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(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-15279
GENERAL COMMUNICATION, INC.
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(Exact name of registrant as specified in its charter)
ALASKA 92-0072737
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2550 Denali Street Suite 1000 Anchorage, Alaska 99503
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (907) 265-5600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A common stock Class B common stock
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(Title of class) (Title of class)
Indicate by check mark whether the registrant (1) 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, and (2) has been subject to such filing requirements
for the past 90 days. Yes /X/ No .
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the average bid and asked prices of such
stock as of the close of trading on February 27, 1998 was approximately
$240,855,000.
The number of shares outstanding of the registrant's common stock as of
February 27, 1998, was:
Class A common stock - 45,329,069 shares; and
Class B common stock - 4,062,864 shares.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Certain portions of the registrant's definitive Proxy Statement to be filed
pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended,
in connection with the Annual Meeting of Stockholders of the registrant to be
held on June 4, 1998 are incorporated by reference into Part III of this report.
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GENERAL COMMUNICATION, INC.
1997 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
<TABLE>
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Page
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PART I........................................................................................................3
Item 1. Business..........................................................................................3
General Background and Description of Business..........................................................3
Industries..............................................................................................3
Geographic Concentration and Alaska Economy.............................................................6
Products................................................................................................7
Seasonality.............................................................................................9
Customer-Sponsored Research.............................................................................9
Facilities..............................................................................................9
Customers..............................................................................................10
Alaska Voice, Video and Data Markets...................................................................12
Competition............................................................................................13
Financial Information About Industry Segments..........................................................17
Recent Developments....................................................................................17
Employees..............................................................................................19
Environmental Regulations..............................................................................19
Foreign and Domestic Operations and Export Sales.......................................................20
Backlog of Orders and Inventory........................................................................20
Patents, Trademarks, Licenses, Certificates............................................................20
Regulation, Franchise Authorizations and Tariffs.......................................................21
Other..................................................................................................23
Item 2. Properties.......................................................................................23
Item 3. Legal Proceedings................................................................................24
Item 4. Submission of Matters to a Vote Of Security Holders..............................................24
PART II......................................................................................................25
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters........................25
Market Information for Common Stock....................................................................25
Holders................................................................................................25
Dividends..............................................................................................25
Item 6. Selected Financial Data..........................................................................26
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations............27
Item 7A. Quantitative and Qualitative Disclosures About Market Risk......................................40
Item 8. Consolidated Financial Statements and Supplementary Data........................................40
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............40
PART III.....................................................................................................40
PART IV......................................................................................................72
Item 14. Exhibits, Consolidated Financial Statement Schedules, and Reports on Form 8-K...................72
</TABLE>
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PART I
Item 1. BUSINESS
General Background and Description of Business
General Communication, Inc. ("GCI") was incorporated in 1979 under the laws
of the State of Alaska. GCI is primarily a holding company and together with its
subsidiaries (collectively the "Company"), is a diversified telecommunications
provider with a leading position in facilities-based long distance service in
the State of Alaska and is Alaska's leading cable television service provider.
The Company seeks to become the first significant provider in Alaska of an
integrated package of long distance, local and wireless telecommunications
services, cable television services and Internet services.
Complementing its long distance, cable, and cellular resale operations, the
Company introduced facilities based competitive local exchange services in
Anchorage, Alaska in 1997. The Company has announced plans to provide similar
competitive local exchange services in Alaska's other major population centers.
The Company also acquired a state-wide 30 MHz B block personal communication
service ("PCS") license in June 1995 and is currently evaluating various
technologies for a proposed wireless PCS network. The Company has obtained
financing and has begun construction of an undersea fiber optic cable linking
Alaska with the lower 48 states. The Company plans to offer retail Internet
services in 1998.
Telecommunication Services. The Company supplies a full range of
common-carrier long-distance and other telecommunication products and services
to residential, commercial and government users. The Company operates a
state-of-the-art, competitive telecommunications network employing the latest
digital transmission technology based upon fiber optic and digital microwave
facilities within and between Anchorage, Fairbanks and Juneau, a digital fiber
optic cable linking Alaska to the networks of other carriers in the lower 49
states and the use of satellite transmission to remote areas of Alaska (and for
certain interstate traffic as well). The Company also offers data communication
equipment sales and technical services. Telecommunication services that the
Company provides are carried over facilities that are owned by the Company or
are leased from other companies.
Cable Services. As a result of acquisitions completed effective October 31,
1996, the Company has become Alaska's leading cable television service provider
to residential, commercial and government users in the State of Alaska. The
Company's cable systems serve 26 communities and areas in Alaska, including the
state's three largest urban areas, Anchorage, Fairbanks, and Juneau. The Company
cable systems consist of approximately 1,820 miles of installed cable plant
having 300 to 450 MHz of channel capacity.
Local Services. The Company's local services division entered the local
services market in Anchorage in 1997, providing services to residential,
commercial, and government users. The Company can access approximately 95% of
Anchorage area local loops from its colocated remote digital facilities and
digital line carrier installations. The Company offers resale of its
competitor's local service where the Company does not have access to loop
facilities.
Industries
General. The Company's management believes that the size and growth
potential of the voice, video and data market, the increasing deregulation of
telecommunications services, and the increased convergence of telephony,
wireless and cable services offer the Company considerable opportunities to
integrate its telecommunications and cable services and expand into
communications markets both within and, longer-term, outside of Alaska. The
Company's management expects the rate of growth in industry-wide
telecommunications revenues to increase as the historical dominance of monopoly
providers is challenged as a result of deregulation. Considerable deregulation
has already taken place in the United States as a result of the Federal
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Telecommunications Act of 1996 (the "1996 Telecom Act") with the barriers to
competition between telecommunications, local exchange and cable providers being
lowered. The Company's management believes that its acquisition of cable
television systems and its development of local exchange service and ultimately,
PCS leave it well positioned to take advantage of this deregulation of
telecommunications markets.
The telecommunications and cable television industries have been
characterized by rapid technological change, frequent new service introductions
and evolving industry standards. The U.S. telecommunication industry remains in
a state of flux, with companies faced with the challenges of new technologies
and rapid changes in the competitive and regulatory environment. Growing
competition has resulted in lower prices, which could stimulate ongoing volume
gains, even in the heavily saturated U.S. market. The 1996 Telecom Act, emerging
technologies, and a blurring of distinctions among industry sectors all portend
new revenue possibilities for the industry. Where the focus was once on
regulation of a closely guarded monopoly, regulators are now ushering the
telecommunication industry into an era of competition and reduced regulation.
Decisions made now will influence the industry's future in ways difficult to
foresee, as technology continues to catapult the industry forward.
The impact of deregulation will continue to affect the telecommunications
industry going forward. The participation of interexchange carriers ("IXCs") in
the local market should eventually exert downward pressure on pricing. In the
short-run, however, some analysts expect the reduction in access fees to reduce
the subsidy to local services, and local rates may increase. At the same time,
growing use of the Internet and computer networking, and the continuing
transformation to an information-based economy, are expected to stimulate demand
for new facilities and higher usage levels. In addition, the growing number of
teenagers in the home, stemming from the rise in births that began in the 1980s,
are expected to generate an added demand for access lines in the home.
Deregulation is expected to drive access rates down, but lower long
distance rates should lead to increased long distance volume, which should help
offset the drop in rates. Currently, Internet service providers ("ISPs") are
exempt from paying access fees, a key factor in allowing them to offer flat-rate
pricing which has helped drive Internet usage. The Regional Bell Operating
Companies ("RBOCs") have petitioned the Federal Communications Commissions
("FCC") to require the ISPs to pay access fees. Access revenue growth is
expected to trend downward over the remainder of the decade, but total revenues
are expected increase to $35.0 billion in 2000.
The size of the competitive local marketplace has doubled in the year and a
half since passage of the 1996 Telecom Act. Many companies now compete with
incumbent providers. Many of the facilities-based competitive local exchange
carriers ("CLECs") have begun to deploy digital switches to compete head-to-head
with incumbents in the switched dial tone arena. Still other CLECs have begun to
offer high-speed data services including Internet access for ISPs, Intranets for
corporate customers, and frame relay over state-of-the-art asynchronous transfer
mode network backbones.
The confluence of new technology and consumer response is forcing
competition among telephone, computer, and entertainment industries just as each
industry converges on similar digital technologies. As opportunities for new
wireless and video services arise and competitors expand beyond their
traditional markets, competition between existing telephone companies and these
major industries will likely intensify. To survive in this competitive
environment, the Company must respond to this technologically driven change with
services that its customers demand.
Telecommunication Services. Among telecommunications services, toll service
revenues represented the largest component, spurred by double-digit increases in
international toll calls, an outgrowth of the expansion in international trade,
and volume gains in domestic long distance service that more than offset price
declines. Industry analysts believe that declining access fees resulting from
deregulation, along with increased competition as local exchange carriers
("LECs") enter the interLATA market, will lower the cost of long distance
service, which should further boost
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volume, as will continued economic expansion. Growth in Internet usage is
expected to increase demand as Internet-access providers lease lines in order to
facilitate Internet traffic.
Cable Services. The programmed video services industry includes traditional
broadcast television, cable television, wireless cable, and direct broadcast
satellite ("DBS") systems. Cable television providers have added non-broadcast
programming, utilized improved technology to increase channel capacity and
expanded service markets to include more densely populated areas and those
communities in which off-air reception is not problematic. Broadcast television
stations including network affiliates and independent stations generally serve
the urban centers. One or more local television stations may serve smaller
communities. Rural communities may not receive local broadcasting or have cable
systems but may receive direct broadcast programming via a satellite dish.
In Alaska, cable television was introduced in the 1970s to provide
television signals to communities with few or no available off-air television
signals and to communities with poor reception or other reception difficulties
caused by terrain interference. Since that time, as on the national level, the
cable television providers in Alaska have added non-broadcast programming.
Local Services. 1997 was distinguished by its lack of progress in opening
the local access market up to significant competition on an industry-wide basis.
While the most lucrative business customers have benefited from increased choice
and lower prices, residential customers in most areas will have to wait as long
distance companies and competitive local exchange carriers drive to lower access
costs through regulatory relief, development of their own local access solutions
or the use of third party suppliers.
Use of the Internet and expansion in the use of local areas networks
("LANs") and wide area networks ("WANs") generated an increased demand for
access lines. In the home, the growing use of computers, faxes, and the Internet
led to increases in access lines and usage. The emergence of new services,
including digital cellular radio, personal communications services, interactive
TV, and video dial tone, has created opportunities for significant growth in
local loop services. These opportunities are also laying the foundation for a
restructuring of the newly competitive local loop services market. Not only are
competitors entering the core business of the local telephone companies, but
they are beginning to pursue the fast-growing markets that previously were
closed to them, such as consumer video.
Wireless Services. Wireless communications services have posted annual
growth rates in excess of 20 percent over the last decade. Declining prices and
the increased productivity that mobile communications provides for both
businesses and consumers have stimulated usage and spending. Declining prices
have been an important factor in generating penetration growth for both the
cellular and paging industries. Increased competition is prompting many cellular
carriers to consider adopting dual branding strategies, segmenting the market
into early adopter and mass market audiences and targeting each with a different
branded level of service.
The FCC adopted a broad set of rules for the licensing of PCS in September
1993. The FCC concluded an auction of spectrum to be used for the provision of
PCS in March 1995. The FCC's efforts are expected to encourage reduction of
communication prices and put the technology within financial reach of most
American homes and businesses. PCS licensees will be required to offer service
to at least one-third of their market population within five years or risk
losing their licenses. Service must be extended to two-thirds of the population
within 10 years. Industry analysts predict that PCS will grow rapidly, reaching
17.9 million subscribers by 2005. PCS's success is expected to occur even with
competition from other wireless services such as cellular, paging and enhanced
specialized mobile radio. Increases in services are expected to be fueled by
declining rates and expanded coverage. All wireless communications services are
expected to continue to expand at double-digit rates over the remainder of the
decade.
New and Emerging Services. Communication sectors not traditionally
competitive with telephone companies, such as cable and wireless services, are
projected to grow an average of 10.9%
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per year. This compares with the projected 3% average per year growth in revenue
for traditional local telephone services through 1998. Cable TV companies may
gain a competitive advantage through marketing of cable modems. Computer-based
services likely will be a strong market for cable TV firms. Cable modems may
enable them to offer a competitive alternative to the second telephone line into
the home, providing high-speed access to data services. Content is expected to
be the ultimate driver of Cable TV profits and may determine which companies
gain the most market share.
Unlicensed PCS is an emerging area for on-site or campus-wide use. The
unlicensed spectrum, previously occupied by microwave users, is in the process
of being cleared for PCS by the FCC-endorsed industry coalition given this
charter. Analysts believe the expansion of unlicensed PCS should lead to a jump
in spending on in-building wireless communications equipment.
Geographic Concentration and Alaska Economy
The Company offers telecommunication and video services to customers
primarily throughout Alaska. As a result of this geographic concentration, the
Company's growth and operations depend upon economic conditions in Alaska. The
economy of Alaska is dependent upon the natural resource industries, and in
particular oil production, as well as tourism, government, and United States
military spending. Any deterioration in these markets could have an adverse
impact on the Company. Oil revenues over the past several years have contributed
in excess of 75% of the revenues from all segments of the Alaska economy and are
projected to account for 77% in 1998.
The volume of oil transported by the TransAlaska Oil Pipeline System over
the past 20 years has been as high as 2.0 million barrels per day in 1988. Over
the past several years, it has begun to decline. The two largest producers of
oil in Alaska (the primary users of the TransAlaska Oil Pipeline System)
continue to explore, develop and produce new oil fields and to enhance recovery
from existing fields to offset the decline in production from the Prudhoe Bay
field. Both companies have invested large sums of money in developing and
implementing oil recovery techniques at the Prudhoe Bay field and other nearby
fields. New oil field development is expected to result in an increase in oil
production in 2000 and 2001. Oil production is projected to decline over the
long term at approximately 6 percent per year.
Effective March 1997, the State of Alaska passed new legislation relaxing
state oil royalties with respect to marginal oil fields that the oil companies
claim would not be economic to develop otherwise. No assurance can be given that
these two oil companies or other oil companies doing business in Alaska will be
successful in discovering new fields or further developing existing fields which
are economic to develop and produce oil with access to the pipeline or other
means of transport to market, even with the reduced level of royalties. Should
the oil companies not be successful in these discoveries or developments, the
long term trend of continued decline in oil production from the Prudhoe Bay
field area is inevitable with a corresponding adverse impact on the economy of
the state, in general, and on demand for telecommunications and cable television
services, and, therefore, on the Company, in particular.
Market prices for North Slope oil have declined to below $11 per barrel in
March 1998, below the average price of approximately $18 per barrel used by the
State of Alaska to budget its oil related revenues. The State of Alaska
maintains surplus accounts that are intended to fund budgetary shortfalls and
would be expected to fund all or a portion of the revenue shortfall. The Company
is not able to predict the effect of declines in the price of North Slope oil on
the State of Alaska's economy or on the Company.
The Company has, since its entry into the telecommunication marketplace
aggressively marketed its services to seek a larger share of the available
market. However, with a small population of approximately 600,000 people,
one-half of whom are located in the Anchorage area and the rest of whom are
spread out over the vast reaches of Alaska, the customer base in Alaska is
limited. No assurance can be given that the driving forces in the Alaska
economy, and in particular, oil production, will continue at levels to provide
an environment for expanded economic activity.
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Products
The Company operates in three industry segments and offers five primary
product lines. The telecommunication services industry segment offers
long-distance message toll services, private line and private network services,
the cable services industry segment offers cable television services, and the
local services industry segment offers local telecommunication services.
Telecommunication Services. The Company offers a broad spectrum of
telecommunication services to residential, commercial and government customers
primarily throughout Alaska.
The Company's long-distance services industry segment is engaged in the
transmission of interstate and intrastate switched MTS and private line and
private network communication service between the major communities in Alaska,
and the remaining United States and foreign countries. The Company's message
toll services include intrastate, interstate and international direct dial, 800
and 888, calling and debit card, operator and enhanced conference calling, as
well as termination of northbound toll service for MCI, U. S. Sprint ("Sprint")
and several large resellers who do not have facilities of their own in Alaska.
The Company also provides origination of southbound calling card and 800 and 888
toll services for MCI and Sprint customers. Regulated telephone relay services
for the deaf, hard-of-hearing and speech impaired are provided through the
Company's operator service center. The Company offers its message services to
commercial, residential, and government subscribers. Subscribers may generally
cancel service at any time. Toll related services account for approximately
70.0%, 86.5%, and 92.8% of the Company's 1997, 1996, and 1995 total revenues,
respectively. Private line and private network services utilize voice and data
transmission circuits, dedicated to particular subscribers, which link a device
in one location to another in a different location.
The Company has positioned itself as a price and customer service leader in
the Alaska telecommunication market. Rates charged for the Company's
telecommunication services are designed to be equal to or below those for
comparable services provided by its competitors.
In addition to providing communication services, the Company designs,
sells, services and operates, on behalf of certain customers, dedicated
communication and computer networking equipment and provides field/depot, third
party, technical support, consulting and outsourcing services through its
systems sales and service business. The Company also supplies integrated voice
and data communication systems incorporating interstate and intrastate digital
private lines, point-to-point and multipoint private network and small earth
station services. The Company's equipment sales and services revenue totaled
$10.2 million in the year ended December 31, 1997, or approximately 4.6% of
total revenues. Presently, there are five companies in Alaska that actively sell
and maintain data and voice communication systems.
The Company's ability to integrate telecommunications networks and data
communication equipment has allowed it to maintain its market position on the
basis of "value added" support rather than price competition. The Company has
expanded its technical services business to include outsourcing, onsite
technical contract services and telecommunications consulting. The Company has
consolidated its technical services business into a new department, Enterprise
Services. This department provides a number of technical operating and
engineering services directly to commercial customers. These services are
blended with other transport products into unique customer solutions, including
managed services and outsourcing.
The Company, using its new demand assigned multiple access ("DAMA")
facilities, expanded its network to 56 additional locations within the State of
Alaska in 1996. The digital DAMA system allows calls to be made between remote
villages using only one satellite hop thereby reducing satellite delay and
capacity requirements while improving quality. The Company obtained the
necessary Alaska Public Utilities Commission ("APUC") and FCC approvals waiving
current prohibitions against construction of competitive facilities in rural
Alaska, allowing for deployment of DAMA technology in 56 sites in rural Alaska
on a demonstration basis. Construction and partial
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deployment occurred in 1996, with deployment completed in 1997. At December 31,
1997 all but four sites were operating. The remaining sites are expected to
begin operations in 1998. Construction, deployment and upgrade costs totaled
$23.0 million through December 31, 1997.
The FCC concluded an auction of spectrum to be used for the provision of
PCS in March 1995. The FCC named the Company as the high bidder for one of the
two 30 megahertz blocks of spectrum, with Alaska statewide coverage. Acquisition
of the license for a cost of $1.7 million is anticipated to allow the Company to
introduce new PCS services in Alaska.
Cable Services. The programming services offered to subscribers of the
Company's cable television systems differ by system (all information as of
December 31, 1997).
Anchorage, Bethel, Kenai and Soldotna systems. Each system offered a basic
service. In addition, Anchorage and Bethel offer a cable programming service
("CPS"). A new product tier ("NPT") is only offered in the Anchorage cable
system. The Anchorage system, which is located in the urban center for Alaska,
is fully addressable, with all optional services scrambled, aside from the
broadcast basic. Kenai, Soldotna, and Bethel had fewer channels, less service
options and less an urban orientation, and use traps for program control. As a
result, these smaller systems do not have access to pay-per-view services. These
systems are expected to be upgraded in 1998 which will provide additional
channel capacity and capabilities that will allow for new services such as
pay-per-view and two-way transmissions.
The composition and rates of the levels of service vary between the
systems. The Anchorage cable system offers a basic service that includes
18-channels. The Anchorage cable system offers a CPS that includes 26 channels
at an additional cost. Subscribers, for an additional cost, receive the six
channel NPT service which includes TNT, CNN, Discovery, MSNBC, Outdoor Life and
the Sci-/Fi Channel. The Bethel cable system offers a basic service and a CPS of
13 channels for an additional cost per month. The basic service for the
Kenai/Soldotna cable system consisted of 32 channels. Pay TV services are
available either individually or as part of a discounted value package.
Commercial subscribers such as hospitals, hotels and motels were charged
negotiated monthly service fees. Apartment and other multi-unit dwelling
complexes received basic services at a negotiated bulk rate.
Fairbanks, Juneau, Ketchikan and Sitka systems. The programming services
currently offered to subscribers are structured so that each cable system
offered a basic service and a CPS. Each of the cable systems has different basic
service packages at different rates. Fairbanks, the second largest city in
Alaska, has a fully addressable system and offers a 12-channel basic and 33
channel CPS tier. Two channels of pay-per-view are available to basic and CPS
subscribers. Fairbanks, North Pole, Fort Wainwright, and Eielson Air Force Base
are all served by the Fairbanks headend and have the same lineup. Fort Greely, a
remote military post, is a stand-alone system, which is fully addressable. Fort
Greely has 8 basic channels, a 21-channel CPS tier, and 1 pay-per-view channel
available to all subscribers. The Juneau cable system offered an 11-channel
basic service package and a Tier 1 that included the basic service plus an
additional 4 channels. The system also offered a CPS Tier 2 that consisted of
the basic service plus Tier 1 service and additional 34 channels. The Ketchikan
system offered an 8-channel basic service and a CPS Tier 1 that consisted of the
basic service plus 33 additional channels. The system also offered a NPT Tier 2
that consisted of the basic service, the CPS Tier 1 and an additional 5
channels. The Sitka system offered an 8 channel basic service. An expanded basic
service included the basic service plus 38 additional channels.
The Juneau, Ketchikan and Sitka systems are expected to be upgraded in
1998. When complete, the systems will have the capacity to add an additional 16
channels. The Juneau and Ketchikan systems are expected to become addressable in
1998 allowing the introduction of additional pay-per-view channels.
Kodiak, Valdez, Cordova, Petersburg, Wrangell, Kotzebue and Nome systems.
These systems offered up to 30 channels of the most popular basic cable
channels, as well as the major broadcast networks, packaged into three levels of
service. The basic service consisted of three channels, one
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of which was a PBS channel. The CPS Tier 1 (which included the basic service)
had either 24 or 25 channels. The CPS Tier 2 had between 8 and 14 cable
channels. In addition, each system offered 4 or 5 channels of premium pay
services, except for Kodiak, which offered 8 channels of premium pay services
and 3 channels of pay-per-view programming. In 1994, the Kodiak cable system was
rebuilt to allow added channel capacity. At that time, addressability was added
to the system in order to add the 3 channels of pay-per-view movies. In 1998
Kodiak, Kotzebue, Nome, Valdez and Cordova plant upgrades are expected to be
completed allowing for additional services and new technology.
Seward system. The Seward cable system was upgraded in 1997. Total channels
were increased to 49 channels offered, packaged into two levels of service.
Basic service was expanded from 3 to 8 channels. CPS had 30 channels (including
the basic service) and was expanded to 44. All of the channels, with the
exception of local origination programming and a single translator channel
licensed to the City of Seward, were received via satellite. In addition there
were five channels of premium pay services. The system is fully addressable. The
system provides 12 channels to 300 outlets in a State of Alaska correction
facility through a separate receive and headend site.
Homer system. The Homer cable system was upgraded in 1997. Total channels
were increased to 50 packaged into two levels of service. Basic service was
expanded from 8 channels to 12. CPS had 36 channels (including the basic service
channels) and was expanded to 45 channels. All of the channels, with the
exception of four local translator channels and local origination programming,
are received via satellite. In addition, five channels of premium pay services
are offered. The system is fully addressable.
Local Services. The Company began offering local exchange services
initially in Anchorage during late September 1997. The Company's digital loop
carrier ("DLC") system allows the Company to offer its own full featured,
switched-based local service products to both residential and commercial
customers. The Company can gain access to approximately 95% of the Anchorage
area local loops from colocated remote facilities and DLC installations. In
areas where the company does not have access to loop facilities, it offers
resale of the Anchorage Telephone Utility's ("ATU") local service. ATU is a
public utility owned by the Municipality of Anchorage.
Seasonality
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 tend to watch more television, and
spend more time at home, 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.
Customer-sponsored research.
The Company has not expended material amounts during the last three fiscal
years on customer-sponsored research activities.
Facilities
Telecommunication Services. Currently, the Company's telecommunication
facilities comprise earth stations at Eagle River, Fairbanks, Juneau, Prudhoe
Bay, Valdez, Kodiak, Sitka, Ketchikan, Unalaska and Cordova, all in Alaska and
at Issaquah, Washington, serving the communities in their vicinity. The Eagle
River and Fairbanks earth stations are linked by digital microwave facilities to
distribution centers in Anchorage and Fairbanks, respectively. The Issaquah
earth station is connected with the Seattle distribution center by means of
diversely routed fiber optic cable transmission systems, each having the
capability to restore the other in the event of failure. The Juneau earth
station and distribution centers are co-located. The Ketchikan, Prudhoe Bay,
Valdez,
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Kodiak, Sitka, Unalaska and Cordova installations consist only of an earth
station. The Company constructed microwave facilities serving the Kenai
Peninsula communities and owns a 49 percent interest in an earth station located
on Adak Island in Alaska. The Company maintains an operator service center in
Wasilla, Alaska. Each of the distribution centers contains electronic switches
to route calls to and from local exchange companies and, in Seattle, to obtain
access to MCI and other facilities to distribute the Company's southbound
traffic to the remaining 49 states and international destinations. During 1996,
the Company expanded its network by constructing DAMA earth station facilities
in 56 additional communities in rural Alaska.
Leasing Company owns a portion of an undersea fiber optic cable which
allows the Company to carry its Anchorage, Eagle River, Wasilla, Palmer, Kenai
Peninsula, Glenallen and approximately one-half of its Fairbanks area traffic to
and from the contiguous lower 48 states over a terrestrial circuit, eliminating
the one-quarter second delay associated with a satellite circuit. The Company's
preferred routing for this traffic is via the undersea fiber optic cable, which
makes available satellite capacity to carry the Company's intrastate traffic.
The Company employs satellite transmission for certain other major routes
and uses advanced digital transmission technology throughout its system.
Pursuant to a purchase and lease-purchase option agreement entered into in
August 1995 the Company leases C-band transponders on Hughes Communications
Galaxy, Inc. ("Hughes") Galaxy IX satellite and has agreed to acquire satellite
transponders on Hughes Galaxy X satellite to meet its long-term satellite
capacity requirements. The Galaxy X satellite is expected to be placed in
service during the third quarter of 1998. The Company paid a $9.1 million
deposit to Hughes during 1996. The balance payable upon expected delivery of the
transponders in 1998 is not expected to exceed $41 million.
The Company employs advanced transmission technologies to carry as many
voice circuits as possible through a satellite transponder without sacrificing
voice quality. Other technologies such as terrestrial microwave systems,
metallic cable, and fiber optics tend to be favored more for point-to-point
applications where the volume of traffic is substantial. With a sparse
population spread over a wide geographic area, neither terrestrial microwave or
fiber optic transmission technology will be economically feasible in rural
Alaska in the foreseeable future.
Cable Services. The Company's cable television businesses are located in
Anchorage, Eagle River, Chugiak, Peters Creek, Kenai, Soldotna, Bethel, Fort
Richardson, Elmendorf Air Force Base, Fairbanks, Fort Wainwright, North Pole,
Fort Greely, Eielson Air Force Base, Juneau, Sitka, Ketchikan, Petersburg,
Wrangell, Cordova, Homer, Sitka, Valdez, Kodiak, Kotzebue, and Nome, Alaska.
Company facilities include cable plant and head-end distribution equipment.
Certain of the head-end distribution centers are co-located with customer
service and administrative offices.
Local Telecommunication Services. During 1997 the Company installed a host
5ESS switching system. Additionally the Company colocated beside or within ATU's
local switching offices six (6) remote facilities to access unbundled loop
network elements. In February 1998 the Company installed a digital loop carrier
system beside a smaller, seventh ATU wire center. These remote and DLC
facilities are interconnected to the host switch via Company-owned diversely
routed fiber optic links.
Customers
Telecommunication Services. The Company had approximately 89,000, 93,900
and 85,600 active Alaska subscribers to its message telephone service at
December 31, 1997, 1996 and 1995, respectively. Approximately 11,500, 11,000 and
9,500 of these were business and government users at December 31, 1997, 1996 and
1995, respectively, and the remainder were residential customers. MTS revenues
averaged approximately $10.9 million per month during 1997.
Substantially all service areas, in which the Company has facilities,
except Bethel, Alaska and most locations serviced by DAMA facilities, have
completed the equal access balloting process.
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The Company estimates it carries 33% to 49% of the southbound interstate MTS
traffic and 21% to 48% of the intrastate MTS traffic originating in those
service areas.
A summary of switched MTS traffic minutes follows:
<TABLE>
<CAPTION>
Interstate Minutes
------------------------------
Combined
Interstate
Inter- and Inter-
South- North- Calling national national Intrastate
For Quarter ended bound bound Card Minutes Minutes Minutes
[6~ -------------------------------------------------------------------------------------------------------------------
(amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
March 31, 1995 58,759 41,600 4,351 1,381 106,091 21,208
June 30, 1995 63,475 43,721 4,113 1,556 112,865 23,051
September 30, 1995 70,219 45,027 4,233 1,699 121,178 23,883
December 31, 1995 70,570 46,545 5,518 1,749 124,382 25,228
------- ------- ------ ----- ------- -------
Total 1995 263,023 176,893 18,215 6,385 464,516 93,370
------- ------- ------ ----- ------- -------
------- ------- ------ ----- ------- -------
March 31, 1996 76,369 49,158 6,094 1,890 133,511 28,910
June 30, 1996 81,753 51,465 6,049 1,964 141,231 30,671
September 30, 1996 86,094 52,856 6,453 1,896 147,299 31,253
December 31, 1996 82,255 55,675 7,863 1,774 147,567 30,374
------- ------- ------ ----- ------- -------
Total 1996 326,471 209,154 26,459 7,524 569,608 121,208
------- ------- ------ ----- ------- -------
------- ------- ------ ----- ------- -------
March 31, 1997 83,284 56,588 8,110 1,741 149,723 32,020
June 30, 1997 85,933 58,420 7,189 1,795 153,337 34,405
September 30, 1997 93,510 60,390 5,530 1,842 161,272 34,755
December 31, 1997 87,657 61,992 5,157 1,703 156,509 31,962
------- ------- ------ ----- ------- -------
Total 1997 350,384 237,390 25,986 7,081 620,841 133,142
------- ------- ------ ----- ------- -------
------- ------- ------ ----- ------- -------
</TABLE>
- ----------------
All minutes data were taken from the Company's billing statistics reports.
In 1993, the Company entered into a significant business relationship with
MCI which includes the following agreements: (1) the Company agreed to terminate
all Alaska-bound MCI long distance traffic and MCI agreed to terminate all of
the Company's long distance traffic terminating in the lower 49 states excluding
Washington, Oregon and Hawaii; (2) MCI licensed certain service marks to the
Company for use in Alaska; (3) MCI, in connection with providing to the Company
credit enhancement to permit the Company to purchase an undersea cable linking
Seward, Alaska, with Pacific City, Oregon, leased from the Company all of the
capacity owned by the Company on the undersea fiber optic cable and the Company
leased such capacity back from MCI; (4) MCI purchased certain service marks of
the Company; and (5) the parties agreed to share some communications network
resources and various marketing, engineering and operating resources. The
Company also handles MCI's 800 and 888 traffic originating in Alaska and
terminating in the lower 49 states and handles traffic for MCI's calling card
customers when they are in Alaska. Concurrently with these agreements, MCI
purchased approximately 31% (19.3% as of December 31, 1997) of GCI's Common
Stock and presently controls nominations to two seats on the Board. In
conjunction with the Cable Acquisition Transactions, MCI purchased an additional
two million shares at a premium to the then current market price for $13 million
or $6.50 per share.
Revenues attributed to the MCI Agreement in 1997, 1996, and 1995 totaled
$34.3 million, $29.2 million and $23.9 million, or 15.3%, 17.7% and 18.5% of
total revenues, respectively. The contract was amended in March 1996 extending
its term three years to March 31, 2001. The amendment also reduced the rate in
dollars to be charged by the Company for certain MCI traffic for the period
April 1, 1996 through July 1, 1999 and thereafter. With the amendments, the
Company is assured that
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<PAGE>
MCI, the Company's largest customer, will continue to make use of the Company's
service during the extended term.
In 1993 the Company entered into a long-term agreement with Sprint,
pursuant to which the Company agreed to terminate all Alaska-bound Sprint
long-distance traffic and Sprint agreed to handle substantially all of the
Company's international traffic. Services provided pursuant to the contract with
Sprint resulted in revenues in 1997, 1996 and 1995 of approximately $24.4
million, $18.8 million and $14.9 million, or approximately 10.9%, 11.4% and
11.5% of total revenues, respectively.
Both MCI and Sprint are major customers of the Company in its
telecommunication services industry segment. Loss of one or both of these
customers would have a significant detrimental effect on the Company's revenues
and contribution. There are no other individual customers, the loss of which
would have a material impact on the Company's revenues or gross profit.
The Company provided private line and private network communication
products and services to approximately 781 commercial and government accounts in
1997. Private lines and private network communication products and services
generated approximately 7.1% of total long-distance revenues in the year ended
December 31, 1997.
Although the Company has several agreements to facilitate the origination
and termination of international toll traffic, it has neither foreign operations
nor export sales (see -Foreign and Domestic Operations and Export Sales).
Cable Services. As of December 31, 1997 the Company cable systems passed
approximately 167,500 homes or approximately 78% of all households in Alaska,
and served approximately 108,000 subscribers. 1997 revenues derived from cable
television services totaled $55.2 million.
Local Services. The Company had approximately 3,300 active Anchorage
subscribers to its local telecommunication service at December 31, 1997. 1997
revenues derived from local services totaled $610,000.
Alaska Voice, Video and Data Markets
The Alaskan voice, video and data markets are unique within the United
States. Alaska is physically distant from the rest of the United States and is
characterized by large geographical size and relatively small, dense population
clusters (with the exception of population centers such as Anchorage, Fairbanks
and Juneau). It lacks a well-developed terrestrial transportation
infrastructure, and the majority of Alaska's communities are accessible only by
air or water. As a result, Alaska's telecommunications networks are different
from those found in the lower 49 states.
Alaska today relies extensively on satellite-based long distance
transmission for intrastate calling between remote communities where investment
in a terrestrial network would be uneconomic or impractical. Also, given the
remoteness of Alaska's communities and lack, in many cases, of major civic
institutions such as hospitals, libraries and universities, Alaskans are
dependent on telecommunications to access the resources and information of large
metropolitan areas in the rest of the U.S. and elsewhere. In addition to
satellite-based communications, the telecommunications infrastructure in Alaska
includes traditional copper wire, digital microwave links between Anchorage and
Fairbanks and Juneau and fiber optic cable. For interstate and international
communication, Alaska is currently connected to the lower 49 states by undersea
fiber optic cable with a capacity of nine DS3s and is backed-up by additional
satellite capacity.
Prior to 1982, Alascom was the sole long distance carrier in Alaska. Under
an agreement with the State of Alaska, Alascom was required to maintain a number
of low bandwidth links and expand service to remote or less developed areas of
the state. Interstate rates initially charged for Alaska telecommunications
services had been substantially higher than interstate rates in the contiguous
48 states. In 1972, the FCC established a policy of rate integration intended to
equalize all domestic
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<PAGE>
interstate rates based on distances of calls. This policy was used to support a
subsidy mechanism to help Alascom cover higher costs associated with rural
operations. When the Company began providing interstate long distance service in
1982, AT&T Corp. ("AT&T") provided almost all of the telecommunications services
in the lower 49 states, and Alascom provided almost all of the long distance
telecommunications services in Alaska and between Alaska and the lower 49 states
and foreign countries. Although Alascom's business was highly subsidized, the
Company competed against Alascom without the advantage of a subsidy. In 1983,
the State of Alaska petitioned the FCC to initiate a rulemaking to determine how
to rationalize the policies of rate integration and competition in the Alaska
market in light of the rapid changes in the telecommunications industry brought
on by the AT&T divestiture and changing FCC competition policies. This action
ultimately led to a negotiated purchase of Alascom from Pacific Telecom, Inc.
("PTI") by AT&T in August 1995 for consideration of approximately $350 million.
After the purchase, Alascom changed its name to AT&T Alascom.
The Alaskan telecommunications business today comprises three distinct
markets: long distance services (interstate and intrastate), local exchange
services and wireless communications services (cellular and eventually PCS). In
the local exchange market, the Company will compete against various incumbent
local exchange carriers including ATU in Anchorage and PTI in Juneau. PTI
acquired the local exchange portion of the Fairbanks Municipal Utilities System
in 1997 and now provides local exchange services in Fairbanks. In the wireless
communications services market, the Company's PCS business expects to compete
against the cellular subsidiaries of AT&T and ATU in the Anchorage market and
the cellular subsidiaries of PTI and others outside of Anchorage. In the long
distance market, the Company competes against AT&T Alascom, ATU and the
Matanuska Telephone Cooperative and may in the future compete against new market
entrants. For calendar year 1997, the Company estimates that the aggregate
telecommunications market in Alaska generated revenues of approximately $758
million. Of this amount, approximately $433 million was attributable to
interstate and intrastate long distance service, $289 million was attributable
to local exchange services, and $36 million was attributable to wireless
communications services.
The market for programmed video services in Alaska includes traditional
broadcast television, cable television, wireless cable, and DBS systems.
Broadcast television stations including network affiliates and independent
stations serve the urban centers in Alaska. Seven, four and two broadcast
stations serve Anchorage, Fairbanks and Juneau, respectively. In addition,
several smaller communities such as Bethel are served by one local television
station. In addition, other rural communities without cable systems receive a
single state sponsored channel of television by a satellite dish and a low power
transmitter.
In Alaska, cable television was introduced in the 1970s to provide
television signals to communities with few or no available off-air television
signals and to communities with poor reception or other reception difficulties
caused by terrain interference. Since that time, as on the national level, the
cable television providers in Alaska have added non-broadcast programming,
utilized improved technology to increase channel capacity and expanded service
markets to include more densely populated areas and those communities in which
off-air reception is not problematic.
At present 26 communities and areas in Alaska, including the state's three
largest urban areas (Anchorage, Fairbanks and Juneau) are served by the
Company's cable systems. A number of cable operators other than the Company
provide cable service in Alaska. All of these companies are relatively small,
with the largest having fewer than 6,500 subscribers.
Competition
The Company is one of Alaska's leading providers of telecommunication and
cable television services and maintains a strong competitive position. There is
active competition in the sale of substantially all products and services
offered by the Company.
The principal methods of competition in the Company's services are customer
service, product innovation, quality and price. The company believes that its
competitive strength rests on its
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<PAGE>
customer service capabilities, its state-of-the-art facilities, its ability to
develop new and improved products and services in response to the needs of its
customers, and the consistent high quality of its products and services.
Telecommunication Services. The telecommunications industry is intensely
competitive, rapidly evolving and subject to constant technological change.
Competition is based upon price and pricing plans, the types of services
offered, customer service, billing services, perceived quality, reliability and
availability. Certain of the Company's competitors are substantially larger and
have greater financial, technical and marketing resources than the Company.
Although the Company believes it has the human and technical resources to pursue
its strategy and compete effectively in this competitive environment, its
success will depend upon its ability to profitably provide high quality, high
value services at prices generally competitive with, or lower than, those
charged by its competitors.
The Company's principal competitor in long distance services, AT&T Alascom,
has substantially greater resources than the Company. This competitor's
interstate rates are integrated with those of AT&T Corp. and are regulated in
part by the FCC. While the Company initially competed based upon offering
substantial discounts, those discounts have been eroded in recent years due to
lowering of prices by AT&T Alascom. Under the terms of AT&T's acquisition of
Alascom, AT&T Alascom rates and services must "mirror" those offered by AT&T, so
changes in AT&T prices indirectly affect the rates and services of the Company.
AT&T's and AT&T Alascom's interstate prices are regulated under a price cap plan
whereby their rate of return is no longer regulated or restricted. Price
increases by AT&T and AT&T Alascom generally improve the Company's ability to
raise its prices while price decreases pressure the Company to follow. The
Company has, so far, successfully adjusted its pricing and marketing strategies
to respond to AT&T pricing practices. However, if AT&T Alascom significantly
lowers its rates, the Company may be forced to reduce its rates, which could
have a material adverse effect on the Company.
As allowed under the 1996 Telecom Act, ATU and other LECs entered the
interstate and international long distance market and pursuant to APUC
authorization entered the intrastate long distance market in 1997. ATU and other
LECs resell other carriers' services in the provision of their interstate and
intrastate long distance services.
Cable Services. Cable television systems face competition from alternative
methods of receiving and distributing television signals and from other sources
of news, information and entertainment such as off-air television broadcast
programming, newspapers, movie theaters, live sporting events, interactive
computer services and home video products, including videotape cassette and
video disks. The extent to which a cable television system is competitive
depends, in part, upon the cable system's ability to provide quality programming
and other services at competitive prices.
The 1996 Telecom Act authorizes LECs and others to provide a wide variety
of video services competitive with services provided by cable systems and to
provide cable services directly to subscribers. Certain LECs in Alaska may seek
to provide video services within their telephone service areas through a variety
of distribution methods. Cable systems could be placed at a competitive
disadvantage if the delivery of video services by LECs becomes widespread since
LECs may not be required, under certain circumstances, to obtain local
franchises to deliver such video services or to comply with the variety of
obligations imposed upon cable systems under such franchises. Issues of
cross-subsidization by LECs of video and telephony services also pose strategic
disadvantages for cable operators seeking to compete with LECs who provide video
services.
Cable television systems generally operate pursuant to franchises granted
on a non-exclusive basis. The 1992 Cable Act gives local franchising authorities
jurisdiction over basic cable service rates and equipment in the absence of
"effective competition," prohibits franchising authorities from unreasonably
denying requests for additional franchises and permits franchising authorities
to operate cable systems. Well-financed businesses from outside the cable
industry (such as the public
-14-
<PAGE>
utilities that own certain of the poles on which cable is attached) may become
competitors for franchises or providers of competing services.
The Cable Systems face limited additional competition from private
satellite master antenna television ("SMATV") systems that serve condominiums,
apartment and office complexes and private residential developments. The
operators of these SMATV systems often enter into exclusive agreements with
building owners or homeowners' associations. Due to the widespread availability
of reasonably priced earth stations, SMATV systems now can offer both improved
reception of local television stations and many of the same satellite-delivered
program services offered by franchised cable systems. The ability of the Cable
Systems to compete for subscribers in residential and commercial developments
served by SMATV operators is uncertain. The 1996 Telecom Act gives cable
operators greater flexibility with respect to pricing of cable television
services provided to subscribers in multi-dwelling unit residential and
commercial developments. It also broadens the definition of SMATV systems not
subject to regulation as a franchised cable television service.
The availability of reasonably-priced home satellite dish earth stations
("HSDs") enables individual households to receive many of the
satellite-delivered program services formerly available only to cable
subscribers. Furthermore, the 1992 Cable Act contains provisions, which the FCC
has implemented with regulations, to enhance the ability of cable competitors to
purchase and make available to HSD owners certain satellite-delivered cable
programs at competitive costs.
In recent years, the FCC and the Congress have adopted policies providing a
more favorable operating environment for new and existing technologies that
provide, or have the potential to provide, substantial competition to cable
systems. These technologies include, among others, DBS services that transmit
signals by satellite to receiving facilities located on the premises of
subscribers. Programming is currently available to the owners of DBS facilities
through conventional, medium and high-powered satellites.
DBS systems are expected to use video compression technology to increase
the channel capacity of their systems to provide movies, broadcast stations and
other program services competitive with those of cable systems. The extent to
which DBS systems are competitive with the service provided by cable systems
depends, among other things, on the availability of reception equipment at
reasonable prices and on the ability of DBS operators to provide competitive
programming. DBS services do not currently provide local programming and DBS
signals are subject to degradation from atmospheric conditions such as rain and
snow. The receipt of DBS signals in Alaska currently has the disadvantage of
requiring subscribers to install larger satellite dishes (generally three to six
feet in diameter) because of the weaker satellite signals currently available in
northern latitudes. In addition, existing satellites have a relatively low
altitude above the horizon when viewed from Alaska, making their signals subject
to interference from mountains, buildings and other structures.
Cable television systems also compete with wireless program distribution
services such as multichannel, multipoint distribution service ("MMDS")
providers which use low-power microwave frequencies to transmit video
programming over-the-air to subscribers. There are MMDS operators who are
authorized to provide or are providing broadcast and satellite programming to
subscribers in areas served by several of the Company's cable systems, including
Anchorage, Fairbanks and Juneau. Additionally, the FCC has allocated frequencies
in the 28 gHz band for a new multichannel wireless video service similar to
MMDS. MMDS operations have the disadvantage of requiring line-of-sight access,
making their signals subject to interference from mountains, buildings and other
structures, and are subject to interference from rain, snow and wind. In 1997
ATU purchased a minority interest in a MMDS provider that currently provides
service in some portions of Anchorage and Fairbanks. At this time, the MMDS
service has not been integrated with ATU's telecommunications services. The
Company is unable to predict whether wireless video services will have a
material impact on its operations.
Other new technologies may become competitive with non-entertainment
services that cable television systems can offer. The FCC has authorized
television broadcast stations to transmit textual and graphic information useful
both to consumers and businesses. The FCC also permits
-15-
<PAGE>
commercial and non-commercial FM stations to use their subcarrier frequencies to
provide non-broadcast services including data transmissions. The FCC established
an over-the-air interactive video and data service that will permit two-way
interaction with commercial and educational programming along with informational
and data services. LECs and other common carriers also provide facilities for
the transmission and distribution to homes and businesses of interactive
computer-based services, including the Internet, as well as data and other
non-video services. The FCC has conducted spectrum auctions for licenses to
provide PCS. PCS will enable license holders, including cable operators, to
provide voice and data services. The Company acquired a license to provide PCS
services in Alaska.
Advances in communications technology as well as changes in the marketplace
are constantly occurring. The Company cannot predict the effect that ongoing or
future developments might have on the telecommunications and cable television
industries or on the Company specifically.
Local Services. In the local exchange services market, the Company believes
that the 1996 Telecom Act and state legislative regulatory initiatives and
developments, as well as a recent series of transactions and proposed
transactions between telephone companies, long distance carriers and cable
companies, increase the likelihood that barriers to local exchange competition
will be substantially reduced or removed. These initiatives include requirements
that local exchange carriers negotiate with entities such as the Company to
provide interconnection to the existing local telephone network, to allow the
purchase, at cost-based rates, of access to unbundled network elements, to
establish dialing parity, to obtain access to rights-of-way and to resell
services offered by the incumbent local exchange carriers.
Local exchange carriers in Alaska outside of Anchorage have a "rural
[6~exemption" from some of their obligations until and unless the exemption is
terminated by the APUC. Certain pricing provisions of the Interconnection
Decision implementing the interconnection portions of the 1996 Telecom Act have
been challenged and are currently stayed by the U.S. Court of Appeals for the
Eighth Circuit, on a jurisdictional basis. In addition the 1996 Telecom Act
expressly prohibits any legal barriers to competition in intrastate or
interstate communications service under state and local laws. The 1996 Telecom
Act further empowers the FCC, after notice and an opportunity for comment, to
preempt the enforcement of any statute, regulation or legal requirement that
prohibits, or has the effect of prohibiting, the ability of any entity to
provide any intrastate or interstate telecommunications service.
In early 1997 the Company received approval from the APUC to provide local
exchange services throughout ATU's existing service area. The APUC also approved
an interconnection agreement negotiated and arbitrated between the Company and
ATU pursuant to the terms of the 1996 Telecom Act. By early 1998, the Company
has positioned itself to offer local exchange services to substantially all
consumers in the ATU service area, primarily through its own facilities and
unbundled local loops leased from ATU.
The 1996 Telecom Act also provides incumbent local exchange carriers with
new competitive opportunities. The Company believes that it has certain
advantages over these companies in providing its telecommunications services,
including the Company's brand awareness by Alaskan customers, its facilities
based telecommunications network, and management's prior experience in, and
knowledge of, the Alaskan market. The 1996 Telecom Act provides that rates
charged by incumbent local exchange carriers for interconnection to the
incumbent carrier's network are to be nondiscriminatory and based upon the cost
of providing such interconnection, and may include a "reasonable profit," which
terms are subject to interpretation by regulatory authorities. If the incumbent
local exchange carriers charge alternative providers such as the Company
unreasonably high fees for interconnection to the local exchange carriers'
networks, or significantly lower their retail rates for local exchange services,
the Company's local service business could be placed at a significant
competitive disadvantage.
Wireless Services. Competition for the Company's proposed PCS services will
come primarily from traditional cellular providers and new PCS entrants.
Anchorage has mature cellular systems in
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<PAGE>
both the wireline (ATU) and non-wireline (AT&T Wireless) license blocks that
together have achieved an estimated 20% penetration of potential subscribers
based on the number of existing wireline access lines. Fairbanks and Juneau have
not achieved the cellular penetration that has occurred in Anchorage. Cellular
pricing has been high in Alaska compared to the lower 48 states, but rates in
Anchorage have become more competitive since the Company entered the cellular
resale market three years ago.
Of the five other PCS licensees, the Alaska A block PCS license owner has
announced plans for service in Alaska as early as 1998. The high cost per POP of
a PCS system infrastructure may deter some license owners from building a
system. PCS has the potential disadvantage when compared to cellular service of
requiring the licensee to enter into interconnection agreements with cellular
providers in order to permit PCS subscribers with dual mode handsets to continue
to receive service once they stray from the PCS service area. However, the
Company believes that the portion of the Alaska population, which will need to
operate outside the Company's planned PCS service areas, is small.
Financial Information About Industry Segments
For financial information with respect to industry segments of the Company,
reference is made to the information set forth in note 9 of the Notes to
Consolidated Financial Statements included in Part II of this Report.
Recent Developments
Financing Completed. The Company completed a major financing effort in
August 1997 which raised $550 million through a combination of the issuance of 7
million shares of class A stock, sale of senior notes totaling $180 million, and
refinancing its credit agreements. More than $350 million of these proceeds will
be invested in new telecommunication facilities in Alaska over the next five
years. Part of this investment will be the Company's $125 million fiber optic
project called Alaska United. The balance will complete a major upgrade and
expansion of the Company's telecommunications and cable systems throughout the
state and the purchase of new satellite transponders. These systems will be
connected to each other and the lower 48 by the Alaska United fiber and the
Company's satellite systems.
Alaska United Project. 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 maximum 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 and completed in 1996. The results of this survey pinpointed the
exact route that the Alaska United fiber would take. The Company entered into a
contract with Tyco Submarine Systems, Ltd. ("TSS"), one of the world's leading
submarine cable vendor which has installed more than 150,000 miles of undersea
cable. TSS is to design, engineer, manufacture and install the undersea cable.
On August 1, 1997 the Company issued a down payment to TSS to begin
construction. Manufacturing of the cable and its electronics has been underway
since that time. The cable is expected to be laid from August to October 1998.
Testing will occur after that, and services are expected to commence in December
1998.
Alaska United will land in Whittier, Valdez and Juneau, Alaska. From
Whittier, the fiber will follow the railroad, highway, and over-land
rights-of-ways to Anchorage. Between Whittier and Valdez, the Company will
construct a second undersea fiber optic cable. The cable will connect in Valdez
with a fiber being constructed by Kanas Telecom, Inc. ("Kanas") as described
below. In Juneau and Seattle, Alaska United will connect to the Company's
existing network.
The Alaska United fiber will be 2,331 miles long (1,995 miles undersea and
336 over land). It will have a total design capacity of 10 billion bits per
second (22 times what is currently available); it can route traffic in different
directions in the event of equipment failures; and, once paired with the
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<PAGE>
Company's existing capacity on the North Pacific Cable, users can achieve route
diversity to achieve multiple fiber paths for back-up purposes. It will deliver
a minimum of 32,256 simultaneous clear channel voice or data circuits at
transmission speeds of 2.5 billion bits per second. As demand increases,
capacity can be quadrupled to support a minimum of 129,024 simultaneous clear
channel voice or data circuits at speeds of 10 billion bits per second.
Currently, the only fiber optic cable connecting Alaska with the contiguous
United States is nearing its capacity limit of 6,048 simultaneous voice or data
circuits at transmission speeds of 420 million bits per second.
Financing for the Alaska United undersea fiber project includes $75 million
available through a new bank credit agreement dated January 27, 1998 and $50
million from funds raised through the issuance of senior notes described above.
Fiber Capacity Exchange. The Company and 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. Dark fiber
is fiber optic line capacity without the electronic equipment needed to repeat
the signal. 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. Demand for bandwidth capacity is expected to grow sharply
in the coming years to accommodate faster Internet access, ISDN, new data
services and higher transmission rates.
The Company plans to build an underwater fiberoptic cable connecting Valdez
with Whittier, and will construct a new fiberoptic link from Whittier to tie
into the Company's Anchorage fiber network, all part of the Alaska United
Project described above. Kanas' fiber optic system will follow the Trans-Alaska
Pipeline from Valdez to Fairbanks, continuing north to Prudhoe Bay. The system
is expected to be available for commercial service during December of 1998.
Acquisition. Effective December 2, 1997, the Company purchased all of the
outstanding shares of Astrolabe Group, Inc. ("Astrolabe"). Astrolabe was founded
in 1995 as a technology management-consulting firm helping Alaska based clients
effectively plan, implement and operationally manage their network and
information system investments. Astrolabe helps clients throughout Alaska manage
their rural telecommunication networks, distributed information systems and
distance delivery of health care educational services. Astrolabe has been an
integral part of the Company's School Access project, providing the Internet
software infrastructure central to the value of the Company's distance education
product offerings. Following the acquisition, Astrolabe was merged into GCI
Communication Corp. and operates as a distinct division named GCI Network
Solutions. The $1,324,000 purchase was accounted for using the purchase method.
The purchase price consisted of a payment of $600,000 and the issuance of
options to purchase 100,000 shares of GCI's Class A common stock for $.01 per
share.
Local Services. PTI, the company providing local telephone services in
Fairbanks and Juneau, Alaska, petitioned the APUC to exempt them from local
service competition under the 1996 Telecom Act. PTI is owned by Century
Telephone Company of Louisiana, one of the largest independent telephone
companies in the Nation. The Company requested that the "rural exemption" be
terminated. In January 1998, the APUC denied the Company's request to terminate
the rural exemption. The basis of the APUC's decision was primarily that various
rulemaking proceedings (including Universal Service, local competition, access
charge reform, and rate restructuring) must be completed before the exemption
would be revoked. Those rulemaking proceedings are now underway. Other
legislative and judicial efforts are also underway to achieve a change in the
APUC ruling. The Company may, however, provide local service on its own
facilities to a limited number of consumers in Juneau and Fairbanks.
The Company believes local services competition is in the best interests of
consumers and intends to vigorously contest the APUC decision. The Company
cannot predict the effect that ongoing or future regulatory developments might
have on competitive local services markets in Alaska or on the Company
specifically.
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<PAGE>
Expansion in Rural Alaska. Both the APUC and the FCC maintain a restriction
that prevents the Company from constructing duplicative satellite earth stations
to provide interexchange services to approximately 200 of the smallest villages
in Alaska. In 1995, the Company obtained a waiver to build facilities in 50 of
those villages. In the Company's opinion, the APUC restriction has been
preempted by section 253 of the 1996 Telecom Act, which prevents any state from
maintaining any rule that prohibits any entity from providing any
telecommunications service. The Company has requested the FCC to preempt the
APUC's restriction and the Company is also seeking a removal of the federal
restriction. Removal of both restrictions will enable the Company to construct
facilities throughout Alaska. Until that time, the Company relies on the
facilities of AT&T Alascom for the termination of traffic.
Cable Services Expansion. The Company completed construction of 109 miles
of a planned 160 mile fiber optic Metropolitan Area Network ("MAN") in Anchorage
during 1996 and 1997, over which it began offering facilities-based local
service to selected major customers in those cases where it was economically
feasible to directly connect them to the network. Additionally, the Metropolitan
Area Network will provide supplemental capacity and connectivity for cable
television services and will improve the quality and reliability of services.
The Company plans to upgrade cable television systems across the state with the
installation of fiber optics and two-way capability. This will allow the Company
to add more channels, develop new services and install cable modems that will
provide high-speed access to the Internet.
Customer Service Integration. Customer service groups were consolidated in the
Company's call centers during 1997 and new customer service representatives and
support personnel were added throughout the state. Consolidation of customer
service across product lines allows customers to access and change information
and service from any of the Company's statewide offices. Customer service hours
were expanded to 24 hours a day 7 days a week throughout the state.
Employees
The Company and its subsidiaries employ approximately 950 persons as of
February 28, 1998. The Company and its subsidiaries are not parties to any union
contracts with their employees. The Company believes that its future success
will depend upon its continued ability to attract and retain highly skilled and
qualified employees. The Company believes that its relations with its employees
are satisfactory.
Environmental Regulations
The Company and its subsidiaries may undertake activities which, under
certain circumstances may affect the environment. Accordingly, they are subject
to federal, state, and local regulations designed to preserve or protect the
environment. The FCC, the Bureau of Land Management, the U.S. Forest Service,
and the National Park Service are required by the National Environmental Policy
Act of 1969 to consider the environmental impact prior to the commencement of
facility construction. Management believes that compliance with such regulations
has no material effect on the Company's consolidated operations. The principal
effect of Company facilities on the environment would be in the form of
construction of facilities at various locations in Alaska. Company facilities
have been constructed in accordance with federal, state and local building codes
and zoning regulations whenever and wherever applicable. Some facilities may be
on lands that may be subject to state and federal wetland regulation.
Uncertainty as to the applicability of environmental regulations is caused
in major part by the federal government's decision to consider a change in the
definition of wetlands, however, none of the Company's facilities has been
constructed in areas which are subject to flooding, tsunami's, etc. and as such
are most likely to fall outside any new wetland designation. Most of the
Company's facilities are on lands leased by the Company, and, with respect to
all of these facilities, the Company is unaware of any violations of lease terms
or federal, state or local regulations pertaining to preservation or protection
of the environment.
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<PAGE>
The Company's Alaska United project consists, in part, of deploying fiber
optic cable facilities between Anchorage, Whittier, Valdez, and Juneau, Alaska
and Seattle, Washington. The engineered route passes over wetlands and other
environmentally sensitive areas. The Company believes its construction methods
used for buried cable have a very minimal impact on the environment. The
agencies, among others, that are involved in permitting and oversight of the
Company's cable deployment efforts are the US Army Corps of Engineers, The
National Marine Fisheries Service, US Fish & Wildlife, US Coast Guard, NOAA,
Alaska Department of Natural Resources, and the Alaska Dept. of Government
Coordination. The Company is unaware of any violations of federal, state or
local regulations or permits pertaining to preservation or protection of the
environment.
In the course of operating the cable television systems, the Company has
used various materials defined as hazardous by applicable governmental
regulations. These materials have been used for insect repellent, locate paint
and pole treatment, and as heating fuel, transformer oil, cable cleaner,
batteries, and in various other ways in the operation of those systems.
Management of the Company does not believe that these materials, when used in
accordance with manufacturer instructions, pose an unreasonable hazard to those
who use them or to the environment.
Foreign and Domestic Operations and Export Sales
Although the Company has several agreements to facilitate the origination
and termination of international toll traffic, it has neither foreign
operations nor export sales. The Company conducts operations throughout the
western contiguous United States, Alaska and Hawaii and believes that any
subdivision of its operations into distinct geographic areas would not be
meaningful. Revenues associated with international toll traffic were $7.6
million, $8.3 million and $7.1 million for the years ended December 31, 1997,
1996 and 1995, respectively.
Backlog of Orders and Inventory
As of December 31, 1997 and 1996, the Company's long distance services
segment had a backlog of equipment sales orders of approximately $104,000 and
$364,000, respectively. The decrease in backlog as of December 31, 1997 can be
attributed primarily to faster completion of outstanding sales orders in 1997
as compared to 1996. The Company expects that all of the orders in backlog at
the end of 1997 will be delivered during 1998.
Patents, Trademarks, Licenses, Certificates of Public Convenience and Necessity,
and Military Franchises
Telecommunication and Local Services. Neither the Company nor its
affiliates hold patents, trademarks, franchises or concessions for
telecommunications services or local services. The Communications Act of 1934
gives the FCC the authority to license and regulate the use of the
electromagnetic spectrum for radio communication. The Company through its long
distance services industry segment holds licenses for its satellite and
microwave transmission facilities for provision of its telecommunication
services. The Company acquired a license for use of a 30-megahertz block of
spectrum for providing PCS services in Alaska. The PCS license has an initial
duration of 10 years. The Company expects to renew the PCS license for an
additional 10-year term under FCC rules. The Company's operations may require
additional licenses in the future.
Cable Services. Applications for transfer of control of 15 certificates of
public convenience and necessity held by the acquired cable companies to the
Company were approved in an APUC order dated September 23, 1996, with transfers
to be effective on October 31, 1996. Such transfer of control allowed the
Company to take control and operate the cable systems of the acquired cable
companies located in Alaska.
The approval of the transfer of the 15 certificates of public convenience
and necessity to the Company by the FCC is not required under federal law, with
one area of limited exception. The
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<PAGE>
Cable Companies operate in part through the use of several radio-band
frequencies licensed through the FCC. These licenses were transferred to the
Company prior to October 31, 1996.
The Company obtained consent of the military commanders at the military
bases serviced by the acquired cable systems to the assignment of the respective
franchises for those bases.
Regulation, Franchise Authorizations and Tariffs
The following summary of regulatory developments and legislation does not
purport to describe all present and proposed federal, state, and local
regulation and legislation affecting the telecommunications and cable television
industries. Other existing federal and state regulations are currently the
subject of judicial proceedings, legislative hearings and administrative
proposals which could change, in varying degrees, the manner in which these
industries operate. Neither the outcome of these proceedings nor their impact
upon the telecommunications and cable television industries or the Company can
be predicted at this time. This section also sets forth a brief description of
regulatory, environmental, and tariff issues pertaining to the operations of the
Company.
The Company is subject to regulation by the FCC and by the APUC as a
non-dominant provider of long distance services. Among other regulatory
requirements, the Company is required to file tariffs with the FCC for
interstate and international service, and with the APUC for intrastate service
but such tariffs routinely become effective without intervention by the FCC,
APUC or other third parties since the Company is a non-dominant carrier. The
Company received approval from the APUC in February 1997 to permit the Company
to provide local exchange services throughout ATU's existing service area.
Military franchise requirements also affect the Company in its provision of
telecommunications and cable television services to military bases.
1996 Telecom Act. A key industry development was passage of the 1996
Telecom Act that was signed into law February 8, 1996. The Act is intended by
Congress to open up the marketplace to competition and is expected to have a
dramatic impact on the telecommunications industry. The legislation breaks down
the old barriers that prevented three groups of companies, the LECs, including
the RBOCs, the long distance carriers, and the cable TV operators, from
competing head-to-head with each other. The Act requires LECs to let new
competitors into their business. It also requires the LECs to open up their
networks to ensure that new market entrants have a fair chance of competing. The
bulk of the legislation is devoted to establishing the terms under which the
LECs, and more specifically the RBOCs, must open up their networks.
Enactment of the bill affects local exchange service markets almost
immediately by requiring states to authorize local exchange service resale.
Resellers will be able to market new bundled service packages to attract
customers. Over the long term, the requirement that local exchange carriers
unbundle access to their networks may lead to increased price competition. Local
exchange service competition may not take hold immediately because
interconnection arrangements are not in place in most areas.
The 1996 Telecom Act substantially changed the competitive and regulatory
environment for telecommunications providers by significantly amending The
Communications Act of 1934 including certain of the rate regulation provisions
previously imposed by the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"). The 1996 Telecom Act provides that rate
regulation of the cable programming service tier will be phased out altogether
in 1999. Further, the regulatory environment will continue to change pending,
among other things, the outcome of legal challenges and FCC rulemaking and
enforcement activity in respect of the 1992 Cable Act and the completion of a
significant number of FCC rulemakings under the 1996 Telecom Act.
The FCC adopted detailed rules in 1996 to govern interconnection to
incumbent local networks by new market entrants. Some LECs and state public
utility commissions appealed these rules to the U.S. Court of Appeals, which
prevented most of the pricing rules from taking effect, pending a full review by
the court.
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<PAGE>
In 1997, the court struck down the FCC's pricing rules. It ruled that the
Telecom Act left jurisdiction over pricing matters to the states. The court also
struck down certain other FCC rules on jurisdictional or substantive grounds.
The U.S. Supreme Court has agreed to review the appeals court decision.
In 1997, the FCC issued important decisions on the structure and level of
access charges and universal service. These decisions will impact the industry
in several ways, including the following:
- An additional subsidy was created to support telecommunications
services for schools, libraries and rural health care providers.
All carriers providing telecommunications services will be
required to fund this program, which is capped at $2.7 billion
per year. However, LECs can pass their portion of these costs on
to long distance carriers.
- Per-minute interstate access rates charged by LECs will decline
over time to become cost-based, beginning in July 1997.
- Certain monthly flat-rate charges paid by some local telephone
customers will increase beginning in 1998.
- Certain per-minute access charges paid by long distance
companies were converted to flat monthly charges based on
pre-subscribed lines.
- A basis has been established for replacing implicit access
subsidies with an explicit interstate universal service fund
beginning in 1999.
A number of LECs, long distance companies and others have appealed some or
all of the FCC's orders. The effective date of the orders has not been delayed,
but the appeals are expected to take a year or more to conclude. The impact of
these FCC decisions on the Company is difficult to determine, but is not
expected to be material.
Some BOCs have also challenged the Telecom Act restrictions on their entry
into long distance markets as unconstitutional. A federal district court in
Wichita Falls, Texas, ruled the restrictions unlawful because they constituted a
legislative act that imposed punishment without a judicial proceeding. The
United States government and others filed appeals of this decision. The federal
district court delayed implementing its decision pending resolution of the
appeals. The Company is unable to predict the outcome of such rulemakings or
litigation or the substantive effect (financial or otherwise) of the 1996
Telecom Act and the rulemakings on the Company.
The Company is also subject to federal and state regulation as a cable
television operator pursuant to the Cable Communications Policy Act of 1984 (the
"1984 Cable Act") and 1992 Cable Act, both amended by the 1996 Telecom Act. The
1992 Cable Act significantly expanded the scope of cable television regulation
on an industry-wide basis by imposing rate regulation, carriage requirements for
local broadcast stations, customer service obligations and other requirements.
The 1992 Cable Act and the FCC's rules implementing that Act generally have
increased the administrative and operational expenses and in certain instances
required rate reductions for cable television systems and have resulted in
additional regulatory oversight by the FCC and state or local (depending on the
regulatory scheme) authorities.
Because the Company is authorized to offer local exchange services in
Anchorage, it will be regulated as a CLEC by the APUC. In addition, the Company
will be subject to other regulatory requirements, including certain requirements
imposed by the 1996 Telecom Act on all LECs, which requirements include
permitting resale of LEC services, number portability, dialing parity, and
reciprocal compensation.
As a PCS licensee, the Company is subject to regulation by the FCC, and
must comply with certain buildout and other conditions of the license, as well
as with the FCC's regulations governing the PCS service. On a more limited
basis, the Company may be subject to certain regulatory oversight by the APUC
(e.g., in the areas of consumer protection), although states are not permitted
to regulate the rates of PCS and other commercial mobile service providers. PCS
licensees may also be subject to regulatory requirements of local jurisdictions
pertaining to, among other things, the siting of tower facilities.
-22-
<PAGE>
Other
No material portion of the businesses of the Company is subject to
renegotiation of profits or termination of contracts at the election of the
federal government.
Item 2. PROPERTIES
General. The Company's property, plant and equipment totaled $224.4 million
at December 31, 1997, of which $131.3 relates to telecommunications services,
$74.5 relates to cable services, and $18.6 relates to local services. These
properties consist primarily of switching equipment, satellite earth stations,
fiber-optic networks, microwave radio and cable and wire facilities, cable
head-end equipment, coaxial distribution networks, transportation equipment,
computer equipment and general office equipment. Substantially all of the
Company's properties secure its credit agreement and senior loan. See note 6 to
the Notes to Consolidated Financial Statements included in Part II of this
Report for further discussion.
Telecommunication Services. The Company operates a state-of-the-art,
competitive telecommunications network employing the latest digital transmission
technology based upon fiber optic and digital microwave facilities within and
between Anchorage, Fairbanks and Juneau. The Company's network includes a
digital fiber optic cable linking Alaska to the contiguous 48 states and
providing access to other carriers' networks for communications around the
world. The Company uses satellite transmission to remote areas of Alaska and for
certain interstate traffic.
The Company's long distance services segment owns properties and facilities
including satellite earth stations, and distribution, transportation and office
equipment. Additionally, the Company acquired in December 1992, access to
capacity on an undersea fiber optic cable from Seward, Alaska to Pacific City,
Oregon. The undersea fiber optic cable capacity is owned subject to an
outstanding mortgage.
The Company entered into a purchase and lease-purchase option agreement in
August 1995 for the acquisition of satellite transponders on the Hughes Galaxy X
satellite to meet its long-term satellite capacity requirements. The balance
payable upon expected delivery of the transponders in the third quarter of 1998
is not expected to exceed $41 million. The Company's remaining commitment will
likely be funded from its senior credit agreement. The purchase and
lease-purchase option agreement provides for the interim lease of transponder
capacity on the Hughes Galaxy IX satellite from June 1996 through the delivery
of the purchased transponders.
The Company leases its long distance services industry segment's executive,
corporate and administrative facilities in Anchorage, Fairbanks and Juneau,
Alaska. The Company's operating, executive, corporate and administrative
properties are in good condition. The Company considers its properties suitable
and adequate for its present needs and are being fully utilized.
Cable Services. The Cable Systems serve 26 communities and areas in Alaska
including Anchorage, Fairbanks and Juneau, the state's three largest urban
areas. As of December 31, 1997 the Cable Systems consisted of approximately
1,820 miles of installed cable plant having between 300 to 450 MHz of channel
capacity (or enough capacity to carry from 70 to 130 channels). The Company
leases its cable services industry segment's operating facilities in
substantially all locations. Such properties are in good condition. The Company
considers its properties suitable and adequate for its present and anticipated
future needs.
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<PAGE>
Local Services. The Company operates a state-of-the-art, competitive
telecommunications network employing the latest digital transmission technology
based upon fiber optic facilities within Anchorage. The Company leases its local
services industry segment's operating facilities in Anchorage. Such properties
are in good condition. The Company considers its properties suitable and
adequate for its present and anticipated future needs.
Item 3. LEGAL PROCEEDINGS
Except as set forth in this item, neither the Company, its property nor
any of its subsidiaries or their property is a party to or subject to any
material pending legal proceedings. The Company and its subsidiaries are parties
to various claims and pending litigation as part of the normal course of
business. The Company is also involved in several administrative proceedings and
filings with the FCC and state regulatory authorities. In the opinion of
management, the nature and disposition of these matters are considered routine
and arising in the ordinary course of business which management believes, even
if resolved unfavorably to the Company, would not have a materially adverse
affect on the Company's business or financial statements.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Date of meeting - November 25, 1997
Nature of meeting - 1997 annual meeting
(b) Election of Directors:
Names of directors elected at the meeting:
Ronald A. Duncan Votes: 75,488,274 For; 333,094 Withheld
Jeffery C. Garvey Votes: 75,489,066 For; 332,302 Withheld
William P. Glasgow Votes: 75,149,466 For; 671,902 Withheld
Donald Lynch Votes: 75,149,965 For; 671,403 Withheld
Larry E. Romrell Votes: 72,208,309 For; 3,612,310 Withheld
Names of directors whose term of office continued after the meeting:
Carter F. Page
Robert M. Walp
Donne F. Fisher
John W. Gerdelman
James M. Schneider
(c) Other matters voted upon:
Adoption of an amendment to the Restated Articles of Incorporation
for the Company increasing the number of authorized shares of Class
A common stock from 50 million to 100 million shares.
Votes: 75,185,292 For; 584,104 Against; 51,972 Abstain
Increasing the number of shares of the Company's Class A common
stock allocated to the Company's Revised 1986 Stock Option Plan by
2.5 million shares of Class A common stock.
Votes: 68,118,255 For; 3,036,531 Against; 69,564 Abstain
(d) Not applicable.
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<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information for Common Stock
Shares of the Company'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 Company's Class B common stock are traded on the Over-the-Counter market.
The following table sets forth the high and low sales price for the
above-mentioned common stock for the periods indicated. The prices, rounded up
to the nearest eighth, represent prices between dealers, do not include retail
markups, markdowns, or commissions, and do not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
Class A Class B
--------------------------- -------------------------------
High Low High Low
<S> <C> <C> <C> <C>
1996:
First Quarter 6 7/8 4 1/2 6 7/8 4 1/2
Second Quarter 9 1/4 6 9 1/4 6
Third Quarter 8 3/8 5 3/4 8 3/8 5 3/4
Fourth Quarter 8 1/4 5 3/4 8 1/4 5 3/4
1997:
First Quarter 8 1/8 6 8 1/8 6
Second Quarter 8 5/8 6 1/4 8 5/8 6 1/4
Third Quarter 9 1/4 6 1/2 9 1/4 6 1/2
Fourth Quarter 8 1/8 6 3/8 8 1/8 6 3/8
</TABLE>
Holders
As of December 31, 1997 there were 1,768 holders of record of the
Company's Class A common stock and 665 holders of record of the Company's Class
B common stock (amounts do not include the number of shareholders whose shares
are held of record by brokers, but do include the brokerage house as one
shareholder).
Dividends
GCI and GCI, Inc. have never paid cash dividends on their common stock and
have no present intention of doing so. Payment of cash dividends in the future,
if any, will be determined by the Company's Board of Directors in light of the
Company's earnings, financial condition and other relevant considerations. The
Company's existing bank loan agreements contain provisions that prohibit payment
of dividends, other than stock dividends (see note 6 to the Consolidated
Financial Statements included in Part II of this Report).
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<PAGE>
Item 6. SELECTED FINANCIAL DATA
The following table presents selected historical information relating to
financial condition and results of operations over the past five years.
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------------------------------
1997 1996 1995 1994 1993
--------- ------- ------- ------- -------
(Amounts in thousands except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Revenues 1 $ 223,809 164,894 129,279 116,981 102,213
Net earnings (loss) before income taxes and
extraordinary item 2 $ (2,235) 12,690 12,601 11,681 6,715
Loss on early extinguishment of debt, net of income tax
benefit of $180 $ 521 0 0 0 0
Net earnings (loss) $ (2,183) 7,462 7,502 7,134 3,951
Basic net earnings (loss) per common share $ (0.05) 0.28 0.32 0.30 0.19
Diluted net earnings (loss) per common share $ (0.05) 0.27 0.31 0.30 0.18
Total assets 3 $ 545,302 447,335 84,765 74,249 71,610
Long-term debt, including current portion 3 $ 250,084 223,242 9,980 12,554 20,823
Obligations under capital leases, including current $ 1,188 746 1,047 1,297 1,522
portion
Total stockholders' equity 3, 4 $ 204,439 149,554 43,016 35,093 27,210
Dividends declared per Common share 5 $ 0.00 0.00 0.00 0.00 0.00
Dividends declared per Preferred share 6 $ 0.00 0.00 0.00 0.00 0.44
</TABLE>
1 The 1997 revenue increase is primarily attributed to the Company's
reporting 12 months of cable television service revenues as compared
to two months reported in 1996.
2 The Company's net loss in 1997 is attributed to additional
depreciation, amortization and interest expense resulting from the
cable company acquisitions in October 1996 and startup losses from the
Company's entry into the local services segment.
3 Increases in the Company's total assets, long-term debt and
stockholders' equity in 1996 as compared to 1995 result in part from
the cable company acquisitions and MCI stock issuance described in
notes (2) and (8) to the Notes to Consolidated Financial Statements
included in Part II of this Report.
4 The 1997 increase in stockholders' equity is primarily attributed to
the Company's equity offering in August 1997, described in note (8) to
the accompanying Notes to Consolidated Financial Statements included
in Part II of this Report.
5 The Company has never paid a cash dividend on its common stock and
does not anticipate paying any dividends in the foreseeable future.
The Company intends to retain its earnings, if any, for the
development of its business. Payment of cash dividends in the future,
if any, will be determined by the board of directors of the Company in
light of the Company's earnings, financial condition, credit
agreements and other relevant considerations. The Company's existing
bank loan agreements contain provisions that prohibit payment of
dividends, other than stock dividends, as further described in note
(6) to the Notes to Consolidated Financial Statements included in Part
II of this Report.
6 The Company declared and issued stock dividends of approximately
304,000 shares of Class B Common Stock in 1992, and paid dividends
totaling $153,000 in 1993 on its non-voting Series A 15% Convertible
Cumulative Preferred Stock. The Preferred Stock was acquired and
retired in 1993.
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<PAGE>
Item 7. 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 Consolidated Financial Statements and the notes thereto and the
other financial data appearing elsewhere. 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
Future operating results of the Company will depend upon many factors and
will be subject to various risks and uncertainties, including those set forth
in this and other sections of Form 10-K. The information contained in Form
10-K includes forward-looking statements regarding the Company's future
performance. Future results of the Company may differ materially from any
forward-looking statement due to such assumptions and risks. Future
performance cannot be ensured.
OVERVIEW
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 U.S. Sprint ("Sprint")). These services
accounted for approximately 93.3% of the Company's telecommunications services
revenues during 1997. The balance of telecommunications services revenues have
been attributable to corporate network management contracts, telecommunications
equipment sales and service 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 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, government and United States
military spending.
The Company's telecommunications cost of sales and services has consisted
principally of the direct costs of providing services, including local access
charges paid to 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 1997, local access
charges accounted for 46.3% of telecommunications cost of sales and services,
fees paid to other long distance carriers represented 37.9%, satellite
transponder lease and undersea fiber maintenance costs represented 9.2%,
telecommunications equipment accounted for 3.4%, and enterprise services and
outsourcing costs represented 2.1% of telecommunications cost of sales and
services.
The Company's telecommunications selling, general, and administrative
expenses have consisted of operating and engineering, service, sales and
communications, management information systems, general and administrative,
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 and certain equipment costs). A significant portion of
telecommunications selling, general, and administrative expenses, 28.7% during
1997, represents the cost of the Company's advertising, promotion and market
analysis programs.
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<PAGE>
Cable Services. Following the cable system acquisitions effective October
31, 1996, the Company now reports a significant level of revenues and EBITDA
from the provision of cable services. During 1997, cable revenues and EBITDA
represented 24.7% and 60.6%, 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 1997
programming services generated 86.8% of total cable services revenues, equipment
rental and installation fees accounted for 7.7% of such revenues, advertising
sales accounted for 3.9% of such revenues, and other services accounted for the
remaining 1.6% of total cable services revenues. The primary factors that
contribute to year-to-year changes in cable services revenues are 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 1997 programming and copyright expenses represented
approximately 40.1% of total cable cost of sales and selling, general and
administrative expenses. Marketing and advertising costs represented
approximately 6.0% of such total expenses.
Local Services. The Company began offering local exchange services in
Anchorage during late September 1997. Local exchange services revenues totaled
$610,000 representing less than 1.0% of total revenues in 1997. The Company
expects local services revenues to represent less than 6.0% of total revenues in
1998. During 1997 operating and engineering expenses represented approximately
12.0% of total local services cost of sales and selling, general and
administrative expenses. Marketing and advertising costs represented
approximately 6.0% of such total expenses, customer service, and general and
administrative costs represented approximately 75.9% of such total expenses. The
Company expects that it will generate operating losses and negative EBITDA from
local exchange services during 1998.
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.
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. As a result, the
Company anticipates recording a net loss in 1998.
-28-
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth selected Statement of Operations data as a
percentage of total revenues for the periods indicated:
<TABLE>
<CAPTION>
Year Ended December 31, Percentage Change
----------------------- -----------------
1996 1997
vs. vs.
1997 1996 1995 1995 1996
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
Telecommunications services 100.0% 94.3% 75.1% 20.2% 8.1%
Cable services -- 5.7% 24.6% -- 482.2%
Local services -- -- 0.3% -- --
------ ------ ------ ------- -------
Total revenues 100.0% 100.0% 100.0% 27.5% 35.7%
Cost of sales and services 55.8% 56.2% 49.6% 28.5% 19.9%
Selling, general and
administrative
expenses 29.2% 28.1% 32.9% 23.1% 58.5%
Depreciation and
amortization 4.6% 5.7% 10.6% 57.0% 152.6%
------ ------ ------ ------- -------
Operating income 10.4% 10.0% 6.9% 21.5% (6.3)%
------ ------ ------ ------- -------
Net earnings (loss) before income
taxes and extraordinary item 9.7% 7.7% (1.0)% 0.7% (117.6)%
Extraordinary item -- -- (0.2)% -- --
------ ------ ------ ------- -------
Net earnings (loss) 5.8% 4.5% (1.0)% (0.5)% (129.3)%
------ ------ ------ ------- -------
------ ------ ------ ------- -------
Other Operating Data:
Cable operating income (1) -- 23.2% 18.9% -- 374.6%
Cable EBITDA (1) -- 46.6% 43.0% -- 437.7%
Local operating loss (2) -- -- (708.5)% -- 396.8%
Local EBITDA (2) -- -- (622.5)% -- 336.4%
Consolidated EBITDA 15.1% 15.7% 17.5% 63.9% 51.6%
</TABLE>
- --------------------
(1) Computed as a percentage of total cable services revenues.
(2) Computed as a percentage of total local services revenues.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996.
Revenues
Total revenues increased 35.7% from $164.9 million in 1996 to $223.8
million in 1997. The Company reported two months' of cable services revenues in
1996 following its acquisition of the Cable Systems effective October 31, 1996.
Cable revenues increased $45.7 million to $55.2 million resulting from 12
months' of activity being recorded in 1997. Long distance transmission revenues
from commercial, residential, governmental, and other common carrier customers
increased 9.8% from $142.6 million in 1996 to $156.6 million in 1997. This
increase reflected a 9.0% increase in interstate minutes of use to 620.8 million
minutes and a 9.8% increase in intrastate minutes of use to 133.1 million
minutes. Long distance revenue growth in 1997 was largely due to a 22.3%
increase in revenues from other common carriers (principally MCI and Sprint),
from $48.0 million in 1996 to $58.7 million in 1997 and a 12.7% increase in
private line and private network transmission services revenues, from $14.1
million in 1996 to $15.9 million in 1997.
-29-
<PAGE>
The above increases in revenues were offset in part by a 1.1% reduction in
the Company's average rate per minute on long distance traffic from $0.179 per
minute in 1996 to $0.177 per minute in 1997. The decrease in rates resulted from
the Company's promotion of and customers' enrollment in new calling plans
offering discounted rates and length of service rebates, such new plans being
prompted in part by the Company's primary long distance competitor, AT&T
Alascom, reducing its rates and entry of local exchange carriers into long
distance markets served by the Company. Systems sales and services revenues
decreased 6.4% from $10.9 million in 1996 to $10.2 million in 1997, primarily
due to a reduced number of large equipment sales transactions in 1997 as
compared to 1996. Other long distance revenues decreased $0.7 million to $1.1
million due primarily to reduced revenues from short term Vsat leases.
Cost of Sales and Services
Cost of sales and services totaled $92.7 million in 1996 and $111.1
million in 1997. As a percentage of total revenues, cost of sales and services
decreased from 56.2% in 1996 to 49.6% in 1997. The decrease in cost of sales and
services as a percentage of revenues is primarily attributed to changes in the
Company's product mix. The Company reported 12 months of cable operations in
1997 as compared to two months in 1996. Cable cost of sales and services as a
percentage of sales are less than long distance and local services cost of sales
and services as a percentage of sales. The increase in cable revenues as a
percentage of total revenues (5.8% in 1996 to 24.7% in 1997) resulted in an
overall decrease in the Company's cost of sales and services as a percentage of
sales.
Additionally, cost of sales and services as a percentage of revenues were
reduced in part by reductions in the rate per minute billed to the Company for
the local access and interstate termination services it obtains from third
parties. Decreases in 1997 cost of sales and services as compared to 1996 were
offset in part by refunds in the first two quarters of 1996 aggregating
approximately $960,000 from a local exchange carrier and the National Exchange
Carriers Association in respect of earnings by them that exceeded regulatory
requirements.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 58.6% from $46.4
million in 1996 to $73.6 million in 1997, and, as a percentage of revenues,
increased from 28.1% in 1996 to 32.9% in 1997. This increase resulted from:
1. The Company's reporting 12 months' of cable television selling,
general and administrative expenses in 1997 ($18.8 million) as
compared to two months' in 1996 ($3.0 million).
2. Operating, engineering, sales, customer service and
administrative costs totaling $4.1 million as compared to
$870,000 in 1996 associated with the Company's local services
segment which initiated service in September 1997.
3. Increased telecommunication general and administrative expenses
of $5.1 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 cable television services, rural
message and data telephone services, PCS services, and Internet
services. Increased customer service expenses were associated
with support of increased sales volumes and expenditures
necessary to integrate customer service operations across product
lines.
4. Bad debt expense totaling $3.0 million for 1997 compared to $1.7
million in 1996 (directly associated with increased revenues).
5. Increased telecommunication segment sales, advertising and
telemarketing costs totaling $13.0 million in 1996 compared to
$14.8 million in 1997. Increased selling costs were associated
with the introduction of various marketing plans and other
proprietary rate plans and cross promotion of products and
services.
-30-
<PAGE>
Depreciation and Amortization
Depreciation and amortization expense increased 153.2% from $9.4 million
in 1996 to $23.8 million in 1997. Of this increase, $13.3 million resulted from
the Company's acquisition of the cable systems effective October 31, 1996, with
the balance of the increase attributable to the Company's $38.6 million
investment in facilities during 1996 for which a full year of depreciation was
recorded during the year ending December 31, 1997 and the 1997 investment of
$73.7 million in facilities for which a partial year of depreciation was
recorded during 1997.
Interest Expense, Net
Interest expense, net of interest income, increased 375.7% from $3.7
million in 1996 to $17.6 million in 1997. This increase resulted primarily from
increases in the Company's average outstanding indebtedness resulting primarily
from its acquisition of the Cable Systems, construction of new facilities in
rural Alaska, expansion and upgrades of cable television facilities, and
investment in local services equipment and facilities. Such increases were
offset in part by increases in the amount of interest capitalized during 1997.
Loss on Extinguishment of Debt
The Company recorded a net loss on extinguishment of debt of $521,000 in
1997 resulting from refinancing its previously outstanding Senior Credit
Facility effective August 1, 1997. The loss resulted from the write-off of
unamortized deferred debt issuance costs. The loss is reported in the
accompanying Consolidated Financial Statements net of an income tax benefit of
$180,000.
Income Tax Expense
Income tax expense decreased from $5.2 million in 1996 to a benefit of
$0.6 million in 1997 due to the Company incurring a net loss before income taxes
and extraordinary item in 1997 as compared to net earnings in 1996. The
Company's effective income tax rate decreased from 41.2% in 1996 to 25.6% in
1997 due to the net loss and the proportional amount of items that are
nondeductible for income tax purposes.
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 December 31, 1997 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 25% 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.
A deferred tax asset was established related to these carryforwards. 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.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995.
Revenues
Total revenues increased 27.5% from $129.3 million in 1995 to $164.9
million in 1996. Long distance transmission revenues from commercial,
residential, governmental, and other common carrier customers increased 18.8%
from $120.0 million in 1995 to $142.6 million in 1996. This increase reflected a
22.6% increase in interstate minutes of use to 569.6 million minutes and a 29.8%
-31-
<PAGE>
increase in intrastate minutes of use to 121.2 million minutes, principally due
to a new marketing program which the Company launched during the third quarter
of 1995. This program consisted of the introduction of a new flat-rate calling
plan ("Great Rate") coupled with telemarketing, direct sales, and the promotion
of a $1 million sweepstakes. Revenue growth in 1996 was also due to a 23.7%
increase in revenues from other common carriers (principally MCI and Sprint),
from $38.8 million in 1995 to $48.0 million in 1996 and a 23.7% increase in
private line and private network transmission services revenues, from $11.4
million in 1995 to $14.1 million in 1996. Systems sales and services revenues
increased 47.3% from $7.4 million in 1995 to $10.9 million in 1996, primarily
due to the commencement in the second quarter of 1996 of services provided under
a new outsourcing contract with National Bank of Alaska. The Company also
reported two months' of cable services revenues in 1996 following its
acquisition of the Cable Systems effective October 31, 1996.
The above increases in revenues were offset in part by a 6.3% reduction in
the Company's average rate per minute on long distance traffic from $0.191 per
minute in 1995 to $0.179 per minute in 1996. The decrease in rates resulted from
the Company's promotion of and customers' enrollment in new calling plans
offering discounted rates and length of service rebates, such new plans being
prompted in part by the Company's primary long distance competitor, AT&T
Alascom, reducing its rates.
Cost of Sales and Services
Cost of sales and services was $72.1 million in 1995 and $92.7 million in
1996. As a percentage of total revenues, cost of sales and services increased
from 55.8% in 1995 to 56.2% in 1996. The increase in cost of sales and services
as a percentage of revenues during 1996 as compared to 1995 resulted primarily
from the reduced average rate per minute billed to customers in 1996 as compared
to 1995 without an offsetting reduction in the rate per minute billed to the
Company for the local access and interstate termination services it obtains from
third parties. These increases were offset in part by refunds in the first two
quarters of 1996 aggregating approximately $960,000 from a local exchange
carrier and the National Exchange Carriers Association in respect of earnings by
them that exceeded regulatory requirements.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 23.1% from $37.7
million in 1995 to $46.4 million in 1996, and, as a percentage of revenues,
decreased from 29.2% in 1995 to 28.1% in 1996. Selling, general and
[6~administrative expenses increased as a result of increased sales and customer
service volumes, bad debt expense totaling $1.7 million for 1996 compared to
$1.5 million in 1995 (directly associated with increased revenues), and
increased sales, advertising and telemarketing costs totaling $9.9 million in
1995 compared to $13.3 million in 1996 due to the introduction of various
marketing plans and other proprietary rate plans. Additionally, selling, general
and administrative expenses increased in 1996 due to increased personnel and
other costs totaling $2.7 million in sales, engineering, operations, accounting,
human resources, legal and regulatory, and management information services. Such
costs were associated with the development and introduction, or planned
introduction, of new products and services including local services, cable
television services, rural message and data telephone services, PCS services,
and Internet services.
Depreciation and Amortization
Depreciation and amortization expense increased 56.7% from $6.0 million in
1995 to $9.4 million in 1996 resulting primarily from the Company's acquisition
of the cable systems effective October 31, 1996 and the Company's $8.9 million
investment in facilities during 1995 for which a full year of depreciation was
recorded during the year ending December 31, 1996 and the 1996 investment of
$38.6 million in facilities for which a partial year of depreciation was
recorded during 1996.
-32-
<PAGE>
Interest Expense, Net
Interest expense, net of interest income, increased 311.1% from $0.9
million in 1995 to $3.7 million in 1996. This increase resulted primarily from
increases in the Company's average outstanding indebtedness resulting primarily
from its acquisition of the Cable Systems and capital expenditures. Such
increases were offset in part by increases in the amount of interest capitalized
during 1996.
Income Tax Expense
Income tax expense increased 2.0% from $5.1 million in 1995 to $5.2
million in 1996 due to an increase in net earnings before income taxes and a
higher effective income tax rate from 40.5% in 1995 to 41.2% in 1996.
SEASONALITY; FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
The following chart provides selected unaudited statement of operations
data from the Company's quarterly results of operations during 1996 and 1997:
<TABLE>
<CAPTION>
(Dollars in thousands, except per share amounts)
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
----
Revenues
Telecommunications services $ 37,969 39,199 38,664 39,587 155,419
Cable services -- -- -- 9,475 9,475
--------------------------------------------------------------------
Total revenues 37,969 39,199 38,664 49,062 164,894
Operating income 3,947 3,970 4,017 4,475 16,409
Net earnings $ 2,137 2,150 2,140 1,035 7,462
--------------------------------------------------------------------
--------------------------------------------------------------------
Basic net earnings per share $ 0.09 0.09 0.08 0.03 0.28
--------------------------------------------------------------------
--------------------------------------------------------------------
Diluted net earnings per share $ 0.08 0.08 0.08 0.03 0.27
--------------------------------------------------------------------
--------------------------------------------------------------------
Other financial data:
Cable EBITDA $ -- -- -- 4,416 4,416
--------------------------------------------------------------------
--------------------------------------------------------------------
Consolidated EBITDA $ 5,834 5,888 5,829 8,267 25,818
--------------------------------------------------------------------
--------------------------------------------------------------------
1997
----
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 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
</TABLE>
-33-
<PAGE>
<TABLE>
<CAPTION>
(Dollars in thousands, except per share amounts)
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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) (2,443) (3,797)
--------------------------------------------------------------------
--------------------------------------------------------------------
Consolidated EBITDA $ 9,412 8,394 9,553 11,790 39,149
--------------------------------------------------------------------
--------------------------------------------------------------------
</TABLE>
Total revenues for the quarter ended December 31, 1997 were $56.8 million,
representing a 2.1% decrease from total revenues in the third quarter of 1997 of
$58.0 million. This decrease in revenues resulted in part from (1) a 4.7%
decrease in telecommunications services revenues to $42.3 million in the fourth
quarter of 1997 from $44.4 million during the third quarter of 1997. This
decrease is attributable in part to a decrease in minutes of traffic carried
during the fourth quarter of 1997 of approximately 7.6 million minutes as
compared to the third quarter of 1997 (a 3.9% decrease), and (2) a decrease in
the average rate per minute billed during the fourth quarter of 1997 of
approximately $0.005 as compared to the third quarter of 1997 (a 2.7% decrease).
Long distance telecommunications revenues are generally lower during the winter
months as compared to the summer months. In addition, entry of two local
exchange carriers into the Anchorage area long distance market contributed to
the reductions in revenue and minutes of use. Partially offsetting this decrease
was an increase in cable services revenues to $14.2 million in the fourth
quarter of 1997 from $13.3 million in the third quarter of 1997. As further
described below, cable revenues are generally higher during the winter months as
compared to the summer months.
Cost of sales and services for the quarter ended December 31, 1997 were
$25.3 million, representing a 12.5% decrease from total cost of sales and
services in the third quarter of 1997 of $28.9 million. Reduced cost of sales
resulted from reduced revenues during the fourth quarter as previously described
and cost reductions as a percentage of revenues in the fourth quarter as
compared to the third quarter of 1997.
Selling, general and administrative expenses increased $198,000 during the
fourth quarter of 1997 as compared to the third quarter of 1997 principally as a
result of personnel, sales, engineering, operations, customer service,
management information systems, accounting, human resources, legal and
regulatory expenses associated with the development and introduction, or planned
introduction, of new products and services including local services, PCS
services and Internet services.
The Company reported a net income of $102,000 for the fourth quarter of
1997 as compared to a net loss of $928,000 during the third quarter of 1997. The
reduced net loss was primarily attributable to (1) fourth quarter cost of sales
and services reductions that exceeded the reduction in revenues as compared to
the third quarter, and (2) the write-off of $701,000 in deferred debt issuance
costs during the third quarter of 1997.
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
-34-
<PAGE>
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. 130,
"Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements. Comprehensive income includes all
changes in equity during a period except those due to owner investments and
distributions. It includes items such as foreign currency translation
adjustments, and unrealized gains and losses on available-for-sale securities
This standard does not change the display or components of present-day net
income. Statement 130 is applicable to all entities that provide a full set of
financial statements consisting of a statement of financial position, results of
operations and cash flows. SFAS No. 130 is effective for interim and annual
periods beginning after December 15, 1997. Management of the Company expects
that adoption of SFAS No. 130 in the first quarter of 1998 will not have a
material impact on the Company's financial statement disclosures.
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.
LIQUIDITY AND CAPITAL RESOURCES
The Company's 1997 cash flows from operating activities totaled $30.8
million, net of changes in the components of working capital. Additional sources
of cash during 1997 included long-term borrowings of $268.3 million and class A
common stock offering proceeds totaling $50.8 million as further described
below. The Company's expenditures for property and equipment, including
construction in progress, totaled $38.6 million and $64.6 million in 1996 and
1997, respectively. Uses of cash during 1997 included repayment of $231.0
million of long-term borrowings and capital lease obligations, payment of
deferred debt issuance costs, underwriting fees and commissions totaling $13.3
million, investment of $39.4 million in restricted cash, payment of undersea
fiberoptic cable construction deposits totaling $9.1 million, and an increase in
notes receivable of $698,000.
Net receivables increased $5.3 million from December 31, 1996 to December
31, 1997 resulting from increased revenues in 1997 as compared to 1996 and an
increase in refundable income taxes in 1997 of $3.7 million.
-35-
<PAGE>
The Company reported a working capital deficit of $22.8 million as of
December 31, 1996. The Company's then existing credit facility matured within
the following twelve-month period resulting in the outstanding balance as of
December 31, 1996 being included in current maturities of long-term debt. Except
for the classification of the Company's senior indebtedness as current, working
capital at December 31, 1996 totaled $4.6 million. Working capital at December
31, 1997 totaled $5.0 million, a $0.4 million increase from working capital
recomputed at December 31, 1996.
General Communication, Inc. issued 7.0 million shares of its class A
common stock on August 1, 1997 for $7.25 per share, before deducting
underwriting discounts and commissions. Net proceeds to General Communication,
Inc. totaled $48.0 million. Concurrently with the stock offering, GCI, Inc., a
newly created wholly owned subsidiary of General Communication, Inc., issued
$180.0 million of 9.75% senior notes due 2007 to the public. Net proceeds to
GCI, Inc. after deducting underwriting discounts and commissions totaled $174.6
million.
Concurrently with the public offerings described above, GCI Holdings, Inc.
("Holdings", a newly created wholly-owned subsidiary of GCI, Inc.) entered into
new $200,000,000 and $50,000,000 credit facilities effective August 1, 1997. The
new facilities mature June 30, 2005 and bear interest at either Libor plus 0.75%
to 2.5%, depending on the leverage ratio of Holdings and certain of its
subsidiaries, or at the greater of the prime rate or the federal funds effective
rate (as defined) plus 0.05%, in each case plus an additional 0.0% to 1.375%,
depending on the leverage ratio of Holdings and certain of its subsidiaries.
$64.7 million was drawn on the credit facilities as of December 31, 1997.
The new credit facilities and the public notes impose restrictions on the
operations and activities of the Company, including requirements that the
Company comply with certain financial covenants and financial ratios. Under the
credit facility, Holdings may not permit the ratio of senior debt to annualized
operating cash flow of Holdings and certain of its subsidiaries to exceed 3.5 to
1.0, total debt to annualized operating cash flow to exceed 7.0 to 1.0, and
annualized operating cash flow to interest expense to exceed 1.5 to 1.0. Each of
the foregoing ratios decreases in specified increments during the life of the
credit facility. The credit facility will also require Holdings to maintain a
ratio of annualized operating cash flow to debt service of Holdings and certain
of its subsidiaries of at least 1.25 to 1.0, and annualized operating cash flow
to fixed charges of at least 1.0 to 1.0 (which adjusts to 1.05 to 1.0 in April,
2003 and thereafter). The credit facility will also limit capital expenditures
of Holdings and certain of its subsidiaries to no more than $55.0 million
(post-closing), $90.0 million, and $65.0 million in 1997, 1998 and 1999,
respectively. The public notes impose a requirement that the leverage ratio of
GCI, Inc. and certain of its subsidiaries will not exceed 7.5 to 1.0 prior to
December 31, 1999 and 6.0 to 1.0 thereafter, subject to the ability of GCI, Inc.
and certain of its subsidiaries to incur specified permitted indebtedness
without regard to such ratios.
Net proceeds from the public offerings and new credit facility were used
to retire amounts owing under the Company's then existing credit agreements,
fund $50 million in capital for use in constructing an undersea fiberoptic
cable, and for working capital requirements.
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 13 and 14
to the accompanying Notes to 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 lender's prime rate plus 1.75%.
The interest rate will decline to Libor plus 2.5%-2.75%, or the lender's prime
rate plus 1.25%-1.5% after the project completion date and when the loan balance
is $40,000,000-60,000,000 or less. $1,018,750 was borrowed under the facility at
closing. 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, interest and principal installments based
on the extended maturity.
-36-
<PAGE>
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. 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.
The Fiber Facility is collateralized by all of Alaska United's assets, as
well as a pledge of the partnership interests' owning Alaska United.
The Company's expenditures for property and equipment, including
construction in progress, totaled $65.5 million and $38.6 million during 1997
and 1996, 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 which have been financed by the Alaska United Fiber
System Partnership ("Alaska United"). 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 upgrade
its cable television plant and to purchase equipment for new cable television
services. Sources of funds for these planned capital expenditures include net
proceeds of the public offerings described above, internally generated cash
flows and borrowings under the Company's new credit facilities described above
and borrowings on GCI Transport Co., Inc.'s new $75 million project financing
described above. All such funds will be necessary to complete the Company's
planned capital expenditures.
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. In November 1996, the Company paid
$1 million to conduct the sub-sea mapping. On August 1, 1997 the Company issued
a down payment to TSS to begin construction. Manufacturing of the cable and its
electronics has been underway since that time. The cable is expected to be laid
from August to October 1998. Testing will occur after that, and services are
expected to commence in December 1998.
Financing for Alaska United includes $75 million through Credit Lyonnais
and other lenders and $50 million from funds raised through the issuance of
senior notes 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
Effective December 2, 1997, the Company purchased all of the outstanding
shares of Astrolabe Group, Inc. Astrolabe was founded in 1995 as a technology
management consulting firm helping Alaska based clients effectively plan,
implement and operationally manage their network and information system
investments. Astrolabe helps clients throughout Alaska manage their rural
telecommunication networks, distributed information systems and distance
delivery of health care educational services. Astrolabe has been an integral
part of the Company's School Access project, providing the Internet software
infrastructure central to the value of the Company's distance education product
offerings. Following the acquisition, Astrolabe was merged into GCI
Communication Corp. and operates as a distinct division named GCI Network
Solutions. The $1,324,000 purchase was accounted for using the purchase method.
The purchase price consisted of a payment of $600,000 and the issuance of
options to purchase 100,000 shares of GCI's Class A common stock for $.01 per
share.
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
-37-
<PAGE>
amount payable upon expected delivery of the transponders during the third
quarter of 1998 is not expected to exceed $41 million.
ALASKA ECONOMY
The Company offers telecommunication and video services to customers
primarily throughout Alaska. As a result of this geographic concentration, the
Company's growth and operations depend upon economic conditions in Alaska. The
economy of Alaska is dependent upon the natural resource industries, and in
particular oil production, as well as tourism, government, and United States
military spending. Any deterioration in these markets could have an adverse
impact on the Company. Oil revenues over the past several years have contributed
in excess of 75% of the revenues from all segments of the Alaska economy and are
expected to account for 77% in 1998.
The volume of oil transported by the TransAlaska Oil Pipeline System over
the past 20 years has been as high as 2.0 million barrels per day in 1988. Over
the past several years, it has begun to decline. The two largest producers of
oil in Alaska (the primary users of the TransAlaska Oil Pipeline System)
continue to explore, develop and produce new oil fields and to enhance recovery
from existing fields to offset the decline in production from the Prudhoe Bay
field. Both companies have invested large sums of money in developing and
implementing oil recovery techniques at the Prudhoe Bay field and other nearby
fields. New oil field development is expected to result in an increase in oil
production in 2000 and 2001. Oil production is projected to decline over the
long term at approximately 6 percent per year.
Effective March 1997, the State of Alaska passed new legislation relaxing
state oil royalties with respect to marginal oil fields that the oil companies
claim would not be economic to develop otherwise. No assurance can be given that
these two oil companies or other oil companies doing business in Alaska will be
successful in discovering new fields or further developing existing fields which
are economic to develop and produce oil with access to the pipeline or other
means of transport to market, even with the reduced level of royalties. Should
the oil companies not be successful in these discoveries or developments, the
long term trend of continued decline in oil production from the Prudhoe Bay
field area is inevitable with a corresponding adverse impact on the economy of
the state, in general, and on demand for telecommunications and cable television
services.
Market prices for North Slope oil have declined to below $11 per barrel in
March 1998, below the average price of approximately $18 per barrel used by the
State of Alaska to budget its oil related revenues. The State of Alaska
maintains surplus accounts that are intended to fund budgetary shortfalls and
would be expected to fund all or a portion of the revenue shortfall. The Company
is not able to predict the effect of declines in the price of North Slope oil on
Alaska's economy or on the Company.
SEASONALITY
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 tend to watch more television, and
spend more time at home, during these months. The Company's local services
revenues 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.
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
-38-
<PAGE>
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 $3 million in each
of 1998 and 1999, subject to further review as part of the detailed conversion
planning. The cost of modifications and conversions is being expensed as
incurred.
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.
REGULATORY DEVELOPMENTS
See Part I, Item 1, Recent Developments and Regulation, Franchise
Authorizations and Tariffs for regulatory developments affecting the Company.
INFLATION
The Company does not believe that inflation has a significant effect on
its operations.
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<PAGE>
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's exposure to market risk - through derivative
financial instruments and other financial instruments, such as
investments in marketable securities and long-term debt - is not
material.
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company are
filed under this Item, beginning on Page 41. The financial
statement schedules required under Regulation S-X are filed
pursuant to Item 14 of this Report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
Incorporated by reference from the Company's Proxy Statement for its 1998 Annual
Shareholders' Meeting.
-40-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
General Communication, Inc.:
We have audited the accompanying consolidated balance sheets of General
Communication, Inc. and Subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1997.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of General
Communication, Inc. and Subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ KPMG PEAT MARWICK LLP
----------------------------
KPMG PEAT MARWICK LLP
Anchorage, Alaska
March 4, 1998
-41-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS 1997 1996
- ----------------------------------------------- -------- --------
(Amounts in thousands)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,048 13,349
-------- --------
Receivables:
Trade 29,599 28,015
Income tax receivable (note 7) 4,752 1,026
Other 649 228
-------- --------
35,000 29,269
Less allowance for doubtful receivables 1,070 597
-------- --------
Net receivables 33,930 28,672
-------- --------
Prepaid and other current assets 2,520 2,236
Deferred income taxes, net (note 7) 1,675 835
Inventories 2,164 1,589
Notes receivable (note 4) 897 421
-------- --------
Total current assets 44,234 47,102
-------- --------
Restricted cash (note 13) 39,406 0
-------- --------
Property and equipment, at cost (notes 6, 9, 10 and 11)
Land and buildings 981 692
Telephony distribution systems 116,016 81,414
Cable television distribution systems 69,445 52,284
Transportation equipment 2,643 1,064
Support equipment 32,596 19,994
Property and equipment under capital leases 2,718 2,030
-------- --------
224,399 157,478
Less amortization and accumulated depreciation 58,406 41,497
-------- --------
Net property and equipment in service 165,993 115,981
Construction in progress 18,513 20,770
-------- --------
Net property and equipment 184,506 136,751
Intangible assets, net of amortization (notes 2 and 5) 246,534 250,920
Transponder deposit (note 13) 9,100 9,100
Undersea fiber optic cable deposit (note 13) 9,094 0
Deferred loan and Senior Notes costs, net of amortization 9,379 900
Notes receivable (note 4) 1,331 1,016
Other assets, at cost, net of amortization 1,718 1,546
-------- --------
Total assets $545,302 447,335
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
-42-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Continued)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
- ------------------------------------------------------------------- ------------- -------------
(Amounts in thousands)
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt (note 6) $ 1,634 31,969
Current maturities of obligations under capital leases
(note 11) 198 71
Accounts payable 25,107 23,677
Accrued payroll and payroll related obligations 4,630 3,830
Accrued liabilities 6,019 4,173
Accrued interest 7,649 2,708
Subscriber deposits and deferred revenues 3,898 3,449
Accrued income taxes (note 7) 111 0
--------- ---------
Total current liabilities 49,246 69,877
Long-term debt, excluding current maturities (note 6) 248,450 191,273
Obligations under capital leases, excluding
current maturities (note 11) 400 0
Obligations under capital leases due to related parties,
excluding current maturities (notes 10 and 11) 590 675
Deferred income taxes, net (note 7) 38,904 33,720
Other liabilities 3,273 2,236
--------- ---------
Total liabilities 340,863 297,781
--------- ---------
Stockholders' equity (notes 2, 3, 6, 7 and 8):
Common stock (no par):
Class A. Authorized 100,000,000 shares; issued and
outstanding 45,279,045 and 36,586,973 shares at
December 31, 1997 and 1996, respectively 170,322 113,421
Class B. Authorized 10,000,000 shares; issued and
outstanding 4,062,892 and 4,074,028 shares at
December 31, 1997 and 1996, respectively;
convertible on a share-per-share basis into Class A 3,432 3,432
common stock
Less cost of 202,768 and 199,081 Class A common
shares held in treasury at December 31, 1997 and
1996, respectively (1,039) (1,010)
Paid-in capital 4,425 4,229
Retained earnings 27,299 29,482
--------- ---------
Total stockholders' equity 204,439 149,554
--------- ---------
Commitments and contingencies (notes 11 and 13)
Total liabilities and stockholders' equity $ 545,302 447,335
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
-43-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
(Amounts in thousands except per share amounts)
<S> <C> <C> <C>
Revenues (notes 9 and 10):
Telecommunication services $ 168,644 155,419 129,279
Cable services 55,165 9,475 0
--------- --------- ---------
Total revenues 223,809 164,894 129,279
Cost of sales and services 111,077 92,664 72,091
Selling, general and administrative expenses 73,583 46,412 37,691
Depreciation and amortization 23,767 9,409 5,993
--------- --------- ---------
Operating income (note 9) 15,382 16,409 13,504
Interest expense, net (notes 3 and 6) 17,617 3,719 903
--------- --------- ---------
Net earnings (loss) before income taxes and
extraordinary item (2,235) 12,690 12,601
Income tax expense (benefit) (notes 3 and 7) (573) 5,228 5,099
--------- --------- ---------
Net earnings (loss) before extraordinary loss on
early extinguishment of debt (1,662) 7,462 7,502
Loss on early extinguishment of debt, net of income tax
benefit of $180 (note 6) 521 0 0
--------- --------- ---------
Net earnings (loss) $ (2,183) 7,462 7,502
--------- --------- ---------
--------- --------- ---------
Basic earnings (loss) per common share:
Net earnings (loss) before extraordinary loss $ (0.04) 0.28 0.32
Extraordinary loss (0.01) 0.00 0.00
--------- --------- ---------
Net earnings (loss) $ (0.05) 0.28 0.32
--------- --------- ---------
--------- --------- ---------
Diluted earnings (loss) per common share:
Net earnings (loss) before extraordinary loss $ (0.04) 0.27 0.31
Extraordinary loss (0.01) 0.00 0.00
--------- --------- ---------
Net earnings (loss) $ (0.05) 0.27 0.31
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
-44-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Class A
Shares of Class A Class B Shares
Common 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>
Balances at December 31, 1994 19,617 4,179 $ 13,830 3,432 (328) 3,641 14,518
Net earnings -- -- -- -- -- -- 7,502
Class B shares converted to Class A 3 (3) -- -- -- -- --
Tax effect of excess stock compensation
expense for tax purposes over amounts
recognized for financial reporting
purposes (note 7) -- -- -- -- -- 397 --
Shares purchased and held in Treasury -- -- -- -- (61) -- --
Shares issued under stock option plan 40 -- 82 -- -- -- --
Shares issued and issuable under officer
stock option agreements 20 -- -- -- -- 3 --
----------------------------------------------------------------------------
Balances at December 31, 1995 19,680 4,176 13,912 3,432 (389) 4,041 22,020
Net earnings -- -- -- -- -- -- 7,462
Class B shares converted to Class A 102 (102) -- -- -- -- --
Tax effect of excess stock
compensation expense for tax
purposes over amounts recognized for
financial reporting purposes (note 7) -- -- -- -- -- 187 --
Shares issued to MCI (notes 2 and 8) 2,000 -- 13,000 -- -- -- --
Shares issued pursuant to
acquisitions, net of costs totaling
$432 (note 2) 14,723 -- 86,278 -- -- -- --
Shares purchased and held in Treasury -- -- -- -- (621) -- --
Shares issued under stock option plan 82 -- 231 -- -- -- --
Shares issued and issuable under officer
stock option agreements -- -- -- -- -- 1 --
----------------------------------------------------------------------------
Balances at December 31, 1996 36,587 4,074 113,421 3,432 (1,010) 4,229 29,482
Net loss -- -- -- -- -- -- (2,183)
Class B shares converted to Class A 11 (11) -- -- -- -- --
Tax effect of excess stock compensation
expense for tax purposes over
amounts recognized for financial
reporting purposes (note 7) -- -- -- -- -- 65 --
Shares issued upon public offering, net
of issuance costs of $4,024 (note 8) 7,000 -- 46,726 -- -- -- --
Shares issued upon conversion of
convertible note net of fees of $16
(notes 2 and 8) 1,538 -- 9,983 -- -- -- --
Shares acquired pursuant to officer
deferred compensation agreement -- -- -- -- (29) -- --
Shares issued under stock option plan 57 -- 192 -- -- 63 --
Shares issued and issuable under officer
stock option agreements 86 -- -- -- -- 68 --
----------------------------------------------------------------------------
Balances at December 31, 1997 45,279 4,063 $170,322 3,432 (1,039) 4,425 27,299
----------------------------------------------------------------------------
----------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
-45-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
(Amounts in thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (2,183) 7,462 7,502
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 23,191 9,346 5,763
Amortization of deferred loan costs 576 63 230
Deferred income tax expense 4,410 2,252 1,017
Deferred compensation and compensatory stock options
477 507 433
Disposals of property and equipment 71 30 170
Loss on early extinguishment of debt 701 0 0
Bad debt expense, net of write-offs 473 (34) (114)
Other noncash income and expense items (125) (42) 354
Change in operating assets and liabilities (note 3) 3,202 2,724 (1,307)
--------- --------- ---------
Net cash provided by operating activities 30,793 22,308 14,048
--------- --------- ---------
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired (notes
2 and 3) (547) (72,818) 0
Purchases of property and equipment (64,644) (38,642) (8,938)
Restricted cash investments (39,406) 0 0
Purchases of other assets, including long-term
deposits (1,292) (10,959) (510)
Payment of undersea fiber optic cable deposits (9,094) 0 0
Proceeds from the sale of investment security 0 0 832
Notes receivable issued (698) (515) (251)
Payments received on notes receivable 32 288 184
--------- --------- ---------
Net cash used in investing activities (115,649) (122,646) (8,683)
--------- --------- ---------
Cash flows from financing activities:
Long-term borrowings- senior notes 180,000 0 0
Long-term borrowings- bank debt and leases 88,305 208,000 0
Repayments of long-term borrowings and capital lease
obligations (231,021) (5,039) (2,824)
Retirement of bank debt assumed 0 (105,200) 0
Proceeds from equity offering 50,750 0 0
Proceeds from common stock issuance 192 13,231 82
Purchase of treasury stock (29) (621) (61)
Payment of debt and stock issuance costs (13,642) (701) (194)
--------- --------- ---------
Net cash provided (used) by financing activities 74,555 109,670 (2,997)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents (10,301) 9,332 2,368
Cash and cash equivalents at beginning of year 13,349 4,017 1,649
--------- --------- ---------
Cash and cash equivalents at end of year $ 3,048 13,349 4,017
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
-46-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(l) Organization and summary of Significant Accounting Principles
(a) Organization
General Communication, Inc. ("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
Holding, 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. GCC also provides northbound services to certain
common carriers terminating traffic in Alaska and sells and services
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
through its ownership in Prime Cable of Alaska L.P. ("Prime"), and
through GCI Cable, Inc.'s 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. Prime is a limited
partnership organized under the laws of the State of Delaware whose
partnership interests are wholly owned by GCI Cable, Inc.
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 13. 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 above and in note 13. Alaska
United is a partnership wholly owned by the Company through GCI Fiber
Co., Inc. and Fiber Hold Co., Inc.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of GCI,
its wholly-owned subsidiary GCI, Inc, GCI, Inc.'s wholly-owned
subsidiary Holdings, Holdings' wholly-owned subsidiaries GCC,
Communication Services, GCI Cable, Communication Services'
wholly-owned subsidiary Leasing Company, GCI Transport Co., Inc, GCI
Transport Co., Inc.'s wholly-owned subsidiaries GCI Fiber Co., Inc.
and Fiber Hold Co., Inc. and GCI Fiber Co., Inc.'s and Fiber Hold
Co., Inc.'s wholly owned partnership Alaska United (collectively "the
Company"). All significant intercompany balances and transactions
have been eliminated in consolidation.
-47-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(c) Net Earnings (Loss) Per Common Share
In February 1997 the Financial Accounting Standards Board (FASB)
issued SFAS 128, "Earnings per Share" ("SFAS 128"). This new standard
simplifies the earnings per share ("EPS") calculation and makes the
U.S. standard for computing EPS more consistent with international
accounting standards. The Company adopted SFAS 128 in 1997. EPS for
prior years has been restated to comply with SFAS 128.
Under SFAS 128, primary EPS was replaced with a more simple
calculation called basic EPS. Basic EPS is calculated by dividing
income available to common shareholders by the weighted average
common shares outstanding. Previously, primary EPS was based on the
weighted average of both outstanding and issuable shares assuming all
dilutive options had been exercised. Under SFAS 128, fully diluted
EPS has not changed significantly, but has been renamed diluted EPS.
Diluted EPS includes the effect of all potentially dilutive
securities, such as options and convertible preferred stock.
Shares used to calculate EPS consist of the following (amounts in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Weighted average common shares outstanding 44,924 26,498 23,600
Common equivalent shares outstanding 0 802 389
------ ------ ------
44,924 27,300 23,989
------ ------ ------
------ ------ ------
</TABLE>
Common equivalent shares outstanding of 1,407,000 are anti-dilutive
at December 31, 1997 and are not included in the diluted net earnings
(loss) per share calculation.
(d) Cash and Cash Equivalents
Cash equivalents consist of short-term, highly liquid investments
that are readily convertible into cash.
(e) Inventories
Inventory of merchandise for resale and parts is stated at the lower
of cost or market. Cost is determined using the first-in, first-out
method for parts and the specific identification method for equipment
held for resale.
Cable television inventories are carried at the lower of cost
(weighted average unit cost) or market.
(f) Property and Equipment
Telecommunications Property and Equipment
Telecommunications property and equipment is stated at cost.
Construction costs of transmission facilities are capitalized.
Equipment financed under capital leases is recorded at the lower of
fair market value or the present value of future minimum lease
payments. Construction in progress represents distribution systems
and support equipment not placed in service on December 31, 1997;
management intends to place this equipment in service during 1998 and
1999.
-48-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company's investment in jointly owned earth station assets on
Adak Island, Alaska is stated at cost and is depreciated on a
straight-line basis over lives ranging from 10 to 12 years. Revenues
derived from customers whose service transits the joint facilities
are recognized based upon the level of service and supporting
facilities that are provided by each owner.
Depreciation and amortization is computed on a straight-line basis
based upon the shorter of the lease term or the estimated useful
lives of the assets ranging from 3 to 20 years for distribution
systems and 5 to 10 years for support equipment. Amortization of
equipment financed under capitalized leases is included in
depreciation expense.
Repairs and maintenance are charged to operations, and renewals and
additions are capitalized. Gains or losses are recognized at the time
of ordinary retirements, sales or other dispositions of property.
Cable Television Property and Equipment
Cable television property and equipment is stated at cost. Cable
television equipment depreciation is computed by the straight-line
method over the estimated useful lives of the assets. The composite
method and a 10-year life are used for cable television distribution
systems. Under the composite method, proceeds from the retirement of
cable television distribution system assets are credited to the
allowance for depreciation. Gains or losses on disposition of
property, plant and equipment (other than cable television
distribution systems) are credited or charged to income. Maintenance
and repairs are charged to expense as incurred. Expenditures for
major renewals and betterments are capitalized.
(g) Intangible Assets
Intangible assets are valued at unamortized cost. Management reviews
the valuation and amortization of intangible assets on a periodic
basis, taking into consideration any events or circumstances which
might indicate diminished value. The assessment of the recoverability
is based on whether the asset can be recovered through undiscounted
future cash flows.
Goodwill represents the excess of cost over fair value of net assets
acquired and is being amortized on a straight-line basis over periods
of 20 to 40 years. Goodwill and certificates of operating rights
arising from the 1996 acquisition of the Cable Companies are
amortized using the straight line method over forty years.
The cost of the Company's PCS license and related financing costs
have been capitalized as an intangible asset. Once the associated
assets are placed into service, the recorded cost of the license will
begin being amortized over a 40-year period using the straight-line
method.
(h) Deferred Loan and Senior Notes Costs
Debt and Senior Notes issuance costs are deferred and amortized using
the straight-line method, which approximates the interest method,
over the term of the related debt and notes.
(i) Other Assets
Other assets are recorded at cost and are amortized on a
straight-line basis over periods of 8-10 years.
-49-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(j) Revenue from Services and Products
Revenues generated from long distance telecommunication services are
recognized when the services are provided. Revenues from the sale of
equipment are recognized at the time the equipment is delivered or
installed. Service revenues are derived primarily from maintenance
contracts on equipment and are recognized on a prorated basis over
the term of the contract.
Cable television, local service and private line telecommunication
revenues are generally billed in advance and are recognized as the
associated service is provided.
Other revenues are recognized when the service is provided.
(k) Research and Development and Advertising Expense
The Company expenses advertising and research and development costs
as incurred. Advertising expenses were approximately $2,897,000,
$2,411,000 and $1,924,000 for 1997, 1996 and 1995, respectively.
(l) Interest Expense
Interest costs incurred during the construction period of significant
capital projects are capitalized. Interest capitalized by the Company
totaled $1,886,000, $1,034,000, and $112,000 during the years ended
December 31, 1997, 1996, and 1995.
(m) Income Taxes
Income taxes are accounted for using the asset and liability method.
Deferred tax assets and liabilities be recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
earnings in the years in which those temporary differences are
expected to be recovered or settled. Deferred tax assets are
recognized to the extent that the benefits are more likely to be
realized than not.
(n) Stock Option Plan
The Company accounts for its stock option plan in accordance with the
provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related
interpretations. As such, compensation expense would be recorded on
the date of grant only if the current market price of the underlying
stock exceeded the exercise price. On January 1, 1996, the Company
adopted SFAS 123, "Accounting for Stock-Based Compensation," ("SFAS
123") which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and
pro forma earnings per share disclosures for employee stock option
grants made in 1995 and future years as if the fair-value-based
method defined in SFAS 123 had been applied. The Company has elected
to continue to apply the provisions of APB Opinion No. 25 and provide
the pro forma disclosure provisions of SFAS 123.
-50-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(o) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(p) Concentrations of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk are primarily cash, temporary
investments, and accounts receivable. Excess cash is invested in
high quality short-term liquid money instruments issued by highly
rated financial institutions. At December 31, 1997, substantially
all of the Company's cash and restricted cash balances were invested
in short-term liquid money instruments. The Company's customers are
located primarily throughout Alaska. As a result of this geographic
concentration, the Company's growth and operations depend upon
economic conditions in Alaska. The economy of Alaska is dependent
upon the natural resource industries, and in particular oil
production, as well as tourism, government, and United States
military spending. Though limited to one geographical area, the
concentration of credit risk with respect to the Company's
receivables is minimized due to the large number of customers,
individually small balances, short payment terms and required
deposits.
(q) Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of
The Company adopted the provisions of SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," on January 1, 1996. This Statement requires that
long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs
to sell. Adoption of this Statement did not have a material impact on
the Company's financial position, results of operations, or
liquidity.
(r) 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. 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 $3
million in each of 1998 and 1999, subject to further review as part
of the detailed conversion planning. The cost of modifications and
conversions is being expensed as incurred.
-51-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(s) Reclassifications
Reclassifications have been made to the 1995 and 1996 financial
statements to make them comparable with the 1997 presentation.
(2) Acquisitions
Cable Television Systems
Effective October 31, 1996, following shareholder and regulatory
approvals, the Company completed the acquisition of seven Alaska
cable television companies ("Cable Systems"). Under the terms of the
transactions, accounted for using the purchase method, the final
purchase price was $280.1 million, which was the aggregate value for
all the Cable Systems and included certain transaction and financing
costs. The purchase price included issuance of 14.7 million shares of
GCI's class A common stock and cash, debt assumption and issuance of
subordinated notes. Financing for the transactions resulted from
borrowings under a new $205 million bank credit facility and from
additional capital provided from the sale of two million shares of
GCI's Class A common stock to MCI Telecommunications Corporation for
$6.50 per share.
Acquisition costs totaling $304.4 million were allocated to tangible
and identifiable intangible assets and liabilities based upon fair
market values. Approximately $206.5 million was allocated to the
certificate of operating rights and approximately $42.4 was allocated
to goodwill.
Various tax attributes of Prime gave rise to a deferred tax liability
(see note 7) of $24.4 million recorded by the Company as a result of
the acquisition.
During January 1997, holders of the GCI subordinated notes exercised
a conversion option which allowed them to exchange their notes for
GCI Class A common shares at a predetermined conversion price of
$6.50 per share. As a result, the note holders received a total of
1,538,457 shares of GCI Class A common stock.
The final closing required approval of the Alaska Public Utilities
Commission (APUC), which was granted on September 23, 1996. The APUC
approval included several conditions placed on the transfer, such as
continuing the existing conditions requiring provision of public
access channels and requiring the cable operations to file annual
income and operating statements.
Astrolabe Group, Inc.
Effective December 2, 1997, the Company purchased all of the
outstanding shares of Astrolabe Group, Inc. The $1,324,000 purchase
was accounted for using the purchase method. The purchase price
consisted of a payment of $600,000 and the issuance of options to
purchase 100,000 shares of GCI's Class A common stock for $.01 per
share.
-52-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
[6~
(3) Consolidated Statements of Cash Flows Supplemental Disclosures
Changes in operating assets and liabilities consist of (amounts in
thousands):
<TABLE>
<CAPTION>
Year ended December 31, 1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
(Increase) in trade receivables $(1,119) (4,604) (4,701)
(Increase) in income tax receivable (3,726) (1,026) 0
(Increase) in other receivables (421) (134) (32)
(Increase) in prepaid and other current
assets (274) (467) (222)
(Increase) decrease in inventories (575) 412 (317)
Increase in accounts payable 1,192 5,517 5,020
[6~ Increase in accrued liabilities 1,846 914 423
Increase (decrease) in accrued payroll and
payroll related obligations 800 1,723 (1,928)
Increase (decrease) in accrued income
taxes 111 (547) 330
Increase in accrued interest 4,941 2,188 31
Increase (decrease) in subscriber deposits
and deferred revenues 449 (4) 220
Increase (decrease) in components of other
liabilities (22) (1,248) (131)
------- ------- -------
$ 3,202 2,724 (1,307)
------- ------- -------
------- ------- -------
</TABLE>
Acquisitions of businesses, net of cash acquired consists of (amounts
in thousands):
<TABLE>
<CAPTION>
Year ended December 31, 1997 1996
-------- --------
<S> <C> <C>
Fair value of assets acquired, net of liabilities assumed $ 1,259 304,441
Bank debt and net working capital deficit assumed 0 (110,538)
Common stock issued to sellers 0 (86,710)
Convertible, subordinated debt issued to sellers 0 (10,000)
Net deferred income tax liability 0 (24,375)
Deferred credit (712) 0
-------- --------
-------- --------
Net cash used to acquire business $ 547 72,818
-------- --------
-------- --------
</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 the Company's Class A
common stock.
Net income tax refunds received totaled $1,546,000 during 1997 and
income taxes paid totaled $4,361,000 and $3,752,000 during 1996 and
1995, respectively.
Interest paid totaled approximately $17,732,000, $2,657,000 and
$1,227,000 during 1997, 1996 and 1995, respectively.
The Company recorded $65,000, $187,000 and $397,000 in 1997, 1996 and
1995, respectively, in paid-in capital in recognition of the income
tax effect of excess stock compensation expense for tax purposes over
amounts recognized for financial reporting purposes.
-53-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(4) Notes Receivable
Notes receivable consist of the following (amounts in thousands):
<TABLE>
<CAPTION>
December 31,
------------------
1997 1996
------- -------
<S> <C> <C>
Note receivable from officer bearing interest at the rate paid
by the Company on its senior indebtedness, secured by GCI
Class A common stock, due on the 90th day after
termination of employment or July 30,
1998, whichever is earlier $ 500 500
Note receivable from officer bearing interest at 10%, secured
by Company stock; payable in equal annual installments of
$36,513 through
August 26, 2004 224 224
Notes receivable from officers and others bearing interest at
7% to 10%, unsecured and secured by Company common stock,
shares of other common stock and equipment; due on demand
and through August 26, 2004. (1) 1,155 493
Interest receivable 349 220
------- -------
Total notes receivable 2,228 1,437
Less current portion, including current interest
receivable (897) (421)
------- -------
Long-term portion, including long-term interest
receivable $ 1,331 1,016
======= =======
</TABLE>
(1) The Company has no current plans to call the notes due on demand
during 1998.
(5) Intangible Assets
Intangible assets consist of the following (amounts in thousands):
<TABLE>
<CAPTION>
December 31,
-------------------
1997 1996
-------- --------
<S> <C> <C>
Certificates of operating rights $206,492 206,492
Goodwill 45,922 44,347
PCS license and related costs 2,051 1,913
Other intangibles 260 121
-------- --------
254,725 252,873
Less amortization 8,191 1,953
-------- --------
Intangible assets, net $246,534 250,920
-------- --------
-------- --------
</TABLE>
-54-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) Long-term Debt
Long-term debt consists of the following (amounts in thousands):
<TABLE>
<CAPTION>
December 31,
-------------------
1997 1996
-------- --------
<S> <C> <C>
Senior notes (a) $180,000 0
Senior GCI Holdings loan (b) 64,700 0
Senior GCI Cable loan (c) 0 175,900
Credit Agreement (d) 0 30,100
Convertible, subordinated notes (e) 0 10,000
Undersea Fiber and Equipment Loan
Agreement (f) 5,384 6,886
Financing Obligation (g) 0 356
-------- --------
250,084 223,242
Less current maturities 1,634 31,969
-------- --------
-------- --------
Long-term debt, excluding current
maturities $248,450 191,273
-------- --------
-------- --------
</TABLE>
(a) On August 1, 1997 GCI, Inc. issued $180,000,000 of 9.75%
senior notes due 2007 ("Senior Notes"). The Senior Notes
were issued at face value. Net proceeds to GCI, Inc. after
deducting underwriting discounts and commissions totaled
$174,600,000. Issuance costs will be amortized to interest
expense over the term of the Senior Notes.
The Senior Notes are not redeemable prior to August 1, 2002.
After August 1, 2002 the Senior Notes are redeemable at the
option of GCI, Inc. under certain conditions and at stated
redemption prices. The Senior Notes include limitations on
additional indebtedness and prohibit payment of dividends,
payments for the purchase, redemption, acquisition or
retirement of GCI, Inc.'s stock, payments for early
retirement of debt subordinate to the note, liens on
property, and asset sales. GCI, Inc. was in compliance with
all covenants during the period commencing August 1, 1997
(date of the notes) through December 31, 1997.
Net proceeds from the stock (see note 8) and Senior Note
offerings and initial draws on the new Senior Holdings Loan
(see note 6(b)) facilities were used to repay borrowings
outstanding under the Company's then existing credit
facilities and to provide initial funding for construction
of the Alaska United undersea fiber optic cable (see note
13). The Company expects to borrow funds under its new
credit facilities in the future to fund capital expenditures
and for other general corporate purposes.
(b) The Company, through Holdings, entered into new $200,000,000
and $50,000,000 credit facilities ("Senior Holdings Loan")
effective August 1, 1997 that mature on June 30, 2005 and
bear interest at either Libor plus 0.75% to 2.25%, depending
on the leverage ratio of Holdings and certain of its
subsidiaries, or at the greater of the prime rate or the
federal funds effective rate (as defined) plus 0.05%, in
each case plus an additional 0.0% to 1.125%, depending on
the leverage ratio of Holdings and certain of its
subsidiaries. Borrowings under the Senior Holdings Loan
facilities totaled $64,700,000 at December 31, 1997. The
Company is required to pay a
-55-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
commitment fee equal to 0.375% per annum on the unused
portion of the commitment. Commitment fee expense on the
Senior Holdings Loan totaled $240,000 in 1997.
While Holdings may elect at any time to reduce amounts due
and available under the Senior Loan facilities, a mandatory
prepayment is required each quarter, beginning September 30,
2000 as follows:
<TABLE>
<CAPTION>
Percentage of Reduction of
Date of Payment Outstanding Facilities
--------------------------------------------------------------
<S> <C>
September 30, 2000 3.750%
December 31, 2000 3.750%
March 31, 2001 3.750%
June 30, 2001 3.750%
September 30, 2001 3.750%
December 31, 2001 3.750%
March 31, 2002 5.000%
June 30, 2002 5.000%
September 30, 2002 5.000%
December 31, 2002 5.000%
March 31, 2003 5.000%
June 30, 2003 5.000%
September 30, 2003 5.000%
December 31, 2003 5.000%
March 31, 2004 5.625%
June 30, 2004 5.625%
September 30, 2004 5.625%
December 31, 2004 5.625%
September 30, 2005 7.500%
December 31, 2005 7.500% and all remaining
outstanding balances
</TABLE>
The Senior Holdings Loan facilities contain, among others,
covenants requiring maintenance of specific levels of
operating cash flow to indebtedness and to interest expense.
The Senior Holdings Loan facilities include limitations on
acquisitions and additional indebtedness, and prohibit any
direct or indirect distribution, dividend, redemption or
other payment to any person on account of any general or
limited partnership interest in, or shares of capital stock
or other securities of Holdings or any of its subsidiaries.
Holdings was in compliance with all Senior Holdings Loan
facilities covenants during the period commencing August 1,
1997 (date of the loans) through December 31, 1997.
The Senior Holdings Loan facilities are collateralized by
essentially all of Holdings' assets as well as a pledge of
Holdings' stock by GCI, Inc.
$3.4 million of the Senior Holdings Loan facilities have
been used to provide a letter of credit to secure payment of
certain access charges associated with the Company's
provision of telecommunications services within the State of
Alaska.
-56-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In connection with the funding of the Senior Holdings Loan
facilities, Holdings paid bank fees and other expenses of
approximately $2,916,000, which will be amortized to
interest expense over the life of the agreement.
(c) GCI Cable entered into a credit facility totaling $205
million ("Senior GCI Cable Loan") effective October 31,
1996, associated with the acquisition of the cable companies
as described in note 2. In August 1997, the Senior GCI Cable
Loan was repaid using proceeds from the Senior Notes (see
note 6(a)) and the Senior Holdings Loan (see note 6(b)).
In connection with the funding of the loan agreement, GCI
Cable Inc. paid bank fees and other expenses of
approximately $764,000 in 1996. The unamortized portion of
these bank fees and other expenses (net of an income tax
benefit of $180,000) was recognized as an extraordinary loss
on the early extinguishment of debt in 1997.
(d) The Company entered into a $62,500,000 interim telephony
credit facility with its senior lender during April 1996. In
August 1997, the Credit Agreement was repaid using proceeds
from the Senior Notes (see note 6(a)) and the Senior GCI
Holdings Loan (see note 6(b)).
(e) GCI issued convertible subordinated notes totaling
$10,000,000 in connection with the cable acquisitions
described in note 2. During January 1997, the holders of the
GCI subordinated notes exercised a conversion option which
allowed them to exchange their notes for GCI Class A common
shares at a predetermined conversion price of $6.50 per
share. As a result, the former note holders received
1,538,457 shares of GCI Class A common stock.
(f) On December 31, 1992, Leasing Company entered into a
$12,000,000 loan agreement, of which approximately
$9,000,000 of the proceeds were used to acquire capacity on
the undersea fiber optic cable linking Seward, Alaska and
Pacific City, Oregon. Concurrently, Leasing Company leased
the capacity under a ten year all events, take or pay,
contract with MCI, who subleased the capacity back to the
Company. The lease and sublease agreements provide for
equivalent terms of 10 years and identical monthly payments
of $200,000. The proceeds of the lease agreement with MCI
were pledged as primary security for the financing. The loan
agreement provides for monthly payments of $170,000
including principal and interest through the earlier of
January 1, 2003, or until repaid. The loan agreement
provides for interest at the prime rate plus one-quarter
percent. Additional collateral includes substantially all of
the assets of Leasing Company including the fiber capacity
and a security interest in all of its outstanding stock. MCI
has a second position security interest in the assets of
Leasing Company.
(g) As consideration for MCI's role in enabling Leasing Company
to finance and acquire the undersea fiber optic cable
capacity described at note 6(d) above, Leasing Company
agreed to pay MCI $2,040,000 in sixty monthly payments of
$34,000. For financial statement reporting purposes, the
obligation was recorded at its remaining present value,
using a discount rate of 10% per annum. The agreement was
secured by a second position security interest in the assets
of Leasing Company. The obligation was fully paid at
December 31, 1997.
-57-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of December 31, 1997 maturities of long-term debt were as follows
(amounts in thousands):
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1998 $ 1,634
1999 1,782
2000 1,945
2001 23
2002 0
2003 and thereafter 244,700
-------------
$ 250,084
-------------
-------------
</TABLE>
(7) Income Taxes
Total income tax expense (benefit) were allocated as follows:
<TABLE>
<CAPTION>
Years ended
December 31,
-----------------------------
1997 1996 1995
------- ------- -------
(Amounts in thousands)
<S> <C> <C> <C>
Earnings (loss) from continuing operations $ (573) 5,228 5,099
Extraordinary item (180) 0 0
Stockholders' equity, for stock option
compensation expense for tax purposes in
excess of amounts recognized for financial
reporting purposes (65) (187) (397)
------- ------- -------
$ (818) 5,041 4,702
------- ------- -------
------- ------- -------
</TABLE>
Income tax expense consists of the following:
<TABLE>
<CAPTION>
Years ended
December 31,
----------------------------
1997 1996 1995
------- ------- -------
(Amounts in thousands)
<S> <C> <C> <C>
Current tax expense:
Federal taxes $(4,267) 2,292 3,077
State taxes (830) 684 1,005
------- ------- -------
(5,097) 2,976 4,082
------- ------- -------
Deferred tax expense:
Federal taxes 3,734 1,734 780
State taxes 610 518 237
------- ------- -------
4,344 2,252 1,017
------- ------- -------
------- ------- -------
$ (753) 5,228 5,099
------- ------- -------
------- ------- -------
</TABLE>
-58-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Total income tax expense differed from the "expected" income tax
expense determined by applying the statutory federal income tax rate
of 34% as follows:
<TABLE>
<CAPTION>
Years ended
December 31,
-----------------------------
1997 1996 1995
------- ------- -------
[6~ (Amounts in thousands)
<S> <C> <C> <C>
"Expected" statutory tax expense $ (997) 4,314 4,284
State income taxes, net of federal benefit (181) 793 820
Income tax effect of goodwill amortization,
nondeductible expenditures and other items, net 107 55 41
Change in valuation allowance 0 (225) (200)
Other 318 291 154
------- ------- -------
$ (753) 5,228 5,099
------- ------- -------
------- ------- -------
</TABLE>
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities at December 31, 1997 and 1996 are presented below.
<TABLE>
<CAPTION>
December 31,
-----------------
1997 1996
------- -------
(Amounts in thousands)
<S> <C> <C>
Net current deferred tax assets:
Accounts receivable, principally due to allowance
for doubtful accounts $ 430 98
Compensated absences, accrued for financial
reporting purposes 566 380
Workers compensation and self insurance health
reserves, principally due to accrual for
financial reporting purposes 266 243
Other 413 114
------- -------
Total gross current deferred tax assets 1,675 835
Less valuation allowance 0 0
------- -------
Net current deferred tax assets $ 1,675 835
------- -------
------- -------
Net long-term deferred tax assets:
Net operating loss carryforwards $15,378 15,378
Alternative minimum tax credits 751 0
Deferred compensation expense for financial
reporting purposes in excess of amounts
recognized for tax purposes 966 617
Employee stock option compensation expense for
financial reporting purposes in excess of
amounts recognized for tax purposes 198 198
Sweepstakes award in excess of amounts recognized
for tax purposes 206 211
Other 75 197
------- -------
Total long-term deferred tax assets 17,574 16,601
------- -------
</TABLE>
-59-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
December 31,
-----------------
1997 1996
------- -------
(Amounts in thousands)
<S> <C> <C>
Net long-term deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation 51,643 50,163
Amortizable assets 3,898 0
Other 937 158
------- -------
Total gross long-term deferred tax liabilities 56,478 50,321
------- -------
Net combined long-term deferred tax liabilities $38,904 33,720
------- -------
------- -------
</TABLE>
In conjunction with the acquisition of the Cable Companies in 1996
the Company incurred a net deferred income tax liability of
$24,375,000.
Tax benefits associated with recorded deferred tax assets, net of
valuation allowances, are considered to be more likely than not
realizable through taxable income earned in carryback years, future
reversals of existing taxable temporary differences, and future
taxable income exclusive of reversing temporary differences and
carryforwards. 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 period are reduced.
At December 31, 1997, the Company has acquired tax net operating loss
carryforwards of approximately $37,616,000 that will begin expiring
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.
(8) Stockholders' Equity
Common Stock
GCI's Class A common stock and Class B common stock are identical in
all respects, except that each share of Class A common stock has one
vote per share and each share of Class B common stock has ten votes
per share. In addition, each share of Class B common stock
outstanding is convertible, at the option of the holder, into one
share of Class A common stock.
After the transaction described in note 2, MCI owns a total of
8,251,509 shares of GCI's Class A and 1,275,791 shares of GCI's Class
B common stock which represented approximately 18 and 31 percent and
23 and 31 percent of the issued and outstanding shares of the
respective class at December 31, 1997 and 1996, respectively.
After the transaction described in note 2, the owners of the cable
television properties acquired in 1996 owned a total of 14,723,077
shares of GCI's Class A common stock representing approximately 40
percent of the issued and outstanding Class A common shares at
December 31, 1996. The holders of the GCI subordinated notes
exercised a conversion option in January 1997. As a result the
noteholders received 1,538,457 shares of GCI's Class A common stock.
GCI issued 7,000,000 shares of its Class A common stock on August 1,
1997 for $7.25 per share, before deducting underwriting discounts and
commissions. Net proceeds to GCI totaled $47,959,000. Other costs
associated with the stock issuance totaled $1,233,000.
-60-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Stock Option Plan
In December 1986, GCI adopted a Stock Option Plan (the "Option Plan")
in order to provide a special incentive to officers, non-employee
directors, and employees by offering them an opportunity to acquire
an equity interest in GCI. The Option Plan, as amended in 1998,
provides for the grant of options for a maximum of 5,700,000 shares
of GCI Class A common stock, subject to adjustment upon the
occurrence of stock dividends, stock splits, mergers, consolidations
or certain other changes in corporate structure or capitalization. If
an option expires or terminates, the shares subject to the option
will be available for further grants of options under the Option
Plan. The Option Committee of GCI's Board of Directors administers
the Option Plan.
The Option Plan provides that all options granted under the Option
Plan must expire not later than ten years after the date of grant. If
at the time an option is granted the exercise price is less than the
market value of the underlying common stock, the "in the money"
amount at the time of grant is expensed ratably over the vesting
period of the option. Options granted pursuant to the Option Plan are
only exercisable if at the time of exercise the option holder is an
employee or non-employee director of GCI.
Information for the years 1995, 1996 and 1997 with respect to the
Plan follows:
<TABLE>
<CAPTION>
Weighted
Average Range of
Exercise Exercise
Shares Price Prices
------------ ---------- ------------
<S> <C> <C> <C>
Outstanding at December 31, 1994 1,729,699 $2.88 $0.75-$4.00
Granted 610,000 $4.00 $4.00
Exercised (40,000) $2.06 $1.87-$2.25
Forfeited (11,500) $4.00 $4.00
-----------
Outstanding at December 31, 1995 2,288,199 $3.19 $0.75-$4.00
Granted 321,000 $5.79 $3.75-$6.50
Exercised (82,291) $2.80 $0.75-$4.00
Forfeited (79,785) $3.11 $0.75-$4.50
-----------
Outstanding at December 31, 1996 2,447,123 $3.54 $0.75-$6.50
Granted 1,051,000 $6.36 $0.01-$7.63
Exercised (57,285) $3.37 $0.75-$4.00
Forfeited (65,938) $4.82 $0.75-$6.50
-----------
Outstanding at December 31, 1997 3,374,900 $4.39 $0.01-$7.63
-----------
-----------
Available for grant at December 31, 1997
1,623,276
-----------
-----------
</TABLE>
The options expire at various dates through December 2007. At
December 31, 1997, 1996 and 1995, the weighted-average remaining
contractual lives of options outstanding were 6.82, 6.73 and 7.15
years, respectively.
-61-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
At December 31, 1997, 1996 and 1995, the number of options
exercisable was 1,664,015, 1,275,903 and 986,999, respectively, and
the weighted-average exercise price of those options was $3.15, $2.85
and $2.56, respectively.
The per share weighted-average fair value of stock options granted
during 1997 was $6.71 for compensatory options and $6.50 for
non-compensatory options; for 1996, $6.94 per share for compensatory
options and $4.40 for non-compensatory options; for 1995, the per
share weighted-average fair value of non-compensatory stock options
granted was $3.87. The amounts were determined as of the options'
grant dates using a qualified Black-Scholes option-pricing model with
the following weighted-average assumptions: 1997 - risk-free interest
rate of 5.46%, volatility of 1.8558 and an expected life of 5.5
years; 1996 - risk-free interest rate of 5.48%, volatility of 1.8558
and an expected life of 5.7 years; 1995 - risk-free interest rate of
5.49%, volatility of 1.8558 and an expected life of 5.9 years.
Had compensation cost for the Company's 1995, 1996 and 1997 grants
for stock-based compensation plans been determined consistent with
SFAS 123, the Company's net income (loss) and net income (loss) per
common share would approximate the pro forma amounts below (in
thousands except per share data):
<TABLE>
<CAPTION>
As Reported Pro Forma
----------- ---------
<S> <C> <C>
1995:
Net earnings $ 7,502 7,484
Basic net earnings per common share $ 0.32 0.32
Diluted net earnings per common share $ 0.31 0.31
1996:
Net earnings $ 7,462 7,212
Basic net earnings per common share $ 0.28 0.27
Diluted net earnings per common share $ 0.27 0.26
1997:
Net loss $ (2,183) (3,387)
Basic net loss per common share $ (0.05) (0.08)
Diluted net loss per common share $ (0.05) (0.08)
</TABLE>
Pro forma net income (loss) reflects options granted in 1997, 1996
and 1995. Therefore, the full impact of calculating compensation cost
for stock options under SFAS 123 is not reflected in the pro forma
net income amounts presented above since compensation cost is
reflected over the options' vesting period of 5 years and
compensation cost for options granted prior to January 1, 1995 is not
considered.
Stock Options Not Pursuant to a Plan
In June 1989, an officer was granted options to acquire 100,000 Class
A common shares at $.75 per share. The options vested in equal annual
increments over a five-year period and expire February 1999.
The Company entered into an incentive agreement in June 1989 with an
officer providing for the acquisition of 85,190 remaining shares of
Class A common stock of the Company for $.001 per share exercisable
through June 1997. The shares under the incentive agreement vested in
equal annual increments over a three-year period and were exercised
in June 1997.
-62-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Class A Common Shares Held in Treasury
The Company acquired 105,111 shares of its Class A common stock in
1989 for approximately $328,000 to fund a deferred bonus agreement
with an officer of the Company. The agreement provides that the
balance is payable after the later of termination of employment or
six months after the effective date of the agreement. In September
1995, July 1996 and March 1997, the Company acquired a total of
97,657 additional shares of Class A common stock for approximately
$711,000 to fund additional deferred compensation agreements for two
of its officers.
Employee Stock Purchase Plan
In December 1986, GCI adopted an Employee Stock Purchase Plan (the
"Plan") qualified under Section 401 of the Internal Revenue Code of
1986 (the "Code"). The Plan provides for acquisition of the Company's
Class A and Class B common stock at market value. The Plan permits
each employee of GCI and affiliated companies who has completed one
year of service to elect to participate in the Plan. Eligible
employees may elect to reduce their compensation in any even dollar
amount up to 10 percent of such compensation up to a maximum of
$9,500 in 1997; they may contribute up to 10 percent of their
compensation with after-tax dollars, or they may elect a combination
of salary reductions and after-tax contributions.
GCI may match employee salary reductions and after tax contributions
in any amount, elected by GCI each year, but not more than 10 percent
of any one employee's compensation will be matched in any year. The
combination of salary reductions, after tax contributions and GCI
matching contributions cannot exceed 25 percent of any employee's
compensation (determined after salary reduction) for any year. GCI's
contributions vest over six years. Prior to July 1, 1995 employee and
GCI contributions were invested in GCI common stock and employee
contributions received up to 100% matching, as determined by the
Company each year, in GCI common stock. Beginning July 1, 1995
employee contributions may be invested in GCI common stock, MCI
common stock, Tele-Communications, Inc. common stock or various
mutual funds. Such employee contributions invested in GCI common
stock receive up to 100% matching, as determined by the Company each
year, in GCI common stock. Employee contributions invested in other
than GCI common stock receive up to 50% matching, as determined by
the Company each year, in GCI common stock. The Company's matching
contributions allocated to participant accounts totaled approximately
$1,800,000, $1,013,000 and $864,000 for the years ended December 31,
1997, 1996, and 1995, respectively. The Plan may, at its discretion,
purchase shares of common stock from the Company at market value or
may purchase GCI common stock on the open market. In 1998 the Company
expects to fund employer matching contributions through the issuance
of new shares of common stock rather than market purchases.
-63-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(9) Industry Segments Data
The Company is engaged in the provision or sale of services and
products in three principal industries: (1) long-distance
telecommunication services ("long-distance services"), (2) cable
television services, and, on a pre-operating basis until September
1997, (3) local telecommunication services ("local services").
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1997 1996 1995
--------- --------- ---------
(Amounts in thousands)
<S> <C> <C> <C>
Net sales
Long-distance services $ 168,034 155,419 129,279
Cable television services 55,165 9,475 0
Local services 610 0 0
--------- --------- ---------
Total net sales $ 223,809 164,894 129,279
--------- --------- ---------
--------- --------- ---------
Operating income
Long-distance services $ 9,281 15,083 13,504
Cable television services 10,423 2,196 0
Local services (4,322) (870) 0
--------- --------- ---------
Total operating income $ 15,382 16,409 13,504
--------- --------- ---------
--------- --------- ---------
Identifiable assets
Long-distance services $ 198,091 133,780 81,377
Cable television services 71,073 62,039 0
Local services 20,224 0 0
--------- --------- ---------
Total identifiable assets $ 289,388 195,819 81,377
--------- --------- ---------
--------- --------- ---------
Capital expenditures
Long-distance services $ 30,088 37,793 8,938
Cable television services 18,226 849 0
Local services 16,330 0 0
--------- --------- ---------
Total capital expenditures $ 64,644 38,642 8,938
--------- --------- ---------
--------- --------- ---------
Depreciation and amortization expense
Long-distance services $ 9,922 7,189 5,993
Cable television services 13,320 2,220 0
Local services 525 0 0
--------- --------- ---------
Total depreciation and amortization expense
$ 23,767 9,409 5,993
--------- --------- ---------
--------- --------- ---------
</TABLE>
Intersegment sales approximate market and are not significant.
Identifiable assets are assets associated with a specific industry
segment. Revenues derived from leasing operations are allocated to
the message and data transmission services segment. Long-distance
services includes equipment sales and service which were previously
reported as a separate segment.
The Company provides message telephone service to MCI (see note 10)
and Sprint, major customers. The Company earned revenues pursuant to
a contract with Sprint totaling approximately $24,357,000,
$18,781,000 and $14,885,000 for the years ended December 31, 1997,
1996 and 1995 respectively. As a percentage of total revenues, Sprint
revenues
-64-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
totaled 10.9%, 11.4% and 11.5% for the years ended December 31, 1997,
1996 and 1995 respectively.
(10) Related Party Transactions
Pursuant to the terms of a contract with MCI, a major shareholder of
GCI (see note 8), the Company earned revenues of approximately
$34,315,000, $29,208,000 and $23,939,000 for the years ended December
31, 1997, 1996 and 1995, respectively. . As a percentage of total
revenues, MCI revenues totaled 15.3%, 17.7% and 18.5% for the years
ended December 31, 1997, 1996 and 1995 respectively. Net amounts
receivable from MCI totaled $3,933,000 and $2,028,000 at December 31,
1997 and 1996, respectively. The Company paid MCI for distribution of
its traffic in the lower 49 states amounts totaling approximately
$14,319,000, $12,224,000 and $12,556,000 for the years ended December
31, 1997, 1996 and 1995, respectively.
The Company entered into a long-term capital lease agreement in 1991
with the wife of the Company's president for property occupied by the
Company. The lease is guaranteed by the Company. The lease term is 15
years with monthly payments increasing in $800 increments at each two
year anniversary of the lease. Monthly lease costs will increase to
$17,600 effective October 1999. If the owner sells the premises prior
to the end of the tenth year of the lease, the owner will rebate to
the Company one-half of the net sales price received in excess of
$900,000. If the property is not sold prior to the tenth year of the
lease, the owner will pay the Company the greater of one-half of the
appreciated value of the property over $900,000, or $500,000. The
leased asset was capitalized in 1991 at the owner's cost of $900,000
and the related obligation was recorded in the accompanying financial
statements.
The Cable Company is a party to a Management Agreement with Prime II
Management, L.P. ("PMLP"). Certain of the Prime sellers are
affiliated with PMLP. The Management Agreement expires on October 31,
2005, however, it can be terminated earlier upon loss of a license to
operate the systems, sale of the systems, breach of contract, or upon
exercise of an option to terminate the Management Agreement by PMLP
or GCI Cable any time after October 31, 1998. Under the terms of the
Management Agreement, PMLP manages the operations of the acquired
cable television systems for fees of $1,000,000 in the first year,
$750,000 in the second year, and $500,000 thereafter (unless the
agreement is terminated as outlined above) and reimbursement for
certain expenses. The fees and reimbursed expenses are payable on a
monthly basis. In connection with the agreement, the Cable Company
incurred approximately $1,040,000 and $197,000 in management fees and
reimbursable expenses for the period ended December 31, 1997 and
1996, respectively.
(11) Leases
The Company leases business offices, has entered into site lease
agreements and uses certain equipment and satellite transponder
capacity pursuant to operating lease arrangements. Rental costs under
such arrangements amounted to approximately $11,574,000, $7,364,000
and $4,353,000 for the years ended December 31, 1997, 1996 and 1995,
respectively.
-65-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
A summary of future minimum lease payments for all leases as of
December 31, 1997 follows:
<TABLE>
<CAPTION>
Year ending December 31: Operating Capital
------------------------ --------------- ---------------
(Amounts in thousands)
<S> <C> <C>
1998 $ 8,541 354
1999 5,839 357
2000 5,524 352
2001 3,913 337
2002 2,409 240
2003 and thereafter $ 11,105 866
--------- ------
Total minimum lease payments 37,331 2,506
---------
---------
Less amount representing interest (1,318)
Less current maturities of obligations under
capital leases (198)
-------
Subtotal - long-term obligations under capital
leases 990
Less long-term obligations under capital leases
due to related parties, excluding current
maturities (590)
-------
Long-term obligations under capital leases,
excluding current maturities $ 400
-------
-------
</TABLE>
The leases generally provide that the Company pay the taxes,
insurance and maintenance expenses related to the leased assets.
It is expected that in the normal course of business, except for
satellite transponder capacity, leases that expire will be renewed or
replaced by leases on other properties.
(12) Disclosure about Fair Value of Financial Instruments
Statement of Financial Standards No. 107, "Disclosures about Fair
Value of Financial Instruments" ("SFAS 107") requires disclosure of
the fair value of financial instruments for which it is practicable
to estimate that value. SFAS 107 specifically excludes certain items
from its disclosure requirements. The fair value of a financial
instrument is the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a
forced sale or liquidation. The carrying amounts at December 31, 1997
and 1996 for the Company's financial assets and liabilities
approximate their fair values.
(13) 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.
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
-66-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 $58,000, $167,000 and
$90,000 as of December 31, 1997, 1996 and 1995, 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.
Self-Insurance
The Company is self-insured for losses and liabilities related
primarily to health and welfare claims up to predetermined amounts
above which third party insurance applies. A reserve of $500,000 was
recorded at December 31, 1997 to cover estimated reported losses,
estimated unreported losses based on past experience modified for
current trends, and estimated expenses for investigating and settling
claims. Actual losses will vary from the recorded reserve. While
management uses what it believes is pertinent information and factors
in determining the amount of reserves, future additions to the
reserves may be necessary due to changes in the information and
factors used.
Litigation
The Company is 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 and 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 petition with
the APUC. At December 31, 1997, the State of Alaska has rate
regulation authority over the Juneau system's basic service rates.
(The Juneau system serves 9% of the
-67-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Company's total basic service subscribers at December 31, 1997.)
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. 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 paid $9.1 million in 1997 and 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
public offerings (see note 8), net of the $9.1 million paid in 1997,
were contributed to Alaska United. The use of such proceeds is
restricted to funding the construction and deployment of the fiber
optic cable system and is reported as Restricted Cash in the
accompanying Consolidated Financial Statements. The Company has
secured up to $75 million in bank financing to fund the remaining
cost of construction and deployment (see note 14).
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.
(14) Subsequent Event
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 as further described in note 13. The Fiber Facility provides
up
-68-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
to $75 million in construction financing and will bear interest at
either Libor plus 3.0%, or at the lender's prime rate plus 1.75%. The
interest rate will decline to Libor plus 2.5%-2.75%, or the lender's
prime rate plus 1.25%-1.5% after the project completion date and when
the loan balance is $40,000,000-60,000,000 or less. $1,018,750 was
borrowed under the facility at closing. 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, 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. The Fiber Facility also a 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.
The Fiber Facility is collateralized by all of Alaska United's
assets, as well as a pledge of the partnership interests' owning
Alaska United.
(15) Supplementary Financial Data
The following is a summary of unaudited quarterly results of
operations for the years ended December 31, 1997 and 1996.
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
First Second Third Fourth Total
1997 Quarter Quarter Quarter Quarter Year
---- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total revenues $52,881 56,186 57,956 56,786 223,809
Net earnings (loss) $ (525) (832) (928) 102 (2,183)
Basic earnings (loss) per
common share:
Net earnings (loss)
before extraordinary
item $(0.01) (0.02) (0.01) 0.00 (0.04)
Extraordinary loss $0.00 0.00 (0.01) 0.00 (0.01)
Net earnings (loss) $(0.01) (0.02) (0.02) 0.00 (0.05)
Diluted earnings (loss)
per common share:
Net earnings (loss)
before extraordinary
item $(0.01) (0.02) (0.01) 0.00 (0.04)
Extraordinary loss $0.00 0.00 (0.01) 0.00 (0.01)
Net earnings (loss) $(0.01) (0.02) (0.02) 0.00 (0.05)
</TABLE>
-69-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
First Second Third Fourth Total
1996 Quarter Quarter Quarter Quarter Year
---- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total revenues $37,969 39,199 38,664 49,062 164,894
Net earnings $2,137 2,150 2,140 1,035 7,462
Basic earnings per share $0.09 0.09 0.09 0.03 0.28
Diluted earnings per share
$0.09 0.09 0.09 0.03 0.27
</TABLE>
(16) Supplemental Financial Information
(Amounts in thousands)
<TABLE>
<CAPTION>
1997
------------------------------------------
Long-
Distance Cable Local Combined
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Telecommunication revenues $168,034 0 610 168,644
Cable revenues 0 55,165 0 55,165
-------- -------- -------- --------
Total revenues 168,034 55,165 610 223,809
-------- -------- -------- --------
Cost of sales and services:
Distribution costs and costs of
services 98,200 0 267 98,467
Programming and copyright costs 0 12,610 0 12,610
-------- -------- -------- --------
Total cost of sales and services 98,200 12,610 267 111,077
-------- -------- -------- --------
Contribution 69,834 42,555 343 112,732
-------- -------- -------- --------
Selling, general and administrative
expenses:
Telephony operating and engineering 11,006 0 530 11,536
Cable television, including
management fees of $1,040 0 18,427 0 18,427
Sales and communications 14,508 0 264 14,772
General and administrative 22,477 0 3,346 25,823
Bad debts 2,640 385 0 3,025
Depreciation and amortization 9,922 13,320 525 23,767
-------- -------- -------- --------
Operating income (loss) $ 9,281 10,423 (4,322) 15,382
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
-70-
<PAGE>
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
1996 1995
------------------------------------------------- ---------
Long- Long-
Distance Cable Local Combined Distance
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Telecommunication revenues $155,419 0 0 155,419 129,279
Cable revenues 0 9,475 0 9,475 0
-------- -------- -------- -------- --------
Total revenues 155,419 9,475 0 164,894 129,279
-------- -------- -------- -------- --------
Cost of sales and services:
Distribution costs and costs of
services 90,597 0 0 90,597 72,091
Programming and copyright costs 0 2,067 0 2,067 0
-------- -------- -------- -------- --------
Total cost of sales and services 90,597 2,067 0 92,664 72,091
-------- -------- -------- -------- --------
Contribution 64,822 7,408 0 72,230 57,188
Selling, general and administrative
expenses:
Telephony operating and
engineering 9,095 0 92 9,187 9,182
Cable television, including
management fees of $197 0 2,992 0 2,992 0
Sales and communications 13,013 0 28 13,041 9,865
General and administrative 17,349 0 316 17,665 15,645
Legal and regulatory 1,357 0 434 1,791 1,540
Bad debts 1,718 0 0 1,736 1,459
Depreciation and amortization 7,189 2,220 0 9,409 5,993
-------- -------- -------- -------- --------
Operating income (loss) $ 15,083 2,196 (870) 16,409 13,504
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
-71-
<PAGE>
PART IV
Item 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a)(l) Consolidated Financial Statements Page No.
--------
<S> <C>
Included in Part II of this Report:
Independent Auditor's Report ................................... 41
Consolidated Balance Sheets, December 31, 1997 and 1996 ........ 42 -- 43
Consolidated Statements of Operations,
Years ended December 31, 1997, 1996 and 1995 ................ 44
Consolidated Statements of Stockholders' Equity,
Years ended December 31, 1997, 1996 and 1995 ................ 45
Consolidated Statements of Cash Flows,
Years ended December 31, 1997, 1996 and 1995 ................ 46
Notes to Consolidated Financial Statements ..................... 47 -- 71
(a)(2) Consolidated Financial Statement Schedules
Included in Part IV of this Report:
Independent Auditors' Report ................................... 78
Schedule VIII - Valuation and Qualifying Accounts,
Years ended December 31, 1997, 1996 and 1995 ................ 79
</TABLE>
Other schedules are omitted as they are not required or are not
applicable, or the required information is shown in the applicable
financial statements or notes thereto.
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<PAGE>
(b) Exhibits
Listed below are the exhibits that are filed as a part of this Report
(according to the number assigned to them in Item 601 of Regulation
S-K):
Exhibit
No. Description
----------- --------------------------------------------------------------
3.1 Restated Articles of Incorporation of the Company dated August 16,
1993. *
3.2 Bylaws of the Company (1)
4.1 1997 Amendment No. 1 to Voting Agreement dated October 31, 1996,
among Prime II Management L.P., as agent for the Voting Prime
Sellers, MCI Telecommunications Corporation, Ronald A. Duncan,
Robert M. Walp and TCI GCI, Inc. *
10.1 Registration Rights Agreement, dated as of January 18, 1991,
between General Communication, Inc. and WestMarc Communications,
Inc (2)
10.2 Employee stock option agreements issued to individuals Spradling,
O'Hara, Strid, Behnke, Lewkowski and Snyder (3)
10.3 Registration Rights Agreement, dated October 31, 1996, between
General Communication, Inc. and the Prime Sellers (12)
10.4 Registration Rights Agreement, dated October 31, 1996, between
General Communication, Inc., and Alaskan Cable Network/Fairbanks,
Inc. ("ACNFI"), Alaskan Cable Network/Juneau, Inc. ("ACNJI"),
Alaskan Cable Network/ Ketchikan-Sitka, Inc. ("ACNKSI") and Jack
Kent Cooke, Inc. (12)
10.5 Registration Rights Agreement, dated October 31, 1996, between
General Communication, Inc., and the owners of Alaska Cablevision,
Inc. ("ACI") (12)
10.6 Lease agreement between GCI Communication Services, Inc. and
National Bank of Alaska Leasing Corporation dated January 15, 1992
(4)
10.7 Westin Building Lease (5)
10.8 Duncan and Hughes Deferred Bonus Agreements (6)
10.9 Compensation Agreement between General Communication, Inc. and
William C. Behnke dated January 1, 1997 (19)
10.10 Order approving Application for a Certificate of Public
Convenience and Necessity to operate as a Telecommunications
(Intrastate Interexchange Carrier) Public Utility within Alaska
(3)
10.11 1986 Stock Option Plan, as amended (21)
10.12 Loan agreement between National Bank of Alaska and GCI Leasing
Co., Inc. dated December 31, 1992 (4)
10.13 Pledge and Security Agreement between National Bank of Alaska and
GCI Communication Services, Inc. dated December 31, 1992 (4)
10.14 Lease Agreement between MCI Telecommunications Corporation and GCI
Leasing Co., Inc. dated December 31, 1992 (4)
10.15 Sublease Agreement between MCI Telecommunications Corporation and
General Communication, Inc. dated December 31, 1992 (4)
10.16 Financial Assistance Agreement between MCI Telecommunications
Corporation and GCI Leasing Co., Inc. dated December 31, 1992 (4)
10.17 Letter of intent between MCI Telecommunications Corporation and
General Communication, Inc. dated December 31, 1992 (7)
10.18 MCI Carrier Agreement between MCI Telecommunications Corporation
and General Communication, Inc. dated January 1, 1993 (8)
10.19 Contract for Alaska Access Services Agreement between MCI
Telecommunications Corporation and General Communication, Inc.
dated January 1, 1993 (8)
10.20 Promissory Note Agreement between General Communication, Inc. and
Ronald A. Duncan, dated August 13, 1993 (9)
10.21 Deferred Compensation Agreement between General Communication,
Inc. and Ronald A. Duncan, dated August 13, 1993 (9)
10.22 Pledge Agreement between General Communication, Inc. and Ronald A.
Duncan, dated August 13, 1993 (9)
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<PAGE>
10.23 Revised Qualified Employee Stock Purchase Plan of General
Communication, Inc. (10)
10.24 Summary Plan Description pertaining to the Revised Qualified
Employee Stock Purchase Plan of General Communication, Inc. (10)
10.25 The GCI Special Non-Qualified Deferred Compensation Plan (11)
10.26 Transponder Purchase Agreement for Galaxy X between Hughes
Communications Galaxy, Inc. and GCI Communication Corp. (11)
10.27 Equipment Purchase Agreement between GCI Communication Corporation
and Scientific-Atlanta, Inc. (11) 10.28 Management Agreement,
between Prime II Management, L.P., and GCI Cable, Inc., dated
October 31, 1996 (12) 10.29 Third Amended and Restated Credit
Agreement, dated as of October 31, 1996, between GCI Communication
Corp., and NationsBank of Texas, N.A. (13)
10.30 Loan Agreement among GCI Cable, Inc., as Borrower and
Toronto-Dominion (Texas), Inc., et al., as of October 31, 1996
(13)
10.31 Licenses (5)
10.31.1 214 Authorization
10.31.2 International Resale Authorization
10.31.3 Digital Electronic Message Service Authorization
10.31.4 Fairbanks Earth Station License
10.31.5 Fairbanks (Esro) Construction Permit for P-T-P Microwave
Service
10.31.6 Fairbanks (Polaris) Construction Permit for P-T-P
Microwave Service
10.31.7 Anchorage Earth Station Construction Permit
10.31.8 License for Eagle River P-T-P Microwave Service
10.31.9 License for Juneau Earth Station
10.31.10 Issaquah Earth Station Construction Permit
10.32 ATU Interconnection Agreement between GCI Communication Corp. and
Municipality of Anchorage, executed January 15, 1997 (18)
10.33 First Amendment to Third Amended and Restated Credit Agreement
entered into among GCI Communication Corp., NationsBank of Texas,
N.A., Toronto Dominion (Texas), Inc., Credit Lyonnais New York
Branch, and National Bank of Alaska (15)
10.34 Second Amendment to Third Amended and Restated Credit Agreement
entered into among GCI Communication Corp., NationsBank of Texas,
N.A., Toronto Dominion (Texas), Inc., Credit Lyonnais New York
Branch, and National Bank of Alaska (20)
10.35 Securities Purchase and Sale Agreement, dated May 2, 1996, among
General Communication, Inc., and the Prime Sellers (12)
10.36 Agreement and Plan of Merger of ACI with and into GCI Cable, Inc.,
dated October 31, 1996 (12)
10.37 Certificate of Merger Merging ACI into GCI Cable, Inc. (filed in
Delaware on October 31, 1996) (12)
10.38 Articles of Merger between GCI Cable Inc., and ACI (filed in
Delaware on October 31, 1996) (12)
10.39 Agreement and Plan of Merger of PCFI with and into GCI Cable,
Inc., dated October 31, 1996 (12)
10.40 Certificate of Merger Merging PCFI into GCI Cable, Inc., (filed in
Delaware on October 31, 1996) (12)
10.41 Articles of Merger between GCI Cable, Inc., and PCFI (for filing
in Alaska) (12)
10.42 Asset Purchase Agreement, dated April 15, 1996, among General
Communication, Inc., ACNFI, ACNJI and ACNKSI (12)
10.43 Asset Purchase Agreement, dated May 10, 1996, among General
Communication, Inc., and Alaska Cablevision, Inc. (12)
10.44 Asset Purchase Agreement, dated May 10, 1996, among General
Communication, Inc., and McCaw/Rock Homer Cable System, J.V. (12)
10.45 Asset Purchase Agreement, dated May 10, 1996, between General
Communication, Inc., and McCaw/Rock Seward Cable System, J.V. (12)
10.46 Amendment No. 1 to Securities Purchase and Sale Agreement, dated
October 31, 1996, among General Communication, Inc., and the Prime
Sellers Agent (13)
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<PAGE>
10.47 First Amendment to Asset Purchase Agreement, dated October 30,
1996, among General Communication, Inc., ACNFI, ACNJI and ACNKSI
(13)
10.48 Amendment to Revised Qualified Employee Stock Purchase Plan of
General Communication, Inc. (18)
10.49 Form of Agreement Waiving Right to Exercise Stock Options (18)
10.50 Order Approving Arbitrated Interconnection Agreement as Resolved
and Modified by Order U-96-89(8) dated January 14, 1997 (18)
10.51 First Amendment to Loan Agreement among GCI Cable, Inc., as
Borrower, and Toronto-Dominion (Texas), Inc., et al., as of
October 31, 1996 (20)
10.52 Amendment to the MCI Carrier Agreement executed April 20, 1994
(18)
10.53 Amendment No. 1 to MCI Carrier Agreement executed July 26, 1994
(16)
10.54 MCI Carrier Addendum--MCI 800 DAL Service effective February 1,
1994 (16)
10.55 Third Amendment to MCI Carrier Agreement dated as of October 1,
1994 (16)
10.56 Fourth Amendment to MCI Carrier Agreement dated as of September
25, 1995 (16)
10.57 Fifth Amendment to the MCI Carrier Agreement executed April 19,
1996 (18)
10.58 Sixth Amendment to MCI Carrier Agreement dated as of March 1, 1996
(16)
10.59 Seventh Amendment to MCI Carrier Agreement dated November 27, 1996
(20)
10.60 First Amendment to Contract for Alaska Access Services between
General Communication, Inc. and MCI Telecommunications Corporation
dated April 1, 1996 (20)
10.61 Letter of Intent between General Communication, Inc. and MCI
Telecorp dated August 6, 1993 (19)
10.62 Service Mark License Agreement between MCI Communications
Corporation and General Communication, Inc. dated April 13, 1994
(19)
10.63 Radio Station Authorization (Personal Communications Service
License), Issue Date June 23, 1995 (19)
10.64 Framework Agreement between National Bank of Alaska (NBA) and
General Communication, Inc. dated October 31, 1995 (17)
10.65 1997 Call-Off Contract between National Bank of Alaska (NBA) and
General Communication, Inc. (GCI) dated November 1, 1996 (20)
10.66 Contract No. 92MR067A Telecommunications Services between BP
Exploration (Alaska), Inc. and GCI Network Systems dated April 1,
1992 (20)
10.67 Amendment No. 03 to BP Exploration (Alaska) Inc. Contract No.
92MRO67A effective August 1, 1996 (20)
10.68 Lease Agreement dated September 30, 1991 between RDB Company and
General Communication, Inc. (3)
10.69 Certificate of Public Convenience and Necessity No. 436 for
Telecommunications Service (Relay Services) (19)
10.70 Order Approving Transfer Upon Closing, Subject to Conditions, and
Requiring Filings dated September 23, 1996 (19)
10.71 Order Granting Extension of Time and Clarifying Order dated
October 21, 1996 (19)
10.72 Contract for Alaska Access Services among General Communication,
Inc. and GCI Communication Corp., and Sprint Communications
Company L.P. dated June 1, 1993 (20)
10.73 First Amendment to Contract for Alaska Access Services between
General Communication, Inc. and Sprint Communications Company L.P.
dated as of August 7, 1996 (20)
10.74 Employment and Deferred Compensation Agreement between General
Communication, Inc. and John M. Lowber dated July 1992 (19)
10.75 Deferred Compensation Agreement between GCI Communication Corp.
and Dana L. Tindall dated August 15, 1994 (19)
10.76 Transponder Lease Agreement between General Communication
Incorporated and Hughes Communications Satellite Services, Inc.,
executed August 8, 1989 (9)
10.77 Addendum to Galaxy X Transponder Purchase Agreement between GCI
Communication Corp. and Hughes Communications Galaxy, Inc. dated
August 24, 1995 (19)
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<PAGE>
10.78 Order Approving Application, Subject to Conditions; Requiring
Filing; and Approving Proposed Tariff on an Inception Basis, dated
February 4, 1997 (19)
10.79 Resale Solutions Switched Services Agreement between Sprint
Communications Company L.P. and GCI Communications, Inc. dated May
31, 1996 (20)
10.80 Commitment Letter from Credit Lyonnais New York Branch,
NationsBank of Texas, N.A. and TD Securities (USA) Inc. for Fiber
Facility dated as of July 3, 1997 (19)
10.81 Commitment Letter from NationsBank for Credit Facility dated July
2, 1997 (19)
10.82 Supply Contract Between Submarine Systems International Ltd. And
GCI Communication Corp. dated as of July 11, 1997. *
10.83 Supply Contract Between Tyco Submarine Systems Ltd. And Alaska
United Fiber System Partnership Contract Variation No. 1 dated as
of December 1, 1997. *
10.84 $200,000,000 Amended and Restated Credit Agreement between GCI
Holdings, Inc. and NationsBank of Texas, N.A., as administrative
agent, Credit Lyonnais New York Branch, as documentation agent,
and TD Securities (USA), Inc. as syndication agent, dated as of
November 14, 1997. *
10.85 $50,000,000 Amended and Restated Credit Agreement between GCI
Holdings, Inc. and NationsBank of Texas, N.A., as administrative
agent, Credit Lyonnais New York Branch, as documentation agent,
and TD Securities (USA), Inc. as syndication agent, dated as of
November 14, 1997. *
21.1 Subsidiaries of the Registrant *
23.1 Consent of KPMG Peat Marwick LLP (Accountant for Company)*
27.1 Financial Data Schedule*
27.2 Restated Financial Data Schedule December 31, 1996*
27.3 Restated Financial Data Schedule December 31, 1995*
99 Additional Exhibits
99.1 The Articles of Incorporation of GCI Communication Corp.(2)
99.2 The By-laws of GCI Communication Corp. (2)
99.3 The Articles of Incorporation of GCI Communication
Services, Inc. (4)
99.4 The By-laws of GCI Communication Services, Inc. (4)
99.5 The Articles of Incorporation of GCI Leasing Co., Inc. (4)
99.6 The By-laws of GCI Leasing Co., Inc. (4)
99.7 The By-laws of GCI Cable, Inc. (14)
99.8 The Articles of Incorporation of GCI Cable, Inc. (14)
99.9 The By-laws of GCI Cable / Fairbanks, Inc. (14)
99.10 The Articles of Incorporation of GCI Cable / Fairbanks,
Inc. (14)
99.11 The By-laws of GCI Cable / Juneau, Inc. (14)
99.12 The Articles of Incorporation of GCI Cable / Juneau, Inc.
(14)
99.13 The By-laws of GCI Cable Holdings, Inc. (14)
99.14 The Articles of Incorporation of GCI Cable Holdings, Inc.
(14)
99.15 The By-laws of GCI Holdings, Inc. (19)
99.16 The Articles of Incorporation of GCI Holdings, Inc. (19)
99.17 The Articles of Incorporation of GCI, Inc. (18)
99.18 The Bylaws of GCI, Inc. (18)
99.19 The By-laws of GCI Transport, Inc. *
99.20 The Articles of Incorporation of GCI Transport, Inc. *
99.21 The By-laws of Fiber Hold Co., Inc. *
99.22 The Articles of Incorporation of Fiber Hold Co., Inc. *
99.23 The By-laws of GCI Fiber Co., Inc. *
99.24 The Articles of Incorporation of GCI Fiber Co., Inc. *
99.25 The By-laws of GCI Satellite Co., Inc. *
99.26 The Articles of Incorporation of GCI Satellite Co., Inc. *
99.27 The Partnership Agreement of Alaska United Fiber System *
-------------------------
* Filed herewith.
1 Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1994
2 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1990
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<PAGE>
3 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1991
4 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992
5 Incorporated by reference to the Company's Registration Statement on Form
10 (File No. 0-15279), mailed to the Securities and Exchange Commission
on December 30, 1986
6 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1989.
7 Incorporated by reference to the Company's Current Report on Form 8-K
dated January 13, 1993.
8 Incorporated by reference to the Company's Current Report on Form 8-K
dated June 4, 1993.
9 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1993.
10 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
11 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
12 Incorporated by reference to the Company's Form S-4 Registration
Statement dated October 4, 1996.
13 Incorporated by reference to the Company's Current Report on Form 8-K
dated November 13, 1996.
14 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
15 Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1997.
16 Incorporated by reference to the Company's Current Report on Form 8-K
dated March 14, 1996, filed March 28, 1996.
17 Incorporated by reference to the Company's Amendment to Annual Report
dated December 31, 1995 on Form 10-K/A as amended on August 6, 1996.
18 Incorporated herein by reference to the Company's Form S-3 Registration
Statement (File No. 333-28001) dated May 29, 1997.
19 Incorporated herein by reference to the Company's Amendment No. 1 to Form
S-3/A Registration Statement (File No. 333-28001) dated July 8, 1997.
20 Incorporated herein by reference to the Company's Amendment No. 2 to Form
S-3/A Registration Statement (File No. 333-28001) dated July 21, 1997.
21 Incorporated herein by reference to the Company's Amendment No. 3 to Form
S-3/A Registration Statement (File No. 333-28001) dated July 22, 1997.
22 Incorporated herein by reference to the Company's Form S-8 POS
Registration Statement (File No. 33-60222) dated February 20, 1998.
(c) Reports on Form 8-K
None.
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<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
General Communication, Inc.:
Under date of March 4, 1998, we reported on the consolidated balance sheets of
General Communication, Inc. and Subsidiaries ("Company") as of December 31, 1997
and 1996 and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1997, which are included in the Company's 1997 Annual Report on
Form 10-K. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related consolidated financial
statement schedule in the consolidated financial statements, which is listed in
the index in Item 14(a)(2) of the Company's 1997 Annual Report on Form 10-K.
This consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
consolidated financial statement schedule based on our audits.
In our opinion this consolidated financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects the information set forth therein.
/s/ KPMG PEAT MARWICK LLP
---------------------------------
KPMG PEAT MARWICK LLP
Anchorage, Alaska
March 4, 1998
-78-
<PAGE>
Schedule VIII
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Additions Deductions
----------------------- ------------
Balance at Charged Write-offs Balance
beginning to profit net of at end
Description of year and loss Other recoveries of year
------------------------------ ----------- ---------- --------- ------------- ---------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Allowance for doubtful
receivables $ 597 3,025 -- 2,552 1,070
----- ----- ----- ----- ---
----- ----- ----- ----- ---
Year ended December 31, 1996:
Allowance for doubtful
receivables $ 295 1,736 354(1) 1,788 597
----- ----- ----- ----- ---
----- ----- ----- ----- ---
Year ended December 31, 1995:
Allowance for doubtful
receivables $ 409 1,459 -- 1,573 295
----- ----- ----- ----- ---
----- ----- ----- ----- ---
</TABLE>
(1) Allowance for doubtful receivables acquired pursuant to the Cable Company
acquisitions described in Note 2 to the Company's consolidated financial
statements.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GENERAL COMMUNICATION, INC.
By: /s/ Ronald A. Duncan
-------------------------------
Ronald A. Duncan, President
(Chief Executive Officer)
Date: March 25, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
---------------- ----------- ----------
<S> <C> <C>
/s/ Carter F. Page Chairman of Board
- ------------------------------- and Director March 26, 1998
Carter F. Page
/s/ Robert M. Walp Vice Chairman of Board and
- ------------------------------- Director March 25, 1998
Robert M. Walp
/s/ Ronald A. Duncan President and Director,
- ------------------------------- (Chief Executive Officer) March 25, 1998
Ronald A. Duncan
/s/ Donne F. Fisher Director March 25, 1998
- -------------------------------
Donne F. Fisher
/s/ Jeffery C. Garvey Director March 25, 1998
- -------------------------------
Jeffery C. Garvey
Director ----------------
- -------------------------------
John W. Gerdelman
Director ----------------
- -------------------------------
William P. Glasgow
/s/ Donald Lynch Director March 27, 1998
- -------------------------------
Donald Lynch
</TABLE>
(Continued)
-80-
<PAGE>
SIGNATURES
(Continued)
<TABLE>
<CAPTION>
Signature Title Date
---------------- ----------- ----------
<S> <C> <C>
Director
- ------------------------------- -----------------
Larry E. Romrell
Director
- ------------------------------- -----------------
James M. Schneider
/s/ John M. Lowber Senior Vice President, Chief
- ------------------------------- Financial Officer, Secretary March 25, 1998
John M. Lowber and Treasurer
/s/ Alfred J. Walker Vice President and Chief
- ------------------------------- Accounting Officer March 25, 1998
Alfred J. Walker
</TABLE>
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<PAGE>
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
GENERAL COMMUNICATION, INC.
The following are the Restated Articles of Incorporation of
General Communication, Inc., adopted by the Board of Directors of that
corporation by a unanimous vote at a meeting held on January 30, 1998, and are
executed by that corporation through its president and its secretary and
verified by its secretary. These Restated Articles of Incorporation correctly
set forth, without change, all of the operative provisions of the Articles of
Incorporation as amended up to that time, and these Restated Articles of
Incorporation supersede the original Articles of Incorporation and all
amendments to them.
ARTICLE I
The name of the corporation is General Communication, Inc.
("Corporation").
ARTICLE II
The duration of this Corporation shall be perpetual.
ARTICLE III
The Corporation is organized for the purposes of transacting
any and all lawful business for which corporations may be incorporated under the
Alaska Corporations Code (AS 10.06).
ARTICLE IV
(a) The total number of shares of stock which the Corporation
shall have authority to issue is one hundred eleven million shares divided into
the following classes:
(i) One hundred million shares of Class A Common
Stock;
RESTATED ARTICLES OF INCORPORATION (1998) Page 1
<PAGE>
(ii) Ten million shares of Class B Common Stock; and
(iii) One million shares of Preferred Stock.
(b) Each share of Class A Common Stock shall be identical in
all respects with the Class B Common Stock, except that each holder of Class A
Common Stock shall be entitled to one vote for each share of such stock held,
and each holder of Class B Common Stock shall be entitled to ten votes for each
share of such stock held.
(c) The Board of Directors is authorized, subject to
limitations prescribed by law and to the provisions of this Article IV, to
provide for the issuance of Preferred Stock from time to time in one or more
series with such distinctive serial designations, rights, preferences and
limitations of the shares of each such series as the Board of Directors shall
establish. The authority of the Board of Directors with respect to each series
shall, to the extent allowed by law, include the authority to establish and fix
the following:
(i) the number of shares initially constituting the
series and the distinctive designation of that series;
(ii) The extent, if any, to which the series shall
have voting rights, whether none, full, fractional or otherwise
limited, subject, however, to the limitation that at the time of
creation of any particular series of Preferred Stock, the voting
rights, if any, of that particular series of Preferred Stock, plus the
total voting rights then authorized for all other Preferred Stock,
shall not exceed five percent of the aggregate voting rights of all
Class A Common Stock and Class B Common Stock issued and outstanding at
that time;
(iii) Whether entitled to receive dividends (which
may be cumulative or noncumulative) at such rate or rates, on such
conditions, and at such times and payable in preference to, or in such
relation to, the dividends payable on any other class or classes or any
other series of the same or any other class or classes of stock of the
Corporation;
(iv) The rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, or upon any distribution of its assets;
(v) Whether the shares have conversion privileges
and, if so, the terms and conditions of such conversion privileges,
including provision, if any, for adjustment of the conversion rate and
for payment of
RESTATED ARTICLES OF INCORPORATION (1998) Page 2
<PAGE>
additional amounts by holders of Preferred Stock of that series upon
exercise of such conversion privileges;
(vi) Whether or not the shares of that series shall
be redeemable, and, if so, the price at and the terms and conditions
upon which such shares shall be redeemable, and whether that series
shall have a sinking fund for the redemption or purchase of shares of
that series, and, if so, the terms and amount of such sinking fund;
(vii) That the Corporation, through a resolution
adopted by its Board of Directors, may agree that, upon the occurrence
and during the continuation of an event of noncompliance by the
Corporation as defined in the terms of an agreement under which
Preferred Stock or a series of Preferred Stock is issued and
outstanding, the then holders of the issued and outstanding shares of
that stock will have the exclusive right to elect additional directors
to the Board of Directors, and each director so elected will thereupon
become an additional director of the Corporation, and the authorized
directors of the Corporation will thereupon be automatically increased
by the number of added directors; provided that under no circumstances
will the right granted through this Article IV to so elect additional
directors extend beyond two additional directors at any one time;
(viii) That the Corporation, through a resolution
adopted by its Board of Directors, may agree with the holders of
Preferred Stock issued or to be issued and outstanding that, without
the consent of the holders of at least two-thirds of the number of
shares of that Preferred Stock, the Corporation will not: (A) effect
any changes in the rights, privileges or preferences of that Preferred
Stock; (B) create, designate or issue any class or series of senior
securities (any class or series of capital stock of the Corporation
ranking senior to that Preferred Stock) or parity securities (any class
or series of capital stock entitled to receive payment of dividends on
a parity with that Preferred Stock or entitled to receive assets upon
liquidation, dissolution or winding up of the affairs of the
Corporation on a parity with that Preferred Stock), in respect of the
right to receive dividends or in respect of the right to participate in
any distribution upon liquidation, dissolution, or winding up of the
affairs of the Corporation; or (C) approve any other action with
respect to which, under applicable law, the vote of the holders of that
Preferred Stock as a separate series or class is required; and such
consents will either be given in writing or by vote at a meeting called
for that purpose at which the holders of that Preferred Stock will vote
as a series or class; and
RESTATED ARTICLES OF INCORPORATION (1998) Page 3
<PAGE>
(ix) Such other preferences and relative
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof.
(d) Notwithstanding the fixing of the number of shares
constituting a particular series upon the issuance thereof, the Board of
Directors may, at any time thereafter, authorize the issuance of additional
shares of the same series or may reduce the number of shares constituting such
series, provided that such number shall not be reduced to less than the number
of shares of such series then issued and outstanding.
(e) The Board of Directors is expressly authorized to vary the
provisions relating to the foregoing matters between the various series of
Preferred Stock, but in all other respects the shares of each series shall be of
equal rank with each other, regardless of series. All Preferred Stock of any one
series shall be identical in all respects, except as to the dates from which
dividends shall be cumulative, if such dividends are provided.
(f) Except as may be determined by the Board of Directors of
the Corporation pursuant to paragraph (c) of this Article IV with respect to the
Preferred Stock, and except as otherwise expressly required by the laws of the
state of Alaska, as then in effect, the holders of the Class A Common Stock and
the holders of the Class B Common Stock shall vote with the holders of voting
shares of the Preferred Stock, if any, as one class with respect to the election
of directors and with respect to all other matters to be voted on by
stockholders of the Corporation.
(g) Except as otherwise expressly required by law, any and all
rights, titles, interests and claims in or to any dividends declared by the
Corporation whether in cash, stock or otherwise, which are unclaimed by the
shareholder entitled thereto for a period of six years after the close of
business on the payment date, shall be and be deemed to be extinguished and
abandoned; and such unclaimed dividends in the possession of the Corporation,
its transfer agents or other agents or depositories, shall at such time become
the absolute property of the Corporation, free and clear of any and all claims
of any person whatsoever.
(h) Each share of Class B Common Stock shall be convertible,
at the option of the holder thereof, into one share of Class A Common Stock. To
exercise the conversion option, a holder of Class B shares must deliver the
certificate or certificates representing the shares of Class B Common Stock to
be converted, duly endorsed in blank, to the Secretary of the Corporation, and
at the same time, notify the Secretary in writing of such holder's desire to so
convert and instruct the Secretary as to the number of shares he or she wishes
converted. Upon receipt by the Secretary of the foregoing certificates and
instructions, the Corporation shall cause to be issued to the holder of the
RESTATED ARTICLES OF INCORPORATION (1998) Page 4
<PAGE>
Class B Common Stock one share of Class A Common Stock for each share of Class B
Common Stock requested to be converted, issuing and delivering to such holder
certificates for shares of Class A Common Stock issued upon such conversion and
all shares of Class B Common Stock remaining unconverted, if any, represented by
such certificates. A number of shares of Class A Common Stock equal to the
number of shares of Class B Common Stock outstanding shall, from time to time,
be set aside and reserved for issuance upon conversion of Class B Common Stock.
Class A Common Stock shall not be convertible into Class B Common Stock.
(i) At each election for directors, every shareholder entitled
to vote at such election will have the right to vote in person or by proxy, the
number of shares owned by that shareholder for as many persons as there are
directors to be elected and for whose election that shareholder has a right to
vote, and such a shareholder will not be allowed to cumulate that shareholder's
votes.
(j) The Corporation will have the power to redeem and
otherwise buy back a portion or all of any or all classes or series of shares of
its stock as allowed by law, including AS 10.06.325, and as the Board of
Directors, in its sole discretion, will deem advisable.
ARTICLE V
(a) The governing body of this Corporation shall be a Board of
Directors. The number of directors shall be determined in the manner provided in
the Bylaws of the Corporation; provided, however, that the number of directors
shall not be less than three nor more than twelve.
(b) Upon the establishment of the Board of Directors of the
Corporation as having three or more members ("Class Date"), that board will be
divided into three classes: Class I, Class II and Class III. Each such class
will consist, as nearly as possible, of one-third of the whole number of the
Board of Directors. Directors in office on the Class Date will be divided among
such classes and in such manner, consistent with the provisions of this Article
V, as the Board of Directors may determine by resolution. The initial Class I
directors so determined shall serve until the next annual meeting of
stockholders of the Corporation following such date. The initial Class II
directors so determined shall serve until the second annual meeting of
stockholders of the Corporation following such date. The initial Class III
directors so determined shall serve until the third annual meeting of
stockholders of the Corporation following such date. In the case of each such
class, such directors shall serve, subject to their earlier death, resignation
or removal in accordance with these Articles of Incorporation, the Bylaws of the
Corporation and the laws of the State of Alaska, until their respective
RESTATED ARTICLES OF INCORPORATION (1998) Page 5
<PAGE>
successors shall be elected and shall qualify. At each annual meeting of
stockholders after the date of such filing, the directors chosen to succeed
those whose terms shall have expired shall be elected to hold office for a term
to expire at the third succeeding annual meeting of stockholders after their
election and, subject to their earlier death, resignation or removal in
accordance with these Articles of Incorporation, the Bylaws of the Corporation
and the laws of the State of Alaska, until their respective successors shall be
elected and shall qualify. If the number of directors is changed, any increase
or decrease shall be apportioned among such classes so as to maintain all
classes as equal in number as possible, and any additional director elected to
any class shall hold office for a term which shall coincide with the terms of
the other directors in such class. Any vacancy occurring on the Board of
Directors caused by death, resignation, removal or otherwise, and any newly
created directorship resulting from an increase in the number of directors on
that Board, may be filled by the directors then in office, although such
directors are less than a quorum, or by the sole remaining director. Each
director chosen to fill a vacancy or newly created directorship shall hold
office until the next election of the class for which such director shall have
been chosen and, subject to that director's earlier death, resignation or
removal in accordance with these Articles of Incorporation, the Bylaws of the
Corporation and the laws of the State of Alaska, until that director's successor
shall be duly elected and shall qualify.
(c) The Corporation shall have the power to issue and sell any
stock, in exchange for such consideration (whether cash, services, assets or
stock of or any interest in any business, or any other property, real or
personal, whatsoever) as the Board of Directors, in its sole discretion, shall
deem advisable. Any stock so issued or sold by the Corporation shall be deemed
fully paid and non-assessable.
ARTICLE VI
The capital stock of this Corporation shall not be assessable.
It shall be issued as fully paid, and the private property of the stockholders
shall not be liable for the debts, obligations or liabilities of this
Corporation.
ARTICLE VII
No shareholder of the Corporation shall have any preemptive
right to subscribe for, purchase or receive, or to be offered the opportunity to
subscribe for, purchase or receive, any part of any shares of stock of the
Corporation of any class, whether now or hereafter authorized and whether
unissued shares or not, at any time issued or sold by the Corporation, or any
part of any options, warrants, rights, bonds,
RESTATED ARTICLES OF INCORPORATION (1998) Page 6
<PAGE>
debentures or other evidences of indebtedness or any other securities of the
Corporation convertible into, exchangeable or exercisable for, or otherwise
entitling the holder thereof to purchase or receive, any such shares. Any and
all of such shares, options, warrants, rights, bonds, debentures or other
evidences of indebtedness or other securities of the Corporation convertible
into, exchangeable or exercisable for, or otherwise entitling the holder thereof
to purchase or receive, any such shares may be issued and disposed of by the
Board of Directors on such terms and for such consideration, so far as may be
permitted by applicable law, and to such person or persons, as the Board of
Directors in its absolute discretion may deem advisable.
ARTICLE VIII
The Corporation shall indemnify, to the full extent permitted
by, and in the manner permissible under, the laws of the State of Alaska and any
other applicable laws, any person made or threatened to be made a party to an
action or proceeding, whether criminal, civil, administrative or investigative,
other than an action by or in the right of the Corporation, by reason of the
fact that the person is or was a director, officer, employee or agent of this
Corporation or is or was serving at the request of the Corporation as a director
or officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise. The foregoing provisions of this Article
VIII will be deemed to be a contract between this Corporation and each director
and officer who serves in such capacity at any time while this Article VIII is
in effect, and any repeal or modification of this Article VIII shall not affect
any rights or obligations then existing with respect to any statement of facts
then or theretofore existing or any action, suit or proceeding theretofore or
thereafter brought based in whole or in part upon any such statement of facts.
The foregoing rights of indemnification shall not be deemed exclusive of any
other rights to which any director or officer or his legal representative may be
entitled apart from the provisions of this Article VIII.
ARTICLE IX
As of the date of these Restated Articles of Incorporation,
the Corporation had no alien affiliates.
ARTICLE X
Only the Board of Directors is expressly authorized and
empowered to adopt, alter, amend or repeal any provision or all of the Bylaws of
this Corporation, to the exclusion of the outstanding shares of the Corporation.
RESTATED ARTICLES OF INCORPORATION (1998) Page 7
<PAGE>
ARTICLE XI
By the affirmative vote of at least 75% of the directors, the
Board of Directors may designate an Executive Committee, all of whose members
shall be directors, to manage and operate the affairs of the Corporation or
particular properties or enterprises of the Corporation. Subject to limitations
provided by the laws of the State of Alaska, said committee shall have the power
to perform or authorize any act that could be done or accomplished by the
majority action of all the directors of the Corporation. The Board of Directors
may by resolution establish other committees than an Executive Committee and
shall specify with particularity the powers and duties of any such committees.
ARTICLE XII
Notwithstanding the Corporation's incorporation prior to the
effective date of the Alaska Corporations Code, the Corporation elects to be
governed by the provisions of the Alaska Corporations Code not otherwise
applicable to it because the Corporation existed at the effective date of that
code and, in particular, the voting provisions of AS 10.06.504 - 10.06.506 of
that code pertaining to the procedure to amend articles of incorporation and
class voting on amendments to those articles.
IN WITNESS WHEREOF, the Corporation through its corporate
officers hereby executes these Restated Articles of Incorporation of General
Communication, Inc. on this 12th day of February, 1998.
GENERAL COMMUNICATION, INC.
By: /s/
Ronald A. Duncan
President
By: /s/
John M. Lowber
Secretary
RESTATED ARTICLES OF INCORPORATION (1998) Page 8
<PAGE>
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
BEFORE ME, the undersigned authority, personally appeared JOHN
M. LOWBER, who, first by me being duly sworn, deposes and states that he is the
secretary of General Communication, Inc., that he has read the above and
foregoing RESTATED ARTICLES OF INCORPORATION OF GENERAL COMMUNICATION, INC. and
knows the contents therein; and that each and all of said facts and matters are
true and correct to the best of his information and belief.
/s/
John M. Lowber
SUBSCRIBED AND SWORN to before me this 12th day of February,
1998.
/s/
Notary Public in and for Alaska
My Commission Expires: January 17, 2001
RESTATED ARTICLES OF INCORPORATION (1998) Page 9
<PAGE>
WOHLFORTH, ARGETSINGER, JOHNSON & BRECHT
A PROFESSIONAL CORPORATION
JULIUS J. BRECHT TELEPHONE
CHERYL RAWLS BROOKING (907) 276-6401
CYNTHIA L. CARTLEDGE
BARBARA J. DREYER ATTORNEYS AT LAW
ROBERT M. JOHNSON
BRADLEY E. MEYEN 900 WEST 5TH AVENUE, SUITE 600 FACSIMILE
KENNETH E. VASSAR (907) 276-5093
ERIC E. WOHLFORTH ANCHORAGE, ALASKA 99501-2048
OF COUNSEL
PETER ARGETSINGER
March 16, 1998
John M. Lowber Via Hand-Delivery
Senior Vice President and
Chief Financial Officer
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Re: Restated Certificate of Incorporation and Replacement
Certificate of Amendment for General Communication, Inc.;
Our File No. 0618.0201
Dear John:
As we discussed in our telephone conversation of this date, please find
enclosed the following documents:
1. Restated Certificate of Incorporation for General
Communication, Inc., dated February 27, 1998;
2. Restated Articles of Incorporation of General Communication,
Inc. filed for record, February 27, 1998; and
3. Certificate of Amendment for General Communication, Inc. dated
December 12, 1997.
The Restated Certificate of Incorporation and the accompanying
Restated Articles of Incorporation with the date stamp of February 27, 1998
by the Alaska Department of Commerce and Economic Development are in response
to the filing by the Company through my letter dated February 26, 1998. The
Restated Certificate of Incorporation and the accompanying Restated
Articles of Incorporation should reflect the current restatement of the
Articles of Incorporation of the Company. The Restated Certificate of
Incorporation and the accompanying Restated Articles of Incorporation should
be held in the Company's corporate file.
<PAGE>
John M. Lowber
Senior Vice President and Chief Financial Officer
General Communication, Inc.
Re: Restated Certificate of Incorporation and Replacement
Certificate of Amendment for General Communication, Inc.
March 16, 1998
Page 2
The enclosed Certificate of Amendment has been executed by the
Department to replace a previous certificate issued on the same date (December
12, 1997), but with the caption "Certificate of Amended and Restated Articles."
That is, the previous certificate was misnamed and the enclosed Certificate of
Amendment is properly named for the action that was taken by the Department on
December 12, 1997. The enclosed Certificate of Amendment should be placed in the
Company's corporate files as reflecting the action taken by the Company on its
Articles of Incorporation. The prior document entitled "Certificate of Amended
and Restated Articles" dated December 12, 1997 is in error and no longer is
valid. An appropriate notation should be made on that certificate to indicate
that it has no effect and is replaced by the Certificate of Amendment dated
December 12, 1997.
I have been in contact with Fred Walker to alert him to the need to
include the restated Articles of Incorporation of the Company as an exhibit to
the Company's Form 10-K for the year ended December 31, 1997. A copy of those
Restated Articles of Incorporation are being sent to Fred directly via e-mail
for inclusion in that Form 10-K.
Should you have any questions regarding the enclosures, please contact
me.
Sincerely,
WOHLFORTH, ARGETSINGER,
JOHNSON & BRECHT
/s/
Julius J. Brecht
JJB/neb
Enclosure(s)
cc: Fred Walker
<PAGE>
EXHIBIT 4.1
1997 Amendment No. 1 to Voting Agreement
This amendment ("Amendment") dated as of December 5, 1997 to that
certain Voting Agreement ("Voting Agreement") entered into effective as of
October 31, 1996 by and among Prime II Management, L.P. ("Prime"), as the
designated agent for the parties named on Annex 1 attached thereto, MCI
Telecommunications Corporation, Ronald A. Duncan, Robert M. Walp, and TCI GCI,
Inc. Terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Voting Agreement.
Background: The Prime Sellers became stockholders of GCI on October 31, 1996
(the "Acquisition Date"), and GCI had agreed to file and keep effective a
registration statement for a period of two years after the Acquisition Date with
respect to the Shares owned by the Prime Sellers. GCI has not maintained the
effectiveness of such registration statement, and in lieu of the registration of
such Shares by GCI at this time, GCI and the parties hereto who currently are
Parties (the "Current Parties") to the Voting Agreement, have agreed to the
withdrawal of Prime and the Prime Sellers as Parties to the Voting Agreement,
all on the terms and conditions set forth herein.
The Current Parties have also agreed to the withdrawal of TCI GCI as a
Party to the Voting Agreement in that it has sold all of the 590,043 shares of
common stock of the Company which constituted the portion of the Shares which
TCI GCI held at the time of execution of the Voting Agreement.
The Current Parties consist of the following:
(1) MCI Telecommunications Corporation;
(2) Ronald A. Duncan; and
(3) Robert M. Walp
In consideration of the mutual covenants and conditions contained in
this Amendment, the Current Parties agree as follows:
1.(a) Clause (1) of Section 1 of the Voting Agreement, which states the
number of Shares held by Prime (i.e., owned by the Prime Sellers) that are
subject to the Voting Agreement, is hereby deleted, and the Shares shown as
having been held by Prime and owned by the Prime Sellers are hereby withdrawn
from the Voting Agreement and Prime and each of the Prime Sellers hereby cease
to be Parties to the Voting Agreement. Prime and Prime Sellers no longer have
any rights or obligations under the Voting Agreement, except as provided in
Paragraphs numbered 2 and 4 below.
1.(b) Clause (5) of Section 1 of the Voting Agreement, which states the
number of Shares held by TCI GCI that are subject to the Voting Agreement is
hereby deleted, and the Shares shown as having been held by TCI GCI are hereby
withdrawn from the Voting Agreement, and TCI GCI hereby ceases to be a Party to
the Voting Agreement.
TCI GCI no longer has any rights or obligations under the Voting Agreement.
2.(a) Clause (C) of Section 2(a)(1) of the Voting Agreement is hereby
deleted in its entirety and left intentionally blank.
2.(b) Clause (D) of Section 2(a)(1) of the Voting Agreement is hereby
amended to read in its entirety as follows: "Prime shall be entitled to
recommend one Nominee for so long as that
1
<PAGE>
certain Management Agreement ("Prime Management Agreement") between Prime and
GCI dated October 31, 1996 is in full force and effect, and not thereafter."
2.(c) Section 2(a)(2) of the Voting Agreement is hereby deleted in its
entirety and left intentionally blank.
3. Section 2(b) of the Voting Agreement is hereby amended so as to
provide that for Nominees allocated to Prime there would be only one Nominee in
Class III, instead of one in Class II and one in Class III. Section 2(b) of the
Voting Agreement is hereby further amended by deleting the last phrase of that
section of the Voting Agreement providing for an allocation of Nominees to TCI
GCI.
4.(a) Section 5(b) of the Voting Agreement is hereby amended by
deleting the subitem (4) relating to shares held by TCI GCI.
4.(b) Section 5(d) of the Voting Agreement is hereby amended to read in
its entirety as follows: "Each Party shall vote for Prime's Nominee pursuant to
Section 2(a)(1) above, for so long as the Prime Management Agreement is in
effect and notwithstanding the fact that such Party ceases to be a Party under
the Voting Agreement.
5. The proviso in the second sentence of Section 6 of the Voting
Agreement is hereby deleted.
6. Section 8 of the Voting Agreement is hereby amended by deleting
reference to Prime and to TCI GCI as Parties to the Voting Agreement.
2
<PAGE>
EXECUTED to be effective as of the date first above mentioned.
PRIME II MANAGEMENT, L.P.
BY Prime II Management, Inc.
Its General Partner
By: /s/ William P. Glasgow
Its: President
MCI TELECOMMUNICATIONS CORPORATION
By: /s/ John W. Gerdelman
Its:
/s/
RONALD A. DUNCAN
/s/
ROBERT M. WALP
GENERAL COMMUNICATION, INC.
/s/ John M. Lowber
---------------------------
By: John M. Lowber
Its: Sr V.P. and CFO
3
<PAGE>
EXHIBIT 10.82
Commercial Volume Terms and Conditions
SUPPLY CONTRACT BETWEEN
SUBMARINE SYSTEMS INTERNATIONAL LTD.
AND
GCI COMMUNICATION CORP.
[CERTAIN INFORMATION HAS BEEN REDACTED FROM THIS DOCUMENT
WHICH THE COMPANY DESIRES TO KEEP UNDISCLOSED AND A COPY
OF THE UNREDACTED DOCUMENT HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.]
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Submarine Systems International, LTD. (SSI) - PROPRIETARY
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of this contract.
July 11, 1997 i Alaska United Fiber System
<PAGE>
Commercial Volume Terms and Conditions
Table of Contents
Article 1. Provision of System.........................................1
Article 2. Documents Forming the Entire Contract.......................1
Article 3. Definitions.................................................2
Article 4. Contract Price..............................................3
Article 5. Terms of Payment............................................4
Article 6. Contract Variations.........................................7
Article 7. Responsibilities for Submarine Cable Construction
Approvals, Permits, Permissions and Consents...............8
Article 8. Route Survey................................................9
Article 9. Acceptance..................................................9
Article 10. Warranty....................................................12
Article 11. Contractor Support..........................................15
Article 12. Purchaser's Obligations.....................................15
Article 13. Termination for Default.....................................16
Article 14. Termination for Convenience.................................17
Article 15. Suspension..................................................20
Article 16. Title and Risk of Loss......................................20
Article 17. Force Majeure...............................................21
Article 18. Intellectual Property.......................................22
Article 19. Infringement................................................25
Article 20. Safeguarding of Information and Technology..................26
Article 21. Export Control..............................................27
Article 22. Liquidated Damages..........................................27
Article 23. Limitation of Liability/Indemnification.....................27
Article 24. (Intentionally Left Blank)..................................28
Article 25. Design and Performance Responsibility.......................28
Article 26. Product Changes.............................................29
Article 27. Risk and Insurance..........................................29
Article 28. Plant and Work Rules........................................30
Article 29. Right of Access.............................................30
Article 30. Quality Assurance...........................................31
Article 31. Documentation...............................................31
Article 32. Training....................................................31
Article 33. Settlement of Disputes/Arbitration..........................31
Article 34. Applicable Law..............................................33
Article 35. Notices.....................................................33
Article 36. Publicity...................................................34
Article 37. Assignment..................................................34
Article 38. Relationship of the Parties.................................34
Article 39. Successors Bound............................................34
Article 40. Paragraph Captions..........................................34
Article 41. Severability................................................34
Article 42. Survival of Obligations.....................................35
Article 43. Non-Waiver..................................................35
Article 44. Language....................................................35
Article 45. Performance Guarantee.......................................35
Article 46. Entire Agreement............................................35
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July 11, 1997 ii Alaska United Fiber System
<PAGE>
Commercial Volume Terms and Conditions
Appendices
Appendix 1 - Provisioning Schedule
Appendix 2 - Billing Schedule
Appendix 3 - Sample Invoice
Appendix 4 - Responsibilities for Submarine Cable Construction Approvals,
Permits, Permissions and Consents
Appendix 5 - (Intentionally Left Blank)
Appendix 6 - Plan of Work
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of this contract.
July 11, 1997 iii Alaska United Fiber System
<PAGE>
Commercial Volume Terms and Conditions
SUPPLY CONTRACT BETWEEN
SUBMARINE SYSTEMS INTERNATIONAL LTD.
AND
GCI COMMUNICATION CORP.
This agreement for the supply of a fiber optic cable system ("Contract") is
effective as of this 11th day of July, 1997 ("Effective Date") between Submarine
Systems International Ltd., a corporation organized and existing under the laws
of the State of Delaware, of the United States of America, and having an office
at 340 Mt. Kemble Avenue, Morristown, New Jersey, 07962-1923 of the United
States of America ("SSI" and "Contractor"); and GCI Communication Corp., a
corporation organized and existing under the laws of Alaska, of the United
States of America, and having an office at 2550 Denali Street, Anchorage,
Alaska, 99503-2721 ("Purchaser").
WHEREAS, Purchaser desires to establish a fiber optic submarine cable system, to
be known as Alaska United Fiber System ("System") linking the State of Alaska,
with landings in Juneau at Lena Point North and Whittier at Lookout Point, and
the State of Washington, with a landing in Richmond Beach at Puget Sound;
WHEREAS, Contractor is in the business of designing, constructing,
manufacturing, supplying, delivering, and installing fiber optic submarine cable
systems;
WHEREAS, Purchaser seeks to purchase and own the System and wishes to engage
Contractor to be responsible to design, construct, manufacture, supply, deliver,
and install the System and for Cable laying, testing, and commissioning the
System (hereinafter collectively called "Work"); and
WHEREAS, Contractor is willing to do the Work in accordance with and subject to
the terms hereof.
NOW THEREFORE, IT HAS BEEN AGREED AS FOLLOWS:
Article 1. Provision of System
Contractor agrees to design, engineer, provide and install or cause to be
designed, engineered, provided and installed and Purchaser agrees to purchase
the System designed, manufactured and installed in accordance with this
Contract.
Article 2. Documents Forming the Entire Contract
This Contract consists of these commercial Terms and Conditions and the
following documents (in the form of attachments, including appendices, attached
hereto), which shall be read and construed as part of the Contract, listed in
order of precedence:
- Technical Volume (including Route Information)
- Plan of Work, Appendix 6
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July 11, 1997 1 Alaska United Fiber System
<PAGE>
Commercial Volume Terms and Conditions
- Provisioning Schedule, Appendix 1
- Billing Schedule, Appendix 2
- Responsibilities for Submarine Cable Construction
Approvals, Permits, Permissions and Consents, Appendix 4
This ordering shall be used to establish priority in the event that there is an
inconsistency between any of these documents. In the event of any inconsistency
between the Terms and Conditions and the above listed documents, the Terms and
Conditions shall prevail.
These documents also may refer to the System as the Alaska United Cable System.
Article 3. Definitions
Definitions are as described in the specific Articles. Except as otherwise
defined, the following definitions shall apply throughout the Contract:
CIF means cost, insurance and freight which charges shall be reimbursed by
Purchaser, as estimated on Appendix 1 and as invoiced by Contractor.
Contract means this agreement, specifically consisting of the documents
described in Article 2, and shall be deemed to include any amendments thereto or
Contract Variations pursuant to Article 6 (Contract Variations).
Contractor means the entity that has executed this Contract as Contractor (SSI)
and will be responsible for the performance of the Work under this Contract and
shall include its successors and/or assigns.
Contract Price means the total price payable for the performance of the
Contract, as contained in Article 4 (Contract Price) and the Provisioning
Schedule, including any variations agreed upon between Contractor and Purchaser
pursuant to Article 6 (Contract Variations).
FOB (Free On Board) means that the Contractor fulfills its obligation to deliver
when the goods have passed over the vessel's rail at the named port of shipment.
Purchaser shall bear all costs of shipping and handling.
Initial Contract Price means the price set forth in Article 4(A).
Party(ies) means either of Purchaser and/or Contractor, as appropriate.
Performance Requirements means the System performance requirements set forth in
the Specifications or such other System performance levels as mutually agreed by
the Parties.
Provisioning Schedule means the price schedule attached hereto in Appendix 1.
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July 11, 1997 2 Alaska United Fiber System
<PAGE>
Commercial Volume Terms and Conditions
Purchaser means the entity that has executed this Contract as the Purchaser (GCI
Communication Corp.) and shall include its successors and/or assigns.
Specifications means the contents of the Technical Volume.
Software means all programs, data, object codes, documentation, and operating
systems, whether in writing, in firmware, or in any other form, which are
necessary for operation of the System. It includes documentation, any support
tools which are not commercially available, and data connected with the
development and support as well as any upgrade or enhancement thereto that may
be required under the warranty provisions.
Work means the managing, coordinating, planning, surveying, designing,
manufacturing, transporting, cable laying, installing, testing, commissioning,
training and any other associated services or activities whatsoever, including
any other work and obligations to be carried out in the execution of this
Contract by Contractor.
Article 4. Contract Price
A. Contract Price
Prices shall be as set forth in Appendix 1, Provisioning
Schedule. The initial Contract Price in United States Dollars
(US$) is ********** ("Initial Contract Price") for the System.
B. Taxes, Levies and Duties
1. Contract Price, as stated in 4(A) above, excludes
customs duties, sales, state, local, business,
occupation and use taxes, VAT, and fiscal stamps
connected with Contract legalization or any other
tax, duty, levy or similar charge which Contractor is
required by law to bill to and collect from the
Purchaser. At the Purchaser's request, Contractor
shall provide a good faith estimate of customs,
duties, and taxes or similar charges payable by the
Purchaser.
2. The Purchaser will be responsible for paying,
including but not limited to, all such appropriate
customs duties, sales, state, local, business,
occupation and use taxes, VAT, and fiscal stamps,
etc. connected with Contract legalizations to the
authorities in their countries. However, if
Contractor is required to pay such, it will be
reimbursed by the Purchaser within thirty (30) days
of the date the appropriate invoice is received by
the Purchaser in accordance with Article 5 (Terms of
Payment).
3. The Purchaser shall obtain at its own risk and
expense any import license or other official
authorization and carry out all customs formalities
necessary for the importation of goods.
Contractor,
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT SUBMITTED TO THE SEC.]
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July 11, 1997 3 Alaska United Fiber System
<PAGE>
Commercial Volume Terms and Conditions
upon request of Purchaser, shall provide Purchaser
with any reasonable assistance. The Purchaser shall
agree to be the Importer of Record or designate an
Importer of Record/Consignee on its behalf. Purchaser
must provide a Letter of Authorization from the third
party designate stating it will agree to be the
Importer of Record on Purchaser's behalf and identify
the individual name of the person and address of the
designated Importer of Record.
4. Unless otherwise agreed to in writing, the equipment,
materials and supplies to be installed or held on
land shall be delivered to the agreed point at the
named place of destination and shall be consigned to
the Purchaser.
C. Contractor's Income Tax
The Contractor shall be responsible for any income tax that
might be incurred by Contractor as a result of income obtained
by Contractor arising from and/or in connection with the
Contract.
Article 5. Terms of Payment
A. General Conditions of Payment
1. All payments shall be made and all invoices shall be
rendered in US Dollars (US$). The Purchaser shall be
responsible for and shall pay all costs and fees for
payment, as well as the banking and cabling costs.
All banking documents and correspondence must be in
English.
2. On or before **********, payment shall be secured by
one of the following Payment Securities: 1)
**********, or 2) **********, or 3) ********** or 4)
any other financial instrument acceptable to
Contractor. Any such Payment Security shall be in a
format that is acceptable to Contractor and be
confirmed by and payable at a bank chosen by
Contractor.
Account Number: **********
ABA Number: **********
Bank name and address: **********
**********
**********
3. The Payment Security will be in an amount equal to
the value of the work undertaken or to be undertaken
by Contractor, plus any other charges associated with
the issuance of any such Payment
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Security. At all times Contractor shall be entitled
to have any work to be undertaken to be secured by a
Payment Security before proceeding with such work.
B. Terms of Payment
1. Down Payment
********** of the Initial Contract Price ("Down
Payment"), as provided in the Billing Schedule, shall
be due after Contract signing and on or before August
1, 1997.
2. Progress Payments
(a) ********** of the Contract Price will be
invoiced in accordance with the Billing
Schedule in Appendix 2
3. Final Payment
(a) The remaining balance ********** of the
Contract Price will be invoiced upon the
issuance of the Certificate of Provisional
Acceptance, as set forth in Article 9.
(b) In the event a Certificate of Commercial
Service is issued prior to the issuance of
the Certificate of Provisional Acceptance,
the Purchaser shall be invoiced **********
of the remaining balance upon issuance of
the Certificate of Commercial Service, with
the balance to be invoiced upon the
issuance of the Certificate of Provisional
Acceptance.
4. Payment for Contract Variations
Contract variations will be invoiced and paid in
accordance with the terms of the Contract Variation
as set forth in Article 6 (Contract Variations).
C. Invoice Procedures
1. Invoices shall be submitted in the format as provided
in Appendix 3. All invoices for Work will be paid in
accordance with Article 5(B) hereof.
2. If the progress of the work within any category is
such that an appropriate milestone is not achieved by
the end of the month corresponding to the milestone
as set forth in the Plan of Work and in accordance
with the Billing Schedule, Contractor may, at the
Purchaser's option, invoice an amount consistent with
the portion thus far completed, to achieve that
milestone. If the Purchaser authorizes the submission
of such an invoice, the remaining amount shall be
invoiced at the time of completion of the milestone.
If the Purchaser does not authorize the partial
invoice, the entire amount will be invoiced upon
completion of the milestone.
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3. The Contractor shall render all invoices, in
accordance with Article 35, to the following
addresses:
GCI Communication Corp.
2550 Denali Street (Suite 1000)
Anchorage, Alaska 99503-2721
Attn: Mr. Jimmy R. Sipes
Vice President
Telephony Network Engineering
GCI Communication Corp.
2550 Denali Street (Suite 1000)
Anchorage, Alaska 99503-2721
Attn: Accounts Payable
D. Payment Procedures
1. Purchaser shall pay Contractor, and Contractor shall
accept payment, in accordance with Article 5 (Terms
of Payment).
2. The full amount owed, as invoiced, shall be paid
within ********** of the date of the respective
invoice, except for the Down Payment which shall be
paid as set forth in Article 5(B)1.
3. Invoices shall be submitted to the Purchaser by the
********** day of the month concerned.
4. Invoices not paid when due shall accrue late payment
charges from the day, following the day, on which
payment was due until the day on which it is paid.
Invoices for extended payment charges shall not be
issued for an amount less than U.S. **********.
Extended payment charges shall be computed at the
rate of **********.
5. An invoice shall be deemed to have been accepted for
payment if the Purchaser does not present a written
good faith objection within ********** of the receipt
date of the invoice by Mail, as defined in Article
35.
6. In the event that the Purchaser has an objection to
an invoice as mentioned in Article 5(D)(5) above, the
Purchaser and Contractor shall make every reasonable
effort to settle promptly the dispute concerning the
invoice in question. The Purchaser will have the
right to withhold payment of the disputed amount so
long as it deposits, in full, such disputed amount
into an escrow account held by a mutually agreed upon
escrow agent (hereinafter referred to as "Escrow") on
or before the date such amount was otherwise due.
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(a) Provided such disputed amount is placed into
Escrow in a timely manner, the Purchaser
shall not be deemed to be in breach of or in
default for failing to pay Contractor.
(b) Upon final resolution of such dispute, the
Escrow agent will distribute the disputed
amount to the prevailing party in accordance
with the resolution, together with any
interest earned on such amount.
(c) In addition, the prevailing party shall be
entitled to receive from the other party
interest on the distributed disputed amount
at a rate of **********.
7. The Purchaser shall make timely payments for that
portion of the invoice not in dispute in accordance
with Article 5(D), or such payments will be assessed
extended payment charges as set forth in Article
5(D)(4) above. Pending resolution of the dispute, the
Purchaser may not withhold payment on any other
invoice concerning different goods and/or services
submitted by Contractor.
8. If Purchaser fails to timely pay into the Escrow or
to Contractor, then Contractor must provide
********** written notice, in accordance with Article
35, to Purchaser of the failure to pay. If Purchaser
fails to cure such failure, then Contractor, upon
written notice, may suspend Work until such payment
is made.
Article 6. Contract Variations
A. Either the Purchaser or the Contractor may, during
construction of the System request, in writing, contract
variations requiring additions or alterations to, deviations
or deductions from the System ("Contract Variation"). Upon
consent of the other Party, any such change will be formalized
as an amendment to the Contract.
B. A Contract Variation shall be priced according to the
applicable unit prices listed in the Provisioning Schedule. To
the extent that the unit prices listed in the Provisioning
Schedule are not applicable to equipment, services or work in
the Contract Variation, the price payable for the Contract
Variation shall be as determined, in advance, by mutual
agreement based upon the price information provided to the
Purchaser by the Contractor. The terms of payment and the
payment procedures for the Contract Variations shall also be
as mutually agreed upon prior to the execution of the Contract
Variation.
C. If a Contract Variation results in an increase in the time
required to complete the Work, the Contractor shall notify, in
writing, the Purchaser of the extension of time required. A
Contract Variation shall not become effective unless and until
the price adjustment, the terms and schedule of
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payment and the extension of time have been mutually agreed
upon by the Parties. A Contract Variation is accepted and
binding when signed by an authorized representative of each
Party and shall be incorporated as amendments into the
Contract.
D. Any changes in Work resulting from a change in route selection
will be treated as a Contract Variation.
E. Any change of any law (except those affecting the customs
duties, sales, use or import taxes, VAT, and any other tax,
duty, levy or similar charges borne by the Purchaser, relating
to Contract items and fiscal stamps connected within Contract
legalization) which require a change in the Work and/or affect
the Contract Price, shall be treated as a Contract Variation
and its terms must be mutually agreed as set forth in Articles
6(B) and 6(C).
F. The engineering for the shore end/land construction is
provided for in the Provisioning Schedule and the
Specifications. Purchaser and Contractor shall work together
cooperatively to determine the final engineering for the shore
end/land construction. Any changes will be treated as a
Contract Variation. In the event, Purchaser seek certain
changes to reach an agreed upon final engineering plan and
provided such changes are within the general scope of Work
covered by the Contract and technically feasible, the
Contractor shall not unreasonably refuse to agree to such
changes where they are not of a fundamental nature and
provided the changes can be implemented during the
construction period. Contractor agrees it will not commence
Work on the final engineering for the shore end/land
construction until such final engineering plan is mutually
agreed upon.
Article 7. Responsibilities for Submarine Cable Construction Approvals,
Permits, Permissions and Consents
A. Both the Contractor and the Purchaser shall work together to
obtain all necessary approvals, permits, permissions,
consents, licenses and customs clearance (hereinafter referred
to as "Permits").
B. The Purchaser shall be solely responsible for obtaining the
Permits identified in Appendix 4(I) (Responsibilities for
Submarine Cable Construction Approvals, Permits, Permissions
and Consents). Upon written request, the Contractor shall
assist the Purchaser in obtaining such Permits. In case of
such assistance, promptly after the actual costs become known
to the Contractor, the Contractor shall provide a statement of
such actual costs to the Purchaser. Thereafter, the Purchaser
shall reimburse the Contractor for the actual costs incurred
by the Contractor against submission of corresponding
invoices, and in accordance with Article 5 (Terms of Payment).
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C. The Contractor shall be solely responsible for obtaining the
Permits identified in Appendix 4(II). Upon written request,
the Purchaser will assist and promptly provide information to
the Contractor.
D. Any delay in obtaining such Permits shall constitute a Force
Majeure and be treated as described in Article 17 (Force
Majeure), unless the fault can be attributed to a Party.
Article 8. Route Survey
A. Contractor has conducted a Route Survey and has made a route
selection for the System, based on the Route Survey. The
Purchaser and Contractor have mutually agreed on the route and
on the consequent Straight Line Diagram (SLD). The Contractor
shall be responsible for any changes resulting from any Route
Survey inaccuracies.
B. Any changes required to the route selection shall be treated
as a Contract Variation in accordance with Article 6, Contract
Variation.
Article 9. Acceptance
A. General
1. Provisional Acceptance and Final Acceptance shall be
determined in accordance with the applicable test
programs described in the Specifications ("Acceptance
Testing").
2. The Acceptance Testing shall be performed by the
Contractor. The Purchaser or its designated
representatives may observe the Contractor's tests
and review the test results. Additionally, Purchaser
shall perform its own tests, including the confidence
trials described in Section 1.1.2 of the
Specifications.
3. All expenses incurred by the Contractor (including
testing apparatus and technical staff) in the
execution of the Acceptance Testing shall be borne by
the Contractor. The Contractor shall not be
responsible for any costs incurred by the Purchaser
or its representatives or for any additional tests
requested by the Purchaser.
4. The Purchaser shall not unreasonably withhold
issuance of any Acceptance Certificate.
B. Provisional Acceptance
1. This System shall be ready for Provisional Acceptance
by a date mutually agreed to by both the Purchaser
and the Contractor. Provisional Acceptance occurs
when the results of the Acceptance Testing
demonstrate that the Work is sufficient to realize
the System performance requirements set forth in the
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Commercial Volume Terms and Conditions
Specifications or such other System performance
levels as agreed upon as acceptable by the Purchaser
and the Contractor (hereinafter collectively
"Performance Requirements"), and the Contractor has
fulfilled its commitments under the Contract.
2. Within ********** of receipt of the complete set of
Acceptance Testing results, the Purchaser must issue
notification of the following:
(a) Issuance of a Certificate of Provisional
Acceptance in accordance with this Article
9(B); or
(b) rejection of a Certificate of Provisional
Acceptance, but instead issuance of a
Certificate of Commercial Service in
accordance with Article 9(C) below; or
(c) rejection of the System for both
Provisional Acceptance and Commercial
Service in its existing condition with a
written explanation of reasons for
rejection.
If the Purchaser fails to respond with such
notification in a timely manner, but no later than
**********, then Provisional Acceptance of the System
shall be deemed from the date of receipt of the
results of Acceptance Testing.
3. On receipt of a notice from the Purchaser pursuant to
Articles 9(B)(2)(b) or (c) above, the Contractor
shall be entitled to address any disputes and explain
any discrepancies to the Purchaser regarding the
results of the Acceptance Testing. If the Purchaser
is agreeable, it may issue a new notice pursuant to
Article 9(B)1 above, which shall be deemed to have
been issued on the date of the original notice.
4. In case of rejection, and if the explanation by the
Contractor as in Article 9(B)(3) above is not
accepted, for good cause, by the Purchaser, the
Contractor shall carry out the necessary corrective
actions and will effect a new series of Acceptance
Testing ("Re-testing"). After receipt of the results
of the Re-testing, the Purchaser will be granted a
new period of ********** to analyze the new results
according to the provisions of Article 9(B)2 and any
new notice from the Purchaser shall apply from the
date the Purchaser receives the latest test results.
5. In accordance with the above, upon issuance of a
Certificate of Provisional Acceptance by the
Purchaser, the System shall vest in the Purchaser on
whichever is the later of the following dates, the
actual deemed date of issue of the notice or the
Provisional Acceptance date. The Certificate of
Provisional Acceptance shall bear the actual date
when the System was put into service and may contain
a written list of outstanding items, if any, required
by this Contract that do not affect the normal
operation and maintenance of the System.
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6. The Contractor shall remedy the items in a timely
fashion, prior to Final Acceptance. In such a
situation, the Purchaser shall allow the Contractor
access to the System, as the Contractor may need to
remedy such outstanding items upon the Contractor
giving the Purchaser reasonable notice of its need
for such access.
7. As from the date of vesting of the System, determined
in accordance with Article 9(B)5 above, the Purchaser
shall assume the risk in respect of all parts of the
System and responsibility for its maintenance.
Notwithstanding the above, provided that the
Contractor has been allowed access to the System as
required in Article 9(B)6, the Contractor shall
continue to carry the risk with respect of any
outstanding items.
C. Commercial Service
1. A Certificate of Commercial Service may be issued if
the results of the Acceptance Testing demonstrate
that the Work: (i) is not sufficient to meet the
System Performance Requirements and (ii) does not
reasonably justify the issuance of a Certificate of
Provisional Acceptance, but nevertheless, the
Contractor determines that the System is capable of
carrying commercial traffic and the Purchaser
consents to put the System into Commercial Service,
which consent shall not be unreasonably withheld.
2. Upon the issuance of a Certificate of Commercial
Service, the System shall be deemed to be accepted
for commercial use and shall vest in the Purchaser on
the actual date when the System was put into
commercial service.
3. The Certificate of Commercial Service shall have
annexed to it a mutually agreed list of all
outstanding items to be completed by the Contractor.
4. The Contractor shall remedy the items in a timely
fashion, provided that the Purchaser allows the
Contractor the necessary access to the System as the
Contractor needs to remedy such outstanding items.
The Contractor shall give the Purchaser reasonable
notice of its requirement for such access.
Notwithstanding the above, provided that the
Contractor has been allowed access to the System as
required in Article 9(D)4, the Contractor shall
continue to carry the risk of loss for any
outstanding items.
5. From the date of vesting, as determined in accordance
with Article 9(C)2 above, the Purchaser shall assume
the risk of loss with
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respect to all parts of the System (except as
mentioned in Article 9(C)4 above) and responsibility
for its maintenance.
6. When the outstanding items referenced in Article
9(C)3 above have been remedied, the Purchaser will
immediately issue a Certificate of Provisional
Acceptance.
7. The issuance of a Certificate of Commercial Service
shall in no way relieve the Contractor from its
obligation to provide a System conforming with the
Performance Requirements at the time of the issuance
of a Certificate of Provisional Acceptance.
D. Final Acceptance
1. Final Acceptance shall occur six months after
Provisional Acceptance provided that the System has
successfully completed Final Acceptance Testing which
demonstrates that the System meets System Performance
Requirements, and the Contractor has fulfilled its
commitments under the Contract.
2. Within ********** of the date of the Report of the
Final Acceptance Testing, the Purchaser shall issue a
Certificate of Final Acceptance. The issuance of the
Certificate of Final Acceptance will not be
unreasonably withheld or delayed. If no such
Certificate of Final Acceptance is issued, then Final
Acceptance of the System shall be deemed to have
occurred at the date of the Report.
3. The Purchaser may choose to dispense with Final
Acceptance Testing and immediately issue the
Certificate of Final Acceptance.
Article 10. Warranty
A. The Contractor warrants that ********** and that **********
(hereinafter "Warranty Period"), **********. However, the
Contractor shall only be responsible for ********** Warranty
Period for **********. The remaining years of the Warranty
Period shall be **********.
1. During the Warranty Period, the Contractor
shall make good, **********, which may
become apparent or be discovered due to
**********
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**********.(a) The Contractor shall perform
any repair required to restore the System to
the Specifications, if at any time during
the Warranty Period, **********.
(b) The Contractor shall make every reasonable
effort **********. The Purchaser agrees to
cooperate with the Contractor to facilitate
the Contractor's repair activity.
(c) In the event that the Contractor fails to
timely make the repair **********, the
Purchaser may repair the System and collect
the reasonable costs of such repair from the
Contractor.
(i) The Contractor shall be entitled to
have a representative on board ship
to observe at sea repairs and shall
be given the earliest possible notice
of any such repair. If the Contractor
is not able to attend in time,
despite such advance notices, then
the Contractor will accept
responsibility for the repairs
provided **********.
(ii) Subject to the foregoing, any repair
by the Purchaser **********. Any
equipment discovered to be defective
or faulty and recovered during a
warranty repair shall be returned to
the Contractor at its request.
2. The Contractor shall ********** required during the
Warranty Period, which **********
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**********.
3. The Contractor shall **********. However, the
Contractor may use, with the consent of the
Purchaser, which shall not be unreasonably withheld,
**********. The Contractor shall replace in kind
**********, or at the option of the Purchaser,
reimburse the Purchaser **********. The replacement
of or reimbursement for such materials shall be made
at a time mutually agreed to by the Purchaser and the
Contractor.
4. If during the Warranty Period **********.
5. Any defective part repaired or replaced during the
Warranty Period **********. However, the Warranty
Period shall never **********.
B. The Contractor warrants that services furnished hereunder will
be performed in a careful and workmanlike manner using
materials free from defects except **********. If such
services prove to be not so performed and the Purchaser
notifies the Contractor **********, the Contractor, at its
option, either **********.
C. The warranty provided by the Contractor shall not apply to
defects or failures of performance, which result from
**********.
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D. EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN, **********.
Article 11. Contractor Support
A. For a period of ********** from the date of Provisional
Acceptance, the Contractor will make available to the
Purchaser replacement parts and repair service for the System
as may be reasonably necessary for its operation, maintenance
or repair. Where identical parts cannot be supplied, the
Contractor shall provide fully compatible parts with
characteristics equal or equivalent to those originally
provided by the Contractor. Such parts and services shall be
provided under Contractor's normal and reasonable conditions
of price and delivery.
B. If for any reason the Contractor intends to cease
manufacturing or having manufactured identical or fully
compatible replacement parts, the Contractor shall give a
minimum of ********** notice to the Purchaser to allow the
Purchaser to order from the Contractor any required
replacement parts and shall forthwith provide full details of
the arrangements to provide equivalents.
C. In the event that Purchaser fails or does not purchase
sufficient parts during the period set forth in Article 11(B),
Purchaser understands that Contractor will provide support,
but such support shall be at Purchaser's expense.
D. Nothing under Article 11(B) shall be interpreted to limit or
eliminate the Contractor's obligations under Article 10(A)4.
Article 12. Purchaser's Obligations
If any loss, damage, delay or failure of performance of the System results from
the Purchaser's failure to perform its obligations hereunder and results in an
increase in the costs of performance or the time required for performance of any
of the Contractor's duties or obligations under this Contract, which cannot be
avoided by reasonable efforts on the part of the Contractor, the Contractor
shall be entitled to (i) **********, (ii) **********, (iii) **********, and (iv)
**********.
A. The Contractor shall inform the Purchaser promptly of any
occurrence covered under this Article, and shall use
reasonable efforts to minimize any such additional costs or
delay.
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B. The Contractor shall promptly provide to the Purchaser an
estimate of the anticipated additional costs and time required
to complete the Work.
C. As soon as reasonably practicable after the actual costs
become known to the Contractor, the Contractor shall provide a
statement of such actual costs to the Purchaser.
D. The Purchaser thereafter shall reimburse the Contractor for
the actual, reasonable and necessary costs incurred by the
Contractor against submission of corresponding invoices, and
in accordance with Article 5 (Terms of Payment).
Article 13. Termination for Default
A. Either Party may, by written Notice of Termination for
Default, immediately upon receipt or such later date as
specified in the notice, terminate the whole or any part of
this Contract in any one of the following circumstances:
1. If a Party materially fails to comply with the Terms
and Conditions of this Contract and does not proceed
to cure such failure within a period of ********** (or
such longer period as the non-breaching Party may
authorize in writing) after receipt of written notice
to cure from the non-breaching Party specifying such
failure; or
2. If the other Party **********.
B. If this Contract is terminated by the Purchaser as provided in
Article 13(A), the Purchaser, in addition to any other rights
provided in this Article and upon payment to Contractor of all
monies due and owing as set forth in Article 13(C) below, may
require the Contractor to transfer title and deliver to the
Purchaser in the manner and to the extent directed by the
Purchaser any completed equipment, material or supplies, and
such partially completed cable and materials, parts, tools,
dies, jigs, fixtures, plans, drawings, information, and
contract rights (hereinafter collectively "Manufacturing
Materials") as the Contractor has had specifically produced or
specifically acquired for the performance of such part of this
Contract as has been terminated and which, if this Contract
had been completed, would have been required to be furnished
to the Purchaser; and the Contractor shall, upon the direction
of the Purchaser, protect and preserve property in the
Contractor's possession in which the Purchaser has an
interest.
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C. If the Contract is terminated by either Party as provided in
13(A), the Contractor shall be paid:
1. the prices, less the applicable discount, specified
in the Provisioning Schedule for completed equipment,
material and supplies delivered and services
performed; and
2. the amount agreed upon by the Purchaser and the
Contractor for Manufacturing Materials delivered to
and approved by the Purchaser; and
3. the Contractor's actual, reasonable, and necessary
costs incurred for the protection and preservation of
property.
D. Force Majeure events pursuant to Article 17 (Force Majeure)
shall not constitute a default under this Article.
E. In the event of any termination of this Contract as provided
in Article 13(A), neither Party shall be relieved from any
liability for damages or otherwise which may have been
incurred by reason of any breach of this Contract.
Article 14. Termination for Convenience
A. On or before **********, the performance of Work under this
Contract may be terminated by Purchaser in whole, or in part,
at its discretion. Purchaser shall deliver to the Contractor a
written Notice of Termination specifying the extent to which
performance of Work under this Contract is terminated, and the
date upon which such termination becomes effective. Upon
termination, the Purchaser will make payment to Contractor of
all monies due and owing as set forth in Article 14(D) below.
B. After receipt of such Notice of Termination, and except as
otherwise directed by the Purchaser, the Contractor shall:
1. Stop Work under this Contract on the date and to the
extent specified in the Notice of Termination;
2. Place no further orders or contracts for materials,
services or facilities except as may be necessary for
completion of such portion of Work under this
Contract as is not terminated;
3. Use reasonable best efforts to terminate all orders
and contracts to the extent that they relate to the
performance of Work terminated by the Notice of
Termination;
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4. Assign to the Purchaser, in the manner, at the time,
and to the extent directed by the Purchaser, all of
the Contractor's rights, title and interest under the
orders and contracts so terminated;
5. Use reasonable efforts to settle all outstanding
liabilities and all claims arising out of such
termination of orders and contracts, with the
Purchaser's prior approval;
6. Transfer title and deliver to the Purchaser in the
manner, at the time and to the extent (if any)
directed for the following:
(a) the fabricated or unfabricated parts, work
in process, completed work, supplies,
inventory and other material produced as a
part of, or acquired in connection with,
the performance of the Work terminated by
the Notice of Termination; and
(b) the completed or partially completed plans,
drawings, information and other property
which, if this Contract had been completed,
would have been required to be furnished to
the Purchaser.
7. Use reasonable best efforts to sell, in the manner,
at the time, to the extent and at the price or prices
directed or authorized by the Purchaser, any property
of the types referred to in Article 13(B)6 above
provided, however, that the Contractor:
(a) shall not be required to extend credit to
any buyer; and
(b) may acquire any such property under the
conditions prescribed by and at a price
approved by the Purchaser; and provided
further that the proceeds of any such
transfer or disposition shall be applied in
reduction of any payments to be made by the
Purchaser to the Contractor under this
Contract or paid in such other manner as
the Purchaser may direct.
8. Complete performance of such part of the Work which
was not terminated by the Notice of Termination; and
9. Take such action as may be necessary, or as the
Purchaser may reasonably direct, for the protection
and preservation of the property related to this
Contract which is in the Contractor's possession and
in which the Purchaser has acquired or may acquire an
interest.
C. After such Notice of Termination, the Contractor shall submit
to the Purchaser a written termination claim. Such claim shall
be submitted promptly, but, unless otherwise extended, in no
event later than one year, but for a termination of the entire
Contract within six months, from the effective date of
termination.
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D. In the settlement of any such partial or total termination
claim, the Purchaser shall pay to the Contractor the total of:
1. the Contract Price for that part of the Work which
has been completed;
2. a fair and reasonable proportion of the Contract
Price for that part of the Work which has been
partially completed;
3. the costs, including administrative costs, plus a
reasonable markup of materials and supplies purchased
in respect of the Contract but not yet incorporated
into the Work;
4. the cost of settling and paying claims rising out of
the termination of Work under the contracts in
orders, as provided in Article 14(D)5 below which are
properly chargeable to the terminated portion of this
Contract, as previously approved Purchaser; and
5. the actual and reasonable costs of settlement
including accounting, legal, clerical and other
expenses necessary for the preparation of settlement
claims and supporting data with respect to the
terminated portion of this Contract and for
termination and settlement of contracts thereunder,
together with reasonable storage, transportation and
other costs incurred in connection with the
protection and disposition of property proper to this
Contract.
E. In arriving at the amount due to the Contractor under this
Article 14 all unliquidated payments made to the Contractor,
any liability which the Contractor may have to the Purchaser,
and the agreed price for, or the proceeds of sale of any
materials, supplies or other things acquired by the Contractor
or sold, pursuant to the provisions of this Article 14, and
not otherwise recovered by or credited to the Purchaser shall
be deducted.
F. In addition, if the Contract is only partially terminated,
prior to the settlement of the terminated portion, the
Contractor may file with the Purchaser a request in writing
for an equitable adjustment of the Contract Price for the
portion of the Contract not terminated by the Notice of
Termination, and any such equitable adjustments as mutually
agreed shall be reflected in the Provisioning Schedule,
Appendix 1.
G. The Purchaser may, from time to time, under such terms and
conditions as it prescribes, approve partial payments and
payments on account against costs incurred by the Contractor
in connection with the terminated portion of this Contract. If
such payments total in excess of the amount finally agreed or
determined to be due under this Article 14, such excess shall
be refunded, upon demand, by the Contractor to the Purchaser.
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H. For a period of ********** after final settlement under this
Contract, the Contractor shall preserve and make available to
the Purchaser and its representatives at reasonable times at
the Contractor's office, but without charge to the Purchaser,
all supporting books, records and documents required to be
kept relating to the terminated Work.
Article 15. Suspension
A. On or before **********, Purchaser may, at its convenience,
order the Contractor to suspend all or part of the Work
(hereafter "Suspension") for such period of time as the
Purchaser determines to be appropriate. If, as a result of
such Suspension, the Contractor incurs additional costs or
losses in the discharge of its responsibilities under this
Contract, and where such suspension, losses or costs are not
caused by the Contractor's act or omission and could not have
been reasonably prevented by the Contractor, the Contractor
shall be allowed an equitable adjustment to the Contract Price
or the Provisioning Schedule in Appendix 1 and an equitable
extension in the time required for performance.
B. Every **********, during the period of Suspension, the Parties
shall meet formally and review the circumstances surrounding
the Suspension including without limitation, the anticipated
date of re-commencing Work.
C. Thereafter, if the Suspension continues for a total of
**********, the Contractor may terminate the Contract in
accordance with the terms as specified in Article 14
(Termination for Convenience).
Article 16. Title and Risk of Loss
A. Except as provided in Article 18 (Intellectual Property),
Article 20 (Safeguarding of Information and Technology) and
Article 21 (Export Control), title to all equipment, materials
and supplies provided by the Contractor hereunder for
incorporation in or attachment to the System shall pass to and
vest in the Purchaser upon receipt of Final Payment in
accordance with Article 5(B)3 and the issuance of Certificate
of Provisional Acceptance. Risk of loss or damage to all
equipment, materials and supplies provided by the Contractor
for incorporation in or attachment to the System shall pass to
and vest in the Purchaser upon Provisional Acceptance or upon
placement of the System in Commercial Service, whichever comes
first. Prior to such vesting, unless provided for otherwise in
this Contract, the risk of loss shall be borne by the
Contractor. Upon termination of this Contract pursuant to
Articles 13 (Termination for Default) or 14 (Termination for
Convenience), the Purchaser may require, upon full payment,
that title to the equipment, materials and supplies, which has
not previously passed to the Purchaser, pass to the Purchaser,
free and clear of all liens, claims, charges and other
encumbrances.
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B. Upon Provisional Acceptance or upon placement in Commercial
Service of the System, the Contractor warrants that all parts,
materials, and equipment furnished by the Contractor or its
subcontractors hereunder are free from valid liens,
encumbrances, and security interests arising by or through the
Contractor.
C. Once risk of loss has passed to the Purchaser, the Purchaser
shall indemnify and hold the Contractor harmless from any
claims by third parties (other than Contractor, its
subcontractors, agents or employees) for damage or loss
including bodily injuries and deaths, resulting from the use,
ownership, or operation of the System.
Article 17. Force Majeure
A. The Contractor shall not be responsible for any loss,
damage, delay or failure of performance resulting directly or
indirectly from any cause which is beyond its reasonable
control, including but not limited to: acts of God or of the
public enemy; acts or failure to act of any governmental
authority; war or warlike operations, civil war or commotions,
mobilizations or military call-up, and acts of similar nature;
revolution, rebellions, sabotage, and insurrections or riots;
fires, floods, epidemics, quarantine restrictions; strikes,
and other labor actions; freight embargoes; severe or
unworkable weather; trawler or anchor damage; damage caused by
other marine activity such as fishing, marine research and
marine development; inability to secure raw materials or
components; delay in obtaining permits, permissions, licenses,
approvals, consents or customs clearance of supplies,
materials or equipment; acts or omissions of transporters; or
the acts or failure to act of any of the Purchaser, of its
representatives or agents.
B. If any such Force Majeure causes an increase in the time or
costs required for performance of any of its duties or
obligations, the Contractor shall be entitled to the
following: (i) an equitable adjustment in the Contract Price,
(ii) an equitable extension of time for completion of the
Work, (iii) reimbursement for all such uninsured additional
costs incurred and (iv) relief from any obligation or duties
as a result thereof.
1. Notwithstanding the above, Contractor will take
the risk of loss for any trawler or anchor damage or
damage caused by other marine activity until risk of
loss passes to Purchaser under Article 16.
2. In addition, there are ********** built into the
Plan of Work for use for reasonable business purposes
to cover unexpected contingencies affecting
Contractor and are to be fully utilized before there
is any equitable adjustment of time for any Force
Majeure condition.
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C. The Contractor shall inform the Purchaser promptly with
written notification, and in all cases within ********** of
discovery and knowledge, of any occurrence covered under this
Article and shall use its reasonable efforts to minimize such
additional costs or delays. The Contractor shall promptly
provide an estimate of the anticipated additional costs and
the time required to complete the Work. Contractor shall be
entitled to an extension of time equal to at **********
resulting from the Force Majeure condition. As soon as
reasonably practicable after the actual costs become known to
the Contractor, the Contractor shall provide a statement of
such actual costs to the Purchaser. Thereafter, the Purchaser
shall reimburse the Contractor for the actual costs incurred
by the Contractor against submission of corresponding invoices
in accordance with Article 5 (Terms of Payment).
D. Within ********** of receipt of such a notice from Contractor,
the Purchaser may provide a written response. The absence of a
response shall be deemed as acceptance of Contractor's notice
and request for additional costs.
Article 18. Intellectual Property
A. Ownership
All right, title, and interest in and to any information,
computer or other apparatus programs, software,
specifications, drawings, designs, sketches, tools, market
research or operating data, prototypes, records,
documentation, works of authorship or other creative works,
ideas, concepts, methods, inventions, discoveries,
improvements, or other business, financial and/or technical
information (whether or not protectable or registrable under
any applicable intellectual property law) developed by
Contractor in the course of its performance under this
Contract, or otherwise furnished by Contractor to Purchaser as
part of the delivery of the System under this Contract, is and
shall remain the sole property of Contractor (hereinafter
individually and collectively referred to as "Intellectual
Property"). Unless otherwise expressed in this Contract, no
license is implied or granted herein to Purchaser to any
Intellectual Property by virtue of this Contract, nor by the
transmittal or disclosure of any such Intellectual Property to
Purchaser. Any Intellectual Property disclosed, furnished, or
conveyed to Purchaser that is marked as "Proprietary" or
"Confidential", (or if transmitted orally is identified as
being proprietary or confidential), or under the totality of
the circumstances ought to reasonably be treated as being
proprietary or confidential to Contractor even if not so
marked or identified, shall be treated in accordance with the
provision of Article 20 (Safeguarding of Information and
Technology).
B. Licenses
Contractor grants to Purchaser a personal, non-transferable
license to use Intellectual Property that is conveyed to
Purchaser when such use is unavoidably necessary for Purchaser
to fulfill its obligations under this Contract. For the
purposes of this Article, transfer means **********. Such
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grant shall further include the right by Purchaser to use such
conveyed Intellectual Property to the extent unavoidably
necessary to use any System supplied in accordance with the
terms of this Contract. The licenses granted herein shall not
include the right to sub-license. No license under
Contractor's patents, copyrights, trade or service marks,
trade secrets or other intellectual property rights
protectable under law in the United States or any foreign
country is granted to Purchaser.
C. Software
Contractor grants to the Purchaser a personal, non-exclusive,
and non-transferable right to use Intellectual Property
conveyed to Purchaser by Contractor in the form of software,
including object codes and related documentation. Such
software license shall not be applicable to commercial,
off-the-shelf software, or software provided or developed by
third parties, and shall be limited to the right to use the
software with the equipment in the System for which the
software was provided.
1. Confidentiality
Purchaser shall keep the software confidential in
accordance with Article 20 (Safeguarding of
Information and Technology) and Article 21 (Export
Control) and agrees to use its best efforts to see
that its employees, consultants, and agents, and
other users of such software, comply with the
provisions of this Contract. Purchaser also agrees to
refrain from taking any steps, such as reverse
assembly or decompilation, to derive a source code
equivalent of any object code that is furnished by
Contractor.
2. Backup Copies
Purchaser may make and retain two archive copies of
software provided. Any copy will contain the same
copyright notice and proprietary markings as are on
the original software and shall be subject to the
same restrictions as the originals.
3. Termination of Software Licenses
In the event of use of software furnished hereunder
other than that permitted in Article 18(C) or any
other material breach of this Article 18 by
Purchaser, Contractor, at its option, may terminate
the rights granted to Purchaser pursuant to this
Article, upon written notice to Purchaser. Upon
termination, Purchaser shall either return or
destroy, at Contractor's option, all copies of
software furnished under this Contract.
4. Indemnification
In the event of use of software furnished hereunder
other than permitted in Article 18(C) or any other
material breach of this Article 18 by Purchaser, the
Purchaser shall indemnify and hold Contractor
harmless from any defect of the software as well as
from any and all third party claims resulting
therein.
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D. Trademarks, Tradenames, etc.
No right is granted herein to Purchaser to use any
identification (such as, but not limited to tradenames,
trademarks, service marks or symbols, and abbreviations,
contractions, or simulations thereof) owned or used by
Contractor or its parent company and affiliates to identify
Contractor or its parent company and affiliates or any of its
products or services. Purchaser agrees that it will not,
without the prior written permission of Contractor, use such
identification in advertising, publicity, packaging, labeling,
or in any other manner to identify itself or any of its
products, services, or organizations, or represent directly or
indirectly that any product, service, or organization of it is
a product, service, or organization of Contractor or its
parent company or affiliates, or that any product or service
of Purchaser is made in accordance with or utilizes any
Intellectual Property of Contractor or its parent company or
affiliates.
E. Disclaimer, Limitation of Liability
Contractor represents that any information or Intellectual
Property furnished in connection with this Contract shall be
true and accurate to the best of its knowledge and belief, but
Contractor shall not be held to any liability for
unintentional errors or omissions therein except under Article
10(A). Except as expressly provided, Contractor makes no
representations or warranties, expressly or implied. By way of
example, but not of limitation, Contractor and its parent
company and affiliates make **********, or that the use of
information or Intellectual Property disclosed or provided
hereunder will not infringe any patent or other intellectual
property right of a third party. Contractor and its parent and
affiliates shall not be held to any liability with respect to
any claim by Purchaser or any third party claim against
Purchaser on account of, or arising from, Purchaser's use of
information or Intellectual Property disclosed or provided by
Contractor.
F. Joint Development
In the event that the disclosure of Intellectual Property by
Contractor or the exchange of other information results in the
creation or development of new information from the
substantial contribution of one or more of Contractor's
employees, agents, or consultants with one or more of
Purchaser's employees, agents, or consultants during the
course of this Contract, then such newly created information
shall be subject to the terms of Article 20 (Safeguarding of
Information and Technology). Any such newly developed
information shall be jointly owned by the Parties.
Notwithstanding the above, the Parties acknowledge and agree
that between them the ownership of any newly created
information comprising inventions, discoveries, improvements,
conceived, first reduced to
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practice, made or developed in anticipation of, in the course
or as a result of Work, shall be determined in accordance with
Title 35 of the United States Code. With respect to any newly
created information that is patented and jointly owned by the
Parties, each Party shall have equal rights to license such
patents or assign their interests to third parties without
accounting to or obtaining the consent of the other Party
hereto. The Parties shall by mutual agreement decide which
Party shall file any United States Patent application. The
Party filing such application shall do so at its own expense
and shall have the right to elect to file in any foreign
country it so chooses. Each Party agrees that it will, without
charge to the other, have its employees, agent, consultants or
other associates, sign all papers and do all acts necessary,
desirable, or convenient to enable the filing party at its
expense to file and prosecute applications for patents on such
inventions, discoveries, or improvements, and to maintain
patents granted thereon.
Article 19. Infringement
A. The Contractor agrees to defend or settle at its own expense
all suits for infringement of any patent, copyright, trademark
or other form of intellectual property right in any country of
the world, for any material (or the manufacture of any material
or the normal use thereof) provided by the Contractor or on its
behalf pursuant to this Contract and will hold the Purchaser
harmless from all expense of defending any such suit and all
payments for final judgment assessed on account of such
infringement, except such infringement or claim arising from:
1. The Contractor's adherence to the Purchaser's
directions to use materials or parts of the
Purchaser's selection; or
2. Such material or parts furnished to the Contractor by
the Purchaser, other than in each case, items of the
Contractor's design or selection or the same as any of
the Contractor's commercial merchandise or in
processes or machines of the Contractor's design or
selection used in the manufacture of such standard
products or parts; or
3. Use of the equipment other than for the purposes
indicated in, or reasonably to be inferred from, this
Contract or in conjunction with other products; or
4. Modification of the equipment by the Purchaser,
without prior expressed written approval by
Contractor.
B. The Purchaser will, at its own expense, defend all suits
against the Contractor for such excepted infringement and hold
the Contractor harmless from all expense of defending any such
suit and from all payments by final judgment assessed against
the Contractor on account of such excepted infringement.
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C. The Contractor and the Purchaser agree to give each other
prompt written notice of claims and suits for infringement,
full opportunity and authority to assume the sole defense,
including appeals and, upon request and at its own expense, the
other agrees to furnish all information and assistance
available to it for such defense.
D. If any part or equipment provided by the Contractor or on its
behalf is held to constitute an infringement (excluding such
excepted infringements specified in Article 19(A)) and is
subject to an injunction restraining its use or any order
providing for its delivery up to or destruction, the Contractor
shall at its own expense either:
1. Procure for the Purchaser the right to retain and
continue to use such part or equipment;
2. Replace or modify the System or such part or equipment
so that it becomes non-infringing; or
3. If the remedies specified in Articles 19(D)1 and
19(D)2 are not feasible, accept return of such part or
equipment and provide a full refund of the price
thereof.
E. In no event shall the Purchaser make any admission in relation
with any claim for infringement.
Article 20. Safeguarding of Information and Technology
A. In performance of this Contract, it may be mutually
advantageous to the Parties hereto to share certain
specifications, designs, plans, drawings, software, market
research or operating data, prototypes, or other business,
financial, and or/technical information related to products,
services, or systems which are proprietary to the disclosing
party or its affiliates (and in the case of Contractor,
Contractor's parent company)("Information"). The Parties
recognize and agree that Information includes information that
was supplied in contemplation hereof prior to execution of this
Contract, and further agree that Information includes
information in both tangible and intangible form.
B. Unless such Information was previously known to the Party
receiving such Information free of any obligation to keep it
confidential, or such Information has been or is subsequently
made public through other than unauthorized disclosure by the
receiving Party or is independently developed by the receiving
Party (as documented by the records of the receiving Party), it
shall be kept confidential by the Party receiving such
Information, shall be used only in the performance of this
Contract, and may not be used for any other purposes except
upon such terms as may
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be agreed upon in writing by the Party owning such Information.
The receiving Party may disclose such Information to other
persons, upon the furnishing Party's prior written
authorization, but solely to perform acts which this Article
expressly authorizes the receiving Party to perform itself and
further provided such other person agrees in writing (a copy of
which writing will be provided to the furnishing Party at its
request) to the same conditions respecting disclosure and use
of Information contained in this Article and to any other
reasonable conditions requested by the furnishing Party.
Article 21. Export Control
The Parties acknowledge that any products, software, and technical information
(including, but not limited to, services and training) provided by either Party
under this Contract are or may be subject to export laws and regulations of the
United States and the destination country(ies) and any use or transfer of such
products, software and technical information must be authorized under those
regulations. The Parties agree that they will not use, distribute, transfer or
transmit the products, software or technical information (even if incorporated
into other products) except in compliance with export regulations. If requested
by either Party, the other Party agrees to sign all necessary export-related
documents as may be required to comply with export regulations
Article 22. Liquidated Damages
The Contractor shall pay to the Purchaser by way of pre-estimated and liquidated
damages for the delay and not as a penalty, an assessed amount equal to
********** under the following limited circumstances:
A. If the System **********:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure); or
3. Other arrangements as agreed between the Purchaser
and the Contractor; OR
B. If **********.
Article 23. Limitation of Liability/Indemnification
A. NOTWITHSTANDING ANY OTHER PROVISION IN THIS CONTRACT, NEITHER
PARTY SHALL IN ANY EVENT BE LIABLE FOR ANY CONSEQUENTIAL,
INCIDENTAL, INDIRECT OR SPECIAL DAMAGES INCLUDING, BUT NOT
LIMITED TO, LOSS OF REVENUE, LOSS OF
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BUSINESS OPPORTUNITY OR THE COSTS ASSOCIATED WITH THE USE OF
RESTORATION FACILITIES RESULTING FROM THEIR FAILURE TO
PERFORM, PURSUANT TO THE TERMS & CONDITIONS OF THIS CONTRACT.
B. THE MAXIMUM LIABILITY OF EITHER PARTY UNDER THIS CONTRACT
SHALL BE LIMITED TO DIRECT DAMAGES PROVEN NOT TO EXCEED ONE
HUNDRED PERCENT (100%) OF THE CONTRACT PRICE.
C. Contractor, at its expense, shall defend, indemnify and hold
harmless Purchaser, 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 Contract to the extent such
damage, injury or death was caused by the negligence or
willful misconduct of the Contractor, its subcontractors,
employees or agents. The defense, indemnification and save
harmless obligation is specifically conditioned on the
following: (i) Purchaser providing prompt notification in
writing of any such claim or demand; (ii) Contractor having
control of the defense of any such action, claim or demand and
of all negotiations for its settlement or compromise; and
(iii) Purchaser cooperating in a reasonable way to facilitate
the defense of such claim or demand or the negotiations for
its settlement.
D. Purchaser, at its expense, shall defend, indemnify and hold
harmless Contractor, 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 Contract, to the extent such
damage, injury or death was caused by the negligence or
willful misconduct of the Purchaser, its subcontractors,
employees or agents. The defense, indemnification and save
harmless obligation is specifically conditioned on the
following: (i) Contractor providing prompt notification in
writing of any such claim or demand; (ii) Purchaser having
control of the defense of any such action, claim or demand and
of all negotiations for its settlement or compromise; and
(iii) Contractor cooperating in a reasonable way to facilitate
the defense of such claim or demand or the negotiations for
its settlement.
Article 24. [Intentionally Left Blank]
Article 25. Design and Performance Responsibility
A. The Contractor shall be solely responsible for the design of
and for all details of the System and for the adequacy
thereof.
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B. The Contractor's responsibility for design of the System shall
not in any way be diminished nor shall the Contractor's design
approach be restricted or limited by the Purchaser's
acceptance of the Contractor's guidance or recommendations as
to engineering standards and design specifications, or by the
Purchaser's suggestions or recommendations on any aspect of
the design.
C. Purchaser shall use all reasonable efforts in assisting the
Contractor to obtain in a timely manner accurate information
required for the Contractor to perform the Work, including but
not limited to, information available from parties to any
Construction and Maintenance agreements for the System.
Article 26. Product Changes
Prior to Provisional Acceptance of the System, the Contractor may at any time
make changes to the System furnished pursuant to this Contract, or modify the
drawings and published specifications relating thereto, or substitute equipment
of later design, provided the changes, modifications, or substitutions under
normal and proper use do not impact upon the form, fit, or function of the
System as provided in the System Performance Requirements.
Article 27. Risk and Insurance
A. Upon request, the Contractor shall furnish the Purchaser with
certificates, or other satisfactory evidence, that all of the
responsibilities and risks of the Contractor herein are
covered by insurance policies or by self-insurance and that
such insurance is being maintained, including but not limited
to:
1. General Liability insurance sufficient to cover all
losses and claims for injuries or death to any
person (including any employee of the Contractor) or
damage to any property (including that of the
Purchaser) under this Contract until Provisional
Acceptance;
2. Marine Cargo or equivalent is required to protect
against all risks of physical loss or damage to the
plant, equipment and supplies to be included in the
System (other than War Risks) beginning with when
each such item is ready for shipping and ending when
the submersible plant and equipment are placed
overside the cable laying vessel and when the
equipment and supplies are delivered to the cable
stations, central offices, or network operation
center;
3. Sea Bed or equivalent coverage is required to
protect against all risks of physical loss or damage
to the submersible plant and equipment described in
Article 27(A)2 above until
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<PAGE>
Commercial Volume Terms and Conditions
Provisional Acceptance (upon written request,
Contractor shall assist Purchaser in obtaining the
continuation of such Sea Bed coverage); and
4. War Risks or equivalent coverage is required to
protect against damage to, seizure by and/or
destruction of the System by means of war, piracy,
takings at sea and other warlike operations until
discharge of the submersible plant and equipment.
For the purposes of this Article "discharge of the
submersible plant and equipment" shall be deemed to
take place when the plant and equipment reaches the
sea bottom, as far as the submersible plant and
equipment is concerned, and when the plant is
off-loaded in the respective terminal country, as
far as non-submersible plant is concerned.
B. The Contractor may organize such levels of deductibles,
excesses and self-insurance as it considers appropriate.
Article 28. Plant and Work Rules
Employees and agents of each Party shall, while on the premises of the other or
its subcontractors, comply with all plant rules and governmental regulations.
Article 29. Right of Access
A. The Contractor shall, upon reasonable notice, during normal
business hours and in a manner to avoid any disruption of the
work on the premises including performance of other contracts,
permit access by the Purchaser or its Quality Assurance (QA)
Representative (other than a competitor of the Contractor) to
the Contractor's premises where the work will be performed,
and will use its best endeavors to secure rights of access to
premises of its subcontractors where the work will be
performed, having subcontracts or orders in the amount of, or
equivalent to U.S. $********** or more, in accordance with the
Contractor's contractual arrangements with its subcontractors,
and allow the Purchaser or its QA Representative to:
1. audit the Contractor's quality assurance system and
its application to the Work, including manufacture,
development and raw materials and components
provision;
2. inspect all parts of the Work to the extent
reasonably practicable to ensure that their quality
meets the Specifications.
This right of access shall allow for the Purchaser and/or its
QA representative (up to a total of three (3) persons). The
Purchaser shall provide the name(s), nationality and title of
each such visitor prior to the visit. The Contractor shall not
be responsible for any costs, including travel and
accommodation costs, of the Purchaser or its representatives.
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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<PAGE>
Commercial Volume Terms and Conditions
B. The right of access shall also allow for the Purchaser and/or
representatives (up to a total of three (3) persons) to be
aboard the vessel(s) during installation, provided
accommodations are available. The Contractor shall not be
responsible for any costs of the Purchaser or its
representatives, except for food and lodging expenses on board
the vessel which includes one (1) daily telex or fax. All
other travel and accommodation costs for the Purchaser or its
QA Representatives shall be for the account of the Purchaser.
C. Any right of access shall not be construed as creating any
obligation requiring the Contractor or its subcontractors to
disclose trade secrets or proprietary information. Further,
such right of access may be conditioned on the execution of a
confidentiality and non-disclosure agreement and/or subject to
routine building security measures.
Article 30. Quality Assurance
All equipment, material and supplies provided under this Contract shall be
inspected and tested by representatives designated by the Contractor to the
extent reasonably practical to assure that the quality of the equipment,
materials and supplies being incorporated is sufficient to realize the System
Performance Requirements. The inspection and test program established for such
equipment, materials and supplies shall be consistent with the Specifications or
if not specified therein, with the commercial practices normally employed by the
Contractor in the construction of submarine cable systems.
Article 31. Documentation
The Contractor shall furnish to the Purchaser documentation as set forth in the
Provisioning Schedule in the English language for the System. Such documentation
shall be provided prior to the Provisional Acceptance testing.
Article 32. Training
The Contractor will make available training for Purchaser's personnel to learn
to operate and maintain the System. Such training as described in the
Specifications at the Contractor's training locations or as may be mutually
agreed. The number of trainees and duration of the training sessions will be as
provided for in the Specifications. All training will be in the English
language; however, training in another language will be made available upon
request and at Purchaser's expense. The Contractor shall not be held liable for
any loss or damage caused to the System or to other properties, or for bodily
injuries, resulting from negligence or intentional act in the use, maintenance
or operation of the System by the Purchaser's personnel who attended the
training sessions.
Article 33. Settlement of Disputes/Arbitration
A. The Parties shall endeavor to settle amicably by mutual
discussions any disputes, differences, or claims whatsoever
related to this Contract. The Parties will internally escalate
all disputes, in writing, to the
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<PAGE>
Commercial Volume Terms and Conditions
highest levels of their respective organizations before
initiating or resorting to Mediation or Arbitration. A meeting
shall be promptly held between the Parties, attended by
individuals with decision-making authority regarding the
dispute, to attempt in good faith to negotiate a resolution of
the dispute.
B. If within ********** after such meeting, the Parties have not
succeeded in negotiating a resolution of the dispute, then the
Parties shall commence non-binding mediation ("Mediation") by
each Party providing the other Party a written statement of
the subject of the dispute and the relief requested. They will
jointly appoint a mutually acceptable neutral person not
affiliated with either of the Parties (the "Mediator"),
seeking assistance in such regard from the American
Arbitration Association ("AAA") if they have been unable to
agree upon such appointment within ********** from the initial
meeting.
The Parties shall cooperate with the Mediator and one another
in scheduling the Mediation proceeding. Both Parties consent
to appear at any scheduled Mediation. The Mediation shall be
held, as soon as possible, but not later than ********** after
the initial meeting, in Seattle, Washington. The fees of the
Mediator shall be shared equally by the Parties.
C. If the Parties are not successful in resolving the dispute
through the Mediation, then the Parties shall submit the
dispute to be settled by arbitration according to the
Commercial Arbitration Rules of the AAA ("Arbitration").
Unless the Parties agree to have the Mediator act as the sole
arbitrator, there shall be three (3) arbitrators, with each
Party appointing one (1) arbitrator with the Mediator serving
as the third arbitrator ("Arbitration Tribunal").
1. The Arbitration Tribunal shall apply the laws of the
State of Alaska and shall render a written decision.
The Arbitration Tribunal will not have the authority
to award punitive damages.
2. Each Party shall bear its own expenses, but the
Parties shall share equally the expenses of the
Arbitration Tribunal.
D. This Contract shall be enforceable, and any arbitration award
shall be final, and judgment thereon shall be entered in any
court of competent jurisdiction. In any such Arbitration, the
decision in any prior arbitration under this Contract shall
not be deemed conclusive of the rights as among themselves of
the Parties hereunder. The Arbitration shall be held in
Seattle, Washington.
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Commercial Volume Terms and Conditions
Article 34. Applicable Law
This Contract shall be construed and governed in accordance with the laws of the
State of Alaska, United States, excluding its conflicts of law provisions.
Article 35. Notices
Any notice required or permitted to be made under this Contract, including
invoicing, shall be in writing and shall be deemed to have been duly given when
it has been delivered by hand, by overnight mail, or facsimile with telephonic
confirmation of receipt, with a paper copy by U.S. mail (collectively U.S. mail
and overnight mail shall be called "Mail") to the Party as specified herein or
as later designated in writing by such Party. All notices shall be made in the
English language.
Changes to the respective name, address or fax number shown below, may be made
at any time by giving thirty (30) days' prior written notice in accordance with
this Article.
Notices shall be sent to the following addresses:
To Contractor:
Submarine Systems International Ltd.
Attention: Mr. Lou Riegler
Room S120
340 Mt. Kemble Ave.
Morristown, New Jersey 07960 U.S.A.
Fax: +1 973-326-2704
Tel: +1 973-326-3552
To Purchaser:
GCI Communication Corp.
2250 Denali Street (Suite 1000)
Anchorage, Alaska 99503-2721
Attn: Mr. Jimmy R. Sipes
Vice President
Telephony Network Engineering
Fax: +1 907-265-5673
Tel: + 1 907-265-5557
For Invoices, a copy also to:
GCI Communication Corp.
2250 Denali Street (Suite 1000)
Anchorage, Alaska 99503-2721
Attn: Accounts Payable
Fax: +1 907-265-5420
Tel: +1 907-265-5600
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<PAGE>
Commercial Volume Terms and Conditions
Article 36. Publicity
No information relating to this Contract shall be released by either Party to
any newspaper, magazine, journal or other written, oral or visual medium without
the prior written approval of an authorized representative of the other Party,
which consent shall not be unreasonably delayed or withheld, and except as to
disclosure to the parties' applicable regulatory authorities, shareholders,
agents, advisors and financial institutions. Notwithstanding the foregoing, the
parties acknowledge that the general terms and conditions of the transaction
must be disclosed under the securities disclosure laws, rules and regulations.
Article 37. Assignment
A. Except as provided in this Article, neither Party shall assign
this Contract or any right or interest under this Contract,
nor delegate any work or obligation to be performed under this
Contract ("Assignment"), without the other Party's prior
written consent which shall not be unreasonably withheld.
Nothing herein shall preclude a Party from employing a
subcontractor in carrying out its obligations under this
Contract. A Party's use of such subcontractor shall not
release the Party from its obligations under this Contract.
B. Each Party has the right to assign this Contract or to assign
its rights and delegate its duties under this Contract, in
whole or in part, at any time and without the other Party's
consent, to any present or future affiliated company, or to an
entity controlled by, under the same control as, or
controlling, the assignor. The assigning Party shall give the
other Party hereto prior written notice of the assignment.
Article 38. Relationship of the Parties
All work performed by one Party under this Contract shall be performed as an
independent contractor and not as an agent of the other and no persons furnished
by the performing Party shall be considered the employees or agents of the
other. The performing Party shall be responsible for its own and its employees'
compliance with all laws, rules and regulations while performing work under this
Contract. The Parties shall not be deemed to be partners by virtue of this
Contract.
Article 39. Successors Bound
This Contract shall be binding on the Contractor and the Purchaser and their
respective successors and assigns.
Article 40. Paragraph Captions
The captions of the Articles do not form part of this Contract and shall not
have any effect on the interpretation thereof.
Article 41. Severability
If any of the provisions of this Contract shall be invalid or unenforceable,
such invalidity or unenforceability shall not invalidate or render unenforceable
the entire Contract, but rather the entire Contract shall be construed as if not
containing the particular invalid or
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<PAGE>
Commercial Volume Terms and Conditions
unenforceable provision or provisions and the rights and obligations of the
Contractor and the Purchaser shall be construed and enforced accordingly. In the
event such invalid or unenforceable provision is an essential and material
element of this Contract, the Parties shall promptly negotiate a replacement
provision.
Article 42. Survival of Obligations
The Parties' rights and obligations, which, by their nature would continue
beyond the termination, cancellation or expiration of this Contract, including,
but not limited to, those contained in Article 10 (Warranty), Article 11
(Contractor Support), Article 18 (Intellectual Property), Article 20
(Safeguarding of Information and Technology) Article 21 (Export Control) and
Article 23 (Limitations of Liability), shall survive termination, cancellation
or expiration hereof.
Article 43. Non-Waiver
No waiver of any of the terms and conditions of this Contract, nor the failure
of either Party strictly to enforce any such term or condition, on one or more
occasions shall be construed as a waiver of the same or of any other term or
condition of this Contract on any other occasion.
Article 44. Language
This Contract has been executed in the English language and English will be the
controlling language for this Contract.
Article 45. Performance Guarantee
A. Contractor shall, by **********, provide a performance guarantee (in
a format mutually and reasonably acceptable to the Parties) to
Purchaser having a value of **********.
B. The performance guarantee shall be reduced to ********** on the
Provisional Acceptance date, and it shall remain in force until the
date of Final Acceptance (as specified in Article 9(D)1).
C. The Purchaser shall be entitled to demand payment under the
performance guarantee if **********.
Article 46. Entire Agreement
This Contract supersedes all prior oral or written understandings between the
Parties and constitutes the entire agreement with respect to the subject matter
herein. Such terms and conditions shall not be modified or amended except by a
writing signed by authorized representatives of both Parties.
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Commercial Volume Terms and Conditions
This Contract is executed by duly authorized representatives of the Parties as
set forth below.
Submarine Systems International Ltd. GCI Communication Corp.
By:/s/ David Vanrossum By:/s/Richard Dowling
Signature Signature
Title: Vice President and CFO Title: Senior Vice
President
Date: July 14, 1997 Date: July 15, 1997
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July 11, 1997 36 Alaska United Fiber System
<PAGE>
<TABLE>
Appendix 1: Alaska United Fiber System
Summary of the Pricing Schedule - Offer B
<CAPTION>
FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C>
1.1 Wet Plant - Seattle, Washington *** *** *** ***
1.2 Wet Plant - Lena Point, Alaska *** *** *** ***
1.3 Wet Plant - Whittier, Alaska *** *** *** ***
2.0 Marine Services *** *** *** ***
3.1 TSE - Seattle, Washington *** *** *** ***
3.2 TSE - Lena Point, Alaska *** *** *** ***
3.3 TSE - Whittier, Alaska *** *** *** ***
4.1 Land Cable - Seattle, Washington *** *** *** ***
4.2 Land Cable - Lena Point, Alaska *** *** *** ***
4.3 Land Cable - Whittier, Alaska *** *** *** ***
5.0 Other *** *** *** ***
Total *** *** *** ***
Remove Repeater *** *** *** ***
Subtotal *** *** *** ***
Discount *** *** *** *** ***
Grand Total (Discounted Price) *** *** *** ***
</TABLE>
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<TABLE>
Appendix 1: Alaska United Fiber System
Submerged Plant - Seattle, Washington to BU
<CAPTION>
Unit
Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.1.1.0 Installed Cable
1.1.1.1 LW *** *** *** *** *** *** ***
1.1.1.2 SPA *** *** *** *** *** *** ***
1.1.1.3 LWA *** *** *** *** *** *** ***
1.1.1.4 DA *** *** *** *** *** *** ***
1.1.2.0 Spare Cable
1.1.2.1 LW *** *** *** *** *** *** ***
1.1.2.2 SPA *** *** *** *** *** *** ***
1.1.2.3 LWA *** *** *** *** *** *** ***
1.1.2.4 DA *** *** *** *** *** *** ***
1.1.3.0 Transitions
1.1.3.1 LW/SPA *** *** *** *** *** *** ***
1.1.3.2 LWA/SPA *** *** *** *** *** *** ***
1.1.3.3 LWA/DA *** *** *** *** *** *** ***
1.1.4.0 Total Cable to Cable Joints
1.1.4.1 LW Cbl-to-Cbl Joint *** *** *** *** *** *** ***
1.1.4.2 SPA Cbl-to-Cbl Joint *** *** *** *** *** *** ***
1.1.4.3 Polysleeves *** *** *** *** *** *** ***
1.1.5.0 End Seals
1.1.5.1 A-838244 *** *** *** *** *** *** ***
1.1.5.2 A-838260 *** *** *** *** *** *** ***
1.1.5.3 A-838611 *** *** *** *** *** *** ***
</TABLE>
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<TABLE>
Appendix 1: Alaska United Fiber System
Submerged Plant - Seattle, Washington to BU
<CAPTION>
Unit
Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.1.6.0 Repeater and BU Integration
1.1.6.1 Unarmored *** *** *** *** *** *** ***
1.1.6.2 Armored *** *** *** *** *** *** ***
1.1.6.3 Branching Unit *** *** *** *** *** *** ***
1.1.7.0 Undersea Quality Assurance *** *** *** *** *** *** ***
1.1.8.0 Integrated Repeaters, BU's, & Couplings
1.1.8.1 Integrated Repeaters 2x0 *** *** *** *** *** *** ***
1.1.8.2 Integrated Branching Unit (PSBU) *** *** *** *** *** *** ***
1.1.8.3 Integrated Couplings *** *** *** *** *** *** ***
1.1.9.0 Spare Repeaters, BU's, & Couplings
1.1.9.1 Spare Repeaters 2x0 *** *** *** *** *** *** ***
1.1.9.2 Spare Branching Unit (PSBU) *** *** *** *** *** *** ***
1.1.9.3 Spare Couplings *** *** *** *** *** *** ***
1.1 Total Submerged Plan - Seattle Washington *** *** *** ***
</TABLE>
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<TABLE>
Appendix 1: Alaska United Fiber System
Submerged Plant - Lena Point, Alaska to BU
<CAPTION>
Unit
Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.2.1.0 INSTALLED CABLE
1.2.1.1 LW *** *** *** *** *** *** ***
1.2.1.2 SPA *** *** *** *** *** *** ***
1.2.1.3 LWA *** *** *** *** *** *** ***
1.2.1.4 DA *** *** *** *** *** *** ***
1.2.2.0 SPARE CABLE
1.2.2.1 LW *** *** *** *** *** *** ***
1.2.2.2 SPA *** *** *** *** *** *** ***
1.2.2.3 LWA *** *** *** *** *** *** ***
1.2.2.4 DA *** *** *** *** *** *** ***
1.2.3.0 TRANSITIONS
1.2.3.1 LW/SPA *** *** *** *** *** *** ***
1.2.3.2 LWA/SPA *** *** *** *** *** *** ***
1.2.3.3 LWA/DA *** *** *** *** *** *** ***
1.2.4.0 TOTAL CABLE TO CABLE JOINTS
1.2.4.1 LW CBL-TO-CBL JOINT *** *** *** *** *** *** ***
1.2.4.2 SPA CBL-TO-CBL JOINT *** *** *** *** *** *** ***
1.2.4.3 POLYSLEEVES *** *** *** *** *** *** ***
1.2.5.0 END SEALS
1.2.5.1 A-838244 *** *** *** *** *** *** ***
1.2.5.2 A-838260 *** *** *** *** *** *** ***
1.2.5.3 A-838611 *** *** *** *** *** *** ***
</TABLE>
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<PAGE>
<TABLE>
Appendix 1: Alaska United Fiber System
Submerged Plant - Lena Point, Alaska to BU
<CAPTION>
Unit
Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.2.6.0 REPEATER AND BU INTEGRATION
1.2.6.1 UNARMORED *** *** *** *** *** *** ***
1.2.6.2 ARMORED *** *** *** *** *** *** ***
1.2.6.3 BRANCHING UNIT *** *** *** *** *** *** ***
1.2.7.0 UNDERSEA QUALITY ASSURANCE *** *** *** *** *** *** ***
1.2.8.0 INTEGRATED REPEATERS, BU'S & COUPLINGS
1.2.8.1 INTEGRATED REPEATERS 2x0 *** *** *** *** *** *** ***
1.2.8.2 INTEGRATED BRANCHING UNIT (PSBU) *** *** *** *** *** *** ***
1.2.8.3 INTEGRATED COUPLINGS *** *** *** *** *** *** ***
1.2.9.0 SPARE REPEATERS, BU'S, & COUPLINGS
1.2.9.1 SPARE REPEATERS 2x0 *** *** *** *** *** *** ***
1.2.9.2 SPARE BRANCHING UNITS (PSBU) *** *** *** *** *** *** ***
1.2.9.3 SPARE COUPLINGS *** *** *** *** *** *** ***
1.2 TOTAL SUBMERGED PLAN - LENA POINT, ALASKA
*** *** *** ***
</TABLE>
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<PAGE>
<TABLE>
Appendix 1: Alaska United Fiber System
Submerged Plant - Whittier, Alaska to BU
<CAPTION>
Unit
Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.3.1.0 INSTALLED CABLE
1.2.1.1 LW *** *** *** *** *** *** ***
1.3.1.2 SPA *** *** *** *** *** *** ***
1.3.1.3 LWA *** *** *** *** *** *** ***
1.3.1.4 DA *** *** *** *** *** *** ***
1.3.2.0 SPARE CABLE
1.3.2.1 LW *** *** *** *** *** *** ***
1.3.2.2 SPA *** *** *** *** *** *** ***
1.3.2.3 LWA *** *** *** *** *** *** ***
1.3.2.4 DA *** *** *** *** *** *** ***
1.3.3.0 TRANSITIONS
1.3.3.1 LW/SPA *** *** *** *** *** *** ***
1.3.3.2 LWA/SPA *** *** *** *** *** *** ***
1.3.3.3 LWA/DA *** *** *** *** *** *** ***
1.3.4.0 TOTAL CABLE TO CABLE JOINTS
1.3.4.1 LW CBL-TO-CBL JOINT *** *** *** *** *** *** ***
1.3.4.2 SPA CBL-TO-CBL JOINT *** *** *** *** *** *** ***
1.3.4.3 POLYSLEEVES *** *** *** *** *** *** ***
1.3.5.0 END SEALS
1.3.5.1 A-838244 *** *** *** *** *** *** ***
1.3.5.2 A-838260 *** *** *** *** *** *** ***
1.3.5.3 A-838611 *** *** *** *** *** *** ***
</TABLE>
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<PAGE>
<TABLE>
Appendix 1: Alaska United Fiber System
Submerged Plant - Whittier, Alaska to BU
<CAPTION>
Unit
Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.3.6.0 REPEATER AND BU INTEGRATION
1.3.6.1 UNARMORED *** *** *** *** *** *** ***
1.3.6.2 ARMORED *** *** *** *** *** *** ***
1.3.6.3 BRANCHING UNIT *** *** *** *** *** *** ***
1.3.7.0 UNDERSEA QUALITY ASSURANCE *** *** *** *** *** *** ***
1.3.8.0 INTEGRATED REPEATERS, BU'S & COUPLINGS
1.3.8.1 INTEGRATED REPEATERS 2x0 *** *** *** *** *** *** ***
1.3.8.2 INTEGRATED BRANCHING UNIT (PSBU) *** *** *** *** *** *** ***
1.3.8.3 INTEGRATED COUPLINGS *** *** *** *** *** *** ***
1.3.9.0 SPARE REPEATERS, BU'S, & COUPLINGS
1.3.9.1 SPARE REPEATERS 2x0 *** *** *** *** *** *** ***
1.3.9.2 SPARE BRANCHING UNITS (PSBU) *** *** *** *** *** *** ***
1.3.9.3 SPARE COUPLINGS *** *** *** *** *** *** ***
1.3 TOTAL SUBMERGED PLAN - WHITTIER, ALASKA
*** *** *** ***
</TABLE>
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<PAGE>
<TABLE>
Appendix 1: Alaska United Fiber System
Marine Services - Total System
<CAPTION>
Unit
Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2.1.0 MARINE SERVICES
2.1.1 OPERATIONS *** *** *** *** *** *** ***
2.1.2 TRANSIT *** *** *** *** *** *** ***
2.1.3 LOADING *** *** *** *** *** *** ***
2.1.4 PORT CALLS *** *** *** *** *** *** ***
2.1.5 MOB/DEMOB *** *** *** *** *** *** ***
2.2.0 SEA PLOW VII
2.2.1 OPERATIONS *** *** *** *** *** *** ***
2.2.2 TRANSIT *** *** *** *** *** *** ***
2.2.3 MOB/DEMOB *** *** *** *** *** *** ***
2.3.0 OTHER
2.3.1 SUPPORT TUG *** *** *** *** *** *** ***
2.3.2 PLIB OPERATIONS *** *** *** *** *** *** ***
2.3.3 SHORE END OPERATIONS *** *** *** *** *** *** ***
2.3.4 CABLE LOADING *** *** *** *** *** *** ***
2.3.5 CABLE ENGINEERING *** *** *** *** *** *** ***
2.3.6 SPLICING OPERATIONS *** *** *** *** *** *** ***
2.3.7 MARINE COORDINATION *** *** *** *** *** *** ***
2.3.8 ROUTE SURVEY *** *** *** *** *** *** ***
2.0 TOTAL MARINE SERVICES *** *** *** ***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT SUBMITTED TO THE SEC.]
AT&T Submarine Systems Inc., PROPRIETARY
Use restricted to Company Instruction
<PAGE>
<TABLE>
Appendix 1: Alaska United Fiber System
Terminal Station Equipment - Seattle, Washington
<CAPTION>
3.1 TERMINAL STATION EQUIPMENT - SEATTLE, Unit
WASHINGTON Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3.1.1.0 TERMINAL TRANSMISSION EQUIPMENT
3.1.1.1 FT 2000, OC48, ADD DROP RING W/ NGLN W/ SPARES
*** *** *** *** *** *** ***
3.1.1.2 ENGINEERING ORDER WIRES W/ SPARES *** *** *** *** *** *** ***
3.1.1.3 CRAFT INTERFACE TERMINALS *** *** *** *** *** *** ***
3.1.1.4 DIGITAL DISTRIBUTION FRAME *** *** *** *** *** *** ***
3.1.2.0 POWER FEED EQUIPMENT
3.1.2.1 MEDIUM VOLTAGE PFE W/ SPARES *** *** *** *** *** *** ***
3.1.2.2 LOW VOLTAGE PFE W/ SPARES *** *** *** *** *** *** ***
3.1.3.0 OUT OF SERVICE MAINTENANCE - COTDR & HLLB SHELF
*** *** *** *** *** *** ***
3.1.4.0 INSTALLATION *** *** *** *** *** *** ***
3.1 SUBTOTAL TSE - SEATTLE, WASHINGTON
*** *** *** ***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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AT&T Submarine Systems Inc., PROPRIETARY
Use restricted to Company Instruction
<PAGE>
<TABLE>
Appendix 1: Alaska United Fiber System
Terminal Station Equipment - Lena Point, Alaska
<CAPTION>
3.2 TERMINAL STATION EQUIPMENT - SEATTLE, Unit
WASHINGTON Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3.2.1.0 TERMINAL TRANSMISSION EQUIPMENT
3.2.1.1 FT 2000, OC48, ADD DROP RING W/ NGLN W/ SPARES
*** *** *** *** *** *** ***
3.2.1.2 ENGINEERING ORDER WIRES W/ SPARES *** *** *** *** *** *** ***
3.2.1.3 CRAFT INTERFACE TERMINALS *** *** *** *** *** *** ***
3.2.1.4 DIGITAL DISTRIBUTION FRAME *** *** *** *** *** *** ***
3.2.2.0 POWER FEED EQUIPMENT
3.2.2.1 MEDIUM VOLTAGE PFE W/ SPARES *** *** *** *** *** *** ***
3.2.2.2 LOW VOLTAGE PFE W/ SPARES *** *** *** *** *** *** ***
3.2.3.0 OUT OF SERVICE MAINTENANCE - COTDR & HLLB SHELF
*** *** *** *** *** *** ***
3.2.4.0 INSTALLATION *** *** *** *** *** *** ***
3.2 SUBTOTAL TSE - LENA POINT, ALASKA *** *** *** ***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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AT&T Submarine Systems Inc., PROPRIETARY
Use restricted to Company Instruction
<PAGE>
<TABLE>
Appendix 1: Alaska United Fiber System
Terminal Station Equipment - Whittier, Alaska
<CAPTION>
3.3 TERMINAL STATION EQUIPMENT - SEATTLE, Unit
WASHINGTON Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3.3.1.0 TERMINAL TRANSMISSION EQUIPMENT
3.3.1.1 FT 2000, OC48, ADD DROP RING W/ NGLN W/ SPARES
*** *** *** *** *** *** ***
3.3.1.2 ENGINEERING ORDER WIRES W/ SPARES *** *** *** *** *** *** ***
3.3.1.3 CRAFT INTERFACE TERMINALS *** *** *** *** *** *** ***
3.3.1.4 DIGITAL DISTRIBUTION FRAME *** *** *** *** *** *** ***
3.3.2.0 POWER FEED EQUIPMENT
3.3.2.1 MEDIUM VOLTAGE PFE W/ SPARES *** *** *** *** *** *** ***
3.3.2.2 LOW VOLTAGE PFE W/ SPARES *** *** *** *** *** *** ***
3.3.3.0 OUT OF SERVICE MAINTENANCE - COTDR & HLLB SHELF
*** *** *** *** *** *** ***
3.3.4.0 INSTALLATION *** *** *** *** *** *** ***
3.3 SUBTOTAL TSE - WHITTIER, ALASKA *** *** *** ***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Use restricted to Company Instruction
<PAGE>
<TABLE>
Appendix 1: Alaska United Fiber System
Land Cable and Installation - Total System
<CAPTION>
Unit
Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4.1.0 LAND CABLE - SEATTLE, WASHINGTON
4.1.1 MV-900 *** *** *** *** *** *** ***
4.1.2 RL *** *** *** *** *** *** ***
4.1.3 INSTALLATION *** *** *** *** *** *** ***
4.1.4 OCEAN GROUND BED *** *** *** *** *** *** ***
4.1 SUBTOTAL LAND CABLE - SEATTLE, WASHINGTON
*** *** *** ***
4.2.0 LAND CABLE - LENA POINT, ALASKA
4.2.1 MV-900 *** *** *** *** *** *** ***
4.2.2 RL *** *** *** *** *** *** ***
4.2.3 INSTALLATION *** *** *** *** *** *** ***
4.2.4 OCEAN GROUND BED *** *** *** *** *** *** ***
4.2 SUBTOTAL LAND CABLE - LENA POINT, ALASKA
*** *** *** ***
4.3.0 LAND CABLE - WHITTIER, ALASKA
4.3.1 MV-900 *** *** *** *** *** *** ***
4.3.2 RL *** *** *** *** *** *** ***
4.3.3 INSTALLATION *** *** *** *** *** *** ***
4.3.4 OCEAN GROUND BED *** *** *** *** *** *** ***
4.3 SUBTOTAL LAND CABLE - WHITTIER, ALASKA
*** *** *** ***
</TABLE>
NOTE: ALL LANDING POINTS ARE ASSUMED
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Use restricted to Company Instruction
<PAGE>
<TABLE>
Appendix 1: Alaska United Fiber System
Other - Total System
<CAPTION>
Unit
Type Quantity Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5.1.0 OTHER
5.1.1 ACCEPTANCE TRAINING *** *** *** *** *** *** ***
5.1.2 ENGINEERING SERVICES *** *** *** *** *** *** ***
5.1.3 WARRANTY *** *** *** *** *** *** ***
5.1.4 PERFORMANCE GUARANTEE *** *** *** *** *** *** ***
5.1.5 PROJECT MANAGEMENT *** *** *** *** *** *** ***
5.2.0 TRAINING
5.2.1 TYPE A *** *** *** *** *** *** ***
5.2.2 TYPE B *** *** *** *** *** *** ***
5.2.3 TYPE C *** *** *** *** *** *** ***
5.3.0 DOCUMENTATION
5.3.1 ORIGINAL *** *** *** *** *** *** ***
5.3.2 COPIES *** *** *** *** *** *** ***
5.0 SUBTOTAL - OTHER *** *** *** ***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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AT&T Submarine Systems Inc., PROPRIETARY
Use restricted to Company Instruction
<PAGE>
<TABLE>
Appendix 2 - Alaska United Fiber System - Billing Schedule
<CAPTION>
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Subtotal
<S> <C> <C> <C> <C> <C> <C>
1997 $*** $***
1998 $*** $*** $*** $*** $*** $***
Total $***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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AT&T Submarine Systems Inc., PROPRIETARY
Use restricted to Company Instruction
<PAGE>
SAMPLE INVOICE
INVOICE
Alaska United Fiber System
Addresses Invoice No. ATTSSI9512xx
Issue Date 12/x/1995
xxxxxxx Central Billing Party Payment Due Date
Attn: Mr(s).: xxxxxxx Customer Code
340 Mount Kemble Ave., Room N100
Morristown, NJ 07962
Remit Payment Wire To:
Submarine Systems International
**********
**********
**********
**********
**********
Billing for the xxxxxxx Cable Construction Activities for milestones achieved by
December x, **********. Per attached Milestone Achievement Certificate.
Amount Due US$ xxxxxxxxxxxxxxx
Attachments
1) Milestone Achievement Certificate
PLEASE INDICATE INVOICE NUMBER(S) AND CUSTOMER CODE ON REMITTANCE
CERTIFIED CORRECT Please Refer Questions Related
To this invoice to: R. M. Grella
Manager - SSI Finance
340 Mt. Kemble Ave., Room N125
P.O. Box 1923
Morristown, NJ 07962-1923
Telephone: (201) 326 4255
Facsimile: (201) 326 2587
R. M. Grella
Manager - SSI Finance
<PAGE>
Commercial Volume Appendix 4
APPENDIX 4
Responsibility For Submarine Cable Construction Approvals, Permits,
Permissions and Consents
(Alaska United Fiber System)
I. Purchaser's Responsibilities:
1. To obtain all necessary permissions **********.
2. To obtain, ********** necessary approvals, permits, permissions and
consents to lay the System **********.
3. To obtain the necessary Government Approvals **********.
4. To bear the cost of **********.
5. To obtain the necessary approvals, permits, permissions, and consent
**********.
6. To obtain Environmental Impact Statement(s), permits, and
environmental approval(s) **********.
7. To obtain all necessary approvals, permits, permissions, and consents
**********.
8. To provide ********** crossing notification **********.
9. Obtain the necessary permissions **********.
10. To obtain customers clearance and make arrangements **********.
11. To obtain import licenses/certificates, **********.
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Submarine Systems International Ltd. (SSI) - Proprietary
Use Restricted to Article 20, Safeguard of Information Technoloty, of
this Contract
July 11, 1997 1 Alaska United Fiber System
<PAGE>
Commercial Volume Appendix 4
II. Contractor's Responsibilities 1. To pay necessary charges **********.
2. to obtain Work Permits **********.
3. Notice to **********.
4. To obtain from relevant third parties approval **********.
5. To remove **********.
6. To obtain temporary import clearance, **********.
7. To jointly obtain import licenses with **********.
8. To obtain, as necessary, temporary radio site and radio frequency
permits **********.
9. To obtain terrestrial permits **********.
10. To obtain excavation and road access permits **********.
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT SUBMITTED TO THE SEC.]
Submarine Systems International Ltd. (SSI) - Proprietary
Use Restricted to Article 20, Safeguard of Information Technoloty, of
this Contract
July 11, 1997 2 Alaska United Fiber System
<PAGE>
<TABLE>
GCI Communication Corp. Submarine Systems International
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
1 ALASKA UNITED FIBER SYSTEM **********
2 Contract Signing
3 Fiber/Cable Manufacture
4 Place Cable & Fiber Order
5 Fiber Manufacture/Delivery
6 Cable Manufacture - Hitachi
7 Unit fiber Structure (UFS)
8 Power Conductor (PC)
9 Extrusion
10 Post Survey SLD
11 Partial Section Details
12 Ship Tank Plan
13 Section Assembly Guidelines
14 Span Assembly
15 SPA Production
16 Armoring
17 SPA/LW Tanking
18 Repeater Manufacture
19 Place Repeater Order
20 Manufacture
21 PSBU Manufacture
22 Repeater Delivery
23 Repeater/Cable Integration
24 Assembled System Test
</TABLE>
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Project Mgr-L. Riegler Progress Summary Rolled Up Milestone
SSI Proprietary Page 1 of 6
<PAGE>
<TABLE>
GCI Communication Corp. Submarine Systems International
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
25 Cable Ready-To-Load **********
26 PFE Manufacture/Ship
27 Seattle
28 Place PFE Order
29 Manufacture - Medium Voltage
30 Factory Acceptance Test (FAT)
31 Ship to Hut Manufacturing Site
32 Whittier
33 Place PFE Order
34 Manufacture - Medium Voltage
35 FAT
36 Ship to Hut Manufacturing Site
37 Lena Point
38 Place PFE Order
39 Manufacture - Low Voltage
40 FAT
41 Ship to Hut Manufacturing Site
42 Transmission Equipment Manufacture/Ship
43 Seattle
44 Place TTE Order
45 Manufacture
46 FAT
47 Ship to Hut Manufacturing Site
48 Whittier
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Project Mgr-L. Riegler Progress Summary Rolled Up Milestone
SSI Proprietary Page 2 of 6
<PAGE>
<TABLE>
GCI Communication Corp. Submarine Systems International
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
49 Place TTE Order **********
50 Manufacture
51 FAT
52 Ship to Hut Manufacturing Site
53 Lena Point
54 Place TTE Order
55 Manufacture
56 FAT
57 Ship to Hut Manufacture Site
58 Land Cable Manufacture/Ship
59 Place Land Cable Order
60 Manufacture
61 Ship Land Cables to Sites
62 Containerized Hut MFG/TSE Installation
63 Seattle
64 Manufacture Containerized Hut
65 Install TSE in Containerized Hut
66 Containerized Hut FAT
67 Ship Containerized Hut to Landing Site
68 Whittier
69 Manufacture Containerized Hut
70 Install TSE in Containerized Hut
71 Containerized Hut FAT
72 Ship Containerized Hut to Landing Site
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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SSI Proprietary Page 3 of 6
<PAGE>
<TABLE>
GCI Communication Corp. Submarine Systems International
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
73 Lena Point **********
74 Manufacture Containerized Hut
75 Install TSE in Containerized Hut
76 Containerized Hut FAT
77 Ship Containerized Hut to Landing Site
78 TSE/Containerized Hut Installation
79 Seattle
80 Installation
81 SAT
82 Type B Training
83 Whittier
84 Installation
85 SAT
86 Type B Training
87 Lena Point
88 Installation
89 SAT
90 Land Construction
91 Seattle
92 Land Cables/Equipment On-Site
93 Land Construction Activities
94 Lena Point
95 Land Cables/Equipment On-Site
96 Land Construction Activities
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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SSI Proprietary Page 4 of 6
<PAGE>
<TABLE>
GCI Communication Corp. Submarine Systems International
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
97 Whittier **********
98 Land Cables/Equipment On-Site
99 Land Construction Activities
100 Training
101 Emergency Land Cable Joint Training
102 Lena Point & Whittier @ Lena Point
103 Cable Loading/Laying Activities
104 Transit to Cable Factory
105 Cable Loading
106 Transit to Whittier, Alaska
107 Land Segment 2 Shore End, Splice/Test
108 Lay/Bury 282 km Armored
109 Surface Lay 729 km Unarmored
110 Transit to Juneau/Coordination Meeting
111 Land Segment 3 Shore End, Splice/Test
112 Lay/Bury 142 km Armored
113 Surface Lay 210 km Armored
114 Lay/Bury 17 km Armored
115 Surface Lay 67 km Unarmored/Deploy BU 1
116 Surface Lay 1,208 km Unarmored
117 Transit to Seattle/Coordination Meeting
118 Land Segment 1 Shore End, Splice/Test
119 Lay/Bury 340 km Armored
120 Contingency
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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SSI Proprietary Page 5 of 6
<PAGE>
<TABLE>
GCI Communication Corp. Submarine Systems International
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
121 Final Splice **********
122 Transit to Depot/Offload Spares
123 Transit to Seattle/Off Charter
124 Commissioning & Acceptance Tests
125 Commissioning Tests
126 Confidence Trial
127 Ready For Provisional Acceptance
</TABLE>
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<PAGE>
EXHIBIT 10.83
SUPPLY CONTRACT BETWEEN
TYCO SUBMARINE SYSTEMS LTD.
AND
ALASKA UNITED FIBER SYSTEM PARTNERSHIP
Contract Variation No. 1
This Contract Variation No. 1 ("CV1"), dated effective as of December 1, 1997,
is between Tyco Submarine Systems Ltd. (formerly known as Submarine Systems
International Ltd.), a Delaware corporation ("Contractor") and the Alaska United
Fiber System Partnership, an Alaska general partnership ("AU" or "Purchaser") as
assignee of GCI Communication Corp., an Alaska corporation ("GCICC," and
Contractor and AU, collectively, the "Parties," or individually, a "Party").
WHEREAS, Article 6 (Contract Variations) of that certain Supply Contract between
Contractor and GCICC dated effective as of July 11, 1997 ("Supply Contract"),
provides for the Parties' ability to modify the Supply Contract;
WHEREAS, dated effective as of October 3, 1997, GCICC assigned all its rights
and delegated all its duties under the Supply Contract to AU;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the Parties
agree as follows:
1. Definitions. Unless specifically defined or redefined below, capitalized
terms used herein shall have the meanings ascribed thereto in the Supply
Contract.
2. Recitals. The Recitals are hereby modified by replacing in its entirety the
first recital with the following new recital:
WHEREAS, Purchaser desires to establish a fiber optic
submarine cable system, to be known as Alaska United Fiber
System ("System") linking the State of Alaska, with landings
in Juneau at Lena Point North and Whittier at Lookout Point,
and the State of Washington, with a landing in Norma Beach at
Puget Sound, and such System is hereby defined to also include
the Valdez Extension, as defined below;
and, the Recitals are further modified by adding the following new recital:
WHEREAS, Purchaser desires by this CV1 to include into the
Work the addition of an extension of the System from Whittier
to Valdez, Alaska (the "Valdez Extension") and to make certain
other modifications to the Supply Contract;
[CERTAIN INFORMATION HAS BEEN REDACTED FROM THIS DOCUMENT
WHICH THE COMPANY DESIRES TO KEEP UNDISCLOSED AND A COPY
OF THE UNREDACTED DOCUMENT HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.]
1
<PAGE>
3. Article 2, Documents Forming the Entire Contract, is hereby amended with the
following documents:
- A Technical Volume; Volume 2-Valdez Extension
- A revised Plan of Work; Appendix 6.1
- A Provisioning Schedule; Appendix 1(A)-Valdez Extension
- A Billing Schedule; Appendix 2(A)-Valdez Extension
- An Appendix 7; Straight Line Diagram-Valdez Extension
The balance of Article 2 remains unchanged hereby.
4. Article 4(A), Contract Price is hereby amended and restated in its entirety
as follows:
A. Contract Price.
1. Prices shall be as set forth in Appendix 1,
Provisioning Schedule. The initial Contract Price in
United States Dollars (US $) is $********** ("Initial
Contract Price") for the System.
2. The CV1 initial Contract Price in United States
Dollars (US $) is $********** for the Valdez
Extension ("CV1 Initial Contract Price").
5. Article 5, Terms of Payment, is hereby modified as follows:
Article 5(A)2 is amended by replacing the first sentence with the following
sentence:
"On or before **********, payment by Purchaser shall be
secured by **********."
Article 5(A)3 is replaced in its entirety with the following:
5(A)(3). The Payment Security for the Supply Contract and this
CV1 will be (i) in the initial amount of $**********; and (ii)
AU shall make an ********** payment **********, amounting to
$**********, in accordance with the new Billing Schedule;
Appendix 2(A). The ********** payment shall be correspondingly
reduced by such $**********, plus **********.
For the purposes of the Valdez Extension, Article 5(B) is hereby amended to add
new Subarticles as follows:
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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<PAGE>
5. Terms of Payment for CV1.
(a) Down Payment. ********** of the CV1 Initial
Contract Price ("CV1 Down Payment"), as provided in the CV1 Billing Schedule,
shall be due after the execution of this CV1, and on or before **********.
(b) Progress Payments. ********** of the CV1 Contract
Price will be invoiced in accordance with the Billing Schedule in Appendix 2
(A).
(c) Final Payment
(i) The remaining balance, ********** of the CV1
Contract Price, will be invoiced upon the
issuance of the Certificate of Provisional
Acceptance for the Valdez Extension, as set
forth in Article 9.
(ii) In the event a Certificate of Commercial
Service is issued prior to the issuance of
the Certificate of Provisional Acceptance,
the Purchaser shall be invoiced **********
of the remaining balance upon issuance of
the Certificate of Commercial Service, with
the balance to be invoiced upon the issuance
of the Certificate of Provisional
Acceptance.
Article 5(D)5 is hereby superseded and replaced in its entirety with the
following provision:
5. An invoice shall be deemed to have been accepted for
payment if the Purchaser does not present a written
good faith objection within ********** of the receipt
date of the invoice by Mail, as defined in Article
35.
The balance of Article 5 remains unchanged hereby.
6. Article 9, Acceptance. Article 9(B)(1) is hereby amended by modifying (i) the
first sentence and (ii) inserting a new sentence after the first line of the
existing text, with the balance of the section remaining unchanged, as follows:
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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3
<PAGE>
B. Provisional Acceptance
1. This System shall be ready for Provisional Acceptance
by **********. The Valdez Extension shall be ready
for Provisional Acceptance by ********** ("CV1
Completion Date"). Provisional Acceptance occurs when
the results of the Acceptance Testing demonstrate
that the Work is sufficient to realize the System
performance requirements set forth in the
Specifications or such other System performance
levels as agreed upon as acceptable by the Purchaser
and the Contractor (hereinafter collectively
"Performance Requirements"), and the Contractor has
fulfilled its commitments under the Contract.
7. Article 10, Warranty. Article 10A, Warranty is hereby amended by adding the
following sentence at the end of Article 10(A):
The Warranty for the Valdez Extension shall ********** for the
entire system.
A new Article 10(E) is hereby added as follows:
E. Notwithstanding to the contrary in Article 10(A),
SL101 Cable provided by Contractor for the Valdez
Extension shall include **********.
8. Article 22, Liquidated Damages. Article 22 is hereby amended and restated in
its entirety as follows:
Article 22, Liquidated Damages
A. For the System (other than the Valdez Extension) the Contractor
shall pay to the Purchaser by way of pre-estimated and liquidated
damages for the delay and not as a penalty, an assessed amount equal to
********** under the following limited circumstances:
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT SUBMITTED TO THE SEC.]
4
<PAGE>
1. If the System **********:
(a) Article 6 (Contract Variations);
(b) Article 17 (Force Majeure); or
(c) Other arrangements as agreed between the Purchaser
and the Contractor; or
2. If **********.
B. For the Valdez Extension only, the Contractor shall pay to the
Purchaser by way of pre-estimated and liquidated damages for the delay
and not as a penalty, an assessed amount equal to **********.
9. Article 45, Performance Guarantee. Article 45(A) is amended in its entirety
as follows:
A. Contractor shall, by **********, provide a performance guarantee (in
a format mutually and reasonably acceptable to the Parties) to Purchaser having
a value of ********** (1) ********** (2) ********** (hereinafter referred to as
the "Guarantee Amount").
Article 45(B) is amended by deleting reference to ********** and replacing it
with "Guarantee Amount."
10. Entire Agreement; Ratification. The Supply Contract and this CV1 represent
the final agreement between the Parties and may not be contradicted by evidence
of prior, contemporaneous or subsequent oral agreement of the Parties. There are
no unwritten oral agreements between the Parties. Except as modified or
supplemented hereby, the Supply Contract and this CV1 and all other documents
and agreements executed in connection therewith shall continue in full force and
effect.
11. Counterparts. This CV1 may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument. In making
proof hereof, it shall not be necessary to produce or account for any
counterpart other than one
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT SUBMITTED TO THE SEC.]
5
<PAGE>
signed by the Party against which enforcement is sought.
12. Governing Law. This CV1 shall be construed in accordance with the laws of
the State of Alaska.
13. Effectiveness. This Contract Variation shall become effective upon the
endorsement of Purchaser and Contractor.
14. Modifications only as Stated. Except as expressly modified in this CV1, in
all other respects, the Supply Contract shall remain unchanged by this CV1.
This CV1 is executed by duly authorized representatives of the Parties
as set forth below.
Tyco Submarine Systems Ltd. Alaska United Fiber System
Partnership
by GCI Fiber Co., Inc.,
a General Partner
By: /s/ C.L. Calandra By: /s/ Richard M. Dowling
Title: Vice President & General Counsel Title: Sr V.P.
Date: 12/3/97 Date: 97 December 1
6
<PAGE>
Plan of Work
Appendix 6.1
<PAGE>
<TABLE>
GCI Communication Corp. Tyco Submarine Systems, Ltd.
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
1 ALASKA UNITED FIBER SYSTEM
2 Contract Signing **********
3 AUFS Invoicing
4 AUFS Down Payment Invoice issued
5 AUFS Down Payment Invoice Due
6 Valdez Extension Milestone Invoice #1 Issued (latest date)
7 Valdez Extension Milestone Invoice #1 Payment Due
8 Milestone Invoice #1 Issued (latest date)
9 Milestone Invoice #1 Payment Due
10 Milestone Invoice #2 Issued (latest date)
11 Milestone Invoice #2 Payment Due
12 Milestone Invoice #3 Issued (latest date)
13 Milestone Invoice #3 Payment Due
14 Valdez Extension Milestone Invoice #2 Issued (latest date)
15 Valdez Extension Milestone Invoice #2 Payment Due
16 Valdez Extension Milestone Invoice #3 Issued (latest date)
17 Valdez Extension Milestone Invoice #3 Payment Due
18 Milestone Invoice #4 Issued (latest date)
19 Milestone Invoice #4 Payment Due
20 Valdez Extension Milestone Invoice #4 Issued (latest date)
21 Valdez Extension Milestone Invoice #4 Payment Due
22 Valdez Extension Milestone Invoice #5 Issued (latest date)
23 Valdez Extension Milestone Invoice #5 Payment Due
24 Milestone Invoice #5 Issued (latest date)
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT SUBMITTED TO THE SEC.]
Date: 10/31/97 Task Milestone Rolled Up Task Rolled Up Progress
Project Mgr-L. Riegler Progress Summary Rolled Up Milestone
TSS Proprietary Page 1 of 8
<PAGE>
<TABLE>
GCI Communication Corp. Tyco Submarine Systems, Ltd.
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
25 Milestone Invoice #5 Payment Due **********
26 Fiber/Cable Manufacture
27 Place Cable & Fiber Order
28 Fiber Manufacture/Delivery
29 Cable Manufacture - Hitachi
30 Unit Fiber Structure (UF8)
31 Power Conductor (PC)
32 Extension
33 Post Survey BLD (final engineering)
34 Partial Section Details
35 Ship Tank Plan
36 Section Assembly Guidelines
37 Span Assembly
38 SPA Production
39 Armoring
40 SPA/LW Tasking
41 Cable Manufacture - Simplex (Valdez Extension)
42 Repeater Manufacture
43 Place Repeater Order
44 Manufacture
45 PSBU Manufacture
46 Repeater Delivery
47 Repeater/Cable Integration
48 Assembled System Test
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT SUBMITTED TO THE SEC.]
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Project Mgr-L. Riegler Progress Summary Rolled Up Milestone
TSS Proprietary Page 2 of 8
<TABLE>
GCI Communication Corp. Tyco Submarine Systems, Ltd.
<PAGE>
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
49 Cable Ready-To-Load - Hitachi **********
50 Cable Ready-To-Load - Simplex
51 PFE Manufacture/Ship
52 Seattle
53 Place PFE Order
54 Manufacture - Medium Voltage
55 Factory Acceptance Test (FAT)
56 Ship to HUT Manufacturing Site
57 Whittier
58 Place PFE Order
59 Manufacture - Medium Voltage
60 FAT
61 Ship to Whittier Station
62 Lena Point
63 Place PFE Order
64 Manufacture - Low Voltage
65 FAT
66 Ship to Lena Point Station
67 Transmission Equipment Manufacture/Ship
68 Whittier (Valdez Extension)
69 Place TTE Order
70 Manufacture
71 FAT
72 Ship to Whittier Station
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT SUBMITTED TO THE SEC.]
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Project Mgr-L. Riegler Progress Summary Rolled Up Milestone
TSS Proprietary Page 3 of 8
<PAGE>
<TABLE>
GCI Communication Corp. Tyco Submarine Systems, Ltd.
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
73 Valdez **********
74 Place TTE Order
75 Manufacture
76 FAT
77 Ship to HUT Manufacturing Site
78 Seattle
79 Place TTE Order
80 Manufacture
81 FAT
82 Ship to HUT Manufacturing Site
83 Whittier
84 Place TTE Order
85 Manufacture
86 FAT
87 Ship to Whittier Station
88 Lena Point
89 Place TTE Order
90 Manufacture
91 FAT
92 Ship to Lena Point Station
93 Land Cable Manufacture/Ship
94 Place Land Cable Order
95 Manufacture
96 Ship Land Cables to Sites
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT SUBMITTED TO THE SEC.]
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Project Mgr-L. Riegler Progress Summary Rolled Up Milestone
TSS Proprietary Page 4 of 8
<TABLE>
GCI Communication Corp. Tyco Submarine Systems, Ltd.
<PAGE>
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
97 TSE Installation/Training **********
98 Valdez Extension
99 Whittier
100 Equipment On-Site at Station
101 Install TSE in Station
102 SAT
103 Type B Training
104 Valdez
105 Equipment On-Site at HUT Manufacturer
106 Install TSE in Containerized HUT
107 Containerized HUT FAT
108 Ship HUT to Landing Site (GCI)
109 Install HUT on Site (GCI)
110 SAT
111 Remaining AUFS Stations
112 Seattle
113 Equipment On-Site at HUT Manufacturer
114 Install TSE in Containerized HUT
115 Containerized HUT Testing
116 Ship Containerized HUT to Landing Site (GCI)
117 Install Containerized HUT on Site (GCI)
118 SAT
119 Type B Training
120 Whittier (Trunk Leg)
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Project Mgr-L. Riegler Progress Summary Rolled Up Milestone
TSS Proprietary Page 5 of 8
<TABLE>
GCI Communication Corp. Tyco Submarine Systems, Ltd.
<PAGE>
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
121 Equipment On-Site at Station **********
122 Install TSE in Station
123 SAT
124 Lena Point
125 Equipment On-Site at Station
126 Install TSE in Station
127 SAT
128 Land Construction
129 Valdez
130 Land Cables/Equipment On-Site
131 Land Construction Activities
132 Whittier
133 Land Cables/Equipment On-Site
134 Land Construction Activities
135 Lena Point
136 Land Cables/Equipment On-Site
137 Land Construction Activities
138 Seattle
139 Land Cables/Equipment On-Site
140 Land Construction Activities
141 Training
142 Emergency Land Cable Joint Training
143 Whittier
144 Valdez Extension Cable Loading/Transit to Seattle
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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TSS Proprietary Page 6 of 8
<TABLE>
GCI Communication Corp. Tyco Submarine Systems, Ltd.
<PAGE>
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
145 Load Valdez Extension Cable into RR
Cars **********
146 RR Transit to Seattle
147 Valdez Cable On-Site @ Seattle
148 Cable Loading/Laying Activities
149 Load Valdez Extension Cable From RR Cars
150 Transit to Hitachi Cable Factory
151 Cable Loading
152 Transit to Whittier/Port Call
153 Land Valdez Shore End, Beach Splice, Test
154 Lay/Bury Valdez Extension, Buoy End
155 Transit to Whittier/Port Call
156 Land Whittier S/E, Beach Splice/Lay toward Buoyed End
157 Recover Buoy/Perform Valdez Extension Final Splice
158 Land Segment 2 Shore End, Splice/Test
159 Lay/Bury 282 km Armored
160 Surface Lay 729 km Unarmored
161 Transit to Juneau/Coordination Meeting
162 Land Segment 3 Shore End, Splice/Test
163 Lay/Bury 142 km Armored
164 Surface Lay 210 km Armored
165 Lay/Bury 17 km Armored
166 Surface Lay 67 km Unarmored/Deploy BU 1
167 Surface Lay 1,208 km Unarmored
168 Transit to Seattle/Coordination Meeting
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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TSS Proprietary Page 7 of 8
<TABLE>
GCI Communication Corp. Tyco Submarine Systems, Ltd.
<PAGE>
ALASKA UNITED FIBER SYSTEM
PLAN OF WORK
<CAPTION>
Start End *** ***
ID Work Activity Days Date Date Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
<S> <C> <C>
169 Land Segment 1 Shore End, Splice/Test **********
170 Lay/Bury 340 km Armored
171 Contingency
172 Final Splice
173 Transit to Depot/Offload Spares
174 Transit to Seattle/Off Charter
175 Commissioning & Acceptance Tests
176 Valdez Extension
177 Commissioning Tests
178 Confidence Trial
179 AUFS (excluding Valdez Extension)
180 Commissioning Tests
181 Confidence Trial
182 Ready for Provisional Acceptance - Valdez Extension
183 Ready for Provisional Acceptance - AUFS
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Project Mgr-L. Riegler Progress Summary Rolled Up Milestone
TSS Proprietary Page 8 of 8
<PAGE>
Provisioning Schedule
Appendix 1(A)
<PAGE>
<TABLE>
Alaska United Fiber System Extention - Whittier to Valdez
<CAPTION>
FOB CIF Taxes Total
<S> <C> <C> <C> <C>
Wet Plant - (Non-Repeatered) *** *** *** ***
Marine and Transit Services *** *** *** ***
TSE - Whittier *** *** *** ***
TSE - Valdez *** *** *** ***
Land Cable - Whittier *** *** *** ***
Land Cable - Valdez *** *** *** ***
Other *** *** *** ***
Grand Total *** *** *** ***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Alaska United Fiber System Tyco Submarine Systems Ltd. PROPRIETARY 10/30/97
<PAGE>
<TABLE>
Alaska United Fiber System Extention - Whittier to Valdez
<CAPTION>
Submerged Plant - Whittier to Valdez Type Quantity Unit Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C>
Installed Cable
SA *** *** *** *** *** *** ***
DA *** *** *** *** *** *** ***
Spare Cable
SA *** *** *** *** *** *** ***
DA *** *** *** *** *** *** ***
Transitions - SA/DA *** *** *** *** *** *** ***
Total Cable to Cable Joints
LW Cbl-to-Cbl Joint *** *** *** *** *** *** ***
SPA Cbl-to-Cbl Joint *** *** *** *** *** *** ***
Polysleaves *** *** *** *** *** *** ***
End Seals
11TH A-838518 *** *** *** *** *** *** ***
11SY A-838724 Common Spare *** *** *** *** *** *** ***
Total Submerged Plant - Whittier to Valdez *** *** *** ***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Alaska United Fiber System Tyco Submarine Systems Ltd. PROPRIETARY 10/30/97
<PAGE>
<TABLE>
Alaska United Fiber System Extention - Whittier to Valdez
<CAPTION>
Type Quantity Unit Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C>
Marine Services
Operations *** *** *** *** *** ***
Transit *** *** *** *** *** ***
Loading *** *** *** *** *** ***
Port Calls *** *** *** *** *** ***
Mob/Demob *** *** *** *** *** ***
Sea Plow VII
Operations *** *** *** *** *** ***
Transit *** *** *** *** *** ***
Mob/Demob *** *** *** *** *** ***
Other
Support Tug *** *** *** *** *** ***
PLIB Operations *** *** *** *** *** ***
Shore End Operations *** *** *** *** *** ***
Cable Loading *** *** *** *** *** ***
Cable Engineering *** *** *** *** *** ***
Splicing Operations *** *** *** *** *** ***
Marine Coordination *** *** *** *** *** ***
Cable Transport by Rail Road *** ***
Total Marine Services *** *** ***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Alaska United Fiber System Tyco Submarine Systems Ltd. PROPRIETARY 10/30/97
<PAGE>
<TABLE>
Alaska United Fiber System Extention - Whittier to Valdez
<CAPTION>
Terminal Station Equipment - Whittier Type Quantity Unit Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C>
Terminal Transmission Equipment
FT 2000, OC48, Add Drop Ring *** *** *** *** *** ***
TOA +16 w/Spares (2 Service = 1 Spare) *** *** *** *** *** ***
Engineering Order Wires w/Spares *** *** *** *** *** ***
Craft Interface Terminals *** *** *** *** *** ***
Digital Distribution Frame *** *** *** *** *** ***
Cable Terminating Unit - CTU *** *** *** *** *** ***
Network Sync. Equipment *** *** *** *** *** ***
Installation ***
Subtotal TSE - Whittier *** *** ***
Terminal Station Equipment - Valdez *** *** *** *** *** *** ***
Terminal Transmission Equipment
FT 2000, OC48, Add Drop Ring w/Spares *** *** *** *** *** ***
TOA +16 w/Spares (2 Service + 1 Spare) *** *** *** *** *** ***
Engineering Order Wires w/Spares *** *** *** *** *** ***
Craft Interface Terminals *** *** *** *** *** ***
Digital Distribution Frame *** *** *** *** *** ***
Cable Terminating Unit - CTU *** *** *** *** *** ***
Network Sync. Equipment *** *** *** *** *** ***
Installation ***
Subtotal TSE - Valdez *** *** ***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Alaska United Fiber System Tyco Submarine Systems Ltd. PROPRIETARY 10/30/97
<PAGE>
<TABLE>
Alaska United Fiber System Extention - Whittier to Valdez
<CAPTION>
Type Quantity Unit Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C>
Land Cable - Whittier
RL *** *** *** *** *** ***
MV-90 *** *** *** *** *** ***
Installation *** *** *** *** *** ***
Ocean Ground Bed *** *** *** *** *** ***
Subtotal Land Cable - Whittier *** *** ***
Land Cable - Valdez
RL *** *** *** *** *** ***
MV-90 *** *** *** *** *** ***
Installation *** *** *** *** *** ***
Ocean Ground Bed *** *** *** *** *** ***
Subtotal Land Cable - Valdez *** *** ***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Alaska United Fiber System Tyco Submarine Systems Ltd. PROPRIETARY 10/30/97
<PAGE>
<TABLE>
Alaska United Fiber System Extention - Whittier to Valdez
<CAPTION>
Type Quantity Unit Price FOB CIF Taxes Total
<S> <C> <C> <C> <C> <C> <C> <C>
Other
Acceptance Testing *** *** *** *** *** ***
Engineering Services *** *** *** *** *** ***
Warranty (Impact to AUFS) *** *** *** *** *** ***
Project Management *** *** *** *** *** ***
Documentation *** *** *** *** *** ***
Original (Added Development) *** *** *** *** *** ***
Copies
Subtotal - Other *** *** ***
</TABLE>
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Alaska United Fiber System Tyco Submarine Systems Ltd. PROPRIETARY 10/30/97
<PAGE>
Billing Schedule
Appendix 2(A)
<PAGE>
Billing Schedule for AUFS Extension - Option A
<TABLE>
<CAPTION>
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
<S> <C> <C> <C> <C> <C> <C>
*** *** ***
*** *** *** *** *** ***
***
</TABLE>
Contract Signature *** ***
Fiber/Cable Manufacture Complete *** ***
Transmission Equipment Manufacture Complete *** ***
Final Splice Complete *** ***
Provisional Acceptance *** ***
TOTAL *** ***
AUFS Extension Tyco Submarine Systems Ltd. (TSSL) PROPRIETARY 12/1/97
<PAGE>
Valdez Extension
Straight Line Diagram
Appendix 7
<PAGE>
Option A
Whittier Valdez
*** *** *** *** ***
*** *** *** *** ***
tentative burial
max depth = ***
Notes:
1. This SLD is a pre-survey
document for planning purposes
only; no detailed engineering has
been conducted.
2. All distances are in
kilometers.
3. Land Cable is estimated, as
are transitions in the segment
lengths.
4. Burial may be required as
indicated.
5. This diagram corresponds to
issue "A" of the RPL.
6. The selection of "Option A" or
"Option B" will be determined
with the results of the survey.
SUMMARY OF CABLE TYPES
AND QUANTITIES ALASKA UNITED FIBER SYSTEM
WHITTIER TO VALDEZ EXTENSION
Option A STRAIGHT LINE DIAGRAM
Land *** PRE-SURVEY CABLE ESTIMATES
DA ***
SA *** ISSUE NO FILE ENGINEER ISSUE DATE CLASS
Total *** A1 VALDEZ CC 07 AUG 97 B
TYCO SUBMARINE PAGE 01
SYSTEMS, INC. OF 01 PAGES
[INFORMATION HAS BEEN REDACTED FROM THIS PAGE PURSUANT
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Alaska United Fiber System Extension TYCO SUBMARINE SYSTEMS L.T.D. PROPRIETARY
<PAGE>
EXHIBIT 10.84
$200,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 14, 1997
BETWEEN
GCI HOLDINGS, INC.
and
NATIONSBANK OF TEXAS, N.A.
As Administrative Agent
CREDIT LYONNAIS NEW YORK BRANCH
As Documentation Agent
TD SECURITIES(USA), INC.
As Syndication Agent
0100.0269\91958
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
ARTICLE I. DEFINITIONS
<S> <C> <C>
1.01. Definitions................................................................................... 1
1.02. Accounting and Other Terms.................................................................... 27
ARTICLE II. AMOUNTS AND TERMS OF ADVANCES
2.01. The Facility.................................................................................. 28
2.02. Making Advances Under the Revolving Loan...................................................... 28
2.03. Evidence of Indebtedness...................................................................... 30
2.04. Reduction of Commitments...................................................................... 30
2.05. Prepayments................................................................................... 34
2.06. Mandatory Repayment........................................................................... 37
2.07. Interest...................................................................................... 37
2.08. Default Interest.............................................................................. 38
2.09. Continuation and Conversion Elections......................................................... 38
2.10. Fees.......................................................................................... 39
2.11. Funding Losses................................................................................ 40
2.12. Computations and Manner of Payments........................................................... 40
2.13. Yield Protection.............................................................................. 41
2.14. Use of Proceeds............................................................................... 44
2.15. Collateral and Collateral Call................................................................ 44
2.16. Increase of Revolving Commitment.............................................................. 45
ARTICLE III. LETTERS OF CREDIT
3.01. Issuance of Letters of Credit................................................................. 46
3.02. Letters of Credit Fees........................................................................ 47
3.03. Reimbursement Obligations..................................................................... 47
3.04. Lenders' Obligations.......................................................................... 49
3.05. Administrative Agent's Obligations............................................................ 49
ARTICLE IV. CONDITIONS PRECEDENT
4.01. Conditions Precedent to the Initial Advance................................................... 50
4.02. Conditions Precedent to All Advances and Letters of Credit.................................... 52
0100.0269\91958
<PAGE>
ARTICLE V. REPRESENTATIONS AND WARRANTIES
5.01. Organization and Qualification................................................................ 53
5.02. Due Authorization; Validity................................................................... 54
5.03. Conflicting Agreements and Other Matters...................................................... 54
5.04. Financial Statements.......................................................................... 54
5.05. Litigation.................................................................................... 55
5.06. Compliance With Laws Regulating the Incurrence of Debt........................................ 55
5.07. Licenses, Title to Properties, and Related Matters............................................ 55
5.08. Outstanding Debt and Liens.................................................................... 56
5.09. Taxes......................................................................................... 56
5.10. ERISA......................................................................................... 57
5.11. Environmental Laws............................................................................ 57
5.12. Disclosure.................................................................................... 58
5.13. Investments; Restricted Subsidiaries.......................................................... 58
5.14. Certain Fees.................................................................................. 58
5.15. Intellectual Property......................................................................... 58
5.16. Due Authorization; Validity of the AUSP Financing Agreements and the Project Agreements....... 59
5.17. Conflicting Agreements and Other Matters with the AUSP Financing Agreements and
Project Agreements............................................................................ 59
5.18. Survival of Representations and Warranties, etc............................................... 59
ARTICLE VI. AFFIRMATIVE COVENANTS
6.01. Compliance with Laws and Payment of Debt...................................................... 60
6.02. Insurance..................................................................................... 60
6.03. Inspection Rights............................................................................. 61
6.04. Records and Books of Account; Changes in GAAP................................................. 61
6.05. Reporting Requirements........................................................................ 61
6.06. Use of Proceeds............................................................................... 64
6.07. Maintenance of Existence and Assets........................................................... 64
6.08. Payment of Taxes.............................................................................. 64
6.09. Indemnity..................................................................................... 65
6.10. Interest Rate Hedging......................................................................... 66
6.11. Management Fees Paid and Earned............................................................... 66
6.12. Authorizations and Material Agreements........................................................ 66
6.13. Further Assurances............................................................................ 66
6.14. AUSP Financing................................................................................ 66
6.15. Subsidiaries and Other Obligors............................................................... 67
6.16. CoBank Participation Certificates............................................................. 67
0100.0269\91958 ii
<PAGE>
ARTICLE VII. NEGATIVE COVENANTS
7.01. Financial Covenants........................................................................... 67
7.02. Debt.......................................................................................... 68
7.03. Contingent Liabilities........................................................................ 69
7.04. Liens......................................................................................... 69
7.05. Dispositions of Assets........................................................................ 69
7.06. Distributions and Restricted Payments......................................................... 70
7.07. Merger; Consolidation......................................................................... 70
7.08. Business...................................................................................... 71
7.09. Transactions with Affiliates.................................................................. 71
7.10. Loans and Investments......................................................................... 72
7.11. Fiscal Year and Accounting Method............................................................. 73
7.12. Issuance of Partnership Interest and Capital Stock; Amendment of Articles and By-Laws......... 73
7.13. Change of Ownership........................................................................... 73
7.14. Sale and Leaseback............................................................................ 73
7.15. Compliance with ERISA......................................................................... 73
7.16. Rate Swap Exposure............................................................................ 74
7.17. Restricted Subsidiaries and Other Obligors.................................................... 74
7.18. Amendments to Material Agreements............................................................. 74
7.19. Limitation on Restrictive Agreements.......................................................... 74
ARTICLE VIII. EVENTS OF DEFAULT
8.01. Events of Default............................................................................. 75
8.02. Remedies Upon Default......................................................................... 80
8.03. Cumulative Rights............................................................................. 81
8.04. Waivers....................................................................................... 81
8.05. Performance by Administrative Agent or any Lender............................................. 81
8.06. Expenditures.................................................................................. 81
8.07. Control....................................................................................... 81
ARTICLE IX. THE ADMINISTRATIVE AGENT
9.01. Authorization and Action...................................................................... 82
9.02. Administrative Agent's Reliance, Etc.......................................................... 82
9.03. NationsBank of Texas, National Association and Affiliates..................................... 83
9.04. Lender Credit Decision........................................................................ 83
9.05. Indemnification by Lenders.................................................................... 83
9.06. Successor Administrative Agent................................................................ 83
0100.0269\91958 iii
<PAGE>
ARTICLE X. MISCELLANEOUS
10.01. Amendments and Waivers........................................................................ 84
10.02. Notices....................................................................................... 85
10.03. Parties in Interest........................................................................... 87
10.04. Assignments and Participations................................................................ 87
10.05. Sharing of Payments........................................................................... 88
10.06. Right of Set-off.............................................................................. 88
10.07. Costs, Expenses, and Taxes.................................................................... 88
10.08. Indemnification by the Borrower............................................................... 89
10.09. Rate Provision................................................................................ 90
10.10. Severability.................................................................................. 90
10.11. Exceptions to Covenants....................................................................... 90
10.12. Counterparts.................................................................................. 91
10.13. GOVERNING LAW; WAIVER OF JURY TRIAL........................................................... 91
10.14. ENTIRE AGREEMENT.............................................................................. 91
</TABLE>
0100.0269\91958 iv
<PAGE>
TABLE OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1.01A Systems
Schedule 1.01B AUSP Financing Agreements; Project Agreements
Schedule 1.02 Prior Stock Lien on Capital Stock of GCI Leasing
Schedule 3.23 Project Agreements
Schedule 5.01 Organization and Qualification of the GCI Entities
Schedule 5.03 Consents under Material Agreements
Schedule 5.05 Litigation
Schedule 5.07a Authorizations
Schedule 5.07b County and State Locations of Assets
Schedule 5.08a Debt,ContingentLiabilities and Liens of the Borrower
and each other GCI Entity in Existence on the
Closing Date
Schedule 5.11 Environmental Liabilities of the GCI Entities on the
Closing Date
Schedule 5.13 Investments and GCI Entities
Schedule 5.14 Fees Payable
Schedule 7.02 Subordination Terms
EXHIBITS
Exhibit A - Form of Revolving Note
Exhibit B - Assignment and Acceptance
Exhibit C - Form of Pledge and Security Agreement
Exhibit D - Form of Compliance Certificate
Exhibit E - Form of Conversion/Continuation Notice
Exhibit F - Form of Borrowing Notice
Exhibit G - Form of Intercompany Notes
Exhibit H - Form of Certificate
0100.0269\91958 v
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GCI HOLDINGS, INC.
$200,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of November 14,
1997 and is between GCI HOLDINGS, INC., an Alaska corporation, (the "Borrower"),
the Lenders from time to time party hereto or to an Assignment and Acceptance,
and NATIONSBANK OF TEXAS, N.A., a national banking association ("NationsBank"),
as a Lender and Administrative Agent (the "Administrative Agent"), CREDIT
LYONNAIS NEW YORK BRANCH ("Credit Lyonnais") as Documentation Agent and TD
SECURITIES (USA), INC. ("TD"), as Syndication Agent, (NationsBank, Credit
Lyonnais and TD being collectively referred to herein as the "Managing Agents").
BACKGROUND
1. The Borrower, the Administrative Agent and the Lenders entered into
a Credit Agreement dated as of August 1, 1997 (the "Original Credit Agreement")
which provides for -an eight year reducing revolving credit facility in an
amount up to $200,000,000 (which, under certain circumstances could be increased
to $300,000,000), with a sub-facility for letters of credit up to $10,000,000.
2. The Borrower, the Administrative Agent and the Lenders party hereto
agree to amend and restate the Original Credit Agreement as follows:
AGREEMENT
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I. DEFINITIONS
1.01. Definitions. As used in this Agreement, the following terms have
the respective meanings indicated below (such meanings to be applicable equally
to both the singular and plural forms of such terms):
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"Administrative Agent" means NationsBank of Texas, National
Association, in its capacity as Administrative Agent hereunder, or any successor
Administrative Agent appointed pursuant to Section 9.06 hereof.
"Advance" means an advance made by a Lender to the Borrower pursuant to
Section 2.01 hereof.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled By or is Under Common Control
with another Person, and with respect to the Borrower, "Affiliate" means a
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled By or is Under Common Control with GCI, the Borrower or any
Subsidiary of the Borrower or GCI.
"Agreement" means this Credit Agreement, as hereafter amended,
modified, or supplemented in accordance with its terms.
"Annualized Operating Cash Flow" means, as of any date of
determination, the product of two times Operating Cash Flow for the two most
recently ended fiscal quarters; provided that notwithstanding the preceding and
any other provision in this Agreement or in the Loan Papers, Annualized
Operating Cash Flow for any period prior to the Closing Date shall be determined
by using the relevant financial information of the Restricted Subsidiaries.
"Applicable Law" means (a) in respect of any Person, all provisions of
Laws applicable to such Person, and all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a party
and (b) in respect of contracts made or performed in the State of Texas,
"Applicable Law" shall also mean the laws of the United States of America,
including, without limiting the foregoing, 12 USC Sections 85 and 86, as amended
to the date hereof and as the same may be amended at any time and from time to
time hereafter, and any other statute of the United States of America now or at
any time hereafter prescribing the maximum rates of interest on loans and
extensions of credit, and the laws of the State of Texas, including, without
limitations, Articles 5069-1H, Title 79, Revised Civil Statutes of Texas, 1925,
as amended ("Art. 1H"), if applicable, and if Art. 1H is not applicable, Article
5069-1D, Title 79, Revised Civil Statutes of Texas, 1925 ("Art. 1D"), as
amended, and any other statute of the State of Texas now or at any time
hereafter prescribing maximum rates of interest on loans and extensions of
credit, provided however, that pursuant to Article 5069-15.10(b), Title 79,
Revised Civil Statutes of Texas, 1925, as amended, the Borrower agrees that the
provisions of Chapter 15, Title 79, Revised Civil Statutes of Texas, 1925, as
amended, shall not apply to the Advances hereunder.
"Applicable Margin" means (i) with respect to the Base Rate Advances
under the Facility, 1.125% per annum and (ii) with respect to LIBOR Advances
under the Facility, 2.250% per annum. Notwithstanding the foregoing, effective
three Business Days after receipt by the
0100.0269\91958 2
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Administrative Agent from the Borrower of a Compliance Certificate delivered to
the Lenders for any reason and demonstrating a change in the Total Leverage
Ratio to an amount so that another Applicable Margin should be applied pursuant
to the table set forth below, the Applicable Margin for each type of Advance
shall mean the respective amount set forth below opposite such relevant Total
Leverage Ratio in Columns A and B below, in each case until the first succeeding
Quarterly Date which is at least three Business Days after receipt by the
Administrative Agent from the Borrower of a Compliance Certificate,
demonstrating a change in the Total Leverage Ratio to an amount so that another
Applicable Margin shall be applied; provided that, if there exists a Default or
if the Total Leverage Ratio shall at any time be greater than or equal to 6.50
to 1.00, the Applicable Margin shall again be the respective amounts first set
forth in this definition; provided further, that the Applicable Margin in effect
on the Closing Date shall be determined pursuant to a Compliance Certificate
delivered on the Closing Date, provided, further, that if the Borrower fails to
deliver any financial statements to the Administrative Agent within the required
time periods set forth in Sections 6.05(a) and Section 6.05(b) hereof, the
Applicable Margin shall again be the respective amounts first set forth in this
definition until the date which is three Business Days after the Administrative
Agent receives financial statements from the Borrower which demonstrate that
another Applicable Margin should be applied pursuant to the table set forth
below; and provided further, that the Applicable Margin shall never be a
negative number.
<TABLE>
<CAPTION>
Column A Column B
Total Leverage Ratio Base Rate LIBOR
<S> <C> <C>
Greater than or equal to
6.50 to 1.00 1.125% 2.250%
Greater than or equal to
6.00 to 1.00 but less than
6.50 to 1.00 0.750% 1.875%
Greater than or equal to
5.50 to 1.00 but less than
6.00 to 1.00 0.500% 1.625%
Greater than or equal to
5.00 to 1.00 but less than
5.50 to 1.00 0.250% 1.375%
Greater than or equal to
4.50 to 1.00 but less than
5.00 to 1.00 0.000% 1.125%
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Greater than or equal to
4.00 to 1.00 but less than
4.50 to 1.00 0.000% 1.000%
Less than 0.000% 0.750%
4.00 to 1.00
</TABLE>
"Application" means any stand-by letter of credit application delivered
to Administrative Agent for or in connection with any Stand-By Letter of Credit
pursuant to Article III hereof, in Administrative Agent's standard form for
stand-by letters of credit.
"Art. 1H" has the meaning specified in the definition herein of
"Applicable Law".
"Art. 1D" has the meaning specified in the definition herein of
"Applicable Law".
"Asset Sale" means any sale, disposition, liquidation, conveyance or
transfer by the Borrower or any Restricted Subsidiary of any Property (or
portion thereof) or an interest (other than Permitted Dispositions and Permitted
Liens or a Lien granted to the Administrative Agent on behalf of the Lenders)
therein, other than in the ordinary course of business.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by Administrative Agent,
in the form of Exhibit B hereto, as each such agreement may be amended,
modified, extended, restated, renewed, substituted or replaced from time to
time.
"Auditor" means KPMG Peat Marwick, L.L.P., or other independent
certified public accountants selected by the Borrower and acceptable to
Administrative Agent.
"AUSP" means Alaska United Fiber System Partnership, an Alaska general
partnership and Unrestricted Subsidiary, which is a wholly owned indirect
Subsidiary of the Borrower.
"AUSP Closing Date" means the closing date for the AUSP Financing, but
in no event later than March 31, 1998.
"AUSP Credit Agreement" means the Credit and Security Agreement among
AUSP, the lenders referred to therein, Credit Lyonnais as administrative agent,
NationsBank as syndication agent, and TD as documentation agent, substantially
similar in all material respects in form and substance to the draft thereof
dated November 5, 1997, as amended, restated or otherwise modified from time to
time (it being understood that nothing herein shall be deemed to permit
amendments contrary to Section 7.18 hereof).
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"AUSP Financing" means that certain credit facility for AUSP, in the
maximum amount of $75,000,000 pursuant to the AUSP Credit Agreement.
"AUSP Financing Agreements" means those certain credit, collateral and
other agreements described on Schedule 1.01B hereto evidencing and related to
the AUSP Financing, and such other agreements as may hereafter be entered into
from time to time which materially and adversely affect the obligations of the
Borrower or the Restricted Subsidiaries in connection with the AUSP Financing;
such AUSP Financing Agreements to be substantially similar in all material
respects in form and substance to drafts thereof dated November 4, 1997 and
which may be amended, restated or otherwise modified from time to time.
"Authorizations" means all filings, recordings and registrations with,
and all validations or exemptions, approvals, orders, authorizations, consents,
Licenses, certificates and permits from, the FCC, applicable public utilities
and other federal, state and local regulatory or governmental bodies and
authorities or any subdivision thereof, including, without limitation, FCC
Licenses.
"Authorized Officer" means any of the President, Senior Vice
President-Chief Financial Officer, Vice President-Chief Accounting Officer, Vice
President-Finance, Secretary-Treasurer, or any other officer authorized by the
Borrower from time to time of which the Administrative Agent has been notified
in writing.
"Bank Affiliate" means the holding company of any Lender, or any wholly
owned direct or indirect subsidiary of such holding company or of such Lender.
"Base Rate Advance" means an Advance bearing interest at the Base Rate.
"Base Rate" means a fluctuating rate per annum as shall be in effect
from time to time equal to the lesser of (a) the Highest Lawful Rate and (b) the
sum of the Applicable Margin plus the greater of (i) the sum of Federal Funds
Rate in effect from time to time plus .50% and (ii) the rate of interest as then
in effect announced publicly by NationsBank of Texas, N.A. in Dallas, Texas from
time to time as its U.S. dollar prime commercial lending rate (such rate may or
may not be the lowest rate of interest charged by NationsBank from time to
time). The Base Rate shall be adjusted automatically as of the opening of
business on the effective date of each change in the prime rate to account for
such change.
"Borrower" means GCI Holdings, Inc., an Alaska corporation.
"Borrowing" means a borrowing under the Facility of the same Type made
on the same day.
"Borrowing Notice" has the meaning set forth in Section 2.02(a) hereof.
0100.0269\91958 5
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"Business Day" means a day of the year on which banks are not required
or authorized to close in Dallas, Texas and, if the applicable day relates to
any notice, payment or calculation related to a LIBOR Advance, London, England.
"Capital Expenditures" means the aggregate amount of all purchases or
acquisitions of items considered to be capital items under GAAP, and in any
event shall include the aggregate amount of items leased or acquired under
Capital Leases at the cost of the item, and the acquisition of realty, tools,
equipment, and fixed assets, and any deferred costs associated with any of the
foregoing.
"Capital Leases" means capital leases and subleases, as defined in
accordance with GAAP.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
of any Person that is a corporation and each class of partnership interests
(including without limitation, general, limited and preference units) in any
Person that is a partnership.
"Cash Equivalents" means investments (directly or through a money
market fund) in (a) certificates of deposit and other interest bearing deposits
or accounts with United States commercial banks having a combined capital and
surplus of at least $250,000,000, which certificates, deposits, and accounts
mature within one year from the date of investment and are fully insured as to
principal by the FDIC, (b) obligations issued or unconditionally guaranteed by
the United States government, or issued by an agency thereof and backed by the
full faith and credit of the United States government, which obligations mature
within one year from the date of investment, (c) direct obligations issued by
any state or political subdivision of the United States, which mature within one
year from the date of investment and have the highest rating obtainable from
Standard & Poor's Ratings Group or Moody's Investors Services, Inc. on the date
of investment, and (d) commercial paper which has one of the three highest
ratings obtainable from Standard & Poor's Ratings Group or Moody's Investors
Services, Inc.
"Change of Control" means the occurrence of one or more of the
following events: (a) any change in the ownership of the Borrower or any
Restricted Subsidiary (except any change due to any merger or consolidation
among the Wholly-Owned Subsidiaries) or (b) any change in the ownership of GCI
resulting in MCI or any of its wholly-owned Subsidiaries, owning less than 18%
of the total combined voting power of GCI, or (c) MCI shall at any time have
less than two representatives sitting on the GCI's Board of Directors.
"Closing Date" means August 1, 1997.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations issued thereunder, as from time to time in effect.
0100.0269\91958 6
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"Collateral" means all "collateral" referred to in any Loan Paper and
all other property which is or may be subject to a Lien in favor or for the
benefit of Administrative Agent on behalf of Lenders or any Lender to secure the
Obligations, including, without limitation, "Collateral" as defined in Section
2.15(a) hereof.
"Commitment Fees" means each of the fees described in Sections 2.10(a)
and 2.10(b) hereof.
"Completion Guaranty" means that certain completion guaranty from the
Borrower that is a Project Agreement and is substantially similar in all
material respects in form and substance to the draft thereof dated November 4,
1997, as such guaranty may be amended, restated or otherwise modified from time
to time.
"Compliance Certificate" means a certificate of an Authorized Officer
of the Borrower acceptable to Administrative Agent, in the form of Exhibit D
hereto, (a) certifying that such individual has no knowledge that a Default or
Event of Default has occurred and is continuing, or if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action being taken or proposed to be taken with respect thereto, and (b)
setting forth detailed calculations with respect to each of the covenants
described in Section 7.01 hereof.
"Consequential Loss," with respect to (a) the Borrower's payment of all
or any portion of the then-outstanding principal amount of a LIBOR Advance on a
day other than the last day of the related Interest Period, including, without
limitation, payments made as a result of the acceleration of the maturity of a
Note, (b) (subject to Administrative Agents' prior consent), a LIBOR Advance
made on a date other than the date on which the Advance is to be made according
to Section 2.02(a) or Section 2.09 hereof, or (c) any of the circumstances
specified in Section 2.04, Section 2.05 and Section 2.06 hereof on which a
Consequential Loss may be incurred, means any loss, cost or expense incurred by
any Lender as a result of the timing of the payment or Advance or in
liquidating, redepositing, redeploying or reinvesting the principal amount so
paid or affected by the timing of the Advance or the circumstances described in
Section 2.04, Section 2.05, and Section 2.06 hereof, which amount shall be the
sum of (i) the interest that, but for the payment or timing of Advance, such
Lender would have earned in respect of that principal amount, reduced, if such
Lender is able to redeposit, redeploy, or reinvest the principal amount, by the
interest earned by such Lender as a result of redepositing, redeploying or
reinvesting the principal amount plus (ii) any expense or penalty incurred by
such Lender by reason of liquidating, redepositing, redeploying or reinvesting
the principal amount. Each determination by each Lender of any Consequential
Loss is, in the absence of manifest error, conclusive and binding.
"Contingent Liability" means, as to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Debt or obligation of any other Person in any manner,
whether directly or indirectly, including without
0100.0269\91958 7
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limitation any obligation of such Person, direct or indirect, (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) such Debt or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Debt, (b) to purchase Property or services for the purpose
of assuring the owner of such Debt of its payment, or (c) to maintain the
solvency, working capital, equity, cash flow, fixed charge or other coverage
ratio, or any other financial condition of the primary obligor so as to enable
the primary obligor to pay any Debt or to comply with any agreement relating to
any Debt or obligation, and shall, in any event, include any contingent
obligation under any letter of credit, application for any letter of credit or
other related documentation.
"Continue," "Continuation" and "Continued" each refer to the
continuation pursuant to Section 2.09 hereof of a LIBOR Advance from one
Interest Period to the next Interest Period.
"Control" or "Controlled By" or "Under Common Control" mean possession,
direct or indirect, of power to direct or cause the direction of management or
policies (whether through ownership of voting securities, by contract or
otherwise); provided that, in any event (a) it shall include any director (or
Person holding the equivalent position) or executive officer (or Person holding
the equivalent position) of such Person or of any Affiliate of such Person, (b)
any Person which beneficially owns 5% or more (in number of votes) of the
securities having ordinary voting power for the election of directors of a
corporation shall be conclusively presumed to control such corporation, (c) any
general partner of any partnership shall be conclusively presumed to control
such partnership, (d) any other Person who is a member of the immediate family
(including parents, spouse, siblings and children) of any general partner of a
partnership, and any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is controlled by any
such member or trust, or is the executor, administrator or other personal
representative of such Person, shall be conclusively presumed to control such
Person, and (e) no Person shall be deemed to be an Affiliate of a corporation
solely by reason of his being an officer or director of such corporation.
"Controlled Group" means, as to any Person, all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
which are under common control with such Person and which, together with such
Person, are treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code.
"Conversion Date" means the date that is 364 days after the Closing
Date.
"Conversion or Continuance Notice" has the meaning set forth in Section
2.09(b) hereof.
"Debt" means all obligations, contingent or otherwise, which in
accordance with GAAP are required to be classified on the balance sheet as
liabilities, and in any event including Capital Leases, Contingent Liabilities
that are required to be disclosed and quantified in notes to
0100.0269\91958 8
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consolidated financial statements in accordance with GAAP, and liabilities
secured by any Lien on any Property, regardless of whether such secured
liability is with or without recourse.
"Debt for Borrowed Money" means, as to any Person, at any date, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes, letters of
credit (or applications for letters of credit) or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business and (d) all obligations of such Person secured by a Lien on any assets
or property of any Person.
"Debtor Relief Laws" means applicable bankruptcy, reorganization,
moratorium, or similar Laws, or principles of equity affecting the enforcement
of creditors' rights generally.
"Default" means any event specified in Section 8.01 hereof, whether or
not any requirement in connection with such event for the giving of notice,
lapse of time, or happening of any further condition has been satisfied.
"Distribution" means, as to any Person, (a) any declaration or payment
of any distribution or dividend (other than a stock dividend) on, or the making
of any pro rata distribution, loan, advance, or investment to or in any holder
(in its capacity as a partner, shareholder or other equity holder) of, any
partnership interest or shares of capital stock or other equity interest of such
Person, or (b) any purchase, redemption, or other acquisition or retirement for
value of any shares of partnership interest or capital stock or other equity
interest of such Person.
"Eligible Assignee" means (a) any Bank Affiliate, (b) a commercial bank
organized under the laws of the United States, or any state thereof, and having
total assets in excess of $500,000,000; (c) a commercial bank organized under
the laws of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country, and
having total assets in excess of $500,000,000, provided that such bank is acting
through a branch or agency located in the country in which it is organized or
another country which is described in this clause; and (d) the central bank of
any country which is a member of the Organization for Economic Cooperation and
Development.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss.9601 et seq.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C ss.6901 et seq.), 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 Toxic Substances Control Act (15 U.S.C. ss.2601 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. ss.651 et seq.) ("OSHA"),
as such laws have been or hereafter may be amended or supplemented, and any and
all analogous future federal, or present or future state or local, Laws.
0100.0269\91958 9
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of GCI, the Borrower or any Subsidiary
of GCI or the Borrower, or is under common control with GCI, the Borrower or any
Subsidiary of GCI or the Borrower, within the meaning of Section 414(c) of the
Code.
"ERISA Event" means (a) a reportable event, within the meaning of
Section 4043 of ERISA, unless the 30-day notice requirement with respect thereto
has been waived by the PBGC, (b) the issuance by the administrator of any Plan
of a notice of intent to terminate such Plan in a distress situation, pursuant
to Section 4041(a)(2) and 4041(c) of ERISA (including any such notice with
respect to a plan amendment referred to in Section 4041(e) of ERISA), (c) the
cessation of operations at a facility in the circumstances described in Section
4062(e) of ERISA, (d) the withdrawal by the Borrower, any Subsidiary of the
Borrower or GCI, or an ERISA Affiliate from a Multiple Employer Plan during a
Plan year for which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA, (e) the failure by the Borrower, any Subsidiary of the
Borrower or either Parent, or any ERISA Affiliate to make a payment to a Plan
required under Section 302 of ERISA, (f) the adoption of an amendment to a Plan
requiring the provision of security to such Plan, pursuant to Section 307 of
ERISA, or (g) the institution by the PBGC of proceedings to terminate a Plan,
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
that constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, a Plan.
"Event of Default" means any of the events specified in Section 8.01
hereof, provided there has been satisfied any requirement in connection
therewith for the giving of notice, lapse of time, or happening of any further
condition.
"Excess Cash Flow" means, for the most recently completed fiscal year,
the difference between Operating Cash Flow for such year minus the sum of (a)
Total Interest Expense for such year, plus (b) scheduled repayments of principal
of Total Debt (whether by installment or as a result of a scheduled reduction in
a revolving commitment, or otherwise) for such year, plus (c) permitted payments
or loans made to AUSP with cash from the operations of the Borrower or its
Restricted Subsidiaries during such year, plus (d) Capital Expenditures made
during such year and financed with cash from operations of the Borrower or its
Restricted Subsidiaries, plus (e) not more than $2,000,000 in working capital of
the Borrower, plus (f) cash taxes for GCII, the Borrower and its Restricted
Subsidiaries with respect to such year, whether accrued or paid.
"Facility" means the Revolving Loan.
"FCC" means the Federal Communications Commission and any successor
thereto.
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"FCC License" means any community antenna relay service, broadcast
auxiliary license, earth station registration, business radio, microwave or
special safety radio service license issued by the FCC pursuant to the
Communications Act of 1934, as amended, and any other FCC license from time to
time necessary or advisable for the operation of the Parent's, the Borrower's or
any of their Subsidiaries' business.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of Dallas, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such date on such
transactions received by Administrative Agent from three federal funds brokers
of recognized standing selected by it.
"Fee Letters" means that certain letter agreement, dated June 30, 1997,
addressed to the Borrower and acknowledged by the Borrower, and describing
certain fees payable to the Administrative Agent in connection with this
Agreement and the Facility, and such other fee letter agreements as may be
executed from time to time among the parties hereto, as each may be amended,
modified, substituted or replaced by the parties thereto.
"Fiber Lease" means that certain lease agreement entered into by GCI
Communication Corp. with AUSP, for lease of a portion of AUSP's fiber network,
which lease constitutes a Project Agreement and is substantially similar in all
material respects in form and substance to the draft thereof dated November 4,
1997, as such agreement may be amended, restated, or otherwise modified from
time to time.
"Fixed Charges" means, for the most recently completed four fiscal
quarters, the sum of (a) cash Total Interest Expense paid or accrued, plus (b)
scheduled repayments of principal of Total Debt (whether by installment or as a
result of a scheduled reduction in a revolving commitment, or otherwise), plus
(c) cash taxes paid or accrued for GCII, the Borrower and its Restricted
Subsidiaries, plus (d) cash payments (in the form of capital contributions,
loans, advances or otherwise) made to Unrestricted Subsidiaries (including,
without limitation, AUSP, except scheduled lease payments made pursuant to the
Fiber Lease, and scheduled payments under the O&M Contract that is a Project
Agreement), plus (e) Capital Expenditures made by any of the Borrower and its
Restricted Subsidiaries.
"Fixed Charges Coverage Ratio" means the ratio of Annualized Operating
Cash Flow to Fixed Charges.
"Funded Debt" means, without duplication, with respect to any Person,
all Debt of such Person, determined on a consolidated basis and measured in
accordance with GAAP that is either
0100.0269\91958 11
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(a) Debt for Borrowed Money, (b) Debt having a final maturity (or extendable at
the option of the obligor for a period ending) more than one year after the date
of creation thereof, notwithstanding the fact that payments are required to be
made less than one year after such date, (c) Capital Lease obligations (without
duplication), (d) reimbursement obligations relating to letters of credit,
without duplication, (e) Contingent Liabilities relating to any of the foregoing
(without duplication), (f) Withdrawal Liability, (g) Debt, if any, associated
with Interest Hedge Agreements, (h) payments due under Non-Compete Agreements,
plus (i) payments due for the deferred purchase price of property and services
(but excluding trade payables that are less than 90 days old and any thereof
that are being contested in good faith).
"GAAP" means generally accepted accounting principles applied on a
consistent basis. Application on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period, except for new
developments or statements promulgated by the Financial Accounting Standards
Board.
"GCI" means General Communication, Inc., an Alaska corporation, and
immediate parent and holder of 100% of the Capital Stock of GCII.
"GCI Entities" means the Borrower, the Parents, each Restricted
Subsidiary and each Guarantor from time to time in existence, and any other
Person from time to time constituting a Subsidiary of Parents or the Borrower,
except the Unrestricted Subsidiaries.
"GCII" means GCI, Inc., an Alaska corporation, and immediate parent and
holder of 100% of the Capital Stock of the Borrower.
"Guarantors" means GCII, GCI Communication Services, Inc., GCI Leasing
Co., Inc., GCI Communication Corp. (including, without limitation, the Long
Distance Division and the Local & Wireless Division), GCI Cable, Inc., each
Subsidiary of GCI Cable, Inc., each other Restricted Subsidiary and each other
Person from time to time guaranteeing payment of the Obligations to the
Administrative Agent and Lenders.
"Guaranty" of a Person means any agreement by which such Person
assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes liable upon, the obligation of any
other Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any creditor or
such other Person against loss, including, without limitation, any agreement
which assures any creditor or such other Person payment or performance of any
obligation, or any take-or-pay contract and shall include without limitation,
the contingent liability of such Person in connection with any application for a
letter of credit (without duplication of any amount already included in its
Debt).
0100.0269\91958 12
<PAGE>
"Hazardous Materials" means all materials subject to any Environmental
Law, including without limitation materials listed in 49 C.F.R. ss. 172.101,
Hazardous Substances, explosive or radioactive materials, hazardous or toxic
wastes or substances, petroleum or petroleum distillates, asbestos, or material
containing asbestos.
"Hazardous Substances" means hazardous waste as defined in the Clean
Water Act, 33 U.S.C. ss. 1251 et seq., the Comprehensive Environmental Response
Compensation and Liability Act as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. ss. 9601 et seq., the Resource Conservation
Recovery Act, 42 U.S.C. ss. 6901 et seq., and the Toxic Substances Control Act,
15 U.S.C. ss. 2601 et seq.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, Administrative Agent is
then permitted to charge on the Obligations. If the maximum rate of interest
which, under Applicable Law, such Lender is permitted to charge on the
Obligations shall change after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each change in the Highest Lawful Rate without notice
to the Borrower. For purposes of determining the Highest Lawful Rate under
Applicable Law, the applicable rate ceiling shall be (a) the indicated rate
ceiling described in and computed in accordance with the provisions of Art. lH;
or (b) either the annualized ceiling or quarterly ceiling computed pursuant to
.008 of Art. 1D; provided, however, that at any time the indicated rate ceiling,
the annualized ceiling or the quarterly ceiling, as applicable, shall be less
than 18% per annum or more than 24% per annum, the provisions of Sections
.009(a) and .009(b) of said Art.
lD shall control for purposes of such determination, as applicable.
"Indemnitees" has the meaning ascribed thereto in Section 6.09 hereof.
"Indenture" means the Indenture dated as of August 1, 1997, between
GCII and The Bank of New York, as Trustee, providing for the Senior Notes.
"Initial Advance" means the initial Advance made in accordance with the
terms hereof, which shall only be after the Borrower has satisfied each of the
conditions set forth in Section 4.01 and Section 4.02 hereof (or any such
condition shall have been waived by each Lender).
"Insufficiency" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities within the meaning of Section 4001(a)(18) of
ERISA.
"Intercompany Notes" means those notes, substantially in the form of
Exhibit G hereto, evidencing loans and/or advances made by the Borrower to AUSP
under the Keepwell Agreement or the Completion Guaranty, and made in accordance
with the terms of Section 7.10(g) hereof.
0100.0269\91958 13
<PAGE>
"Interest Coverage Ratio" means as of any date of determination, the
ratio of (a) Annualized Operating Cash Flow to (b) Total Interest Expense for
the most recently completed four fiscal quarters, provided that, notwithstanding
the preceding and any other provision in this Agreement or in the Loan Papers,
for the first three fiscal quarters after the Closing Date only, Annualized
Operating Cash Flow and Total Interest Expense shall be determined by
annualizing the relevant financial information of GCII, the Borrower and the
Restricted Subsidiaries from the Closing Date through the date of determination;
and provided further that notwithstanding the preceding and any other provision
in this Agreement or in the Loan Papers, Annualized Operating Cash Flow and
Total Interest Expense for any period prior to the Closing Date shall be
determined by using the relevant financial information of the Restricted
Subsidiaries.
"Interest Hedge Agreements" means any interest rate swap agreements,
interest cap agreements, interest rate collar agreements, or any similar
agreements or arrangements designed to hedge the risk of variable interest rate
volatility, or foreign currency hedge, exchange or similar agreements, on terms
and conditions reasonably acceptable to Administrative Agent (evidenced by
Administrative Agent's consent in writing), as such agreements or arrangements
may be modified, supplemented, and in effect from time to time, and
notwithstanding the above, fixed rate Debt for Borrowed Money shall be deemed an
Interest Hedge Agreement.
"Interest Period" means, with respect to any LIBOR Advance, the period
beginning on the date an Advance is made or continued as or converted into a
LIBOR Advance and ending one, two, three or six months thereafter (as the
Borrower shall select) provided, however, that:
(a) the Borrower may not select any Interest Period that ends
after any principal repayment date unless, after giving effect to such
selection, the aggregate principal amount of LIBOR Advances having
Interest Periods that end on or prior to such principal repayment date,
shall be at least equal to the principal amount of Advances due and
payable on and prior to such date;
(b) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that if such extension would cause the
last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the
next preceding Business Day; and
(c) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months in
such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
0100.0269\91958 14
<PAGE>
"Investment" means any acquisition of all or substantially all assets
of any Person, or any direct or indirect purchase or other acquisition of, or a
beneficial interest in, capital stock or other securities of any other Person,
or any direct or indirect loan, advance (other than advances to employees for
moving and travel expenses, drawing accounts, and similar expenditures in the
ordinary course of business), or capital contribution to or investment in any
other Person, including without limitation the incurrence or sufferance of Debt
or accounts receivable of any other Person that are not current assets or do not
arise from sales to that other Person in the ordinary course of business.
"Keepwell Agreement" means that certain operating keepwell agreement
among the Borrower, AUSP, and Credit Lyonnais as administrative agent under the
AUSP Credit Agreement, which such agreement is a Project Agreement and is
substantially similar in all material respects in form and substance to the
draft thereof dated November 4, 1997, as such agreement may be amended,
restated, or otherwise modified from time to time.
"Law" means any constitution, statute, law, ordinance, regulation,
rule, order, writ, injunction, or decree of any Tribunal.
"Lease Guaranty" means that certain lease guaranty agreement among the
Borrower, AUSP, and Credit Lyonnais as administrative agent under the AUSP
Credit Agreement, which such agreement is a Project Agreement and is
substantially similar in all material respects in form and substance to the
draft thereof dated November 4, 1997, as such agreement may be amended,
restated, or otherwise modified from time to time.
"Lenders" means the lenders listed on the signature pages of this
Agreement, and each Eligible Assignee which hereafter becomes a party to this
Agreement pursuant to Section 10.04 hereof, for so long as any such Person is
owed any portion of the Obligations or obligated to make any Advances under the
Revolving Loan.
"Lending Office" means, with respect to each Lender, its branch or
affiliate, (a) initially, the office of such Lender, branch or affiliate
identified as such on the signature pages hereof, and (b) subsequently, such
other office of such Lender, branch or affiliate as such Lender may designate to
the Borrower and Administrative Agent as the office from which the Advances of
such Lender will be made and maintained and for the account of which all
payments of principal and interest on the Advances and the Commitment Fees will
thereafter be made. Lenders may have more than one Lending Office for the
purpose of making Base Rate Advances and LIBOR Advances.
"Letters of Credit" means the irrevocable standby letters of credit
issued by Administrative Agent under and pursuant to Article III hereof, as each
may be amended, modified, substituted, increased, replaced, renewed or extended
from time to time.
0100.0269\91958 15
<PAGE>
"Letter of Credit Commitment" means an amount equal to the lesser of
(i) the Revolving Unused Commitment and (ii) $10,000,000.
"LIBOR Advance" means an Advance bearing interest at the LIBOR Rate.
"LIBOR Rate" means a simple per annum interest rate equal to the lesser
of (a) the Highest Lawful Rate, and (b) the sum of the LIBOR Rate Basis plus the
Applicable Margin. The LIBOR Rate shall, with respect to LIBOR Advances subject
to reserve or deposit requirements, be subject to premiums assessed therefor by
each Lender, which are payable directly to each Lender. Once determined, the
LIBOR Rate shall remain unchanged during the applicable Interest Period.
"LIBOR Rate Basis" means, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR Rate Basis" shall mean, for any LIBOR
Advance for any Interest Period therefor, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page
as the London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"License" means, as to any Person, any license, permit, certificate of
need, authorization, certification, accreditation, franchise, approval, or grant
of rights by any Tribunal or third person necessary or appropriate for such
Person to own, maintain, or operate its business or Property, including FCC
Licenses.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien, or charge of any kind, including without limitation any agreement to give
or not to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement or other similar form of public notice
under the Laws of any jurisdiction (except for the filing of a financing
statement or notice in connection with an operating lease).
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation conducted or threatened by or before any Tribunal, including
without limitation proceedings, claims, lawsuits, and/or investigations under or
pursuant to any environmental, occupational, safety and health, antitrust,
unfair competition, securities, Tax, or other Law, or under or pursuant to any
contract, agreement, or other instrument.
0100.0269\91958 16
<PAGE>
"Loan Papers" means this Agreement; the Notes; Interest Rate Hedge
Agreements executed among any GCI Entity and any Lender or Bank Affiliate; all
Pledge Agreements; all Guaranties executed by any Person guaranteeing payment of
any portion of the Obligations; all Fee Letters; all Letters of Credit, all
Applications and all documentation related to any Letter of Credit; each
Assignment and Acceptance; all promissory notes evidencing any portion of the
Obligations; assignments, security agreements and pledge agreements granting any
interest in any of the Collateral; stock certificates and partnership agreements
constituting part of the Collateral; mortgages, deeds of trust, financing
statements, collateral assignments, and other documents and instruments granting
an interest in any portion of the Collateral, or related to the perfection
and/or the transfer thereof, all collateral assignments or other agreements
granting a Lien on any intercompany note, including without limitation, the
Intercompany Notes; and all other documents, instruments, agreements or
certificates executed or delivered by the Borrower or any other GCI Entity, as
security for the Borrower's obligations hereunder, in connection with the loans
to the Borrower or otherwise; as each such document shall, with the consent of
the Lenders pursuant to the terms hereof, be amended, revised, renewed,
extended, substituted or replaced from time to time.
"Local Telephone Business" means the local telephone business of the
Borrower and its Restricted Subsidiaries in (i) Anchorage, Alaska, for which GCI
Communication Corp. received its authority to operate from the Alaskan Public
Utilities Commission on February 4, 1997 and (ii) elsewhere in Alaska for which
Borrower or any Restricted Subsidiary receives authority to operate from the
Alaska Public Utilities Commission.
"Majority Lenders" means any combination of Lenders having at least
66.67% of the aggregate amount of Advances under the Facility; provided,
however, that if no Advances are outstanding under this Agreement, such term
means any combination of Lenders having a Specified Percentage equal to at least
66.67% of the Facility.
"Management Fees" means all fees from time to time directly or
indirectly (including any payments made pursuant to guarantees of such fees)
paid or payable by the Borrower, any GCI Entity or any of the Restricted
Subsidiaries to any Person for management services for managing any portion of
any System.
"Managing Agents" means NationsBank, Credit Lyonnais and TD.
"Material Adverse Change" means any circumstance or event that (a) can
reasonably be expected to cause a Default or an Event of Default, (b) otherwise
can reasonably be expected to (i) be material and adverse to the continued
operation of the Borrower and the Restricted Subsidiaries taken as a whole or
any other GCI Entity, or (ii) be material and adverse to the financial
condition, business operations, prospects or Properties of the Borrower and the
Restricted Subsidiaries taken as a whole or any other GCI Entity, or (c) in any
manner
0100.0269\91958 17
<PAGE>
whatsoever does or can reasonably be expected to materially and adversely affect
the validity or enforceability of any of the Loan Papers.
"Maturity Date" means July 31, 2005, or such earlier date all of the
Obligations become due and payable (whether by acceleration, prepayment in full,
scheduled reduction or otherwise).
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, Administrative Agent or any Lender is permitted to charge on the
Obligations.
"MCI" means (i) prior to the effective date of the merger of MCI
Telecommunications Corporation into British Telecommunications, PLC, MCI
Telecommunications Corporation and (ii) on and after the effective date of the
merger of MCI Telecommunications Corporation into British Telecommunications,
PLC, British Telecommunications, PLC.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower, any Subsidiary of the Borrower or
GCI or any ERISA Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions, such plan being maintained pursuant
to one or more collective bargaining agreements.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower, any Subsidiary of the Borrower or GCI, or any ERISA Affiliate and at
least one Person other than the Borrower, any Subsidiary of the Borrower or GCI,
and any ERISA Affiliate, or (b) was so maintained and in respect of which the
Borrower, any Subsidiary of the Borrower or GCI, or any ERISA Affiliate could
have liability under Section 4064 or 4069 of ERISA in the event such plan has
been or were to be terminated.
"Net Proceeds" means the gross proceeds received by the Borrower or any
Restricted Subsidiary in connection with or as a result of any Asset Sale, minus
(so long as each of the following are estimated in good faith by the Vice
President - Chief Financial Officer of the Borrower or such Restricted
Subsidiary and certified to the Lenders in reasonable detail by an Authorized
Officer) (a) amounts paid or reserved in good faith, if any, for taxes payable
with respect to such Asset Sale in an amount equal to the tax liability of the
Borrower or any Restricted Subsidiary in respect of such sale (taking into
account all other tax benefits of each of the parties) and (b) reasonable and
customary transaction costs payable by the Borrower or any Restricted Subsidiary
related to such sale.
"Net Total Interest Expense" means as of any date of determination for
any period of calculation, all the Borrower's and the Restricted Subsidiaries'
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) on Senior Debt for such period calculated
on a consolidated basis in accordance with GAAP, including
0100.0269\91958 18
<PAGE>
without limitation or duplication (or, to the extent not so included, with the
addition of) for the Borrower and the Restricted Subsidiaries: (a) the
amortization of Debt discounts; (b) any commitment fees or agency fees related
to any Senior Debt, but specifically excluding any one-time facility and/or
arrangement fees; (c) any fees or expenses with respect to letters of credit,
bankers' acceptances or similar facilities; (d) fees and expenses with respect
to interest rate swap or similar agreements or foreign currency hedge, exchange
or similar agreements, other than fees or charges related to the acquisition or
termination thereof which are not allocable to interest expense in accordance
with GAAP; (e) preferred stock Distributions for the Borrower and the Restricted
Subsidiaries declared and payable in cash; and (f) interest capitalized in
accordance with GAAP.
"Non-Compete Agreement" means any agreement or related set of
agreements under which the Borrower or any Restricted Subsidiary agrees to pay
money in one or more installments to one or more Persons in exchange for
agreements from such Persons to refrain from competing with the Borrower or such
Restricted Subsidiary in a certain line of business in a specific geographical
area for a certain time period, or pursuant to which any Person agrees to limit
or restrict its right to engage, directly or indirectly, in the same or similar
industry for any period of time for any geographic location.
"Notes" means all Revolving Notes in effect from time to time, and
"Note" means any of such notes, as applicable.
"Obligations" means all present and future obligations, indebtedness
and liabilities, and all renewals and extensions of all or any part thereof, of
the Borrower and each other GCI Entity to Lenders and Administrative Agent
arising from, by virtue of, or pursuant to this Agreement, any of the other Loan
Papers and any and all renewals and extensions thereof or any part thereof, or
future amendments thereto, all interest accruing on all or any part thereof and
reasonable attorneys' fees incurred by Lenders and Administrative Agent for the
administration, execution of waivers, amendments and consents, and in connection
with any restructuring, workouts or in the enforcement or the collection of all
or any part thereof, whether such obligations, indebtedness and liabilities are
direct, indirect, fixed, contingent, joint, several or joint and several.
Without limiting the generality of the foregoing, "Obligations" includes all
amounts which would be owed by the Borrower, each other GCI Entity and any other
Person (other than Administrative Agent or Lenders) to Administrative Agent or
Lenders under any Loan Paper, but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Borrower, any other GCI Entity or any other Person
(including all such amounts which would become due or would be secured but for
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding of the Borrower, any other GCI Entity or any
other Person under any Debtor Relief Law).
0100.0269\91958 19
<PAGE>
"O&M Contract" means the Operation and Maintenance Contract between
AUSP and GCI Communication Corp., which agreement is a Project Agreement and is
substantially similar in all material respects in form and substance to the
draft thereof dated October 30, 1997, as such contract may be amended, restated,
or otherwise modified from time to time.
"Operating Cash Flow" means, for the Borrower and the Restricted
Subsidiaries, for any period, determined in accordance with GAAP, the
consolidated net income (loss) for such period taken as a single accounting
period, excluding extraordinary gains and losses, plus the sum of the following
amounts for such period to the extent included in the determination of such
consolidated net income: (a) depreciation expense, (b) amortization expense and
other non-cash charges reducing income, (c) Net Total Interest Expense, (d) cash
income tax expense for the Borrower and Restricted Subsidiaries plus (e)
deferred income Taxes for the Borrower and Restricted Subsidiaries; provided,
the calculation is made after giving effect to acquisitions and dispositions of
assets of the Borrower or any Restricted Subsidiary during such period as if
such transactions had occurred on the first day of such period.
"Operating Leases" means operating leases, as defined in accordance
with GAAP.
"Parents" means, collectively, GCI and GCII.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
agency or entity performing substantially the same functions.
"Permitted Dispositions" means any sale, assignment, disposition,
conveyance or transfer of any agreements, licenses, permits, franchises,
contract rights, documents, instruments or other Property or any interest
therein, related to the construction, operation or maintenance of AUSP's fiber
network including, without limitation, the agreements listed on Schedule 3.23 to
this Agreement.
"Permitted Liens" means
(a) those imposed by the Loan Papers and in connection with
the Revolver/Term Credit Agreement;
(b) Liens in connection with workers' compensation,
unemployment insurance or other social security obligations (which phrase shall
not be construed to refer to ERISA);
(c) deposits, pledges or liens to secure the performance of
bids, tenders, contracts (other than contracts for the payment of borrowed
money), leases, statutory obligations, surety, customs, appeal, performance and
payment bonds and other obligations of like nature arising in the ordinary
course of business;
0100.0269\91958 20
<PAGE>
(d) mechanics', worker's, carriers, warehousemen's,
materialmen's, landlords', or other like Liens arising in the ordinary course of
business with respect to obligations which are not due or which are being
contested in good faith and by appropriate proceedings diligently conducted;
(e) Liens for taxes, assessments, fees or governmental charges
or levies not delinquent or which are being contested in good faith and by
appropriate proceedings diligently conducted, and in respect of which adequate
reserves shall have been established in accordance with GAAP on the books of the
Borrower or such GCI Entity;
(f) Liens or attachments, judgments or awards against the
Borrower or any other GCI Entity with respect to which an appeal or proceeding
for review shall be pending or a stay of execution shall have been obtained, and
which are otherwise being contested in good faith and by appropriate proceedings
diligently conducted, and in respect of which adequate reserves shall have been
established in accordance with GAAP on the books of the Borrower or such other
GCI Entity;
(g) Liens in existence on the Closing Date described on
Schedule 5.08(a) hereto;
(h) statutory Liens in favor of CoBank with respect to the
Participation Certificates (as defined in Section 6.16) and of lessors arising
in connection with Property leased to the Borrower or any other GCI Entity; and
(i) easements, rights of way, restrictions, leases of Property
to others, easements for installations of public utilities, title imperfections
and restrictions, zoning ordinances and other similar encumbrances affecting
Property which in the aggregate do not materially adversely affect the value of
such Property or materially impair its use for the operation of the business of
the Borrower or such GCI Entity.
"Person" means an individual, partnership, joint venture, corporation,
trust, Tribunal, unincorporated organization, and government, or any department,
agency, or political subdivision thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledge Agreement" means each Security Agreement and each Pledge and
Security Agreement, whereby the Pledged Interests are pledged to Administrative
Agent and a security interest is granted in the assets of the Borrower and
Restricted Subsidiaries to secure the Obligations, each substantially in the
form of Exhibit C hereto, as each such agreement may be amended, modified,
extended, renewed, restated, substituted or replaced from time to time.
0100.0269\91958 21
<PAGE>
"Pledged Interests" means (a) a first perfected security interest in
100% of the Capital Stock of the Borrower; (b) a first perfected security
interest in 100% of the Capital Stock of GCI Communication Services, Inc., and
GCI Communication Corp.; (c) subject to the Prior Stock Lien, a first perfected
security interest in 100% of the Capital Stock of GCI Leasing Co., Inc.; and (d)
a first perfected security interest in 100% of the Capital Stock of GCI Cable,
Inc. each Subsidiary of GCI Cable, Inc., and each other Restricted Subsidiary,
if any, now existing or hereafter formed or acquired.
"Prior Stock Lien" means those certain Liens in the stock of GCI
Leasing Co., Inc. and such other Liens as are listed on Schedule 1.02 hereto.
"Prime Management Agreement" means that certain Management Agreement,
between GCI Cable, Inc. and Prime II Management, L.P., dated October 31, 1996.
"Pro Forma Debt Service" means, for GCII, the Borrower and its
Restricted Subsidiaries for the four full fiscal quarters immediately following
the date of determination, the sum of (a) cash Total Interest Expense (using the
interest rates in effect on the date of determination to project interest rates
for any Total Debt subject to a floating interest rate), plus (b) scheduled
repayments of principal of Total Debt (whether by installment or as a result of
a scheduled reduction in a revolving commitment, or otherwise).
"Pro Forma Debt Service Coverage Ratio" means the ratio of Annualized
Operating Cash Flow to Pro Forma Debt Service.
"Prohibited Transaction" has the meaning specified therefor in Section
4975 of the Code or Section 406 of ERISA.
"Project Agreements" means those "Projects Agreements" as defined in
the AUSP Credit Agreement and as described on Schedule 1.01B hereto, and such
other agreements as may hereafter be entered into from time to time which
materially and adversely affect the obligations of the Borrower or the
Restricted Subsidiaries with respect to the AUSP Financing; such Project
Agreements to be substantially similar in all material respects in form and
substance to drafts thereof dated draft November 4, 1997 (except for the O&M
Contract), as amended, restated, or otherwise modified from time to time.
"Property" means all types of real, personal, tangible, intangible, or
mixed property, whether owned in fee simple or leased.
"Quarterly Date" means the last Business Day of each March, June,
September and December during the term of this Agreement, commencing on
September 30, 1997.
"Ratable" means, as to any Lender, in accordance with its Specified
Percentage.
0100.0269\91958 22
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"Reduction Percentage" means that percentage of the Revolving
Commitment as the Revolving Commitment is in effect on June 30, 2000.
"Refinancing Advance" means an Advance that is used to pay the
principal amount of an existing Advance (or any performance thereof) at the end
of its Interest Period and which, after giving effect to such application, does
not result in an increase in the aggregate amount of outstanding Advances.
"Regulatory Change" means any change after the date hereof in federal,
state, or foreign Laws (including the introduction of any new Law) or the
adoption or making after such date of any interpretations, directives, or
requests of or under any federal, state, or foreign Laws (whether or not having
the force of Law) by any Tribunal charged with the interpretation or
administration thereof, applying to a class of financial institutions that
includes any Lender, excluding, however, any such change which results in an
adjustment of the LIBOR Reserve Percentage and the effect of which is reflected
in a change in the LIBOR Rate as provided in the definition of such term.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any such waivers in accordance
with either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Restricted Payments" means (a) any direct or indirect distribution,
Distribution or other payment on account of any general or limited partnership
interest in (or the setting aside of funds for, or the establishment of a
sinking fund or analogous fund with respect to), or shares of Capital Stock or
other securities of, the Borrower or any Restricted Subsidiary; (b) any payments
of principal of, or interest on, or fees related to, or any other payments and
prepayments with respect to, or the establishment of, or any payment to, any
sinking fund or analogous fund for the purpose of making any such payments on,
Funded Debt of GCII, the Borrower or any Restricted Subsidiary (excluding the
Obligations and the obligations under the Revolver/Term Credit Agreement); (c)
any Management Fee or any management, consulting or other similar fees, or any
interest thereon, payable by the Borrower or any Restricted Subsidiary to any
Affiliate of the Borrower or Parents or to any other Person; (d) any
administration fee or any administration, consulting or other similar fees, or
any interest thereon, payable by the Borrower or any Restricted Subsidiary to
any Affiliate of Parents or the Borrower or to any other Person (excluding the
payment of compensation (including, amounts paid pursuant to employee benefit
plans) in the ordinary course of business for the personal services of officers,
directors and employees of Parents, the Borrower or any of its Restricted
Subsidiaries, so long as the Board of Directors of Parents and the Borrower in
good faith shall have approved the terms thereof and
0100.0269\91958 23
<PAGE>
deemed the services therefore or thereafter to be performed for such
compensation or fees to be fair consideration therefor); (e) any payments of any
amounts owing under any Non-Compete Agreements; and (f) fees, loans or other
payments or advances by the Borrower or any Restricted Subsidiary to any
Unrestricted Subsidiary or any other Affiliate of the Parents or the Borrower,
except to the extent such payments are permitted in accordance with the terms of
Section 7.09 hereof.
"Restricted Subsidiaries" means GCI Communication Services, Inc., GCI
Leasing Co., Inc., GCI Communication Corp. (including, without limitation, the
Long Distance Division and the Local & Wireless Division), GCI Cable, Inc., each
Subsidiary of GCI Cable, Inc., and any other Subsidiary, now or hereafter
created or acquired, of the Borrower or the Parents, other than Unrestricted
Subsidiaries, in each case that engages in either the operation of (a) switched
message long distance telephone systems and ancillary services including DAMA,
cellular resale and PCS systems, (b) cable distribution operations, or (c) the
Local Telephone Business and "Restricted Subsidiary" means any one of them, as
applicable in the context.
"Revolver/Term Commitment" has the meaning ascribed to it in the
Revolver/Term Credit Agreement.
"Revolver/Term Credit Agreement" means the $50,000,000 Amended and
Restated Credit Agreement, of even date herewith, between the Borrower, the
Administrative Agent and the Lenders, as amended, restated or otherwise modified
from time to time.
"Revolving Commitment" means, with respect to the Revolving Loan,
$200,000,000, as such amount may be reduced from time to time in accordance with
the terms of Section 2.04 hereof, or increased in accordance with Section 2.16
hereof.
"Revolving Loan" means that certain Revolving Loan made to the Borrower
on the Closing Date until the Maturity Date in accordance with Section 2.01(a)
hereof.
"Revolving Notes" means the promissory notes of the Borrower evidencing
the Advances and obligations owing hereunder to each Lender under the Revolving
Loan, in substantially the form of Exhibit A hereto, each payable to the order
of each Lender, as each such note may be amended, extended, restated, renewed,
substituted or replaced from time to time.
"Revolving Unused Commitment" means, on any date of determination, the
Revolving Commitment as in effect on such date, minus all outstanding Advances
made under the Revolving Loan on such date.
"Rights" means rights, remedies, powers, and privileges.
0100.0269\91958 24
<PAGE>
"Senior Debt" means, without duplication, with respect to the Borrower
and the Restricted Subsidiaries, the sum of all Funded Debt of the Borrower and
the Restricted Subsidiaries, calculated on a consolidated basis in accordance
with GAAP.
"Senior Leverage Ratio" means as of any date of determination, the
ratio of (a) Senior Debt on such date of determination to (b) Annualized
Operating Cash Flow, all calculated for the Borrower and the Restricted
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied.
"Senior Notes" means those certain $180,000,000 9-3\4% Senior Notes due
2007 issued by GCII, pursuant to and in accordance with the Indenture.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, other than a Multiple Employer Plan, that is
maintained for employees of the Borrower or any ERISA Affiliate.
"Solvent" means, with respect to any Person, that on such date (a) the
fair value of the Property of such Person is greater than the total amount of
liabilities, including without limitation Contingent Liabilities of such Person,
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's Property would constitute
an unreasonably small capital.
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll,
P.C., Dallas, Texas, special counsel to Administrative Agent, or such other
counsel selected by the Administrative Agent from time to time.
"Specified Percentage" means, as to any Lender, the percentage
indicated beside its name on the signature pages hereof, or as adjusted or
specified in any Assignment and Acceptance, or amendment to this Agreement.
"Subordinated Debt" means subordinated indebtedness of the Borrower
incurred in accordance with the terms of Section 7.02(f)(ii) hereof.
"Subordination Agreement" means the Subordination Agreement among the
Borrower, AUSP, GCI Transport Co., Inc. and Credit Lyonnais as administrative
agent under the AUSP Credit Agreement, which agreement is substantially similar
in all material respects in form and substance to the draft thereof dated
November 4, 1997, as such agreement may be amended, restated or otherwise
modified from time to time.
0100.0269\91958 25
<PAGE>
"Subsidiary" of any Person means any corporation, partnership, limited
liability company, joint venture, trust or estate of which (or in which) more
than 50% of:
(a) the outstanding Capital Stock having voting power to elect
a majority of the Board of Directors of such corporation (or other
Persons performing similar functions of such entity, and irrespective
of whether at the time Capital Stock of any other class or classes of
such corporation shall or might have voting power upon the occurrence
of any contingency),
(b) the interest in the capital or profits of such partnership
or joint venture, or
(c) the beneficial interest of such trust or estate,
is at the time directly or indirectly owned by (i) such Person, (ii)
such Person and one or more of its Subsidiaries or (iii) one or more of
such Person's Subsidiaries.
"System" or "Systems" means the Borrower's and the other GCI Entities'
(a) switched message long distance telephone systems and ancillary services
including DAMA, cellular resale and PCS systems between Alaska and the
contiguous states and the foreign countries listed on Schedule 1.01A hereto, and
any and all other switched message long distance telephone systems, DAMA,
cellular resale and PCS systems acquired or owned by the Parents, the Borrower,
any of the Restricted Subsidiaries and any of the other GCI Entities from time
to time, (b) cable distribution systems owned or acquired by the Borrower or any
of its Restricted Subsidiaries which receives audio, video, digital, other
broadcast signals or information or telecommunications by cable, optical,
antennae, microwave or satellite transmission and which amplifies and transmits
such signals to persons who pay to receive such signals, and (c) the Local
Telephone Business, and all other such systems owned by the Borrower or any
other GCI Entity from time to time.
"Taxes" means all taxes, assessments, imposts, fees, or other charges
at any time imposed by any Laws or Tribunal.
"Total Debt" means, without duplication, with respect to GCII, the
Borrower and the Restricted Subsidiaries, the sum of all Funded Debt, calculated
on a consolidated basis in accordance with GAAP.
"Total Interest Expense" means as of any date of determination for any
period of calculation, GCII's, the Borrower's and the Restricted Subsidiaries'
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) on Total Debt for such period calculated
on a consolidated basis in accordance with GAAP, including without
0100.0269\91958 26
<PAGE>
limitation or duplication (or, to the extent not so included, with the addition
of) for GCII, the Borrower and the Restricted Subsidiaries: (a) the amortization
of Debt discounts; (b) any commitment fees or agency fees related to any Funded
Debt, but specifically excluding any one-time facility and/or arrangement fees;
(c) any fees or expenses with respect to letters of credit, bankers' acceptances
or similar facilities; (d) fees and expenses with respect to interest rate swap
or similar agreements or foreign currency hedge, exchange or similar agreements,
other than fees or charges related to the acquisition or termination thereof
which are not allocable to interest expense in accordance with GAAP; (e)
preferred stock Distributions for GCII, the Borrower and the Restricted
Subsidiaries declared and payable in cash; and (f) interest capitalized in
accordance with GAAP.
"Total Leverage Ratio" means as of any date of determination, the ratio
of (a) Total Debt of GCII, the Borrower and the Restricted Subsidiaries on such
date of determination to (b) Annualized Operating Cash Flow, all calculated on a
consolidated basis in accordance with GAAP consistently applied.
"Tribunal" means any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision, agency, department,
commission, board, bureau, or instrumentality of a governmental body.
"Type" refers to the distinction between Advances bearing interest at
the Base Rate and LIBOR Rate.
"UCC" means the Uniform Commercial Code as adopted in the State of
Texas.
"Unrestricted Subsidiary" means GCI Transport Co., Inc., GCI Satellite
Co., Inc., GCI Fiber Co., Inc., Fiber Hold Co., Inc. and AUSP, and, with the
prior written consent of the Majority Lenders, any other Subsidiary of the
Parents designated as a "Unrestricted Subsidiary" by the Borrower from time to
time.
"Wholly-Owned Subsidiary" means any Subsidiary of the Borrower that is
owned 100% by the Borrower or either of the Parents, directly or indirectly,
except any Unrestricted Subsidiary.
"Withdrawal Liability" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
1.02. Accounting and Other Terms. All accounting terms used in this
Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP consistently applied on a consolidated basis for Borrower
and the Restricted Subsidiaries, unless otherwise expressly stated herein.
References herein to one gender shall be deemed to include all other
0100.0269\91958 27
<PAGE>
genders. Except where the context otherwise requires, all references to time are
deemed to be Central Standard time.
ARTICLE II. AMOUNTS AND TERMS OF ADVANCES
2.01. The Facility. Each Lender severally agrees, on the terms and
subject to the conditions hereinafter set forth, from the Closing Date until the
Maturity Date, to make Advances under the Revolving Loan to the Borrower on any
Business Day during the period from the Closing Date of this Agreement until the
Maturity Date, in an aggregate principal amount not to exceed at any time
outstanding such Lender's Specified Percentage of the difference between (i) the
Revolving Commitment minus (ii) the sum of the aggregate face amount of all
outstanding Letters of Credit plus, without duplication, all reimbursement
obligations related to any draw on any Letter of Credit. Subject to the terms
and conditions of this Agreement, until the Maturity Date, the Borrower may
borrow, repay and reborrow the Advances under the Revolving Loan.
2.02 Making Advances Under the Revolving Loan
(a) Each Borrowing of Advances shall be made upon the written notice of
the Borrower, received by Administrative Agent not later than (i) 12:00 noon
three Business Days prior to the proposed date of the Borrowing, in the case of
LIBOR Advances and (ii) not later than 10:00 a.m. on the date of such Borrowing,
in the case of Base Rate Advances. Each such notice of a Borrowing (a "Borrowing
Notice") shall be by telecopy, promptly confirmed by letter, in substantially
the form of Exhibit F hereto specifying therein:
(i) the date of such proposed Borrowing, which shall be a
Business Day;
(ii) the amount of such proposed Borrowing which (A) shall not
when aggregated together with all other outstanding Advances under the
Revolving Loan plus the sum of the aggregate face amount of all
outstanding Letters of Credit plus, without duplication, all
reimbursement obligations related to any draw on any Letter of Credit,
exceed the Revolving Commitment, and (B) shall, in the case of a
Borrowing of LIBOR Advances, be in an amount of not less than
$1,000,000 or an integral multiple of $500,000 in excess thereof and,
in the case of a Borrowing of Base Rate Advances, be in an amount of
not less than $500,000 or an integral multiple of $100,000 in excess
thereof;
(iii) the Type of Advances of which the Borrowing is to be
comprised; and
0100.0269\91958 28
<PAGE>
(iv) if the Borrowing is to be comprised of LIBOR Advances,
the duration of the initial Interest Period applicable to such
Advances.
If the Borrowing Notice fails to specify the duration of the initial
Interest Period for any Borrowing comprised of LIBOR Advances, such Interest
Period shall be three months. Each Lender shall, before 1:00 p.m. on the date of
each Advance under the Revolving Loan (other than a Refinancing Advance), make
available to
Administrative Agent
NationsBank Plaza
901 Main Street
14th Floor
Dallas, Texas 75202
such Lender's Specified Percentage of the aggregate Advances under the Revolving
Loan to be made on that day in immediately available funds.
(b) Unless any applicable condition specified in Article IV hereof has
not been satisfied, Administrative Agent will make the funds on Advances under
the Facility promptly available to the Borrower (other than with respect to a
Refinancing Advance) at such account as shall have been specified by the
Borrower.
(c) After giving effect to any Borrowing, (i) there shall not be more
than eight different Interest Periods in the aggregate in effect under the
Facility and under the Revolver/Term Credit Agreement, and (ii) the aggregate
principal of outstanding Advances under the Revolving Loan plus the sum of the
aggregate face amount of all outstanding Letters of Credit plus, without
duplication, all reimbursement obligations related to any draw on any Letter of
Credit, shall not exceed the Revolving Commitment.
(d) No Interest Period for a Borrowing under the Facility shall extend
beyond the Maturity Date.
(e) Unless a Lender shall have notified Administrative Agent prior to
the date of any Advance that it will not make available its Specified Percentage
of any Advance, Administrative Agent may assume that such Lender has made the
appropriate amount available in accordance with Section 2.02(a), and
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If and to the extent any Lender shall not
have made such amount available to Administrative Agent, such Lender and the
Borrower severally agree to repay to Administrative Agent immediately on demand
such corresponding amount together with interest thereon, from the date such
amount is made available to the Borrower until the date such amount is repaid to
Administrative Agent, at (i) in the case of the Borrower, the Base Rate, and
(ii) in the case of such Lender, the Federal Funds Rate.
0100.0269\91958 29
<PAGE>
(f) The failure by any Lender to make available its Specified
Percentage of any Advance hereunder shall not relieve any other Lender of its
obligation, if any, to make available its Specified Percentage of any Advance.
In no event, however, shall any Lender be responsible for the failure of any
other Lender to make available any portion of any Advance.
(g) The Borrower shall indemnify each Lender against any Consequential
Loss incurred by each Lender as a result of (i) any failure to fulfill, on or
before the date specified for the Advance, the conditions to the Advance set
forth herein or (ii) the Borrower's requesting that an Advance not be made on
the date specified in the Borrowing Notice.
2.03 Evidence of Indebtedness.
(a) The obligations of the Borrower with respect to the Letters of
Credit and all Advances under the Revolving Loan made by each Lender shall be
evidenced by a Revolving Note in the form of Exhibit A hereto and in the amount
of such Lender's Specified Percentage of the Revolving Commitment (as the same
may be modified pursuant to Section 10.04 hereof).
(b) Absent manifest error, Administrative Agent's and each Lender's
records shall be conclusive as to amounts owed Administrative Agent and such
Lender under the Notes and this Agreement.
2.04 Reduction of Commitments.
(a) Voluntary Commitment Reduction. The Borrower shall have the right
from time to time upon notice by the Borrower to the Administrative Agent not
later than 1:00 p.m., three Business Days in advance, to reduce the Revolving
Commitment in whole or in part; provided, however, that the Borrower shall pay
the accrued commitment fee on the amount of each such reduction, if any, and any
partial reduction shall be in an aggregate amount which is not less than
$1,000,000 and an integral multiple of $500,000. Such notice shall specify the
amount of reduction and the proposed date of such reduction.
(b) Mandatory Commitment Reductions.
(i) Scheduled Reductions in the Revolving Commitment.
<TABLE>
(A) Scheduled Quarterly Reductions in the Revolving
Commitment. Commencing September 30, 2000, the Revolving
Commitment in effect on such date shall be reduced thereafter
from time to time by the Reduction Percentage set forth below
on such dates as are set forth below:
<CAPTION>
Date of Reduction Reduction Percentage
----------------- --------------------
0100.0269\91958 30
<PAGE>
<S> <C>
September 30, 2000 3.750%
December 31, 2000 3.750%
March 31, 2001 3.750%
June 30, 2001 3.750%
September 30, 2001 3.750%
December 31, 2001 3.750%
March 31, 2002 5.000%
June 30, 2002 5.000%
September 30, 2002 5.000%
December 31, 2002 5.000%
March 31, 2003 5.000%
June 30, 2003 5.000%
September 30, 2003 5.000%
December 31, 2003 5.000%
March 31, 2004 5.625%
June 30, 2004 5.625%
September 30, 2004 5.625%
December 31, 2004 5.625%
March 31, 2005 7.500%
July 31, 2005 7.500%, and the
Revolving Commitment
shall be zero
</TABLE>
(B) Final Maturity - The Revolving Loan. The Revolving
Commitment shall be reduced to zero on the Maturity Date.
(ii) Asset Sales. On the date of any Asset Sale by any of the
GCI Entities (this provision not permitting such Asset Sales),
(A) if there exists no Default or Event of Default (I)
prior to the Conversion Date, the Revolving Commitment and the
Revolver/Term Commitment shall be automatically and
permanently reduced by an amount equal to 100% of the Net
Proceeds from any Asset Sales received by any of the GCI
Entities in excess of $10,000,000 in the aggregate over the
term of this Agreement (or $20,000,000 if before and
immediately after giving effect to any Asset Sale, the Total
Leverage Ratio is equal to or less than 4.50 to 1.00), applied
pro rata to the Revolving Commitment and to the obligations as
specified in the Revolver/Term Credit Agreement, and (II)
after the Conversion Date, the Revolving Commitment shall be
automatically and permanently reduced by an amount equal to
the Revolving Commitment's percentage of the sum of the
Revolving Commitment and outstanding amounts under the
Revolver/Term Credit Agreement, of 100%
0100.0269\91958 31
<PAGE>
of the Net Proceeds from any Asset Sales received by any of
the GCI Entities in excess of $10,000,000 in the aggregate
over the term of this Agreement (or $20,000,000 if before and
immediately after giving effect to any Asset Sale, the Total
Leverage Ratio is equal to or less than 4.50 to 1.00), and
(B) if there exists a Default or an Event of Default, (I)
prior to the Conversion Date, the Revolving Commitment and the
Revolver/Term Commitment shall be automatically and
permanently reduced by an amount equal to 100% of the Net
Proceeds from any Asset Sales received by any of the GCI
Entities applied pro rata to the Revolving Commitment and the
obligations as specified in the Revolver/Term Credit
Agreement, and (II) after the Conversion Date, the Revolving
Commitment shall be automatically and permanently reduced by
an amount equal to the amount required by Section
2.05(b)(i)(B)(II) hereof to repay the outstanding Advances
under the Revolving Loan, and
(C) on each such date set forth in (A) and (B) above, the
Borrower shall deliver to the Administrative Agent a
certificate of an Authorized Officer certifying as to the
amount of (including the calculation of) the reduction of the
Revolving Commitment, and, with respect to the Asset Sale
giving rise thereto, the gross proceeds thereof and the costs
and expenses payable as a result thereof which were deducted
in determining the amount of Net Proceeds.
(iii) Debt Issuance. On the date of any issuance of public or
private Subordinated Debt by the Borrower (this provision not
permitting such Debt issuance),
(A) if there exists a Default or an Event of Default or if
the Total Leverage Ratio equals or is greater than 5.00 to
1.00, (I) prior to the Conversion Date, the Revolving
Commitment and the Revolver/Term Commitment shall be
automatically and permanently reduced by an amount equal to
100% of the net proceeds from any issuances of Subordinated
Debt received by the Borrower, applied pro rata to the
Revolving Commitment and the obligations as specified in the
Revolver/Term Credit Agreement, and (II) after the Conversion
Date, the Revolving Commitment shall be automatically and
permanently reduced by an amount equal to the amount required
by Section 2.05(b)(ii)(B)(II) hereof to repay the outstanding
Advances under the Revolving Loan, and
(B) on such date, the Borrower shall deliver to the
Administrative Agent a certificate of an Authorized Officer
certifying as to the amount of (including the calculation of)
such reduction in the Revolving Commitment, and, with respect
to the Debt issuance giving rise thereto, the gross proceeds
thereof and the costs and expenses payable as a result thereof
which were deducted in determining the amount of net proceeds
of such Debt issuance.
0100.0269\91958 32
<PAGE>
(iv) Change of Control. If a Change of Control occurs, the
Revolving Commitment shall be automatically and permanently reduced to
zero.
(v) Equity Issuances. On the date of any issuance of equity
by the GCI Entities other than the Closing Date and other than the
issuance of common stock or options or rights to purchase common stock
of any GCI Entity to employees and directors pursuant to stock purchase
plans or grant plans, or otherwise (this provision not permitting such
equity issuances),
(A) if there exists a Default or an Event of Default, (I)
prior to the Conversion Date, the Revolving Commitment and the
Revolver/Term Commitment shall be automatically and
permanently reduced by an amount equal to 100% of the net
proceeds from any such equity issuances received by any of the
GCI Entities applied pro rata to the Revolving Commitment and
the obligations as specified in the Revolver/Term Credit
Agreement, and (II) after the Conversion Date, the Revolving
Commitment shall be automatically and permanently reduced by
an amount equal to the amount required by Section
2.05(b)(iii)(B)(II) hereof to repay the outstanding Advances
under the Revolving Loan, and
(B) on each such date set forth in (A) and (B) above, the
Borrower shall deliver to the Administrative Agent a
certificate of an Authorized Officer certifying as to the
amount of (including the calculation of) the reduction of the
Revolving Commitment, with respect to the equity issuance
giving rise thereto, the gross proceeds thereof and the costs
and expenses payable as a result thereof which were deducted
in determining the amount of net proceeds of such equity
issuance.
(vi) Distributions from AUSP or any other Unrestricted
Subsidiary. On the date that any distribution is received by any GCI
Entity from AUSP or any Unrestricted Subsidiary,
(A) if there exists a Default or an Event of Default, (I)
prior to the Conversion Date, the Revolving Commitment and the
Revolver/Term Commitment shall be automatically and
permanently reduced by an amount equal to 100% of the
distribution received by any GCI Entity from AUSP or any other
Unrestricted Subsidiary, applied pro rata to the Revolving
Commitment and the obligations as specified in the
Revolver/Term Credit Agreement, and (II) after the Conversion
Date, the Revolving Commitment shall be automatically and
permanently reduced by an amount equal to the amount required
by Section 2.05(b)(iv)(B)(II) hereof to repay the outstanding
Advances under the Revolving Loan, and
0100.0269\91958 33
<PAGE>
(B) on each such date set forth above, the Borrower shall
deliver to the Administrative Agent a certificate of an
Authorized Officer certifying as to the amount of (including
the calculation of) the reduction of the Revolving Commitment.
(c) Commitment Reductions, Generally. To the extent the sum of (i) the
aggregate outstanding Advances under the Revolving Loan plus (ii) the sum of the
aggregate face amount of all outstanding Letters of Credit plus, (iii) without
duplication, all reimbursement obligations related to any draw on any Letter of
Credit, exceed the Revolving Commitment after any reduction thereof, the
Borrower shall immediately repay on the date of such reduction, any such excess
amount and all accrued interest thereon, together with any amounts constituting
any Consequential Loss. Once reduced or terminated pursuant to this Section
2.04, the Revolving Commitment may not be increased or reinstated.
2.05 Prepayments.
(a) Optional Prepayments. The Borrower may, upon at least three
Business Days prior written notice to Administrative Agent stating the proposed
date and aggregate principal amount of the prepayment, prepay the outstanding
principal amount of any Advances in whole or in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid without
premium or penalty other than any Consequential Loss; provided, however, that in
the case of a prepayment of a Base Rate Advance, the notice of prepayment may be
given by telephone by 11:00 a.m. on the date of prepayment. Each partial
prepayment shall, in the case of Base Rate Advances, be in an aggregate
principal amount of not less than $500,000 or a larger integral multiple of
$100,000 in excess thereof and, in the case of LIBOR Advances, be in an
aggregate principal amount of not less than $1,000,000 or a larger integral
multiple of $500,000 in excess thereof. If any notice of prepayment is given,
the principal amount stated therein, together with accrued interest on the
amount prepaid and the amount, if any, due under Sections 2.11 and 2.13 hereof,
shall be due and payable on the date specified in such notice.
(b) Mandatory Prepayments.
(i) Asset Sales. (A) Prior to the Conversion Date, on the
date of any Asset Sale of any GCI Entity, the Borrower shall repay the
Obligations and the obligations under the Revolver/Term Credit
Agreement by an amount equal to 100% of the Net Proceeds applied pro
rata to Advances outstanding under the Revolving Loan and the
obligations as specified in the Revolver/Term Credit Agreement, and (B)
after the Conversion Date, (I) if there exists no Default or Event of
Default, on the date of any Asset Sale of any GCI Entity, the Borrower
shall repay the Obligations by an amount equal to 100% of the Net
Proceeds, applied to Advances outstanding under the Revolving Loan, and
(II) if there exists a Default or Event of Default, on the date of any
Asset Sale
0100.0269\91958 34
<PAGE>
of any GCI Entity, the Borrower shall repay the Obligations and the
obligations under the Revolver/Term Credit Agreement by an amount equal
to 100% of the Net Proceeds, applied pro rata to Advances outstanding
under the Revolving Loan and the obligations as specified under the
Revolver/Term Credit Agreement. On such date, the Borrower shall
deliver to the Administrative Agent a certificate of an Authorized
Officer certifying as to the amount of (including the calculation of)
such repayment and, with respect to the Asset Sale giving rise thereto,
the gross proceeds thereof and the costs and expenses payable as a
result thereof which were deducted in determining the amount of Net
Proceeds.
(ii) Debt Issuances. (A) Prior to the Conversion Date, on the
date of any issuance of public or private Subordinated Debt by the
Borrower (this provision not permitting such Debt issuance), the
Borrower shall repay the Obligations and the obligations under the
Revolver/Term Credit Agreement by an amount equal to 100% of the net
proceeds from such issuance, applied pro rata to Advances outstanding
under the Revolving Loan and the obligations as specified under the
Revolver/Term Credit Agreement, and (B) after the Conversion Date, (I)
if there exists no Default or Event of Default, on the date of any
issuance of any private or public Subordinated Debt by the Borrower
(and Total Leverage Ratio is less than 5.00 to 1.00), the Borrower
shall repay the Obligations by an amount equal to 100% of the net
proceeds of such Subordinated Debt issuance, applied to Advances
outstanding under the Revolving Loan, and (II) if there exists a
Default or Event of Default or if the Total Leverage Ratio is equal to
or greater than 5.00 to 1.00, on the date of any such issuance by the
Borrower, the Borrower shall repay the Obligations and the obligations
under the Revolver/Term Credit Agreement by an amount equal to 100% of
the net proceeds of such issuance, applied pro rata to Advances
outstanding under the Revolving Loan and the obligations as specified
outstanding under the Revolver/Term Credit Agreement. On such date, the
Borrower shall deliver to the Administrative Agent a certificate of an
Authorized Officer certifying as to the amount of (including the
calculation of) such repayment and, with respect to the Debt issuance
giving rise thereto, the gross proceeds thereof and the costs and
expenses payable as a result thereof which were deducted in determining
the amount of net proceeds of such Debt issuance.
(iii) Equity Issuances. (A) Prior to the Conversion Date
(unless there exists an Event of Default or Default), on the date of
any issuance of equity by any GCI Entity other than the Closing Date
and other than the issuance of common stock or options or rights to
purchase common stock of any GCI Entity to employees and directors
pursuant to stock purchase plans or grant plans, or otherwise (this
provision not permitting such equity issuances), the Borrower shall
repay the Obligations and the obligations under the Revolver Term
Credit Agreement by an amount equal to 50% of the net proceeds of such
equity issuances in excess of $50,000,000 in the aggregate over the
term of this Agreement, applied pro rata to Advances outstanding under
the Revolving Loan and the
0100.0269\91958 35
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obligations outstanding under the Revolver/Term Credit Agreement, and
(B) (I) after the Conversion Date, if there exists no Default or Event
of Default, on the date of any issuance of equity by any GCI Entity,
the Borrower shall repay the Obligations by an amount equal to 50% of
the net proceeds of such equity issuances in excess of $50,000,000 in
the aggregate over the term of this Agreement, applied to Advances
outstanding under the Revolving Loan, and (II) if there exists a
Default or Event of Default, on the date of any such equity issuance by
any GCI Entity, the Borrower shall repay the Obligations and the
obligations outstanding under the Revolver/Term Credit Agreement by an
amount equal to 100% of the net proceeds of such equity issuances,
applied pro rata to Advances outstanding under the Revolving Loan and
the obligations as specified under the Revolver/Term Credit Agreement.
On such date, the Borrower shall deliver to the Administrative Agent a
certificate of an Authorized Officer certifying as to the amount of
(including the calculation of) such repayment and, with respect to the
equity issuance giving rise thereto, the gross proceeds thereof and the
costs and expenses payable as a result thereof which were deducted in
determining the amount of net proceeds of such equity issuance.
(iv) Distributions from AUSP or any other Unrestricted
Subsidiaries. (A) Prior to the Conversion Date, on the date of any
receipt by the Borrower or any Restricted Subsidiary of a distribution
from AUSP or any other Unrestricted Subsidiary, the Borrower shall
repay the Obligations and the obligations under the Revolver/Term
Credit Agreement by an amount equal to 100% of such distribution,
applied pro rata to Advances outstanding under the Revolving Loan and
the obligations outstanding under the Revolver/Term Credit Agreement,
and (B) after the Conversion Date, (I) if there exists no Default or
Event of Default, on the date of any receipt by the Borrower or any
Restricted Subsidiary of a distribution from AUSP or any other
Unrestricted Subsidiary, the Borrower shall repay the Obligations by an
amount equal to 100% of such distribution, applied to Advances
outstanding under the Revolving Loan, and (II) if there exists a
Default or Event of Default, on the date of any such receipt by the
Borrower or any Restricted Subsidiary of a distribution from AUSP or
any other Unrestricted Subsidiary, the Borrower shall repay the
Obligations and the obligations under the Revolver/Term Credit
Agreement by an amount equal to 100% of such distribution, applied pro
rata to Advances outstanding under the Revolving Loan and the
obligations as specified under the Revolver/Term Credit Agreement. On
such date, the Borrower shall deliver to the Administrative Agent a
certificate of an Authorized Officer certifying as to the amount of
(including the calculation of) such repayment.
(v) Change of Control. If a Change of Control occurs, the
Borrower shall repay the Obligations in full.
(c) Prepayments, Generally. No prepayments of Advances under the
Revolving Loan made solely pursuant to this Section 2.05 shall cause the
Commitment to be reduced. Any
0100.0269\91958 36
<PAGE>
prepayment of Advances pursuant to this Section 2.05 shall be applied first to
Base Rate Advances, if any, then outstanding under the Facility, second to LIBOR
Advances for which the date of prepayment is the last day of the applicable
Interest Period, if any, outstanding under the Facility and third to LIBOR
Advances with the shortest remaining Interest Periods outstanding under the
Facility. Any amounts repaying the Revolver/Term Loan on and after the
Conversion Date will be applied in the inverse order of maturity and may not be
reborrowed.
2.06 Mandatory Repayment.
(a) Revolving Loan. On the date of a reduction of the Revolving
Commitment pursuant to Section 2.04(b)(i)(A) hereof, to the extent the sum of
(a) the aggregate outstanding Advances under the Revolving Loan plus (b) the sum
of the aggregate face amount of all outstanding Letters of Credit plus, (c)
without duplication, all reimbursement obligations related to any draw on any
Letter of Credit, outstanding on the date of reduction exceeds the Revolving
Commitment as reduced, such excess amounts shall be immediately due and payable,
which principal payment may not be made by means of a Refinancing Advance.
(b) Final Maturity. The Borrower agrees that all Advances outstanding
under the Revolving Loan, all reimbursement obligations from any draw on any
Letter of Credit, and all other outstanding Obligations are due and payable in
full on the Maturity Date.
Interest. Subject to Section 2.08 below, the Borrower shall pay
interest on the unpaid principal amount of each Advance from the date of such
Advance until such principal shall be paid in full, at the following rates, as
selected by the Borrower in accordance with the provisions of Section 2.02
hereof:
(a) Base Rate Advances. Base Rate Advances shall bear interest
at a rate per annum equal to the lesser of (i) the Base Rate as in
effect from time to time and (ii) the Highest Lawful Rate. If the
amount of interest payable in respect of any interest computation
period is reduced to the Highest Lawful Rate pursuant to the
immediately preceding sentence and the amount of interest payable in
respect of any subsequent interest computation period would be less
than the Maximum Amount, then the amount of interest payable in respect
of such subsequent interest computation period shall be automatically
increased to Maximum Amount; provided that at no time shall the
aggregate amount by which interest paid has been increased pursuant to
this sentence exceed the aggregate amount by which interest has been
reduced pursuant to the immediately preceding sentence.
(b) LIBOR Advances. LIBOR Advances shall bear interest at the
rate per annum equal to the LIBOR Rate applicable to such Advance,
which at no time shall exceed the Highest Lawful Rate.
0100.0269\91958 37
<PAGE>
(c) Payment Dates. Accrued and unpaid interest on Base Rate
Advances shall be paid quarterly in arrears on each Quarterly Date and
on the appropriate maturity, repayment or prepayment date. Accrued and
unpaid interest on LIBOR Advances shall be paid on the last day of the
appropriate Interest Period and on the date of any prepayment or
repayment of such Advance; provided, however, that if any Interest
Period for a LIBOR Advance exceeds three months, interest shall also be
paid on each date occurring during the Interest Period which is the
three month anniversary date of the first day of the Interest Period.
2.08 Default Interest. During the continuation of any Event of Default,
the Borrower shall pay, on demand, interest (after as well as before judgment to
the extent permitted by Law) on the principal amount of all Advances outstanding
and on all other Obligations due and unpaid hereunder equal to the lesser of the
(a) the Highest Lawful Rate and (b) the Base Rate (whether or not in effect)
plus 2.00% per annum.
2.09 Continuation and Conversion Elections.
(a) The Borrower may upon irrevocable written notice to Administrative
Agent and subject to the terms of this Agreement:
(i) elect to convert, on any Business Day, all or any portion
of outstanding Base Rate Advances (in an aggregate amount not less than
$1,000,000 or a larger integral multiple of $500,000 in excess thereof)
into LIBOR Advances.
(ii) elect to convert at the end of any Interest Period
therefor, all or any portion of outstanding LIBOR Advances comprised in
the same Borrowing (in an aggregate amount not less than $500,000 or a
larger integral multiple of $100,000 in excess thereof) into Base Rate
Advances; or
(iii) elect to continue, at the end of any Interest Period
therefor, any LIBOR Advances;
provided, however, that if the aggregate amount of outstanding LIBOR
Advances comprised in the same Borrowing shall have been reduced as a result of
any payment, prepayment or conversion of part thereof to an amount less than
$1,000,000, the LIBOR Advances comprised in such Borrowing shall automatically
convert into Base Rate Advances at the end of each respective Interest Period.
(b) The Borrower shall deliver a notice of conversion or continuation
(a "Notice of Conversion/Continuation"), in substantially the form of Exhibit E
hereto, to Administrative Agent not later than (i) 12:00 noon three Business
Days prior to the proposed date of conversion or continuation, if the Advances
or any portion thereof are to be converted into or continued as
0100.0269\91958 38
<PAGE>
LIBOR Advances; and (ii) not later than 10:00 a.m. on the proposed date of
conversion or continuation, if the Advances or any portion thereof are to be
converted into Base Rate Advances.
Each such Notice of Conversion/Continuation shall be by telecopy or
telephone, promptly confirmed in writing, specifying therein:
(i) the proposed date of conversion or continuation;
(ii) the aggregate amount of Advances to be converted or
continued;
(iii) the nature of the proposed conversion or
continuation; and
(iv) the duration of the applicable Interest Period.
(c) If, upon the expiration of any Interest Period applicable to LIBOR
Advances, the Borrower shall have failed to select a new Interest Period to be
applicable to such LIBOR Advances or if an Event of Default shall then have
occurred and be continuing, the Borrower shall be deemed to have elected to
convert such LIBOR Advances into Base Rate Advances effective as of the
expiration date of such current Interest Period.
(d) Upon receipt of a Notice of Conversion/Continuation, Administrative
Agent shall promptly notify each Lender thereof. All conversions and
continuations shall be made pro rata among Lenders based on their Specified
Percentage of the respective outstanding principal amounts of the Advances with
respect to which such notice was given held by each Lender.
(e) Notwithstanding any other provision contained in this Agreement,
after giving effect to any conversion or continuation of any Advances, there
shall not be outstanding Advances with more than eight different Interest
Periods in the aggregate under the Facility and under the Revolver/Term Credit
Agreement.
2.10 Fees.
(a) Subject to Section 10.09 hereof, the Borrower agrees to pay to the
Administrative Agent, for the account of the Lenders in accordance with their
Specified Percentages, a commitment fee on the average daily amount of the
Revolving Unused Commitment, from the Closing Date through the Maturity Date, at
the rate of .375% per annum, payable quarterly in arrears on each Quarterly Date
occurring after the Closing Date, with the last such payment due and owing on
the Maturity Date.
(b) Subject to Section 10.09 hereof, the Borrower agrees to pay to the
Administrative Agent for its own account as administrative lender and
underwriter, and to NationsBanc
0100.0269\91958 39
<PAGE>
Montgomery Securities, Inc., as arranger hereunder, such fees as agreed to in
writing among the Borrower and the Administrative Agent and NationsBanc
Montgomery Securities, Inc., payable as set forth in that certain Fee Letter
executed among the Borrower, the Administrative Agent and NationsBanc Montgomery
Securities, Inc. in accordance with the terms of the Fee Letter.
2.11 Funding Losses. If the Borrower makes any payment or prepayment of
principal with respect to any LIBOR Advance (including payments made after any
acceleration thereof) or converts any Advance from a LIBOR Advance on any day
other than the last day of an Interest Period applicable thereto or if the
Borrower fails to prepay, borrow, convert, or continue any LIBOR Advance after a
notice of prepayment, borrowing, conversion or continuation has been given (or
is deemed to have been given) to Administrative Agent, the Borrower shall pay to
each Lender on demand (subject to Section 10.09 hereof) any Consequential Loss.
The Borrower agrees that each Lender is not obligated to actually reinvest the
amount prepaid in any specific obligation as a condition to receiving any
Consequential Loss, or otherwise.
2.12 Computations and Manner of Payments.
(a) The Borrower shall make each payment hereunder and under the other
Loan Papers not later than 1:00 p.m. on the day when due in same day funds to
Administrative Agent, for the Ratable account of Lenders unless otherwise
specifically provided herein, at
Administrative Agent
NationsBank Plaza
901 Main Street
14th Floor
Dallas, Texas 75202
for further credit to the account of GCI Holdings, Inc. No later than the end of
each day when each payment hereunder is made, the Borrower shall notify the
Administrative Agent, telephone (800) 880-5537, facsimile (214) 508-2515, or
such other Person as Administrative Agent may from time to time specify.
(b) Unless Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due hereunder that the
Borrower will not make payment in full, Administrative Agent may assume that
such payment is so made on such date and may, in reliance upon such assumption,
make distributions to Lenders. If and to the extent the Borrower shall not have
made such payment in full, each Lender shall repay to Administrative Agent
forthwith on demand the applicable amount distributed, together with interest
thereon at the Federal Funds Rate, from the date of distribution until the date
of repayment. The Borrower
0100.0269\91958 40
<PAGE>
hereby authorizes each Lender, if and to the extent payment is not made when due
hereunder, to charge the amount so due against any account of the Borrower with
such Lender.
(c) Subject to Section 10.09 hereof, interest on LIBOR Advances shall
be calculated on the basis of actual days elapsed but computed as if each year
consisted of 360 days. Subject to Section 10.09 hereof, interest on Base Rate
Advances, the Commitment Fees and other amounts due under the Loan Papers shall
be calculated on the basis of actual days elapsed but computed as if each year
consisted of 365 or 366 days, as the case may be. Such computations shall be
made including the first day but excluding the last day occurring in the period
for which such interest, payment or Commitment Fees is payable. Each
determination by Administrative Agent or a Lender of an interest rate, fee or
commission hereunder shall be conclusive and binding for all purposes, absent
manifest error. All payments under the Loan Papers shall be made in United
States dollars, and without setoff, counterclaim, or other defense.
(d) Except as specifically set forth in Sections 2.04 and 2.05 hereof,
so long as there exists no Default or Event of Default all payments made by the
Borrower shall be applied as designated by the Borrower, and, if there exists a
Default or Event of Default, or if the Borrower fails to designate application
of payments, all payments made by the Borrower shall be applied pro rata among
the Revolving Loan and the obligations as specified in the Revolver/Term Credit
Agreement. Notwithstanding anything herein or in any Loan Paper to the contrary,
any payment made by the Borrower in excess of the Revolving Commitment or
outstanding Advances under the Revolving Loan, shall be applied to outstanding
amounts (or to reduce the commitment) of any other outstanding Obligations.
(e) Reference to any particular index or reference rate for determining
any applicable interest rate under this Agreement is for purposes of calculating
the interest due and is not intended as and shall not be construed as requiring
any Lender to actually fund any Advance at any particular index or reference
rate.
2.13 Yield Protection.
(a) If any Lender determines that either (i) the adoption, after the
date hereof, of any Applicable Law, rule, regulation or guideline regarding
capital adequacy and applicable to commercial banks or financial institutions
generally or any change therein, or any change, after the date hereof, in the
interpretation or administration thereof by any Tribunal, central bank or
comparable agency charged with the interpretation or administration thereof, or
(ii) compliance by any Lender (or Lending Office of any Lender) with any request
or directive made after the date hereof applicable to commercial banks or
financial institutions generally regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency has the effect of reducing the rate of return on such Lender's capital as
a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's
0100.0269\91958 41
<PAGE>
policies with respect to capital adequacy (but excluding consequences of such
Lender's negligence or intentional disregard of law or regulation)) by an amount
reasonably deemed by such Lender to be material, then from time to time, within
fifteen days after demand by such Lender, the Borrower shall pay to such Lender
such additional amount or amounts as will adequately compensate such Lender for
such reduction. Each Lender will notify the Borrower of any event occurring
after the date of this Agreement which will entitle such Lender to compensation
pursuant to this Section 2.13(a) as promptly as practicable after such Lender
obtains actual knowledge of such event; provided, no Lender shall be liable for
its failure or the failure of any other Lender to provide such notification. A
certificate of such Lender claiming compensation under this Section 2.13(a),
setting forth in reasonable detail the calculation of the additional amount or
amounts to be paid to it hereunder and certifying that such claim is consistent
with such Lender's treatment of similar customers having similar provisions
generally in their agreements with such Lender shall be conclusive in the
absence of manifest error. Each Lender shall use reasonable efforts to mitigate
the effect upon the Borrower of any such increased costs payable to such Lender
under this Section 2.13(a).
(b) If, after the date hereof, any Tribunal, central bank or other
comparable authority, at any time imposes, modifies or deems applicable any
reserve (including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit or similar requirement against
assets of, deposits with or for the amount of, or credit extended by, any
Lender, or imposes on any Lender any other condition affecting a Letter of
Credit, a LIBOR Advance, the Notes, or its obligation to make a LIBOR Advance;
and the result of any of the foregoing is to increase the cost to such Lender of
making or maintaining its Letter of Credit, LIBOR Advances, or to reduce the
amount of any sum received or receivable by such Lender under this Agreement or
under the Notes or reimbursement obligations by an amount deemed by such Lender,
to be material, then, within five days after demand by such Lender, the Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduction. Each Lender will (i) notify
the Borrower and Administrative Agent of any event occurring after the date of
this Agreement that entitles such Lender to compensation pursuant to this
Section 2.13(b), as promptly as practicable after such Lender obtains actual
knowledge of the event; provided, no Lender shall be liable for its failure or
the failure of any other Lender to provide such notification and (ii) use good
faith and reasonable efforts to designate a different Lending Office for LIBOR
Advances of such Lender if the designation will avoid the need for, or reduce
the amount of, the compensation and will not, in the sole opinion of such
Lender, be disadvantageous to such Lender. A certificate of such Lender claiming
compensation under this Section 2.13(b), setting forth in reasonable detail the
computation of the additional amount or amounts to be paid to it hereunder and
certifying that such claim is consistent with such Lender's treatment of similar
customers having similar provisions generally in their agreements with such
Lender shall be conclusive in the absence of manifest error. If such Lender
demands compensation under this Section 2.13(b), the Borrower may at any time,
on at least five Business Days' prior notice to such Lender (i) repay in full
the then outstanding principal amount of LIBOR Advances, of such Lender,
together with accrued
0100.0269\91958 42
<PAGE>
interest thereon, or (ii) convert the LIBOR Advances to Base Rate Advances in
accordance with the provisions of this Agreement; provided, however, that the
Borrower shall be liable for the Consequential Loss arising pursuant to those
actions.
(c) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation or administration of
any Law shall make it unlawful, or any central bank or other Tribunal shall
assert that it is unlawful, for a Lender to perform its obligations hereunder to
issue or maintain Letters of Credit, make LIBOR Advances or to continue to fund
or maintain LIBOR Advances hereunder, then, on notice thereof and demand
therefor by such Lender to the Borrower, (i) each LIBOR Advance will
automatically, upon such demand, convert into a Base Rate Advance, (ii) the
obligation of such Lender to make, or to convert Advances into, LIBOR Advances
shall be suspended until such Lender notifies Administrative Agent and the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist and (iii) the obligation of such Lender to make or
maintain Letters of Credit shall be suspended until such Lender notifies
Administrative Agent and the Borrower that such Lender has determined that the
circumstances causing such suspension no longer exist.
(d) Upon the occurrence and during the continuance of any Default or
Event of Default, (i) each LIBOR Advance will automatically, on the last day of
the then existing Interest Period therefor, convert into a Base Rate Advance and
(ii) the obligation of each Lender to make, or to convert Advances into, LIBOR
Advances shall be suspended.
(e) Failure on the part of any Lender to demand compensation for any
increased costs, increased capital or reduction in amounts received or
receivable or reduction in return on capital pursuant to this Section 2.13 with
respect to any period shall not constitute a waiver of any Lender's right to
demand compensation with respect to such period or any other period, subject,
however, to the limitations set forth in this Section 2.13.
(f) The obligations of the Borrower under this Section 2.13 shall
survive any termination of this Agreement.
(g) Determinations by Lenders for purposes of this Section 2.13 shall
be conclusive, absent manifest error. Any certificate delivered to the Borrower
by a Lender pursuant to this Section 2.13 shall include in reasonable detail the
basis for such Lender's demand for additional compensation and a certification
that the claim for compensation is consistent with such Lender's treatment of
similar customers having similar provisions generally in their agreements with
such Lender.
(h) If any Lender notifies Administrative Agent that the LIBOR Rate for
any Interest Period for any LIBOR Advances will not adequately reflect the cost
to such Lender of making, funding or maintaining LIBOR Advances for such
Interest Period, Administrative Agent shall
0100.0269\91958 43
<PAGE>
promptly so notify the Borrower, whereupon (i) each such LIBOR Advance will
automatically, on the last day of the then existing Interest Period therefor,
convert into a Base Rate Advance and (ii) the obligation of such Lender to make,
or to convert Advances into, LIBOR Advances shall be suspended until such Lender
notifies Administrative Agent that such Lender has determined that the
circumstances causing such suspension no longer exist and Administrative Agent
notifies the Borrower of such fact.
2.14 Use of Proceeds. The proceeds of the Advances shall be available
(and the Borrower shall use such proceeds) to (a) refinance existing Funded Debt
of the Borrower and its Restricted Subsidiaries, (b) fund Capital Expenditures
of the Borrower and the Restricted Subsidiaries permitted by the terms of this
Agreement, (c) contribute $50,000,000 to the capitalization of AUSP, and (d) use
for general working capital purposes.
2.15 Collateral and Collateral Call.
(a) Collateral. Payment of the Obligations is secured by (i) subject to
the Prior Stock Lien, a first perfected security interest in 100% of the Capital
Stock the Borrower and the Restricted Subsidiaries and 100% of the Capital Stock
of the Guarantors (other than GCII), (ii) subject to Permitted Liens, a first
perfected security interest in all of the accounts, equipment, inventory,
chattel paper, general intangibles, and other assets of the Borrower, the
Restricted Subsidiaries and the Guarantors (except Parents), including without
limitation a perfected Lien on all Intercompany Notes, including those payable
by AUSP or any other Unrestricted Subsidiary to the Borrower or any other GCI
Entity, subject to no other Lien, and (iii) a Guaranty of the Obligations
executed by each Guarantor (collectively, together with all other Properties or
assets of the Borrower, the Restricted Subsidiaries and other Persons securing
the Obligations from time to time, the "Collateral"). The Borrower agrees that
it will, and will cause the Restricted Subsidiaries, the other GCI Entities and
Affiliates (except the Unrestricted Subsidiaries) to, execute and deliver, or
cause to be executed and delivered, such documents as the Administrative Agent
may from time to time reasonably request to create and perfect a first Lien
(except with respect to the stock of GCI Leasing Co., Inc., which shall be a
second Lien behind the Prior Stock Lien), and subject to Permitted Liens, for
the benefit of the Administrative Agent and the Lenders in the Collateral.
(b) Collateral Call. The Borrower agrees that it will, and will cause
any other Person owning any interest in the Borrower or any Restricted
Subsidiary or other GCI Entity from time to time to immediately pledge such
interest (other than with respect to a pledge of the Capital Stock of Parents
and to the extent permitted by the Indenture) to secure the Obligations,
pursuant to a pledge agreement substantially in the form of the Pledge
Agreements. The Borrower agrees to, and agrees to cause the Restricted
Subsidiaries and each other GCI Entity to, promptly grant the Administrative
Agent and the Lenders from time to time at the request of the Lenders a Lien on
any of the Property of the Borrower or other GCI Entity (other than GCI) not
already constituting Collateral, to the extent permitted by the Indenture. In
that regard, the Borrower
0100.0269\91958 44
<PAGE>
shall, and shall cause each other GCI Entity to, use best efforts to assist the
Administrative Agent and the Lenders in creating and perfecting a first Lien for
the benefit of Administrative Agent and Lenders securing the Obligations in any
such Property of the Borrower and each other GCI Entity, subject to Permitted
Liens (except for the Lien on the Capital Stock of GCI Leasing Co, Inc., which
shall be a second Lien to the Prior Stock Lien)(other than GCI), including,
without limitation, providing the Administrative Agent with title commitments,
appraisals, surveys (with flood plain certification), mortgagee title insurance,
evidence of insurance including flood hazard insurance, environmental audits,
UCC-11 searches, Tax and Lien searches, recorded real estate documents,
intellectual property documentation and registration and other similar types of
documents, consents, Authorizations, instruments and agreements relating to all
Property of the Borrower and each other GCI Entity (other than GCI) as
reasonably requested by the Administrative Agent from time to time.
2.16 Increase of Revolving Commitment. From the Closing Date through
June 30, 2000, the Borrower may increase the Revolving Commitment by up to an
additional $100,000,000 subject to the satisfaction of each of the following
conditions:
(a) there exists no Default or Event of Default both on the date of
notice of such election and on the date of consummation of such event,
(b) such amount is used exclusively to refinance all indebtedness
(except agreed to baskets) of GCI Transport Co., Inc. and the other Unrestricted
Subsidiaries,
(c) the Borrower receives additional commitments from existing Lenders
or other creditors acceptable to the Managing Agents and the Borrower for the
increased amount in the Commitment (which increase shall be in each Lender's
sole discretion),
(d) (i) the Borrower and each Subsidiary of the Borrower pledges 100%
of the Capital Stock of each Unrestricted Subsidiary pursuant to a pledge
agreement in form and substance substantially similar to the pledge agreement
executed on the Closing Date securing the Obligations, (ii) each such
Unrestricted Subsidiary shall become a Restricted Subsidiary under the Loan
Papers, (iii) each such Unrestricted Subsidiary executes a Guaranty of the
Obligations substantially similar to the Guaranty executed by the Restricted
Subsidiaries on the Closing Date and (iv) each such Unrestricted Subsidiary
executes a security agreement and deeds of trust, mortgages, collateral
assignments and all other collateral documents necessary or advisable to grant a
prior first perfected Lien on all tangible and intangible assets of each such
Unrestricted (now Restricted) Subsidiary, subject to Permitted Liens,
(e) the Borrower has delivered prior to such consummation (i) pro forma
projections for the GCI Entities through the Maturity Date and (ii) a pro forma
compliance certificate, demonstrating compliance with all repayment, prepayment
and reduction of commitment terms
0100.0269\91958 45
<PAGE>
hereof, and with each financial covenant included in Section 7.01 hereof, in
form and detail satisfactory to the Managing Agents and the Majority Lenders in
their reasonable judgment,
(f) On any date of proposed increase, the representations and
warranties contained in Article V hereof are true and correct on such date, as
though made on and as of such date, except to the extent expressly made only as
of a prior date,
(g) On any date of proposed increase, there shall have occurred no
material adverse change in the business, assets or financial condition of the
businesses of the Borrower (as operated by the Restricted Subsidiaries) since
December 31, 1996,
(h) On any date of proposed increase, the sum of (i) all Advances
outstanding under the Revolving Loan, plus (ii) the aggregate face amount of all
outstanding Letters of Credit, plus (iii) (without duplication) the sum of the
aggregate reimbursement obligations, shall not exceed the Revolving Commitment,
(i) The proposed increase shall occur prior to June 30, 2000 and shall
not be in excess of the sum of $100,000,000, and
(j) The Administrative Agent and each Lender shall have received a
written request from the Borrower not less than 30 days prior to such increase.
ARTICLE III. LETTERS OF CREDIT
3.01 Issuance of Letters of Credit. The Borrower shall give the
Administrative Agent not less than five Business Days prior written notice of a
request for the issuance of a Letter of Credit, and the Administrative Agent
shall promptly notify each Lender of such request. Upon receipt of the
Borrower's properly completed and duly executed Applications, and subject to the
terms of such Applications and to the terms of this Agreement, the
Administrative Agent agrees to issue Letters of Credit on behalf of the Borrower
in an aggregate face amount not in excess of the Letter of Credit Commitment at
any one time outstanding. No Letter of Credit shall have a maturity extending
beyond the earliest of (a) the Maturity Date, or (b) one year from the date of
its issuance, or (c) such earlier date as may be required to enable the Borrower
to satisfy its repayment obligations under Section 2.06 hereof. Subject to such
maturity limitations and so long as no Default or Event of Default has occurred
and is continuing or would result from the renewal of a Letter of Credit, the
Letters of Credit may be renewed by the Administrative Agent in its discretion.
The Lenders shall participate ratably in any liability under the Letters of
Credit and in any unpaid reimbursement obligations of the Borrower with respect
to any Letter of Credit in their Specified Percentages. The amount of the
Letters of Credit issued and outstanding and the unpaid reimbursement
obligations of the Borrower for such Letters of Credit shall reduce the amount
of Revolving Commitment available, so that at no time shall the sum
0100.0269\91958 46
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of (i) the aggregate outstanding Advances under the Revolving Loan plus (ii) the
sum of the aggregate face amount of all outstanding Letters of Credit plus,
(iii) without duplication, all reimbursement obligations related to any draw on
any Letter of Credit, exceed the Revolving Commitment, and at no time shall the
sum of all Advances by any Lender made under the Revolving Loan, plus its
ratable share of amounts available to be drawn under the Letters of Credit and
the unpaid reimbursement obligations of the Borrower in respect of such Letters
of Credit exceed its Specified Percentage of the Revolving Commitment.
3.02 Letters of Credit Fees. (a) In consideration for the issuance (and
any renewal) of each Letter of Credit, the Borrower shall pay to the
Administrative Agent for its sole account as issuer, a fee in an amount equal to
.50% multiplied by the face amount of each such Letter of Credit. Each fee for a
Letter of Credit shall be due and payable in full on the date of issuance of
each Letter of Credit, and each renewal of each Letter of Credit.
(b) In consideration for the issuance (and any renewal) of each Letter
of Credit, the Borrower shall pay to the Administrative Agent for the account of
the Administrative Agent and the Lenders in accordance with their Specified
Percentages, a per annum fee in an amount equal to 1.00% multiplied by the face
amount of each such Letter of Credit. Each fee for a Letter of Credit shall be
due and payable quarterly in arrears on each Quarterly Date until the expiration
or termination of such Letter of Credit.
3.03 Reimbursement Obligations.
(a) The Borrower hereby agrees to reimburse Administrative Agent
immediately upon demand by Administrative Agent, and in immediately available
funds, for any payment or disbursement made by Administrative Agent under any
Letter of Credit. Payment shall be made by the Borrower with interest on the
amount so paid or disbursed by Administrative Agent from and including the date
payment is made under any Letter of Credit to and including the date of payment,
at the lesser of (i) the Highest Lawful Rate, and (ii) the sum of the Base Rate
in effect from time to time plus 3% per annum; provided, however, that if the
Borrower would be permitted under the terms of Section 2.01, Section 2.02 and
Section 4.02 to borrow Advances in amounts at least equal to their reimbursement
obligation for a drawing under any Letter of Credit, a Base Rate Advance by each
Lender, in an amount equal to such Lender's Specified Percentage, shall
automatically be deemed made on the date of any such payment or disbursement
made by Administrative Agent in the amount of such obligation and subject to the
terms of this Agreement.
(b) The Borrower hereby also agrees to pay to Administrative Agent
immediately upon demand by Administrative Agent and in immediately available
funds, as security for their reimbursement obligations in respect of the Letters
of Credit under Section 3.03(a) hereof and any other amounts payable hereunder
and under the Notes, an amount equal to the aggregate amount available to be
drawn under Letters of Credit then outstanding, irrespective of whether
0100.0269\91958 47
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the Letters of Credit have been drawn upon, at the occurrence of any of the
following events: (i) upon an Event of Default, and (ii) upon a Change of
Control. Any such payments shall be deposited in a separate account designated
"GCI Special Account" or such other designation as Administrative Agent shall
elect. All such amounts deposited with Administrative Agent shall be and shall
remain funds of the Borrower on deposit with Administrative Agent and shall be
invested by Administrative Agent in an interest bearing account, as
Administrative Agent shall determine. Such amounts may not be used by
Administrative Agent to pay the drawings under the Letters of Credit; however,
such amounts may be used by Administrative Agent as reimbursement for Letter of
Credit drawings which Administrative Agent has paid. If any amounts in the GCI
Special Account shall have been deposited upon the occurrence of an Event of
Default only and such Event of Default shall have been subsequently cured or
waived and no other Event of Default exists, the Borrower shall be relieved of
its obligations under this Section 3.03(b) until either of the two events
specified in Section 3.03(b)(i) or Section 3.03(b)(ii) shall occur again. During
the existence of an Event of Default but after the expiry of any Letter of
Credit that was not drawn upon, the Borrower may direct the Administrative Agent
to use any cash collateral for any such expired Letter of Credit, if any, to
reduce the amount of the Obligations. Any amounts remaining in the GCI Special
Account, including any remaining interest, after the date of the expiry of all
Letters of Credit and after all Obligations have been paid in full, shall be
repaid to the Borrower promptly after such expiry and such payment in full.
(c) The obligations of the Borrower under this Section 3.03 will
continue until all Letters of Credit have expired and all reimbursement
obligations with respect thereto have been paid in full by the Borrower and
until all other Obligations shall have been paid in full.
(d) The Borrower shall be obligated to reimburse Administrative Agent
upon demand for all amounts paid under the Letters of Credit as set forth in
Section 3.03(a) hereof; provided, however, if the Borrower for any reason fails
to reimburse Administrative Agent in full upon demand, whether by borrowing
Advances to pay such reimbursement obligations or otherwise, the Lenders shall
reimburse Administrative Agent in accordance with each Lender's Specified
Percentage for amounts due and unpaid from the Borrower as set forth in Section
3.04 hereof; provided, however, that no such reimbursement made by the Lenders
shall discharge the Borrower's obligations to reimburse Administrative Agent.
(e) The Borrower shall indemnify and hold Administrative Agent or any
Lender, its officers, directors, representatives and employees harmless from
loss for any claim, demand or liability which may be asserted against
Administrative Agent or such indemnified party in connection with actions taken
under the Letters of Credit or in connection therewith (including losses
resulting from the negligence of Administrative Agent or such indemnified
party), and shall pay Administrative Agent for reasonable fees of attorneys (who
may be employees of Administrative Agent) and legal costs paid or incurred by
Administrative Agent in connection with any matter related to the Letters of
Credit, except for losses and liabilities incurred as a direct result of the
gross negligence or wilful misconduct of Administrative Agent or such
indemnified party. If the Borrower for any reason fails to indemnify or pay
Administrative Agent or such
0100.0269\91958 48
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indemnified party as set forth herein in full, the Lenders shall indemnify and
pay Administrative Agent upon demand, in accordance with each Lender's Specified
Percentage of such amounts due and unpaid from the Borrower. The provisions of
this Section 3.03(e) shall survive the termination of this Agreement.
3.04 Lenders' Obligations. Each Lender agrees, unconditionally and
irrevocably to reimburse Administrative Agent (to the extent Administrative
Agent is not otherwise reimbursed by the Borrower in accordance with Section
3.03(a) hereof) on demand for such Lender's Specified Percentage of each draw
paid by Administrative Agent under any Letter of Credit. All amounts payable by
any Lender under this subsection shall include interest thereon at the Federal
Funds Effective Rate, from the date of the applicable draw to the date of
reimbursement by such Lender. No Lender shall be liable for the performance or
nonperformance of the obligations of any other Lender under this Section. The
obligations of the Lenders under this Section shall continue after the Maturity
Date and shall survive termination of any Loan Papers.
3.05 Administrative Agent's Obligations.
(a) Administrative Agent makes no representation or warranty, and
assumes no responsibility with respect to the validity, legality, sufficiency or
enforceability of any Application or any document relative thereto or to the
collectibility thereunder. Administrative Agent assumes no responsibility for
the financial condition of the Borrower and the Restricted Subsidiaries or for
the performance of any obligation of the Borrower. Administrative Agent may use
its discretion with respect to exercising or refraining from exercising any
rights, or taking or refraining from taking any action which may be vested in it
or which it may be entitled to take or assert with respect to any Letter of
Credit or any Application.
(b) Except as set forth in subsection (c) below, Administrative Agent
shall be under no liability to any Lender, with respect to anything the
Administrative Agent may do or refrain from doing in the exercise of its
judgment, the sole liability and responsibility of Administrative Agent being to
handle each Lender's share on as favorable a basis as Administrative Agent
handles its own share and to promptly remit to each Lender its share of any sums
received by Administrative Agent under any Application. Administrative Agent
shall have no duties or responsibilities except those expressly set forth herein
and those duties and liabilities shall be subject to the limitations and
qualifications set forth herein.
(c) Neither Administrative Agent nor any of its directors, officers, or
employees shall be liable for any action taken or omitted (whether or not such
action taken or omitted is expressly set forth herein) under or in connection
herewith or any other instrument or document in connection herewith, except for
gross negligence or willful misconduct, and no Lender waives its right to
institute legal action against Administrative Agent for wrongful payment of any
Letter of Credit due to Administrative Agent's gross negligence or willful
misconduct. Administrative
0100.0269\91958 49
<PAGE>
Agent shall incur no liability to any Lender, the Borrower or any Affiliate of
the Borrower or Lender in acting upon any notice, document, order, consent,
certificate, warrant or other instrument reasonably believed by Administrative
Agent to be genuine or authentic and to be signed by the proper party.
ARTICLE IV. CONDITIONS PRECEDENT
Conditions Precedent to the Initial Advance. The obligations of each
Lender under this Agreement and the obligation of each Lender to make the
Initial Advance shall be subject to the following conditions precedent that on
the Closing Date:
(a) All terms, conditions and documentation in connection with this
Credit Agreement shall be acceptable to the Lenders.
(b) The making of the Revolving Commitment shall not contravene any Law
applicable to the Administrative Agent or any Lender.
(c) Each Lender shall have received a Certificate from an Authorized
Officer stating that no Material Adverse Change, as determined by the Lenders,
shall have occurred and be continuing in the Systems, business, assets,
prospects, or financial condition of the businesses of the Borrower (as operated
by the Restricted Subsidiaries) since December 31, 1996.
(d) All proceedings of the Borrower, the Restricted Subsidiaries and
each other GCI Entity taken in connection with the transactions contemplated
hereby, and all documents incidental thereto, shall be reasonably satisfactory
in form and substance to the Lenders. Each Lender shall have received copies of
all documents or other evidence that it may reasonably request in connection
with such transactions.
(e) Each Lender shall have received an executed copy of this Agreement,
the Revolver/Term Credit Agreement and all documents required to be delivered
pursuant thereto, and its respective Notes, duly completed and correct. The
Lenders shall have received copies of the Fee Letters signed by the Borrower, as
applicable. Each of the following shall have been delivered to the
Administrative Agent on behalf of Lenders, in form and substance satisfactory to
the Administrative Agent, Special Counsel and each Lender to the extent required
by the Administrative Agent: Each other Loan Paper requested by the
Administrative Agent, including, without limitation, all guarantees, pledge
agreements, security agreements, mortgages, deeds of trust, collateral
assignments and other agreements granting any interest in any collateral.
(f) The Borrower shall have delivered to each Lender a Certificate,
dated the Closing Date, executed by an Authorized Officer on behalf of each GCI
Entity, certifying that (i) no Default or Event of Default has occurred and is
continuing, (ii) the representations and
0100.0269\91958 50
<PAGE>
warranties set forth in Article V hereof are true and correct, (iii) each of the
GCI Entities has complied with all agreements and conditions to be complied with
by it under the Loan Papers by such date, (iv) that the attached resolutions for
each GCI Entity are the true, accurate and complete resolutions authorizing the
corporate restructuring, the incurrence and performance of the Facility and the
Loan Papers, (v) that the attached copies of certified articles of
incorporation, or other articles of organization, certificates of good standing,
certificates of existence and incumbency certificates for each GCI Entity are
(A) not more than 30 days old and certified by the appropriate secretary of
state of other governmental organization and (B) represent the true and accurate
certificate for each such entity, and (vi) the attached copies of by-laws or
other organizational documents represent the true and accurate by-laws or other
organizational documents for each GCI Entity in effect on the Closing Date.
(g) Each Lender shall have received opinions of (i) Sherman & Howard,
L.L.C. corporate counsel to the Borrower, the Restricted Subsidiaries and each
other GCI Entity, dated the Closing Date, acceptable to the Lenders and
otherwise in form and substance satisfactory to the Lenders and Special Counsel,
with respect to this loan transaction and otherwise, including, without
limitation, opinions (A) to the valid and binding nature of the Loan Papers, (B)
to the enforceability of the Loan Papers, (C) to the power, authorization and
corporate matters of each such Person taken in connection with the transactions
contemplated by the Loan Papers, (D) that the execution, delivery and
performance by the GCI Entities, as applicable, of the Agreement and the Loan
Papers does not violate any of the terms of the Borrower's, the Restricted
Subsidiaries' or any other GCI Entities' agreements, (E) regarding the issuance
and related opinions to the Senior Notes, (F) the corporate restructuring in
order to effectuate this Agreement and the issuance of the Senior Notes, (G)
regarding the equity issuance required by Section 4.01(j) hereof, and (H) to
such other matters as are reasonably requested by Special Counsel, and (ii) such
local counsel opinions relating to the Collateral and such other matters as are
requested by the Administrative Agent and Special Counsel. Copies of all
opinions delivered in connection with the equity issuance required by Section
4.01(j) hereof and the Senior Notes shall be delivered to the Administrative
Agent together with a reliance letter thereon.
(h) Each Lender shall have received an opinion of inhouse counsel to
the Borrower and to each other GCI Entity, dated as of the Closing Date,
acceptable to the Lenders and otherwise in form and substance satisfactory to
the Lenders and Special Counsel, with respect to this transaction, and final
approval shall have been received from the FCC regarding any transfer of any FCC
license.
(i) GCII shall have (i) issued the Senior Notes in an amount not less
than $180,000,000, on terms and conditions, and subject to documentation,
satisfactory to the Administrative Agent and each Lender, and (ii) downstreamed
the net proceeds of the debt issuance described in (i) above to the Borrower as
equity.
0100.0269\91958 51
<PAGE>
(j) GCI shall have raised not less than $50,750,000 in equity on terms
and conditions acceptable to the Administrative Agent and the Lenders and
downstreamed the net proceeds of the equity issuance to the Borrower as equity,
and the Borrower shall have received not less than $47,133,000 as an equity
contribution from such proceeds, on terms and conditions acceptable to the
Administrative Agent and each Lender.
(k) No management agreement with any Person shall be in existence at
the Parents, the Borrower or any Restricted Subsidiaries, except the Prime
Management Agreement.
(l) All proceedings of the Parents, the Borrower and the Subsidiaries
of the Parents and the Borrower taken in connection with the transactions
contemplated hereby, and all documents incidental thereto, shall be satisfactory
in form and substance to each Lender. The Administrative Agent and each Lender
shall have received copies of all documents or other evidence that it may
reasonably request in connection with such transactions. No Material Adverse
Change, as determined by the Lenders, shall have occurred and be continuing in
the financial markets.
(m) All Obligations outstanding under the existing credit facilities of
GCI Cable, Inc. and GCI Communication Corp. shall have been paid in full and
released.
4.02 Conditions Precedent to All Advances and Letters of Credit. The
obligation of each Lender to make each Advance, except for Refinancing Advances,
which constitutes an increase (including the Initial Advance), and the
obligation of the Administrative Agent to issue any Letter of Credit shall be
subject to the further conditions precedent (a) that on the date of such Advance
or such issuance of such Letter of Credit the following statements shall be
true:
(i) The representations and warranties contained in Article V
hereof are true and correct on such date, as though made on and as of
such date (and the delivery of each Borrowing Notice under Section
2.02(a), each Application and each Conversion or Continuation Notice
under Section 2.09(b), or the failure to deliver a Conversion or
Continuation Notice under Section 2.09(b), shall constitute a
representation that on the disbursement date or date of issuance of a
Letter of Credit such representations are true (except as to
representations and warranties which (i) refer to a specific date, (ii)
have been modified by transactions permitted pursuant to this Agreement
or any other Loan Paper or (iii) have been specifically waived in
writing by Administrative Agent));
(ii) No event has occurred and is continuing, or would result
from such Advance or such Letter of Credit (including the intended
application of the proceeds of such Advance), that does or could
constitute a Default or Event of Default;
0100.0269\91958 52
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(iii) There shall have occurred no Material Adverse Change,
and the making of such Advance or the issuance of such Letter of
Credit, as applicable, shall not cause or result in a Material Adverse
Change;
(iv) In the case of each Letter of Credit, the Borrower shall
have delivered to the Administrative Agent a duly executed and complete
Application acceptable to Administrative Agent;
(v) After giving effect to each such Advance, (A) the
aggregate outstanding Advances under the Revolving Loan, plus (B) the
sum of the aggregate face amount of all outstanding Letters of Credit
plus, (C) without duplication, all reimbursement obligations related to
any draw on any Letter of Credit, does not exceed the Revolving
Commitment;
(vi) After giving effect to each such Advance, prior to the
Conversion Date, the aggregate outstanding Advances under the
Revolver/Term Loan does not exceed the Revolver/Term Commitment;
and (b) Administrative Agent shall have received, in form and substance
acceptable to it, such other approvals, documents, certificates, opinions, and
information as it may deem necessary or appropriate, including, without
limitation, a certificate from an Authorized Officer, in form and substance
satisfactory to the Administrative Agent, that the Advances are permitted to be
incurred pursuant to the terms of the Indenture providing for the Senior Notes.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that the following are true and
correct:
5.01 Organization and Qualification. Each GCI Entity is a corporation
or partnership duly organized, validly existing, and in good standing under the
Laws of its state of incorporation or formation, as applicable. Each GCI Entity
is qualified to do business in all jurisdictions where the nature of its
business or Properties require such qualification. Set forth on Schedule 5.01
attached hereto is a complete and accurate listing with respect to the Borrower
and each other GCI Entity, showing (a) the jurisdiction of its organization and
its mailing address, which is the principal place of business and executive
offices of each unless otherwise indicated, (b) the classes of Capital Stock and
shares of Capital Stock issued and outstanding in each GCI Entity, and the
numbers or amounts of each GCI Entity's Capital Stock authorized and
outstanding, (c) other than with respect to GCI, each record and beneficial
owner of outstanding Capital Stock on the date hereof, indicating the ownership
percentage, and (d) all outstanding options, rights, rights of conversion or
purchase, repurchase, rights of first refusal, and similar rights relating to
the Capital Stock of each GCI Entity. Except as set forth on Schedule 5.01
0100.0269\91958 53
<PAGE>
hereto, neither the Borrower, nor any Restricted Subsidiary nor any other GCI
Entity (other than GCI) has agreed to grant or issue any options, warrants or
similar rights to any Person to acquire any Capital Stock of the Borrower, any
Restricted Subsidiary or any other GCI Entity. All Capital Stock is validly
issued and fully paid. The Borrower has no knowledge of any share of Capital
Stock of any GCI Entity (other than GCI) being subject to any Lien, including
any restrictions on hypothecation or transfer, except Liens described on
Schedule 5.08a hereto and the Prior Stock Lien.
5.02 Due Authorization; Validity. The board of directors of the
Borrower and each other GCI Entity, or of its partners, as applicable, have duly
authorized the execution, delivery, and performance of the Loan Papers to be
executed by the Borrower and each other GCI Entity, as appropriate. Each GCI
Entity has full legal right, power, and authority to execute, deliver, and
perform under the Loan Papers to be executed and delivered by it. The Loan
Papers constitute the legal, valid, and binding obligations of the Borrower and
each other GCI Entity, as appropriate, enforceable in accordance with their
terms (subject as to enforcement of remedies to any applicable Debtor Relief
Laws).
5.03 Conflicting Agreements and Other Matters. The execution or
delivery of any Loan Papers, and performance thereunder, does not conflict with,
or result in a breach of the terms, conditions, or provisions of, or constitute
a default under, or result in any violation of, or result in the creation of any
Lien (other than in favor of Administrative Agent) upon any Properties of the
Borrower or any other GCI Entity under, or require any consent (other than
consents described on Schedule 5.03 hereto and the Prior Stock Lien), approval,
or other action by, notice to, or filing with any Tribunal or Person pursuant to
any organizational document, bylaws, award of any arbitrator, or any agreement,
instrument, or Law to which the Borrower or any other GCI Entity, or any of
their Properties is subject.
5.04 Financial Statements. The audited financial statements of GCI and
its Subsidiaries dated December 31, 1996 and delivered to Administrative Agent,
fairly present its financial position and the results of operations as of the
dates and for the periods shown, all in accordance with GAAP. Such financial
statements reflect all material liabilities, direct and contingent, of GCI and
its Subsidiaries that are required to be disclosed in accordance with GAAP. As
of the date of such financial statements, there were no Contingent Liabilities,
liabilities for Taxes, forward or long-term commitments, or unrealized or
anticipated losses from any unfavorable commitments that are substantial in
amount and that are not reflected on such financial statements or otherwise
disclosed in writing to Administrative Agent. Since December 31, 1996, there has
been no Material Adverse Change. The Borrower and each other GCI Entity is
Solvent. The projections of the Borrower dated May 20, 1997 delivered to
Administrative Agent were prepared in good faith and management believes them to
be based on reasonable assumptions (each of which are stated in such statement)
and to provide reasonable estimations of future performance as of the dates and
for the periods shown for the Parents, the Borrower
0100.0269\91958 54
<PAGE>
and their Subsidiaries, subject to the uncertainty and approximation inherent in
any projections. The Borrower's fiscal year ends on December 31.
5.05 Litigation. Shown on Schedule 5.05 is all Litigation that is
pending and, to the Borrower's best knowledge, threatened against the Borrower
or any other GCI Entity, any of their Properties or assets on the date hereof.
There is no pending or, to the Borrower's best knowledge, threatened Litigation
against the Borrower, any other GCI Entity, any of their Properties that could
cause a Material Adverse Change.
5.06 Compliance With Laws Regulating the Incurrence of Debt. No
proceeds of any Advance will be used directly or indirectly to acquire any
security in any transaction which is subject to Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended. The Borrower is not, nor is any
other GCI Entity, engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U issued
by the Board of Governors of the Federal Reserve System), and no proceeds of any
Advance will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock. Following
the Borrower's intended use of the proceeds of each Advance, not more than 25%
of the value of the assets of the Borrower will be "margin stock" within the
meaning of Regulation U. The Borrower is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940, the Interstate Commerce Act (as any of the
preceding acts have been amended), or any other Law that the incurring of Debt
by the Borrower would violate in any material respect, including without
limitation Laws relating to common or contract carriers or the sale of
electricity, gas, steam, water, or other public utility services. None of the
Borrower and its Restricted Subsidiaries, nor any agent acting on their behalf,
have taken or will knowingly take any action which might cause this Agreement or
any Loan Papers to violate any regulation of the Board of Governors of the
Federal Reserve System or to violate the Securities Exchange Act of 1934, in
each case as in effect now or as the same may hereafter be in effect.
5.07 Licenses, Title to Properties, and Related Matters. Except as
listed on Schedule 5.07a hereto, the Borrower and each other GCI Entity possess
all material Authorizations necessary and appropriate to own, operate and
construct the Systems or otherwise for the operation of their businesses and are
not in violation thereof in any material respect. All such Authorizations are in
full force and effect, are listed on Schedule 5.07a hereto, and no event has
occurred that permits, or after notice or lapse of time could permit, the
revocation, termination or material and adverse modification of any such
Authorization, except those which in the aggregate could not reasonably be
expected to cause a Material Adverse Change. Schedule 5.07a shows the expiration
date and/or termination date for each Authorization (including, without
limitation, FCC Licenses) in effect on the Closing Date. The Borrower is not,
nor is any Subsidiary of the Borrower or the Parents, in violation of any
material duty or obligation required by the Communications Act of 1934, as
amended, or any FCC rule or regulation
0100.0269\91958 55
<PAGE>
applicable to the operation of any portion of any of the Systems. There is not
pending or, to the best knowledge of the Borrower, threatened, any action by the
FCC to revoke, cancel, suspend or refuse to renew any FCC License relating to
any System. There is not pending or, or to the best knowledge of the Borrower,
threatened, any action by the FCC to modify adversely, revoke, cancel, suspend
or refuse to renew any other Authorization relating to any System. There is not
issued or outstanding or, to the best knowledge of the Borrower, threatened, any
notice of any hearing, violation or material complaint against the Borrower, the
Parents or any of the Restricted Subsidiaries with respect to the operation of
any portion of the Systems and the Borrower has no knowledge that any Person
intends to contest renewal of any Authorization relating to any System. Each GCI
Entity has requisite corporate or partnership power (as applicable) and legal
right to own and operate its Property and to conduct its business. Each has good
and indefeasible title (fee or leasehold, as applicable) to its Property,
subject to no Lien of any kind, except Permitted Liens. All of the assets of the
Borrower and each other GCI Entity are located within the municipalities and
borough locations described on Schedule 5.07b. No GCI Entity is in violation of
its respective articles of organization or incorporation (as applicable) or
bylaws. None of the GCI Entities is in violation of any Law, or material
agreement or instrument binding on or affecting it or any of its Properties, the
effect of which could reasonably be expected to cause a Material Adverse Change.
No business or Properties of the Parents, the Borrower or any Restricted
Subsidiary is affected by any strike, lock-out or other labor dispute. No
business or Properties of the Parents, the Borrower or any Restricted Subsidiary
is affected by any drought, storm, earthquake, embargo, act of God or public
enemy, or other casualty, the effect of which could reasonably be expected to
cause a Material Adverse Change.
5.08 Outstanding Debt and Liens. The GCI Entities have no outstanding
Debt, Contingent Liabilities or Liens, except Permitted Liens, except as shown
on Schedule 5.08a hereto. No breach, default or event of default exists under
any document, instrument or agreement evidencing or otherwise relating to any
Funded Debt of any GCI Entity, which could reasonably be expected to cause a
Material Adverse Change.
5.09 Taxes. The Parents, the Borrower and each Subsidiary of the
Parents and the Borrower has filed all federal, state, and other Tax returns (or
extensions related thereto) which are required to be filed, and has paid all
Taxes as shown on said returns, as well as all other Taxes, to the extent due
and payable, except to the extent payment is contested in good faith and for
which adequate reserves have been established therefor in accordance with GAAP.
All Tax liabilities of the Parents, the Borrower and each Subsidiary of the
Parents and the Borrower are adequately provided for on its books, including
interest and penalties, and adequate reserves have been established therefor in
accordance with GAAP. No income Tax liability of a material nature has been
asserted by taxing authorities for Taxes in excess of those already paid, and no
taxing authority has notified the Parents, the Borrower or any Subsidiary of the
Parents or the Borrower of any deficiency in any Tax return.
0100.0269\91958 56
<PAGE>
5.10 ERISA. Each Plan of the Parents, the Borrower and each Subsidiary
of the Parents and the Borrower has satisfied the minimum funding standards
under all Laws applicable thereto, and no Plan has an accumulated funding
deficiency thereunder. The Borrower has not, and neither has the Parents, or any
Subsidiary of the Borrower or the Parents incurred any material liability to the
PBGC with respect to any Plan. No ERISA Event has occurred with respect to any
Plan for which an Insufficiency in excess of $100,000 exists on the date of such
occurrence. None of the Parents, the Borrower, or any Subsidiary of the Parents
or the Borrower has participated in any non-exempt Prohibited Transaction with
respect to any Plan or trust created thereunder. None of the Borrower, the
Parents or any Subsidiary of the Borrower and the Parents, nor any ERISA
Affiliate, has incurred any Withdrawal Liability to any Multiemployer Plan that
has not been satisfied. None of the Borrower, the Parents or any Subsidiary of
the Parents or the Borrower, nor any ERISA Affiliate has been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of ERISA.
5.11 Environmental Laws. The Borrower and each other GCI Entity has
obtained all material environmental, health and safety permits, licenses and
other material authorizations required under all Applicable Environmental Laws
to carry on its business as being conducted. On the Closing Date, there are no
environmental liabilities of the Borrower or any other GCI Entity (with respect
to any fee owned or leased Properties), except as disclosed and described in
detail on Schedule 5.11 hereto. Each of such permits, licenses and
authorizations is in full force and effect and the Borrower and each other GCI
Entity is in compliance with the terms and conditions thereof, and is also in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply with
any thereof could not reasonably be expected to cause a Material Adverse Change.
In addition, no written notice, notification, demand, request for information,
citation, summons or order has been issued, no written complaint has been filed,
no penalty has been assessed and no investigation or review is pending or, to
the best knowledge of the Borrower or any other GCI Entity, threatened, by any
Tribunal or other entity with respect to any alleged failure by the Borrower or
any other GCI Entity to have any environmental, health or safety permit, license
or other authorization required under any Applicable Environmental Law in
connection with the conduct of the business of the Borrower or any other GCI
Entity or with respect to any generation, treatment, storage, recycling,
transportation, discharge, disposal or release of any Hazardous Materials by the
Borrower or any other GCI Entity. To the best knowledge of the Borrower and each
other GCI Entity, there are no material environmental liabilities of the
Borrower or any other GCI Entity, except as previously disclosed in writing to
the Lenders. To the best knowledge of the Borrower and each other GCI Entity,
there are no environmental liabilities of the Borrower or any other GCI Entity
which could reasonably be expected to cause a Material Adverse Change. The
Borrower has delivered to the Administrative Agent copies of all environmental
studies and reports conducted
0100.0269\91958 57
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or received by the Borrower or any other GCI Entity in connection with real
Property. Such studies cover all real Property, if any, owned in fee by the
Borrower and each other GCI Entity. No Hazardous Materials are generated or
produced at or in connection with the Properties and operations of any of the
Borrower or any of the other GCI Entities, nor have any Hazardous Materials been
disposed of or otherwise released on or to any Property on which any operations
of the Borrower or any other GCI Entities are conducted, except in compliance
with Applicable Environmental Laws.
5.12 Disclosure. Neither the Borrower nor any other GCI Entity has made
a material misstatement of fact, or failed to disclose any material fact
necessary to make the facts disclosed not misleading, in light of the
circumstances under which they were made, to Administrative Agent or any Lender
during the course of application for and negotiation of any Loan Papers or
otherwise in connection with any Advances. There is no fact known to the
Borrower or any other GCI Entity that materially adversely affects any of the
Borrower's or any of the other GCI Entity's Properties or business, or that
could constitute a Material Adverse Change, and that has not been set forth in
the Loan Papers or in other documents furnished to Administrative Agent or any
Lender.
5.13 Investments; Restricted Subsidiaries. The GCI Entities have no
Investments except as described on Schedule 5.13 hereto and as permitted by
Section 7.10 hereof. Schedule 5.13 is a complete and accurate listing of each
GCI Entity, showing (a) its complete name, (b) its jurisdiction of organization,
(c) its capital structure, (d) its street and mailing address, which is its
principal place of business and executive office and (e) all interests in such
GCI Entity.
5.14 Certain Fees. No broker's, finder's, management fee or other fee
or commission will be payable by the Borrower with respect to the making of the
Revolving Commitment, or Advances hereunder (other than to Administrative Agent,
NationsBanc Montgomery Securities, Inc., Credit Lyonnais and TD hereunder),
except as set forth in Schedule 5.14 hereof. The Borrower and each other GCI
Entity hereby agrees to indemnify and hold harmless Administrative Agent and
each Lender from and against any claims, demand, liability, proceedings, costs
or expenses asserted with respect to or arising in connection with any such fees
or commissions.
5.15 Intellectual Property. The Borrower and each other GCI Entity has
obtained all patents, trademarks, service-marks, trade names, copyrights,
licenses and other rights, free from material restrictions, which are necessary
for the operation of their respective businesses as presently conducted and as
proposed to be conducted. Nothing has come to the attention of the Borrower or
any other GCI Entity to the effect that (a) any process, method, part or other
material presently contemplated to be employed by the Borrower or any other GCI
Entity may or could reasonably be alleged to infringe any patent, trademark,
service-mark, trade name, license or other right (except copyright) owned by any
other Person, or (b) except as shown on Schedule 5.05 attached hereto, there is
pending or threatened any claim or litigation against or
0100.0269\91958 58
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affecting the Borrower or any other GCI Entity contesting its right to sell or
use any such process, method, part or other material. Nothing has come to the
attention of the Borrower or any other GCI Entity to the effect that any
material presently contemplated to be employed by the Borrower or any other GCI
Entity may or could reasonably be alleged to infringe any copyright owned by any
other Person, except to the extent that any such infringement, when aggregated
with all other copyright infringements, could not reasonably be expected to
cause a Material Adverse Change.
5.16 Due Authorization; Validity of the AUSP Financing Agreements and
the Project Agreements. On or before the AUSP Closing Date, the general partner
of AUSP and each other Affiliate of AUSP which is party to the AUSP Financing
Agreements or the Project Agreements will have duly authorized the execution,
delivery, and performance of the AUSP Financing Agreements and the Project
Agreements to be executed by AUSP or each such Affiliate, as appropriate. On or
before the AUSP Closing Date, each of AUSP and its Affiliates will have full
legal right, power, and authority to execute, deliver, and perform under the
Project Agreements and the AUSP Financing Agreements to be executed and
delivered by it. Each of the AUSP Financing Agreements and the Project
Agreements, upon execution thereof on the AUSP Closing Date, will constitute the
legal, valid, and binding obligations of AUSP and its Affiliates, as
appropriate, enforceable in accordance with their terms (subject as to
enforcement of remedies to any applicable Debtor Relief Laws). Each AUSP
Financing Agreement and each Project Agreement to be delivered to the
Administrative Agent on the AUSP Closing Date will be a true and complete copy
of such agreement as executed by AUSP and its Affiliates.
5.17. Conflicting Agreements and Other Matters with the AUSP Financing
Agreements and Project Agreement. The execution or delivery of any AUSP
Financing Agreements and the Project Agreements and performance thereunder, upon
the execution thereof on the AUSP Closing Date will not conflict with, or result
in a breach of the terms, conditions, or provisions of, or constitute a default
under, or result in any violation of, or result in the creation of any Lien
(other than in favor of Administrative Agent) upon any Properties of the
Borrower or any other GCI Entity, under, or require any consent (other than
consents described on Schedule 5.03 hereto and those consents obtained on or
before the AUSP Closing Date), approval, or other action by, notice to, or
filing with any Tribunal or Person pursuant to, any organizational document,
bylaws, award of any arbitrator, or any agreement, instrument, or Law to which
the Borrower or any other GCI Entity, or any of their Properties is subject.
5.18 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement shall be deemed to be
made at and as of the Closing Date and at and as of the date of each Advance,
except for Refinancing Advances, and each shall be true and correct when made,
except to the extent (a) previously fulfilled in accordance with the terms
hereof, (b) subsequently inapplicable, or (c) previously waived in writing by
Administrative Agent and Lenders with respect to any particular factual
circumstance. The representations and warranties made under this Agreement shall
be deemed applicable to each
0100.0269\91958 59
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Restricted Subsidiary as of the formation or acquisition of such Restricted
Subsidiary and at and as of each date the representations and warranties are
remade pursuant to this provision. All representations and warranties made under
this Agreement shall survive, and not be waived by, the execution hereof by the
Administrative Agent and Lenders, any investigation or inquiry by the
Administrative Agent or any Lender, or by the making of any Advance under this
Agreement.
ARTICLE VI. AFFIRMATIVE COVENANTS
So long as the Revolving Commitment, any Advance, any Letter of Credit
or any portion of the Obligations is outstanding, or the Borrower or any other
GCI Entity owes any other amount hereunder or under any other Loan Paper:
6.01 Compliance with Laws and Payment of Debt. The Borrower shall, and
shall cause each of the Parents and all Subsidiaries of the Borrower and the
Parents to, comply with all Applicable Laws, including without limitation
compliance with ERISA and all applicable federal and state securities Laws. The
Borrower shall, and shall cause each other GCI Entity and Affiliates to, pay its
(a) Funded Debt as and when due (or within any applicable grace period), unless
payment thereof is being contested in good faith by appropriate proceedings and
adequate reserves have been established therefor, and (b) trade debt in
accordance with its past practices, and in any event, before any trade creditor
takes any action or terminates any relationship, except those disputes
diligently contested in good faith by the Borrower and/or such GCI Entity or
Affiliate, and for which appropriate reserves have been established in
accordance with GAAP.
6.02 Insurance. The Borrower shall, (a) and shall cause each of the
Restricted Subsidiaries to, keep its offices and other insurable Properties
adequately insured at all times by reputable insurers to such extent and against
such risks, including fire and other risks insured against by extended coverage,
as what is customary with companies similarly situated and in the same or
similar businesses, (b) and shall cause each other GCI Entity to, maintain in
full force and effect public liability (including liability insurance for all
vehicles and other insurable Property) and worker's compensation insurance, in
amounts customary for such similar companies to cover normal risks, by insurers
satisfactory to the Administrative Agent, (c) and shall cause each Restricted
Subsidiary to, maintain business interruption insurance for each System in
amounts satisfactory to the Lenders, (d) and shall cause each other GCI Entity
to, maintain other insurance as may be required by Law or reasonably requested
by the Administrative Agent, provided that such insurance policies will show the
Administrative Agent, on behalf of the Lenders, as additional insured or loss
payee, as appropriate. The Borrower shall deliver evidence of renewal of each
insurance policy on or before the date of its expiration, and from time to time
shall deliver to the Administrative Agent, upon demand, evidence of the
maintenance of such insurance.
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6.03 Inspection Rights. The Borrower shall, and shall cause each other
GCI Entity to, permit the Administrative Agent or any Lender, upon one days
notice or such lesser notice as is reasonable under the circumstances, to
examine and make copies of and abstracts from their records and books of
account, to visit and inspect their Properties and to discuss their affairs,
finances, and accounts with any of their directors, officers, employees,
accountants, attorneys and other representatives, all as the Administrative
Agent or any Lender may reasonably request.
6.04 Records and Books of Account; Changes in GAAP. The Borrower shall,
and shall cause the Parents and each Subsidiary of the Parents and the Borrower
to, keep adequate records and books of account in conformity with GAAP. The
Borrower shall not, nor shall the Borrower permit the Parents or any Restricted
Subsidiary of the Borrower or the Parents to change its fiscal year, nor change
its method of financial accounting except in accordance with GAAP. In connection
with any such change after the date hereof, the Borrower and Lenders shall
negotiate in good faith to make appropriate alterations to the covenants set
forth in Section 7.01 hereof, reflecting such change.
6.05 Reporting Requirements. The Borrower shall furnish to each Lender
and the Administrative Agent:
(a) As soon as available and in any event within 60 days after the end
of the Borrower's fiscal quarters, (i) consolidated balance sheets of GCI and
consolidating balance sheets of the Borrower and its Subsidiaries, as of the end
of such quarter, and consolidated statements of income and statements of cash
flows of GCI, and consolidating statements of income and statements of cash
flows of the Borrower and its Subsidiaries, for the portion of the fiscal year
ending with such quarter, setting forth, in comparative form, figures for the
corresponding periods in the previous fiscal year, all in reasonable detail, and
certified by an Authorized Officer as prepared in accordance with GAAP, and
fairly presenting the financial position and results of operations of GCI, the
Borrower and their Subsidiaries, (ii) for the Borrower and its Restricted
Subsidiaries, comparisons and reconciliations of actual results to the budget
delivered pursuant to Section 6.05(e) below for the fiscal quarter most recently
ended, in reasonable detail and satisfactory to the Administrative Agent, and
(iii) for the Parents, the Borrower and the Restricted Subsidiaries, all
information set forth in (i) and (ii) above in a separate presentation;
(b) As soon as available and in any event within 120 days after the end
of each fiscal year, (i) consolidated balance sheets of GCI, and consolidating
balance sheets of the Borrower and its Subsidiaries, as of the end of such
fiscal year, and consolidated statements of income and cash flows of GCI, and
consolidating statements of income and cash flows of the Borrower and its
Subsidiaries, for such fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an unqualified opinion of the Auditor,
which opinion shall state that such financial statements were prepared in
accordance with GAAP, that the examination by the Auditor in connection with
such financial statements was made in accordance with generally
0100.0269\91958 61
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accepted auditing standards, and that such financial statements present fairly
the financial position and results of operations of GCI, the Borrower and their
Subsidiaries, and each other GCI Entity, and (ii) for GCI, the Borrower and the
Restricted Subsidiaries, all information set forth in (i) above in a separate
presentation;
(c) Promptly upon receipt thereof, (i) copies of all material reports
or letters submitted to the Borrower, the Parents or any Subsidiary of the
Borrower or the Parents by the Auditor or any other accountants in connection
with any annual, interim, or special audit, including without limitation the
comment letter submitted to management in connection with any such audit, (ii)
each financial statement, report, notice or proxy statement sent by GCI, GCII,
the Borrower or any Restricted Subsidiary in writing to stockholders generally,
(iii) each regular or periodic report and any registration statement or
prospectus (or material written communication in respect of any thereof) filed
by the Parents, the Borrower or any Restricted Subsidiary with any securities
exchange, with the Securities and Exchange Commission or any successor agency,
and (iv) all press releases concerning material financial aspects of the
Parents, the Borrower or any Restricted Subsidiary;
(d) Together with each set of financial statements delivered pursuant
to subsections (a) and (b) above, a Compliance Certificate executed by an
Authorized Officer, which such Compliance Certificate must (i) certify that
there has occurred no Default or Event of Default, (ii) compute the Applicable
Margin, and (iii) set forth the detailed calculations with respect to the
financial covenants required by Section 7.01 hereof;
(e) As soon as available and in any event not later than 30 days after
the beginning of each fiscal year of the Borrower, the annual operating and
Capital Expenditure budgets of the Borrower and the Restricted Subsidiaries for
such fiscal year;
(f) (i) Promptly upon knowledge by the Borrower or any other GCI Entity
of the occurrence of any Default or Event of Default, a notice from an
Authorized Officer, setting forth the details of such Default or Event of
Default, and the action being taken or proposed to be taken with respect
thereto; (ii) promptly upon knowledge by the Borrower or any other GCI Entity of
the occurrence of any breach, default or event of default under any Project
Agreement or any AUSP Financing Agreement, a notice from an Authorized Officer,
setting forth the details of such breach, default or event of default, and the
action being taken or proposed to be taken with respect thereto; and (iii)
promptly upon knowledge by the Borrower or any other GCI Entity of the
occurrence of any material adverse change regarding the financial condition,
business, operations or prospects of AUSP or GCI Transport Co., Inc., a notice
from an Authorized Officer, setting forth the details of such material adverse
change and the action being taken or proposed to be taken with respect thereto;
(g) As soon as possible and in any event within five Business Days
after knowledge thereof by the Borrower or any other GCI Entity, notice of any
Litigation pending or threatened
0100.0269\91958 62
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against the Borrower or any other GCI Entity which, if determined adversely,
could reasonably be expected to result in a judgment, penalties, or damages in
excess of $1,000,000 together with a statement of an Authorized Officer
describing the allegations of such Litigation, and the action being taken or
proposed to be taken with respect thereto;
(h) Promptly following notice or knowledge thereof by the Borrower or
any other GCI Entity, notice of any actual or threatened loss or termination of
any material Authorization of the Borrower or any other GCI Entity or any
Unrestricted Subsidiary, together with a statement of an Authorized Officer
describing the circumstances surrounding the same, and the action being taken or
proposed to be taken with respect thereto;
(i) Promptly after filing or receipt thereof, copies of all reports and
notices that the Borrower or any other GCI Entity or Unrestricted Subsidiary (i)
files or receives in respect of any Plan with or from the Internal Revenue
Service, the PBGC, or the United States Department of Labor, or (ii) furnishes
to or receives from any holders of any Debt or Contingent Liability, if in
either case, any information or dispute referred to therein either causes a
Default or Event of Default, or could reasonably be expected to cause or result
in a Default or an Event of Default;
(j) Within 30 days after renewal or issuance of any hazard, public
liability, business interruption, or other insurance policy maintained by the
Borrower or any other GCI Entity, a copy of the binder or insurance certificate
(showing Administrative Agent, on behalf of the Borrower or such GCI Entity, as
loss payee or additional insured, as appropriate);
(k) As soon as possible and in any event within 10 days after the
Borrower or any other GCI Entity knows that any Reportable Event has occurred
with respect to any Plan, a statement, signed by an Authorized Officer,
describing said Reportable Event and the action which the such Person proposes
to take with respect thereto;
(l) As soon as possible, and in any event within 10 days after receipt
by the Borrower or any other GCI Entity, a copy of (a) any notice or claim to
the effect that the Borrower or any other GCI Entity is or may be liable to any
Person as a result of the release by the Borrower, any other GCI Entity or any
other Person of any toxic or hazardous waste or substance into the environment,
and (b) any notice alleging any violation of any federal, state or local
environmental, health or safety law or regulation by the Borrower or any other
GCI Entity, which could reasonably be expected to, in either case, cause a
Material Adverse Change;
(m) Promptly upon the filing thereof, copies of all material
registration statements and all annual, quarterly, monthly or other regular
reports which the Parents, the Borrower or any Subsidiary of the Parents or the
Borrower or any other GCI Entity or Unrestricted Subsidiary files with the FCC
or the Securities and Exchange Commission;
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(n) Promptly upon the sending or receiving thereof by any GCI Entity,
AUSP, GCI Transport Co., Inc., GCI Fiber Co., Inc. or Fiber Hold Co., Inc.,
copies of all material notices, and other material information required by, or
sent in connection with, any Project Agreement or any AUSP Financing Agreement,
including, without limitation, notices of defaults or events of default,
waivers, consents, amendments or other modifications to any of the Project
Agreements or AUSP Financing Agreements, as well as requests therefor;
(o) Copies of all financial information provided to the lenders by AUSP
in accordance with the terms of the Project Agreements and the AUSP Financing
Agreements; and
(p) Promptly upon request, such other information concerning the
condition or operations of the Borrower, any other GCI Entity, Unrestricted
Subsidiary and any of their Affiliates, financial or otherwise, as the
Administrative Agent or any Lender may from time to time reasonably request.
6.06 Use of Proceeds. The proceeds of the Advances shall be available
(and the Borrower shall use such proceeds) to (a) refinance existing Funded Debt
of the Borrower and its Restricted Subsidiaries, (b) fund Capital Expenditures
of the Borrower and the Restricted Subsidiaries permitted by the terms of this
Agreement, (c) contribute $50,000,000 to the capitalization of AUSP, and (d) use
for general working capital purposes.
6.07 Maintenance of Existence and Assets. Except as provided by Section
7.07 of this Agreement, the Borrower shall maintain, and shall cause each other
GCI Entity to maintain, its corporate existence, authority to do business in the
jurisdictions in which it is necessary for the Borrower or such GCI Entity to do
so, and all Authorizations necessary for the operation of any of their
businesses. The Borrower shall maintain, and shall cause each other GCI Entity
to maintain, the assets necessary for use in their respective businesses in good
repair, working order and condition, and make all such repairs, renewals and
replacements thereof as may be reasonably required.
6.08 Payment of Taxes. The Borrower will and will cause the Parents and
all Subsidiaries of the Parents and the Borrower to, promptly pay and discharge
all lawful Taxes imposed upon it or upon its income or profit or upon any
Property belonging to it, unless such Tax shall not at the time be due and
payable, or if the validity thereof shall currently be contested on a timely
basis in good faith by appropriate proceedings (provided that the enforcement of
any Liens arising out of any such nonpayment shall be stayed or bonded during
the proceedings) and adequate reserves with respect to such Tax shall have been
established in accordance with GAAP.
0100.0269\91958 64
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6.09 Indemnity.
(a) The Borrower agrees to defend, protect, indemnify and hold harmless
the Administrative Agent and each Lender, each of their respective Affiliates,
and each of their respective (including such Affiliates') officers, directors,
employees, agents, attorneys, shareholders and consultants (including, without
limitation, those retained in connection with the satisfaction or attempted
satisfaction of any of the conditions set forth herein) of each of the foregoing
(collectively, "Indemnitees") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitees shall be designated a party thereto
or such proceeding shall have actually been instituted), imposed on, incurred
by, or asserted against such Indemnitees (whether direct, indirect or
consequential and whether based on any federal, state, or local laws and
regulations, under common law or at equitable cause, or on contract, tort or
otherwise), arising from or connected with the past, present or future
operations of the Parents, the Borrower, any Subsidiary of the Borrower or the
Parents, any other GCI Entity, any Affiliate or any predecessors in interest, or
the past, present or future environmental condition of property of the Parents,
the Borrower, any Subsidiary of the Borrower or Parents, any other GCI Entity,
any Affiliate or any predecessors in interest, in each case relating to or
arising out of this Agreement, the Loan Papers, any Project Agreement, any AUSP
Financing Agreement, anything relating to the AUSP Financing or any act, event
or transaction or alleged act, event or transaction relating or attendant
thereto and the management of the Advances by the Administrative Agent,
including in connection with, or as a result, in whole or in part, of any
negligence of Administrative Agent or any Lender (other than those matters
involving a claim by a participant purchaser against any Lender and not the
Borrower), or the use or intended use of the proceeds of the Advances hereunder,
or in connection with any investigation of any potential matter covered hereby,
but excluding any claim or liability that arises as the result of the gross
negligence or willful misconduct of any Indemnitee, as finally judicially
determined by a court of competent jurisdiction (collectively, "Indemnified
Matters").
(b) In addition, the Borrower shall periodically, upon request,
reimburse each Indemnitee for its reasonable legal and other actual reasonable
expenses (including the cost of any investigation and preparation) incurred in
connection with any Indemnified Matter. If for any reason the foregoing
indemnification is unavailable to any Indemnitee or insufficient to hold any
Indemnitee harmless with respect to Indemnified Matters, then the Borrower shall
contribute to the amount paid or payable by such Indemnitee as a result of such
loss, claim, damage or liability in such proportion as is appropriate to reflect
not only the relative benefits received by the Borrower and the holders of the
Capital Stock of the Borrower on the one hand and such Indemnitee on the other
hand but also the relative fault
0100.0269\91958 65
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of the Borrower and such Indemnitee, as well as any other relevant equitable
considerations. The reimbursement, indemnity and contribution obligations under
this Section shall be in addition to any liability which the Borrower may
otherwise have, shall extend upon the same terms and conditions to each
Indemnitee, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Borrower, the
Administrative Agent, the Lenders and all other Indemnitees. The obligations of
the Borrower under this Section 6.09 shall survive (i) the execution of this
Agreement and (ii) any termination of this Agreement and payment of the
Obligations.
6.10 Interest Rate Hedging. By no later than 60 days after the Closing
Date, the Borrower or GCII will enter into an Interest Hedge Agreement on terms
acceptable to the Administrative Agent providing for interest rate protection
for not less than three years for 50% of Total Debt on such date. If Borrower
enters into an interest rate cap agreement, the interest rate related thereto
shall not exceed 2% per annum in excess of the then current treasury rate for
the applicable hedge period.
6.11 Management Fees Paid and Earned. The Borrower agrees that no
Management Fees will be paid by the Borrower, or any Restricted Subsidiary to
any Person at any time, except in accordance with the terms of the Prime
Management Agreement.
6.12 Authorizations and Material Agreements. The Borrower shall, and
shall cause the Parents and the Restricted Subsidiaries to, obtain and comply in
all material respects with all FCC Licenses relating to any System. The Borrower
shall, and shall cause the Parents and the Restricted Subsidiaries to, obtain
and comply in all material respects with all Authorizations relating to the
Systems, except to the extent failure to do so could not reasonably be expected
to cause or result in a Material Adverse Change. The Borrower shall, and shall
cause all other GCI Entities to, maintain and comply in all material respects
with all agreements necessary or appropriate for any of them to own, maintain,
or operate any of their businesses or Properties.
6.13 Further Assurances. The Borrower shall, and shall cause each other
GCI Entity to, make, execute or endorse, and acknowledge and deliver or file or
cause the same to be done, all such vouchers, invoices, notices, certifications
and additional agreements, undertakings, conveyances, deeds of trust, mortgages,
security agreements, transfers, assignments, financing statements or other
assurances, and take any and all such other action, as Administrative Agent may,
from time to time, deem reasonably necessary or proper in connection with any
GCI Entity's obligations under any of the Loan Papers and the obligations of the
Borrower thereunder, or for better assuring and confirming unto Administrative
Agent all or any part of the security for any of the Obligations.
6.14 AUSP Financing. No later than the AUSP Closing Date, the Borrower
shall have delivered to the Administrative Agent in form and substance
satisfactory to it (a) a certificate (in the form attached hereto as Exhibit H)
dated the AUSP Closing Date certifying as to the fact
0100.0269\91958 66
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that attached thereto is a copy of each AUSP Financing Agreement and each
Project Agreement and stating that each AUSP Financing Agreement and Project
Agreement attached thereto represents the true, accurate and complete agreement
as in effect on the AUSP Closing Date, and as to the true, accurate and complete
resolutions authorizing the incurrence and performance of the Project
Agreements, and (b) an opinion of counsel to AUSP regarding the Intercompany
Notes. In addition, no later than the AUSP Closing Date, (a) the AUSP Financing
shall have been consummated on terms and conditions satisfactory to the
Administrative Agent, (b) the AUSP Financing Agreements and Project Agreements
shall be in form and substance acceptable to the Administrative Agent, and (c)
the undersea fiber survey owned by the Borrower shall have been sold to AUSP for
fair value (not less than $1,000,000).
6.15 Subsidiaries and Other Obligors. The Borrower shall cause each of
the Restricted Subsidiaries, other GCI Entities and Affiliates (as to
Affiliates, with respect solely to those covenants set forth in Sections 6.01,
6.05, and 6.08 hereof) to comply with each provision of this Article VI.
6.16 CoBank Participation Certificates. The Borrower shall, at all
times during which CoBank, ACB ("CoBank") is a Lender hereunder, acquire and
maintain non-voting participation certificates in CoBank (the "Participation
Certificates") in such amounts and at such times as CoBank may from time to time
require in accordance with its bylaws and capital plan (as each may be amended
from time to time); provided, however, that the maximum amount of Participation
Certificates that the Borrower may be required to purchase may not exceed the
lesser of the maximum amount permitted by CoBank's bylaws as in effect on the
date hereof or $1,000.00, which amount, if not previously purchased, shall be
purchased on or before the date hereof. The rights and obligations of the
parties with respect to the Participation Certificates and any other patronage
or other distributions shall be governed by CoBank's bylaws.
ARTICLE VII. NEGATIVE COVENANTS
So long as the Revolving Commitment, any Advance, any Letter of Credit
or any portion of the Obligations is outstanding, or the Borrower or any other
GCI Entity owes any other amount hereunder or under any other Loan Paper:
7.01 Financial Covenants. The Borrower and the Restricted Subsidiaries
shall comply with the following covenants:
<TABLE>
(a) Total Leverage Ratio. At all times during the term hereof, the
Total Leverage Ratio shall not be greater during the following time periods than
the ratio set forth opposite such time periods:
0100.0269\91958 67
<PAGE>
<CAPTION>
Time Period Maximum Ratio
----------- -------------
<S> <C>
From the Closing Date through March 31, 1998 7.00 to 1.00
April 1, 1998 through March 31, 1999 6.50 to 1.00
April 1, 1999 through December 31, 1999 6.00 to 1.00
January 1, 2000 and thereafter 5.50 to 1.00
</TABLE>
<TABLE>
(b) Senior Leverage Ratio. At all times during the term hereof, the Senior Leverage Ratio shall
not be greater during the following time periods than the ratio set forth opposite such time periods:
<CAPTION>
Time Period Maximum Ratio
----------- -------------
<S> <C>
From the Closing Date through March 31, 1999 3.50 to 1.00
April 1, 1999 through December 31, 1999 3.00 to 1.00
January 1, 2000 through December 31, 2000 2.50 to 1.00
January 1, 2001 and thereafter 2.00 to 1.00
</TABLE>
<TABLE>
(c) Interest Coverage Ratio. At all times during the term hereof, the Interest Coverage Ratio
shall not be less during the following time periods than the ratio set forth opposite such time periods:
<CAPTION>
Time Period Maximum Ratio
----------- -------------
<S> <C>
From the Closing Date through December 31, 1998 1.50 to 1.00
January 1, 1999 and thereafter 2.00 to 1.00
</TABLE>
<TABLE>
(d) Pro Forma Debt Service Coverage Ratio. At all times during the term
hereof, the Pro Forma Debt Service Coverage Ratio shall not be less during the
following time periods than the ratio set forth opposite such time periods:
<CAPTION>
Time Period Maximum Ratio
----------- -------------
<S> <C>
From the Closing Date and thereafter 1.25 to 1.00
</TABLE>
<TABLE>
(e) Fixed Charges Coverage Ratio. Commencing January 1, 2000, and at
all times thereafter during the term hereof, the Fixed Charges Coverage Ratio
shall not be less during the following time periods than the ratio set forth
opposite such time periods:
<CAPTION>
Time Period Maximum Ratio
----------- -------------
<S> <C>
From January 1, 2000 through March 31, 2003 1.00 to 1.00
0100.0269\91958 68
<PAGE>
April 1, 2003 and thereafter 1.05 to 1.00
</TABLE>
<TABLE>
(f) Capital Expenditures. Capital Expenditures paid or incurred by the
Borrower and the Restricted Subsidiaries shall not exceed, in the aggregate, the
following amounts during the following years, provided that, any unused portion
for any such year may be used during the following fiscal year only (but not
thereafter):
<CAPTION>
Fiscal Year Maximum Amount
----------- --------------
<S> <C>
Partial year - Closing Date through 1997 $55,000,000
1998 $90,000,000
1999 $65,000,000
2000 and thereafter N/A
</TABLE>
7.02 Debt. The Borrower shall not, and shall not permit any of the
other GCI Entities to, create, incur, assume, become or be liable in any manner
in respect of, or suffer to exist, any Debt, except (a) Debt under the Loan
Papers and the Revolver/Term Credit Agreement, (b) Debt under the Senior Notes
and other Debt in existence on the date hereof as shown on Schedule 5.08a
hereto, and renewals, extensions (but not increases), and refinancings thereof
on terms substantially similar thereto and on terms no more restrictive, (c)
trade payables incurred and paid in the ordinary course of business, (d) Debt
permitted to be incurred as Contingent Liabilities pursuant to Section 7.03
hereof, (e) Debt between the Borrower and its Restricted Subsidiaries, (f) so
long as there exists no Default or Event of Default in existence at the time
incurred and none is caused thereby, (i) $5,000,000 in Debt constituting Capital
Leases outstanding in the aggregate at any one time, and (ii) unsecured
subordinated Debt of the Borrower on terms and conditions acceptable to the
Administrative Agent and each Lender, subordinated to the Facility pursuant to
the subordination language set forth on Schedule 7.02 hereto, and (g) Debt under
the Project Agreements.
7.03 Contingent Liabilities. The Borrower shall not, and shall not
permit any of the other GCI Entities to, create, incur, assume, become or be
liable in any manner in respect of, or suffer to exist, any Contingent
Liabilities, except (a) Contingent Liabilities under or relating to the Loan
Papers and the Revolver/Term Credit Agreement, (b) Contingent Liabilities in
existence on the Closing Date, as shown on Schedule 5.08a hereto, (c) Contingent
Liabilities resulting from the endorsement of negotiable instruments for
collection in the ordinary course of business, (d) obligations under the
Completion Guaranty, Keepwell Agreement, and Lease Guaranty, and (e) utility
bonds and other similar bonds entered into in the ordinary course of business.
7.04 Liens. The Borrower shall not, and shall not permit any of the
other GCI Entities to, create or suffer to exist any Lien upon any of its
Properties, except Permitted Liens and Liens securing Debt permitted under
Section 7.02(f)(i) hereof. It is specifically acknowledged
0100.0269\91958 69
<PAGE>
and agreed that the Borrower shall not, and shall not permit any of the other
GCI Entities to, hereafter agree with any Person (other than Administrative
Agent) not to grant a Lien on any of its assets, except as specifically provided
in the Indenture on the Closing Date.
7.05 Dispositions of Assets. The Borrower shall not, and shall not
permit any of the other GCI Entities to, sell, lease, assign, or otherwise
dispose of any assets of the Borrower or any Restricted Subsidiary, or otherwise
consummate any Asset Sale, except (a) Permitted Dispositions and sales or
dispositions of assets in the ordinary course of business, including
dispositions of obsolete or useless assets, and (b) so long as there exists no
Default or Event of Default both before and after giving effect to such
disposition, Asset Sales in an aggregate amount over the term of this Agreement
not to exceed $10,000,000 (or $20,000,000 if before and immediately after giving
effect to any Asset Sale, the Total Leverage Ratio is equal to or less than 4.50
to 1.00), so long as any amounts received by the Borrower and the Restricted
Subsidiaries in the aggregate over $10,000,000 in any fiscal year of the
Borrower and its Restricted Subsidiaries (or $20,000,000 if before and
immediately after giving effect to any Asset Sale, the Total Leverage Ratio is
equal to or less than 4.50 to 1.00) are immediately used to reduce the Revolving
Commitment and the Revolver/Term Commitment, in accordance with Section 2.04
hereof, and repay the outstanding Obligations in accordance with the terms of
Section 2.05 hereof, as applicable.
7.06 Distributions and Restricted Payments. The Borrower shall not, and
shall not permit the Parents or any Restricted Subsidiary to, make any
Restricted Payments, other than any Restricted Payment in the form of a
Distribution made by any Restricted Subsidiary to any other Restricted
Subsidiary or to the Borrower, and other than (a) so long as (i) there exists no
Default or Event of Default both before and after giving effect to any such
Restricted Payment, (ii) the Total Leverage Ratio is less than 5.00 to 1.00 both
before and after giving effect to any such Restricted Payment and (iii) the date
of such Restricted Payment is after September 30, 2000, Restricted Payments made
exclusively out of Excess Cash Flow up to a maximum amount of the difference
between $15,000,000 in the aggregate over the term of this Agreement, minus the
aggregate amount of Investments made in accordance with the terms of Section
7.10(e) hereof over the term of this Agreement, (b) so long as there exists no
Default or Event of Default both before and after giving effect to any such
Restricted Payment, the Borrower may make Restricted Payments in the form of
Distributions to GCII in an amount not in excess of cash income Taxes
attributable to income from the Borrower and its Restricted Subsidiaries (and
GCII may make Restricted Payments in such amounts in the form of Distributions
to GCI), and scheduled cash interest payments required to be paid by GCII under
the Senior Notes, and GCII may make Restricted Payments in the form of (and not
in excess of) scheduled cash interest payments required to be paid by GCII under
the Senior Notes, provided that, the Lenders agree that in no event shall the
opening phrase of this subsection (b) prohibit the payment of any such
Distribution by the Borrower or payment of interest by GCII on the Senior Notes
for more than 180 consecutive days in any consecutive 360-day period, unless
there exists an Event of Default under Section 8.01(a) hereof (whether by
acceleration or otherwise), (c) so long as there exists
0100.0269\91958 70
<PAGE>
no Default or Event of Default both before and after giving effect to the
payment thereof, payment of Management Fees and amounts due under the
Transponder Purchase Agreement for Galaxy X referred to in Section 7.18 hereof,
and (d) so long as there exists no Default or Event of Default both before and
after giving effect to any such Restricted Payment, the Borrower or any other
GCI Entity (i) may make Restricted Payments on Funded Debt incurred in
accordance with the terms of Sections 7.02(b)(but with respect to the Senior
Notes, only payments of cash interest which accrues thereon), 7.02(d),
7.02(f)(i), and 7.02(g) hereof, and (ii) may make payments of income Taxes.
7.07 Merger; Consolidation. The Borrower shall not, and shall not
permit any of the other GCI Entities to, merge into or consolidate with any
Person except any Wholly-Owned Subsidiary other than the Borrower may merge or
consolidate with another Wholly-Owned Subsidiary, provided that the Borrower or
the Wholly-Owned Subsidiary is the surviving entity, as the case may be.
7.08 Business. The Borrower shall not, and shall not permit any of the
other GCI Entities to, change the nature of its business as now conducted. The
Borrower shall not conduct any business except the ownership and operation of
its Systems.
7.09 Transactions with Affiliates. The Borrower shall not, and shall
not permit any of the other GCI Entities to, enter into or be party to a
transaction with any Affiliate, except on terms no less favorable than could be
obtained on an arm's-length basis with a Person that is not an Affiliate.
Notwithstanding the foregoing limitation, the Borrower and the other GCI
Entities may enter into or suffer to exist the following: (i) any transaction
pursuant to any contract in existence on the Closing Date on the terms of such
contract as in effect on the Closing Date; (ii) any transaction or series of
transactions between the Borrower and one or more of its Restricted Subsidiaries
or between two or more of its Restricted Subsidiaries; (iii) any Restricted
Payment permitted to be made pursuant to Section 7.06; (iv) the payment of
compensation by Parents, the Borrower or any of its Restricted Subsidiaries
(including, amounts paid pursuant to employee benefit plans) in the ordinary
course of business for the personal services of officers, directors and
employees of Parents, the Borrower or any of its Restricted Subsidiaries, so
long as the Board of Directors of Parents and the Borrower in good faith shall
have approved the terms thereof and deemed the services theretofore or
thereafter to be performed for such compensation or fees to be fair
consideration therefor; (v) loans and advances by Parents, the Borrower or a
Restricted Subsidiary to employees of Parents, the Borrower or a Restricted
Subsidiary made in ordinary course of business and consistent with past practice
of Parents, the Borrower or such Restricted Subsidiary, as the case may be,
provided, that such loans and advances do not exceed in the aggregate $4,000,000
at any one time outstanding; (vi) any transaction between the Borrower and its
Restricted Subsidiaries pursuant to the Transponder Purchase Agreement for
Galaxy X referred to in Section 7.18 hereof; (vii) the assignment or other
transfer to GCI Transport Co., Inc. or any of its Subsidiaries of the $9,100,000
deposit made in connection with the Transponder Purchase Agreement for Galaxy
0100.0269\91958 71
<PAGE>
X referred to in Section 7.18 hereof (provided the Borrower provides the
Administrative Agent with a Pro Forma Compliance Certificate evidencing no
Default or Event of Default both before and after the assignment); (viii) the
Fiber Lease and the Lease Guaranty, provided that, notwithstanding anything to
the contrary in any Project Agreement, AUSP Financing Agreement, in this
Agreement, or in any other Loan Paper, in no event shall the aggregate amount of
all lease payments made by the Borrower, its Restricted Subsidiaries, or GCI
Communication Corp. pursuant to the Fiber Lease, the Lease Guaranty, or any
other lease or Project Agreement with AUSP exceed $28,000,000 in the aggregate
over the term of this Agreement; (ix) the O&M Contract, provided that,
notwithstanding anything to the contrary in any Project Agreement, AUSP
Financing Agreement, in this Agreement or in any other Loan Paper, in no event
shall the aggregate amount of all payments made by the Borrower or any of its
Restricted Subsidiaries pursuant to any and all such operating and maintenance
contracts exceed $17,000,000 over the term of this Agreement; (x) the Completion
Guaranty and the Keepwell Agreement, and provided that, notwithstanding anything
to the contrary in any Project Agreement, AUSP Financing Agreement, in this
Agreement or in any other Loan Paper, in no event shall the aggregate amount of
all payments made pursuant to the Keepwell Agreement, the Completion Guaranty
and any other Project Agreement by the Borrower or any of its Restricted
Subsidiaries (except the Fiber Lease, the Lease Guaranty, and the O&M Contract)
exceed $73,000,000 over the term of this Agreement, (xi) loans and/or advances
to AUSP as may be evidenced by the Intercompany Notes to the extent permitted by
Section 7.10(g) hereof, (xii) the Subordination Agreement, and (xiii) Permitted
Dispositions. Neither the Borrower nor any Restricted Subsidiary shall enter
into any agreement with AUSP obligating the Borrower or any Restricted
Subsidiary to purchase excess capacity pursuant to any Project Agreement or any
other agreement exceeding the amounts set forth above with respect to the Fiber
Lease and the Lease Guaranty. Nothing herein shall prevent the Borrower or any
Restricted Subsidiary from entering into an agreement with AUSP pursuant to any
Project Agreement whereby each may purchase excess capacity from time to time as
needed in the ordinary course of business.
7.10 Loans and Investments. The Borrower shall not, and shall not
permit any of the other GCI Entities to, make any loan, advance, extension of
credit or capital contribution to, or make or have any Investment in, any
Person, or make any commitment to make any such extension of credit or
Investment, or make any acquisition, except (a) Investments on the Closing Date
constituting a $50,000,000 capital contribution to AUSP and other Investments
existing on the date hereof and contemplated by the terms of this Agreement,
each as shown on Schedule 5.13 hereto, (b) Investments in Cash Equivalents, (c)
Investments in advances or loans in the ordinary course of business to officers
and employees in an amount in the aggregate not to exceed $4,000,000 outstanding
at any one time, (d) Investments in accounts receivable arising in the ordinary
course of business, (e) so long as (i) there exists no Default or Event of
Default, both before and after giving effect to the making of such Investments,
(ii) the Total Leverage Ratio is less than 5.00 to 1.00 both before and after
giving effect to any such Investment and (iii) the date of such Investment is
after September 30, 2000, Investments made exclusively out of Excess Cash Flow
up to a maximum amount of the difference between $15,000,000 in the
0100.0269\91958 72
<PAGE>
aggregate over the term of this Agreement, minus the aggregate amount of
Restricted Payments made in accordance with the terms of Section 7.06(a) hereof
over the term of this Agreement, (f) loans, advances, extensions of credit or
capital contributions to, or among, Wholly-Owned Subsidiaries and to GCI
Transport Co., Inc. and its Subsidiaries in connection with the assignment or
other transfer to GCI Transport Co., Inc. or its Subsidiaries of the $9,100,000
deposit made in connection with the Transponder Purchase Agreement for Galaxy X
referred to in Section 7.18 hereof (provided the Borrower provides the
Administrative Agent with a Pro Forma Compliance Certificate evidencing no
Default or Event of Default both before and after the assignment), (g) so long
as there exists no Default or Event of Default both before and after giving
effect to the making of each such Investment, Investments constituting loans
and/or advances to AUSP in accordance with the terms of the Keepwell Agreement
and the Completion Guaranty as may be evidenced by the Intercompany Notes
(collaterally assigned to the Administrative Agent on a first Lien basis), which
Investments in an aggregate amount over the term of this Agreement do not exceed
$73,000,000, and (h) investments in Participation Certificates of CoBank to the
extent required pursuant to Section 6.16.
7.11 Fiscal Year and Accounting Method. The Borrower shall not, and
shall not permit any of the other GCI Entities to, change its fiscal year or
method of accounting, except as may be required by GAAP.
7.12 Issuance of Partnership Interest and Capital Stock; Amendment of
Articles and By-Laws. Except in connection with the transactions consummated on
or prior to the Closing Date, and except as permitted in Section 7.07 hereof,
the Borrower shall not, and shall not permit any of the other GCI Entities
(other than GCI) to, issue, sell or otherwise dispose of any Capital Stock in
such Person, or any options or rights to acquire such partnership interest or
capital stock not issued and outstanding on the Closing Date. The Borrower shall
not amend its articles of organization or bylaws and the Borrower shall not
permit any of the other GCI Entities to amend its articles of organization or
bylaws or partnership agreement, as applicable, except, so long as there exists
no Default or Event of Default both prior to and after giving effect to such
amendment, and after written notice to the Administrative Agent, the Borrower or
any of the other GCI Entities may make (i) changes to comply with applicable Law
and (ii) changes immaterial in nature.
7.13 Change of Ownership. Except as permitted by Section 7.07 hereof,
the Borrower shall not, and shall not permit any other GCI Entity (other than
GCI) to, permit any change in the ownership of the Borrower and each Guarantor
from the ownership thereof as of the date hereof as disclosed on Schedule 5.01
hereto.
7.14 Sale and Leaseback. The Borrower shall not, and shall not permit
any of the other GCI Entities to, enter into any arrangement whereby it sells or
transfers any of its assets, and thereafter rents or leases such assets.
0100.0269\91958 73
<PAGE>
7.15 Compliance with ERISA. The Borrower shall not, and shall not
permit the Parents or any Subsidiary of the Borrower and the Parents to,
directly or indirectly, or permit any member of such Person's Controlled Group
to directly or indirectly, (a) terminate any Plan so as to result in any
material (in the opinion of Administrative Agent) liability to any of the
Borrower, the Parents or any Subsidiary of the Borrower or the Parents, or any
member of their Controlled Group, (b) permit to exist any ERISA Event, or any
other event or condition, which presents the risk of any material (in the
opinion of Administrative Agent) liability of any of the Parents, the Borrower
or any Subsidiary of the Parents or the Borrower, or any member of their
Controlled Group, (c) make a complete or partial withdrawal (within the meaning
of Section 4201 of ERISA) from any Multiemployer Plan so as to result in any
material (in the opinion of Administrative Agent) liability to any of the
Borrower, the Parents, or any Subsidiary of the Parents or the Borrower, or any
member of their Controlled Group, (d) enter into any new Plan or modify any
existing Plan so as to increase its obligations thereunder (except in the
ordinary course of business consistent with past practice) which could result in
any material (in the opinion of Administrative Agent) liability to any of the
Parents, the Borrower or any Subsidiary of the Parents or the Borrower, or any
member of their Controlled Group, or (e) permit the present value of all benefit
liabilities, as defined in Title IV of ERISA, under each Plan of each of the
Parents, the Borrower or any Subsidiary of the Parents or the Borrower, or any
member of their Controlled Group (using the actuarial assumptions utilized by
the PBGC upon termination of a Plan) to materially (in the opinion of
Administrative Agent) exceed the fair market value of Plan assets allocable to
such benefits all determined as of the most recent valuation date for each such
Plan.
7.16 Rate Swap Exposure. The Borrower shall not enter into or become
liable in respect of any Interest Hedge Agreement pursuant to which the
aggregate amount exceeds the aggregate principal amount of all Advances and
amounts outstanding under the Revolver/Term Credit Agreement.
7.17 Restricted Subsidiaries and Other Obligors. The Borrower shall not
permit any of its Restricted Subsidiaries or any other GCI Entity to violate any
provision of this Article VII.
7.18 Amendments to Material Agreements. The Borrower shall not, nor
shall the Borrower permit any other GCI Entity to, amend or change any Project
Agreement or any AUSP Financing Agreement in any manner that is material and
adverse to the interests of the Lenders except with the prior written consent of
Majority Lenders, or amend or change any Loan Paper other than with the prior
written consent of the Lenders pursuant to Section 10.01 hereof, nor shall the
Borrower or any other GCI Entity change or amend (or take any action or fail to
take any action the result of which is an effective amendment or change) or
accept any waiver or consent with respect to (a) any Non-Compete Agreement, (b)
that certain Transponder Purchase Agreement for Galaxy X, dated August 24, 1995,
among the Borrower and Hughes Communications Galaxy, Inc., now held by PanAmSat
Corp., as assignee, (c) that certain Transponder Service Agreement, dated August
24, 1995, among General Communication Corp.
0100.0269\91958 74
<PAGE>
and Hughes Communications Satellite Services, Inc., now held by PanAmSat Corp.,
as assignee, (d) the Senior Notes and all documentation and agreements relating
to the Senior Notes, other than changes that result in a decrease in interest
rate, extension of maturity, or deletion of covenants or obligations to repay,
and changes anticipated by Section 9.01(1) of the Indenture, (e) the Prime
Management Agreement, and (f) all documentation related to any Funded Debt of
any GCI Entity.
7.19 Limitation on Restrictive Agreements. The Borrower shall not, and
shall not permit the Parents or any Restricted Subsidiary to, other than in
connection with the Senior Notes and the Revolver/Term Credit Agreement or the
AUSP Financing Agreements or the Project Agreements, enter into any indenture,
agreement, instrument, financing document or other arrangement which, directly
or indirectly, prohibits or restrains, or has the effect of prohibiting or
restraining, or imposes materially adverse conditions upon: (a) the incurrence
of Debt, (b) the granting of Liens (except for provisions contained in Capital
Leases of property that are permitted hereunder that limit Liens only on the
specific property subject to the Capital Lease, except for Liens in favor of the
Administrative Agent and the Lenders), (c) the making or granting of Guarantees,
(d) the payment of dividends or Distributions, (e) the purchase, redemption or
retirement of any Capital Stock, (f) the making of loans or advances, (g)
transfers or sales of property or assets (including Capital Stock) by the
Parents, the Borrower or any of the Restricted Subsidiaries, (h) the making of
Investments or acquisitions, or (i) any change of control or management.
ARTICLE VIII. EVENTS OF DEFAULT
8.01 Events of Default. Any one or more of the following shall be an
"Event of Default" hereunder, if the same shall occur for any reason whatsoever,
whether voluntary or involuntary, by operation of Law, or otherwise:
(a) The Borrower shall fail to pay (i) any principal on any Note when
due; or (ii) any interest on any Note within three days after the same becomes
due; or (iii) any Commitment Fees, other fees, or other amounts payable under
any Loan Paper within five days after the same becomes due;
(b) Any representation or warranty made or deemed made by the Borrower
or any other GCI Entity (or any of its officers or representatives) under or in
connection with any Loan Papers shall prove to have been incorrect or misleading
in any material respect when made or deemed made;
(c) The Borrower or any other GCI Entity shall fail to perform or
observe any term or condition contained in Article VI hereof (except Section
6.05(f) hereof) which is not remedied within thirty days after the earlier of
(i) actual knowledge of such breach by the Parents, the
0100.0269\91958 75
<PAGE>
Borrower or any of the Restricted Subsidiaries of such breach and (ii) written
notice from the Administrative Agent or any Lender of such breach;
(d) The Borrower or any other GCI Entity shall fail to perform or
observe any term or covenant contained in Article VII hereof or in Section
6.05(f) hereof;
(e) Any GCI Entity shall fail to perform or observe any other term or
covenant contained in any Loan Paper, other than those described in Sections
8.01(a), (b), (c) and (d) hereof which is not remedied within thirty days after
the earlier of (i) actual knowledge of such breach by the Parents, the Borrower
or any of the Restricted Subsidiaries of such breach and (ii) written notice
from the Administrative Agent or any Lender of such breach;
(f) Any Loan Paper or material provision thereof shall, for any reason,
not be valid and binding on the GCI Entity signatory thereto, or not be in full
force and effect, or shall be declared to be null and void; the validity or
enforceability of any Loan Paper shall be contested by any GCI Entity; any GCI
Entity shall deny that it has any or further liability or obligation under its
respective Loan Papers; or any default or breach under any provision of any Loan
Papers shall continue after the applicable grace period, if any, specified in
such Loan Paper;
(g) Any of the following shall occur: (i) any of the Parents, the
Borrower or any Subsidiary of the Parents or the Borrower (including without
limitation, AUSP, GCI Transport Co., Inc., GCI Satellite Co., Inc., GCI Fiber
Co., Inc. and Fiber Hold Co., Inc.) shall make an assignment for the benefit of
creditors or be unable to pay its debts generally as they become due; (ii) any
of the Parents, the Borrower or any Subsidiary of the Parents or the Borrower
(including without limitation, AUSP, GCI Transport Co., Inc., GCI Satellite Co.,
Inc., GCI Fiber Co., Inc., and Fiber Hold Co., Inc.) shall petition or apply to
any Tribunal for the appointment of a trustee, receiver, or liquidator of it, or
of any substantial part of its assets, or shall commence any proceedings
relating to any of the Parents, the Borrower or any Subsidiary of the Parents or
the Borrower (including without limitation, AUSP, GCI Transport Co., Inc., GCI
Satellite Co., Inc., GCI Fiber Co., Inc., and Fiber Hold Co., Inc.) under any
Debtor Relief Law, whether now or hereafter in effect; (iii) any such petition
or application shall be filed, or any such proceedings shall be commenced,
against any of the Parents, the Borrower or any Subsidiary of the Parents or the
Borrower (including without limitation, AUSP, GCI Transport Co., Inc., GCI
Satellite Co., Inc., GCI Fiber Co., Inc., and Fiber Hold Co., Inc.), or an
order, judgment or decree shall be entered appointing any such trustee,
receiver, or liquidator, or approving the petition in any such proceedings and
such petition, application or proceedings shall continue undismissed for 30 days
or such order, judgment or decree shall continue unstayed and in effect for 30
days; (iv) any final order, judgment, or decree shall be entered in any
proceedings against any of the Parents, the Borrower or any Subsidiary of the
Parents or the Borrower (including without limitation, AUSP, GCI Transport Co.,
Inc., GCI Satellite Co., Inc., GCI Fiber Co., Inc., and Fiber Hold Co., Inc.)
decreeing its dissolution; (v) any final order, judgment, or decree shall be
entered in any proceedings against any of the Parents, the
0100.0269\91958 76
<PAGE>
Borrower, or any Subsidiary of the Parents or the Borrower (including without
limitation, AUSP, GCI Transport Co., Inc., GCI Satellite Co., Inc., GCI Fiber
Co., Inc., and Fiber Hold Co., Inc.) decreeing its split-up which requires the
divestiture of a substantial part of its assets; or (vi) any of the Parents, the
Borrower or any Subsidiary of the Parents or the Borrower (including without
limitation, AUSP, GCI Transport Co., Inc., GCI Satellite Co., Inc., GCI Fiber
Co., Inc., and Fiber Hold Co., Inc.) shall petition or apply to any Tribunal for
the appointment of a trustee, receiver, or liquidator of it, or of any
substantial part of its assets, or shall commence any proceedings relating to
any of the Parents, the Borrower or any Subsidiary of the Parents or the
Borrower (including without limitation, AUSP, GCI Transport Co., Inc., GCI
Satellite Co., Inc., GCI Fiber Co., Inc., and Fiber Hold Co., Inc.) under any
Debtor Relief Law, whether now or hereafter in effect;
(h) Any GCI Entity shall fail to pay any Debt or Contingent Liability
of $1,000,000 or more when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt or Contingent Liability; or any GCI Entity
shall fail to perform or observe any term or covenant contained in any agreement
or instrument relating to any such Debt or Contingent Liability, when required
to be performed or observed, and such failure shall continue after the
applicable grace period, if any, specified in such agreement or instrument, and
can result in acceleration of the maturity of such Debt or Contingent Liability;
or any such Debt or Contingent Liability shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(i) Any GCI Entity shall have any judgment(s) outstanding against it
for the payment of $1,000,000 or more, and such judgment(s) shall remain
unstayed, in effect, uncontested and unpaid for a period of 30 days;
(j) (i) Any Authorization necessary for the ownership or essential for
the operation of any of the interstate or intrastate telecommunications systems
or networks operated by the Parents, the Borrower or any Restricted Subsidiary
or any other System, shall expire, and on or prior to such expiration, the same
shall not have been renewed or replaced by another Authorization authorizing
substantially the same operations of such System; or (ii) any Authorization
necessary for the ownership or essential for the operation of any of System
shall be canceled, revoked, terminated, rescinded, annulled, suspended or
modified in a materially adverse respect, or shall no longer be in full force
and effect, or the grant or the effectiveness thereof shall have been stayed,
vacated, reversed or set aside, and such action shall be no longer subject to
further administrative or judicial review; or (iii) the FCC shall have issued,
on its own initiative and not upon the complaint of or at the request of a third
party, any hearing designation order in any non-comparative license renewal
proceeding or any license revocation proceeding involving any License or
Authorization necessary for the ownership or essential for the operation of any
System; or (iv) in any non-comparative license renewal proceeding or
0100.0269\91958 77
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license revocation proceeding initiated by the FCC upon the complaint of or at
the request of a third party or any comparative (i.e., multiple applicant)
license renewal proceeding, in each case involving any License or Authorization
necessary for the ownership or essential for the operation of any System; any
administrative law judge of the FCC (or successor to the functions of an
administrative law judge of the FCC) shall have issued an initial decision to
the effect that the Parents, the Borrower or any Restricted Subsidiary lacks the
basic qualifications to own or operate any System or is not deserving of a
renewal expectancy, and such initial decision shall not have been timely
appealed or shall otherwise have become an order that is final and no longer
subject to further administrative or judicial review (provided, however, that
none of the foregoing events described in clauses (i), (ii), (iii) or (iv) of
this Section 8.01(j) shall constitute an Event of Default if such expiration,
cancellation, revocation or other loss would not materially adversely affect the
value of any of the Collateral or the ability of the Parents, the Borrower or
any Restricted Subsidiary to perform its obligations under the Loan Papers to
which it is a party);
(k) Any of the Parents, the Borrower, or any Subsidiary of the Parents
or the Borrower, or any ERISA Affiliate, shall have committed a failure
described in Section 302(f)(l) of ERISA, and the amount determined under Section
302(f)(3) of ERISA is equal to or greater than $1,000,000;
(l) The Parents, the Borrower, any Subsidiary of the Parents or the
Borrower, or any ERISA Affiliate, shall have been notified by the sponsor of a
Multiemployer Plan that such Plan is in reorganization or is being terminated,
within the meaning of Title IV of ERISA, if as a result thereof the aggregate
annual contributions to all Multiemployer Plans in reorganization or being
terminated is increased over the amounts contributed to such Plans for the
preceding Plan year by an amount exceeding $1,000,000;
(m) The Borrower or any GCI Entity shall be required under any
Environmental Law (i) to implement any remedial, neutralization, or
stabilization process or program, the cost of which could constitute a Material
Adverse Change, or (ii) to pay any penalty, fine, or damages in an aggregate
amount of $1,000,000 or more;
(n) Any Property (whether leased or owned) of any GCI Entity, or the
operations conducted thereon by any of them or any current or prior owner or
operator thereof (in the case of real Property), shall violate or have violated
any applicable Environmental Law, if such violation could constitute a Material
Adverse Change; or any GCI Entity shall not obtain or maintain any License
required to be obtained or filed under any Environmental Law in connection with
the use of such Property and assets, including without limitation past or
present treatment, storage, disposal, or release of Hazardous Materials into the
environment, if the failure to obtain or maintain the same could constitute a
Material Adverse Change;
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(o) Any Collateral Document shall for any reason (other than pursuant
to the terms thereof) cease to create a valid and perfected first priority Lien
in the Collateral (subject to Permitted Liens) (except for the Lien on the stock
of GCI Leasing Co., Inc. which shall be a second Lien behind the Prior Stock
Lien) purported to be covered thereby and the value of such Collateral, singly
or in the aggregate, equals or exceeds $1,000,000;
(p) The occurrence of any Change of Control; or (i) two or more of the
following three senior executive managers of the Borrower shall not be employees
of the Borrower for 60 consecutive days: John Lowber, Ron Duncan or Wilson
Hughes and (ii) the Borrower shall have not replaced such senior executive
managers with new employees acceptable to the Majority Lenders, such consent not
to be unreasonably withheld;
(q) At any time, less than 100% of the Capital Stock of the Borrower,
the Restricted Subsidiaries and the Guarantors (except the Capital Stock of GCI
does not have to be pledged) shall be pledged to the Lenders to secure the
Obligations pursuant to a first and prior perfected Lien (subject to inchoate
tax liens), except with respect to the Lien on the stock of GCI Leasing Co.,
Inc.; at any time, less than 100% of the Capital Stock of GCI Leasing Co., Inc.
shall be pledged to the Lenders to secure the Obligations pursuant to a second
perfected Lien (behind the Prior Tax Lien and subject to inchoate tax Liens); or
all or any portion of the Collateral constituting any System or systems which
service 5% or more of the customers of the Borrower and the Restricted
Subsidiaries ("Significant Segment"), or all or any portion of the Pledged
Interests or the Pledge Agreements shall be the subject of any proceeding
instituted by any Person, or there shall exist any litigation or overtly
threatened litigation with respect to all or any portion of the Collateral
constituting Significant Segment or all or any portion of the Pledged Interests
or the Pledge Agreement; or all or any portion of the Collateral constituting a
Significant Segment shall be the subject of any legal proceeding instituted by
any Person other than a Lender or Administrative Agent (except in connection
with any Lender's exercise of any remedies under the Loan Papers); or any
document or instrument creating or granting a security interest or Lien in any
Collateral shall for any reason fail to create a valid first priority security
interest (subject to Permitted Liens and the Prior Stock Lien) in any collateral
purported to be covered thereby; or any material portion of the Collateral shall
not be subject to a prior perfected security interest (subject to Permitted
Liens), or be subject to attachment, levy or replenishment, unless such
attachment, levy or replenishment shall be stayed, or bonded in an amount
substantially equal to the fair market value of such Property and only for so
long as such stay or bond exists;
(r) (i) A petition or complaint is filed before or by the Federal Trade
Commission, the United States Justice Department, or any other Tribunal, seeking
to cause the Borrower or any other GCI Entity to divest a significant portion of
its assets or the Capital Stock of any GCI Entity or the Borrower, pursuant to
any antitrust, restraint of trade, unfair competition or similar Laws, and such
petition or complaint is not dismissed or discharged within 60 days of the
filing thereof, which such divestiture could reasonably be expected to cause a
Material Adverse
0100.0269\91958 79
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Change or (ii) A warrant of attachment or execution or similar process shall be
issued or levied against Property of the Borrower or any other GCI Entity which,
together with all other such Property of the Borrower and the other GCI Entities
subject to other such process, exceeds in value $1,000,000 in the aggregate, and
if such judgment or award is not insured or, within 60 days after the entry,
issue or levy thereof, such judgment, warrant or process shall not have been
paid or discharged, bonded or stayed pending appeal, or if, after the expiration
of any such stay, such judgment, warrant or process shall not have been paid or
discharged;
(s) Any civil action, suit or proceeding shall be commenced against any
GCI Entity under any federal or state racketeering statute (including, without
limitation, the Racketeer Influenced and Corrupt Organization Act of
1970)("RICO") and such suit shall be adversely determined by a court of
applicable jurisdiction resulting in a judgment against such GCI Entity in
excess of $1,000,000; or any criminal action or proceeding shall be commenced
against any GCI Entity under any federal or state racketeering statute
(including, without limitation, RICO);
(t) There shall exist any breach or default under any Project
Agreement, in each case after giving effect to any applicable period of grace in
connection therewith;
(u) There shall exist any breach or default under any intercompany
promissory note or related agreement executed by AUSP or any other Unrestricted
Subsidiary in favor of the Borrower or any Restricted Subsidiary, including
without limitation, the Intercompany Notes;
(v) There shall exist any Event of Default relating to the Senior Notes
or under the Indenture; or
(w) There shall exist any Event of Default under the Revolver/Term
Credit Agreement.
8.02 Remedies Upon Default. If an Event of Default described in Section
8.01(g) hereof shall occur with respect to the Parents, the Borrower or any
Subsidiary of the Parents or the Borrower, the Revolving Commitment shall be
immediately terminated and the aggregate unpaid principal balance of and accrued
interest on all Advances shall, to the extent permitted by applicable Law,
thereupon become due and payable concurrently therewith, without any action by
Administrative Agent or any Lender, and without diligence, presentment, demand,
protest, notice of protest or intent to accelerate, or notice of any other kind,
all of which are hereby expressly waived. Subject to the foregoing sentence, if
any Event of Default shall occur and be continuing, then no LIBOR Advances shall
be available to the Borrower and Administrative Agent may at its election, and
shall at the direction of Majority Lenders, do any one or more of the following:
(a) Declare the entire unpaid balance of all Advances immediately due
and payable, whereupon it shall be due and payable without diligence,
presentment, demand, protest, notice
0100.0269\91958 80
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of protest or intent to accelerate, or notice of any other kind (except notices
specifically provided for under Section 8.01), all of which are hereby expressly
waived (except to the extent waiver of the foregoing is not permitted by
applicable Law);
(b) Terminate the Revolving Commitment and/or the Letter of Credit
Commitment;
(c) Reduce any claim of Administrative Agent and Lenders to judgment;
(d) Demand (and the Borrower shall pay to Administrative Agent)
immediately upon demand and in immediately available funds, the amount equal to
the aggregate amount of the Letters of Credit then outstanding, irrespective of
whether such Letters of Credit have been drawn upon, all as set forth and in
accordance with the terms of provisions of Article III hereof. The
Administrative Agent shall promptly advise the Borrower of any such declaration
or demand but failure to do so shall not impair the effect of such declaration
or demand; or
(e) Exercise any Rights afforded under any Loan Papers, by Law,
including but not limited to the UCC, at equity, or otherwise.
8.03 Cumulative Rights. All Rights available to Administrative Agent
and Lenders under the Loan Papers shall be cumulative of and in addition to all
other Rights granted thereto at Law or in equity, whether or not amounts owing
thereunder shall be due and payable, and whether or not Administrative Agent or
any Lender shall have instituted any suit for collection or other action in
connection with the Loan Papers.
8.04 Waivers. The acceptance by Administrative Agent or any Lender at
any time and from time to time of partial payment of any amount owing under any
Loan Papers shall not be deemed to be a waiver of any Default or Event of
Default then existing. No waiver by Administrative Agent or any Lender of any
Default or Event of Default shall be deemed to be a waiver of any Default or
Event of Default other than such Default or Event of Default. No delay or
omission by Administrative Agent or any Lender in exercising any Right under the
Loan Papers shall impair such Right or be construed as a waiver thereof or an
acquiescence therein, nor shall any single or partial exercise of any such Right
preclude other or further exercise thereof, or the exercise of any other Right
under the Loan Papers or otherwise.
8.05 Performance by Administrative Agent or any Lender. Should any
covenant of any GCI Entity fail to be performed in accordance with the terms of
the Loan Papers, Administrative Agent may, at its option, perform or attempt to
perform such covenant on behalf of such GCI Entity. Notwithstanding the
foregoing, it is expressly understood that neither Administrative Agent nor any
Lender assumes, and shall not ever have, except by express written consent of
Administrative Agent or such Lender, any liability or responsibility for the
performance of any duties or covenants of any GCI Entity.
0100.0269\91958 81
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8.06 Expenditures. The Borrower shall reimburse Administrative Agent
and each Lender for any sums spent by it in connection with the exercise of any
Right provided herein. Such sums shall bear interest at the lesser of (a) the
Base Rate in effect from time to time, plus 2.0% and (b) the Highest Lawful
Rate, from the date spent until the date of repayment by the Borrower.
8.07 Control. None of the covenants or other provisions contained in
this Agreement shall, or shall be deemed to, give Administrative Agent or any
Lender any Rights to exercise control over the affairs and/or management of any
GCI Entity, the power of Administrative Agent and each Lender being limited to
the Rights to exercise the remedies provided in this Article; provided, however,
that if Administrative Agent or any Lender becomes the owner of any partnership,
stock or other equity interest in any Person, whether through foreclosure or
otherwise, it shall be entitled to exercise such legal Rights as it may have by
being an owner of such stock or other equity interest in such Person.
ARTICLE IX. THE ADMINISTRATIVE AGENT
9.01 Authorization and Action. Each Lender hereby appoints and
authorizes Administrative Agent to take such action as Administrative Agent on
its behalf and to exercise such powers under this Agreement and the other Loan
Papers as are delegated to the Administrative Agent by the terms of the Loan
Papers, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement and the other Loan
Papers (including without limitation enforcement or collection of the Notes),
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
Majority Lenders (or all Lenders, if required under Section 10.01), and such
instructions shall be binding upon all Lenders; provided, however, that
Administrative Agent shall not be required to take any action which exposes
Administrative Agent to personal liability or which is contrary to any Loan
Papers or applicable Law. Administrative Agent agrees to give to each Lender
notice of each notice given to it by the Borrower pursuant to the terms of this
Agreement, and to distribute to each applicable Lender in like funds all amounts
delivered to Administrative Agent by the Borrower for the Ratable or individual
account of any Lender.
9.02 Administrative Agent's Reliance, Etc. Neither Administrative
Agent, nor any of its directors, officers, agents, employees, or representatives
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or any other Loan Paper, except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, Administrative Agent (a) may treat the payee of any
Note as the holder thereof until Administrative Agent receives written notice of
the assignment or transfer thereof signed by such payee and in form satisfactory
to Administrative Agent;
0100.0269\91958 82
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(b) may consult with legal counsel (including counsel for the Borrower or any of
the Restricted Subsidiaries), independent public accountants, and other experts
selected by it, and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants, or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties, or
representations made in or in connection with this Agreement or any other Loan
Papers; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants, or conditions of this
Agreement or any other Loan Papers on the part of any GCI Entity or the
Restricted Subsidiaries or to inspect the Property (including the books and
records) of any GCI Entity or the Restricted Subsidiaries; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement, any other
Loan Papers, or any other instrument or document furnished pursuant hereto; and
(f) shall incur no liability under or in respect of this Agreement or any other
Loan Papers by acting upon any notice, consent, certificate, or other instrument
or writing believed by it to be genuine and signed or sent by the proper party
or parties.
9.03 NationsBank of Texas, National Association and Affiliates. With
respect to its Revolving Commitment, its Advances, and any Loan Papers,
NationsBank of Texas, National Association has the same Rights under this
Agreement as any other Lender and may exercise the same as though it were not
Administrative Agent. NationsBank of Texas, National Association and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with, any GCI Entity, any Affiliate thereof, and any Person who
may do business therewith, all as if NationsBank of Texas, National Association
were not Administrative Agent and without any duty to account therefor to any
Lender.
9.04 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Administrative Agent or any other
Lender, and based on the financial statements referred to in Section 5.04 hereof
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon
Administrative Agent 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 Agreement and the
other Loan Papers.
9.05 Indemnification by Lenders. Lenders shall indemnify Administrative
Agent, pro rata, 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 Administrative Agent in any way relating to or arising out of
any Loan Papers or any action taken or omitted by Administrative Agent
thereunder, including any negligence of Administrative Agent; provided, however,
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from Administrative
0100.0269\91958 83
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Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, Lenders shall reimburse Administrative Agent, pro rata, promptly upon
demand for any out-of-pocket expenses (including reasonable attorneys' fees)
incurred by Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment, or enforcement (whether
through negotiation, legal proceedings or otherwise) of, or legal and other
advice in respect of rights or responsibilities under, the Loan Papers. The
indemnity provided in this Section 9.05 shall survive the termination of this
Agreement.
9.06 Successor Administrative Agent. Administrative Agent may resign at
any time by giving written notice thereof to Lenders and the Borrower, and may
be removed at any time with or without cause by the action of all Lenders (other
than Administrative Agent, if it is a Lender). Upon any such resignation,
Majority Lenders shall have the right to appoint a successor Administrative
Agent. If no successor Administrative Agent shall have been so appointed and
shall have accepted such appointment within thirty days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of Lenders, appoint a successor
Administrative Agent, which shall be 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 $50,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the Rights and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations under the Loan Papers, provided that if the retiring or removed
Administrative Agent is unable to appoint a successor Administrative Agent,
Administrative Agent shall, after the expiration of a sixty day period from the
date of notice, be relieved of all obligations as Administrative Agent
hereunder. Notwithstanding any Administrative Agent's resignation or removal
hereunder, the provisions of this Article shall continue to inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement.
ARTICLE X. MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement, the Revolver/Term Credit Agreement, or any other Loan Papers,
nor consent to any departure by the Borrower or any other GCI Entity therefrom,
shall be effective unless the same shall be in writing and signed by
Administrative Agent with the consent of Majority Lenders, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver,
or consent shall (and the result of action or failure to take action shall not)
unless in writing and signed by all of Lenders and Administrative Agent, (a)
increase the Revolving Commitment (except in accordance with the provisions of
Section 2.16 hereof), increase the Revolver/Term Commitment or the Letter of
Credit Commitment, (b) reduce any principal (including without limitation, any
0100.0269\91958 84
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scheduled reduction of the Revolving Commitment), interest, fees, or other
amounts payable hereunder, or waive or result in the waiver of any Event of
Default under Section 8.01(a) hereof or of the Revolver/Term Credit Agreement,
(c) postpone any date fixed for any payment of principal (including without
limitation, any scheduled reduction of the Revolving Commitment), interest,
fees, or other amounts payable hereunder or under the Revolver/Term Credit
Agreement, or change the pro rata sharing of payments, (d) release any
Collateral or Guaranties securing any GCI Entity's obligations hereunder, other
than releases specifically contemplated hereby and by the Loan Papers, including
without limitation, releases of assets that have been sold or transferred as
specifically permitted hereby or by the Loan Papers, or (e) change the meaning
of Specified Percentage or the number of Lenders required to take any action
hereunder. No amendment, waiver, or consent shall affect the Rights or duties of
Administrative Agent under any Loan Papers, unless it is in writing and signed
by Administrative Agent in addition to the requisite number of Lenders.
10.02 Notices.
(a) Manner of Delivery. All notices communications and other materials
to be given or delivered under the Loan Papers shall, except in those cases
where giving notice by telephone is expressly permitted, be given or delivered
in writing. All written notices, communications and materials shall be sent by
registered or certified mail, postage prepaid, return receipt requested, by
telecopier, or delivered by hand. In the event of a discrepancy between any
telephonic notice and any written confirmation thereof, such written
confirmation shall be deemed the effective notice except to the extent
Administrative Agent, any Lender or the Borrower has acted in reliance on such
telephonic notice.
(b) Addresses. All notices, communications and materials to be given or
delivered pursuant to this Agreement shall be given or delivered at the
following respective addresses and telecopier and telephone numbers and to the
attention of the following individuals or departments:
If to the Borrower:
GCI Holdings, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503-2781
Attention: Mr. John M. Lowber
Telephone No.: (907) 265-5628
Facsimile No.: (907) 265-5676
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With a Copy to:
Hartig, Rhodes, Norman, Mahoney & Edwards, P.C.
717 K Street
Anchorage, Alaska 99501
Attention: Bonnie J. Paskvan
Telephone No.: (907) 276-1592
Facsimile No.: (907) 277-4352
If to Administrative Agent:
NationsBank of Texas, N.A.
901 Main Street, 64th Floor
Dallas, Texas 75202
Attention: Whitney L. Busse
Vice President
Telephone No.: (214) 508-0950
Facsimile No.: (214) 508-9390
With a Copy to:
Donohoe, Jameson & Carroll, P.C.
3400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Attention: Melissa Ruman Stewart
Telephone No.: (214) 698-3814
Facsimile No.: (214) 744-0231
(c) If to any Lender, to its address set forth below opposite its
signature or on any Assignment and Acceptance or amendment to this Agreement.
or at such other address or, telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify for the purpose in a notice to the other
specifically captioned "Notice of Change of Address".
(d) Effectiveness. Each notice, communication and any material to be
given or delivered to any party pursuant to this Agreement shall be effective or
deemed delivered or furnished (i) if sent by mail, on the fifth Business Day
after such notice, communication or
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material is deposited in the mail, addressed as above provided, (ii) if sent by
telecopier, when such notice, communication or material is transmitted to the
appropriate number determined as above provided in this Section 10.02 and the
appropriate receipt is received or otherwise acknowledged, (iii) if sent by hand
delivery or overnight courier, when left at the address of the addressee
addressed as above provided, and (iv) if given by telephone, when communicated
to the individual or any member of the department specified as the individual or
department to whose attention notices, communications and materials are to be
given or delivered except that notices of a change of address, telecopier or
telephone number or individual or department to whose attention notices,
communications and materials are to be given or delivered shall not be effective
until received; provided, however, that notices to Administrative Agent pursuant
to Article II shall be effective when received. The Borrower agrees that
Administrative Agent shall have no duty or obligation to verify or otherwise
confirm telephonic notices given pursuant to Article II, and agrees to indemnify
and hold harmless Administrative Agent and Lenders for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, and expenses resulting, directly or indirectly, from acting upon any such
notice.
10.03 Parties in Interest. All covenants and agreements contained in
this Agreement and all other Loan Papers shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto. Each Lender may
from time to time assign or transfer its interests hereunder pursuant to Section
10.04 hereof. No GCI Entity may assign or transfer its Rights or obligations
under any Loan Paper without the prior written consent of Administrative Agent.
10.04 Assignments and Participations.
(a) Subject to the following sentence, each Lender (an "Assignor") may
assign its Rights and obligations as a Lender under the Loan Papers to one or
more Eligible Assignees pursuant to an Assignment and Acceptance, so long as (i)
each assignment shall be of a constant, and not a varying percentage of all
Rights and obligations thereunder, (ii) each Assignor shall obtain in each case
the prior written consent of Administrative Agent, which consent shall not be
unreasonably withheld, (iii) each Assignor shall in each case pay a $3,000
processing fee to Administrative Agent, (iv) no such assignment is for an amount
less than $5,000,000, and (v) no assignment shall be made unless an assignment
is also made of the Rights and obligations on a pro rata basis as a Lender under
the Revolver/Term Credit Agreement. Assignments and other transfers (except
participations) with respect to each Lender's participation in a given Letter of
Credit may only be made with the prior written consent of the Administrative
Agent. Within five Business Days after Administrative Agent receives notice of
any such assignment, the Borrower shall execute and deliver to Administrative
Agent, in exchange for the Notes issued to Assignor, new Notes to the order of
such Assignor and its assignee in amounts equal to their respective Specified
Percentages of the Revolving Commitment. Such new Notes shall be dated the
effective date of the assignment. It is specifically acknowledged and agreed
that on and after the effective date of each assignment, the assignee shall be a
party hereto and shall have the Rights and obligations of a Lender under the
Loan Papers.
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(b) Each Lender may sell participations to one or more Persons in all
or any of its Rights and obligations under the Loan Papers; provided, however,
that (i) such Lender's obligations under the Loan Papers shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender shall remain the holder
of its Notes for all purposes of the Loan Papers, (iv) the participant shall be
granted the Right to vote on or consent to only those matters described in
Sections 10.01(a), (b), (c) and (d), (v) each GCI Entity, Administrative Agent,
and other Lenders shall continue to deal solely and directly with such Lender in
connection with its Rights and obligations under the Loan Papers and (vi) no
such participation is for an amount less than $5,000,000.
(c) Any Lender may, in connection with any assignment or participation,
or proposed assignment or participation, disclose to the assignee or
participant, or proposed assignee or participant, any information relating to
any GCI Entity furnished to such Lender by or on behalf of any GCI Entity.
(d) Notwithstanding any other provision set forth in this Agreement,
each Lender may at any time create a security interest in all or any portion of
its Rights under this Agreement (including, without limitation, the Advances
owing to it and the Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
10.05 Sharing of Payments. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any Right of set-off,
or otherwise) on account of its Advances in excess of its pro rata share of
payments made by the Borrower, such Lender shall forthwith purchase
participations in Advances made by the other Lenders as shall be necessary to
share the excess payment pro rata with each of them; provided, however, that if
any of such excess payment is thereafter recovered from the purchasing Lender,
its purchase from each Lender shall be rescinded and each Lender shall repay the
purchase price to the extent of such recovery together with a pro rata share of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 10.05
may, to the fullest extent permitted by Law, exercise all its Rights of payment
(including the Right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
10.06 Right of Set-off. Upon the occurrence and during the continuance
of any Event of Default, each Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by Law, to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of the Borrower against any and all of the obligations
of the Borrower now or hereafter existing under this Agreement and the other
Loan Papers, whether or not Administrative Agent or any Lender shall have made
any demand under this
0100.0269\91958 88
<PAGE>
Agreement or the other Loan Papers, and even if such obligations are unmatured.
Each Lender shall promptly notify the Borrower after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The Rights of each Lender under this
Section 10.06 are in addition to other Rights (including, without limitation,
other Rights of set-off) which such Lender may have.
10.07 Costs, Expenses, and Taxes.
(a) The Borrower agrees to pay on demand (i) all costs and expenses of
Administrative Agent in connection with the preparation and negotiation of all
Loan Papers, including without limitation the reasonable fees and out-of-pocket
expenses of Special Counsel and (ii) all costs and expenses (including
reasonable attorneys' fees and expenses) of Administrative Agent and each Lender
in connection with administration, interpretation, modification, amendment,
waiver, or release of any Loan Papers and any restructuring, work-out, or
collection of any portion of the Obligations or the enforcement of any Loan
Papers.
(b) In addition, the Borrower shall pay any and all stamp, debt, and
other Taxes payable or determined to be payable in connection with any payment
hereunder (other than Taxes on the overall net income of Administrative Agent or
any Lender or franchise Taxes or Taxes on capital or capital receipts of
Administrative Agent or any Lender), or the execution, delivery, or recordation
of any Loan Papers, and agrees to save Administrative Agent and each Lender
harmless from and against any and all liabilities with respect to, or resulting
from any delay in paying or omission to pay any Taxes in accordance with this
Section 10.07, including any penalty, interest, and expenses relating thereto.
All payments by the Borrower or any Restricted Subsidiary under any Loan Papers
shall be made free and clear of and without deduction for any present or future
Taxes (other than Taxes on the overall net income of Administrative Agent or any
Lender of any nature now or hereafter existing, levied, or withheld, or
franchise Taxes or Taxes on capital or capital receipts of Administrative Agent
or any Lender), including all interest, penalties, or similar liabilities
relating thereto. If the Borrower shall be required by Law to deduct or to
withhold any Taxes from or in respect of any amount payable hereunder, (i) the
amount so payable shall be increased to the extent necessary so that, after
making all required deductions and withholdings (including Taxes on amounts
payable to Administrative Agent or any Lender pursuant to this sentence),
Administrative Agent or any Lender receives an amount equal to the sum it would
have received had no such deductions or withholdings been made, (ii) the
Borrower shall make such deductions or withholdings, and (iii) the Borrower
shall pay the full amount deducted or withheld to the relevant taxing authority
in accordance with applicable Law. Without prejudice to the survival of any
other agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 10.07 shall survive the execution of this
Agreement, termination of the Revolving Commitment, the Letter of Credit
Commitment, the repayment of the Obligations, satisfaction of each agreement
securing or assuring the Obligations and termination of this Agreement and each
other Loan Paper.
0100.0269\91958 89
<PAGE>
10.08 Indemnification by the Borrower. The Borrower shall indemnify,
defend, and hold harmless Administrative Agent, each Lender and their respective
Affiliates, directors, officers, agents, employees, and representatives, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses, and disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against any of them in any way relating to or arising out of any Loan Papers
(including in connection with or as a result, in whole or in part, of the
negligence of any of them), any transaction related hereto or thereto, or any
act, omission, or transaction of the Borrower, any other GCI Entity and their
respective Affiliates, or any of their directors, partners, officers, agents,
employees, or representatives; provided, however, that neither Administrative
Agent nor any Lender shall be indemnified, defended, and held harmless pursuant
to this Section 10.08 to the extent of any losses or damages which the Borrower
proves were caused by the indemnified party's willful misconduct or gross
negligence.
10.09 Rate Provision. It is not the intention of any party to any Loan
Papers to make an agreement violative of the Laws of any applicable jurisdiction
relating to usury. In no event shall the Borrower or any other Person be
obligated to pay any amount in excess of the Maximum Amount. If Administrative
Agent or any Lender ever receives, collects or applies, as interest, any such
excess, such amount which would be excessive interest shall be deemed a partial
repayment of principal and treated hereunder as such; and if principal is paid
in full, any remaining excess shall be paid to the Borrower or the other Person
entitled thereto. In determining whether or not the interest paid or payable,
under any specific contingency, exceeds the Maximum Amount, each GCI Entity,
Administrative Agent and each Lender shall, to the maximum extent permitted
under Applicable Law, (a) characterize any nonprincipal payment as an expense,
fee or premium rather than as interest, (b) exclude voluntary prepayments and
the effect thereof, and (c) amortize, prorate, allocate and spread in equal
parts, the total amount of interest throughout the entire contemplated term of
the Obligations so that the interest rate is uniform throughout the entire term
of the Obligations; provided that if the Obligations are paid and performed in
full prior to the end of the full contemplated term thereof, and if the interest
received for the actual period of existence thereof exceeds the Maximum Amount,
Administrative Agent or Lenders, as appropriate, shall refund to the Borrower
the amount of such excess or credit the amount of such excess against the total
principal amount owing, and, in such event, neither Administrative Agent nor any
Lender shall be subject to any penalties provided by any Laws for contracting
for, charging or receiving interest in excess of the Maximum Amount. This
Section 10.09 shall control every other provision of all agreements among the
parties to the Loan Papers pertaining to the transactions contemplated by or
contained in the Loan Papers.
10.10 Severability. If any provision of any Loan Papers is held to be
illegal, invalid, or unenforceable under present or future Laws during the term
thereof, such provision shall be fully severable, the appropriate Loan Paper
shall be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part thereof, and the remaining
0100.0269\91958 90
<PAGE>
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of such Loan Paper a
legal, valid, and enforceable provision as similar in terms to the illegal,
invalid, or unenforceable provision as may be possible.
10.11 Exceptions to Covenants. No GCI Entity shall be deemed to be
permitted to take any action or to fail to take any action that is permitted as
an exception to any covenant in any Loan Papers, or that is within the
permissible limits of any covenant, if such action or omission would result in a
violation of any other covenant in any Loan Papers.
10.12 Counterparts. This Agreement and the other Loan Papers may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such agreement,
it shall not be necessary to produce or account for any counterpart other than
one signed by the party against which enforcement is sought.
10.13 GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND ALL OTHER LOAN PAPERS SHALL BE DEEMED TO BE
CONTRACTS MADE IN DALLAS, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS) AND THE UNITED STATES OF AMERICA. WITHOUT EXCLUDING ANY OTHER
JURISDICTION AND NOT AS A LIMITATION OF SECTION 10.14 HEREOF, THE BORROWER
AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS, WILL
HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION HEREWITH. TO THE MAXIMUM EXTENT
PERMITTED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO A
TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT, CONTRACT, EQUITY, OR
OTHERWISE) ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER LOAN PAPERS,
OR ANY RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A
JUDGE SITTING WITHOUT A JURY.
(b) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY LEGAL PROCESS
UPON IT. THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT ITS
ADDRESS DESIGNATED FOR NOTICE UNDER THIS AGREEMENT AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE BUSINESS DAYS AFTER DEPOSIT IN THE UNITED STATES
MAIL. NOTHING IN THIS SECTION 10.13 SHALL AFFECT THE
0100.0269\91958 91
<PAGE>
RIGHT OF ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
10.14. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
10.15 Amendment and Restatement. This Agreement is a renewal,
extension, amendment, and restatement of the Original Credit Agreement, and, as
such, except for the "Obligations" as defined in the Original Credit Agreement
(which shall survive, be renewed, extended, and restated by the terms of this
Agreement), all other terms and provisions supersede in their entirety the
Original Credit Agreement; provided, however, this Agreement shall not
extinguish the obligations under the Original Credit Agreement or be construed
as a substitution or novation of the "Obligations" as defined in the Original
Credit Agreement, except as modified hereby or the other Loan Papers executed
concurrently herewith. All subordination agreements, security agreements, pledge
agreements, mortgages, and deeds of trust executed and delivered in connection
with this Agreement shall supersede the subordination agreements, security
agreements, pledge agreements, mortgages, and deeds of trust executed and
delivered in connection with the Original Credit Agreement (the "Original
Security Documents"), except for the Liens created under the Original Security
Documents which shall remain valid, binding and enforceable Liens against the
Borrower and the Subsidiaries and each of the other Persons which granted such
Liens.
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REMAINDER OF PAGE LEFT BLANK INTENTIONALLY
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0100.0269\91958 92
<PAGE>
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date
first set forth above.
THE BORROWER:
GCI HOLDINGS, INC.
By: /s/ John M. Lowber
Its: Senior Vice President and Chief
Financial Officer
0100.0269\91958 93
<PAGE>
ADMINISTRATIVE AGENT:
NATIONSBANK OF TEXAS, N.A., as Administrative
Agent
By: /s/ Whitney L. Busse
Its: Vice President
0100.0269\91958 94
<PAGE>
DOCUMENTATION AGENT:
CREDIT LYONNAIS NEW YORK BRANCH, as
Documentation Agent
By: /s/ Mark D. Thorsheim
Its: Vice President
0100.0269\91958 95
<PAGE>
SYNDICATION AGENT:
TD SECURITIES (USA), INC., as Syndication Agent
By: /s/ A.L. Miller
Its: M.D.
0100.0269\91958 96
<PAGE>
LENDERS:
Specified Percentage: NATIONSBANK OF TEXAS, N.A., Individually,
as a Lender
10.0000%
Address:
901 Main, 64th Floor
Dallas, Texas 75202
By: /s/ Whitney L. Busse
Its: Vice President
Attention: Whitney L. Busse
Telephone: (214) 508-0950
Facsimile: (214) 508-9390
0100.0269\91958 97
<PAGE>
Specified Percentage: TORONTO DOMINION (TEXAS), INC., Individually as
a Lender
10.0000%
Address:
909 Fannin, Suite 1700
Houston, Texas 77010
By: /s/ Neva Nesbitt
Its: Vice President
Attention: David Parker
Telephone: (713) 653-8248
Facsimile: (713) 951-9921
0100.0269\91958 98
<PAGE>
Specified Percentage: CREDIT LYONNAIS NEW YORK BRANCH,
Individually as a Lender
10.0000%
Address:
1301 Avenue of the Americas
New York, New York 10019
By: /s/ Mark D. Thorsheim
Its: Vice President
Attention: Mark Thorsheim
Telephone: (212) 261-7852
Facsimile: (212) 261-3288
0100.0269\91958 99
<PAGE>
Specified Percentage: COBANK, ACB, Individually as a Lender
8.0000%
Address:
5500 South Quebec Street
Englewood, Colorado 80111
By: /s/ John McFarlane
Its: Vice President
Attention: John McFarlane
Telephone: (303) 740-4332
Facsimile: (303) 740-6496
By:
Its:
0100.0269\91958 100
<PAGE>
Specified Percentage: BANQUE PARIBAS, Individually as a Lender
6.0000%
Address:
2029 Century Park East, Suite 3900
Los Angeles, California 90067
By: /s/ Thomas Brandt
Its: Director
Attention: Todd Rodgers
Telephone: (310) 551-7394
Facsimile: (310) 556-3762
By: /s/ Darlynn Ernst
Its: Assistant Vice President
0100.0269\91958 101
<PAGE>
Specified Percentage: GENERAL ELECTRIC CAPITAL CORPORATION,
Individually as a Lender
6.0000%
Address:
120 Long Ridge Road
Stamford, Connecticut 06927
By: /s/ Molly S. Fergusson
Its: Manager - Operations
Attention: Manager - Operations
Telephone: (203) 961-2275
Facsimile: (203) 961-2017
0100.0269\91958 102
<PAGE>
Specified Percentage: THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY, Individually as a Lender
6.0000%
Address:
350 South Grand Avenue, Suite 3000
Los Angeles, California 90071
By: /s/ T. Morgan Edwards II
Its: Deputy General Manager
Attention: Hiro Negi
Telephone: (213) 689-6344
Facsimile: (213) 689-6294
0100.0269\91958 103
<PAGE>
Specified Percentage: UNION BANK OF CALIFORNIA, N.A.,
Individually as a Lender
6.0000%
Address:
445 S. Figueroa Street, 15th Floor
Los Angeles, California 90071
By: /s/ Christine P. Ball
Its: Vice President
Attention: Sonia Isaacs
Telephone: (213) 236-7834
Facsimile: (213) 236-5747
0100.0269\91958 104
<PAGE>
Specified Percentage: BANK OF HAWAII, Individually as a Lender
4.2500%
Address:
1850 N. Central Avenue, Suite 400
Phoenix, Arizona 85004
By: /s/ Elizabeth O. MacLean
Its: Vice President
Attention: Elizabeth O. MacLean
Telephone: (602) 257-2437
Facsimile: (602) 257-2235
0100.0269\91958 105
<PAGE>
Specified Percentage: THE BANK OF NEW YORK, Individually as
a Lender
4.2500%
Address:
1 Wall Street
New York, New York 10286
By: /s/ Edward F. Ryan, Jr.
Its: Senior Vice President
Attention: Ted Ryan
Telephone: (212) 635-8608
Facsimile: (212) 635-8593
0100.0269\91958 106
<PAGE>
Specified Percentage: BANQUE NATIONALE DE PARIS, Individually as
a Lender
4.2500%
Address:
499 Park Avenue
New York, New York 10022
By: /s/ Serge Desrayaud
Its: Vice President
Attention: Marcus C. Jones
Telephone: (212) 415-4632
Facsimile: (212) 418-8269
By: /s/ Marcus C. Jones
Its: Vice President
0100.0269\91958 107
<PAGE>
Specified Percentage: CITY NATIONAL BANK, Individually as a Lender
4.2500%
Address:
400 N. Roxbury Drive, 3rd Floor
Beverly Hills, California 90210
By: /s/ David C. Burdge
Its: Senior Vice President
Attention: Rod Bollins
Telephone: (310) 888-6149
Facsimile: (310) 888-6152
0100.0269\91958 108
<PAGE>
Specified Percentage: FIRST NATIONAL BANK OF MARYLAND, Individually as
a Lender
4.2500%
Address:
25 South Charles Street
18th Floor, Mail Stop 101-511
Baltimore, Maryland 21201
By: /s/ Christopher L. Smith
Its: Vice President
Attention: Christopher Smith
Telephone: (410) 244-4798
Facsimile: (410) 244-4920
0100.0269\91958 109
<PAGE>
Specified Percentage: FLEET NATIONAL BANK, Individually as a Lender
4.2500%
Address:
One Federal Street
MAOFD03D
Boston, Massachusetts 02110
By: /s/ Chris Swindell
Its: VP
Attention: Christopher Swindell
Telephone: (617) 346-5579
Facsimile: (617) 346-4345
0100.0269\91958 110
<PAGE>
Specified Percentage: THE FUJI BANK, LIMITED, LOS ANGELES AGENCY,
Individually as a Lender
4.2500%
Address:
333 South Hope Street, 39th Floor
Los Angeles, California 90071
By: /s/ Masahito Fukuda
Its: Joint General Manager
Attention: Fred Caparoso
Telephone: (213) 253-4148
Facsimile: (213) 253-4178
0100.0269\91958 111
<PAGE>
Specified Percentage: THE SUMITOMO BANK, LIMITED, Individually as a
Lender
4.2500%
Address:
1201 Third Avenue, Suite 5320
Seattle, Washington 98101
By: /s/ Goro Hirai
Its: Joint General Manager
Attention: Bob Granfelt
Telephone: (206) 223-4050
Facsimile: (206) 623-8551
Original to:
777 S. Figueroa Street
Suite 2600
Los Angeles, California 90017
0100.0269\91958 112
<PAGE>
Specified Percentage: NATIONAL BANK OF ALASKA, Individually as a Lender
4.0000%
Address:
301 W. Northern Lights Blvd.
Commercial Loan Department
Anchorage, Alaska 99503
By: /s/ Patricia Jelley Benz
Its: Vice President
Attention: Pita Jelley Benz
Telephone: (907) 265-2916
Facsimile: (907) 265-2141
0100.0269\91958 113
<PAGE>
SCHEDULE 7.02
SUBORDINATED DEBT PROVISIONS
A. Definition of Subordinated Debt and Senior Debt - all
inclusive, i.e. Subordinated Debt defined as all debt,
principal, interest (including postbankruptcy interest),
indemnitees, liabilities, fees, costs, and expenses now or
hereafter existing, etc. subordinated to all Senior Debt
defined as all debt, principal, interest (including
postbankruptcy interest), indemnitees, liabilities, fees,
costs, and expenses now or hereafter existing, as renewed,
extended, increased, etc. (and all other "Obligations" as
defined in the Credit Agreement)
B. Payment Terms Prebankruptcy
1. no payment of interest, except payment in kind; no
amortization or defeasance or mandatory redemption of
principal (other than change of control provisions
subject to the subordination provisions)
2. fixed maturity date no sooner than one year after the
fully extended maturity date of the Senior Debt; the
maturity of Senior Debt may be extended from time to
time without the consent of the Subordinated Debt
Holders
C. Covenants
1. limitation on covenants to limitation of debt
incurrence (other than Senior Debt and guarantees
thereof) and other affirmative type covenants; no
financial covenants
2. Any change of control provision which triggers a
redemption of the Subordinated Debt must be subject
to payment of Senior Debt in full
3. No dividend restrictions or other restrictive
covenants
D. Defaults; Remedies Upon Default
1. only defaults in Subordinated Debt documents are
payment defaults, affirmative covenant defaults,
bankruptcy defaults, and cross acceleration to Senior
Debt
2. may have right to sue and to accelerate, subject to
standstill provisions, on the direction of the
trustee by 51% of the Subordinated Debt holders
E. Terms Post Bankruptcy - assignment of claims and power of
attorney given Senior Debt holders
<PAGE>
F. Standstill Provisions - typical industry standstill
provisions, including, without limitation:
1. if a payment default occurs under the Senior Debt
documents, an absolute standstill by the Subordinated
Debt holders is required regardless of whether the
Senior Debt holders have accelerated
2. 360 day standstill required for all defaults under
the Subordinated Debt documents, subject to the
absolute standstill if a payment default has occurred
under the Senior Debt documents as described above
G. UNSECURED - no liens permitted to secure the Subordinated Debt
H. Senior Debt may be increased, and all Senior Debt documents
may be amended without the consent of the Subordinated Debt
holders
90658
-2-
<PAGE>
SCHEDULE 1.01B
AUSP FINANCING AGREEMENTS; PROJECT AGREEMENTS
Credit and Security Agreement dated as of January 27, 1998, among
Alaska United Fiber System Partnership as Borrower, and 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.
Completion Guaranty dated as of January 27, 1998, by GCI Holdings,
Inc., as Guarantor in favor of Credit Lyonnais New York Branch as Administrative
Agent for the Lenders referred to therein.
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 for the Lenders
referred to therein.
Operation and Maintenance Contract dated as of January 27, 1998,
between Alaska United Fiber System Partnership and GCI Communication Corp.
Depositary Agreement dated as of January 27, 1998, between Alaska
United Fiber System Partnership and Credit Lyonnais New York Branch as
Administrative Agent for the Lenders referred to therein.
Intercompany Notes by Alaska United Fiber System Partnership to the GCI
Holdings, Inc.
Lease Agreement dated as of January 27, 1998, between GCI Communication
Corp. as Lessee, and Alaska United Fiber System Partnership as Lessor.
Lease Guaranty Agreement dated as of January 27, 1998, among GCI
Holdings, Inc., Alaska United Fiber System Partnership and Credit Lyonnais New
York Branch as Administrative Agent.
Operating Keep Well Agreement dated as of January 27, 1998, among GCI
Holdings, Inc., Alaska United Fiber System Partnership, and Credit Lyonnais New
York Branch as Administrative Agent.
GCI Subordination Agreement dated as of January 27, 1998, between GCI
Cable, Inc., Credit Lyonnais New York Branch, as Administrative Agent, and
NationsBank of Texas, N.A., as Administrative Agent under the AUSP Credit
Agreement.
AU Subordination Agreement dated as of January 27, 1998, between Alaska
United Fiber System Partnership, Credit Lyonnais New York Branch, as
Administrative Agent, and NationsBank of Texas, N.A., as Administrative Agent.
100/269/99522
<PAGE>
EXHIBIT A
NOTE
$ Dallas, Texas DATE
GCI Holdings, Inc., an Alaskan corporation ("Borrower"), promises to
pay to the order of ("Lender") the lesser of the principal sum
of DOLLARS ($ )or the aggregate unpaid principal
amount of all Advances made by Lender to Borrower pursuant to Section 2.01 of
the Credit Agreement (as hereinafter defined) in immediately available funds at
the principal office of NationsBank of Texas, N.A. as Administrative Agent at
901 Main Street, 14th Floor, Dallas, Texas 75202, together with interest on the
unpaid principal amount hereof at the rates and on the dates set forth in the
Credit Agreement. The Borrower shall pay each Advance in full on the last day of
such Advance's applicable Interest Period and shall make such mandatory payments
as are required to be made under the terms of Section 2.05 of the Credit
Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Advance and the date and amount of each principal
payment hereunder.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND
NOT THE LAW OF CONFLICTS) OF THE STATE OF TEXAS BUT GIVING EFFECT TO THE FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.
This Note is one of the Notes issued pursuant to, and is entitled to
the benefits of, the Credit Agreement, dated as of August 1, 1997 (as amended,
restated or otherwise modified and in effect from time to time, the "Credit
Agreement"), among Borrower, the banks named therein and NationsBank of Texas,
N.A., Administrative Agent, to which Agreement reference is hereby made for a
statement of the terms and conditions under which this Note may be prepaid or
its maturity date accelerated. Capitalized terms used herein and not otherwise
defined herein are used with the meanings attributed to them in the Credit
Agreement.
GCI HOLDINGS, INC.
By:
Its:
<PAGE>
SCHEDULE OF ADVANCES AND PAYMENTS OF PRINCIPAL TO
NOTE OF
GCI HOLDINGS, INC
DATED
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Advance Period Paid Balance
---- ------- ------ ---- -------
88001
0100.0269
<PAGE>
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Dated
Reference is made to the Amended and Resated Credit Agreement dated as
of November , 1997, (as amended, restated, or otherwise modified from time to
time, the "Credit Agreement") among GCI Holdings, Inc., an Alaskan corporation
(the "Borrower"), NationsBank of Texas, N.A., as Administrative Agent (the
"Administrative Agent"), and the Lenders parties thereto. Terms defined in the
Credit Agreement are used herein with the same meaning.
("Assignor") and ("Assignee") agree as follows:
1. Assignor hereby sells and assigns to Assignee without recourse or
warranty, and Assignee hereby purchases and assumes from Assignor, a %
interest in and to all of Assignor's rights and obligations under the Credit
Agreement as of the Effective Date (as defined below), with respect to such
percentage interest in Assignor's portion of the Revolving Commitment
[Revolver/Term Commitment] as in effect on the Effective Date, the principal
amount of Advances owing to Assignor on the Effective Date, and the Notes held
by Assignor, subject to the terms and conditions of this Assignment and
Acceptance.
2. Assignor (a) represents and warrants that (i) as of the date hereof
the aggregate amount of its portion of the Revolving Commitment [Revolver/Term
Commitment] (without giving effect to assignments thereof which have not yet
become effective) is $ and, as of the date hereof, the outstanding
principal amount of the Advances owing to it (without giving effect to
assignments thereof which have not yet become effective) is $ , and (ii)
it is the legal and beneficial owner of the interest being assigned by it
hereunder; (b) makes no representation or warranty and assumes no responsibility
with respect to (i) any statements, warranties, or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of the Credit Agreement, the
Loan Papers, or any other instrument or document furnished pursuant thereto or
(ii) the financial condition of the Borrower or the performance or observance by
the Borrower of any of its obligations under the Credit Agreement, the Loan
Papers, or any other instrument or document furnished pursuant thereto; and (c)
attaches the Note referred to in Paragraph 1 above to exchange such Notes for
new Note as follows: .
3. Assignee (a) confirms that it has received a copy of the Credit
Agreement and the other Loan Papers, together with copies of the financial
statements referred to in Section 6.05 of the Credit Agreement 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; (b) agrees
that it will, independently and without reliance upon the Administrative Agent,
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 and the other Loan
Papers; (c) appoints and authorizes the Administrative Agent to
<PAGE>
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement, the other Loan Papers, and this Assignment and Acceptance as
are delegated to the Administrative Agent by the terms thereof and hereof,
together with such powers as are reasonably incidental thereto and hereto; (d)
agrees that it will perform in accordance with its terms all of the obligations
which by the terms of the Credit Agreement, the other Loan Papers, and this
Assignment and Acceptance are required to be performed by it as a Lender; (e)
specifies the addresses set forth in Schedule I attached hereto as its address
for the receipt of notices; and (f) if it is not a United States Person,
attaches the forms prescribed by the Internal Revenue Service certifying as to
Assignee's status for purposes of determining exception from United States
withholding taxes with respect to all payments to be made to Assignee under the
Credit Agreement, the other Loan Papers, and this Assignment and Acceptance or
such other documents as are necessary to indicate that all such payments are
subject to such taxes at a rate reduced by an applicable tax treaty.
4. The effective date for this Assignment and Acceptance shall be
(the "Effective Date").
5. Upon remittance of the $3,500 processing fee to the Administrative
Agent on behalf of the Administrative Agent and the Effective Date, (a) 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 (b) Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement.
6. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Texas and the United States of America.
Without excluding any other jurisdiction, Assignee agrees that the courts of
Texas will have jurisdiction over proceedings in connection herewith.
7. Assignee's Specified Percentage ("Specified Percentage") shall be %.
-2-
<PAGE>
8. This Assignment and Acceptance may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
[ASSIGNOR]
By:
Name:
Title:
[ASSIGNEE]
By:
Name:
Title:
-3-
<PAGE>
Accepted this day of
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent
By:
Name:
Title:
-4-
<PAGE>
Schedule I
ASSIGNEE'S ADDRESS
1. Address for the Loans and Receipt of Notices
2. Initial Eurodollar Lending Office
-5-
89718
0100.0269
<PAGE>
EXHIBIT C
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement (as amended, restated, or otherwise
modified from time to time, this "Security Agreement") is executed as of
November , 1997, by and between the undersigned Company ("Company") and
NationsBank of Texas, N.A., as Administrative Agent ("Administrative Agent") for
the lenders referred to below.
BACKGROUND
GCI Holdings, Inc. has entered into a $200,000,000 Amended and Restated
Credit Agreement dated as of November , 1997 and a $50,000,000 Amended and
Restated Credit Agreement dated as of November , 1997 (as amended, restated
or otherwise modified and in effect from time to time, collectively, the "Credit
Agreement"), which Credit Agreement is a restatement of those certain
$200,000,000 and $50,000,000 Credit Agreements, each dated as of August 1, 1997
among GCI Holdings, Inc., Administrative Agent and the lenders named therein
(collectively, the "Original Credit Agreement"). In connection with the Original
Credit Agreement, the Company has also entered into that certain Pledge and
Security Agreement, dated as of August 1, 1997, for the benefit of
Administrative Agent and the lenders named therein. The Credit Agreement
requires that the Obligations (as defined in the Credit Agreement) be secured by
the Collateral (as hereinafter defined) and Company desires to enter into this
Security Agreement to satisfy such terms. The board of directors of the Company
has determined that the Company will benefit, directly or indirectly, from the
Advances (as defined in the Credit Agreement) made under the Credit Agreement.
AGREEMENT
The parties hereto agree as follows:
1. DEFINITIONS.
As used in this Security Agreement:
"Accounts" means rights to payment for goods sold or leased or for
services rendered, whether or not earned by performance, together with all
security interests securing such rights to payment.
"Collateral" means all of the following property, wherever located, in
which Company now has or hereafter acquires any right or interest, and any and
all proceeds, insurance proceeds and products thereof, together with all cash,
bank accounts, special collateral accounts, books, records, customer lists,
credit files, computer files, programs, printouts and other computer records
related thereto:
<PAGE>
(a) Accounts (e) Pledged Stock
(b) Equipment (f) Stock Rights
(c) Fixtures (g) Inventory
(d) General Intangibles
"Default" means an event described in Section 5 whether or not any
requirement in connection with such event for the giving of notice, lapse of
time, or happening of any further condition has been satisfied.
"Event of Default" means an event described in Section 5.
"Equipment" means all equipment, machinery, furniture and goods used or
usable by Company in its business and all other tangible personal property
(other than Inventory and motor vehicles), and all accessions and additions
thereto, including, without limitation, the Fixtures.
"FCC" means the Federal Communications Commission or any other
regulatory body which succeeds to the functions of the Federal Communications
Commission.
"FCC License" means any community antenna relay service, broadcast
auxiliary license, earth station, business radio, microwave or special safety
radio service license issued by the FCC pursuant to the Communications Act of
1934, as amended.
"Fixtures" means all goods of Company, which have been attached to real
property in such a manner that their removal would cause damage to the realty
and which have therefore taken on the character of real property, including,
without limitation, all trade fixtures.
"General Intangibles" means all intangible personal property including,
without limitation, all contract rights, rights to receive payments of money,
chooses in action, judgments, tax refunds and tax refund claims, patents,
trademarks, trade names, copyrights, licenses (including, without limitation,
all FCC Licenses except to the extent that it is unlawful to grant a security
interest therein and that the grant of any such security interest therein would
result in a default thereunder or forfeiture thereof), franchises, partnership
interests, joint venture interests, leasehold interests in real or personal
property, rights to receive rentals of real or personal property and guarantee
claims.
"Government Claim" means any Receivable which constitutes a claim
against the federal government, any state government or any instrumentality or
agency of any of the foregoing.
"Inventory" means all inventory, raw materials, work in process,
finished goods, returned or repossessed goods, goods held for sale or lease,
goods furnished or to be furnished under contracts of service.
100/269/87988 -2-
<PAGE>
"Lien" means any security interest, mortgage, pledge, hypothecation,
lien, claim, charge, encumbrance, title retention agreement or lessor's interest
in, of or on the Collateral or any portion thereof.
"Person" means any corporation, natural person, firm, joint venture,
partnership, trust, unincorporated organization, enterprise, government or any
department or agency of any government.
"Pledged Stock" means all of the outstanding shares of capital stock of
each Person currently or hereafter owned by Company, other than, in the case of
GCI Holdings, Inc., GCI Transport Company.
"Receivables" means the Accounts and General Intangibles.
"Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"Security Agreement" means this Pledge and Security Agreement, as it
may be amended or modified and in effect from time to time.
"Stock Rights" means any securities, dividends or other distributions
and any other right or property which Company shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any or all of the Pledged Stock and any other property
substituted or exchanged therefor and any stock, any right to receive stock and
any right to receive earnings, in which Company now has or hereafter acquires
any right, issued by an issuer of the Pledged Stock.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. Capitalized terms used herein
and not otherwise defined herein shall have the meanings set forth in the Credit
Agreement.
2. GRANT OF SECURITY INTEREST.
Company hereby pledges, assigns and grants to Administrative Agent for
the benefit of the Lenders, equally and ratably in proportion to the total
Obligations owing at any time to the Lenders, a continuing Lien and security
interest in and right of setoff against the Collateral to secure the full and
complete payment and performance of the Obligations.
3. REPRESENTATIONS AND WARRANTIES.
Company represents and warrants to Administrative Agent that:
100/269/87988 -3-
<PAGE>
3.1. Existence and Standing. Company is duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
3.2. Authorization, Validity and Enforceability. The execution and
delivery by Company of this Security Agreement has been duly authorized by
proper corporate proceedings and this Security Agreement constitutes a legal,
valid and binding obligation of Company and creates a security interest which is
enforceable against Company in all now owned and hereafter acquired Collateral,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
3.3. Conflicting Laws and Contracts. Neither the execution and delivery
by Company of this Security Agreement, nor the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Company or Company's articles
or certificate of incorporation or by-laws, the provisions of any indenture,
instrument or agreement to which Company is a party or is subject, or by which
it or its property is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien pursuant to the
terms of any such indenture, instrument or agreement. No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, which has not heretofore been obtained or
made, is required to authorize, or is required in connection with the execution,
delivery and performance of, or the legality, validity, binding effect or
enforceability of this Security Agreement other than the filing, within the
period established by applicable law, of this Security Agreement with the FCC.
3.4. Principal Location. Company's mailing address for notices
hereunder, the location of its chief executive office and principal place of
business and of its books and records relating to the Receivables are all
disclosed in Exhibit A. Company has no other places of business except those set
forth in Exhibits A and B.
3.5. Property Locations. The Equipment and Fixtures are located solely
at the locations described in Exhibit B. All of said locations are owned by
Company except those listed in Part B of Exhibit B.
3.6. No Other Names. Company has not conducted business under any name
except the name in which it has executed this Security Agreement and the trade
names listed in Exhibit A.
3.7. No Default. No Default or Event of Default exists.
3.8. Receivables. The names of the obligors, amounts owing, due dates
and other information with respect to the Receivables are correctly stated in
all material respects in all
100/269/87988 -4-
<PAGE>
records of Company relating thereto and in all invoices and reports with respect
thereto furnished to Administrative Agent by Company from time to time.
3.9. Filing Requirements. None of the Collateral is of a type where
security interests or liens may be filed under any federal statute, except for
patents and copyrights held by Company described in Exhibit C. The legal
description and street address of the property on which any Fixtures are located
is set forth in Exhibit B, together with the names and addresses of the record
owner of each such property.
3.10. No Financing Statements. No financing statement describing all or
any portion of the Collateral which has not lapsed or been terminated naming
Company as debtor has been filed in any jurisdiction except (a) financing
statements naming Administrative Agent as secured party and (b) financing
statements described in Exhibit D.
3.11. Ownership of Pledged Stock. Company is the holder of record and
the sole beneficial owner of each share of the Pledged Stock and the Pledged
Stock constitutes 100% of the issued and outstanding stock of each Subsidiary
owned by the Company. Exhibit E sets forth a complete and accurate list of the
Pledged Stock and Stock Rights. No Person other than Company is the holder of
record or the beneficial owner of any Stock Rights. All of the shares of Pledged
Stock have been duly and validly issued, are fully paid and non-assessable and
are owned by Company free and clear of any Liens, except Permitted Liens,
options, warrants, puts, calls or other rights of third persons, and
restrictions, other than (a) the security interest granted to Administrative
Agent hereunder and (b) restrictions on transferability imposed by applicable
state and Federal Securities laws or which may arise as a result of Company
being subject to the Communications Act of 1934, as amended, and the rules and
regulations of the FCC thereunder.
4. COVENANTS.
From the date of this Security Agreement, and thereafter until this
Security Agreement is terminated:
4.1. General.
(a) Applications, Approvals and Consents. Company 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 Administrative Agent may
reasonably request in connection with the obtaining of any consent,
approval, registration, qualification, or authorization of the FCC or
of any other Person necessary or appropriate for the effective exercise
of any rights under this Security Agreement. Without limiting the
generality of the foregoing, Company agrees that in the event
Administrative Agent shall exercise its right to sell, transfer, or
otherwise dispose of or take any other action in connection with any of
the Pledged Stock or other Collateral pursuant to this Security
Agreement, Company shall execute and deliver all applications,
certificates, and other documents Administrative Agent may
100/269/87988 -5-
<PAGE>
reasonably request and shall otherwise promptly, fully, and diligently
cooperate with Administrative Agent, the Lenders and any other
necessary Persons, in making any application for the prior consent or
approval of the FCC or any other Person to the exercise by
Administrative Agent or the Lenders of any of such rights relating to
all or any part of the Pledged Stock or other Collateral. Furthermore,
because Company agrees that Administrative Agent's and the Lenders'
remedy at law for failure of Company to comply with the provisions of
this Section 4.1(a) would be inadequate and that such failure would not
be adequately compensable in damages, Company agrees that the covenants
of this Section 4.1(a) may be specifically enforced.
(b) Inspection. Company will permit Administrative Agent, by
its representatives and agents, to inspect the Collateral, to examine
and make copies of the records of Company relating thereto, and to
discuss the Collateral, and the records of Company with respect thereto
with, and to be advised as to the same by, Company's officers and
employees and, in the case of any Receivable, with any Person which is
or may be obligated thereon, all at such reasonable times and intervals
as Administrative Agent may determine, all at Company's expense.
(c) Taxes. Company will pay when due all taxes, assessments
and governmental charges and levies upon the Collateral, except those
which are being contested in good faith by appropriate proceedings.
(d) Records and Reports. Company will maintain complete and
accurate books and records with respect to the Collateral, and furnish
to Administrative Agent such reports relating to the Collateral as
Administrative Agent may from time to time request.
(e) Notice of Default. Company will give prompt notice in
writing to Administrative Agent of the occurrence of any Default or
Event of Default and of any other development, financial or otherwise,
which might materially adversely affect the Collateral or the ability
of Company to perform the Obligations hereunder and under the other
Loan Papers to which it is a party.
(f) Financing Statements and Other Actions. Company will
execute and deliver to Administrative Agent all financing statements
and other documents from time to time requested by Administrative Agent
in order to maintain a first perfected security interest in the
Collateral.
(g) Further Assurances. Company agrees to warrant and defend
title to and ownership of the Pledged Stock and Stock Rights and the
lien created by this Security Agreement against the claims of all
Persons and maintain and preserve such lien at all times during the
term of this Security Agreement. Company, at its expense, shall from
time to time execute and deliver to Administrative Agent all such other
assignments, certificates, supplemental documents, and financing
statements, and shall do all other acts
100/269/87988 -6-
<PAGE>
or things as Administrative Agent may reasonably request in order to
more fully create, evidence, perfect, continue, and preserve the
priority of the lien herein created. Without limiting the generality of
the foregoing, (i) Company shall, upon the request of Administrative
Agent or Majority Lenders at such time as (A) a Default or Event of
Default shall have occurred and be continuing or (B) the total
aggregate amount of all Government Claims shall exceed 7% of all
Receivables owing to Company, execute and deliver to Administrative
Agent, at Company's expense, such assignments of claims or similar
documents as shall be necessary or appropriate to continue or perfect
the priority of the lien herein created in such Government Claims.
(h) Disposition of Collateral. Company will not lease, sell or
otherwise dispose of the Collateral except as permitted by the terms of
the Credit Agreement.
(i) Liens. Company will not create, incur, or suffer to exist
any Lien except (i) the Lien created by this Security Agreement and
(ii) those Liens permitted by the terms of the Credit Agreement.
(j) Change in Location or Name. Without giving Administrative
Agent at least 30 days' prior written notice, Company will not (i) have
any Equipment or Fixtures or proceeds or products thereof (other than
Equipment, Fixtures or proceeds thereof disposed of as permitted by
Section 4.1(h)) at a location other than a location specified in
Exhibit B, (ii) maintain records relating to the Receivables at a
location other than at the location specified on Exhibit A, (iii)
maintain a place of business at a location other than a location
specified on Exhibits A and B, or (iv) change its name or its mailing
address or adopt a trade or assumed name.
(k) Other Financing Statements. Company will not sign or
authorize the signing on its behalf of any financing statement naming
it as debtor covering all or any portion of the Collateral, except
financing statements in respect of the Liens permitted by Section
4.1(i).
4.2. Receivables.
(a) Certain Agreements on Receivables. Company will not make
or agree to make any discount, credit, rebate or other reduction in the
original amount owing on a Receivable or accept in satisfaction of a
Receivable less than the original amount thereof, except that, prior to
the occurrence of an Event of Default, Company may reduce the amount of
Accounts in accordance with its present policies and in the ordinary
course of business.
(b) Collection of Receivables. Subject to the rights of
Administrative Agent under this Security Agreement and as a secured
party under applicable law, Company will collect and enforce, at
Company's sole expense, all amounts due or hereafter due to Company
under the Receivables.
100/269/87988 -7-
<PAGE>
(c) Delivery of Invoices. Upon the request of Administrative
Agent after the occurrence and during the continuance of an Event of
Default, Company will deliver to Administrative Agent duplicate
invoices with respect to each Account bearing such language of
assignment as Administrative Agent shall specify.
(d) Disclosure of Counterclaims on Receivables. If any
discount, credit, agreement to make a rebate or to otherwise reduce
(collectively, a "Reduction") the amount owing on a Receivable exists
or if, to the knowledge of Company, any dispute, setoff, claim,
counterclaim or defense (collectively, a "Claim") exists or has been
asserted or threatened with respect to a Receivable, which Reduction or
Claim may, singly or in the aggregate, materially adversely affect the
value of the Collateral or the ability of Company to fulfill its
obligations under the Loan Papers, Company will disclose such fact to
Administrative Agent in writing in connection with the inspection by
Administrative Agent of any record of Company relating to such
Receivable and in connection with any invoice or report furnished by
Company to Administrative Agent relating to such Receivable.
4.3. Equipment and Fixtures.
(a) Maintenance of Goods. Company will do all things necessary
to maintain, preserve, protect and keep the Equipment and Fixtures in
good repair and working condition.
(b) Insurance. Company will (i) maintain fire and extended
coverage insurance on the Equipment and Fixtures containing a lender's
loss payable and breach of warranty clause in favor of Administrative
Agent and providing that said insurance will not be terminated except
after at least 30 days' written notice from the insurance company to
Administrative Agent, (ii) maintain such other insurance on the
Equipment and Fixtures for the benefit of Administrative Agent as
Administrative Agent shall from time to time reasonably request, and
(iii) furnish to Administrative Agent upon the request of
Administrative Agent from time to time the originals of all policies of
insurance on the Equipment and Fixtures and certificates with respect
to such insurance.
4.4. Pledged Stock.
(a) Delivery of Pledged Stock. Company will deliver to
Administrative Agent concurrently with the execution of this Security
Agreement the certificates representing the Pledged Stock which
constitutes certificated securities, endorsed in blank or accompanied
by appropriate instruments of transfer or assignments executed in
blank. If Company shall at any time acquire any additional shares of
the capital stock of any class of the Pledged Stock or any instrument
evidencing Stock Rights, whether such acquisition shall be by purchase,
exchange, reclassification, dividend, or otherwise, Company shall
forthwith (and without the necessity for any request or demand by
Administrative Agent or any Lender) deliver the certificates
representing such shares which constitutes
100/269/87988 -8-
<PAGE>
certificated securities and such instrument or writing to
Administrative Agent, in the same manner as described in the
immediately preceding sentence.
(b) Changes in Capital Structure of Issuers. Company will not
permit or suffer the issuer of any of the Pledged Stock or Stock Rights
to dissolve, liquidate, retire any of its capital stock, authorize or
issue any stock or rights to acquire stock not outstanding in the name
of Company on the date hereof, reduce its capital or merge or
consolidate with any other Person other than Company or another
Wholly-Owned Subsidiary, and Company will not in any event vote any of
the Pledged Stock or any Stock Rights in favor of any of the foregoing.
(c) Stock Rights. Company will deliver to Administrative
Agent, promptly upon receipt, all Stock Rights (other than, unless and
until a Default shall have occurred and be continuing, ordinary cash
dividends received with respect to the Pledged Stock) and agrees that
such Stock Rights shall be held in trust by Company for Administrative
Agent until delivery thereof to Administrative Agent.
(d) Voting Rights. Upon the occurrence and during the
continuance of an Event of Default, Administrative Agent may, upon prior written
notice to the Company of the Administrative Agent's intention to do so, exercise
all voting rights and all other ownership or consensual rights of or with
respect to the Pledged Stock, but under no circumstances is Administrative Agent
obligated to exercise such rights. Until the occurrence and during the
continuance of an Event of Default and the giving of the aforesaid notice by
Administrative Agent, the Company shall retain all voting rights to the Pledged
Stock.
4.5. Government Claims. Company will, promptly upon a request therefor,
notify Administrative Agent of any Government Claim.
5. DEFAULT.
5.1. The occurrence of any one or more of the following events shall
constitute an Event of Default:
(a) Any material representation or warranty made by or on
behalf of Company to Administrative Agent or any Lender under or in
connection with this Security Agreement shall be materially false on
the date as of which made.
(b) The breach by Company of any of the terms or provisions of
Sections 4.1(a), (e), (f), (g), (h), (j) and (k), 4.4 or 7; or the
breach by Company of any of the terms or provisions of Sections 4.1(b)
and (i) of this Security Agreement which is not remedied within 10 days
after the giving of written notice by Administrative Agent.
100/269/87988 -9-
<PAGE>
(c) The breach by Company (other than a breach which
constitutes a Default under Section 5.1(a) or (b)) of any of the terms
or provisions of this Security Agreement which is not remedied within
30 days after the giving of written notice by Administrative Agent.
(d) Any material portion of the Collateral shall be
transferred or otherwise disposed of in any manner not permitted by
Section 4.1(h) or shall be lost, damaged or destroyed and not covered
by insurance naming Administrative Agent as loss payee (subject to
reasonable deductibles).
(e) The occurrence of any "Event of Default" under, and as
defined in, the Credit Agreement.
5.2. Acceleration and Remedies. If any Event of Default occurs, then
upon the election of Majority Lenders (or, automatically in the case of the
occurrence of a Default under Section 8.01(g) of the Credit Agreement) the
Obligations shall automatically become immediately due and payable without
notice or demand of any kind. If any other Event of Default occurs, then, upon
the election of Majority Lenders, the Obligations shall immediately become due
and payable without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, and Administrative Agent may exercise any or
all of the rights and remedies provided (i) in this Security Agreement,
including, without limitation, Sections 5.2(a) and 5.2(b), (ii) to secured
parties under the Uniform Commercial Code as enacted in the State of Texas or
other applicable jurisdiction, as amended and (iii) any other rights afforded at
law in equity or otherwise.
(a) Exercise of Rights in Pledged Stock and Stock Rights. Upon
the occurrence and continuation of an Event of Default, subject to
compliance with applicable law, Administrative Agent, on behalf of
Lenders, shall have, subject to Section 8, the right (i) to consent in
advance to any vote proposed to be cast by Company with respect to any
merger, consolidation, liquidation or reorganization of any Subsidiary
and, in connection therewith, to join in and become a party to any plan
of recapitalization, reorganization, or readjustment (whether voluntary
or involuntary) as shall seem desirable to Administrative Agent, on
behalf of Lenders, to protect or further their interests in respect of
the Pledged Stock and Stock Rights, (ii) to deposit the Pledged Stock
and Stock Rights under any such plan, and (iii) to make any exchange,
substitution, cancellation, or surrender of the Pledged Stock and Stock
Rights required by any such plan and to take such action with respect
to the Pledged Stock and Stock Rights as may be required by any such
plan or for the accomplishment thereof and no such disposition,
exchange, substitution, cancellation, or surrender shall be deemed to
constitute a release of the Pledged Stock and Stock Rights from the
lien pursuant to this Security Agreement.
(b) Right of Sale of Pledged Stock and Stock Rights after
Default. Upon the occurrence and during the continuance of an Event of
Default, subject to compliance with
100/269/87988 -10-
<PAGE>
applicable law, Administrative Agent, on behalf of Lenders, may,
subject to Section 8, sell, without recourse to judicial proceedings,
with the right to bid for and buy the Pledged Stock and Stock Rights or
any part thereof, upon ten days' notice (which notice is agreed to be
reasonable notice for the purposes hereof) to Company of the time and
place of sale, for cash, upon credit or for future delivery, at
Administrative Agent's option and in Administrative Agent's complete
discretion:
(i) At public sale, including a sale at any broker's
board or exchange;
(ii) At private sale in any commercially reasonable
manner which will not require the Pledged Stock and Stock
Rights, or any part thereof, to be registered in accordance
with the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder, or any other law or
regulation. Administrative Agent and Lenders are also hereby
authorized, but not obligated, to take such actions, give such
notices, obtain such consents, and do such other things as
they may deem required or appropriate in the event of sale or
disposition of any of the Pledged Stock and Stock Rights.
Company understands that Administrative Agent, on behalf of
Lenders, may in its discretion approach a restricted number of
potential purchasers and that a sale under such circumstances
may yield a lower price for the Pledged Stock and Stock
Rights, or any portion thereof, than would otherwise be
obtainable if the same were registered and sold in the open
market. Company agrees that in the event Administrative Agent
shall so sell the Pledged Stock and Stock Rights, or any
portion thereof, at such private sale or sales, Administrative
Agent and Lenders shall have the right to rely upon the advice
and opinion of any Person who regularly deals in or evaluates
stock of the type constituting the Pledged Stock and Stock
Rights as to the price obtainable in a commercially reasonable
manner upon such a private sale thereof.
In the case of any sale by Administrative Agent on behalf of Lenders of
the Pledged Stock and Stock Rights on credit or for future delivery, the Pledged
Stock and Stock Rights sold may be retained by Administrative Agent until the
selling price is paid by the purchaser, but neither Administrative Agent nor any
Lender shall incur liability in case of failure of the purchaser to take up and
pay for the Pledged Stock and Stock Rights so sold.
In connection with the sale of any of the Pledged Stock and Stock
Rights, Administrative Agent and Lenders are authorized, but not obligated, to
limit prospective purchasers to the extent deemed necessary or desirable by
Administrative Agent and Lenders to render such sale exempt from the
registration requirements of the Securities Act of 1933, as amended, and any
applicable state securities laws. In the event that, in the opinion of
Administrative Agent and Lenders, it is necessary or advisable to have such
securities registered under the provisions of such Act, or any similar law
relating to the registration of securities, Company agrees, at its own expense,
to (i) execute and deliver all such instruments and documents, and to do or
cause to be done such other acts and things, as may be necessary or, in the
opinion of Administrative Agent,
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<PAGE>
advisable to register such securities under the provisions of such Act or any
applicable similar law relating to the registration of securities, and Company
will use its best efforts to cause the registration statement relating thereto
to become effective and to remain effective for such period as Administrative
Agent shall reasonably request, and to make all amendments thereof and/or to the
related prospectus which, in the opinion of Administrative Agent, are necessary
or desirable, all in conformity with the requirements of such Act and the rules
and regulations of the Securities and Exchange Commission applicable thereto;
(ii) use its best efforts to qualify such securities under state "blue sky" or
securities laws, all as reasonably requested by the Administrative Agent; and
(iii) at the request of the Administrative Agent, indemnify and hold harmless
Lenders, the Administrative Agent, any underwriters and accountants (and their
respective employees, officers, agents, attorneys) (collectively, the
"Indemnified Parties") from and against any loss, liability, claim, damage, and
expense (including, without limitation, reasonable fees of counsel incurred in
connection therewith) under such Act or otherwise, insofar as such loss,
liability, claim, damage, or expense arises out of or is based upon any untrue
statement or alleged untrue statement of any material fact furnished by Company
contained in any registration statement under which such securities were
registered under such Act or other securities laws, any preliminary prospectus
or final prospectus contained therein, or arise out of or are based upon any
omission or alleged omission by Company to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading, such indemnification to remain operative regardless of any
investigation made by or on behalf of any Indemnified Party; provided, however,
that Company shall not be liable in any case to the extent that any such loss,
liability, claim, damage, or expense arises out of or is based upon an untrue
statement or an omission made in reliance upon and in conformity with written
information furnished to Company by an Indemnified Party specifically for use in
such registration statement or preliminary or final prospectus and the providing
of such untrue statement or such omission resulted from the gross negligence or
willful misconduct of an Indemnified Party.
5.3. Company's Obligations Upon Default. Upon the request of the
Administrative Agent after the occurrence of an Event of Default and during the
continuance thereof, Company will:
(a) Assembly of Collateral. Assemble and make available to the
Administrative Agent the Collateral and all records relating thereto at any
place or places specified by the Administrative Agent.
(b) The Administrative Agent Access. Permit the Administrative
Agent, by the Administrative Agent's representatives and agents, to enter any
premises where all or any part of the Collateral, or the books and records
relating thereto, or both, are located, to take possession of all or any part of
the Collateral and to remove all or any part of the Collateral.
5.4. Governance. All rights and remedies available to Lenders with
respect to the grant, foreclosure and enforcement of the security interest and
lien granted hereby and with respect to any action permitted hereunder may be
exercised solely by the Administrative Agent acting with the concurrence of the
Majority Lenders provided, however, that no release of all
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<PAGE>
or any portion of the Collateral from the lien created hereby shall be effective
without the consent of all Lenders.
6. WAIVERS, AMENDMENTS AND REMEDIES.
No delay or omission of the Administrative Agent to exercise any right
or remedy granted under this Security Agreement or under applicable law shall
impair such right or remedy or be construed to be a waiver of any Default or
Event of Default or an acquiescence therein, and any single or partial exercise
of any such right or remedy shall not preclude other or further exercise thereof
or the exercise of any other right or remedy, and no waiver, amendment or other
variation of the terms, conditions or provisions of this Security Agreement
whatsoever shall be valid unless in writing signed by the Administrative Agent,
and then only to the extent in such writing specifically set forth. All rights
and remedies contained in this Security Agreement or by law afforded shall be
cumulative and all shall be available to the Administrative Agent until the
Obligations have been finally paid in full.
7. PROCEEDS; COLLECTION OF RECEIVABLES.
7.1. Collection of Receivables. The Administrative Agent may at any
time after the occurrence and during the continuance of an Event of Default, by
giving Company written notice, elect to require that the Receivables be paid
directly to the Administrative Agent. In such event Company shall, and shall
permit the Administrative Agent to, promptly notify the account debtors or
obligors under the Receivables of the Administrative Agent's interest therein
and direct such account debtors or obligors to make payment of all amounts then
or thereafter due under the Receivables directly to the Administrative Agent.
Upon receipt of any such notice from Administrative Agent, Company shall
thereafter hold in trust for Administrative Agent all amounts and proceeds
received by it with respect to the Receivables and other Collateral and
immediately and at all times thereafter deliver to Administrative Agent all such
amounts and proceeds in the same form as so received, whether by cash, check,
draft or otherwise, with any necessary endorsements. Administrative Agent shall
hold and apply funds so received as provided by the terms of Sections 7.3 and
7.4.
7.2. Lockboxes. Upon request of Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, Company shall
execute and deliver to Administrative Agent Administrative Agent's standard form
of irrevocable lockbox agreement and notify the obligors on the Receivables to
make payments thereon to such lockbox.
7.3. Special Collateral Account. At any time after the occurrence and
during the continuance of an Event of Default, Administrative Agent may require
all cash proceeds of the Collateral (whether collected through a lockbox
pursuant to Section 7.2 or otherwise) to be deposited in a special non-interest
bearing cash collateral account with Administrative Agent and held there as
security for the Obligations. Company hereby authorizes Administrative Agent in
Administrative Agent's sole discretion to establish such a cash collateral
account and acknowledges that Company shall have no control whatsoever over said
account. Administrative
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Agent may, at its option, and will (to the extent permitted by applicable law),
at Company's written request, apply the collected balances in said cash
collateral account to the payment of the Obligations whether or not the
Obligations shall then be due, or hold the balances in said cash collateral
account as Collateral hereunder.
7.4. Application of Proceeds. Administrative Agent shall apply the
proceeds of the Collateral, including the proceeds of any sales or other
disposition of the Collateral, or any part thereof, under this Section 7 or
Section 5.2(b), in the following order unless a court of competent jurisdiction
shall otherwise direct:
(a) First, to payment of all reasonable costs and expenses of
Administrative Agent incurred in connection with the collection and
enforcement of the Obligations or of the security interest granted to
Administrative Agent for the benefit of Lenders pursuant to this
Security Agreement;
(b) Second, to payment of that portion of the Obligations
constituting accrued and unpaid interest and fees, pro rata amongst
Lenders in accordance with the proportion which the accrued interest
and fees constituting Obligations owing to each such Lender bears to
the aggregate amount of accrued interest and fees constituting
Obligations owing to all of Lenders;
(c) Third, to payment of the principal of the Obligations and
net termination amounts payable in respect of the Obligations under
Interest Hedge Agreements owing to Lenders or any Lender, pro rata
among Lenders in accordance with the proportion which the principal
amount of Obligations and net termination amounts payable in respect of
the Obligations under Interest Hedge Agreements owing to each such
Lender bears to the aggregate principal amount of Obligations and net
termination amounts payable in respect of Obligations under Interest
Hedge Agreements owing to all of Lenders; and
(d) Fourth, the balance, if any, after all of the Obligations
have been satisfied, shall be remitted to Company.
8. CONTROL; LIMITATION OF RIGHTS.
8.1. License. Notwithstanding anything herein to the contrary, this
Security Agreement, the other Loan Papers and the transactions contemplated
hereby and thereby (i) do not and will not constitute, create, or have the
effect of constituting or creating, directly or indirectly, actual or practical
ownership of any Subsidiary by Administrative Agent or Lenders, or control,
affirmative or negative, direct or indirect, by Administrative Agent or Lenders
over the management or any other aspect of the operation of any Subsidiary,
which ownership and control remain exclusively and at all times in such
Subsidiary and Company, and (ii) do not and will not constitute the transfer,
assignment, or disposition in any manner, voluntarily or involuntarily, directly
or indirectly, of any license at any time issued by the FCC to any
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<PAGE>
Subsidiary ("License"), or the transfer of control of any such Subsidiary within
the meaning of Section 310(d) of the Communications Act of 1934, as amended.
8.2. Communications Act. Notwithstanding any other provision of this
Security Agreement, any foreclosure on, sale, transfer or other disposition of,
or the exercise of any right to vote or consent with respect to, any of the
Collateral as provided herein or any other action taken or proposed to be taken
by Administrative Agent and Lenders hereunder which would affect the
operational, voting, or other control of any Subsidiary, shall be pursuant to
Section 310(d) of the Communications Act of 1934, as amended, to any applicable
state laws and to the applicable rules and regulations thereunder and, if and to
the extent required thereby, subject to the prior approval of the FCC.
8.3. Assignment. Subject to Section 8.5, if an Event of Default shall
have occurred and be continuing, Company shall take any action which
Administrative Agent, on behalf of Lenders, may reasonably request in order to
transfer and assign to Administrative Agent, or to such one or more third
parties as Administrative Agent may designate, or to a combination of the
foregoing, each License. To enforce the provisions of this Section 8,
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 an involuntary transfer of control of each such License for the
purpose of seeking a bona fide purchaser to whom control will ultimately be
transferred. Company hereby agrees to authorize such an involuntary transfer of
control upon the request of the receiver so appointed and, if Company shall
refuse to authorize the transfer, its approval may be required by the court.
Upon the occurrence and continuance of an Event of Default, Company shall
further use its best efforts to assist in obtaining approval of the FCC, if
required, for any action or transactions contemplated by this Security Agreement
including, without limitation, the preparation, execution and filing with the
FCC of the assignor's or transferor's portion of any application or applications
for consent to the assignment of any License or transfer of control necessary or
appropriate under the FCC's rules and regulations for approval of the transfer
or assignment of any portion of the Collateral, together with any License.
8.4. Specific Enforcement. Company acknowledges that the assignment or
transfer of each License is integral to Administrative Agent's and Lenders'
realization of the value of the Collateral, that there is no adequate remedy at
law for failure by Company to comply with the provisions of this Section 8 and
that such failure would not be adequately compensable in damages, and therefore
agrees that the agreements contained in this Section 8 may be specifically
enforced.
8.5. Prior Approval. Notwithstanding anything to the contrary contained
in this Security Agreement or in any other Loan Paper, neither Administrative
Agent nor any Lender shall, without first obtaining the approval of the FCC,
take any action pursuant to this Security Agreement which would constitute or
result in any assignment of a License or any change of control of any Subsidiary
if such assignment or change in control would require, under then
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existing law (including the written rules and regulations promulgated by the
FCC), the prior approval of the FCC.
9. GENERAL PROVISIONS.
9.1. Notice of Disposition of Collateral. Company hereby waives notice
of the time and place of any public sale or the time after which any private
sale or other disposition of all or any part of the Collateral. To the extent
such notice may not be waived under applicable law, any notice made shall be
deemed reasonable if sent to Company, addressed as set forth in Section 11, at
least ten days prior to any such public sale or the time after which any such
private sale or other disposition may be made.
9.2. Compromises and Collection of Collateral. Company and
Administrative Agent recognize that setoffs, counterclaims, defenses and other
claims may be asserted by obligors with respect to certain of the Receivables,
that certain of the Receivables may be or become uncollectible in whole or in
part and that the expense and probability of success in litigating a disputed
Receivable may exceed the amount that reasonably may be expected to be recovered
with respect to a Receivable. In view of the foregoing, Company agrees that
Administrative Agent may at any time and from time to time, if an Event of
Default has occurred and is continuing, compromise with the obligor on any
Receivable, accept in full payment of any Receivable such amount as
Administrative Agent in its sole discretion shall determine or abandon any
Receivable, and any such action by Administrative Agent shall be commercially
reasonable so long as Administrative Agent acts in good faith based on
information known to it at the time it takes any such action.
9.3. Administrative Agent Performance of Company Obligations. Without
having any obligation to do so, Administrative Agent may perform or pay any
obligation in this Security Agreement which Company has agreed to perform or pay
but which it has failed to so perform or pay in a timely manner after a request
therefor from Administrative Agent and Company shall reimburse Administrative
Agent for any amounts paid by Administrative Agent pursuant to this Section 9.3.
Company's obligation to reimburse Administrative Agent pursuant to the preceding
sentence shall be part of the Obligation and is payable on demand.
9.4. Authorization for Administrative Agent to Take Certain Action.
Company irrevocably authorizes Administrative Agent at any time and from time to
time in the sole discretion of Administrative Agent and appoints Administrative
Agent as its attorney in fact to act on behalf of Company (a) to execute on
behalf of Company as debtor and to file financing statements necessary or
desirable in Administrative Agent's sole discretion to perfect and to maintain
the perfection and priority of Administrative Agent's security interest in the
Collateral, (b) in accordance with the terms of this Security Agreement, to
indorse and collect any cash proceeds of the Collateral, (c) to file a carbon,
photographic or other reproduction of this Security Agreement or any financing
statement with respect to the Collateral as a financing statement in such
offices as Administrative Agent in its sole discretion deems necessary or
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<PAGE>
desirable to perfect and to maintain the perfection and priority of
Administrative Agent's security interest in the Collateral, (d) after the
occurrence of an Event of Default and during the continuance thereof, to enforce
payment of the Receivables in the name of Administrative Agent or Company, and
(e) to apply the proceeds of any Collateral received by Administrative Agent to
the Obligations as provided in Section 7. The power of attorney provided in this
Section 9.4, and each other appointment by Company of Administrative Agent or
any Lender as Company's attorney-in-fact, is coupled with an interest and is
irrevocable prior to final payment in full of the Obligation.
9.5. Specific Performance of Certain Covenants. Company acknowledges
and agrees that a breach of any of the covenants contained herein will cause
irreparable injury to Administrative Agent, that Administrative Agent has no
adequate remedy at law in respect of such breaches and therefore agrees, without
limiting the right of Administrative Agent to seek and obtain specific
performance of other obligations of Company contained in this Security
Agreement, that the covenants of Company contained in the Sections referred to
in this Section 9.5 shall be specifically enforceable against Company.
9.6. Use and Possession of Certain Premises. Upon the occurrence of an
Event of Default and during the continuance thereof, Administrative Agent shall
be entitled to occupy and use any premises owned or leased by Company where any
of the Collateral or any records relating to the Collateral are located until
the Obligations are paid or the Collateral is removed therefrom, whichever first
occurs, without any obligation to pay Company for such use and occupancy.
9.7. Dispositions Not Authorized. Company is not authorized to sell or
otherwise dispose of the Collateral except as set forth in Section 4.1(h) and
notwithstanding any course of dealing between Company and Administrative Agent
or other conduct of Administrative Agent, no authorization to sell or otherwise
dispose of the Collateral (except as set forth in Section 4.1(h)) shall be
binding upon Administrative Agent unless such authorization is in writing signed
by Administrative Agent.
9.8. Care of Collateral. Administrative Agent shall not have any duty
to assure that all certificates representing the Pledged Stock have been
delivered to it or any obligation whatsoever with respect to the care, custody
or protection of any certificates which may be delivered to it except only to
exercise the same care in physically safekeeping such certificates as it would
exercise in the ordinary course of its own business. Neither Administrative
Agent nor any Lender shall be obligated to preserve or protect any rights with
respect to the Pledged Stock or to receive or give any notice with respect
thereto whether or not Administrative Agent or any Lender is deemed to have
knowledge of such matters.
9.9. Definition of Certain Terms. Terms defined in the Article 9 of
Texas Business and Commerce Code which are not otherwise defined in this
Security Agreement are used in this Security Agreement as defined in the Article
9 of Texas Business and Commerce Code as in effect on the date hereof.
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<PAGE>
9.10. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of Company,
Administrative Agent and Lenders and their respective successors and assigns,
except that Company shall not have the right to assign its rights or obligations
under this Security Agreement or any interest herein, without the prior written
consent of Administrative Agent.
9.11. Survival of Representations. All representations and warranties
of Company contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement.
9.12. Taxes and Expenses. Any taxes (including income taxes) payable or
ruled payable by federal or state authority in respect of this Security
Agreement shall be paid by Company, together with interest and penalties, if
any. Company shall reimburse Administrative Agent for any and all out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of Administrative Agent) paid or incurred
by Administrative Agent in connection with the preparation, execution, delivery,
administration, collection and enforcement of this Security Agreement and in the
audit, analysis, administration, collection, preservation or sale of the
Collateral (including the expenses and charges associated with any periodic or
special audit of the Collateral). The obligations of Company under this Section
9.12 shall survive termination of this Security Agreement.
9.13. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
9.14. Term. This Security Agreement and the Lien arising hereunder (a)
shall become effective as of the date hereof upon the execution hereof, and (b)
shall continue in force (and shall be reinstated if at any time all or any
portion of any amounts in respect of Obligations received by Administrative
Agent or any Lender are required to be returned or paid over to any Person) for
so long as any Obligations, or commitment to extend any Obligations, remain
outstanding.
9.15. PRIOR AGREEMENTS. THIS AGREEMENT AND THE OTHER LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
9.16. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS WITHOUT APPLYING THE LAW OF
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<PAGE>
CONFLICTS OF TEXAS OR ANY OTHER JURISDICTION. COMPANY HEREBY CONSENTS TO THE
JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN DALLAS COUNTY,
TEXAS AND WAIVES ANY OBJECTION WHICH COMPANY MAY HAVE BASED ON IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND
CONSENTS THAT ALL SERVICE OF PROCESS MAY BE MADE BY MAIL OR MESSENGER DIRECTED
TO IT AT THE ADDRESS SET FORTH IN EXHIBIT A. AT THE OPTION OF Administrative
Agent, COMPANY WAIVES, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY, AND WAIVES
ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER,
BE REQUIRED OF ADMINISTRATIVE AGENT. NOTHING CONTAINED IN THIS SECTION 9.16
SHALL AFFECT THE RIGHT OF ADMINISTRATIVE AGENT TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ADMINISTRATIVE AGENT OR
LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST COMPANY OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION.
9.17. Distribution of Reports. Company authorizes Administrative Agent,
as Administrative Agent may elect in its sole discretion, to discuss with and
furnish to any other Person or entity having an interest in the Obligations
(whether as a guarantor, pledgor of collateral, participant, purchaser or
otherwise) all financial statements, audit reports and other information
pertaining to Company and the Subsidiaries if any, whether such information was
provided by Company or prepared or obtained by Administrative Agent.
9.18. Indemnity. Company hereby agrees to assume liability for, and
does hereby agree to indemnify and keep harmless Administrative Agent and each
Lender, and their respective successors, assigns, agents and employees, from and
against any and all liabilities, damages, penalties, suits, costs, and expenses
of any kind and nature, imposed on, incurred by or asserted against
Administrative Agent and each Lender, or their respective successors, assigns,
agents and employees, in any way relating to or arising out of this Security
Agreement, or the manufacture, purchase, acceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of any Collateral (including, without limitation, latent and other
defects, whether or not discoverable by Administrative Agent, any Lender or
Company, and any claim for patent, trademark or copyright infringement and any
acts or omissions which result from such Person's negligence).
9.19. Releases. Any cash dividends received by Company in accordance
with the terms of Section 4.4(c) shall be deemed released from the lien of this
Security Agreement and shall be held by Company (or any transferee of Company)
free and clear of the lien created by this Security Agreement. Upon the sale,
lease or other disposition of assets permitted by the terms of Section 4.1(h),
Administrative Agent and Lenders shall, at Company's request and expense execute
such partial releases as Company may reasonably request, in form and upon terms
acceptable to Administrative Agent and Lenders in all respects. Upon termination
of this Security Agreement in accordance with the provisions of Section 9.14,
Administrative Agent and Lenders
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<PAGE>
shall, at Company's request and expense and subject to the foregoing sentence,
execute such releases as Company may reasonably request, in form and upon terms
acceptable to Administrative Agent and Lenders in all respects, and shall
deliver all certificates representing the Pledged Stock and other property held
in respect thereof hereunder which is in Administrative Agent's possession,
together with all stock powers or other instruments of transfer reasonably
required to effect delivery to Company.
9.20. Waivers. Except to the extent expressly otherwise provided herein
or in any Loan Paper, Company waives, to the extent permitted by applicable law,
(a) any right to require either Administrative Agent or any Lender to proceed
against any other Person, to exhaust their rights in any other collateral, or to
pursue any other right which either Administrative Agent or any Lender may have,
(b) with respect to the Obligations, presentment and demand for payment,
protest, notice of protest and non-payment, and notice of the intention to
accelerate, and (c) all rights of marshalling in respect of any and all of the
Collateral.
9.21. Counterparts. This Security Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Security Agreement by
signing any such counterpart. This Security Agreement shall be effective when it
has been executed by Company and Administrative Agent.
10. Administrative Agent.
NationsBank of Texas, N.A. has been appointed Administrative Agent of
Lenders hereunder pursuant to Article IX of the Credit Agreement, and
Administrative Agent has agreed to act (and any successor Administrative Agent
shall act) as such hereunder only on the express conditions contained in such
Article IX. Any successor Administrative Agent appointed pursuant to Article IX
of the Credit Agreement shall be entitled to all the rights, interests and
benefits of Administrative Agent hereunder.
11. NOTICES.
11.1. Sending Notices. Any notice required or permitted to be given
under this Security Agreement may be, and shall be deemed, given and sent as
provided in the Credit Agreement.
11.2. Change in Address for Notices. Each of Company and Administrative
Agent or any Lender may change the address for service of notice upon it by a
notice in writing to the other.
12. SETOFF.
In addition to, and without limitation of, any rights of Administrative
Agent and Lenders under applicable law, if Company becomes insolvent, however
evidenced, or any Event of Default occurs and is continuing, any indebtedness
from Administrative Agent or Lenders to Company (including, without limitation,
funds of Company on deposit with Administrative Agent
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<PAGE>
or Lenders which have not yet been collected or which are not yet available in
accordance with Administrative Agent's or Lenders' availability schedules from
time to time in effect) may be offset and applied toward the payment of the
Obligations, for the ratable benefit of Lenders whether or not the Obligations,
or any part hereof, shall then be due.
This Security Agreement is an amendment and restatement of that certain
Pledge and Security Agreement dated as of August 1, 1997 executed by the Company
for the benefit of Administrative Agent and the lenders named therein (the
"Original Security Agreement"), and as such, except for the Lien created
thereby, amends and supersedes the Original Security Agreement in its entirety.
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IN WITNESS WHEREOF, the undersigned have executed this Security
Agreement as of the date first above written.
By:
Its:
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<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain
Credit Agreement (as amended, restated, or otherwise modified from time to time,
the "Agreement") dated as of November , 1997, among GCI Holdings, Inc.
(the "Borrower"), the banks party thereto and NationsBank of Texas, N.A. as
Administrative Agent for the Lenders. Unless otherwise defined herein, the terms
used in this Compliance Certificate have the meanings ascribed thereto in the
Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Parent, the Borrower and the Restricted Subsidiaries
during the accounting period covered by the attached financial statements, dated
as of ;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, 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, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain covenants of the
Agreement, all of which data and computations are true, complete and correct.
Listed below are the exceptions, if any, to paragraph 3 describing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
<PAGE>
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this day of , 19 .
GCI HOLDINGS, INC.
By:
Its:
0100.0269\89091 -2-
<PAGE>
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of with
Provisions of Section 7.01 of
the Agreement
1. Section 7.01(a) - Total Leverage Ratio
A. Total Debt (for the fiscal quarter ended
,19 ) of GCII, the Borrower, and
Restricted Subsidiaries
(i) Debt for Borrowed Money $
(ii) Debt having a final maturity of
more than one year $
(iii) Capitalized Lease obligations $
(iv) reimbursement obligations
relating to Letters of Credit
(without duplication) $
(v) Contingent Liabilities
(without duplication) $
(vi) Withdrawal Liabilities $
(vii) Debt, if any, associated with
Hedge Agreements $
(viii) payments due under Non-Compete
Agreements $
(ix) payments due for the deferred
purchase price of property and
services that are less than 90
days old $
0100.0269\89091 3
<PAGE>
(x) Total Debt $
(i) plus (ii) plus (iii) plus (iv) plus
(v) plus (vi) plus (vii) plus (viii) plus
(ix) $
B. Annualized Operating Cash Flow (for the
two fiscal quarters ended , 19 )
of the Borrower, and the Restricted
Subsidiaries
(i) consolidated net income (loss) $
(ii) depreciation expense $
(iii) amortization expense and other
non-cash charges reducing income $
(iv) Net Total Interest Expense $
(v) cash income tax expense $
(vi) deferred income Taxes $
(vii) (i) plus the sum of (ii) plus
(iii) plus (iv) plus (v) plus (vi) $
(viii) Annualized Operating Cash Flow
(Product of two times item (vii)) $
C. The ratio of A to B :1.0
<TABLE>
<CAPTION>
<S> <C>
D. Permitted ratio From Closing Date-3/31/987.00 to 1.00
4/1/98 - 3/31/99 6.50 to 1.00
4/1/99 - 12/31/99 6.00 to 1.00
1/1/00 and thereafter 5.50 to 1.00
</TABLE>
2. Section 7.01(b) - Senior Leverage Ratio
A. Senior Debt (for the fiscal quarter ended
, 19 ) of the Borrower and
Restricted Subsidiaries
0100.0269\89091 4
<PAGE>
(i) Debt for Borrowed Money $
(ii) Debt having a final maturity of
more than one year $
(iii) Capitalized Lease obligations $
(iv) reimbursement obligations
relating to Letters of Credit
(without duplication) $
(v) Contingent Liabilities
(without duplication) $
(vi) Withdrawal Liabilities $
(vii) Debt, if any, associated with
Interest Hedge Agreements $
(viii) payments due under Non-Complete
Agreements $
(ix) payments due for the deferred
purchase price of property and
services that are less than 90
days old $
(x) Senior Debt (i) plus (ii) plus
(iii) plus (iv) plus (v) plus
(vi) plus (vii) plus (viii) plus
(ix) $
B. Annualized Operating Cash Flow (for the
two fiscal quarters ended , 19 )
of the Borrower and the Restricted
Subsidiaries (see 1.B. viii above)
$
C. The ratio of A to B :1.00
0100.0269\89091 5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
D. Permitted ratio Closing Date - 3/31/99 3.50 to 1.00
4/1/99 - 12/31/99 3.00 to 1.00
1/1/00 - 12/31/00 2.50 to 1.00
1/1/01 and thereafter 2.00 to 1.00
</TABLE>
3. Section 7.01(c) - Interest Coverage Ratio (1)
A. Annualized Operating Cash Flow (for
quarters ended , 19 ) of the
Borrower and the Restricted Subsidiaries
(see 1.B. viii above) $
B. Total Interest Expense (for the four
fiscal quarters ended , 19 ) of
GCII, the Borrower, and the Restricted
Subsidiaries
(i) consolidated interest expense $
(ii) amortization of Debt discounts $
(iii) commitment fees $
(iv) agency fees related to Funded
Debt (excluding one-time facility
fees) $
(v) fees or expenses with respect to
letters of credit $
(vi) fees, if any, associated with
interest hedge agreements
$
(vii) preferred stock distributions for
GCII, the Borrower and Restricted
Subsidiaries $
- ----------------------------
1 For the first three fiscal quarters after the Closing Date only,
Annualized Operating Cash Flow and Total Interest Expense shall be determined by
annualizing the relevant financial information of GCII, the Borrower and
Restricted Subsidiaries from the Closing Date to the date of determination
0100.0269\89091 6
<PAGE>
(viii) capitalized interest $
(ix) Total Interest Expense (i) plus
(ii) plus (iii) plus (iv) plus
(v) plus (vi) plus (vii) plus
(viii) $
C. The ratio of A to B :1.00
<TABLE>
<CAPTION>
<S> <C>
D. Permitted ratio: Closing Date-12/31/98 1.50 to 1.00
1/1/99 and thereafter 2.00 to 1.00
</TABLE>
4. Section 7.01(d) Pro Forma Debt Service Coverage
Ratio
A. Annualized Operating Cash Flow (see 1.B.
viii above) $
B. Pro Forma Debt Service for GCII, the
Borrower and its Restricted Subsidiaries $
(i) Cash Total Interest Expense for
the immediately succeeding four
full quarters $
(ii) Scheduled repayments of principal
of Total Debt for the immediately
succeeding four full quarters $
C. The ratio of A to B :1.00
D. Permitted ratio 1.25 to 1.00
5. Section 7.01(e) Fixed Charges Coverage Ratio
A. Annualized Operating Cash Flow (see 1.B.
viii above) $
0100.0269\89091 7
<PAGE>
B. Fixed Charges for the most recently
completed four fiscal quarters
(i) cash Total Interest Expense $
(ii) scheduled repayments of principal
of Total Debt $
(iii) cash Taxes paid by GCII, the
Borrower and Restricted
Subsidiaries $
(iv) cash capital contributions loans
or advances to Unrestricted
Subsidiaries $
(v) Capital Expenditures $
(iv) Fixed Charges (i) plus (ii) plus
(iii) plus (iv) plus (v) $
C. The ratio of A to B :1.00
<TABLE>
<CAPTION>
<S> <C>
D. Permitted ratio 1/1/00 - 3/31/03 1.00 to 1.00
4/1/93 and thereafter 1.05 to 1.00
</TABLE>
0100.0269\89091 8
<PAGE>
6. Section 7.01(f) Capital Expenditures incurred by
the Borrower and the Restricted Subsidiaries
A. Actual $
<TABLE>
<CAPTION>
<S> <C>
B. Permitted Maximum Closing through 1997 $55,000,000
1998 $90,000,000
1999 $65,000,000
2000 and thereafter N/A
</TABLE>
0100.0269\89091 9
<PAGE>
EXHIBIT E
CONVERSION OR CONTINUANCE NOTICE
[Date]
NationsBank of Texas, National Association,
Administrative Agent
NationsBank Plaza
901 Main Street
64th Floor
Dallas, Texas 75202
Re: GCI Holdings, Inc.
Ladies and Gentlemen:
The undersigned refers to the Amended and Restated Credit
Agreement dated as of November , 1997 (the "Credit Agreement", the terms defined
therein being used herein as therein defined) between GCI Holdings, Inc. and
NationsBank of Texas, National Association, as Administrative Agent for
NationsBank of Texas, National Association and each lender, and each Lender, and
hereby gives you notice pursuant to Section 2.09(b) of the Credit Agreement that
the undersigned hereby requests Advance[s] under the Credit
Agreement, and in that connection sets forth below the information relating to
[each] such Advance (a "Proposed Borrowing") as required by Section 2.09(b) of
the Credit Agreement:
Proposed Borrowing:
(i) The principal amount of existing LIBOR Advance to be [converted]
[continued] is $ .
(ii) The Business Day of such Proposed Borrowing is , 199 .
(iii) The Type of Advance[s] comprising such Proposed Borrowing is
[are] LIBOR Advance [to the extent of an aggregate amount of
$ ].
[(iv) The initial Interest Period for each LIBOR Advance made as part
of such Proposed Borrowing is months.]
<PAGE>
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing, before and after giving effect thereto and to the application of the
proceeds therefrom:
(A) the conditions precedent specified in Sections 4.01 and
4.02 of the Credit Agreement have been satisfied with respect to the
Proposed Borrowing and will remain satisfied on the date of such
Proposed Borrowing;
(B) the representations and warranties specified in Article V
of the Credit Agreement are true and correct in all material respects
as though made on and as of such date; and
(C) no event has occurred and is continuing or would result
from such Proposed Borrowing, which constitutes a Default or Event of
Default.
Very truly yours,
GCI HOLDINGS, INC.
By:
, President
50443
0100.0269
-2-
<PAGE>
EXHIBIT F
BORROWING NOTICE
[Date]
NationsBank of Texas, N.A.,
Administrative Agent
NationsBank Plaza
901 Main Street
64th Floor
Dallas, Texas 75202
Re: GCI Holdings, Inc.
Ladies and Gentlemen:
The undersigned refers to the Amended and Restated Credit
Agreement dated as of November , 1997 (the "Credit Agreement", the terms defined
therein being used herein as therein defined) among GCI Holdings, Inc. and
NationsBank of Texas, N.A., as Administrative Agent for NationsBank of Texas,
N.A. and each lender, and each Lender, and hereby gives you notice pursuant to
Section 2.02(a) of the Credit Agreement that the undersigned hereby requests
Borrowing[s] under the Credit Agreement, and in that connection
sets forth below the information relating to [each] such Advance (a "Proposed
Borrowing") as required by Section 2.02(a) of the Credit Agreement:
Proposed Borrowing:
(i) The Business Day of such Proposed Borrowing is , 19 .
(ii) The Type of Advance[s] comprising such Proposed Borrowing is [are]
[Base Advance [to the extent of an aggregate amount of $ ]] [LIBOR
Advance [to the extent of an aggregate amount of
$ ]].
(iii) The aggregate amount of such Proposed Borrowing is $ .
(iv) The initial Interest Period for each LIBOR Advance made as part of
such Proposed Borrowing is .
<PAGE>
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing, before and after giving effect thereto and to the application of the
proceeds therefrom:
(A) the conditions precedent specified in Sections 4.01 and
4.02 of the Credit Agreement have been satisfied with respect to the
Proposed Borrowing and will remain satisfied on the date of such
Proposed Borrowing;
(B) the representations and warranties specified in Article V
of the Credit Agreement are true and correct in all material respects
as though made on and as of such date; and
(C) the Advances are permitted to be incurred pursuant to the
terms of the Indenture providing for the Senior Notes; and
(D) no event has occurred and is continuing or would result
from such Proposed Borrowing, which constitutes a Default or Event of
Default.
Very truly yours,
GCI HOLDINGS, INC.
By:
, President
50448
0100.0269
-2-
<PAGE>
EXHIBIT G
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
, 1997 AMONG ALASKA UNITED FIBER SYSTEM PARTNERSHIP, GCI HOLDINGS,
INC., GCI TRANSPORT CO., INC., AND CREDIT LYONNAIS NEW YORK BRANCH AS
ADMINISTRATIVE AGENT
INTERCOMPANY PROMISSORY NOTE
FOR VALUE RECEIVED, ALASKA UNITED FIBER SYSTEM PARTNERSHIP, an Alaskan
general partnership (hereinafter called "Maker"), promises to pay on [demand (if
this Note is executed after the Final Maturity Date)\the Final Maturity Date (if
this Note is executed before the Final Maturity Date] (as that term is defined
in the Credit and Security Agreement dated as of November 14, 1997 between
Maker, 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, restated, or otherwise modified from time to
time, the "AUSP Credit Agreement")) or such earlier date as all of the
Obligations (as defined in the AUSP Credit Agreement) become due and payable
(whether by acceleration, prepayment in full, scheduled reduction or otherwise)
(the "Maturity Date"), to the order of GCI HOLDINGS, INC., an Alaskan
corporation ("Payee"), at its principal offices at Anchorage, Alaska in lawful
money of the United States of America, the principal sum of
DOLLARS AND NO/100 ($ ) or such lesser sum as shall be due and payable
from time to time hereunder. The unpaid principal balance of this Note, from
time to time outstanding, shall bear interest from the date hereof until payment
in full at the per annum rate equal to the per annum interest rate then in
effect with respect to Payee under its credit facilities with NationsBank of
Texas, N.A., as Administrative Agent, Credit Lyonnais New York Branch, as
Documentation Agent, and TD Securities (USA), Inc., as Syndication Agent, and
other lenders party to the Amended and Restated Credit Agreements, dated as of
November 14, 1997 (as amended, restated or otherwise modified from time to time,
the "Holdings Credit Agreement"), but shall never exceed the maximum rate of
interest permitted from time to time by applicable law, including Tex. Civ.
Stat. Ann. Article 5069--1.04 (and as the same may be incorporated by reference
in other Texas statutes) (hereinafter designated "Maximum Rate"). Accrued
interest hereunder shall be due and payable together with the outstanding
principal amount of this Note on the Maturity Date.
All past due principal shall bear interest at the Maximum Rate until
paid. Interest paid or agreed to be paid shall not exceed the Maximum Rate, and
in any contingency whatsoever, if Payee shall receive anything of value paid or
agreed to be paid to exceed the Maximum Rate, the excessive interest shall be
applied to the reduction of the unpaid principal balance of this Note or
refunded to Maker. Maker acknowledges that Payee has no intent to charge
usurious rates of interest and that any such charge is accidental and a bona
fide error.
<PAGE>
Each Maker, surety, endorser and guarantor of this Note hereby (i)
waives all notices, presentment, protest and diligence in collection, including
but not limited to demand and presentation for payment, notice of nonpayment and
notice of acceleration of maturity, protest and motion of protest, and the
diligence of bringing suit against any party hereto; (ii) consents without
further notice to any renewals, extensions, deferrals or partial payments,
either before or after maturity; and (iii) agrees to pay jointly and severally
to the holder of this Note reasonable attorney's fees and collection fees, plus
interest on such amount at the rate then and as it thereafter may be applicable
to the principal of this Note, if this Note is placed in the hands of an
attorney for collection, or if it is collected through bankruptcy or other
judicial proceedings.
Upon the occurrence of the following events, Payee or a holder of this
Note may declare the entirety of this Note, principal and interest, immediately
due and payable without demand, notice of default, notice of acceleration or
notice of intent to accelerate the maturity hereof:
(a) Failure of Maker to pay principal or interest when due under this
Note; or
(b) The occurrence of an Event of Default (as defined in the AUSP
Credit Agreement); or
(c) The creation or incurrence by Maker of any Debt or Liens (other
than Permitted Liens (as defined in the AUSP Credit Agreement)) other than
pursuant to the Project Agreements and AUSP Financing Agreements (as those terms
are defined in the Holdings Credit Agreement) and secured purchase money
indebtedness in an aggregate amount outstanding at any one time of $2,000,000;
or
(d) the making by Maker of any Investment, Restricted Payment (as those
terms are defined in the AUSP Credit Agreement) or other investment, loan,
advance, distribution or dividend, other than (i) payments of interest,
principal and fees of the Debt incurred under the Project Agreements in
accordance with the terms of the Project Agreements, (ii) payments on $2,000,000
of purchase money indebtedness permitted by (c) above, (iii) up to $10,000,000
distributed over the term of the Project Agreements to Maker in accordance with
the terms of the Project Agreements and (iv) distributions from 50% of excess
cash flow in accordance with the terms of the Project Agreements.
Payee's failure to declare the entirety of the Note due, pursuant to
this paragraph, shall not constitute a waiver of Payee's right to do so at any
other time.
This Note shall be construed under and governed by the laws of the
State of Texas and any applicable federal law.
Maker agrees that during the full term hereof the maximum lawful
interest rate for this Note determined under Texas law shall be the indicated
rate ceiling as specified in Article 5069-1.04 of V.A.T.S. Further, to the
extent that any other lawful rate ceiling exceeds the rate
-2-
<PAGE>
ceiling so determined, then the higher rate ceiling shall apply. Chapter 15 of
the Texas Credit Code does not apply to this Note.
THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
Dated this day of , .
ALASKA UNITED FIBER SYSTEM
PARTNERSHIP
By: GCI Fiber Co., Inc., a
General Partner
By:
Its:
Pay to the order of NationsBank of Texas, N.A., as Administrative Agent.
GCI HOLDINGS, INC.
By:
Its:
98800
0100.0269
-3-
<PAGE>
EXHIBIT H
GCI HOLDINGS, INC.
Officer's Certificate
The undersigned hereby certifies that he is the duly appointed
of GCI Holdings, Inc., an Alaskan corporation ("Company"),
and that he is authorized to execute this Certificate on behalf of the Company
in connection with the $200,000,000 and $50,000,000 Amended and Restated Credit
Agreements of even date herewith, between the Company, NationsBank of Texas,
N.A., individually and as Administrative Agent, and the lenders named therein
(collectively, the "Credit Agreement"). Terms are used herein as defined in the
Credit Agreement. The undersigned further certifies as follows:
1. Attached hereto as Exhibit A are true, accurate and complete copies
of the resolutions duly adopted by the Company's Board of Directors approving
and authorizing that certain credit facility among Alaska United Fiber System
Partnership, Credit Lyonnais New York Branch as Administrative Agent,
NationsBank of Texas, N.A. as Syndication Agent and TD Securities (USA), Inc. as
Syndication Agent, dated , 1997 (the "AUSP Financing").
2. Attached hereto as Exhibit B are true, accurate and complete copies
of the agreements set forth below in effect as of the closing date of the AUSP
Financing:
a. Credit and Security Agreement dated as of , 1997,
among Alaska United Fiber System Partnership as Borrower, and
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.
b. Completion Guaranty dated as of , 1997, by GCI
Holdings, Inc., as Guarantor in favor of Credit Lyonnais New
York Branch as Administrative Agent for the Lenders referred
to therein.
c. Subordination Agreement dated as of , 1997, among
Alaska United Fiber System Partnership, GCI Holdings, Inc.,
GCI Transport Co., Inc., and Credit Lyonnais New York Branch
as Administrative Agent for the Lenders referred to therein.
d. Operation and Maintenance Contract dated as of ,
1997, between Alaska United Fiber System Partnership and GCI
Communication Corp.
<PAGE>
e. Depositary Agreement dated as of , 1997, between
Alaska United Fiber System Partnership and Credit Lyonnais New
York Branch as Administrative Agent for the Lenders referred
to therein.
f. Form of Intercompany Notes by Alaska United Fiber System
Partnership to the GCI Holdings, Inc.
g. Lease Agreement dated as of , 1997, between GCI
Communication Corp. as Lessee, and Alaska United Fiber System
Partnership as Lessor.
h. Lease Guaranty Agreement dated as of , 1997,
among GCI Holdings, Inc., Alaska United Fiber System
Partnership and Credit Lyonnais New York Branch as
Administrative Agent.
i. Operating Keep Well Agreement dated as of , 1997,
among GCI Holdings, Inc., Alaska United Fiber System
Partnership, and Credit Lyonnais New York Branch as
Administrative Agent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
the day of , 1997.
GCI HOLDINGS, INC.
By:
Name:
Title:
99542
100.269
-2-
EXHIBIT 10.85
$50,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 14, 1997
BETWEEN
GCI HOLDINGS, INC.
and
NATIONSBANK OF TEXAS, N.A.
As Administrative Agent
CREDIT LYONNAIS NEW YORK BRANCH
As Documentation Agent
TD SECURITIES(USA), INC.
As Syndication Agent
100\269\91946
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
ARTICLE I. DEFINITIONS
<S> <C> <C>
1.01. Definitions................................................................................... 1
1.02. Accounting and Other Terms.................................................................... 26
ARTICLE II. AMOUNTS AND TERMS OF ADVANCES
2.01. The Facility.................................................................................. 27
2.02. Making Advances Under the Revolver/Term Loan.................................................. 27
2.03. Evidence of Indebtedness...................................................................... 29
2.04. Reduction of Commitments...................................................................... 29
2.05. Prepayments................................................................................... 31
2.06. Mandatory Repayment........................................................................... 34
2.07. Interest...................................................................................... 35
2.08. Default Interest.............................................................................. 36
2.09. Continuation and Conversion Elections......................................................... 36
2.10. Fees.......................................................................................... 38
2.11. Funding Losses................................................................................ 38
2.12. Computations and Manner of Payments........................................................... 38
2.13. Yield Protection.............................................................................. 39
2.14. Use of Proceeds............................................................................... 42
2.15. Collateral and Collateral Call................................................................ 42
ARTICLE III. INTENTIONALLY OMITTED
ARTICLE IV. CONDITIONS PRECEDENT
4.01. Conditions Precedent to the Initial Advance................................................... 43
4.02. Conditions Precedent to All Advances.......................................................... 45
ARTICLE V. REPRESENTATIONS AND WARRANTIES
5.01. Organization and Qualification................................................................ 46
5.02. Due Authorization; Validity................................................................... 47
5.03. Conflicting Agreements and Other Matters...................................................... 47
5.04. Financial Statements.......................................................................... 47
5.05. Litigation.................................................................................... 47
5.06. Compliance With Laws Regulating the Incurrence of Debt........................................ 48
5.07. Licenses, Title to Properties, and Related Matters............................................ 48
5.08. Outstanding Debt and Liens.................................................................... 49
5.09. Taxes......................................................................................... 49
5.10. ERISA......................................................................................... 49
5.11. Environmental Laws............................................................................ 50
100\269\91946 i
<PAGE>
5.12. Disclosure.................................................................................... 50
5.13. Investments; Restricted Subsidiaries.......................................................... 51
5.14. Certain Fees.................................................................................. 51
5.15. Intellectual Property......................................................................... 51
5.16. Due Authorization; Validity of the AUSP Financing Agreements and the Project Agreements....... 51
5.17. Conflicting Agreements and Other Matters with the AUSP Financing Agreements and
Project Agreements............................................................................ 52
5.18. Survival of Representations and Warranties, etc............................................... 52
ARTICLE VI. AFFIRMATIVE COVENANTS
6.01. Compliance with Laws and Payment of Debt...................................................... 52
6.02. Insurance..................................................................................... 53
6.03. Inspection Rights............................................................................. 53
6.04. Records and Books of Account; Changes in GAAP................................................. 53
6.05. Reporting Requirements........................................................................ 53
6.06. Use of Proceeds............................................................................... 56
6.07. Maintenance of Existence and Assets........................................................... 56
6.08. Payment of Taxes.............................................................................. 57
6.09. Indemnity..................................................................................... 57
6.10. Interest Rate Hedging......................................................................... 58
6.11. Management Fees Paid and Earned............................................................... 58
6.12. Authorizations and Material Agreements........................................................ 58
6.13. Further Assurances............................................................................ 58
6.14. AUSP Financing................................................................................ 59
6.15. Subsidiaries and Other Obligors............................................................... 59
6.16. CoBank Participation Certificates............................................................. 59
ARTICLE VII. NEGATIVE COVENANTS
7.01. Financial Covenants........................................................................... 60
7.02. Debt.......................................................................................... 61
7.03. Contingent Liabilities........................................................................ 61
7.04. Liens......................................................................................... 62
7.05. Dispositions of Assets........................................................................ 62
7.06. Distributions and Restricted Payments......................................................... 62
7.07. Merger; Consolidation......................................................................... 63
7.08. Business...................................................................................... 63
7.09. Transactions with Affiliates.................................................................. 63
7.10. Loans and Investments......................................................................... 64
7.11. Fiscal Year and Accounting Method............................................................. 65
7.12. Issuance of Partnership Interest and Capital Stock; Amendment of Articles and By-Laws......... 65
7.13. Change of Ownership........................................................................... 65
7.14. Sale and Leaseback............................................................................ 66
100\269\91946 ii
<PAGE>
7.15. Compliance with ERISA......................................................................... 66
7.16. Rate Swap Exposure............................................................................ 66
7.17. Restricted Subsidiaries and Other Obligors.................................................... 66
7.18. Amendments to Material Agreements............................................................. 66
7.19. Limitation on Restrictive Agreements.......................................................... 67
ARTICLE VIII. EVENTS OF DEFAULT
8.01. Events of Default............................................................................. 67
8.02. Remedies Upon Default......................................................................... 72
8.03. Cumulative Rights............................................................................. 73
8.04. Waivers....................................................................................... 73
8.05. Performance by Administrative Agent or any Lender............................................. 73
8.06. Expenditures.................................................................................. 73
8.07. Control....................................................................................... 73
ARTICLE IX. THE ADMINISTRATIVE AGENT
9.01. Authorization and Action...................................................................... 74
9.02. Administrative Agent's Reliance, Etc.......................................................... 74
9.03. NationsBank of Texas, National Association and Affiliates..................................... 74
9.04. Lender Credit Decision........................................................................ 75
9.05. Indemnification by Lenders.................................................................... 75
9.06. Successor Administrative Agent................................................................ 75
ARTICLE X. MISCELLANEOUS
10.01. Amendments and Waivers........................................................................ 76
10.02. Notices 76
10.03. Parties in Interest........................................................................... 79
10.04. Assignments and Participations................................................................ 79
10.05. Sharing of Payments........................................................................... 80
10.06. Right of Set-off.............................................................................. 80
10.07. Costs, Expenses, and Taxes.................................................................... 80
10.08. Indemnification by the Borrower............................................................... 81
10.09. Rate Provision................................................................................ 82
10.10. Severability.................................................................................. 82
10.11. Exceptions to Covenants....................................................................... 82
10.12. Counterparts.................................................................................. 82
10.13. GOVERNING LAW; WAIVER OF JURY TRIAL........................................................... 83
10.14. ENTIRE AGREEMENT.............................................................................. 83
100\269\91946 iii
<PAGE>
TABLE OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1.01A Systems
Schedule 1.01B AUSP Financing Agreements; Project Agreements
Schedule 1.02 Prior Stock Lien on Capital Stock of GCI Leasing
Schedule 3.23 Project Agreements
Schedule 5.01 Organization and Qualification of the GCI Entities
Schedule 5.03 Consents under Material Agreements
Schedule 5.05 Litigation
Schedule 5.07a Authorizations
Schedule 5.07b County and State Locations of Assets
Schedule 5.08a Debt, Contingent Liabilities and Liens of the
Borrower and each other GCI Entity in Existence on
the Closing Date
Schedule 5.11 Environmental Liabilities of the GCI Entities on the
Closing Date
Schedule 5.13 Investments and GCI Entities
Schedule 5.14 Fees Payable
Schedule 7.02 Subordination Terms
EXHIBITS
Exhibit A - Form of Revolver/Term Note
Exhibit B - Assignment and Acceptance
Exhibit C - Form of Pledge and Security Agreement
Exhibit D - Form of Compliance Certificate
Exhibit E - Form of Conversion/Continuation Notice
Exhibit F - Form of Borrowing Notice
Exhibit G - Form of Intercompany Note
Exhibit H - Form of Certificate
</TABLE>
100\269\91946 iv
<PAGE>
GCI HOLDINGS, INC.
$50,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of November 14,
1997 and is between GCI HOLDINGS, INC., an Alaska corporation, (the "Borrower"),
the Lenders from time to time party hereto or to an Assignment and Acceptance,
and NATIONSBANK OF TEXAS, N.A., a national banking association ("NationsBank"),
as a Lender and Administrative Agent (the "Administrative Agent"), CREDIT
LYONNAIS NEW YORK BRANCH ("Credit Lyonnais") as Documentation Agent and TD
SECURITIES (USA), INC. ("TD"), as Syndication Agent, (NationsBank, Credit
Lyonnais and TD being collectively referred to herein as the "Managing Agents").
BACKGROUND
1. The Borrower, the Administrative Agent and the Lenders entered into
a Credit Agreement dated as of August 1, 1997 (the "Original Credit Agreement")
which provides for a 364 day revolving credit facility up to a maximum amount of
$50,000,000, which converts to a term loan on the 364th day after closing.
2. The Borrower, the Administrative Agent and the Lenders party hereto
agree to amend and restate the Original Credit Agreement as follows:
AGREEMENT
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I. DEFINITIONS
1.01. Definitions. As used in this Agreement, the following terms have
the respective meanings indicated below (such meanings to be applicable equally
to both the singular and plural forms of such terms):
"Administrative Agent" means NationsBank of Texas, National
Association, in its capacity as Administrative Agent hereunder, or any successor
Administrative Agent appointed pursuant to Section 9.06 hereof.
100\269\91946
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"Advance" means an advance made by a Lender to the Borrower pursuant to
Section 2.01 hereof.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled By or is Under Common Control
with another Person, and with respect to the Borrower, "Affiliate" means a
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled By or is Under Common Control with GCI, the Borrower or any
Subsidiary of the Borrower or GCI.
"Agreement" means this Credit Agreement, as hereafter amended,
modified, or supplemented in accordance with its terms.
"Annualized Operating Cash Flow" means, as of any date of
determination, the product of two times Operating Cash Flow for the two most
recently ended fiscal quarters; provided that notwithstanding the preceding and
any other provision in this Agreement or in the Loan Papers, Annualized
Operating Cash Flow for any period prior to the Closing Date shall be determined
by using the relevant financial information of the Restricted Subsidiaries.
"Applicable Law" means (a) in respect of any Person, all provisions of
Laws applicable to such Person, and all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a party
and (b) in respect of contracts made or performed in the State of Texas,
"Applicable Law" shall also mean the laws of the United States of America,
including, without limiting the foregoing, 12 USC Sections 85 and 86, as amended
to the date hereof and as the same may be amended at any time and from time to
time hereafter, and any other statute of the United States of America now or at
any time hereafter prescribing the maximum rates of interest on loans and
extensions of credit, and the laws of the State of Texas, including, without
limitations, Articles 5069-1H, Title 79, Revised Civil Statutes of Texas, 1925,
as amended ("Art. 1H"), if applicable, and if Art. 1H is not applicable, Article
5069-1D, Title 79, Revised Civil Statutes of Texas, 1925 ("Art. 1D"), as
amended, and any other statute of the State of Texas now or at any time
hereafter prescribing maximum rates of interest on loans and extensions of
credit, provided however, that pursuant to Article 5069-15.10(b), Title 79,
Revised Civil Statutes of Texas, 1925, as amended, the Borrower agrees that the
provisions of Chapter 15, Title 79, Revised Civil Statutes of Texas, 1925, as
amended, shall not apply to the Advances hereunder.
"Applicable Margin" means (i) with respect to the Base Rate Advances
under the Facility, 1.125% per annum and (ii) with respect to LIBOR Advances
under the Facility, 2.250% per annum. Notwithstanding the foregoing, effective
three Business Days after receipt by the Administrative Agent from the Borrower
of a Compliance Certificate delivered to the Lenders for any reason and
demonstrating a change in the Total Leverage Ratio to an amount so that another
Applicable Margin should be applied pursuant to the table set forth below, the
Applicable Margin for each type of Advance shall mean the respective amount set
forth below opposite such relevant Total Leverage Ratio in Columns A and B
below, in each case until the first succeeding Quarterly Date which is at least
three Business Days after receipt by the
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<PAGE>
Administrative Agent from the Borrower of a Compliance Certificate,
demonstrating a change in the Total Leverage Ratio to an amount so that another
Applicable Margin shall be applied; provided that, if there exists a Default or
if the Total Leverage Ratio shall at any time be greater than or equal to 6.50
to 1.00, the Applicable Margin shall again be the respective amounts first set
forth in this definition; provided further, that the Applicable Margin in effect
on the Closing Date shall be determined pursuant to a Compliance Certificate
delivered on the Closing Date, provided, further, that if the Borrower fails to
deliver any financial statements to the Administrative Agent within the required
time periods set forth in Sections 6.05(a) and Section 6.05(b) hereof, the
Applicable Margin shall again be the respective amounts first set forth in this
definition until the date which is three Business Days after the Administrative
Agent receives financial statements from the Borrower which demonstrate that
another Applicable Margin should be applied pursuant to the table set forth
below; and provided further, that the Applicable Margin shall never be a
negative number.
<TABLE>
<CAPTION>
Column A Column B
Total Leverage Ratio Base Rate LIBOR
- -------------------- --------- -----
<S> <C> <C>
Greater than or equal to
6.50 to 1.00 1.125% 2.250%
Greater than or equal to
6.00 to 1.00 but less than
6.50 to 1.00 0.750% 1.875%
Greater than or equal to
5.50 to 1.00 but less than
6.00 to 1.00 0.500% 1.625%
Greater than or equal to
5.00 to 1.00 but less than
5.50 to 1.00 0.250% 1.375%
Greater than or equal to
4.50 to 1.00 but less than
5.00 to 1.00 0.000% 1.125%
Greater than or equal to
4.00 to 1.00 but less than
4.50 to 1.00 0.000% 1.000%
Less than 0.000% 0.750%
4.00 to 1.00
</TABLE>
"Art. 1H" has the meaning specified in the definition herein of
"Applicable Law".
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<PAGE>
"Art. 1D" has the meaning specified in the definition herein of
"Applicable Law".
"Asset Sale" means any sale, disposition, liquidation, conveyance or
transfer by the Borrower or any Restricted Subsidiary of any Property (or
portion thereof) or an interest (other than Permitted Dispositions and Permitted
Liens or a Lien granted to the Administrative Agent on behalf of the Lenders)
therein, other than in the ordinary course of business.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by Administrative Agent,
in the form of Exhibit B hereto, as each such agreement may be amended,
modified, extended, restated, renewed, substituted or replaced from time to
time.
"Auditor" means KPMG Peat Marwick, L.L.P., or other independent
certified public accountants selected by the Borrower and acceptable to
Administrative Agent.
"AUSP" means Alaska United Fiber System Partnership, an Alaska general
partnership and Unrestricted Subsidiary, which is a wholly owned indirect
Subsidiary of the Borrower.
"AUSP Closing Date" means the closing date for the AUSP Financing, but
in no event later than March 31, 1998.
"AUSP Credit Agreement" means the Credit and Security Agreement among
AUSP, the lenders referred to therein, Credit Lyonnais as administrative agent,
NationsBank as syndication agent, and TD as documentation agent, substantially
similar in all material respects in form and substance to the draft thereof
dated November 5, 1997, as amended, restated or otherwise modified from time to
time (it being understood that nothing herein shall be deemed to permit
amendments contrary to Section 7.18 hereof).
"AUSP Financing" means that certain credit facility for AUSP, in the
maximum amount of $75,000,000 pursuant to the AUSP Credit Agreement.
"AUSP Financing Agreements" means those certain credit, collateral and
other agreements described on Schedule 1.01B hereto evidencing and related to
the AUSP Financing, and such other agreements as may hereafter be entered into
from time to time which materially and adversely affect the obligations of the
Borrower or the Restricted Subsidiaries in connection with the AUSP Financing;
such AUSP Financing Agreements to be substantially similar in all material
respects in form and substance to drafts thereof dated November 4, 1997, and
which may be amended, restated or otherwise modified from time to time.
"Authorizations" means all filings, recordings and registrations with,
and all validations or exemptions, approvals, orders, authorizations, consents,
Licenses, certificates and permits from, the FCC, applicable public utilities
and other federal, state and local regulatory or governmental bodies and
authorities or any subdivision thereof, including, without limitation, FCC
Licenses.
100\269\91946 4
<PAGE>
"Authorized Officer" means any of the President, Senior Vice
President-Chief Financial Officer, Vice President-Chief Accounting Officer, Vice
President-Finance, Secretary-Treasurer, or any other officer authorized by the
Borrower from time to time of which the Administrative Agent has been notified
in writing.
"Bank Affiliate" means the holding company of any Lender, or any wholly
owned direct or indirect subsidiary of such holding company or of such Lender.
"Base Rate Advance" means an Advance bearing interest at the Base Rate.
"Base Rate" means a fluctuating rate per annum as shall be in effect
from time to time equal to the lesser of (a) the Highest Lawful Rate and (b) the
sum of the Applicable Margin plus the greater of (i) the sum of Federal Funds
Rate in effect from time to time plus .50% and (ii) the rate of interest as then
in effect announced publicly by NationsBank of Texas, N.A. in Dallas, Texas from
time to time as its U.S. dollar prime commercial lending rate (such rate may or
may not be the lowest rate of interest charged by NationsBank from time to
time). The Base Rate shall be adjusted automatically as of the opening of
business on the effective date of each change in the prime rate to account for
such change.
"Borrower" means GCI Holdings, Inc., an Alaska corporation.
"Borrowing" means a borrowing under the Facility of the same Type made
on the same day.
"Borrowing Notice" has the meaning set forth in Section 2.02(a) hereof.
"Business Day" means a day of the year on which banks are not required
or authorized to close in Dallas, Texas and, if the applicable day relates to
any notice, payment or calculation related to a LIBOR Advance, London, England.
"Capital Expenditures" means the aggregate amount of all purchases or
acquisitions of items considered to be capital items under GAAP, and in any
event shall include the aggregate amount of items leased or acquired under
Capital Leases at the cost of the item, and the acquisition of realty, tools,
equipment, and fixed assets, and any deferred costs associated with any of the
foregoing.
"Capital Leases" means capital leases and subleases, as defined in
accordance with GAAP.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
of any Person that is a corporation and each class of partnership interests
(including without limitation, general, limited and preference units) in any
Person that is a partnership.
100\269\91946 5
<PAGE>
"Cash Equivalents" means investments (directly or through a money
market fund) in (a) certificates of deposit and other interest bearing deposits
or accounts with United States commercial banks having a combined capital and
surplus of at least $250,000,000, which certificates, deposits, and accounts
mature within one year from the date of investment and are fully insured as to
principal by the FDIC, (b) obligations issued or unconditionally guaranteed by
the United States government, or issued by an agency thereof and backed by the
full faith and credit of the United States government, which obligations mature
within one year from the date of investment, (c) direct obligations issued by
any state or political subdivision of the United States, which mature within one
year from the date of investment and have the highest rating obtainable from
Standard & Poor's Ratings Group or Moody's Investors Services, Inc. on the date
of investment, and (d) commercial paper which has one of the three highest
ratings obtainable from Standard & Poor's Ratings Group or Moody's Investors
Services, Inc.
"Change of Control" means the occurrence of one or more of the
following events: (a) any change in the ownership of the Borrower or any
Restricted Subsidiary (except any change due to any merger or consolidation
among the Wholly-Owned Subsidiaries) or (b) any change in the ownership of GCI
resulting in MCI or any of its wholly-owned Subsidiaries, owning less than 18%
of the total combined voting power of GCI, or (c) MCI shall at any time have
less than two representatives sitting on the GCI's Board of Directors.
"Closing Date" means August 1, 1997.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations issued thereunder, as from time to time in effect.
"Collateral" means all "collateral" referred to in any Loan Paper and
all other property which is or may be subject to a Lien in favor or for the
benefit of Administrative Agent on behalf of Lenders or any Lender to secure the
Obligations, including, without limitation, "Collateral" as defined in Section
2.15(a) hereof.
"Commitment Fees" means each of the fees described in Sections 2.10(a)
and 2.10(b) hereof.
"Completion Guaranty" means that certain completion guaranty from the
Borrower that is a Project Agreement and is substantially similar in all
material respects in form and substance to the draft thereof dated November 4,
1997, as such guaranty may be amended, restated or otherwise modified from time
to time.
"Compliance Certificate" means a certificate of an Authorized Officer
of the Borrower acceptable to Administrative Agent, in the form of Exhibit D
hereto, (a) certifying that such individual has no knowledge that a Default or
Event of Default has occurred and is continuing, or if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action being taken or proposed to be taken with respect thereto, and (b)
setting forth detailed calculations with respect to each of the covenants
described in Section 7.01 hereof.
100\269\91946 6
<PAGE>
"Consequential Loss," with respect to (a) the Borrower's payment of all
or any portion of the then-outstanding principal amount of a LIBOR Advance on a
day other than the last day of the related Interest Period, including, without
limitation, payments made as a result of the acceleration of the maturity of a
Note, (b) (subject to Administrative Agents' prior consent), a LIBOR Advance
made on a date other than the date on which the Advance is to be made according
to Section 2.02(a) or Section 2.09 hereof, or (c) any of the circumstances
specified in Section 2.04, Section 2.05 and Section 2.06 hereof on which a
Consequential Loss may be incurred, means any loss, cost or expense incurred by
any Lender as a result of the timing of the payment or Advance or in
liquidating, redepositing, redeploying or reinvesting the principal amount so
paid or affected by the timing of the Advance or the circumstances described in
Section 2.04, Section 2.05, and Section 2.06 hereof, which amount shall be the
sum of (i) the interest that, but for the payment or timing of Advance, such
Lender would have earned in respect of that principal amount, reduced, if such
Lender is able to redeposit, redeploy, or reinvest the principal amount, by the
interest earned by such Lender as a result of redepositing, redeploying or
reinvesting the principal amount plus (ii) any expense or penalty incurred by
such Lender by reason of liquidating, redepositing, redeploying or reinvesting
the principal amount. Each determination by each Lender of any Consequential
Loss is, in the absence of manifest error, conclusive and binding.
"Contingent Liability" means, as to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Debt or obligation of any other Person in any manner,
whether directly or indirectly, including without limitation any obligation of
such Person, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt, (b)
to purchase Property or services for the purpose of assuring the owner of such
Debt of its payment, or (c) to maintain the solvency, working capital, equity,
cash flow, fixed charge or other coverage ratio, or any other financial
condition of the primary obligor so as to enable the primary obligor to pay any
Debt or to comply with any agreement relating to any Debt or obligation, and
shall, in any event, include any contingent obligation under any letter of
credit, application for any letter of credit or other related documentation.
"Continue," "Continuation" and "Continued" each refer to the
continuation pursuant to Section 2.09 hereof of a LIBOR Advance from one
Interest Period to the next Interest Period.
"Control" or "Controlled By" or "Under Common Control" mean possession,
direct or indirect, of power to direct or cause the direction of management or
policies (whether through ownership of voting securities, by contract or
otherwise); provided that, in any event (a) it shall include any director (or
Person holding the equivalent position) or executive officer (or Person holding
the equivalent position) of such Person or of any Affiliate of such Person, (b)
any Person which beneficially owns 5% or more (in number of votes) of the
securities having ordinary voting power for the election of directors of a
corporation shall be conclusively presumed to control such corporation, (c) any
general partner of any partnership shall be conclusively presumed to control
such partnership, (d) any other Person who is a member of the
100\269\91946 7
<PAGE>
immediate family (including parents, spouse, siblings and children) of any
general partner of a partnership, and any trust whose principal beneficiary is
such individual or one or more members of such immediate family and any Person
who is controlled by any such member or trust, or is the executor, administrator
or other personal representative of such Person, shall be conclusively presumed
to control such Person, and (e) no Person shall be deemed to be an Affiliate of
a corporation solely by reason of his being an officer or director of such
corporation.
"Controlled Group" means, as to any Person, all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
which are under common control with such Person and which, together with such
Person, are treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code.
"Conversion Date" means the date that is 364 days after the Closing
Date.
"Conversion or Continuance Notice" has the meaning set forth in Section
2.09(b) hereof.
"Debt" means all obligations, contingent or otherwise, which in
accordance with GAAP are required to be classified on the balance sheet as
liabilities, and in any event including Capital Leases, Contingent Liabilities
that are required to be disclosed and quantified in notes to consolidated
financial statements in accordance with GAAP, and liabilities secured by any
Lien on any Property, regardless of whether such secured liability is with or
without recourse.
"Debt for Borrowed Money" means, as to any Person, at any date, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes, letters of
credit (or applications for letters of credit) or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business and (d) all obligations of such Person secured by a Lien on any assets
or property of any Person.
"Debtor Relief Laws" means applicable bankruptcy, reorganization,
moratorium, or similar Laws, or principles of equity affecting the enforcement
of creditors' rights generally.
"Default" means any event specified in Section 8.01 hereof, whether or
not any requirement in connection with such event for the giving of notice,
lapse of time, or happening of any further condition has been satisfied.
"Distribution" means, as to any Person, (a) any declaration or payment
of any distribution or dividend (other than a stock dividend) on, or the making
of any pro rata distribution, loan, advance, or investment to or in any holder
(in its capacity as a partner, shareholder or other equity holder) of, any
partnership interest or shares of capital stock or other equity interest of such
Person, or (b) any purchase, redemption, or other acquisition or retirement for
value of any shares of partnership interest or capital stock or other equity
interest of such Person.
100\269\91946 8
<PAGE>
"Eligible Assignee" means (a) any Bank Affiliate, (b) a commercial bank
organized under the laws of the United States, or any state thereof, and having
total assets in excess of $500,000,000; (c) a commercial bank organized under
the laws of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country, and
having total assets in excess of $500,000,000, provided that such bank is acting
through a branch or agency located in the country in which it is organized or
another country which is described in this clause; and (d) the central bank of
any country which is a member of the Organization for Economic Cooperation and
Development.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss.9601 et seq.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C ss.6901 et seq.), 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 Toxic Substances Control Act (15 U.S.C. ss.2601 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. ss.651 et seq.) ("OSHA"),
as such laws have been or hereafter may be amended or supplemented, and any and
all analogous future federal, or present or future state or local, Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of GCI, the Borrower or any Subsidiary
of GCI or the Borrower, or is under common control with GCI, the Borrower or any
Subsidiary of GCI or the Borrower, within the meaning of Section 414(c) of the
Code.
"ERISA Event" means (a) a reportable event, within the meaning of
Section 4043 of ERISA, unless the 30-day notice requirement with respect thereto
has been waived by the PBGC, (b) the issuance by the administrator of any Plan
of a notice of intent to terminate such Plan in a distress situation, pursuant
to Section 4041(a)(2) and 4041(c) of ERISA (including any such notice with
respect to a plan amendment referred to in Section 4041(e) of ERISA), (c) the
cessation of operations at a facility in the circumstances described in Section
4062(e) of ERISA, (d) the withdrawal by the Borrower, any Subsidiary of the
Borrower or GCI, or an ERISA Affiliate from a Multiple Employer Plan during a
Plan year for which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA, (e) the failure by the Borrower, any Subsidiary of the
Borrower or either Parent, or any ERISA Affiliate to make a payment to a Plan
required under Section 302 of ERISA, (f) the adoption of an amendment to a Plan
requiring the provision of security to such Plan, pursuant to Section 307 of
ERISA, or (g) the institution by the PBGC of proceedings to terminate a Plan,
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
that constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, a Plan.
100\269\91946 9
<PAGE>
"Event of Default" means any of the events specified in Section 8.01
hereof, provided there has been satisfied any requirement in connection
therewith for the giving of notice, lapse of time, or happening of any further
condition.
"Excess Cash Flow" means, for the most recently completed fiscal year,
the difference between Operating Cash Flow for such year minus the sum of (a)
Total Interest Expense for such year, plus (b) scheduled repayments of principal
of Total Debt (whether by installment or as a result of a scheduled reduction in
a revolving commitment, or otherwise) for such year, plus (c) permitted payments
or loans made to AUSP with cash from the operations of the Borrower or its
Restricted Subsidiaries during such year, (d) Capital Expenditures made during
such year and financed with cash from operations of the Borrower or its
Restricted Subsidiaries, plus (e) not more than $2,000,000 in working capital of
the Borrower, plus (f) cash taxes for GCII, the Borrower and its Restricted
Subsidiaries with respect to such year, whether accrued or paid.
"Facility" means the Revolver/Term Loan.
"FCC" means the Federal Communications Commission and any successor
thereto.
"FCC License" means any community antenna relay service, broadcast
auxiliary license, earth station registration, business radio, microwave or
special safety radio service license issued by the FCC pursuant to the
Communications Act of 1934, as amended, and any other FCC license from time to
time necessary or advisable for the operation of the Parent's, the Borrower's or
any of their Subsidiaries' business.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of Dallas, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such date on such
transactions received by Administrative Agent from three federal funds brokers
of recognized standing selected by it.
"Fee Letters" means that certain letter agreement, dated June 30, 1997,
addressed to the Borrower and acknowledged by the Borrower, and describing
certain fees payable to the Administrative Agent in connection with this
Agreement and the Facility, and such other fee letter agreements as may be
executed from time to time among the parties hereto, as each may be amended,
modified, substituted or replaced by the parties thereto.
"Fiber Lease" means that certain lease agreement entered into by GCI
Communication Corp. with AUSP, for lease of a portion of AUSP's fiber network,
which lease constitutes a Project Agreement and is substantially similar in all
material respects in form and substance to the draft thereof dated November 4,
1997, as such agreement may be amended, restated, or otherwise modified from
time to time.
100\269\91946 10
<PAGE>
"Fixed Charges" means, for the most recently completed four fiscal
quarters, the sum of (a) cash Total Interest Expense paid or accrued, plus (b)
scheduled repayments of principal of Total Debt (whether by installment or as a
result of a scheduled reduction in a revolving commitment, or otherwise), plus
(c) cash taxes paid or accrued for GCII, the Borrower and its Restricted
Subsidiaries, plus (d) cash payments (in the form of capital contributions,
loans, advances or otherwise) made to Unrestricted Subsidiaries (including,
without limitation, AUSP, except scheduled lease payments made pursuant to the
Fiber Lease, payments under the Lease Guaranty, and scheduled payments under the
O&M Contract that is a Project Agreement), plus (e) Capital Expenditures made by
any of the Borrower and its Restricted Subsidiaries.
"Fixed Charges Coverage Ratio" means the ratio of Annualized Operating
Cash Flow to Fixed Charges.
"Funded Debt" means, without duplication, with respect to any Person,
all Debt of such Person, determined on a consolidated basis and measured in
accordance with GAAP that is either (a) Debt for Borrowed Money, (b) Debt having
a final maturity (or extendable at the option of the obligor for a period
ending) more than one year after the date of creation thereof, notwithstanding
the fact that payments are required to be made less than one year after such
date, (c) Capital Lease obligations (without duplication), (d) reimbursement
obligations relating to letters of credit, without duplication, (e) Contingent
Liabilities relating to any of the foregoing (without duplication), (f)
Withdrawal Liability, (g) Debt, if any, associated with Interest Hedge
Agreements, (h) payments due under Non-Compete Agreements, plus (i) payments due
for the deferred purchase price of property and services (but excluding trade
payables that are less than 90 days old and any thereof that are being contested
in good faith).
"GAAP" means generally accepted accounting principles applied on a
consistent basis. Application on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period, except for new
developments or statements promulgated by the Financial Accounting Standards
Board.
"GCI" means General Communication, Inc., an Alaska corporation, and
immediate parent and holder of 100% of the Capital Stock of GCII.
"GCI Entities" means the Borrower, the Parents, each Restricted
Subsidiary and each Guarantor from time to time in existence, and any other
Person from time to time constituting a Subsidiary of Parents or the Borrower,
except the Unrestricted Subsidiaries.
"GCII" means GCI, Inc., an Alaska corporation, and immediate parent and
holder of 100% of the Capital Stock of the Borrower.
100\269\91946 11
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"Guarantors" means GCII, GCI Communication Services, Inc., GCI Leasing
Co., Inc., GCI Communication Corp. (including, without limitation, the Long
Distance Division and the Local & Wireless Division), GCI Cable, Inc., each
Subsidiary of GCI Cable, Inc., each other Restricted Subsidiary and each other
Person from time to time guaranteeing payment of the Obligations to the
Administrative Agent and Lenders.
"Guaranty" of a Person means any agreement by which such Person
assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes liable upon, the obligation of any
other Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any creditor or
such other Person against loss, including, without limitation, any agreement
which assures any creditor or such other Person payment or performance of any
obligation, or any take-or-pay contract and shall include without limitation,
the contingent liability of such Person in connection with any application for a
letter of credit (without duplication of any amount already included in its
Debt).
"Hazardous Materials" means all materials subject to any Environmental
Law, including without limitation materials listed in 49 C.F.R. ss. 172.101,
Hazardous Substances, explosive or radioactive materials, hazardous or toxic
wastes or substances, petroleum or petroleum distillates, asbestos, or material
containing asbestos.
"Hazardous Substances" means hazardous waste as defined in the Clean
Water Act, 33 U.S.C. ss. 1251 et seq., the Comprehensive Environmental Response
Compensation and Liability Act as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. ss. 9601 et seq., the Resource Conservation
Recovery Act, 42 U.S.C. ss. 6901 et seq., and the Toxic Substances Control Act,
15 U.S.C. ss. 2601 et seq.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, Administrative Agent is
then permitted to charge on the Obligations. If the maximum rate of interest
which, under Applicable Law, such Lender is permitted to charge on the
Obligations shall change after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each change in the Highest Lawful Rate without notice
to the Borrower. For purposes of determining the Highest Lawful Rate under
Applicable Law, the applicable rate ceiling shall be (a) the indicated rate
ceiling described in and computed in accordance with the provisions of Art. lH;
or (b) either the annualized ceiling or quarterly ceiling computed pursuant to
.008 of Art. 1D; provided, however, that at any time the indicated rate ceiling,
the annualized ceiling or the quarterly ceiling, as applicable, shall be less
than 18% per annum or more than 24% per annum, the provisions of Sections
.009(a) and .009(b) of said Art. lD shall control for purposes of such
determination, as applicable.
"Indemnitees" has the meaning ascribed thereto in Section 6.09 hereof.
100\269\91946 12
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"Indenture" means the Indenture dated as of August 1, 1997, between
GCII and The Bank of New York, as Trustee, providing for the Senior Notes.
"Initial Advance" means the initial Advance made in accordance with the
terms hereof, which shall only be after the Borrower has satisfied each of the
conditions set forth in Section 4.01 and Section 4.02 hereof (or any such
condition shall have been waived by each Lender).
"Installment Percentage" means, with respect to Advances outstanding
under the Revolver/Term Loan, a percentage of the aggregate Revolver/Term
Advances outstanding on the Conversion Date.
"Insufficiency" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities within the meaning of Section 4001(a)(18) of
ERISA.
"Intercompany Notes" means those notes, substantially in the form of
Exhibit G hereto, evidencing loans and/or advances made by the Borrower to AUSP
under the Keepwell Agreement or the Completion Guaranty, and made in accordance
with the terms of Section 7.10(g) hereof.
"Interest Coverage Ratio" means as of any date of determination, the
ratio of (a) Annualized Operating Cash Flow to (b) Total Interest Expense for
the most recently completed four fiscal quarters, provided that, notwithstanding
the preceding and any other provision in this Agreement or in the Loan Papers,
for the first three fiscal quarters after the Closing Date only, Annualized
Operating Cash Flow and Total Interest Expense shall be determined by
annualizing the relevant financial information of GCII, the Borrower and the
Restricted Subsidiaries from the Closing Date through the date of determination;
and provided further that notwithstanding the preceding and any other provision
in this Agreement or in the Loan Papers, Annualized Operating Cash Flow and
Total Interest Expense for any period prior to the Closing Date shall be
determined by using the relevant financial information of the Restricted
Subsidiaries.
"Interest Hedge Agreements" means any interest rate swap agreements,
interest cap agreements, interest rate collar agreements, or any similar
agreements or arrangements designed to hedge the risk of variable interest rate
volatility, or foreign currency hedge, exchange or similar agreements, on terms
and conditions reasonably acceptable to Administrative Agent (evidenced by
Administrative Agent's consent in writing), as such agreements or arrangements
may be modified, supplemented, and in effect from time to time, and
notwithstanding the above, fixed rate Debt for Borrowed Money shall be deemed an
Interest Hedge Agreement.
"Interest Period" means, with respect to any LIBOR Advance, the period
beginning on the date an Advance is made or continued as or converted into a
LIBOR Advance and ending one, two, three or six months thereafter (as the
Borrower shall select) provided, however, that:
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<PAGE>
(a) the Borrower may not select any Interest Period that ends
after any principal repayment date unless, after giving effect to such
selection, the aggregate principal amount of LIBOR Advances having
Interest Periods that end on or prior to such principal repayment date,
shall be at least equal to the principal amount of Advances due and
payable on and prior to such date;
(b) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that if such extension would cause the
last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the
next preceding Business Day; and
(c) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months in
such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Investment" means any acquisition of all or substantially all assets
of any Person, or any direct or indirect purchase or other acquisition of, or a
beneficial interest in, capital stock or other securities of any other Person,
or any direct or indirect loan, advance (other than advances to employees for
moving and travel expenses, drawing accounts, and similar expenditures in the
ordinary course of business), or capital contribution to or investment in any
other Person, including without limitation the incurrence or sufferance of Debt
or accounts receivable of any other Person that are not current assets or do not
arise from sales to that other Person in the ordinary course of business.
"Keepwell Agreement" means that certain operating keepwell agreement
among the Borrower, AUSP, and Credit Lyonnais as administrative agent under the
AUSP Credit Agreement, which such agreement is a Project Agreement and is
substantially similar in all material respects in form and substance to the
draft thereof dated November 4, 1997, as such agreement may be amended,
restated, or otherwise modified from time to time.
"Law" means any constitution, statute, law, ordinance, regulation,
rule, order, writ, injunction, or decree of any Tribunal.
"Lease Guaranty" means that certain lease guaranty agreement among the
Borrower, AUSP, and Credit Lyonnais as administrative agent under the AUSP
Credit Agreement, which such agreement is a Project Agreement and is
substantially similar in all material respects in form and substance to the
draft thereof dated November 4, 1997, as such agreement may be amended,
restated, or otherwise modified from time to time.
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"Lenders" means the lenders listed on the signature pages of this
Agreement, and each Eligible Assignee which hereafter becomes a party to this
Agreement pursuant to Section 10.04 hereof, for so long as any such Person is
owed any portion of the Obligations or obligated to make any Advances under the
Revolver/Term Loan.
"Lending Office" means, with respect to each Lender, its branch or
affiliate, (a) initially, the office of such Lender, branch or affiliate
identified as such on the signature pages hereof, and (b) subsequently, such
other office of such Lender, branch or affiliate as such Lender may designate to
the Borrower and Administrative Agent as the office from which the Advances of
such Lender will be made and maintained and for the account of which all
payments of principal and interest on the Advances and the Commitment Fees will
thereafter be made. Lenders may have more than one Lending Office for the
purpose of making Base Rate Advances and LIBOR Advances.
"LIBOR Advance" means an Advance bearing interest at the LIBOR Rate.
"LIBOR Rate" means a simple per annum interest rate equal to the lesser
of (a) the Highest Lawful Rate, and (b) the sum of the LIBOR Rate Basis plus the
Applicable Margin. The LIBOR Rate shall, with respect to LIBOR Advances subject
to reserve or deposit requirements, be subject to premiums assessed therefor by
each Lender, which are payable directly to each Lender. Once determined, the
LIBOR Rate shall remain unchanged during the applicable Interest Period.
"LIBOR Rate Basis" means, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR Rate Basis" shall mean, for any LIBOR
Advance for any Interest Period therefor, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page
as the London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"License" means, as to any Person, any license, permit, certificate of
need, authorization, certification, accreditation, franchise, approval, or grant
of rights by any Tribunal or third person necessary or appropriate for such
Person to own, maintain, or operate its business or Property, including FCC
Licenses.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien, or charge of any kind, including without limitation any agreement to give
or not to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the
100\269\91946 15
<PAGE>
filing of or agreement to give any financing statement or other similar form of
public notice under the Laws of any jurisdiction (except for the filing of a
financing statement or notice in connection with an operating lease).
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation conducted or threatened by or before any Tribunal, including
without limitation proceedings, claims, lawsuits, and/or investigations under or
pursuant to any environmental, occupational, safety and health, antitrust,
unfair competition, securities, Tax, or other Law, or under or pursuant to any
contract, agreement, or other instrument.
"Loan Papers" means this Agreement; the Notes; Interest Rate Hedge
Agreements executed among any GCI Entity and any Lender or Bank Affiliate; all
Pledge Agreements; all Guaranties executed by any Person guaranteeing payment of
any portion of the Obligations; all Fee Letters; each Assignment and Acceptance;
all promissory notes evidencing any portion of the Obligations; assignments,
security agreements and pledge agreements granting any interest in any of the
Collateral; stock certificates and partnership agreements constituting part of
the Collateral; mortgages, deeds of trust, financing statements, collateral
assignments, and other documents and instruments granting an interest in any
portion of the Collateral, or related to the perfection and/or the transfer
thereof, all collateral assignments or other agreements granting a Lien on any
intercompany note, including without limitation, the Intercompany Notes; and all
other documents, instruments, agreements or certificates executed or delivered
by the Borrower or any other GCI Entity, as security for the Borrower's
obligations hereunder, in connection with the loans to the Borrower or
otherwise; as each such document shall, with the consent of the Lenders pursuant
to the terms hereof, be amended, revised, renewed, extended, substituted or
replaced from time to time.
"Local Telephone Business" means the local telephone business of the
Borrower and its Restricted Subsidiaries in (i) Anchorage, Alaska, for which GCI
Communication Corp. received its authority to operate from the Alaskan Public
Utilities Commission on February 4, 1997 and (ii) elsewhere in Alaska for which
Borrower or any Restricted Subsidiary receives authority to operate from the
Alaska Public Utilities Commission.
"Majority Lenders" means any combination of Lenders having at least
66.67% of the aggregate amount of Advances under the Facility; provided,
however, that if no Advances are outstanding under this Agreement, such term
means any combination of Lenders having a Specified Percentage equal to at least
66.67% of the Facility.
"Management Fees" means all fees from time to time directly or
indirectly (including any payments made pursuant to guarantees of such fees)
paid or payable by the Borrower, any GCI Entity or any of the Restricted
Subsidiaries to any Person for management services for managing any portion of
any System.
"Managing Agents" means NationsBank, Credit Lyonnais and TD.
100\269\91946 16
<PAGE>
"Material Adverse Change" means any circumstance or event that (a) can
reasonably be expected to cause a Default or an Event of Default, (b) otherwise
can reasonably be expected to (i) be material and adverse to the continued
operation of the Borrower and the Restricted Subsidiaries taken as a whole or
any other GCI Entity, or (ii) be material and adverse to the financial
condition, business operations, prospects or Properties of the Borrower and the
Restricted Subsidiaries taken as a whole or any other GCI Entity, or (c) in any
manner whatsoever does or can reasonably be expected to materially and adversely
affect the validity or enforceability of any of the Loan Papers.
"Maturity Date" means July 31, 2005, or such earlier date all of the
Obligations become due and payable (whether by acceleration, prepayment in full,
scheduled reduction or otherwise).
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, Administrative Agent or any Lender is permitted to charge on the
Obligations.
"MCI" means (i) prior to the effective date of the merger of MCI
Telecommunications Corporation into British Telecommunications, PLC, MCI
Telecommunications Corporation and (ii) on and after the effective date of the
merger of MCI Telecommunications Corporation into British Telecommunications,
PLC, British Telecommunications, PLC.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower, any Subsidiary of the Borrower or
GCI or any ERISA Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions, such plan being maintained pursuant
to one or more collective bargaining agreements.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower, any Subsidiary of the Borrower or GCI, or any ERISA Affiliate and at
least one Person other than the Borrower, any Subsidiary of the Borrower or GCI,
and any ERISA Affiliate, or (b) was so maintained and in respect of which the
Borrower, any Subsidiary of the Borrower or GCI, or any ERISA Affiliate could
have liability under Section 4064 or 4069 of ERISA in the event such plan has
been or were to be terminated.
"Net Proceeds" means the gross proceeds received by the Borrower or any
Restricted Subsidiary in connection with or as a result of any Asset Sale, minus
(so long as each of the following are estimated in good faith by the Vice
President - Chief Financial Officer of the Borrower or such Restricted
Subsidiary and certified to the Lenders in reasonable detail by an Authorized
Officer) (a) amounts paid or reserved in good faith, if any, for taxes payable
with respect to such Asset Sale in an amount equal to the tax liability of the
Borrower or any Restricted Subsidiary in respect of such sale (taking into
account all other tax benefits of each of the parties) and (b) reasonable and
customary transaction costs payable by the Borrower or any Restricted Subsidiary
related to such sale.
100\269\91946 17
<PAGE>
"Net Total Interest Expense" means as of any date of determination for
any period of calculation, all the Borrower's and the Restricted Subsidiaries'
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) on Senior Debt for such period calculated
on a consolidated basis in accordance with GAAP, including without limitation or
duplication (or, to the extent not so included, with the addition of) for the
Borrower and the Restricted Subsidiaries: (a) the amortization of Debt
discounts; (b) any commitment fees or agency fees related to any Senior Debt,
but specifically excluding any one-time facility and/or arrangement fees; (c)
any fees or expenses with respect to letters of credit, bankers' acceptances or
similar facilities; (d) fees and expenses with respect to interest rate swap or
similar agreements or foreign currency hedge, exchange or similar agreements,
other than fees or charges related to the acquisition or termination thereof
which are not allocable to interest expense in accordance with GAAP; (e)
preferred stock Distributions for the Borrower and the Restricted Subsidiaries
declared and payable in cash; and (f) interest capitalized in accordance with
GAAP.
"Non-Compete Agreement" means any agreement or related set of
agreements under which the Borrower or any Restricted Subsidiary agrees to pay
money in one or more installments to one or more Persons in exchange for
agreements from such Persons to refrain from competing with the Borrower or such
Restricted Subsidiary in a certain line of business in a specific geographical
area for a certain time period, or pursuant to which any Person agrees to limit
or restrict its right to engage, directly or indirectly, in the same or similar
industry for any period of time for any geographic location.
"Notes" means all Revolver/Term Notes in effect from time to time, and
"Note" means any of such notes, as applicable.
"Obligations" means all present and future obligations, indebtedness
and liabilities, and all renewals and extensions of all or any part thereof, of
the Borrower and each other GCI Entity to Lenders and Administrative Agent
arising from, by virtue of, or pursuant to this Agreement, any of the other Loan
Papers and any and all renewals and extensions thereof or any part thereof, or
future amendments thereto, all interest accruing on all or any part thereof and
reasonable attorneys' fees incurred by Lenders and Administrative Agent for the
administration, execution of waivers, amendments and consents, and in connection
with any restructuring, workouts or in the enforcement or the collection of all
or any part thereof, whether such obligations, indebtedness and liabilities are
direct, indirect, fixed, contingent, joint, several or joint and several.
Without limiting the generality of the foregoing, "Obligations" includes all
amounts which would be owed by the Borrower, each other GCI Entity and any other
Person (other than Administrative Agent or Lenders) to Administrative Agent or
Lenders under any Loan Paper, but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Borrower, any other GCI Entity or any other Person
(including all such amounts which would become due or would be secured but for
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding of the Borrower, any other GCI Entity or any
other Person under any Debtor Relief Law).
100\269\91946 18
<PAGE>
"O&M Contract" means the Operation and Maintenance Contract between
AUSP and GCI Communication Corp., which agreement is a Project Agreement and is
substantially similar in all material respects in form and substance to the
draft thereof dated October 30, 1997, as such contract may be amended, restated,
or otherwise modified from time to time.
"Operating Cash Flow" means, for the Borrower and the Restricted
Subsidiaries, for any period, determined in accordance with GAAP, the
consolidated net income (loss) for such period taken as a single accounting
period, excluding extraordinary gains and losses, plus the sum of the following
amounts for such period to the extent included in the determination of such
consolidated net income: (a) depreciation expense, (b) amortization expense and
other non-cash charges reducing income, (c) Net Total Interest Expense, (d) cash
income tax expense for the Borrower and Restricted Subsidiaries plus (e)
deferred income Taxes for the Borrower and Restricted Subsidiaries; provided,
the calculation is made after giving effect to acquisitions and dispositions of
assets of the Borrower or any Restricted Subsidiary during such period as if
such transactions had occurred on the first day of such period.
"Operating Leases" means operating leases, as defined in accordance
with GAAP.
"Parents" means, collectively, GCI and GCII.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
agency or entity performing substantially the same functions.
"Permitted Dispositions" means any sale, assignment, disposition,
conveyance or transfer of any agreements, licenses, permits, franchises,
contract rights, documents, instruments or other Property or any interest
therein, related to the construction, operation or maintenance of AUSP's fiber
network including, without limitation, the agreements listed on Schedule 3.23 to
this Agreement.
"Permitted Liens" means
(a) those imposed by the Loan Papers and the Revolving Credit
Agreement;
(b) Liens in connection with workers' compensation,
unemployment insurance or other social security obligations (which phrase shall
not be construed to refer to ERISA);
(c) deposits, pledges or liens to secure the performance of
bids, tenders, contracts (other than contracts for the payment of borrowed
money), leases, statutory obligations, surety, customs, appeal, performance and
payment bonds and other obligations of like nature arising in the ordinary
course of business;
100\269\91946 19
<PAGE>
(d) mechanics', worker's, carriers, warehousemen's,
materialmen's, landlords', or other like Liens arising in the ordinary course of
business with respect to obligations which are not due or which are being
contested in good faith and by appropriate proceedings diligently conducted;
(e) Liens for taxes, assessments, fees or governmental charges
or levies not delinquent or which are being contested in good faith and by
appropriate proceedings diligently conducted, and in respect of which adequate
reserves shall have been established in accordance with GAAP on the books of the
Borrower or such GCI Entity;
(f) Liens or attachments, judgments or awards against the
Borrower or any other GCI Entity with respect to which an appeal or proceeding
for review shall be pending or a stay of execution shall have been obtained, and
which are otherwise being contested in good faith and by appropriate proceedings
diligently conducted, and in respect of which adequate reserves shall have been
established in accordance with GAAP on the books of the Borrower or such other
GCI Entity;
(g) Liens in existence on the Closing Date described on
Schedule 5.08(a) hereto;
(h) statutory Liens in favor of CoBank with respect to the
Participation Certificates (as defined in Section 6.16) and of lessors arising
in connection with Property leased to the Borrower or any other GCI Entity; and
(i) easements, rights of way, restrictions, leases of Property
to others, easements for installations of public utilities, title imperfections
and restrictions, zoning ordinances and other similar encumbrances affecting
Property which in the aggregate do not materially adversely affect the value of
such Property or materially impair its use for the operation of the business of
the Borrower or such GCI Entity.
"Person" means an individual, partnership, joint venture, corporation,
trust, Tribunal, unincorporated organization, and government, or any department,
agency, or political subdivision thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledge Agreement" means each Security Agreement and each Pledge and
Security Agreement, whereby the Pledged Interests are pledged to Administrative
Agent and a security interest is granted in the assets of the Borrower and
Restricted Subsidiaries to secure the Obligations, each substantially in the
form of Exhibit C hereto, as each such agreement may be amended, modified,
extended, renewed, restated, substituted or replaced from time to time.
100\269\91946 20
<PAGE>
"Pledged Interests" means (a) a first perfected security interest in
100% of the Capital Stock of the Borrower; (b) a first perfected security
interest in 100% of the Capital Stock of GCI Communication Services, Inc., and
GCI Communication Corp.; (c) subject to the Prior Stock Lien, a first perfected
security interest in 100% of the Capital Stock of GCI Leasing Co., Inc.; and (d)
a first perfected security interest in 100% of the Capital Stock of GCI Cable,
Inc. each Subsidiary of GCI Cable, Inc., and each other Restricted Subsidiary,
if any, now existing or hereafter formed or acquired.
"Prior Stock Lien" means those certain Liens in the stock of GCI
Leasing Co., Inc. and such other Liens as are listed on Schedule 1.02 hereto.
"Prime Management Agreement" means that certain Management Agreement,
between GCI Cable, Inc. and Prime II Management, L.P., dated October 31, 1996.
"Pro Forma Debt Service" means, for GCII, the Borrower and its
Restricted Subsidiaries for the four full fiscal quarters immediately following
the date of determination, the sum of (a) cash Total Interest Expense (using the
interest rates in effect on the date of determination to project interest rates
for any Total Debt subject to a floating interest rate), plus (b) scheduled
repayments of principal of Total Debt (whether by installment or as a result of
a scheduled reduction in a revolving commitment, or otherwise).
"Pro Forma Debt Service Coverage Ratio" means the ratio of Annualized
Operating Cash Flow to Pro Forma Debt Service.
"Prohibited Transaction" has the meaning specified therefor in Section
4975 of the Code or Section 406 of ERISA.
"Project Agreements" means those "Projects Agreements" as defined in
the AUSP Credit Agreement and as described on Schedule 1.01B hereto, and such
other agreements as may hereafter be entered into from time to time which
materially and adversely affect the obligations of the Borrower or the
Restricted Subsidiaries with respect to the AUSP Financing; such Project
Agreements to be substantially similar in all material respects in form and
substance to drafts thereof dated November 4, 1997 (except for the O&M
Contract), as amended, restated, or otherwise modified from time to time.
"Property" means all types of real, personal, tangible, intangible, or
mixed property, whether owned in fee simple or leased.
"Quarterly Date" means the last Business Day of each March, June,
September and December during the term of this Agreement, commencing on
September 30, 1997.
"Ratable" means, as to any Lender, in accordance with its Specified
Percentage.
100\269\91946 21
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"Refinancing Advance" means an Advance that is used to pay the
principal amount of an existing Advance (or any performance thereof) at the end
of its Interest Period and which, after giving effect to such application, does
not result in an increase in the aggregate amount of outstanding Advances.
"Regulatory Change" means any change after the date hereof in federal,
state, or foreign Laws (including the introduction of any new Law) or the
adoption or making after such date of any interpretations, directives, or
requests of or under any federal, state, or foreign Laws (whether or not having
the force of Law) by any Tribunal charged with the interpretation or
administration thereof, applying to a class of financial institutions that
includes any Lender, excluding, however, any such change which results in an
adjustment of the LIBOR Reserve Percentage and the effect of which is reflected
in a change in the LIBOR Rate as provided in the definition of such term.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any such waivers in accordance
with either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Restricted Payments" means (a) any direct or indirect distribution,
Distribution or other payment on account of any general or limited partnership
interest in (or the setting aside of funds for, or the establishment of a
sinking fund or analogous fund with respect to), or shares of Capital Stock or
other securities of, the Borrower or any Restricted Subsidiary; (b) any payments
of principal of, or interest on, or fees related to, or any other payments and
prepayments with respect to, or the establishment of, or any payment to, any
sinking fund or analogous fund for the purpose of making any such payments on,
Funded Debt of GCII, the Borrower or any Restricted Subsidiary (excluding the
Obligations and the obligations under the Revolving Credit Agreement); (c) any
Management Fee or any management, consulting or other similar fees, or any
interest thereon, payable by the Borrower or any Restricted Subsidiary to any
Affiliate of the Borrower or Parents or to any other Person; (d) any
administration fee or any administration, consulting or other similar fees, or
any interest thereon, payable by the Borrower or any Restricted Subsidiary to
any Affiliate of Parents or the Borrower or to any other Person (excluding the
payment of compensation (including, amounts paid pursuant to employee benefit
plans) in the ordinary course of business for the personal services of officers,
directors and employees of Parents, the Borrower or any of its Restricted
Subsidiaries, so long as the Board of Directors of Parents and the Borrower in
good faith shall have approved the terms thereof and deemed the services
therefore or thereafter to be performed for such compensation or fees to be fair
consideration therefor); (e) any payments of any amounts owing under any
Non-Compete Agreements; and (f) fees, loans or other payments or advances by the
Borrower or any Restricted Subsidiary to any Unrestricted Subsidiary or any
other Affiliate of the Parents or the
100\269\91946 22
<PAGE>
Borrower, except to the extent such payments are permitted in accordance with
the terms of Section 7.09 hereof.
"Restricted Subsidiaries" means GCI Communication Services, Inc., GCI
Leasing Co., Inc., GCI Communication Corp. (including, without limitation, the
Long Distance Division and the Local & Wireless Division), GCI Cable, Inc., each
Subsidiary of GCI Cable, Inc., and any other Subsidiary, now or hereafter
created or acquired, of the Borrower or the Parents, other than Unrestricted
Subsidiaries, in each case that engages in either the operation of (a) switched
message long distance telephone systems and ancillary services including DAMA,
cellular resale and PCS systems, (b) cable distribution operations, or (c) the
Local Telephone Business and "Restricted Subsidiary" means any one of them, as
applicable in the context.
"Revolver/Term Commitment" means, with respect to the Revolver/Term
Loan, $50,000,000, as such amount may be reduced from time to time in accordance
with the terms of Section 2.04 hereof.
"Revolver/Term Loan" means that certain Revolver/Term Loan made to the
Borrower on the Closing Date in accordance with Section 2.01 hereof.
"Revolver/Term Notes" means the promissory notes of the Borrower
evidencing the Advances and obligations owing hereunder to each Lender under the
Revolver/Term Loan, in substantially the form of Exhibit A hereto, each payable
to the order of each Lender, as each such note may be amended, extended,
restated, renewed, substituted or replaced from time to time.
"Revolver/Term Unused Commitment" means, on any date of determination,
the Revolver/Term Commitment as in effect on such date, minus all outstanding
Advances made under the Revolver/Term Loan on such date.
"Revolving Commitment" has the meaning ascribed to it in the Revolving
Credit Agreement.
"Revolving Credit Agreement" means, the $200,000,000 Amended and
Restated Credit Agreement, of even date herewith, between the Borrower, the
Administrative Agent and the Lenders, as amended, restated or otherwise modified
from time to time.
"Rights" means rights, remedies, powers, and privileges.
"Senior Debt" means, without duplication, with respect to the Borrower
and the Restricted Subsidiaries, the sum of all Funded Debt of the Borrower and
the Restricted Subsidiaries, calculated on a consolidated basis in accordance
with GAAP.
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"Senior Leverage Ratio" means as of any date of determination, the
ratio of (a) Senior Debt on such date of determination to (b) Annualized
Operating Cash Flow, all calculated for the Borrower and the Restricted
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied.
"Senior Notes" means those certain $180,000,000 9-3\4% Senior Notes due
2007 issued by GCII, pursuant to and in accordance with the Indenture.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, other than a Multiple Employer Plan, that is
maintained for employees of the Borrower or any ERISA Affiliate.
"Solvent" means, with respect to any Person, that on such date (a) the
fair value of the Property of such Person is greater than the total amount of
liabilities, including without limitation Contingent Liabilities of such Person,
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's Property would constitute
an unreasonably small capital.
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll,
P.C., Dallas, Texas, special counsel to Administrative Agent, or such other
counsel selected by the Administrative Agent from time to time.
"Specified Percentage" means, as to any Lender, the percentage
indicated beside its name on the signature pages hereof, or as adjusted or
specified in any Assignment and Acceptance, or amendment to this Agreement.
"Subordinated Debt" means subordinated indebtedness of the Borrower
incurred in accordance with the terms of Section 7.02(f)(ii) hereof.
"Subordination Agreement" means the Subordination Agreement among the
Borrower, AUSP, GCI Transport Co., Inc. and Credit Lyonnais as administrative
agent under the AUSP Credit Agreement, which agreement is substantially similar
in all material respects in form and substance to the draft thereof dated
November 4, 1997, as such agreement may be amended, restated or otherwise
modified from time to time.
"Subsidiary" of any Person means any corporation, partnership, limited
liability company, joint venture, trust or estate of which (or in which) more
than 50% of:
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(a) the outstanding Capital Stock having voting power to elect
a majority of the Board of Directors of such corporation (or other
Persons performing similar functions of such entity, and irrespective
of whether at the time Capital Stock of any other class or classes of
such corporation shall or might have voting power upon the occurrence
of any contingency),
(b) the interest in the capital or profits of such partnership
or joint venture, or
(c) the beneficial interest of such trust or estate,
is at the time directly or indirectly owned by (i) such Person, (ii)
such Person and one or more of its Subsidiaries or (iii) one or more of
such Person's Subsidiaries.
"System" or "Systems" means the Borrower's and the other GCI Entities'
(a) switched message long distance telephone systems and ancillary services
including DAMA, cellular resale and PCS systems between Alaska and the
contiguous states and the foreign countries listed on Schedule 1.01A hereto, and
any and all other switched message long distance telephone systems, DAMA,
cellular resale and PCS systems acquired or owned by the Parents, the Borrower,
any of the Restricted Subsidiaries and any of the other GCI Entities from time
to time, (b) cable distribution systems owned or acquired by the Borrower or any
of its Restricted Subsidiaries which receives audio, video, digital, other
broadcast signals or information or telecommunications by cable, optical,
antennae, microwave or satellite transmission and which amplifies and transmits
such signals to persons who pay to receive such signals, and (c) the Local
Telephone Business, and all other such systems owned by the Borrower or any
other GCI Entity from time to time.
"Taxes" means all taxes, assessments, imposts, fees, or other charges
at any time imposed by any Laws or Tribunal.
"Total Debt" means, without duplication, with respect to GCII, the
Borrower and the Restricted Subsidiaries, the sum of all Funded Debt, calculated
on a consolidated basis in accordance with GAAP.
"Total Interest Expense" means as of any date of determination for any
period of calculation, GCII's, the Borrower's and the Restricted Subsidiaries'
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) on Total Debt for such period calculated
on a consolidated basis in accordance with GAAP, including without limitation or
duplication (or, to the extent not so included, with the addition of) for GCII,
the Borrower and the Restricted Subsidiaries: (a) the amortization of Debt
discounts; (b) any commitment fees or agency fees related to any Funded Debt,
but specifically excluding any one-time facility and/or arrangement fees; (c)
any fees or expenses with respect to letters of credit, bankers' acceptances or
similar facilities; (d) fees and expenses with respect to interest rate swap or
similar agreements or foreign currency hedge, exchange or similar agreements,
other than
100\269\91946 25
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fees or charges related to the acquisition or termination thereof which are not
allocable to interest expense in accordance with GAAP; (e) preferred stock
Distributions for GCII, the Borrower and the Restricted Subsidiaries declared
and payable in cash; and (f) interest capitalized in accordance with GAAP.
"Total Leverage Ratio" means as of any date of determination, the ratio
of (a) Total Debt of GCII, the Borrower and the Restricted Subsidiaries on such
date of determination to (b) Annualized Operating Cash Flow, all calculated on a
consolidated basis in accordance with GAAP consistently applied.
"Tribunal" means any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision, agency, department,
commission, board, bureau, or instrumentality of a governmental body.
"Type" refers to the distinction between Advances bearing interest at
the Base Rate and LIBOR Rate.
"UCC" means the Uniform Commercial Code as adopted in the State of
Texas.
"Unrestricted Subsidiary" means GCI Transport Co., Inc., GCI Satellite
Co., Inc., GCI Fiber Co., Inc., Fiber Hold Co., Inc. and AUSP, and, with the
prior written consent of the Majority Lenders, any other Subsidiary of the
Parents designated as a "Unrestricted Subsidiary" by the Borrower from time to
time.
"Wholly-Owned Subsidiary" means any Subsidiary of the Borrower that is
owned 100% by the Borrower or either of the Parents, directly or indirectly,
except any Unrestricted Subsidiary.
"Withdrawal Liability" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
1.02. Accounting and Other Terms. All accounting terms used in this
Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP consistently applied on a consolidated basis for Borrower
and the Restricted Subsidiaries, unless otherwise expressly stated herein.
References herein to one gender shall be deemed to include all other genders.
Except where the context otherwise requires, all references to time are deemed
to be Central Standard time.
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ARTICLE II. AMOUNTS AND TERMS OF ADVANCES
2.01. The Facility. Each Lender severally agrees, on the terms and
subject to the conditions hereinafter set forth, from the Closing Date until the
Conversion Date, to make Advances under the Revolver/Term Loan to the Borrower
on any Business Day during the period from the Closing Date of this Agreement
until the Conversion Date, in an aggregate principal amount not to exceed at any
time outstanding such Lender's Specified Percentage of the Revolver/Term
Commitment. Subject to the terms and conditions of this Agreement, until the
Conversion Date, the Borrower may borrow, repay and reborrow the Advances under
the Revolver/Term Loan. On the Conversion Date, the aggregate amount of
outstanding Advances under the Revolver/Term Loan shall convert to a term loan,
at which point the Borrower may not borrow, repay and reborrow the Advances
under the Revolver/Term Loan, all Advances under the Revolver/Term Loan being
Refinancing Advances on and after the Conversion Date. In addition to the
installment repayments due on the Revolver/Term Loan as set forth below, the
aggregate amount of all outstanding Revolver/Term Advances are due and payable
on the Maturity Date.
2.02 Making Advances Under the Revolver/Term Loan.
(a) Each Borrowing of Advances shall be made upon the written notice of
the Borrower, received by Administrative Agent not later than (i) 12:00 noon
three Business Days prior to the proposed date of the Borrowing, in the case of
LIBOR Advances and (ii) not later than 10:00 a.m. on the date of such Borrowing,
in the case of Base Rate Advances. Each such notice of a Borrowing (a "Borrowing
Notice") shall be by telecopy, promptly confirmed by letter, in substantially
the form of Exhibit F hereto specifying therein:
(i) the date of such proposed Borrowing, which shall be a
Business Day;
(ii) the amount of such proposed Borrowing which, (A) prior to
the Conversion Date, shall not when aggregated together with all other
outstanding Advances under the Revolver/Term Loan exceed the
Revolver/Term Commitment, and (B) shall, in the case of a Borrowing of
LIBOR Advances, be in an amount of not less than $1,000,000 or an
integral multiple of $500,000 in excess thereof and, in the case of a
Borrowing of Base Rate Advances, be in an amount of not less than
$500,000 or an integral multiple of $100,000 in excess thereof;
(iii) the Type of Advances of which the Borrowing is to be
comprised; and
(iv) if the Borrowing is to be comprised of LIBOR Advances,
the duration of the initial Interest Period applicable to such
Advances.
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If the Borrowing Notice fails to specify the duration of the initial
Interest Period for any Borrowing comprised of LIBOR Advances, such Interest
Period shall be three months. Each Lender shall, before 1:00 p.m. on the date of
each Advance under the Revolver/Term Loan prior to the Conversion Date (other
than a Refinancing Advance), make available to
Administrative Agent
NationsBank Plaza
901 Main Street
14th Floor
Dallas, Texas 75202
such Lender's Specified Percentage of the aggregate Advances under the
Revolver/Term Loan, to be made on that day in immediately available funds.
(b) Unless any applicable condition specified in Article IV hereof has
not been satisfied, Administrative Agent will make the funds on Advances under
the Facility promptly available to the Borrower (other than with respect to a
Refinancing Advance) at such account as shall have been specified by the
Borrower.
(c) After giving effect to any Borrowing, (i) there shall not be more
than eight different Interest Periods in the aggregate in effect under the
Facility and under the Revolving Credit Agreement and (ii) if prior to the
Conversion Date, the aggregate principal of outstanding Advances under the
Revolver/Term Loan shall not exceed the Revolver/Term Commitment.
(d) No Interest Period for a Borrowing under the Facility shall extend
beyond the Maturity Date.
(e) Unless a Lender shall have notified Administrative Agent prior to
the date of any Advance that it will not make available its Specified Percentage
of any Advance, Administrative Agent may assume that such Lender has made the
appropriate amount available in accordance with Section 2.02(a), and
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If and to the extent any Lender shall not
have made such amount available to Administrative Agent, such Lender and the
Borrower severally agree to repay to Administrative Agent immediately on demand
such corresponding amount together with interest thereon, from the date such
amount is made available to the Borrower until the date such amount is repaid to
Administrative Agent, at (i) in the case of the Borrower, the Base Rate, and
(ii) in the case of such Lender, the Federal Funds Rate.
(f) The failure by any Lender to make available its Specified
Percentage of any Advance hereunder shall not relieve any other Lender of its
obligation, if any, to make available its Specified Percentage of any Advance.
In no event, however, shall any Lender be responsible for the failure of any
other Lender to make available any portion of any Advance.
100\269\91946 28
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(g) The Borrower shall indemnify each Lender against any Consequential
Loss incurred by each Lender as a result of (i) any failure to fulfill, on or
before the date specified for the Advance, the conditions to the Advance set
forth herein or (ii) the Borrower's requesting that an Advance not be made on
the date specified in the Borrowing Notice.
2.03 Evidence of Indebtedness.
(a) The obligations of the Borrower with respect to all Advances under
the Revolver/Term Loan made by each Lender shall be evidenced by a Revolver/Term
Note in the form of Exhibit A hereto and in the amount of such Lender's
Specified Percentage of the Revolver/Term Commitment (as the same may be
modified pursuant to Section 10.04 hereof).
(c) Absent manifest error, Administrative Agent's and each Lender's
records shall be conclusive as to amounts owed Administrative Agent and such
Lender under the Notes and this Agreement.
2.04 Reduction of Commitments.
(a) Voluntary Commitment Reduction. The Borrower shall have the right
from time to time upon notice by the Borrower to the Administrative Agent not
later than 1:00 p.m., three Business Days in advance, to reduce prior to the
Conversion Date, the Revolver/Term Commitment, in whole or in part; provided,
however, that the Borrower shall pay the accrued commitment fee on the amount of
each such reduction, if any, and any partial reduction shall be in an aggregate
amount which is not less than $1,000,000 and an integral multiple of $500,000.
Such notice shall specify the amount of reduction and the proposed date of such
reduction.
(b) Mandatory Commitment Reductions.
(i) Scheduled Reductions in the Revolver/Term Commitment. The
Revolver/Term Commitment shall be reduced to zero on the Conversion
Date.
(ii) Asset Sales. On the date of any Asset Sale by any of the
GCI Entities (this provision not permitting such Asset Sales),
(A) if there exists no Default or Event of Default prior
to the Conversion Date, the Revolver/Term Commitment and the
Revolving Commitment shall be automatically and permanently
reduced by an amount equal to 100% of the Net Proceeds from
any Asset Sales received by any of the GCI Entities in excess
of $10,000,000 in the aggregate over the term of this
Agreement (or $20,000,000 if before and immediately after
giving effect to any Asset Sale, the Total Leverage Ratio is
equal to or less than 4.50 to 1.00), applied pro rata to the
obligations as specified under the Revolving Credit Agreement
and the Advances outstanding under Revolver/Term Commitment,
and
100\269\91946 29
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(B) if there exists a Default or an Event of Default,
prior to the Conversion Date, the Revolver/Term Commitment and
the Revolving Commitment shall be automatically and
permanently reduced by an amount equal to 100% of the Net
Proceeds from any Asset Sales received by any of the GCI
Entities applied pro rata to the obligations as specified
under the Revolving Credit Agreement and the Revolver/Term
Commitment, and
(C) on each such date set forth in (A) and (B) above, the
Borrower shall deliver to the Administrative Agent a
certificate of an Authorized Officer certifying as to the
amount of (including the calculation of) the reduction of the
Revolver/Term Commitment, and, with respect to the Asset Sale
giving rise thereto, the gross proceeds thereof and the costs
and expenses payable as a result thereof which were deducted
in determining the amount of Net Proceeds.
(iii) Debt Issuance. On the date of any issuance of public or
private Subordinated Debt by the Borrower (this provision not
permitting such Debt issuance),
(A) if there exists a Default or an Event of Default or if
the Total Leverage Ratio equals or is greater than 5.00 to
1.00, prior to the Conversion Date, the Revolver/Term
Commitment and the Revolving Commitment shall be automatically
and permanently reduced by an amount equal to 100% of the net
proceeds from any issuances of Subordinated Debt received by
the Borrower, applied pro rata to the obligations as specified
under the Revolving Credit Agreement and the Revolver/Term
Commitment, and
(B) on such date, the Borrower shall deliver to the
Administrative Agent a certificate of an Authorized Officer
certifying as to the amount of (including the calculation of)
such reduction in the Revolver/Term Commitment, and, with
respect to the Debt issuance giving rise thereto, the gross
proceeds thereof and the costs and expenses payable as a
result thereof which were deducted in determining the amount
of net proceeds of such Debt issuance.
(iv) Change of Control. If a Change of Control occurs, the
Revolver/Term Commitment shall be automatically and permanently reduced
to zero.
(v) Equity Issuances. On the date of any issuance of equity by
the GCI Entities other than the Closing Date and other than the
issuance of common stock or options or rights to purchase common stock
of any GCI Entity to employees and directors pursuant to stock purchase
plans or grant plans, or otherwise (this provision not permitting such
equity issuances),
(A) if there exists a Default or an Event of Default,
prior to the Conversion Date, the Revolver/Term Commitment and
the Revolving Commitment shall be automatically and
permanently reduced by an amount equal to 100% of the net
100\269\91946 30
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proceeds from any such equity issuances received by any of the
GCI Entities applied pro rata to the obligations as specified
under the Revolving Credit Agreement, and to Advances
outstanding under the Revolver/Term Commitment, and
(B) on each such date set forth in (A) and (B) above, the
Borrower shall deliver to the Administrative Agent a
certificate of an Authorized Officer certifying as to the
amount of (including the calculation of) the reduction of the
Revolver/Term Commitment, and, with respect to the equity
issuance giving rise thereto, the gross proceeds thereof and
the costs and expenses payable as a result thereof which were
deducted in determining the amount of net proceeds of such
equity issuance.
(vi) Distributions from AUSP or any other Unrestricted
Subsidiary. On the date that any distribution is received by any GCI
Entity from AUSP or any Unrestricted Subsidiary,
(A) if there exists a Default or an Event of Default,
prior to the Conversion Date, the Revolver/Term Commitment and
the Revolving Commitment shall be automatically and
permanently reduced by an amount equal to 100% of the
distribution received by any GCI Entity from AUSP or any other
Unrestricted Subsidiary, applied pro rata to the obligations
as specified under the Revolving Credit Agreement and the
Revolver/Term Commitment, and
(B) on each such date set forth above, the Borrower shall
deliver to the Administrative Agent a certificate of an
Authorized Officer certifying as to the amount of (including
the calculation of) the reduction of the Revolver/Term
Commitment.
(c) Commitment Reductions, Generally. To the extent the sum of the
aggregate outstanding Advances under the Revolver/Term Loan exceed the
Revolver/Term Commitment after any reduction thereof, prior to or on the
Conversion Date, the Borrower shall immediately repay on the date of such
reduction, any such excess amount and all accrued interest thereon, together
with any amounts constituting any Consequential Loss. Once reduced or terminated
pursuant to this Section 2.04, the Revolver/Term Commitment may not be increased
or reinstated.
2.05 Prepayments.
(a) Optional Prepayments. The Borrower may, upon at least three
Business Days prior written notice to Administrative Agent stating the proposed
date and aggregate principal amount of the prepayment, prepay the outstanding
principal amount of any Advances in whole or in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid without
premium or penalty other than any Consequential Loss; provided, however, that
100\269\91946 31
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in the case of a prepayment of a Base Rate Advance, the notice of prepayment may
be given by telephone by 11:00 a.m. on the date of prepayment. Each partial
prepayment shall, in the case of Base Rate Advances, be in an aggregate
principal amount of not less than $500,000 or a larger integral multiple of
$100,000 in excess thereof and, in the case of LIBOR Advances, be in an
aggregate principal amount of not less than $1,000,000 or a larger integral
multiple of $500,000 in excess thereof. If any notice of prepayment is given,
the principal amount stated therein, together with accrued interest on the
amount prepaid and the amount, if any, due under Sections 2.11 and 2.13 hereof,
shall be due and payable on the date specified in such notice.
(b) Mandatory Prepayments.
(i) Asset Sales. (A) Prior to the Conversion Date, on the
date of any Asset Sale of any GCI Entity, the Borrower shall repay the
Obligations and the obligations under the Revolving Credit Agreement by
an amount equal to 100% of the Net Proceeds, applied pro rata to the
obligations as specified under the Revolving Credit Agreement and
Advances outstanding under the Revolver/Term Loan, and (B) after the
Conversion Date, (I) if there exists no Default or Event of Default, on
the date of any Asset Sale of any GCI Entity, the Borrower shall repay
the obligations by an amount equal to 100% of the Net Proceeds, applied
to the obligations as specified under the Revolving Credit Agreement,
and (II) if there exists a Default or Event of Default, on the date of
any Asset Sale of any GCI Entity, the Borrower shall repay the
Obligations and the obligations under the Revolving Credit Agreement by
an amount equal to 100% of the Net Proceeds, applied pro rata to the
obligations as specified under the Revolving Credit Agreement and
Advances outstanding under the Revolver/Term Loan. Any amounts repaying
the Revolver/Term Loan on and after the Conversion Date will be applied
in the inverse order of maturity and may not be reborrowed. On such
date, the Borrower shall deliver to the Administrative Agent a
certificate of an Authorized Officer certifying as to the amount of
(including the calculation of) such repayment and, with respect to the
Asset Sale giving rise thereto, the gross proceeds thereof and the
costs and expenses payable as a result thereof which were deducted in
determining the amount of Net Proceeds.
(ii) Debt Issuances. (A) Prior to the Conversion Date, on the
date of any issuance of public or private Subordinated Debt by the
Borrower (this provision not permitting such Debt issuance), the
Borrower shall repay the Obligations and the obligations under the
Revolving Credit Agreement by an amount equal to 100% of the net
proceeds from such issuance, applied pro rata to the obligations as
specified under the Revolving Credit Agreement and to outstanding
Advances under the Revolver/Term Loan, and (B) after the Conversion
Date, (I) if there exists no Default or Event of Default (and the Total
Leverage Ratio is less than 5.00 to 1.00), on the date of any issuance
of any private or public Subordinated Debt by the Borrower, the
Borrower shall repay the obligations under the Revolving Credit
Agreement by an amount equal to 100% of the net proceeds of such
Subordinated Debt issuance, applied to the obligations as
100\269\91946 32
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specified under the Revolving Credit Agreement, and (II) if there
exists a Default or Event of Default or if the Total Leverage Ratio is
equal to or greater than 5.00 to 1.00, on the date of any such issuance
by the Borrower, the Borrower shall repay the Obligations and the
obligations under the Revolving Credit Agreement by an amount equal to
100% of the net proceeds of such issuance, applied pro rata to the
obligations outstanding under the Revolving Loan and Advances
outstanding under the Revolver/Term Loan. Any amounts repaying the
Revolver/Term Loan on and after the Conversion Date will be applied in
the inverse order of maturity and may not be reborrowed. On such date,
the Borrower shall deliver to the Administrative Agent a certificate of
an Authorized Officer certifying as to the amount of (including the
calculation of) such repayment and, with respect to the Debt issuance
giving rise thereto, the gross proceeds thereof and the costs and
expenses payable as a result thereof which were deducted in determining
the amount of net proceeds of such Debt issuance.
(iii) Equity Issuances. (A) Prior to the Conversion Date
(unless there exists a Default or an Event of Default), on the date of
any issuance of equity by any GCI Entity other than the Closing Date
and other than the issuance of common stock or options or rights to
purchase common stock of any GCI Entity to employees and directors
pursuant to stock purchase plans or grant plans, or otherwise (this
provision not permitting such equity issuances), the Borrower shall
repay the obligations under the Revolving Credit Agreement by an amount
equal to 50% of the net proceeds of such equity issuances in excess of
$50,000,000 in the aggregate over the term of this Agreement, applied
pro rata to the obligations as specified under the Revolving Credit
Agreement and Advances outstanding under the Revolver/Term Loan, and
(B) (I) after the Conversion Date, if there exists no Default or Event
of Default, on the date of any issuance of equity by any GCI Entity,
the Borrower shall repay the obligations under the Revolving Credit
Agreement by an amount equal to 50% of the net proceeds of such equity
issuances in excess of $50,000,000 in the aggregate over the term of
this Agreement, applied to the obligations as specified under the
Revolving Credit Agreement, and (II) if there exists a Default or Event
of Default, on the date of any such equity issuance by any GCI Entity,
the Borrower shall repay the Obligations and the obligations under the
Revolving Credit Agreement by an amount equal to 100% of the net
proceeds of such equity issuances, applied pro rata to the obligations
as specified under the Revolving Credit Agreement and Advances
outstanding under the Revolver/Term Loan. Any amounts repaying the
Revolver/Term Loan on and after the Conversion Date will be applied in
the inverse order of maturity and may not be reborrowed. On such date,
the Borrower shall deliver to the Administrative Agent a certificate of
an Authorized Officer certifying as to the amount of (including the
calculation of) such repayment and, with respect to the equity issuance
giving rise thereto, the gross proceeds thereof and the costs and
expenses payable as a result thereof which were deducted in determining
the amount of net proceeds of such equity issuance.
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(iv) Distributions from AUSP or any other Unrestricted
Subsidiaries. (A) Prior to the Conversion Date, on the date of any
receipt by the Borrower or any Restricted Subsidiary of a distribution
from AUSP or any other Unrestricted Subsidiary, the Borrower shall
repay the Obligations and the obligations under the Revolving Credit
Agreement by an amount equal to 100% of such distribution, applied pro
rata to Advances outstanding under the Revolving Loan and Advances
outstanding under the Revolver/Term Loan, and (B) after the Conversion
Date, (I) if there exists no Default or Event of Default, on the date
of any receipt by the Borrower or any Restricted Subsidiary of a
distribution from AUSP or any other Unrestricted Subsidiary, the
Borrower shall repay the obligations under the Revolving Credit
Agreement by an amount equal to 100% of such distribution, applied to
the obligations as specified under the Revolving Credit Agreement, and
(II) if there exists a Default or Event of Default, on the date of any
such receipt by the Borrower or any Restricted Subsidiary of a
distribution from AUSP or any other Unrestricted Subsidiary, the
Borrower shall repay the Obligations and the obligations under the
Revolving Credit Agreement by an amount equal to 100% of such
distribution, applied pro rata to the obligations as specified under
the Revolving Credit Agreement and Advances outstanding under the
Revolver/Term Loan. Any amounts repaying the Revolver/Term Loan on and
after the Conversion Date will be applied in the inverse order of
maturity and may not be reborrowed. On such date, the Borrower shall
deliver to the Administrative Agent a certificate of an Authorized
Officer certifying as to the amount of (including the calculation of)
such repayment.
(v) Change of Control. If a Change of Control occurs, the
Borrower shall repay the Obligations in full.
(c) Prepayments, Generally. Any prepayment of Advances pursuant to this
Section 2.05 shall be applied first to Base Rate Advances, if any, then
outstanding under the Facility, second to LIBOR Advances for which the date of
prepayment is the last day of the applicable Interest Period, if any,
outstanding under the Facility and third to LIBOR Advances with the shortest
remaining Interest Periods outstanding under the Facility.
2.06 Mandatory Repayment.
(a) Revolver/Term Loan Installment Repayments. Commencing September 30,
2000, the aggregate outstanding Advances under the Revolver/Term Loan shall be
repaid by the Borrower in installments thereafter from time to time by the
Installment Percentage set forth below on such dates as are set forth below of
the aggregate Revolver/Term Advances outstanding on the Conversion Date:
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<PAGE>
Date of Reduction Installment Percentage
----------------- ----------------------
September 30, 2000 3.750%
December 31, 2000 3.750%
March 31, 2001 3.750%
June 30, 2001 3.750%
September 30, 2001 3.750%
December 31, 2001 3.750%
March 31, 2002 5.000%
June 30, 2002 5.000%
September 30, 2002 5.000%
December 31, 2002 5.000%
March 31, 2003 5.000%
June 30, 2003 5.000%
September 30, 2003 5.000%
December 31, 2003 5.000%
March 31, 2004 5.625%
June 30, 2004 5.625%
September 30, 2004 5.625%
December 31, 2004 5.625%
March 31, 2005 7.500%
July 31, 2005 7.500% and all
remaining
outstanding
Advances all
other Obligations
shall be due and
payable in full
(b) Final Maturity. The Borrower agrees that all Advances outstanding
under the Revolver/Term Loan, and all other outstanding Obligations are due and
payable in full on the Maturity Date.
2.07 Interest. Subject to Section 2.08 below, the Borrower shall pay
interest on the unpaid principal amount of each Advance from the date of such
Advance until such principal shall be paid in full, at the following rates, as
selected by the Borrower in accordance with the provisions of Section 2.02
hereof:
(a) Base Rate Advances. Base Rate Advances shall bear interest
at a rate per annum equal to the lesser of (i) the Base Rate as in
effect from time to time and (ii) the Highest Lawful Rate. If the
amount of interest payable in respect of any interest computation
period is reduced to the Highest Lawful Rate pursuant to the
immediately
100\269\91946 35
<PAGE>
preceding sentence and the amount of interest payable in respect of any
subsequent interest computation period would be less than the Maximum
Amount, then the amount of interest payable in respect of such
subsequent interest computation period shall be automatically increased
to Maximum Amount; provided that at no time shall the aggregate amount
by which interest paid has been increased pursuant to this sentence
exceed the aggregate amount by which interest has been reduced pursuant
to the immediately preceding sentence.
(b) LIBOR Advances. LIBOR Advances shall bear interest at the
rate per annum equal to the LIBOR Rate applicable to such Advance,
which at no time shall exceed the Highest Lawful Rate.
(c) Payment Dates. Accrued and unpaid interest on Base Rate
Advances shall be paid quarterly in arrears on each Quarterly Date and
on the appropriate maturity, repayment or prepayment date. Accrued and
unpaid interest on LIBOR Advances shall be paid on the last day of the
appropriate Interest Period and on the date of any prepayment or
repayment of such Advance; provided, however, that if any Interest
Period for a LIBOR Advance exceeds three months, interest shall also be
paid on each date occurring during the Interest Period which is the
three month anniversary date of the first day of the Interest Period.
Default Interest. During the continuation of any Event of Default, the
Borrower shall pay, on demand, interest (after as well as before judgment to the
extent permitted by Law) on the principal amount of all Advances outstanding and
on all other Obligations due and unpaid hereunder equal to the lesser of the (a)
the Highest Lawful Rate and (b) the Base Rate (whether or not in effect) plus
2.00% per annum.
2.09 Continuation and Conversion Elections.
(a) The Borrower may upon irrevocable written notice to Administrative
Agent and subject to the terms of this Agreement:
(i) elect to convert, on any Business Day, all or any portion
of outstanding Base Rate Advances (in an aggregate amount not less than
$1,000,000 or a larger integral multiple of $500,000 in excess thereof)
into LIBOR Advances.
(ii) elect to convert at the end of any Interest Period
therefor, all or any portion of outstanding LIBOR Advances comprised in
the same Borrowing (in an aggregate amount not less than $500,000 or a
larger integral multiple of $100,000 in excess thereof) into Base Rate
Advances; or
(iii) elect to continue, at the end of any Interest Period
therefor, any LIBOR Advances;
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<PAGE>
provided, however, that if the aggregate amount of outstanding LIBOR
Advances comprised in the same Borrowing shall have been reduced as a result of
any payment, prepayment or conversion of part thereof to an amount less than
$1,000,000, the LIBOR Advances comprised in such Borrowing shall automatically
convert into Base Rate Advances at the end of each respective Interest Period.
(b) The Borrower shall deliver a notice of conversion or continuation
(a "Notice of Conversion/Continuation"), in substantially the form of Exhibit E
hereto, to Administrative Agent not later than (i) 12:00 noon three Business
Days prior to the proposed date of conversion or continuation, if the Advances
or any portion thereof are to be converted into or continued as LIBOR Advances;
and (ii) not later than 10:00 a.m. on the proposed date of conversion or
continuation, if the Advances or any portion thereof are to be converted into
Base Rate Advances.
Each such Notice of Conversion/Continuation shall be by telecopy or
telephone, promptly confirmed in writing, specifying therein:
(i) the proposed date of conversion or continuation;
(ii) the aggregate amount of Advances to be converted or
continued;
(iii) the nature of the proposed conversion or
continuation; and
(iv) the duration of the applicable Interest Period.
(c) If, upon the expiration of any Interest Period applicable to LIBOR
Advances, the Borrower shall have failed to select a new Interest Period to be
applicable to such LIBOR Advances or if an Event of Default shall then have
occurred and be continuing, the Borrower shall be deemed to have elected to
convert such LIBOR Advances into Base Rate Advances effective as of the
expiration date of such current Interest Period.
(d) Upon receipt of a Notice of Conversion/Continuation, Administrative
Agent shall promptly notify each Lender thereof. All conversions and
continuations shall be made pro rata among Lenders based on their Specified
Percentage of the respective outstanding principal amounts of the Advances with
respect to which such notice was given held by each Lender.
(e) Notwithstanding any other provision contained in this Agreement,
after giving effect to any conversion or continuation of any Advances, there
shall not be outstanding Advances with more than eight different Interest
Periods in the aggregate under the Facility and under the Revolving Credit
Agreement.
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<PAGE>
2.10 Fees.
(a) Subject to Section 10.09 hereof, the Borrower agrees to pay to the
Administrative Agent, for the account of the Lenders in accordance with their
Specified Percentages, a commitment fee on the average daily amount of the
Revolver/Term Unused Commitment, from the Closing Date through the Conversion
Date, at the rate of .125% per annum, payable quarterly in arrears on each
Quarterly Date occurring after the Closing Date, with the last such payment due
and owing on the Conversion Date.
(b) Subject to Section 10.09 hereof, the Borrower agrees to pay to the
Administrative Agent for its own account as administrative lender and
underwriter, and to NationsBanc Montgomery Securities, Inc., as arranger
hereunder, such fees as agreed to in writing among the Borrower and the
Administrative Agent and NationsBanc Montgomery Securities, Inc., payable as set
forth in that certain Fee Letter executed among the Borrower, the Administrative
Agent and NationsBanc Montgomery Securities, Inc. in accordance with the terms
of the Fee Letter.
2.11 Funding Losses. If the Borrower makes any payment or prepayment of
principal with respect to any LIBOR Advance (including payments made after any
acceleration thereof) or converts any Advance from a LIBOR Advance on any day
other than the last day of an Interest Period applicable thereto or if the
Borrower fails to prepay, borrow, convert, or continue any LIBOR Advance after a
notice of prepayment, borrowing, conversion or continuation has been given (or
is deemed to have been given) to Administrative Agent, the Borrower shall pay to
each Lender on demand (subject to Section 10.09 hereof) any Consequential Loss.
The Borrower agrees that each Lender is not obligated to actually reinvest the
amount prepaid in any specific obligation as a condition to receiving any
Consequential Loss, or otherwise.
2.12 Computations and Manner of Payments.
(a) The Borrower shall make each payment hereunder and under the other
Loan Papers not later than 1:00 p.m. on the day when due in same day funds to
Administrative Agent, for the Ratable account of Lenders unless otherwise
specifically provided herein, at
Administrative Agent
NationsBank Plaza
901 Main Street
14th Floor
Dallas, Texas 75202
for further credit to the account of GCI Holdings, Inc. No later than the end of
each day when each payment hereunder is made, the Borrower shall notify the
Administrative Agent, telephone (800) 880-5537, facsimile (214) 508-2515, or
such other Person as Administrative Agent may from time to time specify.
100\269\91946 38
<PAGE>
(b) Unless Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due hereunder that the
Borrower will not make payment in full, Administrative Agent may assume that
such payment is so made on such date and may, in reliance upon such assumption,
make distributions to Lenders. If and to the extent the Borrower shall not have
made such payment in full, each Lender shall repay to Administrative Agent
forthwith on demand the applicable amount distributed, together with interest
thereon at the Federal Funds Rate, from the date of distribution until the date
of repayment. The Borrower hereby authorizes each Lender, if and to the extent
payment is not made when due hereunder, to charge the amount so due against any
account of the Borrower with such Lender.
(c) Subject to Section 10.09 hereof, interest on LIBOR Advances shall
be calculated on the basis of actual days elapsed but computed as if each year
consisted of 360 days. Subject to Section 10.09 hereof, interest on Base Rate
Advances, the Commitment Fees and other amounts due under the Loan Papers shall
be calculated on the basis of actual days elapsed but computed as if each year
consisted of 365 or 366 days, as the case may be. Such computations shall be
made including the first day but excluding the last day occurring in the period
for which such interest, payment or Commitment Fees is payable. Each
determination by Administrative Agent or a Lender of an interest rate, fee or
commission hereunder shall be conclusive and binding for all purposes, absent
manifest error. All payments under the Loan Papers shall be made in United
States dollars, and without setoff, counterclaim, or other defense.
(d) Except as specifically set forth in Sections 2.04 and 2.05 hereof,
so long as there exists no Default or Event of Default all payments made by the
Borrower shall be applied as designated by the Borrower, and, if there exists a
Default or Event of Default, or if the Borrower fails to designate application
of payments, all payments made by the Borrower shall be applied pro rata among
the obligations under the Revolving Credit Agreement and the Revolver/Term Loan.
Notwithstanding anything herein or in any Loan Paper to the contrary, any
payment made by the Borrower in excess of the Revolver/Term Commitment or
outstanding Advances under the Revolver/Term Loan, shall be applied to
outstanding amounts (or to reduce the commitment) of any other outstanding
Obligations.
(e) Reference to any particular index or reference rate for determining
any applicable interest rate under this Agreement is for purposes of calculating
the interest due and is not intended as and shall not be construed as requiring
any Lender to actually fund any Advance at any particular index or reference
rate.
2.13 Yield Protection.
(a) If any Lender determines that either (i) the adoption, after the
date hereof, of any Applicable Law, rule, regulation or guideline regarding
capital adequacy and applicable to commercial banks or financial institutions
generally or any change therein, or any change, after the date hereof, in the
interpretation or administration thereof by any Tribunal, central bank or
comparable agency charged with the interpretation or administration thereof, or
(ii) compliance by any Lender (or Lending Office of any Lender) with any request
or directive made after the
100\269\91946 39
<PAGE>
date hereof applicable to commercial banks or financial institutions generally
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency has the effect of reducing the rate
of return on such Lender's capital as a consequence of its obligations hereunder
to a level below that which such Lender could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's policies
with respect to capital adequacy (but excluding consequences of such Lender's
negligence or intentional disregard of law or regulation)) by an amount
reasonably deemed by such Lender to be material, then from time to time, within
fifteen days after demand by such Lender, the Borrower shall pay to such Lender
such additional amount or amounts as will adequately compensate such Lender for
such reduction. Each Lender will notify the Borrower of any event occurring
after the date of this Agreement which will entitle such Lender to compensation
pursuant to this Section 2.13(a) as promptly as practicable after such Lender
obtains actual knowledge of such event; provided, no Lender shall be liable for
its failure or the failure of any other Lender to provide such notification. A
certificate of such Lender claiming compensation under this Section 2.13(a),
setting forth in reasonable detail the calculation of the additional amount or
amounts to be paid to it hereunder and certifying that such claim is consistent
with such Lender's treatment of similar customers having similar provisions
generally in their agreements with such Lender shall be conclusive in the
absence of manifest error. Each Lender shall use reasonable efforts to mitigate
the effect upon the Borrower of any such increased costs payable to such Lender
under this Section 2.13(a).
(b) If, after the date hereof, any Tribunal, central bank or other
comparable authority, at any time imposes, modifies or deems applicable any
reserve (including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit or similar requirement against
assets of, deposits with or for the amount of, or credit extended by, any
Lender, or imposes on any Lender any other condition affecting a LIBOR Advance,
the Notes, or its obligation to make a LIBOR Advance; and the result of any of
the foregoing is to increase the cost to such Lender of making or maintaining
LIBOR Advances, or to reduce the amount of any sum received or receivable by
such Lender under this Agreement or under the Notes or reimbursement obligations
by an amount deemed by such Lender, to be material, then, within five days after
demand by such Lender, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such increased cost or
reduction. Each Lender will (i) notify the Borrower and Administrative Agent of
any event occurring after the date of this Agreement that entitles such Lender
to compensation pursuant to this Section 2.13(b), as promptly as practicable
after such Lender obtains actual knowledge of the event; provided, no Lender
shall be liable for its failure or the failure of any other Lender to provide
such notification and (ii) use good faith and reasonable efforts to designate a
different Lending Office for LIBOR Advances of such Lender if the designation
will avoid the need for, or reduce the amount of, the compensation and will not,
in the sole opinion of such Lender, be disadvantageous to such Lender. A
certificate of such Lender claiming compensation under this Section 2.13(b),
setting forth in reasonable detail the computation of the additional amount or
amounts to be paid to it hereunder and certifying that such claim is consistent
with such Lender's treatment of similar customers having similar provisions
generally in their agreements with such Lender shall be conclusive in the
absence of manifest error. If such Lender demands
100\269\91946 40
<PAGE>
compensation under this Section 2.13(b), the Borrower may at any time, on at
least five Business Days' prior notice to such Lender (i) repay in full the then
outstanding principal amount of LIBOR Advances, of such Lender, together with
accrued interest thereon, or (ii) convert the LIBOR Advances to Base Rate
Advances in accordance with the provisions of this Agreement; provided, however,
that the Borrower shall be liable for the Consequential Loss arising pursuant to
those actions.
(c) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation or administration of
any Law shall make it unlawful, or any central bank or other Tribunal shall
assert that it is unlawful, for a Lender to perform its obligations hereunder to
make LIBOR Advances or to continue to fund or maintain LIBOR Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower, (i)
each LIBOR Advance will automatically, upon such demand, convert into a Base
Rate Advance, and (ii) the obligation of such Lender to make, or to convert
Advances into, LIBOR Advances shall be suspended until such Lender notifies
Administrative Agent and the Borrower that such Lender has determined that the
circumstances causing such suspension no longer exist.
(d) Upon the occurrence and during the continuance of any Default or
Event of Default, (i) each LIBOR Advance will automatically, on the last day of
the then existing Interest Period therefor, convert into a Base Rate Advance and
(ii) the obligation of each Lender to make, or to convert Advances into, LIBOR
Advances shall be suspended.
(e) Failure on the part of any Lender to demand compensation for any
increased costs, increased capital or reduction in amounts received or
receivable or reduction in return on capital pursuant to this Section 2.13 with
respect to any period shall not constitute a waiver of any Lender's right to
demand compensation with respect to such period or any other period, subject,
however, to the limitations set forth in this Section 2.13.
(f) The obligations of the Borrower under this Section 2.13 shall
survive any termination of this Agreement.
(g) Determinations by Lenders for purposes of this Section 2.13 shall
be conclusive, absent manifest error. Any certificate delivered to the Borrower
by a Lender pursuant to this Section 2.13 shall include in reasonable detail the
basis for such Lender's demand for additional compensation and a certification
that the claim for compensation is consistent with such Lender's treatment of
similar customers having similar provisions generally in their agreements with
such Lender.
(h) If any Lender notifies Administrative Agent that the LIBOR Rate for
any Interest Period for any LIBOR Advances will not adequately reflect the cost
to such Lender of making, funding or maintaining LIBOR Advances for such
Interest Period, Administrative Agent shall promptly so notify the Borrower,
whereupon (i) each such LIBOR Advance will automatically, on the last day of the
then existing Interest Period therefor, convert into a Base Rate Advance
100\269\91946 41
<PAGE>
and (ii) the obligation of such Lender to make, or to convert Advances into,
LIBOR Advances shall be suspended until such Lender notifies Administrative
Agent that such Lender has determined that the circumstances causing such
suspension no longer exist and Administrative Agent notifies the Borrower of
such fact.
2.14 Use of Proceeds. The proceeds of the Advances shall be available
(and the Borrower shall use such proceeds) to (a) refinance existing Funded Debt
of the Borrower and its Restricted Subsidiaries, (b) fund Capital Expenditures
of the Borrower and the Restricted Subsidiaries permitted by the terms of this
Agreement, (c) contribute $50,000,000 to the capitalization of AUSP, and (d) use
for general working capital purposes.
2.15 Collateral and Collateral Call.
(a) Collateral. Payment of the Obligations is secured by (i) subject to
the Prior Stock Lien, a first perfected security interest in 100% of the Capital
Stock the Borrower and the Restricted Subsidiaries and 100% of the Capital Stock
of the Guarantors (other than GCII), (ii) subject to Permitted Liens, a first
perfected security interest in all of the accounts, equipment, inventory,
chattel paper, general intangibles, and other assets of the Borrower, the
Restricted Subsidiaries and the Guarantors (except Parents) including, without
limitation, a perfected Lien on all Intercompany Notes, including those payable
by AUSP or any other Unrestricted Subsidiary to the Borrower or any other GCI
Entity, subject to no other Lien, and (iii) a Guaranty of the Obligations
executed by each Guarantor (collectively, together with all other Properties or
assets of the Borrower, the Restricted Subsidiaries and other Persons securing
the Obligations from time to time, the "Collateral"). The Borrower agrees that
it will, and will cause the Restricted Subsidiaries, the other GCI Entities and
Affiliates (except the Unrestricted Subsidiaries) to, execute and deliver, or
cause to be executed and delivered, such documents as the Administrative Agent
may from time to time reasonably request to create and perfect a first Lien
(except with respect to the stock of GCI Leasing Co., Inc., which shall be a
second Lien behind the Prior Stock Lien), and subject to Permitted Liens, for
the benefit of the Administrative Agent and the Lenders in the Collateral.
(b) Collateral Call. The Borrower agrees that it will, and will cause
any other Person owning any interest in the Borrower or any Restricted
Subsidiary or other GCI Entity from time to time to immediately pledge such
interest (other than with respect to a pledge of the Capital Stock of Parents
and to the extent permitted by the Indenture) to secure the Obligations,
pursuant to a pledge agreement substantially in the form of the Pledge
Agreements. The Borrower agrees to, and agrees to cause the Restricted
Subsidiaries and each other GCI Entity to, promptly grant the Administrative
Agent and the Lenders from time to time at the request of the Lenders a Lien on
any of the Property of the Borrower or other GCI Entity (other than GCI) not
already constituting Collateral, to the extent permitted by the Indenture. In
that regard, the Borrower shall, and shall cause each other GCI Entity to, use
best efforts to assist the Administrative Agent and the Lenders in creating and
perfecting a first Lien for the benefit of Administrative Agent and Lenders
securing the Obligations in any such Property of the Borrower and each other GCI
Entity, subject to Permitted Liens (except for the Lien on the Capital Stock of
GCI Leasing
100\269\91946 42
<PAGE>
Co, Inc., which shall be a second Lien to the Prior Stock Lien)(other than GCI),
including, without limitation, providing the Administrative Agent with title
commitments, appraisals, surveys (with flood plain certification), mortgagee
title insurance, evidence of insurance including flood hazard insurance,
environmental audits, UCC-11 searches, Tax and Lien searches, recorded real
estate documents, intellectual property documentation and registration and other
similar types of documents, consents, Authorizations, instruments and agreements
relating to all Property of the Borrower and each other GCI Entity (other than
GCI) as reasonably requested by the Administrative Agent from time to time.
ARTICLE III. INTENTIONALLY OMITTED
ARTICLE IV. CONDITIONS PRECEDENT
4.01 Conditions Precedent to the Initial Advance. The obligations of
each Lender under this Agreement and the obligation of each Lender to make the
Initial Advance shall be subject to the following conditions precedent that on
the Closing Date:
(a) All terms, conditions and documentation in connection with this
Credit Agreement shall be acceptable to the Lenders.
(b) The making of the Revolver/Term Commitment shall not contravene any
Law applicable to the Administrative Agent or any Lender.
(c) Each Lender shall have received a Certificate from an Authorized
Officer stating that no Material Adverse Change, as determined by the Lenders,
shall have occurred and be continuing in the Systems, business, assets,
prospects, or financial condition of the businesses of the Borrower (as operated
by the Restricted Subsidiaries) since December 31, 1996.
(d) All proceedings of the Borrower, the Restricted Subsidiaries and
each other GCI Entity taken in connection with the transactions contemplated
hereby, and all documents incidental thereto, shall be reasonably satisfactory
in form and substance to the Lenders. Each Lender shall have received copies of
all documents or other evidence that it may reasonably request in connection
with such transactions.
(e) Each Lender shall have received an executed copy of this Agreement,
the Revolving Credit Agreement, and all documents required to be delivered
pursuant thereto, and its respective Notes, duly completed and correct. The
Lenders shall have received copies of the Fee Letters signed by the Borrower, as
applicable. Each of the following shall have been delivered to the
Administrative Agent on behalf of Lenders, in form and substance satisfactory to
the Administrative Agent, Special Counsel and each Lender to the extent required
by the Administrative Agent: Each other Loan Paper requested by the
Administrative Agent, including,
100\269\91946 43
<PAGE>
without limitation, all guarantees, pledge agreements, security agreements,
mortgages, deeds of trust, collateral assignments and other agreements granting
any interest in any collateral.
(f) The Borrower shall have delivered to each Lender a Certificate,
dated the Closing Date, executed by an Authorized Officer on behalf of each GCI
Entity, certifying that (i) no Default or Event of Default has occurred and is
continuing, (ii) the representations and warranties set forth in Article V
hereof are true and correct, (iii) each of the GCI Entities has complied with
all agreements and conditions to be complied with by it under the Loan Papers by
such date, (iv) that the attached resolutions for each GCI Entity are the true,
accurate and complete resolutions authorizing the corporate restructuring, the
incurrence and performance of the Facility and the Loan Papers, (v) that the
attached copies of certified articles of incorporation, or other articles of
organization, certificates of good standing, certificates of existence and
incumbency certificates for each GCI Entity are (A) not more than 30 days old
and certified by the appropriate secretary of state of other governmental
organization and (B) represent the true and accurate certificate for each such
entity, and (vi) the attached copies of by-laws or other organizational
documents represent the true and accurate by-laws or other organizational
documents for each GCI Entity in effect on the Closing Date.
(g) Each Lender shall have received opinions of (i) Sherman & Howard,
L.L.C. corporate counsel to the Borrower, the Restricted Subsidiaries and each
other GCI Entity, dated the Closing Date, acceptable to the Lenders and
otherwise in form and substance satisfactory to the Lenders and Special Counsel,
with respect to this loan transaction and otherwise, including, without
limitation, opinions (A) to the valid and binding nature of the Loan Papers, (B)
to the enforceability of the Loan Papers, (C) to the power, authorization and
corporate matters of each such Person taken in connection with the transactions
contemplated by the Loan Papers, (D) that the execution, delivery and
performance by the GCI Entities, as applicable, of the Agreement and the Loan
Papers does not violate any of the terms of the Borrower's, the Restricted
Subsidiaries' or any other GCI Entities' agreements, (E) regarding the issuance
and related opinions to the Senior Notes, (F) the corporate restructuring in
order to effectuate this Agreement and the issuance of the Senior Notes, (G)
regarding the equity issuance required by Section 4.01(j) hereof, and (H) to
such other matters as are reasonably requested by Special Counsel, and (ii) such
local counsel opinions relating to the Collateral and such other matters as are
requested by the Administrative Agent and Special Counsel. Copies of all
opinions delivered in connection with the equity issuance required by Section
4.01(j) hereof and the Senior Notes shall be delivered to the Administrative
Agent together with a reliance letter thereon.
(h) Each Lender shall have received an opinion of inhouse counsel to
the Borrower and to each other GCI Entity, dated as of the Closing Date,
acceptable to the Lenders and otherwise in form and substance satisfactory to
the Lenders and Special Counsel, with respect to this transaction, and final
approval shall have been received from the FCC regarding any transfer of any FCC
license.
100\269\91946 44
<PAGE>
(i) GCII shall have (i) issued the Senior Notes in an amount not less
than $180,000,000, on terms and conditions, and subject to documentation,
satisfactory to the Administrative Agent and each Lender, and (ii) downstreamed
the net proceeds of the debt issuance described in (i) above to the Borrower as
equity.
(j) GCI shall have raised not less than $50,750,000 in equity on terms
and conditions acceptable to the Administrative Agent and the Lenders and
downstreamed the net proceeds of the equity issuance to the Borrower as equity,
and the Borrower shall have received not less than $47,133,000 as an equity
contribution from such proceeds, on terms and conditions acceptable to the
Administrative Agent and each Lender.
(k) No management agreement with any Person shall be in existence at
the Parents, the Borrower or any Restricted Subsidiaries, except the Prime
Management Agreement.
(l) All proceedings of the Parents, the Borrower and the Subsidiaries
of the Parents and the Borrower taken in connection with the transactions
contemplated hereby, and all documents incidental thereto, shall be satisfactory
in form and substance to each Lender. The Administrative Agent and each Lender
shall have received copies of all documents or other evidence that it may
reasonably request in connection with such transactions. No Material Adverse
Change, as determined by the Lenders, shall have occurred and be continuing in
the financial markets.
(m) All Obligations outstanding under the existing credit facilities of
GCI Cable, Inc. and GCI Communication Corp. shall have been paid in full and
released.
4.02 Conditions Precedent to All Advances. The obligation of each
Lender to make each Advance, except for Refinancing Advances, which constitutes
an increase, shall be subject to the further conditions precedent that on the
date of such Advance the following statements shall be true:
(i) The representations and warranties contained in Article V
hereof are true and correct on such date, as though made on and as of
such date (and the delivery of each Borrowing Notice under Section
2.02(a), and each Conversion or Continuation Notice under Section
2.09(b), or the failure to deliver a Conversion or Continuation Notice
under Section 2.09(b), shall constitute a representation that on the
disbursement date such representations are true (except as to
representations and warranties which (i) refer to a specific date, (ii)
have been modified by transactions permitted pursuant to this Agreement
or any other Loan Paper or (iii) have been specifically waived in
writing by Administrative Agent));
(ii) No event has occurred and is continuing, or would result
from such Advance (including the intended application of the proceeds
of such Advance), that does or could constitute a Default or Event of
Default;
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(iii) There shall have occurred no Material Adverse Change,
and the making of such Advance, shall not cause or result in a Material
Adverse Change;
(iv) After giving effect to each such Advance, prior to the
Conversion Date, the aggregate outstanding Advances under the
Revolver/Term Loan does not exceed the Revolver/Term Commitment; and
(v) After giving effect to each such Advance, the aggregate
outstanding Advances under the Revolving Loan does not exceed the
Revolving Commitment;
and (b) Administrative Agent shall have received, in form and substance
acceptable to it, such other approvals, documents, certificates, opinions, and
information as it may deem necessary or appropriate, including, without
limitation, a certificate from an Authorized Officer, in form and substance
satisfactory to the Administrative Agent, that the Advances are permitted to be
incurred pursuant to the terms of the Indenture providing for the Senior Notes.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that the following are true and
correct:
5.01 Organization and Qualification. Each GCI Entity is a corporation
or partnership duly organized, validly existing, and in good standing under the
Laws of its state of incorporation or formation, as applicable. Each GCI Entity
is qualified to do business in all jurisdictions where the nature of its
business or Properties require such qualification. Set forth on Schedule 5.01
attached hereto is a complete and accurate listing with respect to the Borrower
and each other GCI Entity, showing (a) the jurisdiction of its organization and
its mailing address, which is the principal place of business and executive
offices of each unless otherwise indicated, (b) the classes of Capital Stock and
shares of Capital Stock issued and outstanding in each GCI Entity, and the
numbers or amounts of each GCI Entity's Capital Stock authorized and
outstanding, (c) other than with respect to GCI, each record and beneficial
owner of outstanding Capital Stock on the date hereof, indicating the ownership
percentage, and (d) all outstanding options, rights, rights of conversion or
purchase, repurchase, rights of first refusal, and similar rights relating to
the Capital Stock of each GCI Entity. Except as set forth on Schedule 5.01
hereto, neither the Borrower, nor any Restricted Subsidiary nor any other GCI
Entity (other than GCI) has agreed to grant or issue any options, warrants or
similar rights to any Person to acquire any Capital Stock of the Borrower, any
Restricted Subsidiary or any other GCI Entity. All Capital Stock is validly
issued and fully paid. The Borrower has no knowledge of any share of Capital
Stock of any GCI Entity (other than GCI) being subject to any Lien, including
any restrictions on hypothecation or transfer, except Liens described on
Schedule 5.08a hereto and the Prior Stock Lien.
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5.02 Due Authorization; Validity. The board of directors of the
Borrower and each other GCI Entity, or of its partners, as applicable, have duly
authorized the execution, delivery, and performance of the Loan Papers to be
executed by the Borrower and each other GCI Entity, as appropriate. Each GCI
Entity has full legal right, power, and authority to execute, deliver, and
perform under the Loan Papers to be executed and delivered by it. The Loan
Papers constitute the legal, valid, and binding obligations of the Borrower and
each other GCI Entity, as appropriate, enforceable in accordance with their
terms (subject as to enforcement of remedies to any applicable Debtor Relief
Laws).
5.03 Conflicting Agreements and Other Matters. The execution or
delivery of any Loan Papers, and performance thereunder, does not conflict with,
or result in a breach of the terms, conditions, or provisions of, or constitute
a default under, or result in any violation of, or result in the creation of any
Lien (other than in favor of Administrative Agent) upon any Properties of the
Borrower or any other GCI Entity under, or require any consent (other than
consents described on Schedule 5.03 hereto and the Prior Stock Lien), approval,
or other action by, notice to, or filing with any Tribunal or Person pursuant to
any organizational document, bylaws, award of any arbitrator, or any agreement,
instrument, or Law to which the Borrower or any other GCI Entity, or any of
their Properties is subject.
5.04 Financial Statements. The audited financial statements of GCI and
its Subsidiaries dated December 31, 1996 and delivered to Administrative Agent,
fairly present its financial position and the results of operations as of the
dates and for the periods shown, all in accordance with GAAP. Such financial
statements reflect all material liabilities, direct and contingent, of GCI and
its Subsidiaries that are required to be disclosed in accordance with GAAP. As
of the date of such financial statements, there were no Contingent Liabilities,
liabilities for Taxes, forward or long-term commitments, or unrealized or
anticipated losses from any unfavorable commitments that are substantial in
amount and that are not reflected on such financial statements or otherwise
disclosed in writing to Administrative Agent. Since December 31, 1996, there has
been no Material Adverse Change. The Borrower and each other GCI Entity is
Solvent. The projections of the Borrower dated May 20, 1997 delivered to
Administrative Agent were prepared in good faith and management believes them to
be based on reasonable assumptions (each of which are stated in such statement)
and to provide reasonable estimations of future performance as of the dates and
for the periods shown for the Parents, the Borrower and their Subsidiaries,
subject to the uncertainty and approximation inherent in any projections. The
Borrower's fiscal year ends on December 31.
5.05 Litigation. Shown on Schedule 5.05 is all Litigation that is
pending and, to the Borrower's best knowledge, threatened against the Borrower
or any other GCI Entity, any of their Properties or assets on the date hereof.
There is no pending or, to the Borrower's best knowledge, threatened Litigation
against the Borrower, any other GCI Entity, any of their Properties that could
cause a Material Adverse Change.
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5.06 Compliance With Laws Regulating the Incurrence of Debt. No
proceeds of any Advance will be used directly or indirectly to acquire any
security in any transaction which is subject to Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended. The Borrower is not, nor is any
other GCI Entity, engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U issued
by the Board of Governors of the Federal Reserve System), and no proceeds of any
Advance will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock. Following
the Borrower's intended use of the proceeds of each Advance, not more than 25%
of the value of the assets of the Borrower will be "margin stock" within the
meaning of Regulation U. The Borrower is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940, the Interstate Commerce Act (as any of the
preceding acts have been amended), or any other Law that the incurring of Debt
by the Borrower would violate in any material respect, including without
limitation Laws relating to common or contract carriers or the sale of
electricity, gas, steam, water, or other public utility services. None of the
Borrower and its Restricted Subsidiaries, nor any agent acting on their behalf,
have taken or will knowingly take any action which might cause this Agreement or
any Loan Papers to violate any regulation of the Board of Governors of the
Federal Reserve System or to violate the Securities Exchange Act of 1934, in
each case as in effect now or as the same may hereafter be in effect.
5.07 Licenses, Title to Properties, and Related Matters. Except as
listed on Schedule 5.07a hereto, the Borrower and each other GCI Entity possess
all material Authorizations necessary and appropriate to own, operate and
construct the Systems or otherwise for the operation of their businesses and are
not in violation thereof in any material respect. All such Authorizations are in
full force and effect, are listed on Schedule 5.07a hereto, and no event has
occurred that permits, or after notice or lapse of time could permit, the
revocation, termination or material and adverse modification of any such
Authorization, except those which in the aggregate could not reasonably be
expected to cause a Material Adverse Change. Schedule 5.07a shows the expiration
date and/or termination date for each Authorization (including, without
limitation, FCC Licenses) in effect on the Closing Date. The Borrower is not,
nor is any Subsidiary of the Borrower or the Parents, in violation of any
material duty or obligation required by the Communications Act of 1934, as
amended, or any FCC rule or regulation applicable to the operation of any
portion of any of the Systems. There is not pending or, to the best knowledge of
the Borrower, threatened, any action by the FCC to revoke, cancel, suspend or
refuse to renew any FCC License relating to any System. There is not pending or,
or to the best knowledge of the Borrower, threatened, any action by the FCC to
modify adversely, revoke, cancel, suspend or refuse to renew any other
Authorization relating to any System. There is not issued or outstanding or, to
the best knowledge of the Borrower, threatened, any notice of any hearing,
violation or material complaint against the Borrower, the Parents or any of the
Restricted Subsidiaries with respect to the operation of any portion of the
Systems and the Borrower has no knowledge that any Person intends to contest
renewal of any Authorization relating to any System. Each GCI Entity has
requisite corporate or partnership power (as applicable) and legal right to own
and operate its Property and to conduct its business.
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Each has good and indefeasible title (fee or leasehold, as applicable) to its
Property, subject to no Lien of any kind, except Permitted Liens. All of the
assets of the Borrower and each other GCI Entity are located within the
municipalities and borough locations described on Schedule 5.07b. No GCI Entity
is in violation of its respective articles of organization or incorporation (as
applicable) or bylaws. None of the GCI Entities is in violation of any Law, or
material agreement or instrument binding on or affecting it or any of its
Properties, the effect of which could reasonably be expected to cause a Material
Adverse Change. No business or Properties of the Parents, the Borrower or any
Restricted Subsidiary is affected by any strike, lock-out or other labor
dispute. No business or Properties of the Parents, the Borrower or any
Restricted Subsidiary is affected by any drought, storm, earthquake, embargo,
act of God or public enemy, or other casualty, the effect of which could
reasonably be expected to cause a Material Adverse Change.
5.08 Outstanding Debt and Liens. The GCI Entities have no outstanding
Debt, Contingent Liabilities or Liens, except Permitted Liens, except as shown
on Schedule 5.08a hereto. No breach, default or event of default exists under
any document, instrument or agreement evidencing or otherwise relating to any
Funded Debt of any GCI Entity, which could reasonably be expected to cause a
Material Adverse Change.
5.09 Taxes. The Parents, the Borrower and each Subsidiary of the
Parents and the Borrower has filed all federal, state, and other Tax returns (or
extensions related thereto) which are required to be filed, and has paid all
Taxes as shown on said returns, as well as all other Taxes, to the extent due
and payable, except to the extent payment is contested in good faith and for
which adequate reserves have been established therefor in accordance with GAAP.
All Tax liabilities of the Parents, the Borrower and each Subsidiary of the
Parents and the Borrower are adequately provided for on its books, including
interest and penalties, and adequate reserves have been established therefor in
accordance with GAAP. No income Tax liability of a material nature has been
asserted by taxing authorities for Taxes in excess of those already paid, and no
taxing authority has notified the Parents, the Borrower or any Subsidiary of the
Parents or the Borrower of any deficiency in any Tax return.
5.10 ERISA. Each Plan of the Parents, the Borrower and each Subsidiary
of the Parents and the Borrower has satisfied the minimum funding standards
under all Laws applicable thereto, and no Plan has an accumulated funding
deficiency thereunder. The Borrower has not, and neither has the Parents, or any
Subsidiary of the Borrower or the Parents incurred any material liability to the
PBGC with respect to any Plan. No ERISA Event has occurred with respect to any
Plan for which an Insufficiency in excess of $100,000 exists on the date of such
occurrence. None of the Parents, the Borrower, or any Subsidiary of the Parents
or the Borrower has participated in any non-exempt Prohibited Transaction with
respect to any Plan or trust created thereunder. None of the Borrower, the
Parents or any Subsidiary of the Borrower and the Parents, nor any ERISA
Affiliate, has incurred any Withdrawal Liability to any Multiemployer Plan that
has not been satisfied. None of the Borrower, the Parents or any Subsidiary of
the Parents or the Borrower, nor any ERISA Affiliate has been notified by the
100\269\91946 49
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sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of ERISA.
5.11 Environmental Laws. The Borrower and each other GCI Entity has
obtained all material environmental, health and safety permits, licenses and
other material authorizations required under all Applicable Environmental Laws
to carry on its business as being conducted. On the Closing Date, there are no
environmental liabilities of the Borrower or any other GCI Entity (with respect
to any fee owned or leased Properties), except as disclosed and described in
detail on Schedule 5.11 hereto. Each of such permits, licenses and
authorizations is in full force and effect and the Borrower and each other GCI
Entity is in compliance with the terms and conditions thereof, and is also in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply with
any thereof could not reasonably be expected to cause a Material Adverse Change.
In addition, no written notice, notification, demand, request for information,
citation, summons or order has been issued, no written complaint has been filed,
no penalty has been assessed and no investigation or review is pending or, to
the best knowledge of the Borrower or any other GCI Entity, threatened, by any
Tribunal or other entity with respect to any alleged failure by the Borrower or
any other GCI Entity to have any environmental, health or safety permit, license
or other authorization required under any Applicable Environmental Law in
connection with the conduct of the business of the Borrower or any other GCI
Entity or with respect to any generation, treatment, storage, recycling,
transportation, discharge, disposal or release of any Hazardous Materials by the
Borrower or any other GCI Entity. To the best knowledge of the Borrower and each
other GCI Entity, there are no material environmental liabilities of the
Borrower or any other GCI Entity, except as previously disclosed in writing to
the Lenders. To the best knowledge of the Borrower and each other GCI Entity,
there are no environmental liabilities of the Borrower or any other GCI Entity
which could reasonably be expected to cause a Material Adverse Change. The
Borrower has delivered to the Administrative Agent copies of all environmental
studies and reports conducted or received by the Borrower or any other GCI
Entity in connection with real Property. Such studies cover all real Property,
if any, owned in fee by the Borrower and each other GCI Entity. No Hazardous
Materials are generated or produced at or in connection with the Properties and
operations of any of the Borrower or any of the other GCI Entities, nor have any
Hazardous Materials been disposed of or otherwise released on or to any Property
on which any operations of the Borrower or any other GCI Entities are conducted,
except in compliance with Applicable Environmental Laws.
5.12 Disclosure. Neither the Borrower nor any other GCI Entity has made
a material misstatement of fact, or failed to disclose any material fact
necessary to make the facts disclosed not misleading, in light of the
circumstances under which they were made, to Administrative Agent or any Lender
during the course of application for and negotiation of any Loan Papers or
otherwise in connection with any Advances. There is no fact known to the
Borrower or any other GCI Entity that materially adversely affects any of the
Borrower's or any of the other GCI
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Entity's Properties or business, or that could constitute a Material Adverse
Change, and that has not been set forth in the Loan Papers or in other documents
furnished to Administrative Agent or any Lender.
5.13 Investments; Restricted Subsidiaries. The GCI Entities have no
Investments except as described on Schedule 5.13 hereto and as permitted by
Section 7.10 hereof. Schedule 5.13 is a complete and accurate listing of each
GCI Entity, showing (a) its complete name, (b) its jurisdiction of organization,
(c) its capital structure, (d) its street and mailing address, which is its
principal place of business and executive office and (e) all interests in such
GCI Entity.
5.14 Certain Fees. No broker's, finder's, management fee or other fee
or commission will be payable by the Borrower with respect to the making of the
Revolver/Term Commitment or Advances hereunder (other than to Administrative
Agent, NationsBanc Montgomery Securities, Inc., Credit Lyonnais and TD
hereunder), except as set forth in Schedule 5.14 hereof. The Borrower and each
other GCI Entity hereby agrees to indemnify and hold harmless Administrative
Agent and each Lender from and against any claims, demand, liability,
proceedings, costs or expenses asserted with respect to or arising in connection
with any such fees or commissions.
5.15 Intellectual Property. The Borrower and each other GCI Entity has
obtained all patents, trademarks, service-marks, trade names, copyrights,
licenses and other rights, free from material restrictions, which are necessary
for the operation of their respective businesses as presently conducted and as
proposed to be conducted. Nothing has come to the attention of the Borrower or
any other GCI Entity to the effect that (a) any process, method, part or other
material presently contemplated to be employed by the Borrower or any other GCI
Entity may or could reasonably be alleged to infringe any patent, trademark,
service-mark, trade name, license or other right (except copyright) owned by any
other Person, or (b) except as shown on Schedule 5.05 attached hereto, there is
pending or threatened any claim or litigation against or affecting the Borrower
or any other GCI Entity contesting its right to sell or use any such process,
method, part or other material. Nothing has come to the attention of the
Borrower or any other GCI Entity to the effect that any material presently
contemplated to be employed by the Borrower or any other GCI Entity may or could
reasonably be alleged to infringe any copyright owned by any other Person,
except to the extent that any such infringement, when aggregated with all other
copyright infringements, could not reasonably be expected to cause a Material
Adverse Change.
5.16 Due Authorization; Validity of the AUSP Financing Agreements and
the Project Agreements. On or before the AUSP Closing Date, the general partner
of AUSP and each other Affiliate of AUSP which is party to the AUSP Financing
Agreements or the Project Agreements will have duly authorized the execution,
delivery, and performance of the AUSP Financing Agreements and the Project
Agreements to be executed by AUSP or each such Affiliate, as appropriate. On or
before the AUSP Closing Date, each of AUSP and its Affiliates will have full
legal right, power, and authority to execute, deliver, and perform under the
Project Agreements and the AUSP Financing Agreements to be executed and
delivered by it. Each of
100\269\91946 51
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the AUSP Financing Agreements and the Project Agreements, upon execution thereof
on the AUSP Closing Date, will constitute the legal, valid, and binding
obligations of AUSP and its Affiliates, as appropriate, enforceable in
accordance with their terms (subject as to enforcement of remedies to any
applicable Debtor Relief Laws). Each AUSP Financing Agreement and each Project
Agreement to be delivered to the Administrative Agent on the AUSP Closing Date
will be a true and complete copy of such agreement as executed by AUSP and its
Affiliates.
5.17. Conflicting Agreements and Other Matters with the AUSP Financing
Agreements and Project Agreement. The execution or delivery of any AUSP
Financing Agreements and the Project Agreements and performance thereunder, upon
the execution thereof on the AUSP Closing Date will not conflict with, or result
in a breach of the terms, conditions, or provisions of, or constitute a default
under, or result in any violation of, or result in the creation of any Lien
(other than in favor of Administrative Agent and Credit Lyonnais as
administrative agent under the AUSP Credit Agreement with respect solely to the
Intercompany Notes from AUSP payable to the Borrower pursuant to the
Subordination Agreement) upon any Properties of the Borrower or any other GCI
Entity, under, or require any consent (other than consents described on Schedule
5.03 hereto and consents obtained on or before the AUSP Closing Date), approval,
or other action by, notice to, or filing with any Tribunal or Person pursuant
to, any organizational document, bylaws, award of any arbitrator, or any
agreement, instrument, or Law to which the Borrower or any other GCI Entity, or
any of their Properties is subject.
5.18 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement shall be deemed to be
made at and as of the Closing Date and at and as of the date of each Advance,
except for Refinancing Advances, and each shall be true and correct when made,
except to the extent (a) previously fulfilled in accordance with the terms
hereof, (b) subsequently inapplicable, or (c) previously waived in writing by
Administrative Agent and Lenders with respect to any particular factual
circumstance. The representations and warranties made under this Agreement shall
be deemed applicable to each Restricted Subsidiary as of the formation or
acquisition of such Restricted Subsidiary and at and as of each date the
representations and warranties are remade pursuant to this provision. All
representations and warranties made under this Agreement shall survive, and not
be waived by, the execution hereof by the Administrative Agent and Lenders, any
investigation or inquiry by the Administrative Agent or any Lender, or by the
making of any Advance under this Agreement.
ARTICLE VI. AFFIRMATIVE COVENANTS
So long as the Revolver/Term Commitment, any Advance, or any portion of
the Obligations is outstanding, or the Borrower or any other GCI Entity owes any
other amount hereunder or under any other Loan Paper:
6.01 Compliance with Laws and Payment of Debt. The Borrower shall, and
shall cause each of the Parents and all Subsidiaries of the Borrower and the
Parents to, comply with all Applicable Laws, including without limitation
compliance with ERISA and all applicable federal
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and state securities Laws. The Borrower shall, and shall cause each other GCI
Entity and Affiliates to, pay its (a) Funded Debt as and when due (or within any
applicable grace period), unless payment thereof is being contested in good
faith by appropriate proceedings and adequate reserves have been established
therefor, and (b) trade debt in accordance with its past practices, and in any
event, before any trade creditor takes any action or terminates any
relationship, except those disputes diligently contested in good faith by the
Borrower and/or such GCI Entity or Affiliate, and for which appropriate reserves
have been established in accordance with GAAP.
6.02 Insurance. The Borrower shall, (a) and shall cause each of the
Restricted Subsidiaries to, keep its offices and other insurable Properties
adequately insured at all times by reputable insurers to such extent and against
such risks, including fire and other risks insured against by extended coverage,
as what is customary with companies similarly situated and in the same or
similar businesses, (b) and shall cause each other GCI Entity to, maintain in
full force and effect public liability (including liability insurance for all
vehicles and other insurable Property) and worker's compensation insurance, in
amounts customary for such similar companies to cover normal risks, by insurers
satisfactory to the Administrative Agent, (c) and shall cause each Restricted
Subsidiary to, maintain business interruption insurance for each System in
amounts satisfactory to the Lenders, (d) and shall cause each other GCI Entity
to, maintain other insurance as may be required by Law or reasonably requested
by the Administrative Agent, provided that such insurance policies will show the
Administrative Agent, on behalf of the Lenders, as additional insured or loss
payee, as appropriate. The Borrower shall deliver evidence of renewal of each
insurance policy on or before the date of its expiration, and from time to time
shall deliver to the Administrative Agent, upon demand, evidence of the
maintenance of such insurance.
6.03 Inspection Rights. The Borrower shall, and shall cause each other
GCI Entity to, permit the Administrative Agent or any Lender, upon one days
notice or such lesser notice as is reasonable under the circumstances, to
examine and make copies of and abstracts from their records and books of
account, to visit and inspect their Properties and to discuss their affairs,
finances, and accounts with any of their directors, officers, employees,
accountants, attorneys and other representatives, all as the Administrative
Agent or any Lender may reasonably request.
6.04 Records and Books of Account; Changes in GAAP. The Borrower shall,
and shall cause the Parents and each Subsidiary of the Parents and the Borrower
to, keep adequate records and books of account in conformity with GAAP. The
Borrower shall not, nor shall the Borrower permit the Parents or any Restricted
Subsidiary of the Borrower or the Parents to change its fiscal year, nor change
its method of financial accounting except in accordance with GAAP. In connection
with any such change after the date hereof, the Borrower and Lenders shall
negotiate in good faith to make appropriate alterations to the covenants set
forth in Section 7.01 hereof, reflecting such change.
6.05 Reporting Requirements. The Borrower shall furnish to each Lender
and the Administrative Agent:
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(a) As soon as available and in any event within 60 days after the end
of the Borrower's fiscal quarters, (i) consolidated balance sheets of GCI and
consolidating balance sheets of the Borrower and its Subsidiaries, as of the end
of such quarter, and consolidated statements of income and statements of cash
flows of GCI, and consolidating statements of income and statements of cash
flows of the Borrower and its Subsidiaries, for the portion of the fiscal year
ending with such quarter, setting forth, in comparative form, figures for the
corresponding periods in the previous fiscal year, all in reasonable detail, and
certified by an Authorized Officer as prepared in accordance with GAAP, and
fairly presenting the financial position and results of operations of GCI, the
Borrower and their Subsidiaries, (ii) for the Borrower and its Restricted
Subsidiaries, comparisons and reconciliations of actual results to the budget
delivered pursuant to Section 6.05(e) below for the fiscal quarter most recently
ended, in reasonable detail and satisfactory to the Administrative Agent, and
(iii) for the Parents, the Borrower and the Restricted Subsidiaries, all
information set forth in (i) and (ii) above in a separate presentation;
(b) As soon as available and in any event within 120 days after the end
of each fiscal year, (i) consolidated balance sheets of GCI, and consolidating
balance sheets of the Borrower and its Subsidiaries, as of the end of such
fiscal year, and consolidated statements of income and cash flows of GCI, and
consolidating statements of income and cash flows of the Borrower and its
Subsidiaries, for such fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an unqualified opinion of the Auditor,
which opinion shall state that such financial statements were prepared in
accordance with GAAP, that the examination by the Auditor in connection with
such financial statements was made in accordance with generally accepted
auditing standards, and that such financial statements present fairly the
financial position and results of operations of GCI, the Borrower and their
Subsidiaries, and each other GCI Entity, and (ii) for GCI, the Borrower and the
Restricted Subsidiaries, all information set forth in (i) above in a separate
presentation;
(c) Promptly upon receipt thereof, (i) copies of all material reports
or letters submitted to the Borrower, the Parents or any Subsidiary of the
Borrower or the Parents by the Auditor or any other accountants in connection
with any annual, interim, or special audit, including without limitation the
comment letter submitted to management in connection with any such audit, (ii)
each financial statement, report, notice or proxy statement sent by GCI, GCII,
the Borrower or any Restricted Subsidiary in writing to stockholders generally,
(iii) each regular or periodic report and any registration statement or
prospectus (or material written communication in respect of any thereof) filed
by the Parents, the Borrower or any Restricted Subsidiary with any securities
exchange, with the Securities and Exchange Commission or any successor agency,
and (iv) all press releases concerning material financial aspects of the
Parents, the Borrower or any Restricted Subsidiary;
(d) Together with each set of financial statements delivered pursuant
to subsections (a) and (b) above, a Compliance Certificate executed by an
Authorized Officer, which such Compliance Certificate must (i) certify that
there has occurred no Default or Event of Default,
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(ii) compute the Applicable Margin, and (iii) set forth the detailed
calculations with respect to the financial covenants required by Section 7.01
hereof;
(e) As soon as available and in any event not later than 30 days after
the beginning of each fiscal year of the Borrower, the annual operating and
Capital Expenditure budgets of the Borrower and the Restricted Subsidiaries for
such fiscal year;
(f)(i) Promptly upon knowledge by the Borrower or any other GCI Entity
of the occurrence of any Default or Event of Default, a notice from an
Authorized Officer, setting forth the details of such Default or Event of
Default, and the action being taken or proposed to be taken with respect
thereto; (ii) promptly upon knowledge by the Borrower or any other GCI Entity of
the occurrence of any breach, default or event of default under any Project
Agreement or any AUSP Financing Agreement, a notice from an Authorized Officer,
setting forth the details of such breach, default or event of default, and the
action being taken or proposed to be taken with respect thereto; and (iii)
promptly upon knowledge by the Borrower or any other GCI Entity of the
occurrence of any material adverse change regarding the financial condition,
business, operations or prospects of AUSP or GCI Transport Company, a notice
from an Authorized Officer, setting forth the details of such material adverse
change and the action being taken or proposed to be taken with respect thereto;
(g) As soon as possible and in any event within five Business Days
after knowledge thereof by the Borrower or any other GCI Entity, notice of any
Litigation pending or threatened against the Borrower or any other GCI Entity
which, if determined adversely, could reasonably be expected to result in a
judgment, penalties, or damages in excess of $1,000,000 together with a
statement of an Authorized Officer describing the allegations of such
Litigation, and the action being taken or proposed to be taken with respect
thereto;
(h) Promptly following notice or knowledge thereof by the Borrower or
any other GCI Entity, notice of any actual or threatened loss or termination of
any material Authorization of the Borrower or any other GCI Entity or any
Unrestricted Subsidiary, together with a statement of an Authorized Officer
describing the circumstances surrounding the same, and the action being taken or
proposed to be taken with respect thereto;
(i) Promptly after filing or receipt thereof, copies of all reports and
notices that the Borrower or any other GCI Entity or Unrestricted Subsidiary (i)
files or receives in respect of any Plan with or from the Internal Revenue
Service, the PBGC, or the United States Department of Labor, or (ii) furnishes
to or receives from any holders of any Debt or Contingent Liability, if in
either case, any information or dispute referred to therein either causes a
Default or Event of Default, or could reasonably be expected to cause or result
in a Default or an Event of Default;
(j) Within 30 days after renewal or issuance of any hazard, public
liability, business interruption, or other insurance policy maintained by the
Borrower or any other GCI Entity, a
100\269\91946 55
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copy of the binder or insurance certificate (showing Administrative Agent, on
behalf of the Borrower or such GCI Entity, as loss payee or additional insured,
as appropriate);
(k) As soon as possible and in any event within 10 days after the
Borrower or any other GCI Entity knows that any Reportable Event has occurred
with respect to any Plan, a statement, signed by an Authorized Officer,
describing said Reportable Event and the action which the such Person proposes
to take with respect thereto;
(l) As soon as possible, and in any event within 10 days after receipt
by the Borrower or any other GCI Entity, a copy of (a) any notice or claim to
the effect that the Borrower or any other GCI Entity is or may be liable to any
Person as a result of the release by the Borrower, any other GCI Entity or any
other Person of any toxic or hazardous waste or substance into the environment,
and (b) any notice alleging any violation of any federal, state or local
environmental, health or safety law or regulation by the Borrower or any other
GCI Entity, which could reasonably be expected to, in either case, cause a
Material Adverse Change;
(m) Promptly upon the filing thereof, copies of all material
registration statements and all annual, quarterly, monthly or other regular
reports which the Parents, the Borrower or any Subsidiary of the Parents or the
Borrower or any other GCI Entity or Unrestricted Subsidiary files with the FCC
or the Securities and Exchange Commission;
(n) Promptly upon the sending or receiving thereof by any GCI Entity,
AUSP, GCI Transport Co., Inc., GCI Fiber Co., Inc. or Fiber Hold Co., Inc.,
copies of all material notices, and other material information required by, or
sent in connection with, any Project Agreement or any AUSP Financing Agreement,
including, without limitation, notices of defaults or events of default,
waivers, consents, amendments or other modifications to any of the Project
Agreements or AUSP Financing Agreements, as well as requests therefor;
(o) Copies of all financial information provided to the lenders by AUSP
in accordance with the terms of the Project Agreements; and
(p) Promptly upon request, such other information concerning the
condition or operations of the Borrower, any other GCI Entity, Unrestricted
Subsidiary and any of their Affiliates, financial or otherwise, as the
Administrative Agent or any Lender may from time to time reasonably request.
6.06 Use of Proceeds. The proceeds of the Advances shall be available
(and the Borrower shall use such proceeds) to (a) refinance existing Funded Debt
of the Borrower and its Restricted Subsidiaries, (b) fund Capital Expenditures
of the Borrower and the Restricted Subsidiaries permitted by the terms of this
Agreement, (c) contribute $50,000,000 to the capitalization of AUSP, and (d) use
for general working capital purposes.
6.07 Maintenance of Existence and Assets. Except as provided by Section
7.07 of this Agreement, the Borrower shall maintain, and shall cause each other
GCI Entity to maintain, its
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corporate existence, authority to do business in the jurisdictions in which it
is necessary for the Borrower or such GCI Entity to do so, and all
Authorizations necessary for the operation of any of their businesses. The
Borrower shall maintain, and shall cause each other GCI Entity to maintain, the
assets necessary for use in their respective businesses in good repair, working
order and condition, and make all such repairs, renewals and replacements
thereof as may be reasonably required.
6.08 Payment of Taxes. The Borrower will and will cause the Parents and
all Subsidiaries of the Parents and the Borrower to, promptly pay and discharge
all lawful Taxes imposed upon it or upon its income or profit or upon any
Property belonging to it, unless such Tax shall not at the time be due and
payable, or if the validity thereof shall currently be contested on a timely
basis in good faith by appropriate proceedings (provided that the enforcement of
any Liens arising out of any such nonpayment shall be stayed or bonded during
the proceedings) and adequate reserves with respect to such Tax shall have been
established in accordance with GAAP.
6.09 Indemnity.
(a) The Borrower agrees to defend, protect, indemnify and hold harmless
the Administrative Agent and each Lender, each of their respective Affiliates,
and each of their respective (including such Affiliates') officers, directors,
employees, agents, attorneys, shareholders and consultants (including, without
limitation, those retained in connection with the satisfaction or attempted
satisfaction of any of the conditions set forth herein) of each of the foregoing
(collectively, "Indemnitees") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitees shall be designated a party thereto
or such proceeding shall have actually been instituted), imposed on, incurred
by, or asserted against such Indemnitees (whether direct, indirect or
consequential and whether based on any federal, state, or local laws and
regulations, under common law or at equitable cause, or on contract, tort or
otherwise), arising from or connected with the past, present or future
operations of the Parents, the Borrower, any Subsidiary of the Borrower or the
Parents, any other GCI Entity, any Affiliate or any predecessors in interest, or
the past, present or future environmental condition of property of the Parents,
the Borrower, any Subsidiary of the Borrower or Parents, any other GCI Entity,
any Affiliate or any predecessors in interest, in each case relating to or
arising out of this Agreement, the Loan Papers, or any act, event or transaction
or alleged act, event or transaction relating or attendant thereto and the
management of the Advances by the Administrative Agent, including in connection
with, or as a result, in whole or in part, of any negligence of Administrative
Agent or any Lender (other than those matters involving a claim by a participant
purchaser against any Lender and not the Borrower), or the use or intended use
of the proceeds of the Advances hereunder, or in connection with any
investigation of any potential matter covered hereby, but excluding any claim or
liability
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that arises as the result of the gross negligence or willful misconduct of any
Indemnitee, as finally judicially determined by a court of competent
jurisdiction (collectively, "Indemnified Matters").
(b) In addition, the Borrower shall periodically, upon request,
reimburse each Indemnitee for its reasonable legal and other actual reasonable
expenses (including the cost of any investigation and preparation) incurred in
connection with any Indemnified Matter. If for any reason the foregoing
indemnification is unavailable to any Indemnitee or insufficient to hold any
Indemnitee harmless with respect to Indemnified Matters, then the Borrower shall
contribute to the amount paid or payable by such Indemnitee as a result of such
loss, claim, damage or liability in such proportion as is appropriate to reflect
not only the relative benefits received by the Borrower and the holders of the
Capital Stock of the Borrower on the one hand and such Indemnitee on the other
hand but also the relative fault of the Borrower and such Indemnitee, as well as
any other relevant equitable considerations. The reimbursement, indemnity and
contribution obligations under this Section shall be in addition to any
liability which the Borrower may otherwise have, shall extend upon the same
terms and conditions to each Indemnitee, and shall be binding upon and inure to
the benefit of any successors, assigns, heirs and personal representatives of
the Borrower, the Administrative Agent, the Lenders and all other Indemnitees.
The obligations of the Borrower under this Section 6.09 shall survive (i) the
execution of this Agreement and (ii) any termination of this Agreement and
payment of the Obligations.
6.10 Interest Rate Hedging. By no later than 60 days after the Closing
Date, the Borrower or GCII will enter into an Interest Hedge Agreement on terms
acceptable to the Administrative Agent providing for interest rate protection
for not less than three years for 50% of Total Debt on such date. If Borrower
enters into an interest rate cap agreement, the interest rate related thereto
shall not exceed 2% per annum in excess of the then current treasury rate for
the applicable hedge period.
6.11 Management Fees Paid and Earned. The Borrower agrees that no
Management Fees will be paid by the Borrower, or any Restricted Subsidiary to
any Person at any time, except in accordance with the terms of the Prime
Management Agreement.
6.12 Authorizations and Material Agreements. The Borrower shall, and
shall cause the Parents and the Restricted Subsidiaries to, obtain and comply in
all material respects with all FCC Licenses relating to any System. The Borrower
shall, and shall cause the Parents and the Restricted Subsidiaries to, obtain
and comply in all material respects with all Authorizations relating to the
Systems, except to the extent failure to do so could not reasonably be expected
to cause or result in a Material Adverse Change. The Borrower shall, and shall
cause all other GCI Entities to, maintain and comply in all material respects
with all agreements necessary or appropriate for any of them to own, maintain,
or operate any of their businesses or Properties.
6.13 Further Assurances. The Borrower shall, and shall cause each other
GCI Entity to, make, execute or endorse, and acknowledge and deliver or file or
cause the same to be done,
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all such vouchers, invoices, notices, certifications and additional agreements,
undertakings, conveyances, deeds of trust, mortgages, security agreements,
transfers, assignments, financing statements or other assurances, and take any
and all such other action, as Administrative Agent may, from time to time, deem
reasonably necessary or proper in connection with any GCI Entity's obligations
under any of the Loan Papers and the obligations of the Borrower thereunder, or
for better assuring and confirming unto Administrative Agent all or any part of
the security for any of the Obligations.
6.14 AUSP Financing. No later than the AUSP Closing Date, the Borrower
shall have delivered to the Administrative Agent in form and substance
satisfactory to it (a) a certificate (in the form attached hereto as Exhibit H)
dated the AUSP Closing Date certifying as to the fact that attached thereto is a
copy of each AUSP Financing Agreement and each Project Agreement and stating
that each AUSP Financing Agreement and Project Agreement attached thereto
represents the true, accurate and complete agreement as in effect on the AUSP
Closing Date, and as to the true, accurate and complete resolutions authorizing
the incurrence and performance of the Project Agreements, and (b) an opinion of
counsel to AUSP regarding the Intercompany Notes. In addition, no later than the
AUSP Closing Date, (a) the AUSP Financing shall have been consummated on terms
and conditions satisfactory to the Administrative Agent, (b) the AUSP Financing
Agreements and Project Agreements shall be in form and substance acceptable to
the Administrative Agent, and (c) the undersea fiber survey owned by the
Borrower shall have been sold to AUSP for fair value (not less than $1,000,000).
6.15 Subsidiaries and Other Obligors. The Borrower shall cause each of
the Restricted Subsidiaries, other GCI Entities and Affiliates (as to
Affiliates, with respect solely to those covenants set forth in Sections 6.01,
6.05, and 6.08 hereof) to comply with each provision of this Article VI.
6.16 CoBank Participation Certificates. The Borrower shall, at all
times during which CoBank, ACB ("CoBank") is a Lender hereunder, acquire and
maintain non-voting participation certificates in CoBank (the "Participation
Certificates") in such amounts and at such times as CoBank may from time to time
require in accordance with its bylaws and capital plan (as each may be amended
from time to time); provided, however, that the maximum amount of Participation
Certificates that the Borrower may be required to purchase may not exceed the
lesser of the maximum amount permitted by CoBank's bylaws as in effect on the
date hereof or $1,000.00, which amount, if not previously purchased, shall be
purchased on or before the date hereof. The rights and obligations of the
parties with respect to the Participation Certificates and any other patronage
or other distributions shall be governed by CoBank's bylaws.
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ARTICLE VII. NEGATIVE COVENANTS
So long as the Revolver/Term Commitment, any Advance, or any portion of
the Obligations is outstanding, or the Borrower or any other GCI Entity owes any
other amount hereunder or under any other Loan Paper:
7.01 Financial Covenants. The Borrower and the Restricted Subsidiaries
shall comply with the following covenants:
<TABLE>
(a) Total Leverage Ratio. At all times during the term hereof, the
Total Leverage Ratio shall not be greater during the following time periods than
the ratio set forth opposite such time periods:
<CAPTION>
Time Period Maximum Ratio
----------- -------------
<S> <C>
From the Closing Date through March 31, 1998 7.00 to 1.00
April 1, 1998 through March 31, 1999 6.50 to 1.00
April 1, 1999 through December 31, 1999 6.00 to 1.00
January 1, 2000 and thereafter 5.50 to 1.00
</TABLE>
<TABLE>
(b) Senior Leverage Ratio. At all times during the term hereof, the
Senior Leverage Ratio shall not be greater during the following time periods
than the ratio set forth opposite such time periods:
<CAPTION>
Time Period Maximum Ratio
----------- -------------
<S> <C>
From the Closing Date through March 31, 1999 3.50 to 1.00
April 1, 1999 through December 31, 1999 3.00 to 1.00
January 1, 2000 through December 31, 2000 2.50 to 1.00
January 1, 2001 and thereafter 2.00 to 1.00
</TABLE>
<TABLE>
(c) Interest Coverage Ratio. At all times during the term hereof, the
Interest Coverage Ratio shall not be less during the following time periods than
the ratio set forth opposite such time periods:
<CAPTION>
Time Period Maximum Ratio
----------- -------------
<S> <C>
From the Closing Date through December 31, 1998 1.50 to 1.00
January 1, 1999 and thereafter 2.00 to 1.00
</TABLE>
<TABLE>
(d) Pro Forma Debt Service Coverage Ratio. At all times during the term
hereof, the Pro Forma Debt Service Coverage Ratio shall not be less during the
following time periods than the ratio set forth opposite such time periods:
100\269\91946 60
<PAGE>
<CAPTION>
Time Period Maximum Ratio
----------- -------------
<S> <C>
From the Closing Date and thereafter 1.25 to 1.00
</TABLE>
<TABLE>
(e) Fixed Charges Coverage Ratio. Commencing January 1, 2000, and at
all times thereafter during the term hereof, the Fixed Charges Coverage Ratio
shall not be less during the following time periods than the ratio set forth
opposite such time periods:
<CAPTION>
Time Period Maximum Ratio
----------- -------------
<S> <C>
From January 1, 2000 through March 31, 2003 1.00 to 1.00
April 1, 2003 and thereafter 1.05 to 1.00
</TABLE>
<TABLE>
(f) Capital Expenditures. Capital Expenditures paid or incurred by the
Borrower and the Restricted Subsidiaries shall not exceed, in the aggregate, the
following amounts during the following years, provided that, any unused portion
for any such year may be used during the following fiscal year only (but not
thereafter):
<CAPTION>
Fiscal Year Maximum Amount
----------- --------------
<S> <C>
Partial year - Closing Date through 1997 $55,000,000
1998 $90,000,000
1999 $65,000,000
2000 and thereafter N/A
</TABLE>
7.02 Debt. The Borrower shall not, and shall not permit any of the
other GCI Entities to, create, incur, assume, become or be liable in any manner
in respect of, or suffer to exist, any Debt, except (a) Debt under the Loan
Papers and the Revolving Credit Agreement, (b) Debt under the Senior Notes and
other Debt in existence on the date hereof as shown on Schedule 5.08a hereto,
and renewals, extensions (but not increases), and refinancings thereof on terms
substantially similar thereto and on terms no more restrictive, (c) trade
payables incurred and paid in the ordinary course of business, (d) Debt
permitted to be incurred as Contingent Liabilities pursuant to Section 7.03
hereof, (e) Debt between the Borrower and its Restricted Subsidiaries, (f) so
long as there exists no Default or Event of Default in existence at the time
incurred and none is caused thereby, (i) $5,000,000 in Debt constituting Capital
Leases outstanding in the aggregate at any one time, and (ii) unsecured
subordinated Debt of the Borrower on terms and conditions acceptable to the
Administrative Agent and each Lender, subordinated to the Facility pursuant to
the subordination language set forth on Schedule 7.02 hereto, and (g) Debt under
the Project Agreements.
7.03 Contingent Liabilities. The Borrower shall not, and shall not
permit any of the other GCI Entities to, create, incur, assume, become or be
liable in any manner in respect of, or suffer to exist, any Contingent
Liabilities, except (a) Contingent Liabilities under or relating to the Loan
Papers and the Revolving Credit Agreement, (b) Contingent Liabilities in
existence
100\269\91946 61
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on the Closing Date, as shown on Schedule 5.08a hereto, (c) Contingent
Liabilities resulting from the endorsement of negotiable instruments for
collection in the ordinary course of business, (d) obligations under the
Completion Guaranty, Keepwell Agreement, and Lease Guaranty, and (e) utility
bonds and other similar bonds entered into in the ordinary course of business.
7.04 Liens. The Borrower shall not, and shall not permit any of the
other GCI Entities to, create or suffer to exist any Lien upon any of its
Properties, except the Lien of Credit Lyonnais as administrative agent under the
AUSP Credit Agreement to secure payment of the Intercompany Note payable by
AUSP, Permitted Liens and Liens securing Debt permitted under Section 7.02(f)(i)
hereof. It is specifically acknowledged and agreed that the Borrower shall not,
and shall not permit any of the other GCI Entities to, hereafter agree with any
Person (other than Administrative Agent) not to grant a Lien on any of its
assets, except as specifically provided in the Indenture on the Closing Date.
7.05 Dispositions of Assets. The Borrower shall not, and shall not
permit any of the other GCI Entities to, sell, lease, assign, or otherwise
dispose of any assets of the Borrower or any Restricted Subsidiary, or otherwise
consummate any Asset Sale, except (a) Permitted Dispositions and sales or
dispositions of assets in the ordinary course of business, including
dispositions of obsolete or useless assets, and (b) so long as there exists no
Default or Event of Default both before and after giving effect to such
disposition, Asset Sales in an aggregate amount over the term of this Agreement
not to exceed $10,000,000 (or $20,000,000 if before and immediately after giving
effect to any Asset Sale, the Total Leverage Ratio is equal to or less than 4.50
to 1.00), so long as any amounts received by the Borrower and the Restricted
Subsidiaries in the aggregate over $10,000,000 in any fiscal year of the
Borrower and its Restricted Subsidiaries (or $20,000,000 if before and
immediately after giving effect to any Asset Sale, the Total Leverage Ratio is
equal to or less than 4.50 to 1.00) are immediately used to reduce the
obligations as specified under the Revolving Credit Agreement and/or Advances
outstanding under the Reolver/Term Commitment, in accordance with Section 2.04
hereof, and repay the outstanding Obligations in accordance with the terms of
Section 2.05 hereof, as applicable.
7.06 Distributions and Restricted Payments. The Borrower shall not, and
shall not permit the Parents or any Restricted Subsidiary to, make any
Restricted Payments, other than any Restricted Payment in the form of a
Distribution made by any Restricted Subsidiary to any other Restricted
Subsidiary or to the Borrower, and other than (a) so long as (i) there exists no
Default or Event of Default both before and after giving effect to any such
Restricted Payment, (ii) the Total Leverage Ratio is less than 5.00 to 1.00 both
before and after giving effect to any such Restricted Payment and (iii) the date
of such Restricted Payment is after September 30, 2000, Restricted Payments made
exclusively out of Excess Cash Flow up to a maximum amount of the difference
between $15,000,000 in the aggregate over the term of this Agreement, minus the
aggregate amount of Investments made in accordance with the terms of Section
7.10(e) hereof over the term of this Agreement, (b) so long as there exists no
Default or Event of Default both before and after giving effect to any such
Restricted Payment, the Borrower may make Restricted Payments in the form of
Distributions to GCII in an amount not in excess of
100\269\91946 62
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cash income Taxes attributable to income from the Borrower and its Restricted
Subsidiaries (and GCII may make Restricted Payments in such amounts in the form
of Distributions to GCI), and scheduled cash interest payments required to be
paid by GCII under the Senior Notes, and GCII may make Restricted Payments in
the form of (and not in excess of) scheduled cash interest payments required to
be paid by GCII under the Senior Notes, provided that, the Lenders agree that in
no event shall the opening phrase of this subsection (b) prohibit the payment of
any such Distribution by the Borrower or payment of interest by GCII on the
Senior Notes for more than 180 consecutive days in any consecutive 360-day
period, unless there exists an Event of Default under Section 8.01(a) hereof
(whether by acceleration or otherwise), (c) so long as there exists no Default
or Event of Default both before and after giving effect to the payment thereof,
payment of Management Fees and amounts due under the Transponder Purchase
Agreement for Galaxy X referred to in Section 7.18 hereof, and (d) so long as
there exists no Default or Event of Default both before and after giving effect
to any such Restricted Payment, the Borrower or any other GCI Entity (i) may
make Restricted Payments on Funded Debt incurred in accordance with the terms of
Sections 7.02(b)(but with respect to the Senior Notes, only payments of cash
interest which accrues thereon), 7.02(d), and 7.02(f)(i), and 7.02(g) hereof,
and (ii) may make payments of income Taxes.
7.07 Merger; Consolidation. The Borrower shall not, and shall not
permit any of the other GCI Entities to, merge into or consolidate with any
Person except any Wholly-Owned Subsidiary other than the Borrower may merge or
consolidate with another Wholly-Owned Subsidiary, provided that the Borrower or
the Wholly-Owned Subsidiary is the surviving entity, as the case may be.
7.08 Business. The Borrower shall not, and shall not permit any of the
other GCI Entities to, change the nature of its business as now conducted. The
Borrower shall not conduct any business except the ownership and operation of
its Systems.
7.09 Transactions with Affiliates. The Borrower shall not, and shall
not permit any of the other GCI Entities to, enter into or be party to a
transaction with any Affiliate, except on terms no less favorable than could be
obtained on an arm's-length basis with a Person that is not an Affiliate.
Notwithstanding the foregoing limitation, the Borrower and the other GCI
Entities may enter into or suffer to exist the following: (i) any transaction
pursuant to any contract in existence on the Closing Date on the terms of such
contract as in effect on the Closing Date; (ii) any transaction or series of
transactions between the Borrower and one or more of its Restricted Subsidiaries
or between two or more of its Restricted Subsidiaries; (iii) any Restricted
Payment permitted to be made pursuant to Section 7.06; (iv) the payment of
compensation by Parents, the Borrower or any of its Restricted Subsidiaries
(including, amounts paid pursuant to employee benefit plans) in the ordinary
course of business for the personal services of officers, directors and
employees of Parents, the Borrower or any of its Restricted Subsidiaries, so
long as the Board of Directors of Parents and the Borrower in good faith shall
have approved the terms thereof and deemed the services theretofore or
thereafter to be performed for such compensation or fees to be fair
consideration therefor; (v) loans and advances by Parents, the Borrower or a
Restricted Subsidiary to employees of Parents, the
100\269\91946 63
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Borrower or a Restricted Subsidiary made in ordinary course of business and
consistent with past practice of Parents, the Borrower or such Restricted
Subsidiary, as the case may be, provided, that such loans and advances do not
exceed in the aggregate $4,000,000 at any one time outstanding; (vi) any
transaction between the Borrower and its Restricted Subsidiaries pursuant to the
Transponder Purchase Agreement for Galaxy X referred to in Section 7.18 hereof;
(vii) the assignment or other transfer to GCI Transport Co., Inc. or any of its
Subsidiaries of the $9,100,000 deposit made in connection with the Transponder
Purchase Agreement for Galaxy X referred to in Section 7.18 hereof (provided the
Borrower provides the Administrative Agent with a Pro Forma Compliance
Certificate evidencing no Default or Event of Default both before and after the
assignment); (viii) the Fiber Lease and the Lease Guaranty, provided that,
notwithstanding anything to the contrary in any Project Agreement, AUSP
Financing Agreement, in this Agreement, or in any other Loan Paper, in no event
shall the aggregate amount of all lease payments made by the Borrower, its
Restricted Subsidiaries, or GCI Communication Corp. pursuant to the Fiber Lease,
the Lease Guaranty, or any other lease or Project Agreement with AUSP exceed
$28,000,000 in the aggregate over the term of this Agreement; (ix) the O&M
Contract, provided that, notwithstanding anything to the contrary in any Project
Agreement, AUSP Financing Agreement, in this Agreement or in any other Loan
Paper, in no event shall the aggregate amount of all payments made by the
Borrower or any of its Restricted Subsidiaries pursuant to any and all such
operating and maintenance contracts exceed $17,000,000 over the term of this
Agreement; (x) the Completion Guaranty and the Keepwell Agreement, and provided
that, notwithstanding anything to the contrary in any Project Agreement, AUSP
Financing Agreement, in this Agreement or in any other Loan Paper, in no event
shall the aggregate amount of all payments made pursuant to the Keepwell
Agreement, the Completion Guaranty and any other Project Agreement by the
Borrower or any of its Restricted Subsidiaries (except the Fiber Lease, the
Lease Guaranty, and the O&M Contract) exceed $73,000,000 over the term of this
Agreement, (xi) loans and/or advances to AUSP as may be evidenced by the
Intercompany Notes to the extent permitted by Section 7.10(g) hereof, (xii) the
Subordination Agreement, and (xiii) Permitted Dispositions. Neither the Borrower
nor any Restricted Subsidiary shall enter into any agreement with AUSP
obligating the Borrower or any Restricted Subsidiary to purchase excess capacity
pursuant to any Project Agreement or any other agreement exceeding the amounts
set forth above with respect to the Fiber Lease and the Lease Guaranty. Nothing
herein shall prevent the Borrower or any Restricted Subsidiary from entering
into an agreement with AUSP pursuant to any Project Agreement whereby each may
purchase excess capacity from time to time as needed in the ordinary course of
business.
7.10 Loans and Investments. The Borrower shall not, and shall not
permit any of the other GCI Entities to, make any loan, advance, extension of
credit or capital contribution to, or make or have any Investment in, any
Person, or make any commitment to make any such extension of credit or
Investment, or make any acquisition, except (a) Investments on the Closing Date
constituting a $50,000,000 capital contribution to AUSP and other Investments
existing on the date hereof and contemplated by the terms of this Agreement,
each as shown on Schedule 5.13 hereto, (b) Investments in Cash Equivalents, (c)
Investments in advances or loans in the ordinary course of business to officers
and employees in an amount in the aggregate not to exceed $4,000,000 outstanding
at any one time, (d) Investments in accounts receivable arising
100\269\91946 64
<PAGE>
in the ordinary course of business, (e) so long as (i) there exists no Default
or Event of Default, both before and after giving effect to the making of such
Investments, (ii) the Total Leverage Ratio is less than 5.00 to 1.00 both before
and after giving effect to any such Investment and (iii) the date of such
Investment is after September 30, 2000, Investments made exclusively out of
Excess Cash Flow up to a maximum amount of the difference between $15,000,000 in
the aggregate over the term of this Agreement, minus the aggregate amount of
Restricted Payments made in accordance with the terms of Section 7.06(a) hereof
over the term of this Agreement, (f) loans, advances, extensions of credit or
capital contributions to, or among, Wholly-Owned Subsidiaries and to GCI
Transport Co., Inc. and its Subsidiaries in connection with the assignment or
other transfer to GCI Transport Co., Inc. or its Subsidiaries of the $9,100,000
deposit made in connection with the Transponder Purchase Agreement for Galaxy X
referred to in Section 7.18 hereof (provided the Borrower provides the
Administrative Agent with a Pro Forma Compliance Certificate evidencing no
Default or Event of Default both before and after the assignment), and (g) so
long as there exists no Default or Event of Default both before and after giving
effect to the making of each such Investment, Investments constituting loans
and/or advances to AUSP in accordance with the terms of the Keepwell Agreement
and the Completion Guaranty as may be evidenced by the Intercompany Notes
(collaterally assigned to the Administrative Agent on a first Lien basis), which
Investments in an aggregate amount over the term of this Agreement do not exceed
$73,000,000, and (h) investments in Participation Certificates of CoBank to the
extent required pursuant to Section 6.16.
7.11 Fiscal Year and Accounting Method. The Borrower shall not, and
shall not permit any of the other GCI Entities to, change its fiscal year or
method of accounting, except as may be required by GAAP.
7.12 Issuance of Partnership Interest and Capital Stock; Amendment of
Articles and By-Laws. Except in connection with the transactions consummated on
or prior to the Closing Date, and except as permitted in Section 7.07 hereof,
the Borrower shall not, and shall not permit any of the other GCI Entities
(other than GCI) to, issue, sell or otherwise dispose of any Capital Stock in
such Person, or any options or rights to acquire such partnership interest or
capital stock not issued and outstanding on the Closing Date. The Borrower shall
not amend its articles of organization or bylaws and the Borrower shall not
permit any of the other GCI Entities to amend its articles of organization or
bylaws or partnership agreement, as applicable, except, so long as there exists
no Default or Event of Default both prior to and after giving effect to such
amendment, and after written notice to the Administrative Agent, the Borrower or
any of the other GCI Entities may make (i) changes to comply with applicable Law
and (ii) changes immaterial in nature.
7.13 Change of Ownership. Except as permitted by Section 7.07 hereof,
the Borrower shall not, and shall not permit any other GCI Entity (other than
GCI) to, permit any change in the ownership of the Borrower and each Guarantor
from the ownership thereof as of the date hereof as disclosed on Schedule 5.01
hereto.
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7.14 Sale and Leaseback. The Borrower shall not, and shall not permit
any of the other GCI Entities to, enter into any arrangement whereby it sells or
transfers any of its assets, and thereafter rents or leases such assets.
7.15 Compliance with ERISA. The Borrower shall not, and shall not
permit the Parents or any Subsidiary of the Borrower and the Parents to,
directly or indirectly, or permit any member of such Person's Controlled Group
to directly or indirectly, (a) terminate any Plan so as to result in any
material (in the opinion of Administrative Agent) liability to any of the
Borrower, the Parents or any Subsidiary of the Borrower or the Parents, or any
member of their Controlled Group, (b) permit to exist any ERISA Event, or any
other event or condition, which presents the risk of any material (in the
opinion of Administrative Agent) liability of any of the Parents, the Borrower
or any Subsidiary of the Parents or the Borrower, or any member of their
Controlled Group, (c) make a complete or partial withdrawal (within the meaning
of Section 4201 of ERISA) from any Multiemployer Plan so as to result in any
material (in the opinion of Administrative Agent) liability to any of the
Borrower, the Parents, or any Subsidiary of the Parents or the Borrower, or any
member of their Controlled Group, (d) enter into any new Plan or modify any
existing Plan so as to increase its obligations thereunder (except in the
ordinary course of business consistent with past practice) which could result in
any material (in the opinion of Administrative Agent) liability to any of the
Parents, the Borrower or any Subsidiary of the Parents or the Borrower, or any
member of their Controlled Group, or (e) permit the present value of all benefit
liabilities, as defined in Title IV of ERISA, under each Plan of each of the
Parents, the Borrower or any Subsidiary of the Parents or the Borrower, or any
member of their Controlled Group (using the actuarial assumptions utilized by
the PBGC upon termination of a Plan) to materially (in the opinion of
Administrative Agent) exceed the fair market value of Plan assets allocable to
such benefits all determined as of the most recent valuation date for each such
Plan.
7.16 Rate Swap Exposure. The Borrower shall not enter into or become
liable in respect of any Interest Hedge Agreement pursuant to which the
aggregate amount exceeds the aggregate principal amount of all Advances and
amounts outstanding under the Revolving Credit Agreement.
7.17 Restricted Subsidiaries and Other Obligors. The Borrower shall not
permit any of its Restricted Subsidiaries or any other GCI Entity to violate any
provision of this Article VII.
7.18 Amendments to Material Agreements. The Borrower shall not, nor
shall the Borrower permit any other GCI Entity to, amend or change any Project
Agreement or any AUSP Financing Agreement in any manner that is material and
adverse to the interests of the Lenders except with the prior written consent of
Majority Lenders or any Loan Paper other than with the prior written consent of
the Lenders pursuant to Section 10.01 hereof, nor shall the Borrower or any
other GCI Entity change or amend (or take any action or fail to take any action
the result of which is an effective amendment or change) or accept any waiver or
consent with respect to (a) any Non-Compete Agreement, (b) that certain
Transponder Purchase Agreement for Galaxy X, dated August 24, 1995, among the
Borrower and Hughes Communications
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Galaxy, Inc., now held by PanAmSat Corp., as assignee, (c) that certain
Transponder Service Agreement, dated August 24, 1995, among General
Communication Corp. and Hughes Communications Satellite Services, Inc., now held
by PanAmSat Corp., as assignee, (d) the Senior Notes and all documentation and
agreements relating to the Senior Notes, other than changes that result in a
decrease in interest rate, extension of maturity, or deletion of covenants or
obligations to repay, and changes anticipated by Section 9.01(1) of the
Indenture, (e) the Prime Management Agreement, and (f) all documentation related
to any Funded Debt of any GCI Entity.
7.19 Limitation on Restrictive Agreements. The Borrower shall not, and
shall not permit the Parents or any Restricted Subsidiary to, other than in
connection with the Senior Notes and the Revolving Credit Agreement or the AUSP
Financing Agreements or the Project Agreements, enter into any indenture,
agreement, instrument, financing document or other arrangement which, directly
or indirectly, prohibits or restrains, or has the effect of prohibiting or
restraining, or imposes materially adverse conditions upon: (a) the incurrence
of Debt, (b) the granting of Liens (except for provisions contained in Capital
Leases of property that are permitted hereunder that limit Liens only on the
specific property subject to the Capital Lease, except for Liens in favor of the
Administrative Agent and the Lenders), (c) the making or granting of Guarantees,
(d) the payment of dividends or Distributions, (e) the purchase, redemption or
retirement of any Capital Stock, (f) the making of loans or advances, (g)
transfers or sales of property or assets (including Capital Stock) by the
Parents, the Borrower or any of the Restricted Subsidiaries, (h) the making of
Investments or acquisitions, or (i) any change of control or management.
ARTICLE VIII. EVENTS OF DEFAULT
8.01 Events of Default. Any one or more of the following shall be an
"Event of Default" hereunder, if the same shall occur for any reason whatsoever,
whether voluntary or involuntary, by operation of Law, or otherwise:
(a) The Borrower shall fail to pay (i) any principal on any Note when
due; or (ii) any interest on any Note within three days after the same becomes
due; or (iii) any Commitment Fees, other fees, or other amounts payable under
any Loan Paper within five days after the same becomes due;
(b) Any representation or warranty made or deemed made by the Borrower
or any other GCI Entity (or any of its officers or representatives) under or in
connection with any Loan Papers shall prove to have been incorrect or misleading
in any material respect when made or deemed made;
(c) The Borrower or any other GCI Entity shall fail to perform or
observe any term or condition contained in Article VI hereof (except Section
6.05(f) hereof) which is not remedied within thirty days after the earlier of
(i) actual knowledge of such breach by the Parents, the
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Borrower or any of the Restricted Subsidiaries of such breach and (ii) written
notice from the Administrative Agent or any Lender of such breach;
(d) The Borrower or any other GCI Entity shall fail to perform or
observe any term or covenant contained in Article VII hereof or in Section
6.05(f) hereof;
(e) Any GCI Entity shall fail to perform or observe any other term or
covenant contained in any Loan Paper, other than those described in Sections
8.01(a), (b), (c) and (d) hereof which is not remedied within thirty days after
the earlier of (i) actual knowledge of such breach by the Parents, the Borrower
or any of the Restricted Subsidiaries of such breach and (ii) written notice
from the Administrative Agent or any Lender of such breach;
(f) Any Loan Paper or material provision thereof shall, for any reason,
not be valid and binding on the GCI Entity signatory thereto, or not be in full
force and effect, or shall be declared to be null and void; the validity or
enforceability of any Loan Paper shall be contested by any GCI Entity; any GCI
Entity shall deny that it has any or further liability or obligation under its
respective Loan Papers; or any default or breach under any provision of any Loan
Papers shall continue after the applicable grace period, if any, specified in
such Loan Paper;
(g) Any of the following shall occur: (i) any of the Parents, the
Borrower or any Subsidiary of the Parents or the Borrower (including without
limitation, AUSP, GCI Transport Co., Inc., GCI Satellite Co., Inc., GCI Fiber
Co., Inc. and Fiber Hold Co., Inc.) shall make an assignment for the benefit of
creditors or be unable to pay its debts generally as they become due; (ii) any
of the Parents, the Borrower or any Subsidiary of the Parents or the Borrower
(including without limitation, AUSP, GCI Transport Co., Inc., GCI Satellite Co.,
Inc., GCI Fiber Co., Inc., and Fiber Hold Co., Inc.) shall petition or apply to
any Tribunal for the appointment of a trustee, receiver, or liquidator of it, or
of any substantial part of its assets, or shall commence any proceedings
relating to any of the Parents, the Borrower or any Subsidiary of the Parents or
the Borrower (including without limitation, AUSP, GCI Transport Co., Inc., GCI
Satellite Co., Inc., GCI Fiber Co., Inc., and Fiber Hold Co., Inc.) under any
Debtor Relief Law, whether now or hereafter in effect; (iii) any such petition
or application shall be filed, or any such proceedings shall be commenced,
against any of the Parents, the Borrower or any Subsidiary of the Parents or the
Borrower (including without limitation, AUSP, GCI Transport Co., Inc., GCI
Satellite Co., Inc., GCI Fiber Co., Inc., and Fiber Hold Co., Inc.), or an
order, judgment or decree shall be entered appointing any such trustee,
receiver, or liquidator, or approving the petition in any such proceedings and
such petition, application or proceedings shall continue undismissed for 30 days
or such order, judgment or decree shall continue unstayed and in effect for 30
days; (iv) any final order, judgment, or decree shall be entered in any
proceedings against any of the Parents, the Borrower or any Subsidiary of the
Parents or the Borrower (including without limitation, AUSP, GCI Transport Co.,
Inc., GCI Satellite Co., Inc., GCI Fiber Co., Inc., and Fiber Hold Co., Inc.)
decreeing its dissolution; (v) any final order, judgment, or decree shall be
entered in any proceedings against any of the Parents, the Borrower, or any
Subsidiary of the Parents or the Borrower (including without limitation, AUSP,
GCI Transport Co., Inc., GCI Satellite Co., Inc., GCI Fiber Co., Inc., and Fiber
Hold
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Co., Inc.) decreeing its split-up which requires the divestiture of a
substantial part of its assets; or (vi) any of the Parents, the Borrower or any
Subsidiary of the Parents or the Borrower (including without limitation, AUSP,
GCI Transport Co., Inc., GCI Satellite Co., Inc., GCI Fiber Co., Inc., and Fiber
Hold Co., Inc.) shall petition or apply to any Tribunal for the appointment of a
trustee, receiver, or liquidator of it, or of any substantial part of its
assets, or shall commence any proceedings relating to any of the Parents, the
Borrower or any Subsidiary of the Parents or the Borrower (including without
limitation, AUSP, GCI Transport Co., Inc., GCI Satellite Co., Inc., GCI Fiber
Co., Inc., and Fiber Hold Co., Inc.) under any Debtor Relief Law, whether now or
hereafter in effect;
(h) Any GCI Entity shall fail to pay any Debt or Contingent Liability
of $1,000,000 or more when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt or Contingent Liability; or any GCI Entity
shall fail to perform or observe any term or covenant contained in any agreement
or instrument relating to any such Debt or Contingent Liability, when required
to be performed or observed, and such failure shall continue after the
applicable grace period, if any, specified in such agreement or instrument, and
can result in acceleration of the maturity of such Debt or Contingent Liability;
or any such Debt or Contingent Liability shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(i) Any GCI Entity shall have any judgment(s) outstanding against it
for the payment of $1,000,000 or more, and such judgment(s) shall remain
unstayed, in effect, uncontested and unpaid for a period of 30 days;
(j) (i) Any Authorization necessary for the ownership or essential for
the operation of any of the interstate or intrastate telecommunications systems
or networks operated by the Parents, the Borrower or any Restricted Subsidiary
or any other System, shall expire, and on or prior to such expiration, the same
shall not have been renewed or replaced by another Authorization authorizing
substantially the same operations of such System; or (ii) any Authorization
necessary for the ownership or essential for the operation of any of System
shall be canceled, revoked, terminated, rescinded, annulled, suspended or
modified in a materially adverse respect, or shall no longer be in full force
and effect, or the grant or the effectiveness thereof shall have been stayed,
vacated, reversed or set aside, and such action shall be no longer subject to
further administrative or judicial review; or (iii) the FCC shall have issued,
on its own initiative and not upon the complaint of or at the request of a third
party, any hearing designation order in any non-comparative license renewal
proceeding or any license revocation proceeding involving any License or
Authorization necessary for the ownership or essential for the operation of any
System; or (iv) in any non-comparative license renewal proceeding or license
revocation proceeding initiated by the FCC upon the complaint of or at the
request of a third party or any comparative (i.e., multiple applicant) license
renewal proceeding, in each case involving any License or Authorization
necessary for the ownership or essential for the operation of any System; any
administrative law judge of the FCC (or successor to the functions
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of an administrative law judge of the FCC) shall have issued an initial decision
to the effect that the Parents, the Borrower or any Restricted Subsidiary lacks
the basic qualifications to own or operate any System or is not deserving of a
renewal expectancy, and such initial decision shall not have been timely
appealed or shall otherwise have become an order that is final and no longer
subject to further administrative or judicial review (provided, however, that
none of the foregoing events described in clauses (i), (ii), (iii) or (iv) of
this Section 8.01(j) shall constitute an Event of Default if such expiration,
cancellation, revocation or other loss would not materially adversely affect the
value of any of the Collateral or the ability of the Parents, the Borrower or
any Restricted Subsidiary to perform its obligations under the Loan Papers to
which it is a party);
(k) Any of the Parents, the Borrower, or any Subsidiary of the Parents
or the Borrower, or any ERISA Affiliate, shall have committed a failure
described in Section 302(f)(l) of ERISA, and the amount determined under Section
302(f)(3) of ERISA is equal to or greater than $1,000,000;
(l) The Parents, the Borrower, any Subsidiary of the Parents or the
Borrower, or any ERISA Affiliate, shall have been notified by the sponsor of a
Multiemployer Plan that such Plan is in reorganization or is being terminated,
within the meaning of Title IV of ERISA, if as a result thereof the aggregate
annual contributions to all Multiemployer Plans in reorganization or being
terminated is increased over the amounts contributed to such Plans for the
preceding Plan year by an amount exceeding $1,000,000;
(m) The Borrower or any GCI Entity shall be required under any
Environmental Law (i) to implement any remedial, neutralization, or
stabilization process or program, the cost of which could constitute a Material
Adverse Change, or (ii) to pay any penalty, fine, or damages in an aggregate
amount of $1,000,000 or more;
(n) Any Property (whether leased or owned) of any GCI Entity, or the
operations conducted thereon by any of them or any current or prior owner or
operator thereof (in the case of real Property), shall violate or have violated
any applicable Environmental Law, if such violation could constitute a Material
Adverse Change; or any GCI Entity shall not obtain or maintain any License
required to be obtained or filed under any Environmental Law in connection with
the use of such Property and assets, including without limitation past or
present treatment, storage, disposal, or release of Hazardous Materials into the
environment, if the failure to obtain or maintain the same could constitute a
Material Adverse Change;
(o) Any Collateral Document shall for any reason (other than pursuant
to the terms thereof) cease to create a valid and perfected first priority Lien
in the Collateral (subject to Permitted Liens) (except for the Lien on the stock
of GCI Leasing Co., Inc. which shall be a second Lien behind the Prior Stock
Lien) purported to be covered thereby and the value of such Collateral, singly
or in the aggregate, equals or exceeds $1,000,000;
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(p) The occurrence of any Change of Control; or (i) two or more of the
following three senior executive managers of the Borrower shall not be employees
of the Borrower for 60 consecutive days: John Lowber, Ron Duncan or Wilson
Hughes and (ii) the Borrower shall have not replaced such senior executive
managers with new employees acceptable to the Majority Lenders, such consent not
to be unreasonably withheld;
(q) At any time, less than 100% of the Capital Stock of the Borrower,
the Restricted Subsidiaries and the Guarantors (except the Capital Stock of GCI
does not have to be pledged) shall be pledged to the Lenders to secure the
Obligations pursuant to a first and prior perfected Lien (subject to inchoate
tax liens), except with respect to the Lien on the stock of GCI Leasing Co.,
Inc.; at any time, less than 100% of the Capital Stock of GCI Leasing Co., Inc.
shall be pledged to the Lenders to secure the Obligations pursuant to a second
perfected Lien (behind the Prior Tax Lien and subject to inchoate tax Liens); or
all or any portion of the Collateral constituting any System or systems which
service 5% or more of the customers of the Borrower and the Restricted
Subsidiaries ("Significant Segment"), or all or any portion of the Pledged
Interests or the Pledge Agreements shall be the subject of any proceeding
instituted by any Person, or there shall exist any litigation or overtly
threatened litigation with respect to all or any portion of the Collateral
constituting Significant Segment or all or any portion of the Pledged Interests
or the Pledge Agreement; or all or any portion of the Collateral constituting a
Significant Segment shall be the subject of any legal proceeding instituted by
any Person other than a Lender or Administrative Agent (except in connection
with any Lender's exercise of any remedies under the Loan Papers); or any
document or instrument creating or granting a security interest or Lien in any
Collateral shall for any reason fail to create a valid first priority security
interest (subject to Permitted Liens and the Prior Stock Lien) in any collateral
purported to be covered thereby; or any material portion of the Collateral shall
not be subject to a prior perfected security interest (subject to Permitted
Liens), or be subject to attachment, levy or replenishment, unless such
attachment, levy or replenishment shall be stayed, or bonded in an amount
substantially equal to the fair market value of such Property and only for so
long as such stay or bond exists;
(r) (i) A petition or complaint is filed before or by the Federal Trade
Commission, the United States Justice Department, or any other Tribunal, seeking
to cause the Borrower or any other GCI Entity to divest a significant portion of
its assets or the Capital Stock of any GCI Entity or the Borrower, pursuant to
any antitrust, restraint of trade, unfair competition or similar Laws, and such
petition or complaint is not dismissed or discharged within 60 days of the
filing thereof, which such divestiture could reasonably be expected to cause a
Material Adverse Change or (ii) A warrant of attachment or execution or similar
process shall be issued or levied against Property of the Borrower or any other
GCI Entity which, together with all other such Property of the Borrower and the
other GCI Entities subject to other such process, exceeds in value $1,000,000 in
the aggregate, and if such judgment or award is not insured or, within 60 days
after the entry, issue or levy thereof, such judgment, warrant or process shall
not have been paid or discharged, bonded or stayed pending appeal, or if, after
the expiration of any such stay, such judgment, warrant or process shall not
have been paid or discharged;
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(s) Any civil action, suit or proceeding shall be commenced against any
GCI Entity under any federal or state racketeering statute (including, without
limitation, the Racketeer Influenced and Corrupt Organization Act of
1970)("RICO") and such suit shall be adversely determined by a court of
applicable jurisdiction resulting in a judgment against such GCI Entity in
excess of $1,000,000; or any criminal action or proceeding shall be commenced
against any GCI Entity under any federal or state racketeering statute
(including, without limitation, RICO);
(t) There shall exist any breach or default under any Project Agreement
or any other agreement relating to a loan facility benefitting any of the
Unrestricted Subsidiaries, in each case after giving effect to any applicable
period of grace in connection therewith;
(u) There shall exist any breach or default under any intercompany
promissory note or related agreement executed by AUSP or any other Unrestricted
Subsidiary in favor of the Borrower or any Restricted Subsidiary, including
without limitation, the Intercompany Notes;
(v) There shall exist any Event of Default relating to the Senior Notes
or under the Indenture; or
(w) There shall exist any Event of Default under the Revolver/Term
Credit Agreement.
8.02 Remedies Upon Default. If an Event of Default described in Section
8.01(g) hereof shall occur with respect to the Parents, the Borrower or any
Subsidiary of the Parents or the Borrower, the Revolver/Term Commitment shall be
immediately terminated and the aggregate unpaid principal balance of and accrued
interest on all Advances shall, to the extent permitted by applicable Law,
thereupon become due and payable concurrently therewith, without any action by
Administrative Agent or any Lender, and without diligence, presentment, demand,
protest, notice of protest or intent to accelerate, or notice of any other kind,
all of which are hereby expressly waived. Subject to the foregoing sentence, if
any Event of Default shall occur and be continuing, then no LIBOR Advances shall
be available to the Borrower and Administrative Agent may at its election, and
shall at the direction of Majority Lenders, do any one or more of the following:
(a) Declare the entire unpaid balance of all Advances immediately due
and payable, whereupon it shall be due and payable without diligence,
presentment, demand, protest, notice of protest or intent to accelerate, or
notice of any other kind (except notices specifically provided for under Section
8.01), all of which are hereby expressly waived (except to the extent waiver of
the foregoing is not permitted by applicable Law);
(b) Terminate the Revolver/Term Commitment;
(c) Reduce any claim of Administrative Agent and Lenders to judgment;
or
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(d) Exercise any Rights afforded under any Loan Papers, by Law,
including but not limited to the UCC, at equity, or otherwise.
8.03 Cumulative Rights. All Rights available to Administrative Agent
and Lenders under the Loan Papers shall be cumulative of and in addition to all
other Rights granted thereto at Law or in equity, whether or not amounts owing
thereunder shall be due and payable, and whether or not Administrative Agent or
any Lender shall have instituted any suit for collection or other action in
connection with the Loan Papers.
8.04 Waivers. The acceptance by Administrative Agent or any Lender at
any time and from time to time of partial payment of any amount owing under any
Loan Papers shall not be deemed to be a waiver of any Default or Event of
Default then existing. No waiver by Administrative Agent or any Lender of any
Default or Event of Default shall be deemed to be a waiver of any Default or
Event of Default other than such Default or Event of Default. No delay or
omission by Administrative Agent or any Lender in exercising any Right under the
Loan Papers shall impair such Right or be construed as a waiver thereof or an
acquiescence therein, nor shall any single or partial exercise of any such Right
preclude other or further exercise thereof, or the exercise of any other Right
under the Loan Papers or otherwise.
8.05 Performance by Administrative Agent or any Lender. Should any
covenant of any GCI Entity fail to be performed in accordance with the terms of
the Loan Papers, Administrative Agent may, at its option, perform or attempt to
perform such covenant on behalf of such GCI Entity. Notwithstanding the
foregoing, it is expressly understood that neither Administrative Agent nor any
Lender assumes, and shall not ever have, except by express written consent of
Administrative Agent or such Lender, any liability or responsibility for the
performance of any duties or covenants of any GCI Entity.
8.06 Expenditures. The Borrower shall reimburse Administrative Agent
and each Lender for any sums spent by it in connection with the exercise of any
Right provided herein. Such sums shall bear interest at the lesser of (a) the
Base Rate in effect from time to time, plus 2.0% and (b) the Highest Lawful
Rate, from the date spent until the date of repayment by the Borrower.
8.07 Control. None of the covenants or other provisions contained in
this Agreement shall, or shall be deemed to, give Administrative Agent or any
Lender any Rights to exercise control over the affairs and/or management of any
GCI Entity, the power of Administrative Agent and each Lender being limited to
the Rights to exercise the remedies provided in this Article; provided, however,
that if Administrative Agent or any Lender becomes the owner of any partnership,
stock or other equity interest in any Person, whether through foreclosure or
otherwise, it shall be entitled to exercise such legal Rights as it may have by
being an owner of such stock or other equity interest in such Person.
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ARTICLE IX. THE ADMINISTRATIVE AGENT
9.01 Authorization and Action. Each Lender hereby appoints and
authorizes Administrative Agent to take such action as Administrative Agent on
its behalf and to exercise such powers under this Agreement and the other Loan
Papers as are delegated to the Administrative Agent by the terms of the Loan
Papers, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement and the other Loan
Papers (including without limitation enforcement or collection of the Notes),
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
Majority Lenders (or all Lenders, if required under Section 10.01), and such
instructions shall be binding upon all Lenders; provided, however, that
Administrative Agent shall not be required to take any action which exposes
Administrative Agent to personal liability or which is contrary to any Loan
Papers or applicable Law. Administrative Agent agrees to give to each Lender
notice of each notice given to it by the Borrower pursuant to the terms of this
Agreement, and to distribute to each applicable Lender in like funds all amounts
delivered to Administrative Agent by the Borrower for the Ratable or individual
account of any Lender.
9.02 Administrative Agent's Reliance, Etc. Neither Administrative
Agent, nor any of its directors, officers, agents, employees, or representatives
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or any other Loan Paper, except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, Administrative Agent (a) may treat the payee of any
Note as the holder thereof until Administrative Agent receives written notice of
the assignment or transfer thereof signed by such payee and in form satisfactory
to Administrative Agent; (b) may consult with legal counsel (including counsel
for the Borrower or any of the Restricted Subsidiaries), independent public
accountants, and other experts selected by it, and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants, or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties, or representations made in or in connection with this
Agreement or any other Loan Papers; (d) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants,
or conditions of this Agreement or any other Loan Papers on the part of any GCI
Entity or the Restricted Subsidiaries or to inspect the Property (including the
books and records) of any GCI Entity or the Restricted Subsidiaries; (e) shall
not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement, any other
Loan Papers, or any other instrument or document furnished pursuant hereto; and
(f) shall incur no liability under or in respect of this Agreement or any other
Loan Papers by acting upon any notice, consent, certificate, or other instrument
or writing believed by it to be genuine and signed or sent by the proper party
or parties.
9.03 NationsBank of Texas, National Association and Affiliates. With
respect to its Revolver/Term Commitment, its Advances, its Specified Percentage
of the Revolver/Term Loan
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and any Loan Papers, NationsBank of Texas, National Association has the same
Rights under this Agreement as any other Lender and may exercise the same as
though it were not Administrative Agent. NationsBank of Texas, National
Association and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with, any GCI Entity, any Affiliate
thereof, and any Person who may do business therewith, all as if NationsBank of
Texas, National Association were not Administrative Agent and without any duty
to account therefor to any Lender.
9.04 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Administrative Agent or any other
Lender, and based on the financial statements referred to in Section 5.04 hereof
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon
Administrative Agent 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 Agreement and the
other Loan Papers.
9.05 Indemnification by Lenders. Lenders shall indemnify Administrative
Agent, pro rata, 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 Administrative Agent in any way relating to or arising out of
any Loan Papers or any action taken or omitted by Administrative Agent
thereunder, including any negligence of Administrative Agent; provided, however,
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from Administrative Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, Lenders shall reimburse
Administrative Agent, pro rata, promptly upon demand for any out-of-pocket
expenses (including reasonable attorneys' fees) incurred by Administrative Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiation, legal
proceedings or otherwise) of, or legal and other advice in respect of rights or
responsibilities under, the Loan Papers. The indemnity provided in this Section
9.05 shall survive the termination of this Agreement.
9.06 Successor Administrative Agent. Administrative Agent may resign at
any time by giving written notice thereof to Lenders and the Borrower, and may
be removed at any time with or without cause by the action of all Lenders (other
than Administrative Agent, if it is a Lender). Upon any such resignation,
Majority Lenders shall have the right to appoint a successor Administrative
Agent. If no successor Administrative Agent shall have been so appointed and
shall have accepted such appointment within thirty days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of Lenders, appoint a successor
Administrative Agent, which shall be 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 $50,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor
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Administrative Agent shall thereupon succeed to and become vested with all the
Rights and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
the Loan Papers, provided that if the retiring or removed Administrative Agent
is unable to appoint a successor Administrative Agent, Administrative Agent
shall, after the expiration of a sixty day period from the date of notice, be
relieved of all obligations as Administrative Agent hereunder. Notwithstanding
any Administrative Agent's resignation or removal hereunder, the provisions of
this Article shall continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement.
ARTICLE X. MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement, the Revolving Credit Agreement, or any other Loan Papers, nor
consent to any departure by the Borrower or any other GCI Entity therefrom,
shall be effective unless the same shall be in writing and signed by
Administrative Agent with the consent of Majority Lenders, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver,
or consent shall (and the result of action or failure to take action shall not)
unless in writing and signed by all of Lenders and Administrative Agent, (a)
increase the Revolving Commitment (except in accordance with the provisions of
Section 2.16 of the Revolving Credit Agreement), increase the Revolver/Term
Commitment or the Letter of Credit Commitment, (b) reduce any principal,
interest, fees, or other amounts payable hereunder, or waive or result in the
waiver of any Event of Default under Section 8.01(a) hereof or of the
Revolver/Term Credit Agreement, or change the pro rata sharing of payments, (c)
postpone any date fixed for any payment of principal, interest, fees, or other
amounts payable hereunder or under the Revolver/Term Credit Agreement, (d)
release any Collateral or Guaranties securing any GCI Entity's obligations
hereunder, other than releases specifically contemplated hereby and by the Loan
Papers, including without limitation, releases of assets that have been sold or
transferred as specifically permitted hereby or by the Loan Papers, or (e)
change the meaning of Specified Percentage or the number of Lenders required to
take any action hereunder. No amendment, waiver, or consent shall affect the
Rights or duties of Administrative Agent under any Loan Papers, unless it is in
writing and signed by Administrative Agent in addition to the requisite number
of Lenders.
10.02 Notices.
(a) Manner of Delivery. All notices communications and other materials
to be given or delivered under the Loan Papers shall, except in those cases
where giving notice by telephone is expressly permitted, be given or delivered
in writing. All written notices, communications and materials shall be sent by
registered or certified mail, postage prepaid, return receipt requested, by
telecopier, or delivered by hand. In the event of a discrepancy between any
telephonic notice and any written confirmation thereof, such written
confirmation shall be
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deemed the effective notice except to the extent Administrative Agent, any
Lender or the Borrower has acted in reliance on such telephonic notice.
(b) Addresses. All notices, communications and materials to be given or
delivered pursuant to this Agreement shall be given or delivered at the
following respective addresses and telecopier and telephone numbers and to the
attention of the following individuals or departments:
If to the Borrower:
GCI Holdings, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503-2781
Attention: Mr. John M. Lowber
Telephone No.: (907) 265-5628
Facsimile No.: (907) 265-5676
With a Copy to:
Hartig, Rhodes, Norman, Mahoney & Edwards, P.C.
717 K Street
Anchorage, Alaska 99501
Attention: Bonnie J. Paskvan
Telephone No.: (907) 276-1592
Facsimile No.: (907) 277-4352
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If to Administrative Agent:
NationsBank of Texas, N.A.
901 Main Street, 64th Floor
Dallas, Texas 75202
Attention: Whitney L. Busse
Vice President
Telephone No.: (214) 508-0950
Facsimile No.: (214) 508-9390
With a Copy to:
Donohoe, Jameson & Carroll, P.C.
3400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Attention: Melissa Ruman Stewart
Telephone No.: (214) 698-3814
Facsimile No.: (214) 744-0231
(c) If to any Lender, to its address set forth below opposite its
signature or on any Assignment and Acceptance or amendment to this Agreement.
or at such other address or, telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify for the purpose in a notice to the other
specifically captioned "Notice of Change of Address".
(d) Effectiveness. Each notice, communication and any material to be
given or delivered to any party pursuant to this Agreement shall be effective or
deemed delivered or furnished (i) if sent by mail, on the fifth Business Day
after such notice, communication or material is deposited in the mail, addressed
as above provided, (ii) if sent by telecopier, when such notice, communication
or material is transmitted to the appropriate number determined as above
provided in this Section 10.02 and the appropriate receipt is received or
otherwise acknowledged, (iii) if sent by hand delivery or overnight courier,
when left at the address of the addressee addressed as above provided, and (iv)
if given by telephone, when communicated to the individual or any member of the
department specified as the individual or department to whose attention notices,
communications and materials are to be given or delivered except that notices of
a change of address, telecopier or telephone number or individual or department
to whose attention notices, communications and materials are to be given or
delivered shall not be effective until received; provided, however, that notices
to Administrative Agent pursuant to
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Article II shall be effective when received. The Borrower agrees that
Administrative Agent shall have no duty or obligation to verify or otherwise
confirm telephonic notices given pursuant to Article II, and agrees to indemnify
and hold harmless Administrative Agent and Lenders for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, and expenses resulting, directly or indirectly, from acting upon any such
notice.
10.03 Parties in Interest. All covenants and agreements contained in
this Agreement and all other Loan Papers shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto. Each Lender may
from time to time assign or transfer its interests hereunder pursuant to Section
10.04 hereof. No GCI Entity may assign or transfer its Rights or obligations
under any Loan Paper without the prior written consent of Administrative Agent.
10.04 Assignments and Participations.
(a) Subject to the following sentence, each Lender (an "Assignor") may
assign its Rights and obligations as a Lender under the Loan Papers to one or
more Eligible Assignees pursuant to an Assignment and Acceptance, so long as (i)
each assignment shall be of a constant, and not a varying percentage of all
Rights and obligations thereunder, (ii) each Assignor shall obtain in each case
the prior written consent of Administrative Agent, which consent shall not be
unreasonably withheld, (iii) each Assignor shall in each case pay a $3,000
processing fee to Administrative Agent, (iv) no such assignment is for an amount
less than the lesser of the total amount of the Revolver/Term Commitment or
$5,000,000, and (v) no assignment shall be made unless an assignment is also
made of the Rights and obligations on a pro rata basis as a Lender under the
Revolving Credit Agreement. Within five Business Days after Administrative Agent
receives notice of any such assignment, the Borrower shall execute and deliver
to Administrative Agent, in exchange for the Notes issued to Assignor, new Notes
to the order of such Assignor and its assignee in amounts equal to their
respective Specified Percentages of the Revolver/Term Commitment. Such new Notes
shall be dated the effective date of the assignment. It is specifically
acknowledged and agreed that on and after the effective date of each assignment,
the assignee shall be a party hereto and shall have the Rights and obligations
of a Lender under the Loan Papers.
(b) Each Lender may sell participations to one or more Persons in all
or any of its Rights and obligations under the Loan Papers; provided, however,
that (i) such Lender's obligations under the Loan Papers shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender shall remain the holder
of its Notes for all purposes of the Loan Papers, (iv) the participant shall be
granted the Right to vote on or consent to only those matters described in
Sections 10.01(a), (b), (c) and (d), (v) each GCI Entity, Administrative Agent,
and other Lenders shall continue to deal solely and directly with such Lender in
connection with its Rights and obligations under the Loan Papers and (vi) no
such participation is for an amount less than the lesser of the total amount of
the Revolver/Term Commitment or $5,000,000.
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(c) Any Lender may, in connection with any assignment or participation,
or proposed assignment or participation, disclose to the assignee or
participant, or proposed assignee or participant, any information relating to
any GCI Entity furnished to such Lender by or on behalf of any GCI Entity.
(d) Notwithstanding any other provision set forth in this Agreement,
each Lender may at any time create a security interest in all or any portion of
its Rights under this Agreement (including, without limitation, the Advances
owing to it and the Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
10.05 Sharing of Payments. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any Right of set-off,
or otherwise) on account of its Advances in excess of its pro rata share of
payments made by the Borrower, such Lender shall forthwith purchase
participations in Advances made by the other Lenders as shall be necessary to
share the excess payment pro rata with each of them; provided, however, that if
any of such excess payment is thereafter recovered from the purchasing Lender,
its purchase from each Lender shall be rescinded and each Lender shall repay the
purchase price to the extent of such recovery together with a pro rata share of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 10.05
may, to the fullest extent permitted by Law, exercise all its Rights of payment
(including the Right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
10.06 Right of Set-off. Upon the occurrence and during the continuance
of any Event of Default, each Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by Law, to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of the Borrower against any and all of the obligations
of the Borrower now or hereafter existing under this Agreement and the other
Loan Papers, whether or not Administrative Agent or any Lender shall have made
any demand under this Agreement or the other Loan Papers, and even if such
obligations are unmatured. Each Lender shall promptly notify the Borrower after
any such set-off and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The Rights of
each Lender under this Section 10.06 are in addition to other Rights (including,
without limitation, other Rights of set-off) which such Lender may have.
10.07 Costs, Expenses, and Taxes.nd Taxes
(a) The Borrower agrees to pay on demand (i) all costs and expenses of
Administrative Agent in connection with the preparation and negotiation of all
Loan Papers, including without limitation the reasonable fees and out-of-pocket
expenses of Special Counsel and (ii) all costs and expenses (including
reasonable attorneys' fees and expenses) of
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Administrative Agent and each Lender in connection with administration,
interpretation, modification, amendment, waiver, or release of any Loan Papers
and any restructuring, work-out, or collection of any portion of the Obligations
or the enforcement of any Loan Papers.
(b) In addition, the Borrower shall pay any and all stamp, debt, and
other Taxes payable or determined to be payable in connection with any payment
hereunder (other than Taxes on the overall net income of Administrative Agent or
any Lender or franchise Taxes or Taxes on capital or capital receipts of
Administrative Agent or any Lender), or the execution, delivery, or recordation
of any Loan Papers, and agrees to save Administrative Agent and each Lender
harmless from and against any and all liabilities with respect to, or resulting
from any delay in paying or omission to pay any Taxes in accordance with this
Section 10.07, including any penalty, interest, and expenses relating thereto.
All payments by the Borrower or any Restricted Subsidiary under any Loan Papers
shall be made free and clear of and without deduction for any present or future
Taxes (other than Taxes on the overall net income of Administrative Agent or any
Lender of any nature now or hereafter existing, levied, or withheld, or
franchise Taxes or Taxes on capital or capital receipts of Administrative Agent
or any Lender), including all interest, penalties, or similar liabilities
relating thereto. If the Borrower shall be required by Law to deduct or to
withhold any Taxes from or in respect of any amount payable hereunder, (i) the
amount so payable shall be increased to the extent necessary so that, after
making all required deductions and withholdings (including Taxes on amounts
payable to Administrative Agent or any Lender pursuant to this sentence),
Administrative Agent or any Lender receives an amount equal to the sum it would
have received had no such deductions or withholdings been made, (ii) the
Borrower shall make such deductions or withholdings, and (iii) the Borrower
shall pay the full amount deducted or withheld to the relevant taxing authority
in accordance with applicable Law. Without prejudice to the survival of any
other agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 10.07 shall survive the execution of this
Agreement, termination of the Revolver/Term Commitment, repayment of the
Obligations, satisfaction of each agreement securing or assuring the Obligations
and termination of this Agreement and each other Loan Paper.
10.08 Indemnification by the Borrower. The Borrower shall indemnify,
defend, and hold harmless Administrative Agent, each Lender and their respective
Affiliates, directors, officers, agents, employees, and representatives, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses, and disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against any of them in any way relating to or arising out of any Loan Papers
(including in connection with or as a result, in whole or in part, of the
negligence of any of them), any transaction related hereto or thereto, or any
act, omission, or transaction of the Borrower, any other GCI Entity and their
respective Affiliates, or any of their directors, partners, officers, agents,
employees, or representatives; provided, however, that neither Administrative
Agent nor any Lender shall be indemnified, defended, and held harmless pursuant
to this Section 10.08 to the extent of any losses or damages which the Borrower
proves were caused by the indemnified party's willful misconduct or gross
negligence.
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10.09 Rate Provision. It is not the intention of any party to any Loan
Papers to make an agreement violative of the Laws of any applicable jurisdiction
relating to usury. In no event shall the Borrower or any other Person be
obligated to pay any amount in excess of the Maximum Amount. If Administrative
Agent or any Lender ever receives, collects or applies, as interest, any such
excess, such amount which would be excessive interest shall be deemed a partial
repayment of principal and treated hereunder as such; and if principal is paid
in full, any remaining excess shall be paid to the Borrower or the other Person
entitled thereto. In determining whether or not the interest paid or payable,
under any specific contingency, exceeds the Maximum Amount, each GCI Entity,
Administrative Agent and each Lender shall, to the maximum extent permitted
under Applicable Law, (a) characterize any nonprincipal payment as an expense,
fee or premium rather than as interest, (b) exclude voluntary prepayments and
the effect thereof, and (c) amortize, prorate, allocate and spread in equal
parts, the total amount of interest throughout the entire contemplated term of
the Obligations so that the interest rate is uniform throughout the entire term
of the Obligations; provided that if the Obligations are paid and performed in
full prior to the end of the full contemplated term thereof, and if the interest
received for the actual period of existence thereof exceeds the Maximum Amount,
Administrative Agent or Lenders, as appropriate, shall refund to the Borrower
the amount of such excess or credit the amount of such excess against the total
principal amount owing, and, in such event, neither Administrative Agent nor any
Lender shall be subject to any penalties provided by any Laws for contracting
for, charging or receiving interest in excess of the Maximum Amount. This
Section 10.09 shall control every other provision of all agreements among the
parties to the Loan Papers pertaining to the transactions contemplated by or
contained in the Loan Papers.
10.10 Severability. If any provision of any Loan Papers is held to be
illegal, invalid, or unenforceable under present or future Laws during the term
thereof, such provision shall be fully severable, the appropriate Loan Paper
shall be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part thereof, and the remaining provisions
thereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance therefrom.
Furthermore, in lieu of such illegal, invalid, or unenforceable provision there
shall be added automatically as a part of such Loan Paper a legal, valid, and
enforceable provision as similar in terms to the illegal, invalid, or
unenforceable provision as may be possible.
10.11 Exceptions to Covenants. No GCI Entity shall be deemed to be
permitted to take any action or to fail to take any action that is permitted as
an exception to any covenant in any Loan Papers, or that is within the
permissible limits of any covenant, if such action or omission would result in a
violation of any other covenant in any Loan Papers.
10.12 Counterparts. This Agreement and the other Loan Papers may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such agreement,
it shall not be necessary to produce or account for any counterpart other than
one signed by the party against which enforcement is sought.
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10.13 GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND ALL OTHER LOAN PAPERS SHALL BE DEEMED TO BE
CONTRACTS MADE IN DALLAS, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS) AND THE UNITED STATES OF AMERICA. WITHOUT EXCLUDING ANY OTHER
JURISDICTION AND NOT AS A LIMITATION OF SECTION 10.14 HEREOF, THE BORROWER
AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS, WILL
HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION HEREWITH. TO THE MAXIMUM EXTENT
PERMITTED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO A
TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT, CONTRACT, EQUITY, OR
OTHERWISE) ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER LOAN PAPERS,
OR ANY RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A
JUDGE SITTING WITHOUT A JURY.
(b) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY LEGAL PROCESS
UPON IT. THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT ITS
ADDRESS DESIGNATED FOR NOTICE UNDER THIS AGREEMENT AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE BUSINESS DAYS AFTER DEPOSIT IN THE UNITED STATES
MAIL. NOTHING IN THIS SECTION 10.13 SHALL AFFECT THE RIGHT OF ADMINISTRATIVE
AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
10.14. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
10.15 Amendment and Restatement. This Agreement is a renewal,
extension, amendment, and restatement of the Original Credit Agreement, and, as
such, except for the "Obligations" as defined in the Original Credit Agreement
(which shall survive, be renewed, extended, and restated by the terms of this
Agreement), all other terms and provisions supersede in their entirety the
Original Credit Agreement; provided, however, this Agreement shall not
extinguish the obligations under the Original Credit Agreement or be construed
as a substitution or novation of the "Obligations" as defined in the Original
Credit Agreement, except as modified hereby or the other Loan Papers executed
concurrently herewith. All subordination agreements, security agreements, pledge
agreements, mortgages, and deeds of trust executed and delivered in connection
with this Agreement shall supersede the subordination agreements, security
agreements, pledge agreements, mortgages, and deeds of trust executed and
delivered in
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connection with the Original Credit Agreement (the "Original Security
Documents"), except for the Liens created under the Original Security Documents
which shall remain valid, binding and enforceable Liens against the Borrower and
the Subsidiaries and each of the other Persons which granted such Liens.
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IN WITNESS WHEREOF, this Credit Agreement is executed as of the date
first set forth above.
THE BORROWER:
GCI HOLDINGS, INC.
By: /s/ John M. Lowber
Its: Senior Vice President and Chief
Financial Officer
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ADMINISTRATIVE AGENT:
NATIONSBANK OF TEXAS, N.A., as Administrative
Agent
By: /s/ Whitney L. Busse
Its: Vice President
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DOCUMENTATION AGENT:
CREDIT LYONNAIS NEW YORK BRANCH, as
Documentation Agent
By: /s/Mark D. Thorsheim
Its: Vice President
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SYNDICATION AGENT:
TD SECURITIES (USA), INC., as Syndication Agent
By: /s/ A.L. Miller
Its: Managing Director
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LENDERS:
Specified Percentage: NATIONSBANK OF TEXAS, N.A., Individually, as a
Lender
10.0000%
Address:
901 Main, 64th Floor
Dallas, Texas 75202
By: /s/ Whitney L. Busse
Its: Vice President
Attention: Whitney L. Busse
Telephone: (214) 508-0950
Facsimile: (214) 508-9390
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Specified Percentage: TORONTO DOMINION (TEXAS), INC., Individually as
a Lender
10.0000%
Address:
909 Fannin, Suite 1700
Houston, Texas 77010
By: /s/Neva Nesbitt
Its: Vice President
Attention: David Parker
Telephone: (713) 653-8248
Facsimile: (713) 951-9921
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Specified Percentage: CREDIT LYONNAIS NEW YORK BRANCH, Individually as
a Lender
10.0000%
Address:
1301 Avenue of the Americas
New York, New York 10019
By: /s/ Mark D. Thorsheim
Its: Vice President
Attention: Mark Thorsheim
Telephone: (212) 261-7852
Facsimile: (212) 261-3288
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Specified Percentage: COBANK, ACB, Individually as a Lender
8.0000%
Address:
5500 South Quebec Street
Englewood, Colorado 80111
By: /s/ John McFarlane
Its: Vice President
Attention: John McFarlane
Telephone: (303) 740-4332
Facsimile: (303) 740-6496
By:
Its:
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Specified Percentage: BANQUE PARIBAS, Individually as a Lender
6.0000%
Address:
2029 Century Park East, Suite 3900
Los Angeles, California 90067
By: /s/ Thomas Brandt
Its: Director
Attention: Todd Rodgers
Telephone: (310) 551-7394
Facsimile: (310) 556-3762
By: /s/ Darlynn Ernst
Its: Assistant Vice President
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Specified Percentage: GENERAL ELECTRIC CAPITAL CORPORATION,
Individually as a Lender
6.0000%
Address:
120 Long Ridge Road
Stamford, Connecticut 06927
By: /s/ Molly S. Fergusson
Its: Manager - Operations
Attention: Manager - Operations
Telephone: (203) 961-2275
Facsimile: (203) 961-2017
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Specified Percentage: THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS
ANGELES AGENCY, Individually as a Lender
6.0000%
Address:
350 South Grand Avenue, Suite 3000
Los Angeles, California 90071
By: /s/ T. Morgan Edwards II
Its: Deputy General Manager
Attention: Hiro Negi
Telephone: (213) 689-6344
Facsimile: (213) 689-6294
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Specified Percentage: UNION BANK OF CALIFORNIA, N.A., Individually as
a Lender
6.0000%
Address:
445 S. Figueroa Street, 15th Floor
Los Angeles, California 90071
By: /s/ Christine P. Ball
Its: Vice President
Attention: Sonia Isaacs
Telephone: (213) 236-7834
Facsimile: (213) 236-5747
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Specified Percentage: BANK OF HAWAII, Individually as a Lender
4.2500%
Address:
1850 N. Central Avenue, Suite 400
Phoenix, Arizona 85004
By: /s/ Elizabeth O. MacLean
Its: Vice President
Attention: Elizabeth O. MacLean
Telephone: (602) 257-2437
Facsimile: (602) 257-2235
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Specified Percentage: THE BANK OF NEW YORK, Individually as a Lender
4.2500%
Address:
1 Wall Street
New York, New York 10286
By: /s/ Edward F. Ryan, Jr.
Its: Senior Vice President
Attention: Ted Ryan
Telephone: (212) 635-8608
Facsimile: (212) 635-8593
100\269\91946 98
<PAGE>
Specified Percentage: BANQUE NATIONALE DE PARIS, Individually as a
Lender
4.2500%
Address:
499 Park Avenue
New York, New York 10022
By: /s/ Serge Desrayaud
Its: Vice President
Attention: Marcus C. Jones
Telephone: (212) 415-4632
Facsimile: (212) 418-8269
By: /s/ Marcus C. Jones
Its: Vice President
100\269\91946 99
<PAGE>
Specified Percentage: CITY NATIONAL BANK, Individually as a Lender
4.2500%
Address:
400 N. Roxbury Drive, 3rd Floor
Beverly Hills, California 90210
By: /s/ David C. Burdge
Its: Senior Vice President
Attention: Rod Bollins
Telephone: (310) 888-6149
Facsimile: (310) 888-6152
100\269\91946 100
<PAGE>
Specified Percentage: FIRST NATIONAL BANK OF MARYLAND,
Individually as a Lender
4.2500%
Address:
25 South Charles Street
18th Floor, Mail Stop 101-511
Baltimore, Maryland 21201
By: /s/ Christopher L. Smith
Its: Vice President
Attention: Christopher Smith
Telephone: (410) 244-4798
Facsimile: (410) 244-4920
100\269\91946 101
<PAGE>
Specified Percentage: FLEET NATIONAL BANK, Individually as a Lender
4.2500%
Address:
One Federal Street
MAOFD03D
Boston, Massachusetts 02110
By: /s/ Chris Swindell
Its: VP
Attention: Christopher Swindell
Telephone: (617) 346-5579
Facsimile: (617) 346-4345
100\269\91946 102
<PAGE>
Specified Percentage: THE FUJI BANK, LIMITED, LOS ANGELES AGENCY,
Individually as a Lender
4.2500%
Address:
333 South Hope Street, 39th Floor
Los Angeles, California 90071
By: /s/ Masahito Fukuda
Its: Joint General Manager
Attention: Fred Caparoso
Telephone: (213) 253-4148
Facsimile: (213) 253-4178
100\269\91946 103
<PAGE>
Specified Percentage: THE SUMITOMO BANK, LIMITED, Individually as a
Lender
4.2500%
Address:
1201 Third Avenue, Suite 5320
Seattle, Washington 98101
By: /s/ Goro Hirai
Its: Joint General Manager
Attention: Bob Granfelt
Telephone: (206) 223-4050
Facsimile: (206) 623-8551
Original to:
777 S. Figueroa Street
Suite 2600
Los Angeles, California 90017
100\269\91946 104
<PAGE>
Specified Percentage: NATIONAL BANK OF ALASKA, Individually as a Lender
4.0000%
Address:
301 W. Northern Lights Blvd.
Commercial Loan Department
Anchorage, Alaska 99503
By: /s/ Patricia Jelley Benz
Its: Vice President
Attention: Pita Jelley Benz
Telephone: (907) 265-2916
Facsimile: (907) 265-2141
100\269\91946 105
<PAGE>
SCHEDULE 7.02
SUBORDINATED DEBT PROVISIONS
A. Definition of Subordinated Debt and Senior Debt - all
inclusive, i.e. Subordinated Debt defined as all debt,
principal, interest (including postbankruptcy interest),
indemnitees, liabilities, fees, costs, and expenses now or
hereafter existing, etc. subordinated to all Senior Debt
defined as all debt, principal, interest (including
postbankruptcy interest), indemnitees, liabilities, fees,
costs, and expenses now or hereafter existing, as renewed,
extended, increased, etc. (and all other "Obligations" as
defined in the Credit Agreement)
B. Payment Terms Prebankruptcy
1. no payment of interest, except payment in kind; no
amortization or defeasance or mandatory redemption of
principal (other than change of control provisions
subject to the subordination provisions)
2. fixed maturity date no sooner than one year after the
fully extended maturity date of the Senior Debt; the
maturity of Senior Debt may be extended from time to
time without the consent of the Subordinated Debt
Holders
C. Covenants
1. limitation on covenants to limitation of debt
incurrence (other than Senior Debt and guarantees
thereof) and other affirmative type covenants; no
financial covenants
2. Any change of control provision which triggers a
redemption of the Subordinated Debt must be subject
to payment of Senior Debt in full
3. No dividend restrictions or other restrictive
covenants
D. Defaults; Remedies Upon Default
1. only defaults in Subordinated Debt documents are
payment defaults, affirmative covenant defaults,
bankruptcy defaults, and cross acceleration to Senior
Debt
2. may have right to sue and to accelerate, subject to
standstill provisions, on the direction of the
trustee by 51% of the Subordinated Debt holders
E. Terms Post Bankruptcy - assignment of claims and power of
attorney given Senior Debt holders
<PAGE>
F. Standstill Provisions - typical industry standstill
provisions, including, without limitation:
1. if a payment default occurs under the Senior Debt
documents, an absolute standstill by the Subordinated
Debt holders is required regardless of whether the
Senior Debt holders have accelerated
2. 360 day standstill required for all defaults under
the Subordinated Debt documents, subject to the
absolute standstill if a payment default has occurred
under the Senior Debt documents as described above
G. UNSECURED - no liens permitted to secure the Subordinated Debt
H. Senior Debt may be increased, and all Senior Debt documents
may be amended without the consent of the Subordinated Debt
holders
90658
-2-
<PAGE>
SCHEDULE 1.01B
AUSP FINANCING AGREEMENTS; PROJECT AGREEMENTS
Credit and Security Agreement dated as of January 27, 1998, among
Alaska United Fiber System Partnership as Borrower, and 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.
Completion Guaranty dated as of January 27, 1998, by GCI Holdings,
Inc., as Guarantor in favor of Credit Lyonnais New York Branch as Administrative
Agent for the Lenders referred to therein.
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 for the Lenders
referred to therein.
Operation and Maintenance Contract dated as of January 27, 1998,
between Alaska United Fiber System Partnership and GCI Communication Corp.
Depositary Agreement dated as of January 27, 1998, between Alaska
United Fiber System Partnership and Credit Lyonnais New York Branch as
Administrative Agent for the Lenders referred to therein.
Intercompany Notes by Alaska United Fiber System Partnership to the GCI
Holdings, Inc.
Lease Agreement dated as of January 27, 1998, between GCI Communication
Corp. as Lessee, and Alaska United Fiber System Partnership as Lessor.
Lease Guaranty Agreement dated as of January 27, 1998, among GCI
Holdings, Inc., Alaska United Fiber System Partnership and Credit Lyonnais New
York Branch as Administrative Agent.
Operating Keep Well Agreement dated as of January 27, 1998, among GCI
Holdings, Inc., Alaska United Fiber System Partnership, and Credit Lyonnais New
York Branch as Administrative Agent.
GCI Subordination Agreement dated as of January 27, 1998, between GCI
Cable, Inc., Credit Lyonnais New York Branch, as Administrative Agent, and
NationsBank of Texas, N.A., as Administrative Agent under the AUSP Credit
Agreement.
AU Subordination Agreement dated as of January 27, 1998, between Alaska
United Fiber System Partnership, Credit Lyonnais New York Branch, as
Administrative Agent, and NationsBank of Texas, N.A., as Administrative Agent.
100/269/99522
<PAGE>
EXHIBIT A
NOTE
$ Dallas, Texas DATE
GCI Holdings, Inc., an Alaskan corporation ("Borrower"), promises to
pay to the order of ("Lender") the lesser of the principal sum
of DOLLARS ($ )or the aggregate unpaid principal
amount of all Advances made by Lender to Borrower pursuant to Section 2.01 of
the Credit Agreement (as hereinafter defined) in immediately available funds at
the principal office of NationsBank of Texas, N.A. as Administrative Agent at
901 Main Street, 14th Floor, Dallas, Texas 75202, together with interest on the
unpaid principal amount hereof at the rates and on the dates set forth in the
Credit Agreement. The Borrower shall pay each Advance in full on the last day of
such Advance's applicable Interest Period and shall make such mandatory payments
as are required to be made under the terms of Section 2.05 of the Credit
Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Advance and the date and amount of each principal
payment hereunder.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND
NOT THE LAW OF CONFLICTS) OF THE STATE OF TEXAS BUT GIVING EFFECT TO THE FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.
This Note is one of the Notes issued pursuant to, and is entitled to
the benefits of, the Credit Agreement, dated as of August 1, 1997 (as amended,
restated or otherwise modified and in effect from time to time, the "Credit
Agreement"), among Borrower, the banks named therein and NationsBank of Texas,
N.A., Administrative Agent, to which Agreement reference is hereby made for a
statement of the terms and conditions under which this Note may be prepaid or
its maturity date accelerated. Capitalized terms used herein and not otherwise
defined herein are used with the meanings attributed to them in the Credit
Agreement.
GCI HOLDINGS, INC.
By:
Its:
<PAGE>
SCHEDULE OF ADVANCES AND PAYMENTS OF PRINCIPAL TO
NOTE OF
GCI HOLDINGS, INC
DATED
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Advance Period Paid Balance
---- ------- ------ ---- -------
88001
0100.0269
<PAGE>
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Dated
Reference is made to the Amended and Resated Credit Agreement dated as
of November , 1997, (as amended, restated, or otherwise modified from time to
time, the "Credit Agreement") among GCI Holdings, Inc., an Alaskan corporation
(the "Borrower"), NationsBank of Texas, N.A., as Administrative Agent (the
"Administrative Agent"), and the Lenders parties thereto. Terms defined in the
Credit Agreement are used herein with the same meaning.
("Assignor") and ("Assignee") agree as follows:
1. Assignor hereby sells and assigns to Assignee without recourse or
warranty, and Assignee hereby purchases and assumes from Assignor, a %
interest in and to all of Assignor's rights and obligations under the Credit
Agreement as of the Effective Date (as defined below), with respect to such
percentage interest in Assignor's portion of the Revolving Commitment
[Revolver/Term Commitment] as in effect on the Effective Date, the principal
amount of Advances owing to Assignor on the Effective Date, and the Notes held
by Assignor, subject to the terms and conditions of this Assignment and
Acceptance.
2. Assignor (a) represents and warrants that (i) as of the date hereof
the aggregate amount of its portion of the Revolving Commitment [Revolver/Term
Commitment] (without giving effect to assignments thereof which have not yet
become effective) is $ and, as of the date hereof, the outstanding
principal amount of the Advances owing to it (without giving effect to
assignments thereof which have not yet become effective) is $ , and (ii)
it is the legal and beneficial owner of the interest being assigned by it
hereunder; (b) makes no representation or warranty and assumes no responsibility
with respect to (i) any statements, warranties, or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of the Credit Agreement, the
Loan Papers, or any other instrument or document furnished pursuant thereto or
(ii) the financial condition of the Borrower or the performance or observance by
the Borrower of any of its obligations under the Credit Agreement, the Loan
Papers, or any other instrument or document furnished pursuant thereto; and (c)
attaches the Note referred to in Paragraph 1 above to exchange such Notes for
new Note as follows: .
3. Assignee (a) confirms that it has received a copy of the Credit
Agreement and the other Loan Papers, together with copies of the financial
statements referred to in Section 6.05 of the Credit Agreement 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; (b) agrees
that it will, independently and without reliance upon the Administrative Agent,
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 and the other Loan
Papers; (c) appoints and authorizes the Administrative Agent to
<PAGE>
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement, the other Loan Papers, and this Assignment and Acceptance as
are delegated to the Administrative Agent by the terms thereof and hereof,
together with such powers as are reasonably incidental thereto and hereto; (d)
agrees that it will perform in accordance with its terms all of the obligations
which by the terms of the Credit Agreement, the other Loan Papers, and this
Assignment and Acceptance are required to be performed by it as a Lender; (e)
specifies the addresses set forth in Schedule I attached hereto as its address
for the receipt of notices; and (f) if it is not a United States Person,
attaches the forms prescribed by the Internal Revenue Service certifying as to
Assignee's status for purposes of determining exception from United States
withholding taxes with respect to all payments to be made to Assignee under the
Credit Agreement, the other Loan Papers, and this Assignment and Acceptance or
such other documents as are necessary to indicate that all such payments are
subject to such taxes at a rate reduced by an applicable tax treaty.
4. The effective date for this Assignment and Acceptance shall be
(the "Effective Date").
5. Upon remittance of the $3,500 processing fee to the Administrative
Agent on behalf of the Administrative Agent and the Effective Date, (a) 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 (b) Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement.
6. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Texas and the United States of America.
Without excluding any other jurisdiction, Assignee agrees that the courts of
Texas will have jurisdiction over proceedings in connection herewith.
7. Assignee's Specified Percentage ("Specified Percentage") shall be %.
-2-
<PAGE>
8. This Assignment and Acceptance may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
[ASSIGNOR]
By:
Name:
Title:
[ASSIGNEE]
By:
Name:
Title:
-3-
<PAGE>
Accepted this day of
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent
By:
Name:
Title:
-4-
<PAGE>
Schedule I
ASSIGNEE'S ADDRESS
1. Address for the Loans and Receipt of Notices
2. Initial Eurodollar Lending Office
-5-
89718
0100.0269
<PAGE>
EXHIBIT C
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement (as amended, restated, or otherwise
modified from time to time, this "Security Agreement") is executed as of
November , 1997, by and between the undersigned Company ("Company") and
NationsBank of Texas, N.A., as Administrative Agent ("Administrative Agent") for
the lenders referred to below.
BACKGROUND
GCI Holdings, Inc. has entered into a $200,000,000 Amended and Restated
Credit Agreement dated as of November , 1997 and a $50,000,000 Amended and
Restated Credit Agreement dated as of November , 1997 (as amended, restated
or otherwise modified and in effect from time to time, collectively, the "Credit
Agreement"), which Credit Agreement is a restatement of those certain
$200,000,000 and $50,000,000 Credit Agreements, each dated as of August 1, 1997
among GCI Holdings, Inc., Administrative Agent and the lenders named therein
(collectively, the "Original Credit Agreement"). In connection with the Original
Credit Agreement, the Company has also entered into that certain Pledge and
Security Agreement, dated as of August 1, 1997, for the benefit of
Administrative Agent and the lenders named therein. The Credit Agreement
requires that the Obligations (as defined in the Credit Agreement) be secured by
the Collateral (as hereinafter defined) and Company desires to enter into this
Security Agreement to satisfy such terms. The board of directors of the Company
has determined that the Company will benefit, directly or indirectly, from the
Advances (as defined in the Credit Agreement) made under the Credit Agreement.
AGREEMENT
The parties hereto agree as follows:
1. DEFINITIONS.
As used in this Security Agreement:
"Accounts" means rights to payment for goods sold or leased or for
services rendered, whether or not earned by performance, together with all
security interests securing such rights to payment.
"Collateral" means all of the following property, wherever located, in
which Company now has or hereafter acquires any right or interest, and any and
all proceeds, insurance proceeds and products thereof, together with all cash,
bank accounts, special collateral accounts, books, records, customer lists,
credit files, computer files, programs, printouts and other computer records
related thereto:
<PAGE>
(a) Accounts (e) Pledged Stock
(b) Equipment (f) Stock Rights
(c) Fixtures (g) Inventory
(d) General Intangibles
"Default" means an event described in Section 5 whether or not any
requirement in connection with such event for the giving of notice, lapse of
time, or happening of any further condition has been satisfied.
"Event of Default" means an event described in Section 5.
"Equipment" means all equipment, machinery, furniture and goods used or
usable by Company in its business and all other tangible personal property
(other than Inventory and motor vehicles), and all accessions and additions
thereto, including, without limitation, the Fixtures.
"FCC" means the Federal Communications Commission or any other
regulatory body which succeeds to the functions of the Federal Communications
Commission.
"FCC License" means any community antenna relay service, broadcast
auxiliary license, earth station, business radio, microwave or special safety
radio service license issued by the FCC pursuant to the Communications Act of
1934, as amended.
"Fixtures" means all goods of Company, which have been attached to real
property in such a manner that their removal would cause damage to the realty
and which have therefore taken on the character of real property, including,
without limitation, all trade fixtures.
"General Intangibles" means all intangible personal property including,
without limitation, all contract rights, rights to receive payments of money,
chooses in action, judgments, tax refunds and tax refund claims, patents,
trademarks, trade names, copyrights, licenses (including, without limitation,
all FCC Licenses except to the extent that it is unlawful to grant a security
interest therein and that the grant of any such security interest therein would
result in a default thereunder or forfeiture thereof), franchises, partnership
interests, joint venture interests, leasehold interests in real or personal
property, rights to receive rentals of real or personal property and guarantee
claims.
"Government Claim" means any Receivable which constitutes a claim
against the federal government, any state government or any instrumentality or
agency of any of the foregoing.
"Inventory" means all inventory, raw materials, work in process,
finished goods, returned or repossessed goods, goods held for sale or lease,
goods furnished or to be furnished under contracts of service.
100/269/87988 -2-
<PAGE>
"Lien" means any security interest, mortgage, pledge, hypothecation,
lien, claim, charge, encumbrance, title retention agreement or lessor's interest
in, of or on the Collateral or any portion thereof.
"Person" means any corporation, natural person, firm, joint venture,
partnership, trust, unincorporated organization, enterprise, government or any
department or agency of any government.
"Pledged Stock" means all of the outstanding shares of capital stock of
each Person currently or hereafter owned by Company, other than, in the case of
GCI Holdings, Inc., GCI Transport Company.
"Receivables" means the Accounts and General Intangibles.
"Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"Security Agreement" means this Pledge and Security Agreement, as it
may be amended or modified and in effect from time to time.
"Stock Rights" means any securities, dividends or other distributions
and any other right or property which Company shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any or all of the Pledged Stock and any other property
substituted or exchanged therefor and any stock, any right to receive stock and
any right to receive earnings, in which Company now has or hereafter acquires
any right, issued by an issuer of the Pledged Stock.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. Capitalized terms used herein
and not otherwise defined herein shall have the meanings set forth in the Credit
Agreement.
2. GRANT OF SECURITY INTEREST.
Company hereby pledges, assigns and grants to Administrative Agent for
the benefit of the Lenders, equally and ratably in proportion to the total
Obligations owing at any time to the Lenders, a continuing Lien and security
interest in and right of setoff against the Collateral to secure the full and
complete payment and performance of the Obligations.
3. REPRESENTATIONS AND WARRANTIES.
Company represents and warrants to Administrative Agent that:
100/269/87988 -3-
<PAGE>
3.1. Existence and Standing. Company is duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
3.2. Authorization, Validity and Enforceability. The execution and
delivery by Company of this Security Agreement has been duly authorized by
proper corporate proceedings and this Security Agreement constitutes a legal,
valid and binding obligation of Company and creates a security interest which is
enforceable against Company in all now owned and hereafter acquired Collateral,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
3.3. Conflicting Laws and Contracts. Neither the execution and delivery
by Company of this Security Agreement, nor the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Company or Company's articles
or certificate of incorporation or by-laws, the provisions of any indenture,
instrument or agreement to which Company is a party or is subject, or by which
it or its property is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien pursuant to the
terms of any such indenture, instrument or agreement. No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, which has not heretofore been obtained or
made, is required to authorize, or is required in connection with the execution,
delivery and performance of, or the legality, validity, binding effect or
enforceability of this Security Agreement other than the filing, within the
period established by applicable law, of this Security Agreement with the FCC.
3.4. Principal Location. Company's mailing address for notices
hereunder, the location of its chief executive office and principal place of
business and of its books and records relating to the Receivables are all
disclosed in Exhibit A. Company has no other places of business except those set
forth in Exhibits A and B.
3.5. Property Locations. The Equipment and Fixtures are located solely
at the locations described in Exhibit B. All of said locations are owned by
Company except those listed in Part B of Exhibit B.
3.6. No Other Names. Company has not conducted business under any name
except the name in which it has executed this Security Agreement and the trade
names listed in Exhibit A.
3.7. No Default. No Default or Event of Default exists.
3.8. Receivables. The names of the obligors, amounts owing, due dates
and other information with respect to the Receivables are correctly stated in
all material respects in all
100/269/87988 -4-
<PAGE>
records of Company relating thereto and in all invoices and reports with respect
thereto furnished to Administrative Agent by Company from time to time.
3.9. Filing Requirements. None of the Collateral is of a type where
security interests or liens may be filed under any federal statute, except for
patents and copyrights held by Company described in Exhibit C. The legal
description and street address of the property on which any Fixtures are located
is set forth in Exhibit B, together with the names and addresses of the record
owner of each such property.
3.10. No Financing Statements. No financing statement describing all or
any portion of the Collateral which has not lapsed or been terminated naming
Company as debtor has been filed in any jurisdiction except (a) financing
statements naming Administrative Agent as secured party and (b) financing
statements described in Exhibit D.
3.11. Ownership of Pledged Stock. Company is the holder of record and
the sole beneficial owner of each share of the Pledged Stock and the Pledged
Stock constitutes 100% of the issued and outstanding stock of each Subsidiary
owned by the Company. Exhibit E sets forth a complete and accurate list of the
Pledged Stock and Stock Rights. No Person other than Company is the holder of
record or the beneficial owner of any Stock Rights. All of the shares of Pledged
Stock have been duly and validly issued, are fully paid and non-assessable and
are owned by Company free and clear of any Liens, except Permitted Liens,
options, warrants, puts, calls or other rights of third persons, and
restrictions, other than (a) the security interest granted to Administrative
Agent hereunder and (b) restrictions on transferability imposed by applicable
state and Federal Securities laws or which may arise as a result of Company
being subject to the Communications Act of 1934, as amended, and the rules and
regulations of the FCC thereunder.
4. COVENANTS.
From the date of this Security Agreement, and thereafter until this
Security Agreement is terminated:
4.1. General.
(a) Applications, Approvals and Consents. Company 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 Administrative Agent may
reasonably request in connection with the obtaining of any consent,
approval, registration, qualification, or authorization of the FCC or
of any other Person necessary or appropriate for the effective exercise
of any rights under this Security Agreement. Without limiting the
generality of the foregoing, Company agrees that in the event
Administrative Agent shall exercise its right to sell, transfer, or
otherwise dispose of or take any other action in connection with any of
the Pledged Stock or other Collateral pursuant to this Security
Agreement, Company shall execute and deliver all applications,
certificates, and other documents Administrative Agent may
100/269/87988 -5-
<PAGE>
reasonably request and shall otherwise promptly, fully, and diligently
cooperate with Administrative Agent, the Lenders and any other
necessary Persons, in making any application for the prior consent or
approval of the FCC or any other Person to the exercise by
Administrative Agent or the Lenders of any of such rights relating to
all or any part of the Pledged Stock or other Collateral. Furthermore,
because Company agrees that Administrative Agent's and the Lenders'
remedy at law for failure of Company to comply with the provisions of
this Section 4.1(a) would be inadequate and that such failure would not
be adequately compensable in damages, Company agrees that the covenants
of this Section 4.1(a) may be specifically enforced.
(b) Inspection. Company will permit Administrative Agent, by
its representatives and agents, to inspect the Collateral, to examine
and make copies of the records of Company relating thereto, and to
discuss the Collateral, and the records of Company with respect thereto
with, and to be advised as to the same by, Company's officers and
employees and, in the case of any Receivable, with any Person which is
or may be obligated thereon, all at such reasonable times and intervals
as Administrative Agent may determine, all at Company's expense.
(c) Taxes. Company will pay when due all taxes, assessments
and governmental charges and levies upon the Collateral, except those
which are being contested in good faith by appropriate proceedings.
(d) Records and Reports. Company will maintain complete and
accurate books and records with respect to the Collateral, and furnish
to Administrative Agent such reports relating to the Collateral as
Administrative Agent may from time to time request.
(e) Notice of Default. Company will give prompt notice in
writing to Administrative Agent of the occurrence of any Default or
Event of Default and of any other development, financial or otherwise,
which might materially adversely affect the Collateral or the ability
of Company to perform the Obligations hereunder and under the other
Loan Papers to which it is a party.
(f) Financing Statements and Other Actions. Company will
execute and deliver to Administrative Agent all financing statements
and other documents from time to time requested by Administrative Agent
in order to maintain a first perfected security interest in the
Collateral.
(g) Further Assurances. Company agrees to warrant and defend
title to and ownership of the Pledged Stock and Stock Rights and the
lien created by this Security Agreement against the claims of all
Persons and maintain and preserve such lien at all times during the
term of this Security Agreement. Company, at its expense, shall from
time to time execute and deliver to Administrative Agent all such other
assignments, certificates, supplemental documents, and financing
statements, and shall do all other acts
100/269/87988 -6-
<PAGE>
or things as Administrative Agent may reasonably request in order to
more fully create, evidence, perfect, continue, and preserve the
priority of the lien herein created. Without limiting the generality of
the foregoing, (i) Company shall, upon the request of Administrative
Agent or Majority Lenders at such time as (A) a Default or Event of
Default shall have occurred and be continuing or (B) the total
aggregate amount of all Government Claims shall exceed 7% of all
Receivables owing to Company, execute and deliver to Administrative
Agent, at Company's expense, such assignments of claims or similar
documents as shall be necessary or appropriate to continue or perfect
the priority of the lien herein created in such Government Claims.
(h) Disposition of Collateral. Company will not lease, sell or
otherwise dispose of the Collateral except as permitted by the terms of
the Credit Agreement.
(i) Liens. Company will not create, incur, or suffer to exist
any Lien except (i) the Lien created by this Security Agreement and
(ii) those Liens permitted by the terms of the Credit Agreement.
(j) Change in Location or Name. Without giving Administrative
Agent at least 30 days' prior written notice, Company will not (i) have
any Equipment or Fixtures or proceeds or products thereof (other than
Equipment, Fixtures or proceeds thereof disposed of as permitted by
Section 4.1(h)) at a location other than a location specified in
Exhibit B, (ii) maintain records relating to the Receivables at a
location other than at the location specified on Exhibit A, (iii)
maintain a place of business at a location other than a location
specified on Exhibits A and B, or (iv) change its name or its mailing
address or adopt a trade or assumed name.
(k) Other Financing Statements. Company will not sign or
authorize the signing on its behalf of any financing statement naming
it as debtor covering all or any portion of the Collateral, except
financing statements in respect of the Liens permitted by Section
4.1(i).
4.2. Receivables.
(a) Certain Agreements on Receivables. Company will not make
or agree to make any discount, credit, rebate or other reduction in the
original amount owing on a Receivable or accept in satisfaction of a
Receivable less than the original amount thereof, except that, prior to
the occurrence of an Event of Default, Company may reduce the amount of
Accounts in accordance with its present policies and in the ordinary
course of business.
(b) Collection of Receivables. Subject to the rights of
Administrative Agent under this Security Agreement and as a secured
party under applicable law, Company will collect and enforce, at
Company's sole expense, all amounts due or hereafter due to Company
under the Receivables.
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(c) Delivery of Invoices. Upon the request of Administrative
Agent after the occurrence and during the continuance of an Event of
Default, Company will deliver to Administrative Agent duplicate
invoices with respect to each Account bearing such language of
assignment as Administrative Agent shall specify.
(d) Disclosure of Counterclaims on Receivables. If any
discount, credit, agreement to make a rebate or to otherwise reduce
(collectively, a "Reduction") the amount owing on a Receivable exists
or if, to the knowledge of Company, any dispute, setoff, claim,
counterclaim or defense (collectively, a "Claim") exists or has been
asserted or threatened with respect to a Receivable, which Reduction or
Claim may, singly or in the aggregate, materially adversely affect the
value of the Collateral or the ability of Company to fulfill its
obligations under the Loan Papers, Company will disclose such fact to
Administrative Agent in writing in connection with the inspection by
Administrative Agent of any record of Company relating to such
Receivable and in connection with any invoice or report furnished by
Company to Administrative Agent relating to such Receivable.
4.3. Equipment and Fixtures.
(a) Maintenance of Goods. Company will do all things necessary
to maintain, preserve, protect and keep the Equipment and Fixtures in
good repair and working condition.
(b) Insurance. Company will (i) maintain fire and extended
coverage insurance on the Equipment and Fixtures containing a lender's
loss payable and breach of warranty clause in favor of Administrative
Agent and providing that said insurance will not be terminated except
after at least 30 days' written notice from the insurance company to
Administrative Agent, (ii) maintain such other insurance on the
Equipment and Fixtures for the benefit of Administrative Agent as
Administrative Agent shall from time to time reasonably request, and
(iii) furnish to Administrative Agent upon the request of
Administrative Agent from time to time the originals of all policies of
insurance on the Equipment and Fixtures and certificates with respect
to such insurance.
4.4. Pledged Stock.
(a) Delivery of Pledged Stock. Company will deliver to
Administrative Agent concurrently with the execution of this Security
Agreement the certificates representing the Pledged Stock which
constitutes certificated securities, endorsed in blank or accompanied
by appropriate instruments of transfer or assignments executed in
blank. If Company shall at any time acquire any additional shares of
the capital stock of any class of the Pledged Stock or any instrument
evidencing Stock Rights, whether such acquisition shall be by purchase,
exchange, reclassification, dividend, or otherwise, Company shall
forthwith (and without the necessity for any request or demand by
Administrative Agent or any Lender) deliver the certificates
representing such shares which constitutes
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certificated securities and such instrument or writing to
Administrative Agent, in the same manner as described in the
immediately preceding sentence.
(b) Changes in Capital Structure of Issuers. Company will not
permit or suffer the issuer of any of the Pledged Stock or Stock Rights
to dissolve, liquidate, retire any of its capital stock, authorize or
issue any stock or rights to acquire stock not outstanding in the name
of Company on the date hereof, reduce its capital or merge or
consolidate with any other Person other than Company or another
Wholly-Owned Subsidiary, and Company will not in any event vote any of
the Pledged Stock or any Stock Rights in favor of any of the foregoing.
(c) Stock Rights. Company will deliver to Administrative
Agent, promptly upon receipt, all Stock Rights (other than, unless and
until a Default shall have occurred and be continuing, ordinary cash
dividends received with respect to the Pledged Stock) and agrees that
such Stock Rights shall be held in trust by Company for Administrative
Agent until delivery thereof to Administrative Agent.
(d) Voting Rights. Upon the occurrence and during the
continuance of an Event of Default, Administrative Agent may, upon prior written
notice to the Company of the Administrative Agent's intention to do so, exercise
all voting rights and all other ownership or consensual rights of or with
respect to the Pledged Stock, but under no circumstances is Administrative Agent
obligated to exercise such rights. Until the occurrence and during the
continuance of an Event of Default and the giving of the aforesaid notice by
Administrative Agent, the Company shall retain all voting rights to the Pledged
Stock.
4.5. Government Claims. Company will, promptly upon a request therefor,
notify Administrative Agent of any Government Claim.
5. DEFAULT.
5.1. The occurrence of any one or more of the following events shall
constitute an Event of Default:
(a) Any material representation or warranty made by or on
behalf of Company to Administrative Agent or any Lender under or in
connection with this Security Agreement shall be materially false on
the date as of which made.
(b) The breach by Company of any of the terms or provisions of
Sections 4.1(a), (e), (f), (g), (h), (j) and (k), 4.4 or 7; or the
breach by Company of any of the terms or provisions of Sections 4.1(b)
and (i) of this Security Agreement which is not remedied within 10 days
after the giving of written notice by Administrative Agent.
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(c) The breach by Company (other than a breach which
constitutes a Default under Section 5.1(a) or (b)) of any of the terms
or provisions of this Security Agreement which is not remedied within
30 days after the giving of written notice by Administrative Agent.
(d) Any material portion of the Collateral shall be
transferred or otherwise disposed of in any manner not permitted by
Section 4.1(h) or shall be lost, damaged or destroyed and not covered
by insurance naming Administrative Agent as loss payee (subject to
reasonable deductibles).
(e) The occurrence of any "Event of Default" under, and as
defined in, the Credit Agreement.
5.2. Acceleration and Remedies. If any Event of Default occurs, then
upon the election of Majority Lenders (or, automatically in the case of the
occurrence of a Default under Section 8.01(g) of the Credit Agreement) the
Obligations shall automatically become immediately due and payable without
notice or demand of any kind. If any other Event of Default occurs, then, upon
the election of Majority Lenders, the Obligations shall immediately become due
and payable without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, and Administrative Agent may exercise any or
all of the rights and remedies provided (i) in this Security Agreement,
including, without limitation, Sections 5.2(a) and 5.2(b), (ii) to secured
parties under the Uniform Commercial Code as enacted in the State of Texas or
other applicable jurisdiction, as amended and (iii) any other rights afforded at
law in equity or otherwise.
(a) Exercise of Rights in Pledged Stock and Stock Rights. Upon
the occurrence and continuation of an Event of Default, subject to
compliance with applicable law, Administrative Agent, on behalf of
Lenders, shall have, subject to Section 8, the right (i) to consent in
advance to any vote proposed to be cast by Company with respect to any
merger, consolidation, liquidation or reorganization of any Subsidiary
and, in connection therewith, to join in and become a party to any plan
of recapitalization, reorganization, or readjustment (whether voluntary
or involuntary) as shall seem desirable to Administrative Agent, on
behalf of Lenders, to protect or further their interests in respect of
the Pledged Stock and Stock Rights, (ii) to deposit the Pledged Stock
and Stock Rights under any such plan, and (iii) to make any exchange,
substitution, cancellation, or surrender of the Pledged Stock and Stock
Rights required by any such plan and to take such action with respect
to the Pledged Stock and Stock Rights as may be required by any such
plan or for the accomplishment thereof and no such disposition,
exchange, substitution, cancellation, or surrender shall be deemed to
constitute a release of the Pledged Stock and Stock Rights from the
lien pursuant to this Security Agreement.
(b) Right of Sale of Pledged Stock and Stock Rights after
Default. Upon the occurrence and during the continuance of an Event of
Default, subject to compliance with
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applicable law, Administrative Agent, on behalf of Lenders, may,
subject to Section 8, sell, without recourse to judicial proceedings,
with the right to bid for and buy the Pledged Stock and Stock Rights or
any part thereof, upon ten days' notice (which notice is agreed to be
reasonable notice for the purposes hereof) to Company of the time and
place of sale, for cash, upon credit or for future delivery, at
Administrative Agent's option and in Administrative Agent's complete
discretion:
(i) At public sale, including a sale at any broker's
board or exchange;
(ii) At private sale in any commercially reasonable
manner which will not require the Pledged Stock and Stock
Rights, or any part thereof, to be registered in accordance
with the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder, or any other law or
regulation. Administrative Agent and Lenders are also hereby
authorized, but not obligated, to take such actions, give such
notices, obtain such consents, and do such other things as
they may deem required or appropriate in the event of sale or
disposition of any of the Pledged Stock and Stock Rights.
Company understands that Administrative Agent, on behalf of
Lenders, may in its discretion approach a restricted number of
potential purchasers and that a sale under such circumstances
may yield a lower price for the Pledged Stock and Stock
Rights, or any portion thereof, than would otherwise be
obtainable if the same were registered and sold in the open
market. Company agrees that in the event Administrative Agent
shall so sell the Pledged Stock and Stock Rights, or any
portion thereof, at such private sale or sales, Administrative
Agent and Lenders shall have the right to rely upon the advice
and opinion of any Person who regularly deals in or evaluates
stock of the type constituting the Pledged Stock and Stock
Rights as to the price obtainable in a commercially reasonable
manner upon such a private sale thereof.
In the case of any sale by Administrative Agent on behalf of Lenders of
the Pledged Stock and Stock Rights on credit or for future delivery, the Pledged
Stock and Stock Rights sold may be retained by Administrative Agent until the
selling price is paid by the purchaser, but neither Administrative Agent nor any
Lender shall incur liability in case of failure of the purchaser to take up and
pay for the Pledged Stock and Stock Rights so sold.
In connection with the sale of any of the Pledged Stock and Stock
Rights, Administrative Agent and Lenders are authorized, but not obligated, to
limit prospective purchasers to the extent deemed necessary or desirable by
Administrative Agent and Lenders to render such sale exempt from the
registration requirements of the Securities Act of 1933, as amended, and any
applicable state securities laws. In the event that, in the opinion of
Administrative Agent and Lenders, it is necessary or advisable to have such
securities registered under the provisions of such Act, or any similar law
relating to the registration of securities, Company agrees, at its own expense,
to (i) execute and deliver all such instruments and documents, and to do or
cause to be done such other acts and things, as may be necessary or, in the
opinion of Administrative Agent,
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advisable to register such securities under the provisions of such Act or any
applicable similar law relating to the registration of securities, and Company
will use its best efforts to cause the registration statement relating thereto
to become effective and to remain effective for such period as Administrative
Agent shall reasonably request, and to make all amendments thereof and/or to the
related prospectus which, in the opinion of Administrative Agent, are necessary
or desirable, all in conformity with the requirements of such Act and the rules
and regulations of the Securities and Exchange Commission applicable thereto;
(ii) use its best efforts to qualify such securities under state "blue sky" or
securities laws, all as reasonably requested by the Administrative Agent; and
(iii) at the request of the Administrative Agent, indemnify and hold harmless
Lenders, the Administrative Agent, any underwriters and accountants (and their
respective employees, officers, agents, attorneys) (collectively, the
"Indemnified Parties") from and against any loss, liability, claim, damage, and
expense (including, without limitation, reasonable fees of counsel incurred in
connection therewith) under such Act or otherwise, insofar as such loss,
liability, claim, damage, or expense arises out of or is based upon any untrue
statement or alleged untrue statement of any material fact furnished by Company
contained in any registration statement under which such securities were
registered under such Act or other securities laws, any preliminary prospectus
or final prospectus contained therein, or arise out of or are based upon any
omission or alleged omission by Company to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading, such indemnification to remain operative regardless of any
investigation made by or on behalf of any Indemnified Party; provided, however,
that Company shall not be liable in any case to the extent that any such loss,
liability, claim, damage, or expense arises out of or is based upon an untrue
statement or an omission made in reliance upon and in conformity with written
information furnished to Company by an Indemnified Party specifically for use in
such registration statement or preliminary or final prospectus and the providing
of such untrue statement or such omission resulted from the gross negligence or
willful misconduct of an Indemnified Party.
5.3. Company's Obligations Upon Default. Upon the request of the
Administrative Agent after the occurrence of an Event of Default and during the
continuance thereof, Company will:
(a) Assembly of Collateral. Assemble and make available to the
Administrative Agent the Collateral and all records relating thereto at any
place or places specified by the Administrative Agent.
(b) The Administrative Agent Access. Permit the Administrative
Agent, by the Administrative Agent's representatives and agents, to enter any
premises where all or any part of the Collateral, or the books and records
relating thereto, or both, are located, to take possession of all or any part of
the Collateral and to remove all or any part of the Collateral.
5.4. Governance. All rights and remedies available to Lenders with
respect to the grant, foreclosure and enforcement of the security interest and
lien granted hereby and with respect to any action permitted hereunder may be
exercised solely by the Administrative Agent acting with the concurrence of the
Majority Lenders provided, however, that no release of all
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or any portion of the Collateral from the lien created hereby shall be effective
without the consent of all Lenders.
6. WAIVERS, AMENDMENTS AND REMEDIES.
No delay or omission of the Administrative Agent to exercise any right
or remedy granted under this Security Agreement or under applicable law shall
impair such right or remedy or be construed to be a waiver of any Default or
Event of Default or an acquiescence therein, and any single or partial exercise
of any such right or remedy shall not preclude other or further exercise thereof
or the exercise of any other right or remedy, and no waiver, amendment or other
variation of the terms, conditions or provisions of this Security Agreement
whatsoever shall be valid unless in writing signed by the Administrative Agent,
and then only to the extent in such writing specifically set forth. All rights
and remedies contained in this Security Agreement or by law afforded shall be
cumulative and all shall be available to the Administrative Agent until the
Obligations have been finally paid in full.
7. PROCEEDS; COLLECTION OF RECEIVABLES.
7.1. Collection of Receivables. The Administrative Agent may at any
time after the occurrence and during the continuance of an Event of Default, by
giving Company written notice, elect to require that the Receivables be paid
directly to the Administrative Agent. In such event Company shall, and shall
permit the Administrative Agent to, promptly notify the account debtors or
obligors under the Receivables of the Administrative Agent's interest therein
and direct such account debtors or obligors to make payment of all amounts then
or thereafter due under the Receivables directly to the Administrative Agent.
Upon receipt of any such notice from Administrative Agent, Company shall
thereafter hold in trust for Administrative Agent all amounts and proceeds
received by it with respect to the Receivables and other Collateral and
immediately and at all times thereafter deliver to Administrative Agent all such
amounts and proceeds in the same form as so received, whether by cash, check,
draft or otherwise, with any necessary endorsements. Administrative Agent shall
hold and apply funds so received as provided by the terms of Sections 7.3 and
7.4.
7.2. Lockboxes. Upon request of Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, Company shall
execute and deliver to Administrative Agent Administrative Agent's standard form
of irrevocable lockbox agreement and notify the obligors on the Receivables to
make payments thereon to such lockbox.
7.3. Special Collateral Account. At any time after the occurrence and
during the continuance of an Event of Default, Administrative Agent may require
all cash proceeds of the Collateral (whether collected through a lockbox
pursuant to Section 7.2 or otherwise) to be deposited in a special non-interest
bearing cash collateral account with Administrative Agent and held there as
security for the Obligations. Company hereby authorizes Administrative Agent in
Administrative Agent's sole discretion to establish such a cash collateral
account and acknowledges that Company shall have no control whatsoever over said
account. Administrative
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Agent may, at its option, and will (to the extent permitted by applicable law),
at Company's written request, apply the collected balances in said cash
collateral account to the payment of the Obligations whether or not the
Obligations shall then be due, or hold the balances in said cash collateral
account as Collateral hereunder.
7.4. Application of Proceeds. Administrative Agent shall apply the
proceeds of the Collateral, including the proceeds of any sales or other
disposition of the Collateral, or any part thereof, under this Section 7 or
Section 5.2(b), in the following order unless a court of competent jurisdiction
shall otherwise direct:
(a) First, to payment of all reasonable costs and expenses of
Administrative Agent incurred in connection with the collection and
enforcement of the Obligations or of the security interest granted to
Administrative Agent for the benefit of Lenders pursuant to this
Security Agreement;
(b) Second, to payment of that portion of the Obligations
constituting accrued and unpaid interest and fees, pro rata amongst
Lenders in accordance with the proportion which the accrued interest
and fees constituting Obligations owing to each such Lender bears to
the aggregate amount of accrued interest and fees constituting
Obligations owing to all of Lenders;
(c) Third, to payment of the principal of the Obligations and
net termination amounts payable in respect of the Obligations under
Interest Hedge Agreements owing to Lenders or any Lender, pro rata
among Lenders in accordance with the proportion which the principal
amount of Obligations and net termination amounts payable in respect of
the Obligations under Interest Hedge Agreements owing to each such
Lender bears to the aggregate principal amount of Obligations and net
termination amounts payable in respect of Obligations under Interest
Hedge Agreements owing to all of Lenders; and
(d) Fourth, the balance, if any, after all of the Obligations
have been satisfied, shall be remitted to Company.
8. CONTROL; LIMITATION OF RIGHTS.
8.1. License. Notwithstanding anything herein to the contrary, this
Security Agreement, the other Loan Papers and the transactions contemplated
hereby and thereby (i) do not and will not constitute, create, or have the
effect of constituting or creating, directly or indirectly, actual or practical
ownership of any Subsidiary by Administrative Agent or Lenders, or control,
affirmative or negative, direct or indirect, by Administrative Agent or Lenders
over the management or any other aspect of the operation of any Subsidiary,
which ownership and control remain exclusively and at all times in such
Subsidiary and Company, and (ii) do not and will not constitute the transfer,
assignment, or disposition in any manner, voluntarily or involuntarily, directly
or indirectly, of any license at any time issued by the FCC to any
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Subsidiary ("License"), or the transfer of control of any such Subsidiary within
the meaning of Section 310(d) of the Communications Act of 1934, as amended.
8.2. Communications Act. Notwithstanding any other provision of this
Security Agreement, any foreclosure on, sale, transfer or other disposition of,
or the exercise of any right to vote or consent with respect to, any of the
Collateral as provided herein or any other action taken or proposed to be taken
by Administrative Agent and Lenders hereunder which would affect the
operational, voting, or other control of any Subsidiary, shall be pursuant to
Section 310(d) of the Communications Act of 1934, as amended, to any applicable
state laws and to the applicable rules and regulations thereunder and, if and to
the extent required thereby, subject to the prior approval of the FCC.
8.3. Assignment. Subject to Section 8.5, if an Event of Default shall
have occurred and be continuing, Company shall take any action which
Administrative Agent, on behalf of Lenders, may reasonably request in order to
transfer and assign to Administrative Agent, or to such one or more third
parties as Administrative Agent may designate, or to a combination of the
foregoing, each License. To enforce the provisions of this Section 8,
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 an involuntary transfer of control of each such License for the
purpose of seeking a bona fide purchaser to whom control will ultimately be
transferred. Company hereby agrees to authorize such an involuntary transfer of
control upon the request of the receiver so appointed and, if Company shall
refuse to authorize the transfer, its approval may be required by the court.
Upon the occurrence and continuance of an Event of Default, Company shall
further use its best efforts to assist in obtaining approval of the FCC, if
required, for any action or transactions contemplated by this Security Agreement
including, without limitation, the preparation, execution and filing with the
FCC of the assignor's or transferor's portion of any application or applications
for consent to the assignment of any License or transfer of control necessary or
appropriate under the FCC's rules and regulations for approval of the transfer
or assignment of any portion of the Collateral, together with any License.
8.4. Specific Enforcement. Company acknowledges that the assignment or
transfer of each License is integral to Administrative Agent's and Lenders'
realization of the value of the Collateral, that there is no adequate remedy at
law for failure by Company to comply with the provisions of this Section 8 and
that such failure would not be adequately compensable in damages, and therefore
agrees that the agreements contained in this Section 8 may be specifically
enforced.
8.5. Prior Approval. Notwithstanding anything to the contrary contained
in this Security Agreement or in any other Loan Paper, neither Administrative
Agent nor any Lender shall, without first obtaining the approval of the FCC,
take any action pursuant to this Security Agreement which would constitute or
result in any assignment of a License or any change of control of any Subsidiary
if such assignment or change in control would require, under then
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existing law (including the written rules and regulations promulgated by the
FCC), the prior approval of the FCC.
9. GENERAL PROVISIONS.
9.1. Notice of Disposition of Collateral. Company hereby waives notice
of the time and place of any public sale or the time after which any private
sale or other disposition of all or any part of the Collateral. To the extent
such notice may not be waived under applicable law, any notice made shall be
deemed reasonable if sent to Company, addressed as set forth in Section 11, at
least ten days prior to any such public sale or the time after which any such
private sale or other disposition may be made.
9.2. Compromises and Collection of Collateral. Company and
Administrative Agent recognize that setoffs, counterclaims, defenses and other
claims may be asserted by obligors with respect to certain of the Receivables,
that certain of the Receivables may be or become uncollectible in whole or in
part and that the expense and probability of success in litigating a disputed
Receivable may exceed the amount that reasonably may be expected to be recovered
with respect to a Receivable. In view of the foregoing, Company agrees that
Administrative Agent may at any time and from time to time, if an Event of
Default has occurred and is continuing, compromise with the obligor on any
Receivable, accept in full payment of any Receivable such amount as
Administrative Agent in its sole discretion shall determine or abandon any
Receivable, and any such action by Administrative Agent shall be commercially
reasonable so long as Administrative Agent acts in good faith based on
information known to it at the time it takes any such action.
9.3. Administrative Agent Performance of Company Obligations. Without
having any obligation to do so, Administrative Agent may perform or pay any
obligation in this Security Agreement which Company has agreed to perform or pay
but which it has failed to so perform or pay in a timely manner after a request
therefor from Administrative Agent and Company shall reimburse Administrative
Agent for any amounts paid by Administrative Agent pursuant to this Section 9.3.
Company's obligation to reimburse Administrative Agent pursuant to the preceding
sentence shall be part of the Obligation and is payable on demand.
9.4. Authorization for Administrative Agent to Take Certain Action.
Company irrevocably authorizes Administrative Agent at any time and from time to
time in the sole discretion of Administrative Agent and appoints Administrative
Agent as its attorney in fact to act on behalf of Company (a) to execute on
behalf of Company as debtor and to file financing statements necessary or
desirable in Administrative Agent's sole discretion to perfect and to maintain
the perfection and priority of Administrative Agent's security interest in the
Collateral, (b) in accordance with the terms of this Security Agreement, to
indorse and collect any cash proceeds of the Collateral, (c) to file a carbon,
photographic or other reproduction of this Security Agreement or any financing
statement with respect to the Collateral as a financing statement in such
offices as Administrative Agent in its sole discretion deems necessary or
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desirable to perfect and to maintain the perfection and priority of
Administrative Agent's security interest in the Collateral, (d) after the
occurrence of an Event of Default and during the continuance thereof, to enforce
payment of the Receivables in the name of Administrative Agent or Company, and
(e) to apply the proceeds of any Collateral received by Administrative Agent to
the Obligations as provided in Section 7. The power of attorney provided in this
Section 9.4, and each other appointment by Company of Administrative Agent or
any Lender as Company's attorney-in-fact, is coupled with an interest and is
irrevocable prior to final payment in full of the Obligation.
9.5. Specific Performance of Certain Covenants. Company acknowledges
and agrees that a breach of any of the covenants contained herein will cause
irreparable injury to Administrative Agent, that Administrative Agent has no
adequate remedy at law in respect of such breaches and therefore agrees, without
limiting the right of Administrative Agent to seek and obtain specific
performance of other obligations of Company contained in this Security
Agreement, that the covenants of Company contained in the Sections referred to
in this Section 9.5 shall be specifically enforceable against Company.
9.6. Use and Possession of Certain Premises. Upon the occurrence of an
Event of Default and during the continuance thereof, Administrative Agent shall
be entitled to occupy and use any premises owned or leased by Company where any
of the Collateral or any records relating to the Collateral are located until
the Obligations are paid or the Collateral is removed therefrom, whichever first
occurs, without any obligation to pay Company for such use and occupancy.
9.7. Dispositions Not Authorized. Company is not authorized to sell or
otherwise dispose of the Collateral except as set forth in Section 4.1(h) and
notwithstanding any course of dealing between Company and Administrative Agent
or other conduct of Administrative Agent, no authorization to sell or otherwise
dispose of the Collateral (except as set forth in Section 4.1(h)) shall be
binding upon Administrative Agent unless such authorization is in writing signed
by Administrative Agent.
9.8. Care of Collateral. Administrative Agent shall not have any duty
to assure that all certificates representing the Pledged Stock have been
delivered to it or any obligation whatsoever with respect to the care, custody
or protection of any certificates which may be delivered to it except only to
exercise the same care in physically safekeeping such certificates as it would
exercise in the ordinary course of its own business. Neither Administrative
Agent nor any Lender shall be obligated to preserve or protect any rights with
respect to the Pledged Stock or to receive or give any notice with respect
thereto whether or not Administrative Agent or any Lender is deemed to have
knowledge of such matters.
9.9. Definition of Certain Terms. Terms defined in the Article 9 of
Texas Business and Commerce Code which are not otherwise defined in this
Security Agreement are used in this Security Agreement as defined in the Article
9 of Texas Business and Commerce Code as in effect on the date hereof.
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9.10. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of Company,
Administrative Agent and Lenders and their respective successors and assigns,
except that Company shall not have the right to assign its rights or obligations
under this Security Agreement or any interest herein, without the prior written
consent of Administrative Agent.
9.11. Survival of Representations. All representations and warranties
of Company contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement.
9.12. Taxes and Expenses. Any taxes (including income taxes) payable or
ruled payable by federal or state authority in respect of this Security
Agreement shall be paid by Company, together with interest and penalties, if
any. Company shall reimburse Administrative Agent for any and all out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of Administrative Agent) paid or incurred
by Administrative Agent in connection with the preparation, execution, delivery,
administration, collection and enforcement of this Security Agreement and in the
audit, analysis, administration, collection, preservation or sale of the
Collateral (including the expenses and charges associated with any periodic or
special audit of the Collateral). The obligations of Company under this Section
9.12 shall survive termination of this Security Agreement.
9.13. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
9.14. Term. This Security Agreement and the Lien arising hereunder (a)
shall become effective as of the date hereof upon the execution hereof, and (b)
shall continue in force (and shall be reinstated if at any time all or any
portion of any amounts in respect of Obligations received by Administrative
Agent or any Lender are required to be returned or paid over to any Person) for
so long as any Obligations, or commitment to extend any Obligations, remain
outstanding.
9.15. PRIOR AGREEMENTS. THIS AGREEMENT AND THE OTHER LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
9.16. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS WITHOUT APPLYING THE LAW OF
100/269/87988 -18-
<PAGE>
CONFLICTS OF TEXAS OR ANY OTHER JURISDICTION. COMPANY HEREBY CONSENTS TO THE
JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN DALLAS COUNTY,
TEXAS AND WAIVES ANY OBJECTION WHICH COMPANY MAY HAVE BASED ON IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND
CONSENTS THAT ALL SERVICE OF PROCESS MAY BE MADE BY MAIL OR MESSENGER DIRECTED
TO IT AT THE ADDRESS SET FORTH IN EXHIBIT A. AT THE OPTION OF Administrative
Agent, COMPANY WAIVES, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY, AND WAIVES
ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER,
BE REQUIRED OF ADMINISTRATIVE AGENT. NOTHING CONTAINED IN THIS SECTION 9.16
SHALL AFFECT THE RIGHT OF ADMINISTRATIVE AGENT TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ADMINISTRATIVE AGENT OR
LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST COMPANY OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION.
9.17. Distribution of Reports. Company authorizes Administrative Agent,
as Administrative Agent may elect in its sole discretion, to discuss with and
furnish to any other Person or entity having an interest in the Obligations
(whether as a guarantor, pledgor of collateral, participant, purchaser or
otherwise) all financial statements, audit reports and other information
pertaining to Company and the Subsidiaries if any, whether such information was
provided by Company or prepared or obtained by Administrative Agent.
9.18. Indemnity. Company hereby agrees to assume liability for, and
does hereby agree to indemnify and keep harmless Administrative Agent and each
Lender, and their respective successors, assigns, agents and employees, from and
against any and all liabilities, damages, penalties, suits, costs, and expenses
of any kind and nature, imposed on, incurred by or asserted against
Administrative Agent and each Lender, or their respective successors, assigns,
agents and employees, in any way relating to or arising out of this Security
Agreement, or the manufacture, purchase, acceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of any Collateral (including, without limitation, latent and other
defects, whether or not discoverable by Administrative Agent, any Lender or
Company, and any claim for patent, trademark or copyright infringement and any
acts or omissions which result from such Person's negligence).
9.19. Releases. Any cash dividends received by Company in accordance
with the terms of Section 4.4(c) shall be deemed released from the lien of this
Security Agreement and shall be held by Company (or any transferee of Company)
free and clear of the lien created by this Security Agreement. Upon the sale,
lease or other disposition of assets permitted by the terms of Section 4.1(h),
Administrative Agent and Lenders shall, at Company's request and expense execute
such partial releases as Company may reasonably request, in form and upon terms
acceptable to Administrative Agent and Lenders in all respects. Upon termination
of this Security Agreement in accordance with the provisions of Section 9.14,
Administrative Agent and Lenders
100/269/87988 -19-
<PAGE>
shall, at Company's request and expense and subject to the foregoing sentence,
execute such releases as Company may reasonably request, in form and upon terms
acceptable to Administrative Agent and Lenders in all respects, and shall
deliver all certificates representing the Pledged Stock and other property held
in respect thereof hereunder which is in Administrative Agent's possession,
together with all stock powers or other instruments of transfer reasonably
required to effect delivery to Company.
9.20. Waivers. Except to the extent expressly otherwise provided herein
or in any Loan Paper, Company waives, to the extent permitted by applicable law,
(a) any right to require either Administrative Agent or any Lender to proceed
against any other Person, to exhaust their rights in any other collateral, or to
pursue any other right which either Administrative Agent or any Lender may have,
(b) with respect to the Obligations, presentment and demand for payment,
protest, notice of protest and non-payment, and notice of the intention to
accelerate, and (c) all rights of marshalling in respect of any and all of the
Collateral.
9.21. Counterparts. This Security Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Security Agreement by
signing any such counterpart. This Security Agreement shall be effective when it
has been executed by Company and Administrative Agent.
10. Administrative Agent.
NationsBank of Texas, N.A. has been appointed Administrative Agent of
Lenders hereunder pursuant to Article IX of the Credit Agreement, and
Administrative Agent has agreed to act (and any successor Administrative Agent
shall act) as such hereunder only on the express conditions contained in such
Article IX. Any successor Administrative Agent appointed pursuant to Article IX
of the Credit Agreement shall be entitled to all the rights, interests and
benefits of Administrative Agent hereunder.
11. NOTICES.
11.1. Sending Notices. Any notice required or permitted to be given
under this Security Agreement may be, and shall be deemed, given and sent as
provided in the Credit Agreement.
11.2. Change in Address for Notices. Each of Company and Administrative
Agent or any Lender may change the address for service of notice upon it by a
notice in writing to the other.
12. SETOFF.
In addition to, and without limitation of, any rights of Administrative
Agent and Lenders under applicable law, if Company becomes insolvent, however
evidenced, or any Event of Default occurs and is continuing, any indebtedness
from Administrative Agent or Lenders to Company (including, without limitation,
funds of Company on deposit with Administrative Agent
100/269/87988 -20-
<PAGE>
or Lenders which have not yet been collected or which are not yet available in
accordance with Administrative Agent's or Lenders' availability schedules from
time to time in effect) may be offset and applied toward the payment of the
Obligations, for the ratable benefit of Lenders whether or not the Obligations,
or any part hereof, shall then be due.
This Security Agreement is an amendment and restatement of that certain
Pledge and Security Agreement dated as of August 1, 1997 executed by the Company
for the benefit of Administrative Agent and the lenders named therein (the
"Original Security Agreement"), and as such, except for the Lien created
thereby, amends and supersedes the Original Security Agreement in its entirety.
===============================================================================
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
===============================================================================
100/269/87988 -21-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Security
Agreement as of the date first above written.
By:
Its:
100/269/87988 -22-
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain
Credit Agreement (as amended, restated, or otherwise modified from time to time,
the "Agreement") dated as of November , 1997, among GCI Holdings, Inc.
(the "Borrower"), the banks party thereto and NationsBank of Texas, N.A. as
Administrative Agent for the Lenders. Unless otherwise defined herein, the terms
used in this Compliance Certificate have the meanings ascribed thereto in the
Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Parent, the Borrower and the Restricted Subsidiaries
during the accounting period covered by the attached financial statements, dated
as of ;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, 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, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain covenants of the
Agreement, all of which data and computations are true, complete and correct.
Listed below are the exceptions, if any, to paragraph 3 describing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
<PAGE>
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this day of , 19 .
GCI HOLDINGS, INC.
By:
Its:
0100.0269\89091 -2-
<PAGE>
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of with
Provisions of Section 7.01 of
the Agreement
1. Section 7.01(a) - Total Leverage Ratio
A. Total Debt (for the fiscal quarter ended
,19 ) of GCII, the Borrower, and
Restricted Subsidiaries
(i) Debt for Borrowed Money $
(ii) Debt having a final maturity of
more than one year $
(iii) Capitalized Lease obligations $
(iv) reimbursement obligations
relating to Letters of Credit
(without duplication) $
(v) Contingent Liabilities
(without duplication) $
(vi) Withdrawal Liabilities $
(vii) Debt, if any, associated with
Hedge Agreements $
(viii) payments due under Non-Compete
Agreements $
(ix) payments due for the deferred
purchase price of property and
services that are less than 90
days old $
0100.0269\89091 3
<PAGE>
(x) Total Debt $
(i) plus (ii) plus (iii) plus (iv) plus
(v) plus (vi) plus (vii) plus (viii) plus
(ix) $
B. Annualized Operating Cash Flow (for the
two fiscal quarters ended , 19 )
of the Borrower, and the Restricted
Subsidiaries
(i) consolidated net income (loss) $
(ii) depreciation expense $
(iii) amortization expense and other
non-cash charges reducing income $
(iv) Net Total Interest Expense $
(v) cash income tax expense $
(vi) deferred income Taxes $
(vii) (i) plus the sum of (ii) plus
(iii) plus (iv) plus (v) plus (vi) $
(viii) Annualized Operating Cash Flow
(Product of two times item (vii)) $
C. The ratio of A to B :1.0
<TABLE>
<CAPTION>
<S> <C>
D. Permitted ratio From Closing Date-3/31/987.00 to 1.00
4/1/98 - 3/31/99 6.50 to 1.00
4/1/99 - 12/31/99 6.00 to 1.00
1/1/00 and thereafter 5.50 to 1.00
</TABLE>
2. Section 7.01(b) - Senior Leverage Ratio
A. Senior Debt (for the fiscal quarter ended
, 19 ) of the Borrower and
Restricted Subsidiaries
0100.0269\89091 4
<PAGE>
(i) Debt for Borrowed Money $
(ii) Debt having a final maturity of
more than one year $
(iii) Capitalized Lease obligations $
(iv) reimbursement obligations
relating to Letters of Credit
(without duplication) $
(v) Contingent Liabilities
(without duplication) $
(vi) Withdrawal Liabilities $
(vii) Debt, if any, associated with
Interest Hedge Agreements $
(viii) payments due under Non-Complete
Agreements $
(ix) payments due for the deferred
purchase price of property and
services that are less than 90
days old $
(x) Senior Debt (i) plus (ii) plus
(iii) plus (iv) plus (v) plus
(vi) plus (vii) plus (viii) plus
(ix) $
B. Annualized Operating Cash Flow (for the
two fiscal quarters ended , 19 )
of the Borrower and the Restricted
Subsidiaries (see 1.B. viii above)
$
C. The ratio of A to B :1.00
0100.0269\89091 5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
D. Permitted ratio Closing Date - 3/31/99 3.50 to 1.00
4/1/99 - 12/31/99 3.00 to 1.00
1/1/00 - 12/31/00 2.50 to 1.00
1/1/01 and thereafter 2.00 to 1.00
</TABLE>
3. Section 7.01(c) - Interest Coverage Ratio (1)
A. Annualized Operating Cash Flow (for
quarters ended , 19 ) of the
Borrower and the Restricted Subsidiaries
(see 1.B. viii above) $
B. Total Interest Expense (for the four
fiscal quarters ended , 19 ) of
GCII, the Borrower, and the Restricted
Subsidiaries
(i) consolidated interest expense $
(ii) amortization of Debt discounts $
(iii) commitment fees $
(iv) agency fees related to Funded
Debt (excluding one-time facility
fees) $
(v) fees or expenses with respect to
letters of credit $
(vi) fees, if any, associated with
interest hedge agreements
$
(vii) preferred stock distributions for
GCII, the Borrower and Restricted
Subsidiaries $
- ----------------------------
1 For the first three fiscal quarters after the Closing Date only,
Annualized Operating Cash Flow and Total Interest Expense shall be determined by
annualizing the relevant financial information of GCII, the Borrower and
Restricted Subsidiaries from the Closing Date to the date of determination
0100.0269\89091 6
<PAGE>
(viii) capitalized interest $
(ix) Total Interest Expense (i) plus
(ii) plus (iii) plus (iv) plus
(v) plus (vi) plus (vii) plus
(viii) $
C. The ratio of A to B :1.00
<TABLE>
<CAPTION>
<S> <C>
D. Permitted ratio: Closing Date-12/31/98 1.50 to 1.00
1/1/99 and thereafter 2.00 to 1.00
</TABLE>
4. Section 7.01(d) Pro Forma Debt Service Coverage
Ratio
A. Annualized Operating Cash Flow (see 1.B.
viii above) $
B. Pro Forma Debt Service for GCII, the
Borrower and its Restricted Subsidiaries $
(i) Cash Total Interest Expense for
the immediately succeeding four
full quarters $
(ii) Scheduled repayments of principal
of Total Debt for the immediately
succeeding four full quarters $
C. The ratio of A to B :1.00
D. Permitted ratio 1.25 to 1.00
5. Section 7.01(e) Fixed Charges Coverage Ratio
A. Annualized Operating Cash Flow (see 1.B.
viii above) $
0100.0269\89091 7
<PAGE>
B. Fixed Charges for the most recently
completed four fiscal quarters
(i) cash Total Interest Expense $
(ii) scheduled repayments of principal
of Total Debt $
(iii) cash Taxes paid by GCII, the
Borrower and Restricted
Subsidiaries $
(iv) cash capital contributions loans
or advances to Unrestricted
Subsidiaries $
(v) Capital Expenditures $
(iv) Fixed Charges (i) plus (ii) plus
(iii) plus (iv) plus (v) $
C. The ratio of A to B :1.00
<TABLE>
<CAPTION>
<S> <C>
D. Permitted ratio 1/1/00 - 3/31/03 1.00 to 1.00
4/1/93 and thereafter 1.05 to 1.00
</TABLE>
0100.0269\89091 8
<PAGE>
6. Section 7.01(f) Capital Expenditures incurred by
the Borrower and the Restricted Subsidiaries
A. Actual $
<TABLE>
<CAPTION>
<S> <C>
B. Permitted Maximum Closing through 1997 $55,000,000
1998 $90,000,000
1999 $65,000,000
2000 and thereafter N/A
</TABLE>
0100.0269\89091 9
<PAGE>
EXHIBIT E
CONVERSION OR CONTINUANCE NOTICE
[Date]
NationsBank of Texas, National Association,
Administrative Agent
NationsBank Plaza
901 Main Street
64th Floor
Dallas, Texas 75202
Re: GCI Holdings, Inc.
Ladies and Gentlemen:
The undersigned refers to the Amended and Restated Credit
Agreement dated as of November , 1997 (the "Credit Agreement", the terms defined
therein being used herein as therein defined) between GCI Holdings, Inc. and
NationsBank of Texas, National Association, as Administrative Agent for
NationsBank of Texas, National Association and each lender, and each Lender, and
hereby gives you notice pursuant to Section 2.09(b) of the Credit Agreement that
the undersigned hereby requests Advance[s] under the Credit
Agreement, and in that connection sets forth below the information relating to
[each] such Advance (a "Proposed Borrowing") as required by Section 2.09(b) of
the Credit Agreement:
Proposed Borrowing:
(i) The principal amount of existing LIBOR Advance to be [converted]
[continued] is $ .
(ii) The Business Day of such Proposed Borrowing is , 199 .
(iii) The Type of Advance[s] comprising such Proposed Borrowing is
[are] LIBOR Advance [to the extent of an aggregate amount of
$ ].
[(iv) The initial Interest Period for each LIBOR Advance made as part
of such Proposed Borrowing is months.]
<PAGE>
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing, before and after giving effect thereto and to the application of the
proceeds therefrom:
(A) the conditions precedent specified in Sections 4.01 and
4.02 of the Credit Agreement have been satisfied with respect to the
Proposed Borrowing and will remain satisfied on the date of such
Proposed Borrowing;
(B) the representations and warranties specified in Article V
of the Credit Agreement are true and correct in all material respects
as though made on and as of such date; and
(C) no event has occurred and is continuing or would result
from such Proposed Borrowing, which constitutes a Default or Event of
Default.
Very truly yours,
GCI HOLDINGS, INC.
By:
, President
50443
0100.0269
-2-
<PAGE>
EXHIBIT F
BORROWING NOTICE
[Date]
NationsBank of Texas, N.A.,
Administrative Agent
NationsBank Plaza
901 Main Street
64th Floor
Dallas, Texas 75202
Re: GCI Holdings, Inc.
Ladies and Gentlemen:
The undersigned refers to the Amended and Restated Credit
Agreement dated as of November , 1997 (the "Credit Agreement", the terms defined
therein being used herein as therein defined) among GCI Holdings, Inc. and
NationsBank of Texas, N.A., as Administrative Agent for NationsBank of Texas,
N.A. and each lender, and each Lender, and hereby gives you notice pursuant to
Section 2.02(a) of the Credit Agreement that the undersigned hereby requests
Borrowing[s] under the Credit Agreement, and in that connection
sets forth below the information relating to [each] such Advance (a "Proposed
Borrowing") as required by Section 2.02(a) of the Credit Agreement:
Proposed Borrowing:
(i) The Business Day of such Proposed Borrowing is , 19 .
(ii) The Type of Advance[s] comprising such Proposed Borrowing is [are]
[Base Advance [to the extent of an aggregate amount of $ ]] [LIBOR
Advance [to the extent of an aggregate amount of
$ ]].
(iii) The aggregate amount of such Proposed Borrowing is $ .
(iv) The initial Interest Period for each LIBOR Advance made as part of
such Proposed Borrowing is .
<PAGE>
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing, before and after giving effect thereto and to the application of the
proceeds therefrom:
(A) the conditions precedent specified in Sections 4.01 and
4.02 of the Credit Agreement have been satisfied with respect to the
Proposed Borrowing and will remain satisfied on the date of such
Proposed Borrowing;
(B) the representations and warranties specified in Article V
of the Credit Agreement are true and correct in all material respects
as though made on and as of such date; and
(C) the Advances are permitted to be incurred pursuant to the
terms of the Indenture providing for the Senior Notes; and
(D) no event has occurred and is continuing or would result
from such Proposed Borrowing, which constitutes a Default or Event of
Default.
Very truly yours,
GCI HOLDINGS, INC.
By:
, President
50448
0100.0269
-2-
<PAGE>
EXHIBIT G
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
, 1997 AMONG ALASKA UNITED FIBER SYSTEM PARTNERSHIP, GCI HOLDINGS,
INC., GCI TRANSPORT CO., INC., AND CREDIT LYONNAIS NEW YORK BRANCH AS
ADMINISTRATIVE AGENT
INTERCOMPANY PROMISSORY NOTE
FOR VALUE RECEIVED, ALASKA UNITED FIBER SYSTEM PARTNERSHIP, an Alaskan
general partnership (hereinafter called "Maker"), promises to pay on [demand (if
this Note is executed after the Final Maturity Date)\the Final Maturity Date (if
this Note is executed before the Final Maturity Date] (as that term is defined
in the Credit and Security Agreement dated as of November 14, 1997 between
Maker, 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, restated, or otherwise modified from time to
time, the "AUSP Credit Agreement")) or such earlier date as all of the
Obligations (as defined in the AUSP Credit Agreement) become due and payable
(whether by acceleration, prepayment in full, scheduled reduction or otherwise)
(the "Maturity Date"), to the order of GCI HOLDINGS, INC., an Alaskan
corporation ("Payee"), at its principal offices at Anchorage, Alaska in lawful
money of the United States of America, the principal sum of
DOLLARS AND NO/100 ($ ) or such lesser sum as shall be due and payable
from time to time hereunder. The unpaid principal balance of this Note, from
time to time outstanding, shall bear interest from the date hereof until payment
in full at the per annum rate equal to the per annum interest rate then in
effect with respect to Payee under its credit facilities with NationsBank of
Texas, N.A., as Administrative Agent, Credit Lyonnais New York Branch, as
Documentation Agent, and TD Securities (USA), Inc., as Syndication Agent, and
other lenders party to the Amended and Restated Credit Agreements, dated as of
November 14, 1997 (as amended, restated or otherwise modified from time to time,
the "Holdings Credit Agreement"), but shall never exceed the maximum rate of
interest permitted from time to time by applicable law, including Tex. Civ.
Stat. Ann. Article 5069--1.04 (and as the same may be incorporated by reference
in other Texas statutes) (hereinafter designated "Maximum Rate"). Accrued
interest hereunder shall be due and payable together with the outstanding
principal amount of this Note on the Maturity Date.
All past due principal shall bear interest at the Maximum Rate until
paid. Interest paid or agreed to be paid shall not exceed the Maximum Rate, and
in any contingency whatsoever, if Payee shall receive anything of value paid or
agreed to be paid to exceed the Maximum Rate, the excessive interest shall be
applied to the reduction of the unpaid principal balance of this Note or
refunded to Maker. Maker acknowledges that Payee has no intent to charge
usurious rates of interest and that any such charge is accidental and a bona
fide error.
<PAGE>
Each Maker, surety, endorser and guarantor of this Note hereby (i)
waives all notices, presentment, protest and diligence in collection, including
but not limited to demand and presentation for payment, notice of nonpayment and
notice of acceleration of maturity, protest and motion of protest, and the
diligence of bringing suit against any party hereto; (ii) consents without
further notice to any renewals, extensions, deferrals or partial payments,
either before or after maturity; and (iii) agrees to pay jointly and severally
to the holder of this Note reasonable attorney's fees and collection fees, plus
interest on such amount at the rate then and as it thereafter may be applicable
to the principal of this Note, if this Note is placed in the hands of an
attorney for collection, or if it is collected through bankruptcy or other
judicial proceedings.
Upon the occurrence of the following events, Payee or a holder of this
Note may declare the entirety of this Note, principal and interest, immediately
due and payable without demand, notice of default, notice of acceleration or
notice of intent to accelerate the maturity hereof:
(a) Failure of Maker to pay principal or interest when due under this
Note; or
(b) The occurrence of an Event of Default (as defined in the AUSP
Credit Agreement); or
(c) The creation or incurrence by Maker of any Debt or Liens (other
than Permitted Liens (as defined in the AUSP Credit Agreement)) other than
pursuant to the Project Agreements and AUSP Financing Agreements (as those terms
are defined in the Holdings Credit Agreement) and secured purchase money
indebtedness in an aggregate amount outstanding at any one time of $2,000,000;
or
(d) the making by Maker of any Investment, Restricted Payment (as those
terms are defined in the AUSP Credit Agreement) or other investment, loan,
advance, distribution or dividend, other than (i) payments of interest,
principal and fees of the Debt incurred under the Project Agreements in
accordance with the terms of the Project Agreements, (ii) payments on $2,000,000
of purchase money indebtedness permitted by (c) above, (iii) up to $10,000,000
distributed over the term of the Project Agreements to Maker in accordance with
the terms of the Project Agreements and (iv) distributions from 50% of excess
cash flow in accordance with the terms of the Project Agreements.
Payee's failure to declare the entirety of the Note due, pursuant to
this paragraph, shall not constitute a waiver of Payee's right to do so at any
other time.
This Note shall be construed under and governed by the laws of the
State of Texas and any applicable federal law.
Maker agrees that during the full term hereof the maximum lawful
interest rate for this Note determined under Texas law shall be the indicated
rate ceiling as specified in Article 5069-1.04 of V.A.T.S. Further, to the
extent that any other lawful rate ceiling exceeds the rate
-2-
<PAGE>
ceiling so determined, then the higher rate ceiling shall apply. Chapter 15 of
the Texas Credit Code does not apply to this Note.
THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
Dated this day of , .
ALASKA UNITED FIBER SYSTEM
PARTNERSHIP
By: GCI Fiber Co., Inc., a
General Partner
By:
Its:
Pay to the order of NationsBank of Texas, N.A., as Administrative Agent.
GCI HOLDINGS, INC.
By:
Its:
98800
0100.0269
-3-
<PAGE>
EXHIBIT H
GCI HOLDINGS, INC.
Officer's Certificate
The undersigned hereby certifies that he is the duly appointed
of GCI Holdings, Inc., an Alaskan corporation ("Company"),
and that he is authorized to execute this Certificate on behalf of the Company
in connection with the $200,000,000 and $50,000,000 Amended and Restated Credit
Agreements of even date herewith, between the Company, NationsBank of Texas,
N.A., individually and as Administrative Agent, and the lenders named therein
(collectively, the "Credit Agreement"). Terms are used herein as defined in the
Credit Agreement. The undersigned further certifies as follows:
1. Attached hereto as Exhibit A are true, accurate and complete copies
of the resolutions duly adopted by the Company's Board of Directors approving
and authorizing that certain credit facility among Alaska United Fiber System
Partnership, Credit Lyonnais New York Branch as Administrative Agent,
NationsBank of Texas, N.A. as Syndication Agent and TD Securities (USA), Inc. as
Syndication Agent, dated , 1997 (the "AUSP Financing").
2. Attached hereto as Exhibit B are true, accurate and complete copies
of the agreements set forth below in effect as of the closing date of the AUSP
Financing:
a. Credit and Security Agreement dated as of , 1997,
among Alaska United Fiber System Partnership as Borrower, and
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.
b. Completion Guaranty dated as of , 1997, by GCI
Holdings, Inc., as Guarantor in favor of Credit Lyonnais New
York Branch as Administrative Agent for the Lenders referred
to therein.
c. Subordination Agreement dated as of , 1997, among
Alaska United Fiber System Partnership, GCI Holdings, Inc.,
GCI Transport Co., Inc., and Credit Lyonnais New York Branch
as Administrative Agent for the Lenders referred to therein.
d. Operation and Maintenance Contract dated as of ,
1997, between Alaska United Fiber System Partnership and GCI
Communication Corp.
<PAGE>
e. Depositary Agreement dated as of , 1997, between
Alaska United Fiber System Partnership and Credit Lyonnais New
York Branch as Administrative Agent for the Lenders referred
to therein.
f. Form of Intercompany Notes by Alaska United Fiber System
Partnership to the GCI Holdings, Inc.
g. Lease Agreement dated as of , 1997, between GCI
Communication Corp. as Lessee, and Alaska United Fiber System
Partnership as Lessor.
h. Lease Guaranty Agreement dated as of , 1997,
among GCI Holdings, Inc., Alaska United Fiber System
Partnership and Credit Lyonnais New York Branch as
Administrative Agent.
i. Operating Keep Well Agreement dated as of , 1997,
among GCI Holdings, Inc., Alaska United Fiber System
Partnership, and Credit Lyonnais New York Branch as
Administrative Agent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
the day of , 1997.
GCI HOLDINGS, INC.
By:
Name:
Title:
99542
100.269
-2-
<PAGE>
EXHIBIT 21.1
<TABLE>
SUBSIDIARIES OF THE REGISTRANT
<CAPTION>
JURISDICTION
OF NAME UNDER WHICH SUBSIDIARY
ENTITY ORGANIZATION DOES BUSINESS
- --------------------------------------- -------------- ---------------------------------------
<S> <C> <C>
Alaska United Fiber System Partnership Alaska Alaska United Fiber System Partnership,
Alaska United Fiber System
General Communication, Inc. Alaska General Communication, Inc., GCI
Fiber Hold Co., Inc. Alaska Fiber Hold Co., Inc., Fiber Hold
Company
GCI Communication Corp. Alaska GCC, GCI Communication Corp.
GCI Communication Services, Inc. Alaska GCI Communication Services
GCI, Inc. Alaska GCI, GCI, Inc.
GCI Leasing Co., Inc. Alaska GCI Leasing, GCI Leasing Co.
GCI Cable, Inc. Alaska GCI Cable, GCI Cable, Inc.
GCI Cable/Juneau, Inc. Alaska GCI Cable/Juneau, GCI
Cable/Juneau, Inc.
GCI Cable/Fairbanks, Inc. Alaska GCI Cable/Fairbanks,
GCI Cable/Fairbanks, Inc.
GCI Cable Holdings, Inc. Alaska GCI Cable Holdings,
GCI Cable Holdings, Inc.
GCI Fiber Co., Inc. Alaska GCI Fiber Co., Inc., GCI Fiber Company
GCI Holdings, Inc. Alaska GCI Holdings, Inc.
GCI Satellite Co., Inc. Alaska GCI Satellite Co., Inc., GCI Satellite
Company
GCI Transport Co., Inc. Alaska GCI Transport Co., Inc., GCI Transport Company
</TABLE>
<PAGE>
EXHIBIT 23.1
The Board of Directors
General Communication, Inc.:
We consent to incorporation by reference in the registration statements on
Form S-8 (No. 3360728, No. 33-60222) of General Communication, Inc. of our
report dated March 4, 1998, relating to the consolidated balance sheets of
General Communication, Inc. and subsidiaries as of December 31, 1997 and
1996, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1997, and the related schedule, which report appears in the
December 31, 1997, annual report on Form 10-K of General Communication, Inc.
/s/
KPMG Peat Marwick LLP
Anchorage, AK
March 25, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 AND
THE CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000808461
<NAME> GENERAL COMMUNICATION, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 42,454
<SECURITIES> 0
<RECEIVABLES> 35,000
<ALLOWANCES> 1,070
<INVENTORY> 2,164
<CURRENT-ASSETS> 44,234
<PP&E> 242,912
<DEPRECIATION> 58,406
<TOTAL-ASSETS> 545,302
<CURRENT-LIABILITIES> 49,246
<BONDS> 249,440
0
0
<COMMON> 172,715
<OTHER-SE> 31,724
<TOTAL-LIABILITY-AND-EQUITY> 545,302
<SALES> 0
<TOTAL-REVENUES> 223,809
<CGS> 0
<TOTAL-COSTS> 111,077
<OTHER-EXPENSES> 94,325
<LOSS-PROVISION> 3,025
<INTEREST-EXPENSE> 17,617
<INCOME-PRETAX> (2,235)
<INCOME-TAX> (573)
<INCOME-CONTINUING> (1,662)
<DISCONTINUED> 0
<EXTRAORDINARY> (521)
<CHANGES> 0
<NET-INCOME> (2,183)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 AND
THE CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000808461
<NAME> GENERAL COMMUNICATION, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 13,349
<SECURITIES> 0
<RECEIVABLES> 27,953
<ALLOWANCES> 597
<INVENTORY> 1,589
<CURRENT-ASSETS> 47,102
<PP&E> 178,248
<DEPRECIATION> 41,497
<TOTAL-ASSETS> 447,335
<CURRENT-LIABILITIES> 69,877
<BONDS> 191,948
0
0
<COMMON> 115,843
<OTHER-SE> 33,711
<TOTAL-LIABILITY-AND-EQUITY> 447,335
<SALES> 0
<TOTAL-REVENUES> 164,894
<CGS> 0
<TOTAL-COSTS> 92,664
<OTHER-EXPENSES> 23,421
<LOSS-PROVISION> 1,736
<INTEREST-EXPENSE> 4,199
<INCOME-PRETAX> 12,690
<INCOME-TAX> 5,228
<INCOME-CONTINUING> 7,462
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,462
<EPS-PRIMARY> .28
<EPS-DILUTED> .27
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF OPERATAIONS FOR THE YEAR ENDED DECEMBER 30, 1995 AND
THE CONSOLIDATED BALANCE SHEET AS OF DECEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000808461
<NAME> GENERAL COMMUNICATION, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 4,017
<SECURITIES> 0
<RECEIVABLES> 21,737
<ALLOWANCES> 295
<INVENTORY> 991
<CURRENT-ASSETS> 29,182
<PP&E> 84,243
<DEPRECIATION> 33,789
<TOTAL-ASSETS> 84,765
<CURRENT-LIABILITIES> 24,070
<BONDS> 9,056
0
0
<COMMON> 16,955
<OTHER-SE> 26,061
<TOTAL-LIABILITY-AND-EQUITY> 84,765
<SALES> 0
<TOTAL-REVENUES> 129,279
<CGS> 0
<TOTAL-COSTS> 70,221
<OTHER-EXPENSES> 19,738
<LOSS-PROVISION> 1,459
<INTEREST-EXPENSE> 1,146
<INCOME-PRETAX> 12,601
<INCOME-TAX> 5,099
<INCOME-CONTINUING> 7,502
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,502
<EPS-PRIMARY> .32
<EPS-DILUTED> .31
</TABLE>
EXHIBIT 99.19
BYLAWS
OF
GCI TRANSPORT CO., INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE I OFFICES 1
ARTICLE II SHAREHOLDERS' MEETINGS 1
Section 1. Annual Meeting 1
Section 2. Special Meetings 1
Section 3. Place of Meeting 2
Section 4. Notice of Meeting 2
Section 5. Closing of Transfer Books or Fixing of Record Date 2
Section 6. Voting Lists 3
Section 7. Quorum 3
Section 8. Proxies 3
Section 9. Voting of Shares. 3
Section 10. Voting of Shares by Certain Holders 4
Section 11. Informal Action by Shareholders 4
ARTICLE III BOARD OF DIRECTORS 4
Section 1. General Powers 4
Section 2. Number, Tenure and Qualifications 4
Section 3. Regular Meetings 5
Section 4. Special Meetings 5
Section 5. Quorum 5
Section 6. Manner of Acting 5
Section 7. Attendance at Meetings 5
Section 8. Vacancies 6
Section 9. Compensation 6
Section 10. Presumption of Assent 6
Section 11. Removal of Directors 6
Section 12. Resignation 6
Section 13. Voting by Interested Directors 7
Section 14. Action by Directors Without a Meeting 7
ARTICLE IV OFFICERS 7
Section 1. Number 7
Section 2. Election and Term of Office. 7
Section 3. Removal 7
Section 4. Vacancies 7
Section 5. President 8
Section 6. Vice Presidents 8
Section 7. The Secretary 8
-i-
<PAGE>
Section 8. The Treasurer 9
Section 9. Assistant Secretaries and Assistant Treasurers 9
Section 10. Salaries 9
ARTICLE V LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS,
OFFICERS AND AGENTS OF THE CORPORATION 9
Section 1. Limitation of Liability 9
Section 2. Right of Indemnification 10
Section 3. Rights Cumulative 10
ARTICLE VI CONTRACTS, LOANS, CHECKS, DEPOSITS AND COMPENSATION 11
Section 1. Contracts 11
Section 2. Loans 11
Section 3. Checks, Drafts, etc 11
Section 4. Deposits 11
ARTICLE VII CERTIFICATES FOR SHARES AND THEIR TRANSFER 11
Section 1. Certificates for Shares 11
Section 2. Transfer of Shares. 12
ARTICLE VIII TAXABLE YEAR AND ACCOUNTING PERIOD 12
ARTICLE IX DIVIDENDS 12
ARTICLE X CORPORATE SEAL 12
ARTICLE XI WAIVER OF NOTICE 13
ARTICLE XII AMENDMENTS 13
ARTICLE XIII EXECUTIVE COMMITTEE 13
Section 1. Appointment 13
Section 2. Authority 13
Section 3. Tenure and Qualifications 13
Section 4. Meetings 13
Section 5. Quorum 14
Section 6. Action Without a Meeting 14
Section 7. Vacancies 14
Section 8. Resignations and Removal 14
Section 9. Procedure 14
ARTICLE XIV CONDUCT OF MEETINGS 15
-ii-
<PAGE>
ARTICLE I
OFFICES
The principal office of GCI Transport Co., Inc. (the "Corporation")
shall be located in Anchorage, Alaska. The Corporation may have such other
offices, either within or without the State of Alaska, as the Board of Directors
may designate or as the business of the Corporation may require from time to
time.
The registered office of the Corporation required by the Alaska
Corporations Code to be maintained in the State of Alaska may be, but need not
be, identical with the principal office in the State of Alaska, and the address
of the registered office may be changed from time to time by the Board of
Directors.
ARTICLE II
SHAREHOLDERS' MEETINGS
Section 1. Annual Meeting. The annual meeting of the Shareholders shall
be held in the month of June of each year, for the purpose of electing Directors
and for the transaction of such other business as may come before the meeting.
If the election of Directors shall not be held on the day designated for the
annual meeting of the Shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
Shareholders as soon thereafter as it conveniently may be held.
(a) Meetings of the Shareholders shall be presided over by the
President or by any officer or Director or person selected at any time by the
President to act as Chairman, or if he is not present or available or makes no
selection, then by the Chairman of the Board of Directors. If neither the
President nor the Chairman of the Board of Directors is present and no selection
has been made, a Chairman should be chosen by a majority in interest of the
Shareholders present in person or by proxy at the meeting and entitled to vote
thereat.
(b) The Secretary of the meeting shall be the Secretary of the
Corporation or an Assistant Secretary, or if none of such officers is present,
any person appointed by the Chairman of the meeting.
Section 2. Special Meetings. Special meetings of the Shareholders for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or by the Board of Directors, and shall be called by the
President at the request of the holders of not less than one-tenth of all the
outstanding shares of the corporation entitled to vote at the meeting.
-1-
<PAGE>
Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Alaska, as the place of meeting
called by the Board of Directors. A waiver of notice signed by all Shareholders
entitled to vote at a meeting may designate any place, either within or without
the State of Alaska, as the place for the holding of such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the Corporation in the State of Alaska.
Section 4. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than twenty (20)
nor more than sixty (60) days before the date of the meeting, either personally
or by mail, by or at the direction of the President, or the Secretary, or the
persons calling the meeting, to each Shareholder of record entitled to vote at
such meeting. If mailed, the notice is considered delivered when deposited with
postage prepaid in the United States mail addressed to the shareholder at the
address of the shareholder as it appears on the stock transfer book of the
corporation, or, if the shareholder has filed with the secretary of the
corporation a written request that notice be mailed to a different address,
addressed to the shareholder at the new address.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining Shareholders entitled to notice of or to vote at any
meeting of Shareholders or any adjournment thereof, or Shareholders entitled to
receive payment of a dividend, or in order to make a determination of
Shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, seventy (70) days. If the stock
transfer books shall be closed for the purpose of determining Shareholders
entitled to notice of or to vote at a meeting of Shareholders, such books shall
be closed for at least twenty (20) days immediately preceding such meeting.
Instead of closing the stock transfer books, the Board of Directors may
fix a date as the record date for any such determination of Shareholders. This
record date shall be not more than sixty (60) days, and in case of a meeting of
Shareholders not less than twenty (20) days, prior to the date on which the
particular action requiring such determination of Shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of Shareholders entitled to notice of or to vote at a meeting of
Shareholders, or Shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring the dividend is adopted is, as
the case may be, the record date for the determination of Shareholders. When a
determination of Shareholders entitled to vote at any meeting of Shareholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof except where the determination has been made through the
closing of the stock transfer books and the stated period of closing has
expired.
-2-
<PAGE>
Section 6. Voting Lists. At least twenty (20) days before each meeting
of the Shareholders, the officer or agent having charge of the stock transfer
books for shares of the Corporation shall make a complete list of the
Shareholders entitled to vote at each meeting of Shareholders or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each. The list shall be kept on file at the registered office of
the corporation and is subject to inspection by a Shareholder or the agent or
attorney of a Shareholder at any time during the usual business hours for a
period of twenty (20) days before the meeting. Such list shall be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any Shareholder during the whole time of the meeting.
Section 7. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of Shareholders. If a quorum is present, the
affirmative vote of the majority of shares represented at the meeting and
entitled to vote on the subject matter is the act of the Shareholders unless the
vote of a greater number or voting by class is required by the articles of
incorporation, bylaws or the Alaska Corporations Code.
The Shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken other than
adjournment is approved by at least a majority of shares required to constitute
a quorum.
If less than a majority of the outstanding shares are represented at a
meeting, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 8. Proxies. At all meetings of Shareholders, a Shareholder may
vote in person or by proxy executed in writing by the Shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. A proxy continues in full
force and effect until revoked by the person executing it, however, no proxy
shall be valid after eleven (11) months from the date of its execution, unless
such proxy qualifies as an irrevocable proxy as defined within AS 10.06.418(e).
Section 9. Voting of Shares. An outstanding share, regardless of class,
is entitled to one vote on each matter submitted to a vote at a meeting of
Shareholders, except as may be otherwise provided in the articles of
incorporation.
-3-
<PAGE>
Section 10. Voting of Shares by Certain Holders.
(a) Shares standing in the name of another corporation may be voted by
such officer, agent or proxy as the bylaws of such corporation may prescribe,
or, in the absence of such provisions, as the board of directors of such
corporation may determine.
(b) Shares held by an administrator, executor, guardian or conservator
may be voted by such person, either in person or by proxy, without a transfer of
such shares into his name. Shares standing in the name of a trustee may be voted
by the trustee, either in person or by proxy, but no trustee shall be entitled
to vote shares held by him without a transfer of such shares into his name.
(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer into his name if authority to transfer the
shares is contained in an appropriate order of the court by which such receiver
was appointed.
(d) A Shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
(e) Neither treasury shares, nor shares of its own stock held by the
Corporation in a fiduciary capacity, nor shares held by another corporation if a
majority of the shares entitled to vote for the election of directors of the
other corporation is held by the Corporation, may be voted at a meeting or
counted in determining the total number of outstanding shares.
Section 11. Informal Action by Shareholders. Any action required to be
taken at a meeting of the Shareholders, or any other action which may be taken
at a meeting of the Shareholders, may be taken without a meeting by written
consent, identical in content setting out the action taken, signed by all of the
Shareholders entitled to vote on the action.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of Directors
of the Corporation shall be not less than one (1) nor more than nine (9); unless
the Corporation, now or at any time in the future, has three (3) or more
Shareholders in which case the Corporation shall have not fewer than three (3)
directors; or unless the Corporation has
-4-
<PAGE>
only two (2) Shareholders, in which case the Corporation shall have at least two
(2) directors. Each Director shall hold office until the next annual meeting of
Shareholders and until his successor shall have been elected and qualified.
Directors need not be residents of the State of Alaska or Shareholders of the
Corporation. The initial number of Directors shall be four (4).
Section 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, the annual meeting of the Shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of Alaska, for the holding of additional regular meetings
without other notice than such resolution.
Section 4. Special Meetings.
(a) Special meetings of the Board of Directors may be called by the
Chairman of the Board, the President, a Vice President, the Secretary, or a
Director or such person authorized to call the meeting may fix the time and
place for holding the meeting, either inside or outside the State of Alaska.
(b) Notice of any special meeting shall be given at least ten (10) days
prior thereto by written notice delivered personally or mailed to each Director
at his business address, or at least seventy-two (72) hours before the meeting
by electronic means, personal messenger, or comparable person-to-person
communication. If mailed by certified mail, such notice shall be deemed to be
delivered when deposited in the United States mail properly addressed, with
postage thereon prepaid. Any Director may waive notice of any meeting. The
attendance of a Director at a meeting shall constitute a waiver of notice of
such meeting, except where a Director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
Section 5. Quorum. A majority of the presently qualified Directors
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than such majority is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice; provided, further, that where there are only two
Directors, both shall be necessary to constitute a quorum.
Section 6. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 7. Attendance at Meetings. The Board of Directors may conduct a
meeting of the Board by communicating simultaneously with each other by means of
-5-
<PAGE>
conference telephones or similar communications equipment and any action taken
at such meeting shall not be invalidated by reason of the fact that the
respective members of the Board were not assembled together in one place at the
time of taking such action or conducting such business.
Section 8. Vacancies. Where a vacancy created by the removal of a
Director is pursuant to AS 10.06.460 or 10.06.463, such vacancies occurring on
the Board may be filled only by a vote of the Shareholders. Any other vacancy
occurring in the Board of Directors may be filled by the affirmative vote of a
majority of the remaining Directors though less than a quorum of the Board of
Directors. A Director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. Any directorship to be filled by
reason of an increase in the number of Directors may be filled by election by
the Board of Directors for a term of office continuing only until the next
election of Directors by the Shareholders. In no case may a vacancy continue
longer than six (6) months or until the next annual meeting, whichever occurs
first.
Section 9. Compensation. By resolution of the Board of Directors, each
Director may be paid his or her expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid a stated salary as Director or a
fixed sum for attendance at each meeting of the Board of Directors or both. No
such payment shall preclude any Director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 10. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his/her dissent shall be entered in the minutes of the meeting or unless he/she
shall file a written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the Secretary of the Corporation immediately after
the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
Section 11. Removal of Directors. Any Director may be removed with or
without cause, at any time, by a vote of the Shareholders holding a majority of
the shares then issued and outstanding, at any special meeting called for that
purpose, or at the annual meeting. Except as otherwise prescribed by statute, a
Director may be removed for cause by a vote of the majority of the entire board.
Prior to vote by the Board on the question of removal of any Director for cause,
such Director must be given written notice of the reasons for such action.
Section 12. Resignation. A Director may resign effective upon giving
written notice to the Chairman of the Board, the President, the Secretary, or
the Board of Directors of the Corporation, unless the notice specifies a later
time for the effectiveness of the
-6-
<PAGE>
resignation. If the resignation is effective at a future time, a successor may
be elected to take office when the resignation becomes effective.
Section 13. Voting by Interested Directors. No Director may vote upon
any matter in which he has an adverse or personal interest, unless such interest
has been fully disclosed to the Board of Directors and the Board of Directors,
by majority of vote without the interested Director voting, permits such
interested Director to vote.
Section 14. Action by Directors Without a Meeting. Action required or
permitted to be taken by the Board or a committee designated by the Board may be
taken without a meeting on written consents, identical in consent, setting out
the action taken and signed by all the members of the Board or the committee.
The written consents shall be filed with the minutes. The consents have the same
effect as an unanimous vote.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a
President, one or more Vice Presidents (the number thereof to be determined by
the Board of Directors), a Secretary, and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and assistant officers as
may be deemed necessary may be elected or appointed by the Board of Directors.
Any two (2) or more offices may be held by the same person, except the offices
of President and Secretary.
Section 2. Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the Shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
convenient. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified, or until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided.
Section 3. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
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Section 5. President. The President shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. He shall, when present, preside at all meetings of
the Shareholders and of the Board of Directors. He may sign, with the Secretary
or any other proper officer of the Corporation authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors, or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President may sign, with the Secretary
or an Assistant Secretary, certificates for shares of the Corporation; and shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
Section 7. The Secretary. The Secretary shall:
(a) keep the minutes of the proceedings of the Shareholders and of the
Board of Directors in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the
Corporation and see that the seal of the Corporation is affixed to all documents
the execution of which on behalf of the Corporation under its seal is duly
authorized;
(d) keep a register of the post office address of each Shareholder
which shall be furnished to the Secretary by such Shareholder;
(e) sign with the President, or a Vice President, certificates for
shares of the Corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors;
(f) have general charge of the stock transfer books of the Corporation;
and
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(g) in general perform all duties incident to the office of the
Secretary and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
Section 8. The Treasurer . The Treasurer shall:
(a) have charge and custody of and be responsible for all funds and
securities of the Corporation;
(b) receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the name
of the Corporation in such banks, trust companies or other depositories as shall
be selected; and
(c) in general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Directors
shall determine.
Section 9. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries, when authorized by the Board of Directors, may sign with
the President or a Vice President certificates for shares of the Corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall, if required by the Board of
Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President of the Board of Directors.
Section 10. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.
ARTICLE V
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS, OFFICERS AND AGENTS
OF THE CORPORATION
Section 1. Limitation of Liability. No person shall be liable to the
Corporation for any loss or damage suffered by it on account of any action taken
or omitted to be taken in good faith, as a Director, member of a Committee or
Officer of the Corporation, if such person exercised or used the same degree of
care and skill, including reasonable inquiry, as a prudent person would have
exercised or used under the circumstances in the conduct
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of his/her own affairs. Without limitation on the foregoing, any such person
shall be deemed to have exercised or used such degree of care and skill if such
action were taken or omitted in reliance in good faith upon advice of counsel
for the Corporation, or the books of account or other records of the
Corporation, or reports or information made or furnished to the Corporation by
any officials, accountants, engineers, agents or employees of the Corporation,
or by an independent Certified Public Accountant or auditor, engineer,
appraiser, or other expert employed by the Corporation and selected with
reasonable care by the Board of Directors, by any such committee or by an
authorized officer of the Corporation.
Section 2. Right of Indemnification. Each Director, member of a
Committee, Officer, Agent and Employee of the Corporation, and each former
director, member of a committee, officer, agent and employee of the Corporation,
and any person who may have served at its request as a director, officer, agent
or employee of another Corporation in which it is a creditor, and his heirs and
personal representative shall be indemnified by the Corporation against all loss
or damage suffered and all costs and expenses imposed upon or incurred by him in
connection with or arising out of any action, suit or proceedings (whether civil
or criminal in nature) in which he may be involved, to which he may be a party
by reason of being or having been (or his personal representative or estate
having been) such director, member of a committee, officer, agent or employee,
except in relation to matters as to which he shall be adjudged in such action,
suit or proceeding to be liable for negligence or misconduct in performance of
his duty; provided, however, that the Corporation shall be given reasonable
notice of the institution of such action, suit or proceedings; and in the event
the same shall be settled in whole or in part, the Corporation or its counsel
shall consent to such settlement if it be determined by its counsel or found by
a majority of the Board of Directors then in office and not involved in such
controversy, that such settlement is to the best interest of the Corporation and
that the person to be indemnified was not guilty of negligence or misconduct in
performance of duty.
Indemnification (unless ordered by the court) shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnification is proper in the circumstances because the director,
officer, employee or committee member has met the applicable standard of
conduct. This determination shall be made (a) by the Board of Directors, by a
majority vote of a quorum consisting of directors who were not parties to the
action or proceeding; or (b) by independent legal counsel in a written opinion,
either (i) if such a quorum is not obtainable, or (ii) if a quorum of
disinterested directors so requests such a written opinion; or (c) by approval
of the outstanding shares.
Section 3. Rights Cumulative. The provisions of this Article V shall
not be deemed exclusive or in limitation of, but shall be cumulative of and in
addition to any other limitations of liability, indemnities, and rights to which
such Director, member of a Committee, Officer, Agent or other person may be
entitled under Alaska Statute, these
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Bylaws or pursuant to any agreement or resolution of the Board of Directors or
of the Shareholders, or otherwise.
ARTICLE VI
CONTRACTS, LOANS, CHECKS, DEPOSITS AND COMPENSATION
Section 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary and sealed with the
corporate seal or a facsimile thereof. The signatures of such officers upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation itself or one of
its employees. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person or entity to whom the
shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled; except that in case
of a lost, destroyed or mutilated certificate a new one may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
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All shares issued by the Corporation shall contain a legend on the
certificates stating substantially the following:
The shares represented by this certificate have not
been registered under any federal or state securities
law. They have been acquired for investment and may
not be transferred without an effective registration
statement pursuant to such laws or an opinion of
counsel satisfactory to the corporation that
registration is not required.
Section 2. Transfer of Shares. Transfer of any shares of the
Corporation shall be done in compliance with all federal, state and local
securities laws, and any transfer of in violation thereof is void. Transfer of
shares of the Corporation shall be made only on the stock transfer books of the
Corporation by the holder of record thereof or by its legal representative, who
shall furnish proper evidence of authority to transfer filed with the Secretary
of the Corporation, and on surrender for cancellation of the certificate for
such shares. The entity or person in whose name shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes.
ARTICLE VIII
TAXABLE YEAR AND ACCOUNTING PERIOD
The taxable year and accounting period of the Corporation shall begin
on January 1 and end on December 31, unless changed by resolution of the Board
of Directors.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in cash, property, or
its own shares, except when the Corporation is insolvent, or when the dividend
would render the Corporation insolvent, or when the dividend is contrary to
restrictions contained in the Articles of Incorporation.
ARTICLE X
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the state of incorporation and the words "Corporate Seal."
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ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given to any Shareholder or
Director of the Corporation under the provisions of these Bylaws or under the
provisions of the Articles of Incorporation or under the provisions of the
Alaska Corporation Code, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XII
AMENDMENTS
Except as may be provided in the Articles, these Bylaws may be altered,
amended or repealed and new Bylaws may be adopted by the Board of Directors at
any regular or special meeting of the Board of Directors.
ARTICLE XIII
EXECUTIVE COMMITTEE
Section 1. Appointment. The Board of Directors, by resolution adopted
by a majority of the full board, may designate two (2) or more of its members to
constitute an Executive Committee. The designation of such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
Section 2. Authority. Except as limited by the Articles or AS
10.06.468, the Executive Committee, when the Board of Directors is not in
session, shall have and may exercise all of the authority of the Board of
Directors except to the extent, if any, that such authority shall be limited by
the resolution appointing the Executive Committee.
Section 3. Tenure and Qualifications. Each member of the Executive
Committee shall hold office until the next regular annual meeting of the Board
of Directors following his designation and until his successor is designated as
a member of the Executive Committee and is elected and qualified.
Section 4. Meetings. Regular meetings of the Executive Committee may be
held without notice at such times and places as the Executive Committee may fix
from time to time by resolution. Special meetings of the Executive Committee may
be called by any member thereof upon not less than five (5) days' notice,
stating the place, date and hour of the meeting, which notice may be written or
oral, and if mailed by certified mail, shall be deemed to be delivered when
deposited in the United States mail addressed to the member of the Executive
Committee at his business address, postage prepaid. Any member of the Executive
Committee may waive notice of any meeting, and no notice of
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any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the Executive Committee need not state the business
proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the Executive Committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the Executive Committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
Section 6. Action Without a Meeting. Any action that may be taken by
the Executive Committee at a meeting may be taken without a meeting if a consent
in writing, setting forth the action so to be taken, shall be signed by all of
the members of the Executive Committee before such action be taken further. The
Executive Committee can validly conduct a meeting by communicating
simultaneously with each other by means of conference telephones or similar
communications equipment.
Section 7. Vacancies. Any vacancy in the Executive Committee may be
filled by a resolution adopted by a majority of the full Board of Directors.
Section 8. Resignations and Removal. Any member of the Executive
Committee may be removed at any time, with or without cause, by resolution
adopted by a majority of the full Board of Directors. Any member of the
Executive Committee may resign from the Executive Committee at any time by
giving written notice to the President or Secretary of the Corporation and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 9. Procedure. The Executive Committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these Bylaws. It shall keep regular minutes of its
proceedings and report the same to the Board of Directors for its information at
the meeting thereof held next after the proceedings shall have been taken.
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ARTICLE XIV
CONDUCT OF MEETINGS
All meetings conducted under these Bylaws shall be governed in
accordance with Roberts Rules of Order.
We, the undersigned, hereby certify that the foregoing Bylaws for
governing the operation and management of GCI Transport Co., Inc., were duly
adopted by the Directors by unanimous written consent, effective as of
July 29, 1997.
/s/
John M. Lowber, Secretary
APPROVED:
/s/
Ronald A. Duncan, President
<PAGE>
EXHIBIT 99.20
ARTICLES OF INCORPORATION
OF
GCI TRANSPORT CO., INC.
We, the undersigned natural persons over the age of eighteen (18)
years, acting as incorporators of a corporation under the Alaska Corporation
Code, AS 10.06, do hereby adopt the following Articles of Incorporation for such
corporation.
ARTICLE I - Name
The name of the corporation ("Corporation") is: GCI Transport Co., Inc.
ARTICLE II - Purposes and Powers
The purposes for which the Corporation is specifically organized are
the acquisition of transponders on a satellite, and the construction and
operation of a fiber optic network linking certain cities in the State of Alaska
with the 48 contiguous United States.
The Corporation shall have and may exercise all of the general powers
of a natural person, including those provided in AS 10.06.010, as amended.
ARTICLE III - Registered Office and Agent
The address of the Corporation's registered office and the name of its
registered agent is Hartig, Rhodes, Norman, Mahoney & Edwards, P.C., 717 "K"
Street, Anchorage, AK 99501.
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ARTICLE IV - Capital
The Corporation shall have the authority to issue ten thousand (10,000)
shares of no par value stock. These shares shall be common voting shares, each
share having one (1) vote.
ARTICLE V - No Preemptive Rights
Pursuant to AS 10.06.210(a)(1)(B), no holder of any stock of the
Corporation shall be entitled to purchase, subscribe for or otherwise acquire,
as a matter of right, any new or additional shares of stock, of any class, in
the Corporation, any options or warrants to purchase, subscribe for or otherwise
acquire any new or additional shares in the Corporation, or any shares, bonds,
notes, debentures, or other securities convertible into or carrying options or
warrants to purchase, subscribe for or otherwise acquire any such shares.
ARTICLE VI - No Cumulative Voting
Pursuant to AS 10.06.420(d), shareholders shall not cumulate their
votes, but must vote shares held by them for as many persons as there are
directors to be elected.
ARTICLE VII - Power to Redeem Shares
Pursuant to AS 10.06.325, the Corporation has the power on majority
vote of the shareholders, to redeem, in whole or in part, any class of
outstanding shares.
ARTICLE VIII - Quorum of Shareholders
A quorum for the conducting of any shareholder business shall be
fifty-one percent (51%) of all outstanding shares that are entitled to vote.
ARTICLE IX - Initial Directors
The initial number of directors of the Corporation shall be four (4).
The names and addresses of the initial directors, who shall serve until the
first annual meeting of shareholders or until their successors are elected and
qualified are as follows:
Ronald A. Duncan
2550 Denali Street, Suite 1000
Anchorage, AK 99503
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John M. Lowber
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Wilson Hughes
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Donne F. Fisher
Tele-Communications, Inc.
4643 S. Ulster, Suite 400
Denver, CO 80237
The number of directors may be increased or decreased from time to time
by an amendment of the Bylaws; but no decrease shall have the effect of
shortening the term of any incumbent director. The directors may fill any
vacancy on the board created by reason of removal or retiring of any director.
ARTICLE X - Alien Affiliates
The Corporation is not affiliated with any nonresident alien or a
corporation whose place of incorporation is outside the United States (as
defined in AS 10.06.990(2) and (3)).
ARTICLE XI - Liability of Directors
The directors of the Corporation shall not be liable to the Corporation
for monetary damages for a breach of fiduciary duty except for:
1. A breach of a director's duty of loyalty to the Corporation;
2. Acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; or
3. A transaction from which the director derives an improper personal
benefit.
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ARTICLE XII - Bylaws
The initial Bylaws of the Corporation shall be adopted by the Board of
Directors, and the power to alter, amend or repeal the Bylaws shall be reserved
to the board. The Bylaws may contain any provision for the regulation and
management of the affairs of the Corporation not inconsistent with the Alaska
Corporation Code or with these Articles of Incorporation.
ARTICLE XIII - Duration
The duration of the Corporation shall be perpetual.
ARTICLE XIV - Effective Date
These Articles will be effective upon filing.
ARTICLE XV - Special Provisions
1. The Corporation shall not engage in any dissolution, liquidation,
merger, consolidation or sale, transfer, assignment, lease, conveyance or other
disposal of all or substantially all of its property in any one transaction or
series of transactions as long as any indebtedness under the Fiber Construction
Facility by the Alaska United Fiber System Partnership remains outstanding,
other than (a) any such transaction with or into GCI, Inc., or any of its
Restricted Subsidiaries otherwise effected in accordance with the terms of that
Indenture of 1997, between GCI, Inc., and the Bank of New York, as trustee
("Indenture"), (b) any such transaction with or into another Unrestricted
Subsidiary and (c) any such transaction which, assuming for purposes of this
clause (c) only that such Unrestricted Subsidiary were a Restricted Subsidiary,
would comply with the covenant entitled "Limitation on Asset Sales" in the
Indenture; provided, however, that any Net Available Cash derived therefrom may
also be used to prepay, repay or purchase indebtedness under such Fiber
Construction Facility.
As used herein, "Restricted Subsidiaries" means (i) any
Subsidiary of GCI, Inc., on or after the issue date for the Indenture notes,
unless such Subsidiary shall have been designated an Unrestricted Subsidiary as
permitted or required pursuant to the definition of "Unrestricted Subsidiary"
and (ii) an Unrestricted Subsidiary which is redesignated as a Restricted
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Subsidiary as permitted pursuant to the definition of "Unrestricted Subsidiary."
"Subsidiary" of GCI, Inc., means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, of which at least a majority of the total
voting power of the voting stock is held by GCI, Inc.
"Unrestricted Subsidiary" means (a) the Corporation, GCI
Satellite Co., Inc., GCI Fiber Co., Inc., Fiber Hold Co., Inc., and Alaska
United Fiber System Partnership and (b) any Subsidiary of an Unrestricted
Subsidiary.
"Net Available Cash" from an Asset Sale means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring person of indebtedness or other
obligations relating to such properties or assets or received in any other non
cash form) in each case net of all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal, state,
provincial, foreign and local taxes required to be accrued as a liability under
GAAP, as a consequence of such Asset Sale, and in each case net of all payments
made on any indebtedness (a) which is secured by any assets subject to such
Asset Sale, in accordance with the terms of any lien upon or other security
agreement of any kind with respect to such assets, or (b) which must (1) by its
terms, or in order to obtain a necessary consent to such Asset Sale (except, in
the case of this clause (b), indebtedness that is pari passu with or
subordinated to the Indenture notes), or (2) by applicable law be repaid out of
the proceeds from such Asset Sale, and net of all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Sale.
"Asset Sale" means any transfer, conveyance, sale, lease or
other disposition (including, without limitation, dispositions pursuant to any
consolidation or merger or a sale and leaseback transaction) by the Corporation
in any single transaction or series of transactions of (a) shares of capital
stock or other ownership interests in another person (including capital stock of
Unrestricted Subsidiaries); or (b) any other property of the Corporation;
provided, however, that the term "Asset Sale" shall not include: (i) the sale or
transfer of temporary cash investments, inventory, accounts
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receivable or other property (including, without limitation, the lease of excess
satellite transponder capacity and the lease of excess fiber capacity) in the
ordinary course of business; (ii) the liquidation of property received in
settlement of debts owing to the Corporation as a result of foreclosure,
perfection or enforcement of any lien or debt, which debts were owing to the
Corporation in the ordinary course of business; (iii) the sale or transfer of
any property by the Corporation or to any of the Restricted Subsidiaries; (iv) a
disposition in the form of a restricted payment permitted to be made pursuant to
"--Certain Covenants--Limitation on Restricted Payments" in the Indenture; or
(v) a disposition (taken together with any other dispositions in a single
transaction or series of related transactions) with a fair market value and a
sale price of less than $5 million.
2. The Corporation's board of directors shall consist of not less than
one outside director.
IN WITNESS WHEREOF, I have signed these Articles this 22 day of July,
1997.
/S/
Robert B. Flint
IN WITNESS WHEREOF, I have signed these Articles this 22ND day of July,
1997.
/S/
Bonnie J. Paskvan
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
Robert B. Flint says on oath or affirms that he has read the foregoing
Articles of Incorporation of GCI Satellite Co., Inc., and believes all
statements made in the document are true and correct.
/S/
Notary Public in and for the State
of Alaska
My commission expires: 4-11-2001
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<PAGE>
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
Bonnie J. Paskvan says on oath or affirms that she has read the
foregoing Articles of Incorporation of GCI Satellite Co., Inc., and believes all
statements made in the document are true and correct.
/S/
Notary Public in and for the State
of Alaska
My commission expires: 4-11-2001
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EXHIBIT 99.21
BYLAWS
OF
FIBER HOLD CO., INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE I OFFICES 1
ARTICLE II SHAREHOLDERS' MEETINGS 1
Section 1. Annual Meeting 1
Section 2. Special Meetings 1
Section 3. Place of Meeting 2
Section 4. Notice of Meeting 2
Section 5. Closing of Transfer Books or Fixing of Record Date 2
Section 6. Voting Lists 3
Section 7. Quorum 3
Section 8. Proxies 3
Section 9. Voting of Shares. 3
Section 10. Voting of Shares by Certain Holders 4
Section 11. Informal Action by Shareholders 4
ARTICLE III BOARD OF DIRECTORS 4
Section 1. General Powers 4
Section 2. Number, Tenure and Qualifications 4
Section 3. Regular Meetings 5
Section 4. Special Meetings 5
Section 5. Quorum 5
Section 6. Manner of Acting 5
Section 7. Attendance at Meetings 5
Section 8. Vacancies 6
Section 9. Compensation 6
Section 10. Presumption of Assent 6
Section 11. Removal of Directors 6
Section 12. Resignation 6
Section 13. Voting by Interested Directors 7
Section 14. Action by Directors Without a Meeting 7
ARTICLE IV OFFICERS 7
Section 1. Number 7
Section 2. Election and Term of Office. 7
Section 3. Removal 7
Section 4. Vacancies 7
Section 5. President 8
Section 6. Vice Presidents 8
Section 7. The Secretary 8
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Section 8. The Treasurer 9
Section 9. Assistant Secretaries and Assistant Treasurers 9
Section 10. Salaries 9
ARTICLE V LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS,
OFFICERS AND AGENTS OF THE CORPORATION 9
Section 1. Limitation of Liability 9
Section 2. Right of Indemnification 10
Section 3. Rights Cumulative 10
ARTICLE VI CONTRACTS, LOANS, CHECKS, DEPOSITS AND COMPENSATION 11
Section 1. Contracts 11
Section 2. Loans 11
Section 3. Checks, Drafts, etc 11
Section 4. Deposits 11
ARTICLE VII CERTIFICATES FOR SHARES AND THEIR TRANSFER 11
Section 1. Certificates for Shares 11
Section 2. Transfer of Shares. 12
ARTICLE VIII TAXABLE YEAR AND ACCOUNTING PERIOD 12
ARTICLE IX DIVIDENDS 12
ARTICLE X CORPORATE SEAL 12
ARTICLE XI WAIVER OF NOTICE 13
ARTICLE XII AMENDMENTS 13
ARTICLE XIII EXECUTIVE COMMITTEE 13
Section 1. Appointment 13
Section 2. Authority 13
Section 3. Tenure and Qualifications 13
Section 4. Meetings 13
Section 5. Quorum 14
Section 6. Action Without a Meeting 14
Section 7. Vacancies 14
Section 8. Resignations and Removal 14
Section 9. Procedure 14
ARTICLE XIV CONDUCT OF MEETINGS 15
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<PAGE>
ARTICLE I
OFFICES
The principal office of Fiber Hold Co., Inc. (the "Corporation") shall
be located in Anchorage, Alaska. The Corporation may have such other offices,
either within or without the State of Alaska, as the Board of Directors may
designate or as the business of the Corporation may require from time to time.
The registered office of the Corporation required by the Alaska
Corporations Code to be maintained in the State of Alaska may be, but need not
be, identical with the principal office in the State of Alaska, and the address
of the registered office may be changed from time to time by the Board of
Directors.
ARTICLE II
SHAREHOLDERS' MEETINGS
Section 1. Annual Meeting. The annual meeting of the Shareholders shall
be held in the month of June of each year, for the purpose of electing Directors
and for the transaction of such other business as may come before the meeting.
If the election of Directors shall not be held on the day designated for the
annual meeting of the Shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
Shareholders as soon thereafter as it conveniently may be held.
(a) Meetings of the Shareholders shall be presided over by the
President or by any officer or Director or person selected at any time by the
President to act as Chairman, or if he is not present or available or makes no
selection, then by the Chairman of the Board of Directors. If neither the
President nor the Chairman of the Board of Directors is present and no selection
has been made, a Chairman should be chosen by a majority in interest of the
Shareholders present in person or by proxy at the meeting and entitled to vote
thereat.
(b) The Secretary of the meeting shall be the Secretary of the
Corporation or an Assistant Secretary, or if none of such officers is present,
any person appointed by the Chairman of the meeting.
Section 2. Special Meetings. Special meetings of the Shareholders for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or by the Board of Directors, and shall be called by the
President at the request of the holders of not less than one-tenth of all the
outstanding shares of the corporation entitled to vote at the meeting.
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Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Alaska, as the place of meeting
called by the Board of Directors. A waiver of notice signed by all Shareholders
entitled to vote at a meeting may designate any place, either within or without
the State of Alaska, as the place for the holding of such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the Corporation in the State of Alaska.
Section 4. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than twenty (20)
nor more than sixty (60) days before the date of the meeting, either personally
or by mail, by or at the direction of the President, or the Secretary, or the
persons calling the meeting, to each Shareholder of record entitled to vote at
such meeting. If mailed, the notice is considered delivered when deposited with
postage prepaid in the United States mail addressed to the shareholder at the
address of the shareholder as it appears on the stock transfer book of the
corporation, or, if the shareholder has filed with the secretary of the
corporation a written request that notice be mailed to a different address,
addressed to the shareholder at the new address.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining Shareholders entitled to notice of or to vote at any
meeting of Shareholders or any adjournment thereof, or Shareholders entitled to
receive payment of a dividend, or in order to make a determination of
Shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, seventy (70) days. If the stock
transfer books shall be closed for the purpose of determining Shareholders
entitled to notice of or to vote at a meeting of Shareholders, such books shall
be closed for at least twenty (20) days immediately preceding such meeting.
Instead of closing the stock transfer books, the Board of Directors may
fix a date as the record date for any such determination of Shareholders. This
record date shall be not more than sixty (60) days, and in case of a meeting of
Shareholders not less than twenty (20) days, prior to the date on which the
particular action requiring such determination of Shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of Shareholders entitled to notice of or to vote at a meeting of
Shareholders, or Shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring the dividend is adopted is, as
the case may be, the record date for the determination of Shareholders. When a
determination of Shareholders entitled to vote at any meeting of Shareholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof except where the determination has been made through the
closing of the stock transfer books and the stated period of closing has
expired.
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Section 6. Voting Lists. At least twenty (20) days before each meeting
of the Shareholders, the officer or agent having charge of the stock transfer
books for shares of the Corporation shall make a complete list of the
Shareholders entitled to vote at each meeting of Shareholders or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each. The list shall be kept on file at the registered office of
the corporation and is subject to inspection by a Shareholder or the agent or
attorney of a Shareholder at any time during the usual business hours for a
period of twenty (20) days before the meeting. Such list shall be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any Shareholder during the whole time of the meeting.
Section 7. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of Shareholders. If a quorum is present, the
affirmative vote of the majority of shares represented at the meeting and
entitled to vote on the subject matter is the act of the Shareholders unless the
vote of a greater number or voting by class is required by the articles of
incorporation, bylaws or the Alaska Corporations Code.
The Shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken other than
adjournment is approved by at least a majority of shares required to constitute
a quorum.
If less than a majority of the outstanding shares are represented at a
meeting, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 8. Proxies. At all meetings of Shareholders, a Shareholder may
vote in person or by proxy executed in writing by the Shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. A proxy continues in full
force and effect until revoked by the person executing it, however, no proxy
shall be valid after eleven (11) months from the date of its execution, unless
such proxy qualifies as an irrevocable proxy as defined within AS 10.06.418(e).
Section 9. Voting of Shares. An outstanding share, regardless of class,
is entitled to one vote on each matter submitted to a vote at a meeting of
Shareholders, except as may be otherwise provided in the articles of
incorporation.
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Section 10. Voting of Shares by Certain Holders .
(a) Shares standing in the name of another corporation may be voted by
such officer, agent or proxy as the bylaws of such corporation may prescribe,
or, in the absence of such provisions, as the board of directors of such
corporation may determine.
(b) Shares held by an administrator, executor, guardian or conservator
may be voted by such person, either in person or by proxy, without a transfer of
such shares into his name. Shares standing in the name of a trustee may be voted
by the trustee, either in person or by proxy, but no trustee shall be entitled
to vote shares held by him without a transfer of such shares into his name.
(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer into his name if authority to transfer the
shares is contained in an appropriate order of the court by which such receiver
was appointed.
(d) A Shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
(e) Neither treasury shares, nor shares of its own stock held by the
Corporation in a fiduciary capacity, nor shares held by another corporation if a
majority of the shares entitled to vote for the election of directors of the
other corporation is held by the Corporation, may be voted at a meeting or
counted in determining the total number of outstanding shares.
Section 11. Informal Action by Shareholders. Any action required to be
taken at a meeting of the Shareholders, or any other action which may be taken
at a meeting of the Shareholders, may be taken without a meeting by written
consent, identical in content setting out the action taken, signed by all of the
Shareholders entitled to vote on the action.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of Directors
of the Corporation shall be not less than one (1) nor more than nine (9); unless
the Corporation, now or at any time in the future, has three (3) or more
Shareholders in which case the Corporation shall have not fewer than three (3)
directors; or unless the Corporation has
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only two (2) Shareholders, in which case the Corporation shall have at least two
(2) directors. Each Director shall hold office until the next annual meeting of
Shareholders and until his successor shall have been elected and qualified.
Directors need not be residents of the State of Alaska or Shareholders of the
Corporation. The initial number of Directors shall be four (4).
Section 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, the annual meeting of the Shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of Alaska, for the holding of additional regular meetings
without other notice than such resolution.
Section 4. Special Meetings.
(a) Special meetings of the Board of Directors may be called by the
Chairman of the Board, the President, a Vice President, the Secretary, or a
Director or such person authorized to call the meeting may fix the time and
place for holding the meeting, either inside or outside the State of Alaska.
(b) Notice of any special meeting shall be given at least ten (10) days
prior thereto by written notice delivered personally or mailed to each Director
at his business address, or at least seventy-two (72) hours before the meeting
by electronic means, personal messenger, or comparable person-to-person
communication. If mailed by certified mail, such notice shall be deemed to be
delivered when deposited in the United States mail properly addressed, with
postage thereon prepaid. Any Director may waive notice of any meeting. The
attendance of a Director at a meeting shall constitute a waiver of notice of
such meeting, except where a Director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
Section 5. Quorum. A majority of the presently qualified Directors
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than such majority is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice; provided, further, that where there are only two
Directors, both shall be necessary to constitute a quorum.
Section 6. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 7. Attendance at Meetings. The Board of Directors may conduct a
meeting of the Board by communicating simultaneously with each other by means of
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conference telephones or similar communications equipment and any action taken
at such meeting shall not be invalidated by reason of the fact that the
respective members of the Board were not assembled together in one place at the
time of taking such action or conducting such business.
Section 8. Vacancies. Where a vacancy created by the removal of a
Director is pursuant to AS 10.06.460 or 10.06.463, such vacancies occurring on
the Board may be filled only by a vote of the Shareholders. Any other vacancy
occurring in the Board of Directors may be filled by the affirmative vote of a
majority of the remaining Directors though less than a quorum of the Board of
Directors. A Director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. Any directorship to be filled by
reason of an increase in the number of Directors may be filled by election by
the Board of Directors for a term of office continuing only until the next
election of Directors by the Shareholders. In no case may a vacancy continue
longer than six (6) months or until the next annual meeting, whichever occurs
first.
Section 9. Compensation. By resolution of the Board of Directors, each
Director may be paid his or her expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid a stated salary as Director or a
fixed sum for attendance at each meeting of the Board of Directors or both. No
such payment shall preclude any Director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 10. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his/her dissent shall be entered in the minutes of the meeting or unless he/she
shall file a written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the Secretary of the Corporation immediately after
the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
Section 11. Removal of Directors. Any Director may be removed with or
without cause, at any time, by a vote of the Shareholders holding a majority of
the shares then issued and outstanding, at any special meeting called for that
purpose, or at the annual meeting. Except as otherwise prescribed by statute, a
Director may be removed for cause by a vote of the majority of the entire board.
Prior to vote by the Board on the question of removal of any Director for cause,
such Director must be given written notice of the reasons for such action.
Section 12. Resignation. A Director may resign effective upon giving
written notice to the Chairman of the Board, the President, the Secretary, or
the Board of Directors of the Corporation, unless the notice specifies a later
time for the effectiveness of the
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resignation. If the resignation is effective at a future time, a successor may
be elected to take office when the resignation becomes effective.
Section 13. Voting by Interested Directors. No Director may vote upon
any matter in which he has an adverse or personal interest, unless such interest
has been fully disclosed to the Board of Directors and the Board of Directors,
by majority of vote without the interested Director voting, permits such
interested Director to vote.
Section 14. Action by Directors Without a Meeting. Action required or
permitted to be taken by the Board or a committee designated by the Board may be
taken without a meeting on written consents, identical in consent, setting out
the action taken and signed by all the members of the Board or the committee.
The written consents shall be filed with the minutes. The consents have the same
effect as an unanimous vote.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a
President, one or more Vice Presidents (the number thereof to be determined by
the Board of Directors), a Secretary, and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and assistant officers as
may be deemed necessary may be elected or appointed by the Board of Directors.
Any two (2) or more offices may be held by the same person, except the offices
of President and Secretary.
Section 2. Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the Shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
convenient. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified, or until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided.
Section 3. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
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Section 5. President. The President shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. He shall, when present, preside at all meetings of
the Shareholders and of the Board of Directors. He may sign, with the Secretary
or any other proper officer of the Corporation authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors, or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President may sign, with the Secretary
or an Assistant Secretary, certificates for shares of the Corporation; and shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
Section 7. The Secretary. The Secretary shall:
(a) keep the minutes of the proceedings of the Shareholders and of the
Board of Directors in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the
Corporation and see that the seal of the Corporation is affixed to all documents
the execution of which on behalf of the Corporation under its seal is duly
authorized;
(d) keep a register of the post office address of each Shareholder
which shall be furnished to the Secretary by such Shareholder;
(e) sign with the President, or a Vice President, certificates for
shares of the Corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors;
(f) have general charge of the stock transfer books of the Corporation;
and
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(g) in general perform all duties incident to the office of the
Secretary and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
Section 8. The Treasurer. The Treasurer shall:
(a) have charge and custody of and be responsible for all funds and
securities of the Corporation;
(b) receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the name
of the Corporation in such banks, trust companies or other depositories as shall
be selected; and
(c) in general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Directors
shall determine.
Section 9. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries, when authorized by the Board of Directors, may sign with
the President or a Vice President certificates for shares of the Corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall, if required by the Board of
Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President of the Board of Directors.
Section 10. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.
ARTICLE V
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS, OFFICERS AND
AGENTS OF THE CORPORATION
Section 1. Limitation of Liability. No person shall be liable to the
Corporation for any loss or damage suffered by it on account of any action taken
or omitted to be taken in good faith, as a Director, member of a Committee or
Officer of the Corporation, if such person exercised or used the same degree of
care and skill, including reasonable inquiry, as a prudent person would have
exercised or used under the circumstances in the conduct
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of his/her own affairs. Without limitation on the foregoing, any such person
shall be deemed to have exercised or used such degree of care and skill if such
action were taken or omitted in reliance in good faith upon advice of counsel
for the Corporation, or the books of account or other records of the
Corporation, or reports or information made or furnished to the Corporation by
any officials, accountants, engineers, agents or employees of the Corporation,
or by an independent Certified Public Accountant or auditor, engineer,
appraiser, or other expert employed by the Corporation and selected with
reasonable care by the Board of Directors, by any such committee or by an
authorized officer of the Corporation.
Section 2. Right of Indemnification. Each Director, member of a
Committee, Officer, Agent and Employee of the Corporation, and each former
director, member of a committee, officer, agent and employee of the Corporation,
and any person who may have served at its request as a director, officer, agent
or employee of another Corporation in which it is a creditor, and his heirs and
personal representative shall be indemnified by the Corporation against all loss
or damage suffered and all costs and expenses imposed upon or incurred by him in
connection with or arising out of any action, suit or proceedings (whether civil
or criminal in nature) in which he may be involved, to which he may be a party
by reason of being or having been (or his personal representative or estate
having been) such director, member of a committee, officer, agent or employee,
except in relation to matters as to which he shall be adjudged in such action,
suit or proceeding to be liable for negligence or misconduct in performance of
his duty; provided, however, that the Corporation shall be given reasonable
notice of the institution of such action, suit or proceedings; and in the event
the same shall be settled in whole or in part, the Corporation or its counsel
shall consent to such settlement if it be determined by its counsel or found by
a majority of the Board of Directors then in office and not involved in such
controversy, that such settlement is to the best interest of the Corporation and
that the person to be indemnified was not guilty of negligence or misconduct in
performance of duty.
Indemnification (unless ordered by the court) shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnification is proper in the circumstances because the director,
officer, employee or committee member has met the applicable standard of
conduct. This determination shall be made (a) by the Board of Directors, by a
majority vote of a quorum consisting of directors who were not parties to the
action or proceeding; or (b) by independent legal counsel in a written opinion,
either (i) if such a quorum is not obtainable, or (ii) if a quorum of
disinterested directors so requests such a written opinion; or (c) by approval
of the outstanding shares.
Section 3. Rights Cumulative. The provisions of this Article V shall
not be deemed exclusive or in limitation of, but shall be cumulative of and in
addition to any other limitations of liability, indemnities, and rights to which
such Director, member of a Committee, Officer, Agent or other person may be
entitled under Alaska Statute, these
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Bylaws or pursuant to any agreement or resolution of the Board of Directors or
of the Shareholders, or otherwise.
ARTICLE VI
CONTRACTS, LOANS, CHECKS, DEPOSITS AND COMPENSATION
Section 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary and sealed with the
corporate seal or a facsimile thereof. The signatures of such officers upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation itself or one of
its employees. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person or entity to whom the
shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled; except that in case
of a lost, destroyed or mutilated certificate a new one may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
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All shares issued by the Corporation shall contain a legend on the
certificates stating substantially the following:
The shares represented by this certificate have not
been registered under any federal or state securities
law. They have been acquired for investment and may
not be transferred without an effective registration
statement pursuant to such laws or an opinion of
counsel satisfactory to the corporation that
registration is not required.
Section 2. Transfer of Shares. Transfer of any shares of the
Corporation shall be done in compliance with all federal, state and local
securities laws, and any transfer of in violation thereof is void. Transfer of
shares of the Corporation shall be made only on the stock transfer books of the
Corporation by the holder of record thereof or by its legal representative, who
shall furnish proper evidence of authority to transfer filed with the Secretary
of the Corporation, and on surrender for cancellation of the certificate for
such shares. The entity or person in whose name shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes.
ARTICLE VIII
TAXABLE YEAR AND ACCOUNTING PERIOD
The taxable year and accounting period of the Corporation shall begin
on January 1 and end on December 31, unless changed by resolution of the Board
of Directors.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in cash, property, or
its own shares, except when the Corporation is insolvent, or when the dividend
would render the Corporation insolvent, or when the dividend is contrary to
restrictions contained in the Articles of Incorporation.
ARTICLE X
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the state of incorporation and the words "Corporate Seal."
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ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given to any Shareholder or
Director of the Corporation under the provisions of these Bylaws or under the
provisions of the Articles of Incorporation or under the provisions of the
Alaska Corporation Code, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XII
AMENDMENTS
Except as may be provided in the Articles, these Bylaws may be altered,
amended or repealed and new Bylaws may be adopted by the Board of Directors at
any regular or special meeting of the Board of Directors.
ARTICLE XIII
EXECUTIVE COMMITTEE
Section 1. Appointment. The Board of Directors, by resolution adopted
by a majority of the full board, may designate two (2) or more of its members to
constitute an Executive Committee. The designation of such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
Section 2. Authority. Except as limited by the Articles or AS
10.06.468, the Executive Committee, when the Board of Directors is not in
session, shall have and may exercise all of the authority of the Board of
Directors except to the extent, if any, that such authority shall be limited by
the resolution appointing the Executive Committee.
Section 3. Tenure and Qualifications. Each member of the Executive
Committee shall hold office until the next regular annual meeting of the Board
of Directors following his designation and until his successor is designated as
a member of the Executive Committee and is elected and qualified.
Section 4. Meetings. Regular meetings of the Executive Committee may be
held without notice at such times and places as the Executive Committee may fix
from time to time by resolution. Special meetings of the Executive Committee may
be called by any member thereof upon not less than five (5) days' notice,
stating the place, date and hour of the meeting, which notice may be written or
oral, and if mailed by certified mail, shall be deemed to be delivered when
deposited in the United States mail addressed to the member of the Executive
Committee at his business address, postage prepaid. Any member of the Executive
Committee may waive notice of any meeting, and no notice of
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any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the Executive Committee need not state the business
proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the Executive Committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the Executive Committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
Section 6. Action Without a Meeting. Any action that may be taken by
the Executive Committee at a meeting may be taken without a meeting if a consent
in writing, setting forth the action so to be taken, shall be signed by all of
the members of the Executive Committee before such action be taken further. The
Executive Committee can validly conduct a meeting by communicating
simultaneously with each other by means of conference telephones or similar
communications equipment.
Section 7. Vacancies. Any vacancy in the Executive Committee may be
filled by a resolution adopted by a majority of the full Board of Directors.
Section 8. Resignations and Removal. Any member of the Executive
Committee may be removed at any time, with or without cause, by resolution
adopted by a majority of the full Board of Directors. Any member of the
Executive Committee may resign from the Executive Committee at any time by
giving written notice to the President or Secretary of the Corporation and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 9. Procedure. The Executive Committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these Bylaws. It shall keep regular minutes of its
proceedings and report the same to the Board of Directors for its information at
the meeting thereof held next after the proceedings shall have been taken.
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ARTICLE XIV
CONDUCT OF MEETINGS
All meetings conducted under these Bylaws shall be governed in
accordance with Roberts Rules of Order.
We, the undersigned, hereby certify that the foregoing Bylaws for
governing the operation and management of Fiber Hold Co., Inc., were duly
adopted by the Directors by unanimous written consent, effective as of
July 29, 1997.
/s/
John M. Lowber, Secretary
APPROVED:
/s/
Ronald A. Duncan, President
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EXHIBIT 99.22
ARTICLES OF INCORPORATION
OF
FIBER HOLD CO., INC.
We, the undersigned natural persons over the age of eighteen (18)
years, acting as incorporators of a corporation under the Alaska Corporation
Code, AS 10.06, do hereby adopt the following Articles of Incorporation for such
corporation.
ARTICLE I - Name
The name of the corporation ("Corporation") is: FIBER HOLD CO., INC.
ARTICLE II - Purposes and Powers
The purposes for which the Corporation is specifically organized are
the acquisition of transponders on a satellite, and the construction and
operation of a fiber optic network linking certain cities in the State of Alaska
with the 48 contiguous United States.
The Corporation shall have and may exercise all of the general powers
of a natural person, including those provided in AS 10.06.010, as amended.
ARTICLE III - Registered Office and Agent
The address of the Corporation's registered office and the name of its
registered agent is Hartig, Rhodes, Norman, Mahoney & Edwards, P.C., 717 "K"
Street, Anchorage, AK 99501.
ARTICLE IV - Capital
The Corporation shall have the authority to issue ten thousand (10,000)
shares of no par value stock. These shares shall be common voting shares, each
share having one (1) vote.
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ARTICLE V - No Preemptive Rights
Pursuant to AS 10.06.210(a)(1)(B), no holder of any stock of the
Corporation shall be entitled to purchase, subscribe for or otherwise acquire,
as a matter of right, any new or additional shares of stock, of any class, in
the Corporation, any options or warrants to purchase, subscribe for or otherwise
acquire any new or additional shares in the Corporation, or any shares, bonds,
notes, debentures, or other securities convertible into or carrying options or
warrants to purchase, subscribe for or otherwise acquire any such shares.
ARTICLE VI - No Cumulative Voting
Pursuant to AS 10.06.420(d), shareholders shall not cumulate their
votes, but must vote shares held by them for as many persons as there are
directors to be elected.
ARTICLE VII - Power to Redeem Shares
Pursuant to AS 10.06.325, the Corporation has the power on majority
vote of the shareholders, to redeem, in whole or in part, any class of
outstanding shares.
ARTICLE VIII - Quorum of Shareholders
A quorum for the conducting of any shareholder business shall be
fifty-one percent (51%) of all outstanding shares that are entitled to vote.
ARTICLE IX - Initial Directors
The initial number of directors of the Corporation shall be four (4).
The names and addresses of the initial directors, who shall serve until the
first annual meeting of shareholders or until their successors are elected and
qualified are as follows:
Ronald A. Duncan
2550 Denali Street, Suite 1000
Anchorage, AK 99503
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John M. Lowber
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Wilson Hughes
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Donne F. Fisher
Tele-Communications, Inc.
4643 S. Ulster, Suite 400
Denver, CO 80237
The number of directors may be increased or decreased from time to time
by an amendment of the Bylaws; but no decrease shall have the effect of
shortening the term of any incumbent director. The directors may fill any
vacancy on the board created by reason of removal or retiring of any director.
ARTICLE X - Alien Affiliates
The Corporation is not affiliated with any nonresident alien or a
corporation whose place of incorporation is outside the United States (as
defined in AS 10.06.990(2) and (3)).
ARTICLE XI - Liability of Directors
The directors of the Corporation shall not be liable to the Corporation
for monetary damages for a breach of fiduciary duty except for:
1. A breach of a director's duty of loyalty to the Corporation;
2. Acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; or
3. A transaction from which the director derives an improper personal
benefit.
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ARTICLE XII - Bylaws
The initial Bylaws of the Corporation shall be adopted by the Board of
Directors, and the power to alter, amend or repeal the Bylaws shall be reserved
to the board. The Bylaws may contain any provision for the regulation and
management of the affairs of the Corporation not inconsistent with the Alaska
Corporation Code or with these Articles of Incorporation.
ARTICLE XIII - Duration
The duration of the Corporation shall be perpetual.
ARTICLE XIV - Effective Date
These Articles will be effective upon filing.
ARTICLE XV - Special Provisions
1. The Corporation shall not engage in any dissolution, liquidation,
merger, consolidation or sale, transfer, assignment, lease, conveyance or other
disposal of all or substantially all of its property in any one transaction or
series of transactions as long as any indebtedness under the Fiber Construction
Facility by the Alaska United Fiber System Partnership remains outstanding,
other than (a) any such transaction with or into GCI, Inc., or any of its
Restricted Subsidiaries otherwise effected in accordance with the terms of that
Indenture of 1997, between GCI, Inc., and the Bank of New York, as trustee
("Indenture"), (b) any such transaction with or into another Unrestricted
Subsidiary and (c) any such transaction which, assuming for purposes of this
clause (c) only that such Unrestricted Subsidiary were a Restricted Subsidiary,
would comply with the covenant entitled "Limitation on Asset Sales" in the
Indenture; provided, however, that any Net Available Cash derived therefrom may
also be used to prepay, repay or purchase indebtedness under such Fiber
Construction Facility.
As used herein, "Restricted Subsidiaries" means (i) any
Subsidiary of GCI, Inc., on or after the issue date for the Indenture notes,
unless such Subsidiary shall have been designated an Unrestricted Subsidiary as
permitted or required pursuant to the definition of "Unrestricted Subsidiary"
and (ii) an Unrestricted Subsidiary which is redesignated as a Restricted
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Subsidiary as permitted pursuant to the definition of "Unrestricted Subsidiary."
"Subsidiary" of GCI, Inc., means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, of which at least a majority of the total
voting power of the voting stock is held by GCI, Inc.
"Unrestricted Subsidiary" means (a) the Corporation, GCI
Satellite Co., Inc., GCI Fiber Co., Inc., Fiber Hold Co., Inc., and Alaska
United Fiber System Partnership and (b) any Subsidiary of an Unrestricted
Subsidiary.
"Net Available Cash" from an Asset Sale means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring person of indebtedness or other
obligations relating to such properties or assets or received in any other non
cash form) in each case net of all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal, state,
provincial, foreign and local taxes required to be accrued as a liability under
GAAP, as a consequence of such Asset Sale, and in each case net of all payments
made on any indebtedness (a) which is secured by any assets subject to such
Asset Sale, in accordance with the terms of any lien upon or other security
agreement of any kind with respect to such assets, or (b) which must (1) by its
terms, or in order to obtain a necessary consent to such Asset Sale (except, in
the case of this clause (b), indebtedness that is pari passu with or
subordinated to the Indenture notes), or (2) by applicable law be repaid out of
the proceeds from such Asset Sale, and net of all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Sale.
"Asset Sale" means any transfer, conveyance, sale, lease or
other disposition (including, without limitation, dispositions pursuant to any
consolidation or merger or a sale and leaseback transaction) by the Corporation
in any single transaction or series of transactions of (a) shares of capital
stock or other ownership interests in another person (including capital stock of
Unrestricted Subsidiaries); or (b) any other property of the Corporation;
provided, however, that the term "Asset Sale" shall not include: (i) the sale or
transfer of temporary cash investments, inventory, accounts
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receivable or other property (including, without limitation, the lease of excess
satellite transponder capacity and the lease of excess fiber capacity) in the
ordinary course of business; (ii) the liquidation of property received in
settlement of debts owing to the Corporation as a result of foreclosure,
perfection or enforcement of any lien or debt, which debts were owing to the
Corporation in the ordinary course of business; (iii) the sale or transfer of
any property by the Corporation or to any of the Restricted Subsidiaries; (iv) a
disposition in the form of a restricted payment permitted to be made pursuant to
"--Certain Covenants--Limitation on Restricted Payments" in the Indenture; or
(v) a disposition (taken together with any other dispositions in a single
transaction or series of related transactions) with a fair market value and a
sale price of less than $5 million.
2. The Corporation's board of directors shall consist of not less than
one outside director.
IN WITNESS WHEREOF, I have signed these Articles this 22 day of July,
1997.
/s/
Robert B. Flint
IN WITNESS WHEREOF, I have signed these Articles this 22nd day of July,
1997.
/s/
Bonnie J. Paskvan
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
Robert B. Flint says on oath or affirms that he has read the foregoing
Articles of Incorporation of Fiber Hold Co., Inc., and believes all statements
made in the document are true and correct.
/s/
Notary Public in and for the State
of Alaska
My commission expires: 4-11-2001
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STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
Bonnie J. Paskvan says on oath or affirms that she has read the
foregoing Articles of Incorporation of Fiber Hold Co., Inc., and believes all
statements made in the document are true and correct.
/s/
Notary Public in and for the State
of Alaska
My commission expires: 4-11-2001
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EXHIBIT 99.23
BYLAWS
OF
GCI FIBER CO., INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE I OFFICES 1
ARTICLE II SHAREHOLDERS' MEETINGS 1
Section 1. Annual Meeting 1
Section 2. Special Meetings 1
Section 3. Place of Meeting 2
Section 4. Notice of Meeting 2
Section 5. Closing of Transfer Books or Fixing of Record Date 2
Section 6. Voting Lists 3
Section 7. Quorum 3
Section 8. Proxies 3
Section 9. Voting of Shares. 3
Section 10. Voting of Shares by Certain Holders 4
Section 11. Informal Action by Shareholders 4
ARTICLE III BOARD OF DIRECTORS 4
Section 1. General Powers 4
Section 2. Number, Tenure and Qualifications 4
Section 3. Regular Meetings 5
Section 4. Special Meetings 5
Section 5. Quorum 5
Section 6. Manner of Acting 5
Section 7. Attendance at Meetings 5
Section 8. Vacancies 6
Section 9. Compensation 6
Section 10. Presumption of Assent 6
Section 11. Removal of Directors 6
Section 12. Resignation 6
Section 13. Voting by Interested Directors 7
Section 14. Action by Directors Without a Meeting 7
ARTICLE IV OFFICERS 7
Section 1. Number 7
Section 2. Election and Term of Office. 7
Section 3. Removal 7
Section 4. Vacancies 7
Section 5. President 8
Section 6. Vice Presidents 8
Section 7. The Secretary 8
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Section 8. The Treasurer 9
Section 9. Assistant Secretaries and Assistant Treasurers 9
Section 10. Salaries 9
ARTICLE V LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS,
OFFICERS AND AGENTS OF THE CORPORATION 9
Section 1. Limitation of Liability 9
Section 2. Right of Indemnification 10
Section 3. Rights Cumulative 10
ARTICLE VI CONTRACTS, LOANS, CHECKS, DEPOSITS AND COMPENSATION 11
Section 1. Contracts 11
Section 2. Loans 11
Section 3. Checks, Drafts, etc 11
Section 4. Deposits 11
ARTICLE VII CERTIFICATES FOR SHARES AND THEIR TRANSFER 11
Section 1. Certificates for Shares 11
Section 2. Transfer of Shares. 12
ARTICLE VIII TAXABLE YEAR AND ACCOUNTING PERIOD 12
ARTICLE IX DIVIDENDS 12
ARTICLE X CORPORATE SEAL 12
ARTICLE XI WAIVER OF NOTICE 13
ARTICLE XII AMENDMENTS 13
ARTICLE XIII EXECUTIVE COMMITTEE 13
Section 1. Appointment 13
Section 2. Authority 13
Section 3. Tenure and Qualifications 13
Section 4. Meetings 13
Section 5. Quorum 14
Section 6. Action Without a Meeting 14
Section 7. Vacancies 14
Section 8. Resignations and Removal 14
Section 9. Procedure 14
ARTICLE XIV CONDUCT OF MEETINGS 15
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ARTICLE I
OFFICES
The principal office of GCI Fiber Co., Inc. (the "Corporation") shall
be located in Anchorage, Alaska. The Corporation may have such other offices,
either within or without the State of Alaska, as the Board of Directors may
designate or as the business of the Corporation may require from time to time.
The registered office of the Corporation required by the Alaska
Corporations Code to be maintained in the State of Alaska may be, but need not
be, identical with the principal office in the State of Alaska, and the address
of the registered office may be changed from time to time by the Board of
Directors.
ARTICLE II
SHAREHOLDERS' MEETINGS
Section 1. Annual Meeting. The annual meeting of the Shareholders shall
be held in the month of June of each year, for the purpose of electing Directors
and for the transaction of such other business as may come before the meeting.
If the election of Directors shall not be held on the day designated for the
annual meeting of the Shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
Shareholders as soon thereafter as it conveniently may be held.
(a) Meetings of the Shareholders shall be presided over by the
President or by any officer or Director or person selected at any time by the
President to act as Chairman, or if he is not present or available or makes no
selection, then by the Chairman of the Board of Directors. If neither the
President nor the Chairman of the Board of Directors is present and no selection
has been made, a Chairman should be chosen by a majority in interest of the
Shareholders present in person or by proxy at the meeting and entitled to vote
thereat.
(b) The Secretary of the meeting shall be the Secretary of the
Corporation or an Assistant Secretary, or if none of such officers is present,
any person appointed by the Chairman of the meeting.
Section 2. Special Meetings. Special meetings of the Shareholders for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or by the Board of Directors, and shall be called by the
President at the request of the holders of not less than one-tenth of all the
outstanding shares of the corporation entitled to vote at the meeting.
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Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Alaska, as the place of meeting
called by the Board of Directors. A waiver of notice signed by all Shareholders
entitled to vote at a meeting may designate any place, either within or without
the State of Alaska, as the place for the holding of such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the Corporation in the State of Alaska.
Section 4. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than twenty (20)
nor more than sixty (60) days before the date of the meeting, either personally
or by mail, by or at the direction of the President, or the Secretary, or the
persons calling the meeting, to each Shareholder of record entitled to vote at
such meeting. If mailed, the notice is considered delivered when deposited with
postage prepaid in the United States mail addressed to the shareholder at the
address of the shareholder as it appears on the stock transfer book of the
corporation, or, if the shareholder has filed with the secretary of the
corporation a written request that notice be mailed to a different address,
addressed to the shareholder at the new address.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining Shareholders entitled to notice of or to vote at any
meeting of Shareholders or any adjournment thereof, or Shareholders entitled to
receive payment of a dividend, or in order to make a determination of
Shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, seventy (70) days. If the stock
transfer books shall be closed for the purpose of determining Shareholders
entitled to notice of or to vote at a meeting of Shareholders, such books shall
be closed for at least twenty (20) days immediately preceding such meeting.
Instead of closing the stock transfer books, the Board of Directors may
fix a date as the record date for any such determination of Shareholders. This
record date shall be not more than sixty (60) days, and in case of a meeting of
Shareholders not less than twenty (20) days, prior to the date on which the
particular action requiring such determination of Shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of Shareholders entitled to notice of or to vote at a meeting of
Shareholders, or Shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring the dividend is adopted is, as
the case may be, the record date for the determination of Shareholders. When a
determination of Shareholders entitled to vote at any meeting of Shareholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof except where the determination has been made through the
closing of the stock transfer books and the stated period of closing has
expired.
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Section 6. Voting Lists. At least twenty (20) days before each meeting
of the Shareholders, the officer or agent having charge of the stock transfer
books for shares of the Corporation shall make a complete list of the
Shareholders entitled to vote at each meeting of Shareholders or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each. The list shall be kept on file at the registered office of
the corporation and is subject to inspection by a Shareholder or the agent or
attorney of a Shareholder at any time during the usual business hours for a
period of twenty (20) days before the meeting. Such list shall be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any Shareholder during the whole time of the meeting.
Section 7. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of Shareholders. If a quorum is present, the
affirmative vote of the majority of shares represented at the meeting and
entitled to vote on the subject matter is the act of the Shareholders unless the
vote of a greater number or voting by class is required by the articles of
incorporation, bylaws or the Alaska Corporations Code.
The Shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken other than
adjournment is approved by at least a majority of shares required to constitute
a quorum.
If less than a majority of the outstanding shares are represented at a
meeting, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 8. Proxies. At all meetings of Shareholders, a Shareholder may
vote in person or by proxy executed in writing by the Shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. A proxy continues in full
force and effect until revoked by the person executing it, however, no proxy
shall be valid after eleven (11) months from the date of its execution, unless
such proxy qualifies as an irrevocable proxy as defined within AS 10.06.418(e).
Section 9. Voting of Shares. An outstanding share, regardless of class,
is entitled to one vote on each matter submitted to a vote at a meeting of
Shareholders, except as may be otherwise provided in the articles of
incorporation.
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Section 10. Voting of Shares by Certain Holders.
(a) Shares standing in the name of another corporation may be voted by
such officer, agent or proxy as the bylaws of such corporation may prescribe,
or, in the absence of such provisions, as the board of directors of such
corporation may determine.
(b) Shares held by an administrator, executor, guardian or conservator
may be voted by such person, either in person or by proxy, without a transfer of
such shares into his name. Shares standing in the name of a trustee may be voted
by the trustee, either in person or by proxy, but no trustee shall be entitled
to vote shares held by him without a transfer of such shares into his name.
(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer into his name if authority to transfer the
shares is contained in an appropriate order of the court by which such receiver
was appointed.
(d) A Shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
(e) Neither treasury shares, nor shares of its own stock held by the
Corporation in a fiduciary capacity, nor shares held by another corporation if a
majority of the shares entitled to vote for the election of directors of the
other corporation is held by the Corporation, may be voted at a meeting or
counted in determining the total number of outstanding shares.
Section 11. Informal Action by Shareholders . Any action required to be
taken at a meeting of the Shareholders, or any other action which may be taken
at a meeting of the Shareholders, may be taken without a meeting by written
consent, identical in content setting out the action taken, signed by all of the
Shareholders entitled to vote on the action.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of Directors
of the Corporation shall be not less than one (1) nor more than nine (9); unless
the Corporation, now or at any time in the future, has three (3) or more
Shareholders in which case the Corporation shall have not fewer than three (3)
directors; or unless the Corporation has
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only two (2) Shareholders, in which case the Corporation shall have at least two
(2) directors. Each Director shall hold office until the next annual meeting of
Shareholders and until his successor shall have been elected and qualified.
Directors need not be residents of the State of Alaska or Shareholders of the
Corporation. The initial number of Directors shall be four (4).
Section 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, the annual meeting of the Shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of Alaska, for the holding of additional regular meetings
without other notice than such resolution.
Section 4. Special Meetings.
(a) Special meetings of the Board of Directors may be called by the
Chairman of the Board, the President, a Vice President, the Secretary, or a
Director or such person authorized to call the meeting may fix the time and
place for holding the meeting, either inside or outside the State of Alaska.
(b) Notice of any special meeting shall be given at least ten (10) days
prior thereto by written notice delivered personally or mailed to each Director
at his business address, or at least seventy-two (72) hours before the meeting
by electronic means, personal messenger, or comparable person-to-person
communication. If mailed by certified mail, such notice shall be deemed to be
delivered when deposited in the United States mail properly addressed, with
postage thereon prepaid. Any Director may waive notice of any meeting. The
attendance of a Director at a meeting shall constitute a waiver of notice of
such meeting, except where a Director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
Section 5. Quorum. A majority of the presently qualified Directors
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than such majority is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice; provided, further, that where there are only two
Directors, both shall be necessary to constitute a quorum.
Section 6. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 7. Attendance at Meetings. The Board of Directors may conduct a
meeting of the Board by communicating simultaneously with each other by means of
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conference telephones or similar communications equipment and any action taken
at such meeting shall not be invalidated by reason of the fact that the
respective members of the Board were not assembled together in one place at the
time of taking such action or conducting such business.
Section 8. Vacancies. Where a vacancy created by the removal of a
Director is pursuant to AS 10.06.460 or 10.06.463, such vacancies occurring on
the Board may be filled only by a vote of the Shareholders. Any other vacancy
occurring in the Board of Directors may be filled by the affirmative vote of a
majority of the remaining Directors though less than a quorum of the Board of
Directors. A Director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. Any directorship to be filled by
reason of an increase in the number of Directors may be filled by election by
the Board of Directors for a term of office continuing only until the next
election of Directors by the Shareholders. In no case may a vacancy continue
longer than six (6) months or until the next annual meeting, whichever occurs
first.
Section 9. Compensation. By resolution of the Board of Directors, each
Director may be paid his or her expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid a stated salary as Director or a
fixed sum for attendance at each meeting of the Board of Directors or both. No
such payment shall preclude any Director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 10. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his/her dissent shall be entered in the minutes of the meeting or unless he/she
shall file a written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the Secretary of the Corporation immediately after
the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
Section 11. Removal of Directors. Any Director may be removed with or
without cause, at any time, by a vote of the Shareholders holding a majority of
the shares then issued and outstanding, at any special meeting called for that
purpose, or at the annual meeting. Except as otherwise prescribed by statute, a
Director may be removed for cause by a vote of the majority of the entire board.
Prior to vote by the Board on the question of removal of any Director for cause,
such Director must be given written notice of the reasons for such action.
Section 12. Resignation. A Director may resign effective upon giving
written notice to the Chairman of the Board, the President, the Secretary, or
the Board of Directors of the Corporation, unless the notice specifies a later
time for the effectiveness of the
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resignation. If the resignation is effective at a future time, a successor may
be elected to take office when the resignation becomes effective.
Section 13. Voting by Interested Directors. No Director may vote upon
any matter in which he has an adverse or personal interest, unless such interest
has been fully disclosed to the Board of Directors and the Board of Directors,
by majority of vote without the interested Director voting, permits such
interested Director to vote.
Section 14. Action by Directors Without a Meeting. Action required or
permitted to be taken by the Board or a committee designated by the Board may be
taken without a meeting on written consents, identical in consent, setting out
the action taken and signed by all the members of the Board or the committee.
The written consents shall be filed with the minutes. The consents have the same
effect as an unanimous vote.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a
President, one or more Vice Presidents (the number thereof to be determined by
the Board of Directors), a Secretary, and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and assistant officers as
may be deemed necessary may be elected or appointed by the Board of Directors.
Any two (2) or more offices may be held by the same person, except the offices
of President and Secretary.
Section 2. Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the Shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
convenient. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified, or until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided.
Section 3. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
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Section 5. President. The President shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. He shall, when present, preside at all meetings of
the Shareholders and of the Board of Directors. He may sign, with the Secretary
or any other proper officer of the Corporation authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors, or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President may sign, with the Secretary
or an Assistant Secretary, certificates for shares of the Corporation; and shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
Section 7. The Secretary. The Secretary shall:
(a) keep the minutes of the proceedings of the Shareholders and of the
Board of Directors in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the
Corporation and see that the seal of the Corporation is affixed to all documents
the execution of which on behalf of the Corporation under its seal is duly
authorized;
(d) keep a register of the post office address of each Shareholder
which shall be furnished to the Secretary by such Shareholder;
(e) sign with the President, or a Vice President, certificates for
shares of the Corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors;
(f) have general charge of the stock transfer books of the Corporation;
and
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(g) in general perform all duties incident to the office of the
Secretary and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
Section 8. The Treasurer. The Treasurer shall:
(a) have charge and custody of and be responsible for all funds and
securities of the Corporation;
(b) receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the name
of the Corporation in such banks, trust companies or other depositories as shall
be selected; and
(c) in general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Directors
shall determine.
Section 9. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries, when authorized by the Board of Directors, may sign with
the President or a Vice President certificates for shares of the Corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall, if required by the Board of
Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President of the Board of Directors.
Section 10. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.
ARTICLE V
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS, OFFICERS AND
AGENTS OF THE CORPORATION
Section 1. Limitation of Liability. No person shall be liable to the
Corporation for any loss or damage suffered by it on account of any action taken
or omitted to be taken in good faith, as a Director, member of a Committee or
Officer of the Corporation, if such person exercised or used the same degree of
care and skill, including reasonable inquiry, as a prudent person would have
exercised or used under the circumstances in the conduct
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of his/her own affairs. Without limitation on the foregoing, any such person
shall be deemed to have exercised or used such degree of care and skill if such
action were taken or omitted in reliance in good faith upon advice of counsel
for the Corporation, or the books of account or other records of the
Corporation, or reports or information made or furnished to the Corporation by
any officials, accountants, engineers, agents or employees of the Corporation,
or by an independent Certified Public Accountant or auditor, engineer,
appraiser, or other expert employed by the Corporation and selected with
reasonable care by the Board of Directors, by any such committee or by an
authorized officer of the Corporation.
Section 2. Right of Indemnification. Each Director, member of a
Committee, Officer, Agent and Employee of the Corporation, and each former
director, member of a committee, officer, agent and employee of the Corporation,
and any person who may have served at its request as a director, officer, agent
or employee of another Corporation in which it is a creditor, and his heirs and
personal representative shall be indemnified by the Corporation against all loss
or damage suffered and all costs and expenses imposed upon or incurred by him in
connection with or arising out of any action, suit or proceedings (whether civil
or criminal in nature) in which he may be involved, to which he may be a party
by reason of being or having been (or his personal representative or estate
having been) such director, member of a committee, officer, agent or employee,
except in relation to matters as to which he shall be adjudged in such action,
suit or proceeding to be liable for negligence or misconduct in performance of
his duty; provided, however, that the Corporation shall be given reasonable
notice of the institution of such action, suit or proceedings; and in the event
the same shall be settled in whole or in part, the Corporation or its counsel
shall consent to such settlement if it be determined by its counsel or found by
a majority of the Board of Directors then in office and not involved in such
controversy, that such settlement is to the best interest of the Corporation and
that the person to be indemnified was not guilty of negligence or misconduct in
performance of duty.
Indemnification (unless ordered by the court) shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnification is proper in the circumstances because the director,
officer, employee or committee member has met the applicable standard of
conduct. This determination shall be made (a) by the Board of Directors, by a
majority vote of a quorum consisting of directors who were not parties to the
action or proceeding; or (b) by independent legal counsel in a written opinion,
either (i) if such a quorum is not obtainable, or (ii) if a quorum of
disinterested directors so requests such a written opinion; or (c) by approval
of the outstanding shares.
Section 3. Rights Cumulative. The provisions of this Article V shall
not be deemed exclusive or in limitation of, but shall be cumulative of and in
addition to any other limitations of liability, indemnities, and rights to which
such Director, member of a Committee, Officer, Agent or other person may be
entitled under Alaska Statute, these
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Bylaws or pursuant to any agreement or resolution of the Board of Directors or
of the Shareholders, or otherwise.
ARTICLE VI
CONTRACTS, LOANS, CHECKS, DEPOSITS AND COMPENSATION
Section 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary and sealed with the
corporate seal or a facsimile thereof. The signatures of such officers upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation itself or one of
its employees. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person or entity to whom the
shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled; except that in case
of a lost, destroyed or mutilated certificate a new one may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
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All shares issued by the Corporation shall contain a legend on the
certificates stating substantially the following:
The shares represented by this certificate have not
been registered under any federal or state securities
law. They have been acquired for investment and may
not be transferred without an effective registration
statement pursuant to such laws or an opinion of
counsel satisfactory to the corporation that
registration is not required.
Section 2. Transfer of Shares. Transfer of any shares of the
Corporation shall be done in compliance with all federal, state and local
securities laws, and any transfer of in violation thereof is void. Transfer of
shares of the Corporation shall be made only on the stock transfer books of the
Corporation by the holder of record thereof or by its legal representative, who
shall furnish proper evidence of authority to transfer filed with the Secretary
of the Corporation, and on surrender for cancellation of the certificate for
such shares. The entity or person in whose name shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes.
ARTICLE VIII
TAXABLE YEAR AND ACCOUNTING PERIOD
The taxable year and accounting period of the Corporation shall begin
on January 1 and end on December 31, unless changed by resolution of the Board
of Directors.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in cash, property, or
its own shares, except when the Corporation is insolvent, or when the dividend
would render the Corporation insolvent, or when the dividend is contrary to
restrictions contained in the Articles of Incorporation.
ARTICLE X
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the state of incorporation and the words "Corporate Seal."
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ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given to any Shareholder or
Director of the Corporation under the provisions of these Bylaws or under the
provisions of the Articles of Incorporation or under the provisions of the
Alaska Corporation Code, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XII
AMENDMENTS
Except as may be provided in the Articles, these Bylaws may be altered,
amended or repealed and new Bylaws may be adopted by the Board of Directors at
any regular or special meeting of the Board of Directors.
ARTICLE XIII
EXECUTIVE COMMITTEE
Section 1. Appointment. The Board of Directors, by resolution adopted
by a majority of the full board, may designate two (2) or more of its members to
constitute an Executive Committee. The designation of such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
Section 2. Authority. Except as limited by the Articles or AS
10.06.468, the Executive Committee, when the Board of Directors is not in
session, shall have and may exercise all of the authority of the Board of
Directors except to the extent, if any, that such authority shall be limited by
the resolution appointing the Executive Committee.
Section 3. Tenure and Qualifications. Each member of the Executive
Committee shall hold office until the next regular annual meeting of the Board
of Directors following his designation and until his successor is designated as
a member of the Executive Committee and is elected and qualified.
Section 4. Meetings. Regular meetings of the Executive Committee may be
held without notice at such times and places as the Executive Committee may fix
from time to time by resolution. Special meetings of the Executive Committee may
be called by any member thereof upon not less than five (5) days' notice,
stating the place, date and hour of the meeting, which notice may be written or
oral, and if mailed by certified mail, shall be deemed to be delivered when
deposited in the United States mail addressed to the member of the Executive
Committee at his business address, postage prepaid. Any member of the Executive
Committee may waive notice of any meeting, and no notice of
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any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the Executive Committee need not state the business
proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the Executive Committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the Executive Committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
Section 6. Action Without a Meeting. Any action that may be taken by
the Executive Committee at a meeting may be taken without a meeting if a consent
in writing, setting forth the action so to be taken, shall be signed by all of
the members of the Executive Committee before such action be taken further. The
Executive Committee can validly conduct a meeting by communicating
simultaneously with each other by means of conference telephones or similar
communications equipment.
Section 7. Vacancies. Any vacancy in the Executive Committee may be
filled by a resolution adopted by a majority of the full Board of Directors.
Section 8. Resignations and Removal. Any member of the Executive
Committee may be removed at any time, with or without cause, by resolution
adopted by a majority of the full Board of Directors. Any member of the
Executive Committee may resign from the Executive Committee at any time by
giving written notice to the President or Secretary of the Corporation and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 9. Procedure. The Executive Committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these Bylaws. It shall keep regular minutes of its
proceedings and report the same to the Board of Directors for its information at
the meeting thereof held next after the proceedings shall have been taken.
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ARTICLE XIV
CONDUCT OF MEETINGS
All meetings conducted under these Bylaws shall be governed in
accordance with Roberts Rules of Order.
We, the undersigned, hereby certify that the foregoing Bylaws for
governing the operation and management of GCI Fiber Co., Inc., were duly adopted
by the Directors by unanimous written consent, effective as of July 29, 1997.
/s/
John M. Lowber, Secretary
APPROVED:
/s/
Ronald A. Duncan, President
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EXHIBIT 99.24
ARTICLES OF INCORPORATION
OF
GCI FIBER CO., INC.
We, the undersigned natural persons over the age of eighteen (18)
years, acting as incorporators of a corporation under the Alaska Corporation
Code, AS 10.06, do hereby adopt the following Articles of Incorporation for such
corporation.
ARTICLE I - Name
The name of the corporation ("Corporation") is: GCI Fiber Co., Inc.
ARTICLE II - Purposes and Powers
The purposes for which the Corporation is specifically organized are
the acquisition of transponders on a satellite, and the construction and
operation of a fiber optic network linking certain cities in the State of Alaska
with the 48 contiguous United States.
The Corporation shall have and may exercise all of the general powers
of a natural person, including those provided in AS 10.06.010, as amended.
ARTICLE III - Registered Office and Agent
The address of the Corporation's registered office and the name of its
registered agent is Hartig, Rhodes, Norman, Mahoney & Edwards, P.C., 717 "K"
Street, Anchorage, AK 99501.
ARTICLE IV - Capital
The Corporation shall have the authority to issue ten thousand (10,000)
shares of no par value stock. These shares shall be common voting shares, each
share having one (1) vote.
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ARTICLE V - No Preemptive Rights
Pursuant to AS 10.06.210(a)(1)(B), no holder of any stock of the
Corporation shall be entitled to purchase, subscribe for or otherwise acquire,
as a matter of right, any new or additional shares of stock, of any class, in
the Corporation, any options or warrants to purchase, subscribe for or otherwise
acquire any new or additional shares in the Corporation, or any shares, bonds,
notes, debentures, or other securities convertible into or carrying options or
warrants to purchase, subscribe for or otherwise acquire any such shares.
ARTICLE VI - No Cumulative Voting
Pursuant to AS 10.06.420(d), shareholders shall not cumulate their
votes, but must vote shares held by them for as many persons as there are
directors to be elected.
ARTICLE VII - Power to Redeem Shares
Pursuant to AS 10.06.325, the Corporation has the power on majority
vote of the shareholders, to redeem, in whole or in part, any class of
outstanding shares.
ARTICLE VIII - Quorum of Shareholders
A quorum for the conducting of any shareholder business shall be
fifty-one percent (51%) of all outstanding shares that are entitled to vote.
ARTICLE IX - Initial Directors
The initial number of directors of the Corporation shall be four (4).
The names and addresses of the initial directors, who shall serve until the
first annual meeting of shareholders or until their successors are elected and
qualified are as follows:
Ronald A. Duncan
2550 Denali Street, Suite 1000
Anchorage, AK 99503
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John M. Lowber
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Wilson Hughes
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Donne F. Fisher
Tele-Communications, Inc.
4643 S. Ulster, Suite 400
Denver, CO 80237
The number of directors may be increased or decreased from time to time
by an amendment of the Bylaws; but no decrease shall have the effect of
shortening the term of any incumbent director. The directors may fill any
vacancy on the board created by reason of removal or retiring of any director.
ARTICLE X - Alien Affiliates
The Corporation is not affiliated with any nonresident alien or a
corporation whose place of incorporation is outside the United States (as
defined in AS 10.06.990(2) and (3)).
ARTICLE XI - Liability of Directors
The directors of the Corporation shall not be liable to the Corporation
for monetary damages for a breach of fiduciary duty except for:
1. A breach of a director's duty of loyalty to the Corporation;
2. Acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; or
3. A transaction from which the director derives an improper personal
benefit.
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ARTICLE XII - Bylaws
The initial Bylaws of the Corporation shall be adopted by the Board of
Directors, and the power to alter, amend or repeal the Bylaws shall be reserved
to the board. The Bylaws may contain any provision for the regulation and
management of the affairs of the Corporation not inconsistent with the Alaska
Corporation Code or with these Articles of Incorporation.
ARTICLE XIII - Duration
The duration of the Corporation shall be perpetual.
ARTICLE XIV - Effective Date
These Articles will be effective upon filing.
ARTICLE XV - Special Provisions
1. The Corporation shall not engage in any dissolution, liquidation,
merger, consolidation or sale, transfer, assignment, lease, conveyance or other
disposal of all or substantially all of its property in any one transaction or
series of transactions as long as any indebtedness under the Fiber Construction
Facility by the Alaska United Fiber System Partnership remains outstanding,
other than (a) any such transaction with or into GCI, Inc., or any of its
Restricted Subsidiaries otherwise effected in accordance with the terms of that
Indenture of 1997, between GCI, Inc., and the Bank of New York, as trustee
("Indenture"), (b) any such transaction with or into another Unrestricted
Subsidiary and (c) any such transaction which, assuming for purposes of this
clause (c) only that such Unrestricted Subsidiary were a Restricted Subsidiary,
would comply with the covenant entitled "Limitation on Asset Sales" in the
Indenture; provided, however, that any Net Available Cash derived therefrom may
also be used to prepay, repay or purchase indebtedness under such Fiber
Construction Facility.
As used herein, "Restricted Subsidiaries" means (i) any
Subsidiary of GCI, Inc., on or after the issue date for the Indenture notes,
unless such Subsidiary shall have been designated an Unrestricted Subsidiary as
permitted or required pursuant to the definition of "Unrestricted Subsidiary"
and (ii) an Unrestricted Subsidiary which is redesignated as a Restricted
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Subsidiary as permitted pursuant to the definition of "Unrestricted Subsidiary."
"Subsidiary" of GCI, Inc., means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, of which at least a majority of the total
voting power of the voting stock is held by GCI, Inc.
"Unrestricted Subsidiary" means (a) the Corporation, GCI
Satellite Co., Inc., GCI Fiber Co., Inc., Fiber Hold Co., Inc., and Alaska
United Fiber System Partnership and (b) any Subsidiary of an Unrestricted
Subsidiary.
"Net Available Cash" from an Asset Sale means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring person of indebtedness or other
obligations relating to such properties or assets or received in any other non
cash form) in each case net of all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal, state,
provincial, foreign and local taxes required to be accrued as a liability under
GAAP, as a consequence of such Asset Sale, and in each case net of all payments
made on any indebtedness (a) which is secured by any assets subject to such
Asset Sale, in accordance with the terms of any lien upon or other security
agreement of any kind with respect to such assets, or (b) which must (1) by its
terms, or in order to obtain a necessary consent to such Asset Sale (except, in
the case of this clause (b), indebtedness that is pari passu with or
subordinated to the Indenture notes), or (2) by applicable law be repaid out of
the proceeds from such Asset Sale, and net of all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Sale.
"Asset Sale" means any transfer, conveyance, sale, lease or
other disposition (including, without limitation, dispositions pursuant to any
consolidation or merger or a sale and leaseback transaction) by the Corporation
in any single transaction or series of transactions of (a) shares of capital
stock or other ownership interests in another person (including capital stock of
Unrestricted Subsidiaries); or (b) any other property of the Corporation;
provided, however, that the term "Asset Sale" shall not include: (i) the sale or
transfer of temporary cash investments, inventory, accounts
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receivable or other property (including, without limitation, the lease of excess
satellite transponder capacity and the lease of excess fiber capacity) in the
ordinary course of business; (ii) the liquidation of property received in
settlement of debts owing to the Corporation as a result of foreclosure,
perfection or enforcement of any lien or debt, which debts were owing to the
Corporation in the ordinary course of business; (iii) the sale or transfer of
any property by the Corporation or to any of the Restricted Subsidiaries; (iv) a
disposition in the form of a restricted payment permitted to be made pursuant to
"--Certain Covenants--Limitation on Restricted Payments" in the Indenture; or
(v) a disposition (taken together with any other dispositions in a single
transaction or series of related transactions) with a fair market value and a
sale price of less than $5 million.
2. The Corporation's board of directors shall consist of not less than
one outside director.
IN WITNESS WHEREOF, I have signed these Articles this 22 day of July,
1997.
/s/
Robert B. Flint
IN WITNESS WHEREOF, I have signed these Articles this 22nd day of July,
1997.
/s/
Bonnie J. Paskvan
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
Robert B. Flint says on oath or affirms that he has read the foregoing
Articles of Incorporation of GCI Fiber Co., Inc., and believes all statements
made in the document are true and correct.
/s/
Notary Public in and for the
State of Alaska
My commission expires: 4-11-2001
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STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
Bonnie J. Paskvan says on oath or affirms that she has read the
foregoing Articles of Incorporation of GCI Fiber Co., Inc., and believes all
statements made in the document are true and correct.
/s/
Notary Public in and for the
State of Alaska
My commission expires: 4-11-2001
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EXHIBIT 99.25
BYLAWS
OF
GCI SATELLITE CO., INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE I OFFICES 1
ARTICLE II SHAREHOLDERS' MEETINGS 1
Section 1. Annual Meeting 1
Section 2. Special Meetings 1
Section 3. Place of Meeting 2
Section 4. Notice of Meeting 2
Section 5. Closing of Transfer Books or Fixing of Record Date 2
Section 6. Voting Lists 3
Section 7. Quorum 3
Section 8. Proxies 3
Section 9. Voting of Shares. 3
Section 10. Voting of Shares by Certain Holders 4
Section 11. Informal Action by Shareholders 4
ARTICLE III BOARD OF DIRECTORS 4
Section 1. General Powers 4
Section 2. Number, Tenure and Qualifications 4
Section 3. Regular Meetings 5
Section 4. Special Meetings 5
Section 5. Quorum 5
Section 6. Manner of Acting 5
Section 7. Attendance at Meetings 5
Section 8. Vacancies 6
Section 9. Compensation 6
Section 10. Presumption of Assent 6
Section 11. Removal of Directors 6
Section 12. Resignation 6
Section 13. Voting by Interested Directors 7
Section 14. Action by Directors Without a Meeting 7
ARTICLE IV OFFICERS 7
Section 1. Number 7
Section 2. Election and Term of Office. 7
Section 3. Removal 7
Section 4. Vacancies 7
Section 5. President 8
Section 6. Vice Presidents 8
Section 7. The Secretary 8
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Section 8. The Treasurer 9
Section 9. Assistant Secretaries and Assistant Treasurers 9
Section 10. Salaries 9
ARTICLE V LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS,
OFFICERS AND AGENTS OF THE CORPORATION 9
Section 1. Limitation of Liability 9
Section 2. Right of Indemnification 10
Section 3. Rights Cumulative 10
ARTICLE VI CONTRACTS, LOANS, CHECKS, DEPOSITS AND COMPENSATION 11
Section 1. Contracts 11
Section 2. Loans 11
Section 3. Checks, Drafts, etc 11
Section 4. Deposits 11
ARTICLE VII CERTIFICATES FOR SHARES AND THEIR TRANSFER 11
Section 1. Certificates for Shares 11
Section 2. Transfer of Shares. 12
ARTICLE VIII TAXABLE YEAR AND ACCOUNTING PERIOD 12
ARTICLE IX DIVIDENDS 12
ARTICLE X CORPORATE SEAL 12
ARTICLE XI WAIVER OF NOTICE 13
ARTICLE XII AMENDMENTS 13
ARTICLE XIII EXECUTIVE COMMITTEE 13
Section 1. Appointment 13
Section 2. Authority 13
Section 3. Tenure and Qualifications 13
Section 4. Meetings 13
Section 5. Quorum 14
Section 6. Action Without a Meeting 14
Section 7. Vacancies 14
Section 8. Resignations and Removal 14
Section 9. Procedure 14
ARTICLE XIV CONDUCT OF MEETINGS 15
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ARTICLE I
OFFICES
The principal office of GCI Satellite Co., Inc. (the "Corporation")
shall be located in Anchorage, Alaska. The Corporation may have such other
offices, either within or without the State of Alaska, as the Board of Directors
may designate or as the business of the Corporation may require from time to
time.
The registered office of the Corporation required by the Alaska
Corporations Code to be maintained in the State of Alaska may be, but need not
be, identical with the principal office in the State of Alaska, and the address
of the registered office may be changed from time to time by the Board of
Directors.
ARTICLE II
SHAREHOLDERS' MEETINGS
Section 1. Annual Meeting. The annual meeting of the Shareholders shall
be held in the month of June of each year, for the purpose of electing Directors
and for the transaction of such other business as may come before the meeting.
If the election of Directors shall not be held on the day designated for the
annual meeting of the Shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
Shareholders as soon thereafter as it conveniently may be held.
(a) Meetings of the Shareholders shall be presided over by the
President or by any officer or Director or person selected at any time by the
President to act as Chairman, or if he is not present or available or makes no
selection, then by the Chairman of the Board of Directors. If neither the
President nor the Chairman of the Board of Directors is present and no selection
has been made, a Chairman should be chosen by a majority in interest of the
Shareholders present in person or by proxy at the meeting and entitled to vote
thereat.
(b) The Secretary of the meeting shall be the Secretary of the
Corporation or an Assistant Secretary, or if none of such officers is present,
any person appointed by the Chairman of the meeting.
Section 2. Special Meetings. Special meetings of the Shareholders for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or by the Board of Directors, and shall be called by the
President at the request of the holders of not less than one-tenth of all the
outstanding shares of the corporation entitled to vote at the meeting.
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Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Alaska, as the place of meeting
called by the Board of Directors. A waiver of notice signed by all Shareholders
entitled to vote at a meeting may designate any place, either within or without
the State of Alaska, as the place for the holding of such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the Corporation in the State of Alaska.
Section 4. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than twenty (20)
nor more than sixty (60) days before the date of the meeting, either personally
or by mail, by or at the direction of the President, or the Secretary, or the
persons calling the meeting, to each Shareholder of record entitled to vote at
such meeting. If mailed, the notice is considered delivered when deposited with
postage prepaid in the United States mail addressed to the shareholder at the
address of the shareholder as it appears on the stock transfer book of the
corporation, or, if the shareholder has filed with the secretary of the
corporation a written request that notice be mailed to a different address,
addressed to the shareholder at the new address.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining Shareholders entitled to notice of or to vote at any
meeting of Shareholders or any adjournment thereof, or Shareholders entitled to
receive payment of a dividend, or in order to make a determination of
Shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, seventy (70) days. If the stock
transfer books shall be closed for the purpose of determining Shareholders
entitled to notice of or to vote at a meeting of Shareholders, such books shall
be closed for at least twenty (20) days immediately preceding such meeting.
Instead of closing the stock transfer books, the Board of Directors may
fix a date as the record date for any such determination of Shareholders. This
record date shall be not more than sixty (60) days, and in case of a meeting of
Shareholders not less than twenty (20) days, prior to the date on which the
particular action requiring such determination of Shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of Shareholders entitled to notice of or to vote at a meeting of
Shareholders, or Shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring the dividend is adopted is, as
the case may be, the record date for the determination of Shareholders. When a
determination of Shareholders entitled to vote at any meeting of Shareholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof except where the determination has been made through the
closing of the stock transfer books and the stated period of closing has
expired.
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Section 6. Voting Lists. At least twenty (20) days before each meeting
of the Shareholders, the officer or agent having charge of the stock transfer
books for shares of the Corporation shall make a complete list of the
Shareholders entitled to vote at each meeting of Shareholders or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each. The list shall be kept on file at the registered office of
the corporation and is subject to inspection by a Shareholder or the agent or
attorney of a Shareholder at any time during the usual business hours for a
period of twenty (20) days before the meeting. Such list shall be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any Shareholder during the whole time of the meeting.
Section 7. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of Shareholders. If a quorum is present, the
affirmative vote of the majority of shares represented at the meeting and
entitled to vote on the subject matter is the act of the Shareholders unless the
vote of a greater number or voting by class is required by the articles of
incorporation, bylaws or the Alaska Corporations Code.
The Shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken other than
adjournment is approved by at least a majority of shares required to constitute
a quorum.
If less than a majority of the outstanding shares are represented at a
meeting, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 8. Proxies. At all meetings of Shareholders, a Shareholder may
vote in person or by proxy executed in writing by the Shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. A proxy continues in full
force and effect until revoked by the person executing it, however, no proxy
shall be valid after eleven (11) months from the date of its execution, unless
such proxy qualifies as an irrevocable proxy as defined within AS 10.06.418(e).
Section 9. Voting of Shares. An outstanding share, regardless of class,
is entitled to one vote on each matter submitted to a vote at a meeting of
Shareholders, except as may be otherwise provided in the articles of
incorporation.
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Section 10. Voting of Shares by Certain Holders.
(a) Shares standing in the name of another corporation may be voted by
such officer, agent or proxy as the bylaws of such corporation may prescribe,
or, in the absence of such provisions, as the board of directors of such
corporation may determine.
(b) Shares held by an administrator, executor, guardian or conservator
may be voted by such person, either in person or by proxy, without a transfer of
such shares into his name. Shares standing in the name of a trustee may be voted
by the trustee, either in person or by proxy, but no trustee shall be entitled
to vote shares held by him without a transfer of such shares into his name.
(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer into his name if authority to transfer the
shares is contained in an appropriate order of the court by which such receiver
was appointed.
(d) A Shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
(e) Neither treasury shares, nor shares of its own stock held by the
Corporation in a fiduciary capacity, nor shares held by another corporation if a
majority of the shares entitled to vote for the election of directors of the
other corporation is held by the Corporation, may be voted at a meeting or
counted in determining the total number of outstanding shares.
Section 11. Informal Action by Shareholders. Any action required to be
taken at a meeting of the Shareholders, or any other action which may be taken
at a meeting of the Shareholders, may be taken without a meeting by written
consent, identical in content setting out the action taken, signed by all of the
Shareholders entitled to vote on the action.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of Directors
of the Corporation shall be not less than one (1) nor more than nine (9); unless
the Corporation, now or at any time in the future, has three (3) or more
Shareholders in which case the Corporation shall have not fewer than three (3)
directors; or unless the Corporation has
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only two (2) Shareholders, in which case the Corporation shall have at least two
(2) directors. Each Director shall hold office until the next annual meeting of
Shareholders and until his successor shall have been elected and qualified.
Directors need not be residents of the State of Alaska or Shareholders of the
Corporation. The initial number of Directors shall be four (4).
Section 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, the annual meeting of the Shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of Alaska, for the holding of additional regular meetings
without other notice than such resolution.
Section 4. Special Meetings.
(a) Special meetings of the Board of Directors may be called by the
Chairman of the Board, the President, a Vice President, the Secretary, or a
Director or such person authorized to call the meeting may fix the time and
place for holding the meeting, either inside or outside the State of Alaska.
(b) Notice of any special meeting shall be given at least ten (10) days
prior thereto by written notice delivered personally or mailed to each Director
at his business address, or at least seventy-two (72) hours before the meeting
by electronic means, personal messenger, or comparable person-to-person
communication. If mailed by certified mail, such notice shall be deemed to be
delivered when deposited in the United States mail properly addressed, with
postage thereon prepaid. Any Director may waive notice of any meeting. The
attendance of a Director at a meeting shall constitute a waiver of notice of
such meeting, except where a Director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
Section 5. Quorum. A majority of the presently qualified Directors
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than such majority is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice; provided, further, that where there are only two
Directors, both shall be necessary to constitute a quorum.
Section 6. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 7. Attendance at Meetings. The Board of Directors may conduct a
meeting of the Board by communicating simultaneously with each other by means of
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conference telephones or similar communications equipment and any action taken
at such meeting shall not be invalidated by reason of the fact that the
respective members of the Board were not assembled together in one place at the
time of taking such action or conducting such business.
Section 8. Vacancies. Where a vacancy created by the removal of a
Director is pursuant to AS 10.06.460 or 10.06.463, such vacancies occurring on
the Board may be filled only by a vote of the Shareholders. Any other vacancy
occurring in the Board of Directors may be filled by the affirmative vote of a
majority of the remaining Directors though less than a quorum of the Board of
Directors. A Director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. Any directorship to be filled by
reason of an increase in the number of Directors may be filled by election by
the Board of Directors for a term of office continuing only until the next
election of Directors by the Shareholders. In no case may a vacancy continue
longer than six (6) months or until the next annual meeting, whichever occurs
first.
Section 9. Compensation. By resolution of the Board of Directors, each
Director may be paid his or her expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid a stated salary as Director or a
fixed sum for attendance at each meeting of the Board of Directors or both. No
such payment shall preclude any Director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 10. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his/her dissent shall be entered in the minutes of the meeting or unless he/she
shall file a written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the Secretary of the Corporation immediately after
the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
Section 11. Removal of Directors. Any Director may be removed with or
without cause, at any time, by a vote of the Shareholders holding a majority of
the shares then issued and outstanding, at any special meeting called for that
purpose, or at the annual meeting. Except as otherwise prescribed by statute, a
Director may be removed for cause by a vote of the majority of the entire board.
Prior to vote by the Board on the question of removal of any Director for cause,
such Director must be given written notice of the reasons for such action.
Section 12. Resignation. A Director may resign effective upon giving
written notice to the Chairman of the Board, the President, the Secretary, or
the Board of Directors of the Corporation, unless the notice specifies a later
time for the effectiveness of the
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resignation. If the resignation is effective at a future time, a successor may
be elected to take office when the resignation becomes effective.
Section 13. Voting by Interested Directors. No Director may vote upon
any matter in which he has an adverse or personal interest, unless such interest
has been fully disclosed to the Board of Directors and the Board of Directors,
by majority of vote without the interested Director voting, permits such
interested Director to vote.
Section 14. Action by Directors Without a Meeting. Action required or
permitted to be taken by the Board or a committee designated by the Board may be
taken without a meeting on written consents, identical in consent, setting out
the action taken and signed by all the members of the Board or the committee.
The written consents shall be filed with the minutes. The consents have the same
effect as an unanimous vote.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a
President, one or more Vice Presidents (the number thereof to be determined by
the Board of Directors), a Secretary, and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and assistant officers as
may be deemed necessary may be elected or appointed by the Board of Directors.
Any two (2) or more offices may be held by the same person, except the offices
of President and Secretary.
Section 2. Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the Shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
convenient. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified, or until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided.
Section 3. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
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Section 5. President. The President shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. He shall, when present, preside at all meetings of
the Shareholders and of the Board of Directors. He may sign, with the Secretary
or any other proper officer of the Corporation authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors, or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President may sign, with the Secretary
or an Assistant Secretary, certificates for shares of the Corporation; and shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
Section 7. The Secretary. The Secretary shall:
(a) keep the minutes of the proceedings of the Shareholders and of the
Board of Directors in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the
Corporation and see that the seal of the Corporation is affixed to all documents
the execution of which on behalf of the Corporation under its seal is duly
authorized;
(d) keep a register of the post office address of each Shareholder
which shall be furnished to the Secretary by such Shareholder;
(e) sign with the President, or a Vice President, certificates for
shares of the Corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors;
(f) have general charge of the stock transfer books of the Corporation;
and
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(g) in general perform all duties incident to the office of the
Secretary and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
Section 8. The Treasurer. The Treasurer shall:
(a) have charge and custody of and be responsible for all funds and
securities of the Corporation;
(b) receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the name
of the Corporation in such banks, trust companies or other depositories as shall
be selected; and
(c) in general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Directors
shall determine.
Section 9. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries, when authorized by the Board of Directors, may sign with
the President or a Vice President certificates for shares of the Corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall, if required by the Board of
Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President of the Board of Directors.
Section 10. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.
ARTICLE V
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS, OFFICERS AND
AGENTS OF THE CORPORATION
Section 1. Limitation of Liability. No person shall be liable to the
Corporation for any loss or damage suffered by it on account of any action taken
or omitted to be taken in good faith, as a Director, member of a Committee or
Officer of the Corporation, if such person exercised or used the same degree of
care and skill, including reasonable inquiry, as a prudent person would have
exercised or used under the circumstances in the conduct
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of his/her own affairs. Without limitation on the foregoing, any such person
shall be deemed to have exercised or used such degree of care and skill if such
action were taken or omitted in reliance in good faith upon advice of counsel
for the Corporation, or the books of account or other records of the
Corporation, or reports or information made or furnished to the Corporation by
any officials, accountants, engineers, agents or employees of the Corporation,
or by an independent Certified Public Accountant or auditor, engineer,
appraiser, or other expert employed by the Corporation and selected with
reasonable care by the Board of Directors, by any such committee or by an
authorized officer of the Corporation.
Section 2. Right of Indemnification. Each Director, member of a
Committee, Officer, Agent and Employee of the Corporation, and each former
director, member of a committee, officer, agent and employee of the Corporation,
and any person who may have served at its request as a director, officer, agent
or employee of another Corporation in which it is a creditor, and his heirs and
personal representative shall be indemnified by the Corporation against all loss
or damage suffered and all costs and expenses imposed upon or incurred by him in
connection with or arising out of any action, suit or proceedings (whether civil
or criminal in nature) in which he may be involved, to which he may be a party
by reason of being or having been (or his personal representative or estate
having been) such director, member of a committee, officer, agent or employee,
except in relation to matters as to which he shall be adjudged in such action,
suit or proceeding to be liable for negligence or misconduct in performance of
his duty; provided, however, that the Corporation shall be given reasonable
notice of the institution of such action, suit or proceedings; and in the event
the same shall be settled in whole or in part, the Corporation or its counsel
shall consent to such settlement if it be determined by its counsel or found by
a majority of the Board of Directors then in office and not involved in such
controversy, that such settlement is to the best interest of the Corporation and
that the person to be indemnified was not guilty of negligence or misconduct in
performance of duty.
Indemnification (unless ordered by the court) shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnification is proper in the circumstances because the director,
officer, employee or committee member has met the applicable standard of
conduct. This determination shall be made (a) by the Board of Directors, by a
majority vote of a quorum consisting of directors who were not parties to the
action or proceeding; or (b) by independent legal counsel in a written opinion,
either (i) if such a quorum is not obtainable, or (ii) if a quorum of
disinterested directors so requests such a written opinion; or (c) by approval
of the outstanding shares.
Section 3. Rights Cumulative. The provisions of this Article V shall
not be deemed exclusive or in limitation of, but shall be cumulative of and in
addition to any other limitations of liability, indemnities, and rights to which
such Director, member of a Committee, Officer, Agent or other person may be
entitled under Alaska Statute, these
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Bylaws or pursuant to any agreement or resolution of the Board of Directors or
of the Shareholders, or otherwise.
ARTICLE VI
CONTRACTS, LOANS, CHECKS, DEPOSITS AND COMPENSATION
Section 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary and sealed with the
corporate seal or a facsimile thereof. The signatures of such officers upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation itself or one of
its employees. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person or entity to whom the
shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled; except that in case
of a lost, destroyed or mutilated certificate a new one may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
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All shares issued by the Corporation shall contain a legend on the
certificates stating substantially the following:
The shares represented by this certificate have not
been registered under any federal or state securities
law. They have been acquired for investment and may
not be transferred without an effective registration
statement pursuant to such laws or an opinion of
counsel satisfactory to the corporation that
registration is not required.
Section 2. Transfer of Shares. Transfer of any shares of the
Corporation shall be done in compliance with all federal, state and local
securities laws, and any transfer of in violation thereof is void. Transfer of
shares of the Corporation shall be made only on the stock transfer books of the
Corporation by the holder of record thereof or by its legal representative, who
shall furnish proper evidence of authority to transfer filed with the Secretary
of the Corporation, and on surrender for cancellation of the certificate for
such shares. The entity or person in whose name shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes.
ARTICLE VIII
TAXABLE YEAR AND ACCOUNTING PERIOD
The taxable year and accounting period of the Corporation shall begin
on January 1 and end on December 31, unless changed by resolution of the Board
of Directors.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in cash, property, or
its own shares, except when the Corporation is insolvent, or when the dividend
would render the Corporation insolvent, or when the dividend is contrary to
restrictions contained in the Articles of Incorporation.
ARTICLE X
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the state of incorporation and the words "Corporate Seal."
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ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given to any Shareholder or
Director of the Corporation under the provisions of these Bylaws or under the
provisions of the Articles of Incorporation or under the provisions of the
Alaska Corporation Code, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XII
AMENDMENTS
Except as may be provided in the Articles, these Bylaws may be altered,
amended or repealed and new Bylaws may be adopted by the Board of Directors at
any regular or special meeting of the Board of Directors.
ARTICLE XIII
EXECUTIVE COMMITTEE
Section 1. Appointment. The Board of Directors, by resolution adopted
by a majority of the full board, may designate two (2) or more of its members to
constitute an Executive Committee. The designation of such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
Section 2. Authority. Except as limited by the Articles or AS
10.06.468, the Executive Committee, when the Board of Directors is not in
session, shall have and may exercise all of the authority of the Board of
Directors except to the extent, if any, that such authority shall be limited by
the resolution appointing the Executive Committee.
Section 3. Tenure and Qualifications. Each member of the Executive
Committee shall hold office until the next regular annual meeting of the Board
of Directors following his designation and until his successor is designated as
a member of the Executive Committee and is elected and qualified.
Section 4. Meetings. Regular meetings of the Executive Committee may be
held without notice at such times and places as the Executive Committee may fix
from time to time by resolution. Special meetings of the Executive Committee may
be called by any member thereof upon not less than five (5) days' notice,
stating the place, date and hour of the meeting, which notice may be written or
oral, and if mailed by certified mail, shall be deemed to be delivered when
deposited in the United States mail addressed to the member of the Executive
Committee at his business address, postage prepaid. Any member of the Executive
Committee may waive notice of any meeting, and no notice of
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any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the Executive Committee need not state the business
proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the Executive Committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the Executive Committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
Section 6. Action Without a Meeting. Any action that may be taken by
the Executive Committee at a meeting may be taken without a meeting if a consent
in writing, setting forth the action so to be taken, shall be signed by all of
the members of the Executive Committee before such action be taken further. The
Executive Committee can validly conduct a meeting by communicating
simultaneously with each other by means of conference telephones or similar
communications equipment.
Section 7. Vacancies. Any vacancy in the Executive Committee may be
filled by a resolution adopted by a majority of the full Board of Directors.
Section 8. Resignations and Removal. Any member of the Executive
Committee may be removed at any time, with or without cause, by resolution
adopted by a majority of the full Board of Directors. Any member of the
Executive Committee may resign from the Executive Committee at any time by
giving written notice to the President or Secretary of the Corporation and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 9. Procedure. The Executive Committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these Bylaws. It shall keep regular minutes of its
proceedings and report the same to the Board of Directors for its information at
the meeting thereof held next after the proceedings shall have been taken.
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ARTICLE XIV
CONDUCT OF MEETINGS
All meetings conducted under these Bylaws shall be governed in
accordance with Roberts Rules of Order.
We, the undersigned, hereby certify that the foregoing Bylaws for
governing the operation and management of GCI Satellite Co., Inc., were duly
adopted by the Directors by unanimous written consent, effective as of
July 29, 1997.
/s/
John M. Lowber, Secretary
APPROVED:
/s/
Ronald A. Duncan, President
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EXHIBIT 99.26
ARTICLES OF INCORPORATION
OF
GCI SATELLITE CO., INC.
We, the undersigned natural persons over the age of eighteen (18)
years, acting as incorporators of a corporation under the Alaska Corporation
Code, AS 10.06, do hereby adopt the following Articles of Incorporation for such
corporation.
ARTICLE I - Name
The name of the corporation ("Corporation") is: GCI SATELLITE Co., Inc.
ARTICLE II - Purposes and Powers
The purposes for which the Corporation is specifically organized are
the acquisition of transponders on a satellite, and the construction and
operation of a fiber optic network linking certain cities in the State of Alaska
with the 48 contiguous United States.
The Corporation shall have and may exercise all of the general powers
of a natural person, including those provided in AS 10.06.010, as amended.
ARTICLE III - Registered Office and Agent
The address of the Corporation's registered office and the name of its
registered agent is Hartig, Rhodes, Norman, Mahoney & Edwards, P.C., 717 "K"
Street, Anchorage, AK 99501.
ARTICLE IV - Capital
The Corporation shall have the authority to issue ten thousand (10,000)
shares of no par value stock. These shares shall be common voting shares, each
share having one (1) vote.
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ARTICLE V - No Preemptive Rights
Pursuant to AS 10.06.210(a)(1)(B), no holder of any stock of the
Corporation shall be entitled to purchase, subscribe for or otherwise acquire,
as a matter of right, any new or additional shares of stock, of any class, in
the Corporation, any options or warrants to purchase, subscribe for or otherwise
acquire any new or additional shares in the Corporation, or any shares, bonds,
notes, debentures, or other securities convertible into or carrying options or
warrants to purchase, subscribe for or otherwise acquire any such shares.
ARTICLE VI - No Cumulative Voting
Pursuant to AS 10.06.420(d), shareholders shall not cumulate their
votes, but must vote shares held by them for as many persons as there are
directors to be elected.
ARTICLE VII - Power to Redeem Shares
Pursuant to AS 10.06.325, the Corporation has the power on majority
vote of the shareholders, to redeem, in whole or in part, any class of
outstanding shares.
ARTICLE VIII - Quorum of Shareholders
A quorum for the conducting of any shareholder business shall be
fifty-one percent (51%) of all outstanding shares that are entitled to vote.
ARTICLE IX - Initial Directors
The initial number of directors of the Corporation shall be four (4).
The names and addresses of the initial directors, who shall serve until the
first annual meeting of shareholders or until their successors are elected and
qualified are as follows:
Ronald A. Duncan
2550 Denali Street, Suite 1000
Anchorage, AK 99503
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John M. Lowber
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Wilson Hughes
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Donne F. Fisher
Tele-Communications, Inc.
4643 S. Ulster, Suite 400
Denver, CO 80237
The number of directors may be increased or decreased from time to time
by an amendment of the Bylaws; but no decrease shall have the effect of
shortening the term of any incumbent director. The directors may fill any
vacancy on the board created by reason of removal or retiring of any director.
ARTICLE X - Alien Affiliates
The Corporation is not affiliated with any nonresident alien or a
corporation whose place of incorporation is outside the United States (as
defined in AS 10.06.990(2) and (3)).
ARTICLE XI - Liability of Directors
The directors of the Corporation shall not be liable to the Corporation
for monetary damages for a breach of fiduciary duty except for:
1. A breach of a director's duty of loyalty to the Corporation;
2. Acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; or
3. A transaction from which the director derives an improper personal
benefit.
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ARTICLE XII - Bylaws
The initial Bylaws of the Corporation shall be adopted by the Board of
Directors, and the power to alter, amend or repeal the Bylaws shall be reserved
to the board. The Bylaws may contain any provision for the regulation and
management of the affairs of the Corporation not inconsistent with the Alaska
Corporation Code or with these Articles of Incorporation.
ARTICLE XIII - Duration
The duration of the Corporation shall be perpetual.
ARTICLE XIV - Effective Date
These Articles will be effective upon filing.
ARTICLE XV - Special Provisions
1. The Corporation shall not engage in any dissolution, liquidation,
merger, consolidation or sale, transfer, assignment, lease, conveyance or other
disposal of all or substantially all of its property in any one transaction or
series of transactions as long as any indebtedness under the Fiber Construction
Facility by the Alaska United Fiber System Partnership remains outstanding,
other than (a) any such transaction with or into GCI, Inc., or any of its
Restricted Subsidiaries otherwise effected in accordance with the terms of that
Indenture of 1997, between GCI, Inc., and the Bank of New York, as trustee
("Indenture"), (b) any such transaction with or into another Unrestricted
Subsidiary and (c) any such transaction which, assuming for purposes of this
clause (c) only that such Unrestricted Subsidiary were a Restricted Subsidiary,
would comply with the covenant entitled "Limitation on Asset Sales" in the
Indenture; provided, however, that any Net Available Cash derived therefrom may
also be used to prepay, repay or purchase indebtedness under such Fiber
Construction Facility.
As used herein, "Restricted Subsidiaries" means (i) any
Subsidiary of GCI, Inc., on or after the issue date for the Indenture notes,
unless such Subsidiary shall have been designated an Unrestricted Subsidiary as
permitted or required pursuant to the definition of "Unrestricted Subsidiary"
and (ii) an Unrestricted Subsidiary which is redesignated as a Restricted
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Subsidiary as permitted pursuant to the definition of "Unrestricted Subsidiary."
"Subsidiary" of GCI, Inc., means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, of which at least a majority of the total
voting power of the voting stock is held by GCI, Inc.
"Unrestricted Subsidiary" means (a) the Corporation, GCI
Satellite Co., Inc., GCI Fiber Co., Inc., Fiber Hold Co., Inc., and Alaska
United Fiber System Partnership and (b) any Subsidiary of an Unrestricted
Subsidiary.
"Net Available Cash" from an Asset Sale means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring person of indebtedness or other
obligations relating to such properties or assets or received in any other non
cash form) in each case net of all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal, state,
provincial, foreign and local taxes required to be accrued as a liability under
GAAP, as a consequence of such Asset Sale, and in each case net of all payments
made on any indebtedness (a) which is secured by any assets subject to such
Asset Sale, in accordance with the terms of any lien upon or other security
agreement of any kind with respect to such assets, or (b) which must (1) by its
terms, or in order to obtain a necessary consent to such Asset Sale (except, in
the case of this clause (b), indebtedness that is pari passu with or
subordinated to the Indenture notes), or (2) by applicable law be repaid out of
the proceeds from such Asset Sale, and net of all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Sale.
"Asset Sale" means any transfer, conveyance, sale, lease or
other disposition (including, without limitation, dispositions pursuant to any
consolidation or merger or a sale and leaseback transaction) by the Corporation
in any single transaction or series of transactions of (a) shares of capital
stock or other ownership interests in another person (including capital stock of
Unrestricted Subsidiaries); or (b) any other property of the Corporation;
provided, however, that the term "Asset Sale" shall not include: (i) the sale or
transfer of temporary cash investments, inventory, accounts
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receivable or other property (including, without limitation, the lease of excess
satellite transponder capacity and the lease of excess fiber capacity) in the
ordinary course of business; (ii) the liquidation of property received in
settlement of debts owing to the Corporation as a result of foreclosure,
perfection or enforcement of any lien or debt, which debts were owing to the
Corporation in the ordinary course of business; (iii) the sale or transfer of
any property by the Corporation or to any of the Restricted Subsidiaries; (iv) a
disposition in the form of a restricted payment permitted to be made pursuant to
"--Certain Covenants--Limitation on Restricted Payments" in the Indenture; or
(v) a disposition (taken together with any other dispositions in a single
transaction or series of related transactions) with a fair market value and a
sale price of less than $5 million.
2. The Corporation's board of directors shall consist of not less than
one outside director.
IN WITNESS WHEREOF, I have signed these Articles this 22 day of July,
1997.
/s/
Robert B. Flint
IN WITNESS WHEREOF, I have signed these Articles this 22nd day of July,
1997.
/s/
Bonnie J. Paskvan
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
Robert B. Flint says on oath or affirms that he has read the foregoing
Articles of Incorporation of GCI Satellite Co., Inc., and believes all
statements made in the document are true and correct.
/s/
Notary Public in and for the State
of Alaska
My commission expires: 4-11-2001
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STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
Bonnie J. Paskvan says on oath or affirms that she has read the
foregoing Articles of Incorporation of GCI Satellite Co., Inc., and believes all
statements made in the document are true and correct.
/s/
Notary Public in and for the State
of Alaska
My commission expires: 4-11-2001
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EXHIBIT 99.27
PARTNERSHIP AGREEMENT
THIS PARTNERSHIP AGREEMENT ("Agreement") is made effective as
of the 29th day of July, 1997, by and between GCI FIBER CO., INC., of 2550
Denali Street, Suite 1000, Anchorage, AK 99503-2781 and FIBER HOLD CO., INC., of
2550 Denali Street, Suite 1000, Anchorage, AK 99503-2781 (collectively, the
"Partners" and individually, a "Partner").
1. NAME.
The parties hereby form a partnership under the name Alaska
United Fiber System Partnership, as an Alaska General Partnership, under the
Alaska Uniform Partnership Act, A.S. 32.05 (the "Partnership").
2. TERM.
The Partnership shall commence on the 1st day of August, 1997,
and shall continue until terminated under the provisions of this Agreement.
3. PURPOSE.
The Partnership's purpose is limited to conducting the
business contemplated by the Fiber Construction Agreements (as defined below),
which include the Construction and Term Loan Facility, by and among Credit
Lyonnais New York Branch, NationsBank of Texas, N.A. and Toronto Dominion (USA)
Inc. (collectively, the "Fiber Construction Facility Banks"), as agents, certain
lenders and the Partnership ("Fiber Construction Facility"), for the financing
of an undersea fiber optic cable connecting Anchorage, Fairbanks and Juneau,
Alaska with the contiguous United States ("System"); the Completion Guarantee
between GCI Holdings, Inc., and the Partnership, for the advancement of funds
for the construction of the System; the Operating Keep-Well
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Agreement between GCI Holdings, Inc., and the Partnership, for the advancement
of funds for (i) any operating expenses, including interest and principal
payments on Indebtedness, in excess of the Partnership's Revenues, and (ii) any
unpaid amount on the Fiber Construction Facility when due at stated maturity or
upon acceleration, the Operating Keep-Well Agreement between GCI Transport Co.,
Inc., and the Partnership, for the advancement of funds for the same purposes as
the Operating Keep-Well Agreement with GCI Holdings, Inc.; the Operating and
Maintenance Contract between GCI Communication Corp. and the Partnership, for
the operation and maintenance of the System; and the Lease Contract and related
guarantee by and among GCI Communication Corp., as lessee, and GCI Holdings,
Inc., as guarantor, and the Partnership, as lessor, for a lease of up to
forty-five (45%) percent of the System's output capacity. All of the above
agreements, collectively, comprise the "Fiber Construction Agreements," all as
set forth therein and as may be amended, supplemented or modified from
time-to-time.
4. LOCATION OF PRINCIPAL OFFICE.
(a) The principal office of the business shall be located at
Anchorage, Alaska, and the Partners may establish additional offices at such
other place or places as the Partners deem desirable.
(b) The registered agent for the Partnership shall be Hartig,
Rhodes, Norman, Mahoney & Edwards, P.C., 717 K Street, Anchorage, AK 99501-3397.
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5. CAPITAL; PROFIT AND LOSS.
(a) It is understood and agreed that all working capital of
the Partnership shall be contributed by the Partners in proportion to the
respective interests of each in the capital accounts of the Partnership.
(b) The original contribution of each Partner to the
Partnership capital is:
Fiber Hold Co., Inc. $ 500.00
GCI Fiber Co., Inc. $ 500.00
TOTAL: $1,000.00
(c) An individual capital account shall be maintained for each
Partner. The capital account shall consist of the Partner's original capital
contribution increased by additional contributions to capital and decreased by
its share of Partnership losses and by distributions to it in reduction of its
capital.
(d) No interest shall be paid to any Partner on any
contribution to capital so long as the contributions are in proportion to its
interest in the Partnership.
(e) If any Partner, pursuant to the request of the other
Partners, contributes capital to the Partnership, otherwise than as provided in
Section 5(b), such contribution shall be considered as a loan to the
Partnership, and the contributing Partner shall be entitled to ten and one half
percent (10.5%) interest, or such other percent of interest as shall be agreed
upon in writing by the Partners, on such contributions, until such contributions
have been repaid. Such loans shall be repaid by the Partnership upon demand by
the contributing Partner. If any Partner is required by the Partnership's
creditors to pay any of the Partnership's debts with such Partner's own separate
assets, thereby contributing capital to the Partnership, it shall be considered
as being made
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pursuant to request of the other Partners for the purpose of this Section. All
such loans shall, at the contributing Partner's option, be evidenced by demand
notes.
(f) If those Partners holding a majority of the capital
interests of the Partnership agree that each Partner shall increase its capital
contribution to the Partnership, each Partner must increase its capital
contribution or suffer a proportionate diminishment of its capital account.
(g) The Partnership's profits and losses shall be allocated to
the Partners in proportion to their respective capital accounts.
6. GENERAL MANAGER.
Once each year a General Manager of the Partnership shall be
elected by a vote of the Partners who own a majority in interest of the total
capital accounts of all Partners. The General Manager shall have physical
possession of the Partnership's books, records, deeds and papers. It shall give
such notices to the Partners as may from time to time be required or deemed
advisable and shall perform the Partnership's necessary administrative
functions.
7. MEETINGS.
Regular meetings of the Partnership shall be held at least one
(1) time each year or more often as determined by the Partnership. Notice of the
time and place of these regular meetings shall be given in writing by the
General Manager to each Partner at least three (3) days before such meeting.
Special meetings may be called by the General Manager on such notice as it may
determine.
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8. BOOKS AND RECORDS.
Adequate accounting records of all Partnership business shall
be kept and these shall be open to inspection by any of the Partners at all
reasonable times. The Partnership shall maintain its accounting records and
shall report for income tax purposes on the accrual basis of accounting. At the
end of each year, the General Manager or its agent shall furnish a complete
accounting of the Partnership's affairs to each Partner, together with such
appropriate information as may be required by each Partner for the purpose of
preparing its income tax return for that year.
9. MANAGEMENT.
Each Partner shall have an equal voice in the management of
the Partnership's business. No Partner shall receive any compensation for
services rendered to the Partnership, unless otherwise agreed in writing by all
the Partners.
10. ADDITIONAL PARTNERS.
Additional persons may be admitted as Partners only with the
unanimous consent of all Partners.
11. ANNUAL ACCOUNT AND VALUATION.
As soon as practicable after the end of each year, the General
Manager shall prepare a general account and valuation, considering the
Partnership's stock in trade, credits, property, effects, debts, assets and
liabilities, and all transactions and matters usually comprehended in a general
account. Such account and valuation shall be reviewed, agreed to and signed by
all the Partners, and, when so signed, shall be binding on all the Partners,
except that, if any manifest error be detected and pointed out by any
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Partner to the others within thirty (30) days after such signature, such error
shall be promptly corrected.
Immediately after the signing of such account and valuation,
the Partners shall vote on the withdrawal of all or any part of the net profits
of the business for the previous year.
12. WITHDRAWAL.
A Partner may withdraw from the Partnership upon giving
written notice to all other Partners in accordance with the provisions of
Section 20. Such withdrawal shall be effective one hundred twenty (120) days
from the date of notice. For a period of sixty (60) days from the date of
notice, the other Partner shall have the option, on behalf of the Partnership or
on their own proportionate behalves, to purchase the Partnership interest of the
withdrawing Partner. The exercise of such option must be in writing. If the
option is properly exercised closing shall take place one hundred twenty (120)
days from the date of notice to withdraw ("Closing Date"). Payment of the
Purchase Price (as defined in Section 13) shall be in cash. If the other
Partners do not exercise such option to purchase, the Partnership shall be
terminated and dissolved in accordance with the provisions of Section 16.
13. PURCHASE PRICE.
(a) The purchase price of a Partner's interest in the
Partnership under Section 11 shall be equal to that Partner's pro-rata share,
based on its then-current capital account balance) of the last valuation signed
and agreed to as provided in Section 11 ("Purchase Price"); said valuation shall
be final and binding on all Partners.
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(b) It is the Partners' intention that all amounts payable
under this Section to a withdrawing Partner shall be considered payments made in
liquidation of the interest of the withdrawing Partner in accordance with ss.
736(b) of the Internal Revenue Code and not payment of income under ss. 736(a)
of the Internal Revenue Code, as may be amended from time-to-time.
14. ALTERNATE PAYMENT OF PURCHASE PRICE UPON WITHDRAWAL.
The Purchase Price due from the Partnership or each purchasing
Partner, as the case may be ("Purchaser"), at the election of the Purchaser and
in lieu of payment in full at the time of purchase of the withdrawing Partner's
interest, may be paid to said withdrawing Partner as follows:
(a) Twenty percent (20%) in cash on the Closing Date;and,
(b) the balance by the execution and delivery of a promissory
note dated as of the Closing Date, in the principal amount of the unpaid portion
of the Purchase Price, payable with interest at ten and one half percent (10.5%)
per annum, in equal monthly installments over five (5) years from the Closing
Date. Such note shall provide for the privilege of prepayment at any time
without penalty, and shall recite that any remaining installments shall be
accelerated and due at the option of the holder if all or part of the principal
or interest due on such note remains unpaid for fifteen (15) days after it
becomes due.
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15. CONTINUATION.
If the Partnership interest of a withdrawing Partner is
purchased in accordance with an option to purchase granted under the provisions
of Section 12, the Partnership shall not terminate but shall continue, after an
appropriate adjustment is made in the capital accounts of the remaining
Partners, in accordance with the provisions of this Agreement.
16. DISSOLUTION.
The Partnership may be dissolved and terminated upon the vote
or agreement of Partners who own a majority of the amount of the Partnership's
capital accounts. The Partnership shall be dissolved and terminated upon the
failure of the Partnership and the remaining Partners to exercise an option to
purchase granted under the provisions of Section 12. Upon such dissolution, the
Partners shall promptly wind up the Partnership's affairs and by distributing
all remaining assets in cash or in kind, or partly in cash and partly in kind,
to the Partners, in the ratio of their respective capital accounts on the date
of dissolution.
17. RESTRICTIONS ON PARTNERS.
No Partner, without the consent of all other Partners, shall:
(a) Sell, assign, mortgage, grant a security interest, or
pledge its interest in the Partnership, except in connection with the Fiber
Construction Agreements;
(b) Borrow or lend money on behalf of the Partnership, except
as set forth in the Fiber Construction Agreements;
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(c) Assign, transfer, pledge, compromise, or release any claim
of the Partnership except for full payment; or arbitrate, or consent to the
arbitration of any of its disputes or controversies;
(d) Use the Partnership's name, credit, or property for any
purpose other than a proper Partnership purpose;
(e) Do any act detrimental to the Partnership business or
which would make it impossible to carry on that business.
18. INDEMNITY.
The Partnership shall indemnify and hold all withdrawing
Partners harmless from all of the Partnership's obligations and debts where such
withdrawing Partner may be jointly or severally liable thereon, accrued or
incurred during the term of the Partnership.
19. BANKING.
All funds of the Partnership are to be deposited in its name
and in such checking account or accounts as shall be designated by a majority of
the Partners or by the General Manager, if such authority shall be delegated to
it.
20. NOTICES.
All notices required or permitted to be given under the terms
of this Agreement shall be made in writing personally delivered to the addressee
or sent by certified mail, postage prepaid, to the addressee at the address
first listed above, or to such other address as a party, from time to time, may
furnish in writing.
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21. AMENDMENTS.
This Agreement may be amended only upon the written consent of
all Partners.
22. SPECIAL PROVISIONS.
(a) The Partnership shall not engage in any dissolution,
liquidation, merger, consolidation or sale, transfer, assignment, lease,
conveyance or other disposal of all or substantially all of its property in any
one transaction or series of transactions as long as any indebtedness under the
Fiber Construction Facility remains outstanding, other than (a) any such
transaction with or into GCI, Inc., or any of its Restricted Subsidiaries
otherwise effected in accordance with the terms of that Indenture of 1997,
between GCI, Inc., and the Bank of New York, as trustee ("Indenture"), (b) any
such transaction with or into another Unrestricted Subsidiary and (c) any such
transaction which, assuming for purposes of this clause (c) only that such
Unrestricted Subsidiary were a Restricted Subsidiary, would comply with the
covenant entitled "Limitation on Asset Sales" in the Indenture; provided,
however, that any Net Available Cash derived therefrom may also be used to
prepay, repay or purchase indebtedness under such Fiber Construction Facility.
As used herein, "Restricted Subsidiaries" means (i) any
Subsidiary of GCI, Inc., on or after the issue date for the Indenture notes,
unless such Subsidiary shall have been designated an Unrestricted Subsidiary as
permitted or required pursuant to the definition of "Unrestricted Subsidiary"
and (ii) an Unrestricted Subsidiary which is redesignated as a Restricted
Subsidiary as permitted pursuant to the definition of "Unrestricted Subsidiary."
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"Subsidiary" of GCI, Inc., means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, of which at least a majority of the total
voting power of the voting stock is held by GCI, Inc.
"Unrestricted Subsidiary" means (a) GCI Transport Co., Inc.,
GCI Satellite Co., Inc., GCI Fiber Co., Inc., Fiber Hold Co., Inc., and the
Partnership and (b) any Subsidiary of an Unrestricted Subsidiary.
"Net Available Cash" from an Asset Sale means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring person of indebtedness or other
obligations relating to such properties or assets or received in any other fees
and expenses incurred, and all federal, state, provincial, foreign and local
taxes required to be accrued as a liability under GAAP, as a consequence of such
Asset Sale, and in each case net of all payments made on any indebtedness (a)
which is secured by any assets subject to such Asset Sale, in accordance with
the terms of any lien upon or other security agreement of any kind with respect
to such assets, or (b) which must (1) by its terms, or in order to obtain a
necessary consent to such Asset Sale (except, in the case of this clause (b),
indebtedness that is pari passu with or subordinated to the Indenture notes), or
(2) by applicable law be repaid out of the proceeds from such Asset Sale, and
net of all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Sale.
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"Asset Sale" means any transfer, conveyance, sale, lease or
other disposition (including, without limitation, dispositions pursuant to any
consolidation or merger or a sale and leaseback transaction) by the Partnership
in any single transaction or series of transactions of (a) shares of capital
stock or other ownership interests in another person (including capital stock of
Unrestricted Subsidiaries); or (b) any other property of the Partnership;
provided, however, that the term "Asset Sale" shall not include: (i) the sale or
transfer of temporary cash investments, inventory, accounts receivable or other
property (including, without limitation, the lease of excess satellite
transponder capacity and the lease of excess fiber capacity) in the ordinary
course of business; (ii) the liquidation of property received in settlement of
debts owing to the Partnership as a result of foreclosure, perfection or
enforcement of any lien or debt, which debts were owing to the Partnership in
the ordinary course of business; (iii) the sale or transfer of any property by
the Partnership or to any of the Restricted Subsidiaries; (iv) a disposition in
the form of a restricted payment permitted to be made pursuant to "--Certain
Covenants--Limitation on Restricted Payments" in the Indenture; or (v) a
disposition (taken together with any other dispositions in a single transaction
or series of related transactions) with a fair market value and a sale price of
less than $5 million.
(b) The Partnership shall have not be less than one (1)
outside director on the board of directors of one (1) of its corporate general
partners.
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<PAGE>
IN WITNESS WHEREOF, the Partners have signed this Partnership Agreement
effective as of the date first above written.
GCI FIBER CO., INC. FIBER HOLD CO., INC.
By: /s/ By: /s/
Name: John M. Lowber Name: John M. Lowber
Its: Secretary/Treasurer Its: Secretary/Treasurer
STATE OF ALASKA )
)ss
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this 7-30, 1997 by
John M. Lowber, the Secretary/Treasurer of GCI Fiber Co., Inc., an Alaska
corporation, on behalf of the corporation.
/s/
Notary Public for the State of Alaska
My Commission Expires: January 17, 2001
STATE OF ALASKA )
)ss
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this 7-30, 1997 by
John M. Lowber, the Secretary/Treasurer of Fiber Hold Co., Inc., an Alaska
corporation, on behalf of the corporation.
/s/
Notary Public for the State of Alaska
My Commission Expires: January 17, 2001
13
