any jurisdiction, or any other statute, rule or regulation of any
applicable federal, state, local or foreign jurisdiction, and perform or cause
to be performed such other acts which are necessary, from time to time, in order
to grant and maintain in favor of the Administrative Agent (for the benefit of
the Lenders) the security interest in the Collateral contemplated hereunder and
under the other Fundamental Documents, subject only to Permitted Encumbrances.
(c) Promptly undertake to deliver or cause to be delivered to
the Administrative Agent and the Lenders from time to time such other
documentation, consents, authorizations and approvals in form and substance
reasonably satisfactory to the Administrative
-62-
<PAGE>
Agent, as the Administrative Agent shall deem reasonably necessary or advisable
to perfect or maintain the Liens of the Administrative Agent for the benefit of
the Lenders.
SECTION 5.12. ERISA Compliance and Reports. Furnish to the
Administrative Agent (a) as soon as possible, and in any event within 30 days
after the Borrower knows that (i) any Reportable Event with respect to any Plan
has occurred, a statement of an executive officer of the Borrower or a General
Partner, setting forth on behalf of the Borrower details as to such Reportable
Event and the action which it proposes to take with respect thereto, together
with a copy of the notice, if any, required to be filed by the Borrower of such
Reportable Event given to the PBGC or (ii) an accumulated funding deficiency has
been incurred or an application has been made to the Secretary of the Treasury
for a waiver or modification of the minimum funding standard or an extension of
any amortization period under Section 412 of the Code with respect to a Plan, a
Plan or Multiemployer Plan has been or is proposed to be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA,
proceedings have been instituted to terminate a Plan, a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Multiemployer Plan, or the Borrower will incur any liability (including any
contingent or secondary liability) to or on account of the termination of or
withdrawal from a Plan or Multiemployer Plan under Sections 4062, 4063, 4201 or
4204 of ERISA, if the occurrence of any of the foregoing events would result in
a liability which is materially adverse to the financial condition of the
Borrower or would materially and adversely affect the ability of the Borrower to
perform its obligations under this Credit Agreement or the other Fundamental
Documents, a statement of an executive officer of the Borrower or a General
Partner, setting forth details as to such event and the action the Borrower
proposes to take with respect thereto, (b) promptly upon reasonable request of
the Administrative Agent, copies of each annual and other report with respect to
each Plan and (c) promptly after receipt thereof, a copy of any notice the
Borrower may receive from the PBGC relating to the PBGC's intention to terminate
any Plan or to appoint a trustee to administer any Plan.
SECTION 5.13. Environmental Laws. (a) Promptly notify the
Administrative Agent upon the Borrower becoming aware of any violation or
potential violation or non-compliance with, or liability or potential liability
under, any Environmental Law, and promptly furnish to the Administrative Agent
all notices of any nature which the Borrower may receive from any Governmental
Authority or other Person with respect to any violation, or potential violation
or non-compliance with, or liability or potential liability under, any
Environmental Law.
(b) Comply with and use reasonable efforts to ensure
compliance by all tenants and subtenants with all Environmental Laws, and obtain
and comply in all respects with and maintain and use best efforts to ensure that
all tenants and subtenants obtain and comply in all respects with and maintain
any and all licenses, approvals, registrations or permits required by
Environmental Laws.
-63-
<PAGE>
(c) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under all
Environmental Laws and promptly comply in all respects with all lawful orders
and directives of all Governmental Authorities. Any order or directive whose
lawfulness is being contested in good faith by appropriate proceedings shall be
considered a lawful order or directive when such proceedings, including any
judicial review of such proceedings, have been finally concluded by the issuance
of a final non-appealable order; provided, however, that the Borrower shall have
set aside on its books reserves (the presentation of which is segregated to the
extent required by GAAP) adequate with respect thereto if reserves shall be
deemed necessary.
(d) Defend, indemnify and hold harmless the Administrative
Agent and the Lenders, and their respective employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, known or
unknown, contingent or otherwise, arising out of, or in any way related to the
violation of or non-compliance by the Borrower with any Environmental Laws, or
any orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorney and consultant fees,
reasonable investigation and laboratory fees, court costs and litigation
expenses, but excluding therefrom all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses arising out of or
resulting from (i) the gross negligence or willful misconduct of the party
seeking indemnification hereunder or (ii) any acts or omissions of the party
seeking indemnification hereunder occurring after such party is in possession
of, or controls the operation of, any property or asset.
SECTION 5.14. Construction; Operation. (a) Cause the Project
to be diligently developed, constructed, operated and maintained in all material
respects in accordance with the Plans and Specifications, and the standards set
forth, and within the time period established, in all Capacity Agreements or
other material agreements with respect to the System. Subject to the
Administrative Agent's prior written consent (which will be based on
consultations with the Independent Engineer and will not be unreasonably
withheld), the Borrower may revise the Construction Budget from time to time by
increasing the amount allocated for any category or categories by applying
thereto any savings from any other category or categories (except that the
Borrower shall not decrease amount allocated to the contingency without the
prior written approval of Administrative Agent, which approval shall not be
unreasonably withheld) provided, however, that the sum total of all costs on
such revised budget shall not exceed the sum total of all costs shown on the
Construction Budget.
(b) Cause a complete set of the current and (when available)
as-built plans (and all supplements thereto) relating to the System to be
maintained at the Borrower's chief executive office and available for inspection
by the Independent Engineer and the Administrative Agent.
(c) Give the Administrative Agent and the Independent Engineer
notice of the exact date on which any acceptance testing of any portion of the
System (including, without
-64-
<PAGE>
limitation, any Acceptance Testing (as defined in the Construction Contract)
under the Construction Contract or any total System testing is to be conducted
promptly upon the Borrower's knowledge thereof and permit the Administrative
Agent and the Independent Engineer to witness each such testing.
(d) Cause the System, on and after Completion, to be operated
on a safe basis and in accordance with sound practices in the telecommunications
industry in compliance with all Project Agreements and currently existing
Applicable Law (except where noncompliance could not have a Material Adverse
Effect), so that (i) the Borrower will be able to duly and punctually meet its
material obligations under all Capacity Agreements and the Fundamental Documents
in accordance with the terms thereof and (ii) System availability (excluding
outages due to earthquake, flood or other natural disaster, war or insurrection,
external aggression, action or inaction by Kanas, or which require deployment of
a ship to make repairs to the undersea portion of the System) of at least 99.95%
will be maintained. The System shall be operated in a prudent manner, with the
Borrower taking all commercially reasonable precautions so as to minimize the
likelihood of system outages due to external aggression or which would require
deployment of a ship to make repairs to the undersea portion of the System.
SECTION 5.15. Final Cost Statement; Bank Account Statements.
(a) Deliver to the Administrative Agent, within 30 days after the System is
Completed, a final cost statement.
(b) Arrange for a copy of the monthly bank statement with
respect to the Local Bank Account, the SSI Cash Collateral Account, the Alaska
Depositary Account and each other bank account maintained by the Borrower with
any Person (other than Credit Lyonnais New York Branch) to be sent by the Person
with whom such account is maintained directly to the Administrative Agent.
SECTION 5.16. Minimum Satisfactory Capacity Agreements. At all
times on and after the Conversion Date, cause to be in effect sufficient
Satisfactory Capacity Agreements (excluding the GCI Lease Contract) so that,
without double counting, the sum of (a) the aggregate fixed minimum payments
remaining to be made to the Borrower under all Satisfactory Capacity Agreements
(excluding the GCI Lease Contract), which payments are required to be made on or
before dates certain occurring prior to the Final Maturity Date plus (b) all
cash revenues theretofore actually received by the Borrower from Capacity
Agreements (excluding the GCI Lease Contract), is greater than or equal to
$15,000,000.
SECTION 5.17. Interest Rate Protection Agreements. If at any
time prior to the Conversion Date, the yield on the U.S. Treasury Bond maturing
closest to December 31, 2002 is greater than or equal to 6.97%, then maintain or
cause to be maintained, Interest Rate Protection Agreements (on terms and
conditions satisfactory to the Administrative Agent) to the extent necessary so
that until the Conversion Date, interest on Indebtedness in a principal amount
equal to at least 50% of the Total Debt of the Borrower, is effectively fixed or
capped at rates which are acceptable to the Required Lenders.
-65-
<PAGE>
SECTION 5.18. Local Bank Account. Maintain a prudent level of
working capital on deposit in the Local Bank Account.
SECTION 5.19. Use of Proceeds; Use of certain Funds
Transferred to the Local Bank Account. (a) Use the proceeds of the Construction
Loans solely to finance the Project Costs (including, without limitation,
accrued interest on the Construction Loans and $1,000,000 of working capital)
and use the proceeds of the Term Loan solely to repay in full the Construction
Loans outstanding on the Completion Date.
(b) Use all of the funds transferred to the Local Bank Account
pursuant to Sections 3(a) and 3(e) of the Depositary Agreement solely to pay
operating and maintenance expenses incurred by the Borrower.
SECTION 5.20. Operating Logs; Standby Ship Arrangements. (a)
At its sole cost and expense (i) maintain at its chief executive office, daily
operating logs showing, among other things, the through-put of the System, (ii)
keep maintenance and repair reports in sufficient detail to indicate the nature
and date of all work done, (iii) maintain or cause to be maintained a current
operating manual and a complete set of plans, accounting records and
specifications reflecting all alterations, and (iv) maintain or cause to be
maintained all other records, logs and other materials required by the O&M
Agreement or any Applicable Law.
(b) maintain, or cause to be maintained, arrangements (on
terms reasonably satisfactory to the Administrative Agent) for standby ship
coverage to effect repairs on the undersea portion of the Alaska United Fiber
System.
SECTION 5.21. Permits; Right of Way. No later than July 31,
1998, obtain in the name of the Borrower, all Significant Permits (as defined
below) and Acceptable Rights relating to all of the Right of Way and ensure that
such Significant Permits and Acceptable Rights are assignable to the Lenders to
the extent possible under applicable law. As used in this Section 5.21, the term
"Significant Permits" shall mean those Permits (a) the absence of which could
reasonably be expected to prevent the timely Completion of the System in
accordance with the Construction Budget or the operation of the System in
accordance with the Plans and Specifications and (b) the granting of which
involves any discretion on the part of any Governmental Authority or other
Person.
SECTION 5.22. Survey. As soon as is practicable after the
Completion Date, deliver to the Administrative Agent four (4) prints of an
"as-built" ALTA Class A certified survey of the Land Right of Way and all
easements benefitting and burdening the Land Right of Way certified by a State
of Alaska or a State of Washington (as applicable) licensed surveyor, in form
and substance satisfactory to the Administrative Agent and the applicable
Acceptable Title Company, showing that the Alaska United Fiber System and all
Electronics and Equipment used by the Borrower in the operation of the fiber
pairs in the Kanas Cable and the fiber pairs in the GCI Cable Facility are
within lot and building lines (as applicable) and showing all easements,
-66-
<PAGE>
improvements, utilities and rights of way located on, under or above ground as
of the date of certification, and showing such details as the Administrative
Agent may reasonably require.
SECTION 5.23. Amendments to the Deed of Trust. Within 30 days
after the acquisition of any Newly Acquired Right (as defined below), deliver to
the Administrative Agent an amendment or supplement to each applicable Deed of
Trust which amendment or supplement (a) shall amend the description of the
mortgaged property in such Deed of Trust in order to more specifically describe
the Acceptable Rights with respect to the Right of Way which have been acquired
by the Borrower (any such right shall be referred to as a "Newly Acquired
Right") and (b) shall be in form and substance satisfactory to the
Administrative Agent.
SECTION 5.24. Title Insurance. (a) Within 30 days of the
Closing Date, deliver to the Administrative Agent, an Acceptable Title Insurance
Policy with respect to the parcels of land and the Acceptable Rights listed on
Schedule 3.10 hereto and marked with an asterisk.
(b) Simultaneously with the delivery of an amendment to a Deed
of Trust as contemplated by Section 5.23 hereof, deliver to the Administrative
Agent an Acceptable Title Insurance Policy with respect to any Newly Acquired
Right which relates to either (i) a landing site or (ii) land included in the
Right of Way which land is owned by a Person other than the United States, the
State of Alaska (excluding the Alaska Railroad Corporation) or the State of
Washington.
SECTION 5.25. Proprietary Rights. Promptly upon the Borrower
acquiring any Proprietary Right (other than a Proprietary Right which is readily
available at a nominal cost or is transferable with the services, products or
equipment in respect of which they are expected to be used) (i) notify the
Administrative Agent of such acquisition and (ii) upon the request of the
Administrative Agent, execute and deliver such instruments or documents as may
be appropriate in the reasonable judgment of the Administrative Agent, to
provide the Administrative Agent (for the benefit of the Lenders) a first
perfected Lien in such Proprietary Right and/or to be filed under the provisions
of any statute, rule or regulation in order to grant or perfect in favor of the
Administrative Agent (for the benefit of the Lenders) a security interest in
such Proprietary Right.
6. NEGATIVE COVENANTS
From the date hereof and for so long as the Commitments shall
be in effect or any amount remains outstanding under the Notes or any
Obligations remain unpaid or unsatisfied, the Borrower agrees that, unless the
Required Lenders shall otherwise consent in writing, it will not:
SECTION 6.1. Limitations on Indebtedness. Incur, create,
assume or suffer to exist any Indebtedness other than:
-67-
<PAGE>
(a) the Indebtedness represented by the Notes and the other
Obligations;
(b) Indebtedness in respect of secured purchase money
financing, including Capital Leases, provided that (i) any Lien granted
with respect to such Indebtedness is permitted by Section 6.2(a) hereof
and (ii) the aggregate amount thereof does not exceed $2,000,000 at any
one time outstanding;
(c) intercompany loans and advances to the Borrower from
Holdings or GCI Transport in connection with their respective
obligations under the Holdings Keep-Well Agreement, the Transport
Keep-Well Agreement or the Completion Guaranty (as applicable);
provided that any such intercompany loan or advance is subject to, and
is in compliance with, the Subordination Agreement; and
(d) deferred payment obligations of the Borrower resulting
from the adjudication or settlement of any claim or litigation.
SECTION 6.2. Limitations on Liens. Incur, create, assume or
suffer to exist any Lien on its revenue stream, property or assets, whether now
owned or hereafter acquired, except:
(a) Liens granted in connection with the incurrence of
Indebtedness permitted by Section 6.1(b) to the Person financing the
acquisition of property, plant or equipment or other property acquired
by the Borrower, including Liens related to Capital Leases if (i) the
Lien is limited to the particular assets acquired; (ii) the
Indebtedness secured by the Lien does not exceed the unpaid acquisition
cost of the particular asset for which the Lien is granted; and (iii)
such transaction does not otherwise violate this Credit Agreement;
(b) deposits under worker's compensation, unemployment
insurance, old-age pensions and other social security laws or to secure
statutory obligations or surety or appeal bonds or performance or other
similar bonds incurred in the ordinary course of business;
(c) Liens for taxes, assessments or other governmental charges
or levies which are not yet due and payable or the validity or amount
of which is currently being contested in good faith by appropriate
proceedings pursuant to the terms of Section 5.8 hereof and as to which
foreclosure or other enforcement proceedings shall not have been
commenced (unless fully bonded or effectively stayed);
(d) Liens incurred in the ordinary course of business with
regard to goods provided or services rendered by common carriers,
landlords, warehousemen, mechanics, and suppliers of materials and
equipment which secure outstanding trade payables in amounts not
exceeding $2,000,000 in the aggregate;
-68-
<PAGE>
(e) Liens arising out of attachments, judgments or awards as
to which an appeal or other appropriate proceedings for contest or
review are timely commenced (and as to which foreclosure or other
enforcement proceedings shall not have been commenced (unless fully
bonded or otherwise effectively stayed)) and as to which appropriate
reserves have been established in accordance with GAAP;
(f) the Liens of the Administrative Agent for the benefit of
the Lenders under this Credit Agreement or any other Fundamental
Document;
(g) existing Liens set forth on Schedule 6.2 hereto;
(h) possessory Liens which (i) occur in the ordinary course of
business, (ii) secure normal trade debt which is not yet due and
payable and (iii) do not secure Indebtedness for borrowed money;
(i) Liens arising by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar
rights with respect to deposit accounts of the Borrower; and
(j) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar encumbrances on real property
which do not materially detract from the value of the property subject
thereof or interfere with the Project or the conduct of business of the
Borrower.
SECTION 6.3. Limitations on Investments. Create, make, incur
or suffer to exist any Investment, except (i) Investments in Cash Equivalents;
(ii) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers, customers or other debtors or in
settlement of delinquent obligations arising in the ordinary course of business,
and (iii) loans or advances to employees in the ordinary course of business
(such as travel advances).
SECTION 6.4. Restricted Payments. Declare, make or incur any
liability to make any Restricted Payments, except Restricted Payments in an
aggregate amount over the term of this Credit Agreement not exceeding the
aggregate amount theretofore distributed to the Borrower from funds held in the
Disbursement Account pursuant to Section 3(f) and Section 3(g) of the Depositary
Agreement; and provided that no Restricted Payment of a type described in
clauses (i), (ii) or (iii) of the definition of "Restricted Payment" shall be
permitted to be made unless all Subordinated Debt has been paid in full; and
provided, further that at the time and after giving effect to any such
Restricted Payment, no Default or Event of Default has occurred or is
continuing.
SECTION 6.5. Consolidation, Merger, Sale or Purchase of
Assets, etc. Whether in one transaction or a series of transactions, wind up,
liquidate or dissolve its affairs, or enter
-69-
<PAGE>
into any transaction of merger or consolidation, or sell or otherwise dispose of
all or any part of its property or assets, or purchase, lease or otherwise
acquire all or any part of the property or assets of any Person, or agree to do
or suffer any of the foregoing, except:
(a) entering into Capacity Agreements in the ordinary course
of business;
(b) Restricted Payments permitted by Section 6.4 hereof and
Investments permitted by Section 6.3 hereof;
(c) purchases or other acquisitions of inventory, materials,
equipment and the like in the ordinary course of business;
(d) the acquisition of the exclusive right to use fiber pairs
in the Kanas Cable and the GCI Cable Facility pursuant to, and in accordance
with, the Kanas Agreement and the GCI Fiber Exchange Agreement, respectively;
and
(e) leases in connection with the Right of Way.
SECTION 6.6. Receivables. Sell, discount or otherwise dispose
of notes, accounts receivable or other obligations owing to the Borrower except
for the purpose of collection in the ordinary course of business.
SECTION 6.7. Sale and Leaseback. Enter into any arrangement
with any Person or Persons, whereby in contemporaneous transactions the Borrower
sells essentially all of its right, title and interest in an asset and in
connection therewith, the Borrower acquires or leases back the right to use such
asset.
SECTION 6.8. Places of Business; Change of Name. Change the
location of its chief executive office or principal place of business or any of
the locations where it keeps any portion of the Collateral or its books and
records with respect to the Collateral or its legal name without in each case
(i) giving the Administrative Agent thirty (30) days' written notice of such
change and (ii) filing any additional UCC-1 Financing Statements and such other
documents requested by the Administrative Agent to maintain perfection of the
security interest of the Administrative Agent for the benefit of the Lenders in
the Collateral.
SECTION 6.9. Transactions with Affiliates. Except for the
transactions pursuant to the Project Agreements in existence on the Closing
Date, effect any transaction with an Affiliate on a basis less favorable to the
Borrower than would have been the case if such transaction had been effected on
an arms-length basis (and if involving more than $500,000 without a resolution
approving each such transaction from the Board of Directors of either General
Partner).
-70-
<PAGE>
SECTION 6.10. Prohibition of Amendments or Waivers. Agree to,
or permit, any amendment, alteration, modification, cancellation, termination
suspension or other change of any kind to any of the terms or provisions of:
(a) any Project Agreement; or
(b) the Partnership Agreement.
SECTION 6.11. No Change in Business . Engage in any business
activities other than (a) the Project, (b) the acquisition of the exclusive
right to use fiber pairs in the Kanas Cable pursuant to the Kanas Agreement, (c)
the acquisition of the exclusive right to use fiber pairs in the GCI Cable
Facility pursuant to the GCI Fiber Exchange Agreement and (d) the entering into
of Capacity Agreements in compliance with Section 6.18.
SECTION 6.12. ERISA Compliance. Engage in a "prohibited
transaction", as defined in Section 406 of ERISA or Section 4975 of the Code,
with respect to any Plan or Multiemployer Plan or knowingly consent to any other
"party in interest" or any "disqualified person", as such terms are defined in
Section 3(14) or ERISA and Section 4975(e)(2) of the Code, respectively,
engaging in any "prohibited transaction", with respect to any Plan or
Multiemployer Plan; or permit any Plan to incur any "accumulated funding
deficiency", as defined in Section 302 of ERISA or Section 412 of the Code,
unless such incurrence shall have been waived in advance by the Internal Revenue
Service; or terminate any Plan in a manner which could result in the imposition
of a Lien on any property of the Borrower pursuant to Section 4068 of ERISA; or
breach or knowingly permit any employee or officer or any trustee or
administrator of any Plan to breach any fiduciary responsibility imposed under
Title I of ERISA with respect to any Plan; engage in any transaction which would
result in the incurrence of a liability under Section 4069 of ERISA; or fail to
make contributions to a Plan or Multiemployer Plan which results in the
imposition of a Lien on any property of the Borrower pursuant to Section 302(f)
of ERISA or Section 412(n) of the Code, if the occurrence of any of the
foregoing events (alone or in the aggregate) could result in a Material Adverse
Effect.
SECTION 6.13. Hazardous Materials. Cause or permit any of its
properties or assets to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer, produce or process Hazardous Materials,
except in compliance in all respects with all applicable Environmental Laws, nor
release, discharge, dispose or of permit or suffer any release or disposal as a
result of any intentional act or omission on its part of Hazardous Materials
onto any such property or asset in violation of any Environmental Law.
SECTION 6.14. Interest Rate Protection Agreements, etc. Enter
into any Interest Rate Protection Agreement for other than bona fide hedging
purposes or as required by Section 5.17 hereof.
SECTION 6.15. Subsidiaries. Acquire or create any Subsidiary.
-71-
<PAGE>
SECTION 6.16. Prohibition regarding Joint Ventures and
Partnerships. Be a joint venturer or a general partner of any Person.
SECTION 6.17. Bank Accounts. After the date hereof, open or
maintain any bank account other than the accounts referred to in Section 3.25
hereof.
SECTION 6.18. Capacity Agreements; Sales of Fiber;
Non-Disturbance Agreements. Without obtaining the prior written consent of the
Administrative Agent, enter into:
(a) any Capacity Agreement which (i) has a term (whether
initially, through the exercise of renewals or otherwise) of one year or more,
(ii) involves the sale of any fiber in the Cable, (iii) is on a protected
capacity basis or (iv) would obligate the Borrower to make a payment to any
Person or provide alternative service or facilities, in either case, if the
System failed to be Completed and/or any portion of the System failed to
commence service on or before January 1, 1999, other than the GCI Lease
Contract, the Kanas Agreement and the GCI Fiber Exchange Agreement.
(b) any non-disturbance or similar agreement with any Person
who is a direct competitor of the Borrower.
SECTION 6.19. Repairs and Improvements. Make, or permit to be
made, any renewal, replacement, addition or improvement to the System which
would adversely affect the System or which has a cost of $2,000,000 or more.
SECTION 6.20. Change Orders. Authorize or permit to be
effective any change order or contract variation under the Construction Contract
or the GCI Construction Contract without the prior written approval of the
Administrative Agent (which will be based on consultations with the Independent
Engineer and will not be unreasonably withheld), except for changes which do not
(i) increase Project Costs by more than $100,000 as to any one change or
$250,000 in the aggregate, (ii) postpone or cause a postponement of the date for
achieving any milestone as set forth in the Construction Contract or the GCI
Construction Contract or change the Plans and Specifications or the material
procedures for any acceptance testing (including, without limitation, Acceptance
Testing (as defined in the Construction Contract) under the Construction
Contract.
SECTION 6.21. Location. Remove, or permit to be removed from
the Right of Way, any part of the Alaska United Fiber System or any Electronics
or Equipment used by the Borrower in the operation of the fiber pairs in the
Kanas Cable or the fiber pairs in the GCI Cable Facility.
SECTION 6.22. No Further Negative Pledges. Except with respect
to prohibitions against other encumbrances on specific property encumbered to
secure payment of particular Indebtedness (which Indebtedness relates solely to
such specific property and is
-72-
<PAGE>
otherwise permitted hereby), enter into any agreement (other than this Agreement
and the other Fundamental Documents (i) prohibiting the creation or assumption
of any Lien upon the properties or assets, whether now owned or hereafter
acquired, of the Borrower or (ii) requiring an obligation to be secured if some
other obligation is secured.
SECTION 6.23. Accounting Practices. Modify or change
accounting treatments or reporting practices, except as otherwise required or
permitted by changes in GAAP.
SECTION 6.24. Interest Rate Protection Agreements. Terminate
or otherwise unwind any Interest Rate Protection Agreement to which the Borrower
is a party; provided, however, that the Borrower may terminate or otherwise
unwind an Interest Rate Protection Agreement if (a) such termination or
unwinding does not require any payment by the Borrower to the applicable
counterparty and (b) the Borrower is simultaneously entering into a replacement
Interest Rate Protection Agreement which contains terms reasonably acceptable to
the Administrative Agent.
SECTION 6.25. Use of Proceeds of Loans. Use the proceeds of
Loans hereunder other than for the purposes set forth in, and as required by,
Section 5.19(a) hereof.
SECTION 6.26. The Portion of the System from the Washington
landing station site to the Seattle Distribution Center. To the extent that any
portion of the System connecting the landing station located at 14725 Norma
Beach Road, Edmonds, Washington to GCI Communication's Seattle Distribution
Center located at 2001 6th Avenue, Suite 2900, Seattle, Washington, is not owned
by the Borrower and constructed by GCI Communication pursuant to the GCI
Construction Contract, enter into any fiber exchange agreement, lease or other
agreement pursuant to which the Borrower is granted the right to use fiber pairs
or other telecommunications facilities for such portion of the System without
the Required Lenders' prior written consent.
7. EVENTS OF DEFAULT
In the case of the happening and during the continuance of any
of the following events (herein called "Events of Default"):
(a) any representation or warranty made by the Borrower or any
Transaction Party in this Credit Agreement or any other Fundamental Document or
in connection with this Credit Agreement or any other Fundamental Document or
with the execution and delivery of the Notes or the Borrowings hereunder, or any
statement or representation made in any report, financial statement, certificate
or other document furnished by or on behalf of the Borrower or any Transaction
Party to the Administrative Agent or any Lender under or in connection with this
Credit Agreement or any Fundamental Document shall prove to have been false or
misleading in any material respect when made, deemed to be made or delivered;
-73-
<PAGE>
(b) default shall be made in the payment of any principal of,
or interest on, the Notes or of any fees or other amounts payable by the
Borrower hereunder or under the Fee Letter or an Interest Rate Protection
Agreement to which a Lender is a party, 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 by acceleration thereof or otherwise and such default shall continue
unremedied for more than five (5) days after demand for such payment has been
made to Holdings under and in accordance with the Holdings Keep-Well Agreement;
(c) default shall be made in the due observance or performance
of any covenant, condition or agreement contained in Sections 5.1(j), 5.2, 5.4,
5.5, 5.7(a), 5.14, 5.16, 5.19, 5.20(b) or 5.21 or Article 6 of this Credit
Agreement;
(d) default shall be made by the Borrower, GCI Transport, GCI
Fiber or Fiber Hold in the due observance or performance of any covenant (other
than as set forth in paragraphs (b) and (c) of this Article 7), condition or
agreement to be observed or performed pursuant to the terms of this Credit
Agreement or any other Fundamental Document, and such default shall continue
unremedied for ten (10) consecutive days after the Borrower, GCI Transport, GCI
Fiber or Fiber Hold (as applicable) obtains knowledge of such occurrence;
(e) default shall be made with respect to any payment of any
Indebtedness of the Borrower, GCI Transport, GCI Fiber or Fiber Hold when due,
or in the performance of any other obligation incurred in connection with any
such Indebtedness, if the effect of such default is to accelerate the maturity
of such Indebtedness or to permit the holder thereof to cause such Indebtedness
to become due prior to its stated maturity and such default shall not be
remedied, cured, waived or consented to by the holder of such Indebtedness
within the period of grace with respect thereto;
(f) the Borrower or any Transaction Party shall generally not
pay its debts as they become due or shall admit in writing its inability to pay
its debts, or shall make a general assignment for the benefit of creditors; or
the Borrower or any Transaction Party shall commence any case, proceeding or
other action seeking to have an order for relief entered on its behalf as debtor
or to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors or seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property or
shall file an answer or other pleading in any such case, proceeding or other
action admitting the material allegations of any petition, complaint or similar
pleading filed against it or consenting to the relief sought therein; or the
Borrower or any Transaction Party shall take any action to authorize, or in
contemplation of, any of the foregoing;
(g) any involuntary case, proceeding or other action against
the Borrower or any Transaction Party shall be commenced seeking to have an
order for relief entered against it as debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement,
-74-
<PAGE>
adjustment, liquidation, dissolution or composition of it or its debts under any
law relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its property, and such case,
proceeding or other action (i) results in the entry of any order for relief
against it or (ii) shall remain undismissed for a period of sixty (60) days;
(h) final judgment(s) for the payment of money in excess of
$2,000,000 (which judgment(s) are not covered by insurance) shall be rendered
against the Borrower or any Transaction Party (other than GCI) and within thirty
(30) days from the entry of such judgment shall not have been discharged or
stayed pending appeal or which shall not have been discharged or bonded in full
within thirty (30) days from the entry of a final order of affirmance on appeal;
(i) a Reportable Event relating to a failure to meet minimum
funding standards or an inability to pay benefits when due shall have occurred
with respect to any Plan under the control of the Borrower or any Transaction
Party and shall not have been remedied within thirty (30) days after the
occurrence of such Reportable Event; or a trustee shall be appointed by a United
States District Court to administer such Plan, or the PBGC shall institute
proceedings to terminate such Plan, and the Administrative Agent shall have
notified the Borrower that the Required Lenders have made a determination that
on the basis of such Reportable Event, appointment of trustee or commencement of
proceedings, there are reasonable grounds to believe that such occurrence would
have a Material Adverse Effect;
(j) any Fundamental Document shall, for any reason, not be or
shall cease to be in full force and effect except as provided herein or therein
or shall be declared null and void or any of the Fundamental Documents shall not
give or shall cease to give the Administrative Agent the Liens, rights, powers
and privileges with respect to the Collateral or the collateral thereunder
purported to be created thereby in favor of the Administrative Agent for the
benefit of the Lenders, superior to and prior to the rights of all third Persons
(except to the extent expressly permitted herein or therein) and subject to no
other Liens (except to the extent expressly permitted herein or therein) other
than by actions of the Administrative Agent or any Lender, or the validity or
enforceability of the Liens granted, to be granted, or purported to be granted,
by any of the Fundamental Documents shall be contested by the Borrower, GCI
Transport, GCI Fiber, Fiber Hold or any of their respective Affiliates;
(k) any change, event or circumstance shall occur (including,
without limitation, an act of a Governmental Authority, a natural disaster, or
any amendment, alteration, modification or waiver (made without the prior
written consent of the Required Lenders) to any of the documentation relating to
the Holdings Bank Credit Facility) that could reasonably be expected to have a
Material Adverse Effect;
(l) the Borrower, any Transaction Party or any other
Person shall have breached or disaffirmed any of its obligations under any
Project Agreement or a default, event of
-75-
<PAGE>
default or termination event (as such terms may be defined in any Project
Agreement) shall have occurred and be continuing under a Project Agreement;
(m) the failure of the System to be Completed on or before
January 1, 1999;
(n) at any time after the termination of the Holdings Bank
Credit Facility in its entirety, (i) the failure of Holdings to duly observe and
perform any covenant, condition or agreement contained in Sections 7.02, 7.03,
7.04, 7.05, 7.06, 7.07 or 7.10 of the Long Term Holdings Credit Agreement as in
effect immediately prior to such termination or (ii) an event of default
described in Section 8.01(p) of the Long Term Holdings Credit Agreement as in
effect immediately prior to such termination; or
(o) a Change in Control or an Event of Loss shall occur;
then, in every such event and at any time thereafter during the continuance of
such event, the Administrative Agent may, or if directed by the Required Lenders
shall, take either or both of the following actions, at the same or different
times: terminate forthwith the Commitments and/or declare the principal of and
the interest on the Loans and the Notes and all other amounts payable hereunder
or thereunder to be forthwith due and payable, whereupon the same shall become
and be forthwith due and payable, without presentment, demand, protest, or other
notice of any kind, all of which are hereby expressly waived, anything in this
Credit Agreement or in the Notes to the contrary notwithstanding. If an Event of
Default specified in paragraphs (f) or (g) above shall have occurred, the
Commitments shall automatically terminate and the Loans and the Notes shall
automatically become due and payable, both as to interest and principal, without
presentment, demand, protest, or other notice of any kind, all of which are
hereby expressly waived, anything in this Credit Agreement or the Notes to the
contrary notwithstanding. Such remedies shall be in addition to any other remedy
available to the Administrative Agent and the Lenders pursuant to Applicable Law
or otherwise.
8. GRANT OF SECURITY INTEREST; REMEDIES
SECTION 8.1. Security Interests. As security for the due and
punctual payment and performance of the Obligations (including post-petition
interest to the extent permitted by Applicable Law), the Borrower hereby
mortgages, pledges, assigns, transfers, sets over, conveys and delivers to the
Administrative Agent (for the benefit of the Lenders) and grants to the
Administrative Agent (for the benefit of the Lenders) a security interest in the
Collateral.
SECTION 8.2. Use of Collateral. So long as no Event of Default
shall have occurred and be continuing, and subject always to the various
provisions of this Credit Agreement and the other Fundamental Documents, the
Borrower may use the Collateral in any lawful manner permitted hereunder.
-76-
<PAGE>
SECTION 8.3. Direct Payment to Alaska Depositary Account or
Disbursement Account. (a) The Borrower shall (i) cause each of the Payors to be
notified of the assignment to the Administrative Agent (on behalf of the
Lenders) of the proceeds of each Capacity Agreement and cause each such Payor to
accept and acknowledge such assignment and agree to pay directly to the Alaska
Depositary Account (or if such Payor is an Affiliate of the Borrower, to the
Disbursement Account) all amounts payable to the Borrower under the applicable
Capacity Agreement.
(b) The Borrower will execute documentation (including,
without limitation, assignment agreements, instruction letters and other
documentation) as may now or hereafter be required by the Administrative Agent
in order to provide for the deposit into the Alaska Depositary Account or the
Disbursement Account (as applicable) of the monies referred to in Section 8.3(a)
and to otherwise effectuate the provisions of this Section 8.3. In particular,
the Borrower shall deliver to the Administrative Agent within 90 days after the
Closing Date a fully executed original of the Instruction Letter.
(c) In the event the Borrower receives payment from any Payor,
which payment should have been remitted directly to the Alaska Depositary
Account or the Disbursement Account, the Borrower shall promptly remit such
payment or proceeds to the Disbursement Account to be applied in accordance with
the terms of this Credit Agreement.
(d) The Borrower will provide in all Capacity Agreements for
payment directly to the Alaska Depositary Account (or if such Payor is an
Affiliate of the Borrower, to the Disbursement Account) as contemplated by this
Section 8.3.
(e) Subject to Section 8.7 hereof, all amounts received in the
Disbursement Account shall be held therein, pending application in accordance
with the Depositary Agreement.
SECTION 8.4. Borrower to Hold in Trust. Upon the occurrence
and during the continuance of an Event of Default, the Borrower will, upon
receipt by it of any revenue, income, profits or other sums in which a security
interest is granted by this Article 8, payable pursuant to any agreement or
otherwise, or of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the sum or instrument in
trust for the Lenders, and forthwith, without any notice, demand or other action
on the part of the Lenders whatsoever (all notices, demands, or other actions on
the part of the Lenders being expressly waived), endorse, transfer and deliver
any such sums or instruments or both, to the Administrative Agent to be applied
to the repayment of the Obligations in accordance with the provisions of Section
8.7 hereof.
SECTION 8.5. Collections, etc. Upon the occurrence and during
the continuance of an Event of Default, the Administrative Agent may, in its
sole discretion, in its name or in the name of the Borrower or otherwise,
demand, sue for, collect or receive any money or property at any time payable or
receivable on account of or in exchange for, or make any compromise or
-77-
<PAGE>
settlement deemed desirable with respect to, any of the Collateral, but shall be
under no obligation so to do, or the Administrative Agent may extend the time of
payment, arrange for payment in installments, or otherwise modify the terms of,
or release, any of the Collateral, without thereby incurring responsibility to,
or discharging or otherwise affecting any liability of the Borrower. The
Administrative Agent will not be required to take any steps to preserve any
rights against prior parties to the Collateral. If Borrower fails to make any
payment or to take any action required hereunder or under any Fundamental
Document, the Administrative Agent may make such payments and take all such
actions as the Administrative Agent reasonably deems necessary to protect the
Lenders' Liens and security interests in the Collateral and/or the value
thereof, and the Administrative Agent is hereby authorized (without limiting the
general nature of the authority hereinabove conferred) to pay, purchase, contest
or compromise any Liens which in the judgment of the Administrative Agent appear
to be equal to, prior to or superior to the Liens and security interests of the
Lenders in the Collateral and any Liens not expressly permitted by this Credit
Agreement.
SECTION 8.6. Possession, Sale of Collateral, etc. Upon the
occurrence and during the continuance of an Event of Default, the Administrative
Agent may enter upon the premises of the Borrower or wherever the Collateral may
be, and take possession of the Collateral, and may demand and receive such
possession from any Person who has possession thereof, and the Administrative
Agent may take such measures as it may deem necessary or proper for the care or
protection thereof, including the right to remove all or any portion of the
Collateral, and with or without taking such possession, may sell or cause to be
sold, whenever the Administrative Agent shall decide, in one or more sales or
parcels, at such prices as the Administrative Agent may deem best, and for cash
or on credit or for future delivery, without assumption of any credit risk, all
or any portion of the Collateral, at any broker's board or at a public or
private sale, without any demand of performance or notice of intention to sell
or of the time or place of sale (except 10 days' written notice to the Borrower
of the time and place of any such sale or sales and such other notices as may be
required by Applicable Law and cannot be waived), and any Person may be the
purchaser of all or any portion of the Collateral so sold and thereafter hold
the same absolutely, free (to the fullest extent permitted by Applicable Law)
from any claim or right of whatever kind, including any equity of redemption, of
the Borrower, any such demand, notice, claim, right or equity being hereby
expressly waived and released to the fullest extent permitted by Applicable Law.
At any sale or sales made pursuant to this Article 8, the Administrative Agent
may bid for or purchase, free (to the fullest extent permitted by Applicable
Law) from any claim or right of whatever kind, including any equity of
redemption, of the Borrower, any such claim, right or equity being hereby
expressly waived and released, any part of or all of the Collateral offered for
sale, and may make any payment on account thereof by using any claim for moneys
then due and payable to the Administrative Agent and the Lenders (subject to the
provisions of Article 10 hereof) by the Borrower hereunder as a credit against
the purchase price. The Administrative Agent shall in any such sale make no
representations or warranties with respect to the Collateral or any part
thereof, and neither the Administrative Agent nor any Lender shall be chargeable
with any of the obligations or liabilities of the Borrower. The Borrower hereby
agrees (i) that it will indemnify and hold the Administrative Agent and the
-78-
<PAGE>
Lenders harmless from and against any and all claims with respect to the
Collateral asserted before the taking of actual possession or control of the
relevant Collateral by the Administrative Agent pursuant to this Article 8, or
arising out of any act of, or omission to act on the part of, any Person (other
than the Administrative Agent or Lenders) prior to such taking of actual
possession or control by the Administrative Agent, or arising out of any act on
the part of any of the Borrower, its Affiliates, or their agents before or after
the commencement of such actual possession or control by the Administrative
Agent; and (ii) neither the Administrative Agent nor any Lender shall have any
liability or obligation to the Borrower arising out of any such claim except for
acts of willful misconduct or gross negligence or not taken in good faith. In
any action hereunder, the Administrative Agent shall be entitled to the
appointment of a receiver, without notice, to take possession of all or any
portion of the Collateral and to exercise such powers as the court shall confer
upon the receiver. Notwithstanding the foregoing, upon the occurrence of an
Event of Default, and during the continuation of such Event of Default, the
Administrative Agent shall be entitled to apply, without prior notice to the
Borrower except as may be required by Applicable Law, any cash or cash items
constituting Collateral in the possession of the Administrative Agent to payment
of the Obligations.
SECTION 8.7. Application of Proceeds on Default. Upon the
occurrence and during the continuance of an Event of Default, the balances in
the Disbursement Account or in any other account of the Borrower with any
Lender, all other income on the Collateral, and all proceeds from any sale of
the Collateral pursuant hereto shall be applied in accordance with the
provisions of Section 10.2 hereof; provided, however, that, the Administrative
Agent may, with the consent of the Required Lenders in their discretion, apply
funds comprising the Collateral to pay the cost (i) of Completing the Project
and (ii) fulfilling any obligation under any Fundamental Document. Any amounts
remaining after such payment in full shall be remitted to the Borrower or as a
court of competent jurisdiction may otherwise direct.
SECTION 8.8. Power of Attorney. Upon the occurrence and during
the continuance of an Event of Default, (a) the Borrower does hereby irrevocably
make, constitute and appoint the Administrative Agent or any of its officers or
designees its true and lawful attorney-in-fact with full power in the name of
the Administrative Agent or the Borrower to receive, open and dispose of all
mail addressed to the Borrower, and to endorse any notes, checks, drafts, money
orders or other evidences of payment relating to the Collateral that may come
into the possession of the Administrative Agent, with full power and right to
cause the mail of the Borrower to be transferred to the Administrative Agent's
own offices or otherwise, and to do any and all other acts necessary or proper
to carry out the intent of this Credit Agreement and the other Fundamental
Documents and the grant of the Liens and security interests hereunder and under
the other Fundamental Documents, and the Borrower hereby ratifies and confirms
all that the Administrative Agent or its substitutes shall properly do by virtue
thereof; (b) the Borrower does hereby further irrevocably make, constitute and
appoint the Administrative Agent or any of its officers or designees their true
and lawful attorney-in-fact in the name of the Administrative Agent or the
Borrower (i) to enforce all of the Borrower's rights under and pursuant to all
agreements with respect to the Collateral (including, without limitation, the
Project Agreements),
-79-
<PAGE>
all for the sole benefit of the Administrative Agent for the benefit of the
Lenders, (ii) to enter into and perform such agreements as may be necessary in
order to carry out the terms, covenants and conditions of the Fundamental
Documents that are required to be observed or performed by the Borrower, (iii)
to execute such other and further mortgages, pledges and assignments of the
Collateral, and related instruments or agreements, as the Administrative Agent
may reasonably require for the purpose of perfecting, protecting, maintaining or
enforcing the Liens and security interests granted to the Administrative Agent
for the benefit of the Lenders hereunder and under the other Fundamental
Documents, and (iv) to do any and all other things necessary or proper to carry
out the intention of this Credit Agreement and the grant of the Liens and
security interests hereunder and under the other Fundamental Documents and the
Borrower hereby ratifies and confirms in advance all that the Administrative
Agent as such attorney-in-fact or its substitutes shall properly do by virtue of
this power of attorney.
SECTION 8.9. Financing Statements, Direct Payment,
Confirmation of Receivables. The Borrower hereby authorizes the Administrative
Agent to file UCC-1 Financing Statements and any amendments thereto or
continuations thereof and any other appropriate security documents or
instruments (including, without limitation, the Deeds of Trust and any
amendments thereto) and to give any notices necessary or desirable to perfect
the Lien and security interests of the Administrative Agent for the benefit of
the Lenders on the Collateral, in all cases without the signature of the
Borrower or to execute such items as attorney-in-fact for the Borrower. The
Borrower further authorizes the Administrative Agent upon the occurrence of an
Event of Default, and during the continuation of such Event of Default, to
notify any account debtor that all sums payable to the Borrower relating to the
Collateral shall be paid directly to the Administrative Agent, and to confirm
directly with account debtors the amounts payable by them to the Borrower with
regard to the Collateral and the terms of all accounts receivable.
SECTION 8.10. Termination. The security interests granted
under this Article 8 shall terminate when all of the Obligations shall have been
fully and indefeasibly paid and performed and the Commitments shall have
terminated; at such time all rights to the Collateral pledged or assigned by the
Borrower shall revert to the Borrower. Upon any such termination, the
Administrative Agent will, at the Borrower's expense, execute and deliver to the
Borrower such documents (in form and substance satisfactory to the
Administrative Agent) as the Borrower shall reasonably request to evidence such
termination.
SECTION 8.11. Remedies Not Exclusive. The rights and remedies
conferred upon or reserved to the Administrative Agent in this Article 8 are
intended to be in addition to, and not in limitation of, any other right or
remedy available to the Administrative Agent. Without limiting the generality of
the foregoing, the Administrative Agent and the Lenders shall have all rights
and remedies of a secured party under Article 9 of the UCC and any other
Applicable Law.
SECTION 8.12. Quiet Enjoyment. The Lenders acknowledge that
their security interest hereunder is subject to the rights of Quiet Enjoyment of
various licensees, lessees or
-80-
<PAGE>
purchasers (which are not Affiliates of the Borrower or any of the Transaction
Parties) under Capacity Agreements, whether existing on the date hereof or
hereafter executed. For the purpose hereof, "Quiet Enjoyment" shall mean in
connection with the rights of licensees, lessees or purchasers (which are not
Affiliates of the Borrower or any of the Transaction Parties) under Capacity
Agreements, the Lenders' agreement that their rights under this Credit Agreement
and the other Fundamental Documents and in the Collateral are subject to the
rights of such licensees, lessees or purchasers to use the capacity on the Cable
licensed, leased or sold to them and that even if the Lenders shall become the
owner of the Collateral in case of an Event of Default, the Lenders' ownership
rights shall be subject to the rights of said licensees, lessees or purchasers
under such Capacity Agreements, provided, however, that such licensee, lessees
or purchasers shall not be in material default under the relevant Capacity
Agreement and, provided, further, that the Lenders shall not be responsible for
any liability or obligation of the Borrower or any other Person under any
Capacity Agreement. The Administrative Agent agrees that upon the reasonable
request of the Borrower, it will provide written confirmation to licensees,
lessees and purchasers of the Quiet Enjoyment rights contemplated by this
Section 8.12.
SECTION 8.13. Release of Collateral. Unless a Default or Event
of Default shall have occurred and be continuing, upon request by the Borrower
to the Administrative Agent in writing, the Administrative Agent shall release
its security interest in any Collateral sold by the Borrower in compliance with
the terms of this Credit Agreement and the other Fundamental Documents.
SECTION 8.14. Continuation and Reinstatement. The Borrower
further agrees that the security interest granted hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment or any
part thereof, of any Obligation is rescinded or must otherwise be restored by
the Administrative Agent or the Lenders upon the bankruptcy or reorganization of
the Borrower or otherwise.
SECTION 8.15. Regulatory Approvals. During the continuance of
an Event of Default, the Borrower will, at its expense, promptly execute and
deliver, or cause the execution and delivery of, all applications, certificates,
instruments, registration statements and all other documents and papers the
Administrative Agent may reasonably request or as may be required by applicable
law in connection with the obtaining of any consent, approval, registration,
qualification or authorization of the FCC or of any other Governmental Authority
or Person necessary or appropriate for the effective exercise of any rights
under this Credit Agreement or any other Fundamental Document. Without limiting
the generality of the foregoing, if an Event of Default shall have occurred and
be continuing, the Borrower shall take any action which the Administrative Agent
may reasonably request in order to transfer and assign to the Administrative
Agent, or to such one or more third parties as the Administrative Agent may
designate, or to a combination of the foregoing, each FCC License, Permit or
other similar right or license. To enforce the provisions of this Section, the
Administrative Agent is empowered to request the appointment of a receiver from
any court of competent jurisdiction. Such receiver shall be instructed to seek
from the FCC or other Governmental Authority or Person (as
-81-
<PAGE>
applicable) an involuntary transfer of control of each such FCC License, Permit
or similar right or license for the purpose of seeking a bona fide purchaser to
whom control will ultimately be transferred. The Borrower hereby agrees to
authorize such an involuntary transfer of control upon the request of the
receiver so appointed and, if the Borrower shall refuse to authorize the
transfer, its approval may be required by the court. Upon the occurrence and
continuance of an Event of Default, the Borrower shall further use its best
efforts to assist in obtaining approval of the FCC or other Governmental
Authority or Person, if required, for any action or transactions contemplated by
this Credit Agreement or any other Fundamental Document including, without
limitation, the preparation, execution and filing with the FCC or other
Governmental Authority or Person of the assignor's or transferor's portion of
any application or applications for consent to the assignment of any FCC
License, Permit or similar right or license or the transfer of control necessary
or appropriate under the rules and regulations of the FCC or other Governmental
Authority or otherwise for the approval of the transfer or assignment of any
portion of the Collateral, together with any FCC License, Permit or similar
right or license. The Borrower acknowledges that the assignment or transfer of
each FCC License, Permit or similar right or license is integral to the
Administrative Agent's and Lenders' realization of the value of the Collateral,
that there is no adequate remedy at law for failure by the Borrower to comply
with the provisions of this Section and that such failure would cause
irreparable injury not adequately compensable in damages, and therefore agrees
that each and every covenant contained in this Section may be specifically
enforced, and the Borrower hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants.
9. CASH COLLATERAL ACCOUNT
SECTION 9.1. Cash Collateral Account. On or prior to the date
on which the System is Completed, there shall be established with the
Administrative Agent a collateral account in the name of the Administrative
Agent (the "Cash Collateral Account"), into which the Borrower shall from time
to time deposit (or arrange for the deposit of) amounts pursuant to the express
provisions of this Credit Agreement requiring or permitting such deposits.
Except to the extent otherwise provided in this Article 9, the Cash Collateral
Account shall be under the sole dominion and control of the Administrative
Agent.
SECTION 9.2. Investment of Funds. (a) The Administrative Agent
is hereby authorized and directed to invest and reinvest the funds from time to
time deposited in the Cash Collateral Account, so long as no Event of Default
has occurred and is continuing, on the instructions of the Borrower (provided
that such instructions may be given verbally to be confirmed promptly in writing
by facsimile or otherwise) or, if the Borrower shall fail to give such
instructions, in the sole discretion of the Administrative Agent, provided that
in no event may the Borrower give instructions to the Administrative Agent to,
or may the Administrative Agent in its discretion, invest or reinvest funds in
the Cash Collateral Account in other than Cash Equivalents described in clause
(i) of the definition of Cash Equivalents, or described in clauses (ii) and
(iii) of the definition of Cash Equivalents to the extent issued by Credit
Lyonnais New
-82-
<PAGE>
York Branch or Credit Lyonnais Nassau Branch. The Administrative Agent shall
have no obligation to invest or reinvest any of the funds from time to time
deposited in the Cash Collateral Account if the Borrower shall not have provided
the instructions contemplated by this Section 9.2(a).
(b) Any net income or gain on the investment of funds from
time to time held in the Cash Collateral Account shall be retained by the
Administrative Agent as a part of the Cash Collateral Account and any net loss
on any investment shall be charged against the Cash Collateral Account.
(c) Neither the Administrative Agent nor the Lenders shall be
a trustee for the Borrower, or shall have any obligations or responsibilities,
or shall be liable for anything done or not done, in connection with the Cash
Collateral Account, except as expressly provided herein and except that the
Administrative Agent (for the benefit of the Lenders) shall have the obligations
of a secured party under the UCC. The Administrative Agent and the Lenders shall
not have any obligation or responsibilities and shall not be liable in any way
for any investment decision made pursuant to this Section 9.2 or for any
decrease in the value of the investments held in the Cash Collateral Account.
SECTION 9.3. Grant of Security Interest. For value received
and to induce the Lenders to make the Loans from time to time to the Borrower as
provided for in this Credit Agreement, as security for the due and punctual
payment and performance of all of the Obligations, the Borrower hereby assigns
to the Administrative Agent (for the benefit of the Lenders), and grants to the
Administrative Agent (for the benefit of the Lenders), a first and prior Lien
upon all the Borrower's rights in and to the Cash Collateral Account, all cash,
documents, instruments and securities from time to time held therein, and all
rights pertaining to investments of funds in the Cash Collateral Account and all
products and proceeds of, or income from, any of the foregoing. All cash,
documents, instruments and securities from time to time on deposit in the Cash
Collateral Account, and all rights pertaining to investments of funds in the
Cash Collateral Account shall immediately and without any need for any further
action on the part of the Borrower, any Lender or the Administrative Agent,
become subject to the Lien set forth in this Section 9.3, be deemed Collateral
for all purposes hereof and be subject to the provisions of this Credit
Agreement and the other Fundamental Documents.
SECTION 9.4. Remedies. At any time during the continuation of
an Event of Default, the Administrative Agent may sell any documents,
instruments and securities held in the Cash Collateral Account and may
immediately apply the proceeds thereof and any other cash held in the Cash
Collateral Account in accordance with Section 8.7 hereof.
-83-
<PAGE>
10. THE ADMINISTRATIVE AGENT
SECTION 10.1. Administration by Administrative Agent. (a) The
general administration of the Fundamental Documents and any other documents
contemplated by this Credit Agreement shall be by the Administrative Agent or
its designees. Except as otherwise expressly provided herein, each of the
Lenders hereby irrevocably authorizes the Administrative Agent, at its
discretion, to take or refrain from taking such actions as Administrative Agent
on its behalf and to exercise or refrain from exercising such powers under the
Fundamental Documents, the Notes and any other documents contemplated by this
Credit Agreement or any other Fundamental Document as are expressly delegated to
the Administrative Agent by the terms hereof or thereof, as appropriate,
together with all powers reasonably incidental thereto. The Administrative Agent
shall have no duties or responsibilities except as set forth in the Fundamental
Documents.
(b) The Lenders hereby authorize the Administrative Agent (in
its sole discretion):
(i) in connection with the sale or other disposition
of any asset included in the Collateral, to the extent
undertaken in accordance with the terms of this Credit
Agreement, to release a Lien granted to it (for the benefit of
the Lenders ) on such asset;
(ii) to determine that the cost to the Borrower or a
Transaction Party is disproportionate to the benefit to be
realized by the Administrative Agent and the Lenders by
perfecting a Lien in a given asset or group of assets included
in the collateral under any Fundamental Document and that the
Borrower or Transaction Party should not be required to
perfect such Lien in favor of the Administrative Agent (for
the benefit of the Lenders);
(iii) to appoint subagents to be the holder of record
of a Lien to be granted to the Administrative Agent (for the
benefit of the Lenders) or to hold on behalf of the
Administrative Agent such collateral or instruments relating
thereto;
(iv) to grant in writing the right of Quiet Enjoyment
to licensees, lessees or purchasers pursuant to the terms of
Section 8.12 hereof; and
(v) to enter into and perform its obligations under
the Intercreditor Agreements and the other Fundamental
Documents.
SECTION 10.2. Payments. Any amounts received by the
Administrative Agent in connection with this Credit Agreement, the Notes or the
other Fundamental Documents, the application of which is not otherwise provided
for, shall be applied, first, to pay any unpaid costs and expenses incurred by
the Administrative Agent which costs and expenses are to be paid by
-84-
<PAGE>
the Borrower pursuant to Section 11.4 hereof (including, without limitation, the
costs and expenses of the Administrative Agent in enforcing this Credit
Agreement or any other Fundamental Document, in realizing on or protecting any
Collateral and in enforcing or collecting any Obligation or any obligation of a
third party in connection therewith), second, to pay accrued but unpaid
Commitment Fees in accordance with each Lender's Percentage, third, to pay
accrued but unpaid interest on the Notes in accordance with the amount of
outstanding Loans owed to each Lender, fourth, to pay amounts outstanding under
Interest Rate Protection Agreements with any Lender, fifth, to pay the principal
balance outstanding on the Notes in accordance with the amount of outstanding
Loans owed to each Lender, sixth, to pay other amounts payable to the
Administrative Agent, and seventh, to pay other amounts payable to any of the
Lenders. All amounts to be paid to any of the Lenders by the Administrative
Agent shall be credited to the Lenders after collection by the Administrative
Agent, in immediately available funds, either by wire transfer or deposit in
such Lender's correspondent account with the Administrative Agent, or as such
Lender and the Administrative Agent shall from time to time agree.
SECTION 10.3. Sharing of Setoffs and Cash Collateral. Each of
the Lenders agrees that if it shall, through the exercise of a right of banker's
lien, setoff or counterclaim against the Borrower, including, but not limited
to, a secured claim under Section 506 of Title 11 of the United States Code or
any other security or interest arising from, or in lieu of, such secured claim
and received by such Lender under any applicable bankruptcy, insolvency or other
similar law, or otherwise, obtain payment in respect of its Loans as a result of
which the unpaid portion of its Loans is proportionately less than the unpaid
portion of the Loans of any of the other Lenders (a) it shall promptly purchase
at par (and shall be deemed to have thereupon purchased) from such other Lenders
a participation in the Loans of such other Lenders, so that the aggregate unpaid
principal amount of each of the Lenders' Loans and its participation in Loans of
the other Lenders shall be in the same proportion to the aggregate unpaid
principal amount of all Loans then outstanding as the principal amount of its
Loans prior to the obtaining of such payment was to the principal amount of all
Loans outstanding prior to the obtaining of such payment and (b) such other
adjustments shall be made from time to time as shall be equitable to ensure that
the Lenders share such payment pro rata. If all or any portion of such excess
payment is thereafter recovered from the Lender which originally received such
excess payment, such purchase (or portion thereof) shall be canceled and the
purchase price restored to the extent of such recovery. The Borrower expressly
consents to the foregoing arrangements and agrees that any Lender or Lenders
holding (or deemed to be holding) a participation in a Note may exercise any and
all rights of banker's lien, setoff or counterclaim with respect to any and all
moneys owing by the Borrower to such Lender or Lenders as fully as if such
Lender or Lenders held a Note and was the original obligee thereon, in the
amount of such participation.
SECTION 10.4. Notice to the Lenders. Upon receipt by the
Administrative Agent from the Borrower of any communication calling for an
action on the part of the Lenders, or upon notice to the Administrative Agent of
any Event of Default, the Administrative Agent will in turn promptly inform the
other Lenders in writing (which shall include facsimile
-85-
<PAGE>
communications) of the nature of such communication or of the Event of Default,
as the case may be.
SECTION 10.5. Liability of Administrative Agent. (a) The
Administrative Agent, when acting on behalf of the Lenders, may execute any of
its duties under this Credit Agreement or the other Fundamental Documents by or
through its officers, agents, or employees and neither the Administrative Agent
nor its officers, agents or employees shall be liable to the Lenders or any of
them for any action taken or omitted to be taken in good faith, nor be
responsible to the Lenders or to any of them for the consequences of any
oversight or error of judgment, or for any loss, unless the same shall happen
through its gross negligence or willful misconduct. The Administrative Agent and
its directors, officers, agents, and employees shall in no event be liable to
the Lenders or to any of them for any action taken or omitted to be taken by it
pursuant to instructions received by it from the Required Lenders or in reliance
upon the advice of counsel selected by it with reasonable care. Without limiting
the foregoing, neither the Administrative Agent nor any of its directors,
officers, employees, or agents shall be responsible to any of the Lenders for
the due execution, validity, genuineness, effectiveness, sufficiency, or
enforceability of, or for any statement, warranty, or representation in, or for
the perfection of any Lien or security interest contemplated by, this Credit
Agreement, any Fundamental Document or any related agreement, document or order,
or for freedom of any of the collateral under any Fundamental Document from
prior Liens or security interests, or shall be required to ascertain or to make
any inquiry concerning the performance or observance by the Borrower or any
Transaction Party of the terms, conditions, covenants, or agreements of this
Credit Agreement, any Fundamental Document or any related agreement or document.
(b) The Administrative Agent, as agent for the Lenders
hereunder, any Lender or any of their respective directors, officers, employees,
or agents shall have no responsibility to the Borrower or any Transaction Party
on account of the failure or delay in performance or breach by any other Lender
of any of such Lender's obligations under this Credit Agreement, the Notes, any
Fundamental Document or any related agreement or document or in connection
herewith or therewith.
(c) The Administrative Agent, as agent for the Lenders
hereunder, shall be entitled to rely on any communication, instrument, or
document reasonably believed by it to be genuine or correct and to have been
signed or sent by a Person or Persons believed by it to be the proper Person or
Persons, and it shall be entitled to rely on advice of legal counsel,
independent public accountants, and other professional advisers and experts
selected by it.
SECTION 10.6 Reimbursement and Indemnification. Each of the
Lenders agrees (i) to reimburse the Administrative Agent in accordance with such
Lender's Percentage, for any expenses and fees incurred for the benefit of the
Lenders under the Fundamental Documents, including, without limitation, counsel
fees and compensation of agents and employees paid for services rendered on
behalf of the Lenders, and any other expense incurred in connection with the
operations or enforcement thereof not reimbursed by the Borrower and (ii) to
-86-
<PAGE>
indemnify and hold harmless the Administrative Agent and any of its directors,
officers, employees, or agents, on demand, in accordance with each Lender's
Percentage, from and against, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against, it or any of them in any way relating to or arising out of the
Fundamental Documents or any related agreement or document or any action taken
or omitted by it or any of them under the Fundamental Documents or any related
agreement or document to the extent not reimbursed by the Borrower or any other
Transaction Party (except such as shall result from the gross negligence or
willful misconduct of the Person to be indemnified or held harmless). To the
extent indemnification payments made by the Lenders pursuant to this Section
10.6 are subsequently recovered by the Administrative Agent from the Borrower or
a Transaction Party, the Administrative Agent will promptly refund such
previously paid indemnity payments to the Lenders.
SECTION 10.7. Rights of Administrative Agent. It is understood
and agreed that the Administrative Agent shall have the same rights and powers
hereunder (including, without limitation, the right to give such instructions)
as any of the other Lenders and may exercise such rights and powers, as well as
its rights and powers under other agreements and instruments to which it is or
may be party, and engage in other transactions with the Borrower or any
Transaction Party (or any affiliate of either thereof), as though it were not
the Administrative Agent of the Lenders under this Credit Agreement.
SECTION 10.8. Independent Investigation by Lenders. Each of
the Lenders (i) acknowledges that it has decided to enter into this Credit
Agreement and to make the Loans hereunder based on its own analysis of the
transactions contemplated hereby and of the creditworthiness of the Borrower and
the Transaction Parties and has not relied on any representation, warranty,
statement or information made or provided by the Administrative Agent and (ii)
agrees that the Administrative Agent shall bear no responsibility for any
Lender's decision to enter into this Credit Agreement and to make the Loans
hereunder.
SECTION 10.9. Agreement of Required Lenders. Upon any occasion
requiring or permitting an approval, consent, waiver, election or other action
on the part of the Required Lenders, action shall be taken by the Administrative
Agent for and on behalf of, or for the benefit of, all Lenders upon the
direction of the Required Lenders and any such action shall be binding on all
Lenders. No amendment, modification, consent or waiver shall be effective except
in accordance with the provisions of Section 11.10 hereof.
SECTION 10.10. Notice of Transfer. The Administrative Agent
may deem and treat any Lender which is a party to this Credit Agreement as the
owner of such Lender's respective portions of the Loans for all purposes, unless
and until a written notice of the assignment or transfer thereof executed by
such Lender shall have been received by the Administrative Agent and become
effective in accordance with Section 11.3 hereof.
-87-
<PAGE>
SECTION 10.11. Successor Administrative Agent . The
Administrative Agent may resign at any time by giving ten (10) days prior
written notice thereof to the Lenders and the Borrower, but such resignation
shall not become effective until acceptance by a successor agent of its
appointment pursuant hereto. Upon any such resignation, the retiring
Administrative Agent shall promptly appoint a successor agent from among the
Lenders, provided that such successor is reasonably acceptable (as evidenced in
writing) to the Required Lenders. If no successor agent shall have been so
appointed by the retiring agent and shall have accepted such appointment within
30 days after the retiring Administrative Agent's giving of notice of
resignation, the Borrower may appoint a successor agent (which successor may be
replaced by the Required Lenders; provided that such replacement is reasonably
acceptable to the Borrower), which shall be either a Lender, or a commercial
bank organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $250,000,000. Upon
the acceptance of any appointment as agent hereunder by a successor agent, such
successor agent shall thereupon 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 under this Credit Agreement, the other Fundamental Documents and any
other credit documentation. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this Article 10
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Credit Agreement.
11. MISCELLANEOUS
SECTION 11.1. Notices. Notices and other communications
provided for herein shall be in writing and shall be delivered or mailed (or if
by telegram, delivered to the telegraph company and, if by telecopier, delivered
by such equipment) addressed, if to the Administrative Agent or Credit Lyonnais
New York Branch, to it at 1301 Avenue of the Americas, New York, New York 10019,
Attn: Project Finance Group, facsimile no.: (212) 261-3421 or if to the
Borrower, to it at c/o GCI Fiber Co., Inc., 2550 Denali Street, Suite 1000,
Anchorage, Alaska 99503, Attn: Chief Financial Officer, facsimile no.: (907)
265-5676 or if to a Lender, to it at its address set forth on the signature
page, or such other address as such party may from time to time designate by
giving written notice to the other parties hereunder. Any failure of the
Administrative Agent or a Lender giving notice pursuant to this Section 11.1, to
provide a courtesy copy to a party as provided herein, shall not affect the
validity of such notice. All notices and other communications (other than a
notice of a Default or Event of Default) given to any party hereto in accordance
with the provisions of this Credit Agreement shall be deemed to have been given
on the tenth Business Day after the date when sent by registered or certified
mail, postage prepaid, return receipt requested, if by mail, or when delivered
to the telegraph company, charges prepaid, if by telegram, or when receipt is
acknowledged if by telecopier, in each case addressed to such party as provided
in this Section 11.1 or in accordance with the latest unrevoked written
direction from such party. Any notice of Default or Event of Default given to
any party hereto in accordance with the provisions of this Credit Agreement
shall be deemed to
-88-
<PAGE>
have been given on the tenth Business Day after the date when sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail, or
when delivered to the telegraph company, charges prepaid, if by telegram, or
when receipt is acknowledged by telephonic confirmation with the recipient, if
by telecopier, in each case addressed to such party as provided in this Section
11.1 or in accordance with the latest unrevoked written direction from such
party.
SECTION 11.2. Survival of Agreement, Representations and
Warranties, etc. All warranties, representations and covenants made by the
Borrower or any of the Transaction Parties herein, in any Fundamental Document
or in any certificate or other instrument delivered by it or on its behalf in
connection with this Credit Agreement or any other Fundamental Document shall be
considered to have been relied upon by the Administrative Agent and the Lenders
and, except for any terminations, amendments, modifications or waivers thereof
in accordance with the terms hereof, shall survive the making of the Loans
herein contemplated and the execution and delivery to the Administrative Agent
of the Notes regardless of any investigation made by the Administrative Agent or
the Lenders or on their behalf and shall continue in full force and effect so
long as any amount due or to become due hereunder is outstanding and unpaid and
so long as the Commitments have not been terminated. All statements in any such
certificate or other instrument shall constitute representations and warranties
by the Borrower hereunder or by a Transaction Party under a Fundamental Document
(as applicable).
SECTION 11.3. Successors and Assigns; Syndications; Loan
Sales; Participations. (a) Whenever in this Credit Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party; provided, however, that the Borrower may not assign
any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and all of the Lenders, and all covenants, promises and
agreements by or on behalf of the Borrower which are contained in this Credit
Agreement shall inure to the benefit of the successors and assigns of the
Administrative Agent and any of the Lenders.
(b) Each of the Lenders may (but only with the prior written
consent of the Administrative Agent) assign to one or more banks or other
entities all or a portion of its interests, rights and obligations under this
Credit Agreement (including, without limitation, all or a portion of its
Commitments and the same portion of all Loans at the time owing to it and the
Notes held by it); provided, however, that (i) each assignment shall be of a
constant, and not a varying, percentage of the assigning Lender's interests,
rights and obligations under this Credit Agreement, (ii) without the prior
written consent of the Borrower and the Required Lenders, upon the effectiveness
of such assignment and any other assignment of a Lender's interests, rights and
obligations pursuant to this Section 11.3 with the same effective date as the
applicable assignment, no Lender (A) shall at any time prior to the Completion
Date, have a Construction Commitment which is less than the lesser of
$15,000,000 and one-fifth (1/5) of the aggregate Construction Commitments of all
the Lenders then in effect or (B) shall at any time on or after the Completion
Date, hold outstanding Loans in a principal amount which is less than the lesser
-89-
<PAGE>
of $15,000,000 or one-fifth (1/5) of the aggregate amount of all Loans
outstanding on such effective date and (iii) the parties to each such assignment
shall execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register (as defined below), an Assignment and Acceptance,
together with the original Note subject to such assignment and a processing and
recordation fee of $2,500 to be paid to the Administrative Agent by the
assigning Lender. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be not earlier than five Business Days after the date of
acceptance and recording by the Administrative Agent, (x) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and under the other Fundamental Documents and shall be bound by the provisions
hereof and thereof and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Credit Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of the
assigning Lender's interests, rights and obligations under this Credit
Agreement, such assigning Lender shall cease to be a party hereto), except that
notwithstanding such assignment, any rights and remedies available to the
Borrower for any breaches by such assigning Lender of its obligations hereunder
while a Lender, shall be preserved after such assignment and such Lender shall
not be relieved of any liability to the Borrower due to any such breach.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, the
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Credit Agreement or the other Fundamental
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Fundamental Documents or any other instrument or
document furnished pursuant hereto or thereto; (ii) such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any of the Transaction Parties or the
performance or observance by the Borrower or any of the Transaction Parties of
any of their obligations under the Fundamental Documents or any other instrument
or document furnished pursuant thereto; (iii) such assignee confirms that it has
received a copy of this Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Sections 5.1(a) and 5.1(b) (or
if none of such financial statements shall have then been delivered, then copies
of the financial statements referred to in Section 3.5 hereof) and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee agrees that it will, independently and without reliance upon the
Administrative Agent, the assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this Credit
Agreement or the other Fundamental Documents; (v) such assignee appoints and
authorizes the Administrative Agent to take such
-90-
<PAGE>
action as the agent on its behalf and to exercise such powers under this Credit
Agreement or the other Fundamental Documents as are delegated to the
Administrative Agent by the terms hereof or thereof, together with such powers
as are reasonably incidental thereto; and (vi) such assignee agrees that it will
be bound by the provisions of this Credit Agreement and it will perform in
accordance with its terms all of the obligations which by the terms of this
Credit Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at its address at
which notices are to be given to it pursuant to Section 11.1 a copy of each
Assignment and Acceptance and a written or electronic record of the names and
addresses of the Lenders and the Commitments of, and principal amount of the
Loans owing to, each Lender from time to time (the "Register"). The entries in
the Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of the
Fundamental Documents. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Subject to the foregoing, upon its receipt of an
Assignment and Acceptance executed by an assigning Lender and an assignee
together with the original Note subject to such assignment and the processing
and recordation fee, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in the form of Exhibit I hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt written notice thereof to the Borrower.
Within five (5) Business Days after receipt of the notice, the Borrower, at its
own expense, shall execute and deliver to the Administrative Agent, in exchange
for the surrendered Note, a new Note to the order of such assignee in an amount
equal to the Commitments and/or Loans (as applicable) assumed by it pursuant to
such Assignment and Acceptance and if the assigning Lender has retained a
Commitments and/or Loans (as applicable) hereunder, a new Note to the order of
the assigning Lender in an amount equal to the Commitments and/or Loans (as
applicable) retained by it hereunder. Such new Notes shall be in an aggregate
principal amount equal to the principal amount of the surrendered Note or the
amount of outstanding Loans then due to the assigning Lender (as applicable),
shall be dated the date of the surrendered Note and shall otherwise be in
substantially the form of Exhibit A-1 or A-2 hereto (as applicable). In addition
the Borrower will promptly, at its own expense, execute such amendments to the
Fundamental Documents to which each is a party and such additional documents,
and take such other actions as the Administrative Agent or the assignee Lender
may reasonably request in order to give such assignee Lender the full benefit of
the Liens contemplated by the Fundamental Documents.
(f) Each of the Lenders may, without the consent of the
Borrower, sell participations to one or more banks or other entities in all or a
portion of its interests, rights and obligations under this Credit Agreement
(including, without limitation, all or a portion of its Commitments and the
Loans owing to it and the Note held by it); provided, however, that (i) any such
Lender's obligations under this Credit Agreement shall remain unchanged, (ii)
such
-91-
<PAGE>
participant shall not be granted any voting rights or any right to control the
vote of such Lender under this Credit Agreement, except with respect to proposed
changes to interest rates, amount of Commitments, final maturity of Loans,
releases of all or substantially all the Collateral and fees (as applicable to
such participant), (iii) any such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iv) the
participating banks or other entities shall be entitled to the cost protection
provisions contained in Sections 2.11, 2.12 and 2.15(e) hereof but a participant
shall not be entitled to receive pursuant to such provisions an amount larger
than its share of the amount to which the Lender granting such participation
would have been entitled to receive and (v) the Borrower, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's interests, rights and obligations under
this Credit Agreement.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
11.3, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower or any of the Transaction
Parties furnished to the Administrative Agent or such Lender by or on behalf of
the Borrower or any of the Transaction Parties; provided that prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall agree, by executing a confidentiality letter substantially in
the form of Exhibit T hereto, to preserve the confidentiality of any
confidential information relating to the Borrower or any of the Transaction
Parties received from such Lender.
(h) Any assignment pursuant to paragraph (a) or (b) of this
Section 11.3 shall constitute an amendment of the Schedule of Commitments as of
the effective date of such assignment.
(i) The Borrower consents that any Lender may at any time and
from time to time pledge or otherwise grant a security interest in any Loan or
in any of the Notes evidencing the Loans (or any part thereof) to any Federal
Reserve Bank.
SECTION 11.4. Expenses; Documentary Taxes. Whether or not the
transactions hereby contemplated shall be consummated, the Borrower agrees to
pay all reasonable out-of-pocket expenses incurred by the Administrative Agent
in connection with, or growing out of, the performance of due diligence, the
syndication of the credit facility contemplated hereby, the negotiation,
preparation, execution, delivery, waiver or modification and administration of
this Credit Agreement and any other documentation contemplated hereby, the
Notes, the making of the Loans, the Collateral or the Fundamental Documents,
including but not limited to, the reasonable out-of-pocket costs and internally
allocated charges of audit or field examinations, the reasonable fees and
disbursements of any counsel that the Administrative Agent shall retain, and the
reasonable fees and expenses of technical or other consultants engaged by the
Administrative Agent. Such payments shall be made on the date of execution of
this Credit Agreement and thereafter on demand. In addition, the Borrower agrees
to pay all reasonable out-of-pocket expenses and reasonable allocated costs of
in-house counsel incurred by the Administrative
-92-
<PAGE>
Agent or the Lenders in the enforcement or protection of the rights and remedies
of the Lenders in connection with this Credit Agreement, the Notes or the other
Fundamental Documents, and with respect to any action which may be instituted by
any Person other than the Borrower or any Lender against the Administrative
Agent or any Lender, or as a result of any transaction, action or non-action
arising from any of the foregoing, including but not limited to the reasonable
fees and disbursements of any counsel for the Administrative Agent or the
Lenders. Such payments shall be made on demand after the date of execution of
this Credit Agreement. The Borrower agrees that it shall indemnify the
Administrative Agent and the Lenders from and hold them harmless against any
documentary taxes, assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Credit Agreement or the Notes. The
obligations of the Borrower under this Section 11.4 shall survive the
termination of this Credit Agreement and/or the payment of the Loans.
SECTION 11.5. Indemnification of the Administrative Agent and
the Lenders. The Borrower agrees (a) to indemnify and hold harmless the
Administrative Agent and the Lenders and their respective directors, officers,
employees and agents (each an "Indemnified Party") (to the full extent permitted
by Applicable Law) from and against any and all claims, demands, losses,
judgments, damages and liabilities (including liabilities for penalties)
incurred by any of them as a result of, or arising out of, or in any way related
to, or by reason of, any investigation, litigation or other proceeding (whether
or not any Lender or the Administrative Agent is a party thereto) related to the
entering into and/or performance of any Fundamental Document or the use of the
proceeds of any Loans hereunder or the consummation of any other transaction
contemplated in any Fundamental Document, including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses of an Indemnified party to the
extent incurred by reason of the gross negligence or willful misconduct of such
Indemnified Party). If any proceeding, including any governmental investigation,
shall be instituted involving any Indemnified Party, in respect of which
indemnity may be sought against the Borrower, such Indemnified Party shall
promptly notify the Borrower in writing, and the Borrower shall assume the
defense thereof on behalf of such Indemnified Party including the employment of
counsel (reasonably satisfactory to such Indemnified Party) and payment of all
reasonable expenses. Any Indemnified Party shall have the right to employ
separate counsel in any such proceeding and participate in the defense thereof,
but the fees and expenses of such separate counsel shall be at the expense of
such Indemnified Party unless (i) the employment of such separate counsel has
been specifically authorized by the Borrower or (ii) the named parties to any
such action (including any impleaded parties) include such Indemnified Party and
the Borrower and such Indemnified Party shall have been advised by counsel to
the Administrative Agent that there may be one or more legal defenses available
to such Indemnified Party which are different from or in additional to those
available to the Borrower (in which case the Borrower shall not have the right
to assume the defense of such action on behalf of such Indemnified Party). At
any time after the Borrower has assumed the defense of any proceeding involving
any Indemnified Party in respect of which indemnity has been sought against the
Borrower, such Indemnified Party may elect, by written notice to the Borrower,
to withdraw its
-93-
<PAGE>
request for indemnity and thereafter the defense of such proceeding shall be
maintained by counsel of the Indemnified Party's choosing and at the Indemnified
Party's expense. The foregoing indemnity agreement includes any reasonable costs
incurred by an Indemnified Party in connection with any action or proceeding
which may be instituted in respect of the foregoing by the Administrative Agent
or by any other Person either against the Administrative Agent or the Lenders or
in connection with which any officer or employee of the Administrative Agent or
the Lenders is called as a witness or deponent, including, but not limited to,
the reasonable fees and disbursements of any counsel to the Administrative Agent
and any out-of-pocket costs incurred by the Administrative Agent or the Lenders
in appearing as a witness or in otherwise complying with legal process served
upon them.
If the Borrower or any Transaction Party shall fail to do any
act or thing which it has covenanted to do hereunder or under a Fundamental
Document, or any representation or warranty of the Borrower or any Transaction
Party shall be breached, the Administrative Agent may (but shall not be
obligated to) do the same or cause it to be done or remedy any such breach and
if the Administrative Agent does the same or causes it to be done, there shall
be added to the Obligations hereunder the cost or expense incurred by the
Administrative Agent in so doing, and any and all amounts expended by the
Administrative Agent in taking any such action shall be repayable to it upon its
demand therefor and shall bear interest at 4% in excess of the Alternate Base
Rate from time to time in effect from the date advanced to the date of
repayment.
All indemnities contained in this Section 11.5 shall survive
the expiration or earlier termination of this Credit Agreement and payment of
the Loans and shall inure to the benefit of any Person who was a Lender
notwithstanding such Person's assignment of all its Loans and Commitments
hereunder.
SECTION 11.6. CHOICE OF LAW. THIS CREDIT AGREEMENT AND THE
NOTES SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY,
THE LAWS OF THE STATE OF NEW YORK WHICH ARE APPLICABLE TO CONTRACTS MADE AND TO
BE PERFORMED WHOLLY WITHIN SUCH STATE AND, IN THE CASE OF PROVISIONS RELATING TO
INTEREST RATES, ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA.
SECTION 11.7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT
PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, THE BORROWER HEREBY WAIVES,
AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS
CREDIT AGREEMENT, THE SUBJECT MATTER HEREOF, ANY FUNDAMENTAL DOCUMENT OR THE
SUBJECT MATTER THEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING
AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE BORROWER ACKNOWLEDGES THAT IT
HAS BEEN INFORMED BY THE LENDERS
-94-
<PAGE>
THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH
THE LENDERS HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS CREDIT
AGREEMENT AND ANY OTHER FUNDAMENTAL DOCUMENT. THE ADMINISTRATIVE AGENT OR ANY
LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.7 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE BORROWER TO THE WAIVER OF ITS
RIGHTS TO TRIAL BY JURY.
SECTION 11.8. No Waiver. No failure on the part of the
Administrative Agent or any Lender to exercise, and no delay in exercising, any
right, power, privilege or remedy hereunder, under the Notes or under any other
Fundamental Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power, privilege or remedy preclude any
other or further exercise thereof or the exercise of any other right, power,
privilege or remedy and no course of dealing shall operate as a waiver of any
right, power, privilege or remedy of the Administrative Agent. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law.
SECTION 11.9. Extension of Payment Date. Should any payment or
prepayment of principal of or interest on the Notes or any other amount due
hereunder become due and payable on a day other than a Business Day, the due
date of such payment or prepayment shall be extended to the next succeeding
Business Day and, in the case of a payment or prepayment of principal, interest
shall be payable thereon at the rate per annum herein specified during such
extension.
SECTION 11.10. Amendments, etc. No modification, amendment or
waiver of any provision of this Credit Agreement, and no consent to any
departure by the Borrower from the provisions hereof, shall in any event be
effective unless the same shall be in writing and signed by the Required Lenders
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given; provided, however, that no such
modification, waiver, consent or amendment shall, without the written consent of
all of the Lenders, (i) change the Commitment of any Lender, (ii) amend or
modify any provision of this Credit Agreement which provides for the unanimous
consent or approval of the Lenders, (iii) release any Collateral or any
collateral under any other Fundamental Document (except as contemplated herein)
or release any Transaction Party from any monetary obligation under any
Fundamental Document, (iv) alter the fixed scheduled maturity or principal
amount of any Loan, or the rate of interest payable thereon, or the rate at
which the Commitment Fees accrue or the fixed scheduled maturity or amount of
any other payment required to be made under this Credit Agreement, (v) amend the
definition of "Required Lenders," or (vi) amend this Section 11.10. No such
amendment or modification may adversely affect the rights and obligations of the
Administrative Agent hereunder without its prior written consent. No notice to
or demand on the Borrower shall entitle the Borrower to any other or further
notice or demand in the same, similar or other circumstances. Each holder of a
Note shall be bound by any amendment, modification, waiver or consent authorized
as provided herein, whether or not such Note shall have been
-95-
<PAGE>
marked to indicate such amendment, modification, waiver or consent and any
consent by any holder of Note shall bind any Person subsequently acquiring such
Note whether or not such Note is so marked.
SECTION 11.11. Severability. Any provision of this Credit
Agreement or of the Notes which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 11.12. SERVICE OF PROCESS. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW
YORK AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF OR BASED UPON THIS CREDIT AGREEMENT, THE SUBJECT
MATTER HEREOF, ANY FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF BROUGHT BY
THE ADMINISTRATIVE AGENT OR A LENDER OR ANY OF THEIR SUCCESSORS OR ASSIGNS IN
EITHER OF THE ABOVE-REFERENCED FORUMS AT THE SOLE OPTION OF THE ADMINISTRATIVE
AGENT OR A LENDER. THE BORROWER TO THE EXTENT PERMITTED BY APPLICABLE LAW (A)
HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS, ANY
CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED
COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT
THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS CREDIT
AGREEMENT, THE SUBJECT MATTER HEREOF, ANY FUNDAMENTAL DOCUMENT OR THE SUBJECT
MATTER THEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, (B) HEREBY WAIVES THE
RIGHT TO REMOVE ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED BY THE
ADMINISTRATIVE AGENT OR A LENDER IN STATE COURT TO FEDERAL COURT, AND (C) HEREBY
WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY OFFSETS OR
COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE ARISE FROM
THE SAME SUBJECT MATTER. THE BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS BY
MAIL AT ITS ADDRESS TO WHICH NOTICES ARE TO BE GIVEN PURSUANT TO SECTION 11.1
HEREOF. THE BORROWER AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO
SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE ADMINISTRATIVE
AGENT AND THE LENDERS. FINAL JUDGMENT AGAINST THE BORROWER IN ANY SUCH ACTION,
SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER
JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT,
-96-
<PAGE>
A CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND
THE AMOUNT OF INDEBTEDNESS OR LIABILITY OF THE BORROWER THEREIN DESCRIBED OR (B)
IN ANY OTHER MANNER PROVIDED BY, OR PURSUANT TO, THE LAWS OF SUCH OTHER
JURISDICTION, PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE AGENT OR A LENDER MAY
AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST THE
BORROWER OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES
OR OF ANY COUNTRY OR PLACE WHERE THE BORROWER OR SUCH ASSETS MAY BE FOUND.
SECTION 11.13. Headings. Section headings used herein and the
table of contents are for convenience only and are not to affect the
construction of, or be taken into consideration in interpreting, this Credit
Agreement.
SECTION 11.14. Execution in Counterparts. This Credit
Agreement may be executed in any number of counterparts, each of which shall
constitute an original, but all of which taken together, shall constitute one
and the same instrument.
SECTION 11.15. Confidentiality. Each of the Lenders
understands that certain information furnished to it pursuant to this Credit
Agreement will be received by it prior to the time that such information shall
have been made public, and each of the Lenders hereby agrees that it will keep,
and will direct its officers and employees to keep, all the information provided
to it pursuant to this Credit Agreement confidential prior to its becoming
public except that Lenders shall be permitted to disclose such information (i)
to officers, directors, employees, representatives, agents, auditors,
accountants, consultants, advisors, lawyers and affiliates of such Lender, in
the ordinary course of business who have been made aware of the confidential
nature of the information; (ii) to prospective assignees or participants and
their respective officers, directors, employees, agents and representatives in
accordance with Section 11.3(g) herein; (iii) as required by Applicable Law, or
pursuant to subpoenas or other legal process, or as requested by governmental
agencies and examiners; (iv) in proceedings to enforce the Lenders' rights and
remedies hereunder or under any other Fundamental Document or in any proceeding
against the Lenders in connection with this Credit Agreement or under any other
Fundamental Document or the transactions contemplated hereunder or thereunder;
(v) to the extent such information (A) becomes publicly available other than as
a result of a breach of this Agreement or (B) becomes available to a Lender or a
participant on a non-confidential basis, not in breach of any agreement or other
obligation to Borrower, from a source other than Borrower; or (vi) to the extent
Borrower shall have consented to such disclosure in writing.
SECTION 11.16. Entire Agreement. This Credit Agreement
including the Exhibits and Schedules hereto represents the entire agreement of
the parties with regard to the subject matter hereof, and the terms of any
letters and other documentation entered into between any of the parties hereto
(other than the Fee Letter) prior to the execution of this Credit
-97-
<PAGE>
Agreement which relate to Loans to be made hereunder shall be replaced by the
terms of this Credit Agreement.
-98-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed as of the day and the year first written.
BORROWER:
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By GCI Fiber Co., Inc., a General Partner
By /s/
Name: John M. Lowber
Title: Secretary/Treasurer
By Fiber Hold Co., Inc., a General
Partner
By /s/
Name: John M. Lowber
Title: Secretary/Treasurer
LENDERS:
CREDIT LYONNAIS NEW YORK BRANCH
individually and as Administrative Agent
By /s/
Name: Michael F.G. Pepe
Title: Vice President
Address: 1301 Avenue of the Americas
New York, NY 10019
Attention: Project Finance Group
Facsimile: (212) 261-3421
-99-
<PAGE>
NATIONSBANK OF TEXAS, N.A.,
individually and as Syndication Agent
By /s/
Name: Whitney L. Busse
Title: Vice President
Address: 901 Main Street, 64th Floor
Dallas, TX 75202
Facsimile: (214) 508-9390
with a copy to:
Elaine Harrison
Donohoe, Jameson & Carroll, P.C.
3400 Renaissance Tower
1201 Elm Street
Dallas, TX 75270
Facsimile: (214) 744-0231
TD SECURITIES (USA), INC.,
as Documentation Agent
By /s/
Name: David G. Parker
Title: Vice President
Address: 909 Fannin Suite 1700
Houston, TX 77010
Facsimile: (713) 951-9921
TORONTO DOMINION (TEXAS), INC.
By /s/
Name: Neva Nesbitt
Title: Vice President
Address: 909 Fannin
Houston, TX 77010
Facsimile: (713) 951-9921
-100-
<PAGE>
Schedule 1
Schedule of Commitments
Lender Construction Commitment Term Loan Commitment
------ ----------------------- --------------------
Credit Lyonnais New
York Branch $25,000,000 $25,000,000
NationsBank of Texas, N.A. 25,000,000 25,000,000
Toronto-Dominion (Texas),
Inc. 25,000,000 25,000,000
----------- -----------
Total $75,000,000 $75,000,000
=========== ===========
<PAGE>
SCHEDULE 3.12
LITIGATION
On November 7, 1997, the FCC granted GCI authority, under the Cable Landing
License Act, 47 U.S.C. section 34-039, to land and operate a non-common carrier
submarine fiber optic cable system between the Pacific Northwest United States
and Alaska. See DA 97-2357, FCC File NO. SCL-97-003 (the "Order"). (1) These are
no complaints or appeals filed before the FCC with respect to grant of the
license except three applications for review of the International Bureau's Order
by the full Federal Communications Commission filed on December 8, 1997: (1)
Application for Review jointly filed by TelAlaska Long Distance, Inc. and ASTAC
Long Distance, Inc., (2) Application for Review filed by Alaska Network Systems,
Inc., and (3) Application for Review filed by ATU Long Distance, Inc.
- -------------------
(1) On December 10, 1997, the International Bureau of the FCC granted
consent to the pro forma assignment of the license to Alaska United.
<PAGE>
SCHEDULE 3.20
ENVIRONMENTAL LIABILITIES ON THE CLOSING DATE
None.
<PAGE>
SCHEDULE 3.23
PROJECT AGREEMENTS AND ASSIGNMENTS
PREVIOUSLY OWNED BY GCI AFFILIATES
(Other than the Borrower)
Supply Contract between Submarine Systems International Ltd., k/n/a as Tyco
Submarine Systems Ltd. ("Tyco"), and GCI Communication Corp ("GCICC"), dated
effective as of July 11, 1997, as assigned to the Alaska United Fiber System
Partnership ("Alaska United"), effective as of October 3, 1997, as "Purchaser"
thereunder.
Survey of the undersea route of the Alaska United Fiber System, conducted
for GCICC.
Purchase Order dated July 30, 1997, with David Evans & Associated, Inc. and
General Communication, Inc.
Construction Agreement with Schenck Communications, Inc. and GCI Cable,
Inc., dated May 16, 1997.
Fiber Exchange Agreement dated as of November 21, 1997 between Kanas
Telecom, Inc. and GCICC, as assigned to Alaska United on January 6 , 1998.
Cable Landing License issued by the Federal Communications Commision, File
No. SCL-97-003, issued to General Communication, Inc., as assigned to Alaska
United on January 26, 1998.
<PAGE>
Schedule 5.5 - Insurance Requirements
Construction - Offshore
- Marine Cargo including transportation, laying/installation of submarine
cable system
- Seabed Cover Included
- Limit equal to 125% of maximum expected physical damage loss
- All risk forms including but not limited to:
- Earthquake and flood
- Testing and startup
- Replacement costs with no coinsurance penalties
- Transit and Off-Site
- in an amount equal to values at risk
- Insurance as primary and not contributory
- Thirty (30) day notice of cancellation - 10 days for nonpayment of
premiums
- Reasonable deductibles
Construction - Onshore
- Installation, Builders Risk
- Limit equal to insurable values at risk
- Replacement cost with no coinsurance penalties
- Transit and Off-site
- in an amount equal to values at risk
- Insurance as primary and not contributory
- Thirty (30) day notice of cancellation - 10 days for nonpayment of
premiums
- Reasonable deductibles
- Property damage $50,000
- Earthquake 5% of Values at Risk
- Flood 5% of Values at Risk
Property (Operational)
- All risk forms
- Replacement cost
- Earthquake and flood
- Comprehensive boiler/machinery
- full replacement cost of objects subject to loss at any one location
- joint loss agreement if written on separate policy from property
- Debris removal - 25% of policy limit or $5,000,000
- Inland transit and off-site
- in an amount equal to values at risk
- No coinsurance penalties
- Insurance as primary and not contributory
- Thirty (30) day notice of cancellation - 10 days for nonpayment of
premiums
<PAGE>
- Reasonable deductibles:
- Property damage $50,000
- Earthquake 5% of Values at Risk
- Flood 5% of Values at Risk
Commercial General Liability
- $1,000,000 per occurrence and $2,000,000 in the aggregate
- Occurrence forms
- Explosion, collapse and underground
- Broad form property damage
- Contractual liability
- Premises liability & products/completed operations
- Personal injury
- Independent contractors
- Sudden and accidental pollution (Construction Period)
- Cross liability, if multiple named insureds and severability of
interest
- Additional insured as required by contract
Automobile Liability
- Owned, hired and non-owned
- Statutory provisions
Workers Compensation
- Statutory benefits
- applicable laws
- maritime, USL&R
- Employers liability
- $500,000 limit
Aircraft Liability
- Owned Aircraft, subject to exposure
- Hired and non-owned craft
- rotary
- fixed wing
- $5,000,000 limit plus $5,000,000 of additional coverage if
available at commercially reasonable rates (annual premium on
additional coverage not to exceed $10,000)
- Physical damage for owned aircraft
<PAGE>
Umbrella/Excess
- Excess of third party liability policies
- general liability
- auto liability
- employers liability
- Occurrence forms
- Coverage as broad as primary
- $20,000,000 limit per occurrence and in the aggregate
General Terms And Conditions
- Carriers approved by Administrative Agent
- Waiver of subrogation to benefit Administrative Agent
- Copies of policies to Administrative Agent for review and approval
- The Administrative Agent shall be additional named insured as
respects property during construction and operation of the Project.
- The Administrative Agent shall be additional insured as respects
liability policies, with the exception of workers compensation.
- The insurer shall waive all rights of subrogation against the
Administrative Agent
- Insurance supplied by the Borrower shall be primary as respects any
other insurance carried by or on behalf of the Administrative Agent.
- Insurance carried protecting Project assets (property, boiler, etc.)
shall contain a standard Lenders Loss Payable endorsement and name
the Administrative Agent as first loss payee as respects assets
owned by Alaska United Fiber System Partnership
- Certified copies of insurance policies shall be made available to
the Administrative Agent upon request.
- Annually on the anniversary of financial closing, Borrower is to
furnish to the Administrative Agent evidence of insurance for all
coverage in place and certify 1) premiums are paid or current to date
and 2) that insurance materially complies with credit agreement
requirements.
- Invalidation Clause
- The interests of the Administrative Agent shall not
be invalidated by any action or inaction of the
Owner, Contractor or Subcontractors or any other
Person or by any breach or violation by the Owner,
Contractor or Subcontractor or any other Person or
any warranties, declarations or conditions in such
policies
<PAGE>
SCHEDULE 6.2
EXISTING LIENS
Cash Collateral and Security Agreement dated effective as of December 1,
1997, among Alaska United, Tyco, the Administrative Agent and The First National
Bank of Anchorage, as Account Bank. Thereunder, Alaska United granted (i) to
Tyco a first lien on the Collateral (as therein defined) and (ii) to the
Adminstrative Agent a second lien on the Collateral.
Under the Fiber Exchange Agreement dated as of January 27, 1998, among
Alaska United, GCI Cable, Inc ("GCI Cable"), and GCI Communication Corp., Alaska
United granted to GCI Cable a security interest in the AU Facility (as defined
therein).
<PAGE>
CONSTRUCTION NOTE
$25,000,000 New York, New York
as of January 27, 1998
FOR VALUE RECEIVED, ALASKA UNITED FIBER SYSTEM PARTNERSHIP, an
Alaska general partnership (the "Obligor"), DOES HEREBY PROMISE TO PAY to the
order of CREDIT LYONNAIS NEW YORK BRANCH (the "Lender") at the office of Credit
Lyonnais New York Branch at 1301 Avenue of the Americas, New York, New York
10019, in lawful money of the United States of America in immediately available
funds, the principal amount of TWENTY FIVE MILLION DOLLARS ($25,000,000), or the
aggregate unpaid principal amount of all Construction Loans (as defined in the
Credit Agreement referred to below) made by the Lender to the Obligor pursuant
to said Credit Agreement, whichever is less, on such date or dates as is
required by said Credit Agreement, and to pay interest on the unpaid principal
amount from time to time outstanding hereunder, in like money, at such office,
at such rate or rates per annum and at such times as set forth in said Credit
Agreement.
The Obligor and any and all sureties, guarantors and endorsers
of this Note and all other parties now or hereafter liable hereon severally
waive grace, demand, presentment for payment, protest, notice of any kind
(including, but not limited to, notice of dishonor, notice of protest, notice of
intention to accelerate or notice of acceleration) and diligence in collecting
and bringing suit against any party hereto and agree to the extent permitted by
applicable law (i) to all extensions and partial payments, with or without
notice, before or after maturity, (ii) to any substitution, exchange or release
of any security now or hereafter given for this Note, (iii) to the release of
any party primarily or secondarily liable hereon, and (iv) that it will not be
necessary for any holder of this Note, in order to enforce payment of this Note,
to first institute or exhaust such holder's remedies against the Obligor or any
other party liable hereon or against any security for this Note. The nonexercise
by the holder of any of its rights hereunder in any particular instance shall
not constitute a waiver thereof in that or any subsequent instance.
This Note is one of the Construction Notes referred to in that
certain Credit and Security Agreement dated as of January 27, 1998 (as the same
may be amended, supplemented or otherwise modified, renewed or replaced from
time to time, the "Credit Agreement") among the Obligor, the lenders referred to
therein, Credit Lyonnais New York Branch as Administrative Agent, NationsBank of
Texas, N.A. as Syndication Agent and TD Securities (USA) Inc. as Documentation
Agent, and is entitled to the benefits of, and is secured by the security
interests granted in, the Credit Agreement and the other security documents,
guarantees and other agreements referred to and described therein, which Credit
Agreement, among other things, contains provisions for optional and mandatory
prepayment and for acceleration of the maturity hereof upon the occurrence of
certain events, all as provided in the Credit Agreement.
<PAGE>
The Obligor is personally obligated and fully liable for the
amount due under this Note. Credit Lyonnais New York Branch as Administrative
Agent or the Lender has the right to sue on this Note and obtain a personal
judgment against the Obligor for satisfaction of the amount due under this Note
either before or after a judicial foreclosure of any mortgage or deed of trust
which has been granted by the Obligor, under AS 09.45.170 - 09.45.220. (ss. 2 ch
44 SLA 1988).
THIS NOTE SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE
WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WHICH ARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
ALASKA UNITED FIBER
SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., its General Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
By: Fiber Hold Co., Inc., its General Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
-2-
<PAGE>
[LAST PAGE OF NOTE]
Unpaid Name of
Principal Person
Payments Balance Making
Date Amount of Loan Principal Interest of Note Notation
-3-
<PAGE>
CONSTRUCTION NOTE
$25,000,000 New York, New York
as of January 27, 1998
FOR VALUE RECEIVED, ALASKA UNITED FIBER SYSTEM PARTNERSHIP, an
Alaska general partnership (the "Obligor"), DOES HEREBY PROMISE TO PAY to the
order of NATIONSBANK OF TEXAS, N.A. (the "Lender") at the office of Credit
Lyonnais New York Branch at 1301 Avenue of the Americas, New York, New York
10019, in lawful money of the United States of America in immediately available
funds, the principal amount of TWENTY FIVE MILLION DOLLARS ($25,000,000), or the
aggregate unpaid principal amount of all Construction Loans (as defined in the
Credit Agreement referred to below) made by the Lender to the Obligor pursuant
to said Credit Agreement, whichever is less, on such date or dates as is
required by said Credit Agreement, and to pay interest on the unpaid principal
amount from time to time outstanding hereunder, in like money, at such office,
at such rate or rates per annum and at such times as set forth in said Credit
Agreement.
The Obligor and any and all sureties, guarantors and endorsers
of this Note and all other parties now or hereafter liable hereon severally
waive grace, demand, presentment for payment, protest, notice of any kind
(including, but not limited to, notice of dishonor, notice of protest, notice of
intention to accelerate or notice of acceleration) and diligence in collecting
and bringing suit against any party hereto and agree to the extent permitted by
applicable law (i) to all extensions and partial payments, with or without
notice, before or after maturity, (ii) to any substitution, exchange or release
of any security now or hereafter given for this Note, (iii) to the release of
any party primarily or secondarily liable hereon, and (iv) that it will not be
necessary for any holder of this Note, in order to enforce payment of this Note,
to first institute or exhaust such holder's remedies against the Obligor or any
other party liable hereon or against any security for this Note. The nonexercise
by the holder of any of its rights hereunder in any particular instance shall
not constitute a waiver thereof in that or any subsequent instance.
This Note is one of the Construction Notes referred to in that
certain Credit and Security Agreement dated as of January 27, 1998 (as the same
may be amended, supplemented or otherwise modified, renewed or replaced from
time to time, the "Credit Agreement") among the Obligor, the lenders referred to
therein, Credit Lyonnais New York Branch as Administrative Agent, NationsBank of
Texas, N.A. as Syndication Agent and TD Securities (USA) Inc. as Documentation
Agent, and is entitled to the benefits of, and is secured by the security
interests granted in, the Credit Agreement and the other security documents,
guarantees and other agreements referred to and described therein, which Credit
Agreement, among other things, contains provisions for optional and mandatory
prepayment and for acceleration of the maturity hereof upon the occurrence of
certain events, all as provided in the Credit Agreement.
<PAGE>
The Obligor is personally obligated and fully liable for the
amount due under this Note. Credit Lyonnais New York Branch as Administrative
Agent or the Lender has the right to sue on this Note and obtain a personal
judgment against the Obligor for satisfaction of the amount due under this Note
either before or after a judicial foreclosure of any mortgage or deed of trust
which has been granted by the Obligor, under AS 09.45.170 - 09.45.220. (ss. 2 ch
44 SLA 1988).
THIS NOTE SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE
WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WHICH ARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
ALASKA UNITED FIBER
SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., its General Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
By: Fiber Hold Co., Inc., its General Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
-2-
<PAGE>
[LAST PAGE OF NOTE]
Unpaid Name of
Principal Person
Payments Balance Making
Date Amount of Loan Principal Interest of Note Notation
-3-
<PAGE>
CONSTRUCTION NOTE
$25,000,000 New York, New York
as of January 27, 1998
FOR VALUE RECEIVED, ALASKA UNITED FIBER SYSTEM PARTNERSHIP, an
Alaska general partnership (the "Obligor"), DOES HEREBY PROMISE TO PAY to the
order of TORONTO-DOMINION (TEXAS), INC. (the "Lender") at the office of Credit
Lyonnais New York Branch at 1301 Avenue of the Americas, New York, New York
10019, in lawful money of the United States of America in immediately available
funds, the principal amount of TWENTY FIVE MILLION DOLLARS ($25,000,000), or the
aggregate unpaid principal amount of all Construction Loans (as defined in the
Credit Agreement referred to below) made by the Lender to the Obligor pursuant
to said Credit Agreement, whichever is less, on such date or dates as is
required by said Credit Agreement, and to pay interest on the unpaid principal
amount from time to time outstanding hereunder, in like money, at such office,
at such rate or rates per annum and at such times as set forth in said Credit
Agreement.
The Obligor and any and all sureties, guarantors and endorsers
of this Note and all other parties now or hereafter liable hereon severally
waive grace, demand, presentment for payment, protest, notice of any kind
(including, but not limited to, notice of dishonor, notice of protest, notice of
intention to accelerate or notice of acceleration) and diligence in collecting
and bringing suit against any party hereto and agree to the extent permitted by
applicable law (i) to all extensions and partial payments, with or without
notice, before or after maturity, (ii) to any substitution, exchange or release
of any security now or hereafter given for this Note, (iii) to the release of
any party primarily or secondarily liable hereon, and (iv) that it will not be
necessary for any holder of this Note, in order to enforce payment of this Note,
to first institute or exhaust such holder's remedies against the Obligor or any
other party liable hereon or against any security for this Note. The nonexercise
by the holder of any of its rights hereunder in any particular instance shall
not constitute a waiver thereof in that or any subsequent instance.
This Note is one of the Construction Notes referred to in that
certain Credit and Security Agreement dated as of January 27, 1998 (as the same
may be amended, supplemented or otherwise modified, renewed or replaced from
time to time, the "Credit Agreement") among the Obligor, the lenders referred to
therein, Credit Lyonnais New York Branch as Administrative Agent, NationsBank of
Texas, N.A. as Syndication Agent and TD Securities (USA) Inc. as Documentation
Agent, and is entitled to the benefits of, and is secured by the security
interests granted in, the Credit Agreement and the other security documents,
guarantees and other agreements referred to and described therein, which Credit
Agreement, among other things, contains provisions for optional and mandatory
prepayment and for acceleration of the maturity hereof upon the occurrence of
certain events, all as provided in the Credit Agreement.
<PAGE>
The Obligor is personally obligated and fully liable for the
amount due under this Note. Credit Lyonnais New York Branch as Administrative
Agent or the Lender has the right to sue on this Note and obtain a personal
judgment against the Obligor for satisfaction of the amount due under this Note
either before or after a judicial foreclosure of any mortgage or deed of trust
which has been granted by the Obligor, under AS 09.45.170 - 09.45.220. (ss. 2 ch
44 SLA 1988).
THIS NOTE SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE
WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WHICH ARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
ALASKA UNITED FIBER
SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., its General Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
By: Fiber Hold Co., Inc., its General Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
-2-
<PAGE>
[LAST PAGE OF NOTE]
Unpaid Name of
Principal Person
Payments Balance Making
Date Amount of Loan Principal Interest of Note Notation
-3-
<PAGE>
EXHIBIT A-2
FORM OF TERM NOTE
$ New York, New York
as of , 199
FOR VALUE RECEIVED, ALASKA UNITED FIBER SYSTEM PARTNERSHIP, an
Alaska general partnership (the "Obligor"), DOES HEREBY PROMISE TO PAY to the
order of [insert name of Lender] (the "Lender") at the office of Credit Lyonnais
New York Branch at 1301 Avenue of the Americas, New York, New York 10019, in
lawful money of the United States of America in immediately available funds, the
principal amount of DOLLARS ($ ), (i) in twenty (20)
quarterly installments due on the last Business Day of each March, June,
September and December commencing on the first such date occurring after the
Conversion Date (as defined in the Credit Agreement), and continuing through
December, 2007*, in accordance with the following schedule:
Installment Due on the
Last Business Day of Amount of Principal Installment
---------------------- -------------------------------
March 2003* $
June 2003 $
September 2003 $
December 2003 $
March 2004 $
June 2004 $
September 2004 $
December 2004 $
March 2005 $
June 2005 $
September 2005 $
December 2005 $
March 2006 $
June 2006 $
September 2006 $
December 2006 $
March 2007 $
- -------------------
* Assumes the Commencement Date occurs in January, 1998.
<PAGE>
Installment Due on the
Last Business Day of Amount of Principal Installment
---------------------- -------------------------------
June 2007 $
September 2007 $
December 2007 $
and (ii) in a final installment payable on the Final Maturity Date in an amount
equal to the unpaid principal amount of the outstanding Term Loans.
In addition, the Obligor hereby promises to pay interest on
the unpaid principal amount from time to time outstanding hereunder, in like
money, at such office, at such rate or rates per annum and at such times as set
forth in said Credit Agreement. All capitalized terms used herein but not
defined herein shall have the meanings set forth in the Credit Agreement.
The Obligor and any and all sureties, guarantors and endorsers
of this Note and all other parties now or hereafter liable hereon severally
waive grace, demand, presentment for payment, protest, notice of any kind
(including, but not limited to, notice of dishonor, notice of protest, notice of
intention to accelerate or notice of acceleration) and diligence in collecting
and bringing suit against any party hereto and agree to the extent permitted by
applicable law (i) to all extensions and partial payments, with or without
notice, before or after maturity, (ii) to any substitution, exchange or release
of any security now or hereafter given for this Note, (iii) to the release of
any party primarily or secondarily liable hereon, and (iv) that it will not be
necessary for any holder of this Note, in order to enforce payment of this Note,
to first institute or exhaust such holder's remedies against the Obligor or any
other party liable hereon or against any security for this Note. The nonexercise
by the holder of any of its rights hereunder in any particular instance shall
not constitute a waiver thereof in that or any subsequent instance.
This Note is one of the Term Notes referred to in that certain
Credit and Security Agreement dated as of January 27, 1998 (as the same may be
amended, supplemented or otherwise modified, renewed or replaced from time to
time, the "Credit Agreement") among the Obligor, the lenders referred to
therein, Credit Lyonnais New York Branch as Administrative Agent, NationsBank of
Texas, N.A. as Syndication Agent and TD Securities (USA) Inc. as Documentation
Agent, and is entitled to the benefits of, and is secured by the security
interests granted in, the Credit Agreement and the other security documents,
guarantees and other agreements referred to and described therein, which Credit
Agreement, among other things, contains provisions for optional and mandatory
prepayment and for acceleration of the maturity hereof upon the occurrence of
certain events, all as provided in the Credit Agreement.
The Obligor is personally obligated and fully liable for the
amount due under this Note. Credit Lyonnais New York Branch as Administrative
Agent or the Lender has the right to sue on this Note and obtain a personal
judgment against the Obligor for satisfaction of the
-2-
<PAGE>
amount due under this Note either before or after a judicial foreclosure of any
mortgage or deed of trust which has been granted by the Obligor, under AS
09.45.170 - 09.45.220. (ss. 2 ch 44 SLA 1988).
THIS NOTE SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE
WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WHICH ARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
ALASKA UNITED FIBER SYSTEM
PARTNERSHIP
By: GCI Fiber Co., Inc., its
General Partner
By:
Name:
Title:
By: Fiber Hold Co., Inc., its
General Partner
By:
Name:
Title:
-3-
<PAGE>
[LAST PAGE OF NOTE]
Unpaid Name of
Principal Person
Payments Balance Making
Date Principal Interest of Note Notation
-4-
<PAGE>
DEED OF TRUST AND ASSIGNMENT
THIS DEED OF TRUST AND ASSIGNMENT (herein referred to as "this Deed of Trust")
is entered into effective as of the 27th day of January, 1998, by ALASKA UNITED
FIBER SYSTEM PARTNERSHIP ("Grantor"), an Alaska general partnership the address
of which is c/o GCI Fiber Co., Inc., Attention: Chief Financial Officer, 2550
Denali St., Suite 1000, Anchorage, Alaska 99503, to TRANSALASKA SUMMIT TITLE
INSURANCE AGENCY OF ALASKA L.L.C. ("Trustee"), the address of which is 400 W.
Tudor Road, Anchorage, Alaska 99503, and CREDIT LYONNAIS NEW YORK BRANCH, the
address of which is Attention: Project Finance Group, 1301 Avenue of the
Americas, New York, New York 10019, as Administrative Agent (under the Credit
Agreement described below) for the Lenders (as defined below) ("Beneficiary").
WITNESSETH:
ARTICLE I
Definitions
Section 1.1. Definitions. As used herein, the following terms shall have the
following meanings:
Alaska United Fiber System: The entire fiber optic telecommunications
cable network comprising approximately 2,331 statute route miles
connecting Glen Alps, the Whittier LS, the Valdez LS, the PSMS, the
Juneau LS, the Norma Beach LS, and the SDC, which network shall have an
initial equipped capacity of OC-48 (approximately 2.5 gigabits per
second data rate or 32,256 voice channels). The undersea portion of the
network shall connect landing stations between four sites. The proposed
landing station sites are the Whittier LS, the Valdez LS, the Juneau
LS, and the Norma Beach LS. An undersea branching unit shall connect
the three undersea fiber cable segments originating at the Whittier LS,
the Juneau LS, and the Norma Beach LS; the Valdez LS shall be connected
through a separate undersea extension originating at the Whittier LS.
The terrestrial portion of the network shall consist of inland
extensions from the Whittier LS to Glen Alps, from the Norma Beach LS
to the SDC, and from the Valdez LS to the PSMS. The Alaska United Fiber
System shall be installed on, in, or under the Lands and shall include
(without limitation) the following: (i) the fiber optic cable,
branching unit, optical amplifiers, and terminal station equipment
supplied and included in the network, (ii) all cable ducts or conduits
through which the cable runs, (iii) the associated splice boxes, splice
vaults and other associated concrete structures constructed by or for
Grantor and used to protect, or provide splicing space for, the cable,
together with all manhole and handhole covers relating thereto, (iv)
electrical power facilities, including electrical distribution panels,
lighting, wiring and other related apparatus attached to or within the
cable (excluding any meters owned by other Persons), (v) heating,
ventilating, and air conditioning equipment, (vi) metal enclosures
(sometimes referred to as the regeneration stations) containing certain
of the Electronics together with the concrete slabs to which the
<PAGE>
enclosures are attached, (vii) all fixtures included in the network,
and (viii) auxiliary generators, batteries, battery-charging equipment,
telephone equipment, and other related equipment used by Grantor on the
Lands (the items referred to in the foregoing clauses (i) through
(viii) are referred to herein as "Equipment").
Beneficiary: Credit Lyonnais New York Branch, as Administrative Agent
(under the Credit Agreement described below) for the Lenders.
Cable: The Alaska United Fiber System, the fiber pairs in the GCI Cable
Facility to which Grantor has been granted exclusive use pursuant to
the GCI Fiber Exchange Agreement, and the fiber pairs in the Kanas
Facility to which Grantor has been granted exclusive use pursuant to
the Kanas Fiber Exchange Agreement.
Capacity Agreement: Any lease, capacity agreement, or other contract or
agreement pursuant to which Grantor leases, licenses, or otherwise
grants to any other Person the right to use the System or any portion
thereof, or sells to any other Person capacity on the System or any
portion thereof, or agrees to provide telecommunications services
utilizing the System or any portion thereof, including, without
limitation, any option, standby, or back-up arrangement with respect to
any of the foregoing, any Satisfactory Capacity Agreement, the GCI
Lease Contract, the GCI Fiber Exchange Agreement, and the Kanas Fiber
Exchange Agreement.
Code: The Uniform Commercial Code, as amended from time to time, in
effect in the state in which the Mortgaged Property is located.
Constituent Party: Any signatory to this Deed of Trust that signs on
Grantor's behalf that is a general partner in Grantor.
Contracts: All rights, titles, and interests now owned or hereafter
acquired by or for Grantor in, to, or under (i) any and all contracts
providing for or effecting the purchase of all or any portion of the
Mortgaged Property, whether such contracts are now or hereafter
existing, including all amendments and supplements to and all renewals
and extensions of such contracts at any time made; (ii) any and all
other contracts, licenses, easements, rights-of-way, permits,
approvals, authorizations, variances, non-objections, certificates, and
other rights in, to, under, relating directly or indirectly to, or
obtained, issued, or received in connection with the Project or the
development, construction, installation, testing, occupancy, use,
enjoyment, operation, maintenance, alteration, repair, or
reconstruction of the System, whether executed, granted, or issued by a
private person or entity or a Governmental Authority, and whether such
contracts, licenses, easements, rights-of-way, permits, approvals,
authorizations, variances, non-objections, certificates, and other
rights are now or hereafter existing; (iii) any and all other contracts
which in any way relate to the ownership, development, construction,
installation, testing, occupancy, use, enjoyment, operation,
maintenance, alteration, repair, or reconstruction by Grantor of the
System; (iv) to the extent not included in the foregoing, the Fiber
DEED OF TRUST - Page 2
<PAGE>
Exchange Agreements; and (v) to the extent not included in the
foregoing, any and all Capacity Agreements and any and all other
agreements or contracts authorizing or providing for the exclusive or
non-exclusive use, leasing, licensing, operation, possession, or other
enjoyment all or any portion of the System by others.
Credit Agreement: That certain Credit and Security Agreement of even
date herewith by and among Grantor (as Borrower thereunder),
Beneficiary (as Administrative Agent thereunder for the Lenders),
NationsBank of Texas, N.A. (as Syndication Agent thereunder), and TD
Securities (USA), Inc. (as Documentation Agent thereunder), as said
agreement as may be amended from time to time hereafter.
Default Rate: The rate of interest specified in each Note or the Credit
Agreement to be paid by the maker of the Note from and after the
occurrence of a default in payment under the provisions of the Note and
Loan Documents but not in excess of the Maximum Lawful Rate.
Disposition: Any sale, lease, exchange, assignment, conveyance,
transfer, trade, or other disposition of all or any portion of the
Mortgaged Property (or any interest therein) or all or any part of the
partnership interest held by any Constituent Party in Grantor.
Electronics: The transceivers, regenerators, multiplexers, and other
electronic equipment, together with all racks to which the same are
affixed, now owned or hereafter acquired by or for Grantor and now or
at any time hereafter located at the regenerator sites and points of
presence on the Lands or at the network operations center or along the
GCI Cable Facility or the Kanas Facility, including all equipment
replacing any of the foregoing.
Equipment: The term "Equipment" shall have the meaning given such term
in the definition of "Alaska United Fiber System" set forth herein.
Event of Default: Any happening or occurrence described in Article VI
hereof.
Environmental Law: Any and all federal, state, or local laws, statutes,
ordinances, rules, regulations, permits, approvals, authorizations,
variances, codes, standards, guidelines, decisions, decrees, rulings,
orders, or other requirements of any Governmental Authority relating to
or imposing liability or standards of conduct concerning any Hazardous
Material, environmental protection, health, safety, industrial hygiene,
or the environmental conditions on, under, or about the Mortgaged
Property, including but not limited to the Clean Water Act (also known
as the Federal Water Pollution Control Act), 33 U.S.C. ss. 1251 et
seq., the Clean Air Act, 42 U.S.C. ss. 7401 et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. ss. 136 et seq.,
the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 ("CERCLA"), 42 U.S.C. ss. 9601 et seq., the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. 99-499, 100 Stat.
1613,
DEED OF TRUST - Page 3
<PAGE>
the Emergency Planning and Community Right To Know Act, 42 U.S.C. ss.
11001 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. ss. 6901 et seq., the Occupational Safety and Health Act, 29
U.S.C. ss.ss. 656 and 657, Title 46 of the Alaska Statutes ("AS"), and
rules, regulations, codes, standards, or guidelines promulgated
pursuant to such laws, as such laws, statutes, ordinances, rules,
regulations, codes, standards, and guidelines are amended from time to
time.
FDC: GCICC's Fairbanks Distribution Center, located at 520 5th Avenue,
Suite 407, Fairbanks, Alaska 99701.
Fiber Exchange Agreements: The GCI Fiber Exchange Agreement and the
Kanas Fiber Exchange Agreement.
Fixtures: All materials, supplies, equipment (including but not
necessarily limited to Equipment), systems, apparatus, and other items
now owned or hereafter acquired by or for Grantor and now or hereafter
attached to, installed in, or used in connection with (temporarily or
permanently) any of the Lands or the Improvements, together with all
accessions, additions, alterations, betterments, replacements,
substitutions, and appurtenances to or for any of the foregoing and the
proceeds thereof.
GCI Cable: GCI Cable, Inc., an Alaska corporation, and its wholly-owned
subsidiaries.
GCI Cable Facility: The fiber optic facilities owned, leased, and/or to
be constructed by GCI Cable (i) in the Anchorage area, connecting the
SADC, Glen Alps, and the AT&T POP (located at 210 East Bluff Road,
Anchorage, Alaska 99501), and (ii) in the Fairbanks area, connecting
the NPMS, FDC, and the AT&T POP (located at 200 Gaffney Road,
Fairbanks, Alaska 99701).
GCI Fiber Exchange Agreement: That certain Fiber Exchange Agreement
among Grantor, GCI Cable, and GCICC, substantially in the form attached
to the Credit Agreement as Exhibit U, as such agreement may be amended,
supplemented, or otherwise modified, renewed, or replaced from time to
time.
GCI Lease Contract: The Lease Agreement between Grantor as lessor and
GCICC as lessee, substantially in the form attached to the Credit
Agreement as Exhibit O, as such agreement may be amended, supplemented,
or otherwise modified, renewed, or replaced from time to time.
GCICC: GCI Communication Corp., an Alaska corporation.
GCICC Facility: The locations owned or leased by GCICC in Anchorage at
the SADC and Glen Alps, in Fairbanks at the FDC, and in Seattle at the
SDC.
Glen Alps: GCICC's leased location at Lot 5, Block 1, Tower Estates
Subdivision, Anchorage, Alaska 99516.
DEED OF TRUST - Page 4
<PAGE>
Governmental Authority: Any federal, state, local, or other
governmental entity, department, agency, authority, board, bureau,
commission, office, officer, or instrumentality, or any court, in each
case whether in the United States or a foreign jurisdiction and whether
now or hereafter in existence.
Grantor: The individual or entity described on the first page and in
the initial paragraph of this Deed of Trust and any and all subsequent
owners of the Mortgaged Property or any part thereof (without hereby
implying Beneficiary's consent to any Disposition of the Mortgaged
Property).
Hazardous Material: Any substance, product, waste, or other material
which is or becomes listed, regulated, or addressed as being a
explosive, flammable, hazardous, polluting, radioactive, toxic, or
similarly harmful substance, product, waste, or other material under
any Environmental Law, including but not limited to (i) any substance
included within the definition of "hazardous waste" pursuant to Section
1004 of RCRA; (ii) any substance included within the definition of
"hazardous substance" pursuant to Section 101 of CERCLA; (iii) any
substance included in the definition of "hazardous waste" pursuant to
AS 46.03.900; (iv) any substance included in the definition of
"hazardous substance" pursuant to AS 46.03.826; (v) asbestos; (vi)
polychlorinated biphenyls; and (vii) petroleum products.
Impositions: (i) All real estate and personal property taxes, charges,
assessments, standby fees, excises, and levies and any interest, costs,
or penalties with respect thereto, general and special, ordinary and
extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever which at any time prior to or after the execution hereof may
be assessed, levied, or imposed upon the Mortgaged Property or the
ownership, use, occupancy, or enjoyment thereof, or any portion
thereof; (ii) any charges, fees, license payments, or other sums
payable for or under any Contract maintained for the benefit of the
Mortgaged Property; (iii) water, gas, sewer, electricity, and other
utility charges and fees relating to the Mortgaged Property; and (iv)
assessments and charges arising under any subdivision, condominium,
planned unit development, or other declarations, restrictions, regimes,
or agreements affecting the Mortgaged Property.
Improvements: Any and all buildings, structures, and other
improvements, and any and all additions, alterations, betterments,
replacements, substitutions, and appurtenances thereto, now owned or
hereafter acquired by or for Grantor and now or at any time hereafter
situated, placed, or constructed upon the Lands or any part thereof.
Indebtedness: (i) The principal of, interest on, and all other sums
evidenced by or as are or may become due and owing under or pursuant to
the Notes or the Loan Documents; (ii) such additional sums, with
interest thereon, as may hereafter be borrowed from Beneficiary (or its
successors or assigns) by the then record owner of the Mortgaged
Property, when evidenced by a promissory note which, by its terms, is
secured hereby (it being contemplated by Grantor and Beneficiary that
such future indebtedness may be incurred); and (iii) any
DEED OF TRUST - Page 5
<PAGE>
and all other indebtedness, obligations, and liabilities of any kind or
character of Grantor to Beneficiary, now or hereafter existing,
absolute or contingent, due or not due, arising by operation of law or
otherwise, direct or indirect, primary or secondary, joint, several,
joint and several, fixed or contingent, secured or unsecured by
additional or different security or securities, including indebtedness,
obligations, and liabilities to Beneficiary of Grantor as a member of
any partnership, joint venture, trust, or other type of business
association, or other group, and whether incurred by Grantor as
principal, surety, endorser, guarantor, accommodation party or
otherwise, it being contemplated by Grantor and Beneficiary that
Grantor may hereafter become indebted to Beneficiary in further sum or
sums.
Juneau LS: Grantor's cable landing station at or near 17103 Pt. Lena
Loop Road, Juneau, Alaska.
Kanas: Kanas Telecom, Inc., an Alaska corporation, or any successor or
transferee thereof under the Kanas Fiber Exchange Agreement.
Kanas Facility: The fiber optic telecommunications cable constructed
and owned by Kanas between the PSMS and the NPMS.
Kanas Fiber Exchange Agreement: That certain Fiber Exchange Agreement
between Kanas and GCICC dated November 21, 1997 (certain rights and
obligations under which have been assigned by GCICC to Grantor), as
such agreement may be amended, supplemented, or otherwise modified,
renewed, or replaced from time to time.
Lands: Any and all rights, titles, interests, and privileges now owned
or hereafter acquired by or for Grantor in, to, under, or respecting
the real property (i) described in Exhibit A attached hereto and
incorporated herein by this reference or (ii) otherwise along the route
of the System, together with any and all rights appurtenant thereto
(including but not limited to access rights).
Legal Requirements: (i) Any and all present and future statutes,
ordinances, regulations, rules, permits, approvals, authorizations,
variances, guidelines, standards, decisions, rulings, notices, or
orders of any Governmental Authority in any way applicable to Grantor
or the Mortgaged Property, including, without limiting the generality
of the foregoing, the ownership, development, construction,
installation, testing, occupancy, use, enjoyment, operation,
maintenance, alteration, repair, or reconstruction of the Mortgaged
Property, (ii) any and all covenants, conditions, and restrictions
contained in any deeds, other forms of conveyance, or in any other
instruments of any nature that relate in any way or are applicable to
the Mortgaged Property or the ownership, development, construction,
installation, testing, occupancy, use, enjoyment, operation,
maintenance, alteration, repair, or reconstruction thereof, (iii) all
presently or subsequently effective agreements or articles of
incorporation, partnership, limited partnership, joint venture, limited
liability company, trust, or other form of business association, and
the bylaws of any such entity or association established thereby,
adopted by or for Grantor or any Constituent
DEED OF TRUST - Page 6
<PAGE>
Party, (iv) any and all Contracts, and (v) any and all other contracts
(written or oral) of any nature that relate in any way to the Mortgaged
Property and to which Grantor may be or become bound. Lenders: Such
persons as from time to time may be Lenders under the Credit Agreement.
The initial Lenders are identified on Schedule 1 attached hereto and
incorporated herein by this reference.
Loan Documents: The Credit Agreement, the Notes, this Deed of Trust,
and any and all other documents now or hereafter executed by Grantor or
any other person or party in connection with the loans evidenced by the
Notes or in connection with the payment of the Indebtedness or the
performance and discharge of the Obligations.
Material Adverse Effect: The term "Material Adverse Effect" shall have
the meaning given such term in the Credit Agreement.
Maximum Lawful Rate: The maximum interest rate permitted by applicable
law.
Mortgaged Property: Any and all rights, titles, interests, and
privileges now owned or hereafter acquired by or for Grantor in, to,
under, or respecting the Lands, the Improvements, the Fixtures, the
Contracts, and the Personalty, together with any and all other security
and collateral of any nature whatsoever, now or hereafter given for the
repayment of the Indebtedness or the performance and discharge of the
Obligations, whether obtained for, from, or in connection with the
Project or otherwise. As used in this Deed of Trust, the term
"Mortgaged Property" shall be expressly defined as meaning all or,
where the context permits or requires, any portion of the above and all
or, where the context permits or requires, any interest therein.
Norma Beach LS: Grantor's cable landing station at or near 14725 Norma
Beach Road, Edmonds, Washington 98026.
Note: Each and every Note (as defined in the Credit Agreement) executed
by Grantor pursuant to the Credit Agreement and secured by, among other
things, this Deed of Trust, and any and all renewals, modifications,
rearrangements, reinstatements, enlargements, extensions,
substitutions, or replacements thereof or therefor, from time to time.
NPMS: Kanas's North Pole Metering Station facility located at 3624
Frosty Avenue, North Pole, Alaska 99705.
Obligations: Any and all of the covenants, conditions, representations,
warranties, and other obligations (other than to repay the
Indebtedness) made or undertaken by Grantor to Beneficiary, Trustee, or
others as set forth in the Loan Documents or in any Contract.
DEED OF TRUST - Page 7
<PAGE>
Person: Any natural person, corporation, partnership, limited liability
company, trust, joint venture, association, company, estate,
unincorporated organization, or government or any agency or political
subdivision thereof.
Personalty: Any and all rights, titles, interests, and privileges now
owned or hereafter acquired by or for Grantor in or to any and all
personal property of every kind and character (whether movable or
immovable and including but not limited to goods, equipment (including
but not necessarily limited to Equipment), machinery, inventory,
documents of title, instruments, chattel paper, accounts, insurance
proceeds, contract rights, Rents, trademarks, trade names, general
intangibles, and deposit accounts), together with all accessions,
additions, alterations, betterments, replacements, substitutions, and
appurtenances to or for any of the foregoing and the proceeds thereof.
POP: A party's primary point of presence at a designated location.
Permitted Encumbrances: The term "Permitted Encumbrances" shall have
the meaning given such term in the Credit Agreement.
Project: The acquisition, ownership, development, construction,
installation, testing, occupancy, use, enjoyment, operation,
maintenance, alteration, repair, and reconstruction of the System.
Project Agreements: The term "Project Agreements" shall have the
meaning given such term in the Credit Agreement.
PSMS: Kanas's PetroStar Metering Station, located at 2.5 Mile Dayville
Road, Valdez, Alaska 99686.
Release: The terms "release", "removal", "environment", and "disposal"
shall have the meanings given such terms in CERCLA, and the term
"disposal" shall also have the meaning given it in RCRA; provided that
in the event either CERCLA or RCRA is amended so as to broaden the
meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment, and provided
further that to the extent the laws of the State of Alaska establish a
meaning for "release", "removal", "environment", or "disposal" which is
broader than that specified in either CERCLA and RCRA, such broader
meaning shall apply.
Remedial Work: Any investigation, site monitoring, containment,
cleanup, removal, restoration, or other work of any kind or nature
reasonably necessary or desirable under any applicable Environmental
Law in connection with the current or future presence, suspected
presence, release, or suspected release of a Hazardous Material in or
into the air, soil, ground water, surface water, or soil vapor at, on,
about, under, or within the Mortgaged Property.
DEED OF TRUST - Page 8
<PAGE>
Rents: All of the rents, revenues, income, proceeds, profits, security
and other types of deposits (after Grantor acquires title thereto), and
other benefits paid or payable to Grantor by parties to the Contracts
for using, leasing, licensing, operating, possessing, or otherwise
enjoying all or any portion of the Mortgaged Property.
SADC: GCICC's South Anchorage Distribution Center, located at 6831
Arctic Boulevard, Anchorage, Alaska 99518.
Satisfactory Capacity Agreement: The term "Satisfactory Capacity
Agreement" shall have the meaning given such term in the Credit
Agreement.
SDC: GCICC's Seattle Distribution Center, located at 2001-6th Avenue,
Suite 2900, Seattle, Washington 98121.
Subordinate Mortgage: Any deed of trust, mortgage, pledge, lien
(constitutional, statutory, or contractual), security interest,
encumbrance or charge, or conditional sale or other title retention
agreement (except for Permitted Encumbrances), covering all or any
portion of the Mortgaged Property executed and delivered by Grantor,
the lien of which is subordinate and inferior to the lien of this Deed
of Trust.
System: The SONET OC-48 fiber optic cable network connecting the cities
of Anchorage, Whittier, Valdez, Fairbanks, and Juneau (via Lena Point),
Alaska, and Norma Beach and Seattle, Washington. The system comprises
the Alaska United Fiber System, the Electronics, the fiber pairs in the
Kanas Facility to which Grantor has been granted exclusive use pursuant
to the Kanas Fiber Exchange Agreement, the fiber pairs in the GCI Cable
Facility to which Grantor has been granted exclusive use pursuant to
the GCI Fiber Exchange Agreement, and all other equipment (including
but not necessarily limited to Equipment) and rights (including but not
limited to rights in or to the GCICC Facility under the GCI Fiber
Exchange Agreement) necessary to operate the Alaska United Fiber
System, the fiber pairs in the Kanas Facility to which Grantor has been
granted exclusive use, and the fiber pairs in the GCI Cable Facility to
which Grantor has been granted exclusive use as an integrated
telecommunications network. The undersea portion of the System shall
connect the Whittier LS, the Valdez LS, the Juneau LS, and the Norma
Beach LS. An undersea branching unit shall connect the three undersea
fiber cable segments originating at the Whittier LS, the Juneau LS, and
the Norma Beach LS; the Valdez LS shall be connected through a separate
undersea extension originating at the Whittier LS. The terrestrial
portion of the System shall consist of inland extensions from the
Whittier LS to the SADC and the AT&T POP in Anchorage, from Valdez to
the FDC and the AT&T POP in Fairbanks, from the Norma Beach LS to the
SDC.
Trustee: The person described as Trustee on the first page and in the
initial paragraph of this Deed of Trust and any successor Trustee or
Trustees hereunder.
DEED OF TRUST - Page 9
<PAGE>
Valdez LS: Grantor's cable landing station at or near 200 South Harbor
Drive, Valdez, Alaska 99686.
Whittier LS: Grantor's cable landing station at or near Lot #16, First
Addition to the Port of Whittier, Alaska.
Section 1.2. Additional Definitions: As used herein, the following terms shall
have the following meanings:
"Hereby", "herein", "hereto", "hereunder", "herewith", and similar
terms mean by, in, to, under, and with respect to this Deed of Trust or
the other document or matter being referenced.
"Heretofore" means before, "hereafter" means after, and "herewith"
means concurrently with, the date of this Deed of Trust.
All pronouns, whether in masculine, feminine or neuter form, shall be
deemed to refer to the object of such pronoun whether same is
masculine, feminine or neuter in gender, as the context may suggest or
require.
All terms used herein, whether or not defined in Section 1.1 hereof,
and whether used in singular or plural form, shall be deemed to refer
to the object of such term whether such is singular or plural in
nature, as the context may suggest or require.
ARTICLE II
Grant
Section 2.1. Grant. To secure the full and timely payment of the Indebtedness
and the full and timely performance and discharge of the Obligations, (a)
Grantor by these presents does GRANT, BARGAIN, SELL, and CONVEY unto Trustee, in
trust, with power of sale, the Mortgaged Property, TO HAVE AND TO HOLD the
Mortgaged Property unto Trustee, for the use and benefit of Beneficiary,
forever, and (b) Grantor on behalf of itself, its successors and assigns does
hereby WARRANT AND COVENANT TO DEFEND the title to the Mortgaged Property unto
Trustee and Beneficiary against every person lawfully claiming or attempting to
claim the same or any part thereof; provided, however, that if Grantor shall pay
(or cause to be paid) the Indebtedness as and when the same shall become due and
payable and shall fully perform and discharge (or cause to be fully performed
and discharged) the Obligations on or before the date the same are to be
performed and discharged, then the liens, security interests, estates, and
rights granted by the Loan Documents shall terminate, in accordance with the
provisions thereof, otherwise the same shall remain in full force and effect. A
certificate or other written statement executed on behalf of Trustee or
Beneficiary confirming that the Indebtedness has not been fully paid or the
Obligations have not been fully performed or discharged shall be sufficient
evidence thereof for the purpose of reliance by third parties on such fact.
DEED OF TRUST - Page 10
<PAGE>
ARTICLE III
Representations and Warranties
Grantor hereby unconditionally represents and warrants to Beneficiary, as of the
date hereof and at all times during the term of this Deed of Trust, as follows:
Section 3.1. Representations and Warranties in Credit Agreement. The
representations and warranties made by Grantor in the Credit Agreement are
hereby incorporated by reference into this Deed of Trust.
Section 3.2. No Reliance by Beneficiary. Grantor and Beneficiary have and are
relying solely upon Grantor's expertise and business plan in connection with the
ownership and operation of the Mortgaged Property. Grantor is not relying on
Beneficiary's expertise or business acumen in connection with the Mortgaged
Property.
Section 3.3. Title and Lien. Grantor has or will acquire, no later than July 31,
1998, such good and indefeasible title (free and clear of any liens, charges,
encumbrances, security interests, claims, restrictions, covenants, or other
rights, titles, or interests of third parties of any nature whatsoever, other
than Permitted Encumbrances) to the Mortgaged Property and such other real and
personal property as is necessary or desirable, and the Mortgaged Property
together with such other real and personal property is sufficient, in the
reasonable opinion of Beneficiary, to carry out the Project, to complete the
construction and installation of the System, and to test, occupy, use, enjoy,
operate, maintain, alter, repair, and reconstruct the System during the term
hereof. This Deed of Trust constitutes (a) a valid, subsisting first lien on the
Lands, the Improvements, the Fixtures, and the Contracts (to the extent the same
constitute rights, titles, or interests in real property), (b) a valid,
subsisting first priority security interest in and to the Fixtures (to the
extent the same constitute rights, titles, or interests in personal property
covered by the Code), and (c) a valid, subsisting first priority assignment of
the Contracts and the Rents, all in accordance with the terms hereof and subject
to any Permitted Encumbrances.
Section 3.4. Mailing Address. Grantor's mailing address, as set forth in the
opening paragraph hereof or as changed pursuant to the provisions hereof, is
true and correct.
Section 3.5. Environmental Laws and Hazardous Materials.
(a) To the best of Grantor's knowledge, no property under consideration
for acquisition and addition to the Mortgaged Property, no operations conducted,
being conducted, or to be conducted on any such property, and no transportation
to or from any such property (i) violated, violate, or will violate any
applicable law, statute, ordinance, rule, regulation, permit, approval,
authorization, variance, code, standard, decree, ruling, or order of any
Governmental Authority or any covenant, condition, or restriction (recorded or
otherwise), including but not limited to all applicable Environmental Laws, all
building, fire, and other safety codes, and all zoning ordinances and
restrictions (including restrictions applicable to avalanche, earthquake, and
flood zones), or (ii) are subject to any existing, pending, or threatened
action, suit, investigation, inquiry, or proceeding by any Governmental
Authority or nongovernmental Person under any Environmental Law or to any
remedial obligations under any Environmental Law, except such (in either case)
as is set forth on Schedule 3.20 of the
DEED OF TRUST - Page 11
<PAGE>
Credit Agreement or as does not and will not have (as determined by Beneficiary
after notice thereto) a Material Adverse Effect.
(b) No Mortgaged Property, no operations conducted (either prior to or
after the acquisition thereof by Grantor), being conducted, or to be conducted
thereon, and no transportation thereto or therefrom (either prior to or after
the acquisition thereof by Grantor) (i) violated, violate, or will violate any
applicable law, statute, ordinance, rule, regulation, permit, approval,
authorization, variance, code, standard, guideline, decision, decree, ruling, or
order of any Governmental Authority or any covenant, condition, or restriction
(recorded or otherwise), including but not limited to all applicable
Environmental Laws, all building, fire, and other safety codes, and all zoning
ordinances and restrictions (including restrictions applicable to avalanche,
earthquake, and flood zones) or (ii) are subject to any existing, pending, or
threatened action, suit, investigation, inquiry, or proceeding by any
Governmental Authority or nongovernmental Person under any Environmental Law or
to any remedial obligations under any Environmental Law, except such (in either
case) as is set forth on Schedule 3.20 of the Credit Agreement or as does not
and will not have (as determined by Beneficiary after notice thereto) a Material
Adverse Effect.
(c) Grantor has taken all steps reasonably necessary to determine that,
has no evidence that, and has reasonably determined that no Hazardous Material
has been used, generated, handled, transported, treated, placed, held, stored,
located, buried, discharged, or otherwise released on, in, under, from, or about
the Mortgaged Property and that the Mortgaged Property contains no Hazardous
Material, except (i) as is set forth on Schedule 3.20 of the Credit Agreement or
(ii) as does not and will not have (as determined by Beneficiary after notice
thereto) a Material Adverse Effect.
(d) Grantor has not received any notice, and has no knowledge, that any
Governmental Authority or any employee or agent thereof has determined, has
threatened to determine, or is investigating any allegation that a Hazardous
Material has been, is being, or is threatened to be used, generated, handled,
transported, treated, placed, held, stored, located, buried, discharged, or
otherwise released on, in, under, from, or about the Mortgaged Property, except
as is set forth on Schedule 3.20 of the Credit Agreement.
ARTICLE IV
Affirmative Covenants
Grantor hereby unconditionally covenants and agrees with Beneficiary, until the
entire Indebtedness shall have been paid in full and all of the Obligations
shall have been fully performed and discharged, as follows:
Section 4.1. Payment and Performance. Grantor will pay the Indebtedness as and
when specified in the Loan Documents, and will perform and discharge all of the
Obligations, in full and on or before the dates the same are to be performed.
Section 4.2. Compliance with Loan Documents. Grantor will promptly and
faithfully comply with, conform to, act or refrain from acting in accordance
with, and satisfy and
DEED OF TRUST - Page 12
<PAGE>
discharge all obligations arising under any and all of the Loan Documents
(including any and all obligations which, in accordance with their terms or the
intent of the parties thereto, survive the expiration or earlier termination of
Credit Agreement and thus survive the reconveyance, foreclosure, or other action
terminating this Deed of Trust).
Section 4.3. First Lien Status. Grantor will protect the first lien and security
interest status of this Deed of Trust and the other Loan Documents and will not
permit to be created or to exist in respect of the Mortgaged Property or any
part thereof any lien or security interest superior to, on a parity with, or
inferior to any of the liens or security interests hereof, except for Permitted
Encumbrances.
Section 4.4. Payment of Impositions. Grantor will duly pay and discharge, or
cause to be paid and discharged, the Impositions not later than the earlier to
occur of (i) the due date thereof, (ii) the day any fine, penalty, interest, or
cost may be added thereto or imposed, or (iii) the day any lien may be filed for
the nonpayment thereof (if such day is used to determine the due date of the
respective item).
Section 4.5. Payment for Labor and Materials. Grantor will promptly pay all
bills for labor, materials, and specifically fabricated materials incurred in
connection with the Mortgaged Property and never permit to exist in respect of
the Mortgaged Property or any part thereof any lien or security interest (other
than Permitted Encumbrances), even though inferior to the liens and security
interests hereof, for any such bill, and in any event never permit to be created
or exist in respect of the Mortgaged Property or any part thereof any other or
additional lien or security interest (other than Permitted Encumbrances)
superior to, on a parity with, or inferior to any of the liens or security
interests hereof.
Section 4.6. Repair. Grantor will keep the Mortgaged Property in first-class
order and condition and make all repairs, additions, alterations, betterments,
improvements, renewals, and replacements thereof and thereto, interior and
exterior, structural and nonstructural, ordinary and extraordinary, foreseen and
unforeseen, which are necessary or reasonably appropriate to keep the same in
such order and condition. Grantor will prevent any act, occurrence, or neglect
which might impair the value or usefulness of the Mortgaged Property for its
intended usage. In instances where repairs, additions, alterations, betterments,
improvements, renewals, and replacements are required in and to the Mortgaged
Property on an emergency basis to prevent loss, damage, waste, or destruction
thereof, Grantor shall proceed to repair, add to, alter, better, improve, renew,
or replace the same, or cause the same to be repaired, added to, altered,
bettered, improved, renewed, or replaced, notwithstanding anything to the
contrary contained in Section 5.2 hereof; provided, however, that in instances
where such emergency measures are to be taken, Grantor will notify Beneficiary
in writing of the commencement of the same and the measures to be taken, and,
when same are completed, the completion date and the measures actually taken.
Section 4.7. Insurance. Grantor will obtain and maintain (or will cause to be
obtained and maintained) insurance upon and relating to the Mortgaged Property
with such insurer, in such amounts and covering such risks as are required by
the Credit Agreement.
Section 4.8. Inspection. Grantor will permit Trustee and Beneficiary, and their
agents, representatives, and employees, to inspect the Mortgaged Property at all
reasonable times.
DEED OF TRUST - Page 13
<PAGE>
Section 4.9. Tax on Deed of Trust. At any time any law shall be enacted imposing
or authorizing the imposition of any tax upon this Deed of Trust, or upon any
rights, titles, liens, or security interests created hereby, or upon the
Indebtedness or any part thereof; Grantor will immediately pay all such taxes,
provided that if such law as enacted makes it unlawful for Grantor to pay such
taxes Grantor shall not pay nor be obligated to pay such tax.
Section 4.10. Expenses. Subject to the provision of Section 12.11 hereof,
Grantor will pay on demand all reasonable and bona fide out-of-pocket costs,
fees, and expenses and other expenditures, including but not limited to
reasonable attorneys' fees and costs, paid or incurred by Beneficiary or Trustee
to third parties incident to this Deed of Trust or any other Loan Document
(including but not limited to reasonable attorneys' fees and costs in connection
with the negotiation, preparation, and execution of any amendment hereto, any
release hereof, or any consent, approval or waiver hereunder, and in connection
with any suit to which Beneficiary or Trustee is a party involving this Deed of
Trust or the Mortgaged Property) or incident to the enforcement of the
Indebtedness or the exercise of any right or remedy of Beneficiary under this
Deed of Trust.
Section 4.11. Statement of Unpaid Balance. At any time and from time to time,
Grantor will furnish promptly, upon the request of Beneficiary, a written
statement or affidavit, in form satisfactory to Beneficiary, stating the unpaid
balance of the Indebtedness and that there are no offsets or defenses against
full payment of the Indebtedness and the terms hereof, or if there are any such
offsets or defenses, specifying them.
Section 4.12. Address. Grantor shall give written notice to Beneficiary and
Trustee of any change of address of Grantor in the manner set forth in the
Credit Agreement. Absent such official written notice of a change in address for
Grantor, Beneficiary and Trustee shall be entitled for all purposes under the
Loan Documents to rely upon Grantee's address as set forth in the initial
paragraph of this Deed of Trust, as the same may have been heretofore changed in
accordance with the provisions hereof.
Section 4.13. Further Amendments, Assurances, and Corrections. From time to
time, as provided in the Loan Documents or at the request of Beneficiary,
Grantor will (i) execute, acknowledge, deliver, record and/or file such further
instruments (including but not limited to additional or amended deeds of trust,
security agreements, financing statements, continuation statements, and
assignments of contracts or rents) and perform such further acts and provide
such further assurances as may be necessary, desirable, or proper, in
Beneficiary's opinion, to carry out more effectively the purposes of this Deed
of Trust and the Loan Documents and to subject to the liens and security
interests hereof and thereof any property intended by the terms hereof or
thereof to be covered hereby or thereby, including but not limited to any
accessions, additions, alterations, betterments, renewals, replacements, and
substitutions to, of, or for the Mortgaged Property; (ii) execute, acknowledge,
deliver, procure, record and/or file any document or instrument (including but
not limited to any financing statement) deemed advisable by Beneficiary to
protect the liens and the security interests herein granted against the rights
or interests of third persons; (iii) promptly correct any defect, error, or
omission which may be discovered in the contents of this Deed of Trust or in any
other Loan Document or in the execution or acknowledgment thereof; and (iv) pay
all costs connected with any of the foregoing.
DEED OF TRUST - Page 14
<PAGE>
Section 4.14. Environment Laws and Hazardous Materials.
(a) Grantor will consider for acquisition and addition to the Mortgaged
Property only that property with respect to which it is and will be, to the best
of its knowledge, capable of making the representations and warranties set forth
in Article III hereof.
(b) Grantor will acquire and add to the Mortgaged Property only that
property with respect to which it is capable of making the representations and
warranties set forth in Article III hereof.
(c) Before acquiring and adding any property to the Mortgaged Property,
Grantor will determine that no Hazardous Material has been used, generated,
handled, transported, treated, placed, held, stored, located, buried,
discharged, or otherwise released on, in, under, from, or about the Mortgaged
Property and that the Mortgaged Property contains no Hazardous Material, except
as is set forth on Schedule 3.20 of the Credit Agreement or as does not and will
not have (as determined by Beneficiary after notice thereto) a Material Adverse
Effect.
(d) Grantor will promptly notify Beneficiary in writing whenever
Grantor receives any notice or otherwise acquires knowledge of (i) any existing,
pending, or threatened action, suit, investigation, inquiry, or proceeding by
any Governmental Authority or nongovernmental Person under any Environmental Law
or (ii) any occurrence or condition that could cause the Mortgaged Property or
any part thereof to be subject to such an action, suit, investigation, inquiry,
or proceeding, except such (in either case) as is set forth on Schedule 3.20 of
the Credit Agreement.
(e) Grantor will duly obtain or file all licenses, permits, approvals,
authorizations, variances, non-objections, certificates, and notices as are
required to be obtained or filed in connection with the acquisition, ownership,
development, construction, installation, testing, occupancy, use, enjoyment,
operation, maintenance, alteration, repair, and reconstruction of the Mortgaged
Property and the Project, including but not limited to all licenses, permits,
approvals, authorizations, variances, non-objections, certificates, and notices
required to be obtained or filed in connection with the use, generation,
handling, transporting, treating, placing, holding, storing, locating, burying,
discharging, or otherwise releasing a Hazardous Material into the environment.
(f) Grantor will comply with, and will keep and maintain the Mortgaged
Property in compliance with, all applicable Environmental Laws.
(g) Grantor will permit Beneficiary to join and participate in, as a
party if it so elects, any legal proceedings or actions initiated with respect
to the Mortgaged Property in connection with any Environmental Law or Hazardous
Material.
(h) In the event that any Remedial Work is reasonably necessary or
desirable, Grantor shall commence, within thirty (30) days after written demand
by Beneficiary (or such shorter period of time as may be required under any
Legal Requirement), and thereafter diligently prosecute to completion all such
Remedial Work. All Remedial Work shall be performed by contractors approved in
advance by Beneficiary, and under the supervision of a consulting engineer
approved by Beneficiary. All costs and expenses of such Remedial Work shall be
paid by Grantor including but not limited to Beneficiary's reasonable attorneys'
fees
DEED OF TRUST - Page 15
<PAGE>
and costs incurred in connection with monitoring or review of such Remedial
Work. In the event Grantor shall fail to timely commence, or cause to be
commenced, or fail to prosecute diligently to completion, such Remedial Work,
Beneficiary may, but shall not be required to, cause such Remedial Work to be
performed, and all costs and expenses thereof or incurred in connection
therewith shall become part of the Indebtedness.
ARTICLE V
Negative Covenants
Grantor hereby unconditionally covenants and agrees with Beneficiary, until the
entire Indebtedness shall have been paid in full and all of the Obligations
shall have been fully performed and discharged, as follows:
Section 5.1. Use Violations; Hazardous Materials. Grantor will not use,
maintain, operate, or occupy, or authorize the use, maintenance, operation, or
occupancy of, the Mortgaged Property in any manner which (i) violates any Legal
Requirement, (ii) constitutes a public or private nuisance, or (iii) makes void,
voidable, or cancelable, or increases the premium of, any insurance then in
force with respect thereto. In addition to and without limiting the generality
of the foregoing, Grantor will not use, generate, handle, transport, treat,
place, hold, store, locate, bury, discharge, or otherwise release any Hazardous
Material, or authorize any other Person to do so, on, in, under, from, or about
the Mortgaged Property, in a manner which results in a violation or breach of
any Legal Requirement or any covenant or representation hereunder.
Section 5.2. Waste; Alterations. Grantor will not commit or permit any waste or
impairment of the Mortgaged Property and will not (subject to the provisions of
Section 4.6 hereof), without the prior written consent of Beneficiary, make or
permit to be made any alterations or additions to the Mortgaged Property which
has or would have a Material Adverse Effect.
Section 5.3. Replacement of Fixtures and Personalty. Grantor will not, without
the prior written consent of Beneficiary, permit any of the Fixtures or
Personalty to be removed at any time from the Lands or Improvements unless the
removed item is removed temporarily for maintenance and repair or, if removed
permanently, is replaced by an item of equal suitability and value, owned by
Grantor free and clear of any lien or security interest except Permitted
Encumbrances; provided, however, that Grantor shall not make, or permit to be
made, any renewal, replacement, addition, or improvement to the System which
would adversely affect the System or which has a cost of $200,000 or more.
Section 5.4. Change in Zoning. Grantor will not seek or acquiesce in a zoning
reclassification of all or any portion of the Mortgaged Property, or grant or
consent to any covenant, condition, or restriction covering all or any portion
of the Mortgaged Property, without Beneficiary's prior written consent.
Section 5.5. No Relocation. Except as authorized in the Loan Documents, Grantor
will not relocate or allow any relocation of the Improvements or Fixtures
without the prior written consent of Beneficiary.
Section 5.6. No Disposition. Except as authorized in the Loan Documents, Grantor
will not make a Disposition without the prior written consent of Beneficiary.
DEED OF TRUST - Page 16
<PAGE>
Section 5.7. No Subordinate Mortgages. Grantor will not create, place, or permit
to be created or placed, or through any act or failure to act, acquiesce in the
placing of, or allow to remain any Subordinate Mortgage regardless of whether
such Subordinate Mortgage is expressly subordinate to the liens or security
interests of the Loan Documents with respect to the Mortgaged Property.
ARTICLE VI
Events of Default
The term "Event of Default" as used herein shall mean the occurrence or
happening, at any time and from time to time, of any one or more of the
following:
Section 6.1. Default Under Other Loan Document. If Grantor shall default or if
an event of default--including but not limited to (i) a default in the payment
of any principal of, or interest on, the Notes that continues unremedied for the
period set forth in the Credit Agreement and (ii) any other Event of Default as
defined in the Credit Agreement--shall exist under or pursuant to any Loan
Document other than this Deed of Trust.
Section 6.2. Payment of Indebtedness Arising Hereunder. If Grantor shall fail or
refuse to fully and timely perform and discharge any Indebtedness arising solely
under this Deed of Trust as and when called for and such failure or refusal
continues for a period of five (5) days after demand for such payment has been
made in writing upon Grantor.
Section 6.3. Performance of Obligations. If Grantor shall fail or refuse to
fully and timely perform and discharge any of the Obligations as and when called
for and such failure or refusal shall either be uncurable or, if curable, shall
remain uncured for a period of either (i) ten (10) consecutive days after demand
for such performance has been made upon Grantor or (ii) such shorter period as
may be provided in the Credit Agreement.
Section 6.4. False Representation. If any representation, warranty, or statement
made by Grantor or others in, under, or pursuant to the Loan Documents or any
affidavit or other instrument executed in connection with the Loan Documents
shall be false or misleading in any material respect as of the date made.
Section 6.5. Default Under Other Lien Document. If Grantor shall default or if
an event of default shall exist under or pursuant to any other deed of trust,
mortgage, or security agreement which covers or affects any part of the
Mortgaged Property.
Section 6.6. Abandonment. If Grantor abandons all or any portion of the
Mortgaged Property and such abandonment has or could be expected to have a
Material Adverse Effect.
Section 6.7. Material Adverse Effect. If Beneficiary reasonably determines that
any event shall have occurred that has or could be expected to have a Material
Adverse Effect.
ARTICLE VII
Remedies
Section 7.1. Beneficiary's Remedies Upon Default. Upon the occurrence of an
Event of Default or any event or circumstance which, with the lapse of time or
the giving of notice or
DEED OF TRUST - Page 17
<PAGE>
both, would constitute an Event of Default, Beneficiary may, at Beneficiary's
option, and by or through Trustee, by Beneficiary itself or otherwise, do any
one or more of the following:
(a) Right to Perform Grantor's Covenants. If Grantor has failed to keep
or perform any covenant whatsoever contained in this Deed of Trust or the other
Loan Documents, Beneficiary may, but shall not be obligated to any person to do
so, perform or attempt to perform said covenant, and any payment made or expense
incurred in the performance or attempted performance of any such covenant shall
be and become a part of the Indebtedness, and Grantor promises, upon demand, to
pay to Beneficiary, at the place where the relevant Note is payable, all sums so
advanced or paid by Beneficiary, with interest from the date when paid or
incurred by Beneficiary at the Default Rate. No such payment by Beneficiary
shall constitute a waiver of any Event of Default. In addition to the liens and
security interests hereof, Beneficiary shall be subrogated to all rights,
titles, liens, and security interests securing the payment of any debt, claim,
tax, or assessment for the payment of which Beneficiary may make an advance, or
which Beneficiary may pay.
(b) Right of Entry. Beneficiary may, prior or subsequent to the
institution of any foreclosure proceedings, enter upon the Mortgaged Property,
or any part thereof, and take exclusive possession of the Mortgaged Property and
of all books, records, and accounts relating thereto and to exercise without
interference from Grantor any and all rights which Grantor has with respect to
the management, possession, operation, protection, or preservation of the
Mortgaged Property, including but not limited to the right to rent the same for
the account of Grantor and to deduct from such Rents all costs, expenses, and
liabilities of every character incurred by Beneficiary in collecting such Rents
and in managing, operating, maintaining, protecting, or preserving the Mortgaged
Property and to apply the remainder of such Rents to the Indebtedness in such
manner as Beneficiary may elect. All such costs, expenses, and liabilities
incurred by Beneficiary in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Mortgaged Property, if not paid out
of Rents as hereinabove provided, shall constitute a demand obligation owing by
Grantor and shall bear interest from the date of expenditure until paid at the
Default Rate, all of which shall constitute a portion of the Indebtedness. If
necessary to obtain the possession provided for above, Beneficiary may invoke
any and all legal remedies to dispossess Grantor, including specifically one or
more actions for forcible entry and detainer, ejectment, quiet title, and
restitution. In connection with any action taken by Beneficiary pursuant to this
subsection, Beneficiary shall not be liable for any loss sustained by Grantor
resulting from any failure to rent the Mortgaged Property, or any part thereof,
or from any other act or omission of Beneficiary in managing the Mortgaged
Property unless such loss is caused by the willful misconduct of Beneficiary,
nor shall Beneficiary be obligated to perform or discharge any obligation, duty,
or liability under any Contract or under or by reason hereof or by reason of the
exercise of rights or remedies hereunder. Grantor hereby agrees to indemnify
Beneficiary for, and to hold Beneficiary harmless from, any and all liability,
loss, or damage, which may or might be incurred by Beneficiary under any such
Contract or under or by reason hereof or by reason of the exercise of rights or
remedies hereunder, and from any and all claims and demands whatsoever which may
be asserted against Beneficiary by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants, or
agreements contained in any such Contract. Should Beneficiary incur any such
liability, the amount thereof, including but not limited to costs, expenses, and
reasonable attorneys' fees, together with interest hereon from the date of
expenditure until paid at the Default Rate, shall be secured hereby, and Grantor
shall reimburse Beneficiary therefor immediately upon demand. Nothing in this
subsection shall
DEED OF TRUST - Page 18
<PAGE>
impose any duty, obligation, or responsibility upon Beneficiary for the control,
care, management, leasing, or repair of the Mortgaged Property, nor for the
carrying out of any of the terms and conditions of any Contract; nor shall it
operate to make Beneficiary responsible or liable for any Hazardous Material on
or under the Mortgaged Property, or for any dangerous or defective condition of
the Mortgaged Property or for any negligence in the management, leasing, upkeep,
repair, or control of the Mortgaged Property resulting in loss or injury or
death to any licensee, employee, or stranger. Grantor hereby assents to,
ratifies, and confirms any and all actions of Beneficiary with respect to the
Mortgaged Property taken under this subsection.
The remedies in this subsection are in addition to other
remedies available to Beneficiary and the exercise of the remedies in this
subsection shall not be deemed to be an election of nonjudicial or judicial
remedies otherwise available to Beneficiary. The remedies in this Article VII
are available under and governed by the real property laws of Alaska and are not
governed by the personal property laws of Alaska, including but not limited to,
except as described in Section 7.1(g) hereof, the power to dispose of personal
property in a commercially reasonable manner under Section 9.504 of the Code. No
action by Beneficiary, taken pursuant to this subsection, shall be deemed to be
an election to dispose of personal property under Section 9.505 of the Code. Any
receipt of consideration received by Beneficiary pursuant to this subsection
shall be immediately credited against the Indebtedness (in the inverse order of
maturity) and the value of said consideration shall be treated like any other
payment against the Indebtedness.
(c) Right to Accelerate. Beneficiary may, without notice, demand,
presentment, notice of nonpayment or nonperformance, protest, notice of protest,
notice of intent to accelerate, notice of acceleration, or any other notice or
any other action, all of which are hereby waived by Grantor, declare the entire
unpaid balance of the Indebtedness immediately due and payable, and upon such
declaration, the entire unpaid balance of the Indebtedness shall be immediately
due and payable. The failure to exercise any remedy available to Beneficiary
shall not be deemed to be a waiver of any rights or remedies of Beneficiary
under the Loan Documents, at law or in equity.
(d) Foreclosure--Power of Sale. Beneficiary may request Trustee to
proceed with foreclosure under the power of sale which is hereby conferred, such
foreclosure to be accomplished in accordance with the following provisions:
(i) Public Sale. Trustee is hereby authorized and empowered,
and it shall be Trustee's special duty, upon such request of
Beneficiary, to sell the Mortgaged Property, or any part thereof, at
public auction conducted in the city of Anchorage, Alaska (if the
designation of such site hereby is lawful), to the highest bidder for
cash with or without having taken possession of same. Any such sale
(including notice thereof) shall comply with the applicable
requirements, at the time of the sale, of AS 34.20.70 through
34.20.135, as amended, or, if and to the extent such statute is not
then in force, with the applicable requirements, at the time of the
sale, of the successor statute or statutes, if any, governing sales of
Alaska real property under powers of sale conferred by deeds of trust.
If there is no statute in force at the time of the sale governing sales
of Alaska real property under powers of sale conferred by deeds of
trust, such sale shall comply with applicable law at the time of the
sale.
DEED OF TRUST - Page 19
<PAGE>
(ii) Right To Require Proof of Financial Ability and/or Cash
Bid. At any time during the bidding, Trustee may require a bidding
party (1) to disclose its full name, state and city of residence,
occupation, and specific business office location, and the name and
address of the principal the bidding party is representing (if
applicable), and (2) to demonstrate reasonable evidence of the bidding
party's financial ability (or, if applicable, the financial ability of
the principal of such bidding party), as a condition to the bidding
party submitting bids at the foreclosure sale. If any such bidding
party ("Questioned Bidder") declines to comply with Trustee's
requirement in this regard, or if such Questioned Bidder does respond
but Trustee, in Trustee's sole and absolute discretion, deems the
information or the evidence of the financial ability of the Questioned
Bidder (or, if applicable, the principal of such bidding party) to be
inadequate, then Trustee may continue the bidding with reservation; and
in such event (A) Trustee shall be authorized to caution the Questioned
Bidder concerning the legal obligations to be incurred in submitting
bids, and (B) if the Questioned Bidder is not the highest bidder at the
sale, or if having been the highest bidder the Questioned Bidder fails
to deliver the cash purchase price payment promptly to Trustee, all
bids by the Questioned Bidder shall be null and void. Trustee may, in
Trustee's sole and absolute discretion, determine that a credit bid may
be in the best interest of Grantor and Beneficiary, and elect to sell
the Mortgaged Property for credit or for a combination of cash and
credit; provided, however, that Trustee shall have no obligation to
accept any bid except an all cash bid. In the event Trustee requires a
cash bid and cash is not delivered within a reasonable time after
conclusion of the bidding process, as specified by Trustee, but in no
event later than 3:45 p.m. local time on the day of sale, then said
contingent sale shall be null and void, the bidding process may be
recommenced, and any subsequent bids or sale shall be made as if no
prior bids were made or accepted.
(iii) Sale Subject To Unmatured Indebtedness. In addition to
the rights and powers of sale granted under the preceding provisions of
this subsection, if default is made in the payment of any installment
of the Indebtedness, Beneficiary may, at Beneficiary's option, at once
or at any time thereafter while any matured installment remains unpaid,
without declaring the entire Indebtedness to be due and payable, orally
or in writing direct Trustee to enforce this trust and to sell the
Mortgaged Property subject to such unmatured Indebtedness and to the
rights, powers, liens, security interests, and assignments securing or
providing recourse for payment of such unmatured Indebtedness, in the
same manner, all as provided in the preceding provisions of this
subsection. Sales made without maturing the Indebtedness may be made
hereunder whenever there is a default in the payment of any installment
of the Indebtedness, without exhausting the power of sale granted
hereby, and without affecting in any way the power of sale granted
under this subsection, the unmatured balance of the Indebtedness or the
rights, powers, liens, security interests, and assignments securing or
providing recourse for payment of the indebtedness.
DEED OF TRUST - Page 20
<PAGE>
(iv) Partial Foreclosure. Sale of a part of the Mortgaged
Property shall not exhaust the power of sale, but sales may be made
from time to time until the Indebtedness is paid and the Obligations
are performed and discharged in full. It is intended by each of the
foregoing provisions of this subsection that Trustee may, after any
request or direction by Beneficiary, sell not only the Lands and the
Improvements but also the Fixtures and Personalty and other interests
constituting a part of the Mortgaged Property or any part thereof,
along with the Lands and the Improvements or any part thereof, as a
unit and as a part of a single sale, or may sell at any time or from
time to time any part or parts of the Mortgaged Property separately
from the remainder of the Mortgaged Property. It shall not be necessary
to have present or to exhibit at any sale any of the Mortgaged
Property.
(v) Trustee's Deeds. After any sale under this subsection,
Trustee shall make good and sufficient deeds, assignments, and other
conveyances to the purchaser or purchasers thereunder in the name of
Grantor, conveying the Mortgaged Property or any part thereof so sold
to the purchaser or purchasers with general warranty of title by
Grantor. It is agreed that in any deeds, assignments, or other
conveyances given by Trustee, any and all statements of fact or other
recitals therein made as to the identity of Beneficiary, the occurrence
or existence of any Event of Default, the notice of intention to
accelerate, or acceleration of, the maturity of the Indebtedness, the
request to sell, notice of sale, time, place, terms and manner of sale,
and receipt, distribution, and application of the money realized
therefrom, the due and proper appointment of a substitute trustee, and
without being limited by the foregoing, any other act or thing having
been duly done by or on behalf of Beneficiary or by or on behalf of
Trustee, shall be taken by all courts of law and equity as conclusive
(to the extent authorized by law) or prima facie evidence that such
statements or recitals state true, correct, and complete facts and are
without further question to be so accepted, and Grantor does hereby
ratify and confirm any and all acts that Trustee may lawfully do in the
premises by virtue hereof.
(e) Beneficiary's Judicial Remedies. Beneficiary, or Trustee, upon
written request of Beneficiary, may proceed by suit or suits, at law or in
equity, to enforce the payment of the Indebtedness and the performance and
discharge of the Obligations in accordance with the terms hereof, of each Note,
and the other Loan Documents, to foreclose the liens and security interests of
this Deed of Trust as against all or any part of the Mortgaged Property, and to
have all or any part of the Mortgaged Property sold under the judgment or decree
of a court of competent jurisdiction. This remedy shall be cumulative of any
other nonjudicial remedies available to Beneficiary with respect to the Loan
Documents. Proceeding with a request or receiving a judgment for legal relief
shall not be or be deemed to be an election of remedies or bar any available
nonjudicial remedy of Beneficiary.
(f) Beneficiary's Right to Appointment of Receiver. Beneficiary, as a
matter of right and without regard to the sufficiency of the security for
repayment of the Indebtedness and performance and discharge of the Obligations,
without notice to Grantor and without any showing of insolvency, fraud, or
mismanagement on the part of Grantor, and without the necessity of filing any
judicial or other proceeding other than the proceeding for appointment of a
receiver, shall be entitled to the appointment of a receiver or receivers of the
DEED OF TRUST - Page 21
<PAGE>
Mortgaged Property or any part thereof, and of the Rents, and Grantor hereby
irrevocably consents to the appointment of a receiver or receivers. Any receiver
appointed pursuant to the provisions of this subsection shall have the usual
powers and duties of receivers in such matters.
(g) Beneficiary's Uniform Commercial Code Remedies. Beneficiary may
exercise its rights of enforcement under the Code with respect to Fixtures.
(h) Rights Relating to Rents. Grantor has, pursuant to Article IX of
this Deed of Trust, assigned, as collateral, to Beneficiary all Rents received
for all or any portion of the Mortgaged Property. Beneficiary, or Trustee on
Beneficiary's behalf, may at any time, and without notice, either in person, by
agent, or by receiver to be appointed by a court, enter and take possession of
the Mortgaged Property or any part thereof, and in its own name, sue for or
otherwise collect the Rents. Grantor hereby agrees that Beneficiary may, upon
notice from Trustee or Beneficiary to Grantor of the occurrence of an Event of
Default, terminate the limited license granted to Grantor in Section 9.2 hereof,
and thereafter direct the persons obligated to pay Rent under any of the
Contracts to pay direct to Beneficiary the Rents due and to become due under the
Contracts and attorn in respect of all other obligations thereunder direct to
Beneficiary, or Trustee on Beneficiary's behalf, without any obligation on their
part to determine whether an Event of Default does in fact exist or has in fact
occurred. All Rents collected by Beneficiary, or Trustee acting on Beneficiary's
behalf, shall be applied as provided for in Section 7.4 of this Deed of Trust;
provided, however, that if the costs, expenses, and attorneys' fees shall exceed
the amount of Rents collected, the excess shall be added to the Indebtedness,
shall bear interest at the Default Rate, and shall be immediately due and
payable. The entering upon and taking possession of the Mortgaged Property, the
collection of Rents, and the application thereof as aforesaid shall not cure or
waive any Event of Default or notice of default, if any, hereunder nor
invalidate any act done pursuant to such notice, except to the extent any such
default is fully cured. Failure or discontinuance by Beneficiary, or Trustee on
Beneficiary's behalf, at any time or from time to time, to collect said Rents
shall not in any manner impair the subsequent enforcement by Beneficiary, or
Trustee on Beneficiary's behalf, of the right, power and authority herein
conferred upon it. Nothing contained herein, nor the exercise of any right,
power, or authority herein granted to Beneficiary, or Trustee on Beneficiary's
behalf, shall be, or shall be construed to be, an affirmation by it of any
tenancy, lease, or option, nor an assumption of liability under, nor the
subordination of, the lien or charge of this Deed of Trust, to any such tenancy,
lease, or option, nor an election of judicial relief, if any such relief is
requested or obtained as to Contracts or Rents, with respect to the Mortgaged
Property or any other collateral given by Grantor to Beneficiary. In addition,
from time to time, Beneficiary may elect to subordinate the lien of this Deed of
Trust to any Contract by unilaterally executing and recording an instrument of
subordination, and upon such election the lien of this Deed of Trust shall be
subordinate to the Contract identified in such instrument of subordination;
provided, however, in each instance such subordination will not affect or be
applicable to, and expressly excludes any lien, charge, encumbrance, security
interest, claim, easement, restriction, option, covenant, and other rights,
titles, interests or estates of any nature whatsoever with respect to all or any
portion of the Mortgaged Property to the extent that the same may have arisen or
intervened during the period between the recordation of this Deed of Trust and
the execution of the Contract identified in such instrument of subordination.
(i) Other Rents. Except to the extent provided otherwise in the Credit
Agreement, Beneficiary (i) may surrender the insurance policies maintained
pursuant to Section
DEED OF TRUST - Page 22
<PAGE>
4.7 hereof or any part thereof, and upon receipt shall apply the unearned
premiums as a credit on the Indebtedness, in accordance with the provisions of
Section 7.4 hereof, and, in connection therewith, Grantor hereby appoints
Beneficiary as agent and attorney-in-fact (which is coupled with an interest and
is therefore irrevocable) for Grantor to collect such premiums; and (ii) apply
the reserve for Impositions and insurance premiums, if any, required by the
provisions of this Deed of Trust, toward payment of the Indebtedness; and (iii)
shall have and may exercise any and all other rights and remedies which
Beneficiary may have at law or in equity, or by virtue of any Loan Document or
under the Code, or otherwise.
(j) Beneficiary as Purchaser. Beneficiary may be the purchaser of the
Mortgaged Property or any part thereof, at any sale thereof, whether such sale
be under the power of sale herein vested in Trustee or upon any other
foreclosure of the liens and security interests hereof, or otherwise, and
Beneficiary shall, upon any such purchase, acquire good title to the Mortgaged
Property so purchased, free of the liens and security interests hereof, unless
the sale was made subject to an unmatured portion of the Indebtedness.
Beneficiary, as purchaser, shall be treated in the same manner as any third
party purchaser and the proceeds of Beneficiary's purchase shall be applied in
accordance with Section 7.4 of this Deed of Trust.
Section 7.2. Other Rights of Beneficiary. Should any part of the Mortgaged
Property come into the possession of Beneficiary, whether before or after
default, Beneficiary may (for itself or by or through other persons, firms, or
entities) hold, lease, manage, use, or operate the Mortgaged Property for such
time and upon such terms as Beneficiary may deem prudent under the circumstances
(making such repairs, alterations, additions, and improvements thereto and
taking such other action as Beneficiary may from time to time deem necessary or
desirable) for the purpose of preserving the Mortgaged Property or its value,
pursuant to the order of a court of appropriate jurisdiction or in accordance
with any other rights held by Beneficiary in respect of the Mortgaged Property.
Grantor covenants to promptly reimburse and pay to Beneficiary on demand, at the
place where the Notes are payable, the amount of all reasonable expenses
(including but not limited to the cost of any insurance, Impositions, or other
charges) incurred by Beneficiary in connection with Beneficiary's custody,
preservation, use, or operation of the Mortgaged Property, together with
interest thereon from the date incurred by Beneficiary at the Default Rate; and
all such expenses, costs, taxes, interest, and other charges shall be and become
a part of the Indebtedness. It is agreed, however, that the risk of loss or
damage to the Mortgaged Property is on Grantor, and Beneficiary shall have no
liability whatsoever for decline in value of the Mortgaged Property, for failure
to obtain or maintain insurance, or for failure to determine whether insurance
in force is adequate as to amount or as to the risks insured. Possession by
Beneficiary shall not be deemed an election of judicial relief, if any such
possession is requested or obtained, with respect to any Mortgaged Property or
collateral not in Beneficiary's possession.
Section 7.3. Possession After Foreclosure. If the liens or security interests
hereof shall be foreclosed by power of sale granted herein, by judicial action,
or otherwise, the purchaser at any such sale shall receive, as an incident to
purchaser's ownership, immediate possession of the property purchased, and if
Grantor or Grantor's successors shall hold possession of (or other rights in,
to, or respecting) said property or any part thereof subsequent to foreclosure,
Grantor and Grantor's successors shall (unless otherwise provided in a writing
executed by said purchaser either before or after said purchase) be considered
as tenants at sufferance of the purchaser at foreclosure sale (without
limitation of other rights or remedies, at a reasonable rental per day, due and
payable daily, based upon the value of the portion of the Mortgaged
DEED OF TRUST - Page 23
<PAGE>
Property so occupied and sold to such purchaser), and anyone so occupying (or
exercising other rights in, to, or respecting) such portion of the Mortgaged
Property, after demand is made for possession thereof, shall be guilty of
forcible detainer and shall be subject to eviction and removal, forcible or
otherwise, with or without process of law, and all damages by reason thereof are
hereby expressly waived.
Section 7.4. Application of Proceeds. Except as may be provided to the contrary
in Sections 8.7, 10.2, and 11.4 of the Credit Agreement, the proceeds from any
sale, lease, or other disposition made pursuant to this Article VII or the
proceeds from the surrender of any insurance policies pursuant hereto, or any
Rents collected by Beneficiary from the Mortgaged Property, or the reserve for
Impositions and insurance premiums, if any, required by the provisions of this
Deed of Trust or sums received pursuant to Section 8.1 hereof, or proceeds from
insurance which Beneficiary elects to apply to the Indebtedness pursuant to
Section 8.2 hereof, shall be applied by Trustee, or by Beneficiary, as the case
may be, to the Indebtedness in the following order and priority: (i) to the
payment of all expenses of advertising, selling, and conveying the Mortgaged
Property or part thereof, and/or prosecuting or otherwise collecting Rents,
proceeds, premiums, or other sums including reasonable attorneys' fees and costs
and a reasonable fee or commission to Trustee, not to exceed five percent of the
proceeds thereof or sums so received; (ii) to the remainder of the Indebtedness
as follows; first, to the remaining accrued but unpaid interest, second, to the
matured portion of principal of the Indebtedness, and third, to prepayment of
the unmatured portion, if any, of principal of the Indebtedness applied to
installments of principal in inverse order of maturity; and (iii) the balance if
any, and to the extent applicable, remaining after the full and final payment of
the Indebtedness and full performance and discharge of the Obligations to the
holder of any inferior liens covering the Mortgaged Property, if any, in order
of the priority of such inferior liens (Trustee and Beneficiary shall hereby be
entitled to rely exclusively upon a commitment for title insurance issued to
determine such priority); and (iv) the cash balance, if any, to Grantor. The
application of proceeds of sale or other proceeds as otherwise provided herein
shall be deemed to be a payment of the Indebtedness like any other payment. The
balance of the Indebtedness remaining unpaid, if any, shall remain fully due and
owing in accordance with the terms of the Notes or the other Loan Documents.
Section 7.5. Abandonment of Sale. In the event a foreclosure hereunder is
commenced by Trustee in accordance with Section 7.1(d) hereof, at any time
before the sale Trustee may abandon the sale, and Beneficiary may then institute
suit for the collection of the Indebtedness and for the foreclosure of the liens
and security interests hereof and of the Loan Documents. If Beneficiary should
institute a suit for the collection of the Indebtedness and for a foreclosure of
the liens and security interests, Beneficiary may, at any time before the entry
of a final judgment in said suit, dismiss the same and require Trustee to sell
the Mortgaged Property or any part thereof in accordance with the provisions of
this Deed of Trust.
Section 7.6. Payment of Fees. If any Note or any other part of the Indebtedness
shall be collected or if any of the Obligations shall be enforced by legal
proceedings, whether through a probate or bankruptcy court or otherwise, or
shall be placed in the hands of an attorney for collection after maturity,
whether matured by the expiration of time or by an option given to Beneficiary
to accelerate same, or if Beneficiary becomes a party to any suit where this
Deed of Trust or the Mortgaged Property or any part thereof is involved, Grantor
agrees to pay Beneficiary's reasonable attorneys' fees and expenses incurred,
and such fees shall be and
DEED OF TRUST - Page 24
<PAGE>
become a part of the Indebtedness and shall bear interest from the date such
costs are incurred at the Default Rate.
Section 7.7. Miscellaneous.
(a) In case Beneficiary shall have proceeded to invoke any right,
remedy, or recourse permitted under the Loan Documents and shall thereafter
elect to discontinue or abandon same for any reason, Beneficiary shall have the
unqualified right to do so and, in such event, Grantor and Beneficiary shall be
restored to their former positions with respect to the Indebtedness, the Loan
Documents, the Mortgaged Property or otherwise, and the rights, remedies,
recourses and powers of Beneficiary shall continue as if same had never been
invoked.
(b) In addition to the remedies set forth in this Article VII, upon the
occurrence of an Event of Default, Beneficiary and Trustee shall, in addition,
have all other remedies available to them under any other Loan Document or at
law or in equity.
(c) All rights, remedies, and recourses of Beneficiary granted in the
Notes, this Deed of Trust, the other Loan Documents, any other pledge of
collateral, or otherwise available at law or equity (i) shall be cumulative and
concurrent; (ii) may be pursued separately, successively, or concurrently
against Grantor, the Mortgaged Property, or any one or more of them, at the sole
discretion of Beneficiary; (iii) may be exercised as often as occasion therefor
shall arise, it being agreed by Grantor that the exercise or failure to exercise
any of same shall in no event be construed as a waiver or release thereof or of
any other right, remedy, or recourse; (iv) shall be nonexclusive; (v) shall not
be conditioned upon Beneficiary exercising or pursuing any remedy in relation to
the Mortgaged Property prior to Beneficiary bringing suit to recover the
Indebtedness or suit on the Obligations; and (vi) in the event Beneficiary
elects to bring suit on the Indebtedness and/or the Obligations and obtains a
judgment against Grantor prior to exercising any remedies in relation to
Mortgaged Property, all liens and security interests, including the lien of this
Deed of Trust, shall remain in full force and effect and may be exercised at
Beneficiary's option.
(d) Beneficiary may release, regardless of consideration, any part of
the Mortgaged Property without, as to the remainder, in any way impairing,
affecting, subordinating, or releasing the lien or security interests evidenced
by this Deed of Trust or the other Loan Documents or affecting the obligations
of Grantor to pay the Indebtedness or to perform and discharge the Obligations.
For payment of the Indebtedness, Beneficiary may resort to any of the collateral
therefor in such order and manner as Beneficiary may elect.
(e) Grantor hereby irrevocably and unconditionally waives and releases
(i) all benefits that might accrue to Grantor by virtue of any present or future
law exempting the Mortgaged Property from attachment, levy, or sale on execution
or providing for any appraisement, valuation, stay of execution, exemption from
civil process, redemption, or extension of time for payment; and (ii) any right
to a marshaling of assets or a sale in inverse order of alienation.
(f) Grantor and Beneficiary mutually agree that all agreed contractual
duties are set forth in this Deed of Trust, the Notes, and the other Loan
Documents and that, consistent with AS 34.15.080, there are no
DEED OF TRUST - Page 25
<PAGE>
implied covenants other than the implied covenant of good faith and fair dealing
required by Section 1.203 of the Code.
(g) The remedies in this Article VII are available under and governed
by the real property laws of Alaska and are not governed by the personal
property laws of Alaska, including but not limited to the power to dispose of
personal property in a commercially reasonable manner under Section 9.504 of the
Code.
Section 7.8. Power of Attorney. Upon the occurrence and during the continuance
of an Event of Default, (a) Grantor does hereby irrevocably make, constitute,
and appoint Beneficiary, acting through any of Beneficiary's officers or other
designees, the true and lawful attorney-in-fact of Grantor (which appointment is
coupled with an interest and therefore irrevocable) with full power in the name
of Beneficiary or Grantor to receive, open, and dispose of all mail addressed to
Grantor, and to endorse any notes, checks, drafts, money orders, or other
evidence of payment relating to the Mortgaged Property that may come into the
possession of Beneficiary, with full power and right to cause the mail of
Grantor to be transferred to Beneficiary's own offices or otherwise, and to do
any and all other acts necessary or proper to carry out the intent of this Deed
of Trust and the other Loan Documents and the grant of the Liens (as described
in the Credit Agreement) and security interests hereunder and under the other
Loan Documents, and Grantor hereby ratifies and confirms all that Beneficiary or
its substitutes shall properly do by virtue of this power of attorney; (b)
Grantor does hereby further irrevocably make, constitute, and appoint
Beneficiary, acting through any of Beneficiary's officers or other designees,
the true and lawful attorney-in-fact of Grantor (which appointment is coupled
with an interest and therefore irrevocable) with full power in the name of
Beneficiary or Grantor (i) to enforce all of Grantor's rights under and pursuant
to all Contracts respecting the Mortgaged Property, all for the sole benefit of
Beneficiary, (ii) to enter into and perform such agreements as may be necessary
in order to carry out the terms, covenants, and conditions of the Loan Documents
that are required to be observed or performed by Grantor, (iii) to execute such
other and further deeds of trust, mortgages, pledges, and assignments of the
Mortgaged Property, and related instruments or agreements, as Beneficiary may
reasonably require for the purpose of perfecting, protecting, maintaining, or
enforcing the Liens (as described in the Credit Agreement) and security
interests granted or intended to be granted to Beneficiary hereunder and under
the other Loan Documents, and (iv) to do any and all other things necessary or
proper to carry out the intention of this Deed of Trust and the grant of the
Liens (as described in the Credit Agreement) and security interests hereunder
and under the other Loan Documents, and Grantor hereby ratifies and confirms all
that Beneficiary or its substitutes shall properly do by virtue of this power of
attorney.
ARTICLE VIII
Special Provisions
Section 8.1. Condemnation Proceeds. Beneficiary shall be entitled to receive any
and all sums which may be awarded and become payable to Grantor for condemnation
of the Mortgaged Property or any part thereof, for public or quasi-public use,
or by virtue of private sale in lieu thereof, and any sums which may be awarded
or become payable to Grantor for damages caused by public works or construction
on or near the Mortgaged Property. All such sums are hereby assigned to
Beneficiary, and Grantor shall, upon request of Beneficiary, make, execute,
acknowledge, and deliver any and all additional assignments and documents as may
be necessary from time to time to enable Beneficiary to collect and receipt for
any such sums.
DEED OF TRUST - Page 26
<PAGE>
Beneficiary shall not be, under any circumstances, liable or responsible for
failure to collect, or exercise diligence in the collection of, any of such
sums. Beneficiary shall have the option, in Beneficiary's sole discretion, to
apply all proceeds so collected either to the restoration of the Mortgaged
Property, in the amounts, manner, method and pursuant to such requirements and
documents as Beneficiary may require, or to the liquidation of the Indebtedness
in accordance with the provisions of Section 7.4 hereof. If there shall occur
any condemnation of a part of the Mortgaged Property and if and so long as there
is no default hereunder, Beneficiary will (to the extent and in the manner
provided in the Credit Agreement) make available to Grantor for such
restoration, proceeds of condemnation, if any, collected by Beneficiary because
of the act or occurrence and not restricted by any adverse claim thereto in
accordance with the provisions of Section 8.3 below.
Section 8.2. Insurance Proceeds. Except as may be otherwise provided in the
Credit Agreement, the proceeds of any and all insurance upon the Mortgaged
Property shall be collected by Beneficiary, and Beneficiary shall have the
option, in Beneficiary's sole discretion, to apply all proceeds so collected
either to the restoration of the Mortgaged Property, in the amounts, manner,
method and pursuant to such requirements and documents as Beneficiary may
require, or to the liquidation of the Indebtedness in accordance with the
provisions of Section 7.4 hereof. If there shall occur any insured damage to or
destruction of the Mortgaged Property or any part hereof and if and so long as
there is no default hereunder, Beneficiary will (to the extent and in the manner
provided in the Credit Agreement) make available to Grantor for such
restoration, proceeds of insurance, if any, collected by Beneficiary because of
the act or occurrence and not restricted by any adverse claim thereto in
accordance with the provisions of Section 8.3 below.
Section 8.3. Provisions Applicable to Restoration. In the event that proceeds of
insurance or condemnation, if any, shall be made available to Grantor for the
restoring, repairing, replacing, or rebuilding of the Mortgaged Property,
Grantor hereby covenants to restore, repair, replace or rebuild the same to be
of at least equal value and of substantially the same character as prior to such
damage, destruction, or taking, all to be effected in accordance with applicable
law and plans and specifications approved in advance by Beneficiary. In the
event Grantor is entitled to reimbursement out of insurance or condemnation
proceeds held by Beneficiary, such proceeds shall be disbursed from time to time
upon Beneficiary being furnished with (1) evidence satisfactory to it of the
estimated cost of completion of the restoration, repair, replacement, and
rebuilding, (2) funds, or, at Beneficiary's option, assurances satisfactory to
Beneficiary that such funds are available, sufficient in addition to the
proceeds of insurance or condemnation (as applicable) to complete the proposed
restoration, repair, replacement and rebuilding, and (3) such architect's or
engineer's certificates, waivers of lien, contractor's sworn statements, title
insurance endorsements, bonds, plats of survey, and such other evidences of
cost, payment, and performance as Beneficiary may reasonably require and
approve; and Beneficiary may, in any event, require that all plans and
specifications for such restoration, repair, replacement, and rebuilding be
submitted to and approved by Beneficiary prior to commencement of work. Unless
otherwise provided in the Credit Agreement, no payment made prior to the final
completion of the restoration, repair, replacement and rebuilding shall exceed
ninety percent of the value of the work performed from time to time; funds other
than proceeds of insurance shall be disbursed prior to disbursement of such
proceeds; and at all times the undisbursed balance of such proceeds remaining in
the hands of Beneficiary, together with funds deposited for that purpose or
irrevocably committed to the satisfaction of Beneficiary by or on behalf of
Grantor for that purpose, shall be at least
DEED OF TRUST - Page 27
<PAGE>
sufficient in the reasonable judgment of Beneficiary to pay for the cost of
completion of the restoration, repair, replacement or rebuilding, free and clear
of all liens or claims for lien (except Permitted Encumbrances). Unless
otherwise provided in the Credit Agreement, Grantor shall pay all costs (and if
required by Beneficiary, Grantor shall deposit the total thereof with
Beneficiary in advance) of such restoring, repairing, replacing, or rebuilding
in excess of the net proceeds of insurance or condemnation made available
pursuant to the terms hereof. Any surplus which may remain out of insurance or
condemnation proceeds (as applicable) held by Beneficiary after payment of such
costs of restoration, repair, replacement, or rebuilding shall be paid to any
party entitled thereto.
Section 8.4. Subrogation. Except to the extent otherwise provided in the Credit
Agreement, Grantor waives any and all right to claim, recover, or subrogation
against Beneficiary or its officers, directors, employees, agents, attorneys, or
representatives for loss or damage to Grantor, the Mortgaged Property, Grantor's
property, or the property of others under Grantor's control from any cause
insured against or required to be insured against by the provisions of the Loan
Documents.
Section 8.5. Waiver of Setoff. Except to the extent otherwise provided in the
Credit Agreement, the Indebtedness, or any part thereof, shall be paid by
Grantor without notice, demand, counterclaim, setoff, deduction, or defense and
without abatement, suspension, deferment, diminution, or reduction by reason of
(i) any damage to, destruction of, or any condemnation or similar taking of the
Mortgaged Property; (ii) any restriction or prevention of or interference with
any use of the Mortgaged Property; (iii) any title defect or encumbrance or any
eviction from the Mortgaged Property by superior title or otherwise; (iv) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation. or other like proceeding relating to Trustee, Beneficiary, or
Grantor, or any action taken with respect to this Deed of Trust by any trustee
or receiver of Beneficiary or Grantor, or by any court, in any such proceeding;
(v) any claim which Grantor has or might have against Trustee or Beneficiary;
(vi) any default or failure on the part of Beneficiary to perform or comply with
any of the terms hereof or of any other agreement with Grantor; or (vii) any
other occurrence whatsoever, whether similar or dissimilar to the foregoing,
whether or not Grantor shall have notice or knowledge of any of the foregoing.
Except as expressly provided herein or in the Credit Agreement, Grantor waives
all rights now or hereafter conferred by statute or otherwise to any abatement,
suspension, deferment, diminution, or reduction of the Indebtedness.
Section 8.6. Contest of Certain Impositions and Encumbrances. Notwithstanding
the provisions of Section 4.4 or 4.5 hereof, Grantor shall not be in default for
failure to pay or discharge any Imposition or mechanic's or materialman's lien
(excluding Permitted Encumbrances) asserted against the Mortgaged Property if,
and so long as, Grantor complies with the provisions of the Credit Agreement
relating to the same.
ARTICLE IX
Assignment of Contracts and Rents
Section 9.1. Assignment. For Ten Dollars ($10.00) and other good and valuable
consideration, including the indebtedness evidenced by the Notes, the receipt
and sufficiency of which are hereby acknowledged and confessed, Grantor by these
presents does GRANT, BARGAIN, SELL, and CONVEY unto Beneficiary the Contracts
and the Rents, as security for the payment of the Indebtedness and the
performance and discharge of the Obligations, subject
DEED OF TRUST - Page 28
<PAGE>
only to the "License" (hereinafter defined), TO HAVE AND TO HOLD the Contracts
and the Rents unto Beneficiary, forever, and Grantor on behalf of itself, its
successors and assigns does hereby WARRANT AND COVENANT TO DEFEND the title to
the Contracts and the Rents unto Beneficiary against every person lawfully
claiming or attempting to claim the same or any part thereof; provided, however,
that if Grantor shall pay (or cause to be paid) the Indebtedness as and when the
same shall become due and payable and shall fully perform and discharge (or
cause to be fully performed and discharged) the Obligations on or before the
date the same are to be performed and discharged, then this assignment shall
terminate, in accordance with the provisions hereof, otherwise the same shall
remain in full force and effect.
Section 9.2. Limited License. Beneficiary hereby grants to Grantor a limited
license ("License") to exercise and enjoy all incidences of the status of an
obligee under the Contracts and all Rents, including but not limited to the
right to collect, demand, sue for, attach, levy, recover, and receive the Rents,
and to give proper receipts, releases, and acquittances therefor. The License
shall be automatically revoked during the continuance of an Event of Default.
Grantor hereby agrees to receive all Rents and hold the same as a trust fund to
be applied, and to apply the Rents so collected, in accordance with the Credit
Agreement.
Section 9.3. Enforcement of Contracts. So long as the License is in effect, and
unless otherwise provided in the Credit Agreement, Grantor shall (i) submit any
and all Project Agreements to Beneficiary for approval prior to the execution
thereof, (ii) duly and punctually perform and comply with any and all
representations, warranties, covenants, and agreements expressed as binding upon
the obligee under any Contract, (iii) maintain each of the Contracts in full
force and effect during the term thereof, (iv) appear in and defend any action
or proceeding in any manner connected with any of the Contracts, (v) deliver to
Beneficiary copies of all Contracts as and to the extent requested by
Beneficiary, and (vi) deliver to Beneficiary such further information, and
execute and deliver to Beneficiary such further assurances and assignments, with
respect to the Contracts as Beneficiary may from time to time request. Except to
the extent permitted in the Credit Agreement, Grantor shall not, without
Beneficiary's prior written consent, (1) do or knowingly permit to be done
anything to impair the value of any of the Contracts, (2) except for security or
similar deposits, collect any of the Rent more than one month in advance of the
time when the same becomes due under the terms of any Contract, (3) discount any
future accruing Rents, (4) amend, modify, or terminate any of the Project
Agreements or any other Contract the amendment, modification, or termination of
which would have a Material Adverse Effect, or (5) assign or grant a security
interest in or to the License or any of the Contracts or Rents.
Section 9.4. No Merger of Estates. So long as any part of the Indebtedness or
the Obligations secured hereby remains unpaid and unperformed or undischarged,
the fee, leasehold, and other possessory and non-possessory rights, titles, and
interests constituting the Mortgaged Property shall not merge but rather shall
remain separate and distinct, notwithstanding the union of such rights, titles,
and interests in Grantor, Beneficiary, any lessee, or any third party purchaser
or otherwise.
ARTICLE X
Fixture Filing
Section 10.1. Fixture Filing. Grantor by these presents does GRANT, BARGAIN,
CONVEY, ASSIGN, TRANSFER and SET OVER, unto Beneficiary a first and prior
security
DEED OF TRUST - Page 29
<PAGE>
interest in all of Grantor's right, title and interest in, to, under, and with
respect to the Fixtures, to secure the full and timely payment of the
Indebtedness and the full and timely performance and discharge of the
Obligations. This Deed of Trust thus shall also constitute a "fixture filing"
for the purposes of the Code. All or part of the Mortgaged Property are or are
to become fixtures. Information concerning the security interest herein granted
may be obtained from the parties at the addresses of the parties set forth
herein. For purposes of the security interest herein granted, the addresses of
both the debtor (Grantor) and the secured party (Beneficiary) are set forth in
the first paragraph of this Deed of Trust.
ARTICLE XI
Concerning Trustee
Section 11.1. No Required Action. Trustee shall not be required to take any
action toward the execution and enforcement of the trust hereby created or to
institute, appear in, or defend any action, suit, or other proceeding in
connection therewith where, in its opinion, such action would be likely to
involve it in expense or liability, unless requested so to do by a written
instrument signed by Beneficiary and, if Trustee so requests, unless Trustee is
tendered security and indemnity satisfactory to Trustee against any and all
cost, expense, and liability arising therefrom. Trustee shall not be responsible
for the execution, acknowledgment, or validity of the Loan Documents, or for the
proper authorization thereof, or for the sufficiency of the lien and security
interest purported to be created hereby, and Trustee makes no representation in
respect thereof or in respect of the rights, remedies, and recourses of
Beneficiary.
Section 11.2. Certain Rights. With the approval of Beneficiary, Trustee shall
have the right to take any and all of the following actions: (i) to select,
employ, and consult with counsel (who may be, but need not be, counsel for
Beneficiary) upon any matters arising hereunder, including the preparation,
execution, and interpretation of the Loan Documents, and shall be fully
protected in relying as to legal matters on the advice of counsel, (ii) to
execute any of the trusts and powers hereof and to perform any duty hereunder
either directly or through its agents or attorneys, (iii) to select and employ,
in and about the execution of its duties hereunder, suitable accountants,
engineers, and other experts, agents, and attorneys-in-fact, either corporate or
individual, not regularly in the employ of Trustee, and Trustee shall not be
answerable for any act, default, negligence, or misconduct of any such
accountant, engineer, or other expert, agent, or attorney-in-fact, if selected
with reasonable care, or for any error of judgment or act done by Trustee in
good faith, or be otherwise responsible or accountable under any circumstances
whatsoever, except for Trustee's gross negligence or bad faith, and (iv) any and
all other lawful action as Beneficiary may instruct Trustee to take to protect
or enforce Beneficiary's rights hereunder. Trustee shall not be personally
liable in case of entry by Trustee, or anyone entering by virtue of the powers
herein granted to Trustee, upon the Mortgaged Property for debts contracted for
or liability or damages incurred in the management or operation of the Mortgaged
Property. Trustee shall have the right to rely on any instrument, document, or
signature authorizing or supporting any action taken or proposed to be taken by
Trustee hereunder, believed by Trustee in good faith to be genuine. Trustee
shall be entitled to reimbursement for expenses incurred by Trustee in the
performance of Trustee's duties hereunder and to reasonable compensation for
such of Trustee's services hereunder as shall be rendered. Grantor will, from
time to time, pay the compensation due to Trustee hereunder and reimburse
Trustee for, and save Trustee harmless against, any and all liability and
expenses which may be incurred by Trustee in the performance of Trustee's
duties.
DEED OF TRUST - Page 30
<PAGE>
Section 11.3. Retention of Money. All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by applicable law) and Trustee shall be
under no liability for interest on any moneys received by Trustee hereunder.
Section 11.4. Successor Trustees. Trustee may resign by the giving of notice of
such resignation in writing or verbally to Beneficiary. If Trustee shall die,
resign, or become disqualified from acting in the execution of this trust, or
if, for any reason, Beneficiary shall prefer to appoint a substitute Trustee or
multiple substitute trustees, or successive substitute trustees or successive
multiple substitute Trustees, to act instead of the aforenamed Trustee,
Beneficiary shall have full power to appoint a substitute Trustee (or, if
preferred, multiple substitute trustees) in succession who shall succeed (and if
multiple substitute trustees are appointed, each of such multiple substitute
trustees shall succeed) to all the estates, rights, powers, and duties of the
aforenamed Trustee. Such appointment may be executed by any authorized agent of
Beneficiary, and if such Beneficiary be a corporation and such appointment be
executed in its behalf by any officer of such corporation, such appointment
shall be conclusively presumed to be executed with authority and shall be valid
and sufficient without proof of any action by the board of directors or any
superior officer of the corporation. Grantor hereby ratifies and confirms any
and all acts which the aforenamed Trustee, or its successor or successors in
this trust, shall do lawfully by virtue hereof. If multiple substitute Trustees
are appointed, each of such multiple substitute Trustees shall be empowered and
authorized to act alone without the necessity of the joinder of the other
multiple substitute trustees, whenever any action or undertaking of such
substitute trustees is requested or required under or pursuant to this Deed of
Trust or applicable law.
Section 11.5. Perfection of Appointment. Should any deed, conveyance, or
instrument of any nature be required from Grantor by any Trustee or substitute
Trustee to more fully and certainly vest in and confirm to Trustee or substitute
Trustee such estates, rights, powers, and duties, then, upon request by Trustee
or substitute Trustee, any and all such deeds, conveyances and instruments shall
be made, executed, acknowledged, and delivered and shall be caused to be
recorded and/or filed by Grantor.
Section 11.6. Succession Instruments. Any substitute Trustee appointed pursuant
to any of the provisions hereof shall, without any further act, deed, or
conveyance, become vested with all the estates, properties, rights, powers, and
trusts of its predecessor in the rights hereunder with like effect as if
originally named as Trustee herein; but nevertheless, upon the written request
of Beneficiary or of the substitute Trustee, Trustee ceasing to act shall
execute and deliver any instrument transferring to such substitute Trustee, upon
the trusts herein expressed, all the estates, properties, rights, powers, and
trusts of Trustee so ceasing to act, and shall duly assign, transfer, and
deliver any of the property and moneys held by such Trustee to the substitute
Trustee so appointed in Trustee's place.
Section 11.7. No Representation by Trustee or Beneficiary. By accepting or
approving anything required to be observed, performed, or fulfilled or to be
given to Trustee or Beneficiary pursuant to the Loan Documents, including but
not limited to any officer's certificate, balance sheet, statement of profit and
loss or other financial statement, survey, appraisal, or insurance policy,
neither Trustee nor Beneficiary shall be deemed to have warranted, consented to,
or affirmed the sufficiency, legality, effectiveness, or legal effect of
DEED OF TRUST - Page 31
<PAGE>
the same, or of any term, provision, or condition thereof, and such acceptance
or approval thereof shall not be or constitute any warranty or affirmation with
respect thereto by Trustee or Beneficiary.
ARTICLE XII
Miscellaneous
Section 12.1. Release. If the Indebtedness is paid in full in accordance with
the terms of this Deed of Trust, the Notes, and the other Loan Documents, and if
Grantor shall well and truly perform each and every one of the Obligations to be
performed and discharged in accordance with the terms of this Deed of Trust, the
Notes and the other Loan Documents, then this conveyance shall become null and
void and be released at Grantor's request and expense, and Beneficiary shall
have no further obligation to make advances under and pursuant to the provisions
hereof or the other Loan Documents.
Section 12.2. Performance at Grantor's Expense. Subject to the provisions of
Section 12.11 hereof, Grantor shall (i) pay all reasonable legal fees incurred
by Beneficiary in connection with the preparation of the Loan Documents
(including any amendments thereto or consents, releases, or waivers granted
thereunder); (ii) reimburse Beneficiary, promptly upon demand, for all amounts
expended, advanced, or incurred by Beneficiary to satisfy any obligation of
Grantor under the Loan Documents, which amounts shall include all court costs,
reasonable attorneys' fees (including but not limited to fees for trial, appeal,
or other proceedings), fees of auditors and accountants, and other investigation
expenses reasonably incurred by Beneficiary in connection with any such matters;
and (iii) any and all other costs and expenses of performing or complying with
any and all of the Obligations. Except to the extent that costs and expenses are
included within the definition of "Indebtedness", the payment of such costs and
expenses shall not be credited, in any way and to any extent, against any
installment on or portion of the Indebtedness.
Section 12.3. Survival of Obligations. Each and all of the Obligations shall
survive the execution and delivery of the Loan Documents and the consummation of
the loan called for therein and shall continue in full force and effect until
the Indebtedness shall have been paid in full; provided, however, that nothing
contained in this Section 12.3 shall limit the obligations of Grantor as
otherwise set forth herein.
Section 12.4. Recording and Filing. Grantor will cause the Loan Documents and
all amendments and supplements thereto and substitutions therefor to be
recorded, filed, re-recorded, and refiled in such manner and in such places as
Trustee or Beneficiary shall reasonably request, and will pay all such
recording, filing, re-recording, and refiling taxes, documentary stamp taxes,
fees, and other charges.
Section 12.5. Notices. All notices or other communications required or permitted
to be given pursuant to this Deed of Trust shall be in writing and shall be
considered as properly given if (i) mailed by first class United States mail,
postage prepaid, registered or certified with return receipt requested, (ii) by
delivering same in person to the intended addressee, (iii) by delivery to an
independent third party commercial delivery service for same day or next day
delivery and providing for evidence of receipt at the office of the intended
addressee, or (iv) by prepaid telegram or facsimile to the addressee. Notice so
mailed shall be effective ten (10) business days after its deposit with the
United States Postal Service or any successor thereto; notice
DEED OF TRUST - Page 32
<PAGE>
given by personal delivery shall be effective only if and when received by the
addressee; notice sent by such a commercial delivery service shall be effective
upon the first business day following delivery to such commercial delivery
service; and notice given by other means shall be effective only if and when
received at the office or designated place of the intended addressee. For
purposes of notice, the addresses of the parties shall be as set forth in the
Credit Agreement; provided, however, that either party shall have the right to
change its address for notice hereunder to any other location within the United
States in the manner provided in the Credit Agreement.
Section 12.6. Covenants Running With the Lands. All Obligations contained in
this Deed of Trust and the other Loan Documents are intended by Grantor,
Beneficiary, and Trustee to be, and shall be construed as, covenants running
with the Mortgaged Property until the lien of this Deed of Trust has been fully
released by Beneficiary.
Section 12.7. Successors and Assigns. All of the terms of the Loan Documents
shall apply to, be binding upon, and inure to the benefit of the parties
thereto, their permitted successors, assigns, heirs, and legal representatives
and all other persons claiming by, through, or under them.
Section 12.8. No Waiver; Severability. Any failure by Trustee or Beneficiary to
insist, or any election by Trustee or Beneficiary not to insist, upon strict
performance by Grantor or others of any of the terms, provisions, or conditions
of the Loan Documents shall not be deemed to be a waiver of same or of any other
terms, provisions, or conditions thereof, and Trustee or Beneficiary shall have
the right at any time or times thereafter to insist upon strict performance by
Grantor or others of any and all of such terms, provisions, and conditions. The
Loan Documents are intended to be performed in accordance with, and only to the
extent permitted by, all applicable Legal Requirements. If any provision of any
of the Loan Documents or the application thereof to any person or circumstance
shall, for any reason and to any extent, be invalid or unenforceable, then
neither the remainder of the instrument in which such provision is contained nor
the application of such provision to other persons or circumstances nor the
other instruments referred to herein shall be affected thereby, but rather shall
be enforced to the greatest extent permitted by law.
Section 12.9. Counterparts. To facilitate execution, this Deed of Trust may be
executed in as many counterparts as may be convenient or required. It shall not
be necessary that the signature and acknowledgment of each party, or that the
signature and acknowledgment of all persons required to bind any party, appear
on each counterpart. All counterparts shall collectively constitute a single
instrument. It shall not be necessary in making proof of this Deed of Trust to
produce or account for more than a single compiled counterpart containing the
respective signatures and acknowledgment of each of the parties hereto. Any
signature and acknowledgment page to any counterpart may be detached from such
counterpart without impairing the legal effect of the signatures and
acknowledgments thereon and thereafter attached to another counterpart identical
thereto except having attached to it additional signature and acknowledgment
pages.
Section 12.10. Applicable Law. All of Grantor's obligations to Beneficiary under
the Notes and the other Loan Documents were negotiated, created, executed and
delivered in New York. The Credit Agreement and the Notes shall be governed by
and construed in accordance with the internal laws of the State of New York and
the laws of the United States applicable to
DEED OF TRUST - Page 33
<PAGE>
transactions in the State of New York. This Deed of Trust shall also be governed
by and construed in accordance with the internal laws of the State of New York
(without regard to choice of law or conflict of law rules) and the laws of the
United States applicable to transactions in the State of New York, except to the
extent that the laws of the State of Alaska, including laws governing
foreclosure and laws pertaining to environmental matters, shall necessarily
govern.
Section 12.11. Controlling Agreement. It is expressly stipulated and agreed to
be the intent of Grantor, Trustee, and Beneficiary at all times to comply with
applicable New York law or applicable United States federal law (to the extent
that it permits Beneficiary to contract for, charge, take, reserve, or receive a
greater amount of interest than under New York law) and that this section shall
control every other covenant and agreement in this Deed of Trust and the other
Loan Documents. If the applicable law is ever judicially interpreted so as to
render usurious any amount called for under any Note or under any of the other
Loan Documents, or contracted for, charged, taken, reserved, or received with
respect to the Indebtedness, or if Beneficiary's exercise of the option to
accelerate the maturity of any Note, or if any prepayment by Grantor results in
Grantor having paid any interest in excess of that permitted by applicable law,
then it is Grantor's, Trustee's, and Beneficiary's express intent that all
excess amounts theretofore collected by Beneficiary shall be credited on the
principal balance of the relevant Note and all other Indebtedness (or, if the
Notes and all other Indebtedness have been or would thereby be paid in full,
refunded to Grantor), and the provisions of the Notes and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Beneficiary for the use, forbearance, or
detention of the Indebtedness shall, to the extent permitted by applicable law,
be amortized, prorated, allocated, and spread throughout the full stated term of
the Indebtedness until payment in full so that the rate or amount of interest on
account of the Indebtedness does not exceed the Maximum Lawful Rate from time to
time in effect and applicable to the Indebtedness for so long as the
Indebtedness is outstanding. Notwithstanding anything to the contrary contained
herein or in any of the other Loan Documents, it is not the intention of Trustee
or Beneficiary to accelerate the maturity of any interest that has not accrued
at the time of such acceleration or to collect unearned interest at the time of
such acceleration.
Section 12.12. Subrogation. If any or all of the proceeds of any Note have been
used to extinguish, extend, or renew any indebtedness heretofore existing
against the Mortgaged Property, then, to the extent of such funds so used,
Beneficiary shall be subrogated to all of the rights, claims, liens, titles, and
interests existing against the Mortgaged Property heretofore held by, or in
favor of, the holder of such indebtedness and such former rights, claims, liens,
titles, and interests if any, are not waived but rather are continued in full
force and effect in favor of Beneficiary and are merged with the lien and
security interest created herein as cumulative security for the repayment of the
Indebtedness and the performance and discharge of the Obligations.
Section 12.13. Rights Cumulative. Beneficiary shall have all rights, remedies,
and recourses granted in the Loan Documents and available at law or in equity
(including but not limited to those granted by the Code and applicable to the
Mortgaged Property or any portion thereof), and the same (i) shall be cumulative
and concurrent, (ii) may be pursued separately, successively, or concurrently
against Grantor or others obligated for the Indebtedness or any
DEED OF TRUST - Page 34
<PAGE>
part hereof, or against any one or more of them, or against the Mortgaged
Property, at the sole discretion of Beneficiary, (iii) may be exercised as often
as occasion therefor shall arise, it being agreed by Grantor that the exercise
of, discontinuance of the exercise of, or failure to exercise any of the same
shall in no event be construed as a waiver or release thereof or of any other
right, remedy, or recourse, and (iv) are intended to be, and shall be,
nonexclusive. All rights and remedies of Beneficiary hereunder and under the
other Loan Documents shall extend to any period after the initiation of
foreclosure proceedings, judicial or otherwise, with respect to the Mortgaged
Property.
Section 12.14. Payments. Remittances in payment of any part of the Indebtedness
other than in the required amount in funds immediately available at the place
where the Notes are payable shall not, regardless of any receipt or credit
issued therefor, constitute payment until the required amount is actually
received by Beneficiary in funds immediately available at the place where the
Notes are payable (or such other place as Beneficiary, in Beneficiary's sole
discretion, may have established by delivery of written notice thereof to
Grantor) and shall be made and accepted subject to the condition that any check
or draft may be handled for collection in accordance with the practice of the
collecting bank or banks. Acceptance by Beneficiary of any payment in an amount
less than the amount then due shall be deemed an acceptance on account only, and
the failure to pay the entire amount then due shall be and continue to be an
Event of Default.
Section 12.15. Exceptions to Covenants. Grantor shall not be deemed to be
permitted to take any action or to fail to take any action with respect to any
particular covenant or condition contained herein or in any of the Loan
Documents if the action or omission would result in the breach of any other
covenant or condition contained herein or in any of the Loan Documents which has
not been specifically waived or consented to by Beneficiary, nor shall
Beneficiary be deemed to have consented to any such act or omission if the same
would provide cause for acceleration of the Indebtedness as a result of the
breach of any other covenant or condition contained herein or in any of the Loan
Documents which has not been specifically waived or consented to by Beneficiary.
Section 12.16. Reliance. Grantor recognizes and acknowledges that in entering
into the loan transaction evidenced by the Loan Documents and accepting this
Deed of Trust, Beneficiary is expressly and primarily relying on the truth and
accuracy of the foregoing warranties and representations set forth in Article
III hereof without any obligation to investigate the Mortgaged Property and
notwithstanding any investigation of the Mortgaged Property by Beneficiary; that
such reliance exists on the part of Beneficiary prior hereto; that such
warranties and representations are a material inducement to Beneficiary in
making the loan evidenced by the Loan Documents and in accepting this Deed of
Trust; and that Beneficiary would not be willing to make the loan evidenced by
the Loan Documents and accept this Deed of Trust in the absence of any of such
warranties and representations.
Section 12.17. Change of Security. Any part of the Mortgaged Property may be
released, regardless of consideration, by Beneficiary from time to time without
impairing, subordinating, or affecting in any way the lien, security interest,
and other rights hereof against the remainder. The lien, security interest, and
other rights granted hereby shall not be affected by any other security taken
for the Indebtedness or Obligations, or any part thereof. The taking of
additional collateral, or the amendment, extension, renewal, or rearrangement of
the Indebtedness or Obligations, or any part thereof, shall not release or
impair the lien, security interest, and other
DEED OF TRUST - Page 35
<PAGE>
rights granted hereby, or affect the liability of any endorser or guarantor or
improve the right of any junior lienholder; and this Deed of Trust, as well as
any instrument given to secure any amendment. extension, renewal, or
rearrangement of the Indebtedness or Obligations, or any part thereof shall be
and remain a first and prior lien, except as otherwise provided herein, on all
of the Mortgaged Property not expressly released until the Indebtedness is fully
paid and the Obligations are fully performed and discharged.
Section 12.18. Headings. The Article, Section, and subsection entitlements
hereof are inserted for convenience of reference only and shall in no way alter,
modify, or define, or be used in construing the text of such Articles, Sections,
or subsections.
Section 12.19. Credit Agreement. Reference is hereby made for all purposes to
the Credit Agreement. In the event of a conflict between the terms and
provisions hereof and the Credit Agreement, the Credit Agreement shall govern.
Section 12.20. Entire Agreement; Amendment. THIS DEED OF TRUST AND THE OTHER
LOAN DOCUMENTS EMBODY THE FINAL EXPRESSION OF THE ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO. The provisions of this Deed of Trust and the other Loan
Documents may be amended or waived only by an instrument in writing signed by
the respective parties to such documents.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
[this space left intentionally blank]
DEED OF TRUST - Page 36
<PAGE>
EXECUTED to be effective as of the date first above written.
ALASKA UNITED FIBER SYSTEM PARTNERSHIP,
an Alaska general partnership
By: FIBER HOLD CO., INC., an Alaska
corporation, general partner
By:
Name:
Title:
By: GCI FIBER CO., INC., an Alaska
corporation, general partner
By:
Name:
Title:
DEED OF TRUST - Page 37
<PAGE>
STATE OF ALASKA )
) ss:
THIRD JUDICIAL DISTRICT )
THIS CERTIFIES that the foregoing instrument was acknowledged before me
this day of January, 1998, by (name) , (title) of FIBER HOLD CO., INC.,
an Alaska corporation that is a general partner in ALASKA UNITED FIBER SYSTEM
PARTNERSHIP, on behalf of said corporation acting in its capacity as a general
partner in ALASKA UNITED FIBER SYSTEM PARTNERSHIP, an Alaska general
partnership, on behalf of said partnership.
Dated this day of January, 1998.
Notary Public in and for the State of
Alaska, residing at the following
address:
My commission expires
STATE OF ALASKA )
) ss:
THIRD JUDICIAL DISTRICT )
THIS CERTIFIES that the foregoing instrument was acknowledged before me
this day of January, 1998, by (name) , (title) of GCI FIBER CO., INC., an
Alaska corporation that is a general partner in ALASKA UNITED FIBER SYSTEM
PARTNERSHIP, on behalf of said corporation acting in its capacity as a general
partner in ALASKA UNITED FIBER SYSTEM PARTNERSHIP, an Alaska general
partnership, on behalf of said partnership.
Dated this day of January, 1998.
Notary Public in and for the State of
Alaska, residing at the following
address:
My commission expires
DEED OF TRUST - Page 38
<PAGE>
EXHIBIT A
Legal Description (Alaska and Adjacent Outer Continental Shelf)
(to be inserted)
<PAGE>
SCHEDULE 1
Initial Lenders
Credit Lyonnais New York Branch
NationsBank of Texas, N.A.
Toronto-Dominion (Texas), Inc.
<PAGE>
ASSIGNMENT AGREEMENT
(GCICC AND GCI CABLE)
THIS ASSIGNMENT AGREEMENT dated effective as of January 27,
1998 (as amended, supplemented or otherwise modified, renewed or replaced from
time to time, "Assignment Agreement") is among (i) ALASKA UNITED FIBER SYSTEM
PARTNERSHIP, an Alaska general partnership ("Borrower"), (ii) GCI COMMUNICATION
CORP., an Alaska corporation ("GCICC"), (iii) GCI CABLE, INC., an Alaska
corporation ("GCI Cable"), and (iv) CREDIT LYONNAIS NEW YORK BRANCH, as
administrative agent for the Lenders referred to in the Credit Agreement (as
hereinafter defined) (in such capacity, "Administrative Agent").
WHEREAS, the Borrower, GCICC and GCI Cable entered into that
Fiber Exchange Agreement dated effective as of January 27, 1998 ("Fiber Exchange
Agreement");
WHEREAS, the Borrower and GCICC entered into that General
Contractor Agreement dated effective as of January 27, 1998 ("General Contractor
Agreement");
WHEREAS, the Borrower and GCICC entered into that Operation
and Maintenance Agreement dated effective as of January 27, 1998 ("Operation and
Maintenance Agreement");
WHEREAS, the Fiber Exchange Agreement, the General Contractor
Agreement, and the Operation and Maintenance Agreement are collectively referred
to herein as "Covered Agreements," and each individually as a "Covered
Agreement;"
In order to finance the Project, the Borrower has entered into
a Credit and Security Agreement dated as of January 27, 1998 with the lenders
referred to therein ("Lenders"), the Administrative Agent, NationsBank of Texas,
N.A. as Syndication Agent and TD Securities (USA) Inc. as Documentation Agent
(as such agreement may be amended, supplemented or otherwise modified, renewed
or replaced from time to time, "Credit Agreement"). Capitalized terms used
herein and not otherwise defined are used herein as defined in the Credit
Agreement. Pursuant to the Credit Agreement and the other Fundamental Documents,
the Lenders have agreed, subject to the terms and conditions set forth in the
Credit Agreement, to make Loans to the Borrower, and the Administrative Agent
for the benefit of the Lenders has been granted a security interest in all of
the Borrower's right, title and interest in and to both real and personal
property, including without limitation, the Covered Agreements.
Accordingly, the parties hereto hereby agree as follows:
1. The Borrower hereby confirms that for good and valuable
consideration, as security for the due and punctual payment and performance of
the Obligations, it has mortgaged, pledged, assigned, transferred, set over,
conveyed and
<PAGE>
delivered to the Administrative Agent (for the benefit of the Lenders), and
granted to the Administrative Agent (for the benefit of the Lenders) a security
interest in, all of the Borrower's right, title and interest in and to the
Covered Agreements (including, without limitation, the Borrower's rights and
benefits under and pursuant thereto and all of the Borrower's right, title and
interest in and to any and all payments due or to become due from GCICC and GCI
Cable, respectively, pursuant to the Covered Agreements). GCICC and GCI Cable
each hereby acknowledge that the Borrower has assigned and granted a security
interest in all of its right, title and interest in and to the Covered
Agreements (including, without limitation, the Borrower's rights and benefits
under and pursuant thereto and all of the Borrower's right, title and interest
in and to any and all payments due or to become due from GCICC or GCI Cable,
respectively, thereunder) to the Administrative Agent (for the benefit of the
Lenders) as security for the due and punctual payment and performance of the
Obligations and GCICC and GCI Cable each hereby consent to such assignment and
grant of the security interest.
2. GCICC and GCI Cable each hereby agree that any amounts
payable by it, respectively, to the Borrower pursuant to the Covered Agreements
shall be made in cash without offset or counterclaim (except as arises directly
from the Covered Agreements), directly into the Alaska Depositary Account (as
defined below) or in such other manner as the Administrative Agent may specify
from time to time by notice to GCICC and GCI Cable, respectively, and the
Borrower hereby specifically authorizes and directs GCICC and GCI Cable to make
payment of all amounts due and to become due to the Borrower under the Covered
Agreements into the Alaska Depositary Account (or such other manner) and
irrevocably authorizes and empowers the Administrative Agent to ask, command,
receive or give a discharge for any and all such amounts. As used herein, the
term "Alaska Depositary Account" shall mean Account No. 1510-562-0, entitled
"Alaska Depositary Account" at the office of The First National Bank of
Anchorage, 201 West 36th Avenue, P.O. Box 200628, Anchorage, Alaska 99520-0628,
ABA No. 125200060.
3. GCICC and GCI Cable each hereby agree that notwithstanding
any provision to the contrary contained in the Covered Agreements, the Covered
Agreements may be assigned or otherwise transferred (a) from the Borrower to the
Administrative Agent and (b) with the consent of GCICC or GCI Cable (not to be
unreasonably withheld), from the Administrative Agent to a third party.
4. Until such time as GCICC or GCI Cable has received written
notice from the Administrative Agent stating that the assignment and security
interest described herein has terminated, each of the Borrower, GCICC and GCI
Cable hereby agrees and acknowledges that upon receipt by GCICC or GCI Cable of
a notice from the Administrative Agent that a Default or Event of Default has
occurred and is continuing, the Administrative Agent shall have the exclusive
right to exercise all rights, and shall have all the benefits, granted to the
Borrower under the Covered Agreements including, without limitation, the right
to give consents, approvals, waivers, notices or the like, to make
2
<PAGE>
elections, demands or the like or to take other discretionary action thereunder.
GCICC and GCI Cable hereby agree to deliver directly to the Administrative Agent
copies of all notices, certificates, opinions or other documents delivered by it
to the Borrower under or pursuant to the Covered Agreements and upon the request
of the Administrative Agent at a time when a Default or Event of Default has
occurred and is continuing, to deal directly with the Administrative Agent with
respect to all matters arising under, or relating to, the Covered Agreements.
5. Neither the Administrative Agent nor any of the Lenders
shall have any obligation or liability under the Covered Agreements by reason of
this Assignment Agreement or the assignment and grant of the security interest
described herein, nor shall the Administrative Agent or any Lender be obligated
to perform any of the obligations or duties of the Borrower under the Covered
Agreements or to take any action to collect or enforce any claim for payment
assigned hereunder, except that if the Administrative Agent or any of the
Lenders or their successors or assigns shall, following an uncured Event of
Default, become a successor-in-interest to the Borrower under any of the Covered
Agreements, such successor shall not be entitled to GCICC's or GCI Cable's
applicable continued performance under such Covered Agreements unless GCICC or
GCI Cable, respectively, shall be compensated for the Work thereunder in
accordance with the terms of the Covered Agreements.
6. GCICC and GCI Cable each hereby agree that it will not
terminate the Covered Agreements for any reason (including, without limitation,
any bankruptcy proceeding relating to the Borrower) without providing the
Administrative Agent thirty (30) days' prior written notice, which notice shall
specify the reason for the termination.
7. The Borrower, GCICC and GCI Cable each hereby agree that it
will execute, or cause to be executed, such additional documentation (including,
without limitation, assignment agreements, letters of instruction, consents or
other documentation) as may now or hereafter be reasonably required by the
Administrative Agent in order to provide for the deposit into the Alaska
Depositary Account of all amounts due and to become due to the Borrower under
the Covered Agreements as contemplated by Section 2 above, and to otherwise
effectuate the provisions of this Assignment Agreement.
8. GCICC and GCI Cable each hereby agree that without the
Administrative Agent's prior written consent (which consent will not be
unreasonably withheld), it will not agree to, or permit, any amendment,
alteration, modification, cancellation, suspension or other change of any kind
to any of the terms and provisions of the Covered Agreements except for changes
which do not (i) increase the contract price by more than $100,000 as to any one
change or $250,000 in the aggregate, (ii) postpone or cause a postponement of
the date for achieving any milestone as set forth in the General Contractor
Agreement or change the Specifications or the material procedures for any of the
acceptance testing or performance requirements.
3
<PAGE>
9. Each of the Borrower, GCICC and GCI Cable hereby represent
and warrant that attached hereto as Annex A are true and complete copies of the
Covered Agreements as in effect on the date hereof.
10. Notices and other communications provided for herein shall
be in writing and shall be delivered or mailed (or if by telegram, delivered to
the telegraph company and, if by telecopier, delivered by such equipment)
addressed, (i) if to the Administrative Agent or Credit Lyonnais New York
Branch, to it at 1301 Avenue of the Americas, New York, New York 10019, Attn:
Project Finance Group, facsimile no.: (212) 261-3421, (ii) if to the Borrower,
to it at c/o GCI Fiber Co., Inc., 2550 Denali Street, Suite 1000, Anchorage,
Alaska 99503, Attn: Chief Financial Officer, facsimile no.: (907) 265-5676,
(iii) if to GCICC, to it at 2550 Denali Street, Suite 1000, Anchorage, Alaska
99503, Attn: Chief Financial Officer, facsimile no.: (907) 265-5676 and (iv) if
to GCI Cable, to it at 5151 Fairbanks Street Anchorage, Alaska 99503, Attn:
Riley Snell, facsimile no.: (907) 786-9270. All notices and other communications
given to any party hereto in accordance with the provisions of this Assignment
Agreement shall be deemed to have been given on the tenth (10th) Business Day
after the date when sent by registered or certified mail, postage prepaid,
return receipt requested, if by mail, or when delivered to the telegraph
company, charges prepaid, if by telegram, or when receipt is acknowledged if by
telecopier, in each case addressed to such party as provided in this Section 10
or in accordance with the latest unrevoked written direction from such party.
11. All references herein to any of the parties to this
Agreement shall be deemed to include the successors and assigns of such party;
provided, however, that the Borrower, GCICC and GCI Cable may not assign any of
their respective rights or obligations hereunder without the prior written
consent of the Administrative Agent and all of the Lenders, and all covenants,
promises and agreements by or on behalf of the Borrower, GCICC and GCI Cable
which are contained herein shall inure to the benefit of the successors and
assigns of the Administrative Agent and any of the Lenders.
12. This Agreement may be amended, modified or supplemented,
and the terms hereof may be waived, in each case only by a written instrument
executed by the parties to this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent or other breach, whether or not similar.
13. Any provision hereof which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by Applicable Law, the parties
hereby waive any provision of law which may render any provision hereof
prohibited or unenforceable in any respect.
4
<PAGE>
14. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
agreement, and all signatures need not appear on any one counterpart.
15. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO ANY CHOICE-OF-LAW RULES THEREOF WHICH MIGHT APPLY THE LAWS OF ANY OTHER
JURISDICTION.
16. No failure on the part of the Administrative Agent or any
Lender to exercise, and no delay in exercising, any right, power, privilege or
remedy hereunder or under the Covered Agreements shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power,
privilege or remedy preclude any other or further exercise thereof or the
exercise of any other right, power, privilege or remedy. All remedies hereunder
are cumulative and are not exclusive of any other remedies provided by law.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment Agreement to be duly executed as of the date and year first above
written.
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., a General
Partner and General Manager
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
GCI COMMUNICATION CORP.
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
5
<PAGE>
GCI CABLE, INC.
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
Executed in CREDIT LYONNAIS NEW YORK BRANCH,
New York, New York as Administrative Agent
By: /s/
Name: Michael F.G. Pepe
Title: Vice President
6
<PAGE>
Annex A to
Assignment Agreement
Attach true and complete copies of:
- Fiber Exchange Agreement
- General Contractor Agreement
- Operation and Maintenance Agreement
<PAGE>
EXHIBIT D
TRANSPORT PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of January 27, 1998 (as amended,
supplemented or otherwise modified, renewed or replaced from time to time, the
"Pledge Agreement") between GCI TRANSPORT CO., INC., an Alaska corporation (the
"Pledgor") and CREDIT LYONNAIS NEW YORK BRANCH, as administrative agent for the
Lenders referred to in the Credit Agreement referred to below (in such capacity,
the "Administrative Agent").
Pursuant to a Credit and Security Agreement dated as of
January 27, 1998 among Alaska United Fiber System Partnership, a general
partnership organized under the laws of Alaska (the "Borrower"), the lenders
referred to therein (the "Lenders"), Credit Lyonnais New York Branch as
Administrative Agent, NationsBank of Texas, N.A. as Syndication Agent and TD
Securities (USA) Inc. as Documentation Agent (as the same may be amended,
supplemented or otherwise modified, renewed or replaced from time to time, the
"Credit Agreement"), the Lenders have agreed (subject to the terms and
conditions set forth therein) to make Loans to the Borrower.
The Pledgor owns beneficially and of record all of the issued
and outstanding shares of the capital stock of each of its respective
Subsidiaries listed on Schedule 1 hereto (being referred to herein as the
"Pledged Affiliates").
Each of the Pledged Affiliates owns fifty percent (50%) of the
partnership interests in the Borrower.
In order to induce the Lenders to enter into the Credit
Agreement and make the Loans to the Borrower pursuant to the terms and
conditions set forth therein and in order to secure the Obligations, the Pledgor
is pledging to the Administrative Agent (for the benefit of the Lenders), all of
the issued and outstanding capital stock of the Pledged Affiliates, all as more
fully set forth herein.
Accordingly, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Credit Agreement.
2. Pledge.
(a) As security for the due and punctual payment and
performance in full of the Obligations (including post-petition interest to the
extent permitted by Applicable Law), the Pledgor hereby pledges, hypothecates,
assigns, transfers, sets over and delivers unto the Administrative Agent, for
the benefit of the Lenders, and hereby grants to the Administrative Agent for
the benefit of the Lenders, a security interest in (i) all the capital stock of
each of the
<PAGE>
Pledged Affiliates which the Pledgor now or hereafter owns beneficially and of
record, and (ii) all proceeds of such capital stock and all other securities or
other property at any time and from time to time receivable or otherwise
distributed in respect of, or in exchange for, any or all of such capital stock
or additional securities. All items referred to in clauses (i) and (ii) of this
Section 2(a) are hereinafter referred to collectively as the "Pledged
Securities".
(b) The Pledgor shall deliver to the Administrative Agent, the
certificates representing, the Pledged Securities accompanied by undated stock
powers executed in blank and by such other instruments or documents as the
Administrative Agent or its counsel shall reasonably request.
3. Registration in Nominee Name; Denominations. The
Administrative Agent shall have the right (in its sole and absolute discretion)
to hold the certificates representing any of the Pledged Securities in its own
name, the name of its nominee or in the name of the Pledgor, endorsed or
assigned in blank or in favor of the Administrative Agent, for the benefit of
the Lenders. Upon the occurrence and during the continuation of an Event of
Default, the Administrative Agent shall have the right to exchange the
certificates representing the Pledged Securities for certificates of smaller or
larger denominations for any purpose consistent with this Pledge Agreement.
4. Pledgor's Representations, Warranties and Covenants. The
Pledgor hereby represents and warrants to and/or covenants and agrees with the
Administrative Agent for the benefit of the Lenders as follows:
(i) the Pledged Securities described on Schedule 1 hereto
constitute 100% of the issued and outstanding equity securities of each of the
Pledged Affiliates;
(ii) the Pledged Securities are duly authorized, validly
issued, fully paid and non-assessable and are subject to no options to purchase
or similar rights of any Person;
(iii) there are no restrictions on the transfer of the Pledged
Securities other than under applicable securities laws or the regulations
promulgated thereunder;
(iv) the Pledgor has good title to the Pledged Securities;
(v) the Pledged Securities are not subject to any prior Liens,
encumbrances or security interests;
(vi) the Pledgor has the right to pledge the Pledged
Securities hereunder free and clear of any Liens, encumbrances or security
interests (except the Lien created hereby) and without the consent of the
creditors of the Pledgor or the Pledged Affiliates or any other Person or any
government agency whatsoever;
-2-
<PAGE>
(vii) the Pledgor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Alaska and is duly
qualified to do business in all jurisdictions where the nature of its properties
or business so requires. The Pledgor has the corporate power and authority (a)
to own its respective properties and to carry on its respective business as now
being conducted and as intended to be conducted, to execute, deliver and perform
its obligations under this Pledge Agreement and the other Fundamental Documents
to which it is a party and any other documents contemplated hereby and thereby
to which it is or will be a party and (b) to pledge the Pledged Securities
hereunder;
(viii) the execution, delivery, and performance of this Pledge
Agreement and the other Fundamental Documents to which it is a party and the
pledge of the Pledged Securities hereunder (A) have been duly authorized by all
necessary corporate action on the part of the Pledgor, (B) will not violate any
provision of the Certificate of Incorporation or By-Laws of the Pledgor, (C)
will not constitute a violation by the Pledgor of any provision of Applicable
Law or any order of any court or other agency of the United States or any state
thereof applicable to the Pledgor or any of its properties or assets, (D) will
not violate any provision of any indenture, agreement, bond, note or other
similar instrument to which the Pledgor is a party or by which the Pledgor or
its properties or assets are bound, (E) will not be in conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under, or create any right to terminate, any such indenture, agreement, bond,
note or other instrument and (F) will not result in the creation or imposition
of any Lien, security interest, charge or encumbrance of any nature whatsoever
upon any of the properties or assets of the Pledgor other than pursuant to this
Pledge Agreement;
(ix) the Pledgor will not take any action to allow any
additional equity securities of any of the Pledged Affiliates to be issued, or
to grant any options or warrants, unless such securities are pledged to the
Administrative Agent, for the benefit of the Lenders, on terms satisfactory to
the Administrative Agent for the benefit of the Lenders, as security for the
Obligations;
(x) all authorizations, approvals, registrations or filings
with any governmental or public regulatory body or authority of the United
States or any state thereof or any foreign jurisdiction required for the
execution, delivery and performance by the Pledgor of this Pledge Agreement and
the other Fundamental Documents to which it is a party, have been duly obtained
or made, or duly applied for and are in full force and effect, and if any such
further authorizations, approvals, registrations or filings should hereafter
become necessary, the Pledgor shall obtain or make all such authorizations,
approvals, registrations or filings;
(xi) upon the delivery of the certificates representing the
Pledged Securities to the Administrative Agent in accordance with Section 2
hereof, the Administrative Agent for the benefit of the Lenders will have a
valid and perfected security interest in the Pledged Securities subject to no
prior Lien, encumbrance or security interest. Neither the Pledgor nor any of its
Subsidiaries has performed or will perform any acts which might prevent the
Administrative
-3-
<PAGE>
Agent from enforcing any of the terms and conditions of this Pledge Agreement or
which would limit the Administrative Agent in any such enforcement;
(xii) this Pledge Agreement and the other Fundamental
Documents to which the Pledgor is a party when executed by the Pledgor will
constitute the legal, valid and binding obligations of the Pledgor, enforceable
in accordance with their respective terms, subject only, as to the enforcement
of remedies, to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and general principles of equity;
(xiii) the Pledgor will realize a direct economic benefit as a
result of the Loans being made to the Borrower under the Credit Agreement;
(xiv) there are no pending or, to the knowledge of the
Pledgor, threatened actions, suits, proceedings or investigations against it or
affecting it or its properties that, individually or in the aggregate, would if
adversely determined be likely to have a material adverse effect on the
performance by the Pledgor of its obligations under this Pledge Agreement and
the other Fundamental Documents to which it is a party or its assets,
operations, business or financial condition; and
(xv) no sales, use, documentation or similar taxes, fees or
other charges are payable with respect to the execution and delivery by the
Pledgor of this Pledge Agreement and the other Fundamental Documents to which it
is a party.
5. Voting Rights; Dividends; etc. 17. Unless and until an
Event of Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any
and all voting and/or consensual rights and powers accruing to the owner of the
Pledged Securities or any part thereof for any purpose not inconsistent with the
terms hereof.
(ii) Any dividends or distributions of any kind
whatsoever made by a Pledged Affiliate (other than cash dividends or
distributions made by a Pledged Affiliate from funds distributed by the Borrower
to such Pledged Affiliate as expressly permitted and contemplated by Section 6.4
of the Credit Agreement) and received by the Pledgor, whether resulting from a
subdivision, combination or reclassification of the outstanding capital stock of
a Pledged Affiliate or received in exchange for the Pledged Securities or any
part thereof or as a result of any merger, consolidation, acquisition or other
exchange of assets to which a Pledged Affiliate may be a party, or otherwise,
shall be and become part of the Pledged Securities pledged hereunder and shall
immediately be delivered to the Administrative Agent to be held subject to the
terms of this Pledge Agreement.
(iii) The Administrative Agent shall execute and
deliver to the Pledgor, or cause to be executed and delivered to the Pledgor,
all such proxies, powers of attorney and
-4-
<PAGE>
other instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to exercise the voting and/or consensual rights and powers
which it is entitled to exercise pursuant to clause (i) above.
(b) Upon the occurrence and during the continuance of an Event
of Default, all rights of the Pledgor to (i) exercise the voting and/or
consensual rights and powers which it is entitled to exercise pursuant to
Section 5(a)(i) hereof and (ii) receive and retain dividends and distributions
which the Pledgor would be entitled to receive and retain pursuant to Section
5(a)(ii), if any, shall cease and all such rights shall thereupon become vested
in the Administrative Agent for the benefit of the Lenders, which shall have the
sole and exclusive right and authority to exercise such voting and/or consensual
rights and to receive and retain such dividends and distributions; provided,
however, that to the extent any governmental consents or filings are required
for the exercise by the Administrative Agent of any of the foregoing rights and
powers, the Administrative Agent shall refrain from exercising such rights or
powers until the making of such required filings, the receipt of such consents
and the expiration of all related waiting periods.
6. Remedies Upon Default. 5. If an Event of Default shall have
occurred and be continuing, the Administrative Agent, on behalf of the Lenders,
may sell the Pledged Securities, or any part thereof, at a public or private
sale or at any broker's board or on any securities exchange, for cash, upon
credit or for future delivery as the Administrative Agent shall deem appropriate
subject to the terms hereof or as otherwise provided in the New York Uniform
Commercial Code. The Administrative Agent shall be authorized at any such sale
(if it deems it advisable to do so) (i) to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are purchasing the
Pledged Securities for their own account for investment and not with a view to
the distribution or sale thereof and/or (ii) to impose such other limitations or
conditions in connection with any such sale as the Administrative Agent deems
necessary or advisable in order to comply with the Securities Act of 1933 or any
other law. Upon consummation of any such sale the Administrative Agent shall
have the right to assign, transfer, and deliver to the purchaser or purchasers
thereof the Pledged Securities so sold. Each such purchaser at any such sale
shall hold the property sold absolutely, free from any claim or right on the
part of the Pledgor.
(b) The Administrative Agent shall give the Pledgor not less
than 10 days' written notice of the Administrative Agent's intention to make any
such public or private sale, or sale at any broker's board or on any such
securities exchange, or of any other disposition of the Pledged Securities (it
being acknowledged by the Pledgor that such notice constitutes reasonable
notification). Such notice, in the case of public sale, shall state the time and
place for such sale and, in the case of sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Pledged Securities, or portion thereof, will
first be offered for sale at such board or exchange. Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as the Administrative Agent may fix and shall state in the notice of
such sale. At any such sale, the
-5-
<PAGE>
Pledged Securities, or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Administrative Agent may (in its sole
and absolute discretion) determine. The Administrative Agent shall not be
obligated to make any sale of the Pledged Securities if it shall determine not
to do so, regardless of the fact that notice of sale of the Pledged Securities
may have been given. The Administrative Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case the sale of all or any part of the
Pledged Securities is made on credit or for future delivery, the Pledged
Securities so sold shall be retained by the Administrative Agent until the sale
price is paid by the purchaser or purchasers thereof, but the Administrative
Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Pledged Securities so sold and, in case of
any such failure, such Pledged Securities may be sold again upon like notice. At
any sale or sales made pursuant to this Section 6, the Administrative Agent, on
behalf of the Lenders, may bid for or purchase, free from any claim or right of
whatever kind, including any equity of redemption, of the Pledgor, any such
demand, notice, claim, right or equity being hereby expressly waived and
released, any or all of the Pledged Securities offered for sale, and may make
any payment on the account thereof by using any claim for moneys then due and
payable to the Lenders by the Pledgor or the Borrower as a credit against the
purchase price; and the Administrative Agent, upon compliance with the terms of
sale, may hold, retain and dispose of the Pledged Securities without further
accountability therefor to the Pledgor or any third party. The Administrative
Agent shall in any such sale make no representations or warranties with respect
to the Pledged Securities or any part thereof, and the Administrative Agent
shall not be chargeable with any of the obligations or liabilities of the
Pledgor with respect thereto. The Pledgor hereby agrees that (i) it will
indemnify and hold the Administrative Agent harmless from and against any and
all claims with respect to the Pledged Securities asserted before the taking of
actual possession or control of the Pledged Securities by the Administrative
Agent pursuant to this Pledge Agreement or arising out of any act of, or
omission to act on the part of, any party other than the Administrative Agent
prior to such taking of actual possession or control by the Administrative
Agent, or arising out of any act on the part of the Pledgor or its agents before
or after the commencement of such actual possession or control by the
Administrative Agent; and (ii) the Administrative Agent shall have no liability
or obligation arising out of any such claim. As an alternative to exercising the
power of sale herein conferred upon it, the Administrative Agent may proceed by
a suit or suits at law or in equity to foreclose this Pledge Agreement and the
pledge hereunder and to sell the Pledged Securities, or any portion thereof,
pursuant to a judgment or decree of a court or courts having competent
jurisdiction.
7. Application of Proceeds. Upon the occurrence and during
the continuance of an Event of Default, all income on the Pledged Securities and
all proceeds from any sale of the Pledged Securities pursuant hereto shall be
applied by the Administrative Agent in the manner set forth in Section 8.7 of
the Credit Agreement.
-6-
<PAGE>
8. Administrative Agent Appointed Attorney-in-Fact. Upon the
occurrence of an Event of Default and during the continuance of an Event of
Default, the Pledgor hereby appoints the Administrative Agent its
attorney-in-fact for the purpose of carrying out the provisions of this Pledge
Agreement and the pledge of the Pledged Securities hereunder and taking any
action and executing any instrument which the Administrative Agent may deem
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, the Administrative Agent shall have the right and power to receive,
endorse, and collect all checks and other orders for the payment of money made
payable to the Pledgor representing any dividend or other distribution payable
in respect of the Pledged Securities or any part thereof and to give full
discharge for the same.
9. Securities Act, etc. In view of the position of the
Pledgor in relation to the Pledged Securities, or because of other present or
future circumstances, a question may arise under the Securities Act of 1933, as
amended, as now or hereafter in effect, or any similar statute hereafter enacted
analogous in purpose or effect (such Act and any such similar statute as from
time to time in effect being hereinafter called the "Federal Securities Laws"),
with respect to any disposition of the Pledged Securities permitted hereunder.
The Pledgor understands that compliance with the Federal Securities Laws may
very strictly limit the course of conduct of the Administrative Agent if the
Administrative Agent were to attempt to dispose of all or any part of the
Pledged Securities, and may also limit the extent to which or the manner in
which any subsequent transferee of any Pledged Securities may dispose of the
same. Similarly, there may be other legal restrictions or limitations affecting
the Administrative Agent in any attempt to dispose of all or any part of the
Pledged Securities under applicable "Blue Sky" or other state securities laws,
or similar laws analogous in purpose or effect. Under Applicable Law, in the
absence of an agreement to the contrary, the Administrative Agent may perhaps be
held to have certain general duties and obligations to the Pledgor to make such
effort towards obtaining a fair price even though the Obligations may be
discharged or reduced by the proceeds of a sale at a lesser price. To the
maximum extent permitted by applicable law, the Pledgor hereby agrees that the
Administrative Agent shall not have any such general duty or obligation to it,
and the Pledgor will not attempt to hold the Administrative Agent responsible
for selling all or any part of the Pledged Securities at an inadequate price,
even if the Administrative Agent shall accept the first offer received or does
not approach more than one possible purchaser. Without limiting the generality
of the foregoing, the provisions of this Section 9 would apply if, for example,
the Administrative Agent were to place all or any part of the Pledged Securities
for private placement by an investment banking firm, or if such investment
banking firm purchased all or any part of the Pledged Securities for its own
account, or if the Administrative Agent placed all or any part of the Pledged
Securities privately with a purchaser or purchasers.
10. Regulatory Approvals. During the continuance of an Event
of Default, the Pledgor will, at its expense, promptly execute and deliver, or
cause the execution and delivery of, all applications, certificates,
instruments, registration statements and all other documents and papers the
Administrative Agent may reasonably request or as may be required by applicable
law in connection with the obtaining of any consent, approval, registration,
qualification or
-7-
<PAGE>
authorization of the FCC or of any other Governmental Authority or Person
necessary or appropriate for the effective exercise of any rights under this
Pledge Agreement or any other Fundamental Document. Without limiting the
generality of the foregoing, if an Event of Default shall have occurred and be
continuing, the Pledgor shall take any action which the Administrative Agent may
reasonably request in order to transfer and assign to the Administrative Agent,
or to such one or more third parties as the Administrative Agent may designate,
or to a combination of the foregoing, each FCC License, Permit, other similar
right or license or other agreement. To enforce the provisions of this Section,
the Administrative Agent is empowered to request the appointment of a receiver
from any court of competent jurisdiction. Such receiver shall be instructed to
seek from the FCC or other Governmental Authority or Person (as applicable) an
involuntary transfer of control of each such FCC License, Permit, similar right
or license or other agreement for the purpose of seeking a bona fide purchaser
to whom control will ultimately be transferred. The Pledgor hereby agrees to
authorize such an involuntary transfer of control upon the request of the
receiver so appointed and, if the Pledgor shall refuse to authorize the
transfer, its approval may be required by the court. Upon the occurrence and
continuance of an Event of Default, the Pledgor shall further use its best
efforts to assist in obtaining approval of the FCC or other Governmental
Authority or Person, if required, for any action or transactions contemplated by
this Pledge Agreement or any other Fundamental Document including, without
limitation, the preparation, execution and filing with the FCC or other
Governmental Authority or Person of the assignor's or transferor's portion of
any application or applications for consent to the assignment of any FCC
License, Permit, similar right or license or other agreement or the transfer of
control necessary or appropriate under the rules and regulations of the FCC or
other Governmental Authority or otherwise for the approval of the transfer or
assignment of any portion of the Collateral, together with any FCC License,
Permit, similar right or license or other agreement. The Pledgor acknowledges
that the assignment or transfer of each FCC License, Permit, similar right or
license or other agreement is integral to the Administrative Agent's and
Lenders' realization of the value of the Collateral, that there is no adequate
remedy at law for failure by the Pledgor to comply with the provisions of this
Section and that such failure would cause irreparable injury not adequately
compensable in damages, and therefore agrees that each and every covenant
contained in this Section may be specifically enforced, and the Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants.
11. Continuation and Reinstatement. The Pledgor further agrees
that its pledge hereunder shall continue to be effective or be reinstated, as
the case may be, if at any time payment or any part thereof, of any Obligation
is rescinded or must otherwise be restored by the Administrative Agent or any
Lender upon the bankruptcy or reorganization of the Pledgor, the Borrower or
otherwise.
12. Termination. The pledge hereunder shall terminate when all
of the Obligations shall have been fully and indefeasibly paid and performed and
the Commitments shall have terminated. At such time, the Administrative Agent
shall, at the sole cost and expense of the Pledgor, assign and deliver to the
Pledgor, or to such Person or Persons as the Pledgor
-8-
<PAGE>
shall designate in writing, against receipt, such of the Pledged Securities (if
any) as shall not have been sold or otherwise applied by the Administrative
Agent pursuant to the terms hereof and shall still be held by it hereunder,
together with appropriate instruments of reassignment and release. Any such
reassignment shall be without recourse upon or warranty by the Administrative
Agent.
13. Further Assurances. The Pledgor, at its own expense, will
execute and deliver, from time to time, any and all further, or other,
instruments, and perform such acts, as the Administrative Agent may reasonably
request to effect the purposes of this Pledge Agreement and to secure to the
Administrative Agent for the benefit of the Lenders, the benefits of all rights,
authorities, and remedies conferred upon the Administrative Agent by the terms
of this Pledge Agreement.
14. Notices. Notices and other communication provided for
herein shall be in writing and shall be delivered or mailed (or if by telegram,
delivered to the telegraph company and, if by telecopier, delivered by such
equipment) to the parties at the following respective addresses:
(1) If to the Administrative Agent:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attn: Project Finance Group
Facsimile No.: (212) 261-3421
(2) If to the Pledgor:
GCI Transport Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Facsimile No.: (907) 265-5676
or such other address as such party may from time to time designate by giving
written notice to the other parties hereunder. All notices and other
communications given to any party hereto in accordance with the provisions of
this Pledge Agreement shall be deemed to have been given on the tenth Business
Day after the date when sent by registered or certified mail, postage prepaid,
return receipt requested, if by mail, or when delivered to the telegraph
company, charges prepaid, if by telegram, or when receipt is acknowledged if by
telecopier, in each case addressed to such party as provided in this Section 14
or in accordance with the latest unrevoked written direction from such party.
-9-
<PAGE>
15. No Waiver. No delay or failure on the part of the
Administrative Agent in the exercise of any right, power, privilege or remedy
hereunder or under any other Fundamental Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power, privilege
or remedy by the Administrative Agent preclude any other or further exercise
thereof or the exercise of any other right, power, privilege or remedy and no
course of dealing between the parties shall operate as a waiver of any right,
power, privilege or remedy of the Administrative Agent. All remedies hereunder
are cumulative and are not exclusive of any other remedies provided by law.
16. Governing Law. THIS PLEDGE AGREEMENT AND ANY INSTRUMENT OR
AGREEMENT REQUIRED HEREUNDER SHALL BE DEEMED TO BE MADE UNDER, SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
17. Severability. This Pledge Agreement shall be interpreted
in such manner as to be effective and valid under Applicable Law, but if any
provision of this Pledge Agreement shall be prohibited by or invalidated under
the Applicable Law of any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Pledge Agreement and any such prohibition or invalidity in any
jurisdiction shall not invalidate such provision in any other jurisdiction. The
parties hereto agree to negotiate in good faith a provision to replace any
ineffective provision, such provision to be as similar in effect and intent as
the ineffective provision as permissible. To the extent permitted by Applicable
Law, the parties hereby waive any provision of law which may render any
provision hereof prohibited or unenforceable in any respect.
18. Amendments. This Pledge Agreement may be amended, modified
or supplemented, and the terms hereof may be waived, in each case only by a
written instrument executed by the parties to this Pledge Agreement. The waiver
by any party hereto of a breach of any provision of this Pledge Agreement shall
not operate or be construed as a waiver of any subsequent or other breach,
whether or not similar. No notice to, or demand on, the Pledgor in any case
shall entitle the Pledgor to any other or further notice or demand in the same,
similar or other circumstances.
19. Survival of Representations and Warranties. All
warranties, representations and covenants made by the Pledgor herein shall be
considered to have been relied upon by the Administrative Agent and the Lenders
and shall survive the making of the Loans contemplated by the Credit Agreement
and the issuance and delivery to the Administrative Agent of the Notes,
regardless of any investigation made by the Administrative Agent or the Lenders
or on their behalf and shall continue in full force and effect so long as any
Obligation that is due or could become due, is outstanding and unpaid and so
long as the Commitments have not been terminated.
-10-
<PAGE>
20. Successors and Assigns. All references herein to any of
the parties to this Pledge Agreement shall be deemed to include the successors
and assigns of such party; provided, however, that the Pledgor may not assign
any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent, and all covenants, promises and agreements by or on
behalf of the Pledgor which are contained herein shall inure to the benefit of
the successors and assigns of the Administrative Agent and any of the Lenders.
21. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, THE PLEDGOR HEREBY WAIVES, AND COVENANTS
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS PLEDGE AGREEMENT,
THE SUBJECT MATTER HEREOF OR ANY PROJECT AGREEMENT, ANY OTHER FUNDAMENTAL
DOCUMENT OR THE SUBJECT MATTER THEREOF, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE PLEDGOR
ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE ADMINISTRATIVE AGENT THAT THE
PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE
ADMINISTRATIVE AGENT AND THE LENDERS HAVE RELIED, ARE RELYING AND WILL RELY IN
ENTERING INTO THIS PLEDGE AGREEMENT AND ANY OTHER PROJECT AGREEMENT OR OTHER
FUNDAMENTAL DOCUMENT. THE ADMINISTRATIVE AGENT OR ANY LENDER MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 21 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PLEDGOR TO THE WAIVER OF ITS RIGHTS TO TRIAL BY
JURY.
22. Submission to Jurisdiction; Service of Process. THE
PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE COURTS OF
THE STATE OF NEW YOUR AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHER DISTRICT OF NEW YOURK FOR THE PURPOSES OF ANY SUIT, ACTION
OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS PLEDGE AGREEMENT, THE
SUBJECT MATTER HEREOF OR ANY PROJECT AGREEMENT, ANY OTHER FUNDEMTAL DOCUMENT OR
THE SUBJECT MATTER THEREOF BROUGHT BY THE ADMINISTRATIVE AGENT OR A LENDER OR
FORUMS AT THE SOLE OPTION OF THE ADMINISTRATIVE AGENT OR A LENDER. THE PLEDGOR
TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY WIVES, AND AGREES NOT TO
ASSET, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH COURTS, ANY CLAIM THAT IS IS NOT SUBJECT PERSONALLY
TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR
IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF
-11-
<PAGE>
THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS PLEDGE AGREEMENT, THE
SUBJECT MATTER HEREOF OR ANY PROJECT AGREEMENT OR ANY OTHER FUNDAMENTAL DOCUMENT
OR THE SUBJECT MATTER THEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, (B)
HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED
BY THE ADMINISTRATIVE AGENT OR A LENDER IN STATE COURT TO FEDERAL COURT, AND (C)
HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY
OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE
ARISE FROM THE SAME SUBJECT MATTER. THE PLEDGOR HEREBY CONSENTS TO SERVICE OF
PROCESS BY MAIL AT ITS ADDRESS TO WHICH NOTICES ARE TO BE GIVEN PURSUANT TO
SECTION 13 HEREOF. THE PLEDGOR AGREES THAT ITS SUBMISSION TO JURISDICTION AND
CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE
ADMINISTRATIVE AGENT AND THE LENDERS. FINAL JUDGMENT AGAINST THE PLEDGOR IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY
OTHER JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE
AMOUNT OF INDEBTEDNESS OR LIABILITY OF THE PLEDGOR THEREIN DESCRIBED OR (Y) IN
ANY OTHER MANNER PROVIDED BY, OR PURSUANT TO, THE LAWS OF SUCH OTHER
JURISDICTION, PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE AGENT OR A LENDER MAY
AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST THE
PLEDGOR OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES
OR OF ANY COUNTRY OR PLACE WHERE THE PLEDGOR OR SUCH ASSETS MAY BE FOUND.
23. Counterparts. This Pledge Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original for all purposes, but all such counterparts shall
together constitute one and the same agreement, and all signatures need not
appear on any one counterpart.
24. Headings. The headings and captions in this Pledge
Agreement are for convenience of reference only and shall not define, limit or
otherwise affect any of the terms or provisions hereof.
25. This Pledge Agreement represents the entire agreement of
the parties with regard to the subject matter hereof, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Pledge Agreement.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed as of the day and year first above written.
GCI TRANSPORT CO., INC.
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
CREDIT LYONNAIS NEW YORK BRANCH,
as Administrative Agent
By: /s/
Name: Michael F. G. Pepe
Title: Vice President
<PAGE>
SCHEDULE 1
Pledged Securities
Subsidiary Stock Certificate No. No. of Shares
- ---------- --------------------- -------------
GCI Fiber Co., Inc. 1 100
Fiber Hold Co., Inc. 1 100
<PAGE>
FIBER SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of January 27, 1998 (as
amended, supplemented or otherwise modified, renewed or replaced from time to
time, the "Security Agreement") is by and among (i) GCI FIBER CO., INC., an
Alaska corporation and FIBER HOLD CO., INC., an Alaska corporation (each a
"Debtor" and collectively, the "Debtors") and (ii) CREDIT LYONNAIS NEW YORK
BRANCH, as administrative agent for the Lenders referred to in the Credit
Agreement referred to below (in such capacity, the "Administrative Agent").
Pursuant to a Credit and Security Agreement dated as of
January 27, 1998 among Alaska United Fiber System Partnership, a general
partnership formed under the laws of Alaska (the "Borrower"), the lenders
referred to therein (the "Lenders"), Credit Lyonnais New York Branch as
Administrative Agent, NationsBank of Texas, N.A. as Syndication Agent and TD
Securities (USA) Inc. as Documentation Agent (as the same may be amended,
supplemented, or otherwise modified, renewed or replaced from time to time, the
"Credit Agreement"), the Lenders have agreed (subject to the terms and
conditions set forth therein) to make Loans to the Borrower.
The Debtors each own fifty percent (50%) of the partnership
interests in the Borrower.
In order to induce the Lenders to enter into the Credit
Agreement and make the Loans to the Borrower pursuant to the terms and
conditions set forth therein and in order to secure the Obligations, each of the
Debtors is pledging to the Administrative Agent (for the benefit of the
Lenders), and granting a security interest to the Administrative Agent (for the
benefit of the Lenders) in, all of its respective partnership interests in the
Borrower.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. (a) Definitions. When used in this Security
Agreement the term "Collateral" shall mean with respect to each Debtor, such
Debtor's partnership and other ownership rights and interests in the Borrower,
all of such Debtor's contract rights, powers, privileges, claims and remedies
and all other interests and benefits arising under or in respect of the
Partnership Agreement dated as of July 29, 1997 by and between the Debtors (as
the same may be amended from time to time, the "Partnership Agreement") and any
proceeds or products of any of the foregoing or any income therefrom.
(b) All capitalized terms used herein but not defined herein
shall have the respective meanings set forth in the Credit Agreement. Terms not
otherwise defined herein or in the Credit Agreement shall have, where
appropriate, their respective definitions as set forth in the Uniform Commercial
Code as in effect in the State of New York.
<PAGE>
SECTION 2. Grant of Security Interest. As security for the due
and punctual payment and performance of the Obligations (including post-petition
interest to the extent permitted by Applicable Law), each Debtor hereby
mortgages, pledges, assigns, transfers, sets over, conveys and delivers to the
Administrative Agent (for the benefit of the Lenders) and grants to the
Administrative Agent (for the benefit of the Lenders) a security interest in all
of its right, title and interest in and to the Collateral.
SECTION 3. Representations and Warranties of the Debtors. Each
Debtor hereby represents and warrants to the Administrative Agent (for the
benefit of the Lenders) that:
(i) it is a corporation duly organized, validly existing and
in good standing under the laws of the State of Alaska and is duly qualified to
do business in all jurisdictions where the nature of its properties or business
so requires. Such Debtor has the corporate power and authority (a) to own its
respective properties and to carry on its respective business as now being
conducted and as intended to be conducted, to execute, deliver and perform its
obligations under this Security Agreement and the other Fundamental Documents to
which it is a party and any other documents contemplated hereby and thereby to
which it is or will be a party and (b) to grant to the Administrative Agent for
the benefit of the Lenders, a security interest in the Collateral as
contemplated hereby;
(ii) it is a general partner of the Borrower, holding a 50%
interest in the Borrower, and except for the other Debtor, no other Person owns
or holds any partnership or other ownership rights or interests in the Borrower;
(iii) the execution, delivery, and performance of this
Security Agreement and the other Fundamental Documents to which it is a party
and the grant to the Administrative Agent (for the benefit of the Lenders) of
the Liens and the security interests hereunder (A) have been duly authorized by
all necessary corporate action on the part of such Debtor, (B) will not violate
any provision of the Certificate of Incorporation or By-Laws of such Debtor, or
the Partnership Agreement, (C) will not constitute a violation by such Debtor of
any provision of Applicable Law or any order of any court or other agency of the
United States or any state thereof applicable to such Debtor or any of its
properties or assets, (D) will not violate any provision of any indenture,
agreement, bond, note or other similar instrument to which such Debtor is a
party or by which such Debtor or its properties or assets are bound, (E) will
not be in conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under, or create any right to terminate, any
such indenture, agreement, bond, note or other instrument and (F) will not
result in the creation or imposition of any Lien, security interest, charge or
encumbrance of any nature whatsoever upon any of the properties or assets of
such Debtor other than pursuant to this Security Agreement;
(iv) no consent of any other Person (including, without
limitation, creditors of such Debtor) is required to be obtained by such Debtor
in connection with the execution, delivery and performance of this Security
Agreement;
-2-
<PAGE>
(v) all authorizations, approvals, registrations or filings
with any governmental or public regulatory body or authority of the United
States or any state thereof or any foreign jurisdiction (other than UCC-1
Financing Statements) required for the execution, delivery and performance by
such Debtor of this Security Agreement and the other Fundamental Documents to
which it is a party, have been duly obtained or made, or duly applied for and
are in full force and effect, and if any such further authorizations, approvals,
registrations or filings should hereafter become necessary, such Debtor shall
obtain or make all such authorizations, approvals, registrations or filings;
(vi) no financing statement, mortgage, notice of Lien, deed of
trust, security agreement, or any other agreement or instrument creating or
giving notice of a Lien against any of the Collateral is in existence or on file
in any public office other than those created or filed pursuant to the terms of
this Security Agreement in favor of the Administrative Agent (for the benefit of
the Lenders);
(vii) this Security Agreement, when executed and delivered,
will create and grant to the Administrative Agent (for the benefit of the
Lenders), upon the filing of the appropriate UCC-1 Financing Statements, a valid
Lien on and a perfected security interest in favor of the Administrative Agent
(for the benefit of the Lenders) in, all right, title or interest of such Debtor
in or to the Collateral, subject to no prior pledge, Lien, security interest,
charge or encumbrance or to any agreement purporting to grant any third party a
security interest in or Lien on the Collateral;
(viii) this Security Agreement and the other Fundamental
Documents to which such Debtor is a party when executed by such Debtor will
constitute the legal, valid and binding obligations of such Debtor, enforceable
in accordance with their respective terms, subject only, as to the enforcement
of remedies, to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and general principles of equity;
(ix) it is not doing business and does not intend to do
business other than under its full corporate name, including, without
limitation, under any trade name or other doing business name;
(x) it has good title to the Collateral owned by it, free and
clear of Liens;
(xi) the chief executive office of such Debtor is as set forth
on Schedule 1 hereto, and such office is the place where such Debtor keeps any
books and records concerning the Collateral;
(xii) it will realize a direct economic benefit as a result of
the Loans being made to the Borrower under the Credit Agreement;
-3-
<PAGE>
(xiii) there are no pending or, to the knowledge of such
Debtor, threatened actions, suits, proceedings or investigations against it or
affecting it or its properties that, individually or in the aggregate, would if
adversely determined be likely to have a material adverse effect on the
performance by such Debtor of its obligations under this Security Agreement and
the other Fundamental Documents to which it is a party or its assets,
operations, business or financial condition; and
(xiv) no sales, use, documentation or similar taxes, fees or
other charges are payable with respect to the execution and delivery by such
Debtor of this Security Agreement and the other Fundamental Documents to which
it is a party.
SECTION 4. Covenants of the Debtors. Each Debtor hereby
covenants and agrees with the Administrative Agent (for the benefit of the
Lenders) that:
(a) Such Debtor will keep the Collateral free and clear of all
security interests, Liens and claims other than the security interest and Lien
herein granted and will not sell, assign, transfer, exchange or otherwise
dispose of, or grant any option with respect to, any of the Collateral.
(b) Such Debtor will defend the Administrative Agent's (for
the benefit of the Lenders) right, title and security interest in and to the
Collateral against claims and demands of all Persons whomsoever.
(c) Such Debtor will not take any action, including, without
limitation, any action under or in accordance with the Partnership Agreement, to
allow any additional partners of the Borrower.
SECTION 5. The Administrative Agent's Rights Exclusive of the
Debtors' Default. Each of the Debtors hereby agrees to permit representatives of
the Administrative Agent, upon reasonable notice to such Debtor, to discuss such
Debtor's records in connection with the Collateral at such reasonable times and
as often as may be reasonably requested by the Administrative Agent. The
Administrative Agent, from time to time, at its option may perform any agreement
of a Debtor which such Debtor shall fail to perform and take any other action
which the Administrative Agent reasonably deems necessary or advisable for the
maintenance or preservation of any of the Collateral or its interest therein,
and the Debtors agree to reimburse the Administrative Agent on demand for all
reasonable expenses of the Administrative Agent in connection with the
foregoing. The Administrative Agent shall have the right to designate any
officer, employee or attorney to execute, sign, endorse, assign, transfer or
deliver in the name of a Debtor or in their names any documents or certificates
necessary to evidence, perfect and realize upon the security interest granted
herein.
SECTION 6. The Administrative Agent's Rights and Remedies Upon
an Event of Default.
-4-
<PAGE>
(a) Debtors to Hold in Trust. Upon the occurrence and during
the continuance of an Event of Default, each Debtor will, upon receipt by it of
any revenue, income, profits or other sums in which a security interest is
granted by this Security Agreement, payable pursuant to any agreement or
otherwise, or of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the sum or instrument in
trust for the Lenders, and forthwith, without any notice, demand or other action
on the part of the Administrative Agent or any Lender whatsoever (all notices,
demands, or other actions on the part of the Administrative Agent and the
Lenders being expressly waived), endorse, transfer and deliver any such sums or
instruments or both to the Administrative Agent to be applied to the repayment
of the Obligations in accordance with the provisions of Section 6(d) hereof.
(b) Collections, etc. Upon the occurrence and during the
continuance of an Event of Default, the Administrative Agent may, in its sole
discretion, in its name or in the names of the Debtors or otherwise, demand, sue
for, collect or receive any money or property at any time payable or receivable
on account of or in exchange for, or make any compromise or settlement deemed
desirable with respect to, the Collateral, but shall be under no obligation so
to do, or the Administrative Agent may extend the time of payment, arrange for
payment in installments, or otherwise modify the terms of, or release, any of
the Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of either of the Debtors. The Administrative
Agent will not be required to take any steps to preserve any rights against
prior parties to the Collateral. If a Debtor fails to make any payment or to
take any action required hereunder, the Administrative Agent may make such
payments and take all such actions as the Administrative Agent reasonably deems
necessary to protect the Lenders' Liens and security interests in the Collateral
and/or the value thereof, and the Administrative Agent is hereby authorized
(without limiting the general nature of the authority hereinabove conferred) to
pay, purchase, contest or compromise any Liens which in the judgment of the
Administrative Agent appear to be equal to, prior to or superior to the security
interests of the Lenders in the Collateral.
(c) Possession, Sale of Collateral, etc. Upon the occurrence
and during the continuance of an Event of Default, the Administrative Agent may
take such measures as it may deem necessary or proper for the care or protection
of the Administrative Agent's rights and remedies hereunder, including, without
limitation, the right to sell or cause to be sold, whenever the Administrative
Agent shall decide, in one or more sales or parcels, at such prices as the
Administrative Agent may deem best, and for cash or on credit or for future
delivery, without assumption of any credit risk, all or any portion of the
Collateral, at any broker's board or at a public or private sale, without any
demand of performance or notice of intention to sell or of the time or place of
sale (except 10 days' written notice to the applicable Debtor of the time and
place of any such sale or sales and such other notices as may be required by
Applicable Law and cannot be waived), and any Person may be the purchaser of all
or any portion of the Collateral so sold and thereafter hold the same
absolutely, free (to the fullest extent permitted by Applicable Law) from any
claim or right of whatever kind, including any equity of redemption, of any
Debtor, any such demand, notice, claim, right or equity being hereby expressly
waived and released to the fullest extent permitted by Applicable Law. At any
sale or sales made pursuant to
-5-
<PAGE>
this Section 6, the Administrative Agent may bid for or purchase, free (to the
fullest extent permitted by Applicable Law) from any claim or right of whatever
kind, including any equity of redemption, of any Debtor any such demand, notice,
claim, right or equity being hereby expressly waived and released, any part of
or all of the Collateral offered for sale, and may make any payment on account
thereof by using any claim for moneys then due and payable to the Administrative
Agent and the Lenders (subject to the provisions of Article 10 of the Credit
Agreement) by the Borrower under the Credit Agreement as a credit against the
purchase price. The Administrative Agent shall in any such sale make no
representations or warranties with respect to the Collateral or any part
thereof, and the Administrative Agent shall not be chargeable with any of the
obligations or liabilities of any of the Debtors. Each of the Debtors hereby
agrees, on a joint and several basis, (i) that it will indemnify and hold the
Administrative Agent and the Lenders harmless from and against any and all
claims with respect to the Collateral asserted before the taking control of the
relevant Collateral by the Administrative Agent pursuant to this Section 6, or
arising out of any act of, or omission to act on the part of, any Person (other
than the Administrative Agent or the Lenders) prior to such taking of actual
control by the Administrative Agent, or arising out of any act on the part of
the Debtors, their Affiliates or their respective agents before or after the
commencement of such actual control by the Administrative Agent; and (ii)
neither the Administrative Agent nor any Lender shall have any liability or
obligation to any of the Debtors arising out of any such claim except for acts
of willful misconduct or gross negligence or not taken in good faith. In any
action hereunder, the Administrative Agent shall be entitled to the appointment
of a receiver, without notice, to take possession of all or any portion of the
Collateral and to exercise such powers as the court shall confer upon the
receiver. Notwithstanding the foregoing, upon the occurrence of an Event of
Default, and during the continuation of such Event of Default, the
Administrative Agent shall be entitled to apply, without prior notice to the
Debtors except as may be required by Applicable Law, any cash or cash items
constituting Collateral in the possession of the Administrative Agent to payment
of the Obligations.
(d) Application of Proceeds on Default. Upon the occurrence
and during the continuance of an Event of Default, all income on the Collateral
and all proceeds from any sale of the Collateral pursuant hereto shall be
applied in accordance with the provisions of Section 8.7 of the Credit
Agreement.
(e) Power of Attorney. Upon the occurrence and during the
continuance of an Event of Default (i) each of the Debtors does hereby
irrevocably make, constitute and appoint the Administrative Agent or any of its
officers or designees their true and lawful attorney-in-fact with full power in
the name of the Administrative Agent or such Debtor to receive, open and dispose
of all mail addressed to such Debtor and to endorse any notes, checks, drafts,
money orders or other evidences of payment relating to the Collateral that may
come into the possession of the Administrative Agent, with full power and right
to cause the mail of such Debtor to be
-6-
<PAGE>
transferred to the Administrative Agent's own offices or otherwise, and to do
any and all other acts necessary or proper to carry out the intent of this
Security Agreement and the grant of the Liens and security interests hereunder,
and each of the Debtors hereby ratifies and confirms all that the Administrative
Agent or its substitutes shall properly do by virtue hereof; (ii) each of the
Debtors hereby further irrevocably makes, constitutes and appoints the
Administrative Agent or any of its officers or designees its true and lawful
attorney-in-fact in the name of the Administrative Agent or such Debtor (A) to
enforce all of such Debtor's rights under and pursuant to all agreements with
respect to the Collateral, all for the sole benefit of the Administrative Agent
for the benefit of the Lenders, (B) to enter into and perform such agreements as
may be necessary in order to carry out the terms, covenants and conditions of
this Security Agreement or any other Fundamental Document that are required to
be observed or performed by such Debtor, (C) to execute such other and further
mortgages, pledges and assignments of the Collateral, and related instruments or
agreements, as the Administrative Agent may reasonably require for the purpose
of perfecting, protecting, maintaining or enforcing the Liens and security
interests granted to the Administrative Agent for the benefit of the Lenders
hereunder and (D) to do any and all other things necessary or proper to carry
out the intention of this Security Agreement and the grant of the Liens and
security interests hereunder. Each of the Debtors hereby ratifies and confirms
in advance all that the Administrative Agent as such attorney-in-fact or its
substitutes shall properly do by virtue of this power of attorney.
SECTION 7. Financing Statements. Each of the Debtors hereby
authorizes the Administrative Agent to file UCC-1 Financing Statements and any
amendments thereto or continuations thereof, and any other appropriate security
documents or instruments, and to give any notices necessary or desirable to
perfect the Lien and security interests of the Administrative Agent for the
benefit of the Lenders on the Collateral, in all cases without the signature of
such Debtor or to execute such items as attorney-in-fact for such Debtor.
SECTION 8. Further Assurances. (a) Each of the Debtors agrees
that such Debtor will from time to time, on request of the Administrative Agent
(i) duly execute and deliver, or cause to be duly executed and delivered, at the
cost and expense of the Debtors, such further instruments as may be appropriate
in the reasonable judgment of the Administrative Agent to carry out the
provisions and purposes of this Security Agreement; (ii) promptly execute and
deliver or cause to be executed and delivered, at the cost and expense of the
Debtors, such further instruments as may be appropriate in the reasonable
judgment of the Administrative Agent, to provide the Administrative Agent a
first perfected Lien in the Collateral and any and all documents (including,
without limitation, the execution, amendment or supplementation of any financing
statement and continuation statement or other statement) for filing under the
provisions of the Uniform Commercial Code of any jurisdiction or any statute,
rule or regulation of any applicable foreign, federal, state or local
jurisdiction, and perform or cause to be performed such other acts which are
necessary or advisable, from time to time, in order to grant and maintain in
favor of the Administrative Agent (for the benefit of the Lenders) the Lien and
security interest in the Collateral contemplated hereunder, subject to no other
Liens or security interests; and (iii) promptly undertake to deliver or cause to
be delivered to the Administrative Agent and the Lenders from time to time, such
other documentation, consents, authorizations and approvals in form and
substance reasonably satisfactory to the Administrative Agent, as the
-7-
<PAGE>
Administrative Agent shall deem reasonably necessary or advisable to perfect or
maintain the Liens of the Administrative Agent (for the benefit of the Lenders).
(b) The Debtors hereby agree to pay any and all stamp,
registration, recordation and similar taxes, fees or charges, reasonable fees
and expenses of the Administrative Agent's counsel and of any agents therefor
and to indemnify the Administrative Agent and its agents against any and all
liabilities with respect to or resulting from any delay in the payment or
omission to pay any such taxes, fees or charges, which may be payable or
determined to be payable in connection with the execution, delivery, performance
or enforcement of this Security Agreement and any other document or instrument
executed in connection herewith or the perfection of any rights or security
interests hereunder.
SECTION 9. Regulatory Approvals. During the continuance of an
Event of Default, each Debtor will, at its expense, promptly execute and
deliver, or cause the execution and delivery of, all applications, certificates,
instruments, registration statements and all other documents and papers the
Administrative Agent may reasonably request or as may be required by applicable
law in connection with the obtaining of any consent, approval, registration,
qualification or authorization of the FCC or of any other Governmental Authority
or Person necessary or appropriate for the effective exercise of any rights
under this Security Agreement or any other Fundamental Document. Without
limiting the generality of the foregoing, if an Event of Default shall have
occurred and be continuing, each Debtor shall take any action which the
Administrative Agent may reasonably request in order to transfer and assign to
the Administrative Agent, or to such one or more third parties as the
Administrative Agent may designate, or to a combination of the foregoing, each
FCC License, Permit, other similar right or license or other agreement. To
enforce the provisions of this Section, the Administrative Agent is empowered to
request the appointment of a receiver from any court of competent jurisdiction.
Such receiver shall be instructed to seek from the FCC or other Governmental
Authority or Person (as applicable) an involuntary transfer of control of each
such FCC License, Permit, similar right or license or other agreement for the
purpose of seeking a bona fide purchaser to whom control will ultimately be
transferred. Each Debtor hereby agrees to authorize such an involuntary transfer
of control upon the request of the receiver so appointed and, if a Debtor shall
refuse to authorize the transfer, its approval may be required by the court.
Upon the occurrence and continuance of an Event of Default, each Debtor shall
further use its best efforts to assist in obtaining approval of the FCC or other
Governmental Authority or Person, if required, for any action or transactions
contemplated by this Security Agreement or any other Fundamental Document
including, without limitation, the preparation, execution and filing with the
FCC or other Governmental Authority or Person of the assignor's or transferor's
portion of any application or applications for consent to the assignment of any
FCC License, Permit, similar right or license or other agreement or the transfer
of control necessary or appropriate under the rules and regulations of the FCC
or other Governmental Authority or otherwise for the approval of the transfer or
assignment of any portion of the Collateral, together with any FCC License,
Permit, similar right or license or other agreement. Each Debtor acknowledges
that the assignment or transfer of each FCC License, Permit, similar right or
license or other agreement is
-8-
<PAGE>
integral to the Administrative Agent's and Lenders' realization of the value of
the Collateral, that there is no adequate remedy at law for failure by a Debtor
to comply with the provisions of this Section and that such failure would cause
irreparable injury not adequately compensable in damages, and therefore agrees
that each and every covenant contained in this Section may be specifically
enforced, and each Debtor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants.
SECTION 10. The rights and remedies conferred upon or reserved
to the Administrative Agent in this Security Agreement are intended to be in
addition to, and not in limitation of, any other right or remedy available to
the Administrative Agent. Without limiting the generality of the foregoing, the
Administrative Agent and the Lenders shall have all rights and remedies of a
secured party under Article 9 of the UCC or any other Applicable Law.
SECTION 11. Continuation and Reinstatement. Each of the
Debtors further agrees that the security interest granted hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment or any part thereof, of any Obligation is rescinded or must otherwise be
restored by the Administrative Agent or any Lender upon the bankruptcy or
reorganization of any Debtor, the Borrower or otherwise.
SECTION 12. Termination. The security interests granted under
this Security Agreement shall terminate when all the Obligations shall have been
fully and indefeasibly paid and performed and the Commitments shall have
terminated. At such time, all rights to the Collateral pledged or assigned by a
Debtor shall revert to such Debtor. Upon any such termination the Administrative
Agent will, at the Debtor's expense, execute and deliver to such Debtor such
documents (in form and substance satisfactory to the Administrative Agent) as
such Debtor shall reasonably request to evidence such termination.
SECTION 13. Notice. Notices and other communication provided
for herein shall be in writing and shall be delivered or mailed (or if by
telegram, delivered to the telegraph company and, if by telecopier, delivered by
such equipment) to the parties at the following respective addresses:
(1) If to the Administrative Agent:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attn: Project Finance Group
Facsimile No.: (212) 261-3421
(2) If to the Debtors:
-9-
<PAGE>
GCI Fiber Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Facsimile No.: (907) 265-5676
and
Fiber Hold Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Facsimile No.: (907) 265-5676
or such other address as such party may from time to time designate by giving
written notice to the other party hereunder. All notices and other
communications given to any party hereto in accordance with the provisions of
this Security Agreement shall be deemed to have been given on the tenth Business
Day after the date when sent by registered or certified mail, postage prepaid,
return receipt requested, if by mail, or when delivered to the telegraph
company, charges prepaid, if by telegram, or when receipt is acknowledged if by
telecopier, in each case addressed to such party as provided in this Section 13
or in accordance with the latest unrevoked written direction from such party.
SECTION 14. No Waiver. No delay or failure on the part of the
Administrative Agent in the exercise of any right, power, privilege or remedy
hereunder or under any other Fundamental Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power, privilege
or remedy by the Administrative Agent preclude any other or further exercise
thereof or the exercise of any other right, power, privilege or remedy and no
course of dealing between the parties shall operate as a waiver of any right or
remedy of the Administrative Agent. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by law.
SECTION 15. Governing Law. THIS SECURITY AGREEMENT AND ANY
INSTRUMENT OR AGREEMENT REQUIRED HEREUNDER SHALL BE DEEMED TO BE MADE UNDER,
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 16. Severability. This Security Agreement shall be
interpreted in such manner as to be effective and valid under Applicable Law,
but if any provision of this Security Agreement shall be prohibited by or
invalidated under the Applicable Law of any jurisdiction, such provision shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining
-10-
<PAGE>
provisions of this Security Agreement and any such prohibition or invalidity in
any jurisdiction shall not invalidate such provision in any other jurisdiction.
The parties hereto agree to negotiate in good faith a provision to replace the
ineffective provision, such provision to be as similar in effect and intent as
the ineffective provision as permissible. To the extent permitted by Applicable
Law, the parties hereby waive any provision of law which may render any
provision hereof prohibited or unenforceable in any respect.
SECTION 17. Amendments. This Security Agreement may be
amended, modified or supplemented, and the terms hereof may be waived, in each
case only by a written instrument executed by the parties to this Security
Agreement. The waiver by any party hereto of a breach of any provision of this
Security Agreement shall not operate or be construed as a waiver of any
subsequent or other breach, whether or not similar. No notice to, or demand on,
the Debtors in any case shall entitle the Debtors to any other or further notice
or demand in the same, similar or other circumstances.
SECTION 18. Survival of Representations and Warranties. All
warranties, representations and covenants made by the Debtors herein shall be
considered to have been relied upon by the Administrative Agent and the Lenders
and shall survive the making of the Loans contemplated by the Credit Agreement
and the issuance and delivery to the Administrative Agent of the Notes,
regardless of any investigation made by the Administrative Agent or the Lenders
or on their behalf and shall continue in full force and effect so long as any
Obligation that is due or could become due, is outstanding and unpaid and so
long as the Commitments have not been terminated.
SECTION 19. Successors and Assigns. All references herein to
any of the parties to this Security Agreement shall be deemed to include the
successors and assigns of such party; provided, however, that none of the
Debtors may assign any of their rights or obligations hereunder without the
prior written consent of the Administrative Agent, and all covenants, promises
and agreements by or on behalf of the Debtors which are contained herein shall
inure to the benefit of the successors and assigns of the Administrative Agent
and any of the Lenders.
SECTION 20. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED
BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE DEBTORS, RESPECTIVELY,
HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED
UPON THIS SECURITY AGREEMENT, THE SUBJECT MATTER HEREOF OR ANY PROJECT
AGREEMENT, ANY OTHER FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT
OR OTHERWISE. EACH OF THE DEBTORS ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE
ADMINISTRATIVE AGENT THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL
INDUCEMENT UPON
-11-
<PAGE>
WHICH THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE RELIED, ARE RELYING AND WILL
RELY IN ENTERING INTO THIS SECURITY AGREEMENT AND ANY OTHER PROJECT AGREEMENT OR
OTHER FUNDAMENTAL DOCUMENT. THE ADMINISTRATIVE AGENT OR ANY LENDER MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 20 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE DEBTORS TO THE WAIVER OF THEIR RIGHTS TO TRIAL BY
JURY.
SECTION 21. Submission to Jurisdiction; Service of Process.
EACH OF THE DEBTORS, RESPECTIVELY, HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW YORK AND TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF
OR BASED UPON THIS SECURITY AGREEMENT, THE SUBJECT MATTER HEREOF OR ANY PROJECT
AGREEMENT, ANY OTHER FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF BROUGHT
BY THE ADMINISTRATIVE AGENT OR A LENDER OR ANY OF THEIR SUCCESSORS OR ASSIGNS IN
EITHER OF THE ABOVE-REFERENCED FORUMS AT THE SOLE OPTION OF THE ADMINISTRATIVE
AGENT OR A LENDER. EACH OF THE DEBTORS, RESPECTIVELY, TO THE EXTENT PERMITTED BY
APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS
A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH
COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE
ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR
EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
SECURITY AGREEMENT, THE SUBJECT MATTER HEREOF OR ANY PROJECT AGREEMENT OR ANY
OTHER FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF MAY NOT BE ENFORCED IN
OR BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCH ACTION, SUIT OR
PROCEEDING INSTITUTED BY THE ADMINISTRATIVE AGENT OR A LENDER IN STATE COURT TO
FEDERAL COURT, AND (C) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION,
SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE
COMPULSORY OR OTHERWISE ARISE FROM THE SAME SUBJECT MATTER. EACH OF THE DEBTORS
HEREBY CONSENTS TO SERVICE OF PROCESS BY MAIL AT ITS ADDRESS TO WHICH NOTICES
ARE TO BE GIVEN PURSUANT TO SECTION 12 HEREOF. EACH OF THE DEBTORS AGREES THAT
ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE
FOR THE EXPRESS BENEFIT OF THE ADMINISTRATIVE AGENT AND THE LENDERS. FINAL
JUDGMENT AGAINST A DEBTOR IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT, ACTION OR
PROCEEDING ON THE JUDGMENT, A
-12-
<PAGE>
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE
AMOUNT OF INDEBTEDNESS OR LIABILITY OF SUCH DEBTOR THEREIN DESCRIBED OR (Y) IN
ANY OTHER MANNER PROVIDED BY, OR PURSUANT TO, THE LAWS OF SUCH OTHER
JURISDICTION, PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE AGENT OR A LENDER MAY
AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST A
DEBTOR OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES
OR OF ANY COUNTRY OR PLACE WHERE THE DEBTOR OR SUCH ASSETS MAY BE FOUND.
SECTION 22. Counterparts. This Security Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original for all purposes, but all such
counterparts shall together constitute one and the same agreement, and all
signatures need not appear on any one counterpart.
SECTION 23. Headings. The headings and captions in this
Security Agreement are for convenience of reference only and shall not define,
limit or otherwise affect any of the terms or provisions hereof.
SECTION 24. Entire Agreement. This Security Agreement
represents the entire agreement of the parties with regard to the subject matter
hereof, and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter of this Security
Agreement.
-13-
<PAGE>
IN WITNESS WHEREOF, the Debtors and the Administrative Agent
have caused this Security Agreement to be duly executed on the date and year
first written above.
GCI FIBER CO., INC.
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
FIBER HOLD CO., INC.
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
CREDIT LYONNAIS NEW YORK BRANCH, as
Administrative Agent
By: /s/
Name: Michael F.G. Pepe
Title: Vice President
<PAGE>
Schedule 1
Chief Executive Office
(Fiber Security Agreement)
1. Each Debtor's chief executive office is, on the Closing Date, at:
2550 Denali Stree Suite 1000
Anchorage, Alaska 99503
2. Each Debtor keeps all of its books and records concerning the Collateral at
the above address. Additional sets of documents regarding the System will
also be kept at each of the landing stations.
<PAGE>
EXHIBIT F
SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT dated as of January 27,
1998 (as amended, supplemented or otherwise modified,
renewed or replaced from time to time, the
"Subordination Agreement") among (i) ALASKA UNITED
FIBER SYSTEM PARTNERSHIP, a general partnership
organized under the laws of Alaska (the "Obligor"),
(ii) GCI HOLDINGS, INC., an Alaskan corporation
("Holdings"), (iii) GCI TRANSPORT CO., INC., an
Alaska corporation ("GCI Transport") and (iv) CREDIT
LYONNAIS NEW YORK BRANCH, as administrative agent for
the Lenders referred to below (in such capacity, the
"Administrative Agent").
Introductory Statement
Pursuant to the terms of a Credit and Security Agreement dated
as of January 27, 1998 (as amended, supplemented or otherwise modified, renewed
or replaced from time to time, the "Credit Agreement") among the Obligor, the
lenders referred to therein (the "Lenders"), Credit Lyonnais New York Branch as
Administrative Agent, NationsBank of Texas, N.A. as Syndication Agent and TD
Securities (USA) Inc. as Documentation Agent, the Lenders have agreed, subject
to the terms and conditions thereof, to make Loans (as such term is defined in
the Credit Agreement) to the Obligor. In addition, one or more of the Lenders
may from time to time enter into interest rate swap agreements, interest rate
cap agreements, synthetic caps, collars and floors or other financial agreements
or arrangements designed to protect the Obligor against fluctuations in interest
rates (each an "Interest Rate Protection Agreement"). The Credit Agreement, the
Notes referred to therein, any Interest Rate Protection Agreement, the other
Fundamental Documents and any other documents, instruments and agreements
contemplated by any of the foregoing as they may be amended, supplemented or
otherwise modified, renewed or replaced from time to time, shall hereinafter be
referred to as the "Senior Obligation Documents". All capitalized terms not
otherwise defined herein shall have the meanings given them in the Credit
Agreement.
Holdings and GCI Transport shall be referred to herein
individually, as a "Subordinated Creditor" and collectively, as the
"Subordinated Creditors". Any loan or advance from a Subordinated Creditor to
the Obligor, whether in existence on the date hereof or hereafter made or
incurred, shall be referred to herein individually, as an "Intercompany Loan"
and collectively, as the "Intercompany Loans." An Intercompany Loan may be
evidenced by any promissory note(s). The obligation of the Obligor to repay the
principal amount of any Intercompany Loan and all interest thereon, and any
other Indebtedness (as such term is defined in the Credit Agreement) or
obligation of the Obligor owing to a Subordinated Creditor, and all other
amounts payable to a Subordinated Creditor in connection with any of the
foregoing is hereinafter referred to individually, as a "Subordinated
Obligation" and collectively, as the
<PAGE>
"Subordinated Obligations". Any promissory note(s) evidencing any Subordinated
Obligation, any replacement or substitute for any such note, any promissory note
issued in satisfaction of any obligation to pay interest thereon and any
purchase agreement, security agreement or any other agreement relating in any
way to any Intercompany Loan or other Indebtedness or obligation of the Obligor
owing to a Subordinated Creditor are hereinafter collectively referred to as
"Junior Obligation Documents".
In order to induce the Administrative Agent and the Lenders to
enter into the Credit Agreement, the Subordinated Creditors have agreed, subject
to the provisions of this Subordination Agreement, that the Subordinated
Obligations shall be subordinate to the Senior Obligations (as hereinafter
defined).
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Agreement to Subordinate. Each Subordinated Creditor agrees
that the Subordinated Obligations owed from time to time to such Subordinated
Creditor, are and shall be subordinate and subject in right of payment, to the
extent and in the manner hereinafter set forth, to the prior payment in full of
the Senior Obligations (as hereinafter defined) and that any guarantees,
security interests, mortgages and other Liens securing payment of, or otherwise
relating to, any of the Subordinated Obligations are and shall be subordinate,
to the fullest extent permitted by law and as hereinafter set forth, to the
Senior Obligations, notwithstanding the perfection, order of perfection or
failure to perfect, any such security interest or other Lien, or the filing or
recording, order of filing or recording, or failure to file or record this
Subordination Agreement or any instrument or other document in any filing or
recording office in any jurisdiction. The term "Senior Obligations" shall mean
all monetary obligations of the Obligor under the Senior Obligation Documents
including, without limitation, whether outstanding at the date hereof or
hereafter incurred or created, all obligations to pay principal, premium, if
any, interest (including, without limitation, interest accruing after the
commencement of any bankruptcy, insolvency, reorganization or similar
proceedings with respect to the Obligor, whether or not determined to be an
allowed claim in any such proceeding), charges, costs, expenses and fees
(including, without limitation, the disbursements and fees of counsel to the
Administrative Agent), all obligations to reimburse or indemnify the
Administrative Agent in any way, and all renewals, extensions, restructurings,
refinancings or refunding of any indebtedness or obligation under the Senior
Obligation Documents in the nature of a "workout" or otherwise.
The expressions "prior payment in full", "payment in full",
"paid in full" or any other similar term(s) or phrase(s) when used herein with
respect to the Senior Obligation Documents shall mean the payment in full, in
cash or other property satisfactory to the Lenders, of all of the Senior
Obligations.
-2-
<PAGE>
2. Restrictions on Payment of the Subordinated Obligations,
etc. No Subordinated Creditor will ask, demand, sue for, take or receive,
directly or indirectly, from the Obligor, in cash or other property, by set-off,
by realizing upon collateral, foreclosing on any Lien or otherwise, by
exercising any remedies or rights under any Junior Obligation Document or by
executions, garnishments, levies, attachments or by any other action relating to
any of the Subordinated Obligations, or in any other manner, payment of, or
security for, all or any part of the Subordinated Obligations unless and until
the Senior Obligations shall have been paid in full; provided, however, that a
Subordinated Creditor may receive, and the Obligor may make, payments with
respect to the Subordinated Obligations owed to such Subordinated Creditor to
the extent the Obligor is permitted to make such payments pursuant to Section
6.4 of the Credit Agreement; provided, further, however, that if at any time the
payment of cash interest on any Subordinated Obligation is otherwise prohibited
by the terms hereof, then the outstanding principal amount of the Subordinated
Obligations in respect of which such interest is payable may be increased by an
amount equal to such prohibited interest payment. The Obligor will not make any
payment of any of the Subordinated Obligations, or take any other action, in
contravention of the provisions of this Subordination Agreement. Each
Subordinated Creditor expressly agrees that, unless and until such time as the
Loans under the Credit Agreement shall have been accelerated, any payment in
respect of any Subordinated Obligation owed to such Subordinated Creditor which
is not made in a timely manner by reason of the operation of this Subordination
Agreement shall be deemed to be deferred and the Obligor shall not be in default
under any of the Junior Obligation Documents by reason thereof.
Each Subordinated Creditor further acknowledges and agrees
that it will not take any collateral of the Obligor unless and until the Lenders
have been paid in full.
3. Additional Provisions Concerning Subordination. Each of the
Subordinated Creditors and the Obligor hereby agrees as follows:
(a) In the event of (i) any dissolution, winding up,
liquidation or other similar reorganization of the Obligor (whether voluntary or
involuntary and whether in bankruptcy, insolvency or receivership proceedings,
or upon an assignment for the benefit of creditors or proceedings for voluntary
or involuntary liquidation, dissolution or other winding up of the Obligor,
whether or not involving insolvency or bankruptcy, or any other marshaling of
the assets and liabilities of the Obligor or otherwise); or (ii) any Default or
Event of Default which is in effect and continuing, or any default, demand for
payment or acceleration of maturity regarding any Subordinated Obligation:
(1) all Senior Obligations shall first be paid to the
Administrative Agent for the benefit of the Lenders
in full before any payment or distribution is made
upon the principal of or interest on or any fees,
costs, charges or expenses in connection with any of
the Subordinated Obligations, and before any remedial
action is taken by any Subordinated Creditor
including, without limitation, any action described
in Section 2 or 7 hereof
-3-
<PAGE>
(it being understood and agreed that nothing herein
shall prevent any Subordinated Creditor from
exercising rights which might otherwise be available
to it to take any action to preserve or protect the
validity of any claim it may have with respect to any
Subordinated Obligation or its security interest in
any collateral securing any Subordinated Obligation,
so long as such action would not adversely affect any
claim of the Administrative Agent or any Lender or
the security interest of the Administrative Agent (on
behalf of the Lenders) in the Collateral or the value
of any thereof); and
(2) any payment or distribution of assets of the Obligor
with respect to any Subordinated Obligation or
pursuant to any Junior Obligation Document, whether
in cash, property or securities (other than equity
securities or debt securities which are subordinated
to the Senior Obligations at least to the same extent
as the Subordinated Obligations) to which any
Subordinated Creditor would be entitled with respect
to any Subordinated Obligation or pursuant to any
Junior Obligation Document except for the provisions
hereof, shall be paid or delivered by the Obligor, or
any receiver, trustee in bankruptcy, liquidating
trustee, disbursing agent, agent or other Person
making such payment or distribution, directly to the
Administrative Agent for the benefit of the Lenders,
to the extent necessary to pay in full all Senior
Obligations remaining unpaid, after giving effect to
any concurrent payment or distribution to the
Administrative Agent for the benefit of the Lenders,
before any payment or distribution is made to any
Subordinated Creditor;
(b) In any proceeding referred to, or resulting from any event
referred to, in subsection (a) of this Section 3 commenced by or against the
Obligor:
(1) The Administrative Agent may, and is hereby
irrevocably authorized and empowered (in its own name
or in the name of any of the Subordinated Creditors
or otherwise) to, but shall have no obligation to,
(i) demand, sue for, collect and receive every
payment or distribution referred to in subsection (a)
of this Section 3 and give acquittance therefor, (ii)
file claims and proofs of claim in respect of any of
the Subordinated Obligations if the applicable
Subordinated Creditor has not done so by the date
which is ten (10) Business Days prior to any
applicable bar date and (iii) take such other action
as the Administrative Agent may deem necessary or
advisable for the exercise or enforcement of any of
the rights or interests of the Administrative Agent
and/or the Lenders hereunder; and
(2) Each Subordinated Creditor hereby agrees that it will
duly and promptly take such action as the
Administrative Agent may reasonably request to
-4-
<PAGE>
collect the Subordinated Obligations which are owed
to such Subordinated Creditor for the account of the
Lenders, file appropriate claims or proofs of claim
with respect thereto, execute and deliver to the
Administrative Agent such powers of attorney,
assignments or other instruments as the
Administrative Agent may request in order to enable
it to enforce any and all claims with respect to the
Subordinated Obligations which are owed to such
Subordinated Creditor and collect and receive any and
all payments or distributions which may be payable or
deliverable upon or with respect to the Subordinated
Obligations which are owed to such Subordinated
Creditor;
(c) All payments or distributions upon or with respect to any
of the Subordinated Obligations which are received by a Subordinated Creditor
contrary to the provisions of this Subordination Agreement shall be deemed to be
the property of the Lenders, shall be received in trust for the benefit of the
Lenders, shall be segregated from other funds and property held by such
Subordinated Creditor and shall be forthwith paid over to the Administrative
Agent for the benefit of the Lenders in the same form as so received (with any
necessary endorsement) to be applied to the payment or prepayment of the Senior
Obligations until the Senior Obligations shall have been paid in full;
(d) Each Subordinated Creditor hereby waives any requirement
for marshaling of assets by the Administrative Agent or the Lenders in
connection with any foreclosure of any Lien of the Administrative Agent or the
Lenders under the Senior Obligation Documents;
(e) None of the Subordinated Creditors shall take any action
to impair or otherwise adversely affect the foreclosure of, or other realization
of, the Administrative Agent's or the Lenders' rights under the Senior
Obligation Documents; and
(f) The Administrative Agent is hereby authorized to demand
specific performance of this Subordination Agreement at any time when a
Subordinated Creditor shall have failed to comply with any of the provisions of
this Subordination Agreement, and each of the Subordinated Creditors hereby
irrevocably waives any defense based on the adequacy of a remedy at law which
might be asserted as a bar to such remedy of specific performance.
4. Subrogation. Each Subordinated Creditor agrees that no
payment or distribution to the Administrative Agent and/or the Lenders pursuant
to the provisions of this Subordination Agreement shall entitle such
Subordinated Creditor to exercise any rights of subrogation in respect thereof
until the Senior Obligations shall have been paid in full.
5. Legend. Notwithstanding any other provision of this
Subordination Agreement, the applicable Subordinated Creditor and the Obligor
will cause any promissory note evidencing any Subordinated Obligation, any
replacement thereof and any mortgage or security document relating thereto to
include the following provision:
-5-
<PAGE>
"The indebtedness evidenced or secured by this
instrument is subordinated to other indebtedness pursuant to,
and to the extent provided in, and is otherwise subject to the
terms of, the Subordination Agreement dated as of January 27,
1998 among Alaska United Fiber System Partnership, GCI
Holdings, Inc., GCI Transport Co., Inc. and Credit Lyonnais
New York Branch as Administrative Agent."
6. Negative Covenants of the Subordinated Creditors. So long
as any of the Senior Obligations shall remain outstanding, none of the
Subordinated Creditors will, without the prior written consent of the
Administrative Agent:
(a) Sell, assign, pledge, encumber or otherwise dispose of any
instrument evidencing the Indebtedness or other obligation of the Obligor owed
to such Subordinated Creditor or any collateral securing the Subordinated
Obligations unless such sale, assignment, pledge, encumbrance or other
disposition is made expressly subject to this Subordination Agreement and the
other party to such sale, assignment, pledge, encumbrance or other disposition
consents in writing to be bound by the terms hereof;
(b) Permit the terms of any of the Junior Obligation Documents
or collateral securing the Subordinated Obligations to be changed in any way
which would limit or impair these subordination provisions, change any payment
date thereunder or accept any collateral therefor;
(c) Declare all or any portion of the Subordinated Obligations
due and payable prior to the date fixed therefor unless the Loans under the
Credit Agreement shall have first been accelerated;
(d) Realize upon, or otherwise exercise any remedies with
respect to, any collateral securing the Subordinated Obligations or any portion
thereof or take any other action described in Section 2 hereof with respect to
any of the Subordinated Obligations; or
(e) Commence, or join with any creditor other than the
Administrative Agent or the Lenders in commencing any proceeding referred to in
subsection (a) of Section 3 hereof.
7. Obligations Unconditional. All rights and interests of the
Administrative Agent and the Lenders hereunder, and all agreements and
obligations of the Subordinated Creditors and the Obligor hereunder, shall
remain in full force and effect irrespective of:
(a) Any lack of validity or enforceability of any Senior
Obligation Document or any other agreement or instrument relating thereto;
-6-
<PAGE>
(b) Any change in the time, manner or place of payment of, or
in any other term of, all or any of the Senior Obligations, or any other
amendment or waiver of, or any consent to departure from, any Senior Obligation
Document;
(c) Any exchange, release or nonperfection of any collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Senior Obligations; or
(d) Any other circumstances which might otherwise constitute a
defense available to, or a discharge of, either (i) the Obligor in respect of
the Senior Obligations or (ii) any Subordinated Creditor or the Obligor in
respect of this Subordination Agreement.
8. Additional Agreement by the Subordinated Creditors. Each
Subordinated Creditor agrees that neither the Administrative Agent nor any
Lender shall have any liability or obligation to such Subordinated Creditor on
account of exercise of the rights and remedies of the Administrative Agent
and/or the Lenders under any Senior Obligation Document.
9. Further Assurances. Each Subordinated Creditor and the
Obligor will, at its own expense and at any time and from time to time, promptly
execute and deliver all further instruments and documents, and take all further
action that the Administrative Agent may reasonably request, in order to protect
any right or interest granted or purported to be granted hereby or to enable the
Administrative Agent to exercise and enforce its rights and remedies hereunder.
10. Expenses. The Obligor agrees to pay to the Administrative
Agent, upon demand, the amount of any and all reasonable expenses, including the
reasonable fees and expenses of counsel for the Administrative Agent, which the
Administrative Agent may incur in connection with the exercise or enforcement of
any of the rights or interests of the Administrative Agent or the Lenders
hereunder.
11. Notice. All demands, notices and other communications
which any party hereto may desire or may be required to give to any other party
hereunder shall be in writing and shall be delivered or mailed (or if telegram,
delivered to the telegraph company and, if by telecopier, delivered by such
equipment) to such other party at its address as follows:
(a) to the Administrative Agent at:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
Attn: Project Finance Group
Facsimile No.: (212) 261-3421
-7-
<PAGE>
(b) to the Obligor at:
Alaska United Fiber System Partnership
c/o GCI Fiber Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Telecopier: (907) 265-5676
(c) to Holdings at:
GCI Holdings, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Telecopier: (907) 265-5676
(d) to GCI Transport at:
GCI Transport Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Telecopier: (907) 265-5676
or to any such party at such other address as shall be designated by such party
in a written notice to each other party hereto, complying as to delivery with
the terms of this Section 11. All such demands, notices, and other
communications given to any party hereto in accordance with the provisions
hereof shall be deemed to have been given on the tenth Business Day after the
date when sent by registered or certified mail, postage prepaid, return receipt
requested, if by mail, or when delivered to the telegraph company, charges
prepaid, if by telegram, or when receipt is acknowledged if by telecopier, in
each case addressed to such party as provided in this Section 11 or in
accordance with the latest unrevoked written direction from such party.
12. Service of Process. EACH OF THE SUBORDINATED CREDITORS AND
THE OBLIGOR (A) HEREBY IRREVOCABLY SUBMITS ITSELF TO THE JURISDICTION OF THE
STATE COURTS OF THE STATE OF NEW YORK IN NEW YORK COUNTY AND TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR
THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON
THIS SUBORDINATION AGREEMENT, THE SUBJECT MATTER HEREOF, ANY FUNDAMENTAL
DOCUMENT OR THE SUBJECT MATTER THEREOF BROUGHT BY THE ADMINISTRATIVE AGENT, A
LENDER OR ANY OF THEIR RESPECTIVE
-8-
<PAGE>
SUCCESSORS OR ASSIGNS AND (B) TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES AND
AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS, ANY CLAIM THAT IT IS NOT
SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS
PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION
OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER OR THAT THIS SUBORDINATION AGREEMENT, THE
SUBJECT MATTER HEREOF, ANY FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF
MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND (C) HEREBY WAIVES IN ANY SUCH
ACTION, SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS (EXCEPT FOR COMPULSORY
COUNTERCLAIMS). EACH OF THE SUBORDINATED CREDITORS AND THE OBLIGOR HEREBY
CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL AT THE ADDRESS TO WHICH
NOTICES ARE TO BE GIVEN PURSUANT HERETO. EACH OF THE SUBORDINATED CREDITORS AND
THE OBLIGOR AGREES THAT ITS SUBMISSION TO JURISDICTION AND ITS CONSENT TO
SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE ADMINISTRATIVE
AGENT AND THE LENDERS. FINAL JUDGMENT AGAINST ANY SUBORDINATED CREDITOR OR THE
OBLIGOR IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE
ENFORCED IN OTHER JURISDICTIONS (X) BY SUIT, ACTION OR PROCEEDING ON THE
JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE
FACT AND OF THE AMOUNT OF ANY INDEBTEDNESS OR LIABILITY OF SUCH SUBORDINATED
CREDITOR OR THE OBLIGOR THEREIN DESCRIBED OR (Y) IN ANY OTHER MANNER PROVIDED BY
OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION; PROVIDED, HOWEVER, THAT THE
ADMINISTRATIVE AGENT AND/OR A LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE
OTHER JUDICIAL PROCEEDINGS AGAINST A SUBORDINATED CREDITOR OR THE OBLIGOR OR ANY
OF THEIR RESPECTIVE ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES OR
OF ANY COUNTRY OR PLACE WHERE SUCH SUBORDINATED CREDITOR, THE OBLIGOR OR THEIR
RESPECTIVE ASSETS MAY BE FOUND.
13. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE SUBORDINATED CREDITORS AND
THE OBLIGOR HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF,
OR BASED UPON, THIS SUBORDINATION AGREEMENT, THE SUBJECT MATTER HEREOF, ANY
FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH
OF THE SUBORDINATED CREDITORS AND THE
-9-
<PAGE>
OBLIGOR ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT THE PROVISIONS OF THIS
SECTION 13 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE ADMINISTRATIVE AGENT
AND THE LENDERS HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS
SUBORDINATION AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER FUNDAMENTAL
DOCUMENTS. THE ADMINISTRATIVE AGENT AND THE LENDERS MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 13 WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE SUBORDINATED CREDITORS AND THE OBLIGOR TO THE WAIVER OF THEIR
RIGHTS TO TRIAL BY JURY.
14. Termination. This Subordination Agreement shall terminate
when the Senior Obligations have been indefeasibly paid in full and the
Commitments shall have terminated.
15. Consent by the Administrative Agent. The Administrative
Agent, on behalf of the Lenders, hereby consents to the pledge and grant of a
security interest by Holdings to NationsBank of Texas, N.A. as administrative
agent for the lenders referred to in the Holdings Credit Agreements (in such
capacity, the "Holdings Administrative Agent"), in and to the Subordinated
Obligations owed by the Obligor to Holdings and in any note evidencing any of
such Subordinated Obligations in order to secure the Obligations (as such term
is defined in each of the Holdings Credit Agreements). The provisions of this
Section 15 shall not become effective unless and until the Holdings
Administrative Agent executes the acknowledgment, agreement and consent set
forth below the signature lines of this Subordination Agreement.
16. Miscellaneous.
(a) No amendment of any provision of this Subordination
Agreement shall be effective unless it is in writing, signed by the
Administrative Agent and all the other parties hereto and consented to by the
Required Lenders. No waiver of any provision of this Subordination Agreement,
and no consent to any departure herefrom, shall be effective unless it is in
writing, signed by the Administrative Agent and consented to by the Required
Lenders, and any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) No failure on the part of the Administrative Agent or any
Lender to exercise, and no delay in exercising, any right, power, privilege or
remedy hereunder or under any other Fundamental Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power, privilege or remedy preclude any other or further exercise thereof or the
exercise of any other right, power, privilege or remedy. All remedies hereunder
are cumulative and are not exclusive of any other remedies provided by law.
(c) Any provision of this Subordination Agreement which is
prohibited or unenforceable in any jurisdiction, shall, as to such jurisdiction,
be ineffective to the extent of
-10-
<PAGE>
such prohibition or unenforceability without invalidating the remaining portions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, the parties hereto waive any
provision of law which may render any provision hereof prohibited or
unenforceable in any respect.
(d) All references herein to any of the parties to this
Subordination Agreement shall be deemed to include the successors and assigns of
such party; provided, however, that the Obligor and the Subordinated Creditors
may not assign any of their rights or obligations hereunder without the prior
written consent of the Administrative Agent and all of the Lenders, and all
covenants, promises, and agreements by or on behalf of the Obligor and the
Subordinated Creditors which are contained herein shall inure to the benefit of
the successors and assigns of the Administrative Agent and any of the Lenders.
(e) This Subordination Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original for all purposes, but all such counterparts shall
together constitute one and the same agreement, and all signatures need not
appear on any one counterpart.
(f) THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO ANY CHOICE-OF-LAW RULES THEREOF WHICH MIGHT APPLY THE LAWS OF ANY OTHER
JURISDICTION.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Subordination Agreement to be duly executed as of the day and year first written
above.
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., its General
Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
By: Fiber Hold Co., Inc., its General
Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
GCI HOLDINGS, INC.
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
GCI TRANSPORT CO., INC.
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
Executed in
New York, New York
CREDIT LYONNAIS NEW YORK BRANCH, as
Administrative Agent
By: /s/
Name : Michael F.G. Pepe
Title: Vice President
<PAGE>
ACKNOWLEDGMENT, AGREEMENT AND CONSENT
In accordance with Section 6(a) of the Subordination
Agreement, NationsBank of Texas, N.A. as administrative agent (the "Holdings
Administrative Agent") for the lenders referred to in the Holdings Credit
Agreements (the "Holdings Lenders"), on behalf of the Holdings Lenders, hereby
(i) acknowledges and agrees that the pledge and grant of a security interest by
Holdings to the Holdings Administrative Agent, in and to the Subordinated
Obligations owed by the Obligor to Holdings and in any note evidencing any of
such Subordinated Obligations in order to secure the Obligations (as such term
is defined in each of Holdings Credit Agreements), is subject to the terms and
provisions of the foregoing Subordination Agreement and (ii) consents and agrees
to be bound by the terms and provisions of such Subordination Agreement as if it
were a Subordinated Creditor.
Date: 1/26, 1998 NATIONSBANK OF TEXAS, N.A.,
as administrative agent
By: /s/
Name: Whitney Busse
Title: Vice President
<PAGE>
EXHIBIT G
DEPOSITARY AGREEMENT
DEPOSITARY AGREEMENT (as amended, supplemented or otherwise
modified, renewed or replaced from time to time, the "Depositary Agreement")
dated as of January 27, 1998 by and between Alaska United Fiber System
Partnership, a general partnership organized under the laws of Alaska (the
"Borrower") and Credit Lyonnais New York Branch, as administrative agent for the
Lenders referred to below (in such capacity, the "Administrative Agent").
Pursuant to that certain Credit and Security Agreement dated
as of January 27, 1998 among the Borrower, the lenders referred to therein (the
"Lenders"), Credit Lyonnais New York Branch as Administrative Agent, NationsBank
of Texas, N.A. as Syndication Agent and TD Securities (USA) Inc. as
Documentation Agent (as such agreement may be amended, supplemented or otherwise
modified, renewed or replaced from time to time, the "Credit Agreement"), the
Lenders have agreed to make loans to the Borrower on the terms, and subject to
the conditions, set forth therein.
The Lenders require that the Borrower enter into this
Depositary Agreement in order to set forth the order of priority of withdrawals
from the Disbursement Account (as such term is hereinafter defined) and other
matters relating thereto.
Accordingly, in consideration of the premises and of the
mutual agreements herein contained and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions.
(a) All capitalized terms used herein but not defined herein
shall have the meanings set forth in the Credit Agreement.
(b) As used herein, the following terms shall have the
meanings set forth below:
"Adequate Debt Service Coverage" shall mean for any
date at which it is to be determined, that the Debt Service
Coverage Ratio as of such date equals or exceeds 1.20:1.00.
"Alaska Depositary Account" shall mean Account No.
1510-562-0, entitled "Alaska Depositary Account", in the name
of the Borrower at the office of The First National Bank of
Anchorage, 201 West 36th Avenue, P.O. Box 200628, Anchorage,
Alaska 99520.
<PAGE>
"Budgeted O&M" shall be as defined in Section 3(a)
hereof.
"Cash Receipts" shall mean the cash receipts,
revenues or income actually received by the Borrower pursuant
to the terms of any Capacity Agreement, any Project Agreement
or otherwise, including, without limitation, (a) interest and
other income earned on the amounts in the Disbursement
Account, (b) interest and other income earned on any amount in
the Interest Reserve Account or the Holding Account and
withdrawn therefrom for deposit into the Disbursement Account
and (c) any payments, rebates or refunds to the Borrower
pursuant to any of the Capacity Agreements, other Project
Agreements or otherwise including, without limitation,
payments for services provided by the Borrower, but
specifically excluding any recovery of any insurance loss
relating to the Project or any amount relating to an Event of
Loss (which recoveries and amounts are required to be
deposited in the Insurance Proceeds Account in accordance with
the terms of the Credit Agreement).
"Debt Service Coverage Ratio" shall mean for any date
at which it is to be determined, the ratio of (i) Cash
Receipts actually received by the Borrower during the Trailing
Four Quarters less the amount of operating, maintenance and
other expenses (but excluding interest expense) incurred by
the Borrower during the Trailing Four Quarters, to (ii) all
scheduled principal, interest and fees paid or accrued with
respect to all outstanding Indebtedness of the Borrower and
all amounts paid or accrued with respect to all Interest Rate
Protection Agreements of the Borrower in each case, during the
Trailing Four Quarters less the amount of any payments with
respect to Interest Rate Protection Agreements actually
received by the Borrower during the Trailing Four Quarters.
"Disbursement Account" shall mean Account No.
0139787000100 entitled "Alaska United Disbursement Account" at
the office of Credit Lyonnais New York Branch, 1301 Avenue of
the Americas, New York, New York 10019.
"Holding Account" shall mean Account No.
0139787000102, entitled "Alaska United Holding Account" at the
office of Credit Lyonnais New York Branch, 1301 Avenue of the
Americas, New York, New York 10019.
"Holdover Funds" shall be as defined in Section 5(b)
hereof.
"Interest Reserve Account" shall mean Account No.
0139787000103 entitled "Alaska United Interest Reserve
Account" at the office of Credit Lyonnais New York Branch,
1301 Avenue of the Americas, New York, New York 10019.
-2-
<PAGE>
"Local Bank Account" shall mean Account No.
1511-174-3 established by the Borrower at the office of The
First National Bank of Anchorage, 201 West 36th Avenue, P.O.
Box 200628, Anchorage, Alaska 99520.
"Trailing Four Quarters" shall mean with respect to
any date at which it is to be determined, the fiscal quarter
then ended and the three immediately preceding fiscal
quarters, considered as a single period; provided, however,
that for each of the first three (3) fiscal quarters following
the Completion Date, "Trailing Four Quarters" shall mean the
period from the Completion Date to the last day of such fiscal
quarter.
2. Disbursement Account; Direct Payment.
(a) The Borrower hereby agrees that the Disbursement Account
shall be under the sole dominion and control of the Administrative Agent.
(b) The Borrower hereby agrees that all Cash Receipts received
by the Borrower after the Closing Date shall be deposited directly in the Alaska
Depositary Account (or if such Cash Receipt is to be received from an Affiliate
of the Borrower, in the Disbursement Account). The Borrower shall instruct all
Persons party to any agreement (including, without limitation, any Capacity
Agreement or any Project Agreement) whether now existing or hereafter entered
into, which requires or provides for a payment of any Cash Receipts to the
Borrower, to make such payments directly into the Alaska Depositary Account or
the Disbursement Account (as applicable) and shall cause all such Persons to
agree to make such payments directly into the Alaska Depositary Account or the
Disbursement Account (as applicable). The Borrower shall promptly notify the
Administrative Agent if the Borrower becomes aware that any such Person refuses
or fails to make such payments directly into the Alaska Depositary Account or
the Disbursement Account (as applicable).
(c) The Borrower hereby specifically authorizes and directs
all Persons party to any agreement which requires or provides for a payment of
any Cash Receipts to the Borrower to make such payments directly into the Alaska
Depositary Account or the Disbursement Account (as applicable). The Borrower
further acknowledges and agrees that all payments made by a Person directly into
the Alaska Depositary Account or the Disbursement Account in accordance with the
instructions of the Borrower (or the Administrative Agent) shall constitute and
be deemed to be payments to the Borrower under the applicable agreement, and
shall discharge the obligations of such Person to make such payments to the
Borrower under the applicable agreement to the extent of such payments made
directly into the Alaska Depositary Account or the Disbursement Account.
(d) In the event the Borrower receives any Cash Receipts from
any Person, which Cash Receipts should have been remitted directly to the Alaska
Depositary Account or the
-3-
<PAGE>
Disbursement Account (as applicable), the Borrower shall promptly remit such
Cash Receipts to the Disbursement Account to be applied in accordance with the
terms of this Depositary Agreement.
3. Withdrawals from the Disbursement Account. The Borrower
hereby irrevocably authorizes the Administrative Agent to make withdrawals and
transfers and/or applications of funds on deposit in the Disbursement Account on
and after the date on which the System is Completed, on the applicable dates
indicated below, in the following order of priority:
(a) first, on the last Business Day of each calendar month,
the Administrative Agent shall withdraw funds from the Disbursement Account in
an amount not exceeding the amount of the operating and maintenance expenses
budgeted for such month as set forth in the applicable Operating Budget
delivered to the Administrative Agent pursuant to Section 5.1(l) of the Credit
Agreement (such expenses shall be referred to herein as the "Budgeted O&M" for
such month) and shall transfer such funds to the Local Bank Account; provided,
however, that any withdrawal or transfer of funds to the Borrower pursuant to
this paragraph (a) shall only be made if, on the date of the proposed withdrawal
and transfer, no Default or Event of Default shall have occurred and then be
continuing or any Default or Event of Default shall have been waived by the
Required Lenders;
(b) second, on the last Business Day of each calendar month,
if any funds remain on deposit in the Disbursement Account after making the
withdrawal specified in paragraph (a) above, then the Administrative Agent shall
withdraw funds from the Disbursement Account in an amount not exceeding the sum
of (i) any accrued interest, fees or other amounts that will become payable in
the next succeeding month to the Administrative Agent or any of the Lenders
pursuant to the Credit Agreement or any of the other Fundamental Documents plus
(ii) any periodic net payments with respect to any Interest Rate Protection
Agreement that will become payable in the next succeeding month, and shall
transfer such funds to the Interest Reserve Account;
(c) third, on the last Business Day of each calendar month, if
any funds remain on deposit in the Disbursement Account after making the
withdrawals specified in paragraphs (a) and (b) above, then the Administrative
Agent shall withdraw funds from the Disbursement Account in an amount not
exceeding any termination payment with respect to an Interest Rate Protection
Agreement (the termination of which has been consented to by the Required
Lenders as required by the Credit Agreement) which payment will become payable
in the next succeeding month and shall transfer such funds to the Interest
Reserve Account;
(d) fourth, on the last Business Day of each calendar quarter,
if any funds remain on deposit in the Disbursement Account after making the
withdrawals specified in paragraphs (a), (b) and (c) above, then the
Administrative Agent shall withdraw funds from the Disbursement Account in an
amount not exceeding any scheduled amortization payment due to the Lenders at
the end of such quarter pursuant to the Credit Agreement and/or the Term Notes
-4-
<PAGE>
and shall apply such funds to the repayment of the outstanding principal amount
of the Loans in accordance with the terms of the Credit Agreement;
(e) fifth, on the last Business Day of each calendar quarter,
if any funds remain on deposit in the Disbursement Account after making the
withdrawals specified in paragraphs (a), (b), (c) and (d) above, then the
Administrative Agent shall withdraw funds from the Disbursement Account in an
amount not exceeding the amount (if any) by which the amount of operating and
maintenance expenses actually incurred by the Borrower during such quarter
exceeded the amount of Budgeted O&M for such quarter and shall transfer such
funds to the Local Bank Account; provided, however, that any withdrawal and
transfer of funds to the Borrower pursuant to this paragraph (e) shall only be
made if, on the date of the proposed withdrawal and transfer, no Default or
Event of Default shall have occurred and then be continuing or any Default or
Event of Default shall have been waived by the Required Lenders;
(f) sixth, on the last Business Day of each calendar quarter,
if any funds remain on deposit in the Disbursement Account after making the
withdrawals specified in paragraphs (a), (b), (c), (d) and (e) above, then the
Administrative Agent shall withdraw such funds and shall transfer such funds to
the Local Bank Account; provided, however, that any withdrawal or transfer of
funds to the Borrower pursuant to this paragraph (f) shall only be made if on
the date of the proposed withdrawal and transfer, (i) no Default or Event of
Default shall have occurred and then be continuing or any Default or Event of
Default shall have been waived by the Required Lenders and (ii) the Borrower is
able to demonstrate to the Administrative Agent that there is Adequate Debt
Service Coverage; and provided, further, however, that over the term of the
Credit Agreement, the Administrative Agent shall only transfer an aggregate,
cumulative amount of up to ten million dollars ($10,000,000) to the Borrower
pursuant to this paragraph (f);
(g) seventh, on the last Business Day of each calendar
quarter, if any funds remain on deposit in the Disbursement Account after making
the withdrawals specified in paragraphs (a), (b), (c), (d), (e) and (f) above,
then the Administrative Agent shall withdraw all such funds (the "Remaining
Funds") and shall apply the Remaining Funds to the repayment of the outstanding
principal amount of the Loans in accordance with the terms of the Credit
Agreement; provided, however, that with respect to any calendar quarter
occurring after the Conversion Date, if (i) no Default or Event of Default shall
have occurred and then be continuing or any Default or Event of Default shall
have been waived by the Required Lenders and (ii) the Borrower is able to
demonstrate to the Administrative Agent that there is Adequate Debt Service
Coverage, then upon the request of the Borrower, the Administrative Agent shall
transfer fifty percent (50%) of the Remaining Funds to the Local Bank Account
and shall apply the other fifty percent (50%) of the Remaining Funds to the
repayment of the outstanding principal amount of the Loans in accordance with
the terms of the Credit Agreement.
The parties hereto hereby agree that any withdrawals and
transfers and/or applications of funds pursuant to this Section 3 shall be made
after the time any transfer of funds
-5-
<PAGE>
from the Alaska Depositary Account to the Disbursement Account should have been
made in accordance with the Instruction Letter.
4. Interest Reserve Account; Withdrawals from the Interest
Reserve Account.
(a) The Borrower hereby agrees that the Interest Reserve
Account shall be under the sole dominion and control of the Administrative
Agent.
(b) The Administrative Agent shall make withdrawals and
transfers of funds on deposit in the Interest Reserve Account from time to time
in each month as and when necessary in order to duly and timely pay to the
Administrative Agent and/or any of the Lenders any accrued but unpaid interest,
fees, payments with respect to any Interest Rate Protection Agreements to which
a Lender is a party or other amounts becoming due in such month; provided that
any such withdrawal and transfer shall only be made on the date on which the
applicable payment is due.
(c) On the last Business Day of each month (after giving
effect to any withdrawals to be made on such Business Day pursuant to Section
4(b) above), the Administrative Agent shall withdraw all funds on deposit in the
Interest Reserve Account and shall transfer such funds to the Disbursement
Account. Any such transfer shall be made prior to any withdrawals to be made on
such Business Day from the Disbursement Account pursuant to Section 3 hereof.
(d) The Borrower hereby irrevocably authorizes the
Administrative Agent to make the withdrawals and transfers contemplated by this
Section 4.
5. Holding Account; Failure to have Adequate Debt Service
Coverage.
(a) The Borrower hereby agrees that the Holding Account shall
be under the sole dominion and control of the Administrative Agent.
(b) In the event that on the last Business Day of any calendar
quarter, any funds on deposit in the Disbursement Account are not withdrawn and
transferred as provided in paragraphs (f) and (g) of Section 3 hereof because
the Borrower is unable to demonstrate to the Administrative Agent that there is
Adequate Debt Service Coverage (such funds being referred to herein as "Holdover
Funds"), the Administrative Agent shall withdraw the Holdover Funds from the
Disbursement Account and shall transfer the Holdover Funds to the Holding
Account.
(c) If (i) funds have been transferred and are being held in
the Holding Account pursuant to the provisions hereof and (ii) on the fifth
Business Day prior to the end of any calendar quarter occurring after the date
any such funds were transferred to the Holding Account, the Borrower
demonstrates to the Administrative Agent that there will be Adequate Debt
Service Coverage as of the last Business Day of such quarter, then on the last
Business Day
-6-
<PAGE>
of such quarter, the Administrative Agent shall withdraw all funds then on
deposit in the Holding Account and shall transfer such funds to the Disbursement
Account. Such transfer shall be made prior to any withdrawals to be made on such
Business Day from the Disbursement Account pursuant to Section 3 hereof.
(d) The Borrower hereby authorizes the Administrative Agent to
make the withdrawals and transfers and/or to apply funds as contemplated by this
Section 5.
6. Certificates by the Borrower.
(a) The Borrower hereby agrees to deliver to the
Administrative Agent at least three (3) Business Days prior to the end of each
calendar month, a certificate signed by an Authorized Officer setting forth the
amount of any payment becoming due in the immediately succeeding month in
respect of any Interest Rate Protection Agreement, the date such payment becomes
due and the Person to which such payment is owed.
(b) The Borrower hereby agrees to deliver to the
Administrative Agent at least five (5) Business Days prior to the end of each
calendar quarter, a certificate signed by an Authorized Officer (i)
demonstrating in reasonable detail whether or not there will be Adequate Debt
Service Coverage as of the last Business Day of such quarter and (ii) setting
forth the amount (if any) by which the amount of operating and maintenance
expenses actually incurred by the Borrower during such quarter exceeded the
amount of Budgeted O&M for such quarter.
7. Investment of Funds.
(a) The Administrative Agent is hereby authorized and directed
to invest and reinvest the funds from time to time deposited in the Disbursement
Account, the Interest Reserve Account or the Holding Account, so long as no
Default or Event of Default has occurred and is continuing, on the instructions
of the Borrower (provided that if such instructions are given verbally, they
shall be confirmed promptly in writing by facsimile or otherwise) or, if the
Borrower shall fail to give such instructions, in the sole discretion of the
Administrative Agent, provided that in no event may the Borrower give
instructions to the Administrative Agent to, or may the Administrative Agent in
its discretion, invest or reinvest funds in the Disbursement Account, the
Interest Reserve Account or the Holding Account in other than Cash Equivalents
described in clause (i) of the definition of Cash Equivalents or described in
clauses (ii) and (iii) of the definition of Cash Equivalents to the extent
issued by Credit Lyonnais New York Branch or Credit Lyonnais Nassau Branch. The
Administrative Agent shall have no obligation to invest or reinvest any of the
funds from time to time deposited in the Disbursement Account, the Interest
Reserve Account or the Holding Account if the Borrower shall not have provided
the instructions contemplated by this Section 7(a).
(b) Any net income or gain on the investment of funds from
time to time held in the Disbursement Account, the Interest Reserve Account or
the Holding Account, shall be
-7-
<PAGE>
retained by the Administrative Agent as a part of the Disbursement Account, the
Interest Reserve Account or the Holding Account (as the case may be) and any net
loss on any such investment shall be charged against the Disbursement Account,
the Interest Reserve Account or the Holding Account (as the case may be).
(c) Neither the Administrative Agent nor the Lenders shall be
a trustee for the Borrower, or shall have any obligations or responsibilities,
or shall be liable for anything done or not done, in connection with the
Disbursement Account, the Interest Reserve Account or the Holding Account,
except as expressly provided herein and except that the Administrative Agent
(for the benefit of the Lenders) shall have the obligations of a secured party
under the UCC. The Administrative Agent and the Lenders shall not have any
obligation or responsibilities and shall not be liable in any way for any
investment decision made pursuant to this Section 7 or for any decrease in the
value of the investments held in the Disbursement Account, the Interest Reserve
Account or the Holding Account.
(d) The Borrower acknowledges and agrees that no investment
loss or other decrease in the value of any investments or cash or other property
held in the Disbursement Account, the Interest Reserve Account or the Holding
Account shall in any way affect the Borrower's obligations under the Credit
Agreement or the other Fundamental Documents.
8. Grant of Security Interest. For value received and to
induce the Lenders to make the Loans from time to time to the Borrower as
provided for in the Credit Agreement, as security for the due and punctual
payment and performance of all of the Obligations, the Borrower hereby assigns
to the Administrative Agent (for the benefit of the Lenders), and grants to the
Administrative Agent (for the benefit of the Lenders), a first and prior Lien
upon all the Borrower's right, title and interest in and to the Disbursement
Account, the Interest Reserve Account and the Holding Account, all cash,
documents, instruments and securities from time to time held in the Disbursement
Account, the Interest Reserve Account or the Holding Account, all rights
pertaining to investments of funds in the Disbursement Account, the Interest
Reserve Account or the Holding Account and all products and proceeds of, or
income from, any of the foregoing. All cash, documents, instruments and
securities from time to time on deposit in the Disbursement Account, the
Interest Reserve Account or the Holding Account, and all rights pertaining to
investments of funds in the Disbursement Account, the Interest Reserve Account
and the Holding Account shall immediately and without any need for any further
action on the part of the Borrower, any Lender or the Administrative Agent,
become subject to the Lien set forth in this Section 8, be deemed Collateral for
all purposes and be subject to the provisions of this Depositary Agreement and
the other Fundamental Documents.
9. Remedies. At any time during the continuation of an Event
of Default, the Administrative Agent may sell any documents, instruments or
securities held in the Disbursement Account, the Interest Reserve Account or the
Holding Account and may immediately apply the proceeds thereof and any other
cash held in the Disbursement Account,
-8-
<PAGE>
the Interest Reserve Account or the Holding Account in accordance with Section
8.7 of the Credit Agreement.
10. Further Assurances. The Borrower hereby agrees to execute
documentation (including, without limitation, assignment agreements, instruction
letters and other documentation) as may now or hereafter be required by the
Administrative Agent in order (a) to reflect the security interest of the
Administrative Agent (for the benefit of the Lenders) in the Disbursement
Account, the Interest Reserve Account and the Holding Account, (b) to provide
for the deposit into the Alaska Depositary Account or the Disbursement Account
of all Cash Receipts as contemplated by Section 2 hereof and (c) to otherwise
effectuate the provisions of this Depositary Agreement.
11. No Obligation. The Administrative Agent shall not be
obligated to perform any of the obligations or duties of the Borrower under any
Project Agreement or any other agreement to which the Borrower is a party, or to
take any action to collect or enforce any claim for payment of any Cash
Receipts. The Borrower hereby agrees that the neither Administrative Agent nor
any of its Affiliates, directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them hereunder except for
its or their own gross negligence or willful misconduct.
12. Term. This Depositary Agreement shall remain in full force
and effect until all of the Obligations shall have been fully and indefeasibly
paid and performed and the Commitments shall have terminated.
13. Notices. Notices and other communications provided for
herein or otherwise given hereunder shall be in writing and shall be delivered
or mailed (or if by telegram, delivered to the telegraph company and, if by
telecopier, delivered by such equipment) to the parties at the following
respective addresses:
(1) If to the Administrative Agent:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attn: Project Finance Group, Portfolio
Facsimile No.: (212) 261-3421
-9-
<PAGE>
(2) If to the Borrower:
Alaska United Fiber System Partnership
c/o GCI Fiber Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Facsimile No.: (907) 265-5676
or such other address as such party may from time to time designate by giving
written notice to the other party hereto. All notices and other communications
given to any party hereto in accordance with the provisions hereof shall be
deemed to have been given on the tenth Business Day after the date when sent by
registered or certified mail, postage prepaid, return receipt requested, if by
mail, or when delivered to the telegraph company, charges prepaid, if by
telegram, or when receipt is acknowledged if by telecopier, in each case
addressed to such party as provided in this Section 13 or in accordance with the
latest unrevoked written direction from such party.
14. Successors and Assigns. All references herein to any of
the parties to this Depositary Agreement shall be deemed to include the
successors and assigns of such party; provided, however, that the Borrower may
not assign any of its rights or obligations hereunder without the prior written
consent of the Administrative Agent and all of the Lenders, and all covenants,
promises and agreements by or on behalf of the Borrower which are contained
herein shall inure to the benefit of the successors and assigns of the
Administrative Agent and any of the Lenders.
15. Amendments. This Depositary Agreement may be amended,
modified or supplemented, and the terms hereof may be waived, in each case only
by a written instrument executed by the Borrower and the Administrative Agent
and consented to by the Required Lenders; provided, however, that any amendment,
modification, supplement or waiver of the provisions of Section 3 hereof shall
require the consent of all the Lenders except as expressly provided in such
Section 3. The waiver by any party hereto of a breach of any provision of this
Depositary Agreement shall not operate or be construed as a waiver of any
subsequent or other breach, whether or not similar. No notice to, or demand on,
the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in the same, similar or other circumstances.
16. Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by Applicable Law, the parties
hereby waive
-10-
<PAGE>
any provision of law which may render any provision hereof prohibited or
unenforceable in any respect.
17. Counterparts. This Depositary Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same agreement, and all signatures need not appear on any
one counterpart.
18. Headings. The headings and captions in this Depositary
Agreement are for convenience of reference only and shall not define, limit or
otherwise affect any of the terms or provisions hereof.
19. Governing Law. THIS DEPOSITARY AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO ANY CHOICE OF LAW RULES THEREOF WHICH MIGHT APPLY THE
LAWS OF ANY OTHER JURISDICTION.
20. No Waiver. No failure on the part of the Administrative
Agent or any Lender to exercise, and no delay in exercising, any right, power,
privilege or remedy hereunder or under any other Project Agreement or
Fundamental Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power, privilege or remedy preclude any
other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. All remedies hereunder are cumulative and are not exclusive
of any other remedies provided by law.
21. Entire Agreement. This Depositary Agreement represents the
entire agreement of the parties with regard to the subject matter hereof, and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter of this Depositary
Agreement.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Depositary Agreement to be executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., its General
Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
By: Fiber Hold Co., Inc., its General
Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
CREDIT LYONNAIS NEW YORK BRANCH, as
Administrative Agent
By: /s/
Name: Michael F.G. Pepe
Title: Vice President
<PAGE>
EXHIBIT H
SPONSOR UNDERTAKING
UNDERTAKING made as of January 27, 1998 (as amended,
supplemented or otherwise modified, renewed or replaced from time to time, the
"Undertaking") by General Communication, Inc., an Alaska corporation ("GCI") for
the benefit of Credit Lyonnais New York Branch, as Administrative Agent for the
Lenders referred to below.
Reference is hereby made to that certain Credit and Security
Agreement dated as of January 27, 1998 among Alaska United Fiber System
Partnership (the "Borrower"), the lenders referred to therein (the "Lenders"),
Credit Lyonnais New York Branch as Administrative Agent, NationsBank of Texas,
N.A. as Syndication Agent and TD Securities (USA) Inc. as Documentation Agent
(as such agreement may be amended, supplemented or otherwise modified, renewed
or replaced from time to time, the "Credit Agreement"). Pursuant to the Credit
Agreement, the Lenders have agreed, subject to the terms and conditions set
forth in the Credit Agreement, to make loans to the Borrower.
GCI is the ultimate indirect owner of all of the partnership
interests in the Borrower.
It is a condition precedent to the initial loan under the
Credit Agreement that GCI deliver this Undertaking to the Lenders.
Accordingly, for good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, GCI hereby agrees as follows:
1. Definitions. All capitalized terms used herein but not
defined herein shall have the meanings set forth in the Credit Agreement.
2. Representations and Warranties.
(a) GCI has contributed $50,000,000 in cash, and certain other
property to the Borrower.
(b) (i) The audited, consolidated balance sheet of GCI and its
consolidated Subsidiaries at December 31, 1996 and (ii) the
unaudited, consolidated balance sheet of GCI and its consolidated
Subsidiaries at September 30, 1997, together with the related
statements of income, cash flows and stockholders' equity and the
related notes and supplemental information for such statements, in
the forms which have previously been provided to the Lenders, have
been prepared in accordance with GAAP, except as otherwise indicated
in the notes to such financial statements. All of such financial
statements fairly present in all material respects the consolidated
financial condition or the results of operations of GCI and its
consolidated Subsidiaries at the dates or for the periods indicated,
subject in the case of unaudited statements, to changes resulting
from
<PAGE>
normal year-end and audit adjustments, and (in the case of balance
sheets) reflect (including the notes thereto) all known liabilities,
contingent or otherwise, as of such dates required in accordance with
GAAP to be shown or reserved against, or disclosed in the notes to
the financial statements.
(c) There has been no material adverse change with respect to
the business, operations, performance, assets, properties, condition
(financial or otherwise) or prospects of GCI or any of its
consolidated Subsidiaries since December 31, 1996.
(d) This Undertaking when executed by GCI will constitute the
legal, valid and binding obligation of GCI, enforceable in accordance
with its terms, subject only, as to the enforcement of remedies, to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and general principles of equity.
3. Covenants. GCI agrees that, unless the Required Lenders
shall otherwise consent in writing, it will:
(a) furnish or cause to be furnished to the Administrative
Agent (with sufficient copies for the Lenders) within 120 days after
the end of each fiscal year of GCI, the audited, consolidated balance
sheet of GCI and its consolidated Subsidiaries as at the end of, and
the related statements of income, cash flow and stockholders' equity
for, such year, and the corresponding figures as at the end of, and
for, the preceding fiscal year, accompanied by an unqualified report
and opinion of KPMG Peat Marwick LLP or such other independent public
accountants of recognized standing as shall be retained by GCI and be
reasonably satisfactory to the Required Lenders, which report and
opinion shall be prepared in accordance with generally accepted
auditing standards relating to reporting and which report and opinion
shall contain no material exceptions or qualifications except for
qualifications relating to accounting changes (with which such
independent public accountants concur) in response to FASB releases
or other authoritative pronouncements;
(b) furnish or cause to be furnished to the Administrative
Agent (with sufficient copies for the Lenders) within 60 days after
the end of each of the first three fiscal quarters of each of its
fiscal years, the unaudited, consolidated balance sheet of GCI and
its consolidated Subsidiaries as at the end of, and the related
unaudited statements of income, cash flow and stockholders' equity
for, such quarter, and for the portion of the fiscal year through the
end of such quarter, and the corresponding figures as at the end of,
and for, the corresponding periods in the preceding fiscal year,
together with a certificate signed by the President, Vice President
or Treasurer of GCI, on behalf of GCI, to the effect that such
financial statements, while not examined by independent public
accountants, reflect, in the opinion of GCI, all adjustments
necessary to present fairly the financial position of GCI as at the
end of the fiscal quarter and the results of its operations for the
quarter then ended in conformity with GAAP, subject to normal
year-end audit adjustments and the absence of footnotes;
-2-
<PAGE>
(c) not permit a Change in Control to occur; and
(d) in the event that GCI or any of its Affiliates sells or
otherwise transfers to AT&T any partnership interests in the Borrower
or any equity interests in any Affiliate of GCI and as a result of
such transaction, AT&T either (i) owns (whether directly or
indirectly) a greater amount of the partnership interests in the
Borrower than GCI or (ii) has (whether directly or indirectly)
greater power to direct or cause the direction of the management and
policies of the Borrower than GCI, cause AT&T to sign an undertaking
letter substantially similar to this Undertaking.
4. Term. This Undertaking shall remain in full force and
effect until all of the Obligations shall have been fully and indefeasibly paid
and performed and the Commitments shall have terminated.
5. Remedies. It is expressly understood and agreed by GCI
that its failure to perform its obligations under Sections 3(c) and 3(d) hereof
will cause irreparable injury to the Administrative Agent and the Lenders, that
the Administrative Agent and the Lenders have no adequate remedy at law in
respect of such failure and, as a consequence, agrees that each such obligation
shall be specifically enforceable against GCI, and GCI hereby waives and agrees
not to assert any defenses against an action for specific performance of such
obligations.
6. Notices. Notices and other communications to GCI or the
Administrative Agent in connection with this Undertaking shall be in writing and
shall be delivered or mailed (or if by telegram, delivered to the telegraph
company and, if by telecopier, delivered by such equipment) to the parties at
the following respective addresses:
(1) If to GCI:
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Facsimile No.: (907) 265-5676
(2) If to the Administrative Agent:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attn: Project Finance Group
Facsimile No.: (212) 261-3421
-3-
<PAGE>
or such other address as such party may from time to time designate by giving
written notice to the other party hereunder. All notices and other
communications given to any party in accordance with the provisions hereof shall
be deemed to have been given on the tenth Business Day after the date when sent
by registered or certified mail, postage prepaid, return receipt requested, if
by mail, or when delivered to the telegraph company, charges prepaid, if by
telegram, or when receipt is acknowledged if by telecopier, in each case
addressed to such party as provided in this Section 6 or in accordance with the
latest unrevoked written direction from such party.
7. Successors and Assigns. All references herein to any of
the parties to this Undertaking shall be deemed to include the successors and
assigns of such party; provided, however, that GCI may not assign any of its
rights or obligations hereunder without the prior written consent of the
Administrative Agent and all of the Lenders, and all covenants, promises and
agreements by or on behalf of GCI which are contained herein shall inure to the
benefit of the successors and assigns of the Administrative Agent and any of the
Lenders.
8. Amendment; Waiver; Consent. This Undertaking may be
amended, modified or supplemented, and the terms hereof may be waived, in each
case only by a written instrument executed by GCI and the Administrative Agent
and consented to by the Required Lenders. The waiver by the Administrative Agent
and the Required Lenders of a breach by GCI of any provision of this Undertaking
shall not operate or be construed as a waiver of any subsequent or other breach,
whether or not similar.
9. Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by Applicable Law, the parties
hereby waive any provision of law which may render any provision hereof
prohibited or unenforceable in any respect.
10. Counterparts. This Undertaking may be executed by GCI and
the Administrative Agent in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same agreement, and all signatures need not
appear on any one counterpart.
11. Headings. The headings and captions in this Undertaking
are for convenience of reference only and shall not define, limit or otherwise
affect any of the terms or provisions hereof.
12. Governing Law. THIS UNDERTAKING SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
-4-
<PAGE>
STATE OF NEW YORK, WITHOUT REGARD TO ANY CHOICE-OF-LAW RULES THEREOF WHICH MIGHT
APPLY THE LAWS OF ANY OTHER JURISDICTION.
13. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, GCI HEREBY WAIVES, AND COVENANTS THAT IT
WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS UNDERTAKING, THE SUBJECT
MATTER HEREOF OR ANY PROJECT AGREEMENT OR FUNDAMENTAL DOCUMENT, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR
OTHERWISE. GCI ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE ADMINISTRATIVE
AGENT THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON
WHICH THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE RELIED, ARE RELYING AND WILL
RELY IN ENTERING INTO THE FUNDAMENTAL DOCUMENTS AND ANY OF THE PROJECT
AGREEMENTS. THE ADMINISTRATIVE AGENT OR ANY LENDER MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 13 WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF GCI TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
14. No Waiver. No failure on the part of the Administrative
Agent or any Lender to exercise, and no delay in exercising, any right, power,
privilege or remedy hereunder or under any other Project Agreement or
Fundamental Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power, privilege or remedy preclude any
other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. All remedies hereunder are cumulative and are not exclusive
of any other remedies provided by law.
15. Submission to Jurisdiction; Service of Process. GCI HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW
YORK AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF OR BASED UPON THIS UNDERTAKING, THE SUBJECT MATTER
HEREOF OR ANY PROJECT AGREEMENT OR FUNDAMENTAL DOCUMENT BROUGHT BY THE
ADMINISTRATIVE AGENT OR A LENDER OR ANY OF THEIR SUCCESSORS OR ASSIGNS IN EITHER
OF THE ABOVE-REFERENCED FORUMS AT THE SOLE OPTION OF THE ADMINISTRATIVE AGENT OR
A LENDER. GCI TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVES, AND
AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS, ANY CLAIM THAT IT IS NOT
SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS
-5-
<PAGE>
PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION
OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER OR THAT THIS UNDERTAKING, THE SUBJECT MATTER
HEREOF OR ANY PROJECT AGREEMENT OR FUNDAMENTAL DOCUMENT MAY NOT BE ENFORCED IN
OR BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCH ACTION, SUIT OR
PROCEEDING INSTITUTED BY THE ADMINISTRATIVE AGENT OR A LENDER IN STATE COURT TO
FEDERAL COURT, AND (C) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION,
SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE
COMPULSORY OR OTHERWISE ARISE FROM THE SAME SUBJECT MATTER. GCI HEREBY CONSENTS
TO SERVICE OF PROCESS BY MAIL AT ITS ADDRESS TO WHICH NOTICES ARE TO BE GIVEN
PURSUANT TO SECTION 6 HEREOF. GCI AGREES THAT ITS SUBMISSION TO JURISDICTION AND
CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE
ADMINISTRATIVE AGENT AND THE LENDERS. FINAL JUDGMENT AGAINST GCI IN ANY SUCH
ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER
JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR
TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF
INDEBTEDNESS OR LIABILITY OF GCI THEREIN DESCRIBED OR (Y) IN ANY OTHER MANNER
PROVIDED BY, OR PURSUANT TO, THE LAWS OF SUCH OTHER JURISDICTION, PROVIDED,
HOWEVER, THAT THE ADMINISTRATIVE AGENT OR A LENDER MAY AT ITS OPTION BRING SUIT,
OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST GCI OR ANY OF ITS ASSETS IN ANY
STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE GCI
OR SUCH ASSETS MAY BE FOUND.
-6-
<PAGE>
IN WITNESS WHEREOF, GCI has caused this Undertaking to be
executed and delivered by its officer thereunto duly authorized as of the day
and year first above written.
GENERAL COMMUNICATION, INC.
By: /s/
Name: John M. Lowber
Title: Senior Vice President, Chief
Financial Officer
Accepted:
CREDIT LYONNAIS NEW YORK BRANCH,
as Administrative Agent
By: /s/
Name: Michael F.G. Pepe
Title: Vice President
<PAGE>
EXHIBIT I
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated
Reference is hereby made to the Credit and Security Agreement
dated as of January 27, 1998 (as the same may be amended, supplemented or
otherwise modified, renewed or replaced from time to time, the "Credit
Agreement") among Alaska United Fiber System Partnership (the "Borrower"), the
lenders referred to therein (the "Lenders"), Credit Lyonnais New York Branch as
Administrative Agent (in such capacity, the "Administrative Agent"), NationsBank
of Texas, N.A. as Syndication Agent and TD Securities (USA) Inc. as
Documentation Agent. Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Credit Agreement.
(the "Assignor") and
(the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, the
interests set forth below in and to all the Assignor's rights and obligations
under the Credit Agreement, effective as of the Effective Date (such term being
used herein as hereinafter defined) (including, without limitation, the amounts
and percentages set forth below in (a) the Commitments of the Assignor on the
Effective Date (if applicable) and (b) the outstanding Loans owing to the
Assignor on the Effective Date, together with all unpaid interest accrued to the
Effective Date); provided, however, it is expressly understood and agreed that
(x) the Assignor is not assigning to the Assignee and the Assignor shall retain
(i) all of the Assignor's rights under Section 2.12 the Credit Agreement with
respect to any cost, reduction or payment incurred or made prior to the
Effective Date including, without limitation, the rights to indemnification and
to reimbursement for taxes, costs and expenses and (ii) any and all amounts paid
to the Assignor prior to the Effective Date and (y) both Assignor and Assignee
shall be entitled to the benefits of Sections 11.4 and 11.5 of the Credit
Agreement:
<PAGE>
(1) (1) (2) (3) (4)
Amount Held Amount being Percentage of the
by Assignor (2) assigned pursuant Commitment and
hereto (2) Outstanding Loans
assigned pursuant
hereto
- ------------ ------------------ ------------------ ------------------
[Construction
Commitment] (3)
[Term Loan
Commitment] (3)
Outstanding Loans
2. The Assignor (i) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Fundamental Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, the Fundamental
Documents or any other instrument or document furnished pursuant thereto, other
than that it is the legal and beneficial owner of the interest being assigned by
it hereby and that such interest is free and clear of any adverse claim; (ii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any of the Transaction Parties or
the performance or observance by the Borrower or any of the Transaction
- -------------------
(1) Pursuant to Section 11.3(b) of the Credit Agreement, no Lender may
assign its rights and obligations under the Credit Agreement without
the prior written consent of the Borrower and the Required Lenders if,
upon the effectiveness of such assignment and any other assignment of a
Lender's interests, rights and obligations pursuant to Section 11.3 of
the Credit Agreement with the same effective date as such assignment,
any Lender (A) shall at any time prior to the Completion Date, have a
Construction Commitment which is less than the lesser of $15,000,000
and one-fifth (1/5) of the aggregate Construction Commitments of all
the Lenders then in effect or (B) shall at any time on or after the
Completion Date, hold outstanding Loans in a principal amount which is
less than the lesser of $15,000,000 or one-fifth (1/5) of the aggregate
amount of all Loans outstanding on such effective date.
(2) Calculated after giving effect to all assignments of Commitments and
Loans that will be effective prior to the Effective Date.
(3) Only applicable for assignments with an Effective Date on or before the
Completion Date.
-2-
<PAGE>
Parties of any of their obligations under the Credit Agreement, the Fundamental
Documents or any other instrument or document furnished pursuant thereto; and
(iii) attaches the Note held by it and requests that the Administrative Agent
exchange such Note for a new Note payable to the Assignor (if the Assignor has
retained a Commitment or holds any outstanding Loans under the Credit Agreement)
and a new Note payable to the Assignee, in the respective amount(s) which
reflect the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 5.1(a) and Section
5.1(b) thereof (or if no such statements have been delivered as of the date
hereof, then copies of the financial statements referred to in Section 3.5
thereof) and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (iii) agrees that it will, independently and without reliance upon
the Administrative Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement or any other Fundamental Document; (iv) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement or any other Fundamental Document as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (v) agrees that it will be bound by
the provisions of the Credit Agreement and will perform in accordance with their
terms all the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender; (vi) agrees that it will keep
confidential all information with respect to the Borrower and the Transaction
Parties furnished to it by the Borrower, any of the Transaction Parties, the
Assignor or the Administrative Agent (other than information generally available
to the public or otherwise available to the Assignor on a non-confidential
basis); (vii) if the Assignee is organized under the laws of a jurisdiction
outside the United States, attaches the forms prescribed by the Internal Revenue
Service of the United States certifying as to the Assignee's exemption from
United States withholding taxes with respect to all payments to be made to the
Assignee under the Credit Agreement or such other documents as are necessary to
indicate that all such payments are subject to such tax at a rate reduced by any
applicable tax treaty and (viii) has supplied the information requested on the
administrative questionnaire attached hereto as Exhibit A.
4. The effective date for this Assignment and Acceptance shall
be (the "Effective Date"). (4) Following the execution of this
Assignment and
- -------------------
(4) See Section 11.3(b) of the Credit Agreement. Such date shall be not
earlier than five (5) Business Days after the date of acceptance and
recording by the Administrative Agent of the Assignment and Acceptance.
-3-
<PAGE>
Acceptance by the Assignee and the Assignor, it will be delivered to the
Administrative Agent, together with the processing and recording fee of $2,500
to be paid to the Administrative Agent by the Assignor, for acceptance and
recording by the Administrative Agent pursuant to Section 11.3 of the Credit
Agreement, effective as of the Effective Date.
5. Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and under the other Fundamental Documents and
shall be bound by the provisions thereof and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement (and if this Assignment
and Acceptance covers all or the remaining portion of the Assignor's interests,
rights and obligations under the Credit Agreement, the Assignor shall cease to
be a party thereto).
6. Upon the acceptance and recording by the Administrative
Agent, from and after the Effective Date, the Administrative Agent shall make
all payments in respect of the interest assigned hereby (including payments of
principal, interest, fees and other amounts) to the Assignee whether such
amounts have accrued prior to the Effective Date or accrue subsequent to the
Effective Date. The Assignor and Assignee shall make all appropriate adjustments
in payments made by the Administrative Agent for periods prior to the Effective
Date or with respect to the making of this assignment directly between
themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
8. This Assignment and Acceptance may be executed in
counterparts, each of which shall be deemed to constitute an original, but all
of which when taken together shall constitute one and the same instrument.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be duly executed by their respective duly
authorized officers.
[NAME OF ASSIGNOR], as Assignor
By
Name:
Title:
[NAME OF ASSIGNEE], as Assignee
By
Name:
Title:
Accepted this day
of , 199
CREDIT LYONNAIS NEW YORK BRANCH,
as Administrative Agent
By:
Name:
Title:
-5-
<PAGE>
Exhibit A to Assignment and Acceptance
dated between
(Assignor) and (Assignee)
[Attach a copy of the Administrative Questionnaire]
<PAGE>
EXHIBIT J
FORM OF BORROWING CERTIFICATE
The undersigned hereby certifies, represents and warrants with
respect to the Borrowing to be made on the date indicated below pursuant to, and
on the terms and conditions stated in, the Credit and Security Agreement dated
as of January 27, 1998 among Alaska United Fiber System Partnership (the
"Borrower"), the lenders referred to therein (the "Lenders"), Credit Lyonnais
New York Branch as Administrative Agent, NationsBank of Texas, N.A. as
Syndication Agent and TD Securities (USA) Inc. as Documentation Agent (as the
same may be amended, supplemented or otherwise modified, renewed or replaced
from time to time, the "Credit Agreement") and the related Notes that
(capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Credit Agreement):
(a) The representations and warranties set forth in
the Credit Agreement and in the other Fundamental Documents
are and will be true and correct in all material respects on
and as of the date hereof and on the date of the Borrowing
requested hereunder (except to the extent that such
representations and warranties expressly relate to an earlier
date) with the same effect as if made on and as of such date.
(b) On the date hereof and on the date of the
Borrowing requested hereunder, the Borrower and each
Transaction Party is and will be in compliance with all of the
terms and provisions set forth in the Credit Agreement and the
other Fundamental Documents and no Default or Event of Default
has occurred or is continuing, nor shall any such event occur
by reason of the making of the Loan(s) requested herein.
(c) No material adverse change has occurred with
respect to the business, operations, performance, assets,
properties, condition (financial or otherwise) or prospects of
the Borrower since July 29, 1997 or any of the Transaction
Parties since June 30, 1997.
(d) The Borrower has received the full amount of the
Sponsor Equity Funds and all of such funds have been (i) used
for the payment of Project Costs (including, without
limitation, Project Costs owed to the Contractor) or (ii)
deposited in the SSI Cash Collateral Account pursuant to the
SSI Cash Collateral Agreement.
<PAGE>
(e) (i) The Borrower has no reason to believe that it
will not be able to fulfill its obligations under Section 5.21
of the Credit Agreement.
(f) The outstanding Obligations at July 31, 1998 will
not exceed the Specified Amount.
(g) The Borrower hereby irrevocably requests [a]
Loan(s) on the terms and conditions as stated in the Credit
Agreement and the related Notes and in that connection sets
forth below the terms on which such Borrowing is requested to
be made:
(i) the Loan(s) being requested is a
[Construction Loan or the Term Loan].
(ii) the requested Business Day of the Loan(s)
is , 199 ;
(iii) the type of Loan(s) requested is [a
Alternate Base Rate Loan or a Eurodollar
Loan], the amount(s) thereof and the
Interest Period(s) [if a Eurodollar Loan
is requested] are as follows:
Type [Interest Period] Amount
---- ----------------- ------
(h) [If a Construction Loan is being requested] The
proceeds of the Construction Loan(s) requested hereby shall be
used solely to pay Project Costs previously incurred and
currently due and payable (or in the case of the Final
Construction Loan, incurred but not yet due and payable). Such
Project Costs do not exceed the sum of the amount budgeted
therefor (given the amount of the work completed on the
Project) as set forth in the Construction Budget plus the
amount of the contingency set forth in the Construction Budget
which has not previously been used to pay Project Costs (the
"Unused Contingency"). The amount of the Unused Contingency
(after giving effect to the Borrowing requested hereby) will
be $ .
(i) Upon disbursement by the Borrower of the funds
advanced by the Lenders as requested in this Certificate, all
Project Costs heretofore incurred and due and payable will be
fully paid and satisfied.
(j) The actual cost required to complete all matters
of a type included in any line item in the Construction Budget
does not exceed the amount allocated to that line item in the
Construction Budget, except as follows (if any): [describe]
-2-
<PAGE>
(k) All Permits required to be obtained on or before
the date hereof have been obtained and the same are valid and
in full force and effect and not subject to any appeal or
other unsatisfied requirements that may allow modifications or
revocation thereof, except as follows: [describe]
The Borrower has no reason to believe that any Permits
remaining to be obtained cannot be obtained in a timely
manner. The Project has been conducted in compliance with all
Permits.
(l) There does not exist, and after giving effect to
the Borrowing requested in this Certificate there will not
exist, any Event of Loss.
(m) The Project is progressing in a satisfactory
manner so as to assure Completion of the System on or before
January 1, 1999.
(n) There are no Liens on any of the Collateral,
other than Permitted Encumbrances.
(o) Each Fundamental Document remains in full force
and effect.
(p) The statements, calculations, amounts and other
information set forth in this Certificate are true and
correct.
(q) The Borrower has undertaken all investigations
necessary to make all of the foregoing statements.
(r) The Borrower hereby agrees to notify the
Administrative Agent in writing immediately if any of the
matters certified herein will not be true and correct as of
the date of the Borrowing requested hereby and the
certifications herein shall be deemed made and ratified as of
the time of such Borrowing unless the Borrower otherwise
notifies the Administrative Agent.
(s) The Borrower hereby agrees that the
Administrative Agent's acceptance of this Certificate will in
no way operate as a waiver by the Administrative Agent or any
Lender of any term, condition, covenant or agreement contained
in the Credit Agreement or any of the other Fundamental
Documents or of the Administrative Agent's or any Lender's
right to enforce any term, condition, covenant or agreement
therein.
(t) The Borrower hereby acknowledges that this
Certificate is submitted for the purpose of inducing the
Lenders to advance funds to the Borrower and that, in so
lending such funds, the Lenders will rely upon the accuracy of
matters stated in this Certificate.
-3-
<PAGE>
(u) Attached hereto is the most recent construction
progress report.
(v) The Person executing this Certificate on behalf
of the General Partner (on behalf of the Borrower) is a duly
authorized officer of the General Partner and he or she is
authorized to execute this Certificate on behalf of the
General Partner (on behalf of the Borrower).
-4-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this
certificate to be executed as of this day of , 199 .
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., its General
Partner
By:
Name:
Title:
By: Fiber Hold Co., Inc., its General
Partner
By:
Name:
Title:
-5-
<PAGE>
[Attach the most recent construction progress report]
<PAGE>
EXHIBIT K
FORM OF ENGINEER'S CERTIFICATE
The undersigned, being the of
(the "Independent Engineer") DO HEREBY CERTIFY on behalf of the Independent
Engineer that:
1. This Certificate is being delivered pursuant to Section
4.3(e) of the Credit and Security Agreement dated as of January 27, 1998 (as
such agreement may be amended, supplemented or otherwise modified, renewed or
replaced from time to time, the "Credit Agreement") among Alaska United Fiber
System Partnership, an Alaska general partnership (the "Borrower"), the lenders
referred to therein (the "Lenders"), Credit Lyonnais New York Branch as
Administrative Agent, NationsBank of Texas, N.A. as Syndication Agent and TD
Securities (USA) Inc. as Documentation Agent in connection with the Borrowing in
the amount of $ requested by the Borrower to be made by the Lenders on
, 199 (a copy of the Borrowing Certificate delivered by the Borrower
to the Administrative Agent in connection with such proposed Borrowing is
attached hereto as Annex 1). Unless otherwise defined herein, capitalized terms
used in this Certificate have the meanings given to such terms in the Credit
Agreement.
2. All Project Costs incurred by the Borrower through the date
of this Certificate are reasonable and do not exceed the sum of (A) the amount
budgeted for such costs (given the amount of work completed on the Project) as
set forth in the Construction Budget plus (B) the amount of the contingency set
forth in the Construction Budget (the "Contingency"). The amount of the
Contingency which has not been used to pay Project Costs (after giving effect to
the Borrowing requested in the attached Borrowing Certificate) is $ .
3. To the best of the Independent Engineer's knowledge after
due inquiry and examination, Completion should be achieved by the dates required
under all agreements relating to the Project including, without limitation, the
Credit Agreement, all Project Agreements and all Capacity Agreements.
4. The amount of the Borrowing requested in the attached
Borrowing Certificate, plus amounts on deposit in the Construction Account and
the Local Bank Account, plus amounts on deposit in the SSI Cash Collateral
Account, plus the proceeds of Loans in an aggregate amount equal to the unused
Revolving Credit Commitments, will be sufficient to pay all Project Costs which
are necessary for Completion of the Project and which are either incurred but
not yet paid or have yet to be incurred.
5. Except as set forth on Annex 2 hereto, no information has
come to the attention of the Independent Engineer that would cause the
Independent Engineer to conclude
<PAGE>
that the information set forth in the attached Borrowing Certificate is
inaccurate in any material respect.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate on behalf of the Independent Engineer.
Date: [to be dated the date [ ]
of the proposed
Borrowing]
By:
Name:
Title:
-2-
<PAGE>
Annex 1
[Attach a copy of the applicable Borrowing Certificate]
<PAGE>
Annex 2
[See paragraph 5 of the Engineer's Certificate]
<PAGE>
EXHIBIT L
FORM OF OPERATING KEEP-WELL AGREEMENT
(GCI Transport Co., Inc.)
OPERATING KEEP-WELL AGREEMENT (as amended, supplemented or otherwise
modified, renewed or replaced from time to time, the "Agreement") made as of
, 1998 by and among GCI Transport Co., Inc., an Alaska corporation
("GCI Transport"), Alaska United Fiber System Partnership, a general partnership
organized under the laws of Alaska (the "Borrower") and Credit Lyonnais New York
Branch, as Administrative Agent.
Pursuant to that certain Credit and Security Agreement dated as of
January 27, 1998 among the Borrower, the lenders referred to therein (the
"Lenders"), Credit Lyonnais New York Branch as Administrative Agent, NationsBank
of Texas, N.A., as Syndication Agent and TD Securities (USA) Inc., as
Documentation Agent (as such agreement may be amended, supplemented or otherwise
modified, renewed or replaced from time to time, the "Credit Agreement"), the
Lenders have agreed to make loans to the Borrower on the terms, and subject to
the conditions, set forth therein.
Fiber Hold Co., Inc., an Alaska corporation ("Fiber Hold") and GCI
Fiber Co., Inc., an Alaska corporation ("GCI Fiber"), each own fifty (50)
percent of the partnership interests in the Borrower.
GCI Transport owns all the issued and outstanding capital stock of each
of Fiber Hold and GCI Fiber.
The Lenders require that GCI Transport provide the Lenders with certain
assurances in connection with the Borrower's operating expenses and its
obligations under and pursuant to the Credit Agreement.
Accordingly, in consideration of the premises and of the mutual
agreements herein contained and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions. All capitalized terms used herein
but not defined herein shall have the meanings set forth in the
Credit Agreement.
2. Subordinated Loans and Capital Contributions.
(a) Subject to the terms and conditions set forth herein, GCI Transport
hereby agrees that upon receipt of a notice and request for funds from the
Borrower or the Administrative Agent given at any time on or after the
Completion Date, it shall make subordinated loans or cash
<PAGE>
capital contributions, as it may elect, to the Borrower in order to provide
sufficient funds for the Borrower to pay:
(i) all of the Borrower's operating expenses (including,
without limitation, interest and principal on any Loan), to the extent
necessary in order to prevent a payment default by the Borrower under
any agreement to which the Borrower is or may be a party, including,
without limitation, the Credit Agreement or any Project Agreement; and
(ii) the entire amount of the Obligations, if any, remaining
unpaid at the Final Maturity Date or upon any acceleration of the Loans
by reason of an Event of Default (each of the expenses and Obligations
of the Borrower described in clauses (i) and (ii) of this Section 2(a)
shall be referred to herein as a "Supported Obligation").
(b) Promptly upon knowledge of any anticipated need of funds by the
Borrower to pay any Supported Obligation, but in any event no later than seven
(7) Business Days prior to the date the applicable Supported Obligation in
respect of which such funds are needed becomes due, the Borrower shall give
notice and request for funds to GCI Transport setting forth (x) a description of
the Supported Obligation becoming due, (y) the date such Supported Obligation
becomes due and (z) the amount of funds required from GCI Transport by the
Borrower in order to pay such Supported Obligation in full. The Borrower agrees
that it shall cause a copy of any notice given by it to GCI Transport hereunder
to be delivered to the Administrative Agent at the same time such notice is
delivered to GCI Transport.
(c) The Administrative Agent shall at all times have the right to give
a notice and request for funds hereunder to GCI Transport.
(d) If GCI Transport receives a notice and request for funds from
either the Borrower or the Administrative Agent, GCI Transport agrees that it
will make a subordinated loan or capital contribution to the Borrower in
accordance with Section 2(a) above, in an amount in cash no less than the amount
requested by the Borrower or the Administrative Agent (as applicable) no later
than five (5) Business Days after GCI Transport's receipt of the applicable
notice and request for funds or the date the applicable Supported Obligation is
due and payable, whichever is later.
3. Obligations Absolute.
(a) The obligations of GCI Transport under this Agreement are direct,
absolute and unconditional and shall not be affected or impaired in any way by
reason of (i) the lack of (or the extent of) prior enforcement by the
Administrative Agent or the Lenders or any other Person or (ii) any
modification, limitation or discharge of any obligation arising out of or by
virtue of any bankruptcy, arrangement, reorganization or similar proceeding for
relief of debtors under federal
-2-
<PAGE>
or state law hereinafter initiated by or against the Borrower. The obligations
of GCI Transport hereunder are in addition to any liability it may have under
any other Project Agreement.
(b) The obligations of GCI Transport hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense (other than payment) or
set-off, counterclaim, recoupment or termination whatsoever, by reason of the
invalidity, illegality or unenforceability of any of the Supported Obligations
or otherwise. Without limiting the generality of the foregoing, the obligations
of GCI Transport hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Borrower or the Administrative Agent to assert
any claim or demand or to enforce any remedy hereunder or under the Credit
Agreement, any Fundamental Document, any Project Agreement or any other
agreement, by any waiver or delay, willful 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 GCI Transport or would otherwise operate as a discharge of GCI Transport
as a matter of law.
(c) GCI Transport further agrees that any of the Supported Obligations
may be extended or renewed, in whole or in part, without notice or further
assent from it, and it will remain bound hereunder notwithstanding any extension
or renewal of any Supported Obligation.
(d) The obligations of GCI Transport hereunder shall not be affected by
(i) the failure of the Administrative Agent to assert any claim or demand or to
enforce any right or remedy against the Borrower or any other Person providing
credit support for the Obligations under the provisions of any Project
Agreement, any Fundamental Document or any other agreement or otherwise; (ii)
any extension or renewal of any provision hereof or of any Fundamental Document
or any other agreement; (iii) any rescission, waiver, compromise, acceleration,
amendment or modification of any of the terms or provisions of the Credit
Agreement, any Project Agreement, any Fundamental Document or any other
agreement; or (iv) the release, exchange, waiver or foreclosure of any security
held by the Administrative Agent or any Lender for the Obligations or any of
them.
(e) The obligations of GCI Transport hereunder shall not be affected by
any lack of due execution, validity or enforceability of the Obligations, the
Credit Agreement, any Project Agreement, any Fundamental Document or any
instrument or document evidencing any of the Supported Obligations, or by the
existence, validity, enforceability, perfection, or extent of any collateral
therefor or by any other circumstance relating to any of the Supported
Obligations (other than payment) which might otherwise constitute a defense to
GCI Transport's obligations hereunder. Neither the Administrative Agent nor any
Lender makes any representation or warranty in respect to any such circumstances
or has any duty or responsibility whatsoever to GCI Transport in respect to the
management and maintenance of the Obligations or any collateral securing any of
the Obligations.
-3-
<PAGE>
(f) GCI Transport further agrees that its obligations hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by the Administrative Agent or any Lender upon the bankruptcy or
other reorganization of the Borrower, GCI Holdings, Inc. ("Holdings"), or any
guarantor of the Obligations or otherwise.
4. Payment of Dividends or Cash. During the term of this Agreement, GCI
Transport shall not pay dividends or otherwise transfer any cash to Holdings or
any other Affiliate of GCI Transport, except for (a) loans or capital
contributions to the Borrower (all such loans to the Borrower shall be
subordinate to the Obligations pursuant to, in accordance with, the
Subordination Agreement), (b) the assignment or other transfer to GCI Satellite
Company ("Satco") of the $9,100,000 deposit made to Hughes Communications
Galaxy, Inc. ("Hughes") in connection with the Transponder Purchase Agreement
for Galaxy X dated August 24, 1995 between Holdings and Hughes, which assignment
or other transfer will be characterized as a loan or a capital contribution to
Satco, (c) cash distributions to Holdings in an aggregate amount over the term
of this Agreement not exceeding the aggregate amount theretofore distributed to
the Borrower from funds held in the Disbursement Account pursuant to Section
3(f) and Section 3(g) of the Depositary Agreement, provided that, at the time
and after giving effect to such cash distribution, no Default or Event of
Default has occurred or is continuing and (d) cash distributions to Holdings in
an aggregate amount not exceeding the aggregate amount of cash distributions
theretofore actually made to GCI Transport by Satco, provided that, at the time
and after giving effect to any such cash distribution, no Default or Event of
Default has occurred or is continuing.
5. Assignment to the Administrative Agent. (a) The Borrower hereby
confirms that for good and valuable consideration it has assigned, transferred,
conveyed and set over to the Administrative Agent as security for the
Obligations, all of the Borrower's rights under this Agreement (which include,
without limitation, all of the Borrower's right, title and interest in and to
any payment due or to become due from GCI Transport under this Agreement).
(b) Each of the Borrower and Holdings hereby agrees that it will
execute, or cause to be executed, such additional documentation (including,
without limitation, assignment agreements or other consents) as may now or
hereafter be reasonably required by the Administrative Agent in order to
otherwise effectuate the provisions of the assignment pursuant to this Section
5.
(c) Until such time as GCI Transport has received written notice from
the Administrative Agent stating that the assignment referred to in this Section
5 has terminated, the Administrative Agent shall have the right to exercise all
rights, and shall have all the benefits, granted to the Borrower under this
Agreement and GCI Transport shall deliver directly to the Administrative Agent
copies of all documents, instruments or other items required to be delivered to
the Borrower under this Agreement.
-4-
<PAGE>
(d) The Administrative Agent shall not have any obligation or liability
under this Agreement or any other Project Agreement by reason of this
assignment, and the Administrative Agent shall not be obligated to perform any
of the obligations or duties of the Borrower under any of the foregoing
agreements or to take any action to collect or enforce any claim for payment
assigned hereunder.
(e) GCI Transport hereby agrees that the proceeds of any subordinated
loans or any capital contributions made by it to the Borrower pursuant to this
Agreement shall be deposited in cash directly into the Disbursement Account, and
the Borrower hereby specifically authorizes and directs GCI Transport to deposit
the proceeds of all such loans and capital contributions to the Borrower under
this Agreement into the Disbursement Account and irrevocably authorizes and
empowers the Administrative Agent to ask, command, receive or give a discharge
for any and all such amounts.
6. Term. This Agreement shall remain in full force and effect until all
of the Obligations shall have been fully and indefeasibly paid and performed by
the Borrower and the Commitments shall have terminated.
7. Not a Guaranty. This Agreement is not, and nothing herein contained
and nothing done pursuant hereto by GCI Transport shall be deemed to constitute,
a guaranty by GCI Transport of the payment of any obligation, indebtedness or
liability of any kind or character whatsoever of the Borrower.
8. Notices. Notices and other communications provided for herein shall
be in writing and shall be delivered or mailed (or if by telegram, delivered to
the telegraph company and, if by telecopier, delivered by such equipment) to the
parties at the following respective addresses:
(1) If to the Administrative Agent:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attn: Project Finance Group
Facsimile No.: (212) 261-3421
(2) If to GCI Transport:
GCI Transport Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Facsimile No.: (907) 265-5676
-5-
<PAGE>
(3) If to the Borrower:
Alaska United Fiber System Partnership
c/o GCI Fiber Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Facsimile No.: (907) 265-5676
or such other address as such party may from time to time designate by giving
written notice to the other parties hereunder. All notices and other
communications given to any party hereto in accordance with the provisions
hereof shall be deemed to have been given on the tenth Business Day after the
date when sent by registered or certified mail, postage prepaid, return receipt
requested, if by mail, or when delivered to the telegraph company, charges
prepaid, if by telegram, or when receipt is acknowledged if by telecopier, in
each case addressed to such party as provided in this Section 8 or in accordance
with the latest unrevoked written direction from such party. If either GCI
Transport or the Borrower gives the other any notice hereunder for any reason
whatsoever, each of GCI Transport and the Borrower agrees to simultaneously
deliver a copy of such notice to the Administrative Agent.
9. Successors and Assigns. All references herein to any of the parties
to this Agreement shall be deemed to include the successors and assigns of such
party; provided, however, that GCI Transport may not assign any of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and all of the Lenders, and all covenants, promises and agreements by or
on behalf of GCI Transport which are contained herein shall inure to the benefit
of the successors and assigns of the Administrative Agent and any of the
Lenders.
10. Amendment; Waiver; Consent. This Agreement may be amended, modified
or supplemented, and the terms hereof may be waived, in each case only by a
written instrument executed by all the parties to this Agreement and consented
to by all of the Lenders. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent or other breach, whether or not similar.
11. Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by Applicable Law, the parties
hereby waive any provision of law which may render any provision hereof
prohibited or unenforceable in any respect.
-6-
<PAGE>
12. Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same agreement, and all signatures need not appear on any one counterpart.
13. Headings. The headings and captions in this
Agreement are for convenience of reference only and shall not
define, limit or otherwise affect any of the terms or provisions
hereof.
14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ANY CHOICE-OF-LAW RULES THEREOF WHICH MIGHT APPLY THE LAWS OF ANY
OTHER JURISDICTION.
15. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, GCI TRANSPORT HEREBY WAIVES, AND COVENANTS THAT IT
WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE SUBJECT MATTER
HEREOF OR ANY PROJECT AGREEMENT OR FUNDAMENTAL DOCUMENT, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE.
GCI TRANSPORT ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE ADMINISTRATIVE AGENT
THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH
THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE RELIED, ARE RELYING AND WILL RELY
IN ENTERING INTO THIS AGREEMENT AND ANY OTHER PROJECT AGREEMENT OR FUNDAMENTAL
DOCUMENT. THE ADMINISTRATIVE AGENT OR ANY LENDER MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 15 WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF GCI TRANSPORT TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
16. No Waiver. No failure on the part of the Administrative Agent or
any Lender to exercise, and no delay in exercising, any right, power, privilege
or remedy hereunder or under any other Project Agreement or Fundamental Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power, privilege or remedy preclude any other or further
exercise thereof or the exercise of any other right, power, privilege or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
17. Submission to Jurisdiction; Service of Process. GCI TRANSPORT
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE COURTS OF THE STATE
OF NEW YORK AND TO THE JURISDICTION OF THE UNITED STATES
-7-
<PAGE>
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSES OF ANY
SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS UNDERTAKING,
THE SUBJECT MATTER HEREOF OR ANY PROJECT AGREEMENT OR FUNDAMENTAL DOCUMENT
BROUGHT BY THE ADMINISTRATIVE AGENT OR A LENDER OR ANY OF THEIR SUCCESSORS OR
ASSIGNS IN EITHER OF THE ABOVE-REFERENCED FORUMS AT THE SOLE OPTION OF THE
ADMINISTRATIVE AGENT OR A LENDER. GCI TRANSPORT TO THE EXTENT PERMITTED BY
APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS
A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH
COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE
ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR
EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
UNDERTAKING, THE SUBJECT MATTER HEREOF OR ANY PROJECT AGREEMENT OR FUNDAMENTAL
DOCUMENT OR THE SUBJECT MATTER THEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT,
(B) HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCH ACTION, SUIT OR PROCEEDING
INSTITUTED BY THE ADMINISTRATIVE AGENT OR A LENDER IN STATE COURT TO FEDERAL
COURT, AND (C) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR
PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY
OR OTHERWISE ARISE FROM THE SAME SUBJECT MATTER. GCI TRANSPORT HEREBY CONSENTS
TO SERVICE OF PROCESS BY MAIL AT ITS ADDRESS TO WHICH NOTICES ARE TO BE GIVEN
PURSUANT TO SECTION 8 HEREOF. GCI TRANSPORT AGREES THAT ITS SUBMISSION TO
JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS
BENEFIT OF THE ADMINISTRATIVE AGENT AND THE LENDERS. FINAL JUDGMENT AGAINST GCI
TRANSPORT IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON THE
JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE
FACT AND THE AMOUNT OF INDEBTEDNESS OR LIABILITY OF GCI TRANSPORT THEREIN
DESCRIBED OR (Y) IN ANY OTHER MANNER PROVIDED BY, OR PURSUANT TO, THE LAWS OF
SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE AGENT OR A
LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS
AGAINST GCI TRANSPORT OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE
UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE GCI TRANSPORT OR SUCH ASSETS MAY
BE FOUND.
18. Entire Agreement. This Agreement represents the entire agreement of
the parties with regard to the subject matter hereof, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the day and year first above written.
GCI TRANSPORT CO., INC.
By:
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH, as
Administrative Agent
By:
Name:
Title:
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., its General
Partner
By:
Name:
Title:
By: Fiber Hold Co., Inc., its General
Partner
By:
Name:
Title:
<PAGE>
EXHIBIT M
FORM OF OPERATING KEEP-WELL AGREEMENT
(GCI Holdings, Inc.)
OPERATING KEEP-WELL AGREEMENT (as amended, supplemented or otherwise
modified, renewed or replaced from time to time, the "Agreement") made as of
, 1998 by and among GCI Holdings, Inc., an Alaska corporation
("Holdings"), Alaska United Fiber System Partnership, a general partnership
organized under the laws of Alaska (the "Borrower") and Credit Lyonnais New York
Branch, as Administrative Agent.
Pursuant to that certain Credit and Security Agreement dated as of
January 27, 1998 among the Borrower, the lenders referred to therein (the
"Lenders"), Credit Lyonnais New York Branch as Administrative Agent, NationsBank
of Texas, N.A., as Syndication Agent and TD Securities (USA) Inc., as
Documentation Agent (as such agreement may be amended, supplemented or otherwise
modified, renewed or replaced from time to time, the "Credit Agreement"), the
Lenders have agreed to make loans to the Borrower on the terms, and subject to
the conditions, set forth therein.
Fiber Hold Co., Inc., an Alaska corporation ("Fiber Hold") and GCI
Fiber Co., Inc., an Alaska corporation ("GCI Fiber"), each own fifty (50)
percent of the partnership interests in the Borrower.
GCI Transport Co., Inc., an Alaska corporation ("GCI Transport"), owns
all the issued and outstanding capital stock of each of Fiber Hold and GCI
Fiber, and Holdings owns all the issued and outstanding capital stock of GCI
Transport.
The Lenders require that Holdings provide the Lenders with certain
assurances in connection with the Borrower's operating expenses and its
obligations under and pursuant to the Credit Agreement.
Accordingly, in consideration of the premises and of the mutual
agreements herein contained and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions. All capitalized terms used herein
but not defined herein shall have the meanings set forth in the
Credit Agreement.
<PAGE>
2. Subordinated Loans. (a) Subject to the terms and conditions set
forth herein, Holdings hereby agrees that upon receipt of a notice and request
for funds from the Borrower or the Administrative Agent given at any time on or
after the Completion Date, it shall make subordinated loans to the Borrower in
order to provide sufficient funds for the Borrower to pay:
(i) all of the Borrower's operating expenses (including,
without limitation, interest and principal on any Loan), to the extent
necessary in order to prevent a payment default by the Borrower under
any agreement to which the Borrower is or may be a party, including,
without limitation, the Credit Agreement or any Project Agreement;
provided, however, that no notice and request for funds to Holdings
under this clause (i) of Section 2(a) shall be made unless GCI
Transport has failed to provide the requisite funds to the Borrower
within five (5) Business Days after demand for such funds has been
received by GCI Transport or the date the applicable Supported
Obligation (as defined below) of the Borrower becomes due and payable,
whichever is later, pursuant to, and in accordance with, the Transport
Keep-Well Agreement; and
(ii) the entire amount of the Obligations, if any, remaining
unpaid at the Final Maturity Date or upon any acceleration of the Loans
by reason of an Event of Default (each of the expenses and Obligations
of the Borrower described in clauses (i) and (ii) of this Section 2(a)
shall be referred to herein as a "Supported Obligation"); provided,
however, that no notice and request for funds to Holdings under this
clause (ii) of Section 2(a) shall be made unless and until the
Administrative Agent on behalf of the Lenders has (x) taken
commercially reasonable efforts to exhaust its remedies against the
partnership interests of the Borrower and the Collateral, (y) demanded
payment from GCI Transport under the Transport Keep-Well Agreement and
(z) filed a claim for payment against GCI Transport under the Transport
Keep-Well Agreement.
(b) The Administrative Agent shall at all times have the right to give
a notice and request for funds hereunder to Holdings.
(c) If Holdings receives a notice and request for funds from either the
Borrower or the Administrative Agent, Holdings agrees that it will make a
subordinated loan to the Borrower in accordance with Section 2(a) above and
Section 3 below, in an amount in cash no less than the amount requested by the
Borrower or the Administrative Agent (as applicable) no later than two (2)
Business Days after Holdings' receipt of the applicable notice and request for
funds.
(d) Any notice and request for funds hereunder by the Borrower or the
Administrative Agent shall set forth (i) a description of the Supported
Obligation that became due, (ii) the date such Supported Obligation became due
and (iii) the amount of funds required from Holdings by the Borrower in order to
pay such Supported Obligation in full. The Borrower agrees that it shall
-2-
<PAGE>
cause a copy of any notice given by it to Holdings hereunder to be delivered to
the Administrative Agent at the same time such notice is delivered to Holdings.
3. Subordination. All payments by Holdings to the Borrower pursuant to
this Agreement will be in the form of subordinated loans which shall be
subordinated to the Obligations in accordance with the Subordination Agreement.
Holdings shall not be required to make any loans pursuant to Section 2 above in
excess of the maximum amount permitted under (i) Sections 4.13 and 4.20 of the
Indenture dated as of August 1, 1997 between GCI, Inc. and The Bank of New York,
as Trustee, as in effect on the date hereof, relating to the Senior Notes due
2007 of GCI, Inc. and (ii) Section 7.09 of each of the Holdings Credit
Agreements as in effect on the date hereof, so long as any of the obligations
under such agreements are not paid in full.
4. Obligations Absolute.
(a) The obligations of Holdings under this Agreement are direct,
absolute and unconditional and shall not be affected or impaired in any way by
reason of (i) the lack of (or the extent of) prior enforcement by the
Administrative Agent or the Lenders or any other Person or (ii) any
modification, limitation or discharge of any obligation arising out of or by
virtue of any bankruptcy, arrangement, reorganization or similar proceeding for
relief of debtors under federal or state law hereinafter initiated by or against
the Borrower. The obligations of Holdings hereunder are in addition to any
liability it may have under any other Project Agreement.
(b) The obligations of Holdings hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense (other than payment) or
set-off, counterclaim, recoupment or termination whatsoever, by reason of the
invalidity, illegality or unenforceability of any of the Supported Obligations
or otherwise. Without limiting the generality of the foregoing, the obligations
of Holdings hereunder shall not be discharged or impaired or otherwise affected
by the failure of the Borrower or the Administrative Agent to assert any claim
or demand or to enforce any remedy hereunder or under the Credit Agreement, any
Fundamental Document, any Project Agreement or any other agreement, by any
waiver or delay, willful 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 Holdings or
would otherwise operate as a discharge of Holdings as a matter of law.
(c) Holdings further agrees that any of the Supported Obligations may
be extended or renewed, in whole or in part, without notice or further assent
from it, and it will remain bound hereunder notwithstanding any extension or
renewal of any Supported Obligation.
(d) The obligations of Holdings hereunder shall not be affected by (i)
the failure of the Administrative Agent to assert any claim or demand or to
enforce any right or remedy against the Borrower or any other Person providing
credit support for the Obligations under the provisions
-3-
<PAGE>
of any Project Agreement, any Fundamental Document or any other agreement or
otherwise, except as explicitly provided in Section 2 hereof; (ii) any extension
or renewal of any provision hereof or of any Fundamental Document or any other
agreement; (iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of the Credit Agreement, any
Project Agreement, any Fundamental Document or any other agreement; or (iv) the
release, exchange, waiver or foreclosure of any security held by the
Administrative Agent or any Lender for the Obligations or any of them.
(e) The obligations of Holdings hereunder shall not be affected by any
lack of due execution, validity or enforceability of the Obligations, the Credit
Agreement, any Project Agreement, any Fundamental Document or any instrument or
document evidencing any of the Supported Obligations, or by the existence,
validity, enforceability, perfection, or extent of any collateral therefor or by
any other circumstance relating to any of the Supported Obligations (other than
payment) which might otherwise constitute a defense to Holdings's obligations
hereunder. Neither the Administrative Agent nor any Lender makes any
representation or warranty in respect to any such circumstances or has any duty
or responsibility whatsoever to Holdings in respect to the management and
maintenance of the Obligations or any collateral securing any of the
Obligations.
(f) Holdings further agrees that its obligations hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by the Administrative Agent or any Lender upon the bankruptcy or
other reorganization of the Borrower, GCI Transport or any guarantor of the
Obligations or otherwise.
5. Assignment to the Administrative Agent.
(a) The Borrower hereby confirms that for good and valuable
consideration it has assigned, transferred, conveyed and set over to the
Administrative Agent as security for the Obligations, all of the Borrower's
rights under this Agreement (which include, without limitation, all of the
Borrower's right, title and interest in and to any payment due or to become due
from Holdings under this Agreement).
(b) Each of the Borrower and Holdings hereby agrees that it will
execute, or cause to be executed, such additional documentation (including,
without limitation, assignment agreements or other consents) as may now or
hereafter be reasonably required by the Administrative Agent in order to
otherwise effectuate the provisions of the assignment pursuant to this Section
5.
(c) Until such time as Holdings has received written notice from the
Administrative Agent stating that the assignment referred to in this Section 5
has terminated, the Administrative Agent shall have the right to exercise all
rights, and shall have all the benefits, granted to the Borrower under this
Agreement and Holdings shall deliver directly to the Administrative Agent
-4-
<PAGE>
copies of all documents, instruments or other items required to be delivered to
the Borrower under this Agreement.
(d) The Administrative Agent shall not have any obligation or liability
under this Agreement or any other Project Agreement by reason of this
assignment, and the Administrative Agent shall not be obligated to perform any
of the obligations or duties of the Borrower under any of the foregoing
agreements or to take any action to collect or enforce any claim for payment
assigned hereunder.
(e) Holdings hereby agrees that the proceeds of any subordinated loans
made by it to the Borrower pursuant to this Agreement shall be deposited in cash
directly into the Disbursement Account, and the Borrower hereby specifically
authorizes and directs Holdings to deposit the proceeds of all such loans to the
Borrower under this Agreement into the Disbursement Account and irrevocably
authorizes and empowers the Administrative Agent to ask, command, receive or
give a discharge for any and all such amounts.
6. Term. This Agreement shall remain in full force and effect until all
of the Obligations shall have been fully and indefeasibly paid and performed by
the Borrower and the Commitments shall have terminated.
7. Not a Guaranty. This Agreement is not, and nothing herein contained
and nothing done pursuant hereto by Holdings shall be deemed to constitute, a
guaranty by Holdings of the payment of any obligation, indebtedness or liability
of any kind or character whatsoever of the Borrower.
8. Notices. Notices and other communications provided for herein shall
be in writing and shall be delivered or mailed (or if by telegram, delivered to
the telegraph company and, if by telecopier, delivered by such equipment) to the
parties at the following respective addresses:
(1) If to the Administrative Agent:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attn: Project Finance Group
Facsimile No.: (212) 261-3421
(2) If to Holdings:
GCI Holdings, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
-5-
<PAGE>
Facsimile No.: (907) 265-5676
(3) If to the Borrower:
Alaska United Fiber System Partnership
c/o GCI Fiber Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Facsimile No.: (907) 265-5676
or such other address as such party may from time to time designate by giving
written notice to the other parties hereunder. All notices and other
communications given to any party hereto in accordance with the provisions
hereof shall be deemed to have been given on the tenth Business Day after the
date when sent by registered or certified mail, postage prepaid, return receipt
requested, if by mail, or when delivered to the telegraph company, charges
prepaid, if by telegram, or when receipt is acknowledged if by telecopier, in
each case addressed to such party as provided in this Section 8 or in accordance
with the latest unrevoked written direction from such party. If either Holdings
or the Borrower gives the other any notice hereunder for any reason whatsoever,
each of Holdings and the Borrower agrees to simultaneously deliver a copy of
such notice to the Administrative Agent.
9. Successors and Assigns. All references herein to any of the parties
to this Agreement shall be deemed to include the successors and assigns of such
party; provided, however, that Holdings may not assign any of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and all of the Lenders, and all covenants, promises and agreements by or
on behalf of Holdings which are contained herein shall inure to the benefit of
the successors and assigns of the Administrative Agent and any of the Lenders.
10. Amendment; Waiver; Consent. This Agreement may be amended, modified
or supplemented, and the terms hereof may be waived, in each case only by a
written instrument executed by all the parties to this Agreement and consented
to by all of the Lenders. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent or other breach, whether or not similar.
11. Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by Applicable Law, the parties
hereby waive any provision of law which may render any provision hereof
prohibited or unenforceable in any respect.
-6-
<PAGE>
12. Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same agreement, and all signatures need not appear on any one counterpart.
13. Headings. The headings and captions in this
Agreement are for convenience of reference only and shall not
define, limit or otherwise affect any of the terms or provisions
hereof.
14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ANY CHOICE-OF-LAW RULES THEREOF WHICH MIGHT APPLY THE LAWS OF ANY
OTHER JURISDICTION.
15. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, HOLDINGS HEREBY WAIVES, AND COVENANTS THAT IT WILL
NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF
ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE SUBJECT MATTER HEREOF OR
ANY PROJECT AGREEMENT OR FUNDAMENTAL DOCUMENT, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. HOLDINGS
ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE ADMINISTRATIVE AGENT THAT THE
PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE
ADMINISTRATIVE AGENT AND THE LENDERS HAVE RELIED, ARE RELYING AND WILL RELY IN
ENTERING INTO THIS AGREEMENT AND ANY OTHER PROJECT AGREEMENT OR FUNDAMENTAL
DOCUMENT. THE ADMINISTRATIVE AGENT OR ANY LENDER MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 15 WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF HOLDINGS TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
16. No Waiver. No failure on the part of the Administrative Agent or
any Lender to exercise, and no delay in exercising, any right, power, privilege
or remedy hereunder or under any other Project Agreement or Fundamental Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power, privilege or remedy preclude any other or further
exercise thereof or the exercise of any other right, power, privilege or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
17. Submission to Jurisdiction; Service of Process. HOLDINGS
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE COURTS OF THE STATE
OF NEW YORK AND TO THE JURISDICTION OF THE UNITED STATES
-7-
<PAGE>
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSES OF ANY
SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS UNDERTAKING,
THE SUBJECT MATTER HEREOF OR ANY PROJECT AGREEMENT OR FUNDAMENTAL DOCUMENT
BROUGHT BY THE ADMINISTRATIVE AGENT OR A LENDER OR ANY OF THEIR SUCCESSORS OR
ASSIGNS IN EITHER OF THE ABOVE-REFERENCED FORUMS AT THE SOLE OPTION OF THE
ADMINISTRATIVE AGENT OR A LENDER. GCI TRANSPORT TO THE EXTENT PERMITTED BY
APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS
A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH
COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE
ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR
EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
UNDERTAKING, THE SUBJECT MATTER HEREOF OR ANY PROJECT AGREEMENT OR FUNDAMENTAL
DOCUMENT OR THE SUBJECT MATTER THEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT,
(B) HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCH ACTION, SUIT OR PROCEEDING
INSTITUTED BY THE ADMINISTRATIVE AGENT OR A LENDER IN STATE COURT TO FEDERAL
COURT, AND (C) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR
PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY
OR OTHERWISE ARISE FROM THE SAME SUBJECT MATTER. HOLDINGS HEREBY CONSENTS
TO SERVICE OF PROCESS BY MAIL AT ITS ADDRESS TO WHICH NOTICES ARE TO BE GIVEN
PURSUANT TO SECTION 8 HEREOF. HOLDINGS AGREES THAT ITS SUBMISSION TO
JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS
BENEFIT OF THE ADMINISTRATIVE AGENT AND THE LENDERS. FINAL JUDGMENT AGAINST GCI
TRANSPORT IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON THE
JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE
FACT AND THE AMOUNT OF INDEBTEDNESS OR LIABILITY OF HOLDINGS THEREIN
DESCRIBED OR (Y) IN ANY OTHER MANNER PROVIDED BY, OR PURSUANT TO, THE LAWS OF
SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE AGENT OR A
LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS
AGAINST HOLDINGS OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE
UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE HOLDINGS OR SUCH ASSETS MAY
BE FOUND.
18. Entire Agreement. This Agreement represents the entire agreement of
the parties with regard to the subject matter hereof, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the day and year first above written.
GCI HOLDINGS, INC.
By:
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
as Administrative Agent
By:
Name:
Title:
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., its General
Partner
By:
Name:
Title:
By: Fiber Hold Co., Inc., its General
Partner
By:
Name:
Title:
<PAGE>
EXHIBIT N
FORM OF COMPLETION GUARANTY
COMPLETION GUARANTY dated as of , 1998 (the
"Guaranty") by GCI Holdings, Inc. (the "Guarantor") in favor of Credit Lyonnais
New York Branch, as Administrative Agent for the Lenders referred to herein.
Pursuant to that certain Credit and Security Agreement dated
as of January 27, 1998 among Alaska United Fiber System Partnership, a general
partnership organized under the laws of Alaska, as Borrower, the lenders
referred to therein (the "Lenders"), Credit Lyonnais New York Branch, as
Administrative Agent, NationsBank of Texas, N.A., as Syndication Agent, and TD
Securities (USA) Inc., as Documentation Agent, (as such agreement may be
amended, supplemented or otherwise modified, renewed or replaced from time to
time, the "Credit Agreement"), the Lenders have agreed to make Loans to the
Borrower on the terms, and subject to the conditions, set forth therein, which
Loans will be used to finance the development, construction, testing and
operation of the System, as defined therein.
The Guarantor owns all of the issued and outstanding stock in
GCI Transport Co., Inc., an Alaska corporation ("GCI Transport"), and GCI
Transport owns all of the issued and outstanding stock in each of Fiber Hold
Co., Inc., an Alaska corporation ("Fiber Hold") and GCI Fiber Co., Inc., an
Alaska corporation ("GCI Fiber"). Fiber Hold and GCI Fiber each own a fifty (50)
percent partnership interest in the Borrower.
The Guarantor also owns all of the issued and outstanding
stock in GCI Communication Corp., an Alaska corporation ("GCI Communication")
which, pursuant to that certain Lease Agreement dated as of January 27, 1998
between the Borrower, as Lessor, and GCI Communication, as Lessee, will be
leasing a major portion of the System capacity.
It is a condition precedent to the obligations of the Lenders
under the Credit Agreement to make the Loans to the Borrower, that the Guarantor
execute this Completion Guaranty in favor of the Administrative Agent for the
benefit of the Lenders.
Accordingly, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. Capitalized terms not otherwise defined in
this Guaranty shall have the meanings set forth for such terms in the Credit
Agreement, and such definitions are referred to and incorporated herein as if
fully set forth in this Guaranty.
2. Guaranty.
<PAGE>
(a) Completion Guaranty. The Guarantor hereby unconditionally
and irrevocably guarantees to the Administrative Agent and the Lenders that the
Project will be Completed (as defined in Schedule A hereto) not later than
January 1, 1999 (the "Outside Completion Date"). In furtherance of the
foregoing, and not in limitation thereof, the Guarantor agrees as follows:
(i) The Guarantor guarantees that all costs and
expenses of development, construction and testing of the
System and the timely Completion thereof (including, without
limitation, all costs and expenses of the Contractor under the
Construction Contract) shall be paid in full and when due. In
the event that such costs and expenses exceed the sum of the
Sponsor Equity Funds and funds available to the Borrower under
the Credit Agreement, the Guarantor shall pay in full and on
demand by notice from the Administrative Agent the entire
amount of such costs and expenses which are due and unpaid
either by direct payment or by advances of additional funds to
the Borrower;
(ii) The Guarantor guarantees that all costs and
expenses to fulfill the conditions precedent to the making of
the Loans as set forth in Article 4 of the Credit Agreement
shall be paid in full as and when due, including, without
limitation, all costs and expenses to fulfill legal conditions
or to obtain governmental approvals and the Permits for the
Project and all costs and expenses relating to the discharge,
release or termination of any Liens in respect of the System
other than Permitted Liens. In the event that such costs and
expenses exceed the sum of the Sponsor Equity Funds and funds
available to the Borrower under the Credit Agreement, the
Guarantor shall pay in full and on demand by notice from the
Administrative Agent the entire amount of such costs and
expenses which are due and unpaid either by direct payment or
by advances of additional funds to the Borrower;
(iii) The Guarantor further consents and agrees that
the Lenders or the Administrative Agent may take all actions
and incur any costs reasonably necessary or desirable in the
judgment of the Administrative Agent or the Lenders to achieve
Completion by the Outside Completion Date and to fulfill the
conditions precedent to the making of the Loans. In
furtherance thereof, the Administrative Agent or the Lenders
may employ any architects, engineers or other consultants on
construction or any attorneys, accountants or consultants in
relation to Permits, Liens or other matters and may contract
with any supplier or other Persons to achieve Completion by
the Outside Completion Date and to fulfill the conditions
precedent to the making of the Loans, and the Administrative
Agent or the Lenders may repair or replace any work, cure or
correct any damaged
2
<PAGE>
portions of the System and award any contracts or rebid
contracts in relation to any work required, in the reasonable
judgment of the Administrative Agent or the Lenders, to be
performed; and
(iv) The Guarantor consents and agrees (A) that in
the event that any cost or expense referred to in subsection
(i), (ii) or (iii) above shall not be paid by the Borrower or
paid directly or advanced to the Borrower by the Guarantor,
then the Administrative Agent and/or the Lenders may pay such
cost or expense directly, and the Guarantor shall on demand
reimburse the Administrative Agent and/or the Lenders for the
full amount of any such payments and (B) that the Guarantor
shall on demand reimburse the Administrative Agent and/or the
Lenders for the full amount of any reasonable costs or
expenses incurred by the Administrative Agent or the Lenders
pursuant to subsection (iv) above, in all cases together with
interest accrued thereon computed at the interest rate then
applicable to overdue amounts payable to the Lenders under
Section 2.8 of the Credit Agreement.
(b) Guaranty of Contractor's and GCI Communication's
Obligations.
(i) The Guarantor hereby unconditionally and
irrevocably guarantees to the Administrative Agent and the
Lenders the full and timely performance when due of all
covenants, terms and agreements to be performed and observed
by the Contractor under and in connection with the
Construction Contract and by GCI Communication under and in
connection with the GCI Construction Contract including,
without limitation, the work to be performed by the Contractor
and by GCI Communication, the Contractor's and GCI
Communication's warranty and indemnity obligations, and any
obligation of the Contractor or GCI Communication which
survives Completion (collectively, the "Performance
Obligations"). Whenever the Contractor or GCI Communication
shall be in default in the performance when due or observance
when due of any of the Performance Obligations or shall have
otherwise committed a breach of any of the Performance
Obligations, the Administrative Agent may give the Guarantor
notice of such default or breach, whereupon the Guarantor
shall promptly remedy the default or breach, or shall
promptly, upon the consent of the Administrative Agent and the
Lenders:
(x) complete the Construction Contract or the
GCI Construction Contract (as applicable)
in accordance with its terms and conditions
including, without limitation, the
Performance Obligations; or
3
<PAGE>
(y) cause the completion of the portion of the
System to be constructed by the Contractor
or GCI Communication (as applicable) in
accordance with the terms and conditions of
the Construction Contract or the GCI
Construction Contract by another contractor
reasonably acceptable to the Administrative
Agent and the Lenders. If the Guarantor
elects this alternative, the Guarantor
shall be responsible hereunder for such
other contractor's performance of the
Performance Obligations to the same extent
that it would have been responsible
hereunder for the Contractor's and GCI
Communication's performance of the
Performance Obligations.
(ii) The Guarantor hereby unconditionally and
irrevocably guarantees to the Administrative Agent and the
Lenders the punctual payment when due of all payment
obligations of the Contractor to the Borrower under the
Construction Contract and of GCI Communication to the Borrower
under the GCI Construction Contract, including, without
limitation, payment of warranty and indemnity claims, the
payment of damages for delay or non-performance, and the
payment of liquidated damages if the System fails to become
commercially operational by the Outside Completion Date
(collectively, the "Payment Obligations"). The Guarantor shall
pay in full and on demand by notice from the Administrative
Agent the entire amount of any Payment Obligations which are
due and unpaid either by direct payment or by advances of
additional funds to the Borrower.
(iii) In addition to the Guarantor's other
obligations hereunder, the Guarantor shall be required to
perform its obligations under this Guaranty upon the
occurrence of any of the following events: (A) the Contractor
or GCI Communication is adjudged as bankrupt or insolvent; (B)
the Contractor or GCI Communication makes a general assignment
for the benefit of creditors; (C) the Contractor or GCI
Communication dissolves or liquidates; (D) a trustee or
receiver is appointed for the Contractor or GCI Communication
or for any of their respective property; (E) the Contractor or
GCI Communication files a petition to take advantage of any
debtor's act or to reorganize under bankruptcy or similar
laws; or (F) the Contractor or GCI Communication fails to
obtain a vacation or stay of any involuntary bankruptcy
proceedings within thirty (30) days after the filing thereof.
4
<PAGE>
(c) Guaranty of GCI Communication's and GCI Cable's
Obligations under the GCI Fiber Exchange Agreement.
(i) The Guarantor hereby unconditionally and
irrevocably guarantees to the Administrative Agent and the
Lenders the full and timely Substantial Completion (as such
term is defined in the GCI Fiber Exchange Agreement) of that
portion of the System to be provided to the Borrower by GCI
Communication and GCI Cable, Inc., an Alaska corporation ("GCI
Cable") under and pursuant to the GCI Fiber Exchange Agreement
(collectively, the "Fiber Exchange Obligations"). Whenever GCI
Communication or GCI Cable shall be in default in the
performance when due or observance when due of any of the
Fiber Exchange Obligations or shall have otherwise committed a
breach of any of the Fiber Exchange Obligations, the
Administrative Agent may give the Guarantor notice of such
default or breach, whereupon the Guarantor shall promptly
remedy the default or breach, or shall promptly, upon the
consent of the Administrative Agent and the Lenders:
(x) complete the Fiber Exchange Obligations in
accordance with the terms and conditions of
the Fiber Exchange Agreement; or
(y) cause the Substantial Completion of the
portion of the System to be provided by GCI
Communication and/or GCI Cable in
accordance with the terms and conditions of
the GCI Fiber Exchange Agreement by another
Person reasonably acceptable to the
Administrative Agent and the Lenders. If
the Guarantor elects this alternative, the
Guarantor shall be responsible hereunder
for such other Person's performance of the
Fiber Exchange Obligations to the same
extent that it would have been responsible
hereunder for GCI Communication's or GCI
Cable's performance of the Fiber Exchange
Obligations.
(ii) In addition to the Guarantor's other obligations
hereunder, the Guarantor shall be required to perform its
obligations under this Guaranty upon the occurrence of any of
the following events: (A) GCI Communication or GCI Cable is
adjudged as bankrupt or insolvent; (B) GCI Communication or
GCI Cable makes a general assignment for the benefit of
creditors; (C) GCI Communication or GCI Cable dissolves or
liquidates; (D) a trustee or receiver is appointed for GCI
Communication or GCI Cable or for any of its property; (E) GCI
Communication or GCI
5
<PAGE>
Cable files a petition to take advantage of any debtor's act
or to reorganize under bankruptcy or similar laws; or (F) GCI
Communication or GCI Cable fails to obtain a vacation or stay
of any involuntary bankruptcy proceedings within thirty (30)
days after the filing thereof.
3. Subordination; Limitation on Payments. All payments by the
Guarantor to the Borrower pursuant to this Guaranty will be in the form of
subordinated loans which shall be subordinated to the Obligations in accordance
with the Subordination Agreement. Notwithstanding any other provision of this
Guaranty, the Guarantor shall not be required to make any loans or payments
hereunder in excess of the maximum amount permitted under (i) Sections 4.13 and
4.20 of the Indenture dated as of August 1, 1997 between GCI, Inc. and The Bank
of New York, as Trustee, as in effect on the date hereof, relating to the Senior
Notes due 2007 of GCI, Inc. and (ii) Section 7.09 of each of the Holdings Credit
Agreements as in effect on the date hereof, in each case so long as any of the
obligations under such agreements are not paid in full.
4. Obligations Absolute. The Guarantor agrees that this
Guaranty constitutes an irrevocable and unconditional obligation to perform
hereunder and to pay all amounts due and/or guaranteed hereunder on demand. The
Guarantor agrees to perform and make payment strictly in accordance with the
terms hereof regardless of any law, regulation or equitable principle now or
hereafter in effect which would modify or restrict either the Guarantor's
obligations hereunder or the rights of the Administrative Agent or the Lenders
with respect to this Guaranty, and the Guarantor confirms the absolute nature of
its obligations hereunder and waives defenses to the payment or performance by
the Guarantor hereunder as further provided in Section 5 of this Guaranty.
5. Waiver of Defenses
(a) Invalidity. The Guarantor agrees that its obligations
under this Guaranty shall be absolute (i) irrespective of any lack or defect in
relation to the legality, validity or enforceability of the obligations of the
Borrower or any other Person under the Credit Agreement or any of the other
Fundamental Documents (including, without limitation, the Project Agreements);
(ii) irrespective of any inaccuracy or breach of any representation or warranty
made by the Borrower or any other Person in the Credit Agreement or any of the
other Fundamental Documents or the inaccuracy or breach of any representation or
warranty made by the Guarantor in this Guaranty or any of the other Fundamental
Documents; and (iii) irrespective of the failure to file or to file properly any
financing statement or continuation statement (or any other failure to perfect
or record) with respect to any security interest under any of the Fundamental
Documents.
(b) Protest. The Guarantor hereby waives any protest,
diligence, demand or notice with respect to any breach by the Borrower or any
other Person of its obligations under the Credit Agreement or any of the other
Fundamental Documents except for demand by notice for payment or performance of
this Guaranty as provided in Section 2, and the Guarantor hereby
6
<PAGE>
waives the filing of any proof of claim or any diligence with respect to any
proceeding of bankruptcy, receivership or reorganization of the Borrower or any
other Person.
(c) Modification. The Guarantor agrees that its obligations
under this Guaranty shall be absolute (i) irrespective of any amendment, waiver
or consent of the Administrative Agent, the Lenders or any other Persons with
respect to the Credit Agreement or any of the other Fundamental Documents,
whether or not the Guarantor has received notice thereof or have given consent
thereto, including, without limitation, any change in the time, manner, place or
currency of payment or any change in the amount of any payment obligation
thereunder or any postponement or indulgence granted by the Administrative
Agent, the Lenders or any other Person with respect to any payment obligation or
the performance of any term of the Credit Agreement or any of the other
Fundamental Documents; and (ii) irrespective of any amendment, modification,
release or termination of any rights of the Administrative Agent, the Lenders or
any other Person pursuant to the Credit Agreement or any of the other
Fundamental Documents or any amendment, modification, release, or termination of
any rights or lien created pursuant to the Credit Agreement or any of the other
Fundamental Documents notwithstanding that any such amendment, modification,
release or termination may diminish the value of collateral against which the
Administrative Agent and/or the Lenders can realize value as an alternative to
demand for payment under this Guaranty.
(d) Collection. The Guarantor agrees that its obligations
under this Guaranty shall be absolute, and the Administrative Agent and/or the
Lenders shall have the right to demand and receive payment or performance of
such obligations without any prior attempt or undertaking to collect amounts
past due from the Borrower, the Contractor, GCI Communication, GCI Cable or any
other Person or to enforce performance by the Borrower, the Contractor, GCI
Communication, GCI Cable or any other Person and without any attempt or
undertaking to foreclose on or to realize value from collateral or foreclose
under any of the Fundamental Documents. The Guarantor further agrees that the
election of any remedy by the Administrative Agent or the Lenders shall not
preclude the Administrative Agent and/or the Lenders from the right to payment
under this Guaranty, and this Guaranty shall continue in full force and effect
and constitute the enforceable obligation of the Guarantor notwithstanding the
dismissal, compromise or abandonment of any proceeding against the Borrower, the
Contractor, GCI Communication, GCI Cable or any other Person or pursuant to any
of the Fundamental Documents. In the event that the Administrative Agent or the
Lenders do elect to undertake collection from the Borrower, the Contractor, GCI
Communication, GCI Cable or any other Person or do elect to enforce any of the
Fundamental Documents, any deficiency or remaining amount due following such
collection proceeding is guaranteed hereunder and shall be paid by the Guarantor
without limitation. If the Administrative Agent or the Lenders, by taking any
action or commencing any proceeding were to forfeit or release the rights
against the Guarantor because of the application of any laws or equitable
principles relating to the "election of remedies", then, to the fullest extent
permitted by law, the Guarantor hereby waives and consents to such action or
proceeding by the Administrative Agent or the Lenders constituting such
"election of remedies", and such waiver and consent shall be effective even if
that results in a full or partial loss by the Guarantor of any
7
<PAGE>
rights of subrogation, contribution or reimbursement which the Guarantor might
otherwise have had.
(e) Bankruptcy. The Guarantor agrees that its obligations
under this Guaranty shall be absolute notwithstanding the commencement of any
proceeding in bankruptcy, receivership or reorganization under the Bankruptcy
Code or any laws similar thereto with respect to the Borrower, the Contractor,
GCI Communication, GCI Cable or any other Person. The obligations of the
Guarantor hereunder shall not be modified or affected by reason of any election
by the Administrative Agent or the Lenders in any such bankruptcy proceeding of
the application of ss. 1111(b)(2) of the Bankruptcy Code or by the disallowance
under the Bankruptcy Code of all or any portion of the claims of the
Administrative Agent and/or the Lenders for payment or performance by the
Borrower of its obligations under the Credit Agreement or any of the other
Fundamental Documents or any other claims. The Guarantor consents and agrees
that the Administrative Agent and the Lenders shall be under no obligation to
marshall any assets or property of the Borrower or any other Person in order to
protect the interest of the Guarantor with respect to any claims, by subrogation
or otherwise, for reimbursement after payment by the Guarantor to the
Administrative Agent or the Lenders hereunder.
(f) Disclosure. The Guarantor agrees that its obligations
under this Guaranty shall be absolute irrespective of any change in the
financial condition or results of operations of the Borrower or any other Person
or any adverse changes affecting the Project. The Guarantor consents and agrees
that the Administrative Agent and the Lenders shall have no obligation to
provide information or to disclose any documents, reports or financial
statements relating to the Borrower, the Contractor, GCI Communication, GCI
Cable, any other Person or the Project. In the event that the Administrative
Agent or the Lenders furnish any such information or disclose any such reports
at any time to the Guarantor, the Administrative Agent or the Lenders shall be
under no obligation to give any other information or to disclose any other
reports at any other time.
(g) Defenses. The Guarantor hereby waives the benefit of any
statute of limitation applicable to the Borrower, the Contractor, GCI
Communication, GCI Cable or any other Person under the Credit Agreement or any
other Fundamental Document (which might absent such waiver affect the
Guarantor's obligations under this Guaranty), and the Guarantor, to the fullest
extent permitted by law, waives the benefit of any statute of limitation
applicable to the Guarantor with respect to enforcement of this Guaranty and any
legal or equitable defense to the enforcement of its obligations hereunder so
that its obligations hereunder shall not be affected or discharged by any act or
circumstance except for the payment and performance of all obligations
guaranteed hereunder.
8
<PAGE>
6. Taxes.
(a) All sums payable by the Guarantor hereunder shall be paid
in full, free and clear of any deduction or withholding. In the event that the
Guarantor is prohibited by any applicable law from making payments hereunder
free and clear of deduction or withholding, then the Guarantor shall pay such
additional amounts as may be necessary in order that the actual amount received
after deduction or withholding (and after deduction or withholding of any
additional taxes or charges due as a consequence of a payment of such additional
amount) shall equal the amount that would have been received if such deductions
or withholdings were not required.
(b) The Guarantor shall pay directly any present or future
stamp, court or documentary taxes or other charges due under applicable law with
respect to the execution and delivery of this Guaranty or the enforcement or
admission of this Guaranty in any court, except taxes or other charges imposed
on the Administrative Agent and/or the Lenders in respect of amounts received by
the Administrative Agent and/or the Lenders under this Guaranty by reason of a
tax imposed on the overall net income of the Administrative Agent or the
applicable Lender assessed in or by the jurisdiction of its incorporation or of
the office from which it has advanced or in which it has booked the loans made
to the Borrower under the Credit Agreement.
(c) The Guarantor shall indemnify and hold the Administrative
Agent and the Lenders harmless from all consequences arising from any delay or
failure by the Guarantor to pay any taxes or charges required in this Section to
be paid by the Guarantor. In the event that the Administrative Agent or the
Lenders pay or any Lender pays such taxes or other charges directly, together
with any penalties and expenses related thereto, irrespective of whether the
Administrative Agent or the Lenders have protested, defended, compromised or
settled the assessment of such taxes or charges or have pursued any applicable
procedure for protest or defense against such assessments, the Guarantor shall
reimburse the Administrative Agent and/or the Lenders upon demand for any such
taxes or other charges paid by any of them.
(d) If the Guarantor pays any tax or other charge as provided
herein, or makes any deduction or withholding from amounts paid hereunder, the
Guarantor shall forthwith deliver to the Administrative Agent or the Lenders (or
to the affected Lender), official tax receipts or other evidence acceptable to
the Administrative Agent or the Lenders establishing payment of such amounts.
7. Remedies.
(a) It is expressly understood and agreed by the Guarantor
that its failure to timely perform any of its obligations hereunder (time being
of the essence) will cause irreparable injury to the Administrative Agent and
the Lenders, that the Administrative Agent and the Lenders have no adequate
remedy at law in respect of such failure and, as a consequence, agrees that each
and every obligation hereunder shall be specifically enforceable against the
Guarantor,
9
<PAGE>
and the Guarantor hereby waives and agrees not to assert any defenses against an
action for specific performance of such obligations. The Guarantor further
acknowledges the impossibility of ascertaining the amount of damages which would
be suffered by the Administrative Agent and the Lenders by reason of any delay
in Completion and, consequently, agrees that, (i) in the event Completion is
delayed until after the Outside Completion Date, then in addition to paying all
costs of Completion and other amounts required to be paid pursuant to Section 2
above, the Guarantor shall pay directly into the Operating Account, as
liquidated damages and not as a penalty, an amount in cash for each day that
Completion is not attained (beyond the Outside Completion Date) equal to
$32,084.00 per day and (ii) subject to the provisions of Section 3 hereof, if
the Borrower does not fulfill all of its obligations under Section 5.21 of the
Credit Agreement in a timely manner, then on August 1, 1998, the Guarantor
hereby agrees to pay to the Administrative Agent (on behalf of the Lenders and
as the assignee of the Borrower), as liquidated damages, an amount equal to the
then outstanding Obligations.
(b) All sums payable by the Guarantor to the Borrower, the
Administrative Agent and/or the Lenders, as the case may be, pursuant to this
Guaranty, shall be made in immediately available funds in United States Dollars
and shall be paid within five (5) days after receipt of notice by the Guarantor
from the Administrative Agent or the Lenders demanding such payment.
(c) In addition, the Guarantor shall pay all costs, expenses
and damages incurred (including, without limitation, reasonable attorneys' fees
and expenses) in connection with the enforcement of the Guarantor's obligations
hereunder.
8. Survival. This Guaranty shall remain in full force and
effect until indefeasible payment in full and performance in full of the
Guarantor's obligations hereunder. The Guarantor agrees that this Guaranty shall
be automatically reinstated if and to the extent that for any reason any payment
by or on behalf of the Borrower, the Contractor, GCI Communication, GCI Cable or
any other Person is rescinded or must be otherwise restored, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise.
9. No Waiver; Cumulative Rights.
No failure on the part of the Administrative Agent or the
Lenders to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The rights and remedies herein provided are cumulative and
not alternative or exclusive, and such rights and remedies shall exist in
addition to all other rights and remedies of the Administrative Agent and the
Lenders in relation to this Guaranty, the Credit Agreement and the other
Fundamental Documents in accordance with the provisions thereof and applicable
law. Failure by the Administrative Agent or the Lenders at any time or times
hereafter to require strict performance by the Borrower, the Guarantor or any
other Person of any of the terms and conditions of this Guaranty or of the
Credit Agreement or of any other Fundamental
10
<PAGE>
Document shall not waive, release or diminish any right of the Administrative
Agent or the Lenders at any other time to demand strict performance thereof, and
such right shall not be deemed to have been waived or released by any act,
course of conduct or knowledge of the Administrative Agent or the Lenders, their
respective agents, officers or employees, unless such waiver or release is
contained in an instrument in writing signed by the Administrative Agent, the
Required Lenders and/or the Lenders (as applicable). No waiver by the
Administrative Agent or the Lenders of any default shall operate as a waiver of
any other default or the same default on a future occasion. Any determination by
a court of competent jurisdiction of the amount of the obligations of the
Guarantor hereunder shall be conclusive and binding on the Guarantor
irrespective of whether the Guarantor was a party to the suit or action in which
such determination was made.
10. Amendments. This Guaranty may be amended, supplemented,
waived or modified only by an instrument in writing signed by the Guarantor and
consented to by the Administrative Agent and the Lenders.
11. Counterparts. This Guaranty may be signed in any number of
counterparts. Any single counterpart or set of counterparts signed, in either
case, by the Guarantor and the Administrative Agent shall constitute a full and
original Guaranty for all purposes.
12. Assignments. This Guaranty shall be binding upon the
Guarantor and enforceable by the Administrative Agent and the Lenders as stated
herein. The Administrative Agent or the Lenders or each of them may assign,
transfer or participate all or any part of its interest in this Guaranty to any
other party at any time. The Guarantor shall have no right to assign or transfer
its rights or obligations under this Guaranty without the prior written consent
of the Administrative Agent and the Lenders.
13. Notices. Any notice required or permitted to be given
hereunder (each such notice being referred to herein as a "Notice") shall be in
writing and shall be (i) personally delivered, (ii) transmitted by postage
prepaid mail, return receipt requested, or (iii) transmitted by telex,
telecopier or facsimile, as elected by the party giving such Notice, as follows:
To the Guarantor:
GCI Holdings, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn.:Chief Financial Officer
Facsimile No.(907) 265-5676
11
<PAGE>
To the Administrative Agent:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
Attn: Project Finance Group
Facsimile No.: (212) 261-3421
All Notices and other communications shall be effective on (i)
the date of receipt if personally delivered, (ii) on the tenth Business Day
after mailing if mailed and (iii) on transmission with confirmed answerback if
transmitted by telex, telecopier or facsimile. Any party may change its address
for the purposes hereof by notice to the parties.
14. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS. THE
GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE COURTS OF
THE STATE OF NEW YORK AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION
OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS GUARANTY, THE SUBJECT
MATTER HEREOF, THE CREDIT AGREEMENT OR ANY OTHER FUNDAMENTAL DOCUMENT OR THE
SUBJECT MATTER THEREOF BROUGHT BY THE ADMINISTRATIVE AGENT OR A LENDER OR ANY OF
THEIR SUCCESSORS OR ASSIGNS IN EITHER OF THE ABOVE-REFERENCED FORUMS AT THE SOLE
OPTION OF THE ADMINISTRATIVE AGENT OR A LENDER. THE GUARANTOR TO THE EXTENT
PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY
OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE
JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE
FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER OR THAT THIS GUARANTY, THE SUBJECT MATTER HEREOF, THE CREDIT AGREEMENT
OR ANY OTHER FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF MAY NOT BE
ENFORCED IN OR BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCH
ACTION, SUIT OR PROCEEDING INSTITUTED BY THE ADMINISTRATIVE AGENT OR A LENDER IN
STATE COURT TO FEDERAL COURT, AND (C) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY
SUCH ACTION, SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT
COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE ARISE FROM THE SAME SUBJECT
12
<PAGE>
MATTER. THE GUARANTOR HEREBY CONSENTS TO SERVICE OF PROCESS BY MAIL AT ITS
ADDRESS TO WHICH NOTICES ARE TO BE GIVEN PURSUANT TO SECTION 13 HEREOF. THE
GUARANTOR AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF
PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE ADMINISTRATIVE AGENT AND
THE LENDERS. FINAL JUDGMENT AGAINST THE GUARANTOR IN ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION
(X) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF
WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF INDEBTEDNESS OR
LIABILITY OF THE GUARANTOR THEREIN DESCRIBED OR (Y) IN ANY OTHER MANNER PROVIDED
BY, OR PURSUANT TO, THE LAWS OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT
THE ADMINISTRATIVE AGENT OR A LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE
OTHER JUDICIAL PROCEEDINGS AGAINST THE GUARANTOR OR ANY OF ITS ASSETS IN ANY
STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE THE
GUARANTOR OR SUCH ASSETS MAY BE FOUND.
16. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, THE GUARANTOR HEREBY WAIVES, AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS
GUARANTY, THE SUBJECT MATTER HEREOF, THE CREDIT AGREEMENT OR ANY OTHER
FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE
GUARANTOR ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE ADMINISTRATIVE AGENT
THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH
THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE RELIED, ARE RELYING AND WILL RELY
IN ENTERING INTO THIS GUARANTY, THE CREDIT AGREEMENT AND ANY OTHER FUNDAMENTAL
DOCUMENT. THE ADMINISTRATIVE AGENT OR ANY LENDER MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 16 WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE GUARANTOR TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
13
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be executed by its duly authorized officer or other representative as of the
date first set forth above.
GUARANTOR:
GCI HOLDINGS, INC.
By:
Name:
Title:
Accepted and Agreed:
CREDIT LYONNAIS NEW YORK BRANCH,
as Administrative Agent
By:
Name:
Title:
<PAGE>
SCHEDULE A
DEFINITIONS OF COMPLETION AND COMPLETED
"Completion" shall mean delivery by the Independent Engineer
of a certificate in form and substance satisfactory to the Administrative Agent
certifying that:
a. the System has been fully constructed and equipped in
strict conformity with the Plans and Specifications;
b. the System is fully and properly interconnected to a local
loop telephone system at each point of presence within Alaska and to a
long distance system at the System's Seattle, Washington terminus;
c. the System has satisfactorily completed the testing program
set forth in Article 9 of the Construction Contract, Exhibit A to the
Kanas Agreement, Exhibit A to the GCI Fiber Exchange Agreement and
Schedule II to the GCI Construction Contract (with all matters stated
therein as being subject to the agreement of the Borrower also having
been approved by the Independent Engineer);
d. no known defective or uncompleted work exists that can
reasonably be expected to result in a significant degradation of the
performance of the System which has not been compensated for by the
warranty of, or the payment of liquidated damages by, the Contractor as
contemplated in the Construction Contract or by GCI Communication as
contemplated in the GCI Construction Contract;
e. the System as constructed complies in all material respects
with all requirements of Applicable Law and with all of the Permits,
all of which have been obtained and are in full force and effect; and
f. all acceptance tests set forth in any Capacity Agreement
then in existence have been met.
"Completed" shall mean that Completion has been achieved.
<PAGE>
EXHIBIT O
FORM OF GCI LEASE CONTRACT
LEASE AGREEMENT
Dated as of January 27, 1998
between
Alaska United Fiber System Partnership, as Lessor
and
GCI Communication Corp., as Lessee
As set forth in Section 21 hereof, Lessor has assigned as collateral
security to the Agent (as defined herein), its right, title and
interest in and to this Lease Agreement. To the extent that this Lease
Agreement constitutes chattel paper (as such term is defined in the
Uniform Commercial Code), no security interest in this Lease Agreement
may be created by the transfer or possession of any counterpart hereof
other than the counterpart marked as the "Original" and containing the
receipt therefor executed by the Agent on or immediately following the
signature page hereof.
<PAGE>
LEASE AGREEMENT
LEASE AGREEMENT dated as of January 27, 1998 between Alaska
United Fiber System Partnership, a general partnership (herein called "Lessor"),
and GCI Communication Corp., an Alaska corporation (herein called "Lessee").
The parties hereto agree as follows:
SECTION 1. DEFINITIONS.
For all purposes of this Lease, capitalized terms shall have
the respective meanings assigned thereto in Exhibit A hereto. The words
"hereto", "hereof", "hereunder" and words of similar import shall refer to this
Lease (including all annexes and schedules hereto), as the same may be amended,
modified or supplemented from time to time in accordance with the terms hereof.
SECTION 2. LEASE OF FACILITY.
Lessor hereby agrees to lease the Facility to Lessee and
Lessee hereby agrees to lease the Facility from Lessor commencing upon the
Completion Date and ending upon expiration of the Term as evidenced by the
execution and delivery by Lessor and Lessee of this Lease.
SECTION 3. TERM; RENT; PAYMENTS, ETC.
(a) Lease Term. This Lease is effective as of the date first
written above. Lessee shall have the right to commence using the Facility, and
Lessee shall be obligated to commence paying Rent, on the Completion Date. The
term of this Lease (the "Term") shall commence on the date first written above
and shall continue for a period ending on the day preceding the eleventh (11th)
anniversary of the Completion Date subject to renewal at the option of the
Lessee in accordance with Section 10 hereof.
(b) Rent. Commencing on the Completion Date, and on the first
(1st) day of every month throughout the Term (the "Rent Payment Date"), Lessee
shall pay rental ("Rent") for the Facility at the rate of Three Million Nine
Hundred Thousand and No/100 Dollars ($3,900,000.00) per year. Each monthly
payment of Rent shall be in the amount of one-twelfth (1/12) of the aforesaid
annual rental rate. If the Completion Date is not the first (1st) day of the
month, the Rent payment due on the Completion Date shall be prorated, as shall
the payment for the last partial month of the Term.
(c) Payments; Calculations. Subject to the provisions of
Section 21 hereof, all Rent payable to Lessor hereunder shall be paid to Lessor
at the office of Credit Lyonnais New York Branch, 1301 Avenue of the Americas,
New York, New York 10019 for deposit in Account
<PAGE>
No. 0139787000100, entitled "Alaska United Disbursement Account" in the name of
the Administrative Agent (or to such other Person or at such other address as
Lessor may from time to time specify in writing to Lessee) in lawful money of
the United States of America and in immediately available funds, on or before
1:00 p.m., New York, New York time, on the due date of such payment. Any payment
hereunder which is due on a date which is not a Business Day shall be paid on
the next succeeding Business Day together with an amount equal to interest on
such payment at the Past Due Rate for the period from the due date of such
payment to the date of payment; provided, however, that if such next succeeding
Business Day shall be in a different calendar year, then such payment shall be
made on the next preceding Business Day. All interest, fees and other amounts
provided for under this Lease which are to be calculated on an annual basis
shall be computed on the basis of a 360-day year for the actual number of days
elapsed (including the first day but excluding the last day).
(d) Net Lease; No Set-Off, Counterclaims, etc. This Lease is a
net lease, and Lessee's obligation to pay all Rent hereunder is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, (i) any abatement, reduction, set-off, defense,
counterclaim or recoupment whatsoever or any right to any thereof (including,
without limitation, abatements, reductions, set-offs, defenses, counterclaims
and recoupments for or on account of any past, present or future claims which
Lessee may have against Lessor, the Agent or other Person for any reason
whatsoever), (ii) any insolvency, bankruptcy, reorganization or similar
proceedings by or against Lessee, or (iii) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing; nor, except as
otherwise expressly provided herein, shall this Lease terminate, nor shall any
of the obligations of Lessee to pay Rent hereunder be otherwise affected, by
reason of any defect in the title to, or any defect in or lack or fitness for
use of, or any damage to, or loss of, or loss of the use of, or destruction or
theft of, all or any part of the Facility or all or any part of the Right of Way
from any cause whatsoever, the prohibition of the use or possession by Lessee
of, or any ouster or dispossession by paramount title or otherwise of, all or
any part of the Facility or the Right of Way, the interference with such use or
possession by any governmental agency or authority or other Person, or the
invalidity or unenforceability or the disaffirmance of this Lease, any of the
other Project Agreements or any agreement related thereto, or by reason of any
failure by Lessor or any other Person to perform any of its obligations herein
or therein contained, or by reason of any Liens on all or any part of the
Facility or the Right of Way, or for any other cause whether similar or
dissimilar to the foregoing, it being the intention of the parties hereto that
all Rent payable by Lessee hereunder shall continue to be payable in all events
in the manner and at the times herein provided unless the obligation to pay the
same shall be terminated pursuant to the express provisions of this Lease. In
that connection, Lessee hereby waives, to the extent permitted by Applicable
Law, any and all rights which it may now have or which may at any time hereafter
be conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Lease except in accordance with the express terms hereof and
agrees that if, for any reason whatsoever, this Lease shall be terminated in
whole or in part by operation of law or otherwise except as specifically
provided herein, Lessee will nonetheless pay to Lessor (or to whomsoever shall
be entitled thereto as expressly provided in accordance with Section 21 below)
an aggregate
-2-
<PAGE>
amount equal to each Rent payment at the time such payment would have become due
and payable in accordance with the terms hereof had such termination not
occurred. Each payment of Rent made by Lessee shall be final and Lessee will not
seek or have any right to recover all or any part of such payment from Lessor,
the Agent or any Lender for any reason whatsoever.
SECTION 4. INSPECTION.
During the Term, the Lessor or the Agent and their respective
authorized representatives may inspect, subject to Lessee's normal requirements
regarding health, safety and security, the Facility and the Right of Way and the
books and records of Lessee with respect thereto, and make copies and extracts
therefrom, and may discuss Lessee's affairs, finances and accounts relating to
the Facility and the Right of Way with its officers, and Lessee shall furnish to
the Lessor and the Agent statements accurate in all material respects regarding
the condition and state of repair of the Facility and the Right of Way, all upon
such reasonable notice and at such reasonable times during normal business hours
and as often as may be reasonably requested and all at the expense of the Lessor
(or at the expense of Lessee if a Lease Event of Default has occurred and is
continuing). Lessor and the Agent shall have no duty to make any inspection or
inquiry and shall not incur any liability or obligation by reason of not making
any such inspection or inquiry.
SECTION 5. DISCLAIMER OF WARRANTIES.
THE LESSEE TAKES THE FACILITY AND THE PROPERTY RIGHTS "AS-IS",
"WHERE-IS". NEITHER LESSOR NOR THE AGENT MAKES OR SHALL BE DEEMED TO HAVE MADE
(1) ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE DESIGN
OR CONDITION OF, OR AS TO THE QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP
IN, OR AS TO THE SUITABILITY FOR ANY PURPOSE OF, THE FACILITY OR ANY PART
THEREOF OR AS TO THE ABILITY OF THE FACILITY TO PERFORM ANY FUNCTION, OR (2) ANY
WARRANTY OF MERCHANTABILITY OR FITNESS OF THE FACILITY OR ANY PART THEREOF FOR
ANY PARTICULAR PURPOSE OR AS TO THE TITLE TO OR LESSOR'S INTEREST IN THE
FACILITY OR ANY PART THEREOF OR AS TO ANY OTHER MATTER RELATING TO THE FACILITY
OR ANY PART THEREOF, IT BEING AGREED THAT ALL SUCH RISKS, AS BETWEEN LESSOR AND
THE AGENT, ON THE ONE HAND, AND LESSEE ON THE OTHER HAND, ARE TO BE BORNE BY
LESSEE, AND THE BENEFITS OF ANY AND ALL IMPLIED WARRANTIES AND REPRESENTATIONS
OF LESSOR ARE HEREBY WAIVED BY LESSEE.
LESSEE CONFIRMS THAT IT HAS SELECTED THE FACILITY AND EACH
PART THEREOF ON THE BASIS OF ITS OWN JUDGMENT AND EXPRESSLY DISCLAIMS RELIANCE
UPON ANY STATEMENTS, REPRESENTATIONS OR WARRANTIES MADE BY LESSOR OR THE AGENT,
AND LESSEE ACKNOWLEDGES
-3-
<PAGE>
THAT NEITHER LESSOR NOR THE AGENT IS A MANUFACTURER OR VENDOR OF ANY PART OF THE
FACILITY.
SECTION 6. MAINTENANCE; OPERATION; COMPLIANCE WITH LAWS.
Lessee will use the Facility in a careful and proper manner in
the conduct of its lawful business.
Lessee shall not in its use of the Facility or in its
operation of any equipment supplied by Lessee and associated with the Facility
interfere with or impair the service over the whole or any section of the System
or cause any damage to any equipment or facilities of Lessor or any other Person
or create hazards to the public or the servants, agents, or employees of Lessor
or of any other Person. Lessee shall undertake in any tariff, contract,
agreement or other arrangement whatsoever concerning or arising in connection
with the use of the Facility by its customers, to extend to and make binding
upon its customers the provisions of this Section.
During the Term, Lessee shall, at its sole cost and expense,
conform to and comply or cause compliance with:
(i) all Applicable Law with respect to the use of the
Facility and each part thereof except (i) to the extent valid variances,
waivers, exemptions or similar exceptions that will be available to the Lessor
on the termination of this Lease or on its exercise of remedies under Section 15
hereof have been obtained therefrom; (ii) where noncompliance would (A) have no
material adverse effect on the ownership, use, operation or maintenance of the
Facility or on the business, operations, property or financial or other
condition of Lessee, and (B) not make Lessor or Agent subject to any criminal
liability or penalty or, unless indemnified or bonded by Lessee in manner and
form satisfactory to Lessor or Agent, any civil liability or any other penalty,
fine or cost of any kind whatsoever; and (iii) for violations of any such law or
requirement the validity of which is being contested by Lessee in good faith by
appropriate proceedings diligently prosecuted and violations of any such law or
requirement (other than violations involving criminal penalties with respect to
Lessor or the Agent) which Lessee is diligently proceeding to correct; provided,
however, that no violation referred to in this clause (iii) shall involve any
danger of the foreclosure, sale, forfeiture or loss of any part of the Facility
or of the impairment of the operation of the Facility or of the impairment of
Lessee's ability to perform its obligations hereunder or under any of the other
Project Agreements; and
(ii) the terms and conditions of all insurance
policies in effect with respect to the Facility or any part thereof which are
required to be maintained under Section 19 hereof.
-4-
<PAGE>
SECTION 7. EVENT OF LOSS, ETC.
(a) Event of Loss. If an Event of Loss shall occur during the
Term, Lessee shall promptly give Lessor and the Agent written notice thereof and
Lessee shall pay to Lessor, on the Rent Payment Date next succeeding the date on
which such Event of Loss occurred the sum of (i) the Stipulated Loss Value
determined as of such Rent Payment Date, and (ii) all Rent due on such date;
provided, however, that (x) for purposes of this Section 7(a), an Event of Loss
which occurs 20 or fewer Business Days prior to a Rent Payment Date shall be
deemed to have occurred on such Rent Payment Date and (y) if an Event of Loss
occurs on the last scheduled day of the Term or 20 or fewer Business Days prior
to the last scheduled day of the Term, Lessee shall make all payments required
pursuant to clauses (i) and (ii) of this Section 7(a) on the last scheduled day
of the Term. Lessee shall continue to pay Rent when due from and including the
date on which the Event of Loss occurs to and including the date on which it
pays Stipulated Loss Value. Upon payment of all Rent payable hereunder to Lessor
to and including the date on which Lessee pays Stipulated Loss Value and of all
other amounts then due and owing by Lessee hereunder, the Term shall end and
Lessor shall transfer title to the Facility to Lessee on an "as-is, where-is"
basis, without any representation or warranty, express or implied, by Lessor and
without recourse to Lessor.
(b) Application of Other Payments with Respect to Event of
Loss. Any payments received at any time by Lessor, Lessee or the Agent from any
Governmental Authority, insurer (other than payments of liability insurance and
other than payments on account of insurance carried by the Agent pursuant to
Section 9(f) hereof) or other Person with respect to an Event of Loss shall be
applied in reduction of Lessee's obligation to pay the Stipulated Loss Value and
all amounts of Rent payable pursuant to Section 7(a) hereof to the extent not
already paid by Lessee, and, after the Stipulated Loss Value and such other
amounts shall have been paid by Lessee, the balance, if any, remaining shall, be
paid to, or retained by, the Lessee and the Lessor as their interests may
appear.
(c) Application of Payments Not Relating to Event of Loss. Any
payments received at any time by Lessor or Lessee from any Governmental
Authority, insurer or other Person with respect to any condemnation,
confiscation or seizure of, or requisition of title to or use of, or theft of,
or loss of use of, or damage to, any part of the Facility not constituting an
Event of Loss or a Lease Event of Default shall (i) if such payments shall be in
the aggregate in excess of $50,000, be paid over to or retained by Lessor, and
(ii) if such payments shall be in the aggregate of $50,000 or less, be paid over
to or retained by Lessee, unless a Lease Default or Lease Event of Default shall
have occurred and be continuing, in which event all such payments under (i) and
(ii) of this subsection shall be paid over to or retained by the Lessor. In
either case, such payments shall be applied directly in payment of repairs to,
or for replacement of, such property in accordance with the provisions of
Section 6 hereof if the cost of such repairs or replacement has not already been
paid by Lessee, and any balance remaining after compliance with the provisions
of said Section 6 shall, unless a Lease Default or Lease Event of Default shall
-5-
<PAGE>
have occurred and be continuing, be paid over to, or retained by, Lessee and
Lessor as their interests may appear.
(d) Disposition of Payments Not Payable to Lessee. Any amounts
that would be payable to Lessee, or which Lessee would be entitled to retain,
pursuant to this Section 7 but which are not so payable or retainable solely
because a Lease Default or Lease Event of Default shall have occurred and be
continuing, shall be retained by, or paid to, Lessor and held as security for
the obligations of Lessee under this Lease, and shall be paid over to Lessee
when no Lease Default or Lease Event of Default shall be continuing unless this
Lease shall have been declared to be in default pursuant to Section 15 hereof,
in which case such amounts shall be retained by Lessor and applied to reduce the
obligations of Lessee under this Lease.
SECTION 8. LIMITATION ON CLAIMS.
Lessee shall have no claim, demand, action or suit against
Lessor, Agent, any Lender or any of their respective servants, agents or
employees for any injury, including injury resulting in death or loss of or
damage to any property, suffered or sustained by it or its servants, agents or
employees or by any other Person which directly or indirectly results from,
arises out of or is, in any way, connected with the use of the Facility by
Lessee, except to the extent that such injury, loss or damage, including injury
resulting in death or loss of or damage to property, is due to the gross
negligence of the Person causing such injury.
SECTION 9. INSURANCE
(a) Insurance Against Loss or Damage to Facility. Each of
Lessor and Lessee, at its sole cost and expense, shall maintain throughout the
Term and thereafter until the Facility is returned to Lessor pursuant to Section
12(a) hereof, physical damage insurance with respect to their respective
interests in the Facility with insurers rated "A-" or better and with a
financial rating IX or better, by A.M. Best & Co. (or other insurers reasonably
satisfactory to Lessor and the Agent), such insurance to be all-risk physical
damage insurance, including earthquake and flood coverage, in amounts sufficient
to prevent Lessee, Lessor or the Agent from being a co-insurer of any partial
loss under the applicable policies, in such scope as shall be reasonably
acceptable to Lessee, Lessor and the Agent and in such form, amounts and against
such insurable hazards, casualties, risks and damages as shall be consistent
with large, creditworthy corporate insureds' practices; provided, however, that
in any event the amount of such insurance shall not at any time be less than the
then applicable Stipulated Loss Value of the Facility and provided further that
Lessor and Lessee shall indemnify and hold each other harmless from any loss or
damage caused to each of their interests by the other to the extent of the
insurance coverage required to be maintained by such indemnifyng party.
Notwithstanding the provisions of this paragraph Lessee may self insure, by
means of deductibles or otherwise, against the risks referred to in this
paragraph in an annual aggregate (or, if such policies containing aggregate
annual deductibles are not commercially available on reasonable terms, per
occurrence) amount
-6-
<PAGE>
not in excess of $250,000 for all perils except earthquake and flood which shall
be subject to a maximum deductible of 5% of values at risk at the time of loss.
(b) Insurance Against Public Liability and Property Damage.
Lessee, at its sole cost and expense, shall maintain throughout the Term and
thereafter until the Facility is returned to Lessor pursuant to Section 12(a)
hereof, comprehensive general liability insurance against claims for bodily
injury or death or property damage arising out of the use, possession, operation
or condition of the Facility in such scope as shall be reasonably acceptable to
the Lessor and the Agent and in such form, such amounts (but in any event at
least $5,000,000) and against such risks as shall be consistent with large,
creditworthy corporate insureds' practices and with insurers rated "A-" or
better and with a financial rating of IX or better by A.M. Best & Co. (or other
insurer reasonably satisfactory to Lessor and the Agent). Notwithstanding the
provisions of this paragraph the Lessee may self insure, by means of deductibles
or otherwise, against the risks referred to in this paragraph in an annual
aggregate (or, if such policies containing aggregate annual deductibles are not
commercially available on reasonable terms, per occurrence) amount not in excess
of $100,000.
(c) Workers' Compensation Coverage. Lessee, at its sole cost
and expense, shall maintain throughout the Term and thereafter until the
Facility is returned to Lessor pursuant to Section 12(a) hereof, workers'
compensation coverage complying with the provisions of all Applicable Law with
respect thereto and employer's liability insurance in a minimum amount of
$5,000,000 per loss. Notwithstanding the provisions of this paragraph Lessee may
self insure, by means of deductibles or otherwise, against the risks referred to
in this paragraph in an annual aggregate (or, if such policies containing
aggregate annual deductibles are not commercially available on reasonable terms,
per occurrence) amount not in excess of $100,000.
(d) Provisions of Policies. Lessee will use all reasonable
efforts to cause all insurance policies referred to in Sections 9(a) and 9(b)
hereof to (i) in the case of the insurance referred to in Section 9(a) hereof,
be payable to Lessor and the Agent, as their respective interests may appear;
provided, however, that until the insurance company has received written notice
that the Credit Agreement has been satisfied and discharged all such insurance
proceeds shall be payable to the Agent, provided, further, however, that payment
of less than $250,000 in respect of any single casualty may be paid directly to
Lessee and Lessor as their interests may appear; (ii) in the case of the
insurance referred to in Section 9(b) hereof, name Lessor and the Agent as
additional insureds and be payable to the Person or Persons to whom the
liability covered by such insurance has been incurred; (iii) provide that no
cancellation, termination or material change in such insurance shall be
effective until at least 30 days after receipt by Lessor and the Agent of
written notice thereof; (iv) insure the interests of Lessor and the Agent
regardless of any breach or violation by Lessee or any other Person of any
warranties, declarations or conditions contained in such insurance policies or
any action or inaction of Lessee or any other interests insured thereunder; (v)
provide that neither Lessor nor the Agent shall be liable for the payment of any
premiums, commissions, assessments or calls in connection with such insurance;
(vi) contain a waiver of any rights of subrogation of the insurer against Lessor
or the Agent; and
-7-
<PAGE>
(vii) provide that all provisions thereof, except the limits of liability (which
shall be applicable to all insureds as a group) and liability for premiums
(which, except as provided in Section 9(a), shall be solely a liability of
Lessee), shall operate in the same manner as if there were a separate policy
covering each such insured, without right of contribution from any other
insurance which may be carried by an any insured.
(e) Delivery of Insurance Certificates, etc. Lessee will
deliver to Lessor and the Agent, on or prior to the Completion Date and on or
prior to each expiration date thereof certificates, executed by the insurer or
its duly authorized agent, of all insurance policies that Lessee is required to
maintain pursuant to this Section 9. In the event policies of the Lessee are
utilized by the Lessor to satisfy insurance requirements of Section 5.5 of the
Credit Agreement, copies of such policies shall be supplied to the Lessor and
the Agent upon request.
(f) Insurance by Lessor or Agent. Nothing in this Section 9
shall prohibit Lessor or the Agent from maintaining, at its expense, additional
insurance for its own account with respect to the Facility.
(g) General. The inclusion of insurance requirements in this
Section 9 does not restrict the liability of the Lessee under the terms of this
Agreement.
SECTION 10. RENEWAL OPTION.
Lessee may at its option renew the lease of the Facility
hereunder (i) at the end of the Primary Term or Fixed Rate Renewal Term for a
Renewal Term or Terms that, in the aggregate, consist of not more than three (3)
three year renewal periods (each such three year term being herein called a
"Fixed Rate Renewal Term"), ending not later than December 31, 2024 and (ii) at
the end of the Primary Term, any Fixed Rate Renewal Term or any Fair Market
Value Renewal Term, for successive Renewal Terms (each such term being herein
called a "Fair Market Value Renewal Term") of no less than two years; provided,
however, that (i) Lessee shall give Lessor notice of each such renewal, which
shall be irrevocable, at least twelve months and no more than fifteen months
prior to the expiration of, as the case may be, the Primary Term, any of the
Fixed Rate Renewal Terms or any of the Fair Market Value Renewal Terms, (ii)
such renewal shall not be prohibited by any Applicable Law, (iii) no Lease Event
of Default shall have occurred and be continuing on the day preceding the first
day of such Renewal Term and (iv) the final Fair Market Renewal Term in the Term
shall end on or before December 31, 2024. All of the provisions of this Lease
shall be applicable during such Renewal Term, except that (x) the Rent payable
on each Rent Payment Date during each Fixed Rate Renewal Term shall be in an
amount determined by multiplying .50 by the amount of Rent payable on each Rent
Payment Date during the Primary Term, and (y) the Rent for each Fair Market
Value Renewal Term shall be the Fair Market Rental Value of the Facility, as of
the first day of such Fair Market Value Renewal Term, for a period equal to such
Fair Market Value Renewal Term, and shall be payable in equal quarterly
installments, in arrears, on each Rent Payment Date during such Fair Market
Value Renewal Term.
-8-
<PAGE>
SECTION 11. LOCATION; POSSESSION; OPERATION; LIENS; QUIET ENJOYMENT; ETC.
(a) Location. Lessee will not remove, or permit to be removed,
any part of the Facility from the Right of Way without the prior written consent
of Lessor and the Agent.
(b) Assignment; Sublease, Possession. Lessee shall not,
without the prior consent of Lessor or the Agent, assign or sublease all or any
part of the Facility to any Person, unless such sublease shall be with a Person
who is not one of Lessor's target customers and shall be expressly subject and
subordinate to this Lease and to the rights of the Lessor and the Agent
hereunder. In no event shall any such sublease impair or diminish any of the
rights of Lessor and the Agent or the obligations of Lessee under this Lease or
of the Guarantor under the Lease Guaranty Agreement, which rights and
obligations shall continue in full force and effect as though no such assignment
or sublease had been effected, it being understood that the obligations of
Lessee hereunder shall continue in full force and effect as the obligations of a
principal and not of a guarantor or surety.
(c) Operation. No provision hereof shall restrict the Lessee's
rights to enter into contracts for the sale of capacity of the Facility in the
ordinary course of business or for services based upon use of the Facility so
long as such contracts are not binding upon the Lessor and do not encumber the
Facility and are not with Persons who are among Lessor's target customers.
(d) Restriction on Liens. Lessee will not directly or
indirectly create, incur, assume or suffer to exist any Lien on or with respect
to the Facility or the Right of Way, or any part thereof, title thereto or any
interest therein or in this Lease except the following (herein referred to as
"Permitted Liens"): (i) the respective rights and interests of Lessee, Lessor
and the Agent as provided in the Project Agreements, (ii) Liens for taxes either
not yet due or being contested by Lessee in good faith by appropriate
proceedings and as to which adequate reserves are being maintained in accordance
with generally accepted accounting principles, so long as such proceedings do
not involve any danger of the sale, forfeiture or loss of any part of the
Facility or the Right of Way, or any interest therein or interfere with the
payment of Rent, (iii) materialmen's, mechanics', workmen's, repairmen's or
other like Liens arising in the ordinary course of business for amounts the
payment of which is either not yet delinquent or is bonded, and (iv) Liens
arising out of judgments or awards against Lessee with respect to which at the
time an appeal or proceeding for review is being diligently prosecuted in good
faith and there shall have been secured a stay of execution pending such appeal
or proceeding for review and for the payment of which adequate reserves have
been provided.
(e) Quiet Enjoyment. So long as no Lease Event of Default
shall have occurred and be continuing, Lessor shall not take any action that
interferes with the peaceful and quiet enjoyment and the exclusive possession
and control of the Facility by Lessee.
-9-
<PAGE>
SECTION 12. RETURN OF FACILITY; PURCHASE OPTION.
(a) Return. Upon expiration of the Term (unless the Term shall
end pursuant to Section 7(a) hereof or pursuant to Section 12(b) hereof upon
Lessee's exercise of its purchase option), Lessee shall comply with its
obligations under Section 6(a) hereof and return the Facility to Lessor by
surrendering the same into the possession of Lessor at its then location on the
Right of Way. At the time of such return, the Facility and each part thereof
shall be free and clear of all Liens (other than Lessor Liens) and shall be in
the condition and repair required to be maintained during the Term under Section
6 hereof. At the time of such return, the Facility shall not be deemed to have
been returned to Lessor until (i) it is surrendered into the possession of
Lessor and (ii) the provisions of the preceding sentence shall have been
complied with and Lessee shall have given Lessor written notice of such fact,
and, until such time, all of the provisions of this Lease shall continue in full
force and effect.
(b) Purchase Option. Provided that this Lease has not been
terminated and no Lease Event of Default shall have occurred and be continuing,
Lessee shall have the right, at its option, upon not less than six months' and
not more than twelve months' written notice to Lessor and the Agent, to purchase
the Facility on any Rent Payment Date or on the last day of the Term, for a cash
purchase price equal to the greater of the Fair Market Sale Value of the
Facility and the Stipulated Loss Value determined as of the date of purchase. In
the event that Lessee elects to purchase the Facility in accordance with this
Section 12(b), on the last day of the Term or on such Rent Payment Date, as the
case may be, Lessee shall pay to Lessor the purchase price specified above. Upon
receipt of such amount, Lessor shall transfer title to the Facility to Lessee on
an "as-is, where-is" basis, without any representation or warranty, express or
implied, by Lessor (except as to the absence of Lessor's Liens) and without
recourse to Lessor.
SECTION 13. TAXES; GENERAL INDEMNITY; OTHER COVENANTS; PERSONAL PROPERTY.
(a) Taxes. All taxes levied upon Lessor's receipt of the Rent
paid hereunder shall be the responsibility of Lessor. All other taxes and
assessments of any kind whatsoever incidental to the use of the Facility
(including, without limitation, any consumption type taxes which may be charged
or imposed in any way by any authority incidental to Lessee's communication
transmission over the Facility) shall be the sole responsibility of Lessee and
Lessee shall indemnify and hold Lessor harmless from and against all such taxes
(and any penalties, fines and interest thereon).
(b) General Indemnity. Lessee shall assume liability for, and
shall indemnify, protect, save and keep harmless the Agent and Lessor and their
respective directors, officers, shareholders, employees, agents and servants
from and against, all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs, expenses and disbursements of whatever name or
nature (including liabilities for penalties) incurred by any of them as a result
of, or arising out of, or in any way related to, or by reason of, any breach by
Lessee of any of its obligations
-10-
<PAGE>
hereunder, including without limitation the reasonable fees and disbursements of
counsel incurred in connection with any investigation, litigation or other
proceedings in any way involving any of the foregoing.
(c) Personal Property. It is the intent of the parties hereto
that the Facility shall at all times be deemed to be personal property and not
real property under the laws of the States of Alaska and Washington.
SECTION 14. EVENTS OF DEFAULT.
The following events shall constitute Lease Events of Default
under this Lease.
(i) Lessee shall default in the payment of Rent or
Stipulated Loss Value when and as the same shall become due and payable and the
continuance of such default unremedied for a period of 30 days, or
(ii) Lessee or Guarantor shall default in the
observance or performance of any other covenant or agreement of Lessee or
Guarantor contained herein or in the Lease Guaranty Agreement, and the
continuance of such default unremedied for a period of 30 days after notice
thereof shall be given by Lessor to Lessee or Guarantor; or
(iii) This Lease shall at any time for any reason
cease to be in full force and effect or shall become, or shall be declared to
be, null and void; or
(iv) Any representation or warranty made by Lessee or
the Guarantor in this Lease or in the Lease Guaranty Agreement, or in any
document or certificate furnished by Lessee or the Guarantor in connection
herewith or therewith or pursuant hereto or thereto, shall prove to be incorrect
in any material respect on the date as of which made; or
(v) Lessee, Guarantor or any parent entity of either
shall default in the payment of, or there shall be an acceleration for payment
of, any portion of any Indebtedness aggregating $15,000,000 or more, including
interest thereon, for which it is liable directly or as guarantor, in each case
beyond the period of grace, if any, provided with respect thereto; or
(vi) The merger of the Guarantor with, or transfer of
all or substantially all its assets to, any Person other than one of its
Restricted Subsidiaries; or
(vii) The incurrence of any indebtedness by Lessor,
Guarantor or any Restricted Subsidiary of the Guarantor which results in the
Senior Leverage Ratio at the time of such incurrence to be in excess of 5 to 1
at any time on or before December 31, 1999 or 3.75 to 1 at any time thereafter;
or
-11-
<PAGE>
(viii) The entry of a decree or order for relief by a
court having jurisdiction in respect of Lessee or Guarantor, adjudging Lessee or
Guarantor a bankrupt or insolvent, or approving as properly filed a petition
seeking a reorganization, arrangement, adjustment or composition of or in
respect of Lessee or Guarantor in an involuntary proceeding or case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal, state or foreign bankruptcy, insolvency or other similar
law, or appointing a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or other similar official) of Lessee or Guarantor or of any
substantial part of its property, or ordering the winding-up or liquidation of
the affairs of Lessee or Guarantor, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(ix) The institution by Lessee or Guarantor of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by Lessee
or Guarantor to the institution of bankruptcy or insolvency proceedings against
Lessee or Guarantor, or the commencement by Lessee or Guarantor of a voluntary
proceeding or case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal, state or foreign bankruptcy,
insolvency or other similar law, or the consent by Lessee or Guarantor to the
filing of any petition seeking a reorganization, arrangement, adjustment or
composition of or in respect of Lessee or Guarantor or to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian or
sequestrator (or other similar official) of Lessee or Guarantor or of any
substantial part of its property, or the making by Lessee or Guarantor of an
assignment for the benefit of creditors, or the admission by Lessee or Guarantor
of its inability to pay its debts generally as they become due or of its
willingness to be adjudicated a bankrupt, or the failure of Lessee or the
Guarantor generally to pay its debts as they become due, or the taking of
corporate action by Lessee or the Guarantor in furtherance of any of the
foregoing; or
(x) Final judgment or judgments for more than an
aggregate of $15,000,000 shall be rendered against Lessee or Guarantor, and
within 30 days after entry thereof such judgment or judgments shall not have
been discharged or execution thereof stayed pending appeal, or within 60 days
after the expiration of any such stay such judgment or judgments shall not have
been discharged; or
(xi) Any other event or circumstance shall occur
(including, without limitation, an act of any Governmental Authority or natural
disaster) that could reasonably be expected to have a material adverse effect on
the ability of the Lessee to satisfy its obligations hereunder or of the
Guarantor to satisfy its obligations under the Lease Guaranty Agreement; or
(xii) Any of the Lease Guaranty Agreement by
Guarantor, the Holdings Keep-Well Agreement or the Transport Keep-Well Agreement
shall at any time for any reason cease to be in full force and effect, except as
a result of indefeasible payment or performance of the Obligations under the
Credit Agreement.
SECTION 15. REMEDIES.
-12-
<PAGE>
Upon the occurrence of any Lease Event of Default and at any
time thereafter so long as the same shall be continuing, Lessor may, at its
option, by notice to Lessee, the Guarantor and the Agent, declare this Lease to
be in default. Lessor may, either directly or through its agent, do one or more
of the following as Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with any mandatory requirements of,
Applicable Law then in effect:
(a) demand that Lessee, and Lessee shall at its sole risk, cost
and expense upon such demand, return and/or relinquish the
Facility or any part thereof designated by Lessor promptly to
Lessor or its agent in the manner and condition required by,
and otherwise in accordance with the provisions of, Section
12(a) hereof (as specified by Lessor) as if the same were
being returned at the end of the Term; or Lessor or its agent,
at Lessor's option, may enter upon the premises where the
Facility or any part thereof is located and take immediate
possession of and remove the same by summary proceedings or
otherwise, all without liability on the part of Lessor or its
agent for or by reason of such entry or taking of possession,
whether for the restoration of damage to property caused by
such taking or otherwise;
(b) sell the Facility or any part thereof in a commercially
reasonable manner at public or private sale, as Lessor may
determine, upon at least 15 days' prior written notice to
Lessee, free and clear of any rights of Lessee and without any
duty to account to Lessee with respect to such sale or for the
proceeds thereof (except to the extent required by Section
15(e) hereof if Lessor elects to exercise its rights
thereunder);
(c) hold, keep idle, use, operate or lease to others the Facility
or any part thereof, as Lessor may determine, free and clear
of any rights of Lessee and without any duty to account to
Lessee with respect to any such action or inaction or for any
proceeds with respect thereto, except that Lessee's obligation
to pay Rent for the Facility for Rental Periods commencing
after Lessee shall have been deprived of the possession
thereof pursuant to this Section 15(c) shall be reduced by the
net proceeds, if any, received by Lessor from using or
operating the Facility, or leasing the Facility or such part
to any Person other than Lessee for such Rental Periods or any
portion thereof;
(d) by notice to Lessee specifying a payment date which is not
earlier than 10 days after the date of such notice, demand
that Lessee pay to Lessor and Lessee shall pay to Lessor, on
the payment date specified in such notice, as liquidated
damages for loss of a bargain and not as a penalty, the sum of
-13-
<PAGE>
any unpaid Rent payable in accordance with the terms of this
Lease on or prior to the payment date specified in such
notice, plus whichever of the following amounts Lessor, in its
sole discretion, shall specify in such notice (together with
interest on such amount at the Past Due Rate from the payment
date specified in such notice to the date of actual payment):
(i) the Stipulated Loss Value of the Facility, computed
as of the Rent Payment Date occurring on or
immediately preceding the payment date specified in
such notice; or
(ii) an amount equal to the excess, if any, of the amount
determined in accordance with clause (i) above, over
the Fair Market Sale Value of the Facility determined
as of the Rent Payment Date occurring on or next
preceding the payment date specified in such notice;
provided, however, that if Lessor elects to receive the amount
referred to in clause (i) above of this paragraph (d), and
such amount and all other amounts payable by Lessee under this
Section 15 are received by Lessor (or the Agent for
application pursuant to the Credit Agreement), Lessor shall
not be entitled to exercise any remedy pursuant to paragraphs
(a), (b), (c) or (e) of this Section 15 and shall be required,
after discharge and satisfaction of the Credit Agreement, to
promptly convey the Facility to Lessee "as-is, where-is",
without any representation or warranty, express or implied, by
Lessor (other than that the Facility shall be free and clear
of Lessor Liens) and without recourse to Lessor, the expenses
of such discharge and conveyance being for the account of
Lessee;
(e) if Lessor shall have sold the Facility or any part thereof
pursuant to Section 15(b) hereof, Lessor, in lieu of
exercising its rights under Section 15(d) hereof with respect
thereto, may, if it shall so elect, demand that Lessee pay to
Lessor and Lessee shall pay to Lessor, as liquidated damages
for loss of a bargain and not as a penalty, any unpaid Rent
due for periods up to and including the Rental Period in which
such sale occurs plus an amount equal to the Stipulated Loss
Value of the Facility or such part, computed as of the Rent
Payment Date next preceding the date of such sale, together
with interest at the Past Due Rate on such amount from the
Rent Payment Date as of which such Stipulated Loss Value is
computed to the date of actual payment; provided, however,
that the amount so payable shall be reduced by the net
proceeds, if any, theretofore received by Lessor with respect
to the Facility or such part from the use, operation or sale
of, or the leasing by Lessor to a Person other than Lessee of,
the Facility or such part pursuant to Section 15(b) or 15(c)
hereof;
-14-
<PAGE>
(f) terminate or rescind this Lease; or
(g) exercise any other right or remedy that may be available to
Lessor under Applicable Law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for
the breach hereof or to rescind this Lease as to the Facility
or any part thereof.
In addition (but without duplication), Lessee shall be liable,
except as otherwise provided above, for any and all unpaid installments of Rent,
whether or not then due, which are payable in respect of any Rental Period
ending before or during the exercise of any of the foregoing remedies and for
all reasonable legal fees and other costs and expenses incurred or suffered by
reason of the occurrence of any Lease Default or Lease Event of Default or the
exercise of any Lessor's or Agent's rights and remedies with respect thereto,
including all costs and expenses incurred in connection with the return of the
Facility or any part thereof or any disconnection, disassembly, preparation for
shipment, storage and delivery of the Facility or any part thereof or in placing
the Facility or any part thereof in the condition required by Section 12(a)
hereof.
At any sale of the Facility or any part thereof pursuant to
this Section 15, Lessor, the Agent or any Lender may bid for and purchase the
same.
No right or remedy referred to in this Section 15 is intended
to be exclusive, but each shall be cumulative and in addition to any other right
or remedy referred to above or otherwise available to Lessor or the Agent under
any of the Project Agreements or at law or in equity; and the exercise or
beginning of exercise by Lessor or the Agent of any one or more of such rights
or remedies shall not preclude the simultaneous or later exercise by Lessor or
the Agent of any or all such other rights and remedies. To the extent permitted
by Applicable Law, Lessee hereby waives any rights now or hereafter conferred by
statute or otherwise which may require Lessor or the Agent to sell, lease or
otherwise use the Facility or any part thereof in mitigation of Lessor's or
Agent's damages or which may otherwise limit or modify any of Lessor's or
Agent's rights and remedies in this Section 15 or under any of the Project
Agreements. No express or implied waiver by Lessor or Agent of any Lease Default
or Lease Event of Default shall in any way be, or be construed to be, a waiver
of any other Lease Default or Lease Event of Default.
If it should become necessary for the purpose of any of the
foregoing provisions of this Section 15 to allocate to any part of the Facility
a portion of the Rent or a portion of the Stipulated Loss Value of the Facility,
such allocation shall be in the same proportion as the then Fair Market Sale
Value of such part bears to the then Fair Market Sale Value of the Facility.
SECTION 16. ENFORCEMENT.
-15-
<PAGE>
Without limiting the effect of any provision of this Lease or
any provision of any of the other Project Agreements, including without
limitation, Section 10.4 and 10.5 of the Credit Agreement, Lessee will pay all
costs and expenses, including reasonable attorneys' fees and expenses, incurred
by Lessor or the Agent in enforcing their respective rights or remedies under
this Lease. In the event that Lessor or the Agent shall bring any suit against
Lessee to enforce any rights hereunder and shall be entitled to judgment, then
in such suit it may recover expenses, including reasonable attorneys' fees, and
the amount thereof shall be included in such judgment.
SECTION 17. LESSOR'S RIGHT TO PERFORM FOR LESSEE.
If Lessee fails to make any payment required to be paid by it
hereunder or fails to perform or comply with any of its other agreements
contained herein, Lessor may itself make such payment or perform or comply with
such agreement, and the amount of such payment and the amount of the reasonable
expenses of Lessor incurred in connection with such payment or in connection
with the performance of or compliance with such agreement, as the case may be,
together with interest thereon at the Past Due Rate, shall be deemed additional
Rent, payable by Lessee upon demand.
SECTION 18. FURTHER ASSURANCES.
Lessee will promptly and duly execute and deliver to Lessor or
the Agent such documents and assurances and take such further action as Lessor
or the Agent may from time to time reasonably request in order to carry out more
effectively the intent and purpose of this Lease and to establish, protect and
preserve the rights, interests and remedies created, or intended to be created,
in favor of Lessor and the Agent hereunder and under any other Project
Agreement, including, without limitation, if requested by Lessor or the Agent,
at the expense of Lessee, the recording or filing of counterparts hereof and of
such other documents (including, without limitation, financing statements) with
respect hereto, in accordance with the laws of such jurisdictions, as Lessor or
the Agent may from time to time reasonably request.
SECTION 19. NOTICES.
Notices, requests, demands and other communications provided
for herein shall be in writing and shall be delivered or mailed (or if by
telegram, delivered to the telegraph company and, if by telecopier, delivered by
such equipment) addressed, if to the Agent, to it at 1301 Avenue of the
Americas, New York, New York 10019, Attn: Project Finance Group, facsimile no.:
(212) 261-3421, if to the Lessor, to it at 2550 Denali Street, Suite 1000,
Anchorage, Alaska 99503, Attn: Chief Financial Officer, facsimile no.:(907)
265-5676, or if to the Lessee, to it at 2550 Denali Street, Suite 1000,
Anchorage, Alaska 99503, Attn:Chief Financial Officer, facsimile no.:(907)
265-5676, or such other address as such party may from time to time designate by
giving written notice to the other parties hereunder. All notices and other
communications given to any party hereto in accordance with the provisions
hereof shall be deemed to have been given on the tenth Business Day after the
date when sent by registered or
-16-
<PAGE>
certified mail, postage prepaid, return receipt requested, if by mail, or when
delivered to the telegraph company, charges prepaid, if by telegram, or when
receipt is acknowledged if by telecopier, in each case addressed to such party
as provided in this Section 19 or in accordance with the latest unrevoked
written direction from such party.
If either the Lessor or the Lessee gives the other any notice hereunder
for any reason whatsoever, the Lessor and the Lessee each agrees to
simultaneously deliver a copy of such notice to the Agent.
SECTION 20. BINDING EFFECT; SUCCESSORS AND ASSIGNS.
The terms and provisions of this Lease and the respective
rights and obligations of Lessor, Lessee, the Guarantor and the Agent hereunder
shall be binding upon, and inure to the benefit of, their respective successors
and assigns; provided, however, that Lessee shall not assign any of its rights
or obligations hereunder except in accordance with the provisions of Section
11(b) hereof, and any attempted assignment by Lessee in violation of such
provisions shall be void.
SECTION 21. SECURITY FOR LESSOR'S OBLIGATIONS TO AGENT.
In order to secure the indebtedness of Lessor under the Credit
Agreement and the payment of certain other obligations as provided in the Credit
Agreement, the Credit Agreement provides, among other things, for the assignment
by Lessor to the Agent (for the benefit of the Lenders) of its right, title and
interest in, to and under this Lease, and for the creation of a first lien on
and prior perfected security interest in the Facility in favor of the Agent (for
the benefit of the Lenders. Lessee hereby consents to such assignment and to the
creation of such lien and security interest, and consents to the terms and
provisions of the Credit Agreement. Lessee and Lessor agree and acknowledge that
so long as any Obligation (as such term is defined in the Credit Agreement)
remains outstanding, the Agent shall have the exclusive right to exercise all
rights of Lessor hereunder to give consents, approvals, waivers, notices or the
like, to make elections, demands or the like and to take other discretionary
action hereunder. Lessee will furnish to the Agent counterparts of all notices,
certificates, opinions or other documents required to be delivered hereunder by
Lessee to Lessor. Until Lessee receives notice from the Agent stating that the
Credit Agreement has been terminated, Lessee will make all payments payable
hereunder strictly in accordance with Section 3(c) hereof for the benefit of the
Agent and the Lenders or in such other manner as the Agent may specify from time
to time by notice to Lessee, and the right of the Agent to receive all such
payments shall not be subject to any defense, counterclaim, set-off or other
right or claim of any kind which Lessee may be able to assert against Lessor in
any action brought by it on this Lease.
SECTION 22. THE AGENT
-17-
<PAGE>
The provisions of this Lease which require or permit action
by, the consent or approval of, the furnishing of any instrument or information
to, or the performance of any other obligation to, the Agent shall not be
effective, and the Sections hereof containing such provisions shall be read as
though there were no such requirements or permissions, at all times after all
the Obligations (as such term is defined in the Credit Agreement) have been
fully and indefeasibly paid and performed and the Commitments (as such term is
defined in the Credit Agreement) shall have terminated.
SECTION 23. SERVICE OF PROCESS.
THE LESSOR AND THE LESSEE, RESPECTIVELY, HEREBY IRREVOCABLY
SUBMIT TO THE JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW YORK AND TO
THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT
OF OR BASED UPON THIS LEASE, THE SUBJECT MATTER HEREOF OR ANY PROJECT DOCUMENT
BROUGHT BY THE AGENT OR ANY OF ITS SUCCESSORS OR ASSIGNS IN EITHER OF THE
ABOVE-REFERENCED FORUMS AT THE SOLE OPTION OF THE AGENT. THE LESSOR AND THE
LESSEE, RESPECTIVELY, TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY
WAIVE, AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS, ANY CLAIM THAT THEY
ARE NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT
THEIR PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE
SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS LEASE, THE SUBJECT MATTER
HEREOF OR ANY PROJECT DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURT, (B)
HEREBY WAIVE THE RIGHT TO REMOVE ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED
BY THE AGENT IN STATE COURT TO FEDERAL COURT, AND (C) HEREBY WAIVE THE RIGHT TO
ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS
EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE ARISE FROM THE SAME
SUBJECT MATTER. THE LESSOR AND THE LESSEE HEREBY CONSENT TO SERVICE OF PROCESS
BY MAIL AT THEIR RESPECTIVE ADDRESSES TO WHICH NOTICES ARE TO BE GIVEN PURSUANT
TO SECTION 19 HEREOF. THE LESSOR AND THE LESSEE AGREE THAT THEIR SUBMISSION TO
JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS
BENEFIT OF THE AGENT. FINAL JUDGMENT AGAINST THE LESSOR OR THE LESSEE IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY
OTHER JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE
AMOUNT OF INDEBTEDNESS OR LIABILITY OF THE LESSOR OR
-18-
<PAGE>
THE LESSEE THEREIN DESCRIBED OR (B) IN ANY OTHER MANNER PROVIDED BY, OR PURSUANT
TO, THE LAWS OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT THE AGENT MAY
AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST THE
LESSOR OR THE LESSEE OR ANY OF THEIR ASSETS IN ANY STATE OR FEDERAL COURT OF THE
UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE THE LESSOR OR LESSEE OR SUCH
ASSETS MAY BE FOUND.
SECTION 24. WAIVER OF JURY TRIAL.
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE
WAIVED, THE LESSEE HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM
IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT
OF OR BASED UPON THIS LEASE AGREEMENT OR THE SUBJECT MATTER THEREOF, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT
OR OTHERWISE. THE LESSEE ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE LESSOR
THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH
THE LESSOR HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THIS LEASE
AGREEMENT. AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 24 MAY BE FILED
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE LESSEE TO THE WAIVER OF
ITS RIGHTS TO TRIAL BY JURY.
SECTION 25. EXECUTION IN COUNTERPARTS.
This Lease may be executed in any number of counterparts.
However, to the extent, if any, that this Lease constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no security interest in this Lease may be created
through the transfer or possession of any counterpart other than the counterpart
identified by marking as the "Original" and containing a receipt therefor signed
by the Agent on or immediately following the signature page hereof. All other
counterparts of this Lease shall be marked as "Duplicates"; provided, however,
that any such Duplicates shall be valid evidence of this Lease.
SECTION 26. MISCELLANEOUS.
(a) Severability. Any provision of this Lease that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by Applicable
-19-
<PAGE>
Law, Lessee hereby waives any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
(b) Modifications. No term or provision of this Lease may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. Furthermore, so long as any obligations
remain outstanding under the Credit Agreement, no such modification, amendment
or waiver shall be effective unless consented to by the Agent.
(c) No Conveyance of Title. This Lease shall constitute an
agreement of lease only and nothing herein shall be construed as conveying to
Lessee any right, title or interest in the Facility or any part thereof except
as lessee only.
(d) Captions. The captions in this Lease and the table of
contents are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof. Except to the extent provided for in the
definition of "Appraisal Procedure", none of the provisions of this Lease is
subject to arbitration.
(e) Governing Law. This Lease shall be governed by, and
construed in accordance with, the laws of the State of New York.
-20-
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed and delivered by their respective officers or
representatives hereunto duly authorized as of the date and year first above
written.
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., its General
Partner
By:
Name:
Title:
By: Fiber Hold Co., Inc., its General
Partner
By:
Name:
Title:
GCI COMMUNICATION CORP.
By:
Name:
Title:
<PAGE>
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
Before me personally appeared , personally
known to me to be the person whose name is subscribed to the foregoing
instrument as the designated officer of , one of the
corporations named in said instrument, and personally known to me to be such
officer of said corporation, and acknowledged to me that he executed said
instrument for the purposes and consideration therein expressed and in the
capacity therein stated, for and on behalf of and as the act and deed of said
corporation.
IN WITNESS of which I have hereunto set my hand and official
seal, this day of , 199 .
-----------------------------
Notary Public
[NOTARIAL STAMP AND SEAL]
<PAGE>
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
Before me personally appeared , personally
known to me to be the person whose name is subscribed to the foregoing
instrument as the designated officer of , one of the
corporations named in said instrument, and personally known to me to be such
officer of said corporation, and acknowledged to me that he executed said
instrument for the purposes and consideration therein expressed and in the
capacity therein stated, for and on behalf of and as the act and deed of said
corporation.
IN WITNESS of which I have hereunto set my hand and official
seal, this day of , 199 .
-----------------------------
Notary Public
[NOTARIAL STAMP AND SEAL]
<PAGE>
Receipt of this original counterpart of this Lease is hereby acknowledged on
this day of January, 1998.*
CREDIT LYONNAIS NEW YORK BRANCH, as Agent
for the benefit of the Lenders
By:
Name:
Title:
- -------------------
* This acknowledgment of receipt to appear in the original only; other
originals to bear the legend "duplicate original".
<PAGE>
EXHIBIT A
Definitions
"Affiliate" of the specified Person shall mean any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with, such specified Person. For purposes of this definition, the
term "control" (including the correlative meanings of the terms "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agent" shall mean Credit Lyonnais New York Branch and its successors
as Administrative Agent under the Credit Agreement.
"Applicable Law" shall mean all applicable laws (including, without
limitation, federal and state securities laws), ordinances, judgments, decrees,
injunctions, writs and orders of any court, arbitrator or governmental agency or
authority and rules, regulations, orders, interpretations, licenses and permits
of any federal, state, county, municipal, regional or other governmental body,
instrumentality, agency or authority.
"Appraisal Procedure" shall mean the following procedure for
determining Fair Market Sale Value or Fair Market Rental Value if either Lessor
or Lessee shall request by notice (the "Appraisal Request") to the other the
determination of either of such Values by the Appraisal Procedure. Lessor and
Lessee shall, within 15 days after the Appraisal Request, appoint an independent
appraiser mutually satisfactory to them, who shall determine such Value and such
determination shall be final and binding on Lessor and Lessee. If Lessor and
Lessee are unable to agree on a mutually acceptable appraiser within such 15-day
period, Fair Market Sale Value or Fair Market Rental Value, as the case may be,
shall be determined by a panel of three independent appraisers, one of whom
shall be appointed by Lessor, another by Lessee and the third of whom shall be
appointed by the other two appraisers or, if such two appraisers are unable to
agree on a third appraiser within 45 days after the Appraisal Request, by the
American Arbitration Association (or its successor); provided, however, that if
Lessor or Lessee shall not have appointed its appraiser within 30 days after the
Appraisal Request, such Value shall be determined solely by the appraiser
selected by the other party. The appraiser or appraisers appointed pursuant to
the foregoing procedure shall be instructed to determine Fair Market Sale Value
or Fair Market Rental Value, as the case may be, within 45 days after such
appointment, and such determination shall be final and binding on Lessor and
Lessee. If three appraisers are appointed, the determination of the appraiser
that shall differ most from the second highest determinations of all three
appraisers shall be excluded, the remaining two determinations shall be averaged
and such average shall constitute the determination of the appraisers. In the
event that a single appraiser is appointed, the fees of such appraiser shall be
divided equally between
<PAGE>
Lessee and Lessor. In the event that more than a single appraiser is appointed,
the fees and expenses of the appraiser appointed by Lessee shall be paid by
Lessee, the fees and expenses of the appraiser appointed by Lessor shall be paid
by Lessor and the fees and expenses of the third appraiser shall be divided
equally between Lessee and Lessor. Notwithstanding the foregoing, all fees and
expenses of each appraiser shall be paid by Lessee in the case of an appraisal
or determination under Section 15 of the Lease and the Lessee shall pay all such
fees and expenses in the circumstances provided in Section 12(b) of the Lease.
"Business Day" shall mean any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized by law to be
closed.
"Completion Date" shall be as defined in the Credit Agreement.
"Credit Agreement" shall mean the Credit and Security Agreement dated
as of January 27, 1998 among the Lessor, the Lenders referred to therein, Credit
Lyonnais New York Branch as Administrative Agent, NationsBank of Texas, N.A. as
Syndication Agent and TD Securities (USA) Inc. as Documentation Agent, as such
agreement may be amended, supplemented or otherwise modified, renewed or
replaced from time to time.
"Event of Loss" shall mean any of the following events or conditions:
(i) all or substantially all of the Facility shall become
destroyed or damaged beyond repair or permanently rendered unfit for
commercial operation, as a consequence of any event whatsoever;
(ii) any damage to or loss of all or any portion of the
Facility occurring through any cause whatsoever, which results in the
receipt of insurance proceeds with respect to the Facility on the basis
of an actual or constructive total loss of the Facility; or
(iii) the condemnation, confiscation or seizure of, or other
requisition of title to, or use of, all or substantially all of the
Facility or the Right of Way (including the taking of title to, or use
of, all or substantially all of the Facility or the Right of Way under
power of eminent domain or by forfeiture pursuant to any proceeding
commenced under any provision of law providing for escheat) by a
Governmental Authority; provided, however, that, in the case of a
requisition of use of all or substantially all of the Facility or the
Right of Way such requisition shall be for an indefinite period which
shall have continued for at least one year or for a definite period of
at least three years' duration or that extends beyond the end of the
Term or, if such requisition shall occur during a Renewal Term, beyond
the end of such Renewal Term.
Subject to the proviso in Section 17(a) of this Lease, the
date of occurrence of any of the Events of Loss specified in clause (i), (ii) or
(iii) above shall be the date of the casualty or other occurrence specified
above giving rise to such Event of Loss.
-2-
<PAGE>
"Facility" shall mean the exclusive use of 22 STS-1's of the Alaska
United Fiber System (as defined in the Credit Agreement) which is equivalent to
1.14048 Gb/s.
"Fair Market Rental Value" shall mean at any time, with respect to the
Facility or any part thereof, the fair market rental value thereof at such time
as determined by agreement between Lessor and Lessee or, if requested by either
of such parties, by the Appraisal Procedure. Fair Market Rental Value shall be
equal to the rental value of the Facility or such part, as the case may be, that
would be obtained in an arm's-length transaction between an informed and willing
lessor under no compulsion to lease and an informed and willing lessee, which
determination shall be made on the assumption that the Facility or such part, as
the case may be, is free and clear of all Liens and is in the condition and
repair required under Section 6 of this Lease.
"Fair Market Sale Value" shall mean at any time, with respect to the
Facility or any part thereof, the fair market sale value thereof at such time as
determined by agreement between Lessor and Lessee or, if requested by either of
such parties, by the Appraisal Procedure. Fair Market Sale Value shall be equal
to the sale value of the Facility or such part, as the case may be, that would
be obtained in an arm's-length transaction between an informed and willing
seller under no compulsion to sell and an informed and willing buyer-user (other
than a buyer currently in possession), which determination shall be made on the
assumption that the Facility or such part, as the case may be, is free and clear
of all Liens and is in the condition and repair required under Section 6 of this
Lease, and shall be calculated at the higher of (i) the fair market sale value
thereof at its existing location, on the assumption that the buyer-user has the
full and unfettered right to use the Facility and (ii) the fair market sale
value thereof at any place other than at its existing location, after deduction
of all costs and expenses of dismantling, removal, delivery and reconstruction
thereof; provided, however, that notwithstanding the foregoing provisions of
this definition, the determination of Fair Market Sale Value for the purpose of
Section 12(b) or 15(d) of the Lease shall be based on the actual condition of
the Facility or part thereof at the time of such determination and shall take
into account any legal impediments to the prompt transfer of title to the
Facility or such part.
"GCI" shall be as defined in the Credit Agreement.
"Governmental Authority" shall mean any federal, state, county,
municipal, local, territorial, or other governmental department, court,
commission, board, bureau, agency, taxing authority or instrumentality, domestic
or foreign.
"Guarantor" shall mean GCI Holdings, Inc., an Alaska corporation, and
its successors and, to the extent permitted by the Lease Guaranty Agreement, its
assigns.
"Highest Lawful Rate" shall mean the maximum legal rate of interest
permitted to be contracted for, charged or received under applicable law,
against which one could not successfully assert a claim or defense of usury.
-3-
<PAGE>
"Holdings Credit Agreement" shall be as defined in the Credit
Agreement.
"Holdings Keep-Well Agreement" shall be as defined in the Credit
Agreement.
"Indebtedness" shall be as defined in the Credit Agreement.
"Lease" shall mean this Lease Agreement dated as of January 27, 1998,
between the Lessor and the Lessee, pertaining to the leasing of the Facility by
the Lessor to Lessee, as the same may be amended, modified or supplemented from
time to time in accordance with the provisions thereof.
"Lease Default" shall mean a Lease Event of Default or an event or a
condition that, with notice or lapse of time or both, would become such a Lease
Event of Default.
"Lease Event of Default" shall be as defined in Section 14 of this
Lease.
"Lease Guaranty Agreement" shall mean the Lease Guaranty Agreement
dated as of January 27, 1998, by the Guarantor for the benefit of the Lessor and
the Agent, as the same may be amended, modified or supplemented from time to
time in accordance with the provisions thereof.
"Lender" shall be as defined in the Credit Agreement.
"Lessee" shall mean GCI Communication Corp., an Alaska corporation, and
its successors and, to the extent permitted by the Lease, its assigns thereunder
and sublessees.
"Lessor" shall mean Alaska United Fiber System Partnership, a general
partnership organized under the laws of Alaska and, to the extent permitted by
the Lease, its successors and assigns.
"Lien" shall mean any lien, mortgage, deed of trust, encumbrance,
pledge, charge, lease, easement, servitude, or other security interest of any
kind.
"Past Due Rate" shall mean the lesser of (a) the Highest Lawful Rate
and (b) a rate per annum equal to 4% plus the Prime Rate.
"Permitted Liens" shall be as defined in Section 11(d) of this Lease.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, non-incorporated organization,
or government, or any agency or political subdivision thereof.
-4-
<PAGE>
"Primary Term" shall mean the fixed minimum Term as set forth in
Section 3(a) of this Lease, without giving effect to any renewal or extension
pursuant to Section 10 of this Lease or otherwise.
"Prime Rate shall mean the interest rate per annum (computed on the
basis of actual days elapsed in a year of 360 days) announced by Credit Lyonnais
New York Branch in New York City from time to time as its stated rate. The Prime
Rate shall be a fluctuating rate and shall change automatically from time to
time effective as of the opening of business on the effective date of each
change in such stated rate.
"Project Agreements" shall be as defined in the Credit Agreement.
"Renewal Term" shall mean each of the periods after the end of the
Primary Term with respect to which the Lessee shall exercise its option to renew
the Lease pursuant to Section 13 of this Lease, or such shorter period as may
result from the termination of the Lease.
"Rent" shall be as defined in Section 3(b) of this Lease.
"Rent Payment Date" shall be as defined in Section 3(b) of this Lease.
"Rental Period" shall mean the period commencing on (and including) the
Completion Date and ending on (and including) the first Rent Payment Date and
each of the subsequent one-month periods throughout the Term, such subsequent
periods commencing on the first day of each month and ending on the last day of
each month.
"Restricted Subsidiary" shall be as defined in the Holdings Credit
Agreement.
"Right of Way" shall be as defined in the Credit Agreement.
"Senior Leverage Ratio" shall be as defined in the Long Term Holdings
Credit Agreement.
"Stipulated Loss Value" shall mean, as of any particular Rent Payment
Date, the amount equal to the Fair Market Sale Value of the Facility as of such
Rent Payment Date; provided, however, that Stipulated Loss Value shall be, under
any circumstances and in any event, in an amount which is no less than the net
present value (determined using a discount rate of 5% per annum) of all
remaining Rent payments that would have become due if the Lease had not been
terminated, but rather, had been renewed for an additional eight (8) year term
at the same Rent.
"System" shall be as defined in the Credit Agreement.
"Taxes" shall be as defined in the Credit Agreement.
-5-
<PAGE>
"Term" shall be as defined in Section 3(a) of this Lease.
"Transport Keep-Well Agreement" shall be as defined in the Credit
Agreement.
-6-
<PAGE>
EXHIBIT P
FORM OF HOLDINGS LEASE GUARANTY AGREEMENT
LEASE GUARANTY AGREEMENT
dated as of , 1998
between
GCI HOLDINGS, INC.
as Guarantor,
and
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
as Lessor,
and
CREDIT LYONNAIS NEW YORK BRANCH,
as Agent
<PAGE>
LEASE GUARANTY AGREEMENT
LEASE GUARANTY AGREEMENT, dated as of , 1998
(as amended, supplemented or otherwise modified,
renewed or replaced from time to time, the
"Guaranty"), between GCI Holdings, Inc., an Alaska
corporation (the "Guarantor"), Alaska United Fiber
System Partnership, a general partnership organized
under the laws of Alaska ("Lessor") and Credit
Lyonnais New York Branch, as Administrative Agent
(the "Agent") under the Credit Agreement referred to
below.
The Guarantor is the owner of all the issued and outstanding
capital stock of GCI Communication Corp. GCI Communication Corp. is the lessee
("Lessee") under that certain Lease Agreement dated as of January 27, 1998
between Lessor and Lessee (as such agreement may be amended, supplemented or
otherwise modified, renewed or replaced from time to time, the "Lease"), which
provides for, among other things, the leasing of the Facility by the Lessor to
the Lessee.
In order to finance the construction of the Facility, the
Lessor has entered into a Credit and Security Agreement dated as of January 27,
1998 (as such agreement may be amended, supplemented or otherwise modified,
renewed or replaced from time to time, the "Credit Agreement") with the Lenders
referred to therein, Credit Lyonnais New York Branch as Administrative Agent,
NationsBank of Texas, N.A., as Syndication Agent and TD Securities (USA) Inc.,
as Documentation Agent.
In order to induce the Lessor to enter into the Lease, and to
induce the Lenders to enter into the Credit Agreement and to make loans to the
Lessor pursuant thereto, the Guarantor has agreed to enter into this Guaranty.
Accordingly, the parties agree as follows:
SECTION 1
DEFINITIONS.
Unless otherwise defined herein, capitalized terms used herein
shall have their defined meanings set forth in Exhibit A to the Lease.
<PAGE>
SECTION 2
GUARANTY.
The Guarantor hereby guarantees to the Lessor and to the Agent
(for the benefit of the Lenders), and their respective successors and assigns,
that (A) the Lessee will pay (when due, by acceleration or otherwise) all
amounts from time to time payable by the Lessee under the Lease, including
(without limitation) all Rent, Stipulated Loss Value and all indemnity payments,
all payments of costs, fees, expenses and all other amounts however denominated,
and all damages (whether provided for in the Lease or otherwise allowable by
law) in respect of the failure or the refusal by the Lessee to make any such
payment, all in accordance with the terms of the Lease, and agrees that if for
any reason whatsoever the Lessee shall fail to pay (when due, by acceleration or
otherwise) any of said amounts, the Guarantor will pay the same forthwith, and
(B) each of the terms, conditions, covenants and agreements under the Lease to
be performed or observed by the Lessee will be duly and punctually performed and
observed strictly in accordance with the terms of the Lease, and agrees that if
for any reason whatsoever the Lessee shall fail to do so, the Guarantor shall
duly and punctually perform and observe the same (all of the aforesaid amounts,
payments, obligations, terms, conditions, covenants and agreements being herein
called the "Guaranteed Obligations"). This Guaranty is a guaranty of payment,
performance and compliance and not of collectibility. The Guarantor agrees that
its obligations hereunder are absolute and unconditional and irrevocable without
regard to the genuineness, validity, legality or enforceability of the Lease or
any of the Project Agreements or of any term thereof or lack of power or
authority of any party to enter into the Lease or any of the Project Agreements
or of any assignment or termination of the Lease or any of the Project
Agreements, or any assignment of any property thereunder, or any substitution,
release or exchange of any other guaranty of or any security for any of the
Guaranteed Obligations or any other circumstances which might otherwise
constitute a legal or equitable discharge of a surety or guarantor, and shall
not be subject to any withholding by any Governmental Authority of whatsoever
nature or any right of set-off or counterclaim and are in no way conditioned
upon any attempt to enforce performance or compliance by the Lessee or any other
event or contingency. Without limiting the generality of the foregoing, it is
agreed that the occurrence of any one or more of the following shall not affect
the liability of the Guarantor hereunder: (a) at any time or from time to time,
without notice to the Guarantor, the time for the Lessee's payment or
performance of or compliance with any of the Guaranteed Obligations or other
obligations of the Lessee under the Lease or any of the Project Agreements may
be extended or renewed, or such performance or compliance may be waived; (b) any
of the acts mentioned in any of the Project Agreements may be done; (c) the
Lease or any of the Project Agreements may be modified, amended or supplemented
in any respect or renewed or replaced from time to time; (d) any other guarantee
of the Guaranteed Obligations or any security therefor may be released or
exchanged in whole or in part or otherwise dealt with; and (e) any of the
Guaranteed Obligations may be settled or compromised or subordinated to the
claims of others. The
-2-
<PAGE>
Guarantor hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever and any requirements that the Lessor or the
Agent proceed against the Lessee or any security for, or any other guarantor of,
any of the Guaranteed Obligations, or exercise any other right or remedy against
the Lessee or any other Person before proceeding directly against the Guarantor
(and without having to join the Lessee, any other guarantor or other Person in
any such action). The Guarantor also waives notice of the reliance on this
Guaranty by the Lessor and the Agent. Each of the Guaranteed Obligations (now or
hereafter in effect) shall be deemed conclusively to have been created,
contracted or incurred in reliance upon this Guaranty.
In case the Lease or any of the Project Agreements shall be
terminated as a result of the rejection or disaffirmance thereof by any trustee,
receiver, liquidator, agent or other representative of the Lessee or any of its
property in any assignment for the benefit of creditors or in any bankruptcy,
insolvency, reorganization, arrangement, readjustment, liquidation, dissolution
or similar proceeding, the Guarantor's obligations hereunder shall continue to
the same extent as if such Lease or Project Agreement had not been so rejected
or disaffirmed. The Guarantor shall and does hereby waive all rights and
benefits that might accrue to it by reason of any such assignment or proceeding
and the Guarantor agrees that it shall be liable for the full amount of the
Guaranteed Obligations irrespective of, and without regard to, any modification,
limitation or discharge of liability of the Lessee that may result from or in
connection with any such assignment or proceeding.
The Guarantor agrees that this Guaranty shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of the Lessee is rescinded or must be otherwise restored by the Lessor or the
Agent, whether as a result of any proceedings in bankruptcy or reorganization or
otherwise.
The Guarantor shall pay all costs, expenses and damages
incurred by the Lessor or the Agent (including, without limitation, reasonable
attorneys' fees and expenses) in connection with any action or appeal to enforce
the obligations of the Lessee under the Lease or any of the Project Agreements
to the extent that such costs, expenses and damages are not paid by the Lessee
pursuant to the Lease or the Project Agreements or otherwise, and in connection
with any action to enforce the obligations of the Guarantor under this Guaranty.
SECTION 3
SUBROGATION.
The Guarantor shall be subrogated to the rights against the
Lessee of the Lessor and the Agent to which a payment shall be made by the
Guarantor; provided, however, that in any case under the Federal Bankruptcy Code
involving the Lessee as the debtor, the claim therein of the Guarantor based
upon such subrogation or otherwise shall be limited (and the
-3-
<PAGE>
Guarantor hereby agrees so to limit such claim) to the amount allowable under
such Code as a claim in respect of the Guaranteed Obligations; and provided,
further, however, that the Guarantor shall not be entitled to receive payment
from the Lessee in respect of any claim against the Lessee arising from a
payment by the Guarantor, and any such payment from the Lessee shall be
subordinate and junior in right of payment to the Guaranteed Obligations, in the
following circumstances:
(a) while a Lease Event of Default shall have occurred and be
continuing, no such payment in respect of a claim by the Guarantor may
be made by the Lessee; and
(b) in the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings relating to the Lessee, or
in the event of any proceedings for voluntary liquidation, dissolution
or other winding up of the Lessee, whether or not involving insolvency
or bankruptcy proceedings, then the Guaranteed Obligations shall be
paid in full before any payment in respect of a claim by the Guarantor
shall be made by or on behalf of the Lessee.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR.
The Guarantor represents and warrants to the Lessor and the
Agent that:
(a) the Guarantor and each of its Subsidiaries (such term
being used herein as defined in the Credit Agreement) which is a party
to any of the Project Agreements or any of the Fundamental Documents
(collectively, the "GCI Parties") is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and has full power, authority and legal right to carry on
its business as presently conducted, to own its properties and to enter
into and perform its obligations under each Project Agreement and each
Fundamental Document to which it is a party, and is duly qualified to
do business and is in good standing in each jurisdiction in which the
failure to be so qualified could reasonably be expected to have a
material adverse effect on its financial condition, business or
operations or its ability to perform its obligations under any of the
Project Agreements or any of the Fundamental Documents to which it is a
party;
(b) the execution, delivery and performance by each GCI Party
of each Project Agreement and each Fundamental Document to which it is
a party have been duly authorized by all necessary corporate action, do
not require any stockholder approval, do not and will not contravene
any presently existing law or any governmental rule, regulation or
order applicable to such GCI Party or its properties and do not and
will not contravene the provisions of, or constitute a default under,
the certificate of
-4-
<PAGE>
incorporation or by-laws of such GCI Party or any indenture, mortgage,
contract or other agreement or instrument to which such GCI Party is a
party or by which such GCI Party is bound;
(c) the execution, delivery and performance by each GCI Party
of each Project Agreement and each Fundamental Document to which it is
a party do not require the consent or approval or authorization or
order of, the giving of notice to, or the registration with, or the
taking of any other action in respect of, any Federal, state or other
governmental authority or agency, foreign or domestic, other than such
as have been duly obtained, given or taken;
(d) each Project Agreement and each Fundamental Document has
been duly authorized, executed and delivered by each GCI Party which is
a party thereto and constitutes the legal, valid and binding obligation
of each such GCI Party, enforceable against each such GCI Party in
accordance with their respective terms except as the enforceability
hereof may be limited by (i) any applicable bankruptcy, reorganization,
insolvency and other similar rights generally and (ii) general
principles of equity (whether considered at a suit at law or in
equity);
(e) the audited financial statements of General Communication,
Inc., an Alaska corporation ("GCI") and its consolidated Subsidiaries
for the fiscal year ended December 31, 1996, and the unaudited
financial statements of GCI and its consolidated Subsidiaries for the
9-month period ended September 30, 1997, copies of which have been
delivered by the Guarantor to the Lessor and the Agent, are complete
and correct in all material respects and present fairly the financial
condition of GCI and its consolidated Subsidiaries as at the dates
thereof and the results of operations and changes in financial position
of GCI and its consolidated Subsidiaries for the periods covered
thereby, all in conformity with generally accepted accounting
principles consistently applied (except as stated therein or in the
notes thereto). Since June 30, 1997, there has been no material adverse
change in the consolidated financial condition, business or operations
of the Guarantor or of GCI and its consolidated Subsidiaries;
(f) there are no pending or, to the knowledge of the
Guarantor, threatened actions, suits, proceedings or investigations
against any GCI Party or affecting any GCI Party or any of their
respective properties that, individually or in the aggregate, would if
adversely determined be likely to materially adversely affect the
performance by any GCI Party of its obligations under any Project
Agreement or any Fundamental Document to which it is a party or its
assets, operations, business or financial condition;
(g) no sales, use, documentation or similar taxes, fees or
other charges are payable with respect to the execution and delivery by
any GCI Party of any Project Agreement or any Fundamental Document to
which it is a party;
-5-
<PAGE>
(h) the representations and warranties of the Guarantor set
forth in Article 5 of each of the Holdings Credit Agreements are true
and correct; and
(i) the Guarantor is not in default in the performance,
observance or fulfillment of any material obligation, covenant or
condition contained in, and no event of default has occurred and is
continuing under, any bond, debenture, note or other evidence of
indebtedness, or in any mortgage, deed of trust, trust indenture or
loan agreement to which it is a party or by which its property is
bound; nor has any act, omission or event occurred which, with the
giving of notice and/or the passing of time, would become an event of
default under any such instrument or document.
SECTION 5
COVENANT OF THE GUARANTOR.
The Guarantor covenants that it will not merge with, or
transfer all or substantially all of its assets to, any Person other than one of
its Restricted Subsidiaries; provided that in the case of any such permitted
transfer or if the Guarantor is not the surviving entity in any such merger,
then the survivor or transferee shall expressly assume all obligations of the
Guarantor hereunder by a written instrument in form and substance satisfactory
to the Lessor and the Agent.
SECTION 6
FINANCIAL STATEMENTS.
The Guarantor agrees that it will deliver to the Lessor and the Agent:
(a) all financial statements and reports required to be
delivered pursuant to Section 6.05 of the Holdings Credit Agreement,
as and when required to be delivered by the Guarantor thereunder; and
(b) from time to time, such other information as the Lessor or
the Agent may reasonably request.
-6-
<PAGE>
SECTION 7
MISCELLANEOUS.
(a) In the event of the acquisition of the Lessee by, or the
consolidation or merger of the Lessee with or into, or the sale of the
Lessee to, another corporation, this Guaranty shall remain in full
force and effect unless and until the Lessee shall have obtained, for
the benefit of Lessor and the Agent, (i) a replacement guaranty
substantially in the form of this Guaranty covering the Guaranteed
Obligations issued by a guarantor satisfactory to the Lessor and the
Agent in their sole discretion and/or (ii) a letter of credit in form
and substance satisfactory to Lessor and the Agent in their sole
discretion from a bank or other financial institution satisfactory to
Lessor and the Agent in their sole discretion.
(b) No failure on the part of either the Lessor or the Agent
to exercise, no delay in exercising, and no course of dealing with
respect to, any right or remedy hereunder will operate as a waiver
thereof; nor will any single or partial exercise of any right or
remedy hereunder preclude any other further exercise of any other
right or remedy. This Guaranty may not be amended or modified except
by written agreement of the Guarantor on the one hand, and the Lessor
and the Agent or the other hand.
(c) All notices required under the terms and provisions hereof
shall be in writing, shall be deemed given and shall become effective
when delivered by hand or courier service or received by telex,
telecopier, facsimile, telegram, cable or registered or certified
first-class mail, postage prepaid, addressed as follows: if to the
Guarantor, at 2550 Denali Street, Suite 1000, Anchorage, Alaska 99503,
Attention: Chief Financial Officer; if to the Lessor, at c/o GCI Fiber
Co., Inc., 2550 Denali Street, Suite 1000, Anchorage, Alaska 99503,
Attention: Chief Financial Officer; if to the Agent, at its offices at
1301 Avenue of the Americas, New York, New York 10019, Attention:
Project Finance Group; and if to the Lessee, at 2550 Denali Street,
Suite 1000, Anchorage, Alaska 99503, Attention: Chief Financial
Officer; or at such other address as any of the foregoing Persons
shall from time to time designate in writing. If either the Lessor or
the Guarantor gives any notice hereunder (for any reason whatsoever)
to the other or to the Lessee, the Lessor and the Guarantor each
agrees to simultaneously deliver a copy of such notice to the Agent.
(d) The Guarantor acknowledges that the Lessor is assigning
the Lessor's right, title and interest in and to this Guaranty and all
moneys due or to become due hereunder to the Agent (for the benefit of
the Lenders) as security for all obligations secured by the Credit
Agreement and the other Fundamental Documents; and the Guarantor
consents to such assignment and agrees to make all payments hereunder
in the same manner as would be required of the Lessee under the Lease.
The Guarantor hereby acknowledges receipt of a copy of the Lease. The
Guarantor hereby waives the
-7-
<PAGE>
right to assert against the Agent, as assignee of the Lessor, any
claim, defense, counterclaim or set off that it could assert against
the Lessor in an action brought by the Lessor upon this Guaranty.
Unless the Agent shall otherwise direct in writing, the Guarantor
hereby agrees that it will make payment of all moneys due or to become
due to the Lessor to the Agent for application pursuant to the Credit
Agreement.
(e) The terms of this Guaranty shall be binding upon the
Guarantor and its successors and assigns, and shall inure to the
benefit of, and be enforceable by, the Lessor and the Agent and their
respective successors and assigns; provided, however, that the
Guarantor shall not assign any of its rights or obligations under this
Guaranty without the prior written consent of the Lessor and the
Agent, and any attempted assignment by the Guarantor in violation of
this provision shall be void.
(f) THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(g) If any term of this Guaranty and any other application
thereof shall be invalid or unenforceable, the remainder of this
Guaranty and any other application of such terms shall not be affected
thereby.
(h) The Guarantor hereby submits to the jurisdiction of
certain courts on the same terms as are provided in Section 23 of the
Lease for the Lessee.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Guaranty to be executed and delivered by their respective officers thereunto
duly authorized as of the date first set forth above.
GCI HOLDINGS, INC.
By
Name:
Title:
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., its General
Partner
By
Name:
Title:
By: Fiber Hold Co., Inc., its General
Partner
By
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH, as
Administrative Agent
By
Name:
Title:
<PAGE>
EXHIBIT R
FORM OF COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected [President, Vice President, Treasurer
or Secretary] of GCI Fiber Co., Inc., an Alaska corporation and a general
partner of Alaska United Fiber System Partnership (the "Borrower"), a general
partnership organized under the laws of Alaska;
2. I have reviewed the terms of the Credit and Security
Agreement dated as of January 27, 1998, among the Borrower, the lenders referred
to therein, Credit Lyonnais New York Branch as Administrative Agent, NationsBank
of Texas, N.A. as Syndication Agent and TD Securities (USA) Inc. as
Documentation Agent (as such agreement may be amended, supplemented or otherwise
modified, renewed or replaced from time to time, the "Credit Agreement";
capitalized terms used herein without definition shall have the meanings set
forth in the Credit Agreement), and the Notes and I have conducted, in
reasonable detail, a review of the transactions and condition of the Borrower
during the accounting period covered by the attached financial statements. In
the course of the performance of my duties, I would normally have knowledge of
any condition or event which would constitute a Default or Event of Default;
3. The examinations described in paragraph (2) did not
disclose the existence of any condition or event which constitutes a Default or
Event of Default during, or at the end of, the accounting period covered by the
attached financial statements or as of the date of this Certificate; and as of
the date of this Certificate, I have no knowledge of any condition or event
which would constitute a Default or Event of Default, except as set forth below:
Described below (or in a separate attachment to this
Certificate) the exceptions, if any, to paragraph (3) above by listing, in
detail, the nature of each condition or event, the period during which it has
existed and any action which the Borrower or any Transaction Party has taken, is
taking, or proposes to take, with respect to each such condition or event:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
4. As of , Total Debt of the Borrower is
$ . [if applicable insert the following sentence: The Borrower is still
entitled to the same reduced
<PAGE>
Applicable Margin (which is set forth below) pursuant to, and in accordance
with, Section 2.5(c) of the Credit Agreement.
Reduced Applicable Margin for Alternate Base Rate Loans:
Reduced Applicable Margin for Eurodollar Loans:
The foregoing certifications, together with the financial
statements delivered with this Certificate in support hereof, are made and
delivered this day of , pursuant to Section 5.1(c) of the
Credit Agreement.
GCI FIBER CO., INC., a General Partner of
Alaska United Fiber System Partnership
By:
Name:
Title:
-2-
<PAGE>
EXHIBIT S
FORM OF SCHEDULE TO THE INTEREST
RATE PROTECTION AGREEMENT
SCHEDULE
to the
MASTER AGREEMENT
dated as of
between
CREDIT LYONNAIS NEW YORK BRANCH ("PARTY A")
and
ALASKA UNITED FIBER SYSTEM PARTNERSHIP ("PARTY B")
Part 1. Termination Provisions.
(a) "Specified Entity" means in relation to Party A for the
purpose of:
Section 5(a)(v), None
Section 5(a)(vi), None
Section 5(a)(vii), None
Section 5(b)(iv), None
and in relation to Party B for the purpose of:
Section 5(a)(v), None
Section 5(a)(vi), None
Section 5(a)(vii), None
Section 5(b)(iv), None
(b) "Specified Transaction" will have the meaning specified in
Section 14 of this Agreement.
(c) The "Cross Default" provisions of Section 5(a)(vi) of this
Agreement will apply to both parties. For such purpose, Section 5(a)(vi) of this
Agreement is hereby amended by deleting subclauses (1) and (2) thereof in their
entirety and replacing them with the following:
<PAGE>
"an Event of Default (as defined in the
Credit Agreement dated as of January 27, 1998 among
Alaska United Fiber System Partnership, as Borrower,
Credit Lyonnais New York Branch, as Administrative
Agent, Nationsbank of Texas, N.A., as Sydication
Agent, and TD Securities (USA) Inc., as Documentation
Agent, and The Lenders signatory thereto, as in
effect from time to time, "Credit Agreement") which
has resulted in the Obligations (as defined in the
Credit Agreement) becoming due and payable".
If such provisions apply:
"Specified Indebtedness" will have the meaning
specified in Section 14 of this Agreement, except that such term shall not
include any obligation in respect of deposits received in the ordinary course of
Party A's banking business.
(d) "Termination Currency" means United States Dollars.
(e) The "Credit Event Upon Merger" provisions of Section
5(b)(iv) of this Agreement will apply to Party A and to Party B.
(f) The "Automatic Early Termination" provision of Section
6(a) of this Agreement will not apply to Party A and will not apply to Party B.
(g) Payments on Early Termination. For the purpose of Section
6(e) of this Agreement:
Market Quotation will apply.
The Second Method will apply.
(h) Additional Termination Event will not apply.
(i) Additional Event of Default will not apply.
Part 2. Tax Representations
(a) Payer Representations. For the purpose of Section 3(e) of
this Agreement, each of Party A and Party B represent that it is not required by
any applicable law, as modified by the practice of any relevant governmental
revenue authority, of any Relevant Jurisdiction to make any deduction or
withholding for or on account of any Tax from any payment (other than interest
under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it to the
other party under this Agreement. In making this representation, it may rely on
(i) the accuracy of any representation made by the other party pursuant to
Section 3(f) of this Agreement; (ii) the
-2-
<PAGE>
satisfaction of the agreement of the other party contained in Section 4(a)(i) or
4(a)(iii) of this Agreement and the accuracy and effectiveness of any document
provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this
Agreement; and (iii) the satisfaction of the agreement of the other party
contained in Section 4(d) of this Agreement; provided, that it shall not be a
breach of this representation where reliance is placed on clause (ii) and the
other party does not deliver a form or document under Section 4(a)(iii) of this
Agreement by reason of material prejudice to its legal or commercial position.
(b) Payee Representations
(i) Party A / Payee Tax Representation. For the
purpose of Section 3(f) of this Agreement,
Party A represents that each payment
received or to be received by it in
connection with this Agreement will be
effectively connected with its conduct of a
trade or business in the United States of
America.
(ii) Party B / Payee Tax Representation. For the
purpose of Section 3(f) of this Agreement,
Party B represents that it is a general
partnership organized under the laws of the
state of Alaska.
Part 3. Agreement to Deliver Documents
For the purpose of Sections 4(a)(i) and (ii) of this
Agreement:
(a) Tax forms, documents or certificates to be delivered are:
(i) Party A agrees to execute and deliver to
Party B, a United States Internal Revenue
Service Form 4224, or any successor form,
(i) upon execution of this Agreement, (ii)
promptly upon reasonable demand by Party B,
and (iii) promptly upon learning that any
such form previously provided by Party A has
become obsolete or incorrect.
Other documents to be delivered are:
-3-
<PAGE>
<TABLE>
<CAPTION>
Covered by
Party Required to Date by Which Section 3(d)
Deliver Document Form/Document/Certificate to Be Delivered Representation
- ----------------- ------------------------- ---------------- --------------
<S> <C> <C> <C>
Party B Certified copies of all Upon execution Yes
documents evidencing necessary of Agreement
corporate and other
authorizations and approvals
with respect to the
execution, delivery and
performance by the party
of this Agreement, each
Confirmation and any
applicable Credit Support
Document.
Party A and Party B A certificate of an authorized Upon execution of the Yes
officer of the party certifying Agreement
the names, true signatures
and authority of the
officers of the party signing
this Agreement, each
Confirmation and any
applicable Credit Support
Document.
Party A and Party B A duly executed Credit Upon execution of No
Support Document. Agreement
Party B An opinion of counsel to Party Upon execution of No
B in form and substance this Agreement
satisfactory to Party A.
</TABLE>
Part 4. Miscellaneous
(a) Addresses for Notices. For the purpose of Section 12(a) of
this Agreement:
Address for notices or communications to Party A:
Address: 1301 Avenue of the Americas, New York, New York 10019
Attention: Treasury Department
Telex No.: 62410
Answerback: CREDW
Telephone No.: (212) 261-7290
Facsimile No.: (212) 459-3167
-4-
<PAGE>
Electronic Messaging System Details: None
Address for notices or communications to Party B:
Address: c/o GCI Fiber Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attention: Chief Financial Officer
Telex No.: None
Answerback: None
Telephone No.:
Facsimile No.: (907) 265-5676
Electronic Messaging System Details: None
(b) Process Agent. For the purpose of Section 13(c) of this
Agreement, Party B appoints as its Process Agent: CT Corporation.
(c) Offices. The provisions of Section 10(a) will apply to
Party A and Party B.
(d) Multibranch Party. For the purpose of Section 10(c), (i)
Party A is not a Multibranch Party, and (ii) Party B is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent shall be Party A.
(f) Credit Support Document. The Credit Support Documents are
the Fundamental Documents as defined in the Credit Agreement.
(g) Credit Support Provider. Credit Support Provider means:
(i) in relation to Party A: Not Applicable; (ii) in relation to Party B, the
Transaction Parties.
(h) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(i) Netting of Payments. As of the date of this Agreement,
subparagraph (ii) of Section 2(c) of this Agreement will not apply to any
Transaction.
(j) "Affiliate" will have the meaning specified in Section 14
of this Agreement, except that for purposes of Section 3(c), "Affiliate" means
with respect to Party A, any entity controlled, directly or indirectly by Party
A. For this purpose, "control of a majority of person" means ownership of a
majority of the voting power of the entity or person.
Part 5. Other Provisions
-5-
<PAGE>
(a) Procedures for Entering into Transactions. With respect to
each Transaction entered into pursuant to this Agreement, Party A will, on or
promptly after the Trade Date thereof (by mail, telex, telecopier or other
electronic means), send Party B a Confirmation of each Transaction between them
on the standard form used by Party A or in such other form as is mutually agreed
upon by the parties. Party B will promptly thereafter confirm the accuracy of or
request the correction of such Confirmation. If Party B fails to accept or
dispute the Confirmation in the manner set forth above within three Local
Business Days after receipt from Party A, its failure shall constitute it
acknowledgment that the Confirmation correctly reflects the parties' agreement
on the terms of the Transaction referenced therein. The requirement of this
Agreement that the parties exchange Confirmations shall for all purposes be
deemed satisfied by a Confirmation sent and an acknowledgment deemed given as
provided herein.
(b) Definitions. This Agreement, each Confirmation and each
Transaction are subject to the 1991 ISDA Definitions (the "1991 Definitions")
published by the International Swap and Derivatives Association, Inc. ("ISDA"),
and will be governed in all respects by the provisions set forth in the 1991
Definitions. The provisions of the 1991 Definitions are incorporated by
reference in, and made part of, this Agreement and each Confirmation as if set
forth in full in this Agreement and each Confirmation. For these purposes, all
references in the 1991 Definitions to a "Swap Transaction" shall be deemed to
apply to each Transaction under this Agreement. The provisions of the 1991
Definitions relating to Market Disruption Events and Adjustments to Indices (and
their effects as well) will apply to a Transaction under this Agreement only to
the extent not inconsistent with the provision of the applicable Confirmation.
In the event of any inconsistency between 1991 Definitions and any provisions of
this Agreement, the provisions of this Agreement will prevail. The definitions
incorporated into a Confirmation shall prevail over the provisions of this
Agreement and the 1991 Definitions.
(c) Affected Parties in Termination Events. For purposes of
Section 6(e) of this Agreement, both parties shall be deemed to be Affected
Parties in connection with any Illegality or Tax Event, so that payments in
connection with early termination shall be calculated as provided in Section
6(e)(ii) of this Agreement.
(d) Deferral of Payments in Connection with Illegality. If a
party gives a notice of Illegality, the due date for any payment scheduled to be
made by either party pursuant to Section 2 of this Agreement in connection with
any Affected Transaction at any time after that notice is effective shall be
deferred to the earliest to occur of (i) the date for settlement payments
pursuant to Section 6(e) of this Agreement in connection with an Early
Termination Date, (ii) the final Scheduled Payment Date for the Affected
Transactions and (iii) the date on which arrangements made pursuant to Section
6(b)(ii) of this Agreement to avoid the Illegality are effected. Any payments
deferred pursuant to this provision shall be made on the deferred payment date
together with interest accrued on each deferred amount from and including its
originally scheduled due date to but excluding the deferred due date (or, if an
Early Termination Date is designated, to but excluding the day it is designated)
at the Non-default Rate.
-6-
<PAGE>
(e) Conditions Precedent. The condition precedent in Section
2(a)(iii)(1) of this Agreement shall not apply to a payment and delivery owing
by a party if the other party has satisfied in full all its payment or delivery
obligations under Section 2(a)(i) of this Agreement and has at the relevant time
no future payment or delivery obligations, whether absolute or contingent, under
Section 2(a)(i) of this Agreement.
(f) Indemnifiable Tax. For purposes of Section 14 of this
Agreement, the following shall be added as the end of the definition of
"Indemnifiable Tax":
"Notwithstanding the foregoing, "Indemnifiable Tax" also means
any Tax imposed in respect of payment under this Agreement by
reason of a Change in Tax Law by a government or taxing
authority of a Relevant Jurisdiction with respect to the party
making such payment, unless the other party is incorporated,
organized, managed and controlled or considered to have its
seat in such jurisdiction, or is acting for purposes of this
Agreement through a branch office located in such
jurisdiction."
(g) Additional Agreement. For purposes of Section 4(a)(iii) of
this Agreement, the following shall be added immediately prior to the existing
text: "upon learning that such form or document is required or".
(h) Right of Set-off . Any amount (the "Early Termination
Amount") payable to one party (the "Payee") by the other party (the "Payer")
under Section 6(e), in circumstances where there is (i) a Defaulting Party or
(ii) one Affected Party in the case where a Termination Event under Section
5(b)(iv) has occurred, will, at the option of the party ("X)" other than the
Defaulting Party or the Affected Party (and without prior notice to the
Defaulting Party or the Affected Party), be reduced by its set-off against any
amount(s) (the "Other Agreement Amount") payable (whether at such time or in the
future or upon the occurrence of a contingency) by the Payee to the Payer
(irrespective of the currency, place of payment or booking office of the
obligation) under any other agreement(s) between the Payee and the Payer or
instrument(s) or undertaking(s) issued or executed by one party to, or in favor
of, the other party except as otherwise specified in those agreement(s),
instrument(s), or undertaking(s) or separately agreed between the Payer and the
Payee (and the Other Agreement Amount will be discharged promptly and in all
respects to the extent it is so set-off). X will give notice to the other party
of any set-off so effected.
For this purpose, either the Early Termination Amount or the
Other Agreement Amount (or the relevant portion of such amounts) may be
converted by X into the currency in which the other is denominated at the rate
of exchange at which such party would be able, acting in a reasonable manner and
in good faith, to purchase the relevant amount of such currency.
-7-
<PAGE>
If an obligation is unascertained, X may in good faith
estimate that obligation and set-off in respect of the estimate, subject to the
relevant party accounting to the other when the obligation is ascertained.
Nothing herein shall be effective to create a charge or other
security interest. This provision shall be without prejudice and in addition to
any right of set-off, combination of accounts, lien or other right to which any
party is at any time otherwise entitled (whether by operation of law, contract
or otherwise).
(i) Escrow. If either party in its reasonable judgment
determines at any time that there has been a material adverse change that is
likely to affect the other party's ability to perform its ensuing payment
obligation in connection with a Transaction or Transactions involving payments
due from each of the parties on the same day in different currencies, the party
that has formed that judgment may notify the other that the payments due on that
day in connection with that Transaction or those Transactions are to be made in
escrow, to a major commercial bank selected by that party in good faith and that
has offices in the cities in which both payments are to be made. If such an
election is made, each party shall make the payment due from it on that day by
deposit into escrow with that escrow agent, for value on that day, with
irrevocable instructions (i) to release the payment to the intended payee upon
receipt by the escrow agent of the required counter payment due from that payee
on the same day in connection with that Transaction accompanied by irrevocable
instructions to the same effect, or (ii) if the required deposit in escrow of
the counter payment due is not so made on the same day, for value on that day,
to return the payment deposited in escrow to the party that made the escrow
deposit. The party that elects to have payments made in escrow shall pay the
costs of the escrow arrangements and cause those arrangements to provide that
the escrow agent will pay interest on each amount deposited in escrow with it in
either of the relevant cities, for each day such amount remains in escrow past
5:00 p.m. local time in the city, at the same rate per annum, and calculated in
the same way, as it would pay on overnight deposits placed with it in the
relevant currency and city for value on such day. The escrow arrangements shall
also provide that such interest on any amount in escrow shall be payable to the
intended payee of that amount, provided that it has deposited the counter
payment due from it into escrow as contemplated herein, and that, if it has not
done so, such interest shall be payable to the other party.
(j) The following paragraph shall be added to the Agreement as
a new Section 15:
Jury Trial. Each party hereby waives its respective
right to jury trial with respect to any litigation
arising under, or in connection with, this Agreement
or any Transaction.
(k) Representations. Section 3 is hereby amended by adding at
the end thereof the following Subparagraphs (g), (h) and (i):
-8-
<PAGE>
Line of Business. It has entered into this Agreement
(including each Transaction evidenced hereby) in
conjunction with its line of business (including
financial intermediation services) or the financing
of its business.
Eligible Swap Participant. It constitutes an
"eligible swap participant" as such term is defined
in Rule 35.1 (b) (2) of the Commodity Futures Trading
Commission, 17 C.F.R. 35.1 (b) (2) (1993).
Relationship Between Parties. Absent a written agreement to
the contrary:
Either party is not relying on any advice (whether written or
oral) of the other party regarding any Transaction, other than the
representations expressly made by that other party in this Agreement and in the
Confirmation in respect of that Transaction;
In respect of each Transaction under this Agreement,
Either party has the capacity to evaluate (internally or
through independent professional advice) that Transaction and has made its own
decisions to enter into that Transaction; and
Either party understands the terms, conditions, and risks of
that Transaction and is willing to accept those terms and conditions and to
assume (financially and otherwise) those risks.
(l) Monitoring and Recording. Each party (i) consents to the
monitoring or recording, at any time and from time to time, by the other party
of any and all communications between officers or employees of the parties, (ii)
waives any further notice of such monitoring or recording, (iii) agrees to
notify its officers and employees of such monitoring and recording, and (iv)
agrees that any such recordings may be submitted in evidence to any court or in
any proceeding relating to this Agreement.
(m) Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
(n) Scope of Agreement. Notwithstanding any contained in the
Agreement to the contrary, if the parties enter into any Specified Transaction,
such Specified Transaction shall be subject to, governed by and construed in
accordance with the terms of this Agreement unless the Confirmation relating
thereto shall specifically state to the contrary. Each such Specified
Transaction shall be a Transaction for the purposes of this Agreement and each
confirmation
-9-
<PAGE>
with respect thereto will constitute a "Confirmation" subject, governed by and
form part of this Agreement.
(o) Outstanding Specified Transactions. Upon the effectiveness
of the Agreement, unless otherwise agreed to in writing by the parties to this
Agreement with respect to specific Specified Transactions, all Specified
Transactions then outstanding shall be subject to, governed by and construed in
accordance with this Agreement. Each confirmation governing any Specific
Transaction entered into prior to the date hereof shall constitute a supplement
to, and form a part of, this Agreement, and will be read and construed as one
with this Agreement.
Part 6. Additional Terms for FX Transactions and Currency Option Provisions.
(a) FX Definitions. The 1992 ISDA FX and Currency Option
Definitions, as published by the International Swaps and Derivatives
Association, Inc. (the "FX Definitions") are incorporated by reference into this
Agreement. Any terms used and not otherwise defined in this Agreement that are
contained in the FX Definitions shall have the respective meanings specified
therein, in the event of any inconsistency between the FX Definitions and the
1991 Definitions, the FX Definitions shall prevail with respect to an FX
Transaction or a Currency Option. In the event of any inconsistency between the
FX Definitions and the provisions otherwise contained in this Agreement, those
provisions otherwise contained in this Agreement shall prevail.
The following amendments are made to the FX Definitions:
Section 1.2 of the FX Definitions is amended by the addition
of the following definitions with respect to the FX Transactions:
"Currency Obligation" means the undertaking of a party
hereunder to receive or deliver an amount of currency, including a netted
Currency Obligation, and including any Currency Obligation previously entered
into by the parties.
Section 2.2 of the FX Definitions is amended by the addition
of the following definitions with respect to Currency Options:
"Call". "Call" means a Currency Option entitling, but not
obligating, the Buyer to purchase from the seller at the Strike Price a
specified quantity of the Call Currency;
"Put". "Put" means a Currency Option entitling, but not
obligating, the Buyer to sell to the Seller at the Strike Price a specified
quantity of the Put Currency;
Section 2.2(k) is hereby amended by deleting in its entirety
the final sentence thereof and adding the following two sentences at the end
thereof: "An Option may be exercised in whole or in part. If an Option is
exercised in part, the unexercised portion shall not be
-10-
<PAGE>
extinguished thereby but shall remain an Option to the extent of such
unexercised portion until the earlier of (i) the expiration of the Option or
(ii) an exercise of the Option that leaves no remaining unexercised portion
thereof."
(b) FX Transaction Novation Netting. In addition to the
settlement netting provisions of Section 2(c) of this Agreement, unless
otherwise agreed, if the parties enter into an FX Transaction giving rise to a
Currency Obligation for the same Value Date in and the same Currency as a then
existing Currency Obligation, then immediately upon entering into such FX
Transaction, each such Currency Obligation shall automatically and without
further action be individually canceled and simultaneously replaced by a new
Currency Obligation for such Value Date determined as follows: the amount of
such Currency that would otherwise have been payable by each party on such Value
Date shall be aggregated and the party with the larger aggregate amount shall
have a new Currency Obligation to pay to the other party the amount of such
currency by which its aggregate amount exceeds the other party's aggregate
amount, provided that if the aggregate amounts are equal, no new Currency
Obligation shall arise. This paragraph (c) shall not affect any other Currency
Obligation of a party to pay any different Currency on the same Value Date. This
provision shall apply notwithstanding that either party (i) may fail to send out
a Confirmation in respect of any such novation, or (ii) may fail to make changes
in any of its books as a result of any such novation.
(c) Currency Option Discharge and Termination. Unless
otherwise agreed, any Call Option or any Put Option written by a party will
automatically be terminated and discharged, in whole or in part, as applicable,
against a Call Option or a Put Option, respectively, written by the other party,
such termination and discharge to occur automatically upon the payment in full
of the last Premium payable in respect of such Currency Options; provided that
such termination and discharge may only occur in respect of Currency Options:
each being with respect to the same Put Currency and the same
Call Currency each having the same Expiration Date and
Expiration Time; each being of the same style, i.e. either
both being American Style Options or both being European Style
Options; each having the same Strike Price; neither of which
shall have been exercised by delivery of a Notice of Exercise;
and, upon occurrence of such termination and discharge, neither party shall have
any further obligation to the other party in respect of the relevant Currency
Options or, as the case may be, parts thereof so terminated and discharged. In
the case of a partial termination and discharge (i.e. where the relevant
Currency Options are for different amounts of the Currency Pair), the remaining
portion of the Currency Option which is partially discharged and terminated
shall continue to be a Currency Option for all purposes of this Agreement. This
provision shall apply notwithstanding that either party (i) may fail to send out
a Confirmation in respect of any such discharge and termination, or (ii) may
fail to make changes in any of its books as a result of any such discharge and
termination.
-11-
<PAGE>
(d) Confirmations. Any FX Transaction and Currency Option
shall be promptly confirmed by the parties by Confirmations exchanged by mail,
telex, facsimile or other electronic means. Unless either party objects to the
terms of an FX Transaction or Currency Option contained in any Confirmation
within ten (10) Local Business Days of receipt thereof, the terms of such
Confirmation shall be deemed correct and accepted absent manifest error, unless
a corrected Confirmation is sent by a party within such ten (10) day period. The
requirement of this Agreement that the parties exchange Confirmations shall for
all purposes be deemed satisfied by a Confirmation sent and an acknowledgment
deemed given as provided herein.
Please confirm your agreement to the terms of the foregoing
Schedule by signing below.
CREDIT LYONNAIS NEW YORK BRANCH
By:
Name:
Title:
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., a General
Partner
By:
Name:
Title:
By: Fiber Hold Co., Inc., a General
Partner
By:
Name:
Title:
-12-
<PAGE>
EXHIBIT T
FORM OF CONFIDENTIALITY LETTER
[Date]
[Addressed to Assigning Lender]
Dear Sirs:
In connection with the undersigned's proposed participation in
the credit facility (the "Facility") which has been extended to Alaska United
Fiber System Partnership (the "Borrower"), you, Credit Lyonnais New York Branch,
NationsBank of Texas, N.A., TD Securities (USA) Inc. and/or their respective
affiliates, are furnishing to the undersigned certain nonpublic information
relating to the Borrower, one or more of its affiliates and/or their respective
businesses. The information which you, Credit Lyonnais New York Branch,
NationsBank of Texas, N.A., TD Securities (USA) Inc., the Borrower or any of
their respective affiliates may furnish to us in connection with our evaluation
of the Borrower, one or more of its affiliates and/or their respective
businesses and of the Facility is collectively called the "Information".
We agree to keep confidential (and to cause our officers,
directors, employees, agents and representatives to keep confidential) and, at
your or the Borrower's request (except as provided below), to promptly return to
you or the Borrower (as applicable) or destroy, the Information and all copies
thereof, extracts therefrom and analyses or other materials based thereon,
except that we shall be permitted to disclose Information (i) to such of our
officers, directors, employees, agents and representatives as need to know such
Information in connection with our evaluation of a possible participation in the
Facility (who will be informed of the confidential nature of the material); (ii)
to the extent required by applicable laws and regulations or by any subpoena or
similar legal process or requested by any bank or other regulatory authority (in
any which event we will notify Credit Lyonnais New York Branch and the Borrower
to the extent not prohibited by applicable law); (iii) to the extent such
Information (A) becomes publicly available other than as a result of a breach of
this confidentiality letter, (B) becomes available to us on a nonconfidential
basis from a source other than you, Credit Lyonnais
<PAGE>
New York Branch, NationsBank of Texas, N.A., TD Securities (USA) Inc., the
Borrower or any of their respective affiliates or (C) was available to us on a
nonconfidential basis prior to its disclosure to us by you, Credit Lyonnais New
York Branch, NationsBank of Texas, N.A., TD Securities (USA) Inc., the Borrower
or any of their respective affiliates; (iv) to the extent the Borrower shall
have consented to such disclosure in writing; or (v) pursuant to the last
paragraph of this confidentiality letter.
We further agree that we will use the Information (except to
the extent the conditions referred to in subclauses (A), (B) and (C) of clause
(iii) above have been met) only with regard to our possible participation in the
Facility.
We further agree that in the event we elect to participate in
the Facility, we will not disclose any of the Information to any further
participant or assignee or proposed participant or assignee until such further
participant or assignee or proposed participant or assignee executes and
delivers a confidentiality letter substantially in the form hereof.
Our obligations under this confidentiality letter are for the
benefit of you, Credit Lyonnais New York Branch, NationsBank of Texas, N.A., TD
Securities (USA) Inc., the Borrower and their respective affiliates and each of
them may pursue remedies against us for the breach hereof, either in equity or
at law.
Notwithstanding anything to the contrary contained above, if
we participate in the Facility, we shall be entitled to retain all Information
and to use it in servicing the credit and in protecting our rights with regard
thereto.
-----------------------------
Proposed Participant's or Assignee's Name
By [Authorized Officer]
Name:
Title:
-2-
<PAGE>
EXHIBIT U
FIBER EXCHANGE AGREEMENT
THIS FIBER EXCHANGE AGREEMENT ("Agreement"), dated effective as of the
27th day of January, 1998 ("Effective Date"), is among the ALASKA UNITED FIBER
SYSTEM PARTNERSHIP, an Alaska general partnership, 2550 Denali Street, Suite
1000, Anchorage, Alaska 99503 ("AU"), GCI CABLE, INC., an Alaska corporation,
2550 Denali Street, Suite 1000, Anchorage, Alaska 99503 ("GCI CABLE"), and GCI
COMMUNICATION CORP., an Alaska corporation, 2550 Denali Street, Suite 1000,
Anchorage, Alaska 99503 ("GCICC").
WHEREAS, AU is constructing and will own and/or lease a fiber optic
telecommunications cable System as defined in that General Contractor Agreement
between AU and GCICC of even date;
WHEREAS, GCI Cable desires to obtain certain fiber and facilities from
AU;
WHEREAS, GCICC desires to obtain space and power from AU;
WHEREAS, AU desires to obtain space and power from GCICC under this
Agreement at FDC, SADC and SDC (all as defined below);
WHEREAS, AU desires to include in that network the fiber to be acquired
pursuant to this Agreement from GCI Cable, which, with the network described at
(i) and (ii) above, collectively shall be known as the Alaska United Fiber
System ("System"); and
WHEREAS, AU's lenders for the financing of the System under that
certain Credit and Security Agreement dated as of January 27, 1998, among AU, as
Borrower, and Credit Lyonnais New York Branch, as Administrative Agent,
NationsBank of Texas, N.A., as Syndication Agent, and TD Securities (USA) Inc.,
as Documentation Agent, and the lenders named therein ("Credit Agreement") are
requiring that AU grant a security interest in the entire System, including an
assignment of this Agreement, to the Administrative Agent on behalf of all the
lenders under the Credit Agreement;
WITNESSETH, that in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto mutually covenant and agree
as follows:
1. Definitions and General Provisions.
1.1 Definitions. The following terms shall, for all purposes of this
Agreement, have the following meanings:
Fiber Exchange Agreement 1
<PAGE>
"Agreement" means this Fiber Exchange Agreement, as amended
from time to time.
"AU" means Alaska United Fiber System Partnership, an Alaska
general partnership.
"AU Facility" means the fiber optic cable network owned,
leased and/or to be constructed by AU, connecting the NPMS, Glen Alps, Whittier,
Valdez, and Lena Point, Alaska, and Norma Beach, through to the SDC, Washington.
"AU Fibers" means the pairs of Dark Fiber in the GCI Cable
Facility, the right to exclusive use of which GCI Cable has granted to AU, as
described in Section 3.1.
"Award" means all compensation, sums, or anything of value
awarded, paid, or received on a total or partial Condemnation.
"Business Day" means any day other than a Saturday, Sunday or
holiday when federal or State of Alaska government offices are closed.
"Condemnation" means (a) the exercise of any governmental
power, whether by legal proceedings or otherwise, by a Condemnor, or (b) a
voluntary sale or transfer to any Condemnor, either under threat of Condemnation
or while legal proceedings for Condemnation are pending.
"Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of eminent domain.
"Dark Fiber" means an identified fiber contained within a
fiber optic cable, which has been installed with all required splicing completed
and terminated to an intermediate fiber distribution panel, but which has no
light source present and has not been terminated to any electronic system.
"Date of Taking" means the date the Condemnor has the right to
possession of the property being condemned.
"Event of Default" means any of the events specified as an
event of default in Section 10.1, or elsewhere in this Agreement.
"Exchange Date" means the single date on which each party's
right to use Dark Fiber on each other party's Facility commences as provided in
Section 3.2.
Fiber Exchange Agreement 2
<PAGE>
"Facility" means when reference is made to the Facility of a
party, (i) the GCICC Facility if the party is GCICC, (ii) the AU Facility if the
party is AU, or (iii) the GCI Cable Facility if the party is GCI Cable.
"FDC" means GCICC's Fairbanks Distribution Center, located at
520 5th Avenue, Suite 407, Fairbanks, Alaska 99701.
"Force Majeure" means, without limitation, the following: acts
of God; strikes, lockouts, or other industrial disturbances; acts of public
enemies; orders or restraints of any kind of the government of the United States
or of the State of Alaska or any other governmental authority, or any of their
departments, agencies, subdivisions, or officials, or any civil or military
authority (including any orders or restraints exercised pursuant to any
agreement to which GCI Cable, GCICC or AU is a party); war or warlike
operations, civil war or commotions, mobilizations or military call-up, and acts
of similar nature; revolution, rebellions, sabotage, and insurrections;
epidemics or quarantine restrictions; landslides; icebergs; typhoons; tornadoes;
adverse weather conditions; tidal waves; earthquakes; fires; storms; droughts;
floods; explosions; breakage, malfunction, or accident to cable, facilities,
machinery, transmission pipes, or canals; provided that no event which is
reasonably in the control of a party or which the party, through the exercise of
reasonable maintenance or management, could have reasonably prevented from
occurring, shall be considered "force majeure."
"GCI Cable" means GCI Cable, Inc., an Alaska corporation, and
its wholly-owned subsidiaries.
"GCI Cable Facility" means those fiber optic facilities owned,
leased and/or to be constructed by GCI Cable (i) in the Anchorage area,
connecting the SADC, Glen Alps and the AT&T POP (located at 210 East Bluff Road,
Anchorage, Alaska 99501), and (ii) in the Fairbanks area, connecting the NPMS,
FDC and the AT&T POP (located at 200 Gaffney Road, Fairbanks, Alaska 99701) all
consisting of buried or aerial optic cable.
"GCI Cable Fibers" means the pairs of Dark Fiber in the AU
Facility, the right to exclusive use of which AU has granted to GCI Cable, as
described in Section 3.1.
"GCICC" means GCI Communication Corp., an Alaska corporation.
"GCICC Facility" means the locations owned or leased by GCICC,
at SADC and Glen Alps, in Anchorage, the FDC, in Fairbanks and the SDC, in
Seattle.
"Glen Alps" means GCICC's leased location at Lot 5, Block 1,
Tower Estates Subdivision, Anchorage, Alaska 99516.
Fiber Exchange Agreement 3
<PAGE>
"Norma Beach" means AU's cable landing station at 14725 Norma
Beach Road, Edmonds, Washington 98026.
"NPMS" means Kanas Telecom, Inc.'s ("Kanas") North Pole
Metering Station facility located at 3624 Frosty Avenue, North Pole, Alaska
99705.
"OLT" means optical line termination equipment.
"POP" means a party's primary point of presence at a
designated location.
"PSMS" means Kanas's PetroStar Metering Station, located at
2.5 Mile Dayville Road, Valdez, Alaska 99686.
"SADC" means GCICC's South Anchorage Distribution Center,
located at 6831 Arctic Boulevard, Anchorage, Alaska.
"SDC" means GCICC's Seattle Distribution Center, located at
2001-6th Avenue, Suite 2900, Seattle, Washington 98121.
"Substantial Completion" or "Substantially Complete" means,
with respect to Dark Fiber, that (i) the fiber has been installed, with all
required splicing completed, (ii) the fiber transports light in accordance with
the standards in Exhibit A, as demonstrated under the testing procedure
described in Exhibit A, (iii) space, power and equipment access have been
provided to the extent required by the terms of this Agreement; and the owner of
the Facility containing the fiber has acquired all permits and rights-of-way
that are required for its operation of that Facility.
"Term" means the term of this Agreement, which shall be
determined as provided in Section 13.1.
"Valdez" means AU's cable landing station to be built at 200
South Harbor Drive, Valdez, Alaska 99686.
"Whittier" means AU's cable landing station at Lot #16, First
Addition to the Port of Whittier, Alaska.
1.2 General Definitions.
Authority. Every "approval," "request," "order," "demand,"
"application," "appointment," "notice," "statement," "certificate," "consent,"
or similar action hereunder shall, unless the form thereof is specifically
provided, be in writing, signed by a duly authorized officer or agent of the
party or other person with a duly authorized signature.
Fiber Exchange Agreement 4
<PAGE>
GAAP. All accounting terms not otherwise defined herein have
meanings assigned to them in accordance with generally accepted accounting
practices, consistently applied, in effect from time to time.
General Words of Reference. The words "herein," "hereof,"
"hereto," "hereby," and "hereunder" and other words of similar import refer to
this Agreement as a whole and not any particular section or other subdivisions.
Sections. All references in this Agreement to designated
"Sections" and other subdivisions are to designated sections and other
subdivisions of this Agreement.
Singular/Plural. The terms specifically defined in Section 1.1
have the meanings ascribed to them in that Section and include the plural as
well as the singular.
2. Representations and Warranties.
2.1 AU's Representations and Warranties. As of the date
hereof, AU hereby represents and warrants as follows:
2.1.1 Formation. AU is a general partnership formed under the
laws of the State of Alaska. Each of its general partners is a corporation in
good standing under the laws of Alaska.
2.1.2 Authorization. AU has full power and authority to carry
on its business as now conducted and to enter into this Agreement. The execution
and delivery of this Agreement has been authorized by proper partnership action,
and this Agreement constitutes AU's valid and legally binding obligation.
2.1.3 Consent, Approval. Except as may have already been
obtained, no consent or approval of any trustee or holder of any indebtedness or
obligation of AU, and no consent, approval, permission, authorization, order, or
license of any governmental authority, is required to be obtained by AU for the
execution and delivery of this Agreement or any other instrument or agreement
required of AU under this Agreement.
2.1.4 No Insolvency. AU is not insolvent as of the date
hereof.
2.1.5 No Defaults. To its knowledge, AU is not in default nor
has any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default by AU under any material agreement or instrument to which AU is a party
or by which AU is bound which default would have a material adverse effect on
AU's performance under this Agreement.
2.1.6 No Conflicts with Other Agreements. Neither the
execution and delivery
Fiber Exchange Agreement 5
<PAGE>
of this Agreement, and the consummation of the transactions contemplated hereby,
nor the fulfillment of or compliance with the provisions hereto, materially
conflicts with, violates, or breaches any partnership agreement provision of AU,
any of the material terms, conditions, or provisions of any indenture,
instrument, or agreement to which AU is a party or by which AU is bound, any
statute, rule or regulation, or any judgment, decree, or order of any court or
agency binding on AU, or constitutes a default under any of the foregoing which
has not been waived or consented to in writing by the appropriate party or
parties.
2.1.7 Litigation. To AU's knowledge, there is no action, suit,
proceeding, inquiry, or investigation by or before any court, governmental
agency, or public board or body pending or threatened against AU which (i) seeks
to prohibit, restrain, or enjoin the execution and delivery of this Agreement,
(ii) questions the validity or enforceability of this Agreement, or (iii)
questions the power or authority of AU to carry out the transactions
contemplated by, or to perform its obligations under, this Agreement.
2.1.8 Enforceability. When duly executed, this Agreement will
be enforceable against AU according to its terms, except as may be limited by
bankruptcy, insolvency, reorganization, or other laws affecting creditors'
rights generally as amended from time to time.
2.1.9 Effect of Certificate. Any certificate signed by a
general partner of AU duly authorized to execute such certificate and delivered
pursuant to this Agreement shall be deemed to be a representation and warranty
by AU as to the statements made therein.
2.1.10 Title; Right to Use. AU has, or will have by the date
provided herein for Substantial Completion of the AU Facility, title or the
right to use all property necessary to fulfill its obligations under this
Agreement.
2.2 GCICC's Representations and Warranties. As of the date hereof,
GCICC hereby represents and warrants as follows:
2.2.1 Good Standing. GCICC is a corporation in good standing
under the laws of the State of Alaska.
2.2.2 Authorization. GCICC has full corporate power and
authority to carry on its business as now conducted and to enter into this
Agreement. The execution and delivery of this Agreement has been authorized by
proper corporate action, and this Agreement constitutes a valid and legally
binding obligation of GCICC.
2.2.3 Consent, Approval. Except as may have already been
obtained, no consent or approval of any trustee or holder of any indebtedness or
obligation of GCICC, and no consent, approval, permission, authorization, order,
or license of any governmental authority, is required to be obtained by GCICC
for the execution and delivery of this Agreement or any other instrument or
agreement required of GCICC under this Agreement.
Fiber Exchange Agreement 6
<PAGE>
2.2.4 No Insolvency. GCICC is not insolvent as of the date
hereof.
2.2.5 No Defaults. To its knowledge, GCICC is not in default
nor has any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default by GCICC under any material agreement or instrument to which GCICC is a
party or by which GCICC is bound which default would have a material adverse
effect on GCICC's performance under this Agreement.
2.2.6 No Conflicts with Other Agreements. Neither the
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
provisions hereto, materially conflicts with, violates, or breaches any charter,
bylaw, or stock provision of GCICC, any of the material terms, conditions, or
provisions of any indenture, instrument, or agreement to which GCICC is a party
or by which GCICC is bound, any statute, rule or regulation, or any decree, or
order of any court or agency binding on GCICC, or constitutes a default under
any of the foregoing which has not been waived or consented to in writing by the
appropriate party or parties.
2.2.7 Litigation. To GCICC's knowledge, there is no action,
suit, proceeding, inquiry, or investigation by or before any court, governmental
agency, or public board or body pending or threatened against GCICC which (i)
seeks to prohibit, restrain, or enjoin the execution and delivery of this
Agreement, (ii) questions the validity or enforceability of this Agreement, or
(iii) questions the power or authority of GCICC to carry out the transactions
contemplated by, or to perform its obligations under, this Agreement.
2.2.8 Enforceability. When duly executed, this Agreement will
be enforceable against GCICC according to its terms, except as may be limited by
bankruptcy, insolvency, reorganization, or other laws affecting creditors'
rights generally as amended from time to time.
2.2.9 Effect of Certificate. Any certificate signed by an
officer of GCICC duly authorized to execute such certificate and delivered
pursuant to this Agreement shall be deemed to be a representation and warranty
by GCICC as to the statements made therein.
2.2.10 Title; Right to Use. GCICC has, or will have by the
date provided herein for Substantial Completion of the GCICC Facility, or will
have title or the right to use all property necessary to fulfill its obligations
under this Agreement.
2.3 GCI Cable's Representations and Warranties. As of the date hereof,
GCI Cable hereby represents and warrants as follows:
2.3.1 Good Standing. GCI Cable is a corporation in good
standing under the laws of the State of Alaska.
2.3.2 Authorization. GCI Cable has full corporate power and
authority to carry
Fiber Exchange Agreement 7
<PAGE>
on its business as now conducted and to enter into this Agreement. The execution
and delivery of this Agreement has been authorized by proper corporate action,
and this Agreement constitutes a valid and legally binding obligation of GCI
Cable.
2.3.3 Consent, Approval. Except as may have already been
obtained, no consent or approval of any trustee or holder of any indebtedness or
obligation of GCI Cable, and no consent, approval, permission, authorization,
order, or license of any governmental authority, is required to be obtained by
GCI Cable for the execution and delivery of this Agreement or any other
instrument or agreement required of GCI Cable under this Agreement.
2.3.4 No Insolvency. GCI Cable is not insolvent as of the date
hereof.
2.3.5 No Defaults. To its knowledge, GCI Cable is not in
default nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a default by GCI Cable under any material agreement or instrument to
which GCI Cable is a party or by which GCI Cable is bound which default would
have a material adverse effect on GCI Cable's performance under this Agreement.
2.3.6 No Conflicts with Other Agreements. Neither the
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
provisions hereto, materially conflicts with, violates, or breaches any charter,
bylaw, or stock provision of GCI Cable, any of the material terms, conditions,
or provisions of any indenture, instrument, or agreement to which GCI Cable is a
party or by which GCI Cable is bound, any statute, rule or regulation, or any
decree, or order of any court or agency binding on GCI Cable, or constitutes a
default under any of the foregoing which has not been waived or consented to in
writing by the appropriate party or parties.
2.3.7 Litigation. To GCI Cable's knowledge, there is no
action, suit, proceeding, inquiry, or investigation by or before any court,
governmental agency, or public board or body pending or threatened against GCI
Cable which (i) seeks to prohibit, restrain, or enjoin the execution and
delivery of this Agreement, (ii) questions the validity or enforceability of
this Agreement, or (iii) questions the power or authority of GCI Cable to carry
out the transactions contemplated by, or to perform its obligations under, this
Agreement.
2.3.8 Enforceability. When duly executed, this Agreement will
be enforceable against GCI Cable according to its terms, except as may be
limited by bankruptcy, insolvency, reorganization, or other laws affecting
creditors' rights generally as amended from time to time.
2.3.9 Effect of Certificate. Any certificate signed by an
officer of GCI Cable duly authorized to execute such certificate and delivered
pursuant to this Agreement shall be deemed to be a representation and warranty
by GCI Cable as to the statements made therein.
Fiber Exchange Agreement 8
<PAGE>
2.3.10 Title; Right to Use. GCI Cable has, or will have by the
date provided herein for Substantial Completion of the GCI Cable Facility, or
will have title or the right to use all property necessary to fulfill its
obligations under this Agreement.
3. Exclusive Use of Dark Fiber; Grant of Certain Facilities.
3.1 Grants of Exclusive Use of Dark Fiber. GCI Cable hereby grants to
AU the exclusive right to use Dark Fibers in the GCI Cable Facility, and AU
hereby grants to GCI Cable the exclusive right to use Dark Fibers in the AU
Facility, as described below and as set forth on Exhibit B hereto:
- Between SADC and Glen Alps, GCI Cable shall provide 16fibers
to AU. (1)
- Between AT&T's Anchorage POP and Glen Alps, GCI Cable shall
provide 10 fibers to AU.
- Between SADC and AT&T's Anchorage POP, GCI Cable shall provide
10 fibers to AU.
- Between Kanas's NPMS and FDC, GCI Cable shall provide 8 fibers
to AU.
- Between FDC and AT&T's Fairbanks POP, GCI Cable shall provide
4 fibers to AU on each side of a diversely routed ring.
- Between Glen Alps and Whittier, AU shall provide 18 fibers to
GCI Cable.
- Between Whittier and Valdez, AU shall provide 10 fibers to GCI
Cable.
- Between Valdez and Kanas's PSMS, AU shall provide 22 fibers to
GCI Cable.
The specific locations and points of termination of the AU Fibers are described
in Exhibit B-1. The specific locations and points of termination of the GCI
Cable Fibers are described in Exhibit C. The rights to exclusive use granted
under this Section shall commence on the Exchange Date, and shall continue
thereafter until the end of the Term of this Agreement.
3.2 Exchange Date. Each party's right granted under Section 3.1 to the
exclusive use of Dark Fiber in the other party's facility shall each commence on
the Exchange Date, which shall occur not later than January 1, 1999. The
Exchange Date is the first Business Day after each of the following conditions
has been satisfied:
3.2.1 Substantial Completion of AU Facility. AU has given GCI
Cable written notice that the AU Facility is Substantially Complete.
3.2.2 Substantial Completion of GCI Cable Facility. GCI Cable
has given AU written notice that the GCI Cable Facility is Substantially
Complete.
- -------------------
1 This number is inclusive of the 6 fibers to be provided to Kanas under
that Fiber Exchange Agreement dated as of November 21, 1997 between Kanas and
GCICC, which Agreement GCICC assigned to AU on January 6, 1998.
Fiber Exchange Agreement 9
<PAGE>
Notwithstanding any other provision of this Agreement, the requirement that each
of the foregoing conditions occur before the Exchange Date shall not be affected
by any act or event of Force Majeure.
3.3 Notice of Substantial Completion. GCI Cable shall give AU written
notice of the Substantial Completion of the GCI Cable Facility within ten (10)
days after its Substantial Completion. AU shall give GCI Cable written notice of
the Substantial Completion of the AU Facility within ten (10) days after its
Substantial Completion. Each party shall have ten (10) days to perform such
reasonable testing as it may desire, prior to its acceptance of the other
party's Facility.
3.4 Title to Facilities. Notwithstanding the grants of exclusive use
under Section 3.1, each party shall retain title to all of its Facility, except
as set forth in Section 3.5.
3.5 Grant of Certain Facilities. Notwithstanding Section 3.4, in
consideration of the overall connectivity granted under this Agreement, AU
hereby grants title to GCI Cable to those certain facilities described as "new"
on Exhibit E hereto. AU agrees to execute any documentation necessary or
desirable to evidence such transfer, including a bill of sale.
4. Electronic Equipment; Interconnection.
4.1 Installation of Electronic Equipment on AU Fibers. AU shall bear
the expense of acquiring and installing its own OLT, repeater and other
electronic equipment to operate the AU Fibers. Subject to AU's obtaining any
required third party consent, GCICC and GCI Cable, as applicable, shall allow AU
reasonable access to the GCICC Facility and the GCI Cable Facility, as
applicable, for the purpose of installing AU's electronic equipment.
4.2 Installation of Electronic Equipment on GCI Cable Fibers. GCI Cable
shall bear the expense of acquiring and installing its own OLT, repeater and
other electronic equipment to operate the GCI Cable Fibers. Subject to GCI
Cable's obtaining any required third party consent, AU shall allow GCI Cable
reasonable access to the AU Facility for the purpose of installing GCI Cable's
electronic equipment.
4.3 Space and Power on AU Facility. AU shall charge GCICC for the space
and power for GCICC's electronic equipment installed on the AU Facility. Such
space and power shall be charged at $8.50 per square foot per month, which rate
shall be annually adjusted at an amount equal to the percentage increase, if
any, in the U.S. Consumer Price Index, as published by the U.S. Department of
Labor, Bureau of Labor Statistics for Anchorage, Alaska using the preceding
December as the base period. The rate shall not be decreased because of
decreases in the Consumer Price Index. The locations at which GCICC will require
space and power for such electronic equipment, and GCICC's space and power
requirements for
Fiber Exchange Agreement 10
<PAGE>
each location, are specified in Exhibit D. Upon request, but subject to AU's
sole approval, which shall not be reasonably withheld, GCICC may request
modifications to Exhibit D.
4.4 Space and Power on GCICC Facility. GCICC shall charge AU for the
space and power for AU's electronic equipment installed to operate the AU
Fibers. Such space and power shall be charged at $8.50 per square foot per
month, which rate shall be annually adjusted at an amount equal to the
percentage increase, if any, in the U.S. Consumer Price Index, as published by
the U.S. Department of Labor, Bureau of Labor Statistics for Anchorage, Alaska
using the preceding December as the base period. The rate shall not be decreased
because of decreases in the Consumer Price Index. The locations at which AU will
require space and power for such electronic equipment, and AU's space and power
requirements for each location, are specified in Exhibit D. Upon request, but
subject to GCICC's sole approval, which shall not be unreasonably withheld, AU
may request modifications to Exhibit D.
4.5 Modifications of Electronic Equipment. Each party, at its own
expense, may modify or replace electronic equipment that it has installed under
Sections 4.1 or 4.2, subject to any limitations imposed by the space and power
that the other party is obligated to provide for the equipment at that location.
If a party requires an increase in space or power to accommodate the
modification or replacement of its equipment, it shall notify the applicable
party in writing of its increased requirements. The recipient of the notice
shall use its best efforts to accommodate the request subject to its own
operating requirements and contractual arrangements with third parties. The
recipient of the request need not make any modifications to its facilities to
accommodate the request until the requesting party has agreed in writing to pay
the cost thereof.
4.6 Relocation of Electronic Equipment. AU may relocate electronic
equipment installed for the operation of the GCI Cable Fibers, and GCI Cable may
relocate electronic equipment installed for the operation of the AU Fibers,
provided that, before the relocation:
A. The relocating party gives forty-five (45) days' written
notice to the applicable party of the relocation;
B. The relocating party demonstrates to the reasonable
satisfaction and written approval of the applicable party that
the relocation will not adversely affect either (i) the
quality or reliability of the applicable party's
telecommunications service, or (ii) access by the applicable
party for maintenance of its equipment; and
C. The relocating party has agreed in writing to pay all costs of
relocating the applicable party's equipment.
The relocating party shall conduct the relocation in a manner that does not
interrupt or degrade the quality of the applicable party's telecommunications
service, in accordance with the standards in that certain Operation and
Maintenance Contract dated effective as of January
Fiber Exchange Agreement 11
<PAGE>
, 1998, between AU and GCICC ("Operation and Maintenance Contract").
4.7 Electronic Equipment at Additional Locations. AU may, at its own
expense, install electronic equipment at locations on the GCI Cable Facility
and/or GCICC Facility other than the locations described in Exhibit B, provided
that any such location is one where GCI Cable or GCICC, as applicable, already
maintains its own electronic equipment, and AU shall be responsible for all
costs and arrangements required to accommodate its equipment. GCI Cable or GCICC
may, at its own expense, respectively, install electronic equipment at locations
on the AU Facility other than the locations described in Exhibit B, provided
that any such location is one where AU has ready access to the GCI Cable Fibers,
and GCI Cable or GCICC, as applicable, shall be responsible for all costs and
arrangements required to accommodate its equipment.
4.8 Interconnection with Other Telecommunications Facilities.
4.8.1 Interconnection by GCI Cable. Subject to GCI Cable's
obtaining any required third party consent, GCI Cable may, at its own expense,
connect the GCI Cable Fibers with other telecommunications facilities at
intermediate points on the AU Facility. AU shall have the right to approve how
such work is done, but shall have no obligations, and shall be subject to no
expense, with respect to the interconnection.
4.8.2 Interconnection by AU. Subject to AU's obtaining any
required third party consent, AU may, at its own expense, connect the AU Fibers
with other telecommunications facilities at intermediate points on the GCI Cable
Facility and/or the GCICC Facility. GCI Cable and GCICC, as applicable, shall
have the right to approve how such work is done, but each respectively, shall
have no obligations, and shall be subject to no expense, with respect to the
interconnection.
5. Maintenance; Risk of Loss.
5.1 Electronic Equipment.
5.1.1 Maintenance. Each party shall provide, at its own
expense, for the routine and non-routine maintenance of the electronic equipment
that it has caused to be installed for its use under Section 4.
5.1.2 Risk of Loss. Each party shall bear the risk of damage
or loss to the electronic equipment that it has caused to be installed for its
use under Section 4, except that each other party shall be responsible to such
loss or damage that is caused by its own negligence or intentional misconduct.
5.2 Fiber.
Fiber Exchange Agreement 12
<PAGE>
5.2.1 Maintenance. Each party shall maintain its Facility in
accordance with the standards in the Operation and Maintenance Contract. Each
party shall bear all operations and maintenance costs associated with its
Facility, subject to the terms of this Agreement and of the Operation and
Maintenance Contract. Such operations and maintenance costs shall include
without limitation all labor, training, contracts, materials, transportation and
all other related maintenance expenses.
5.2.2 Risk of Loss. Each party shall bear the risk of damage
or loss to its Facility, except that each other party shall be responsible for
such loss or damage that is caused by its own negligence or intentional
misconduct.
5.3 Access for Equipment Maintenance. Subject to AU's obtaining any
required third party consent, GCI Cable and GCICC, as applicable, shall grant AU
reasonable access to the GCI Cable Facility and the GCICC Facility,
respectively, for the purpose of maintaining AU's electronic equipment on the AU
Fibers. Subject to GCI Cable's and GCICC's, as applicable, obtaining any
required third party consent, AU shall grant GCI Cable reasonable access to the
AU Facility for the purpose of maintaining GCI Cable's electronic equipment on
the GCI Cable Fibers.
6. Access to Facilities. Each party understands that each other party's Facility
may be located on private property of rights-of-way to which the former party
presently has no right of access. Each party understands that it is solely
responsible for obtaining such access from third parties as may be necessary for
it to install, operate, maintain, remove, repair or replace its equipment
located on another party's Facility. Each party will use its best efforts to
assist each other party in obtaining such access, but no party is obligated to
incur any expense or liability in providing such assistance. Each party shall
bear all costs of complying with conditions required by third parties for access
to each other party's Facility.
7. Destruction/Restoration.
7.1 Total or Partial Destruction; Obligation to Restore. If, during the
Term, any party's Facility is totally or partially destroyed, rendering the
Facility totally or partially inaccessible or unusable, the party that owns the
Facility shall restore the Facility to substantially the same condition as it
was in immediately before destruction, except as provided in Sections 7.1.1 and
7.1.2.
7.1.1 Excessive Cost to Restore. If the cost of repairing or
restoring the Facility, net of any available insurance proceeds not reduced by
applicable deductibles and coinsurance, exceeds ten percent (10%) of the then
replacement cost of the Facility, the party that owns the Facility can elect to
(i) restore the Facility as set forth in Section 7.1 or (ii) provide an
equivalent, alternative facility.
7.1.2 Restoration Contrary to Law. If the existing laws do not
permit the
Fiber Exchange Agreement 13
<PAGE>
restoration, any party can terminate this Agreement immediately by giving notice
to the other party.
8. Condemnation.
8.1 Rights and Obligations of Parties Governed by this Agreement. If,
during the Term, there is any taking of all or any part of a Facility by
Condemnation, the rights and obligations of the parties shall be determined
pursuant to this Section 8.
8.2 Total Taking. If the Premises are totally taken by Condemnation,
this Agreement shall terminate on the Date of Taking.
8.3 Partial Taking. If any portion of a Facility is taken by
Condemnation, this Agreement shall remain in effect, except that any party may
elect to terminate this Agreement if the remaining portion of the Facility is
rendered unsuitable for that party's continued use of the Facility.
8.4 Payment of Award. The Award shall be payable to the owner of the
Condemned Facility; except that each other party shall receive from the Award
the amount attributable to the value of its right under this Agreement to use
any fibers in the Facility that were Condemned.
9. Regulatory Matters. Each party shall obtain all permits, authorizations or
approvals that are required by any regulatory authority to operate its Facility.
By entering into this Agreement, no party waives any exclusion or exemption of
its facilities or services from common carrier or public utility regulation. The
parties will cooperate in obtaining any required governmental approvals or
consents.
10. Default.
10.1 Events of Default. The occurrence of any of the following shall
constitute a Default under this Agreement:
10.1.1 Payment Default. Any party fails to pay when due any
sum of money owed to another , and such failure continues for more than ten (10)
Business Days after notice from the applicable party;
10.1.2 Failure to Perform. Any party fails to observe, perform
and keep the covenants, agreements, provisions, stipulations and conditions
herein contained to be observed, performed and kept by such party and persists
in such failure after thirty (30) days' written notice by the party requesting
that such party remedy, correct, desist or comply (or if any such failure to
comply would reasonably require more than thirty (30) days to rectify, unless
such party commences a cure within the thirty (30) day notice period and
thereafter promptly,
Fiber Exchange Agreement 14
<PAGE>
effectively and continuously proceeds with the cure of the failure to comply);
10.1.3 Breach of Representations or Warranties. If any
representation or warranty by a party contained in this Agreement is false in
any material respect as of the date of the making or furnishing thereof and
would have a material adverse effect on another party;
10.1.4 Insolvency, Bankruptcy. If a party shall (i) apply for
or consent to the appointment of a receiver, trustee or liquidator (or other
officer having powers, under applicable law, similar to those of a receiver,
trustee or liquidator) of it or of all or the major portion of its assets, (ii)
be unable, or admit in writing its inability, to pay its debts as they mature,
(iii) make a general assignment for the benefit of creditors, (iv) be
adjudicated a bankrupt or insolvent or (v) institute proceedings to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
on insolvency proceedings against it, or file a petition or an answer or a
consent seeking reorganization or relief under any bankruptcy, reorganization or
insolvency law of any jurisdiction, or any other law analogous in purpose and
effect, or consent to the filing of any such petition or the material
allegations thereof, or corporate action shall be taken by it for the purpose of
effecting any of the foregoing; or
10.1.5 Order Appointing Receiver, Trustee or Liquidator. If
any order, judgment or decree shall be entered, without the application,
approval or consent of a party, by any court of competent jurisdiction,
approving a petition seeking reorganization of the party or appointing a
receiver, trustee or liquidator (or other officer having powers, under
applicable law, similar to those of a receiver, trustee or liquidator) of it or
of all or a major portion of its assets, and such order, judgment or decree
shall continue unstayed and in effect for any period of sixty (60) consecutive
days.
10.2 Remedies on Default. Upon the occurrence and continuation of an
Event of Default, any non-defaulting party, following thirty (30) days' prior
written notice of such Default to the defaulting party, in addition to all
remedies available at law, may do any one or more of the following with respect
to the defaulting party:
10.2.1 Termination. Terminate this Agreement and the rights
created herein by giving notice of such election to the defaulting party.
10.2.2 Specific Performance. Seek specific performance of any
term or provision of this Agreement.
10.2.3 Force Majeure. Except where this Agreement provides
otherwise, if by reason of Force Majeure, a party is unable in whole or in part
to perform its obligations under this Agreement, the party shall not be in
default under this Agreement during the continuance of such inability. However,
that party shall use all reasonable efforts to remedy with all reasonable
dispatch the cause or causes of its failure to carry out its obligations under
this
Fiber Exchange Agreement 15
<PAGE>
Agreement; provided that the settlement of strikes, lockouts, and other
industrial disturbances shall be entirely within the discretion of the party or
its contractors, as the case may be, and the party and its contractors shall not
be required to make settlement of strikes, lockouts, or other industrial
disturbances by acceding to demands of opposing parties when such course is in
the judgment of the party unfavorable to it.
10.2.4 No Remedy Exclusive. No remedy herein conferred upon or
reserved to a party is intended to be exclusive of any other available remedy or
remedies but each and every such remedy shall be cumulative and shall be in
addition to every other remedy herein or now or hereafter existing at law, in
equity or by statute. No delay or omission to exercise any right or power
accruing upon an Event or Default shall impair any such right or power ro shall
be construed to be a waiver thereof (unless expressly waived by AU, GCI Cable or
GCICC, as applicable), but any such right or power may be exercised from time to
time and as often as may be deemed expedient. Notwithstanding the forgoing,
under no circumstances may any party recover incidental or consequential
damages, or damages for loss of business, under this Agreement.
Security Interest.
11.1 Security Interest in Favor of AU. As security for the performance
by GCI Cable of its obligations hereunder, GCI Cable hereby grants to AU a
security interest in all of its right, title and interest in the GCI Cable
Facility, whether now existing or hereafter constructed or acquired. If for any
reason AU shall at any time be deprived of the exclusive right to use the AU
Fibers as contemplated by this Agreement, then in addition to the other remedies
provided for in Section 10.2 hereof, AU shall be entitled to exercise any of the
remedies provided to secured creditors under the Uniform Commercial Code.
11.2 Security Interest in Favor of GCI Cable. As security for the
performance by AU of its obligations hereunder, AU hereby grants to GCI Cable a
security interest in all of its right, title and interest in the AU Facility,
whether now existing or hereafter constructed or acquired. If for any reason GCI
Cable shall at any time be deprived of the exclusive right to use the GCI Cable
Fibers as contemplated by this Agreement, then in addition to the other remedies
provided for in Section 10.2 hereof, GCI Cable shall be entitled to exercise any
of the remedies as provided to secured creditors under the Uniform Commercial
Code.
12. Confidentiality; Media Relations.
12.1 Confidentiality. The parties agree that the terms of this
Agreement, and information furnished by any party to each other in contemplation
or pursuant to this Agreement (including, without limitation, technical
specifications, operating data and customer information) are confidential and
may not be disclosed without all applicable parties' written consent, except as
may be required by law or as contemplated by this Agreement, and except for
disclosure to the parties' applicable shareholders, partners, agents, advisors
and financial
Fiber Exchange Agreement 16
<PAGE>
institutions. Notwithstanding the foregoing, the parties acknowledge that the
general terms and conditions of this Agreement are required to be disclosed in
reports, filings and offering documents under state and federal securities laws.
12.2 Media Relations. The parties shall agree on the content of all
releases to, and conferences with, the news media concerning the subject matter
of this Agreement; provided that each party shall approve or disapprove each
other party's release within three (3) days after receipt or it shall be deemed
approved.
13. Term; Duties Upon Termination.
13.1 Term. Unless earlier terminated under the terms hereof, this
Agreement shall continue in effect for a period of twenty-five (25) years
commencing on the Effective Date hereof. The Term shall continue automatically
thereafter until the end of the last of three subsequent consecutive periods of
five (5) years each, unless a written notice of termination has been given by
any party hereto thirty (30) days prior to the end of the then- applicable Term.
13.2 Duties upon Termination. Within sixty (60) days after the
termination of this Agreement for any reason after the Exchange Date, (i) each
party shall remove its electronic equipment and other personal property from
each other party's Facility, and perform all restoration of each other party's
premises made necessary by the removal, and (ii) each party shall return in good
condition, ordinary wear and tear excepted, each other party's premises that it
occupied in its use of fibers, space and/or power on the other party's Facility.
14. Exhibits. The following Exhibits and any others referred to in this
Agreement as attached are incorporated in this Agreement in their entirety:
Exhibit A: Light Transmission Standards and Testing Procedure
for Substantial Completion
Exhibit B: Exchange of Dark Fibers and Space and Power Between
GCI Cable, GCICC, AU and Kanas
Exhibit B-1: Locations and Points of Termination of AU Fibers;
Locations of Electronic Equipment on AU Fibers
Exhibit C: Locations and Points of Termination of GCI Cable
Fibers; Locations of Electronic Equipment on GCI
Cable Fibers
Exhibit D: AU Space and Power Requirements; GCICC Space and
Power Requirements
Exhibit E : AU's Grant of Certain Facilities to GCI Cable
15. Miscellaneous.
15.1 No Implied Waiver. In the event any agreement, covenant, or
condition
Fiber Exchange Agreement 17
<PAGE>
contained in this Agreement should be breached by any party and thereafter
waived by the applicable party, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other breach hereunder.
Notwithstanding any such waiver, all the provisions of this Agreement shall
remain in full force and effect.
15.2 Successors in Interest. Each party may, upon written notice to
each other, assign its rights and delegate its duties under this Agreement to
any subsidiary, affiliate or joint venture partner, provided that the assignor
or its parent entity retains at least 50% ownership, or voting control, directly
or indirectly, of the assignee. The foregoing restrictions on free transfer
shall not apply following an uncured Event of Default under the Credit
Agreement. This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereto.
15.3 Notices. All statements, notices or communications to be given
under the terms of this Agreement shall be in writing and delivered by hand, or
sent by certified mail, registered mail or overnight service, with postage
prepaid and return receipt requested, and addressed as follows:
If to AU: 2550 Denali Street
Suite 1000
Anchorage, Alaska 99503
Fax Number: (907) 265-5676
Attention: Director of Finance
If to GCI Cable: 5151 Fairbanks Street
Anchorage, Alaska 99503
Fax Number (907) 786-9270
Attention: Vice President & General
Manager
Cable Television & Entertainment
If to GCICC: 2500 Denali Street
Suite 1000
Anchorage, Alaska 99503
Fax Number: (907) 265-5676
Attention: Senior Vice President &
Chief Financial Officer
or at such other address as from time to time designated by notice pursuant
hereto by the party receiving the notice. The date of service of such notices
shall be the date such notices are received or refused, as the case may be, as
evidenced by addressee's registry or certification receipt. Additionally,
notices may be given by telephone facsimile transmission, provided that an
original copy of said transmission shall be delivered to the addressee by hand
or by nationally utilized overnight delivery services on the business day
following such transmission.
Fiber Exchange Agreement 18
<PAGE>
Telephone facsimiles shall be deemed delivered on the date of such transmission,
with telephonic confirmation of their receipt by the recipient.
15.4 Parties in Interest. Nothing in this Agreement expressed or
implied is intended or shall be construed to confer upon any person, firm, or
corporation, other than the parties hereto, any right, remedy or claim, legal or
equitable, under or by reason of this Agreement, this Agreement being intended
to be and being for the sole and exclusive benefit of the parties hereto.
15.5 Relationship of Parties. Nothing in this Agreement expressed or
implied is intended or shall be construed to establish any relationship between
the parties other than that of independent contractors, and neither party shall
be considered thereby to be the partner, co-venturer or in any other
relationship with the other.
15.6 Time of Essence. Time shall be of the essence of each and every
term of this Agreement.
15.7 Headings. The Section headings contained herein are for
convenience and reference and are not intended to define or limit the scope of
any provision of this Agreement.
15.8 Law Governing Construction of Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of Alaska.
15.9 Exclusive Forum and Venue. Any actions or judicial proceedings
arising out of this Agreement shall be filed and prosecuted in the Superior
Court for the State of Alaska, Third Judicial District, at Anchorage. The
parties hereto each affirmatively waive the right to trial by jury.
15.10 Severability. In the event any provision of this Agreement shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
15.11 Integration and Modification. This document contains the entire
agreement of the parties hereto. All negotiations, statements, or
representations, warranties, and assurances, whether oral or written, which are
in any way related to the subject matter of this Agreement, and the performance
of each party hereto, are merged and integrated into the terms of this document.
This Agreement may not be modified or amended except by a writing signed by all
parties hereto, and any proposed amendment or modification is without effect
until reduced to a writing signed by all parties.
15.12 Additional Documents. The parties agree to execute any additional
documents which may be necessary in order to effectuate the terms of this
Agreement.
Fiber Exchange Agreement 19
<PAGE>
15.13 No Claims. No party shall have any claim, demand, action or suit
against any other, its servants, agents or employees for any injury, including
injury resulting in death or loss of or damage to any property, suffered or
sustained by it or its servants, agents or employees or by any other person or
corporation which directly or indirectly results from, arises out of or is, in
any way, connected with the use of the System by the another except to the
extent that such injury, loss or damage, including injury resulting in death or
loss of or damage to property, is due to the gross negligence of another party,
its servants, agents or employees.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
Fiber Exchange Agreement 20
<PAGE>
IN WITNESS WHEREOF, the parties hereto, in consideration of the mutual
covenants set forth herein and intending to be legally bound, have caused this
Agreement to be executed and delivered as of the date first written above.
GCI COMMUNICATION CORP.
By:
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc., a General
Partner and its General Manager
By:
GCI CABLE, INC.
By:
Fiber Exchange Agreement 21
<PAGE>
EXHIBIT A
Light Transmission Standards and Testing Procedure for Substantial Completion
I. Testing Procedure
1. Ensure that all fibers to be tested have been properly
terminated.
2. Clean all connectors.
3. Turn on the power meter and light source test equipment and
allow them to warm up and stabilize.
4. Before the facility can be tested, the power meter should be
calibrated to 0 dB as follows:
a) Using a test patch cord, connect the light source to the
power meter.
b) Set the power meter to the dBm scale.
c) Make sure that the light source is on, and read the
received optical power at the power meter in dBm. This
value should be close to the light source manufacturer's
output power specification.
d) Set the power meter to the dB scale and adjust to 0.0 dB.
This 0-dB calibration will be used as the light source's
reference power level.
e) Disconnect this test assembly but do not adjust or turn off
the power meter.
5. Disconnect the existing patch cord from the FDP for the link
under test. Do not disturb the power meter's zero reference
calibration performed in the previous step. Connect the light
source using the test patch cord to one end of the fiber
section and power meter using a second tested patch cord to
the other end of the fiber section.
6. Ensure that the configuration is connected properly, and turn
on the light source. Read the optical power meter and record
the optical power level.
7. Repeat the procedure to test all fibers in the facility.
Fiber Exchange Agreement 22
<PAGE>
II. Light Transmission Standards
Attenuation on a fiber shall be 0.30 dB/km on land cables and 0.22 dB/km on
undersea cables. Dispersion on land cable shall be 18 ps/(nm)(km). Both
attenuation and dispersion are specified for a nominal 1550 nm wavelength.
The estimated Fiber Route distances between sites and calculated loss budgets
for the AU Facility are:
Site Miles Kilometers Loss Budget
- ---- ----- ---------- -----------
Glen Alps to Whittier 52.0 83.7 25.1 dB
Whittier to Valdez 96.3 154.9 34.1 dB
Valdez to PSMS 10.0 16.1 4.8 dB
Norma Beach to SDC tbd tbd 0.3dB/km
The estimated Fiber Route distances between sites and calculated loss budgets
for the GCI Cable Facility are:
Site Miles Kilometers Loss Budget
- ---- ----- ---------- -----------
SADC to Glen Alps 16.4 26.4 7.9
AT&T Anchorage to Glen Alps 23.7 38.1 11.4
SADC to AT&T POP Anchorage 7.2 11.6 3.5
FDC to NPMS tbd tbd 0.3dB/km
AT&T POP Fairbanks to NPMS tbd tbd 0.3dB/km
FDC to AT&T POP Fairbanks tbd tbd 0.3dB/km
Fiber Exchange Agreement 23
<PAGE>
EXHIBIT B-1
Locations and Points of Termination of AU Fibers
Locations of Electronic Equipment on AU Fibers
1. Location of AU Fibers shall be at the following facilities: Glen Alps, SADC,
FDC, and AT&T POPs in Anchorage and Fairbanks.
2. Point of Termination of AU Fibers shall be at the fiber termination panel.
3. Locations of electronic equipment on AU Fibers shall be at the following
facilities: SADC, FDC, and AT&T POPs in Anchorage and Fairbanks.
Fiber Exchange Agreement 24
<PAGE>
EXHIBIT C
Locations and Points of Termination of GCI Cable Fibers
Locations of Electronic Equipment on GCI Cable Fibers
1. Location of GCI Cable Fibers shall be at the following facilities: Whittier,
Valdez and PSMS.
2. Point of Termination of GCI Cable Fibers shall be at the fiber termination
panels.
3. Locations of electronic equipment on GCI Cable Fibers shall be at the
following facilities: Whittier, Valdez, and PSMS.
Fiber Exchange Agreement 25
<PAGE>
EXHIBIT D
AU Space and Power Requirements
Space Requirements: SADC (2) 23-inch wide equipment racks
FDC (2) 23-inch wide equipment racks
AT&T POPs To be negotiated
Power Requirements: SADC 1250 Watts @ 48 Volts DC
FDC 1250 Watts @ 48 Volts DC
AT&T POPs To be negotiated
GCICC Space and Power Requirements
Space Requirements: Whittier (2) 23-inch wide equipment racks
Valdez (2) 23-inch wide equipment racks
PSMS (1) 23-inch wide equipment rack
Power Requirements: Whittier 1250 Watts @ 48 Volts DC
Valdez 1250 Watts @ 48 Volts DC
PSMS 750 Watts @ 48 Volts DC
Fiber Exchange Agreement 26
<PAGE>
EXHIBIT E
AU's Grant of Certain Facilities to GCI Cable
In accordance with the attached key map and related narrative (below),
Alaska United will utilize fibers in the existing and proposed GCI-Anchorage
Metropolitan Area Network ("MAN") commencing from Glen Alps.
Location Existing/New No. of Fibers Buffer Tube
- -------- ------------ ------------- -----------
(each) (assigned)
A. Glen Alps
to New 10 5/6
B. O'Malley Wire Center
to Existing 10 5
C. Node 61 - O'Malley Road
to New 10 5/6
D. Tudor & Bragaw OCC
to Existing 10 8
E. AT&T Alascom
to Existing 10 8
F. GCI North (ADC)
to Existing 10 8
G. GCI South (SADC)
to Existing 16 5
H. Rabbit Creek Wire Center
to Existing 16 5
I. Node 72 - Birch Road OCC
to New 16 5/6
A. Glen Alps
Fiber Exchange Agreement 27
<PAGE>
General Contractor Agreement
EXHIBIT V
GENERAL CONTRACTOR
AGREEMENT
THIS GENERAL CONTRACTOR AGREEMENT ("Agreement"), dated effective as of
the 27th day of January, 1998 ("Effective Date"), is between the ALASKA UNITED
FIBER SYSTEM PARTNERSHIP, an Alaska general partnership, 2550 Denali Street,
Suite 1000, Anchorage, Alaska 99503 ("AU") and GCI COMMUNICATION CORP., an
Alaska corporation, 2550 Denali Street, Suite 1000, Anchorage, Alaska 99503
("GCICC").
WHEREAS, AU desires that GCICC act as the general contractor for the
construction of the terrestrial portions of that fiber optic telecommunications
cable network which will be comprised of:
(i) the network connecting the Petro Star Metering Station, Glen
Alps, Whittier, Valdez, and Lena Point, Alaska, and Edmonds,
through to the Seattle Distribution Center, Washington, and
other intermediate regeneration sites;
(ii) the fiber to be acquired pursuant to that Fiber Exchange
Agreement dated as of November 21, 1997, between Kanas
Telecom, Inc. ("Kanas"), and GCICC, which Agreement was
assigned by GCICC to AU on January 6, 1998; and
(iii) the fiber to be acquired pursuant to that Fiber Exchange
Agreement dated as of January 27th, 1998, between GCI Cable,
Inc., GCICC and AU;
collectively, with the Work described below, to be known as the "System";
WITNESSETH, that in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto mutually covenant and agree
as follows:
1. CONSTRUCTION. GCICC shall construct those portions of the System
described in the scope of work attached as Schedule I and the Gantt chart
attached thereto as Attachment 2 ("Work") and in material conformity with AU's
budget for the Work, except to the extent specifically indicated on Attachment 2
to be the responsibility of others.
2. COMMENCEMENT DATE AND SUBSTANTIAL COMPLETION.
General Contractor Agreement 1
<PAGE>
2.1 The commencement date for construction of the System is
the Effective Date.
2.2 GCICC shall achieve Substantial Completion of the entire
Work not later than December 31, 1998. "Substantial Completion" shall mean ready
to be placed into service, following satisfactory completion of the System
commissioning and acceptance tests set forth in Schedule II.
3. PAYMENT TERMS. In consideration of the services to be provided under
this Agreement, AU shall pay to GCICC the amount of GCICC's direct, actual,
necessary and reasonable costs incurred in connection with the construction of
the System, plus GCICC's general and administrative overhead costs which are
allocable to the construction of the System, which overhead costs shall not
exceed five (5%) percent of the direct costs ("Contract Sum").
4. PAYMENTS. AU shall make payments on account of the Contract Sum to
GCICC as provided below:
4.1 The period covered by each invoice shall be one calendar
month ending on the last day of the month, or as follows:
4.2 AU shall pay all such amounts within sixty (60) days of
its receipt of each of GCICC's invoices for such charges.
4.3 Each invoice shall be based upon the invoiced costs
submitted by GCICC.
5. WARRANTY.
5.1 GCICC warrants that the overall performance of the System
(other than the portion of the System constructed by Tyco Submarine System
Limited) (the "Terrestrial System") shall be in accordance with the acceptance
standards contemplated by Schedule II hereto, and the Terrestrial System shall
be free from defects due to faulty design or engineering for a period of one (1)
year from the date of Substantial Completion (the "Basic Warranty Period").
During the Basic Warranty Period, GCICC shall make good, by repair or
replacement, at its sole cost and expense, any defects in the Terrestrial System
which may become apparent or be discovered due to faulty design or engineering
or any act, negligence or omission by GCICC, its agents, or representatives.
GCICC shall make every reasonable effort to effect such repairs or replacements
in a timely manner so as to minimize the period of time that the System is out
of service. If GCICC fails to timely make any required repair or replacement or
to make every reasonable effort to minimize out-of-service time, AU may repair
the System and collect the reasonable costs of such
General Contractor Agreement 2
<PAGE>
repair from GCICC. However, any repair by AU shall not in any way diminish
GCICC's warranty obligations hereunder.
5.2 With respect to any portion of the Work performed by any
subcontractor and any supplies, materials or equipment obtained from any person
other than GCICC which are used in the Work or incorporated in the System, (i)
GCICC shall assign to AU any warranty provided by such third-party subcontractor
or vendor, and (ii) if and to the extent that for any reason any such warranty
is not assigned by GCICC to AU, then GCICC shall provide warranty protection to
AU to the same extent, on such terms and for such period, as each such
third-party subcontractor or vendor provides warranty protection to GCICC.
6. NOTICES. All statements, notices or communications to be given under
the terms of this Agreement shall be in writing and delivered by hand, or sent
by certified mail, registered mail, with postage prepaid and return receipt
requested, or, overnight courier service, and addressed as follows:
If to GCICC: 2500 Denali Street
Suite 1000
Anchorage, Alaska 99503
Fax Number: (907) 265-5676
Attention: John M. Lowber,
Senior Vice President &
Chief Financial Officer
If to AU: 2550 Denali Street
Suite 1000
Anchorage, Alaska 99503
Fax Number: (907) 265-5676
Attention: Bruce L. Broquet,
Director of Finance
or at such other address as from time to time designated by notice pursuant
hereto by the party receiving the notice. The date of service of such notices
shall be the date such notices are received or refused, as the case may be, as
evidenced by addressee's registry or certification receipt. Additionally,
notices may be given by telephone facsimile transmission, provided that an
original copy of said transmission shall be delivered to the addressee by hand
or by nationally utilized overnight delivery services on the business day
following such transmission. Telephone facsimiles shall be deemed delivered on
the date of such transmission, with telephonic confirmation of their receipt by
the recipient.
General Contractor Agreement 3
<PAGE>
7. DEFAULT. The occurrence of either of the following shall constitute
a Default under this Agreement:
7.1 AU fails to pay when due any undisputed sum of money owed
to GCICC, and such failure continues for more than ten (10) business days after
notice from GCICC to AU; or
7.2 GCICC fails to observe, perform and keep the covenants,
agreements, provisions, stipulations and conditions herein contained to be
observed, performed and kept it and persists in such failure for thirty (30)
days after written notice by AU that GCICC remedy, correct, desist or comply (or
if any such failure to comply would reasonably require more than thirty (30)
days to rectify, then GCICC does not commence a cure within the thirty (30) day
period and thereafter promptly, effectively and continuously proceed with the
cure of the failure to comply).
8. REMEDIES. Upon a default by GCICC of its obligations under Section
1, AU may, at its option, assume, perform or pay such obligations and/or
withhold payment of invoices on the uncompleted or unsatisfactory Work. If AU
fails to pay any undisputed charges due under Section 3 within sixty (60) days
following the receipt of the invoice therefor, GCICC may, upon ten (10) business
days' written notice to AU, terminate this Agreement; provided, however, that AU
may cure the default prior to the end of the notice period. Upon the occurrence
of a Default, unless cured as provided herein, the non-defaulting party may
exercise any and all remedies available at law and/or in equity, including
termination of this Agreement, following any applicable cure period if such
Default has not been timely cured. Any exercise of one particular remedy shall
not bar the exercise of other available remedies, the remedies of the
non-defaulting party hereunder being cumulative rather than mutually exclusive.
9. INDEMNIFICATION. GCICC, at its expense, shall defend, indemnify and
hold harmless AU, its agents, subcontractors and employees against any and all
claims, demands, and judgments for losses or damages to real or tangible
property or for bodily injury or death to any person due to any act or omission,
arising out of, or in connection with this Agreement to the extent such damage,
injury or death was caused by the negligence or willful misconduct of GCICC, its
subcontractors, employees or agents. The defense, indemnification and save
harmless obligations is specifically conditioned on the following: (i) AU
providing prompt notification in writing of any such claim or demand; (ii) GCICC
having control of the defense of any such action, claim or demand and of all
negotiations for its settlement or compromise; and (iii) AU cooperating in a
reasonable way to facilitate the defense of such claim or demand or the
negotiations for its settlement, provided however, that any failure to so notify
GCICC shall not relieve GCICC of its indemnity obligations hereunder except to
the extent GCICC's ability to defend such claim shall be prejudiced thereby.
General Contractor Agreement 4
<PAGE>
10. INSPECTION RIGHT. Throughout the term hereof, AU shall have the
right to inspect the Work at any time and may require all necessary or desirable
corrections to the Work so that it conforms to Section 1 of this Agreement and
the requirements of the Credit and Security Agreement dated as of January 27th,
1998, among AU as Borrower, the Lenders referred to therein, and Credit Lyonnais
New York Branch as Administrative Agent, NationsBank of Texas, N.A. as
Syndication Agent, and TD Securities (USA) Inc., as Documentation Agent (as
amended, supplemented, or otherwise modified, renewed or replaced from time to
time, the "Credit Agreement").
11. MISCELLANEOUS.
11.1 NO CLAIMS. GCICC shall have no claim, demand, action or
suit against AU, its servants, agents or employees for any injury, including
injury resulting in death or loss of or damage to any property, suffered or
sustained by it or its servants, agents or employees or by any other person or
corporation which directly or indirectly results from, arises out of or is, in
any way, connected with GCICC's construction of the System, except to the extent
that such injury, loss or damage, including injury resulting in death or loss of
or damage to property, is due to the gross negligence of AU, its servants,
agents or employees.
11.2 NO WAIVER. The failure of any party to enforce any of the
provisions of this Agreement or the waiver thereof in any instance shall not be
construed as a general waiver or relinquishment on its part of any provision,
and, notwithstanding such failure or waiver, all the provisions of this
Agreement shall be and remain in full force and effect.
11.3 GOVERNING LAW. The construction, interpretation and
performance of this Agreement and all causes of action arising out of this
Agreement shall be governed by the laws of the State of Alaska and any
applicable federal statutes. Any action concerning or arising from this
Agreement, in whole or in part, shall be brought and maintained in the Superior
Court of Alaska, Third Judicial District at Anchorage, Alaska.
11.4 ASSIGNMENTS. GCICC shall not assign, transfer, convey or
part with the whole or any portion of the System or any rights and duties
assumed hereunder during the term hereof without AU's prior written consent,
which consent shall not be unreasonably withheld. AU shall have the right to
freely assign, transfer, convey or part with the whole or any portion of the
System or any rights or duties hereunder without the prior consent of GCICC,
provided that GCICC's rights and liabilities under this Agreement shall not be
materially affected thereby.
11.5 BINDING AGREEMENT. This Agreement shall be binding upon
the parties hereto and upon their respective successors and assigns.
General Contractor Agreement 5
<PAGE>
11.6 WAIVERS, AMENDMENTS AND MODIFICATIONS. No provision of
this Agreement shall be deemed waived, amended or modified by either party
unless such waiver, amendment or modification is in writing and signed by both
parties.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
General Contractor Agreement 6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the Effective Date.
ALASKA UNITED FIBER GCI COMMUNICATION CORP.
SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc.,
a General Partner and its
General Manager
By: By:
Title: Title:
General Contractor Agreement 7
<PAGE>
SCHEDULE I
SCOPE OF WORK
[Attached]
General Contractor Agreement 8
<PAGE>
Alaska United Cable System
Scope of Work
for
Management, Engineering & Construction
CONTENTS:
A. General
B. Safety
C. Management
D. Engineering
E. Construction
F. Schedule
G. Attachment
<PAGE>
A. GENERAL
1.0
This Specification outlines the requirement for the management, engineering and
construction deliverables to be provided by GCICC to AU, to complete the System
by Dec. 31, 1998.
2.0
Attachment 1 describes the Alaska United OC-48 SONET System.
3.0
The maintenance and operation activities are addressed in that Operation and
Maintenance Contract dated January 27th, 1998 between the parties hereto.
4.0
Management of AU includes all services required to ensure the construction is
coordinated, controlled, recorded and contrived in an effective and timely
manner to ensure the System is provided to AU in a secure manner.
5.0
Engineering of AU includes all System design, interface issues, and equipment
specifications. System test criteria and compliance to this criteria is also an
engineering function.
6.0
Construction includes all outside plant activities, building of required
structures, installation of all auxiliary equipment, securing of materials &
equipment, and the installation of all required equipment.
B. SAFETY
"NO JOB IS SO IMPORTANT AND NO SERVICE SO URGENT THAT WE CANNOT TAKE THE TIME TO
PERFORM OUR WORK SAFELY."
All work operations of GCICC and of all subcontractors shall be carefully
planned, organized, and controlled to reduce hazardous working conditions to an
absolute minimum.
Adequate protection in the form of warning signs, barricades, flagmen, or
otherwise required by local ordinances shall be provided to minimize the hazards
of injury to personnel and property.
Contractor Agreement Page 2 of 10
<PAGE>
All equipment and building designs shall be constructed an design within OSHA
standards for safety. Local environmental concerns will be included in all
design and engineering considerations.
C. MANAGEMENT. GCICC shall provide all of the following management services
under this Agreement:
1.0
Acquire all permits and closely monitor all right-of-ways to ensure securing
them in a timely manner. Coordinate between obtaining all permits and
construction activities. Employ subject matter expertise through subcontracts to
David Evans and Associates Inc. and New Horizons Telecom Inc. Organize
subcontractors to most effectively utilize their resources.
- - David Evans and Associates environmental permitting services from undersea
route to cable landing point based on DEA Scope of Work documents assuming
all four landing sites are included. DEA is also responsible for ROW
acquisition, beach to building site and including building site at Norma
Beach.
- - New Horizons Telecom Inc. ("NHTI") cable landing station parcel surveys,
Juneau, Valdez, Whittier
- - NHTI ROW acquisition, beach to building site, Juneau, Valdez, & Whittier
- - NHTI Engineering and Design Package for Beach Manhole and Cable Duct,
Juneau, Valdez, & Whittier
- - DEA Engineering and Design Package for Beach Manhole and Cable Duct, Norma
Beach site.
- - Misc. professional land and title research services primarily for
pipeline-route sites.
2.0
Oversight of the Tyco Submarine Systems Ltd. ("TSSL") Supply Contract dated July
11, 1997 ("Supply Contract"), as amended by the Contract Variation No. 1 dated
effective as of December 1, 1997, and milestone scheduling thereunder, including
all performance and acceptance tests thereunder. Quality assurance monitoring
and recording program with be conducted. Quarterly meeting will be scheduled
with TSSL to review status and address any concerns.
3.0
Maintain System schedule and plan of work to ensure deponent tasks are completed
as scheduled. Identify all critical path tasks and closely manage to avoid any
program delay.
Contractor Agreement Page 3 of 10
<PAGE>
4.0
Supervision and oversight of all outside plant activities, building
construction, submarine cable installation, equipment installation and fiber
installation. Maintain records of all installation and construction activities
and quality assurance.
5.0
Conduct all accounting and account payable functions to contracted and approved
vendor and suppliers.
6.0
Maintain financial oversight of project relative to terms and conditions
pursuant to AU credit agreements. Maintain communications and documentation flow
with System lenders.
D. ENGINEERING. GCICC shall:
1.0
Design the System to be a complete OC-48 SONET System between the four points of
presence in Fairbanks, Anchorage, Juneau, and Seattle. All telephony equipment
not provided in the Supply Contract will be engineered, ordered, received,
staged and installed by GCICC. In general, Lucent FT-2000 terminals will be
utilized throughout the System.
2.0
Ensure interface between the wet plant and dry plant is engineered to allow
design capacity and SONET structure throughout the System. Review the Supply
Contract and design to match the remainder of the System network and established
effective SONET visibility throughout the System.
3.0
Ensure a thorough submarine route study and survey are conducted utilizing TSSL
as prime subcontractor to perform survey activities. Review all survey
information and ensure routing provides for safe and secure placement of the
cable and cable types produced by TSSL conform to the seafloor conditions
encountered.
- - Desktop Study of preliminary undersea cable route and landings at Whittier,
Lena Point, and Puget Sound
- - Marine Survey during fourth quarter 1996, to determine exact cable routing
and to minimize external aggressions and costs
- - Desktop Study of preliminary Whittier to Valdez cable route and landing
sites
- - Marine Survey during third quarter 1997, to determine exact cable routing
between Whittier and Valdez
Contractor Agreement Page 4 of 10
<PAGE>
- - Marine Survey between Norma Beach and previous survey
- - Additional Marine Survey within Puget Sound and at the Norma Beach landing
site
4.0
Develop test and acceptance criteria for the System and perform these tests for
the acceptance of the System. All tests shall be recorded and documented for
future baseline comparisons. The System is to operate at satisfactory meeting
standard transmission performance of SONET network, including error performance
over time, automatic protection switching, and high network visibility through
embedded overheads.
5.0
Conduct installation tests as components of the System are installed. Commence
component repair or change out as needed. Document all tests for future baseline
comparisons. An Engineer will be on site coordinating installations and
inspecting installation to ensure installation meets GCICC standards.
6.0
Engineer and design all buildings and structures. The structures will be design
to withstand the rigorous environment for the System's life span. All buildings
shall have backup emergency power systems including battery plant and generator
set with automatic switching capabilities.
E. CONSTRUCTION GCICC shall:
1.0 Cable Landing Stations
Construct cable landing stations consisting of block building, concrete
foundation, site and parking improvements, ground field, chain link fence, cable
entrance, building conduits, AC and water utility extensions, HVAC, lighting,
fire suppression system, relay rack, cable tray superstructure, 120 VAC
distribution, - 48 VDC plant and distribution, emergency generator system,
restroom and other according to GCICC engineering design. Cable landing stations
will be constructed at the following locations:
1. Whittier, Alaska 36'X 52' floor plan
2. Valdez, Alaska 24' X 48' floor plan
3. Norma Beach, Washington 36' X 52' floor plan
2.0 Cable Landing Station Support
Acquire sites either through fee simple purchases or long term leases. Secure
building site permit. Procure VSAT system and install at three truck leg cable
landing stations. Secure and provide equipment cabinets, patch and distribution
equipment, test equipment, office equipment, furnishings. The above items will
be performed at the following sites:
1. Whittier, Alaska
2. Valdez, Alaska (no VSAT at site)
Contractor Agreement Page 5 of 10
<PAGE>
3. Norma Beach, Washington
4. Juneau, Alaska (lease space, provide emergency power plant, space
improvements)
3.0 Outside Plant Engineering
Outside plant engineering consisting of route selection, route survey, route
staking, detail design drawings, agency permit preparation, permit submission,
and permit acquisition.
1. Whittier to Anchorage - approximately 52.5 miles
2. Valdez Landing site to Petrostar Metering Station - approximately
10 miles
3. Norma Beach to Cable Landing Station to Seattle area Interconnect
points
4.0 Outside Plant Construction
Construction of all outside plant facilities shall be completed under the direct
supervision of a GCICC employee to ensure compliance with GCICC's high
installation standards and best industry practices for long distance networks.
Minimum standards to be met at each site are listed below:
1. Whittier to Anchorage (approx. 51 miles)
Conduit consisting of 1 1/4" schedule 40 innerduct shall be buried at a
minimum of 36" by plowing, trenching, solid rock trenching, and
directional boring. Within the POL tunnel, the cable shall be installed
within a 2" plastic conduit that will be transferred to the utility
protection tray at such time the tray is made available by ADOT. Any
bridge crossing will consist of hanging fiberglass conduit in protected
areas such as between bridge girders. Cable vaults, 30" X 48",
strategically placed approximately every 3,000' along the route.
Warning signs will be placed every 500' on route. A buried caution tape
will be placed 12" below the surface directly above the innerducts. All
construction will conform to detail route drawings as close as
possible, any changes will be reviewed and agreed by GCICC supervisor.
Upon completion of the above civil works, the fiber cable will be blown
through the innerduct.
Option A - Utilizing Powerline Pass.
- 38,000' Wetland Construction
- 15,000' Rock Trenching
- 216,280' Trenching, Plowing, Boring, Hanging
Option B
- 38,000' Wetland Construction
- 110,000' Rock Trenching
- 121,280' Trenching, Plowing, Boring, Hanging
Contractor Agreement Page 6 of 10
<PAGE>
2. Valdez Cable Landing Station to Petrostar Metering Station
(approx. 9 miles)
Conduit consisting of 1 1/4" schedule 40 innerduct shall be buried at a
minimum of 36" by plowing, trenching, and directional boring. Any
bridge crossing will consist of hanging fiberglass conduit in protected
areas such as between bridge girders. Cable vaults, 30" X 48", shall be
strategically placed approximately every 3,000' along the route.
Warning signs shall be placed every 500' on route. A buried caution
tape will be placed 12" below the surface directly above the
innerducts. All construction will conform to detail route drawings as
closely as possible. Any changes must be reviewed and agreed to by a
GCICC supervisor. Upon completion of the above civil works, the fiber
cable will be blown through the innerduct.
- 52,380' Trenching, Plowing, Boring
- 1000' Hanging on Richardson Highway Bridge
3. Valdez Landing Site to Valdez Cable Landing Station (approx. .75
mile)
Conduit consisting of 1 1/4" schedule 40 innerduct shall be buried at a
minimum of 36" by plowing, trenching, and directional boring. Cable
vaults, 30" X 48", shall be strategically placed approximately every
2,000' along the route. Warning signs will be placed every 500' on
route. A buried caution tape shall be placed 12" below the surface
directly above cement cap over innerducts. All construction shall
conform to detail route drawings as closely as possible. Any changes
must be reviewed and agreed to by a GCICC supervisor. The fiber cable
will be installed by TSSL.
4. Norma Beach Interconnect to SDC Acquisition
Fiber will be acquired between the Norma Beach area and GCICC and AT&T
Seattle facilities in a diverse ring. GCICC will by preference obtain
dark fiber rights on this route with a long term agreement on lit fiber
as a fall back scenario. GCICC will negotiate for this fiber access on
the behalf of AUFS.
5. Norma Beach Landing to AUFS Cable Landing Station
Installation of 4 - 4" PVC conduits at a minimum depth of 36" for
approximately 3 miles along 148 Street. The conduits will be concrete
encased for protection. Approximately 15 cable vaults consisting of a
mix of manholes and pull boxes will be strategically placed 1,200 feet
apart along the route including a manhole at the landing point
appropriately designed to accommodate submarine cables. A buried
caution tape will be placed 12" below the surface directly above
conduits. The interduct and fiber cable will be installed by TSSL.
6. Norma Beach AU Cable Landing Station to Interconnect Point
Contractor Agreement Page 7 of 10
<PAGE>
A completely diverse route (assumed to be aerial) will be constructed
from the AU Cable Landing Station to a interconnect point along an
existing fiber ring. This route can be placed underground for
additional protection but in either case the route must be completely
diverse for invulnerability of the route.
7. Augmentation of GCICC MANs
AU requires fully diversified routing of terrestrial cables within
metropolitan area net works ("MAN's"). AU needs exceeds GCICC current
fiber availability in outlying metropolitan areas. Therefore GCICC will
undertake to augment its internal MAN facilities to accommodate AU. In
Anchorage AU requires 24 fibers from Glen Alps to SADC, 10 fibers to
AT&T and 10 fibers back to Glen Alps. This augmentation is shown in
chart form on Exhibits A and E to the Fiber Exchange Agreement of even
date, among AU, GCICC and GCI Cable, Inc..
8. Lena Pt., Juneau Cable Landing Station to Landing Point
Installation of 2 - 4" PVC conduits at a minimum depth of 36" for
approximately 1466' within existing AT&T utility right of way. A
manhole will be installed at the cable landing point appropriately
designed to accommodate submarine cables with two 4" stub PVC conduits
facing the water. A buried caution tape will be placed 12" below the
surface directly above conduits. Interduct and fiber cable will be
installed by TSSL.
9. Whittier Cable Landing Station to Landing Point
Installation of 2 - 4" PVC conduits at a minimum depth of 36" for
approximately 1 mile within Alaska railroad right of way. A manhole
will be installed at the cable landing point appropriately designed to
accommodate submarine. Approximately 3 cable vaults consisting of a mix
of manholes and pull boxes will be strategically placed 1,300 feet
apart along the route. A concrete cap 12" above conduits and buried
caution tape 12" below the surface above conduits concrete cap will be
placed. The interduct and fiber cable will be installed by TSSL.
5.0 Outside Plant Materials
All materials required to complete tasks within Section 4.0
and materials required to complete cable splices will be
secured by GCICC for the System. These materials will be
ordered, received, staged, transported and assembled by GCICC.
These material will be purchased using direct AU accounts and
will be the property of AU. The materials shall include the
following:
- Tubestar single-armor fiber cable
- 1 1/4" innerduct
- 4" PVC conduit
- Splice enclosures and splicing consumables
Contractor Agreement Page 8 of 10
<PAGE>
- Splicing labor
- Warning tape
- Concrete mix
- Bridge hangers and Fiberglass conduit
- Cable vaults and manholes
- Aerial installation hardware
- Pull line and cable blowing materials
6.0 Communication Equipment
All materials required to complete tasks as engineered within section D
and materials required to complete equipment interconnects and power
feed will be secured by GCICC for the System. These materials will be
ordered, received, staged, transported and assembled by GCICC. These
materials will be purchased using direct AU accounts, purchased in AU's
name and will be the property of AU. The material include the
following:
1. SADC, AT&T Gov't Hill, and one spare unit
Lucent FT-2000 OC-48 Add/Drop/Ring SONET Terminal, dual-node D-bay,
equipped with 1500nm optics, all common equipment, low-speed shelf,
without low-speed drop cards.
2. FDC, SDC, and AT&T POPs in Seattle and Fairbanks
FT-2000 OC-48 Add/Drop/Ring SONET Terminal, single-node E-bay, equipped
with 1500nm optics, without low-speed drop cards.
3. Lucent FT-2000 3xSTS1 Circuit Packs for terminating dropped capacity
between sites, equipping 9xSTS1s,12xSTS1s at SADC, 3xSTS1s each at FDC,
SDC, and AT&T sites, 1:N equipment protection, and associated low-speed
cabling.
4. Glennallen and Delta Junction sites and one spare.
Lucent FT-2000 OC-48 Regenerator, R-bay, equipped with 1550nm optics
and all common equipment.
5. Valdez, PS-12, Glennallen, PS-10, Delta Junction, North Pole,
Whittier, and one spare unit
Ditech STAR Erbium Doped Fiber Amplifiers and Dispersion Compensation
Fiber as required by optical engineering to overcome attenuation and
dispersion on 0.30dB/km 18ps/nm-km fiber between Petrostar Metering
Station and North Pole Metering Station.
Contractor Agreement Page 9 of 10
<PAGE>
6. Monitor and Control Equipment for Cable Landing Sites, SDC,
Glennallen, Delta Junction, and one additional Pipeline route site.
7.0 Terrestrial Communication Sites
Intermediate pipeline route sites near PS-12, Glennallen, PS-10, Delta
Junction, and North Pole will be engineered, designed, built and
installed. The building enclosures will include HVAC, fire detection,
AC and DC power System, and emergency generator set. The installation
will include site pad preparation and cable lateral installation.
The equipment design will allow for either placement within existing
facilities or within the separate enclosures outlined above. The
closures will be fabricated in Anchorage and transported to pre-set
foundation pads. On site installation will be minimal.
F. SCHEDULE
The above scheduled Work shall be performed in a timely manner as characterized
in Attachment 2, the Gantt chart. The schedule shall ensure the overall
completion of the System on December 31, 1998.
G. ATTACHMENTS
1. Alaska United OC-48 SONET System Chart.
2. Gantt Chart.
3. Schedule II - System Commissioning and Acceptance.
Contractor Agreement Page 10 of 10
<PAGE>
Exhibit W to
Credit and Security Agreement
NON-DISTURBANCE AGREEMENT
This NON-DISTURBANCE AGREEMENT (as the same may from time to
time be amended, supplemented or otherwise modified, renewed or replaced, this
"Agreement") is made as of January 27, 1998, between (i) Credit Lyonnais New
York Branch, as administrative agent under the AU Credit Agreement (as defined
below) (in such capacity, the "AU Agent"), and (ii) NationsBank of Texas, N.A.,
as administrative agent under the Holdings Credit Agreement (as defined below)
(in such capacity, the "Holdings Agent").
WHEREAS, GCI Holdings, Inc. ("GCI Holdings") as borrower, the
Holdings Agent, Credit Lyonnais New York Branch as documentation agent, TD
Securities (USA), Inc. as syndication agent, and the lenders party thereto have
entered into two amended and restated credit agreements each dated as of
November 14, 1997 (collectively, the "Holdings Credit Agreement") pursuant to
which, inter alia, the Holdings Agent, for the benefit of the lenders party
thereto, has a security interest in "Collateral" as defined therein (the
"Holdings Collateral"), including the GCI Cable Facility, to secure the payment
and performance of all of GCI Holdings' obligations under the Holdings Credit
Agreement (the "Holdings Credit Obligations").
WHEREAS, Alaska United Fiber System Partnership ("AU") as
borrower, the AU Agent, NationsBank of Texas, N.A. as syndication agent, TD
Securities (USA) Inc. as documentation agent, and the lenders party thereto,
have entered into a credit agreement dated as of January 27, 1998 (the "AU
Credit Agreement") pursuant to which, inter alia, the AU Agent for the benefit
of the lenders party thereto, has been granted a security interest in the
"Collateral" as defined therein (the "AU Lender Collateral"), including the AU
Facility, to secure the payment and performance of all of AU's obligations under
the AU Credit Agreement (the "AU Credit Obligations").
WHEREAS, AU, GCI Cable, Inc. ("GCI Cable") and GCI
Communication Corp. have entered into a Fiber Exchange Agreement dated effective
as of January 27, 1998 (the "Fiber Exchange Agreement"), pursuant to which,
inter alia, (1) GCI Cable has granted to AU the exclusive right to use certain
specified Dark Fibers (as defined in the Fiber Exchange Agreement) in the GCI
Cable Facility (the "AU Fibers") and AU has granted to GCI Cable the exclusive
right to use certain specified Dark Fibers in the AU Facility (the "GCI Cable
Fibers") and (2) GCI Cable has granted to AU a security interest (the "AU
Security Interest") in all of its right, title and interest in the GCI Cable
Facility (the "AU Collateral," which AU Collateral is also part of the Holdings
Collateral) to secure the obligation of GCI Cable to make the AU Fibers
<PAGE>
available to AU in accordance with the terms of the Fiber Exchange Agreement
(such obligation is hereinafter referred to as the "AU Secured Obligations") and
AU has granted to GCI Cable a security interest (the "GCI Cable Security
Interest") in all of its right, title and interest in the AU Facility (the "GCI
Cable Collateral," which GCI Cable Collateral is also part of the AU Lender
Collateral) to secure the obligation of AU to make the GCI Cable Fibers
available to GCI Cable in accordance with the terms of the Fiber Exchange
Agreement (such obligation is hereinafter referred to as the "GCI Cable Secured
Obligations").
WHEREAS, all right, title and interest of AU in, to and under
the Fiber Exchange Agreement (including without limitation, the benefits of the
AU Security Interest) is included as part of the AU Lender Collateral.
WHEREAS, all right, title and interest of GCI Cable in, to and
under the Fiber Exchange Agreement (including without limitation, the benefits
of the GCI Cable Security Interest) is included as part of the Holdings
Collateral.
WHEREAS, the Holdings Agent, the AU Agent and AU have entered
into that certain AU Subordination Agreement dated the date hereof (the "AU
Subordination Agreement").
WHEREAS, the AU Agent, the Holdings Agent and GCI Cable have
entered into that certain GCI Cable Subordination Agreement dated the date
hereof (the "GCI Cable Subordination Agreement").
NOW, THEREFORE, for good and valuable consideration the
receipt and adequacy of which are hereby acknowledged the parties hereto hereby
agree as follows:
1. Definitions. All capitalized terms used herein and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Fiber Exchange Agreement.
2. Quiet Enjoyment of AU Fibers. The Holdings Agent hereby
acknowledges and agrees that, so long as GCI Cable or its successor or assignee
continues to enjoy the exclusive right to use the GCI Cable Fibers, the Holdings
Agent will not foreclose or otherwise realize upon all or any portion of the
Holdings Collateral which consists of the AU Fibers, except in compliance with
the following provisions:
(i) if the Holdings Agent sells the AU Fibers
and/or any or all rights therein by private sale pursuant to
the Holdings Credit Agreement or otherwise, the Holdings Agent
shall cause the buyer to enter into (A) a novation agreement
with AU or its successor as owner of the AU Facility on the
same terms and conditions as those contained in the Fiber
Exchange Agreement and (B)
-2-
<PAGE>
a subordination agreement for the benefit of the AU Agent on
substantially the same terms as the GCI Cable Subordination
Agreement;
(ii) if the AU Fibers and/or any rights therein
shall be sold as a result of a judicial foreclosure proceeding
(i.e. an execution sale) or by or on behalf of the Holdings
Agent at a public sale under the Uniform Commercial Code, the
Holdings Agent shall use its reasonable commercial efforts to
cause the buyer at any such sale to enter into (A) a novation
agreement with AU or its successor as owner of the AU Facility
on the same terms and conditions as those contained in the
Fiber Exchange Agreement and (B) a subordination agreement for
the benefit of the AU Agent on substantially the same terms as
the GCI Cable Subordination Agreement;
(iii) if the Holdings Agent is the buyer at any
such public sale or judicial foreclosure proceeding or
otherwise acquires rights in the AU Fibers upon a disposition
thereof, it will enter into (A) a novation agreement with AU
or its successor as owner of the AU Facility on the same terms
and conditions as those contained in the Fiber Exchange
Agreement and (B) a subordination agreement for the benefit of
the AU Agent on substantially the same terms as the GCI Cable
Subordination Agreement; and
(iv) the Holdings Agent agrees that in the event
it shall conduct a private sale, it will not accept an offer
from a third party on terms less favorable to the Holdings
Agent than the last offer for the AU Fibers made by AU or the
AU Agent (as the case may be) to the Holdings Agent prior to
the Holdings Agent's receipt of such third party offer unless
the Holdings Agent first notifies AU and the AU Agent of such
less favorable offer and within five business days after
receiving such notice, neither AU nor the AU Agent shall have
notified the Holdings Agent that AU or the AU Agent wishes to
purchase the AU Fibers on the same terms offered by such third
party.
3. Quiet Enjoyment of GCI Cable Fibers. The AU Agent hereby
acknowledges and agrees that, so long as AU or its successor or assignee
continues to enjoy the exclusive right to use the AU Fibers, the AU Agent will
not foreclose or otherwise realize upon all or any portion of the AU Lender
Collateral which consists of the GCI Cable Fibers, except in compliance with the
following provisions:
(i) if the AU Agent sells the GCI Cable Fibers
and/or any or all rights therein by private sale pursuant to
the AU Credit Agreement or otherwise, the AU Agent shall cause
the buyer to enter into (A) a novation agreement with GCI
Cable or its successor as owner of the GCI Cable Facility on
the same terms and conditions as those contained in the Fiber
Exchange Agreement and (B) a
-3-
<PAGE>
subordination agreement for the benefit of the Holdings Agent
on substantially the same terms as the AU Subordination
Agreement;
(ii) if the GCI Cable Fibers and/or any rights
therein shall be sold as a result of a judicial foreclosure
proceeding (i.e. an execution sale) or by or on behalf of the
AU Agent at a public sale under the Uniform Commercial Code,
the AU Agent shall use its reasonable commercial efforts to
cause the buyer at any such sale to enter into (A) a novation
agreement with GCI Cable or its successor as owner of the GCI
Cable Facility on the same terms and conditions as those
contained in the Fiber Exchange Agreement and (B) a
subordination agreement for the benefit of the Holdings Agent
on substantially the same terms as the AU Subordination
Agreement;
(iii) if the AU Agent is the buyer at any such
public sale or judicial foreclosure proceeding or otherwise
acquires rights in the GCI Cable Fibers upon a disposition
thereof, it will enter into (A) a novation agreement with GCI
Cable or its successor as owner of the GCI Cable Facility on
the same terms and conditions as those contained in the Fiber
Exchange Agreement and (B) a subordination agreement for the
benefit of the Holdings Agent on substantially the same terms
as the AU Subordination Agreement; and
(iv) the AU Agent agrees that in the event it
shall conduct a private sale, it will not accept an offer from
a third party on terms less favorable to the AU Agent than the
last offer for the GCI Cable Fibers made by GCI Cable or the
Holdings Agent (as the case may be) to the AU Agent prior to
the AU Agent's receipt of such third party offer unless the AU
Agent first notifies GCI Cable and the Holdings Agent of such
less favorable offer and within five business days after
receiving such notice, neither GCI Cable nor the Holdings
Agent shall have notified the AU Agent that GCI Cable or the
Holdings Agent wishes to purchase the GCI Cable Fibers on the
same terms offered by such third party.
4. Assignments.
(a) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of, and be enforceable by, the parties
hereto and their respective transferees, successors and assigns.
(b) The Holdings Agent agrees that other than assignments or
participations pursuant to Section 10.04 of the Holdings Credit Agreement, it
shall not at any time voluntarily sell (including,
-4-
<PAGE>
without limitation, pursuant to a public or private sale), assign, license or
otherwise transfer or dispose of any or all of the Holdings Agent's rights or
interests (including, without limitation, any lien or security interest) in any
or all of the AU Fibers to any person or entity unless and until the Holdings
Agent has notified the AU Agent in writing and such third party transferee
expressly assumes in writing for the benefit of the AU Agent and its successors
and assigns all of the Holdings Agent's covenants, agreements and obligations
hereunder.
(c) The AU Agent agrees that other than assignments or
participations pursuant to Section 11.3 of the AU Credit Agreement, it shall not
at any time voluntarily sell (including, without limitation, pursuant to a
public or private sale), assign, license or otherwise transfer or dispose of any
or all of the AU Agent's rights or interests (including, without limitation, any
lien or security interest) in any or all of the GCI Cable Fibers to any person
or entity unless and until the AU Agent has notified the Holdings Agent in
writing and such third party transferee expressly assumes in writing for the
benefit of the Holdings Agent and its successors and assigns all of the AU
Agent's covenants, agreements and obligations hereunder.
(d) If requested by the Holdings Agent, in connection with any
assignment of GCI Cable's rights under the Fiber Exchange Agreement to a person
or entity which is not a subsidiary of GCI Holdings, the AU Agent will enter
into a non-disturbance agreement for the benefit of such assignee on
substantially the same terms set forth herein; provided that such assignee
simultaneously enters into a subordination agreement for the benefit of the AU
Agent on substantially the same terms as the GCI Cable Subordination Agreement.
(e) If requested by the AU Agent, in connection with any
assignment of AU's rights under the Fiber Exchange Agreement to a person or
entity which is not a subsidiary of GCI Holdings, the Holdings Agent will enter
into a non-disturbance agreement for the benefit of such assignee on
substantially the same terms set forth herein; provided that such assignee
simultaneously enters into a subordination agreement for the benefit of the
Holdings Agent on substantially the same terms as the AU Subordination
Agreement.
5. Other Collateral Not Affected. Nothing in this Agreement
shall prevent the Holdings Agent from exercising any remedies with respect to
any of the Holdings Collateral other than the AU Fibers, so long as such
exercise does not prevent the use of the AU Fibers and access thereto by AU or
its successor or assignee. Nothing in this Agreement shall prevent the AU Agent
from exercising any remedies with respect to any of the AU Lender Collateral
other than the GCI Cable Fibers, so long as such exercise does not prevent the
use of the GCI Cable Fibers and access thereto by GCI Cable or its successor or
assignee.
6. Modifications. No modification, amendment or waiver of any
provision of this Agreement shall be enforceable against any party hereto unless
the same shall be in writing and signed by such party.
7. Further Assurances. Each of the parties hereto agrees to
execute and deliver such further instruments and agreements and to take such
further actions as any other
-5-
<PAGE>
party hereto may at any time or times reasonably request in order to carry out
the provisions and intent of this Agreement.
8. Notices. All notices, requests, demands or other
communications hereunder shall be in writing and shall be sent by telex or
telecopier, delivered by messenger or courier delivery, or sent by certified or
registered U.S. mail, postage prepaid, to the address set forth below or at such
other address as may be furnished in writing:
If to the AU Agent: 1301 Avenue of the Americas
New York, New York 10019
Fax Number: 212-261-3421
Attention: Project Finance Group
If to the Holdings Agent: NationsBank of Texas, N.A.
901 Main Street, 64th Floor
Dallas, TX 75202
Fax Number: (214) 508-9390
Attention: Vice President
Such notices, requests, demands or other communications given by messenger or
courier delivery as provided herein shall be deemed given when delivered; any
such notices, requests, demands or other communications given by telex or
telecopier as provided herein shall be deemed delivered on the business day
following the date such notice is received; and any such notices, requests,
demands and other communications sent by U.S. certified or registered U.S. mail,
postage prepaid, as provided herein shall be deemed given ten (10) Business Days
after the date of mailing. Either party may by notice to the other made in
accordance herewith change the address at which such notices, requests, demands
or other communications may be given to it.
9. Effect on Third Parties. The provisions of this Agreement
are not intended to give, nor shall they be construed to confer upon any other
person owning or holding any rights or security interests in the AU Collateral
or the GCI Cable Collateral (including any person who acquires any rights to the
AU Collateral or the GCI Cable Collateral upon a sale, realization or other
disposition of the AU Collateral or the GCI Cable Collateral), or any other
person or entity other than the parties hereto and their respective successors
and assigns, any rights, remedies or claims under or by reason hereof.
10. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original and all of which
when taken together shall constitute one and the same instrument.
11. Severability. Each provision of this Agreement shall be
interpreted in such manner as to make such provision valid and enforceable under
applicable law, but if any provision hereof shall be or become prohibited or
invalid under any applicable law, such
-6-
<PAGE>
provision shall be ineffective to the extent of such prohibition or invalidity
only, without thereby invalidating the remainder of such provision or any of the
remaining provisions hereof.
12. Headings; Interpretation. Paragraph or other headings
contained in this Agreement are for reference purpose only and shall not affect
in any way the meaning or interpretation of this Agreement.
13. No Waiver. No breach of any provision hereof may be
waived unless in writing and the waiver of any one breach shall not be deemed to
be a waiver of any other breach of the same or any other provision hereof.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ALASKA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE AND
THE LAWS OF THE UNITED STATES.
15. Termination. This Agreement shall terminate upon the
earlier to occur of (i) the satisfaction of the Holdings Credit Obligations and
termination of the Holdings Agent's security interest in the Holdings
Collateral, and (ii) the satisfaction of the AU Credit Obligations and
termination of the AU Agent's security interest in the AU Lender Collateral.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
CREDIT LYONNAIS NEW YORK BRANCH as
administrative agent under the AU Credit
Agreement
By:
Name:
Title:
NATIONSBANK OF TEXAS, N.A., as
administrative agent under the Holdings
Credit Agreement
By:
Name:
Title:
<PAGE>
EXHIBIT X
FORM OF GCI CABLE SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (as the same may from time to
time be amended, supplemented or otherwise modified, renewed or replaced, this
"Agreement") is made as of January 27, 1998, among (i) GCI Cable, Inc. ("GCI
Cable"), (ii) Credit Lyonnais New York Branch, as administrative agent under the
AU Credit Agreement (as defined below) (in such capacity, the "AU Agent"), (iii)
NationsBank of Texas, N.A., as administrative agent under the Holdings Credit
Agreement (as defined below) (in such capacity, the "Holdings Agent").
WHEREAS, GCI Holdings, Inc. ("GCI Holdings") as borrower, the
Holdings Agent, Credit Lyonnais New York Branch as documentation agent, TD
Securities (USA), Inc. as syndication agent, and the lenders party thereto have
entered into two amended and restated credit agreements each dated as of
November 14, 1997 (collectively, the "Holdings Credit Agreement") pursuant to
which, inter alia, the Holdings Agent, for the benefit of the lenders party
thereto, has a security interest in "Collateral" as defined therein (the
"Holdings Collateral"), including the GCI Cable Facility, to secure the payment
and performance of all of GCI Holdings' obligations under the Holdings Credit
Agreement (the "Holdings Credit Obligations").
WHEREAS, Alaska United Fiber System Partnership ("AU") as
borrower, the AU Agent, NationsBank of Texas, N.A. as syndication agent, TD
Securities (USA) Inc. as documentation agent, and the lenders party thereto,
have entered into a credit agreement dated as of January 27, 1998 (the "AU
Credit Agreement") pursuant to which, inter alia, the AU Agent for the benefit
of the lenders party thereto, has been granted a security interest in the
"Collateral" as defined therein (the "AU Lender Collateral"), including the AU
Facility, to secure the payment and performance of all of AU's obligations under
the AU Credit Agreement (the "AU Credit Obligations").
WHEREAS, AU, GCI Cable and GCI Communication Corp. have
entered into a Fiber Exchange Agreement dated effective as of January 27, 1998
(the "Fiber Exchange Agreement"), pursuant to which, inter alia, (1) GCI Cable
has granted to AU the exclusive right to use certain specified Dark Fibers (as
defined in the Fiber Exchange Agreement) in the GCI Cable Facility (the "AU
Fibers") and AU has granted to GCI Cable the exclusive right to use certain
specified Dark Fibers in the AU Facility (the "GCI Cable Fibers") and (2) GCI
Cable has granted to AU a security interest (the "AU Security Interest") in all
of its right, title and interest in the GCI Cable Facility (the "AU Collateral,"
which AU Collateral is also part of the Holdings Collateral) to secure the
obligation of GCI Cable to make the AU Fibers available to AU in accordance with
the terms of the Fiber Exchange Agreement (such obligation is hereinafter
<PAGE>
referred to as the "AU Secured Obligations") and AU has granted to GCI Cable a
security interest (the "GCI Cable Security Interest") in all of its right, title
and interest in the AU Facility (the "GCI Cable Collateral," which GCI Cable
Collateral is also part of the AU Lender Collateral) to secure the obligation of
AU to make the GCI Cable Fibers available to GCI Cable in accordance with the
terms of the Fiber Exchange Agreement (such obligation is hereinafter referred
to as the "GCI Cable Secured Obligations").
WHEREAS, all right, title and interest of AU in, to and under
the Fiber Exchange Agreement (including without limitation, the benefits of the
AU Security Interest) is included as part of the AU Lender Collateral.
WHEREAS, all right, title and interest of GCI Cable in, to and
under the Fiber Exchange Agreement (including without limitation, the benefits
of the GCI Cable Security Interest) is included as part of the Holdings
Collateral.
WHEREAS, AU, the Holdings Agent and the AU Agent have entered
into that certain AU Subordination Agreement dated the date hereof.
NOW, THEREFORE, for good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Definitions. All capitalized terms used herein and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Fiber Exchange Agreement.
2. Acknowledgments and Consents.
(a) The AU Agent hereby acknowledges that AU has entered into
the Fiber Exchange Agreement and has granted to GCI Cable a continuing security
interest in the GCI Cable Collateral and certain remedies with respect to the
GCI Cable Collateral pursuant to the Fiber Exchange Agreement. However, GCI
Cable and the Holdings Agent acknowledge that the GCI Cable Security Interest
shall be subordinated to the AU Agent's security interest in the AU Lender
Collateral as provided in Section 3 of this Agreement. Subject to the terms and
conditions of this Agreement, the AU Agent acknowledges and agrees that AU's
grant to GCI Cable of the GCI Cable Security Interest and its grant of rights
and remedies to GCI Cable with respect to the GCI Cable Collateral shall not
constitute a breach of or a default under the AU Credit Agreement.
(b) GCI Cable acknowledges and consents that (i) the terms of
this Agreement, and (ii) the inclusion of all right, title and interest of AU
in, to and under the Fiber Exchange Agreement (including the benefits of the AU
Security Interest) as part of the AU Lender Collateral, shall not constitute a
breach or a default under the Fiber Exchange Agreement.
-2-
<PAGE>
3. Priority of Security Interests.
Notwithstanding (i) any contrary provision of the Fiber
Exchange Agreement or (ii) any priority in time of creation of any lien or other
encumbrance on the GCI Cable Collateral by either GCI Cable or the AU Agent, or
(iii) any provision of, or filing or recording under, the Uniform Commercial
Code of any state or any other applicable statute, rule or regulation of the
United States, the states thereof, their counties, municipalities or other
subdivision, or any other applicable jurisdiction, GCI Cable and the Holdings
Agent hereby agree that any security interest, pledge, mortgage, lien or other
encumbrance granted to the AU Agent by AU in all or any part of the GCI Cable
Collateral in order to secure the AU Credit Obligations is and shall be superior
and prior in right of claim and payment to any security interest, pledge,
mortgage, lien or other encumbrance granted to GCI Cable, whether now existing
or hereafter vested, in any of the GCI Cable Collateral regardless of the time
(x) when GCI Cable or the AU Agent shall acquire rights to any of the GCI Cable
Collateral or (y) when AU incurs any obligations to GCI Cable. GCI Cable and the
Holdings Agent agree that GCI Cable's and the Holdings Agent's subordination of
the GCI Cable Security Interest shall continue until the full payment and
performance of the AU Credit Obligations and said subordination shall apply
without limitation with respect to any security interest, pledge, mortgage, lien
or other encumbrance heretofore or hereafter granted to the AU Agent, in all or
any part of the AU Lender Collateral whether now owned or hereafter acquired.
4. Forbearance; Notice; Right to Cure.
(a) Without the written consent of the AU Agent, each of GCI
Cable and the Holdings Agent agrees that until all AU Credit Obligations are
paid and performed it will not in its capacity as a secured party with respect
to the GCI Cable Collateral (A) exercise any of its rights, remedies and options
or assert any claim with respect to the GCI Cable Collateral, (B) seek to sell
or otherwise dispose of the GCI Cable Collateral, or (C) take any action,
directly or indirectly, with respect to any of the foregoing described in
clauses (A) and (B) above; provided, however, it being understood and agreed
that nothing herein shall prevent GCI Cable or the Holdings Agent from
exercising rights which might otherwise be available to it to (i) take any
action to preserve or protect the validity of the GCI Cable Security Interest so
long as such action would not adversely affect the AU Lender Collateral, (ii)
take any action to seek equitable relief or to sue for damages in connection
with the enforcement of the GCI Cable Secured Obligations, or (iii) subject to
compliance with Section 5 hereof, assign the GCI Cable Security Interest to any
person who acquires any of GCI Cable's rights under the Fiber Exchange
Agreement. The AU Agent agrees to give GCI Cable and the Holdings Agent prior
written notice of any exercise by the AU Agent of any of its rights as a secured
creditor under the AU Credit Agreement with respect to the GCI Cable Fibers;
provided, however, that such prior notice may be eliminated if required by the
exigencies of the situation (provided that the AU Agent gives GCI Cable and the
Holdings Agent notice promptly after taking action); and provided further that
any failure of the AU Agent to give notice to GCI Cable and/or the Holdings
Agent pursuant to this Section 4(a)
-3-
<PAGE>
shall not affect the AU Agent's right to exercise its rights in connection with
the AU Lender Collateral.
(b) If there is a default on the part of AU under the Fiber
Exchange Agreement, prior to exercising its right to terminate the Fiber
Exchange Agreement,GCI Cable shall provide the AU Agent written notice of its
intention to exercise such termination right and the AU Agent shall have ten
(10) Business Days from the receipt of such notice to cure such default under
the Fiber Exchange Agreement before GCI Cable shall exercise such termination
right. Exercise of such cure right by the AU Agent shall be at its sole
discretion and under no circumstances will the AU Agent have any obligation to
cure any default under the Fiber Exchange Agreement
5. Assignments.
(a) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of, and be enforceable by, the parties
hereto and their respective transferees, successors and assigns.
(b) The AU Agent agrees that other than assignments or
participations pursuant to Section 11.3 of the AU Credit Agreement, it shall not
at any time voluntarily sell (including, without limitation, pursuant to a
public or private sale), assign, license or otherwise transfer or dispose of any
or all of the AU Agent's rights or interests (including, without limitation, any
lien or security interest) in any or all of the GCI Cable Collateral to any
person or entity unless and until the AU Agent has notified GCI Cable and the
Holdings Agent in writing and such third party transferee expressly assumes in
writing for the benefit of GCI Cable and the Holdings Agent and their successors
and assigns all of the AU Agent's covenants, agreements and obligations
hereunder.
(c) GCI Cable agrees that GCI Cable shall not at any time
voluntarily sell (including, without limitation, pursuant to a public or private
sale), assign, or otherwise transfer or dispose of any or all of GCI Cable's
rights under the Fiber Exchange Agreement to any person or entity unless and
until GCI Cable has notified the AU Agent in writing and such third party
transferee expressly assumes in writing for the benefit of the AU Agent and its
successors and assigns all of GCI Cable's covenants, agreements and obligations
hereunder.
(d) The Holdings Agent agrees that other than assignments or
participations pursuant to Section 10.04 of the Holdings Credit Agreement, it
shall not at any time voluntarily sell (including, without limitation, pursuant
to a public or private sale), assign, license or otherwise transfer or dispose
of any or all of the Holdings Agent's rights or interests (including, without
limitation, any lien or security interest) in any or all of GCI Cable's rights
under the Fiber Exchange Agreement to any person or entity unless and until the
Holdings Agent has notified the AU Agent in writing and such third party
transferee expressly assumes in writing for
-4-
<PAGE>
the benefit of the AU Agent and its successors and assigns all of the Holdings
Agent's covenants, agreements and obligations hereunder.
6. Modifications. No modification, amendment or waiver of any
provision of this Agreement shall be enforceable against any party hereto unless
the same shall be in writing and signed by such party.
7. Further Assurances. Each of the parties hereto agrees to
execute and deliver such further instruments and agreements and to take such
further actions as any other party hereto may at any time or times reasonably
request in order to carry out the provisions and intent of this Agreement.
8. Notices. All notices, requests, demands or other
communications hereunder shall be in writing and shall be sent by telex or
telecopier, delivered by messenger or courier delivery, or sent by certified or
registered U.S. mail, postage prepaid, to the address set forth below or at such
other address as may be furnished in writing:
If to GCI Cable: 2550 Denali Street
Suite 1000
Anchorage, Alaska 99503
Fax Number: (907) 265-5676
Attention: Director of Finance
and if to the AU Agent: 1301 Avenue of the Americas
New York, New York 10019
Fax Number: 212-261-3421
Attention: Project Finance Group
If to the Holdings Agent: NationsBank of Texas, N.A.
901 Main Street, 64th Floor
Dallas, TX 75202
Fax Number: (214) 508-9390
Attention: Vice President
Such notices, requests, demands or other communications given by messenger or
courier delivery as provided herein shall be deemed given when delivered; any
such notices, requests, demands or other communications given by telex or
telecopier as provided herein shall be deemed delivered on the business day
following the date such notice is received; and any such notices, requests,
demands and other communications sent by U.S. certified or registered U.S. mail,
postage prepaid, as provided herein shall be deemed given ten (10) Business Days
after the date of mailing. Either party may by notice to the other made in
accordance herewith change the address at which such notices, requests, demands
or other communications may be given to it.
-5-
<PAGE>
9. Effect on Third Parties. The provisions of this Agreement
are not intended to give, nor shall they be construed to confer upon any other
person owning or holding any rights or security interests in the GCI Cable
Collateral (including any person who acquires any rights to the GCI Cable
Collateral upon a sale, realization or other disposition of the GCI Cable
Collateral, or any other person or entity other than the parties hereto and
their respective successors and assigns, any rights, remedies or claims under or
by reason hereof.
10. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original and all of which
when taken together shall constitute one and the same instrument.
11. Severability. Each provision of this Agreement shall be
interpreted in such manner as to make such provision valid and enforceable under
applicable law, but if any provision hereof shall be or become prohibited or
invalid under any applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity only, without thereby invalidating the
remainder of such provision or any of the remaining provisions hereof.
12. Headings; Interpretation. Paragraph or other headings
contained in this Agreement are for reference purpose only and shall not affect
in any way the meaning or interpretation of this Agreement.
13. No Waiver. No breach of any provision hereof may be
waived unless in writing and the waiver of any one breach shall not be deemed to
be a waiver of any other breach of the same or any other provision hereof.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ALASKA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE AND
THE LAWS OF THE UNITED STATES.
15. Termination. This Agreement shall terminate upon the
earlier to occur of (i) the satisfaction of the AU Credit Obligations and
termination of the AU Agent's security interest in the AU Lender Collateral, and
(ii) termination of the Fiber Exchange Agreement, the GCI Cable Security
Interest and the AU Security Interest.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
GCI CABLE, INC.
By:
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH as
administrative agent under the AU Credit
Agreement
By:
Name:
Title:
NATIONSBANK OF TEXAS, N.A., as
administrative agent under the Holdings
Credit Agreement
By:
Name:
Title:
<PAGE>
EXHIBIT Y
FORM OF AU SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (as the same may from time to
time be amended, supplemented or otherwise modified, renewed or replaced, this
"Agreement") is made as of January 27, 1998, among (i) Alaska United Fiber
System Partnership ("AU"), (ii) Credit Lyonnais New York Branch, as
administrative agent under the AU Credit Agreement (as defined below) (in such
capacity, the "AU Agent"), (iii) NationsBank of Texas, N.A., as administrative
agent under the Holdings Credit Agreement (as defined below) (in such capacity,
the "Holdings Agent").
WHEREAS, GCI Holdings, Inc. ("GCI Holdings") as borrower, the
Holdings Agent, Credit Lyonnais New York Branch as documentation agent, TD
Securities (USA), Inc. as syndication agent, and the lenders party thereto have
entered into two amended and restated credit agreements each dated as of
November 14, 1997 (collectively, the "Holdings Credit Agreement") pursuant to
which, inter alia, the Holdings Agent, for the benefit of the lenders party
thereto, has a security interest in "Collateral" as defined therein (the
"Holdings Collateral"), including the GCI Cable Facility, to secure the payment
and performance of all of GCI Holdings' obligations under the Holdings Credit
Agreement (the "Holdings Credit Obligations").
WHEREAS, AU as borrower, the AU Agent, NationsBank of Texas,
N.A. as syndication agent, TD Securities (USA) Inc. as documentation agent, and
the lenders party thereto, have entered into a credit agreement dated as of
January 27, 1998 (the "AU Credit Agreement") pursuant to which, inter alia, the
AU Agent for the benefit of the lenders party thereto, has been granted a
security interest in the "Collateral" as defined therein (the "AU Lender
Collateral"), including the AU Facility, to secure the payment and performance
of all of AU's obligations under the AU Credit Agreement (the "AU Credit
Obligations").
WHEREAS, AU, GCI Cable, Inc. ("GCI Cable") and GCI
Communication Corp. have entered into a Fiber Exchange Agreement dated effective
as of January 27, 1998 (the "Fiber Exchange Agreement"), pursuant to which,
inter alia, (1) GCI Cable has granted to AU the exclusive right to use certain
specified Dark Fibers (as defined in the Fiber Exchange Agreement) in the GCI
Cable Facility (the "AU Fibers") and AU has granted to GCI Cable the exclusive
right to use certain specified Dark Fibers in the AU Facility (the "GCI Cable
Fibers") and (2) GCI Cable has granted to AU a security interest (the "AU
Security Interest") in all of its right, title and interest in the GCI Cable
Facility (the "AU Collateral," which AU Collateral is also part of the Holdings
Collateral) to secure the obligation of GCI Cable to make the AU Fibers
available to AU in accordance with the terms of the Fiber Exchange Agreement
(such obligation
<PAGE>
is hereinafter referred to as the "AU Secured Obligations") and AU has granted
to GCI Cable a security interest (the "GCI Cable Security Interest") in all of
its right, title and interest in the AU Facility (the "GCI Cable Collateral,"
which GCI Cable Collateral is also part of the AU Lender Collateral) to secure
the obligation of AU to make the GCI Cable Fibers available to GCI Cable in
accordance with the terms of the Fiber Exchange Agreement (such obligation is
hereinafter referred to as the "GCI Cable Secured Obligations").
WHEREAS, all right, title and interest of AU in, to and under
the Fiber Exchange Agreement (including without limitation, the benefits of the
AU Security Interest) is included as part of the AU Lender Collateral.
WHEREAS, all right, title and interest of GCI Cable in, to and
under the Fiber Exchange Agreement (including without limitation, the benefits
of the GCI Cable Security Interest) is included as part of the Holdings
Collateral.
WHEREAS, GCI Cable, the Holdings Agent and the AU Agent have
entered into that certain GCI Cable Subordination Agreement dated the date
hereof.
NOW, THEREFORE, for good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Definitions. All capitalized terms used herein and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Fiber Exchange Agreement.
2. Acknowledgments and Consents.
(a) The Holdings Agent hereby acknowledges that GCI Cable has
entered into the Fiber Exchange Agreement and has granted to AU a continuing
security interest in the AU Collateral and certain remedies with respect to the
AU Collateral pursuant to the Fiber Exchange Agreement. However, AU and the AU
Agent acknowledge that the AU Security Interest shall be subordinated to the
Holdings Agent's security interest in the Holdings Collateral as provided in
Section 3 of this Agreement. Subject to the terms and conditions of this
Agreement, the Holdings Agent acknowledges and agrees that GCI Cable's grant to
AU of the AU Security Interest and its grant of rights and remedies to AU with
respect to the AU Collateral shall not constitute a breach of or a default under
the Holdings Credit Agreement.
(b) AU acknowledges and consents that (i) the terms of this
Agreement, and (ii) the inclusion of all right, title and interest of GCI Cable
in, to and under the Fiber Exchange Agreement (including the benefits of the GCI
Cable Security Interest) as part of the Holdings Collateral, shall not
constitute a breach or a default under the Fiber Exchange Agreement.
3. Priority of Security Interests.
-2-
<PAGE>
Notwithstanding (i) any contrary provision of the Fiber
Exchange Agreement or (ii) any priority in time of creation of any lien or other
encumbrance on AU Collateral by either AU or the Holdings Agent, or (iii) any
provision of, or filing or recording under, the Uniform Commercial Code of any
state or any other applicable statute, rule or regulation of the United States,
the states thereof, their counties, municipalities or other subdivision, or any
other applicable jurisdiction, AU and the AU Agent hereby agree that any
security interest, pledge, mortgage, lien or other encumbrance granted to the
Holdings Agent by GCI Cable in all or any part of the AU Collateral in order to
secure the Holdings Credit Obligations is and shall be superior and prior in
right of claim and payment to any security interest, pledge, mortgage, lien or
other encumbrance granted to AU, whether now existing or hereafter vested, in
any of the AU Collateral regardless of the time (x) when AU or the Holdings
Agent shall acquire rights to any of the AU Collateral or (y) when GCI Cable
incurs any obligations to AU. AU and the AU Agent agree that AU's and the AU
Agent's subordination of the AU Security Interest shall continue until the full
payment and performance of the Holdings Credit Obligations and said
subordination shall apply without limitation with respect to any security
interest, pledge, mortgage, lien or other encumbrance heretofore or hereafter
granted to the Holdings Agent, in all or any part of the Holdings Collateral
whether now owned or hereafter acquired.
4. Forbearance; Notice; Right to Cure.
(a) Without the written consent of the Holdings Agent, each of
AU and the AU Agent agrees that until all Holdings Credit Obligations are paid
and performed it will not in its capacity as a secured party with respect to the
AU Collateral (A) exercise any of its rights, remedies and options or assert any
claim with respect to the AU Collateral granted to it, (B) seek to sell or
otherwise dispose of the AU Collateral, or (C) take any action, directly or
indirectly, with respect to any of the foregoing described in clauses (A) and
(B) above; provided, however, it being understood and agreed that nothing herein
shall prevent AU or the AU Agent from exercising rights which might otherwise be
available to it to (i) take any action to preserve or protect the validity of
the AU Security Interest so long as such action would not adversely affect the
Holdings Collateral, (ii) take any action to seek equitable relief or to sue for
damages in connection with the enforcement of the AU Secured Obligations, or
(iii) subject to compliance with Section 5 hereof, assign the AU Security
Interest to any person who acquires any of AU's rights under the Fiber Exchange
Agreement. The Holdings Agent agrees to give AU and the AU Agent prior written
notice of any exercise by the Holdings Agent of any of its rights as a secured
creditor under the Holdings Credit Agreement with respect to the AU Fibers;
provided, however, that such prior notice may be eliminated if required by the
exigencies of the situation (provided that the Holdings Agent gives AU and the
AU Agent notice promptly after taking action); and provided further that any
failure of the Holdings Agent to give notice to AU and/or the AU Agent pursuant
to this Section 4(a) shall not affect the Holdings Agent's right to exercise its
rights in connection with the Holdings Collateral.
-3-
<PAGE>
(b) If there is a default on the part of GCI Cable under the
Fiber Exchange Agreement, prior to exercising its right to terminate the Fiber
Exchange Agreement, AU shall provide the Holdings Agent written notice of its
intention to exercise such termination right and the Holdings Agent shall have
ten (10) Business Days from the receipt of such notice to cure such default
under the Fiber Exchange Agreement before AU shall exercise such termination
right. Exercise of such cure right by the Holdings Agent shall be at its sole
discretion and under no circumstances will the Holding Agent have any obligation
to cure any default under the Fiber Exchange Agreement
5. Assignments.
(a) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of, and be enforceable by, the parties
hereto and their respective transferees, successors and assigns.
(b) The Holdings Agent agrees that other than assignments or
participations pursuant to Section 10.04 of the Holdings Credit Agreement, it
shall not at any time voluntarily sell (including, without limitation, pursuant
to a public or private sale), assign, license or otherwise transfer or dispose
of any or all of the Holdings Agent's rights or interests (including, without
limitation, any lien or security interest) in any or all of the AU Collateral to
any person or entity unless and until the Holdings Agent has notified AU and the
AU Agent in writing and such third party transferee expressly assumes in writing
for the benefit of AU and the AU Agent and their successors and assigns all of
the Holdings Agent's covenants, agreements and obligations hereunder.
(c) AU agrees that AU shall not at any time voluntarily sell
(including, without limitation, pursuant to a public or private sale), assign,
or otherwise transfer or dispose of any or all of AU's rights under the Fiber
Exchange Agreement to any person or entity unless and until AU has notified the
Holdings Agent in writing and such third party transferee expressly assumes in
writing for the benefit of the Holdings Agent and its successors and assigns all
of AU's covenants, agreements and obligations hereunder.
(d) The AU Agent agrees that other than assignments or
participations pursuant to Section 11.3 of the AU Credit Agreement, it shall not
at any time voluntarily sell (including, without limitation, pursuant to a
public or private sale), assign, license or otherwise transfer or dispose of any
or all of the AU Agent's rights or interests (including, without limitation, any
lien or security interest) in any or all of AU's rights under the Fiber Exchange
Agreement to any person or entity unless and until the AU Agent has notified the
Holdings Agent in writing and such third party transferee expressly assumes in
writing for the benefit of the Holdings Agent and its successors and assigns all
of the AU Agent's covenants, agreements and obligations hereunder.
-4-
<PAGE>
6. Modifications. No modification, amendment or waiver of any
provision of this Agreement shall be enforceable against any party hereto unless
the same shall be in writing and signed by such party.
7. Further Assurances. Each of the parties hereto agrees to
execute and deliver such further instruments and agreements and to take such
further actions as any other party hereto may at any time or times reasonably
request in order to carry out the provisions and intent of this Agreement.
8. Notices. All notices, requests, demands or other
communications hereunder shall be in writing and shall be sent by telex or
telecopier, delivered by messenger or courier delivery, or sent by certified or
registered U.S. mail, postage prepaid, to the address set forth below or at such
other address as may be furnished in writing:
If to AU: 2550 Denali Street
Suite 1000
Anchorage, Alaska 99503
Fax Number: (907) 265-5676
Attention: Director of Finance
and if to the AU Agent: 1301 Avenue of the Americas
New York, New York 10019
Fax Number: 212-261-3421
Attention: Project Finance Group
If to the Holdings Agent: NationsBank of Texas, N.A.
901 Main Street, 64th Floor
Dallas, TX 75202
Fax Number: (214) 508-9390
Attention: Vice President
Such notices, requests, demands or other communications given by messenger or
courier delivery as provided herein shall be deemed given when delivered; any
such notices, requests, demands or other communications given by telex or
telecopier as provided herein shall be deemed delivered on the business day
following the date such notice is received; and any such notices, requests,
demands and other communications sent by U.S. certified or registered U.S. mail,
postage prepaid, as provided herein shall be deemed given ten (10) Business Days
after the date of mailing. Either party may by notice to the other made in
accordance herewith change the address at which such notices, requests, demands
or other communications may be given to it.
9. Effect on Third Parties. The provisions of this Agreement
are not intended to give, nor shall they be construed to confer upon any other
person owning or holding any rights or security interests in the AU Collateral
(including any person who acquires any rights to the
-5-
<PAGE>
AU Collateral upon a sale, realization or other disposition of the AU
Collateral, or any other person or entity other than the parties hereto and
their respective successors and assigns, any rights, remedies or claims under or
by reason hereof.
10. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original and all of which
when taken together shall constitute one and the same instrument.
11. Severability. Each provision of this Agreement shall be
interpreted in such manner as to make such provision valid and enforceable under
applicable law, but if any provision hereof shall be or become prohibited or
invalid under any applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity only, without thereby invalidating the
remainder of such provision or any of the remaining provisions hereof.
12. Headings; Interpretation. Paragraph or other headings
contained in this Agreement are for reference purpose only and shall not affect
in any way the meaning or interpretation of this Agreement.
13. No Waiver. No breach of any provision hereof may be
waived unless in writing and the waiver of any one breach shall not be deemed to
be a waiver of any other breach of the same or any other provision hereof.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ALASKA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE AND
THE LAWS OF THE UNITED STATES.
15. Termination. This Agreement shall terminate upon the
earlier to occur of (i) the satisfaction of the Holdings Credit Obligations and
termination of the Holdings Agent's security interest in the Holdings
Collateral, and (ii) termination of the Fiber Exchange Agreement, the AU
Security Interest and the GCI Security Interest.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ALASKA UNITED FIBER SYSTEM PARTNERSHIP By
GCI Fiber Co., Inc., General Partner
By:
Name:
Title:
By Fiber Hold Co., Inc., a General
Partner
By:
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH as
administrative agent under the AU Credit
Agreement
By:
Name:
Title:
NATIONSBANK OF TEXAS, N.A., as
administrative agent under the Holdings
Credit Agreement
By:
Name:
Title:
<PAGE>
EXHIBIT Z
FORM OF INSTRUCTION LETTER
as of , 1998
[insert name of contact person]
The First National Bank of Anchorage
201 West 36th Avenue
P.O. Box 200628
Anchorage, Alaska 99520
Re: Alaska United Fiber System Partnership
Account No. 1510-562-0
Gentlemen:
The undersigned, Alaska United Fiber System Partnership (the
"Depositor") presently maintains with you (the "Depositary Bank") the bank
account identified above (the "Alaska Depositary Account"). The Depositor hereby
irrevocably notifies and instructs the Depositary Bank with respect to the
Alaska Depositary Account as set forth herein below, and hereby requests the
Depositary Bank to indicate its acceptance of, and agreement to be bound by, the
terms hereof by signing in the space provided at the foot hereof.
1. In order to provide security for the obligations of the
Depositor pursuant to the terms of that certain Credit and Security Agreement
dated as of January 27, 1998 (as such agreement may be amended, supplemented or
otherwise modified, renewed or replaced from time to time, the "Credit
Agreement") among the Depositor, the lenders referred to therein (the
"Lenders"), Credit Lyonnais New York Branch as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), NationsBank of Texas,
N.A. as Syndication Agent and TD Securities (USA), Inc. as Documentation Agent,
the Depositor has, among other things, granted to the Administrative Agent (for
the benefit of the Lenders) a security interest in (a) the Alaska Depositary
Account, (b) all items now or from time to time in the Alaska Depositary Account
and (c) any proceeds of any of the foregoing.
<PAGE>
2
2. The Depositary Bank is hereby irrevocably authorized and
directed not to permit the withdrawal or transfer (by the Depositor or
otherwise) of any amounts on deposit in the Alaska Depositary Account, other
than pursuant to, and in accordance with, this letter agreement.
3. The Depositary Bank is hereby irrevocably authorized and
directed on each business day to wire transfer all amounts on deposit in the
Alaska Depositary Account to the account of the Depositor maintained at the
office of the Administrative Agent at 1301 Avenue of the Americas, New York, New
York 10019 (ABA#: 026008073), designated as the "Alaska United Disbursement
Account", Account No. 0139787000100 or such other account as the Administrative
Agent may specify in writing. If either the Administrative Agent or the
Depositary Bank is not open for business on any day, then such transfers shall
be made on the next succeeding day on which both the Administrative Agent and
the Depositary Bank are open for business. The Depositary Bank hereby agrees to
make any such transfer no later than [ ] (New York City time) on the
applicable business day.
4. The Depositary Bank is hereby further irrevocably
authorized and directed to promptly forward to the Administrative Agent copies
of each daily statement pertaining to the Alaska Depositary Account and each
telex, telecopy or other correspondence which accompanies or indicates the
source any payment deposited in the Alaska Depositary Account.
5. By its acceptance hereof and agreement hereto, the
Depositary Bank hereby waives, with respect to all its existing and future
claims against the Depositor or any affiliate thereof, all existing and future
rights of set-off, banker's liens and rights of pledge against the Alaska
Depositary Account and all items from time to time in the Alaska Depositary
Account and all proceeds of any of the foregoing that come into the possession
of the Depositary Bank in connection with the Alaska Depositary Account,
provided, however, that the Depositary Bank retains the right to charge the
Alaska Depositary Account for (a) items deposited in the Alaska Depositary
Account and subsequently returned unpaid to the Depositary Bank and (b) unpaid
fees and expenses pertaining to the Alaska Depositary Account or any related
lockboxes.
6. The Depositary Bank further agrees (i) to provide the
Administrative Agent with written notice if any fees and expenses pertaining to
the Alaska Depositary Account or any related lockboxes have not been paid by the
Depositor, and agrees not to discontinue any services pertaining to the Alaska
Depositary Account or such lockboxes unless 30 days have elapsed from such
notice being given by the Depositary Bank to the Administrative Agent and such
fees and expenses shall not have been paid; (ii) agrees to provide to the
Administrative Agent written notice if any changes or discontinuations are for
any reason contemplated with
<PAGE>
3
respect to the Alaska Depositary Account or any related lockboxes, and agrees
not to alter, change or discontinue any services pertaining to the Alaska
Depositary Account or such lockboxes unless 30 days have elapsed from such
notice being given by the Depositary Bank to the Administrative Agent or the
Administrative Agent shall have consented in writing; and (iii) agrees that in
the event any services pertaining to the Alaska Depositary Account or such
lockboxes are discontinued after notice to the Administrative Agent as
aforesaid, the Depositary Bank will (subject to being furnished with reasonable
assurance regarding payment of its related fees and expenses) comply with
reasonable instructions of the Administrative Agent regarding the forwarding of
any payment or items subsequently deposited in the Alaska Depositary Account or
delivered to any related lockboxes.
7. The Depositor and the Depositary Bank confirm that attached
hereto are true and correct copies of all existing agreements between the
Depositor and the Depositary Bank with respect to the Alaska Depositary Account
or any related lockboxes or otherwise relating to the collection of receivables
of the Depositor.
8. This letter agreement (a) shall be effective as of the date
first above written; (b) shall to the extent inconsistent therewith, supersede
any other agreement or instruction letter relating to the matters referred to
herein, including, without limitation, any bank account agreement between the
Depositor and the Depositary Bank relating to collection of receivables of the
Depositor; (c) is binding upon the parties hereto and their respective
successors and assigns and shall inure to their benefit; (d) shall not in any
way or to any extent be changed, amended, modified or waived without the prior
written consent of the Administrative Agent; (e) shall be governed by, and
interpreted in accordance with, the laws of the State of New York; and (f) may
be executed in any number of counterparts each of which shall constitute an
original but all of which when taken together shall constitute one and the same
instrument. Any provision hereof that may prove unenforceable under any law or
regulation shall not affect the validity of any other provisions hereof.
<PAGE>
9. This letter agreement shall terminate upon the full and
indefeasible payment of all the Loans and the other Obligations (as such terms
are defined in the Credit Agreement) and the termination of the Commitments
(such term being used herein as defined in the Credit Agreement). The
Administrative Agent shall notify the Depositary Bank in writing once such full
and indefeasible repayment has occurred and the Commitments have terminated.
Very truly yours,
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
By: GCI Fiber Co., Inc. a General Partner
By:
Name:
Title:
By: Fiber Hold Co., Inc., a General
Partner
By:
Name:
Title:
ACCEPTED AND AGREED,
AS AFORESAID,
THE FIRST NATIONAL BANK
OF ANCHORAGE, as Depositary Bank
By:
Name:
Title:
<PAGE>
ACCEPTED,
CREDIT LYONNAIS NEW YORK BRANCH,
as Administrative Agent
By:
Name:
Title:
<PAGE>
[Attach true and correct copies of all existing agreements between the
Depositor and the Depositary Bank relating to the Alaska Depositary
Account, any related lockboxes or otherwise relating to the collection
of the Depositor's receivables]
<PAGE>
BORROWER'S CERTIFICATE
(KANAS CONSENT)
I am the Secretary/Treasurer of GCI Fiber Co., Inc., a General Partner and
the General Manager of Alaska United Fiber System Partnership, an Alaska general
partnership ("Borrower").
1. This Certificate is being delivered pursuant to the credit and Security
Agreement dated as of January 27, 1998 ("Credit Agreement") among the Borrower,
the lenders named therein, Credit Lyonnais New Your Branch, as Administrative
Agent, Nationsbank of Teas, N.A., as Syndication Agent and TD Securities (USA)
Inc., as Documentation Agent. Unless otherwise defined herein, capitalized terms
in this Certificate shall have the meanings given to them in the Credit
Agreement.
2. Attached hereto is a correct and complete copy of that certain
Acknowledgment and Consent between GCI Communication Corp., the Borrower, Kanas
Telecom, Inc., Credit Lyonnais New Your Branch, NationsBank of Texas, N.A., and
TD Securities (USA) Inc., dated as of January 8, 1998.
In witness whereof, the undersigned has duly executed this Certificate on
behalf of the Borrower as of January 27, 1998.
ALASKA UNITED FIBER SYSTEM
PARTNERSHIP by a General Partner and
its General Manager, GCI Fiber Co.,
Inc.
By /s/
John M. Lowber, Secretary/Treasurer
<PAGE>
ACKNOWLEDGMENT AND CONSENT
THIS ACKNOWLEDGMENT AND CONSENT (this "Consent") dated as of
January 8, 1998 is by and among GCI COMMUNICATION CORP., an Alaska corporation
("GCICC"), ALASKA UNITED FIBER SYSTEM PARTNERSHIP, an Alaska general partnership
(the "Borrower"), KANAS TELECOM, INC., an Alaska corporation (the "Company"),
CREDIT LYONNAIS NEW YORK BRANCH, ("Credit Lyonnais"), NATIONSBANK OF TEXAS, N.A.
("NationsBank") and TD SECURITIES (USA) INC. ("Toronto Dominion"; together with
Credit Lyonnais and NationsBank, the "Banks").
WITNESSETH:
WHEREAS, the Company and GCICC have entered into that certain
Fiber Exchange Agreement dated as of November 21, 1997 (as amended, modified or
supplemented from time to time, the "Assigned Agreement"); and
WHEREAS, GCICC has assigned certain of its rights under and
pursuant to the Assigned Agreement to the Borrower; and
WHEREAS, General Communication, Inc. and the Banks have
entered into a Commitment Letter dated as of July 3, 1997 (as heretofore
amended, the "Commitment Letter") pursuant to which the Banks have committed to
provide a construction and term loan facility to the Borrower a portion of which
will be used to finance the construction, ownership and operation of an undersea
fiber optic telecommunications cable connecting certain cities in Alaska to the
lower 48 states (the "Alaska United System") (any such loan facility which may
be made in the future shall be referred to herein as the "Facility" and shall
only be made upon execution of definitive documentation which is in form and
substance satisfactory to the Banks; Credit Lyonnais would be the administrative
agent for the lenders under the credit agreement for the Facility (in such
capacity, the "Administrative Agent")); and
WHEREAS, in connection with the Facility, the Borrower would
be required to collaterally assign its rights under the Assigned Agreement to
the Administrative Agent (on behalf of certain lenders) pursuant to
documentation which is in form and substance satisfactory to the Banks (the
"Security Instruments"), as security for the Borrower's obligations related to
the Facility (the "Secured Obligations").
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
Section 1. Payments under the Assignment Agreement. The
parties hereto agree that the Company shall make all payments due and to become
due to the Borrower or GCICC under the Assigned Agreement, without offset or
counterclaim except as arises directly from the Assigned Agreement, in lawful
money of the United States of America, in immediately available funds by wire
transfer, directly to such account and/or address as the Administrative Agent
shall specify from time to time to the Company in writing. Any and all payments
made by the Company pursuant to the provisions of this Consent and any
performance by the Company of its obligations under the Assigned Agreement at
the request of the Administrative Agent pursuant to this Consent shall fully
satisfy and discharge the Company's obligations to make such payment to or
perform such obligations at the request of the Borrower or GCICC pursuant to the
Assigned Agreement. The Borrower and GCICC each hereby irrevocably authorizes
and directs the Company to make such payments as set forth herein, and the
Borrower and GCICC each hereby releases and agrees to hold the Company harmless
from any and all liability for making payments as provided for herein or as
directed by the Administrative Agent.
Section 2. Agreement of the Company.
(a) The Company acknowledges and consents to an assignment by
the Borrower to the Administrative Agent (for the benefit of certain lenders) of
all of the Borrower's right, title and interest in, to, and under the Assigned
Agreement as collateral security for the Secured Obligations.
(b) The Company acknowledges and consents that the
Administrative Agent or its designee shall have the right to exercise its rights
and remedies with respect to such assignment or under the Security Instruments
and agrees that, upon the occurrence of an event of default under the credit
agreement or any other applicable document for the Facility, if the
Administrative Agent shall elect to exercise rights under the Security
Instruments and if the Administrative Agent notifies the Company, then the
Company will accept the Administrative Agent's exercise of any and all rights of
the Borrower under the Assigned Agreement.
(c) The Company agrees that the Administrative Agent or its
designee shall have the right to enforce directly against the Company all
obligations of the Company under the Assigned Agreement to the same extent that
the Borrower could exercise all rights and remedies thereunder. Further, any
exercise of remedies under the Assigned Agreement shall not require the further
consent of the Company except as may be expressly required under the terms of
the Assigned Agreement.
(d) The Company agrees that neither the Administrative Agent
nor its designee shall be subject to any duty or obligation under the Assigned
Agreement, unless and until the Administrative Agent shall have notified the
Company that it has elected to exercise its rights pursuant to the Security
Instruments and to have itself or its
-2-
<PAGE>
designee substituted for the Borrower under the Assigned Agreement, in which
case the Administrative Agent or its designee, as the case may be, shall
thereafter become liable to the Company to perform such duties and obligations
of the Borrower as the Assigned Agreement requires.
(e) The Company agrees that it will not take any action to
sell, assign, or dispose (by operation of law or otherwise) of any part of its
interest in the Assigned Agreement without making such transfer subject to this
Consent.
(f) The Company agrees that it will not exercise any right it
may have to suspend performance under or terminate the Assigned Agreement until
it (i) gives written notice to the Borrower and the Banks (or if definitive
documentation for the Facility has been executed, the Administrative Agent) of
all then-existing defaults of which it has knowledge, specifying in reasonable
detail the nature (and in the case of monetary defaults, the amount) thereof,
and (ii) affords the Banks or the Administrative Agent (as applicable) a total
period of ten (10) days to cure such default or breach, from the date of receipt
of such notice.
(g) The Company acknowledges that it will not have the right
to be named as an additional insured or loss payee on any property insurance of
the Borrower or GCICC.
(h) The Company agrees that it will deliver to the
Administrative Agent, in the manner set forth in Section 6 hereof, concurrently
with the delivery thereof to the Borrower or GCICC, a copy of each material
notice, request, or demand given by the Company pursuant to the Assigned
Agreement.
Section 3. Agreement of the Borrower and GCICC.
(a) The Borrower and GCICC each agrees that the Company is
authorized to act in accordance with the Administrative Agent's (or its
designee, as the case may be) instructions or its exercise of the Borrower's
rights under the Assigned Agreement and shall release and hold the Company
harmless from all liability to the Borrower and GCICC in connection therewith.
(b) The Borrower agrees that it will not exercise any right it
may have to suspend performance under or terminate the Assigned Agreement
without the prior written consent of the Banks (or if definitive documentation
for the Facility has been executed, the required lenders under the credit
agreement for the Facility).
Section 4. Consent of the Banks; Agreement of Administrative
Agent.
(a) The Banks hereby consent to the execution by the Borrower
of the Acknowledgment and Consent dated as of January 8, 1998 by and among
GCICC, the Borrower, the Company and Credit Lyonnais, New York Branch as
administrative agent provided such document is in substantially the same form as
this Consent (such document shall be referred to herein as the "GCI
Acknowledgment and Consent"). The Banks hereby further (i) consent to the
-3-
<PAGE>
execution of the Assigned Agreement by GCICC and the assignment by GCICC of
certain of its rights under the Assigned Agreement to the Borrower provided the
administrative agent and the lenders referred to in that certain Credit
Agreement dated November 1, 1996 among the Company, Credit Lyonnais, New York
Branch, as administrative agent and the financial institutions parties thereto
(as amended, the "Kanas Credit Agreement") (A) acknowledge in writing that any
assignment by the Company to any of them of any part of the Company's interest
in the Assigned Agreement is subject to this Consent, (B) acknowledge in writing
that their rights are subject to the rights of exclusive use of the Borrower
under the Assigned Agreement (which shall be in the same form as Section 4(b)
below) and (C) consent to the Assigned Agreement (which consent is in form and
substance satisfactory to the Banks) and do not require anything from GCICC or
the Borrower other than an Acknowledgment and Consent substantially in the form
hereof and (ii) acknowledge and agree that any assignment by the Borrower to the
Administrative Agent or any of the Banks of any part of the Borrower's interest
in the Assigned Agreement is subject to the GCI Acknowledgment and Consent.
(b) The Banks hereby acknowledge that any security interest of
the Administrative Agent (on behalf of certain lenders) in the Borrower's assets
pursuant to the Security Instruments would be subject to the rights of the
Company to use the fiber pairs in the Alaska United System to which the Company
has been granted exclusive use pursuant to the Assigned Agreement. In
particular, the lenders' rights under the credit agreement for the Facility
and/or the Security Instruments and in the Borrower's assets (including, without
limitation, the Alaska United System) would be subject to the right of the
Company to use the fiber pairs in the Alaska United System to which the Company
has been granted exclusive use pursuant to the Assigned Agreement, and that even
if the lenders shall exercise any rights that they have as secured parties under
the credit agreement for the Facility and/or the Security Instruments, the
lenders' rights shall be subject to such rights of the Company; provided,
however, that the Borrower (or its assignee) is still entitled to use the fiber
pairs to which the Borrower has been granted exclusive use by the Company
pursuant to the Assigned Agreement and, provided, further, that the lenders make
no representation or warranty of any kind whatsoever regarding the Company's
rights under the Assigned Agreement and except as specifically set forth herein
shall not be responsible for any liability or obligation of the Borrower or any
other person.
(c) The Administrative Agent acknowledges that its rights
hereunder shall terminate and be of no further force or effect following written
notification by the Administrative Agent to the Company that the Secured
Obligations have been repaid in full and that all commitments of any lenders to
make loans or to extend credit have terminated or expired.
Section 5. Representations and Warranties. The Company hereby
represents and warrants that:
(a) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Alaska. The
Company has full corporate power,
-4-
<PAGE>
authority, and legal right to conduct its business as presently conducted and to
execute, deliver, and perform its obligations under the Assigned Agreement and
this Consent.
(b) The execution, delivery, and performance by the Company of
the Assigned Agreement and this Consent (i) have been duly authorized by all
necessary corporate action, and (ii) do not and will not (A) require any further
consents or approvals which have not been obtained, (B) violate any provisions
of any law, regulation, order, judgment, injunction or similar matters, (C)
result in the breach of or constitute a material default under any material
agreement presently in effect with respect to or binding on the Company, or (D)
result in, or require, the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance of any
nature (other than as may be contemplated by this Consent or the Assigned
Agreement) upon or with respect to any of the properties or assets of the
Company now owned or hereafter acquired.
(c) Each of this Consent and the Assigned Agreement are legal,
valid, and binding obligations of the Company, enforceable against the Company
in full in accordance with their respective terms.
(d) No approval, authorization or other action by any
governmental authority or filing with any such authority which has not been
obtained or accomplished is required in connection with the execution, delivery
and performance of this Consent or the Assigned Agreement.
(e) There are no actions, suits or proceedings pending or
overtly threatened against the Company before any court or administrative agency
that would materially impair the Company's performance of its obligations under
this Consent or the Assigned Agreement.
(f) All conditions precedent to the effectiveness of the
Assigned Agreement have been satisfied by the parties thereto, and the Assigned
Agreement is in full force and effect and has not been amended, supplemented, or
modified.
(g) The Company is not in default of any material covenant or
obligation under the Assigned Agreement. To the knowledge of the Company as of
the date hereof, there are no breaches under the Assigned Agreement that would
allow the Company to terminate the Assigned Agreement.
(h) As of the date hereof, the Company has no knowledge of
existing counterclaims, offsets or defenses against the Borrower.
(i) Attached hereto as Exhibit A is a true and correct copy of
the Assigned Agreement as in effect on the date hereof.
-5-
<PAGE>
Section 6. Notices. Notices hereunder shall be in writing and
may be given by hand delivery or nationally recognized overnight courier. Notice
to any party hereto shall be deemed to be delivered on the date of personal
delivery and shall be addressed as follows:
Credit Lyonnais or the CREDIT LYONNAIS, NEW YORK
Administrative Agent BRANCH
1301 Avenue of the Americas
New York, New York 10019
Attn: Project Finance Group
NationsBank NATIONSBANK OF TEXAS, N.A.
901 Main Street, 64th Floor
Dallas, Texas 75202
Attn: Whitney L. Busse
Toronto Dominion TD SECURITIES (USA) INC.
31 West 52nd Street
New York, New York
10019-6101
Attn: Tom Westdyk
GCICC GCI COMMUNICATION CORP.
2550 Denali Street
Anchorage, Alaska 99503
Attn: General Manager
Company KANAS TELECOM, INC.
4041 B Street, Suite 102
Anchorage, Alaska
99503-4196
Attn: Vice President/Chief
Operating Officer
Borrower ALASKA UNITED FIBER SYSTEM
PARTNERSHIP
C/O GCI FIBER CO., INC.
2550 Denali Street,
Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial
Officer
Section 7. Counterparts. This Consent may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same agreement.
Section 8. Governing Law. This Consent shall be governed by,
and construed in accordance with, the laws of the State of New York.
-6-
<PAGE>
Section 9. Successors and Assigns. This Consent shall inure to
the benefit of the Company, GCICC, the Borrower, the Administrative Agent, the
Banks and the lenders under the credit agreement for the Facility, and their
respective successors, transferees, and assigns (including, without limitation,
any entity that refinances all or any portion of any loans extended to the
Borrower).
Section 10. Protection of Administrative Agent. In the event
that either (i) the Borrower's interest in the Assigned Agreement shall be sold,
assigned, or otherwise transferred pursuant to the exercise of any right, power,
or remedy by the Administrative Agent or pursuant to judicial proceedings, or
(ii) the Borrower rejects the Assigned Agreement under 11 U.S.C. Section 365,
and such rejection is approved by the appropriate bankruptcy court, and, in
either case, (a) no funds payable under the Assigned Agreement shall then be due
and payable to the Company at the time of such transfer or rejection, (b) the
Administrative Agent shall have arranged for the curing of any default
susceptible of being corrected by the Administrative Agent or by a purchaser at
any judicial or no-judicial sale, and (c) the Assigned Agreement shall have been
terminated pursuant to the terms thereof by reason of default or a rejection by
the Borrower or a trustee in bankruptcy under 11 U.S.C. Section 365, the Company
shall, within fifteen (15) days after receipt of written request therefor,
execute and deliver a fiber exchange agreement to the Administrative Agent or
its permitted designee (or the assignee of either of them, as the case may be)
for the remainder of the term of the Assigned Agreement and with the same terms
as are contained in the Assigned Agreement and with respect to all facilities
that were subject to the Assigned Agreement.
[Remainder of page intentionally left blank]
-7-
<PAGE>
IN WITNESS WHEREOF, the parties have by the signatures of
their duly authorized officers entered into this Consent as of the date first
set forth above.
CREDIT LYONNAIS CREDIT LYONNAIS NEW YORK BRANCH
By: /S/
Name: Michael F.G. Pepe
Title: Vice President
NATIONSBANK NATIONSBANK OF TEXAS, N.A.
By: /s/
Name: Whitney Busse
Title: Vice President
TORONTO DOMINION TD SECURITIES (USA) INC.
By: /s/
Name: Michael Bandzierz
Title: Managing Director
GCICC GCI COMMUNICATION CORP.
By: /s/
Name: John M. Lowber
Title: Chief Financial Officer
BORROWER ALASKA UNITED FIBER SYSTEM
PARTNERSHIP
By: GCI Fiber Co., Inc., a General
Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
By: Fiber Hold Co., Inc. a General
Partner
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
COMPANY KANAS TELECOM, INC.
By: /s/
Name: Michael F.G. Williams
Title: Vice President
<PAGE>
EXHIBIT A
TO
ACKNOWLEDGMENT AND CONSENT
FIBER EXCHANGE AGREEMENT
by and between
KANAS TELECOM, INC.,
an Alaska corporation ("KANAS")
and
GCI COMMUNICATION CORP.,
an Alaska corporation ("GCICC")
November 21, 1997
<PAGE>
TABLE OF CONTENTS
1. Definitions and General Provisions................................ 1
1.1 Definitions.............................................. 1
1.2 General Definitions...................................... 3
2. Representations and Warranties.................................... 4
2.1 Representations and Warranties of Kanas.................. 4
2.1.1 Good Standing................................... 4
2.1.2 Authorization................................... 4
2.1.3 Consent, Approval............................... 4
2.1.4 No Insolvency................................... 4
2.1.5 No Defaults..................................... 4
2.1.6 No Conflicts with Other Agreements.............. 4
2.1.7 Litigation...................................... 5
2.1.8 Enforceability.................................. 5
2.1.9 Effect of Certificate........................... 5
2.1.10 Title; Right to Use............................... 5
2.2 Representations and Warranties of GCICC.................. 5
2.2.1 Good Standing................................... 5
2.2.2 Authorization................................... 5
2.2.3 Consent, Approval............................... 5
2.2.4 No Insolvency................................... 5
2.2.5 No Defaults..................................... 5
2.2.6 No Conflicts with Other Agreements.............. 6
2.2.7 Litigation...................................... 6
2.2.8 Enforceability.................................. 6
2.2.9 Effect of Certificate........................... 6
2.2.10 Title; Right to Use............................... 6
3. Exclusive Use of Dark Fiber....................................... 6
3.1 Grants of Exclusive Use of Dark Fiber.................... 6
3.2 Exchange Date............................................ 6
3.2.1 Substantial Completion of Kanas Facility........ 7
3.2.2 Substantial Completion of GCICC Facility........ 7
3.2.3 Liquidated Damages.............................. 7
3.3 Notice of Substantial Completion......................... 7
3.4 Title to Facilities...................................... 7
4. Optional Interim Exchange of Circuits............................. 7
4.1 Kanas' Option for Interim Exchange....................... 7
4.2 Interim Exchange of Circuits............................. 7
5. Consent for Kanas................................................. 7
5.1 Consent by Alyeska....................................... 7
5.2 Consent by Majority Lenders.............................. 8
<PAGE>
6. Milestone Requirements for GCICC Facility......................... 8
6.1 GCICC Facility Construction Milestones................... 8
6.2 Effect of Failure to Meet GCICC Facility Construction
Milestones............................................... 9
7. Rights-of-Way and Permits for GCICC Facility...................... 9
8. Liquidated Damages................................................ 9
9. GCICC Payments to Kanas........................................... 9
10. Electronic Equipment; Interconnection............................. 9
10.1 Installation of Electronic Equipment on Kanas Fibers..... 9
10.2 Installation of Electronic Equipment on GCICC Fibers..... 10
10.3 Space and Power on Kanas Facility........................ 10
10.4 Space and Power on GCICC Facility........................ 10
10.5 Modifications of Electronic Equipment.................... 10
10.6 Relocation of Electronic Equipment....................... 10
10.7 Electronic Equipment at Additional Locations............. 11
10.8 Interconnection with Other Telecommunications Facilities. 11
10.8.1 Interconnection by GCICC........................ 11
10.8.2 Interconnection by Kanas........................ 11
11. Maintenance; Risk of Loss......................................... 11
11.1 Electronic Equipment...................................... 11
11.2 Fiber.................................................... 12
11.3 Access for Equipment Maintenance......................... 12
12. Access to Facilities.............................................. 12
13. Destruction/Restoration........................................... 12
13.1 Total or Partial Destruction; Obligation to Restore...... 12
13.1.1 Excessive Cost to Restore....................... 12
13.1.2 Restoration Contrary to Law..................... 12
14. Condemnation...................................................... 13
14.1 Rights and Obligations of Parties Governed by this
Agreement................................................ 13
14.2 Total Taking............................................. 13
14.3 Partial Taking........................................... 13
14.4 Payment of Award......................................... 13
15. Management Meetings............................................... 13
16. Regulatory Matters................................................ 13
-ii-
<PAGE>
17. Default and Remedies.............................................. 13
17.1 Events of Default........................................ 13
17.1.1 Failure to Pay.................................. 13
17.1.2 Default of Covenants or Conditions.............. 13
17.1.3 Breach of Representations or Warranties......... 13
17.1.4 Insolvency, Bankruptcy.......................... 14
17.1.5 Order Appointing Receiver, Trustee or Liquidator 14
17.2 Remedies on Default...................................... 14
17.2.1 Termination..................................... 14
17.2.2 Specific Performance............................ 14
17.2.3 Force Majeure................................... 14
17.3 No Remedy Exclusive...................................... 15
18. Confidentiality; Media Relations.................................. 15
18.1 Confidentiality.......................................... 15
18.2 Media Relations.......................................... 15
19. Term; Duties Upon Termination..................................... 15
19.1 Term..................................................... 15
19.2 Duties upon Termination.................................. 15
21. Exhibits.......................................................... 16
22. Miscellaneous..................................................... 16
22.1 No Implied Waiver........................................ 16
22.2 Successors in Interest................................... 16
22.3 Notices.................................................. 16
22.4 Parties in Interest...................................... 17
22.5 Relationship of Parties.................................. 17
22.6 Time of Essence.......................................... 17
22.7 Headings................................................. 17
22.8 Law Governing Construction of Agreement.................. 17
22.9 Exclusive Forum and Venue................................ 17
22.10 Severability............................................. 17
22.11 Integration and Modification............................. 17
22.12 Additional Documents..................................... 18
-iii-
<PAGE>
FIBER EXCHANGE AGREEMENT
THIS FIBER EXCHANGE AGREEMENT (the "Agreement") is dated as of the 21st
day of November 1997, and is entered into by and between KANAS TELECOM, INC., an
Alaska corporation ("Kanas"), and GCI COMMUNICATION CORP., an Alaska corporation
("GCICC").
WHEREAS, Kanas is constructing, and will own, operate and
maintain, a fiber optic telecommunications facility between Valdez, Alaska and
Prudhoe Bay, Alaska, along the right-of-way for the Trans-Alaska Pipeline; and
WHEREAS, GCICC intends to construct, and to own, operate and
maintain, a fiber optic telecommunications facility between Anchorage, Alaska
and Valdez, consisting of buried or aerial cable from Anchorage to Whittier,
Alaska, and a submarine cable from Whittier to Valdez; and
WHEREAS, both Kanas and GCICC desire to obtain the use of
fiber optic facilities necessary to provide telecommunications services between
Anchorage and Fairbanks, Alaska;
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES and of the
mutual covenants herein set forth, the parties hereto agree and covenant as
follows:
1. Definitions and General Provisions.
1.1 Definitions. The following terms shall, for all purposes of this
Agreement, have the following meanings:
1.1.1 "Agreement" means this Fiber Exchange Agreement, as
amended from time to time.
1.1.2 "Alyeska" means Alyeska Pipeline Service Company, a
Delaware Corporation.
1.1.3 "Alyeska Agreement" means Contract TAPS/6220 dated as of
May 31, 1996 between Kanas and Alyeska, as amended from time to time.
1.1.4 "Award" means all compensation, sums, or anything of
value awarded, paid, or received on a total or partial Condemnation.
1.1.5 "Business Day" means any day other than a Saturday,
Sunday or holiday when federal or State of Alaska government offices are closed.
1.1.6 "Condemnation" means (a) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a Condemnor,
or (b) a voluntary sale or transfer
PAGE 1 OF 18
<PAGE>
to any Condemnor, either under threat of Condemnation or while legal proceedings
for Condemnation are pending.
1.1.7 "Condemnor" means any public or quasi-public authority,
or private corporation or individual, having the power of eminent domain.
1.1.8 "Dark Fiber" means an identified fiber contained within
a fiber optic cable, which has been installed with all required splicing
completed and terminated to an intermediate fiber distribution panel, but which
has no light source present and has not been terminated to any electronic
system.
1.1.9 "Date of Taking" means the date the Condemnor has the
right to possession of the property being condemned.
1.1.10 "Event of Default" means any of the events specified as
an event of default in Section 17.1, or elsewhere in this Agreement.
1.1.11 "Exchange Date" means the single date on which each
party's right to use Dark Fiber on the other party's Facility commences as
provided in Section 3.2.
1.1.12 "Facility" means, when reference is made to the
Facility of a party, (i) the GCICC Facility if the party is GCICC, or (ii) the
Kanas Facility if the party is Kanas.
1.1.13 "Force Majeure" means, without limitation, the
following: acts of God; strikes, lockouts, or other industrial disturbances;
acts of public enemies; orders or restraints of any kind of the government of
the United States or of the State of Alaska or any other governmental authority,
or any of their departments, agencies, subdivisions, or officials, or any civil
or military authority (including any orders or restraints exercised pursuant to
any agreement to which GCICC or Kanas is a party); war or warlike operations,
civil war or commotions, mobilizations or military call-up, and acts of similar
nature; revolution, rebellions, sabotage, and insurrections; epidemics or
quarantine restrictions; landslides; icebergs; typhoons; tornadoes; adverse
weather conditions; tidal waves; earthquakes; fires; storms; droughts; floods;
explosions; breakage, malfunction, or accident to cable, facilities, machinery,
transmission pipes, or canals; provided that no event which is reasonably in the
control of a party or which the party, through the exercise of reasonable
maintenance or management, could have reasonably prevented from occurring, shall
be considered "force majeure."
1.1.14 "GCICC" means GCI COMMUNICATION CORP., a corporation
organized under the laws of the State of Alaska.
1.1.15 "GCICC Facility" means the fiber optic cable to be
constructed by GCICC between the SADC and the Petro Star Metering Station in the
vicinity of Valdez, consisting of buried or aerial fiber optic cable from
Anchorage to Whittier, a submarine fiber optic cable from Whittier to Valdez,
and buried or aerial fiber optic cable from Valdez to the Petro Star Metering
Station.
PAGE 2 OF 18
<PAGE>
1.1.16 "GCICC Fibers" means the three pairs of Dark Fiber in
the Kanas Facility, the right to exclusive use of which Kanas has granted to
GCICC under Section 3.1.
1.1.17 "Kanas" means KANAS TELECOM, INC. a corporation
organized under the laws of the State of Alaska.
1.1.18 "Kanas Facility" means the fiber optic cable to be
constructed by Kanas between the Petro Star Metering Station and the North Pole
Metering Station, along the right-of-way for the Trans-Alaska Pipeline.
1.1.19 "Kanas Fibers" means the three pairs of Dark Fiber in
the GCICC Facility, the right to exclusive use of which GCICC has granted to
Kanas under Section 3.1.
1.1.20 "Majority Lenders" means the Majority Lenders as
defined in the Credit Agreement dated as of November 1, 1996 among Kanas, Credit
Lyonnais, New York Branch, individually and as Administrative Agent, and the
Lenders (as defined therein).
1.1.21 "OLT" means optical line termination equipment.
1.1.22 "POP" means a party's primary point of presence at a
designated location.
1.1.23 "SADC" means GCICC's South Anchorage Distribution
Center, located at 6831 Arctic Boulevard, Anchorage, Alaska.
1.1.24 "Substantial Completion" or "Substantially Complete"
means, with respect to Dark Fiber, that (i) the fiber has been installed, with
all required splicing completed, (ii) the fiber transports light in accordance
with the standards in Exhibit A, as demonstrated under the testing procedure
described in Exhibit A, (iii) space, power and equipment access have been
provided to the extent required by the terms of this Agreement; and the owner of
the Facility containing the fiber has acquired all permits and rights-of-way
that are required for its operation of that Facility.
1.1.25 "Term" means the term of this Agreement, which shall be
determined as provided in Section 19.1.
1.2 General Definitions.
1.2.1 Sections. All references in this Agreement to designated
"Sections" and other subdivisions are to designated sections and other
subdivisions of this Agreement.
1.2.2 General Words of Reference. The words "herein,"
"hereof," "hereto," "hereby," and "hereunder" and other words of similar import
refer to this Agreement as a whole and not any particular section or other
subdivisions.
1.2.3 Singular/Plural. The terms specifically defined in
Section 1.1 have the meanings ascribed to them in that Section and include the
plural as well as the singular.
PAGE 3 OF 18
<PAGE>
1.2.4 GAAP. All accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally accepted
accounting practices, consistently applied, in effect from time to time.
1.2.5 Authority. Every "approval," "request," "order,"
"demand," "application," "appointment," "notice," "statement," "certificate,"
"consent," or similar action hereunder shall, unless the form thereof is
specifically provided, be in writing, signed by a duly authorized officer or
agent of the party or other person with a duly authorized signature.
1.2.6 Fiber Pair. The term "fiber pair," or "pair" used in
reference to fiber, means two fibers in a fiber optic cable.
2. Representations and Warranties.
2.1 Representations and Warranties of Kanas. As of the date hereof,
Kanas hereby represents and warrants as follows:
2.1.1 Good Standing. Kanas is a corporation in good standing
under the laws of the State of Alaska.
2.1.2 Authorization. Kanas has full corporate power and
authority to carry on its business as now conducted and to enter into this
Agreement. The execution and delivery of this Agreement has been authorized by
proper corporate action, and this Agreement constitutes a valid and legally
binding obligation of Kanas.
2.1.3 Consent, Approval. Except as may have already been
obtained, and except for the consents of Alyeska and the Majority Lenders
required in Section 5, no consent or approval of any trustee, shareholder or
holder of any indebtedness or obligation of Kanas, and no consent, approval,
permission, authorization, order, or license of any governmental authority, is
required to be obtained by Kanas for the execution and delivery of this
Agreement or any other instrument or agreement required of Kanas under this
Agreement.
2.1.4 No Insolvency. Kanas is not insolvent as of the date
hereof.
2.1.5 No Defaults. To its knowledge, Kanas is not in default
nor has any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default by Kanas under any material agreement or instrument to which Kanas is a
party or by which Kanas is bound which default would have a material adverse
effect on Kanas' performance under this Agreement.
2.1.6 No Conflicts with Other Agreements. Neither the
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
provisions hereto, materially conflicts with, violates, or breaches any charter,
bylaw, or stock provision of Kanas, any of the material terms, conditions, or
provisions of any indenture, instrument, or agreement to which Kanas is a party
or by which Kanas is bound, any statute, rule or regulation, or any judgment,
decree, or order of any court
PAGE 4 OF 18
<PAGE>
or agency binding on Kanas, or constitutes a default under any of the foregoing
which has not been waived or consented to in writing by the appropriate party or
parties.
2.1.7 Litigation. To the knowledge of Kanas, there is no
action, suit, proceeding, inquiry, or investigation by or before any court,
governmental agency, or public board or body pending or threatened against Kanas
which (i) affects or seeks to prohibit, restrain, or enjoin the execution and
delivery of this Agreement, (ii) affects or questions the validity or
enforceability of this Agreement, or (iii) questions the power or authority of
Kanas to carry out the transactions contemplated by, or to perform its
obligations under, this Agreement.
2.1.8 Enforceability. When duly executed, this Agreement will
be enforceable against Kanas according to its terms, except as may be limited by
bankruptcy, insolvency, reorganization, or other laws affecting creditors'
rights generally as amended from time to time.
2.1.9 Effect of Certificate. Any certificate signed by an
officer of Kanas duly authorized to execute such certificate and delivered
pursuant to this Agreement shall be deemed to be a representation and warranty
by Kanas as to the statements made therein.
2.1.10 Title; Right to Use. Kanas has, or will have by the
date provided herein for Substantial Completion of the Kanas Facility, title or
the right to use all property necessary to fulfill its obligations under this
Agreement.
2.2 Representations and Warranties of GCICC. As of the date hereof,
GCICC hereby represents and warrants as follows:
2.2.1 Good Standing. GCICC is a corporation in good standing
under the laws of the State of Alaska.
2.2.2 Authorization. GCICC has full corporate power and
authority to carry on its business as now conducted and to enter into this
Agreement. The execution and delivery of this Agreement has been authorized by
proper corporate action, and this Agreement constitutes a valid and legally
binding obligation of GCICC.
2.2.3 Consent, Approval. Except as may have already been
obtained, or will be obtained as provided in Section 6.1, no consent or approval
of any trustee or holder of any indebtedness or obligation of GCICC, and no
consent, approval, permission, authorization, order, or license of any
governmental authority, is required to be obtained by GCICC for the execution
and delivery of this Agreement or any other instrument or agreement required of
GCICC under this Agreement.
2.2.4 No Insolvency. GCICC is not insolvent as of the date
hereof.
2.2.5 No Defaults. To its knowledge, GCICC is not in default
nor has any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default by GCICC under any material agreement
PAGE 5 OF 18
<PAGE>
or instrument to which GCICC is a party or by which GCICC is bound which default
would have a material adverse effect on GCICC's performance under this
Agreement.
2.2.6 No Conflicts with Other Agreements. Neither the
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
provisions hereto, materially conflicts with, violates, or breaches any charter,
bylaw, or stock provision of GCICC, any of the material terms, conditions, or
provisions of any indenture, instrument, or agreement to which GCICC is a party
or by which GCICC is bound, any statute, rule or regulation, or any judgment,
decree, or order of any court or agency binding on GCICC, or constitutes a
default under any of the foregoing which has not been waived or consented to in
writing by the appropriate party or parties.
2.2.7 Litigation. To the knowledge of GCICC, there is no
action, suit, proceeding, inquiry, or investigation by or before any court,
governmental agency, or public board or body pending or threatened against GCICC
which (i) affects or seeks to prohibit, restrain, or enjoin the execution and
delivery of this Agreement, (ii) affects or questions the validity or
enforceability of this Agreement, or (iii) questions the power or authority of
GCICC to carry out the transactions contemplated by, or to perform its
obligations under, this Agreement.
2.2.8 Enforceability. When duly executed, this Agreement will
be enforceable against GCICC according to its terms, except as may be limited by
bankruptcy, insolvency, reorganization, or other laws affecting creditors'
rights generally as amended from time to time.
2.2.9 Effect of Certificate. Any certificate signed by an
officer of GCICC duly authorized to execute such certificate and delivered
pursuant to this Agreement shall be deemed to be a representation and warranty
by GCICC as to the statements made therein.
2.2.10 Title; Right to Use. GCICC has, or will have by the
date provided herein for Substantial Completion of the GCICC Facility, title or
the right to use all property necessary to fulfill its obligations under this
Agreement.
3. Exclusive Use of Dark Fiber.
3.1 Grants of Exclusive Use of Dark Fiber. GCICC hereby grants to Kanas
the exclusive right to use three Dark Fiber pairs in the GCICC Facility, and
Kanas hereby grants to GCICC the exclusive right to use three Dark Fiber pairs
in the Kanas Facility. The rights to exclusive use granted under this Section
shall commence on the Exchange Date, and shall continue thereafter until the end
of the Term of this Agreement. The specific locations and points of termination
of the Kanas Fibers are described in Exhibit B. The specific locations and
points of termination of the GCICC Fibers are described in Exhibit C.
3.2 Exchange Date. Each party's right granted under Section
3.1 to the exclusive use of Dark Fiber in the other party's facility shall
commence on the same date, i.e., the
PAGE 6 OF 18
<PAGE>
Exchange Date. The Exchange Date is the first Business Day after each of the
following conditions has been satisfied:
3.2.1 Substantial Completion of Kanas Facility. Kanas has
given GCICC written notice that the Kanas Facility is Substantially Complete.
3.2.2 Substantial Completion of GCICC Facility. GCICC has
given Kanas written notice that the GCICC Facility is Substantially Complete.
3.2.3 Liquidated Damages. Each party has paid any liquidated
damages that are due the other party under Section 8.
Notwithstanding any other provision of this Agreement, the requirement that each
of the foregoing conditions occur before the Exchange Date shall not be affected
by any act or event of Force Majeure.
3.3 Notice of Substantial Completion. GCICC shall give Kanas written
notice of the Substantial Completion of the GCICC Facility within 10 days after
its Substantial Completion. Kanas shall give GCICC written notice of the
Substantial Completion of the Kanas Facility within 10 days after its
Substantial Completion.
3.4 Title to Facilities. Notwithstanding the grants of exclusive use
under Section 3.1, each party shall retain title to all of its Facility.
4. Optional Interim Exchange of Circuits.
4.1 Kanas' Option for Interim Exchange. If the Exchange Date does not
occur upon Kanas' written notification to GCICC under Section 3.2.1 that the
Kanas Facility is Substantially Complete, Kanas, in its sole discretion, may
exercise the option to make the interim exchange of telecommunications circuits
described in Section 4.2. Kanas shall exercise the option by providing written
notice to GCICC of its election to exercise the option not later than 30 days
after Substantial Completion of the Kanas Facility.
4.2 Interim Exchange of Circuits. The following interim exchange of
telecommunications circuits shall be made for a period commencing with Kanas'
exercise of the option as provided in Section 4.1, and ending on the Exchange
Date. GCICC shall provide at no cost to Kanas six terrestrial T-1 circuits
between Fairbanks and Anchorage, and Kanas shall provide at no cost to GCICC two
T-1 circuits between Fairbanks and Prudhoe Bay, and two T-1 circuits between
Valdez and Fairbanks.
5. Consent for Kanas.
5.1 Consent by Alyeska. Kanas will use its best efforts to obtain the
consent of Alyeska to this Agreement. If Kanas fails to obtain the written
consent of Alyeska to this Agreement on or before November 26, 1997, GCICC shall
have the option to terminate this Agreement by written notice to Kanas. Upon the
exercise of this option by GCICC, this
PAGE 7 OF 18
<PAGE>
Agreement shall terminate, and neither party shall have any further obligation
to the other under this Agreement.
5.2 Consent by Majority Lenders. Kanas will use its best efforts to
obtain the consent of the Majority Lenders to this Agreement. This Agreement
shall become effective only upon the receipt by Kanas on or before January 1,
1998 of the written consent of the Majority Lenders to this Agreement, which
consent shall be either unconditional or subject only to such conditions as are
acceptable to Kanas.
6. Milestone Requirements for GCICC Facility.
<TABLE>
6.1 GCICC Facility Construction Milestones. GCICC shall accomplish each
of the following tasks for construction of the GCICC Facility no later than the
deliverable due date stated below.
<CAPTION>
Task Deliverable Date Deliverable
---- ---------------- -----------
<S> <C> <C>
Award of Submarine Cable Construction December 10, 1997 Executed Submarine Cable Construction
Contract Contract
Approval of this Agreement by GCICC Lead December 15, 1997 Written Approval of Lead Bank
Lender Bank
Completion of Preliminary Survey January 8, 1998 Preliminary Survey Report for
Complete System between GCICC SADC
and Valdez
Completion of Preliminary Detailed Design March 1, 1998 Preliminary Design Documents for all
Outside Plant
Completion of Survey June 1, 1998 Final Survey Report for Complete
System Between GCICC SADC and Petro
Star Metering Station
Completion of Detailed Design July 1, 1998 Construction Drawings For All Outside
Plant
</TABLE>
Each task described above shall be considered complete for the purposes of this
Agreement on the date of Kanas' written notice to GCICC of Kanas' acceptance of
the deliverable. Kanas will inspect each deliverable with reasonable promptness,
and respond to GCICC in writing within 10 business days either stating that it
accepts the deliverable, or giving notice of any defects therein. Such
acceptance shall not be unreasonably withheld. It shall be the responsibility of
GCICC to complete each deliverable, including curing any deficiencies identified
by Kanas, and obtain Kanas' acceptance thereof, no later than the deliverable
due date stated above. Notwithstanding any other provision of this Agreement, no
deliverable due date in this Section shall be affected by any act or event of
Force Majeure.
PAGE 8 OF 18
<PAGE>
6.2 Effect of Failure to Meet GCICC Facility Construction Milestones.
If GCICC fails to complete any of the tasks described in Section 6.1 on or
before the deliverable due date for that task in Section 6.1, Kanas shall have
the option to terminate this Agreement by written notice delivered to GCICC not
later than 15 days after the deliverable due date. Upon termination under this
Section, neither party shall have any further obligation to the other under this
Agreement.
7. Rights-of-Way and Permits for GCICC Facility. Within ten days after the
execution of this Agreement, GCICC shall prepare and submit for Kanas'
information a schedule of the permits and rights-of-way that GCICC then expects
to acquire to effect construction and Substantial Completion of the GCICC
Facility. Not later than the second Business Day of each month commencing after
the execution of this Agreement, and until Substantial Completion of the GCICC
Facility, GCICC shall provide to Kanas a written report on the status of all
permits and rights-of-way that GCICC then expects to acquire to effect the
construction or Substantial Completion of the GCICC Facility. Each monthly
report shall contain a comparison of actual progress with the estimated progress
of the acquisition each such permit and right-of-way, and in the case of the
acquisition of any permit or right-of-way whose actual progress does not meet
the estimate, a narrative description of the means and methods which GCICC
intends to employ to expedite the progress of acquisition of the permit or
right-of-way to ensure timely Substantial Completion of the GCICC Facility.
8. Liquidated Damages. If one party's Facility is Substantially Complete and the
other party's Facility is not Substantially Complete, the party whose Facility
is not Substantially Complete shall pay to the other liquidated damages in the
amount of $200,000 for each calendar month (i) commencing on or after the later
of the date the first party's Facility is Substantially complete, or December 1,
1998, and (ii) ending on or before the Exchange Date. The parties hereby agree
in advance that this amount reflects their estimation of actual damages that
will be suffered from a delay in the Exchange Date. The affected party may
institute an action to recover such liquidated damages from the defaulting party
as compensation for its failure to receive the exclusive use of the pairs of
Dark Fiber described in Section 3.1, not as a penalty. Liquidated damages shall
be available as provided in this Section whether on not Kanas exercises the
option for interim exchange of circuits under Section 4.
9. GCICC Payments to Kanas. GCICC will pay to Kanas the sum of $500,000 in two
installments of $250,000 each. GCICC shall pay the first installment of $250,000
to Kanas within 10 days after the Exchange Date. GCICC shall pay the second
installment of $250,000 to Kanas on the date that is 12 months after the date
when the first installment is due.
10. Electronic Equipment; Interconnection.
10.1 Installation of Electronic Equipment on Kanas Fibers. Kanas shall
bear the expense of acquiring and installing its own OLT, repeater and other
electronic equipment to operate the Kanas Fibers. The locations where Kanas'
electronic equipment is to be installed are described in Exhibit B. Subject to
Kanas' obtaining any required third party consent, GCICC shall allow Kanas
reasonable access to the GCICC Facility for the purpose of installing Kanas'
electronic equipment.
PAGE 9 OF 18
<PAGE>
10.2 Installation of Electronic Equipment on GCICC Fibers. GCICC shall
bear the expense of acquiring and installing its own OLT, repeater and other
electronic equipment to operate the GCICC Fibers. The locations where GCICC's
electronic equipment is to be installed are described in Exhibit C. Subject to
GCICC's obtaining any required third party consent, Kanas shall allow GCICC
reasonable access to the Kanas Facility for the purpose of installing GCICC's
electronic equipment.
10.3 Space and Power on Kanas Facility. GCICC will pay the incremental
cost of providing space and power for the electronic equipment that it will
install to operate the GCICC Fibers. GCICC understands that it cannot obtain any
space for GCICC electronic equipment within facilities owned or controlled by
Alyeska. Upon the request and at the expense of GCICC, Kanas shall extend the
GCICC Fibers and any power conductors from the Alyeska perimeter to the
interconnect with the Kanas Facility and any power made available to GCICC by
Alyeska. Kanas will use its best efforts to assist GCICC in obtaining from
Alyeska access to power for GCICC's electronic equipment, and Alyeska's
permission to extend the GCICC Fibers and power supply cable to the facilities
that GCICC constructs to house its electronic equipment; provided that Kanas
shall not be obligated to incur any expense or liability for this purpose.
10.4 Space and Power on GCICC Facility. Kanas shall pay the incremental
cost of providing space and power for the electronic equipment that it will
install to operate the Kanas Fibers. The locations at which Kanas will require
space and power for such electronic equipment, and Kanas' space and power
requirements for each location, are specified in Exhibit D.
10.5 Modifications of Electronic Equipment. Each party, at its own
expense, may modify or replace electronic equipment that it has installed under
Sections 10.1 or 10.2, subject to any limitations imposed by the space and power
that the other party is obligated to provide for the equipment at that location.
If a party requires an increase in space or power to accommodate the
modification or replacement of its equipment, it shall notify the other party in
writing of its increased requirements. The recipient of the notice shall use its
best efforts to accommodate the request subject to its own operating
requirements and contractual arrangements with third parties. The recipient of
the request need not make any modifications to its facilities to accommodate the
request until the requesting party has agreed in writing to pay the cost
thereof.
10.6 Relocation of Electronic Equipment. Kanas may relocate electronic
equipment installed for the operation of the GCICC Fibers, and GCICC may
relocate electronic equipment installed for the operation of the Kanas Fibers,
provided that, before the relocation:
A. The relocating party gives 45 days written notice to the other
party of the relocation;
B. The relocating party demonstrates to the reasonable
satisfaction and written approval of the other party that the
relocation will not adversely effect either (i) the quality or
reliability of the other party's telecommunications service,
or (ii)
PAGE 10 OF 18
<PAGE>
access by the other party for maintenance of its equipment;
and
C. The relocating party has agreed in writing to pay all costs of
relocating the other party's equipment.
The relocating party shall conduct the relocation in a manner that does not
interrupt or degrade the quality of the other party's telecommunications
service, in accordance with the standards in Exhibit E.
10.7 Electronic Equipment at Additional Locations. Kanas may, at its
own expense, install electronic equipment at locations on the GCICC Facility
other than the locations described in Exhibit B, provided that any such location
is one where GCICC already maintains its own electronic equipment, and Kanas
shall be responsible for all costs and arrangements required to accommodate its
equipment. GCICC may, at its own expense, install electronic equipment at
locations on the Kanas Facility other than the locations described in Exhibit C,
provided that any such location is one where Kanas has ready access to the GCICC
Fibers, and GCICC shall be responsible for all costs and arrangements required
to accommodate its equipment.
10.8 Interconnection with Other Telecommunications Facilities.
10.8.1 Interconnection by GCICC. Subject to GCICC's obtaining
any required third party consent, GCICC may, at its own expense, connect the
GCICC Fibers with other telecommunications facilities at intermediate points on
the Kanas Facility. Kanas shall have the right to approve how such work is done,
but shall have no obligations, and shall be subject to no expense, with respect
to the interconnection.
10.8.2 Interconnection by Kanas. Subject to Kanas' obtaining
any required third party consent, Kanas may, at its own expense, connect the
Kanas Fibers with other telecommunications facilities at intermediate points on
the GCICC Facility. GCICC shall have the right to approve how such work is done,
but shall have no obligations, and shall be subject to no expense, with respect
to the interconnection.
11. Maintenance; Risk of Loss.
11.1 Electronic Equipment.
11.1.1 Maintenance. Each party shall provide, at its own
expense, for the routine and non-routine maintenance of the electronic equipment
that it has caused to be installed for its use under Section 10.
11.1.2 Risk of Loss. Each party shall bear the risk of damage
or loss to the electronic equipment that it has caused to be installed for its
use under Section 10, except that the other party shall be responsible for such
loss or damage that is caused by its own negligence or intentional misconduct.
PAGE 11 OF 18
<PAGE>
11.2 Fiber.
11.2.1 Maintenance. Each party shall maintain its Facility in
accordance with the standards in Exhibit E. Each party shall bear all operations
and maintenance costs associated with its Facility, subject to the terms of this
Agreement. Such operations and maintenance costs shall include without
limitation all labor, training, contracts, materials, transportation and all
other related maintenance expenses.
11.2.2 Risk of Loss. Each party shall bear the risk of damage
or loss to its Facility, except that the other party shall be responsible for
such loss or damage that is caused by its own negligence or intentional
misconduct.
11.3 Access for Equipment Maintenance. Subject to Kanas' obtaining any
required third party consent, GCICC shall grant Kanas reasonable access to the
GCICC Facility for the purpose of maintaining Kanas' electronic equipment on the
Kanas Fibers. Subject to GCICC's obtaining any required third party consent,
Kanas shall grant GCICC reasonable access to the Kanas Facility for the purpose
of maintaining GCICC's electronic equipment on the GCICC Fibers.
12. Access to Facilities. Each party understands that the other party's Facility
may be located on private property or rights-of-way to which the former party
presently has no right of access. Each party understands that it is solely
responsible for obtaining such access from third parties as may be necessary for
it to install, operate, maintain, remove, repair or replace its equipment
located on the other party's Facility. Each party will use its best efforts to
assist the other party in obtaining such access, but neither party is obligated
to incur any expense or liability in providing such assistance. Each party shall
bear all costs of complying with conditions required by third parties for access
to the other party's Facility.
13. Destruction/Restoration.
13.1 Total or Partial Destruction; Obligation to Restore. If, during
the Term, either party's Facility is totally or partially destroyed, rendering
the Facility totally or partially inaccessible or unusable, the party that owns
the Facility shall restore the Facility to substantially the same condition as
it was in immediately before destruction, except as provided in Sections 13.1.1
and 13.1.2.
13.1.1 Excessive Cost to Restore. If the cost of repairing or
restoring the Facility, net of any available insurance proceeds not reduced by
applicable deductibles and coinsurance, exceeds ten percent (10%) of the then
replacement cost of the Facility, the party that owns the Facility can elect to
terminate this Agreement by giving notice to the other party within fifteen (15)
days after determining the restoration cost and replacement value, and this
Agreement shall terminate.
13.1.2 Restoration Contrary to Law. If the existing laws do
not permit the restoration, either party can terminate this Agreement
immediately by giving notice to the other party.
PAGE 12 OF 18
<PAGE>
14. Condemnation.
14.1 Rights and Obligations of Parties Governed by this Agreement. If,
during the Term, there is any taking of all or any part of a Facility by
Condemnation, the rights and obligations of the parties shall be determined
pursuant to this Section 14.
14.2 Total Taking. If the Premises are totally taken by Condemnation,
this Agreement shall terminate on the Date of Taking.
14.3 Partial Taking. If any portion of a Facility is taken by
Condemnation, this Agreement shall remain in effect, except that either party
may elect to terminate this Agreement if the remaining portion of the Facility
is rendered unsuitable for that party's continued use of the Facility.
14.4 Payment of Award. The Award shall be payable to the owner of the
Condemned Facility; except that the other party shall receive from the Award the
amount attributable to the value of its right under this Agreement to use any
fibers in the Facility that were Condemned.
15. Management Meetings. Designated representatives of a majority of the
shareholders of Kanas and GCICC senior management shall meet semiannually to
review the performance of the facilities that are the subject of this Agreement.
16. Regulatory Matters. Each party shall obtain all permits, authorizations or
approvals that are required by any regulatory authority to operate its Facility.
By entering into this Agreement, neither party waives any exclusion or exemption
of its facilities or services from common carrier or public utility regulation.
The parties will cooperate in obtaining any required governmental approvals or
consents.
17. Default and Remedies.
17.1 Events of Default. The following events shall constitute an "Event
of Default" under this Agreement:
17.1.1 Failure to Pay. The failure of a party to pay any sum
of money due under this Agreement within ten (10) days after the same is due
hereunder.
17.1.2 Default of Covenants or Conditions. Default by a party
in the performance or observance of any covenant or condition of this Agreement
(other than a default involving the payment of money under Section 17.1.1
hereof), which default is not cured within thirty (30) days after the giving of
notice thereof by the other party, unless such default is of a nature that it
cannot be cured within such thirty (30) day period, in which case no Event of
Default shall be declared so long as the defaulting party shall commence the
curing of the default within such thirty (30) day period and shall thereafter
diligently prosecute the curing of same.
17.1.3 Breach of Representations or Warranties. If any
representation or warranty by a party contained in this Agreement is false in
any material respect as of the date
PAGE 13 OF 18
<PAGE>
of the making or furnishing thereof and which would have a material adverse
effect on the other party.
17.1.4 Insolvency, Bankruptcy. If a party shall (i) apply for
or consent to the appointment of a receiver, trustee or liquidator (or other
officer having powers, under applicable law, similar to those of a receiver,
trustee or liquidator) of it or of all or the major portion of its assets, (ii)
be unable, or admit in writing its inability, to pay its debts as they mature,
(iii) make a general assignment for the benefit of creditors, (iv) be
adjudicated a bankrupt or insolvent or (v) institute proceedings to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against it, or file a petition or an answer or a
consent seeking reorganization or relief under any bankruptcy, reorganization or
insolvency law of any jurisdiction, or any other law analogous in purpose and
effect, or consent to the filing of any such petition or the material
allegations thereof, or corporate action shall be taken by it for the purpose of
effecting any of the foregoing.
17.1.5 Order Appointing Receiver, Trustee or Liquidator. If an
order, judgment or decree shall be entered, without the application, approval or
consent of a party, by any court of competent jurisdiction, approving a petition
seeking reorganization of the party or appointing a receiver, trustee or
liquidator (or other officer having powers,under applicable law, similar to
those of a receiver, trustee or liquidator) of it or of all or a major portion
of its assets, and such order, judgment or decree shall continue unstayed and in
effect for any period of 60 consecutive days.
17.2 Remedies on Default. Upon the occurrence and continuation of an
Event of Default, the non-defaulting party, without notice to the defaulting
party in any instance (except where expressly provided for below), in addition
to all remedies available at law, may do any one or more of the following with
respect to the defaulting party:
17.2.1 Termination. Terminate this Agreement and the rights
created herein by giving notice of such election to the defaulting party.
17.2.2 Specific Performance. Seek specific performance of any
term or provision of this Agreement.
17.2.3 Force Majeure. Except where this Agreement provides
otherwise, if by reason of Force Majeure, a party is unable in whole or in part
to perform its obligations under this Agreement, the party shall not be in
default under this Agreement during the continuance of such inability. However,
that party shall use all reasonable efforts to remedy with all reasonable
dispatch the cause or causes of its failure to carry out its obligations under
this Agreement; provided that the settlement of strikes, lockouts, and other
industrial disturbances shall be entirely within the discretion of the party or
its contractors, as the case may be, and the party and its contractors shall not
be required to make settlement of strikes, lockouts, or other industrial
disturbances by acceding to demands of opposing parties when such course is in
the judgment of the party unfavorable to it.
PAGE 14 OF 18
<PAGE>
17.3 No Remedy Exclusive. No remedy herein conferred upon or reserved
to a party is intended to be exclusive of any other available remedy or remedies
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy herein or now or hereafter existing at law, in equity or by
statute. No delay or omission to exercise any right or power accruing upon an
Event of Default shall impair any such right or power or shall be construed to
be a waiver thereof (unless expressly waived by Kanas or GCICC), but any such
right or power may be exercised from time to time and as often as may be deemed
expedient.
18. Confidentiality; Media Relations.
18.1 Confidentiality. The parties agree that the terms of this
Agreement, and information furnished by either party to the other in
contemplation or pursuant to this Agreement (including without limitation
technical specifications, operating data and customer information) are
confidential and may not be disclosed without both parties' written consent,
except as may be required by law or as contemplated by this Agreement, and
except for disclosure to the parties' shareholders, agents, advisors and
financial institutions. Notwithstanding the foregoing, the parties acknowledge
that the general terms and conditions of this Agreement are required to be
disclosed in reports, filings and offering documents under state and federal
securities laws.
18.2 Media Relations. The parties shall agree on the content of all
releases to, and conferences with, the news media concerning the subject matter
of this Agreement; provided that each party shall approve or disapprove the
other party's release within five Business Days after receipt or it shall be
deemed approved.
19. Term; Duties Upon Termination.
19.1 Term. Unless earlier terminated under the terms hereof, this
Agreement shall continue in effect for a period of 15 years commencing on the
date hereof. The Term shall continue automatically thereafter until the earlier
of (i) the end of the last of three subsequent consecutive periods of five years
each, and (ii) the termination of the Alyeska Agreement by Alyeska, and the
shutdown of the Kanas Facility.
19.2 Duties upon Termination. Within 60 days after the termination of
this Agreement for any reason after the Exchange Date, (i) each party shall
remove its electronic equipment and other personal property from the other
party's Facility, and perform all restoration of the other party's premises made
necessary by the removal, and (ii) each party shall return in good condition,
ordinary wear and tear excepted, the other party's premises that it occupied in
its use of fibers on the other party's Facility.
20. Indemnity.
20.1 GCICC shall indemnify, defend and hold harmless Kanas, its
officers, agents, employees and contractors from liability, suits and damages,
arising from death or injury to any person or damage to property by virtue of
any act or omission of GCICC or GCICC's officers, agents, employees or
contractors in constructing, installing, operating or maintaining the GCICC
Facility or any electronic equipment under this Agreement, except that Kanas
shall be liable to
PAGE 15 OF 18
<PAGE>
GCICC for damages resulting from the negligence or intentional misconduct of
Kanas or its officers, agents, employees or contractors.
20.2 Kanas shall indemnify, defend and hold harmless GCICC, its
officers, agents, employees and contractors from liability, suits and damages,
arising from death or injury to any person or damage to property by virtue of
any act or omission of Kanas or Kanas' officers, agents, employees or
contractors in constructing, installing, operating or maintaining the Kanas
Facility or any electronic equipment under this Agreement, except that GCICC
shall be liable to Kanas for damages resulting from the negligence or
intentional misconduct of GCICC or its officers, agents, employees or
contractors.
21. Exhibits. The following Exhibits and any others referred to in this
Agreement as attached are incorporated in this Agreement in their entirety:
Exhibit A: Light Transmission Standard and Testing Procedure for
Substantial Completion
Exhibit B: Locations and Points of Termination of Kanas Fibers;
Locations of Electronic Equipment on Kanas Fibers
Exhibit C: Locations and Points of Termination of GCICC Fibers;
Locations of Electronic Equipment on GCICC Fibers
Exhibit D: Kanas Space and Power Requirements
Exhibit E: Fiber Maintenance Standards
22. Miscellaneous.
22.1 No Implied Waiver. In the event any agreement, covenant, or
condition contained in this Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
22.2 Successors in Interest. Each party may, upon written notice to the
other, assign its rights and delegate its duties under this Agreement to any
subsidiary, affiliate or joint venture partner, provided that the assignor or
its parent entity retains at least 50% ownership, or voting control, directly or
indirectly, of the assignee. This Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto.
22.3 Notices. Any and all notices required or permitted under this
Agreement, unless otherwise specified in writing by the party whose address
changes, shall be addressed as follows:
Kanas: Kanas Telecom, Inc.
4041 B Street, Suite 102
Anchorage, Alaska 99503-4196
tel: (907) 562-7793
fax: (907) 562-7794
attn: Vice President/Chief Operating
Officer
PAGE 16 OF 18
<PAGE>
GCICC: GCI Communication Corp.
2550 Denali Street
Anchorage, Alaska 99503
tel: (907) 265-5600
fax: (907) 265-5676
attn: General Manager
All notices permitted or required to be made under this Agreement shall be in
writing and shall be deemed made at the time mailed to the address provided
above by certified mail, delivered by overnight express service, or hand
delivered. Failure of an addressee to receive said notice will not nullify
and/or void a notice as long as such notice was sent pursuant to the terms of
this Agreement.
22.4 Parties in Interest. Nothing in this Agreement expressed or
implied is intended or shall be construed to confer upon any person, firm, or
corporation, other than the parties hereto, any right, remedy or claim, legal or
equitable, under or by reason of this Agreement, this Agreement being intended
to be and being for the sole and exclusive benefit of the parties hereto.
22.5 Relationship of Parties. Nothing in this Agreement expressed or
implied is intended or shall be construed to establish any relationship between
the parties other than that of independent contractors, and neither party shall
be considered thereby to be the partner, co-venturer or in any other
relationship with the other.
22.6 Time of Essence. Time shall be of the essence of each and every
term of this Agreement.
22.7 Headings. The Section headings contained herein are for
convenience and reference and are not intended to define or limit the scope of
any provision of this Agreement.
22.8 Law Governing Construction of Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of Alaska.
22.9 Exclusive Forum and Venue. Any actions or judicial proceedings
arising out of this Agreement shall be filed and prosecuted in the Superior
Court for the State of Alaska, Third Judicial District, at Anchorage. The
parties hereto affirmatively waive the right to trial by jury.
22.10 Severability. In the event any provision of this Agreement shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
22.11 Integration and Modification. This document contains the entire
agreement of the parties hereto. All negotiations, statements, or
representations, warranties, and assurances, whether oral or written, which are
in any way related to the subject matter of this Agreement, and the performance
of either party hereto, are merged and integrated into the terms of this
PAGE 17 OF 18
<PAGE>
document. This Agreement may not be modified or amended except by a writing
signed by both parties hereto, and any proposed amendment or modification is
without effect until reduced to a writing signed by both parties.
22.12 Additional Documents. The parties agree to execute any additional
documents which may be necessary in order to effectuate the terms of this
Agreement.
IN WITNESS WHEREOF, the parties hereto, in consideration of
the mutual covenants set forth herein and intending to be legally bound, have
caused this Agreement to be executed and delivered as of the date first written
KANAS: KANAS TELECOM, INC., an Alaska
corporation
By: /s/ Michael F.G. Williams
GCICC: GCI COMMUNICATION CORP., an Alaska
corporation
By: /s/ Wilson Hughes
PAGE 18 OF 18
<PAGE>
EXHIBIT A
LIGHT TRANSMISSION STANDARDS AND TESTING PROCEDURE
FOR SUBSTANTIAL COMPLETION
I. TESTING PROCEDURE
1. Ensure that all fibers to be tested have been properly terminated.
2. Clean all connectors.
3. Turn on the power meter and light source test equipment and allow
them to warm up and stabilize.
4. Before the facility can be tested, the power meter should be
calibrated to 0 dB as follows:
a) Using a test patch cord, connect the light source to
the power meter.
b) Set the power meter to the dBm scale.
c) Make sure that the light source is on, and read the
received optical power at the power meter in dBm.
This value should be close to the light source
manufacturer's output power specification.
d) Set the power meter to the dB scale and adjust to 0.0
dB. This 0-dB calibration will be used as the light
source's reference power level.
e) Disconnect this test assembly but do not adjust or
turn off the power meter.
5. Disconnect the existing patch cord from the FDP for the link
under test. Do not disturb the power meter's zero reference
calibration performed in the previous step. Connect the light
source using the test patch cord to one end of the fiber
section and power meter using a second tested patch cord to
the other end of the fiber section.
6. Ensure that the configuration is connected properly, and turn
on the light source. Read the optical power meter and record
the optical power level.
7. Repeat the procedure to test all fibers in the facility.
II. LIGHT TRANSMISSION STANDARDS
Attenuation and dispersion on a fiber shall be 0.30 dB/km and 18 ps/(nm)(km) for
a nominal 1550 nm wavelength, respectively.
<PAGE>
The actual Fiber Route distances between sites and calculated loss budgets for
the Kanas Facility are:
Site Miles Kilometers Loss Budget
- ---- ----- ---------- -----------
Petrostar to PS-12 70.1 112.16 33.65 dB
PS-12 to PS-11 52 83.2 24.96 dB
PS-11 to RGV 97 39.5 63.2 18.96 dB
RGV 97 to PS-10 63.9 102.24 30.67 dB
PS-10 to PS-9 38 60.8 18.24 dB
PS-9 to PS-8 61.7 98.72 29.62 dB
PS-8 to NPMS 21.1 33.76 10.13 dB
The estimated Fiber Route distances between sites and calculated loss budgets
for the GCICC facility are:
Site Miles Kilometers Loss Budget
- ---- ----- ---------- -----------
SADC to Whittier 63 101.4 30.42 dB
Whittier to Valdez 96 154.5 46.35 dB
Valdez to Petro Star 9 14.5 43.50 dB
<PAGE>
EXHIBIT B
LOCATIONS AND POINTS OF TERMINATION OF KANAS FIBERS;
LOCATIONS OF ELECTRONIC EQUIPMENT ON KANAS FIBERS
1. Locations of Kanas Fibers:
SADC: fiber termination panel.
Whittier: fiber termination panel.
Valdez: fiber termination panel.
2. Points of Termination of Kanas Fibers:
The Kanas Fibers will be terminated on the GCICC fiber termination panels.
3. Locations of electronic equipment on Kanas Fibers:
To be negotiated in Space and Power Agreement.
<PAGE>
EXHIBIT C
LOCATIONS AND POINTS OF TERMINATION OF GCICC FIBERS;
LOCATIONS OF ELECTRONIC EQUIPMENT ON GCICC FIBERS
1. Locations of GCICC Fibers:
North Pole Metering Station: Kanas equipment building fiber termination
panel.
PS8: Pump Station communication room fiber termination panel
PS9: Pump Station communication room fiber termination panel
PS10: Pump Station communication room fiber termination panel
PS11: Pump Station communication room fiber termination panel
RGV97: Kanas regeneration site equipment building fiber termination
panel
PS12: Pump Station communication room fiber termination panel Petro Star
Metering Station: Kanas equipment building fiber termination panel.
2. Points of Termination of GCICC Fibers:
The GCICC fibers will be terminated on the Kanas fiber termination panels.
These panels are located either in the pump station communication room,
metering station Kanas equipment building, or remote gate valve Kanas
regeneration equipment building.
3. Locations of Electronic Equipment on GCICC Fibers:
GCICC electronic equipment is to be installed within GCICC owned equipment
buildings located in close proximity to the following locations, exterior to
Kanas or Alyeska right-of ways, easements, or fee simple land:
Pump Station #8, Pump Station #9, Pump Station #10, Pump Station #11, Remote
Gate Valve 97, and Pump Station #12 and Petro Star Metering Station.
<PAGE>
EXHIBIT D
KANAS SPACE AND POWER REQUIREMENTS
Space Requirement: Valdez GCICC POP (2) 23-inch racks
Whittier (2) 23-inch racks
Anchorage GCICC POP (3) 23-inch racks
Power Requirement: Valdez GCICC POP 1250 watts @ 48 volts DC
Whittier 1050 watts @ 48 volts DC
Anchorage GCICC POP 1250 watts @ 48 volts DC
<PAGE>
EXHIBIT E
FIBER MAINTENANCE STANDARDS
1. TIMES FOR REPAIRING FIBER AND ASSOCIATED EQUIPMENT:
1. Terrestrial Cable.
Mobilization and Travel 4 hours
Repair 4 hours
2. Undersea Cable.
Ship and Crew Mobilization 2 days
Transit 4 days
Recovery and Splicing 10 days
Times are estimates subject to force majeure.
2. MAINTENANCE PROCEDURES.
1. Kanas:
a. Kanas' maintenance contractor will have personnel
stationed in Fairbanks, Valdez, and at least one
other location along the route from Fairbanks to
Valdez.
b. Kanas' maintenance contractor will maintain a 24 hour
per day, 7 days per week Network Operations Control.
c. The Network Control Center will initiate technician
call out if required to respond to any critical
service affecting issue. This dispatching will occur
within 30 minutes of identified equipment failure.
Personnel safety will be a primary consideration when
responding to a failure. In extreme weather
conditions response will be delayed until it is safe
to proceed.
d. Routine maintenance will be performed on a periodic
basis according to manufacturer recommendations.
e. All Facility repairs will be performed according to
manufacturer recommendations and normal
telecommunications industry standards.
<PAGE>
2. GCI:
a. GCICC's maintenance contractor will have personnel
stationed in Anchorage, Valdez, and at least one
other location along the route from Anchorage to
Valdez.
b. GCICC's maintenance contractor will maintain a 24
hour per day, 7 days per week Network Operations
Control.
c. GCICC will monitor periodically its submarine cable
route for activities that may pose a risk including
fishing and shipping. GCICC will participate in
meetings of fishermen and contact vessels known to
fish near the cable route to promote avoidance of
harm.
d. The Network Control Center will initiate technician
call out if required to respond to any critical
service affecting issue. This dispatching will occur
within 30 minutes of identified equipment failure.
Personnel safety will be a primary consideration when
responding to a failure. In extreme weather
conditions response will be delayed until it is safe
to proceed.
e. Routine maintenance will be performed on a periodic
basis according to manufacturer recommendations.
f. All Facility repairs will be performed according to
manufacturer recommendations and normal
telecommunications industry standards.
<PAGE>
FIBER SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of January 27, 1998 (as
amended, supplemented or otherwise modified, renewed or replaced from time to
time, the "Security Agreement") is by and among (i) GCI FIBER CO., INC., an
Alaska corporation and FIBER HOLD CO., INC., an Alaska corporation (each a
"Debtor" and collectively, the "Debtors") and (ii) CREDIT LYONNAIS NEW YORK
BRANCH, as administrative agent for the Lenders referred to in the Credit
Agreement referred to below (in such capacity, the "Administrative Agent").
Pursuant to a Credit and Security Agreement dated as of
January 27, 1998 among Alaska United Fiber System Partnership, a general
partnership formed under the laws of Alaska (the "Borrower"), the lenders
referred to therein (the "Lenders"), Credit Lyonnais New York Branch as
Administrative Agent, NationsBank of Texas, N.A. as Syndication Agent and TD
Securities (USA) Inc. as Documentation Agent (as the same may be amended,
supplemented, or otherwise modified, renewed or replaced from time to time, the
"Credit Agreement"), the Lenders have agreed (subject to the terms and
conditions set forth therein) to make Loans to the Borrower.
The Debtors each own fifty percent (50%) of the partnership
interests in the Borrower.
In order to induce the Lenders to enter into the Credit
Agreement and make the Loans to the Borrower pursuant to the terms and
conditions set forth therein and in order to secure the Obligations, each of the
Debtors is pledging to the Administrative Agent (for the benefit of the
Lenders), and granting a security interest to the Administrative Agent (for the
benefit of the Lenders) in, all of its respective partnership interests in the
Borrower.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. (a) Definitions. When used in this Security
Agreement the term "Collateral" shall mean with respect to each Debtor, such
Debtor's partnership and other ownership rights and interests in the Borrower,
all of such Debtor's contract rights, powers, privileges, claims and remedies
and all other interests and benefits arising under or in respect of the
Partnership Agreement dated as of July 29, 1997 by and between the Debtors (as
the same may be amended from time to time, the "Partnership Agreement") and any
proceeds or products of any of the foregoing or any income therefrom.
(b) All capitalized terms used herein but not defined herein
shall have the respective meanings set forth in the Credit Agreement. Terms not
otherwise defined herein or in the Credit Agreement shall have, where
appropriate, their respective definitions as set forth in the Uniform Commercial
Code as in effect in the State of New York.
<PAGE>
SECTION 2. Grant of Security Interest. As security for the due
and punctual payment and performance of the Obligations (including post-petition
interest to the extent permitted by Applicable Law), each Debtor hereby
mortgages, pledges, assigns, transfers, sets over, conveys and delivers to the
Administrative Agent (for the benefit of the Lenders) and grants to the
Administrative Agent (for the benefit of the Lenders) a security interest in all
of its right, title and interest in and to the Collateral.
SECTION 3. Representations and Warranties of the Debtors. Each
Debtor hereby represents and warrants to the Administrative Agent (for the
benefit of the Lenders) that:
(i) it is a corporation duly organized, validly existing and
in good standing under the laws of the State of Alaska and is duly qualified to
do business in all jurisdictions where the nature of its properties or business
so requires. Such Debtor has the corporate power and authority (a) to own its
respective properties and to carry on its respective business as now being
conducted and as intended to be conducted, to execute, deliver and perform its
obligations under this Security Agreement and the other Fundamental Documents to
which it is a party and any other documents contemplated hereby and thereby to
which it is or will be a party and (b) to grant to the Administrative Agent for
the benefit of the Lenders, a security interest in the Collateral as
contemplated hereby;
(ii) it is a general partner of the Borrower, holding a 50%
interest in the Borrower, and except for the other Debtor, no other Person owns
or holds any partnership or other ownership rights or interests in the Borrower;
(iii) the execution, delivery, and performance of this
Security Agreement and the other Fundamental Documents to which it is a party
and the grant to the Administrative Agent (for the benefit of the Lenders) of
the Liens and the security interests hereunder (A) have been duly authorized by
all necessary corporate action on the part of such Debtor, (B) will not violate
any provision of the Certificate of Incorporation or By-Laws of such Debtor, or
the Partnership Agreement, (C) will not constitute a violation by such Debtor of
any provision of Applicable Law or any order of any court or other agency of the
United States or any state thereof applicable to such Debtor or any of its
properties or assets, (D) will not violate any provision of any indenture,
agreement, bond, note or other similar instrument to which such Debtor is a
party or by which such Debtor or its properties or assets are bound, (E) will
not be in conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under, or create any right to terminate, any
such indenture, agreement, bond, note or other instrument and (F) will not
result in the creation or imposition of any Lien, security interest, charge or
encumbrance of any nature whatsoever upon any of the properties or assets of
such Debtor other than pursuant to this Security Agreement;
(iv) no consent of any other Person (including, without
limitation, creditors of such Debtor) is required to be obtained by such Debtor
in connection with the execution, delivery and performance of this Security
Agreement;
-2-
<PAGE>
(v) all authorizations, approvals, registrations or filings
with any governmental or public regulatory body or authority of the United
States or any state thereof or any foreign jurisdiction (other than UCC-1
Financing Statements) required for the execution, delivery and performance by
such Debtor of this Security Agreement and the other Fundamental Documents to
which it is a party, have been duly obtained or made, or duly applied for and
are in full force and effect, and if any such further authorizations, approvals,
registrations or filings should hereafter become necessary, such Debtor shall
obtain or make all such authorizations, approvals, registrations or filings;
(vi) no financing statement, mortgage, notice of Lien, deed of
trust, security agreement, or any other agreement or instrument creating or
giving notice of a Lien against any of the Collateral is in existence or on file
in any public office other than those created or filed pursuant to the terms of
this Security Agreement in favor of the Administrative Agent (for the benefit of
the Lenders);
(vii) this Security Agreement, when executed and delivered,
will create and grant to the Administrative Agent (for the benefit of the
Lenders), upon the filing of the appropriate UCC-1 Financing Statements, a valid
Lien on and a perfected security interest in favor of the Administrative Agent
(for the benefit of the Lenders) in, all right, title or interest of such Debtor
in or to the Collateral, subject to no prior pledge, Lien, security interest,
charge or encumbrance or to any agreement purporting to grant any third party a
security interest in or Lien on the Collateral;
(viii) this Security Agreement and the other Fundamental
Documents to which such Debtor is a party when executed by such Debtor will
constitute the legal, valid and binding obligations of such Debtor, enforceable
in accordance with their respective terms, subject only, as to the enforcement
of remedies, to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and general principles of equity;
(ix) it is not doing business and does not intend to do
business other than under its full corporate name, including, without
limitation, under any trade name or other doing business name;
(x) it has good title to the Collateral owned by it, free and
clear of Liens;
(xi) the chief executive office of such Debtor is as set forth
on Schedule 1 hereto, and such office is the place where such Debtor keeps any
books and records concerning the Collateral;
(xii) it will realize a direct economic benefit as a result of
the Loans being made to the Borrower under the Credit Agreement;
-3-
<PAGE>
(xiii) there are no pending or, to the knowledge of such
Debtor, threatened actions, suits, proceedings or investigations against it or
affecting it or its properties that, individually or in the aggregate, would if
adversely determined be likely to have a material adverse effect on the
performance by such Debtor of its obligations under this Security Agreement and
the other Fundamental Documents to which it is a party or its assets,
operations, business or financial condition; and
(xiv) no sales, use, documentation or similar taxes, fees or
other charges are payable with respect to the execution and delivery by such
Debtor of this Security Agreement and the other Fundamental Documents to which
it is a party.
SECTION 4. Covenants of the Debtors. Each Debtor hereby
covenants and agrees with the Administrative Agent (for the benefit of the
Lenders) that:
(a) Such Debtor will keep the Collateral free and clear of all
security interests, Liens and claims other than the security interest and Lien
herein granted and will not sell, assign, transfer, exchange or otherwise
dispose of, or grant any option with respect to, any of the Collateral.
(b) Such Debtor will defend the Administrative Agent's (for
the benefit of the Lenders) right, title and security interest in and to the
Collateral against claims and demands of all Persons whomsoever.
(c) Such Debtor will not take any action, including, without
limitation, any action under or in accordance with the Partnership Agreement, to
allow any additional partners of the Borrower.
SECTION 5. The Administrative Agent's Rights Exclusive of the
Debtors' Default. Each of the Debtors hereby agrees to permit representatives of
the Administrative Agent, upon reasonable notice to such Debtor, to discuss such
Debtor's records in connection with the Collateral at such reasonable times and
as often as may be reasonably requested by the Administrative Agent. The
Administrative Agent, from time to time, at its option may perform any agreement
of a Debtor which such Debtor shall fail to perform and take any other action
which the Administrative Agent reasonably deems necessary or advisable for the
maintenance or preservation of any of the Collateral or its interest therein,
and the Debtors agree to reimburse the Administrative Agent on demand for all
reasonable expenses of the Administrative Agent in connection with the
foregoing. The Administrative Agent shall have the right to designate any
officer, employee or attorney to execute, sign, endorse, assign, transfer or
deliver in the name of a Debtor or in their names any documents or certificates
necessary to evidence, perfect and realize upon the security interest granted
herein.
SECTION 6. The Administrative Agent's Rights and Remedies Upon
an Event of Default.
-4-
<PAGE>
(a) Debtors to Hold in Trust. Upon the occurrence and during
the continuance of an Event of Default, each Debtor will, upon receipt by it of
any revenue, income, profits or other sums in which a security interest is
granted by this Security Agreement, payable pursuant to any agreement or
otherwise, or of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the sum or instrument in
trust for the Lenders, and forthwith, without any notice, demand or other action
on the part of the Administrative Agent or any Lender whatsoever (all notices,
demands, or other actions on the part of the Administrative Agent and the
Lenders being expressly waived), endorse, transfer and deliver any such sums or
instruments or both to the Administrative Agent to be applied to the repayment
of the Obligations in accordance with the provisions of Section 6(d) hereof.
(b) Collections, etc. Upon the occurrence and during the
continuance of an Event of Default, the Administrative Agent may, in its sole
discretion, in its name or in the names of the Debtors or otherwise, demand, sue
for, collect or receive any money or property at any time payable or receivable
on account of or in exchange for, or make any compromise or settlement deemed
desirable with respect to, the Collateral, but shall be under no obligation so
to do, or the Administrative Agent may extend the time of payment, arrange for
payment in installments, or otherwise modify the terms of, or release, any of
the Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of either of the Debtors. The Administrative
Agent will not be required to take any steps to preserve any rights against
prior parties to the Collateral. If a Debtor fails to make any payment or to
take any action required hereunder, the Administrative Agent may make such
payments and take all such actions as the Administrative Agent reasonably deems
necessary to protect the Lenders' Liens and security interests in the Collateral
and/or the value thereof, and the Administrative Agent is hereby authorized
(without limiting the general nature of the authority hereinabove conferred) to
pay, purchase, contest or compromise any Liens which in the judgment of the
Administrative Agent appear to be equal to, prior to or superior to the security
interests of the Lenders in the Collateral.
(c) Possession, Sale of Collateral, etc. Upon the occurrence
and during the continuance of an Event of Default, the Administrative Agent may
take such measures as it may deem necessary or proper for the care or protection
of the Administrative Agent's rights and remedies hereunder, including, without
limitation, the right to sell or cause to be sold, whenever the Administrative
Agent shall decide, in one or more sales or parcels, at such prices as the
Administrative Agent may deem best, and for cash or on credit or for future
delivery, without assumption of any credit risk, all or any portion of the
Collateral, at any broker's board or at a public or private sale, without any
demand of performance or notice of intention to sell or of the time or place of
sale (except 10 days' written notice to the applicable Debtor of the time and
place of any such sale or sales and such other notices as may be required by
Applicable Law and cannot be waived), and any Person may be the purchaser of all
or any portion of the Collateral so sold and thereafter hold the same
absolutely, free (to the fullest extent permitted by Applicable Law) from any
claim or right of whatever kind, including any equity of redemption, of any
Debtor, any such demand, notice, claim, right or equity being hereby expressly
waived and released to the fullest extent permitted by Applicable Law. At any
sale or sales made pursuant to
-5-
<PAGE>
this Section 6, the Administrative Agent may bid for or purchase, free (to the
fullest extent permitted by Applicable Law) from any claim or right of whatever
kind, including any equity of redemption, of any Debtor any such demand, notice,
claim, right or equity being hereby expressly waived and released, any part of
or all of the Collateral offered for sale, and may make any payment on account
thereof by using any claim for moneys then due and payable to the Administrative
Agent and the Lenders (subject to the provisions of Article 10 of the Credit
Agreement) by the Borrower under the Credit Agreement as a credit against the
purchase price. The Administrative Agent shall in any such sale make no
representations or warranties with respect to the Collateral or any part
thereof, and the Administrative Agent shall not be chargeable with any of the
obligations or liabilities of any of the Debtors. Each of the Debtors hereby
agrees, on a joint and several basis, (i) that it will indemnify and hold the
Administrative Agent and the Lenders harmless from and against any and all
claims with respect to the Collateral asserted before the taking control of the
relevant Collateral by the Administrative Agent pursuant to this Section 6, or
arising out of any act of, or omission to act on the part of, any Person (other
than the Administrative Agent or the Lenders) prior to such taking of actual
control by the Administrative Agent, or arising out of any act on the part of
the Debtors, their Affiliates or their respective agents before or after the
commencement of such actual control by the Administrative Agent; and (ii)
neither the Administrative Agent nor any Lender shall have any liability or
obligation to any of the Debtors arising out of any such claim except for acts
of willful misconduct or gross negligence or not taken in good faith. In any
action hereunder, the Administrative Agent shall be entitled to the appointment
of a receiver, without notice, to take possession of all or any portion of the
Collateral and to exercise such powers as the court shall confer upon the
receiver. Notwithstanding the foregoing, upon the occurrence of an Event of
Default, and during the continuation of such Event of Default, the
Administrative Agent shall be entitled to apply, without prior notice to the
Debtors except as may be required by Applicable Law, any cash or cash items
constituting Collateral in the possession of the Administrative Agent to payment
of the Obligations.
(d) Application of Proceeds on Default. Upon the occurrence
and during the continuance of an Event of Default, all income on the Collateral
and all proceeds from any sale of the Collateral pursuant hereto shall be
applied in accordance with the provisions of Section 8.7 of the Credit
Agreement.
(e) Power of Attorney. Upon the occurrence and during the
continuance of an Event of Default (i) each of the Debtors does hereby
irrevocably make, constitute and appoint the Administrative Agent or any of its
officers or designees their true and lawful attorney-in-fact with full power in
the name of the Administrative Agent or such Debtor to receive, open and dispose
of all mail addressed to such Debtor and to endorse any notes, checks, drafts,
money orders or other evidences of payment relating to the Collateral that may
come into the possession of the Administrative Agent, with full power and right
to cause the mail of such Debtor to be
-6-
<PAGE>
transferred to the Administrative Agent's own offices or otherwise, and to do
any and all other acts necessary or proper to carry out the intent of this
Security Agreement and the grant of the Liens and security interests hereunder,
and each of the Debtors hereby ratifies and confirms all that the Administrative
Agent or its substitutes shall properly do by virtue hereof; (ii) each of the
Debtors hereby further irrevocably makes, constitutes and appoints the
Administrative Agent or any of its officers or designees its true and lawful
attorney-in-fact in the name of the Administrative Agent or such Debtor (A) to
enforce all of such Debtor's rights under and pursuant to all agreements with
respect to the Collateral, all for the sole benefit of the Administrative Agent
for the benefit of the Lenders, (B) to enter into and perform such agreements as
may be necessary in order to carry out the terms, covenants and conditions of
this Security Agreement or any other Fundamental Document that are required to
be observed or performed by such Debtor, (C) to execute such other and further
mortgages, pledges and assignments of the Collateral, and related instruments or
agreements, as the Administrative Agent may reasonably require for the purpose
of perfecting, protecting, maintaining or enforcing the Liens and security
interests granted to the Administrative Agent for the benefit of the Lenders
hereunder and (D) to do any and all other things necessary or proper to carry
out the intention of this Security Agreement and the grant of the Liens and
security interests hereunder. Each of the Debtors hereby ratifies and confirms
in advance all that the Administrative Agent as such attorney-in-fact or its
substitutes shall properly do by virtue of this power of attorney.
SECTION 7. Financing Statements. Each of the Debtors hereby
authorizes the Administrative Agent to file UCC-1 Financing Statements and any
amendments thereto or continuations thereof, and any other appropriate security
documents or instruments, and to give any notices necessary or desirable to
perfect the Lien and security interests of the Administrative Agent for the
benefit of the Lenders on the Collateral, in all cases without the signature of
such Debtor or to execute such items as attorney-in-fact for such Debtor.
SECTION 8. Further Assurances. (a) Each of the Debtors agrees
that such Debtor will from time to time, on request of the Administrative Agent
(i) duly execute and deliver, or cause to be duly executed and delivered, at the
cost and expense of the Debtors, such further instruments as may be appropriate
in the reasonable judgment of the Administrative Agent to carry out the
provisions and purposes of this Security Agreement; (ii) promptly execute and
deliver or cause to be executed and delivered, at the cost and expense of the
Debtors, such further instruments as may be appropriate in the reasonable
judgment of the Administrative Agent, to provide the Administrative Agent a
first perfected Lien in the Collateral and any and all documents (including,
without limitation, the execution, amendment or supplementation of any financing
statement and continuation statement or other statement) for filing under the
provisions of the Uniform Commercial Code of any jurisdiction or any statute,
rule or regulation of any applicable foreign, federal, state or local
jurisdiction, and perform or cause to be performed such other acts which are
necessary or advisable, from time to time, in order to grant and maintain in
favor of the Administrative Agent (for the benefit of the Lenders) the Lien and
security interest in the Collateral contemplated hereunder, subject to no other
Liens or security interests; and (iii) promptly undertake to deliver or cause to
be delivered to the Administrative Agent and the Lenders from time to time, such
other documentation, consents, authorizations and approvals in form and
substance reasonably satisfactory to the Administrative Agent, as the
-7-
<PAGE>
Administrative Agent shall deem reasonably necessary or advisable to perfect or
maintain the Liens of the Administrative Agent (for the benefit of the Lenders).
(b) The Debtors hereby agree to pay any and all stamp,
registration, recordation and similar taxes, fees or charges, reasonable fees
and expenses of the Administrative Agent's counsel and of any agents therefor
and to indemnify the Administrative Agent and its agents against any and all
liabilities with respect to or resulting from any delay in the payment or
omission to pay any such taxes, fees or charges, which may be payable or
determined to be payable in connection with the execution, delivery, performance
or enforcement of this Security Agreement and any other document or instrument
executed in connection herewith or the perfection of any rights or security
interests hereunder.
SECTION 9. Regulatory Approvals. During the continuance of an
Event of Default, each Debtor will, at its expense, promptly execute and
deliver, or cause the execution and delivery of, all applications, certificates,
instruments, registration statements and all other documents and papers the
Administrative Agent may reasonably request or as may be required by applicable
law in connection with the obtaining of any consent, approval, registration,
qualification or authorization of the FCC or of any other Governmental Authority
or Person necessary or appropriate for the effective exercise of any rights
under this Security Agreement or any other Fundamental Document. Without
limiting the generality of the foregoing, if an Event of Default shall have
occurred and be continuing, each Debtor shall take any action which the
Administrative Agent may reasonably request in order to transfer and assign to
the Administrative Agent, or to such one or more third parties as the
Administrative Agent may designate, or to a combination of the foregoing, each
FCC License, Permit, other similar right or license or other agreement. To
enforce the provisions of this Section, the Administrative Agent is empowered to
request the appointment of a receiver from any court of competent jurisdiction.
Such receiver shall be instructed to seek from the FCC or other Governmental
Authority or Person (as applicable) an involuntary transfer of control of each
such FCC License, Permit, similar right or license or other agreement for the
purpose of seeking a bona fide purchaser to whom control will ultimately be
transferred. Each Debtor hereby agrees to authorize such an involuntary transfer
of control upon the request of the receiver so appointed and, if a Debtor shall
refuse to authorize the transfer, its approval may be required by the court.
Upon the occurrence and continuance of an Event of Default, each Debtor shall
further use its best efforts to assist in obtaining approval of the FCC or other
Governmental Authority or Person, if required, for any action or transactions
contemplated by this Security Agreement or any other Fundamental Document
including, without limitation, the preparation, execution and filing with the
FCC or other Governmental Authority or Person of the assignor's or transferor's
portion of any application or applications for consent to the assignment of any
FCC License, Permit, similar right or license or other agreement or the transfer
of control necessary or appropriate under the rules and regulations of the FCC
or other Governmental Authority or otherwise for the approval of the transfer or
assignment of any portion of the Collateral, together with any FCC License,
Permit, similar right or license or other agreement. Each Debtor acknowledges
that the assignment or transfer of each FCC License, Permit, similar right or
license or other agreement is
-8-
<PAGE>
integral to the Administrative Agent's and Lenders' realization of the value of
the Collateral, that there is no adequate remedy at law for failure by a Debtor
to comply with the provisions of this Section and that such failure would cause
irreparable injury not adequately compensable in damages, and therefore agrees
that each and every covenant contained in this Section may be specifically
enforced, and each Debtor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants.
SECTION 10. The rights and remedies conferred upon or reserved
to the Administrative Agent in this Security Agreement are intended to be in
addition to, and not in limitation of, any other right or remedy available to
the Administrative Agent. Without limiting the generality of the foregoing, the
Administrative Agent and the Lenders shall have all rights and remedies of a
secured party under Article 9 of the UCC or any other Applicable Law.
SECTION 11. Continuation and Reinstatement. Each of the
Debtors further agrees that the security interest granted hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment or any part thereof, of any Obligation is rescinded or must otherwise be
restored by the Administrative Agent or any Lender upon the bankruptcy or
reorganization of any Debtor, the Borrower or otherwise.
SECTION 12. Termination. The security interests granted under
this Security Agreement shall terminate when all the Obligations shall have been
fully and indefeasibly paid and performed and the Commitments shall have
terminated. At such time, all rights to the Collateral pledged or assigned by a
Debtor shall revert to such Debtor. Upon any such termination the Administrative
Agent will, at the Debtor's expense, execute and deliver to such Debtor such
documents (in form and substance satisfactory to the Administrative Agent) as
such Debtor shall reasonably request to evidence such termination.
SECTION 13. Notice. Notices and other communication provided
for herein shall be in writing and shall be delivered or mailed (or if by
telegram, delivered to the telegraph company and, if by telecopier, delivered by
such equipment) to the parties at the following respective addresses:
(1) If to the Administrative Agent:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attn: Project Finance Group
Facsimile No.: (212) 261-3421
(2) If to the Debtors:
-9-
<PAGE>
GCI Fiber Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Facsimile No.: (907) 265-5676
and
Fiber Hold Co., Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Chief Financial Officer
Facsimile No.: (907) 265-5676
or such other address as such party may from time to time designate by giving
written notice to the other party hereunder. All notices and other
communications given to any party hereto in accordance with the provisions of
this Security Agreement shall be deemed to have been given on the tenth Business
Day after the date when sent by registered or certified mail, postage prepaid,
return receipt requested, if by mail, or when delivered to the telegraph
company, charges prepaid, if by telegram, or when receipt is acknowledged if by
telecopier, in each case addressed to such party as provided in this Section 13
or in accordance with the latest unrevoked written direction from such party.
SECTION 14. No Waiver. No delay or failure on the part of the
Administrative Agent in the exercise of any right, power, privilege or remedy
hereunder or under any other Fundamental Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power, privilege
or remedy by the Administrative Agent preclude any other or further exercise
thereof or the exercise of any other right, power, privilege or remedy and no
course of dealing between the parties shall operate as a waiver of any right or
remedy of the Administrative Agent. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by law.
SECTION 15. Governing Law. THIS SECURITY AGREEMENT AND ANY
INSTRUMENT OR AGREEMENT REQUIRED HEREUNDER SHALL BE DEEMED TO BE MADE UNDER,
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 16. Severability. This Security Agreement shall be
interpreted in such manner as to be effective and valid under Applicable Law,
but if any provision of this Security Agreement shall be prohibited by or
invalidated under the Applicable Law of any jurisdiction, such provision shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining
-10-
<PAGE>
provisions of this Security Agreement and any such prohibition or invalidity in
any jurisdiction shall not invalidate such provision in any other jurisdiction.
The parties hereto agree to negotiate in good faith a provision to replace the
ineffective provision, such provision to be as similar in effect and intent as
the ineffective provision as permissible. To the extent permitted by Applicable
Law, the parties hereby waive any provision of law which may render any
provision hereof prohibited or unenforceable in any respect.
SECTION 17. Amendments. This Security Agreement may be
amended, modified or supplemented, and the terms hereof may be waived, in each
case only by a written instrument executed by the parties to this Security
Agreement. The waiver by any party hereto of a breach of any provision of this
Security Agreement shall not operate or be construed as a waiver of any
subsequent or other breach, whether or not similar. No notice to, or demand on,
the Debtors in any case shall entitle the Debtors to any other or further notice
or demand in the same, similar or other circumstances.
SECTION 18. Survival of Representations and Warranties. All
warranties, representations and covenants made by the Debtors herein shall be
considered to have been relied upon by the Administrative Agent and the Lenders
and shall survive the making of the Loans contemplated by the Credit Agreement
and the issuance and delivery to the Administrative Agent of the Notes,
regardless of any investigation made by the Administrative Agent or the Lenders
or on their behalf and shall continue in full force and effect so long as any
Obligation that is due or could become due, is outstanding and unpaid and so
long as the Commitments have not been terminated.
SECTION 19. Successors and Assigns. All references herein to
any of the parties to this Security Agreement shall be deemed to include the
successors and assigns of such party; provided, however, that none of the
Debtors may assign any of their rights or obligations hereunder without the
prior written consent of the Administrative Agent, and all covenants, promises
and agreements by or on behalf of the Debtors which are contained herein shall
inure to the benefit of the successors and assigns of the Administrative Agent
and any of the Lenders.
SECTION 20. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED
BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE DEBTORS, RESPECTIVELY,
HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED
UPON THIS SECURITY AGREEMENT, THE SUBJECT MATTER HEREOF OR ANY PROJECT
AGREEMENT, ANY OTHER FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT
OR OTHERWISE. EACH OF THE DEBTORS ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE
ADMINISTRATIVE AGENT THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL
INDUCEMENT UPON
-11-
<PAGE>
WHICH THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE RELIED, ARE RELYING AND WILL
RELY IN ENTERING INTO THIS SECURITY AGREEMENT AND ANY OTHER PROJECT AGREEMENT OR
OTHER FUNDAMENTAL DOCUMENT. THE ADMINISTRATIVE AGENT OR ANY LENDER MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 20 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE DEBTORS TO THE WAIVER OF THEIR RIGHTS TO TRIAL BY
JURY.
SECTION 21. Submission to Jurisdiction; Service of Process.
EACH OF THE DEBTORS, RESPECTIVELY, HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW YORK AND TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF
OR BASED UPON THIS SECURITY AGREEMENT, THE SUBJECT MATTER HEREOF OR ANY PROJECT
AGREEMENT, ANY OTHER FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF BROUGHT
BY THE ADMINISTRATIVE AGENT OR A LENDER OR ANY OF THEIR SUCCESSORS OR ASSIGNS IN
EITHER OF THE ABOVE-REFERENCED FORUMS AT THE SOLE OPTION OF THE ADMINISTRATIVE
AGENT OR A LENDER. EACH OF THE DEBTORS, RESPECTIVELY, TO THE EXTENT PERMITTED BY
APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS
A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH
COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE
ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR
EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
SECURITY AGREEMENT, THE SUBJECT MATTER HEREOF OR ANY PROJECT AGREEMENT OR ANY
OTHER FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF MAY NOT BE ENFORCED IN
OR BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCH ACTION, SUIT OR
PROCEEDING INSTITUTED BY THE ADMINISTRATIVE AGENT OR A LENDER IN STATE COURT TO
FEDERAL COURT, AND (C) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION,
SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE
COMPULSORY OR OTHERWISE ARISE FROM THE SAME SUBJECT MATTER. EACH OF THE DEBTORS
HEREBY CONSENTS TO SERVICE OF PROCESS BY MAIL AT ITS ADDRESS TO WHICH NOTICES
ARE TO BE GIVEN PURSUANT TO SECTION 12 HEREOF. EACH OF THE DEBTORS AGREES THAT
ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE
FOR THE EXPRESS BENEFIT OF THE ADMINISTRATIVE AGENT AND THE LENDERS. FINAL
JUDGMENT AGAINST A DEBTOR IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT, ACTION OR
PROCEEDING ON THE JUDGMENT, A
-12-
<PAGE>
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE
AMOUNT OF INDEBTEDNESS OR LIABILITY OF SUCH DEBTOR THEREIN DESCRIBED OR (Y) IN
ANY OTHER MANNER PROVIDED BY, OR PURSUANT TO, THE LAWS OF SUCH OTHER
JURISDICTION, PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE AGENT OR A LENDER MAY
AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST A
DEBTOR OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES
OR OF ANY COUNTRY OR PLACE WHERE THE DEBTOR OR SUCH ASSETS MAY BE FOUND.
SECTION 22. Counterparts. This Security Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original for all purposes, but all such
counterparts shall together constitute one and the same agreement, and all
signatures need not appear on any one counterpart.
SECTION 23. Headings. The headings and captions in this
Security Agreement are for convenience of reference only and shall not define,
limit or otherwise affect any of the terms or provisions hereof.
SECTION 24. Entire Agreement. This Security Agreement
represents the entire agreement of the parties with regard to the subject matter
hereof, and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter of this Security
Agreement.
-13-
<PAGE>
IN WITNESS WHEREOF, the Debtors and the Administrative Agent
have caused this Security Agreement to be duly executed on the date and year
first written above.
GCI FIBER CO., INC.
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
FIBER HOLD CO., INC.
By: /s/
Name: John M. Lowber
Title: Secretary/Treasurer
CREDIT LYONNAIS NEW YORK BRANCH, as
Administrative Agent
By: /s/
Name: Michael F.G. Pepe
Title: Vice President
<PAGE>
Schedule 1
Chief Executive Office
(Fiber Security Agreement)
1. Each Debtor's chief executive office is, on the Closing Date, at:
2550 Denali Stree Suite 1000
Anchorage, Alaska 99503
2. Each Debtor keeps all of its books and records concerning the Collateral at
the above address. Additional sets of documents regarding the System will
also be kept at each of the landing stations.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
INTERIM CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS
ENDED JUNE 30, 1998 AND THE INTERIM CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000075679
<NAME> GCI, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 274
<SECURITIES> 0
<RECEIVABLES> 46,053
<ALLOWANCES> 1,058
<INVENTORY> 2,857
<CURRENT-ASSETS> 54,020
<PP&E> 346,861
<DEPRECIATION> 71,272
<TOTAL-ASSETS> 597,947
<CURRENT-LIABILITIES> 50,227
<BONDS> 300,837
0
0
<COMMON> 206,622
<OTHER-SE> (6,083)
<TOTAL-LIABILITY-AND-EQUITY> 597,947
<SALES> 0
<TOTAL-REVENUES> 121,093
<CGS> 0
<TOTAL-COSTS> 56,670
<OTHER-EXPENSES> 59,291
<LOSS-PROVISION> 1,248
<INTEREST-EXPENSE> 10,343
<INCOME-PRETAX> (5,827)
<INCOME-TAX> (2,145)
<INCOME-CONTINUING> (3,682)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,682)
<EPS-PRIMARY> (36,820)
<EPS-DILUTED> (36,820)
</TABLE>
