10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from          to

Commission file number 000-28167

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	52-2126573
(State or Other Jurisdiction	(I.R.S. Employer
of Incorporation or Organization)	Identification No.)

600 Telephone Avenue, Anchorage, Alaska 99503
(Address of Principal Executive Offices) (Zip Code)

(907) 297-3000
(Registrant’s Telephone Number, Including Area Code)

Not Applicable
(Former name, former address and former three months, if changed since last report)

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    þ         No   o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes   o         No    þ

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes   o         No   o

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of the registrant’s Common Stock, as of April 30, 2003 was 30,134,466

DOCUMENTS INCORPORATED BY REFERENCE
None

TABLE OF CONTENTS

		Consolidated Balance Sheets
		Consolidated Statements of Operations
		Consolidated Statements of Stockholders’ Equity
		Consolidated Statements of Cash Flows
		Notes to Consolidated Financial Statements
	Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
CERTIFICATIONS
EXHIBIT 10.13
EXHIBIT 10.14
EXHIBIT 99.1
EXHIBIT 99.2

TABLE OF CONTENTS

		Page
		Number
PART I.	Financial Information
Item 1.	Financial Statements:
	Consolidated Balance Sheets (unaudited) As of March 31, 2003 and December 31, 2002	3
	Consolidated Statements of Operations (unaudited) For the Three Months Ended March 31, 2003 and 2002	4
	Consolidated Statements of Stockholders’ Equity (unaudited) For the Three Months Ended March 31, 2003 and 2002	5
	Consolidated Statements of Cash Flows (unaudited) For the Three Months Ended March 31, 2003 and 2002	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.	Other Information
Item 1.	Legal Proceedings	27
Item 2.	Changes in Securities and Use of Proceeds	28
Item 3.	Defaults upon Senior Securities	28
Item 4.	Submission of Matters to a Vote of Security Holders	28
Item 5.	Other Information	28
Item 6.	Exhibits and Reports on Form 8-K	28
Signatures		29
Certifications		30

2

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Consolidated Balance Sheets
(Unaudited, In Thousands Except Per Share Amounts)

				March 31,			December 31,
				2003			2002
			Assets
Current assets:
	Cash and cash equivalents			$	33,482		$	18,565
	Restricted cash				310			3,440
	Accounts receivable-trade, net of allowance of $6,179 and $6,075				45,536			48,820
	Materials and supplies				10,924			11,203
	Prepayments and other current assets				5,091			6,172
	Assets held for sale				—			261
		Total current assets			95,343			88,461
Property, plant and equipment					1,094,131			1,090,365
Less: accumulated depreciation					643,420			625,276
	Property, plant and equipment, net				450,711			465,089
Goodwill					77,225			77,225
Intangible assets					23,026			23,269
Debt issuance costs, net of amortization of $17,410 and $16,365					20,484			21,529
Deferred charges and other assets					26,030			26,047
Total assets				$	692,819		$	701,620
			Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
	Current portion of long-term obligations			$	7,998		$	5,649
	Accounts payable-affiliates				1,624			1,319
	Accounts payable, accrued and other current liabilities				45,596			49,796
	Advance billings and customer deposits				9,852			9,804
		Total current liabilities			65,070			66,568
Long-term obligations, net of current portion					601,859			602,114
Other deferred credits and long-term liabilities					31,227			32,930
Commitments and contingencies					—			—
Stockholders’ equity (deficit):
	Preferred stock, no par, 5,000 authorized, no shares issued and outstanding				—			—
	Common stock, $.01 par value; 145,000 shares authorized, 33,481 and 33,481 shares issued and 30,555 and 30,745 outstanding, respectively				334			334
	Treasury stock, 2,926 and 2,737 shares, respectively, at cost				(12,500	)		(12,082	)
	Paid in capital in excess of par value				277,810			277,810
	Accumulated deficit				(253,757	)		(247,168	)
	Accumulated other comprehensive loss				(17,224	)		(18,886	)
		Total stockholders’ equity (deficit)			(5,337	)		8
Total liabilities and stockholders’ equity (deficit)				$	692,819		$	701,620

See Notes to Consolidated Financial Statements

3

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Consolidated Statements of Operations
(Unaudited, In Thousands Except Per Share Amounts)

			Three Months Ended
			March 31,
			2003			2002
Operating revenue:
	Local telephone		$	54,001		$	55,322
	Wireless			10,330			9,355
	Directory			8,278			8,641
	Internet			6,296			3,842
	Interexchange			4,766			4,850
		Total operating revenue		83,671			82,010
Operating expense:
	Local telephone (exclusive of depreciation and amortization)			27,847			28,998
	Wireless (exclusive of depreciation and amortization)			6,564			6,042
	Directory (exclusive of depreciation and amortization)			3,449			3,426
	Internet (exclusive of depreciation and amortization)			9,276			5,128
	Interexchange (exclusive of depreciation and amortization)			6,589			6,615
	Depreciation and amortization			22,600			19,259
	Loss of disposal of assets			746			—
		Total operating expense		77,071			69,468
Operating income				6,600			12,542
Other income (expense):
	Interest expense			(13,329	)		(13,386	)
	Interest income and other			192			500
		Total other expense		(13,137	)		(12,886	)
Loss before income taxes, discontinued operations and cumulative effect of change in accounting principle				(6,537	)		(344	)
Income tax benefit				—			—
Loss from continuing operations				(6,537	)		(344	)
Loss from discontinued operations				(52	)		(6,872	)
Loss before cumulative effect of change in accounting principle				(6,589	)		(7,216	)
Cumulative effect of change in accounting principle				—			(105,350	)
Net loss			$	(6,589	)	$	(112,566	)
Net loss per share - basic and diluted:
	Loss from continuing operations		$	(0.21	)	$	(0.01	)
	Loss from discontinued operations			(0.00	)		(0.22	)
	Loss before cumulative effect of change in accounting principle			(0.21	)		(0.23	)
	Cumulative effect of change in accounting principle			—			(3.32	)
	Net loss		$	(0.21	)	$	(3.55	)
Weighted average shares outstanding:
	Basic and diluted			30,653			31,743

See Notes to Consolidated Financial Statements

4

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Consolidated Statements of Stockholders’ Equity (Deficit)
Three Months Ended March 31, 2003 and 2002
(Unaudited, In Thousands Except Share Amounts)

							Paid in					Accumulated
							Capital in					Other			Stockholders'
		Common		Treasury			Excess of		Accumulated			Comprehensive			Equity
		Stock		Stock			Par		Deficit			Loss			(Deficit)
Balance, December 31, 2001		$	332	$	(9,735	)	$	276,840	$	(61,921	)	$	(13,829	)	$	191,687
Components of Comprehensive loss:
	Net loss		—		—			—		(112,566	)		—			(112,566	)
	Interest rate swap marked to market		—		—			—		—			2,903			2,903
Total comprehensive loss																(109,663	)
Issuance of 75,300 shares of common stock, $.01 par			1		—			460		—			—			461
Balance, March 31, 2002		$	333	$	(9,735	)	$	277,300	$	(174,487	)	$	(10,926	)	$	82,485
Balance, December 31, 2002		$	334	$	(12,082	)	$	277,810	$	(247,168	)	$	(18,886	)	$	8
Components of Comprehensive loss:
	Net loss		—		—			—		(6,589	)		—			(6,589	)
	Interest rate swap marked to market		—		—			—		—			1,662			1,662
Total comprehensive loss																(4,927	)
Purchase of 189,175 shares of treasury stock			—		(418	)		—		—			—			(418	)
Balance, March 31, 2003		$	334	$	(12,500	)	$	277,810	$	(253,757	)	$	(17,224	)	$	(5,337	)

See Notes to Consolidated Financial Statements

5

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Consolidated Statements of Cash Flows
(Unaudited, In Thousands)

			Three Months Ended
			March 31,
			2003			2002
Cash Flows from Operating Activities:
Net loss			$	(6,589	)	$	(112,566	)
Adjustments to reconcile net loss to net cash provided by operating activities:
	Loss on discontinued operations			52			6,872
	Cumulative effect of change in accounting principle			—			105,350
	Depreciation and amortization			22,600			19,259
	Loss on disposal of assets			746			—
	Amortization of debt issuance costs and original issue discount			1,115			1,115
	Capitalized interest			—			(349	)
	Other deferred credits			(41	)		3,973
	Changes in components of working capital:
		Accounts receivable and other current assets		4,624			688
		Accounts payable and other current liabilities		(3,856	)		2,922
		Other		17			(742	)
	Net cash used in discontinued operations			(41	)		(384	)
Net cash provided by operating activities				18,627			26,138
Cash Flows from Investing Activities:
Construction and capital expenditures, net of capitalized interest				(6,115	)		(13,246	)
Release of funds from escrow				3,339			—
Placement of funds in restricted account				(200	)		—
Net cash used by investing activities				(2,976	)		(13,246	)
Cash Flows from Financing Activities:
Payments on long-term debt				(316	)		(331	)
Purchase of treasury stock				(418	)		—
Issuance of common stock				—			461
Net cash provided (used) by financing activities				(734	)		130
Increase in cash and cash equivalents				14,917			13,022
Cash and cash equivalents at beginning of the period				18,565			41,012
Cash and cash equivalents at the end of the period			$	33,482		$	54,034
Supplemental Cash Flow Data:
Interest paid			$	8,401		$	9,805
Income taxes paid				—			—
Supplemental Noncash Transactions:
Property acquired under capital leases and mortgages			$	2,340		$	—
Interest rate swap marked to market			$	(1,662	)	$	(2,903	)

See Notes to Consolidated Financial Statements

6

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Notes to Consolidated Financial Statements
(Unaudited, Dollars In Thousands Except Per Share Amounts)

1. DESCRIPTION OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Alaska Communications Systems Group, Inc. and Subsidiaries (the “Company” or “ACS Group”), a Delaware corporation, is an integrated communications provider engaged principally in providing local telephone, directory, wireless, Internet, and interexchange services to its customers in the state of Alaska through its telecommunications subsidiaries. The Company was formed in October of 1998 for the purpose of acquiring and operating telecommunications properties.

     The financial statements for the Company represent the consolidated financial position, results of operations and cash flows principally of the following entities:

• Alaska Communications Systems Group, Inc.

• Alaska Communications Systems Holdings, Inc. (“ACS Holdings”)

• ACS of Alaska, Inc. (“ACSAK”)

• ACS of the Northland, Inc. (“ACSN”)

• ACS of Fairbanks, Inc. (“ACSF”)

• ACS of Anchorage, Inc. (“ACSA”)

• ACS Wireless, Inc. (“ACSW”)

• ACS Long Distance, Inc. (“ACSLD”)

• ACS Internet, Inc. (“ACSI”)

• ACS InfoSource, Inc. (“ACSIS”)

     Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. However, the Company believes the disclosures which are made are adequate to make the information presented not misleading. The consolidated financial statements and footnotes included in this Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. Certain reclassifications have been made to the 2002 financial statements to make them conform to the current presentation.

     In the opinion of management, the financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows for all periods presented. The results of operations for the three months ended March 31, 2003 and 2002 are not necessarily indicative of the results of operations which might be expected for the entire year or any other interim periods.

     Revenue Recognition

     Access revenue is recognized when earned. The Company participates in toll revenue pools with other telephone companies. Such pools are funded by toll revenue and/or access charges regulated by the Regulatory Commission of Alaska (“RCA”) within the intrastate jurisdiction and the Federal Communications Commission (“FCC”) within the interstate jurisdiction. Much of the interstate access revenue is initially recorded based on estimates. These estimates are derived from interim financial statements, available separations studies and the most recent information available about achieved rates of return. These estimates are subject to adjustment in future accounting periods as additional operational information becomes available. To the extent that disputes arise over revenue settlements, the Company’s policy is to defer revenue collected until settlement methodologies are resolved and finalized. During the second quarter of 2002, the Company recognized as revenue $11,066 of previously deferred interstate access revenue and reversed $1,673 of interest expense previously accrued thereon as a result of a favorable ruling by the District of Columbia Court of Appeals related to a dispute on interstate access rates for the Anchorage market. At March 31, 2003 and 2002, the Company had liabilities of $17,532 and $35,433, respectively, related to its estimate of refundable access revenue.

7

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited, Dollars In Thousands Except Per Share Amounts)

1. DESCRIPTION OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Regulatory Accounting and Regulation

     The local telephone exchange operations of the Company account for costs in accordance with the accounting principles for regulated enterprises prescribed by Statement of Financial Accounting Standards (“SFAS”) No. 71, Accounting for the Effects of Certain Types of Regulation. This accounting recognizes the economic effects of rate regulation by recording cost and a return on investment as such amounts are recovered through rates authorized by regulatory authorities. Accordingly, under SFAS No. 71, plant and equipment is depreciated over lives approved by regulators and certain costs and obligations are deferred based upon approvals received from regulators to permit recovery of such amounts in future years. Historically, lives approved for regulatory purposes have approximated economically useful lives. On July 21, 2002, the Company received an order from the RCA which appears to extend lives approved for rate-making purposes beyond the economically useful lives of the underlying assets. Management petitioned for reconsideration, and the RCA has agreed to take additional testimony. A final order on the matter is not expected until the second quarter of 2003. The Company implemented, effective January 1, 2003, higher depreciation rates for its regulated telephone plant for the interstate jurisdiction. As a result, the Company has recorded a regulatory asset under SFAS No. 71 of $2,418. As of March 31, 2002 the Company has also deferred as a regulatory asset $894 of costs incurred in connection with regulatory rate making proceedings, which will be amortized in future periods. If the Company were not following SFAS No. 71, it would have recorded additional depreciation expense of $2,418 for the intrastate and local jurisdictions and the deferred costs incurred in connection with regulatory rate making proceedings would have been charged to expense as incurred. Non-regulated revenues and costs incurred by the local telephone exchange operations and non-regulated operations of the Company are not accounted for under SFAS No. 71 principles.

Stock Incentive Plans

     The Company applies Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for its stock incentive plans. Accordingly, no compensation cost has been recognized for options with exercise prices equal to or greater than fair value on the date of grant. No compensation costs were charged to operations for the three months ended March 31, 2003 or 2002. If compensation costs had been determined consistent with SFAS No. 123, Accounting for Stock-Based Compensation, the Company’s net loss and net loss per share on a pro forma basis for the three months ended March 31, 2003 and 2002 would have been as follows:

		For the three months ended
		March 31,
		2003			2002
Net loss:
	As reported	$	(6,589	)	$	(112,566	)
	Pro forma		(7,017	)		(113,037	)
Net loss per share - basic and diluted:
	As reported	$	(0.21	)	$	(3.55	)
	Pro forma		(0.23	)		(3.56	)

     The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for grants:

	2003			2002
Risk free rate		2.88	%		4.98	%
Dividend yield		0.0	%		0.0	%
Expected volatility factor		64.2	%		52.3	%
Expected option life (years)		6.1			6.1

8

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited, Dollars In Thousands Except Per Share Amounts)

1. DESCRIPTION OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Change in Accounting Estimate

     During the period, the Company changed its estimate of the useful lives of certain classes of assets resulting in additional depreciation expense of $806, or $0.03 per share for the three months ended March 31, 2003. Management adopted the higher depreciation rates as a result of an evaluation of the expected useful lives of the underlying assets, primarily in its regulated local telephone segment as applied to the interstate jurisdiction under SFAS No. 71.

2. NEW ACCOUNTING STANDARDS

     On August 15, 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 143, Accounting for Asset Retirement Obligations. This statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. SFAS No. 143 addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This standard generally applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset. Under the new accounting method, asset retirement obligations are recognized in the period in which they are incurred if a reasonable estimate of fair value can be made. When the liability is initially recorded, the cost is capitalized and increases the carrying value of the related long-lived asset. The liability is then accreted to its present value each period and the capitalized cost is depreciated over the estimated useful life of the related asset. At the settlement date, the obligation is settled for its recorded amount or a gain or loss is recognized upon settlement.

     In accordance with federal and state regulations, depreciation expense for the Company’s local exchange carriers regulated operations have historically included an additional provision for cost of removal. Under SFAS No. 143, the additional cost of removal provision would no longer be included in depreciation expense, because it does not meet the recognition and measurement principles of an asset retirement obligation. On December 20, 2002, the FCC notified local exchange carriers that they should not adopt the provisions of SFAS No. 143 unless specifically required by the FCC in the future. As a result of the FCC ruling, the Company will continue to record a regulatory liability for cost of removal for its local exchange carriers subsidiaries that follow SFAS No. 71 accounting.

     The Company applied the provisions of SFAS No. 143 to its nonregulated subsidiaries effective January 1, 2003. The Company has cell site leases which typically have terms of 10 years that contain contractual obligations to restore the site to its original condition. Since the Company plans to renew these leases indefinitely, it is unable to determine when it might have to perform the restoration of the cell sites to their original condition. The Company is therefore unable to estimate the fair value of these asset retirement obligations and has not recorded a liability under SFAS No. 143.

     In June 2002, FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 requires that companies recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The Company does not believe the adoption of this statement will have a material impact on its financial position, results of operations, or cash flows.

9

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited, Dollars In Thousands Except Per Share Amounts)

2. NEW ACCOUNTING STANDARDS (Continued)

     On December 31, 2002, FASB issued SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company does not currently have plans to change to the fair value method of accounting for our stock based compensation. The disclosure requirements are now effective.

     In November 2002, the FASB issued FASB Interpretation No. 45 (“FIN 45”), Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The recognition and measurement provisions are effective on a prospective basis to guarantees issued or modified after December 31, 2002. The adoption of FIN 45 has no effect on the Company’s financial position, results of operations or cash flows.

3. DISCONTINUED OPERATIONS

     On March 30, 2002, the Company approved a plan to sell its wireless cable television service segment. As a result of this decision, the operating revenue and expense of this segment has been classified as discontinued operations under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, for all periods presented and the assets and liabilities of the disposal group have been written down to their fair value, net of expected selling expenses. The income tax benefit in all periods was offset by a valuation allowance. The Company completed its disposal of its wireless cable television segment as of March 31, 2003. The following discloses the results of the discontinued operations for the three months ended March 31, 2003 and 2002:

	Three Months Ended
	March 31,
	2003			2002
Operating revenue	$	110		$	214
Operating expense		162			398
Operating loss		(52	)		(184	)
Interest expense		—			(28	)
Loss from operations of discontinued segment		(52	)		(212	)
Write down of net assets to fair value		—			(6,660	)
Loss from discontinued operations	$	(52	)	$	(6,872	)

10

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited, Dollars In Thousands Except Per Share Amounts)

4. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

     Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires that goodwill be tested for impairment at the reporting unit level upon adoption and at least annually thereafter, utilizing a two-step methodology. The initial step requires the Company to determine the fair value of each reporting unit and compare it to the carrying value, including goodwill, of such unit. If the fair value exceeds the carrying value, no impairment loss would be recognized. However, if the carrying value of the reporting unit exceeds its fair value, the goodwill of the unit may be impaired. The amount, if any, of the impairment is then measured in the second step. The second step of the goodwill impairment test compares the implied fair value goodwill of the reporting unit with the carrying amount of that goodwill. The implied fair value of a reporting unit’s goodwill is the excess of the fair value of a reporting unit over the amounts assigned to assets and liabilities. If the carrying value amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess.

     The Company has determined that its business segments constitute reporting units, with the exception of the Internet segment, which includes two reporting units. Those reporting units are (1) Internet service and (2) IP based private network service. The Company completed the initial step of impairment testing which indicated that goodwill recorded in the local telephone, Internet, and interexchange segments was impaired as of January 1, 2002. Due to the potential impairment, the Company then completed the second step of the test to measure the amount of the impairment. The Company determined the fair value of each reporting unit for purposes of this test primarily by using a discounted cash flow valuation technique. Significant estimates used in the valuation include estimates of future cash flows, both future short-term and long-term growth rates, and the Company’s estimated cost of capital for purposes of arriving at a discount factor. Based on that analysis, a transitional impairment loss of $105,350 was recognized as the cumulative effect of a change in accounting principle in the consolidated statement of operations. The income tax benefit of $39,540 was offset by a valuation allowance.

5. STOCK INCENTIVE PLANS

     Under various plans, ACS Group, through the Compensation Committee of the Board of Directors, may grant stock options, stock appreciation rights and other awards to officers, employees and non-employee directors. At March 31, 2003, ACS Group has reserved a total of 6,060 shares of authorized common stock for issuance under the plans. The plans terminate in approximately 10 years from the date of adoption and allow forfeited options to be reissued. In general, options under the plans vest ratably over three, four or five years and will have an exercise price equal to the fair market value of the common stock on the date of grant. The term of options granted under the plan may not exceed 10 years.

Alaska Communications Systems Group, Inc. 1999 Stock Incentive Plan

     ACS Group has reserved 4,910 shares under this plan, which was adopted by the Company in November 1999. At March 31 2003, 5,712 options have been granted, 1,935 have been forfeited, 441 have been exercised, and 1,133 shares are available for grant under the plan.

Alaska Communications Systems Group, Inc. 1999 Non-Employee Director Stock Compensation Plan

     The non-employee director stock compensation plan was adopted by ACS Group in November 1999. ACS Group has reserved 150 shares under this plan. At March 31, 2003, 110 shares have been awarded and 40 shares are available for grant under the plan. Prior to 2003, directors were required to receive not less than 25% of their annual retainer and meeting fees in the form of ACS Group’s stock, and may have elected to receive up to 100% of director’s compensation in the form of stock. Starting in 2003, directors no longer have the option of receiving stock and receive all of their annual retainer and meeting fees in cash.

11

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited, Dollars In Thousands Except Per Share Amounts)

5. STOCK INCENTIVE PLANS (Continued)

Alaska Communications Systems Group, Inc. 1999 Employee Stock Purchase Plan

     This plan was also adopted by ACS Group in November 1999. ACS Group has reserved 1,000 shares under this plan. At March 31, 2003, 632 shares are available for issuance and sale. The plan will terminate on December 31, 2009. All ACS Group employees and all of the employees of designated subsidiaries generally will be eligible to participate in the purchase plan, other than employees whose customary employment is 20 hours or less per week or is for not more than five months in a calendar year, or who are ineligible to participate due to restrictions under the Internal Revenue Code.

6. BUSINESS SEGMENTS

     The Company has five reportable segments: local telephone, wireless, directory, Internet and interexchange. Local telephone provides landline telecommunications services, and consists of local telephone service, network access and deregulated and other revenue; wireless provides wireless telecommunications service; directory provides yellow page advertising and other related products; Internet provides Internet service and advanced IP based private networks; and interexchange provides switched and dedicated long distance services. Each reportable segment is a strategic business under separate management and offering different services than those offered by the other segments. The Company evaluates the performance of its segments based on operating income (loss).

     The Company also incurs interest expense, interest income, equity in earnings of investments, and other operating and non operating income and expense at the corporate level which are not allocated to the business segments, nor are they evaluated by the chief operating decision maker in analyzing the performance of the business segments. These non operating income and expense items are provided in the accompanying table under the caption “All Other” in order to assist the users of these financial statements in reconciling the operating results and total assets of the business segments to the consolidated financial statements. Common use assets are held at either the Company or ACS Holdings and are allocated to the business segments based on operating revenue. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

     The following table illustrates selected financial data for each segment as of and for the three months ended March 31, 2003:

	Local
	Telephone		Wireless		Directory		Internet			Interexchange			All Other			Eliminations			Total
Operating revenue	$	54,001	$	10,353	$	8,278	$	6,296		$	6,839		$	6,321		$	(8,417	)	$	83,671
Depreciation and amortization		14,692		1,445		2		2,410			555			3,496			—			22,600
Operating income (loss)		6,326		29		4,749		(6,453	)		(575	)		2,533			(9	)		6,600
Interest expense		136		1		—		34			74			13,084			—			13,329
Interest income		1		—		—		—			—			245			—			246
Income tax provision (benefit)		2,507		4		1,952		—			—			(4,463	)		—			—
Income (loss) from continuing operations		3,684		24		2,797		(6,487	)		(649	)		(5,897	)		(9	)		(6,537	)
Total assets		517,528		81,702		114,183		(32,692	)		4,199			7,899			—			692,819
Capital expenditures		3,994		121		—		1,232			8			3,100			—			8,455

     Operating revenue disclosed above includes intersegment operating revenue of $5,633 for local telephone, $413 for wireless, $350 for directory, $2,873 for interexchange and $6,321 for all other. In accordance with SFAS No. 71, intercompany revenue between local telephone and all other segments is not eliminated above.

12

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited, Dollars In Thousands Except Per Share Amounts)

6. BUSINESS SEGMENTS (Continued)

     The following table illustrates selected financial data for each segment as of and for the three months ended March 31, 2002:

	Local
	Telephone			Wireless			Directory		Internet			Interexchange			All Other			Eliminations			Total
Operating revenue	$	55,322		$	9,364		$	8,641	$	3,842		$	7,134		$	4,841		$	(7,134	)	$	82,010
Depreciation and amortization		13,681			1,365			1		1,253			574			2,385			—			19,259
Operating income (loss)		8,589			757			5,211		(3,864	)		(279	)		2,150			(22	)		12,542
Interest expense		(433	)		(1	)		—		(7	)		(75	)		(12,870	)		—			(13,386	)
Interest income		1			—			—		—			—			563			—			564
Income tax provision (benefit)		2,689			294			2,142		—			—			(5,125	)		—			—
Income (loss) from continuing operations		5,468			465			3,069		(3,871	)		(354	)		(5,099	)		(22	)		(344	)
Total assets		686,409			106,988			55,182		5,053			28,834			17,913			—			900,379
Capital expenditures		5,970			955			198		3,126			—			2,997			—			13,246

     Operating revenue disclosed above include intersegment operating revenue of $5,376 for local telephone, $405 for wireless, $351 for directory, $3,198 for interexchange and $4,481 for all other. In accordance with SFAS No. 71, intercompany revenue between local telephone and all other segments is not eliminated above.

7. RELATED PARTY TRANSACTIONS

     On April 17, 2001, the Company issued an interest bearing note receivable to an officer totaling $328. The note bears interest at the Mid-Term Applicable Federal Rate, which was 3.19% as of March 31, 2003, and is due on April 15, 2005. The note is secured by a pledge of 100 shares of ACS Group’s stock held in the officer’s name. In accordance with an addendum to the officer’s employment agreement dated May 3, 2001, the loan will be forgiven ratably over a three year period ending April 16, 2004. Accordingly, $114 was forgiven on April 16, 2002 and recognized as compensation expense. The note balance, including accrued interest, was $237 as of March 31, 2003.

     Fox Paine & Company, the majority stockholder, receives an annual management fee in the amount of one percent of the Company’s net income before interest expense, income taxes and depreciation and amortization, calculated without regard to the fee. The management fee expense for the three months ended March 31, 2003 and 2002 was $304 and $345, respectively.

8. SEVERANCE AND RESTRUCTURING CHARGES

     In June 2002, the Company adopted a restructuring plan and recorded $862 of associated charges, including $523 of severance costs and $339 of lease termination costs for office space. Employee force reductions expected as a result of this plan total approximately 30 persons, and the plan is expected to be completed by June 2003. As of March 31, 2003, 12 employees have been terminated and are eligible for severance and the Company has paid out $342 accrued under this plan.

9. COMMITMENTS AND CONTINGENCIES

     The Company is involved in various claims, legal actions and regulatory proceedings arising in the ordinary course of business. The Company believes that the disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

13

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited, Dollars In Thousands Except Per Share Amounts)

9. COMMITMENTS AND CONTINGENCIES (Continued)

     A class action lawsuit was filed against the Company on March 14, 2001. The litigation alleges various contract and tort claims concerning the Company’s decision to terminate its Infinite Minutes long distance plan. Although the Company believes this suit is without merit and intends to vigorously defend its position, it is impossible to determine at this time the actual number of plaintiffs or the claims that will actually continue to be in dispute.

     In December 2001, the Company entered into a material contract with the State of Alaska to provide it with comprehensive telecommunications services for a period of five years. This contract obligates the Company to, among other things, provide on the state’s behalf customer premise equipment and other capital assets which the Company believes will range between $25,000 and $30,000 over the term of the agreement, of which approximately $12,400 has been expended through March 31, 2003. The Company intends to fund this commitment with cash on hand and cash flows from operations. The contract with the State of Alaska contains specific completion dates for various implementation aspects as well as specific service level agreements which, if not met, may result in revenue credits and/or penalties which in the aggregate could amount to as much as $200 per month.

     On July 15, 2002 the Company fulfilled a commitment to Neptune Communications, L.L.C. (“Neptune”) to provide a loan in the form of an unsecured note receivable totaling $15,000 in return for certain consideration. The note, which is included in deferred charges and other assets on the Company’s Consolidated Balance Sheets, bears interest at the applicable federal rate, which was 4.84% at March 31, 2003, and matures on July 15, 2022. Interest is payable semiannually, but Neptune may elect to add the interest to the principal in lieu of cash payments. The commitment was funded with cash on hand. In connection with this note, Neptune has granted the Company an option to purchase certain network assets of Neptune, no later than January 2, 2006 at a price equal to the then outstanding loan balance. The Company has also entered into a strategic agreement with Neptune for the life of the fiber optic cable system owned by Neptune. The significant provisions of this agreement are: i) purchase commitments by the Company for capacity in 2005 and 2007, the final price and quantity of which are subject to future events, ii) Neptune’s restoration of the Company’s traffic carried on another cable system, iii) and specific interconnection arrangements between the Company and Neptune, should the Company exercise its option to purchase certain network assets from Neptune. The Company is currently renegotiating the terms and conditions of this agreement and it is not possible to determine the ultimate outcome of these negotiations at this time.

10. SUBSEQUENT EVENT

     The Company has been authorized by its Board of Directors to evaluate the disposition of all or part of its directory business, ACSIS. The Company has met substantially all of the conditions necessary to sell its directory business and, on April 28, 2003, entered into an underwriting agreement with a syndicate of Canadian investment banks to complete the sale of a majority interest in it. The Company subsequently filed on April 29, 2003, a final prospectus with Canadian securities regulators to sell a majority interest in its directories business in a public offering in Canada through a Canadian income fund. The transaction is expected to close on May 8, 2003. This transaction, if completed, would result in a de-leveraging of the Company’s balance sheet and generate cash for other corporate objectives.

     The board of directors has also approved the payment of a fee equal to 1% of the gross proceeds generated from the sale of the Company’s directories business to Fox Paine & Company, the majority stockholder, contingent upon closing such sale, plus expenses in connection with such transaction, including the reimbursement by the Company of the $250 consulting fee and transaction bonus to be paid to an officer under the agreement described below. The Company expects to complete such sale during May of 2003.

14

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Notes to Consolidated Financial Statements, Continued
(Unaudited, Dollars In Thousands Except Per Share Amounts)

10. SUBSEQUENT EVENT (Continued)

     Fox Paine & Company has entered into a consulting agreement with an officer of the Company for services rendered for the benefit of the Company related to the sale of the Company’s directories business. Under this agreement, the officer is to be paid a lump sum consulting fee and transaction bonus of $250 in May 2003. As described above, Fox Paine & Company is entitled to reimbursement of this expense.

     On April 17, 2001, the Company issued an interest bearing note receivable to an officer totaling $328. In accordance with an addendum to the officer’s employment agreement dated May 3, 2001, the loan will be forgiven ratably over a three year period ending April 16, 2004. The note balance, including accrued interest, was $237 as of March 31, 2003. The officer has waived certain rights under his employment agreement, contingent upon closing a contemplated sale of the Company’s directories business for which he will receive a fee of $840. Included in these waived rights, valued in total at approximately $700, the officer has waived the forgiveness terms of this indebtedness that would have occurred during 2003 and 2004. The Company expects to complete such sale during May of 2003.

15

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS AND ANALYSTS’ REPORTS

     This Form 10-Q and future filings by the Company on Forms 10-K, 10-Q and 8-K and future oral and written statements by the Company and its management may include, certain “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995, including (without limitation) statements with respect to anticipated future operating and financial performance, financial position and liquidity, growth opportunities and growth rates, pricing plans, acquisition and divestitive opportunities, business prospects, strategic alternatives, business strategies, regulatory and competitive outlook, investment and expenditure plans, financing needs and availability, and other similar forecasts and statements of expectation. Words such as “aims,” “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” and “will,” and variations of these words and similar expressions, are intended to identify these forward-looking statements. These forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company’s historical experience and our present expectations or projections. Forward-looking statements by the Company and its management are based on estimates, projections, beliefs and assumptions of management and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information, or otherwise.

     Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of important factors. Examples of these factors include (without limitation) rapid technological developments and changes in the telecommunications industries; ongoing deregulation (and the resulting likelihood of significantly increased price and product/service competition) in the telecommunications industry as a result of the Telecommunications Act of 1996 (the “1996 Act”) and other similar federal and state legislation and the federal and state rules and regulations enacted pursuant to that legislation; regulatory limitations on the Company’s ability to change its pricing for communications services; the possible future unavailability of SFAS No. 71, Accounting for the Effects of Certain Types of Regulation, to the Company’s wireline subsidiaries; and possible changes in the demand for the Company’s products and services. In addition to these factors, actual future performance, outcomes and results may differ materially because of other, more general, factors including (without limitation) changes in general industry and market conditions and growth rates; changes in interest rates or other general national, regional or local economic conditions; governmental and public policy changes; changes in accounting policies or practices adopted voluntarily or as required by accounting principles generally accepted in the United States of America; and the continued availability of financing in the amounts, at the terms and on the conditions necessary to support the Company’s future business.

     Investors should also be aware that while ACS Group does, at various times, communicate with securities analysts, it is against the Company’s policy to disclose to them any material non-public information or other confidential information. Accordingly, investors should not assume that ACS Group agrees with any statement or report issued by an analyst irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of ACS Group.

INTRODUCTION

     On May 14, 1999, the Company acquired the incumbent providers of local telephone services in Anchorage, Juneau, Fairbanks and approximately 70 rural communities in Alaska, making it the largest provider of local telephone service in the state and the fourteenth largest provider of local exchange services in the United States. The Company also acquired on May 14, 1999 interexchange operations primarily serving the Anchorage market and wireless and Internet services providing statewide coverage. The Company has unified its statewide branding under the ACS name.

16

     Today, the Company generates revenue primarily through the provision of:

• local telephone services, including:

• basic local service to retail customers within ACS Group’s service areas,

• wholesale service to CLECs,

• network access services to interexchange carriers for origination and termination of interstate and intrastate long distance phone calls,

• enhanced services,

• ancillary services, such as B&C, and

• universal service payments;

• wireless services;

• yellow pages directory advertising;

• Internet services; and

• interexchange network long-distance and data services.

     Local Telephone - Within the telecommunications industry, LECs have historically enjoyed stable revenue and cash flow from local exchange operations resulting from the need for basic telecommunications services, the highly regulated nature of the telecommunications industry and, in the case of rural LECs, the underlying cost recovery settlement and support mechanisms applicable to local exchange operations. Basic local service is generally provided at a flat monthly rate and allows the user to place unlimited calls within a defined local calling area. Access revenues are generated by providing interexchange carriers access to the LEC’s local network and its customers. Universal service revenues are a subsidy paid to rural LECs to support the high cost of providing service in rural markets. Other service revenue is generated from ancillary services and enhanced services.

     Changes in revenue are largely attributable to changes in the number of access lines, local service rates and minutes of use. Other factors can also impact revenue, including:

• intrastate and interstate revenue settlement methodologies,

• authorized rates of return for regulated services,

• whether an access line is used by a business or residential subscriber,

• intrastate and interstate calling patterns,

• customers’ selection of various local rate plan options,

• selection of enhanced calling services, such as voice mail, and

• other subscriber usage characteristics.

     LECs have three basic tiers of customers:

• business and residential customers located in their local service areas that pay for local phone service,

• interexchange carriers that pay for access to long distance calling customers located within its local service areas and

• CLEC’s that pay for wholesale access to the Company’s network in order to provide competitive local service on either a wholesale or UNE basis as prescribed under the 1996 Act.

     LECs provide access service to numerous interexchange carriers and may also bill and collect long distance charges from interexchange carrier customers on behalf of the interexchange carriers. The amount of access charge revenue associated with a particular interexchange carrier varies depending upon long distance calling patterns and the relative market share of each long distance carrier.

     ACS Group’s local service rates for end users are authorized by the RCA. Authorized rates are set by the FCC and the RCA for interstate and intrastate access charges, respectively, and may change from time to time.

17

     Wireless - The Company is the largest and only statewide provider of wireless services in Alaska, currently serving approximately 82,000 subscribers. Its wireless network covers over 478,000 residents, including all major population centers and highway corridors. The Company operates a TDMA digital network in substantially all of its service areas, and intends to upgrade this network to a new generation of digital network known as CDMA.

     Directory - The Company through its subsidiary ACSIS, is the largest provider of published directory advertising in Alaska. The Company serves over 13,500 customers through its yellow page directory books tailored to serve the needs of each of its local exchange markets, with many customers advertising in multiple books. During 2002, ACSIS published ten different yellow pages, white pages or combined directory books covering approximately 95% of the State of Alaska’s population. ACSIS publishes the white pages directories under a publishing agreement with its affiliated LECs. ACSIS also provides an online directory product and other specialized advertising vehicles to its customers.

     Internet - The Company is the second largest provider of Internet access services in Alaska with approximately 45,000 customers. The Company offers dial-up and dedicated digital subscriber line, (“DSL”) Internet access to its customers. The Company is also the only single source provider of advanced IP based private networks in Alaska.

     Interexchange - The Company provides switched and dedicated long distance services to approximately 58,000 customers in Alaska. The traffic from these customers is carried over the Company’s owned or leased facilities.

RESULTS OF OPERATIONS

     Three Months Ended March 31, 2003 Compared to Three Months Ended March 31, 2002

     All amounts are discussed at the consolidated level after the elimination of intercompany revenue and expense.

     Operating Revenue

     Operating revenue increased $1.7 million, or 2.0%, for the three months ended March 31, 2003 compared to the three months ended March 31, 2002. Wireless and Internet revenue increased compared to the corresponding period of 2002, while local telephone, directory advertising and interexchange revenue decreased compared to the corresponding period of 2002.

     Local Telephone

     Local telephone revenue, which consist of local network service, network access revenue and deregulated and other revenue, decreased $1.3 million, or 2.4%, for the three months ended March 31, 2003 compared to the same period in 2002. The following table summarizes the Company’s consolidated local telephone revenue by category.

	Three Months Ended
	March 31,
	2003		2002
	(In Thousands)
Local telephone revenue:
Local network	$	24,129	$	25,644
Network access		25,061		25,036
Deregulated and other		4,811		4,642
Total local telephone revenue	$	54,001	$	55,322

18

     The following table summarizes the Company’s local telephone access lines.

	As of March 31,
	2003		2002
Retail		231,832		252,417
Wholesale		19,619		24,537
Unbundled network elements - platform (UNE - P)		4,275		—
Unbundled network elements - loop (UNE - L)		64,821		53,704
Total local telephone access lines		320,547		330,658

     The local network service component of local telephone revenue was $24.1 million for the three months ended March 31, 2003 compared with $25.6 million for the three months ended March 31, 2002. Revenue decreased $1.5 million or 5.9% from the prior year. This decrease reflects the impact of competition exacerbated by below cost UNE rates.

     The Company continued to experience loss of retail market share for local network service in its Anchorage, Fairbanks and Juneau service areas during the year. Generally, when the Company loses a retail local network service line to a competitor, it continues to provide the line to the competitor on a wholesale basis at reduced revenue per line. Management believes that the continuing loss of market share it has experienced in certain of its markets is partially attributable to below cost interconnection rates mandated by the RCA for UNEs. During the second quarter of 2001, the Company reopened interconnection proceedings for its Anchorage market and filed for an interim and refundable UNE rate increase of approximately $10 per month per loop. On October 25, 2001, the RCA granted ACSA an interim and refundable UNE rate increase of $1.07, increasing the UNE rates from $13.85 to $14.92. The interim and refundable rate increase was implemented in November 2001 and generated approximately $0.7 million in additional revenue during 2002. The Company expects the RCA to hold hearings during 2003 and adjudicate final Anchorage UNE rates during 2003 or 2004.

     The Company believes it is earning less than its required rate of return for local network service in several of its markets and filed local service rate cases for all of its LEC businesses with the RCA on July 2, 2001 aimed at making up this deficiency. Subsequently, in October 2001, the Company filed for interim and refundable local service rates in its Anchorage market in order to expedite a partial recovery of the total revenue deficiency. On November 15, 2001 the RCA approved an interim and refundable rate increase for ACSA of 24% for certain services. This interim and refundable rate increase was implemented in November 2001 and generated approximately $4.2 million in additional revenue in 2002. The Company expects the RCA to continue to hold hearings during 2003 and to adjudicate final local service rates during 2003 or 2004.

     On March 25, 2003, the RCA issued an order approving new revenue requirements for ACSF, ACSAK, and ACSN. The order reduces the revenue requirements for ACSF and ACSN while slightly increasing the revenue requirement for ACSAK. The Company has sought reconsideration of this decision. In addition, the RCA has allowed for the reopening of the revenue requirement phase of the hearing for ACSA. The ACSA hearing will be to review the RCA’s decision to reduce the revenue requirement for ACSA by lengthening the service lives of specific assets and thereby reducing depreciation expense. The RCA will evaluate whether to correct earlier ACSA decisions that were based on erroneous information about several categories of assets and resulted in longer service lives, lower depreciation expense, and therefore a reduced allowable revenue requirement. The RCA’s decisions on revenue requirements will have a direct impact on the retail rates and intrastate access rates that the Company is allowed to charge.

     Network access revenue was essentially flat for 2003 at $25.1 million. Network access revenue is based on a regulated return on rate base and recovery of allowable expense associated with the origination and termination of toll calls for the Company’s retail and resale customers. Management expects that network access revenue will decline as a component of local telephone revenue for the foreseeable future.

     Deregulated and other revenue, which increased slightly to $4.8 million compared to $4.6 million in the prior year, consists principally of B&C services, space and power rents, deregulated equipment sales, paystation revenue, regulated directory listing revenue, and other miscellaneous telephone revenue.

19

     Wireless

     Wireless revenue increased $1.0 million, or 10.4%, to $10.3 million for the three months ended March 31, 2003 compared to $9.4 million for the three months ended March 31, 2002. This increase was due to a growth in average subscribers of 3.0% from 79,860 in 2002 to 82,223 in 2003. The average revenue per unit, or ARPU, increased to $41.88 in 2003 compared to $39.05 during 2002.

     Directory

     Directory revenue decreased to $8.3 million in 2003 from $8.6 million in 2002. On April 28, 2003, the Company signed an underwriting agreement to sell a majority interest in its directory business and on April 29, 2003 filed a final prospectus to offer this majority interest to investors through a Canadian income fund.

     Internet

     Internet revenue increased from $3.8 million in 2002 to $6.3 million in 2003 — an increase of $2.5 million, or 63.9%. This increase is primarily due to revenue associated with the Company’s contract with the State of Alaska and growth in DSL subscribers of 63.9% from 8,488 in 2002 to 13,910 in 2003.

     On December 10, 2001, the Company entered into a five year contract with the State of Alaska to provide a broad range of telecommunications services, many of which will be provided over an IP network owned and operated by ACSI. Services under this contract began to be implemented during the second quarter of 2002. The Company anticipates that revenue for this segment will increase in future periods as additional services are added under the contract.

     Interexchange

     Interexchange revenue decreased slightly from $4.9 million in 2002 to $4.8 million in 2003. Long distance subscribers decreased from 66,521 in 2002 to 57,677 in 2003. The decrease in subscribers was substantially due to database grooming to remove approximately 12,000 non-revenue generating inactive subscribers from the subscriber list in connection with the conversion of long distance billing from an outside service bureau to an in-house system during the first quarter of 2003. The average revenue per unit, or ARPU, increased slightly to $24.89 in 2003 compared to $24.45 during 2002 and total minutes of use declined slightly from 37.9 million in 2002 to 37.8 million in 2003.

     Operating Expense

     Operating expense increased $7.6 million, or 10.9%, from $69.5 million for the three months ended March 31, 2002 to $77.1 million for the three months ended March 31, 2003. Depreciation and amortization associated with the operation of each of the Company’s segments has been included in total depreciation and amortization.

     Local Telephone

     The components of local telephone expense are plant specific operations, plant non-specific operations, customer operations, corporate operations and property and other operating tax expense. Local telephone expense decreased to $27.8 million for the three months ended March 31, 2003 from $29.0 million for the three months ended March 31, 2002. The decrease in local telephone expense was substantially attributable to cost reductions achieved as a result of the Company’s restructuring plan adopted in June of 2002.

     Wireless

     Wireless expense increased $0.5 million, or 8.6%, for the three months ended March 31, 2003 compared to the three months ended March 31, 2002. This increase is due substantially to an increase in minutes of use from 41.2 million minutes in 2002 to 47.2 million minutes in 2003.

20

     Directory

     Directory expense was $3.4 million for both of the quarters ended March 31, 2003 and 2002. On April 28, 2003, the Company signed an underwriting agreement to sell a majority interest in its directory business and on April 29, 2003 filed a final prospectus to offer this majority interest to investors through a Canadian income fund.

     Internet

     Internet expense increased by $4.2 million, or 80.9%, from $5.1 million in 2002 to $9.3 million in 2003. The increase in Internet expense was due principally to transition expenses and operating costs associated with commencing services under the State of Alaska telecommunications contract. On December 10, 2001, the Company entered into a five year contract with the State of Alaska to provide a broad range of telecommunications services, many of which will be provided over an IP network and supported by a service center owned and operated by ACSI. The Company anticipates expense for this segment to level out or decline as it completes the integration of the State of Alaska services.

     Interexchange

     Interexchange expense was steady at $6.6 million for both of the quarters ended March 31, 2003 and 2002. The Company converted its long distance billing from an outside service bureau to an in-house system during the first quarter of 2003. This billing conversion is expected to result in annual cost savings of approximately $0.6 million and improved customer service.

     Depreciation and Amortization

     Depreciation and amortization expense increased $3.3 million, or 17.3%, due principally to increases in plant in service and to the adoption of shorter depreciable lives for certain classes of assets compared to the corresponding period of 2002. Management adopted the higher depreciation rates on these classes of assets as a result of an evaluation of the expected useful lives of its underlying assets, primarily in its regulated local telephone segment.

     Loss on disposal of assets

     The Company recorded a non-cash loss on disposal of certain wireless assets of $0.7 million during the quarter ended March 31, 2003 as a result of retiring assets which had not been fully recovered through depreciation expense.

     Interest Expense and Interest Income and Other

     Interest expense decreased slightly to $13.3 million for the three months ended March 31, 2003 compared to $13.4 million for the three months ended March 31, 2002 as a result of market interest rate effects on the Company’s variable interest rate debt. Interest income and other also declined by $0.3 million, or 61.6%, as a result of a lower average invested cash balance and lower market interest rates during 2003 compared to 2002.

     Income Taxes

     The Company has provided a valuation allowance for the full income tax benefit resulting from the consolidated losses it has incurred since May 14, 1999 - the date of the acquisition of substantially all of its operations.

     Discontinued Operations

     On March 30, 2002, the Company’s management approved a plan to offer for sale its wireless cable television service segment. As a result of this decision, the operating revenue and expense of this segment have been classified as discontinued operations under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, for all periods presented and the assets and liabilities of the

21

disposal group have been written down to their fair value, net of expected selling expense. The results of operations of this discontinued segment resulted in a charge to discontinued operations of $52 thousand and $6.9 million for the three months ended March 31, 2003 and 2002, respectively. The Company has fully reserved in the form of a valuation allowance the income tax benefit resulting from this discontinuance. The Company completed its disposal of its wireless cable television segment as of March 31, 2003.

     Cumulative Effect of Change in Accounting Principle

     Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires that goodwill be tested for impairment at the reporting unit level upon adoption and at least annually thereafter, utilizing a two-step methodology. The transitional review for goodwill impairment required under SFAS No. 142 indicated that goodwill recorded in the local telephone, Internet and interexchange segments was impaired as of January 1, 2002. Accordingly, the Company measured and recognized in the first quarter of 2002 a transitional impairment loss of $105.4 million as the cumulative effect of a change in accounting principle in the consolidated statement of operations. The income tax benefit of $39.5 million was offset by a valuation allowance. See Note 4 “Cumulative Effect of Change in Accounting Principle” in the Notes to Consolidated Financial Statements included elsewhere in this 10-Q for additional discussion of the this statement.

     Net loss

     The change in net loss is primarily a result of the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

     The Company has satisfied its operational and capital cash requirements primarily through internally generated funds, the sale of stock and debt financing. For the three months ended March 31, 2003 the Company’s cash flows from operating activities were $18.6 million. At March 31, 2003, the Company had approximately $30.3 million in net working capital. As of March 31, 2003 the Company had $75.0 million of remaining capacity under its revolving credit facility, representing 100% of available capacity.

     The Company has outstanding a $430.7 million bank credit agreement (“Senior Credit Facility”), $150.0 million in 9.375% senior subordinated notes due 2009 and $17.3 million in 13% senior discount debentures due 2011, representing substantially all of the Company’s long-term debt of $609.9 million as of March 31, 2003. Interest on the Company’s senior subordinated notes and senior discount debentures is payable semiannually. Interest on borrowings under the Senior Credit Facility is payable monthly, bi-monthly, quarterly or semi-annually at the Company’s option. The Senior Credit Facility requires 1% annual principal payments that commenced on May 14, 2002, with balloon payments in each of 2006, 2007, and 2008. The Senior Credit Facility contains a number of restrictive covenants and events of default, including covenants limiting capital expenditures, incurrence of debt, and the payment of dividends, and requires the Company to achieve certain financial ratios. The Company is in compliance with all of its debt covenants. During the first quarter of 2003, the Company’s lenders approved an Amendment and Waiver to its Senior Credit Facility that, among other things, permits the Company to sell its directory business, ACSIS, provided that it can achieve a certain minimum amount of proceeds from the sale and that 75% of such proceeds would be used to repay outstanding Senior Credit Facility term loans. This Amendment and Waiver will not become effective until executed by the Company.

     The Company employs an interest rate hedge transaction, which fixes at 5.99% the underlying variable rate on $217.5 million of the borrowings under the Senior Credit Facility, expiring in June 2004. The underlying variable rate for the Senior Credit Facility is based on the London Interbank Offer Rate (“LIBOR”), which is adjusted at each monthly, quarterly or semi-annual rollover date.

     In December 2001, the Company entered into a material contract with the State of Alaska to provide it with comprehensive telecommunications services for a period of five years. This contract obligates the Company to, among other things, provide on the state’s behalf customer premise equipment and other capital assets which the Company believes will range between $25 million and $30 million over

22

the term of the agreement, of which approximately $12.4 million has been expended through March 31, 2003. The Company intends to fund this commitment with cash on hand and cash flows from operations.

     On July 15, 2002 the Company fulfilled a commitment to Neptune to provide to that party a loan in the form of an unsecured note receivable totaling $15 million in return for certain consideration. The note bears interest at the applicable federal rate, which was 4.84% at March 31, 2003 and matures on July 15, 2022. Interest is payable semiannually, but the borrower may elect to add the interest to the principal in lieu of cash payments. The commitment was funded with cash on hand. In connection with this note, Neptune has granted the Company an option to purchase certain network assets of Neptune, no later than January 2, 2006, at a price equal to the then outstanding loan balance. The Company has also entered into a strategic agreement with Neptune for the life of the fiber optic cable system owned by Neptune. The significant provisions of this agreement are: i) purchase commitments by the Company for capacity in 2005 and 2007, the final price and quantity of which are subject to future events, ii) Neptune’s restoration of the Company’s traffic carried on another cable system, iii) and specific interconnection arrangements between the Company and Neptune, should the Company exercise its option to purchase certain network assets from Neptune. The Company is currently renegotiating the terms and conditions of this agreement and it is not possible to determine the ultimate outcome of these negotiations at this time.

     The local telephone network requires the timely maintenance of plant and infrastructure. The Company’s historical capital expenditures have been significant. The construction and geographic expansion of the Company’s wireless network has required significant capital. The implementation of the Company’s interexchange network and data services strategy is also capital intensive. In 1999, the Company purchased fiber capacity for $19.5 million, which was funded with monies borrowed to finance the 1999 acquisitions. Capital expenditures for 2000 were $72.3 million, including $3.2 million in capital leases. Capital expenditures for 2001 were $87.6 million, including $19.5 million for additional fiber capacity and $15.0 million for an IP based network and service center. Capital expenditures for 2002 were $71.4 million, including 4.2 million in capital leases, approximately $12.4 million necessary to meet its obligations under a contract with the State of Alaska and approximately $5.0 million for the first phase of its buildout of PCS licenses. The Company anticipates capital spending of between $60 million and $65 million for 2003, and has spent $8.4 million in the first quarter of 2003, including property acquired under a mortgage of $2.3 million. The Company intends to fund its future capital expenditures with cash on hand, through internally generated cash flows, and if necessary, through borrowings under the revolving credit facility.

     The Company has been authorized by its Board of Directors to evaluate the disposition of all or part of its directory business, ACSIS. The Company has met substantially all of the conditions necessary to sell its directory business and, on April 28, 2003, entered into an underwriting agreement with a syndicate of Canadian investment banks to complete the sale of a majority interest in it. The Company subsequently filed on April 29, 2003, a final prospectus with Canadian securities regulators to sell a majority interest in its directories business in a public offering in Canada through a Canadian income fund. The transaction is expected to close on May 8, 2003. This transaction, if completed, would result in a de-leveraging of the Company’s balance sheet and generate cash for other corporate objectives.

     The Company’s capital requirements may change due to, among other things: impacts of regulatory decisions that affect the Company’s ability to recover its investments, changes in technology, the effects of competition, changes in the Company’s business strategy, and the Company’s decision to pursue specific acquisition opportunities.

     The Company believes that it will have sufficient working capital provided by operations and available borrowing capacity under the existing revolving credit facility to service its debt and fund its operations, capital expenditures and other obligations over the next 12 months. The Company’s ability to service its debt and fund its operations, capital expenditures and other obligations will be dependent upon its future financial performance, which is, in turn, subject to future economic conditions and to financial, business, regulatory and other factors, many of which are beyond the Company’s control.

23

CRITICAL ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

     Management is responsible for the financial statements presented elsewhere in this 10-Q and has evaluated the accounting policies used in their preparation. Management believes these policies to be reasonable and appropriate. The Company’s significant accounting policies are described in Note 1 in the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. The following discussion identifies those accounting policies that management believes are critical in the preparation of the Company’s financial statements, the judgements and uncertainties affecting the application of those policies, and the possibility that materially different amounts would be reported under different conditions or using different assumptions.

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Among the significant estimates affecting the financial statements are those related to the realizable value of accounts receivable, long-lived assets, income taxes and network access revenue reserves. Actual results may differ from those estimates.

     Access revenue is recognized when earned. The Company participates in toll revenue pools with other telephone companies. Such pools are funded by toll revenue and/or access charges regulated by the RCA within the intrastate jurisdiction and the FCC within the interstate jurisdiction. Much of the interstate access revenue is initially recorded based on estimates. These estimates are derived from interim financial statements, available separations studies and the most recent information available about achieved rates of return. These estimates are subject to adjustment in future accounting periods as additional operational information becomes available. To the extent that disputes arise over revenue settlements, the Company’s policy is to defer revenue collected until settlement methodologies are resolved and finalized. At March 31, 2003, the Company had recorded liabilities of $17.5 million related to its estimate of refundable access revenue. Actual results could vary from this estimate.

     The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred taxes reflect the temporary differences between the financial and tax basis of assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent that it is more likely than not that such deferred tax assets will not be realized. The cumulative valuation allowance against deferred tax assets is $96.4 million as of March 31, 2003.

     The local telephone exchange operations of the Company account for costs in accordance with the accounting principles for regulated enterprises prescribed by SFAS No. 71, Accounting for the Effects of Certain Types of Regulation. This accounting recognizes the economic effects of rate regulation by recording cost and a return on investment as such amounts are recovered through rates authorized by regulatory authorities. Accordingly, under SFAS No. 71, plant and equipment is depreciated over lives approved by regulators and certain costs and obligations are deferred based upon approvals received from regulators to permit recovery of such amounts in future years. Historically, lives approved for regulatory purposes have approximated economically useful lives. On July 21, 2002, the Company received an order from the RCA which appears to extend lives approved for rate-making purposes beyond the economically useful lives of the underlying assets. Management petitioned for reconsideration, and the RCA has agreed to take additional testimony. A final order on the matter is not expected until the second quarter of 2003. The Company implemented, effective January 1, 2003, higher depreciation rates for its regulated telephone plant for the interstate jurisdiction. As a result, the Company has recorded a regulatory asset under SFAS No. 71 of $2.4 million. As of March 31, 2002 the Company has also deferred as a regulatory asset $0.9 million of costs incurred in connection with regulatory rate making proceedings, which will be amortized in future periods. If the Company were not following SFAS No. 71, it would have recorded additional depreciation expense of $2.4 million for the intrastate and local jurisdictions and the deferred costs incurred in connection with regulatory rate making proceedings would have been charged to expense as incurred.

24

     Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. In accordance with the guidelines of this accounting principle, goodwill and indefinite-lived intangible assets are no longer amortized but will be assessed for impairment on at least an annual basis. SFAS No. 142 requires that goodwill be tested for impairment at the reporting unit level upon adoption and at least annually thereafter, utilizing a two-step methodology. The initial step requires the Company to determine the fair value of each reporting unit and compare it to the carrying value, including goodwill, of such unit. If the fair value exceeds the carrying value, no impairment loss would be recognized. However, if the carrying value of the reporting unit exceeds its fair value, the goodwill of the unit may be impaired. The amount, if any, of the impairment is then measured in the second step. The Company determines the fair value of each reporting unit for purposes of this test primarily by using a discounted cash flow valuation technique. Significant estimates used in the valuation include estimates of future cash flows, both future short-term and long-term growth rates, and estimated cost of capital for purposes of arriving at a discount factor. The Company recognized in the first quarter of 2002 a transitional impairment loss of $105.4 million under SFAS No. 142 as the cumulative effect of a change in accounting principle in the consolidated statement of operations. At March 31, 2003 the Company had recorded goodwill of $77.2 million.

OUTLOOK

     The Company expects that, overall, the demand for telecommunications services in Alaska to grow, particularly as a result of:

• increasing demand for private network services by government and business on a statewide basis on either a circuit switched or IP basis,

• increasing demand for wireless voice and data services, and

• growth in demand for DSL and Internet access services due to higher business and consumer bandwidth needs.

     The Company believes that it will be able to capitalize on this demand through its diverse service offerings on its owned circuit switched and IP facilities and new sales and marketing initiatives directed toward basic voice, enhanced and data services.

     There are currently a number of regulatory proceedings underway at the state and federal levels that could have a significant impact on the Company’s operations. The Company cannot predict with certainty the impact of current or future regulatory developments on any of its businesses.

     The telecommunications industry is extremely competitive, and the Company expects competition to intensify in the future. As an ILEC, the Company faces competition mainly from resellers, local providers who lease its UNEs and, to a lesser degree, from facilities-based providers of local telephone services. In addition, as a result of the RCA’s recent affirmation of the APUC’s termination of the Company’s rural exemptions, the Company may be required to provide interconnection elements and/or wholesale discounted services to competitors in all or some of its rural service areas. Moreover, while wireless telephone services have historically complemented traditional LEC services, the Company anticipates that existing and emerging wireless technologies may increasingly compete with LEC services. In wireless services, the Company currently competes with at least one other wireless provider in each of its wireless service areas. The Company competes for directory advertising services with at least one other publisher in substantially all of its service areas. In the highly competitive business for Internet access services, the Company currently competes with a number of established online service companies, interexchange carriers and cable companies. In the interexchange market, the Company believes it currently has less than 10% of total revenue in Alaska and faces competition from the two major interexchange providers.

     The telecommunications industry is subject to continuous technological change. The Company expects that new technological developments in the future will generally serve to enhance its ability to provide service to its customers. However, these developments may also increase competition or require the Company to make significant capital investments to maintain its leadership position in Alaska.

25

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company has issued senior discount debentures, senior subordinated notes and has entered into a bank credit facility. These on-balance sheet financial instruments, to the extent they provide for variable rates of interest, expose the Company to interest rate risk, with the primary interest rate risk exposure resulting from changes in LIBOR or the prime rate, which are used to determine the interest rates that are applicable to borrowings under the Company’s bank credit facilities. The Company uses derivative financial instruments, in particular an interest rate swap agreement, to partially hedge variable interest transactions. The Company’s derivative financial instrument transaction has been entered into for hedging purposes. The terms and characteristics of the derivative financial instruments are matched with the underlying on-balance sheet instrument or anticipated transactions and do not constitute speculative or leveraged positions independent of these exposures. There have been no material changes to the Company’s outstanding debt instruments since December 31, 2002.

ITEM 4. CONTROLS AND PROCEDURES

     Evaluation of disclosure controls and procedures

     Within the 90 days prior to the date of this report, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (“Exchange Act”) Rules 13a-14(c) and 15d-14(c)) under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and its Chief Financial Officer. Based upon that evaluation, the Company’s Chief Executive Officer and its Chief Financial Officer concluded that our disclosure controls and procedures are effective.

     Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure.

     Changes in internal controls

     There were no significant changes in our internal controls or, to our knowledge, in other factors that could significantly affect our disclosure controls and procedures subsequent to the date the Company carried out this evaluation.

26

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

     As previously reported, the Company filed a formal appeal of the RCA’s order terminating the rural exemption for Fairbanks, Juneau and the rural communities in the Glacier State study area on November 10, 1999. This matter has been fully briefed and argued and is currently pending before the Alaska Supreme Court.

     General Communication, Inc. (“GCI”), requested a new interconnection agreement for the rural communities in ACSN’s Glacier State study area on November 29, 2001. The RCA’s right to impose this obligation on ACSN during the term of an existing agreement was challenged in federal court, but the federal court declined to pursue the matter. GCI is currently negotiating and/or arbitrating new interconnection agreements with ACSN, ACSF, ACSAK and ACSA.

     On March 25, 2003, the RCA issued an order approving new revenue requirements for ACSF, ACSAK, and ACSN. The order reduces the revenue requirements for ACSF and ACSN while slightly increasing the revenue requirement for ACSAK. The Company has sought reconsideration of this decision. In addition, the RCA has allowed for the reopening of the revenue requirement phase of the hearing for ACSA. The ACSA hearing will be to review the RCA’s decision to reduce the revenue requirement for ACSA by lengthening the service lives of specific assets and thereby reducing depreciation expense. The RCA will evaluate whether to correct earlier ACSA decisions that were based on erroneous information about several categories of assets and resulted in longer service lives, lower depreciation expense, and therefore a reduced allowable revenue requirement. The RCA’s decisions on revenue requirements will have a direct impact on the retail rates and intrastate access rates that the Company is allowed to charge.

     The Company previously reported that it had a dispute with GCI pending before the FCC concerning interstate access charges. This matter has been resolved.

     The Company has been involved with a number of service-oriented disputes with GCI. Most recently, the Company was ordered, amongst other things, to construct new facilities for GCI to serve GCI customers and to provide GCI with access to the ACS ordering and provisioning systems. The Company is currently seeking review of these decisions.

     On May 14, 2001, the Company was served with a class action lawsuit concerning its interstate Infinite Minutes long distance plan. It is impossible to determine at this time the actual number of plaintiffs or the claims that will actually continue to be in dispute. The Company believes this suit is without merit and intends to vigorously defend its position.

     The Company is involved in various other claims, legal actions and regulatory proceedings arising in the ordinary course of business. The Company believes that the disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

27

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

     On December 3, 1999 the Company registered 6,021,489 shares under various employee and non-employee stock option plans and an employee stock purchase plan (File # 333-92091) on Form S-8 under the Securities Act of 1933. As of April 30, 2003, 3,336,044 option grants are outstanding under the employee stock option plans and 441,305 options have been exercised and converted into shares of the Company’s common stock. As of April 30, 2003, 110,093 shares have been awarded under the non-employee stock plan, of which 55,846 were elected to be deferred. As of April 30, 2003, 367,693 shares have been issued under the employee stock purchase plan. See Note 5, “Stock Incentive Plans” to the Alaska Communications Systems Group, Inc. Consolidated Financial Statements for further discussion.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

     None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.

ITEM 5. OTHER INFORMATION.

     None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits:

10.13	Investment Agreement, dated April 28, 2003, between ACS Media Income Fund, ACS Media Canada Inc., ACS Media Holdings LLC, ACS InfoSource, Inc., ACS Media LLC, and Alaska Communications Systems Holdings, Inc.
10.14	Underwriters Agreement dated April 28, 2003 by and among ACS Media Income Fund, ACS Media Canada Inc., ACS Media Holdings LLC, ACS InfoSource, Inc., ACS Media LLC, and Alaska Communications Systems Holdings, Inc. and CIBC World Markets Inc., RBC Dominion Securities Inc., Scotia Capital Inc., BMO Nesbitt Burns Inc., National Bank Financial Inc., and Westwind Partners Inc.
99.1	Certification of Charles R. Robinson, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted to Section 906 of The Sarbanes-Oxley Act of 2002.
99.2	Certification of Kevin P. Hemenway, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted to Section 906 of The Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K:

The following item was reported on Form 8-K, filed March 6, 2003

Item 9. Regulation FD Disclosure - A preliminary prospectus with Canadian securities regulators was filed on March 6, 2003 in connection with a proposed Canadian public offering of Alaska Communications Systems Group, Inc.’s directories business.

28

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 6, 2003 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

/s/ Charles E. Robinson

Charles E. Robinson

Chief Executive Officer and
Chairman of the Board

/s/ Kevin P. Hemenway

Kevin P. Hemenway

Senior Vice President and
Chief Financial Officer

(Principal Accounting Officer)

29

CERTIFICATIONS

Form of Sarbanes-Oxley Section 302(a) Certification

I, Charles E. Robinson, Chief Executive Officer of Alaska Communications Systems Group, Inc., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Alaska Communications Systems Group, Inc.;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
c)	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 6, 2003	/s/ Charles E. Robinson
	Charles E. Robinson
	Chief Executive Officer and Chairman of the Board
	Alaska Communications Systems Group, Inc.

30

Form of Sarbanes-Oxley Section 302(a) Certification

I, Kevin P. Hemenway, Chief Financial Officer of Alaska Communications Systems Group, Inc, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Alaska Communications Systems Group, Inc.;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
c)	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 6, 2003	/s/ Kevin P. Hemenway
	Kevin P. Hemenway
	Senior Vice President and Chief Financial Officer
	Alaska Communications Systems Group, Inc.

31 EX-10.13 3 v89821exv10w13.txt EXHIBIT 10.13 EXHIBIT 10.13 ACS MEDIA INCOME FUND - and - ACS MEDIA CANADA INC. - and - ACS MEDIA HOLDINGS LLC - and - ACS INFOSOURCE, INC. - and - ACS MEDIA LLC - and - ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC. ================================================================================ INVESTMENT AGREEMENT ================================================================================ April 28, 2003 [TORYS LLP LOGO] INVESTMENT AGREEMENT THIS AGREEMENT is made as of the 28th day of April, 2003 BETWEEN: ACS MEDIA INCOME FUND, a trust formed under the laws of the Province of Ontario, (the "FUND"), - and - ACS MEDIA CANADA INC., a corporation existing under the laws of the Province of Ontario, ("ACS CANADA"), - and - ACS MEDIA HOLDINGS LLC, a limited liability company existing under the laws of the State of Alaska, ("ACS HOLDINGS"), - and - ACS INFOSOURCE, INC., a corporation existing under the laws of the State of Alaska, ("ACS INFOSOURCE"), - and - ACS MEDIA LLC, a limited liability company existing under the laws of the State of Alaska, (the "COMPANY"), - and - ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC., a corporation existing under the laws of the State of Delaware, (the "ACSH"). RECITALS: A. The Fund intends to complete an offering of its trust units (the "UNITS") to the public under the Prospectus (as defined herein) filed with the securities regulatory authorities in each of the provinces and territories of Canada, including pursuant to the exercise (if any) of the over-allotment option contemplated by the Prospectus (the "OFFERING"); B. the Fund will use 50% of the net proceeds of the Offering (after deducting certain fees and expenses of the Offering payable by the Fund) to subscribe for the ACS Canada Notes; C. the Fund will use the remaining 50% of the net proceeds of the Offering to subscribe for common shares of ACS Canada, representing all of the outstanding shares of ACS Canada; D. ACS InfoSource will contribute the Business to ACS Holdings in consideration for all of the ACS Holdings Membership Interests and for the ACS Holdings Note; 50% of the consideration will be in the form of the ACS Holdings Note and the remaining 50% of such consideration will be in the form of ACS Holdings Membership Interests; E. ACS Holdings will contribute the Business to the Company in consideration for all of the Company Membership Interests; F. the Company will enter into a note purchase agreement and a revolving loan agreement with Metropolitan Life Insurance Company, as administrative agent and the other Lenders thereunder and Guarantors thereto for a senior secured credit facility in an aggregate principal amount of $40 million (the "PROPOSED CREDIT FACILITY"). A substantial portion of the proceeds of the Proposed Credit Facility will be used to repurchase Company Membership Interests from ACS Holdings; G. the Company will repurchase a portion of the outstanding Company Membership Interests from ACS Holdings; H. ACS Canada will use a portion of the proceeds that it receives from the sale of its common shares and the ACS Canada Notes to the Fund to pay certain expenses relating to the Offering and will use the remainder to purchase approximately 87.42% of the Company Membership Interests from ACS Holdings; I. ACS InfoSource is currently a guarantor under a credit facility between Alaska Communications Systems Group, Inc., JPMorgan Chase Bank, as administrative agent, Canadian Imperial Bank of Commerce, as syndication agent, and Credit Suisse First Boston Corporation, as documentation agent, dated as of May 14, 1999 (the "CURRENT CREDIT FACILITY"). On the Closing Date, the lender under the Current Credit Facility will release all security interests granted by ACS InfoSource in connection with the Current Credit Facility which relate to the Business; J. immediately following the Closing, the Fund will, indirectly through ACS Canada, hold approximately 87.42% of the Company Membership Interests and ACS InfoSource will, indirectly through ACS Holdings, hold the balance of the Company Membership Interests; and K. the Underwriting Agreement provides that, as a condition to the completion of the Offering, the Fund, ACS Canada, the Company, ACS Holdings and ACS InfoSource enter into this Agreement. NOW THEREFORE in consideration of the mutual covenants and agreements contained in this Agreement and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties), the parties hereto agree as follows: ARTICLE 1. INTERPRETATION 1.1. DEFINITIONS In this Agreement, "ACS CANADA COMMON SHARES" means common shares in the capital of ACS Canada, as subsequently consolidated or subdivided, or any other securities resulting from a reclassification or amendment thereto; "ACS CANADA NOTE INDENTURE" means the note indenture to be dated as of the Date of Closing between ACS Canada and CIBC Mellon Trust Company, in the form agreed to by the parties thereto; "ACS CANADA NOTES" means the notes of ACS Canada issued pursuant to the ACS Canada Note Indenture; "ACS HOLDINGS MEMBERSHIP INTERESTS" means membership interests in the capital of ACS Holdings, as subsequently consolidated or subdivided, or any other securities resulting from a reclassification or amendment thereto; "ACS HOLDINGS NOTE" means the note of ACS Holdings issued by ACS Holdings to ACS InfoSource; "ACTUAL KNOWLEDGE" means to the actual knowledge of Wesley E. Carson, Wayne Graham and Vicki Pedersen, after due inquiry of their direct reports and review of such other books, records and other assets of the Business as they judge, acting reasonably, to be relevant; "AFFILIATE" has the meaning attributed to such term in s. 1(1) and 1(4) of the Business Corporations Act (Ontario), R.S.O. 1990, c. B.16, as the same may be amended from time to time and any successor legislation thereto; "AGREEMENT", "HERETO", "HEREIN", "HEREBY", "HEREUNDER", "HEREOF", and similar expressions refer to this Investment Agreement and not to any particular Article, Section, subsection, clause, subdivision or other portion hereof and include any and every instrument supplemental or ancillary hereto; "ANCILLARY AGREEMENTS" means the Securityholders Agreement, the Exchange Agreement, the ACS Canada Note Indenture (including any ACS Canada Notes issued thereunder), the ACS Holdings Note and the guarantees by the Company in favour of the Fund and ACS InfoSource of obligations under the ACS Canada Note and the ACS Holdings Note, respectively; "BUSINESS" means the business currently operated by ACS InfoSource, as a going concern, which consists of all of the assets and liabilities of ACS InfoSource other than any intercompany indebtedness between ACS InfoSource and ACSH or its affiliates; "BUSINESS DAY" means any day except Saturdays, Sundays and statutory holidays in the Province of Ontario as specified in s. 29(1) of the Interpretation Act (Ontario), R.S.O. 1990, c. I.11, as amended; "CLAIM" has the meaning attributed to such term in Section 13.4; "CLOSING" means the completion of the transactions of purchase and sale contemplated in Articles 2 through 7 of this Agreement; "CLOSING TIME" means 8:00 a.m. (Toronto time) on the Date of Closing or such other time on such date as may be agreed upon in writing by the parties; "CODE" means the United States Internal Revenue Code of 1986, as amended; "COMPANY CONTRIBUTION" has the meaning attributed to such term in Section 5.1; "COMPANY MEMBERSHIP INTEREST PURCHASE PRICE" has the meaning attributed to such term in Section 7.1; "COMPANY MEMBERSHIP INTERESTS" means membership interests in the capital of the Company, as subsequently consolidated or subdivided, or any other securities resulting from a reclassification or amendment thereto; "COMPANY PLANS" has the meaning attributed to such term in Section 10.6.17.1; "COMPANY REPURCHASE PRICE" has the meaning attributed to such term in Section 6.1; "DAMAGES" means any direct damages, direct losses, direct expenses or direct claims suffered by, imposed upon or asserted against an Indemnified Party under the Securities Laws, other Laws, at common law or otherwise, together with the expenses incurred in defence of same, such amount being correspondingly reduced by (i) any insurance proceeds actually received by the Indemnified Party in respect of the same claim, or (ii) the present value of the net benefit, if any, that will be received by such party in the current or any future tax period as a result of the payment of Damages; "DATE OF CLOSING" means the date on which the completion of the issue of Units to the public pursuant to the Offering (other than in respect of the Over-Allotment Option) occurs; "DECLARATION OF TRUST" means the declaration of trust of the Fund made as of the 5th day of March, 2003, as amended and restated from time to time; "DISCLOSURE LETTER" means the letter dated the date of this Agreement from the Company to the applicable parties hereto in respect of the representations and warranties related to the Business, in the form satisfactory to such other parties; "ENVIRONMENTAL LAWS" means all Laws relating to environmental and/or health matters, including Laws governing the labeling, use and storage of hazardous substances; "EXCHANGE AGREEMENT" means the exchange agreement to be dated the Date of Closing by and among the Fund, ACS Canada, ACS Holdings and the Company and such other persons who from time to time execute the exchange agreement or are deemed to be parties thereto, in the form agreed to by the parties thereto; "FUND COMMON SHARE SUBSCRIPTION PRICE" has the meaning attributed to such term in Section 2.1; "FUND NOTE SUBSCRIPTION PRICE" has the meaning attributed to such term in Section 3.1; "GOVERNMENTAL CHARGES" means all taxes, duties, levies, assessments, reassessments and other charges together with all related penalties, interest and fines, payable in respect of periods ending on or before the Date of Closing to any domestic or foreign government (federal, provincial, state, municipal or otherwise) or to any regulatory authority, agency, commission or board of any domestic or foreign government, or imposed by any court or any other law, regulation or rule-making entity having jurisdiction in the relevant circumstances; "GOVERNMENTAL ENTITY" means any (i) multinational, federal, provincial, state, municipal, local or other governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign; (ii) any subdivision or authority of any of the foregoing; (iii) any quasi-governmental, self-regulatory organization or private body exercising any regulatory, expropriation or taxing authority under or for the account of its members or any of the above; or (iv) any arbitrator exercising jurisdiction over the affairs of the applicable Person, asset, obligation or other matter; "HOLDINGS CONTRIBUTION" has the meaning attributed to such term in Section 4.1; "INDEMNIFYING PARTY" means a party to this Agreement providing indemnification to its Indemnified Persons pursuant to Article 13; "INDEMNIFIED PERSONS" has the meaning attributed to such term in Section 13.2; "INTERIM PERIOD" means the period between the close of business on the date of this Agreement and the Closing; "LAWS" means any and all laws, including all federal, state, provincial and local statutes, codes, ordinances, decrees, rules, regulations and municipal by-laws and all judicial, arbitral, administrative, ministerial, departmental or regulatory judgments, orders, decisions, rulings or awards or other requirements of any other Governmental Entity, binding on or affecting the Person referred to in the context in which the term was used; "LIEN" mean any mortgage, charge, pledge, hypothecation, security interest, assignment, lien (statutory or otherwise), charge, title retention agreement or arrangement, restrictive covenant or other encumbrance of any nature, or any other arrangement or condition which, in substance, secures payment or performance of an obligation; "LITIGATION" means an action, suit, claim, proceeding or investigation, at law or in equity, before any Governmental Entity, by any Person; "MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE", with respect to the Business or any Person, means any effect or change on the Business or such Person, as the case may be, that is or is reasonably likely to be materially adverse to the results of operations, financial condition, assets, properties, capital, liabilities (contingent or otherwise), cash flow, income or business operations of the Business or such Person, as the case may be, after giving effect to this agreement and the transactions contemplated hereby, in each case taken as a whole and as a going concern and, for greater certainty, where applicable, applying the multiple or yield based upon which Units are priced and sold under the Prospectus in determining the consequential loss or diminution of value resulting from such effect or change; "MATERIAL AGREEMENTS" means, collectively, (i) the Directory Publishing Services Agreement between ACS InfoSource and L.M. Berry and Company, (ii) the Publishing Rights Agreement, the PRA Licence Agreement, the PRA Subscriber List Information Agreement, the PRA Directory Agreement, the Directory Publication and Distribution Agreement, the License Agreement, the Subscriber List Information License Agreement, the Data Services Agreement, the Billing and Collection Agreement described in the Prospectus, (iii) the Non-Competition Agreement among ACSH, the Company and others, described in the Prospectus, and (iv) the Transition Services Agreement among the Company, ACSH and others, described in the Prospectus. "NON-PERFORMING PARTY" has the meaning attributed to such term in Section 14.1; "ORDINARY COURSE" means, with respect to an action taken by a Person, that such action (i) is consistent in all material respects with past practices of the Person, (ii) is taken in the ordinary course of the normal day-to-day operations of the Person, or (iii) is consistent with industry practice; "OVER-ALLOTMENT COMPLETION DATE" means the date of the closing of the Transactions contemplated by the Over-Allotment Option; "OVER-ALLOTMENT OPTION" means the over-allotment option as described in the Prospectus and as more fully set out in the Underwriting Agreement; "PERSON" means any individual, partnership, limited partnership, limited liability company, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted; "PROPOSED CREDIT FACILITY" means the senior secured credit facility to be established pursuant to a note purchase agreement and a revolving loan agreement between the Company, Metropolitan Life Insurance Company, the Lenders thereunder and the Guarantors thereto; "PROSPECTUS" means the final prospectus of the Fund, including all exhibits and schedules thereto, dated the date hereof and filed with the securities commissions or other regulatory authorities in the Qualifying Jurisdictions in connection with the Offering; "QUALIFYING JURISDICTIONS" means, collectively, each of the provinces and territories of Canada; "REQUIRED CONSENTS" means the consents listed in the Disclosure Letter; "SECURITIES COMMISSION" means the applicable securities commission or other regulatory authority in each of the Qualifying Jurisdictions; "SECURITIES LAWS" means, collectively, the applicable securities laws of each of the Qualifying Jurisdictions and the respective regulations and rules made under those securities laws, together with all applicable policy statements, blanket orders and rulings of the Securities Commissions and all discretionary orders or rulings, if any, of the Securities Commissions made in connection with the transactions contemplated by the Underwriting Agreement and the securities legislation and policies of each other applicable jurisdiction (including the United States); "SECURITYHOLDERS AGREEMENT" means the securityholders agreement to be dated as of the Date of Closing by and among ACS Canada, ACS Holdings and the Company, in the form agreed to by the parties thereto; "TERMINATING PARTY" has the meaning attributed to such term in Section 14.1; "UNDERWRITERS" means the underwriters of the Offering; and "UNDERWRITING AGREEMENT" means the underwriting agreement entered into by and among the Fund, ACS Canada, the Company, ACS Holdings, ACS InfoSource, ACSH and the Underwriters in connection with the Offering. 1.2. SCHEDULES The following are the schedules attached to this Agreement: Schedule "A" - Capital of ACS Canada Schedule "B" - Capital of ACS Holdings Schedule "C" - Capital of the Company 1.3. HEADINGS The division of this Agreement into articles and sections and the insertion of headings are for the convenience of reference only and will not affect the construction or interpretation of this Agreement. Unless something in the subject matter or context is inconsistent therewith, references herein to "ARTICLES" or "SECTIONS" are to articles or sections of this Agreement. 1.4. GENDER AND NUMBER In this Agreement, words importing the singular number only will include the plural and vice versa, words importing the masculine gender will include the feminine and neuter genders and vice versa and words importing persons will include individuals, partnerships, associations, trusts, unincorporated organizations, limited liability companies, and corporations and vice versa. 1.5. CURRENCY Except where otherwise expressly provided, all payments contemplated herein will be paid in Canadian funds, and all references herein to dollar amounts are references to dollars in the lawful currency of Canada. 1.6. DAY NOT A BUSINESS DAY In the event that any day on or before which any action is required to be taken hereunder is not a Business Day, then such action will be required to be taken on or before the requisite time on the next succeeding day that is a Business Day. 1.7. ACCOUNTING PRINCIPLES Wherever in this Agreement reference is made to generally accepted accounting principles in the United States, such reference will be deemed to be to the requirements at the relevant time of the Financial Accounting Standards Board, or any successor accounting body, applicable on a consolidated basis (unless otherwise specifically provided or contemplated herein to be applicable on an unconsolidated basis) as at the date on which such calculation is made or required to be made in accordance with generally accepted accounting principles. Where the character or amount of any asset or liability or item of revenue or expense or amount of equity is required to be determined, or any consolidation or other accounting computation is required to be made for the purpose of this Agreement, such determination or calculation will, to the extent applicable and except as otherwise specified herein or as otherwise agreed in writing by the parties, be made in accordance with generally accepted accounting principles applied on a consistent basis. Wherever in this Agreement reference is made to generally accepted accounting principles in Canada, such reference will be deemed to be to the requirements at the relevant time of the Canadian Institute of Chartered Accountants, or any successor institute, applicable on a consolidated basis (unless otherwise specifically provided or contemplated herein to be applicable on an unconsolidated basis) as at the date on which such calculation is made or required to be made in accordance with generally accepted accounting principles in Canada. 1.12. WAIVER, AMENDMENT Except as expressly provided in this Agreement, no amendment or waiver of this Agreement will be binding unless executed in writing by the party to be bound thereby. No waiver of any provision of this Agreement will constitute a waiver of any other provision nor will any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided. 1.9. CONSTRUCTION The words "including" and "includes" where used in this Agreement will be deemed to mean "including, without limitation" and "includes, without limitation", respectively. 1.9. TRANSACTION VALUE The parties agree that the Business has an agreed upon value of US$231,402.750 for the purposes of the transactions contemplated in this Agreement. ARTICLE 2. FUND'S SUBSCRIPTION FOR COMMON SHARES OF ACS CANADA 2.1. PURCHASE AND SALE; SUBSCRIPTION PRICE Subject to the terms and conditions of this Agreement, at the Closing, ACS Canada will issue and sell to the Fund, and the Fund will purchase from ACS Canada, 80,271,009 ACS Canada Common Shares at a price of $1.00 per ACS Canada Common Share for an aggregate subscription price of $80,271,009 (the "FUND COMMON SHARE SUBSCRIPTION PRICE"). 2.2. PAYMENT OF THE FUND COMMON SHARE SUBSCRIPTION PRICE AND DELIVERY OF THE CERTIFICATES The Fund Common Share Subscription Price will be paid at the Closing by, or on behalf of, the Fund by wire transfer of immediately available funds or by delivery of a bank draft or a certified cheque payable to, or to the order of, ACS Canada, or as may be otherwise directed by ACS Canada in writing, against delivery by ACS Canada of a share certificate representing the ACS Canada Common Shares issued to the Fund, registered in the name of the Fund. ARTICLE 3. FUND'S SUBSCRIPTION FOR ACS CANADA NOTES 3.1. PURCHASE AND SALE; SUBSCRIPTION PRICE Subject to the terms and conditions of this Agreement, at the Closing, ACS Canada will issue and sell to the Fund, and the Fund will purchase from ACS Canada, $80,271,009 of ACS Canada Notes at a price of 100% of the aggregate subscription price (the "FUND NOTE SUBSCRIPTION PRICE"). 3.2. PAYMENT OF THE FUND NOTE SUBSCRIPTION PRICE AND DELIVERY OF THE NOTES The Fund Note Subscription Price will be paid at the Closing by, or on behalf of, the Fund by wire transfer of immediately available funds or by delivery of a bank draft or a certified cheque payable to, or to the order of, ACS Canada, or as may be otherwise directed by ACS Canada in writing, against delivery by ACS Canada of the ACS Canada Notes issued to the Fund, registered in the name of the Fund. ARTICLE 4. ACS INFOSOURCE'S CONTRIBUTION OF THE BUSINESS TO ACS HOLDINGS 4.1. CONTRIBUTION Subject to the terms and conditions of this Agreement, at the Closing, ACS InfoSource shall contribute to ACS Holdings as a going concern with all related goodwill, all of ACS InfoSource's right, title and interest in and to the Business (the "HOLDINGS CONTRIBUTION"). 4.2. ALLOCATION OF THE HOLDINGS CONTRIBUTION 4.2.1. The Holdings Contribution will be satisfied at the Closing by, or on behalf of, ACS Holdings by delivery of a certificate representing 79,788,552 ACS Holdings Membership Interests and by the delivery of the ACS Holdings Note in a principal amount of US$79,788,552 issued to ACS InfoSource, each registered in the name of ACS InfoSource, against delivery by ACS InfoSource of the documentation necessary to confirm the contribution of the Business, in form and substance acceptable to ACS InfoSource and ACS Holdings. 4.2.2. 50% of the Holdings Contribution Amount will be allocated to the ACS Holdings Note and 50% of the Holdings Contribution Amount will be allocated to the ACS Holdings Membership Interests. ARTICLE 5. ACS HOLDINGS' CONTRIBUTION OF THE BUSINESS TO THE COMPANY 5.1. CONTRIBUTION Subject to the terms and conditions of this Agreement, at the Closing, ACS Holdings shall contribute to the Company as a going concern with all related goodwill, all of ACS Holdings' right, title and interest in and to the Business (the "COMPANY CONTRIBUTION"). 5.2. SATISFACTION OF THE COMPANY CONTRIBUTION The Company Contribution will be satisfied at the Closing by, or on behalf of, the Company by delivery of a certificate representing 174,382,148 Company Membership Interests, registered in the name of ACS Holdings, against delivery by ACS Holdings of the documentation necessary to confirm the contribution of the Business, in form and substance acceptable to ACS Holdings and the Company. ARTICLE 6. THE COMPANY'S REPURCHASE OF CERTAIN OF ITS MEMBERSHIP INTERESTS FROM ACS HOLDINGS 6.1. PURCHASE AND SALE; PURCHASE PRICE Subject to the terms and conditions of this Agreement, at the Closing, ACS Holdings shall sell to the Company, and the Company shall repurchase for cancellation all of ACS Holdings' right title and interest in and to 36,334,827 Company Membership Interests for an aggregate purchase price of US$33,250,000 (the "COMPANY REPURCHASE PRICE"). 6.2. PAYMENT OF THE COMPANY REPURCHASE PRICE AND DELIVERY OF CERTIFICATES The Company Repurchase Price will be paid at the Closing by, or on behalf of, the Company by wire transfer of immediately available funds or delivery of a bank draft or certified cheque payable to, or to the order of, ACS Holdings, or as may be otherwise directed by ACS Holdings in writing, against delivery by ACS Holdings of a certificate representing 36,334,827 Company Membership Interests, together with a duly executed transfer and power of attorney, executed in blank. ARTICLE 7. ACS CANADA'S PURCHASE OF COMPANY MEMBERSHIP INTERESTS FROM ACS HOLDINGS 7.1. PURCHASE AND SALE; PURCHASE PRICE Subject to the terms and conditions of this Agreement, at the Closing, ACS Holdings will sell to ACS Canada, and ACS Canada will purchase from ACS Holdings, 120,680,968 Company Membership Interests for an aggregate purchase price of US$160,142,018 (the "COMPANY MEMBERSHIP INTEREST PURCHASE PRICE"). 7.2. PAYMENT OF COMPANY MEMBERSHIP INTEREST PURCHASE PRICE AND DELIVERY OF THE CERTIFICATES The Company Membership Interest Purchase Price will be paid at the Closing by, or on behalf of, ACS Canada by wire transfer of immediately available funds or by delivery of a bank draft or a certified cheque payable to, or to the order of, ACS Holdings, or as may be otherwise directed by ACS Holdings in writing, against delivery by ACS Holdings of a certificate representing the 120,680,968 Company Membership Interests, together with a duly executed transfer and power of attorney, executed in blank. ARTICLE 8. ACS HOLDINGS' REPURCHASE OF CERTAIN OF ITS MEMBERSHIP INTERESTS AND NOTES FROM ACS INFOSOURCE 8.1. PURCHASE AND SALE; PURCHASE PRICE Subject to the terms and conditions of this Agreement, at the Closing, ACS InfoSource shall sell to ACS Holdings, and ACS Holdings shall repurchase for cancellation, all of ACS InfoSource's right, title and interest in and to 71,842,577 ACS Holdings Membership Interests at a price of US$71,842,577 per ACS Holdings Membership Interest and US$71,842,577 principal amount of ACS Holdings Notes at a price of US$71,842,577 for an aggregate purchase price of US$143,685,154 (the "ACS HOLDINGS REPURCHASE PRICE") 8.2. PAYMENT OF THE ACS HOLDINGS REPURCHASE PRICE AND DELIVERY OF CERTIFICATES The ACS Holdings Repurchase Price will be paid at the Closing by, or on behalf of, ACS Holdings by wire transfer of immediately available funds or by delivery of a bank draft or a certified cheque payable to, or to the order of, ACS InfoSource, or as may be otherwise directed by ACS InfoSource in writing, against delivery by ACS InfoSource of a certificate representing 71,842,577 ACS Holdings Membership Interests, together with a duly executed transfer and power of attorney, executed in blank, and by the delivery of the ACS Holdings Note in the principal amount of US$71,842,577 (which ACS Holdings will re-issue to ACS InfoSource the ACS Holdings Note in the principal amount of US$71,842,577). ARTICLE 9. TRANSACTIONS TO BE EFFECTED UPON EXERCISE OF THE OVER ALLOTMENT OPTION 9.1. PURCHASE AND SALE TRANSACTIONS Upon exercise of the Over-Allotment Option, if any, the Fund, ACS Canada, the Company, ACS Holdings and ACS InfoSource shall enter into and implement the following transactions: 9.1.1. ACS Canada will issue and sell to the Fund, and the Fund will purchase from ACS Canada, ACS Canada Common Shares at a price of $1.00 per ACS Canada Common Share for an aggregate subscription price equal to 50% of the aggregate proceeds received by the Fund pursuant to the exercise of the Over-Allotment Option (net of any fees and expenses of the Offering payable by the Fund) (the "OVER-ALLOTMENT FUND COMMON SHARE SUBSCRIPTION PRICE"). 9.1.2. ACS Canada will issue and sell to the Fund, and the Fund will purchase from ACS Canada, ACS Canada Notes in a principal amount equal to 50% of the aggregate proceeds received by the Fund pursuant to the exercise of the Over-Allotment Option (net of any fees and expenses of the Offering payable by the Fund) of a price of 100% of such principal amount (the "OVER-ALLOTMENT FUND NOTE SUBSCRIPTION FEE"). 9.1.3. ACS Holdings will sell to ACS Canada, and ACS Canada will purchase from ACS Holdings, such number of Company Membership Interests at a price of US$1.00 per Company Membership Interest for an aggregate price equal to the sum of the Over-Allotment Fund Common Share Subscription Price and Over-Allotment Fund Note Subscription Price (net of any fees and expenses of the Offering payable by ACS Canada) (the "OVER-ALLOTMENT COMPANY MEMBERSHIP INTEREST PURCHASE PRICE"). 9.1.4. ACS InfoSource shall sell to ACS Holdings, and ACS Holdings shall repurchase for cancellation all of ACS InfoSource's right, title and interest in and to ACS Holdings Membership Interests (at a price of US$1.00 per ACS Holdings Membership Interest) and a portion of the principal amount of ACS Holdings Notes for an aggregate purchase price equal to the Over-Allotment Company Membership Interest Purchase Price to be allocated as between ACS Holdings Membership Interests (the "OVER-ALLOTMENT ACS HOLDINGS MEMBERSHIP INTERESTS REPURCHASE PRICE") and ACS Holdings Notes (THE "OVER-ALLOTMENT ACS HOLDINGS NOTES REPURCHASE PRICE") in the same proportions as the ACS Holdings Repurchase Price in Section 8.1. 9.1.5. The parties agree that any expenses attributable to the Over-Allotment Option will be paid in the same proportion as the fees in connection with the Closing. 9.2. PAYMENT The Over-Allotment Fund Common Share Subscription Price, the Over-Allotment Fund Note Subscription Price and the Over-Allotment Company Membership Interest Purchase Price will be paid in the same manner as set out in Sections 2.2, 3.2 and 7.2 respectively, in the applicable amounts. The Over-Allotment ACS Holdings Membership Interests Repurchase Price and the Over-Allotment ACS Holdings Notes Repurchase Price will be paid in the same manner as set out in Section 8.2. ARTICLE 10. REPRESENTATIONS AND WARRANTIES 10.1. REPRESENTATIONS AND WARRANTIES OF THE FUND The Fund represents and warrants to ACS Canada as follows and acknowledges that ACS Canada is relying upon the following representations and warranties in completing the transactions contemplated hereby: 10.1.1. FORMATION AND STATUS OF THE FUND. The Fund has been properly established and settled and is validly existing as a trust under the laws of the Province of Ontario. The Fund is a person referred to in paragraph (r) of the definition of "accredited investor" in Ontario Securities Commission Rule 45-501 for the purposes of the acquisition of the ACS Canada Common Shares and the ACS Canada Notes in accordance with this Agreement. The Fund is duly qualified to carry on its business in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets, requires such qualification, except to the extent that any failure to be so qualified, either individually or in the aggregate, would not have a Material Adverse Effect. 10.1.2. POWER OF THE FUND AND DUE AUTHORIZATION. The Fund has the power and capacity to enter into and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party and to carry out the transactions contemplated in the Prospectus. Each of this Agreement and the Ancillary Agreements to which it is a party has been, or will at the Closing Time be, duly authorized, executed and delivered by the Fund and is, or will at the Closing Time be, a legal, valid and binding obligation of the Fund, enforceable against the Fund in accordance with its terms, subject to exceptions as to applicable bankruptcy, insolvency and similar laws and the availability of equitable remedies. 10.1.3. CAPITAL OF THE FUND. The Fund is authorized to issue an unlimited number of Units, of which as at the date of this Agreement, one Unit is issued and outstanding as a fully paid Unit of the Fund. 10.1.4. NO OBLIGATIONS TO ISSUE SECURITIES. Except as contemplated by the Prospectus and the Exchange Agreement, there are no agreements, options, warrants, rights of conversion or other rights pursuant to which the Fund is, or may become, obligated to issue any Units or any securities convertible or exchangeable, directly or indirectly, into any Units. 10.1.5. NO APPROVALS. Except as set out in the Disclosure Letter, no consent, approval, authorization or order of, and no filing, registration or recording with, any Governmental Entity is required in connection with the execution and delivery of this Agreement and the Ancillary Agreements, to which it is a party, or the performance by the Fund of its obligations hereunder and thereunder and the consummation by the Fund of the transactions contemplated herein and therein. 10.1.6. NO CONTRAVENTION. Except as set out in the Disclosure Letter, the execution and delivery by the Fund of this Agreement and the Ancillary Agreements to which it is a party, the performance by the Fund of its obligations hereunder and thereunder and compliance with the other provisions hereof and thereof does not and will not contravene, breach or result in any default under its organizational documents or under any mortgage, indenture, lease, agreement, other legally binding instrument, licence, permit, statute, regulation, order, judgment, decree or Law to which the Fund is a party or by which it is bound. 10.1.7. RESIDENCE OF THE FUND. The Fund is not a non-resident of Canada within the meaning of the Income Tax Act (Canada). 10.2. REPRESENTATIONS AND WARRANTIES OF ACS CANADA ACS Canada represents and warrants to each of the Fund and ACS Holdings as follows and acknowledges that each of the Fund and ACS Holdings is relying upon the following representations and warranties in completing the transactions contemplated hereby: 10.2.1. INCORPORATION AND STATUS. ACS Canada is duly incorporated and existing under the laws of the Province of Ontario. ACS Canada is a Person referred to in paragraph (aa) of the definition of "accredited investor" in Ontario Securities Commission Rule 45-501 for the purposes of the acquisition of the Company Membership Interests in accordance with this Agreement. ACS Canada is duly qualified to carry on its business in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets, requires such qualification, except to the extent that any failure to be so qualified, either individually or in the aggregate, would not have a Material Adverse Effect. 10.2.2. CORPORATE POWER OF ACS CANADA AND DUE AUTHORIZATION. ACS Canada has the power and capacity to enter into and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party and to carry out the transactions contemplated in the Prospectus. Each of this Agreement and the Ancillary Agreements to which it is a party has been, or will at the Closing Time be, duly authorized, executed and delivered by ACS Canada and is, or will at the Closing Time be, a legal, valid and binding obligation of ACS Canada, enforceable against ACS Canada in accordance with its terms, subject to exceptions as to applicable bankruptcy, insolvency and similar laws and the availability of equitable remedies. 10.2.3. CAPITAL OF ACS CANADA. The authorized and issued capital of ACS Canada at the date of this Agreement and after giving effect to the Closing, is and will be as set forth in Schedule "A". All the shares indicated on such Schedule "A" as being issued and outstanding have been validly issued and are outstanding as fully paid and non-assessable shares. After giving effect to the Closing, the Fund shall have good and marketable title, to the ACS Canada Common Shares owned by it, free of all Liens, other than any Liens created by the Fund. 10.2.4. NO OBLIGATION TO ISSUE SECURITIES. Except as contemplated by this Agreement and the Exchange Agreement, there are no agreements, options, warrants, rights of conversion or other rights pursuant to which ACS Canada is, or may become, obligated to issue any ACS Canada Common Shares or any ACS Canada Notes or any securities convertible or exchangeable, directly or indirectly, into any ACS Canada Common Shares or ACS Canada Notes. 10.2.5. NO APPROVALS. Except as set out in the Disclosure Letter, no consent, approval, authorization or order of, and no filing, registration or recording with, any Governmental Entity is required in connection with the execution and delivery of this Agreement and the Ancillary Agreements to which it is a party or the performance by ACS Canada of its obligations hereunder and thereunder or the consummation by ACS Canada of the transactions contemplated herein and therein. 10.2.6. NO CONTRAVENTION. Except as set out in the Disclosure Letter, the execution and delivery by ACS Canada of this Agreement and the Ancillary Agreements to which it is a party, the performance by ACS Canada of its obligations hereunder and thereunder and compliance with the other provisions hereof and thereof does not and will not contravene, breach or result in any default under its organizational documents or under any mortgage, indenture, lease, agreement, other legally binding instrument, licence, permit, statute, regulation, order, judgment, decree or Law to which ACS Canada is a party or by which it is bound. 10.2.7. RESIDENCE OF ACS CANADA. ACS Canada is not a non-resident of Canada within the meaning of the Income Tax Act (Canada). 10.3. REPRESENTATIONS AND WARRANTIES OF ACS HOLDINGS ACS Holdings represents and warrants to the Fund, ACS Canada, ACS InfoSource and the Company as follows and acknowledges that each of ACS Canada, ACS InfoSource and the Company is relying upon the following representations and warranties in completing the transactions contemplated hereby: 10.3.1. ORGANIZATION AND STATUS. ACS Holdings is a limited liability company duly organized and existing under the laws of the State of Alaska. ACS Holdings is duly qualified to carry on its business in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets, requires such qualification, except to the extent that any failure to be so qualified, either individually or in the aggregate, would not have a Material Adverse Effect. 10.3.2. CORPORATE POWER OF ACS HOLDINGS AND DUE AUTHORIZATION. ACS Holdings has the power and capacity to enter into and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party and to carry out the transactions contemplated in the Prospectus. Each of this Agreement and the Ancillary Agreements to which it is a party has been, or will at the Closing Time be, duly authorized, executed and delivered by or on behalf of ACS Holdings and is, or will at the Closing Time be, a legal, valid and binding obligation of ACS Holdings, enforceable against ACS Holdings in accordance with its terms, subject to exceptions as to applicable bankruptcy, insolvency and similar laws and the availability of equitable remedies. 10.3.3. CAPITAL OF ACS HOLDINGS. The authorized and issued capital of ACS Holdings at the date of this Agreement and after giving effect to the Closing, is and will be as set forth in Schedule "B". All the membership interests indicated on such Schedule "B" as being issued and outstanding have been validly issued and are outstanding as fully paid and non-assessable membership interests. After giving effect to the Closing, ACS InfoSource shall have good and marketable title to the ACS Holdings Membership Interests owned by it, free of all Liens, other than any Liens created by ACS InfoSource. 10.3.4. NO OBLIGATIONS TO ISSUE SECURITIES. Except as contemplated by this Agreement and the Exchange Agreement, there are no agreements, options, warrants, rights of conversion or other rights pursuant to which ACS Holdings is, or may become, obligated to issue any ACS Holdings Membership Interests or ACS Holdings Notes or any securities convertible or exchangeable, directly or indirectly, into any ACS Holdings Membership Interests or ACS Holdings Notes. 10.3.5. NO APPROVALS. Except as set out in the Disclosure Letter, no consent, approval, authorization or order of, and no filing, registration or recording with, any Governmental Entity is required in connection with the execution and delivery of this Agreement and the Ancillary Agreements to which it is a party, or the performance by ACS Holdings of its obligations hereunder and thereunder or the consummation by ACS Holdings of the transactions contemplated herein and therein. 10.3.6. NO CONTRAVENTION. Except as set out in the Disclosure Letter, the execution and delivery by ACS Holdings of this Agreement and the Ancillary Agreements to which it is a party, the performance by ACS Holdings of its obligations hereunder and thereunder and compliance with other provisions hereof and thereof does not and will not contravene, breach or result in any default under its organizational documents or under any mortgage, indenture, lease, agreement, other legally binding instrument, licence, permit, statute, regulation, order, judgment, decree or Law to which ACS Holdings is a party or by which it is bound. 10.4. REPRESENTATIONS AND WARRANTIES OF ACS INFOSOURCE ACS InfoSource represents and warrants to the Fund and ACS Holdings (other than in respect of the representation and warranty contained in Section 10.4.5) as follows and acknowledges that the Fund and ACS Holdings is relying upon the following representations and warranties in completing the transactions contemplated hereby: 10.4.1. ORGANIZATION AND STATUS. ACS InfoSource is a corporation duly organized and existing under the laws of the State of Alaska. ACS InfoSource is duly qualified to carry on its business in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets, requires such qualification, except to the extent that any failure to be so qualified, either individually or in the aggregate, would not have a Material Adverse Effect. 10.4.2. CORPORATE POWER OF ACS INFOSOURCE AND DUE AUTHORIZATION. ACS InfoSource has the power and capacity to enter into and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party and to carry out the transactions contemplated in the Prospectus. Each of this Agreement and the Ancillary Agreements to which it is a party has been, or will at the Closing Time be, duly authorized, executed and delivered by or on behalf of ACS InfoSource and is, or will at the Closing Time be, a legal, valid and binding obligation of ACS InfoSource, enforceable against ACS InfoSource in accordance with its terms, subject to exceptions as to applicable bankruptcy, insolvency and similar laws and the availability of equitable remedies. 10.4.3. NO APPROVALS. Except as set out in the Disclosure Letter, no consent, approval, authorization or order of, and no filing, registration or recording with, any Governmental Entity is required in connection with the execution and delivery of this Agreement and the Ancillary Agreements to which it is a party or the performance by ACS InfoSource of its obligations hereunder and thereunder or the consummation by ACS InfoSource of the transactions contemplated herein and therein. 10.4.4. NO CONTRAVENTION. Except as set out in the Disclosure Letter, the execution and delivery by ACS InfoSource of this Agreement and the Ancillary Agreements to which it is a party, the performance by ACS InfoSource of any of its obligations hereunder and thereunder and compliance with the provisions hereof and thereof does not and will not contravene, breach or result in any default under its organizational documents or under any mortgage, indenture, lease, agreement, other legally binding instrument, licence, permit, statute, regulation, order, judgment, decree or Law to which ACS InfoSource is a party or by which it is bound. 10.4.5. PROSPECTUS DISCLOSURE. To the Actual Knowledge of ACS InfoSource, as of the date of its filing with the Securities Commissions and as of the Closing Time, the Prospectus does not contain any misrepresentation (as that term is defined in s. 1(1) of the Securities Act (Ontario), R.S.O. 1990, c. S.5, as amended). 10.5. REPRESENTATIONS AND WARRANTIES OF ACSH ACSH represents and warrants to the Fund as follows and acknowledges that the Fund is relying upon the following representations and warranties in completing the transactions contemplated hereby: 10.5.1. ORGANIZATION AND STATUS. ACSH is a corporation duly organized and existing under the laws of the State of Delaware. ACSH is duly qualified to carry on its business in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets, requires such qualification, except to the extent that any failure to be so qualified, either individually or in the aggregate, would not have a Material Adverse Effect. 10.5.2. CORPORATE POWER OF ACSH AND DUE AUTHORIZATION. ACSH has the power and capacity to enter into and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party. This Agreement has been duly authorized, executed and delivered by or on behalf of ACSH and is a legal, valid and binding obligation of ACSH, enforceable against ACSH in accordance with its terms, subject to exceptions as to applicable bankruptcy, insolvency and similar laws and the availability of equitable remedies. 10.5.3. NO APPROVALS. Except as set out in the Disclosure Letter, no consent, approval, authorization or order of, and no filing, registration or recording with, any Governmental Entity is required in connection with the execution and delivery of this Agreement or the performance by ACSH of its obligations hereunder. 10.5.4. NO CONTRAVENTION. Except as set out in the Disclosure Letter, the execution and delivery by ACSH of this Agreement, the performance by ACSH of any of its obligations hereunder and compliance with the provisions hereof does not and will not contravene, breach or result in any default under its organizational documents or under any mortgage, indenture, lease, agreement, other legally binding instrument, licence, permit, statute, regulation, order, judgment, decree or Law to which ACSH is a party or by which it is bound. 10.5.5. PROSPECTUS DISCLOSURE. To the Actual Knowledge of ACSH, as of the date of its filing with the Securities Commissions and as of the Closing Time, the Prospectus does not contain any misrepresentation (as that term is defined in s. 1(1) of the Securities Act (Ontario), R.S.O. 1990, c. S.5, as amended). 10.6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to the Fund, ACS Holdings (other than in respect of the representation and warranty contained in Section 10.6.19) and ACS Canada as follows and acknowledges that each of the Fund, ACS Holdings and ACS Canada is relying upon the following representations and warranties in completing the transactions contemplated hereby: 10.6.1. ORGANIZATION AND STATUS. The Company is a limited liability company duly organized and existing under the laws of the State of Alaska. The Company is duly qualified to carry on its business in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets, requires such qualification, except to the extent that any failure to be so qualified, either individually or in the aggregate, would not have a Material Adverse Effect. The Company does not own an interest in any Person. 10.6.2. CORPORATE POWER OF THE COMPANY AND DUE AUTHORIZATION. The Company has the power and capacity to enter into and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party and to carry out the transactions contemplated in the Prospectus. Each of this Agreement and the Ancillary Agreements to which it is a party has been, or will at the Closing Time be, duly authorized, executed and delivered by or on behalf of the Company and is, or will at the Closing Time be, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to exceptions as to applicable bankruptcy, insolvency and similar laws and the availability of equitable remedies. 10.6.3. CAPITAL OF THE COMPANY. The authorized and issued capital of the Company at the date of this Agreement and after giving effect to the Closing, is and will be as set forth in Schedule "C". All the membership interests indicated on such Schedule "C" as being issued and outstanding have been validly issued and are outstanding as fully paid and non-assessable membership interests. After giving effect to the Closing, ACS Canada shall have good and marketable title to the Company Membership Interests owned by it, free of all Liens, other than any Liens created by ACS Canada and, other than the Securityholders Agreement and the Exchange Agreement, there are no shareholder agreements, pooling agreements, voting trusts or other agreements with respect to such securities. 10.6.4. NO OBLIGATIONS TO ISSUE SECURITIES. Except as contemplated by this Agreement, the Underwriting Agreement, the Securityholders Agreement and the Exchange Agreement, there are no agreements, options, warrants, rights of conversion or other rights pursuant to which the Company is, or may become, obligated to issue any Company Membership Interests or any securities convertible or exchangeable, directly or indirectly, into any Company Membership Interests. 10.6.5. NO CONTRAVENTION. Except as set out in the Disclosure Letter, the execution and delivery by the Company of this Agreement and the Ancillary Agreements to which it is a party, the performance by the Company of its obligations hereunder and thereunder and compliance with other provisions hereof and thereof does not and will not contravene, breach or result in any default under its organizational documents or under any mortgage, indenture, lease, agreement, other legally binding instrument, licence, permit, statute, regulation, order, judgment, decree or Law to which the Company is a party or by which it is bound. 10.6.6. FINANCIAL STATEMENTS. The consolidated financial statements of ACS InfoSource contained in the Prospectus, including the footnotes thereto: (i) are accurate, correct and complete and are in accordance with the books of account and records of ACS InfoSource (the "FINANCIAL STATEMENTS"), and (ii) present fairly, in all material respects, the assets, liabilities and financial position of ACS InfoSource as at December 31, 2002, 2001 and 2000, as applicable, in each case in accordance with generally accepted accounting principles in the United States, as reconciled to generally accepted accounting principles in Canada in the footnotes thereto. 10.6.7. CONDUCT OF BUSINESS IN ORDINARY COURSE. Except as disclosed in the Prospectus, since December 31, 2002, the Business has been carried on in the Ordinary Course. 10.6.8. OPERATION OF BUSINESS. The Material Agreements permit and provide for the conduct of the Business substantially in the manner in which it has been conducted since January 2001, assuming compliance by the parties with the material terms thereof. 10.6.9. NO MATERIAL ADVERSE CHANGE. Except as disclosed in the Prospectus, since December 31, 2002, there has not been any Material Adverse Change. 10.6.10. LITIGATION. Except as disclosed in the Prospectus and in the Disclosure Letter, there is no Litigation pending, or, to the Actual Knowledge of the Company, threatened against or affecting ACS InfoSource, or the Company, or any of their properties or rights or any of its assets which would, either individually, or in the aggregate, constitute a Material Adverse Effect or otherwise prevent or materially delay the consummation of the transactions contemplated hereby. 10.6.11. ASSETS. As of the Closing, the Company has good and marketable title to all of the assets of the Business, free and clear of all Liens except as set forth in the Disclosure Letter except Liens that individually or aggregated with all others would not cause a Material Adverse Effect. ACS InfoSource owns or has the right to use (and, following Closing, the Company will own or have the right to use) all assets (including the Licensed Software) that are necessary for use in and operation of the Business as currently conducted except where the failure to have any such rights either individually or aggregated with all others would not cause a Material Adverse Effect. ACS InfoSource does not own or have any interest (other than a leasehold interest) in any real property. 10.6.12. MATERIAL CONTRACTS. 10.6.12.1. The Disclosure Letter sets forth all of the material agreements or contracts (including all leases of real property) to which ACS InfoSource is a party. 10.6.12.2. As of the Closing, each agreement and contract disclosed in the Disclosure Letter is a valid and binding obligation of ACS InfoSource, and the other parties thereto (and, following Closing, will be a valid and binding obligation of the Company and such other parties) is in full force and effect and is enforceable in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defences and to the discretion of the court before which any proceeding therefor may be brought. ACS InfoSource is not, nor, to the Actual Knowledge of the Company, is any other party thereto, in default in any material respect under the terms of any such agreement or contract or has any intention of breaching or defaulting under such agreement or contract. 10.6.13. REQUIRED CONSENTS. Except as set out in the Disclosure Letter, no authorization, consent or approval of, or filing with or notice to, any Governmental Entity or other Person is required in connection with the execution, delivery and performance by ACSH, ACS InfoSource, ACS Holdings and/or the Company of this Agreement and the Ancillary Agreements to which ACSH, ACS InfoSource, ACS Holdings and/or the Company is a party, or in connection with the transfer of the Business hereunder. 10.6.14. COMPLIANCE WITH LAWS; NO DEFAULTS. 10.6.14.1. Except as disclosed in the Prospectus, ACS InfoSource and the Company are in compliance in all material respects with all applicable provisions of any Law, except where such failure would not result in a Material Adverse Effect. Neither ACS InfoSource nor the Company is presently subject to any material consent, injunction, order, judgment or decree of any Governmental Entity or other Person, which resulted from a violation or threatened violation of applicable Laws (including Environmental Laws). 10.6.14.2. Each of ACS InfoSource and the Company holds, or will hold at the Closing Time, all permits, leases, by-laws, licences, waivers, exemptions, consents, certificates, registrations, authorizations, approvals, rights, rights of way and entitlements and the like which are required from any Governmental Entity or any other Person required or necessary to conduct the Business as currently conducted or as the Prospectus discloses it will be conducted, the failure of which to hold or obtain, individually or in the aggregate, would have a Material Adverse Effect, and all such permits, leases, by-laws, licences, waivers, exemptions, consents, certificates, registrations, authorizations, approvals, rights, rights of way and entitlements and the like are in full force and effect and in good standing in all material respects, except where such failure would not result in a Material Adverse Effect. 10.6.14.3. Except as set forth in the Disclosure Letter, ACS InfoSource and the Company are not in default under, and no condition exists that with notice or lapse of time or both would constitute a default under, any judgment, order, decree, consent or injunction of any Governmental Entity. 10.6.15. INTELLECTUAL PROPERTY. Set forth in the Disclosure Letter is a true and complete list of all trade marks and trade mark applications, trade names, certification marks, patents and patent applications, copyrights and industrial designs used by ACS InfoSource in connection with the Business (the "INTELLECTUAL PROPERTY"), along with the offices (if any) in which the same is registered (being the only offices where such registration is necessary to preserve the rights thereto) and the applicable expiry dates of any registrations. The Intellectual Property (other than computer systems software licensed by third parties to ACS InfoSource) which is used by ACS InfoSource in connection with the Business is owned by ACS InfoSource and ACS InfoSource has the sole and exclusive right to use the same, except as noted in the Disclosure Letter and except where the failure to possess such right would not result in a Material Adverse Effect. No Person has made a claim or a demand that conduct of the Business infringes on any Intellectual Property owned by any other person and, to the Actual Knowledge of ACS InfoSource, ACS Holdings and the Company, the conduct of the Business does not infringe on any Intellectual Property owned by any other person. 10.6.16. TAX, ETC. MATTERS. To the Actual Knowledge of the Company, each of ACS InfoSource and the Company has paid or will pay or have made or will make arrangements for the payment of all Governmental Charges in respect of the Business, which are capable of forming or resulting in a Lien on the assets of the Business. There are no proceedings either in progress, pending or to the Actual Knowledge of the Company, threatened in connection with any Governmental Charges in respect of the Business. Each of ACS InfoSource and the Company has withheld or collected and remitted all material amounts required to be withheld or collected and remitted by it in respect of any Governmental Charges. 10.6.17. EMPLOYEE ARRANGEMENTS. 10.6.17.1. The Disclosure Letter lists, as of the date of this Agreement, all stock option plans, employment and severance agreements, pension, profit sharing and retirement plans and all bonus and other employee benefit or fringe benefit plans, including, without limitation, "employee benefit plans" as such term is defined under section 3(3) of ERISA, maintained or with respect to which contributions are made by ACS InfoSource or the Company or with respect to which ACS InfoSource or the Company have any liability (collectively, the "COMPANY PLANS"). 10.6.17.2. (i) Each Company Plan which is intended to be qualified under section 401(a) of the U.S. Tax Code has received a favourable determination letter from the Internal Revenue Service that it is so qualified, and nothing has occurred since the date of such letter that could reasonably be expected to affect the qualified status of such Company Plan; (ii) each Company Plan has been operated in all material respects in accordance with its terms and the requirements of applicable Law; and (iii) none of ACS InfoSource and the Company have incurred a direct or indirect liability under, arising out of or by operation of Title IV of ERISA in connection with the termination of, or withdrawal from, any of its Company Plans or other retirement plan or arrangement (including, without limitation, any "EMPLOYEE PENSION BENEFIT PLAN" as defined in section 3(2) of ERISA that ACS InfoSource or the Company, or any other entity that together with any of them is treated as a single employer under section 414 of the U.S. Tax Code, maintains or ever has maintained or to which any of them contributes, ever has contributed, or ever has been required to contribute), and, to the Actual Knowledge of the Company, no fact or event exists that could reasonably be expected to give rise to any such liability. The aggregate accumulated benefit obligations of each Company Plan, as of the Date of Closing, will not exceed the fair market value of the assets of such plan. 10.6.17.3. All Company Plans that are subject to the Laws of the United States are in compliance in all material respects with such applicable Laws, including relevant tax Laws relating thereto, and the requirements of any trust deed or equivalent instrument under which they are established. 10.6.18. LABOUR MATTERS. Except as set out in the Disclosure Letter, neither of ACS InfoSource nor the Company are a party to or bound by any: 10.6.18.1. oral or written contract or commitment for the employment or retainer of any individual, including, for greater certainty, any contract or commitment with directors, officers, employees, independent contractors or agents, other than for contracts of indefinite hire terminable by ACS InfoSource or the Company, as applicable, without cause on reasonable notice; 10.6.18.2. oral or written contract or commitment providing for severance, termination or similar payments, including on a change of control of ACS InfoSource; or 10.6.18.3. contract with or commitment to any trade union, council of trade unions, employee bargaining agent or affiliated bargaining agent (collectively called "LABOUR REPRESENTATIVES") and neither ACS InfoSource nor the Company have conducted negotiations with respect to any such future contracts or commitments; no labour representatives hold bargaining rights with respect to any employees of ACS InfoSource or the Company. 10.6.19. PROSPECTUS DISCLOSURE. To the Actual Knowledge of the Company, as of the date of its filing with the Securities Commissions and as of the Closing Time, the Prospectus does not contain any misrepresentation (as that term is defined in s. 1(1) of the Securities Act (Ontario), R.S.O. 1990, c. S.5, as amended). 10.7. NO FINDERS' FEE Except as disclosed in the Disclosure Letter, each of the parties hereto represents and warrants to the other parties that it has not taken, and agrees that it will not take, any action that would cause such other parties to become liable to any claim or demand for a brokerage commission, finder's fee or other similar payment in connection with the transactions contemplated hereby, other than with respect to any underwriter's fees as described in the Prospectus. 10.8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES The representations and warranties of each party contained in this Agreement and in all certificates and documents delivered pursuant to or contemplated by this Agreement will survive the Closing and continue in full force and effect for a period ending three months after the completion of the audit of the Company for fiscal 2003, except that: 10.8.1. the representations and warranties set out in Sections 10.1.1, 10.1.2, 10.1.5, 10.1.6, 10.2.1, 10.2.2, 10.2.5, 10.2.6, 10.3.1, 10.3.2, 10.3.5, 10.3.6, 10.4.1, 10.4.2, 10.4.3, 10.4.4, 10.5.1, 10.5.2, 10.5.3, 10.5.4, 10.6.1, 10.6.2, and 10.6.5 will survive Closing and continue in full force and effect without limitation of time; and 10.8.2. the representations and warranties contained in Sections 10.4.5, 10.5.5 and 10.6.19 will survive the Closing and continue in full force and effect for a period of three years from the date which the Underwriters notify the Securities Commissions in accordance with Securities Laws of the completion of the distribution of Units under the Prospectus, and no claim for breach of representation or warranty (other than those referenced in Section 10.8.1) will be valid unless the party against whom such claim is made has been given reasonably detailed notice in writing specifying the amount of the claim and the reasons therefore before the expiry of such period. ARTICLE 11. CLOSING CONDITIONS 11.1. CONDITIONS PRECEDENT TO CLOSING The obligation of each of the parties to complete the transactions contemplated in this Agreement at the Date of Closing is subject to the satisfaction or waiver of, or compliance with, at or prior to the Closing Time, each of the following conditions: 11.1.1. TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of each of the parties, as the case may be, made in or pursuant to this Agreement or in any Ancillary Agreement as to which it is a party, will have been true and correct in all material respects as of the date of this Agreement and will be true and correct in all material respects as of the Closing Time (except in each case, for those representations and warranties that are subject to a materiality qualification, which will be true and correct in all respects and except in respect of any representations and warranties that are to be true and correct as a specified date, in which case they will be true and correct as of that date only) with the same force and effect as if such representations and warranties had been made on and as of such date, and each party will have executed and delivered a certificate of a senior officer (without personal liability) or, in the case of a party which is an individual, by that individual, to that effect with respect to the representations and warranties of such party which are contained in this Agreement or in any Ancillary Agreement. Neither the receipt of such certificate nor the Closing will constitute a waiver by the party receiving such certificate of any of the representations and warranties of such party providing such certificate which are contained in this Agreement. Upon the delivery of such certificates, the representations and warranties of the parties in Article 10, as applicable, will be deemed to have been made on and as of the Date of Closing with the same force and effect as if made on and as of such date. 11.1.2. COMPLIANCE WITH AND PERFORMANCE OF COVENANTS. Each party, to their knowledge, will have fulfilled or complied in all material respects with all covenants contained in this Agreement and in any Ancillary Agreements as to which it is a party, to be fulfilled or complied with by it at or prior to the Closing and each party will have executed and delivered a certificate of a senior officer (without personal liability) or, in the case of a party which is an individual, by that individual, to that effect. 11.1.3. OFFERING. The Fund will have completed the sale of Units pursuant to the Offering other than the Over-Allotment Option (in escrow pending the completion of the Closing) on terms satisfactory to the Fund, acting reasonably. 11.1.4. FINANCING. The Company will have entered into the Proposed Credit Facility as contemplated by the Prospectus, on terms and conditions satisfactory to the Company, acting reasonably, and the credit facilities to be provided for under the Proposed Credit Facility will be available to be drawn down by the Company. 11.1.5. RELEASE OF SECURITY. All security granted over the assets of the Business under the Current Credit Facility, shall have been released. 11.1.6. REQUIRED CONSENTS. All of the Required Consents shall have been obtained. 11.1.7. RELEASE OF GUARANTEE. L.M. Berry and Company shall have released ACSH from its obligations under the Guarantee of Performance of Contract among L.M. Berry and Company and ACSH dated July 31, 2001. 11.1.8. L.M. BERRY CONFIRMATION. L.M. Berry and Company shall have provided, in form and substance acceptable to ACS Canada and the Fund, each acting reasonably, confirmation of all amounts outstanding to L.M. Berry and Company from the Company and confirmation to the effect that the agreements between L.M. Berry and Company and the Company remain in full force and effect and that neither the Company nor L.M. Berry and Company is in default under any such agreements. 11.1.9. DELIVERIES. All documents relating to the due authorization and completion of the transactions contemplated hereby, all actions and all corporate, trust and other proceedings taken at or prior to the Closing Time on the Date of Closing in connection with the performance by each party of its respective obligations under this Agreement, and all other documents and materials of any kind relating to this Agreement and carrying out the terms hereof, will have been completed and satisfied including the following: 11.1.9.1. each of the parties will initiate the wire transfers or deliver the bank drafts, certified cheques, share certificates, note certificates or unit certificates, applicable to them, as specified in Articles 2 through 7; and 11.1.9.2. each party will deliver or cause to be delivered the certificates referred to in Sections 11.1.1 and 11.1.2. 11.1.10. EXECUTION OF OTHER AGREEMENTS. The Ancillary Agreements will have been executed and delivered by all parties thereto and the other transactions contemplated by the Prospectus to be completed on or prior to the Date of Closing will have been completed to the satisfaction of the Fund, acting reasonably. 11.1.11. NO ADVERSE LEGISLATION. There will not be any statute, rule or regulation of any Governmental Entity which makes it illegal for any of the parties to consummate the transactions contemplated hereby or any order, decree or judgment of any Governmental Entity enjoining any party to this Agreement from consummating any of the transactions contemplated hereby. 11.1.12. NO LEGAL ACTION. No action or proceeding will be pending or threatened by any Person (other than the Fund, ACS Canada, ACS Holdings, the Company and ACS InfoSource and any of their affiliates) in any jurisdiction, to enjoin, restrict or prohibit any of the transactions contemplated by this Agreement or the right of the Company to conduct the Business after Closing on substantially the same basis as heretofore operated or to seek damages in connection with this Agreement. ARTICLE 12. COVENANTS OF THE PARTIES 12.1. COVENANT REGARDING REPRESENTATIONS, WARRANTIES AND CONDITIONS Except as expressly provided in this Agreement or except with the prior written consent of the other parties hereto, prior to the Closing Time each of the parties will do or refrain from doing all acts and things in order to ensure that the respective representations and warranties of such party in Article 10 remain true and correct at the Closing Time as if such representations and warranties were made at and as of such date and to satisfy or cause to be satisfied the conditions in Article 11 which are within such party's control. 12.2. CONDUCT OF BUSINESS PRIOR TO CLOSING Except as disclosed in the Disclosure Letter, during the Interim Period, ACS InfoSource agrees that it will, and will cause the Company to, use reasonable commercial efforts to conduct the Business only in the Ordinary Course and in compliance in all material respects with the Current Credit Facility. 12.3. TRANSFER OF THE SECURITIES 12.3.1. ACS Canada will take all necessary steps and corporate proceedings to cause the ACS Canada Common Shares issued by ACS Canada to be duly and validly issued and delivered to the Fund at the Closing on the Date of Closing and the Over-Allotment Completion Date, as the case may be, free and clear of all Liens other than (i) the restrictions on transfer, if any, contained in the articles of ACS Canada and (ii) Liens, if any, granted by the Fund. 12.3.2. ACS Canada will take all necessary steps and corporate proceedings to cause the ACS Canada Notes issued by ACS Canada to be duly and validly created, issued and delivered to the Fund at the Closing on the Date of Closing, and the Over-Allotment Completion Date, as the case may be, free and clear of all Liens other than Liens, if any, granted by the Fund. 12.3.3. ACS Holdings will take all necessary steps and corporate or other proceedings to cause the ACS Holdings Membership Interests issued by ACS Holdings to be duly and validly issued and delivered to ACS InfoSource at the Closing on the Date of Closing, free and clear of all Liens other than (i) the restrictions on transfer, if any, contained in the limited liability company agreement of ACS Holdings and (ii) Liens, if any, granted by ACS InfoSource. 12.3.4. ACS Holdings will take all necessary steps and corporate or other proceedings to cause the ACS Holdings Note issued by ACS Holdings to be duly and validly created, issued and delivered to ACS InfoSource at the Closing on the Date of Closing, free and clear of all Liens other than Liens, if any, granted by ACS InfoSource. 12.3.5. The Company will take all necessary steps and corporate or other proceedings to cause the Company Membership Interests issued by the Company to be duly and validly issued and delivered to ACS Holdings at the Closing on the Date of Closing, free and clear of all Liens other than (i) the restrictions on transfer, if any, contained in the limited liability company agreement of the Company and (ii) Liens, if any, granted by ACS Holdings. 12.3.6. ACS Holdings will take all necessary steps and corporate or other proceedings to cause or permit good title to such of the Company Membership Interests owned by it to be duly and validly transferred and assigned to the Company at the Closing on the Date of Closing, free and clear of all Liens other than (i) the restrictions on transfer, if any, contained in the limited liability company agreement of the Company and (ii) Liens, if any, granted by the Company. 12.3.7. ACS Holdings will take all necessary steps and corporate or other proceedings to cause or permit good title to such of the Company Membership Interests owned by it to be duly and validly transferred and assigned to ACS Canada at the Closing on the Date of Closing and the Over-Allotment Completion Date, respectively, free and clear of all Liens other than (i) the restrictions on transfer, if any, contained in the limited liability company agreement of the Company and (ii) Liens, if any, granted by ACS Canada. 12.4. FILINGS AND AUTHORIZATIONS Each of the parties, as promptly as practicable either before or after the execution of this Agreement, will (i) make, or cause to be made, all such filings and submissions under all Laws applicable to it, including, without limitation, any required filings under the Hart Scott Rodino Act, as may be required for it to complete the transactions contemplated in this Agreement, and (ii) use its reasonable commercial efforts to take, or cause to be taken, all other actions necessary in order for it to fulfill its obligations under this Agreement. Each of the parties will co-ordinate and cooperate with one another in exchanging such information and supplying such assistance as may be reasonably requested by each in connection with the foregoing including, providing each other with all notices and information supplied or filed with any Governmental Entity and all notices and correspondence received from any Governmental Entity. 12.5. COOPERATION Each of ACS InfoSource, ACS Holdings, the Fund, ACS Canada, and the Company will cooperate fully in good faith with each other and their respective legal advisors, accountants and other representatives in connection with any steps required to be taken as part of their respective obligations under this Agreement. From time to time after the Date of Closing, each such Person will, at the request of any other party, execute and deliver such additional conveyances, transfers and other assurances as may be reasonably required to effectively complete the transactions contemplated herein and to carry out the intent of this Agreement. ARTICLE 13. REMEDIES 13.1. INDEMNIFICATION If the Closing occurs, subject to Sections 10.8, 13.2 and 13.3, an Indemnifying Party will, severally and not jointly or jointly and severally, indemnify and save its respective Indemnified Persons harmless of and from any Damages suffered by, imposed upon or asserted against any of such Indemnified Persons as a result of, in respect of, connected with, or arising out of, under, or pursuant to: 13.1.1. any failure of such Indemnifying Party to perform or fulfil any of its covenants under this Agreement; or 13.1.2. any breach or inaccuracy of any representation or warranty given by such Indemnifying Party to its Indemnified Persons contained in this Agreement. 13.2. INDEMNIFIED PERSONS The terms "INDEMNIFIED PERSONS" as used in Section 13.1 above shall mean the parties set forth below: 13.2.1. the Fund's Indemnified Persons shall be: ACS Canada; 13.2.2. ACS Canada's Indemnified Persons shall be: the Fund and ACS Holdings; 13.2.3. ACS Holdings' Indemnified Persons shall be: the Fund, ACS Canada, ACS InfoSource and the Company; 13.2.4. the Company's Indemnified Person shall be: the Fund, ACS Holdings and ACS Canada; 13.2.5. ACS InfoSource's Indemnified Persons shall be: the Fund and ACS Holdings; and 13.2.6. ACSH's Indemnified Persons shall be: the Fund. 13.3. LIMITATIONS OF LIABILITY The obligation of each of the Indemnifying Parties pursuant to the indemnification provisions set forth in this Article 13 will be limited such that: 13.3.1. no double recovery by any Person shall be permitted under this Agreement and the Underwriting Agreement as a result of any action that results in breach under both agreements; and 13.3.2. the total amount payable by ACSH, ACS InfoSource and ACS Holdings under this Agreement will not exceed, in aggregate, the gross proceeds received in the Offering by the Fund plus the value of ACS InfoSource's indirect retained interest in ACS Media LLC plus the amount that ACSH will receive from the Proposed Credit Facility on Closing. 13.4. NOTICE OF CLAIM If an Indemnified Person wishes to make a claim for indemnification (a "CLAIM") pursuant to this Article 13 against one or more of the Indemnifying Party to which it is an Indemnified Person, the Indemnified Person will promptly give notice to the Indemnifying Party of the Claim. Such notice will specify with reasonable particularity (to the extent that the information is available): 13.4.1. the factual basis for the Claim; and 13.4.2. the amount of the Claim, or, if an amount is not then determinable, an approximate and reasonable estimate of the potential amount of the Claim. 13.5. PROCEDURE FOR INDEMNIFICATION 13.5.1. The obligation of an Indemnifying Party to indemnify an Indemnified Person pursuant to this Article will be subject to an initial aggregate one time deductible of US$500,000. 13.5.1. Following receipt of Notice of a Claim from an Indemnified Person, the Indemnifying Party will have 30 Business Days to make such investigation of the Claim as the Indemnifying Party considers necessary or desirable. For the purpose of such investigation, the Indemnified Person will make available to the Indemnifying Party and its authorized representatives the information relied upon by the Indemnified Person to substantiate the Claim. If the Indemnified Person and the Indemnifying Party agree at or prior to the expiration of such 30 Business Day period (or any mutually agreed upon extension thereof) to the validity and amount of the Claim, the Indemnifying Party will immediately pay to the Indemnified Person the full agreed upon amount of the Claim. 13.5.2. In the event that the parties cannot agree upon the amount of the Claim within such 30 Business Day period or there is a dispute as to if the Claim is valid, either party may bring an action against such other party. 13.6. INJUNCTIVE RELIEF Each of the parties acknowledges that irreparable harm will result to the others if one of them breaches its obligations under this Agreement. The parties acknowledge that such a breach may not be adequately compensable by an award of Damages. Each of the parties agrees that any other party may apply to a court of competent jurisdiction for an order for injunctive relief or other equitable relief enjoining such breach at the earliest possible date. 13.7. NO REQUIREMENT TO EXHAUST CLAIMS An Indemnified Party may elect to proceed with a Claim against any one or more of its Indemnifying Parties. For greater certainty, no Indemnified Party, in making a Claim under this Agreement, shall be required to seek or exhaust its remedies against an Indemnifying Party as a precondition to making, adjudicating or settling such Claim against any other Indemnifying Party. 13.8. SUBORDINATION BY ACS HOLDINGS Notwithstanding any other provision of this Agreement, Claims by ACSH and/or ACS InfoSource shall be subordinate to Claims by the Fund and/or ACS Canada. Without limiting the generality of the foregoing: 13.8.1. ACS Holdings further agrees to subordinate any claims (and its rights and entitlement to the proceeds thereof) in respect of any remedies that may be available to ACS Holdings under or pursuant to the Prospectus by virtue of the distribution of the exchange right contemplated by the Exchange Agreement and the securities issuable upon the exercise of the exchange right. 13.9. CLAIMS Notwithstanding any other provision of this Agreement, the parties agree that Article 13 sets out the sole and exclusive manner by which any party to this Agreement may seek monetary compensation from any other party to this Agreement. ARTICLE 14. TERMINATION 14.1. TERMINATION This Agreement may, by notice in writing by any party given prior to or on the Date of Closing, be terminated: (i) by mutual consent of all the parties; or (ii) if the Closing has not been completed prior to May 30, 2003. Upon giving the requisite notice, each of the parties hereto will be released from all obligations hereunder, save and except for the obligations under Section 16.4, which will survive. If a party waives compliance with any of the conditions, obligations or covenants contained in this Agreement, subject to Article 13, the waiver will be without prejudice to any of its rights of termination or otherwise in the event of non-fulfillment, non-observance or non-performance of any other condition, obligation or covenant in whole or in part. ARTICLE 15. CLOSING 15.1. LOCATION AND TIME OF THE CLOSING The Closing will take place at the Closing Time on the Date of Closing at the offices of Torys LLP in Toronto, Ontario, Canada, or at such other place, on such other date and at such other time as may be agreed upon in writing by the parties. 15.2. CLOSING PROCEDURES Subject to satisfaction or waiver by the relevant parties of the conditions of Closing, at the Closing Time the deliveries and payments contemplated by this Agreement, in the case of the Closing, will be completed as provided herein. ARTICLE 16. GENERAL MATTERS 16.1. SEVERABILITY If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party. Upon any determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties to this Agreement will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are fulfilled to the fullest extent possible. 16.2. ENUREMENT This Agreement will be binding upon and enure to the benefit of the parties to this Agreement and their respective successors and permitted assigns from time to time. 16.3. ASSIGNMENT This Agreement may not be assigned by any party hereto without the prior written consent of each of the other parties. 16.4. EXPENSES Except as otherwise expressly provided in this Agreement or the Prospectus, all costs and expenses (including the fees and disbursements of legal counsel, investment advisers and accountants) incurred in connection with this Agreement, the Ancillary Agreements and the transactions contemplated herein and therein, will be paid by ACS InfoSource. 16.5. NOTICES All notices and other communications to ACSH, the Fund, ACS Canada, ACS Holdings, the Company and ACS InfoSource under this Agreement will be in writing and will be deemed to have been given if delivered personally or by confirmed telecopy to the parties at the following addresses (or at any other address for the party as is specified in like notice): 16.5.1. if to the Fund: 79 Wellington Street West Suite 3000, Maritime Life Building Toronto-Dominion Centre Toronto, Ontario M5K 1N2 Attention: The Trustees c/o Philip Brown Fax: 416.865.7380 with a copy to the Company (at the address provided herein); 16.5.2. if to ACS Canada: 79 Wellington Street West Suite 3000, Maritime Life Building Toronto-Dominion Centre Toronto, Ontario M5K 1N2 Attention: Chief Executive Officer of ACS Canada c/o Philip Brown Fax: 416.865.7380 16.5.3. if to the Company: 3601 C Street Anchorage, AK 99503 Attention: President Fax: 907.561.6834 16.5.4. if to ACS Holdings: 600 Telephone Ave., MS 65 Anchorage, AK 99503 Attention: President Fax: 907.297.3100 16.5.5. if to ACS InfoSource: 600 Telephone Ave., MS 65 Anchorage, AK 99503 Attention: President Fax: 907.297.3100 16.5.6. if to ACSH: 600 Telephone Ave., MS 65 Anchorage, AK 99503 Attention: President Fax: 907.297.3100 Any notice given as aforesaid will be deemed to have been given at the time delivered or faxed (provided complete transmission is confirmed) if delivered or faxed to the recipient on a Business Day (in the city in which the addressee is located) and before 4:30 p.m. (local time in the city in which the addressee is located) on such Business Day, and otherwise will be deemed to be given at 9:00 a.m. (local time in the city in which the addressee is located) on the next following Business Day (in the city in which the addressee is located). Any party may change its address for notice by notice to the other parties hereto given in the manner herein provided. 16.6. NON-MERGER Except as otherwise expressly provided in this Agreement, the covenants, representations and warranties will not merge on and will survive the Closing and, notwithstanding such Closing and any investigation made by or on behalf of any party, will continue in full force and effect. Subject to Section 10.8 and Articles 11 and 13, Closing will not prejudice any right of one party against any other party in respect of anything done or omitted under this Agreement or in respect of any right to Damages or other remedies. 16.7. GOVERNING LAW This Agreement will be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. 16.8. ATTORNMENT Subject to Section 14.6, each of the parties agrees that any action or proceeding arising out of or relating to this Agreement may be instituted in the courts of Ontario, waives any objection which it may have now or later to the venue of that action or proceeding, irrevocably submits to the jurisdiction of those courts in that action or proceeding, agrees to be bound by any judgment of those courts. 16.9. TORYS LLP ACTING FOR MORE THAN ONE PARTY Each of the parties to this Agreement has been advised and acknowledges that Torys LLP is acting as counsel to and jointly representing the Fund, ACS Canada, ACS Holdings, ACS InfoSource and the Company (each a "CLIENT" and, collectively, "CLIENTS") and, in this role, information disclosed to Torys LLP by one Client will not be kept confidential and will be disclosed to all Clients and each of the parties consents to Torys LLP so acting. In addition, should a conflict arise between any Clients, Torys LLP may not be able to continue to act for any of such Clients. 16.10. LIMITATION OF LIABILITY IN RESPECT OF THE FUND 16.10.1. The trustees of the Fund, in incurring any debts, liabilities or obligations, or in taking or omitting any other actions for or in connection with the affairs of the Fund are, and shall be conclusively deemed to be, acting for and on behalf of the Fund, and not in their own personal capacities. None of the trustees of the Fund shall be subject to any personal liability for any debts, liabilities, obligations, claims, demands, judgements, costs, charges or expenses (including legal expenses) against or with respect to the Fund or in respect to the affairs of the Fund. No property or assets of the trustees of the Fund, owned in their personal capacity or otherwise, will be subject to any levy, execution or other enforcement procedure with regard to any obligations under this Agreement. No recourse may be had or taken, directly or indirectly, against the trustees of the Fund in their personal capacity. The Fund shall be solely liable therefor and resort shall be had solely to the property and assets of the Fund for payment or performance thereof. 16.10.2. No unitholder of the Fund as such shall be subject to any personal liability whatsoever, in tort, contract or otherwise, to any party to this Agreement in connection with the obligations or the affairs of the Fund or the acts or omissions of the trustees of the Fund whether under this Agreement or otherwise and the other parties hereto shall look solely to the property and assets of the Fund for satisfaction of claims of any nature arising out of or in connection therewith and the property and assets of the Fund only shall be subject to levy or execution. 16.11. TIME OF ESSENCE Time is of the essence of this Agreement. 16.12. ENTIRE AGREEMENT This Agreement and the other agreements contemplated hereby constitute the entire agreement between the parties pertaining to the subject matter hereof. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to in this Agreement or as otherwise set out in writing and delivered at Closing. No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made by any party hereto or its directors, officers, employees or agents, to any other party hereto or its directors, officers, employees or agents, except to the extent that the same has been reduced to writing and included as a term of this Agreement. Accordingly, there will be no liability, either in tort or in contract, assessed in relation to any such warranty, representation, opinion, advice or assertion of fact, except to the extent aforesaid. 16.13. COUNTERPARTS This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which taken together will be deemed to constitute one and the same instrument. Counterparts may be executed either in original or faxed form and the parties adopt any signatures received by a receiving fax machine as original signatures of the parties; provided, however, that any party providing its signature in such manner will promptly forward to the other parties an original of the signed copy of this Agreement which was so faxed. 16.14. FURTHER ASSURANCES Each of the parties hereto will promptly do, make, execute or deliver, or cause to be done, made, executed or delivered, all such further acts, documents and things as the other party hereto may reasonably require from time to time for the purpose of giving effect to this Agreement and will use reasonable efforts and take all such steps as may be reasonably within its power to implement to their full extent the provisions of this Agreement. IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed as of the date first written above. ACS MEDIA INCOME FUND, BY ITS ATTORNEY, ACS ACS MEDIA CANADA INC. MEDIA CANADA INC. By: /s/ Wesley E. Carson By: /s/ Wesley E. Carson --------------------- --------------------- Name: Welsey E. Carson Name: Wesley E. Carson Title: President Title: President ACS MEDIA HOLDINGS LLC ACS INFOSOURCE, INC. By: /s/ Kevin P. Hemenway By: /s/ Kevin P. Hemenway ------------------------- ------------------------- Name: Kevin P. Hemenway Name: Kevin P. Hemenway Title: Vice President Title: Director ACS MEDIA LLC ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC. By: /s/ Wesley E. Carson By: /s/ Kevin P. Hemenway --------------------- -------------------------- Name: Wesley E. Carson Name: Kevin P. Hemenway Title: President and CEO Title: Chief Financial Officer SCHEDULE "A" CAPITAL OF ACS CANADA CAPITAL OF ACS CANADA AS OF THE DATE HEREOF Authorized: unlimited common shares unlimited preference shares Issued and Outstanding: 1 common share issued to the Fund no preference shares CAPITAL OF ACS CANADA AFTER GIVING EFFECT TO CLOSING (ASSUMING NO EXERCISE OF THE OVER-ALLOTMENT OPTION) Authorized: unlimited common shares unlimited preference shares Issued and Outstanding: 80,271,009 common shares issued to the Fund no preference shares SCHEDULE "B" CAPITAL OF ACS HOLDINGS CAPITAL OF ACS HOLDINGS AS OF THE DATE HEREOF Authorized: unlimited membership interests Issued and Outstanding: 1 membership interest issued to ACS InfoSource CAPITAL OF ACS HOLDINGS AFTER GIVING EFFECT TO CLOSING (ASSUMING NO EXERCISE OF THE OVER-ALLOTMENT OPTION) Authorized: unlimited membership interests Issued and Outstanding: 159,571,104 membership interests issued to ACS InfoSource SCHEDULE "C" CAPITAL OF THE COMPANY CAPITAL OF THE COMPANY AS OF THE DATE HEREOF Authorized: unlimited membership interests Issued and Outstanding: 1 membership interest issued to ACS Holdings CAPITAL OF THE COMPANY AFTER GIVING EFFECT TO CLOSING (ASSUMING NO EXERCISE OF THE OVER-ALLOTMENT OPTION) Authorized: unlimited membership interests Issued and Outstanding: 17,366,353 membership interests issued to ACS Holdings EX-10.14 4 v89821exv10w14.txt EXHIBIT 10.14 EXHIBIT 10.14 UNDERWRITING AGREEMENT April 28, 2003 ACS MEDIA INCOME FUND 79 Wellington Street West Suite 3000 Toronto, Ontario M5A 4R4 ATTENTION: Trustees - - and - ACS MEDIA LLC 3601 C Street Anchorage, Alaska 99503 ATTENTION: President - - and - ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC. 600 Telephone Avenue, MS 65 Anchorage, Alaska 99503 ATTENTION: General Counsel - - and - THE OTHER ACS PARTIES Dear Sirs: We understand that ACS Media Income Fund (the "FUND") proposes to issue and sell to the Underwriters (as defined below) previously unissued trust units of the Fund (the "UNITS") and has prepared and filed a Preliminary Prospectus (as amended and restated) with respect to the Units in each of the provinces and territories of Canada (the "QUALIFYING JURISDICTIONS"). We also understand that Alaska Communications Systems Holdings, Inc. ("ALASKA COMMUNICATIONS SYSTEMS") is the promoter of the Fund and that the Fund intends to use the proceeds of the sale of the Units to indirectly, through ACS Media Canada Inc. ("ACS CANADA"), acquire a 87.4% interest in ACS Media LLC (the "COMPANY") from ACS Media Holdings LLC ("ACS HOLDINGS"), a wholly-owned subsidiary of ACS InfoSource, Inc. ("ACS INFOSOURCE"). Upon and subject to the terms and conditions contained in this agreement, CIBC World Markets Inc. ("CIBC WM"), RBC Dominion Securities Inc. ("RBC DS"), Scotia Capital Inc. ("SCOTIA"), BMO Nesbitt Burns Inc. ("BMO NB"), National Bank Financial Inc. ("NBF") and Westwind Partners Inc. ("WESTWIND") (collectively, the "UNDERWRITERS", and each, an "UNDERWRITER") hereby severally offer to purchase from the Fund in the respective percentages set out in Section 25 of this agreement, and the Fund hereby agrees to sell to the Underwriters, all but not less than all of the 17,500,000 Units (the "INITIAL UNITS") at the purchase price of $10.00 per Unit, being an aggregate purchase price of $175,000,000. By acceptance of this agreement, the Fund grants to the Underwriters an irrevocable right (the "OVER-ALLOTMENT OPTION") to purchase, severally and not jointly, up to 1,500,000 additional Units (or such lesser amount, such that following the exercise of the Over-Allotment Option in full, ACS Holdings will continue to own at least 5% of the issued and outstanding Company Interests) (the "ADDITIONAL UNITS") from the Fund on the same basis (including as to the fee payable to the Underwriters per Additional Unit) as the purchase of the Initial Units. If CIBC WM, on behalf of the Underwriters, elects to exercise the Over-Allotment Option (which election may occur on no more than one occasion), CIBC WM shall notify the Fund in writing not later than noon on the 30th day following the Closing Date, which notice shall specify the number of Additional Units to be purchased by the Underwriters and the date and time at which such Additional Units are to be purchased (the "OVER-ALLOTMENT CLOSING TIME"). Such date may be the same as the Closing Date but not earlier than the later of (i) the Closing Date and (ii) three business days after the delivery date of such notice, nor later than five business days after the date of such notice. Additional Units may be purchased solely for the purpose of covering over-allotments made in connection with the offering of the Initial Units. If any Additional Units are purchased, each Underwriter agrees, severally and not jointly, to purchase the number of Additional Units (subject to such adjustments to eliminate fractional Units as CIBC WM may determine) that bears the same proportion to the total number of Additional Units to be purchased as the number of Initial Units set out in Section 25 opposite the name of such Underwriter bears to the total number of Initial Units. The Initial Units and the Additional Units are hereinafter referred to, collectively, as the "PURCHASED UNITS") In consideration of the agreement of the Underwriters to purchase the Initial Units and to offer them to the public pursuant to the Prospectus, the Fund agrees to pay to the Underwriters, at the Time of Closing (as defined below), an aggregate fee of $10,062,500, being a fee equal to 5.75% of the aggregate purchase price for the Initial Units, or $0.575 per Initial Unit. TERMS AND CONDITIONS The following are additional terms and conditions of this agreement among the Fund, ACS Canada, the Company, ACS Holdings, ACS InfoSource, Alaska Communications Systems and the Underwriters. 1. DEFINITIONS. Where used in this agreement, or in any amendment to this agreement, the following terms will have the following meanings, respectively: 1.1 "ACS CANADA" means ACS Media Canada Inc., a corporation existing under the laws of the Province of Ontario; 1.2 "ACS CREDIT DOCUMENTS" means any or all of the credit agreements, indentures or other similar documents to which Alaska Communications Systems Group, Inc. and/or Alaska Communications Systems Holdings, Inc. and/or any of their respective affiliates are a party or are bound, together with all instruments and other agreements entered into in connection with such agreements, each as amended, supplemented, or otherwise modified from time to time; 1.3 "ACS HOLDINGS" means ACS Media Holdings LLC, a limited liability company existing under the laws of the State of Alaska; 1.4 "ACS INFOSOURCE" means ACS InfoSource, Inc., a corporation existing under the laws of the State of Alaska; 1.5 "ACS NOTES" means the notes issued pursuant to the Note Indenture; 1.6 "ACS PARTIES" means, collectively, the Fund, ACS Canada, the Company, ACS Holdings, ACS InfoSource and Alaska Communications Systems Holdings, Inc.; 1.7 "AFFILIATE" means an affiliated entity for purposes of Section 1.2 of Ontario Securities Commission Rule 45-501 [Revised] - Exempt Distributions; 1.8 "BENEFICIARIES" has the meaning given to that term in Section 16.8; 1.9 "BUSINESS" means the business carried on by ACS InfoSource, and to be carried on by the Fund, indirectly through the Company, immediately following the Time of Closing, as described in the Prospectus; 1.10 "BUSINESS DAY" means a day other than a Saturday, a Sunday or a day on which banks are not open for business either in Toronto, Ontario or Anchorage, Alaska; 1.11 "CLAIM" has the meaning given to that term in Section 16; 1.12 "CLOSING" means the completion of the offering of the Initial Units under the Prospectus and the transactions contemplated in Articles 2, 3, 4, 5, 6, 7 and 8 of the Investment Agreement on the Closing Date; 1.13 "CLOSING DATE" means May 8, 2003 or any earlier or later date as may be agreed to in writing by the Fund, Alaska Communications Systems and the Underwriters, each acting reasonably, but will in any event not be later than May 30, 2003; 1.14 "CODE" means the U.S. Internal Revenue Code of 1986, as amended; 1.15 "COMPANY" means ACS Media LLC, a limited liability company existing under the laws of the State of Alaska; 1.16 "COMPANY INTERESTS" means membership interests in the capital of the Company, as subsequently consolidated or subdivided, or any other securities resulting from a reclassification or amendment thereto; 1.17 "CONTINUING UNDERWRITERS" has the meaning given to that term in Section 25; 1.18 "DECLARATION OF TRUST" means the declaration of trust dated March 5, 2003, pursuant to which the Fund was created, as amended and restated from time to time; 1.19 "DEFAULTED UNITS" has the meaning given to that term in Section 25; 1.20 "DISCLOSURE LETTER" means the letter dated the date of this agreement from the Company to the Underwriters in respect of the representations and warranties related to the Company and the Business, in form satisfactory to the Underwriters, and which letter forms an integral part of this agreement; 1.21 "DISTRIBUTION" means a distribution or distribution to the public, as the case may be, for the purposes of the Securities Laws or any of them; 1.22 "EMPLOYMENT AGREEMENTS" means, collectively, the employment agreements to be dated the Closing Date between the Company and each of Wesley E. Carson, Wayne P. Graham and Vicki L. Pedersen in respect of his/her services as President and Chief Executive Officer, Executive Vice President and Chief Financial Officer and Vice President, Operations of the Company, respectively. 1.23 "ENVIRONMENT" means soils, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins and wetlands), groundwaters, draining water supply, stream sediments, air, plant and animal life, and any other environmental medium or natural resource; 1.24 "ENVIRONMENTAL LAWS" means any U.S. federal, state, municipal or local law, statute, by-law, ordinance, regulation, rule, order, decree, permit agreement, judicial or administrative decision, injunction or legally binding requirement of any governmental authority which relates to or otherwise imposes liability or standards of conduct concerning discharges, spills, releases or threatened releases of noises, odours or any Substances into, or the presence of noises, odours or any Substances in, ambient air, ground or surface water or land, municipal or other works (including sewers and storm drains) or otherwise relating to the manufacture, processing, generation, distribution, use, treatment storage, discharge, release, disposal, clean-up, transport or handling of Substances or to the protection of the environment, as now or at any time hereafter in effect; 1.25 "ENVIRONMENTAL PERMITS" means all permits, certificates, consents, authorizations, registrations, licences or other approvals issued by any Governmental Body pursuant to any Environmental Laws; 1.26 "EXCHANGE AGREEMENT" means the exchange agreement to be entered into on the closing of the offering under the Prospectus among the Fund, ACS Canada, the Company, ACS Holdings and ACS InfoSource and such other Persons who from time to time execute the exchange agreement or are deemed to be party thereto, regarding the Exchange Rights; 1.27 "EXCHANGE RIGHTS" means the rights granted pursuant to, and referred to as the "Investor Exchange Right" in, the Exchange Agreement; 1.28 "EXISTING SECURITYHOLDERS" has the meaning given to that term in Section 20; 1.29 "FINAL MRRS DECISION DOCUMENT" means a receipt for the Prospectus issued in accordance with the MRRS; 1.30 "FINANCIAL INFORMATION" means: a. the selected consolidated financial information of ACS InfoSource set forth in the Prospectus under the headings "Prospectus Summary - Summary of Distributable Cash Flows of the Fund", "Prospectus Summary - Selected Consolidated Financial Information", "Summary of Distributable Cash Flows of the Fund", "Reconciliation of Income Before Income Taxes to EBITDA", "Selected Consolidated Financial Information" and "Consolidated Capitalization"; b. the selected consolidated financial information of the Fund set forth in the Prospectus under the headings "Prospectus Summary - Summary of Distributable Cash Flows of the Fund" and "Summary of Distributable Cash Flows of the Fund"; c. management's discussion and analysis of financial condition and results of operations set forth in the Prospectus under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations"; and d. the financial statements (including pro forma financial statements) of the Fund and ACS InfoSource; e. in each case, included in the Prospectus, together with the reports of Deloitte & Touche LLP, on those financial statements, if applicable, and including the notes with respect to those financial statements, if applicable; 1.31 "FUND" means ACS Media Income Fund, a trust formed under the laws of the Province of Ontario; 1.32 "GOVERNMENTAL BODY" means any (i) multinational, federal, provincial, state, municipal, local or other governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign; (ii) any subdivision or authority of any of the foregoing; (iii) any quasi-governmental, self-regulatory organization or private body exercising any regulatory, expropriation or taxing authority under or for the account of its members or any of the above; or (iv) any arbitrator exercising jurisdiction over the affairs of the applicable Person, asset, obligation or other matter; 1.33 "GOVERNMENTAL CHARGES" means all taxes, duties, levies, assessments, reassessments and other charges together with all related penalties, interest and fines, payable in respect of periods ending on or before the Closing Date to any domestic or foreign government (federal, provincial, state, municipal or otherwise) or to any regulatory authority, agency, commission or board of any domestic or foreign government, or imposed by any court or any other law, regulation or rule making entity having jurisdiction in the relevant circumstances, applicable to any of ACS InfoSource, ACS Holdings, the Company, or the Business; 1.34 "HSR ACT" means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations promulgated thereunder; 1.35 "INDEMNIFIED PARTY" and "Indemnified Parties" have the meanings given to those terms in Section 16.1; 1.36 "INVESTMENT AGREEMENT" means the investment agreement to be entered into on the date of the Prospectus among the Fund, ACS Canada, the Company, ACS Holdings, ACS InfoSource and Alaska Communications Systems respecting, among other things, the investment by the Fund of the proceeds of the offering under the Prospectus in ACS Canada and the purchase by ACS Canada of 87.4% of the existing and outstanding Company Interests from ACS Holdings; 1.37 "IPO OFFERING DOCUMENTS" has the meaning given to that term in Section 16.1.2; 1.38 "LAW" means any and all laws, including all federal, state, provincial and local statutes, codes, ordinances, guidelines, decrees, rules, regulations and municipal by-laws and all judicial, arbitral, administrative, ministerial, departmental or regulatory judgments, orders, directives, decisions, rulings or awards or other requirements of any other Governmental Body, binding on or affecting the Person referred to in the context in which the term was used; 1.39 "LIEN" means any mortgage, charge, pledge, hypothecation, security interest, assignment, Lien (statutory or otherwise), charge, title retention agreement or arrangement, restrictive covenant or other encumbrance of any nature, or any other arrangement or condition which, in substance, secures payment or performance of an obligation; 1.40 "LLC AGREEMENT" means the limited liability company agreement of the Company dated April 28, 2003; 1.41 "LTIP" means the long-term incentive plan for the managers, officers and senior management employees of the Company; 1.42 "MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" means any effect or change on the Fund, ACS Canada, the Company or the Business that is or is reasonably likely to be materially adverse to the results of operations, financial condition, assets, properties, capital, liabilities (contingent or otherwise), cash flow, income or business operations of the Fund, ACS Canada, the Company or the Business, after giving effect to this agreement and the transactions contemplated hereby or that is materially adverse to the completion of the transactions contemplated by this agreement or the Related Agreements, in each case taken as a whole and as a going concern and, for greater certainty, where applicable, applying the multiple or yield based upon which Units are priced and sold under the Prospectus and the consequential loss or diminution of value resulting from such effect or change; 1.43 "MATERIAL AGREEMENTS" means, collectively, (i) the Directory Publishing Services Agreement between ACS InfoSource and L.M. Berry and Company, (ii) the Publishing Rights Agreement, the PRA Licence Agreement, the PRA Subscriber List Information Agreement, the PRA Directory Agreement, the Directory Publication and Distribution Agreement, the License Agreement, the Subscriber List Information License Agreement, the Data Services Agreement, the Billing and Collection Agreement, each described in the Prospectus, (iii) the Non-Competition Agreement among Alaska Communications Systems, the Company and others, described in the Prospectus, and (iv) the Transition Services Agreement among the Company, Alaska Communications Systems and others, described in the Prospectus; 1.44 "MATERIAL FACT" means a fact that significantly affects, or would reasonably be expected to have a significant effect on, the market price or value of the Purchased Units; 1.45 "MISREPRESENTATION" means (i) an untrue statement of a material fact, or (ii) an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made; 1.46 "MRRS" means the mutual reliance review system procedures provided for under National Policy 43-201- Mutual Reliance Review System for Prospectuses and Annual Information Forms, as amended; 1.47 "NON-U.S. UNITHOLDER" means any holder of Units that is not a U.S. Unitholder. 1.48 "NOTE INDENTURE" means the note indenture providing for the issuance of the 14% unsecured, subordinated notes of ACS Canada, dated the Closing Date, among ACS Canada and the Trust Company, as trustee; 1.49 "OCCUPATIONAL SAFETY AND HEALTH LAW" means any U.S. federal, state, municipal or local statute, law, by-law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability or standards of conduct concerning employee health and/or safety; 1.50 "OFFERING" means the offering of trust units to the public under the Prospectus, including pursuant to the exercise of the Over-Allotment Option; 1.51 "ORDINARY COURSE" means, with respect to an action taken by a Person, that such action is consistent in all material respects with past practices of the Person and is taken in ordinary course of the normal day-to-day operations of the Person; 1.52 "PERMITTED ENCUMBRANCES" means (i) Liens for taxes, assessments or governmental charges or levies on property not yet due and delinquent; and (ii) easements, encroachments and other minor imperfections of title which do not, individually or in the aggregate, materially detract from the value of or impair the use or marketability of any real property; 1.53 "PERSON" means any individual, partnership, limited partnership, limited liability company, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted; 1.54 "PLANS" has the meaning given to that term in Section 13.1.18.2; 1.55 "PRELIMINARY PROSPECTUS" means the preliminary prospectus of the Fund dated March 6, 2003, as amended and restated on April 9, 2003, in each case approved, signed and certified in accordance with the Securities Laws relating to the qualification for distribution of the Purchased Units under applicable Securities Laws in the Qualifying Jurisdictions; 1.56 "PROPOSED CREDIT FACILITY" means the senior secured credit facility to be established pursuant to a note purchase agreement and a revolving loan agreement, in the aggregate principal amount of U.S.$40 million, between the Company, Metropolitan Life Insurance Company, the Lenders thereunder and the Guarantors thereto; 1.57 "PROSPECTUS" means the (final) prospectus of the Fund dated the date of this agreement, approved, signed and certified in accordance with the Securities Laws, relating to the qualification for distribution of the Purchased Units under applicable Securities Laws in the Qualifying Jurisdictions; 1.58 "REFUSING UNDERWRITER" has the meaning given to that term in Section 25; 1.59 "RELATED AGREEMENTS" means the Declaration of Trust, the Investment Agreement, the Securityholders Agreement, the Proposed Credit Facility, the Exchange Agreement, the Note Indenture, the LLC Agreement and the Employment Agreements; 1.60 "RELEASE" means any discharge, including any emission, release, deposit, issuance, spray, escape, spill or leak; 1.61 "SECURITIES COMMISSION" means the applicable securities commission or regulatory authority in each of the Qualifying Jurisdictions; 1.62 "SECURITIES LAWS" means, collectively, and, as the context may require, the applicable securities laws of each of the Qualifying Jurisdictions and the respective regulations and rules made under those securities laws together with all applicable policy statements, blanket orders and rulings of the Securities Commissions and all discretionary orders or rulings, if any, of the Securities Commissions made in connection with the transactions contemplated by this agreement, together with applicable published policy statements of the Canadian Securities Administrators; 1.63 "SECURITYHOLDERS AGREEMENT" means the securityholders agreement to be entered into on the Closing Date, among ACS Canada, ACS Holdings and the Company respecting, among other things, appointment of the managers of the Company, pre-emptive rights to purchase Company Interests and certain approval rights of ACS Holdings over the affairs of the Company; 1.64 "STANDARD LISTING CONDITIONS" has the meaning given to that term in Section 5.5.3; 1.65 "SUBSIDIARY" means a subsidiary entity for purposes of Section 1.2 of Ontario Securities Commission Rule 45-501 [Revised] - Exempt Distributions; 1.66 "SUBSTANCE" means any substances or material which under any Environmental Law is defined to be "hazardous", "toxic", "deleterious", "caustic", "dangerous", a "contaminant", a "pollutant", a "dangerous good", a "waste", a "special waste", a "source of contamination" or a "source of pollutant" and any substances or materials the discharge of or release to, or the concentration of which in soil, sediment, ground water or surface water or ambient air are regulated under any Environmental Law; 1.67 "SUPPLEMENTARY MATERIAL" means, collectively, any amendment to the Prospectus or U.S. Placement Memorandum, any amendment or supplemental prospectus or ancillary materials that may be filed by or on behalf of the Fund under the Securities Laws and the Securities Laws of the United States relating to the qualification for distribution of, the Purchased Units; 1.68 "TAX ACT" has the meaning given to that term in Section 13.1.18.2; 1.69 "TIME OF CLOSING" means 8:00 a.m. (Toronto time) on the Closing Date, or any other time on the Closing Date as may be mutually agreed to by the Fund, Alaska Communications Systems and the Underwriters; 1.70 "TRUST COMPANY" means CIBC Mellon Trust Company; 1.71 "TSX" means the Toronto Stock Exchange; 1.72 "UNITED STATES" means the United States of America, its territories and possessions, and any state of the United States and the District of Columbia; 1.73 "U.S. PLACEMENT MEMORANDUM" means the placement memorandum, if any, of the Fund, and any amendment thereto, prepared in accordance with the U.S. Securities Laws, in connection with a private placement of Units in the United States as contemplated by Section 23; 1.74 "U.S. EXCHANGE ACT" has the meaning given to that term in Section 23; 1.75 "U.S. SECURITIES ACT" has the meaning given to that term in Section 23; 1.76 "U.S. SECURITIES LAWS" means the U.S. Securities Act, the U.S. Exchange Act, all rules and regulations promulgated thereunder, and any state securities laws; and 1.77 "U.S. UNITHOLDER" means any holder of Units that is (i) a citizen or individual resident in the United States for U.S. federal tax purposes, (ii) a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any political subdivision thereof, (iii) an estate, the income of which is subject to United States federal income tax regardless of the source, or (iv) a trust, if a court within the United States is able to exercise primary supervision over the trust's administration and one or more United States persons have the authority to control all its substantial decisions. Capitalized terms used but not defined in this agreement have the meanings given to them in the Prospectus. Unless otherwise indicated, all references to monetary amounts in this agreement are to lawful money of Canada. Any reference in this agreement to a Section, paragraph, subsection, subparagraph, clause or subclause will refer to a Section, paragraph, subsection, subparagraph, clause or subclause of this agreement. All words and personal pronouns relating to those words will be read and construed as the number and gender of the party or parties referred to in each case required and the verb will be construed as agreeing with the required word and/or pronoun. Wherever the words "include", "includes" or "including" are used in this agreement, they shall be deemed to be followed by the words "without limitation". References in this agreement to actions to be taken by the Fund, mean actions to be taken by the trustees of the Fund on behalf of the Fund, or their duly authorized agent or attorney. 2. ATTRIBUTES OF THE PURCHASED UNITS. The Purchased Units to be issued and sold under this agreement by the Fund will be duly and validly created and issued by the Fund and, when issued and sold by the Fund, those Purchased Units will have the attributes set out in the Declaration of Trust, subject to those modifications or changes (if any) prior to the Closing Date as may be permitted under the Declaration of Trust and agreed to in writing by the Fund and the Underwriters. 3. FILING OF PROSPECTUS. 3.1 The Fund will, as soon as possible following the execution of this agreement, prepare and file the Prospectus in each of the Qualifying Jurisdictions with the Securities Commissions under the Securities Laws, and will obtain the Final MRRS Decision Document as soon as possible after the filing and, in any event, not later than 5:00 p.m. (Toronto time) on April 30, 2003 (or such other time and/or later date as the Fund and the Underwriters may agree) and will have taken all other steps and proceedings that may be necessary in order to qualify the Purchased Units for distribution in each of the Qualifying Jurisdictions by the Underwriters and other persons who are registered in a category permitting them to distribute the Purchased Units under the Securities Laws and who comply with the Securities Laws. 3.2 Until the distribution of the Purchased Units is completed, the Fund will promptly take, or cause to be taken, all additional steps and proceedings that may from time to time be required under the Securities Laws to continue to qualify the distribution of the Purchased Units or, in the event that the Purchased Units have, for any reason, ceased so to qualify, to so qualify again the Purchased Units, as applicable, for distribution. 4. DISTRIBUTION AND CERTAIN OBLIGATIONS OF UNDERWRITERS. 4.1 During the course of the distribution of the Purchased Units to the public by or through the Underwriters, the Underwriters will offer and sell those Purchased Units to the public, only in those jurisdictions where they may be lawfully offered for sale or sold and only at the price per Unit set out on the cover page of the Prospectus. The Underwriters will comply with applicable Securities Laws (including the U.S. Securities Act) in connection with the offer to sell or distribution of the Purchased Units. Except in the Qualifying Jurisdictions, the Underwriters will not, directly or indirectly, solicit offers to purchase or sell the Purchased Units or deliver the Prospectus or any Supplementary Material so as to require registration of those Units or filing of a prospectus with respect to those Units under the laws of any jurisdiction, including, without limitation, the United States. Any offer or sale of the Purchased Units in the United States will be made in accordance with Section 23 of this agreement. Each Underwriter will cause similar undertakings to be contained in any agreements among the members of the banking, selling or other groups formed for the distribution of the Purchased Units and will require any member of the banking, selling or other group formed for the distribution of the Purchased Units to comply with applicable Securities Laws (including the U.S. Securities Act) and any applicable Securities Laws in the United States. 4.2 The Underwriters will complete and will use their reasonable best efforts to cause members of their selling group (if any) to complete the distribution of the Purchased Units as promptly as possible after the Time of Closing. The Underwriters will notify the Fund and the TSX, in writing, when, in the Underwriters' opinion, the Underwriters and the members of their selling group (if any) have ceased distribution of the Purchased Units and, promptly after completion of the distribution, will provide the Fund, in writing, with a breakdown of the number of Purchased Units distributed in each of the Qualifying Jurisdictions where that breakdown is required by the Securities Commission of that jurisdiction for the purpose of calculating fees payable to that Securities Commission. 4.3 No Underwriter will be liable to the Fund under this Section 4 with respect to a default by any of the other Underwriters but will be liable to the Fund for its own default. 5. DELIVERY OF PROSPECTUS AND RELATED MATTERS. 5.1 The Fund will cause to be delivered to the Underwriters, at those delivery points as the Underwriters reasonably request, as soon as possible and in any event no later than 12:00 p.m. (Toronto time) on May 1, 2003, and thereafter from time to time during the distribution of the Purchased Units, as many commercial copies of the Prospectus in the English language and French language as the Underwriters may reasonably request. The Fund will similarly cause to be delivered to the Underwriters, at those delivery points as the Underwriters may reasonably request, commercial copies of any Supplementary Material required to be delivered to purchasers or prospective purchasers of the Purchased Units. The Fund has previously delivered to the Underwriters copies of the Preliminary Prospectus as approved, signed and certified as required by the Securities Laws. Each delivery of the Preliminary Prospectus, the Prospectus or any Supplementary Material will have constituted or constitute, as the case may be, consent by the Fund, ACS Canada, the Company, ACS Holdings, ACS InfoSource and Alaska Communications Systems to the use by the Underwriters and members of their selling group (if any) of those documents in connection with the distribution of the Purchased Units for sale in all of the Qualifying Jurisdictions, subject to the Securities Laws. 5.2 The Fund will cause to be delivered to the Underwriters, at those delivery points as the Underwriters may reasonably request, copies of the U.S. Placement Memorandum. Each delivery of the U.S. Placement Memorandum will constitute consent by the Fund, ACS Canada, the Company, ACS Holdings, ACS InfoSource and Alaska Communications Systems to the use of the U.S. Placement Memorandum and any Supplementary Material required to be prepared and/or filed under Securities Laws of the United States by the U.S. broker affiliates of the Underwriters and members of their selling group (if any) for the distribution of the Purchased Units for sale by them in the United States in accordance with this agreement. 5.3 Each delivery of the Preliminary Prospectus, the Prospectus and any Supplementary Material to the Underwriters by the Fund in accordance with Section 5.1 will constitute a representation and warranty of the Fund, ACS Canada and the Company to the Underwriters that (except for information and statements relating to the Underwriters and furnished by them), at the respective times of delivery: 5.3.1 the information and statements contained in each of the Preliminary Prospectus, the Prospectus and any Supplementary Material: 5.3.1.1 are true and correct in all material respects and contain no Misrepresentation; and 5.3.1.2 constitute full, true and plain disclosure of all material facts relating to the Purchased Units as required by the Securities Laws; and 5.3.2 no material fact has been omitted from any of those documents which is required to be stated in any of such documents or is necessary to make the statements therein not misleading in the light of the circumstances in which they were made; and 5.3.3 each of those documents complies with applicable Securities Laws, other than as to non-material matters. 5.4 Each delivery of the Preliminary Prospectus, the Prospectus and any Supplementary Material to the Underwriters by the Fund in accordance with Section 5.1 will constitute a representation and warranty of ACS Holdings, ACS InfoSource and Alaska Communications Systems to the Underwriters that (except for information and statements relating to the Underwriters and furnished by them), at the respective times of delivery, the information and statements contained in each of the Preliminary Prospectus, the Prospectus and any Supplementary Material are true and correct in all material respects and contain no Misrepresentation. 5.5 The Fund will deliver to the Underwriters, without charge, in Toronto, Ontario, contemporaneously with or prior to the filing of the Prospectus, unless otherwise indicated: 5.5.1 a copy of the Prospectus in the English language and a copy of the Prospectus in the French language, each signed on behalf of the Fund and Alaska Communications Systems, in its capacity as promoter, as required by the Securities Laws of each of the Qualifying Jurisdictions; 5.5.2 a copy of any other document required to be filed by the Fund under the Securities Laws in connection with the offering of the Purchased Units contemplated by this agreement; 5.5.3 evidence satisfactory to the Underwriters of the approval of the listing and posting for trading on the TSX of the Purchased Units, subject only to satisfaction by the Fund of customary post-closing conditions imposed by the TSX in similar circumstances (the "STANDARD LISTING CONDITIONS"); 5.5.4 a "long-form" comfort letter dated the date of the Prospectus, in form and substance satisfactory to the Underwriters, addressed to the Underwriters, the trustees of the Fund and the managers of the Company from the auditors of the Fund and the Company, and based on a review completed not more than three business days prior to the date of the letter, with respect to certain financial and accounting information relating to the Fund and to the Company in the Prospectus, which letter shall be in addition to the auditors' report contained in the Prospectus and any auditors' comfort letter addressed to the Securities Commissions; 5.5.5 as soon as possible, but in any event contemporaneously with the filing of the Prospectus with the Securities Commission in the Province of Quebec, an opinion of Quebec counsel to the Fund and the Company, addressed to the Underwriters, the Fund and the Company, and their respective counsel in form and substance satisfactory to the Underwriters, acting reasonably, to the effect that the French language version of the Prospectus, other than the Financial Information, is, in all material respects, a complete and proper translation of the English language version thereof; 5.5.6 as soon as possible, but in any event contemporaneously with the filing of the Prospectus with the Securities Commission in the Province of Quebec, an opinion of the auditors of the Fund and the Company, addressed to the Underwriters, the Fund and the Company and their respective counsel in form and substance satisfactory to the Underwriters, acting reasonably, to the effect that the French translation of the Financial Information, is, in all material respects, a complete and proper translation of the English language version; and 5.6 Opinions, comfort letters and other documents substantially similar to those referred to in Section 5.5 will be delivered to the Underwriters, the Fund and the Company, and their respective counsel, as applicable, with respect to any Supplementary Material, concurrently with the execution of the Supplementary Material. 6. MATERIAL CHANGE. 6.1 The Fund and the Company will promptly inform the Underwriters in writing during the period prior to the completion of the distribution of the Purchased Units of the full particulars of: 6.1.1 any Material Adverse Change (whether actual, anticipated, contemplated, proposed or threatened); 6.1.2 any material fact which has arisen or has been discovered and would have been required to have been stated in the Prospectus or any Supplementary Material had that fact arisen or been discovered on, or prior to, the date of any of the Prospectus or any Supplementary Material; or 6.1.3 any change in any material fact contained in any of the Prospectus or any Supplementary Material or whether any event or state of facts has occurred after the date of this agreement, which, in any case, is of such a nature as to render any of the Prospectus or any Supplementary Material untrue or misleading in any material respect or to result in any Misrepresentation in any of the Prospectus or any Supplementary Material. 6.2 During the period from the date hereof until the completion of the distribution under the Prospectus, the Fund will comply with Section 57 of the Securities Act (Ontario) and with the comparable provisions of the other Securities Laws and any applicable U.S. Securities Laws, and the Fund and the Company will prepare, with the input of the Underwriters, and the Fund will file promptly at the request of the Underwriters any Supplementary Material which, in the opinion of the Underwriters, acting reasonably, may be necessary or advisable, and will otherwise comply with all legal requirements necessary, to continue to qualify the Purchased Units for distribution in each of the Qualifying Jurisdictions. 6.3 In addition to the provisions of Sections 6.1 and 6.2, the Fund and the Company will, in good faith, discuss with the Underwriters any change, event or fact contemplated in Sections 6.1 and 6.2 which is of such a nature that there may be reasonable doubt as to whether notice should be given to the Underwriters under Section 6.1 and will consult with the Underwriters with respect to the form and content of any Supplementary Material proposed to be filed by the Fund, it being understood and agreed that no such Supplementary Material will be filed with any Securities Commission prior to the review and approval by the Underwriters and their counsel, acting reasonably. 7. REGULATORY APPROVALS. 7.1 The Fund and the Company will file or cause to be filed with the TSX all necessary documents and will take or cause to be taken all necessary steps to ensure that the Purchased Units have been approved for listing and posting for trading on the TSX, prior to the filing of the Prospectus with the Securities Commissions, subject only to satisfaction by the Fund of the Standard Listing Conditions. 7.2 The Fund and the Company will make all necessary filings, obtain all necessary regulatory consents and approvals (if any) and the Fund and the Company will pay all filing fees required to be paid in connection with the transactions contemplated in this agreement. 7.3 The Fund and the Company will notify the Underwriters of any notice or other correspondence received by any of the ACS Parties from any Governmental Body requesting any information, meeting or hearing relating to the Company, the Fund, the Offering or any other event or state of affairs that the Fund or the Company reasonably believes may be material to the Underwriters or the unitholders of the Fund. 8. REPRESENTATIONS AND WARRANTIES OF THE FUND, ACS CANADA AND THE COMPANY. The Fund, ACS Canada and the Company, jointly and severally, represent and warrant to the Underwriters as follows and acknowledge that the Underwriters are relying upon the following representations and warranties in completing the transactions contemplated by this agreement: 8.1 the Fund has been created and is existing as a trust under the laws of the Province of Ontario; pursuant to the Declaration of Trust, the trustees have been appointed as trustees of the Fund and the trustees have the power to carry on the business and affairs of the Fund as described in the Prospectus, including the business proposed to be conducted as described in the Prospectus, and to enter into and perform its obligations under this agreement and each of the Related Agreements to which it is a party; 8.2 ACS Canada is a corporation existing under the laws of the Province of Ontario and has all requisite corporate power and authority to carry on its business as described in the Prospectus and to enter into and perform its obligations under this agreement and each of the Related Agreements to which it is a party; 8.3 the Company is a limited liability company duly organized and existing under the laws of the State of Alaska and has all requisite corporate power and authority to carry on its business, including the business as described in the Prospectus, and to own or lease and to operate its assets and to enter into and perform its obligations under this agreement and each of the Related Agreements to which it is a party; 8.4 the Company does not own an interest in any Person; 8.5 the execution, delivery and performance by each of the Fund, ACS Canada and the Company of this agreement and each of the Related Agreements to which it is a party, and the issuance, sale and delivery of the Purchased Units by the Fund, as applicable: 8.5.1 has been, or will at the Time of Closing be, duly authorized by all necessary action of the Fund, ACS Canada and the Company; 8.5.2 except as disclosed in Section 8.5 of the Disclosure Letter, does not require the consent, approval, authorization, registration or qualification of or with any governmental authority, stock exchange, Securities Commission or other securities regulatory authority or other third party, except: (i) those which have been obtained; (ii) those as may be required (and will be obtained prior to the Time of Closing) under applicable Securities Laws or the Related Agreements; or (iii) those which have not been obtained and would not result in a Material Adverse Effect; 8.5.3 does not (or will not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or a violation of, or conflict with or result in a default under, or allow any other person to exercise any rights under, any of the terms or provisions of the constating documents or by-laws or resolutions of the trustees or directors or managers (or any committee thereof), or securityholders of the Fund, ACS Canada or the Company or any judgement, decree, order or award of any court, governmental body or arbitrator having jurisdiction over the Fund, ACS Canada or the Company, or any agreement, license or permit to which the Fund, ACS Canada or the Company is a party or by which its business may be affected, except, in each case, any breach, violation, conflict, default or right that would not result in a Material Adverse Effect; 8.5.4 will not result in the violation of any Law; and 8.5.5 will not give rise to any Lien of any kind whatsoever other than Permitted Encumbrances, in or with respect to the properties or assets now owned or acquired at or prior to the Time of Closing by the Fund, ACS Canada or the Company or the acceleration of or the maturity of any debt under any material indenture, mortgage, lease, agreement or instrument binding or affecting any of them or any of their properties, in any case; 8.6 this agreement and the Related Agreements to which the Fund, ACS Canada or the Company is a party have been or, as the case may be, will be, at the Time of Closing, duly executed and delivered by or on behalf of the Fund, ACS Canada or the Company and constitute or, will constitute, when so executed and delivered, legal, valid and binding obligations of the Fund, ACS Canada and the Company enforceable in accordance with their respective terms, provided that enforceability may be limited by bankruptcy, insolvency and other similar laws affecting creditors' rights generally, that specific performance, injunctive relief and other equitable remedies may only be granted in the discretion of a court of competent jurisdiction and that rights of indemnity and/or contribution set out in this agreement and the Investment Agreement may be limited by applicable Law; 8.7 ACS InfoSource is conducting its Business and affairs, as described in the Prospectus, in compliance in all material respects with all applicable Laws, rules, regulations, licences and permits and is, and the Company will be at the Time of Closing, licensed, registered or qualified and has, and the Company will have at the Time of Closing, all necessary licences and permits in all jurisdictions in which it carries on business to enable the Business, as now conducted and as presently proposed to be conducted, to be carried on, and to enable its assets to be owned or to be leased and to be operated, except where the failure to be so licensed, registered or qualified would not have a Material Adverse Effect, and all such licences, registrations, qualifications and permits held, or to be held at the Time of Closing, by the Company are valid and existing and in good standing and none of them contains, or will contain at the Time of Closing, any term, provision, condition or limitation which would reasonably be expected to have a Material Adverse Effect; neither the Fund nor the Company nor ACS InfoSource is aware of any legislation, regulation, by-law or other lawful requirement currently in force or proposed to be brought into force by any Governmental Body with which the Company will be unable to comply and which would reasonably be expected to have a Material Adverse Effect; 8.8 except as disclosed in the Prospectus, each property, operation and facility comprising (currently or following Closing) part of the assets of the Company: 8.8.1 complies and the Business is operated in compliance with (i) all applicable Environmental Laws, and (ii) all applicable Occupational Safety and Health Laws, except where such instances, if any of non-compliance, in the aggregate, would not have a Material Adverse Effect; and 8.8.2 is not subject to any judicial, administrative or other proceeding alleging the violation of any Environmental Law or Occupational Safety and Health Law, except where such proceedings, if any, in the aggregate, would not have a Material Adverse Effect. 8.9 except as disclosed in the Prospectus, in connection with the Business or its operation: 8.9.1 neither ACS InfoSource nor the Company has received any written notice (i) alleging that it may be in violation of any Environmental Law or Occupational Safety and Health Law, or (ii) threatening the commencement of any proceeding relating to alleged non-compliance with any Environmental Law or Occupational Safety and Health Law, or (iii) alleging that it is or may be responsible for any response, clean-up, or corrective action, including any remedial investigation/feasibility study, under any Environmental Law or Occupational Safety and Health Law; 8.9.2 neither ACS InfoSource nor the Company has received any written notice that it is the subject of federal, state or municipal government investigation evaluating whether any investigation, remedial action or other response is needed to respond to (i) a spillage, disposal or release or threatened release into the environment of any Substance, or (ii) any alleged violation of any Occupational Safety and Health Law; 8.9.3 neither ACS InfoSource nor the Company has filed any written notice under or relating to any Environmental Law or Occupational Safety and Health Law indicating or reporting (i) any past or present spillage, disposal or release (other than permitted releases) into the environment of, or treatment, storage or disposal of (other than permitted treatment, storage or disposal), any Substance in excess of quantities requiring notification under any Environmental Law, or (ii) any violation of any Occupational Safety and Health Law; and 8.9.4 there are no Substances on, in or under any property or facilities currently or formerly, owned, operated, leased or controlled by ACS InfoSource or the Company in connection with the Business or comprising (currently or following Closing) part of the assets of the Company that, under applicable Environmental Laws or Occupational Safety and Health Laws (i) impose a liability in the aggregate for investigation, removal, remediation, or other clean-up or damage to natural resources, or (ii) would have a Material Adverse Effect. 8.10 other than as set out in Section 8.10 of the Disclosure Letter and as set out in the Prospectus and the Securityholders Agreement or the LLC Agreement, there is currently no, and will not at the Time of Closing be any, agreement in force or effect which in any manner affects or will affect the voting or control of any of the securities of the Fund, ACS Canada or the Company; 8.11 the authorized and issued and outstanding capital of the Company at the date of this agreement and immediately before the Time of Closing and, provided that the Closing occurs, the Over-Allotment Closing Time, is and shall be, as applicable, as set forth in Schedule 8.11. All issued and outstanding Company Interests are, and all Company Interests shown on Schedule 8.11 to be issued at Closing and the Over-Allotment Closing Time will be, validly issued and outstanding, fully-paid and non-assessable and not subject to pre-emptive rights (except as set out in the Securityholders Agreement to be entered into on Closing) or rights of first refusal created by statute or any agreement to which the Company (except as set out in the Securityholders Agreement to be entered into on Closing) is a party or by which it is bound; and with the exception of the LLC Agreement and the Securityholders Agreement to be entered into on Closing, and as set out in Section 8.10 of the Disclosure Letter there are, and will be at the Time of Closing and the Over-Allotment Closing Time, no shareholder agreements, pooling agreements, voting trusts or other agreements with respect to the voting of Company Interests; 8.12 except as contemplated by the Investment Agreement, the Securityholders Agreement and the Exchange Agreement, there are no agreements, options, warrants, rights of conversion or other rights pursuant to which the Company is, or may become, obligated to issue any membership interests or any securities convertible or exchangeable, directly or indirectly, into membership interests; 8.13 at the Time of Closing, provided that not more than two business days elapse between the initiation of the procedures of Closing (including the transactions set out in Articles 2, 3, 4, 5, 6, 7, and 8 of the Investment Agreement) and the completion of the Closing, immediately following the distribution of the Company Interests to ACS Holdings, as contemplated by Article 5 of the Investment Agreement, ACS Holdings shall own all of the issued and outstanding Company Interests as the sole registered and beneficial owner and free of any Liens, other than any Liens created by or imposed under this agreement and the Related Agreements as to which it is a party; 8.14 as of the Time of Closing, provided that not more than two business days elapse between the initiation of the procedures of Closing (including the transactions set out in Articles 2, 3, 4, 5, 6, 7, and 8 of the Investment Agreement) and the completion of the Closing, following the completion of the transactions contemplated by Articles 2, 3, 4, 5, 6, 7 and 8 of the Investment Agreement, assuming no exercise of the Over-Allotment Option: 8.14.1 the authorized capital of ACS Canada will consist of an unlimited number of common shares and an unlimited number of preferred shares, of which 80,271,009 common shares and no preferred shares will be issued and outstanding; and 8.14.2 the authorized capital of the Company will consist of an unlimited number of membership interests, of which 138,047,321 membership interests will be issued and outstanding; 8.15 as of the Time of Closing, following the completion of the transactions contemplated by Articles 2, 3, 4, 5, 6, 7 and 8 of the Investment Agreement, assuming no exercise of the Over-Allotment Option, provided that not more than two business days elapse between the initiation of the procedures of Closing (including the transactions set out in Articles 2, 3, 4, 5, 6, 7, and 8 of the Investment Agreement) and the completion of the Closing: 8.15.1 the Fund will be the registered and beneficial owner of 80,271,009 common shares of ACS Canada, respecting all of the issued and outstanding equity securities of ACS Canada, on a fully-diluted basis, and ACS Notes in the principal amount of $80,271,009 and will hold those securities free and clear of any Liens except as disclosed in Section 8.15 of the Disclosure Letter; 8.15.2 ACS Canada will be the registered and beneficial owner of 120,680,968 Company Interests of the Company, representing 87.4% of the issued and outstanding Company Interests, on a fully-diluted basis, and will hold those securities free and clear of all Liens except as disclosed in Section 8.15 of the Disclosure Letter; 8.15.3 ACS Holdings will be the registered and beneficial owner of 17,366,353 Company Interests, representing 12.6% of the issued and outstanding Company Interests, on a fully-diluted basis, and will hold these securities free and clear of all Liens except as disclosed in Section 8.15 of the Disclosure Letter; 8.16 except for investments in the securities of ACS Canada, including the ACS Notes, the Fund does not, directly or indirectly, hold any shares, other securities, options or rights to subscribe for shares or other securities of any corporation, partnership or other entity; 8.17 the Fund is authorized to issue an unlimited number of Units, of which, as of the date of this agreement, one Unit is issued and outstanding as a fully paid Unit of the Fund; 8.18 the Trust Company has been duly appointed as the registrar and transfer agent of the Fund with respect to its Units; 8.19 except as contemplated by this agreement, the Declaration of Trust, the Investment Agreement, the Securityholders Agreement, the Exchange Agreement or as disclosed in the Prospectus, no Person has any written or oral agreement, option, understanding or commitment, or any right or privilege capable of becoming such (i) under which the Fund, ACS Canada or the Company is, or may become, obligated to issue any of its securities, or (ii) for the purchase of any security (including debt) of the Fund, ACS Canada or the Company; 8.20 except as disclosed in the Prospectus, there is no material action, suit, proceeding or investigation, at law or in equity, by any person, nor any arbitration, administrative or other proceeding by or before any Governmental Body pending, or, to the best of the knowledge of the Fund or the Company, threatened against or affecting the Fund, ACS Canada, ACS InfoSource or the Company, or any of their respective properties, rights or assets; 8.21 the TSX has conditionally approved the listing of the Purchased Units, subject to satisfaction by the Fund of the Standard Listing Conditions; 8.22 the form and terms of the certificate for the Units have been approved and adopted by the trustees of the Fund and do not conflict with the Declaration of Trust; 8.23 the Purchased Units to be issued as described in this agreement and in the Prospectus will, at the Time of Closing, be duly created and, when issued, delivered and paid for in full, will be validly issued as fully paid Units of the Fund, and will not have been issued in violation of or subject to any pre-emptive rights or contractual rights to purchase securities issued by the Fund; 8.24 as of the date of this agreement, the information and statements contained in the Prospectus, including the industry data, description of the Business and the Financial Information, are true and correct in all material respects and contain no Misrepresentation; 8.25 the Financial Information with respect to the Fund has been prepared in accordance with Canadian generally accepted accounting principles consistently applied throughout the periods indicated and is complete and accurate in all material respects and presents fairly, in all material respects, the financial condition and the results of operations, and cash flow of the Fund as at the dates and for the periods referred to in such Financial Information, and there has been no Material Adverse Change in the financial position of the Fund from that reflected in such Financial Information; 8.26 the Financial Information with respect to ACS InfoSource, has been prepared in accordance with United States generally accepted accounting principles (except for the note disclosure regarding a reconciliation to Canadian generally accepted accounting principles which has been prepared in accordance with Canadian generally accepted accounting principles) consistently applied throughout the periods indicated and is complete and accurate in all material respects and presents, fairly, in all material respects, the financial condition and the results of operations and cash flow of ACS InfoSource at the dates and for the periods referred to in such Financial Information, and there has been no Material Adverse Change in the financial position of the Fund from that reflected in such Financial Information; 8.27 except as disclosed in the Prospectus, since December 31, 2002, the Business has been carried on in the Ordinary Course; 8.28 the Company and ACS InfoSource and any affiliated, combined or unitary group of which the Company and/or ACS InfoSource is or was a member, as the case may be (a "TAX AFFILIATE"), has (i) timely filed (or has had timely filed on their behalf) all returns, declarations, reports, estimates, information, returns, elections and statements ("RETURNS") required to be filed or sent in respect of any Governmental Charges or required to be filed or sent by it to any taxing authority having jurisdiction since incorporation or organization to and including the Time of Closing and all such Returns have been prepared in accordance with the provisions of the applicable legislation are true, correct and complete in all material respects; (ii) timely and properly paid (or has had paid on its behalf), or will pay when due, all Governmental Charges and all professional fees incurred in connection such Governmental Charges due or claimed to be due by an Governmental Body; and (iii) has properly withheld or collected and remitted all amounts required to be withheld or collected and remitted by it in respect of any Governmental Charges; 8.29 there are no Liens for Governmental Charges upon any assets of ACS InfoSource or the Company; 8.30 no refinancing for any Governmental Charges has been proposed, asserted or assessed against ACS InfoSource or the Company or any Tax Affiliate; 8.31 there are no proceedings either in progress, pending or, to the knowledge of the Company, threatened in connection with any Governmental Charges in respect of the Business which in the aggregate would have a Material Adverse Effect; 8.32 except as set out in the Financial Information, neither the Fund nor the Company has outstanding any bonds, debentures, notes, mortgages or other indebtedness which are material to the Fund and the Company considered as a whole and, except as disclosed in Section 8.32 of the Disclosure Letter or as described in the Prospectus, neither the Fund nor the Company has agreed to create or issue any bonds, debentures, notes, mortgages or other indebtedness; 8.33 each of ACS InfoSource and the Company has performed all obligations required to be performed by it in connection with all material contracts, agreements (including the Material Agreements), leases or other instruments to which it is a party or by which it may be bound, is entitled to all benefits, rights and privileges thereunder, is not in default or alleged to be in default under any such contract, agreement, lease or other instrument and is not aware of any material breaches thereof by any other parties thereto except where such failure to perform or lack of entitlement would not cause a Material Adverse Effect; 8.34 the lease of real property to be leased by the Company as disclosed in the Prospectus, is the only lease of the Company. Such lease is in full force and effect and the Company holds a valid, existing and binding leasehold interest under such lease for the term disclosed in the Prospectus, free and clear of any Liens. The Company is not in default and, to the knowledge of the Company, no circumstances exist which, if unremedied, would, with or without notice or lapse of time or both, result in such default under such lease; 8.35 all material equipment and other material tangible assets used by ACS InfoSource (and to be used by the Company) in the context of the Business are in good condition and repair, ordinary wear and tear excepted, and are adequate and suitable for the purposes for which they are currently being used; 8.36 Section 8.36 of the Disclosure Letter describes all trade marks and trade mark applications, trade names, certification marks, patents and patent applications, copyrights and industrial designs used by ACS InfoSource in connection with the Business (the "INTELLECTUAL PROPERTY"), along with the offices (if any) in which the same is registered (being the only offices where such registration is necessary to preserve the rights thereto) and the applicable expiry dates of any registrations. The Intellectual Property (other than computer systems software licensed by third parties to ACS InfoSource) which is used by ACS InfoSource in connection with the Business is owned by ACS InfoSource and ACS InfoSource has the sole and exclusive right to use the same, except as noted in Section 8.36 of the Disclosure Letter and except where the failure to possess such right would not result in a Material Adverse Effect. No Person has made a claim or a demand that conduct of the Business infringes on any Intellectual Property owned by any other person and, to the knowledge of ACS InfoSource, ACS Holdings, the Company and the Fund, the conduct of the Business does not infringe on any Intellectual Property owned by any other person. 8.37 except as set forth in Section 8.37 of the Disclosure Letter, with respect to all employees and former employees of ACS InfoSource (and, following Closing, the Company) and all dependants and beneficiaries of such employees and former employees, (i) the Company does not, and will not at the Time of Closing, maintain or contribute to any nonqualified deferred compensation or retirement plans, contracts or arrangements; (ii) the Company does not, and will not at the Time of Closing, maintain or contribute to any qualified defined contribution plans (as defined in Section 3(34) of the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 414(i) of the Code (as defined below)); (iii) the Company does not, and will not at the Time of Closing, maintain or contribute to any qualified defined benefit plans (as defined in Section 3(35) of ERISA or Section 414(j) of the Code); and (iv) the Company does not, and will not at the Time of Closing, maintain or contribute to any employee welfare benefit plans (as defined in Section 3(1) of ERISA); 8.38 prior to and at the Time of Closing, all employee benefit plans (as defined in Section 3(3) of ERISA) which the Company maintains or to which it contributes (collectively, the "PLANS") comply with the requirements of ERISA and the Code; 8.39 the Underwriters have received true and complete copies of (i) the most recent determination letter, if any, received by either ACS InfoSource or the Company from the Internal Revenue Service regarding the Plans which either ACS InfoSource or the Company maintains or to which it contributes and any amendment to any Plan made subsequent to any Plan amendments covered by any such determination letter; (ii) the most recent financial statements and annual report or return for the Plans; and (iii) the most recently prepared actuarial valuation reports; 8.40 except as set forth in Section 8.37 of the Disclosure Letter, neither the Company nor ACS InfoSource contributes (and has not ever contributed) to any multi-employer plan, as defined in Section 3(37) of ERISA. Neither ACS, InfoSource nor the Company has any actual or potential liabilities under Section 4201 of ERISA for any complete or partial withdrawal from a multi-employer plan. Neither ACS, InfoSource nor the Company has any actual or potential liability for death or medical benefits after separation from employment; 8.41 neither ACS InfoSource nor the Company nor any of their respective directors, managers, officers, employees or other "fiduciaries", as such term is defined in Section 3(21) of ERISA, has committed any breach of fiduciary responsibility imposed by ERISA or any other applicable Law with respect to the Plans which would subject the Company or any of its managers, officers or employees to any liability under ERISA or any applicable Law; 8.42 neither ACS InfoSource nor the Company has incurred any liability for any tax or civil penalty or any disqualification of any employee benefit plan (as defined in Section 3(3) of ERISA) imposed by Sections 4980B and 4975 of the Code and Part 6 of Title I and Section 502(i) of ERISA; 8.43 all policies, binders and insurance contracts under which the Company or any of the properties or assets to be acquired by the Company on Closing are insured are in full force and are in amounts, with regard to deductibles and co-insurance clauses, as are adequate to fully insure the Company, such properties and assets and the Business and are customary in the Company's industry and market and business; 8.44 except as disclosed in the Prospectus, since December 31, 2002, there has not been any Material Adverse Change and, to the knowledge of the Company, no event has occurred or circumstance exists which results in such a Material Adverse Change except for general economic changes and changes that may affect the industries of the Business generally; 8.45 none of the Fund, ACS Canada and the Company has taken, and agree that none of them will take, any action that would cause any of them to become liable to any claim or demand for a brokerage commission, finder's fee or other similar payment in connection with the transactions contemplated hereby, other than with respect to any underwriters' fees as described in the Prospectus; 8.46 there has not been any reportable disagreement (within the meaning of National Policy Statement No. 31 of the Canadian Securities Administrators) with the auditors of the Fund or the Company; 8.47 the Material Agreements permit and provide for the conduct of the Business substantially in the manner in which it has been conducted since January 2001, assuming compliance by the parties with the material terms thereof; and 8.48 except under the Material Agreements and Related Agreements and as disclosed in the Prospectus, none of the trustees, directors, managers, officers or employees of the Fund, ACS Canada or the Company, any person who owns, directly or indirectly, more than 10% of any class of securities of the Fund or securities of any person exchangeable for more than 10% of any class of securities of the Fund, or any associate or affiliate of any of the foregoing, had within the three years preceding the date of this agreement that is continuing, or has any material interest, direct or indirect, in any material transaction or any proposed material transaction with the Fund, ACS Canada or the Company which, as the case may be, materially affects, is material to or will materially affect the Fund, ACS Canada or the Company. 9. REPRESENTATIONS AND WARRANTIES OF ACS HOLDINGS ACS Holdings represents and warrants to the Underwriters as follows and acknowledges that the Underwriters are relying upon the following representations and warranties in completing the transactions contemplated hereby: 9.1 ACS Holdings is a limited liability company duly organized and existing under the laws of the State of Alaska. ACS Holdings is duly qualified to carry on its business in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification, except to the extent that the failure to be so qualified would not have a Material Adverse Effect; 9.2 ACS Holdings has the corporate power and capacity to enter into and perform its obligations under this agreement and the Related Agreements to which it is a party and to carry out the transactions contemplated by such agreements and the Prospectus. Each of this agreement and the Related Agreements to which it is a party has been, or shall be at the Time of Closing, duly authorized, executed and delivered by or on behalf of ACS Holdings and is, or shall be at the Time of Closing, a legal, valid and binding obligation of ACS Holdings, enforceable against ACS Holdings in accordance with its terms, provided that enforceability may be limited by bankruptcy, insolvency and other similar laws affecting creditors' rights generally, that specific performance, injunctive relief and other equitable remedies may only be granted in the discretion of a court of competent jurisdiction and that rights of indemnity and/or contribution set out in this agreement or the Investment Agreement may be limited by applicable law; 9.3 the authorized and issued and outstanding capital of the Company at the date of this agreement and immediately before the Time of Closing and, provided that the Closing occurs, the Over-Allotment Closing Time, is and shall be, as applicable, as set forth in Schedule 8.11. All issued and outstanding Company Interests are, and all Company Interests shown on Schedule 8.11 to be issued at Closing and the Over-Allotment Closing Time will be, validly issued and outstanding, fully-paid and non-assessable and not subject to pre-emptive rights (except as set out in the Securityholders Agreement to be entered into on Closing) or rights of first refusal created by statute or any agreement to which the Company (except as set out in the Securityholders Agreement to be entered into on Closing) is a party or by which it is bound; and with the exception of the Securityholders Agreement and the LLC Agreement to be entered into on Closing, and as set out in Section 8.10 of the Disclosure Letter there are, and will be at the Time of Closing and the Over-Allotment Closing Time, no shareholder agreements, pooling agreements, voting trusts or other agreements with respect to the voting of the Company Interests; 9.4 except as contemplated by the Investment Agreement, the Securityholders Agreement and the Exchange Agreement, there are no agreements, options, warrants, rights of conversion or other rights pursuant to which the Company is, or may become, obligated to issue any membership interests or any securities convertible or exchangeable, directly or indirectly, into membership interests; 9.5 at the Time of Closing following the distribution of the Company Interests contemplated by Article 5 of the Investment Agreement, provided that not more than two business days elapse between the initiation of the procedures of Closing (including the transactions set out in Articles 2, 3, 4, 5, 6, 7, and 8 of the Investment Agreement) and the completion of the Closing, ACS Holdings shall own all of the issued and outstanding Company Interests as the sole registered and beneficial owner and free of any Liens, other than any Liens created by or imposed under this agreement and the Related Agreements as to which it is a party; and ACS Holdings will be (provided that the Closing occurs), at the Over-Allotment Closing Time, the registered and beneficial owner of the Company Interests to be sold and transferred by it to ACS Canada under the Investment Agreement, free of any Liens other than any Liens created by or imposed under this agreement and the Related Agreements; 9.6 except as disclosed in Section 8.5 of the Disclosure Letter, no consent, approval, authorization or order of, and no filing, registration or recording with, any Governmental Body is required in connection with the execution and delivery of this agreement and the Related Agreements to which ACS Holdings is a party or the performance by ACS Holdings of its obligations hereunder and thereunder and the consummation by ACS Holdings of the transactions contemplated herein and therein; 9.7 the execution and delivery by ACS Holdings of this agreement and the Related Agreements to which it is a party, the performance by ACS Holdings of its obligations hereunder and thereunder and compliance with the provisions hereof and thereof does not and shall not contravene, breach or result in any default under its organizational documents or under any mortgage, indenture, lease, agreement, other legally binding instrument, licence, permit or Law to which ACS Holdings is a party or by which it is bound; 9.8 other than as contemplated by this agreement, the Investment Agreement and the Exchange Agreement, no Person has any written or oral agreement, option or warrant or any right or privilege (whether by Law, pre-emptive or contractual) capable of becoming such for the purchase or acquisition, (i) from ACS Holdings of any of ACS Holdings' membership interests in ACS Holdings, or (ii) from ACS Holdings of any Company Interests; and 9.9 to the knowledge of ACS Holdings, as of the date of its filing with the Securities Commissions and as of the Closing Time, the Prospectus does not and will not contain any Misrepresentation. 10. REPRESENTATIONS AND WARRANTIES OF ACS INFOSOURCE ACS InfoSource represents and warrants to the Underwriters as follows and acknowledges that the Underwriters are relying upon the following representations and warranties in completing the transactions contemplated hereby: 10.1 ACS InfoSource is a corporation duly organized and existing under the laws of the State of Alaska. ACS InfoSource is duly qualified to carry on its business in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification, except to the extent that the failure to be so qualified would not have a Material Adverse Effect; 10.2 ACS InfoSource has the corporate power and capacity to enter into and perform its obligations under this agreement and the Related Agreements to which it is a party and to carry out the transactions contemplated by such agreements and the Prospectus. Each of this agreement and the Related Agreements to which it is a party has been, or shall be at the Time of Closing, duly authorized, executed and delivered by or on behalf of ACS InfoSource and is, or shall be at the Time of Closing, a legal, valid and binding obligation of ACS InfoSource, enforceable against ACS InfoSource in accordance with its terms, provided that enforceability may be limited by bankruptcy, insolvency and other similar laws affecting creditors' rights generally, that specific performance, injunctive relief and other equitable remedies may only be granted in the discretion of a court of competent jurisdiction ant that rights of indemnity and/or contribution set out in this agreement or the Investment Agreement may be limited by applicable law; 10.3 the authorized and issued and outstanding capital of the Company at the date of this agreement and immediately before the Time of Closing and, provided that the Closing occurs, the Over-Allotment Closing Time, is and shall be, as applicable, as set forth in Schedule 8.11. All issued and outstanding Company Interests are, and all Company Interests shown on Schedule 8.11 to be issued at Closing and the Over-Allotment Closing Time will be, validly issued and outstanding, fully-paid and non-assessable and not subject to pre-emptive rights (except as set out in the Securityholders Agreement to be entered into on Closing) or rights of first refusal created by statute or any agreement to which the Company (except as set out in the Securityholders Agreement to be entered into on Closing) is a party or by which it is bound; and with the exception of the LLC Agreement and the Securityholders Agreement to be entered into on Closing, and as set out in Section 8.10 of the Disclosure Letter there are, and will be at the Time of Closing and the Over-Allotment Closing Time, no shareholder agreements, pooling agreements, voting trusts or other agreements with respect to the voting of the Company Interests; 10.4 except as contemplated by the Investment Agreement, the Securityholders Agreement and the Exchange Agreement, there are no agreements, options, warrants, rights of conversion or other rights pursuant to which the Company is, or may become, obligated to issue any membership interests or any securities convertible or exchangeable, directly or indirectly, into membership interests; 10.5 at the Time of Closing, provided that not more than two business days elapse between the initiation of the procedures of Closing (including the transactions set out in Articles 2, 3, 4, 5, 6, 7, and 8 of the Investment Agreement) and the completion of the Closing, immediately following the distribution of the Company Interests to ACS Holdings, as contemplated by Article 5 of the Investment Agreement, ACS Holdings shall own all of the issued and outstanding Company Interests as the sole registered and beneficial owner and free of any Liens, other than any Liens created by or imposed under this agreement and the Related Agreements as to which it is a party; 10.6 the Company and ACS InfoSource and any affiliated, combined or unitary group of which the Company and/or ACS InfoSource is or was a member, as the case may be (a "TAX AFFILIATE"), has (i) timely filed (or has had timely filed on their behalf) all returns, declarations, reports, estimates, information, returns, elections and statements ("RETURNS") required to be filed or sent in respect of any Governmental Charges or required to be filed or sent by it to any taxing authority having jurisdiction since incorporation or organization to and including the Time of Closing and all such Returns have been prepared in accordance with the provisions of the applicable legislation and are true, correct and complete in all material respects; (ii) timely and properly paid (or has had paid on its behalf), or will pay when due, all Governmental Charges and all professional fees incurred in connection such Governmental Charges due or claimed to be due by any Governmental Body; and (iii) has properly withheld or collected and remitted all amounts required to be withheld or collected and remitted by it in respect of any Governmental Charges; 10.7 there are no Liens for Governmental Charges upon any assets of ACS InfoSource or the Company; 10.8 no refinancing for any Governmental Charges has been proposed, asserted or assessed against ACS InfoSource or the Company or any Tax Affiliate; 10.9 there are no proceedings either in progress, pending or, to the knowledge of the Company, threatened in connection with any Governmental Charges in respect of the Business which in the aggregate would have a Material Adverse Effect; 10.10 except as disclosed in Section 8.5 of the Disclosure Letter, no consent, approval, authorization or order of, and no filing, registration or recording with, any Governmental Body is required in connection with the execution and delivery of this agreement and the Related Agreements to which ACS InfoSource is a party or the performance by ACS InfoSource of its obligations hereunder and thereunder and the consummation by ACS InfoSource of the transactions contemplated herein and therein; 10.11 the execution and delivery by ACS InfoSource of this agreement and the Related Agreements to which it is a party, the performance by ACS InfoSource of its obligations hereunder and thereunder and compliance with the provisions hereof and thereof does not and shall not contravene, breach or result in any default under its organizational documents or under any mortgage, indenture, lease, agreement, other legally binding instrument, licence, permit or Law to which ACS InfoSource is a party or by which it is bound; 10.12 other than as contemplated by the Investment Agreement, no Person has any written or oral agreement, option or warrant or any right or privilege (whether by Law, pre-emptive or contractual) capable of becoming such for the purchase or acquisition, (i) from ACS InfoSource of any of ACS InfoSource's membership interests in ACS Holdings, or (ii) from ACS Holdings of any Company Interests; and 10.13 to the knowledge of ACS InfoSource, as of the date of its filing with the Securities Commissions and as of the Closing Time, the Prospectus does not and will not contain any Misrepresentation. 11. REPRESENTATIONS AND WARRANTIES OF ALASKA COMMUNICATIONS SYSTEMS Alaska Communications Systems represents and warrants to the Underwriters as follows and acknowledges that the Underwriters are relying upon the following representations and warranties in completing the transactions contemplated hereby: 11.1 Alaska Communications Systems is a corporation duly amalgamated and existing under the laws of the State of Delaware. Alaska Communications Systems is duly qualified to carry on its business in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification, except to the extent that the failure to be so qualified would not have a Material Adverse Effect; 11.2 Alaska Communications Systems has the corporate power and capacity to enter into and perform its obligations under this agreement and the Related Agreements to which it is a party and to carry out the transactions contemplated by such agreements and the Prospectus. Each of this agreement and the Related Agreements to which it is a party has been, or shall be at the Time of Closing, duly authorized, executed and delivered by or on behalf of Alaska Communications Systems and is, or shall be at the Time of Closing, a legal, valid and binding obligation of Alaska Communications Systems, enforceable against Alaska Communications Systems in accordance with its terms, provided that enforceability may be limited by bankruptcy, insolvency and other similar laws affecting creditors' rights generally, that specific performance, injunctive relief and other equitable remedies may only be granted in the discretion of a court of competent jurisdiction ant that rights of indemnity and/or contribution set out in this agreement or the Investment Agreement may be limited by applicable law; 11.3 except as disclosed in Section 8.5 of the Disclosure Letter, no consent, approval, authorization or order of, and no filing, registration or recording with, any Governmental Body is required in connection with the execution and delivery of this agreement and the Related Agreements to which Alaska Communications Systems is a party or the performance by Alaska Communications Systems of its obligations hereunder and thereunder and the consummation by Alaska Communications Systems of the transactions contemplated herein and therein; 11.4 the execution and delivery by Alaska Communications Systems of this agreement and the Related Agreements to which it is a party, the performance by Alaska Communications Systems of its obligations hereunder and thereunder and compliance with the provisions hereof and thereof does not and shall not contravene, breach or result in any default under its organizational documents or under any mortgage, indenture, lease, agreement, other legally binding instrument, licence, permit or Law to which Alaska Communications Systems is a party or by which it is bound; 11.5 to the knowledge of Alaska Communications Systems, as of the date of its filing with the Securities Commissions and as of the Closing Time, the Prospectus does not and will not contain any Misrepresentation. 12. COVENANTS OF THE FUND AND THE COMPANY. Each of the Fund and the Company, jointly and severally, covenants and agrees with the Underwriters that: 12.1 it will advise the Underwriters, promptly after receiving notice thereof, of the time when the Prospectus and any Supplementary Material has been filed and receipts have been obtained and will provide evidence satisfactory to the Underwriters of each filing and the issuance of receipts; 12.2 it will advise the Underwriters, promptly after receiving notice or obtaining knowledge, of: (i) the issuance by any Securities Commission of any order suspending or preventing the use of the Preliminary Prospectus, the Prospectus, the U.S. Placement Memorandum or any Supplementary Material; (ii) the suspension of the qualification of the Purchased Units for offering or sale in any of the Qualifying Jurisdictions; (iii) the institution, threatening or contemplation of any proceeding for any of those purposes; or (iv) any requests made by any Securities Commission for amending or supplementing the Prospectus or for additional information, and will use its reasonable best efforts to prevent the issuance of any such order and, if any such order is issued, to obtain the withdrawal of the order promptly; 12.3 it will, and will cause ACS Canada to, apply the net proceeds from the issue and sale of the Purchased Units substantially in accordance with the disclosure set out under the heading "Use of Proceeds" in the Prospectus; and 12.4 it will cause ACS Canada to maintain and ACS Canada shall maintain, while Units are outstanding, a "substantial Canadian presence" (as that term is understood for the purposes of subsection 206(1.1) of the Tax Act) in order that the Units of the Fund will not be considered "foreign property" for the purposes of the Tax Act. 13. CONDITIONS OF CLOSING. The obligation of the Underwriters to purchase the Purchased Units will be subject to the following: 13.1 the Fund, ACS Canada and the Company will cause their legal counsel to deliver to the Underwriters and their legal counsel a legal opinion, subject to ordinary qualifications and assumptions and reliance on a certificate of an officer of the Fund, ACS Canada or the Company, as applicable, where reasonable and appropriate, dated and delivered on the Closing Date, in form and substance satisfactory to the Underwriters and their legal counsel, acting reasonably, with respect to those matters as the Underwriters may reasonably request relating to the distribution of the Purchased Units, including without limitation that: 13.1.1 the Fund has been created and is existing as a trust under the laws of the Province of Ontario and the trustees have been appointed as trustees of the Fund, and the trustees have the power to carry on the business and affairs of the Fund as described in the Prospectus in compliance with the terms and provisions of the Declaration of Trust; 13.1.2 ACS Canada (i) is a corporation incorporated and existing under the laws of the Province of Ontario, and (ii) has all requisite corporate power and capacity to carry on its business and to own, lease and operate its property and assets, as described in the Prospectus; 13.1.3 the Company (i) is a limited liability company organized and existing under the laws of the State of Alaska, and (ii) has all requisite corporate power and capacity to carry on its business and to own, lease and operate its property and assets, as described in the Prospectus; 13.1.4 the authorized capital of the Fund consists of an unlimited number of Units; 13.1.5 the authorized capital of ACS Canada consists of an unlimited number of common shares and an unlimited number of preferred shares, and following completion of the transactions contemplated in the Investment Agreement, 80,271,009 common shares will be issued and outstanding; 13.1.6 the authorized capital of the Company consists of an unlimited number of membership interests, and following completion of the transactions contemplated by the Investment Agreement, 138,047,321 membership interests will be issued and outstanding; 13.1.7 the Fund is, and following Closing will be, the registered and beneficial owner of all of the issued and outstanding shares in the capital of ACS Canada on a fully-diluted basis; 13.1.8 ACS Holdings is the registered and beneficial owner of all of the issued outstanding Company Interests and, following completion of the transactions contemplated by the Investment Agreement, ACS Canada and ACS Holdings will be the registered and beneficial owners of 87.4% and 12.6%, respectively, of all of the issued and outstanding Company Interests; 13.1.9 each of the Preliminary Prospectus and the Prospectus, in both the French and English languages, and its execution by the trustees of the Fund and the filing of each of the Preliminary Prospectus and the Prospectus, in both the French and English languages, with the Securities Commissions have been duly approved and authorized by all necessary action on the part of the trustees of the Fund and each of the Preliminary Prospectus and the Prospectus, in both the French and English languages, have been duly executed by and on behalf of the Fund; 13.1.10 all necessary action has been taken by the trustees of the Fund to validly issue and sell to the Underwriters the Purchased Units; 13.1.11 the Initial Units, when issued and delivered by the Fund pursuant to this agreement against payment of the purchase price therefor to the Fund will be validly issued and outstanding as fully paid Units of the Fund; 13.1.12 the Over-Allotment Option to purchase the Additional Units has been validly created by the Fund, and upon proper exercise of the option by the Underwriters and payment of the purchase price therefor to the Fund, the Additional Units will be validly issued and outstanding as fully-paid Units of the Fund; 13.1.13 all necessary action has been taken by the trustees, managers and directors of the Fund, ACS Canada and the Company to authorize the execution and delivery by the Fund, ACS Canada and the Company of this agreement and the execution and delivery by the Fund, ACS Canada and the Company of the Related Agreements to which any of them is a party and the performance of their respective obligations under those agreements, and this agreement and the Related Agreements to which any of them is a party have been duly executed and delivered by the trustees, managers and directors of the Fund, ACS Canada and the Company and constitute legal, valid and binding obligations of the Fund, ACS Canada and the Company enforceable against them in accordance with their terms, provided that enforcement may be limited by bankruptcy, insolvency and other similar laws of general application affecting the enforcement of creditors' rights generally, specific performance, injunctive relief and other equitable remedies may be granted only in the discretion of a court of competent jurisdiction and that rights of indemnity and/or contribution set out in this agreement and the Investment Agreement may be limited by applicable law; 13.1.14 the attributes of the Units are consistent in all material respects with the description thereof under the headings "Description of the Fund - Units", "- Issuance of Units", "- Cash Distributions", "- Redemption Right" and "- Meetings of Unitholders" in the Prospectus; 13.1.15 the form of the certificate representing the Units has been approved and adopted by the trustees of the Fund and does not conflict with the Declaration of Trust; 13.1.16 the Trust Company at its principal office in the City of Toronto has been appointed the transfer agent and registrar for the Units; 13.1.17 the execution and delivery of this agreement and the Related Agreements, the fulfilment of the terms of those agreements by the Fund, ACS Canada and the Company, as applicable, and the issuance, sale and delivery of the Purchased Units: 13.1.17.1 do not and will not result in a breach of or default under, and do not and will not create a state of facts which, after notice or lapse of time or both, will result in a breach of or default under, and do not and will not conflict with: (i) any of the terms, conditions or provisions of the constating documents or resolutions of the securityholders, trustees, managers or directors, or any committee of trustees, managers or directors of the Fund, ACS Canada or the Company; (ii) based solely on such counsel's knowledge, any material indenture, mortgage, deed of trust, agreement or instrument (including the Credit Documents) to which the Fund, ACS Canada and the Company, as applicable, is a party or by which it or its properties is to be subject or be bound; or (iii) any federal laws of Canada, or the laws of Ontario or Alaska, applicable to the Fund, ACS Canada or the Company; and 13.1.17.2 based solely on such counsel's knowledge, will not give rise to the acceleration of or the maturity of any debt under any material indenture, agreement or instrument (including the Credit Documents) governed by the federal laws of Canada, or the laws of Ontario or Alaska, binding or affecting any of the Fund, ACS Canada and the Company (other than those which terminate on the Closing Date or in respect of which waivers or consents have been received or will be received prior to the Time of Closing); 13.1.18 the Purchased Units: 13.1.18.1 subject to compliance with the prudent investor standards and general provisions and restrictions of the federal or Ontario statutes listed under the heading "Eligibility for Investment" in the Prospectus (and, where applicable, the regulations under those statutes) and, in certain cases, subject to the satisfaction of additional requirements relating to investment or lending policies, standards, procedures or goals and, in certain cases, subject to the filing of those policies, standards, procedures or goals, will not at the date of their issue be precluded as investments under those statutes; 13.1.18.2 will be qualified investments under the Income Tax Act (Canada) and the regulations thereunder (the "TAX ACT") for trusts governed by registered retirement savings plans, registered retirement income funds, deferred profit sharing plans (together, the "PLANS") and for trusts governed by registered education savings plans provided the Fund is a mutual fund trust under the Tax Act; and 13.1.18.3 do not constitute "foreign property" for the purposes of the tax imposed under Part XI of the Tax Act on Plans, registered investments and other tax exempt entities, including most registered pension funds or plans; and 13.1.19 subject to the qualifications, assumptions, limitations and understandings set out therein, the statements as to matters of the laws of Canada set out in the Prospectus under the heading "Certain Income Tax Considerations - Certain Canadian Federal Income Tax Considerations" fairly describe the principal Canadian federal income tax considerations as at the date hereof generally applicable under the Tax Act to a holder of Units who acquires such securities pursuant to the offering and who, for the purposes of the Tax Act, is resident in Canada, holds the Units as capital property and deals at arm's length with the Fund; 13.1.20 subject to the qualifications, assumptions, limitations and understandings set out therein, the statements as to matters of the laws of the United States set out in the Prospectus under the heading "Certain Income Tax Considerations - Certain U.S. Federal Income Tax Considerations" fairly describes the principal U.S. federal income tax considerations as at the date hereof generally applicable to a non-U.S. Unitholder who acquires such securities pursuant to the offering; 13.2 each of ACS Holdings, ACS InfoSource and Alaska Communications Systems will cause its counsel, acceptable to the Underwriters acting reasonably, to deliver to the Underwriters and their legal counsel a legal opinion dated and delivered on the Closing Date, in form and substance satisfactory to the Underwriters and their legal counsel, acting reasonably, that: 13.2.1 ACS Holdings (i) is a limited liability company organized and existing under the laws of the State of Alaska, and (ii) has all requisite corporate power and capacity to carry on its business and to own, lease and operate its property and assets; 13.2.2 ach of ACS InfoSource and Alaska Communications Systems: (i) is a corporation incorporated and existing under the laws of the State of Alaska and the State of Delaware, respectively, and (ii) has all requisite corporate power and capacity to carry on its business and to own, lease and operate its property and assets; and 13.2.3 all necessary action has been taken by its managers or directors, as applicable, to authorize the execution and delivery by it of this agreement and the Related Agreements to which it is a party and the performance of its obligations under such agreements, and this agreement and the Related Agreements to which it is a party have been duly executed and delivered by it and constitute legal, valid and binding obligations of it enforceable against it in accordance with their terms, provided that enforcement may be limited by bankruptcy, insolvency and other similar laws of general application affecting the enforcement of creditors' rights generally, specific performance, injunctive relief and other equitable remedies may be granted only in the discretion of a court of competent jurisdiction and that rights of indemnity and/or contribution set out in this agreement and the Investment Agreement may be limited by applicable law; 13.2.4 neither the execution and delivery by each of ACS InfoSource, ACS Holdings and Alaska Communications Systems of this agreement and the Related Agreements to which it is a party, nor the consummation of any of the transactions contemplated thereby, nor compliance with any of the terms and provisions thereof, and based solely on counsel's knowledge, conflict or will conflict with, or result or will result in a breach of or default under (whether or not after notice or lapse of time or both), any of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, any material indenture, mortgage, deed of trust, agreement or instrument (including the ACS Credit Documents), to which ACS InfoSource, ACS Holdings and Alaska Communications Systems, as applicable, is a party or by which it or its properties known to such counsel is or is to be subject or be bound; 13.2.5 each of the Preliminary Prospectus and the Prospectus, in both the French and English languages, and its execution by Alaska Communications Systems, in its capacity as promoter, and the filing of each of the Preliminary Prospectus and the Prospectus in both the French and English languages with the Securities Commissions have been duly approved and authorized by all necessary action on the part of the board of directors of Alaska Communications Systems, and each of the Preliminary Prospectus and the Prospectus, in both the French and English languages, have been duly executed by and on behalf of Alaska Communications Systems; 13.3 opinions of counsel to the Fund in each of the Qualifying Jurisdictions addressed to the Underwriters, the Fund and the Company and their respective counsel that: 13.3.1 subject to compliance with the prudent investor standards and general provisions and restrictions of the statutes listed under the heading "Eligibility for Investment" in the Prospectus (and, where applicable, the regulations under those statutes) and, in certain cases, subject to the satisfaction of additional requirements relating to investment or lending policies, standards, procedures or goals and, in certain cases, subject to the filing of those policies, standards, procedures or goals, the Purchased Units, at the date of their issue, will be eligible investments or will not be precluded as investments under such statutes, in form and substance satisfactory to the Underwriters, acting reasonably; and 13.3.2 all necessary documents have been filed, all requisite proceedings have been taken and all other legal requirements have been fulfilled under the laws of each of the Qualifying Jurisdictions in order to qualify the distribution of the Purchased Units through investment dealers or brokers who are registered under applicable legislation of the Qualifying Jurisdictions and who have complied with the relevant provisions of such applicable legislation; 13.4 an opinion of Quebec counsel to the Fund, addressed to the Underwriters, regarding compliance with all the laws of Quebec relating to the use of the French language in connection with the distribution of the Purchased Units; 13.5 if any Purchased Units are to be offered or sold in the United States, the Fund will cause its U.S. counsel to deliver to the Underwriters a favourable legal opinion to the effect that no registration of the Purchased Units is required under the U.S. Securities Act, provided that, in each case, the offer or sale is made in accordance with Section 23 of this agreement and all other offers and sales of Purchased Units are made in accordance with the provisions of this agreement; 13.6 the Underwriters will have received from each of their counsel, Goodmans LLP and Goodwin Procter LLP, legal opinions dated and delivered on the Closing Date, in form and substance satisfactory to the Underwriters, with respect to those matters as the Underwriters may reasonably require relating to the distribution of the Purchased Units. In connection with its opinion, Goodmans LLP may rely on the opinion of counsel to the Fund and the Company and any underlying certificates and, with respect to matters governed by the laws of jurisdictions other than the Province of Ontario, on the opinions of local counsel to the Fund and the Company; 13.7 the Underwriters will have received certificates dated the Closing Date signed by those senior officers of the Fund, ACS Canada, ACS Holdings, ACS InfoSource, Alaska Communications Systems and the Company, in form and content satisfactory to the Underwriters, acting reasonably, with respect to: 13.7.1 the constating documents of each such entity; 13.7.2 the resolutions of the trustees, managers or directors (as the case may be) of the Fund, ACS Canada, ACS Holdings, ACS InfoSource, Alaska Communications Systems and the Company relevant to the allotment, issue and sale, as the case may be, of the Purchased Units and the authorization of the other agreements and transactions contemplated by this agreement and the Related Agreements to which they are a party; and 13.7.3 the incumbency and signatures of signing officers of the Fund, ACS Canada, ACS Holdings, ACS InfoSource, Alaska Communications Systems and the Company; 13.8 the Fund and the Company will cause the auditors of the Fund and of the Company to deliver to the Underwriters a comfort letter, dated the Closing Date, in form and substance satisfactory to the Underwriters, acting reasonably, bringing forward to the Closing Date the information contained in the comfort letter referred to in Section 5.5.4; 13.9 the Fund will deliver to the Underwriters, at and as of the Time of Closing, a certificate dated the Closing Date addressed to the Underwriters and signed by the trustees of the Fund, certifying for and on behalf of the Fund, after having made due inquiries, to those matters as the Underwriters may reasonably request, including to the effect that: 13.9.1 the Fund has complied with all the covenants and satisfied all the terms and conditions of this agreement on its part to be complied with and satisfied at or prior to the Time of Closing; 13.9.2 subsequent to the respective dates as at which information is given in the Prospectus, there has not been any Material Adverse Change in the condition (financial or otherwise) or results of operations of the Fund, ACS Canada or the Company, other than as disclosed in the Prospectus or any Supplementary Material, as the case may be; 13.9.3 subsequent to the respective dates as at which information is given in the Prospectus, no transaction out of the ordinary course of business, material to the Fund, ACS Canada or the Company has been entered into by the Fund, ACS Canada or the Company or has been approved by the management of any of them, which results in a Material Adverse Change, other than as disclosed in the Prospectus or any Supplementary Material, as the case may be; 13.9.4 the representations and warranties of the Fund contained in this agreement, and in any certificates of the Fund delivered pursuant to or in connection with this agreement, are true and correct as at the Time of Closing (except in each case, for those representations and warranties that are subject to a materiality qualification, which will be true and correct in all respects and except in respect of any representations and warranties that are to be true and correct as of a specified date, in which case they will be true and correct as of that date only), with the same force and effect as if made on and as at the Time of Closing, after giving effect to the transactions contemplated by this agreement; 13.9.5 receipts have been issued by the appropriate Securities Commissions for the Prospectus and no order, ruling or determination having the effect of ceasing the trading or suspending the sale of the Units of the Fund has been issued and no proceedings for that purpose have been instituted or are pending or, to the knowledge of those officers, contemplated or threatened by any regulatory authority; and 13.9.6 the representations and warranties of the Fund arising by reason of the delivery of the Preliminary Prospectus, the Prospectus and any Supplementary Material are true and correct on and as at the Time of Closing as if those documents had been dated the Closing Date and delivered to the Underwriters on that date; and all of those matters will in fact be true and correct as at the Time of Closing; 13.10 ACS Canada will deliver to the Underwriters, at the Time of Closing, a certificate dated the Closing Date addressed to the Underwriters and signed by two senior officers of ACS Canada acceptable to the Underwriters, acting reasonably, certifying for and on behalf of ACS Canada, after having made due inquiries, to those matters as the Underwriters may reasonably request, including to the effect that: 13.10.1 ACS Canada has complied with all the covenants and satisfied all the terms and conditions of this agreement on its part to be complied with and satisfied at or prior to the Time of Closing; 13.10.2 subsequent to the respective dates as at which information is given in the Prospectus, there has not been any Material Adverse Change in the condition (financial or otherwise) or results of operations of the Fund, ACS Canada or the Company, other than as disclosed in the Prospectus or any Supplementary Material, as the case may be; 13.10.3 subsequent to the respective dates as at which information is given in the Prospectus, no transaction out of the ordinary course of business, material to the Fund, ACS Canada or the Company has been entered into by the Fund, ACS Canada or the Company or has been approved by the management of any of them, which results in a Material Adverse Change, other than as disclosed in the Prospectus or any Supplementary Material, as the case may be; 13.10.4 the representations and warranties of ACS Canada contained in this agreement, and in any certificates of the Fund delivered pursuant to or in connection with this agreement, are true and correct as at the Time of Closing (except in each case, for those representations and warranties that are subject to a materiality qualification, which will be true and correct in all respects and except in respect of any representations and warranties that are to be true and correct as of a specified date, in which case they will be true and correct as of that date only), with the same force and effect as if made on and as at the Time of Closing, after giving effect to the transactions contemplated by this agreement; 13.10.5 receipts have been issued by the appropriate Securities Commissions for the Prospectus and no order, ruling or determination having the effect of ceasing the trading or suspending the sale of the Units of the Fund has been issued and no proceedings for that purpose have been instituted or are pending or, to the knowledge of those officers, contemplated or threatened by any regulatory authority; and 13.10.6 the representations and warranties of ACS Canada arising by reason of the delivery of the Preliminary Prospectus, the Prospectus and any Supplementary Material are true and correct on and as at the Time of Closing as if those documents had been dated the Closing Date and delivered to the Underwriters on that date; and all of those matters will in fact be true and correct as at the Time of Closing; 13.11 the Company will deliver to the Underwriters, at the Time of Closing, a certificate dated the Closing Date addressed to the Underwriters and signed by the chief executive officer and the chief financial officer of the Company, certifying for and on behalf of the Company, after having made due inquiries, to those matters as the Underwriters may reasonably request, including to the effect that: 13.11.1 the Fund, ACS Canada and the Company have complied with all the covenants and satisfied all the terms and conditions of this agreement on their respective parts to be complied with and satisfied at or prior to the Time of Closing; 13.11.2 subsequent to the respective dates as at which information is given in the Prospectus, there has not been any Material Adverse Change in the condition (financial or otherwise) or results of operations of the Fund, ACS Canada or the Company, other than as disclosed in the Prospectus or any Supplementary Material, as the case may be; 13.11.3 subsequent to the respective dates as at which information is given in the Prospectus, no transaction out of the ordinary course of business, material to the Fund, ACS Canada or the Company, has been entered into by the Fund, ACS Canada or the Company or has been approved by the management of any of them, which results in a Material Adverse Change, other than as disclosed in the Prospectus or any Supplementary Material, as the case may be; 13.11.4 the representations and warranties of the Company contained in this agreement, and in any certificates of the Company delivered pursuant to or in connection with this agreement, are true and correct as at the Time of Closing (except in each case, for those representations and warranties that are subject to a materiality qualification, which will be true and correct in all respects and except in respect of any representations and warranties that are to be true and correct as of a specified date, in which case they will be true and correct as of that date only), with the same force and effect as if made on and as at the Time of Closing, after giving effect to the transactions contemplated by this agreement; 13.11.5 receipts have been issued by the appropriate Securities Commissions for the Prospectus and no order, ruling or determination having the effect of ceasing the trading or suspending the sale of the Units of the Fund has been issued and no proceedings for that purpose have been instituted or are pending or, to the knowledge of those officers, contemplated or threatened by any regulatory authority; and 13.11.6 the representations and warranties of the Company arising by reason of the delivery of the Preliminary Prospectus, the Prospectus and any Supplementary Material are true and correct on and as at the Time of Closing as if those documents had been dated the Closing Date and delivered to the Underwriters on that date; and all of those matters will in fact be true and correct as at the Time of Closing; 13.12 each of ACS Holdings, ACS InfoSource and Alaska Communications Systems will deliver to the Underwriters, at the Time of Closing, a certificate dated the Closing Date addressed to the Underwriters and signed by its chief executive officer and the chief financial officer, certifying for and on behalf of it, after having made due inquiries, to those matters as the Underwriters may reasonably request, including to the effect that: 13.12.1 it has complied with all the covenants and satisfied all the terms and conditions of this agreement on its part to be complied with and satisfied at or prior to the Time of Closing; 13.12.2 the representations and warranties of it contained in this agreement, and in any certificates of it delivered pursuant to or in connection with this agreement, are true and correct as at the Time of Closing in all material respects (except in the case of representations or warranties that are already qualified by materiality, in which case such representations and warranties shall be true in all respects, and except in respect of any representations and warranties that are to be true and correct as of a specified date, in which case they will be true and correct as of that date only) with the same force and effect as if made on and as at the Time of Closing, after giving effect to the transactions contemplated by this agreement; and 13.12.3 in the case of Alaska Communications Systems, the representations and warranties of Alaska Communications Systems arising by reason of the delivery of the Preliminary Prospectus, the Prospectus and any Supplemental Material are true and correct on and as at the Time of Closing as if those documents had been dated the Closing Date and delivered to the Underwriters on that date, and all of those matters will in fact be true and correct as at the Time of Closing; 13.13 each of the Related Agreements shall have been executed and delivered and not terminated, and the transactions contemplated by the Related Agreements will be completed prior to or contemporaneous with the sale of the Initial Units; without limiting the generality of the foregoing, the Company and the lenders under the Proposed Credit Facility shall have entered into the Proposed Credit Facility on terms and conditions satisfactory to the Underwriters, Alaska Communications Systems and the Company, each acting reasonably, and the Company shall have drawn down sufficient funds under the Proposed Credit Facility to permit the Company to make the payments contemplated by Article 6 of the Investment Agreement and the Company shall have, in the opinion of the Underwriters, the unfettered right and ability, following such drawdown under the Proposed Credit Facility, to operate the Business without material liquidity risk; 13.14 all actions required to be taken by or on behalf of the Fund including the passing of all requisite resolutions of the sole unitholder and trustees of the Fund and all requisite filings with governmental authorities, Securities Commissions or courts will have occurred at or prior to the Time of Closing so as to validly authorize the execution and filing of the Preliminary Prospectus, the Prospectus and any Supplementary Material and to create and issue the Purchased Units having the attributes contemplated by the Prospectus; 13.15 the Purchased Units will have been approved for listing and posting for trading on the TSX on the business day immediately preceding the Closing Date, subject only to the Standard Listing Conditions; and 13.16 the Underwriters will have received such other certificates, opinions, agreements, materials or documents, in form and substance satisfactory to the Underwriters, as the Underwriters may reasonably request. 14. CLOSING. The closing of the purchase and sale of the Initial Units or the Additional Units, as the case may be, will be completed at the Time of Closing or the Over-Allotment Closing Time at the offices of Torys LLP, Maritime Life Tower, Toronto-Dominion Centre, Suite 3000, Toronto, Ontario M5K 1N2, or at any other place determined in writing by the Fund and the Underwriters. At the Time of Closing, or the Over-Allotment Closing Time, as the case may be, the Fund will deliver to CIBC WM: 14.1 for the respective accounts of the Underwriters, the Purchased Units through the facilities of The Canadian Depository for Securities Limited; the Fund will pay all fees and expenses payable to or incurred by the Trust Company and all fees payable to The Canadian Depository for Securities Limited; and 14.2 all further documentation as may be contemplated in this agreement or as counsel to the underwriters may reasonably require; against payment by the Underwriters to the Fund of the purchase price for the Initial Units or the Additional Units, as the case may be, net of (i) the fees payable by the Fund to the Underwriters as provided in the second paragraph of this agreement, and (ii) the reimbursable expenses payable by the Fund to the Underwriters as provided for in Section 19 of this agreement by certified cheque, bank draft or wire transfer payable to, or as directed by, the Fund. 15 RESTRICTIONS ON FURTHER ISSUES OR SALES. 15.1 For purposes of this Section 15, "TRANSFER" means, in respect of a security, any sale, exchange, transfer, assignment, gift, Lien, hypothecation, alienation or other transaction, whether voluntary, involuntary or by operation of law, by which the legal or beneficial ownership or, or any security interest or other interest in, the security passes from one person to another, or to the same person in a different capacity, whether or not the value, and any change in ownership of the legal or beneficial owner of the security or any person which owns, directly or indirectly, in any manner whatsoever, such legal or beneficial owner of the security, provided that the defined term "Transfer" as used in this agreement shall not include any Transfer to the extent that the prohibitions or restrictions contained in this agreement with respect to such Transfer would be prohibited by or constitute a default under any of the ACS Credit Documents. 15.2 During the period commencing the date of this agreement and ending on the day which is 180 days following the Closing Date, the Fund agrees that it will not, directly or indirectly, without the prior written consent of CIBC WM, given by instrument in writing duly authorized and executed on behalf of CIBC WM, issue, offer, sell, contract to sell, grant any option to purchase, transfer, assign or otherwise dispose of any Units or financial instruments or any securities convertible into or exchangeable for any Units, or announce any intention to effect the foregoing, other than Units of the Fund, or rights, options or warrants to acquire such Units, issued or granted under the Exchange Agreement. 15.3 ACS Holdings hereby covenants and agrees that, except with the prior written consent of CIBC WM, given by instrument in writing duly authorized and executed on behalf of CIBC WM, it shall not Transfer any Exchange Rights currently held by it or any Units issuable on the exercise of the Exchange Rights (collectively, with the Exchange Rights, the "RESTRICTED SECURITIES") until the expiry of 180 days from the closing of the Offering, provided that, following the expiry of the Over-Allotment Option, ACS Holdings may Transfer Restricted Securities to ACS InfoSource or Alaska Communications Systems. For the purposes of the foregoing, any issuance or Transfer of securities in the capital of ACS Holdings or ACS InfoSource that would have the same effective economic effect as a direct Transfer of Restricted Securities shall be deemed to be a Transfer of Restricted Securities by ACS Holdings and, accordingly, each of ACS Holdings, ACS InfoSource and Alaska Communications Systems hereby covenants and agrees not to issue or permit the Transfer of any securities to any Person that would have such effect except in accordance with the terms of this agreement, and further covenants and agrees to abide and be bound by the same restrictions applicable to ACS Holdings under this Section 15 in respect of any Restricted Securities which it receives from ACS Holdings. Without limiting the generality of the foregoing, any agreement, contract, option, short sale, hedging transaction, swap or other arrangement of similar economic effect requiring ACS Holdings to Transfer, or providing another with the right to acquire, whether any such transaction is to be settled by delivery of Units, other securities, cash or otherwise, shall be deemed to be a Transfer of such Restricted Securities as at the date such agreement, contract, option, short sale, hedging transaction, swap or arrangement is entered into. 16. INDEMNIFICATION. 16.1 The Fund, ACS Canada and the Company jointly and severally hereby agree to protect, hold harmless and indemnify each of the Underwriters and their respective affiliates and their respective directors, officers, employees, advisors, shareholders, partners and agents (collectively, the "INDEMNIFIED PARTIES" and individually an "INDEMNIFIED PARTY") from and against all losses (other than losses of profit in connection with the distribution of the Purchased Units), claims, actions, suits, proceedings, damages, liabilities, costs and expenses, including, without limitation, all amounts paid to settle actions, suits, proceedings, or satisfy judgements or awards and all reasonable fees, disbursements and taxes of their counsel (collectively, a "CLAIM") caused by or arising directly or indirectly by reason of: 16.1.1 any breach of or default under any representation, warranty, covenant or agreement of the Fund, ACS Canada or the Company in this agreement or any other document to be delivered pursuant hereto or the failure of the Fund, ACS Canada or the Company to comply with any of its obligations hereunder or thereunder; 16.1.2 any information or statement (except any information or statement relating to the Underwriters, or any of them, provided by the Underwriters) contained in any of the Preliminary Prospectus, the Prospectus, the U.S. Placement Memorandum or any Supplementary Material or any other document or material filed or delivered by or on behalf of the Fund pursuant to this agreement (collectively, the "IPO OFFERING DOCUMENTS") being or being alleged to be a Misrepresentation 16.1.3 any order made or any inquiry, investigation or proceeding instituted, threatened or announced by any court, securities regulatory authority, stock exchange or by any other competent authority, based upon any Misrepresentation (except a Misrepresentation relating to the Underwriters, or any of them, provided by the Underwriters) contained in any of the IPO Offering Documents, preventing or restricting the trading in or the sale or distribution of the Purchased Units; or 16.1.4 the Fund, ACS Canada or the Company not complying prior to the completion of the distribution of the Purchased Units with any requirement of any Securities Laws relating to the sale of the Purchased Units, and will reimburse the Indemnified Parties for all reasonable costs, charges and expenses, as incurred, which any of them may pay or incur in connection with investigating or disputing any Claim or action related thereto. 16.2 Each of ACS Holdings, ACS InfoSource and Alaska Communications Systems, subject to Sections 16.3 and 16.4, severally, and not jointly, hereby agrees to protect, hold harmless and indemnify each of the Indemnified Parties from and against all Claims caused by or arising directly or indirectly by reason of any breach of or default under any representation, warranty, covenant or agreement given by it in this agreement or any other document to be delivered pursuant hereto (including all Related Agreements) or its failure to comply with any of its obligations hereunder or thereunder, and will reimburse the Indemnified Parties for all reasonable costs, charges and expenses, as incurred, which any of them may pay or incur in connection with investigating or disputing any Claim or action related thereto. 16.3 The obligation of each of ACS InfoSource and Alaska Communications Systems to indemnify the Indemnified Parties pursuant to Section 16.2 shall be limited to an amount equal to, in the aggregate, the gross proceeds received in the Offering, plus the value of ACS InfoSource's indirect retained interest in the Company, plus the amount that Alaska Communications Systems will receive from the Proposed Credit Facility on Closing. 16.4 The obligation of an indemnifying party under Section 16.1 or Section 16.2 (collectively, the "INDEMNIFYING PARTIES") to indemnify the Indemnified Parties pursuant to this Section 16 will be subject to an initial, aggregate, one-time deductible of U.S.$500,000. 16.5 The indemnities set out in Sections 16.1 and 16.2 will be in addition to any liability which the Indemnifying Parties thereunder may otherwise have. 16.6 If any Claim contemplated by this Section 16 is asserted against any of the Indemnified Parties, or if any potential Claim contemplated by this Section 16 comes to the knowledge of any of the Indemnified Parties, the Indemnified Party concerned will notify in writing the Fund, ACS Canada and the Company and, if applicable, one or more of ACS Holdings, ACS InfoSource and Alaska Communications Systems (collectively, the "NOTIFIED PARTIES" and individually a "NOTIFIED PARTY"), as soon as reasonably practicable, of the nature of the Claim (provided that any failure to so notify in respect of any potential Claim will not affect the liability of any of the Notified Parties under this Section 16 unless that delay or failure prejudices the defence of the Claim or increases the liability which the Notified Parties have under this Section 16). The Notified Parties will, subject to the following, be entitled (but not required) to assume the defence on behalf of the Indemnified Party of any suit brought to enforce the Claim; provided that the defence will be through legal counsel selected by the Notified Parties and acceptable to the Indemnified Party, acting reasonably, and no admission of liability will be made by the Notified Parties or the Indemnified Party without, in each case, the prior written consent of all the Indemnified Parties affected and the Notified Parties, in each case, which consent will not be unreasonably withheld or delayed. An Indemnified Party will have the right to employ separate counsel in any such suit and participate in its defence but the fees and expenses of that counsel will be at the expense of the Indemnified Party unless: 16.6.1 the Notified Parties fail to assume the defence of the suit on behalf of the Indemnified Party within ten days of receiving notice of the suit; 16.6.2 the employment of that counsel has been authorized by the Notified Parties; or 16.6.3 the named parties to the suit (including any added or third parties) include the Indemnified Party and the Notified Parties and the Indemnified Party has been advised in writing by counsel that there are legal defences available to the Indemnified Parties that are different or in addition to those available to any of the Notified Parties or that representation of the Indemnified Party by counsel for the Notified Parties or any of them is inappropriate as a result of the potential or actual conflicting interests of those represented; (in each of the cases set out in Section 16.6.1, 16.6.2 or 16.6.3, the Notified Parties will not have the right to assume the defence of the suit on behalf of the Indemnified Party, but the Notified Parties will be liable to pay the reasonable fees and expenses of separate counsel for all Indemnified Parties and, in addition, of local counsel in each applicable jurisdiction.) Notwithstanding the foregoing, no settlement, compromise, or termination of the Claim may be made by an Indemnified Party without the prior written consent of the Notified Parties, which consent will not be unreasonably withheld or delayed. 16.7 The rights of indemnity contained in this Section 16 will not enure to the benefit of the Underwriters if the Fund and the Company have complied with the provisions of Sections 5 and 6 and the person asserting any Claim contemplated by this Section 16 was not provided with a copy of any Prospectus or Supplementary Material which corrects any Misrepresentation (for the purposes of Securities Laws or any of them) which is the basis of the Claim and which is required under Securities Laws to be delivered to that person by the Underwriters or members of their banking or selling group (if any). 16.8 The Indemnifying Parties hereby acknowledge and agree that, with respect to Sections 16 and 17, the Underwriters are contracting on their own behalf and as agents for their affiliates', directors, officers, employees and agents and their respective affiliates, directors, officers, employees and agents (collectively, the "BENEFICIARIES"). In this regard, each of the Underwriters will act as trustee for the Beneficiaries of the covenants of the Indemnified Parties under Sections 16 and 17 with respect to the Beneficiaries and accepts these trusts and will hold and enforce those covenants on behalf of the Beneficiaries. 17. CONTRIBUTION. In order to provide for just and equitable contribution in circumstances in which an indemnity provided in Section 16.1 or 16.2 would otherwise be available in accordance with its terms but is, for any reason not solely attributable to any one or more of the Indemnified Parties, held to be unavailable to or unenforceable by the Indemnified Parties or enforceable otherwise than in accordance with its terms, the Underwriters and the applicable Indemnifying Parties will contribute to the aggregate of all claims, damages, liabilities, costs and expenses and all losses (other than losses of profits in connection with the distribution of the Purchased Units) of the nature contemplated in Section 16.1 or 16.2, as applicable, and suffered or incurred by the Indemnified Parties in proportions so that the Underwriters will be responsible for the portion represented by the percentage that the total fee paid to the Underwriters in connection with the sale of the Purchased Units bears to the aggregate purchase price of the Purchased Units, both as determined pursuant to the provisions of this agreement, and the Indemnifying Parties will, subject to Section 18.2, be responsible for the balance, whether or not they have been sued or sued separately; provided that the Underwriters will not in any event be liable to contribute, in the aggregate, any amount in excess of the total fee or any portion actually received. 18. LIMITATION ON RIGHTS OF INDEMNITY AND CONTRIBUTION. 18.1 No party who has engaged in any fraud, wilful default, fraudulent misrepresentation, gross negligence, wilful misconduct or reckless disregard will be entitled to claim indemnification under Section 16.1 or 16.2 or contribution under Section 17 from any person who has not engaged in that fraud, wilful default, fraudulent misrepresentation or gross negligence, wilful misconduct or reckless disregard. 18.2 For greater certainty, the Indemnifying Parties will not have any obligation to contribute pursuant to Section 17 in respect of any Claim except to the extent the indemnity given by them in Sections 16.1 and 16.2 would have been applicable to that Claim in accordance with its terms, had that indemnity been found to be enforceable and available to the Indemnified Parties. 18.3 The rights to contribution provided in Section 17 will be in addition to and not in derogation of any other right to contribution which the Indemnified Parties may have by statute or otherwise at law provided that Sections 17 and 18.2 will apply, mutatis mutandis, in respect of that other right. 18.4 The obligations under Sections 16 and 17 shall survive the completion of transactions contemplated under this agreement and the Investment Agreement for a period of three (3) years, provided that, in respect of any Claim brought during such three (3) year period, the obligations under Sections 16 and 17 in respect of such Claim shall continue until final expiry of any appeal periods in connection therewith, and provided further that, in respect of any Claims brought at any time for breach of any representation and warranty that, pursuant to Section 17.5, survives indefinitely, the obligations under Sections 16 and 17 survive indefinitely in connection with such Claim. 19. EXPENSES. 19.1 Whether or not the purchase and sale of the Purchased Units is completed, all expenses of or incidental to the contribution by ACS InfoSource of the Business to ACS Holdings, the contribution by ACS Holdings of the Business to the Company, the subscription by the Fund for the common shares of ACS Canada and ACS Notes, the acquisition by ACS Canada of membership interests of the Company and the creation, issuance and delivery of the Purchased Units and of or incidental to all matters in connection with the transactions set out in this agreement or the Investment Agreement will be borne by the Fund (or by ACS InfoSource if the issuance and sale of the Purchased Units does not close) including, without limitation: 19.1.1 expenses payable in connection with the qualification for distribution of the Purchased Units under applicable Securities Laws; 19.1.2 the fees, expenses and disbursements of the auditors, counsel to all and any of the Fund, ACS Canada, the Company, ACS Holdings, ACS InfoSource and Alaska Communications Systems and all related foreign/local counsel; 19.1.3 the fees of any experts retained in connection with the sale of the Purchased Units; 19.1.4 the reasonable out-of-pocket expenses incurred by the Underwriters, including the reasonable fees, expenses, taxes and disbursements of the Underwriters' legal counsel and all related foreign/local counsel, and any advertising, printing, courier, telecommunications, data searches, roadshow presentation, travel, entertainment and any other reasonable expenses incurred by the Underwriters, subject to a maximum aggregate amount of $400,000 (or such greater amount as is agreed to by the Company in writing); 19.1.5 all costs incurred in connection with the preparation, translation, filing and printing of the Preliminary Prospectus, the "green sheet", the Prospectus, any Supplementary Material, the U.S. Placement Memorandum and any Unit certification costs; 19.1.6 all fees and expenses of the Trust Company; and 19.1.7 all expenses associated with the "road shows" and marketing activities of the Fund, including all travel and lodging expenses; including Canadian federal goods and services tax and provincial sales tax exigible in respect of any of the foregoing. 20. SUBORDINATION Each of ACS Holdings, ACS InfoSource and Alaska Communications Systems (collectively, the "EXISTING SECURITYHOLDERS") covenants and agrees with the Underwriters, the Fund and the Company that it shall subordinate (the "SUBORDINATION") any entitlement, which such Existing Securityholder may have to make a Claim against the Fund, ACS Canada or the Company (including under Securities Laws by virtue of such Existing Securityholder having received a distribution of the Exchange Rights under the Prospectus), to any Claim made by the Underwriters, the Fund or any unitholder of the Fund (other than the Existing Securityholders) against the Fund, ACS Canada or the Company. The Subordination shall apply to all Claims by the Existing Securityholders, regardless of whether or not such Claims are also made by an Underwriter, the Fund or other unitholder of the Fund and whether or not made first in time. The Subordination shall apply to prevent any Existing Securityholder from enforcing or realizing on a judgment in respect of a Claim until the final adjudication or settlement of any other Claims by the Underwriters, the Fund or any unitholder of the Fund. The Subordination shall not be interpreted or constructed to in any manner limit or otherwise detract from any of the rights of the Fund, the Company or any unitholder of the Fund under this Agreement or otherwise. 21. ALL TERMS TO BE CONDITIONS. Each of the Fund, ACS Canada, the Company and the Existing Securityholders agrees that the conditions contained in Section 13 will be complied with insofar as they relate to acts to be performed or caused to be performed by it, and that it will use its reasonable best efforts to cause all of those conditions to be complied with, provided that such conditions (except to the extent that they constitute representations, warranties or covenants under any other provision of this agreement) shall merge on the Closing. All representations, warranties, covenants and other terms of this agreement will be and will be deemed to be conditions, and any breach or failure to comply with any of them or any of the conditions set out in Section 13 will entitle the Underwriters to terminate their obligation to purchase the Purchased Units, by written notice to that effect given to the Fund and the Company at or prior to the Time of Closing. It is understood that the Underwriters may waive, in whole or in part, or extend the time for compliance with, any of those terms and conditions without prejudice to the rights of the Underwriters in respect of any of those terms and conditions or any other or subsequent breach or non-compliance, provided that to be binding on the Underwriters any such waiver or extension must be in writing. 22. TERMINATION BY UNDERWRITERS IN CERTAIN EVENTS. 22.1 Each Underwriter will also be entitled to terminate its obligation to purchase the Purchased Units by written notice to that effect given to the Fund and the Company at or prior to the Time of Closing if: 22.1.1 any: 22.1.1.1 inquiry, investigation or other proceeding, or 22.1.1.2 order, ruling or other pronouncement (whether current or contemplated), is issued, announced or threatened under or pursuant to any relevant statute or by any stock exchange, Governmental Body (including the Canada Customs and Revenue Agency, the United States Internal Revenue Service and/or the United States Treasury Department) or other regulatory authority, or there is any change of Law (including any Law relating to the taxation of the Fund, ACS Canada and/or the Company), or in the interpretation or administration thereof (in each case whether current or contemplated), which, in the reasonable opinion of that Underwriter, after consultation with the Fund and the Company, operates or could operate to prevent, suspend, hinder, delay, restrict, inhibit or otherwise adversely affect the trading in, or which adversely impacts the distribution or the marketability of, the Purchased Units or any of them; 22.1.2 any: 22.1.2.1 Material Adverse Change (actual, imminent or reasonably expected) occurs in the business, affairs, operations, assets, liabilities (contingent or otherwise), capital or ownership of the Fund, ACS Canada or the Company, howsoever caused, or 22.1.2.2 material fact arises or is discovered that would have been required to have been stated in the Prospectus or any Supplementary Material had that fact arisen or been discovered on, or prior to, the date of any of the Prospectus or any Supplementary Material, or 22.1.2.3 change occurs in any material fact contained in any of the Prospectus or any Supplementary Material or any event or state of facts occurs after the date of this agreement, which, in any case, is of such a nature as to render any of the Prospectus or any Supplementary Material untrue or misleading in any material respect or to result in any Misrepresentation in any of the Prospectus or any Supplementary Material, which fact or change, as the case may be, in the opinion of that Underwriter, after consultation with the Fund and the Company, could reasonably be expected to result in the purchasers of a material number of Purchased Units exercising their right under Securities Laws to withdraw from or rescind their purchase thereof or sue for damages in respect thereof or which has or could reasonably be expected to have a significant adverse effect on the market price, value or marketability of the Purchased Units or any of them; 22.1.3 the state of the Canadian financial markets becomes such that the Purchased Units cannot, in the reasonable opinion of that Underwriter, be profitably marketed; or 22.1.4 there should develop, occur or come into effect or existence any event, action, state, condition or major financial occurrence of national or international consequence, including any act of terrorism, war or like event, or any governmental action, law, regulation, inquiry or other occurrence of any nature which, in the reasonable opinion of that Underwriter, materially adversely affects or may materially affect the financial markets in Canada or the United States or the business, operations or affairs of the Fund or the Company or the market price, value or marketability of the Purchased Units or any of them. 22.2 If this agreement is terminated by any of the Underwriters pursuant to Section 22.1, there will be no further liability on the part of that Underwriter or of the Fund or the Company to that Underwriter, except in respect of any liability which may have arisen or may later arise under Sections 16, 17, and 19. 22.3 The right of the Underwriters or any of them to terminate their respective obligations under this agreement is in addition to all other remedies they may have in respect of any default, act or failure to act of the Fund, ACS Canada, the Company or any of the Existing Securityholders in respect of any of the matters contemplated by this agreement. A notice of termination given by one Underwriter under this Section 22 will not be binding upon the other Underwriters. 23. OFFERING IN THE UNITED STATES 23.1 For the purposes of this agreement, the following terms will have the meanings indicated: 23.1.1 "DIRECTED SELLING EFFORTS" means directed selling efforts as that term is defined in Regulation S. Without limiting the foregoing, but for greater clarity in this agreement, it means, subject to the exclusions from the definition of directed selling efforts contained in Regulation S, any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for any of the Purchased Units and shall include, without limitation, the placement of any advertisement in a publication with a general circulation in the United States that refers to the offering of any of the Purchased Units; 23.1.2 "FOREIGN ISSUER" means a foreign issuer as that term is defined in Regulation S. Without limiting the foregoing, but for greater clarity in this agreement, it means any issuer that is (a) the government of any country, or of any political subdivision of a country, other than the United States; or (b) a corporation or other organization incorporated under the laws of any country other than the United States, except an issuer meeting the following conditions: (1) more than 50 percent of the outstanding voting securities of such issuer are directly or indirectly owned of record by residents of the United States; and (2) any of the following: (i) the majority of the executive officers or directors are United States citizens or residents, (ii) more than 50 percent of the assets of the issuer are located in the United States, or (iii) the business of the issuer is administered principally in the United States; 23.1.3 "GENERAL SOLICITATION" and "GENERAL ADVERTISING" means "general solicitation" and "general advertising", respectively, as used in Rule 502(c) of Regulation D, including, without limitation, advertisements, articles, notices or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising; 23.1.4 "QUALIFIED INSTITUTIONAL BUYER" means a "qualified institutional buyer" as defined in Rule l44A; 23.1.5 "REGULATION D" means Regulation D adopted by the SEC under the U.S. Securities Act; 23.1.6 "REGULATION S" means Regulation S adopted by the SEC under the U.S. Securities Act; 23.1.7 "RULE 144A" means Rule 144A adopted by the SEC under the U.S. Securities Act; 23.1.8 "SEC" means the United States Securities and Exchange Commission; 23.1.9 "SUBSTANTIAL U.S. MARKET INTEREST" means "substantial U.S. market interest" as that term is defined in Regulation S; 23.1.10 "UNITED STATES" means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia; 23.1.11 "U.S. EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as amended; 23.1.12 "U.S. PLACEMENT MEMORANDUM" means the placement memorandum of the Fund in respect of the offering and sale of Purchased Units in the United States, and any amendment thereto, prepared in accordance with the securities laws of the United States; and 23.1.13 "U.S. SECURITIES ACT" means the United States Securities Act of 1933, as amended. 23.2 The Underwriters may offer and sell the Purchased Units within the United States on the terms and subject to the conditions of this Section 23. In connection therewith, the Fund and the Company jointly and severally represent, warrant and covenant that: 23.2.1 the Fund is a Foreign Issuer and reasonably believes there is no Substantial U.S. Market Interest with respect to the Purchased Units; 23.2.2 none of the Fund, ACS Canada, the Company or any person acting on its or their behalf (other than the Underwriters, U.S. affiliates of the Underwriters ("U.S. AFFILIATES"), or any members of the banking and selling group formed by them collectively, the "SELLING FIRMS", in respect of whose activities the Fund and the Company make no representation), has engaged or will engage in any Directed Selling Efforts in the United States with respect to the Purchased Units and the press release relating to the filing of the Preliminary Prospectus issued by Alaska Communications Systems Group, Inc. on March 6, 2003 does not constitute Directed Selling Efforts in the United States in respect to the Purchased Units; 23.2.3 the Fund is not, and as a result of the sale of the Purchased Units will not be, an open-end investment company, unit investment trust or face amount certificate company that is or is required to be registered or a closed-end investment company that is required to be, but is not, registered under Section 8 of the United States Investment Company Act of 1940, as amended; 23.2.4 none of the Fund, ACS Canada, the Company, their affiliates or any person acting on its or their behalf, (other than the Underwriters, U.S. Affiliates, or any members of the Selling Firms, in respect of whose activities the Fund and the Company make no representation), has engaged in any form of General Solicitation or General Advertising in connection with any offer or sale of the Purchased Units or any security convertible or exchangeable into Purchased Units in the United States within the six month period prior to the date of this agreement and the press release relating to the filing of the Preliminary Prospectus issued by Alaska Communications Systems Group, Inc. on March 6, 2003 does not constitute a General Solicitation or General Advertising in connection with any offer or sale of the Purchased Units; 23.2.5 so long as any of the Purchased Units are outstanding and are "restricted securities" within the meaning of Rule 144(a)(3) under the U.S. Securities Act, the Fund will, unless it becomes subject to and complies with the reporting requirements of Section 13 or Section 15(d) of the U.S. Exchange Act or the information furnishing requirements of Rule 12g3-2(b) thereunder, provide to any holder of those restricted securities, or to any prospective purchaser of those restricted securities designated by a holder, upon the request of that holder or prospective purchaser, at or prior to the time of sale, the information required to be provided by Rule 144A(d)(4)(i) under the U.S. Securities Act (so long as that requirement is necessary in order to permit holders of the restricted securities to effect resales under Rule l44A) to a Qualified Institutional Buyer which is a holder of the restricted securities; 23.2.6 none of the Fund, ACS Canada, the Company or their affiliates: (i) will take any action for a period of forty (40) days from the Closing Date that would cause the registration exemptions in Regulation S, Rule 144A or Rule 506 of Regulation D to be unavailable for the offer and sale of Units pursuant to this agreement, or (ii) has been subject to any order, judgment or decree of any court of competent jurisdiction temporarily, preliminarily or permanently enjoining that person for failure to comply with Rule 503 of Regulation D; 23.2.7 the Units are not, and as of the Time of Closing the Units will not be, and no securities of the same class as the Units are or will be, (i) listed on a national securities exchange in the United States, (ii) quoted in an "automated inter-dealer quotation system", as such term is used in the U.S. Exchange Act, or (iii) convertible or exchangeable at an effective conversion premium (calculated as specified in paragraph (a)(6) of Rule 144A) of less than ten percent for securities so listed or quoted; and 23.2.8 the Fund will, within prescribed time periods, prepare and file any forms or notices required under the U.S. Securities Act or applicable blue sky laws. 23.3 Each Underwriter acknowledges that the Purchased Units have not been and will not be registered under the U.S. Securities Act and may be offered and sold in transactions exempt from or not subject to the registration requirements of the U.S. Securities Act. Accordingly, each Underwriter separately and not jointly represents, warrants and covenants that: 23.3.1 it has not offered or sold, and will not offer or sell, any of the Purchased Units constituting part of its allotment except in accordance with Regulation S or Rule 144A; 23.3.2 it has not entered and will not enter into any contractual arrangement with respect to the distribution of the Purchased Units, except with its U.S. Affiliates and other Selling Firms or with the prior written consent of the Company; and 23.3.3 it shall use its reasonable efforts to ensure that each Selling Firm complies with the provisions of Sections 23.4 and 23.5 as if such provisions applied to such Selling Firm. 23.4 Each Underwriter covenants to and agrees with the Fund that: 23.4.1 all offers and sales of the Purchased Units in the United States will be effected through a U.S. Affiliate in accordance with all applicable U.S. Broker-dealer requirements; 23.4.2 its U.S. Affiliate is a Qualified Institutional Buyer; 23.4.3 it will not, either directly or through its U.S. Affiliate, solicit offers for, or offer to sell, the Purchased Units in the United States by means of any form of General Solicitation or General Advertising and neither it nor its U.S. Affiliate, nor any persons acting on its or their behalf have engaged or will engage in any Directed Selling Efforts with respect to the Purchased Units; 23.4.4 it will solicit, and will cause its U.S. Affiliate to solicit, offers for the Purchased Units in the United States only from, and will offer the Purchased Units only to, persons it reasonably believes to be Qualified Institutional Buyers in accordance with Rule 144A. It also agrees that it will solicit offers for the Purchased Units only from, and will offer the Purchased Units only to, persons that in purchasing such Purchased Units will be deemed to have represented and agreed as provided in paragraphs (3)(a) through (d) below (to the extent such representations are applicable to the purchaser concerned); 23.4.5 it will inform, and cause its U.S. Affiliate to inform, all purchasers of the Purchased Units in the United States that the Purchased Units have not been and will not be registered under the U.S. Securities Act and are being sold to them without registration under the U.S. Securities Act in reliance on Rule 144A; 23.4.6 it will deliver, or cause to be delivered, a copy of the U.S. Placement Memorandum to each person in the United States purchasing Purchased Units from it; 23.4.7 it shall cause its U.S. Affiliate, at the request of the Fund, to agree, for the benefit of the Fund, to the same provisions as are contained in Sections 23.3 and 23.4 of this agreement; 23.4.8 at least one business day prior to closing, it shall request CIBC WM to provide the Trust Company with a list of all purchasers of the Purchased Units in the United States; and 23.4.9 at closing it, together with its U.S. Affiliate selling Purchased Units in the United States, will provide a certificate, substantially in the form of Schedule 23.4.9. 23.5 It is understood and agreed by the Underwriters that the Purchased Units may be offered and resold by the Underwriters, its U.S. Affiliates and Selling Firms in the United States pursuant to the provisions of Rule 144A to persons who are, or are reasonably believed by them to be, Qualified Institutional Buyers in transactions meeting the requirements of Rule 144A and in compliance with any applicable state securities laws of the United States, provided that by purchasing Purchased Units, each purchaser shall be deemed to have represented and warranted for the benefit of the Company and the Underwriters that: 23.5.1 it is a Qualified Institutional Buyer and acknowledges that the sale of Purchased Units to it is being made in reliance on Rule 144A, and it is acquiring such Purchased Units for its own account or for the account of one or more Qualified Institutional Buyers with respect to which it exercises sole investment discretion; 23.5.2 it understands and acknowledges that the Purchased Units will not be and have not been registered under the U.S. Securities Act or the securities laws of any state of the United States, and are therefore "restricted securities" within the meaning of the Rule 144, and that if in the future it shall decide to resell, pledge or otherwise transfer such Purchased Units, the same may be resold, pledged or otherwise transferred only (A) to ACS Media Income Fund, (B) in the United States, in accordance with Rule 144A to a person it reasonably believes is a Qualified Institutional Buyer that purchases for its own account or for the account of a Qualified Institutional Buyer and to whom notice is given that the offer, sale or transfer is being made in reliance on Rule 144A, (C) outside the United States, in accordance with Rule 904 of Regulation S and in compliance with applicable local laws and regulations, (D) in a transaction exempt from registration under the U.S. Securities Act pursuant to Rule 144 and in compliance with any applicable state securities laws of the United States, or (E) in a transaction that does not require registration under the U.S. Securities Act or any applicable United States state securities laws, and it has furnished to ACS Media Income Fund an opinion of counsel of recognized standing reasonably satisfactory to ACS Media Income Fund to that effect; 23.5.3 it understands that all Purchased Units sold in the United States as part of this offering under the Prospectus will bear a legend to the following effect: "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF ACS MEDIA INCOME FUND THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO ACS MEDIA INCOME FUND, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, OR (E) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION AFTER PROVIDING A LEGAL OPINION SATISFACTORY TO ACS MEDIA INCOME FUND. A NEW CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM CIBC MELLON TRUST COMPANY UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO CIBC MELLON TRUST COMPANY AND ACS MEDIA INCOME FUND, TO THE EFFECT THAT THE SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT." If the Purchased Units are being sold in compliance with the requirements of Rule 904 of Regulation S, the legend may be removed by providing a declaration to CIBC Mellon Trust Company to the following effect (or as the Fund may prescribe from time to time). "The undersigned (A) acknowledges that the sale of the securities to which this declaration relates is being made in reliance on Rule 904 of Regulation S under the U.S. Securities Act of 1933, as amended, and (B) certifies that (1) it is not an "affiliate" (as defined in Rule 405 under the Securities Act, as amended) of ACS Media Income Fund, (2) the offer of such securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States or (b) the transaction was executed on or through the facilities of the Toronto Stock Exchange and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, and (3) neither the seller nor any person acting on its behalf engaged in any directed selling efforts in connection with the offer and sale of such securities. Terms used herein have the meanings given to them by Regulation S."; and 23.5.4 it understands and acknowledges that it is making the representations and warranties and agreements contained herein with the intent that they may be relied upon by the Fund, the Company and the Underwriters in determining its eligibility or (if applicable) the eligibility of others on whose behalf it is contracting hereunder to purchase the Purchased Units. 24. STABILIZATION. In connection with the distribution of the Purchased Units, the Underwriters and members of their selling group (if any) may over-allot or effect transactions which stabilize or maintain the market price of the Purchased Units at levels above those which might otherwise prevail in the open market, in compliance with Securities Laws. Those stabilizing transactions, if any, may be discontinued at any time. 25. OBLIGATIONS OF THE UNDERWRITERS TO BE SEVERAL. Subject to the terms and conditions of this agreement, the obligation of the Underwriters to purchase the Initial Units or the Additional Units, as the case may be, will be several and not joint. The percentage of the Purchased Units to be severally purchased and paid for by each of the Underwriters will be as follows: CIBC World Markets Inc. 35% RBC Dominion Securities Inc. 20% Scotia Capital Inc. 20% BMO Nesbitt Burns Inc. 12% National Bank Financial Inc. 12% Westwind Partners Inc. 1% If an Underwriter (a "REFUSING UNDERWRITER") does not complete the purchase and sale of the Initial Units which that Underwriter has agreed to purchase under this agreement (the "DEFAULTED UNITS"), CIBC WM may delay the closing date for not more than five days and the remaining Underwriters (the "CONTINUING UNDERWRITERS") will be entitled, at their option, to purchase all but not less than all of the Defaulted Units pro rata according to the number of Initial Units to have been acquired by the Continuing Underwriters under this agreement or in any proportion agreed upon, in writing, by the Continuing Underwriters. If no such arrangement has been made and the number of Defaulted Units to be purchased by the Refusing Underwriter does not exceed 10% of the Initial Units the Continuing Underwriters will be obligated to purchase the Defaulted Units on the terms set out in this agreement in proportion to their obligations under this agreement. If the number of Defaulted Units to be purchased by the Refusing Underwriters exceeds 10% of the Initial Units, the Continuing Underwriters will not be obliged to purchase the Defaulted Units and, if the Continuing Underwriters do not elect to purchase the Defaulted Units: 25.1 the Continuing Underwriters will not be obliged to purchase any of the Initial Units; 25.2 the Fund will not be obliged to sell less than all of the Initial Units; and 25.3 the Fund and the Company will be entitled to terminate their obligations under this agreement arising from their acceptance of this offer, in which event there will be no further liability on the part of the Continuing Underwriters or the Fund, ACS Canada, the Company and the Existing Securityholders except pursuant to the provisions of Sections 16, 17, and 19. 26. NOTICE. Any notice or other communication required or permitted to be given under this agreement will be in writing and will be delivered to: (a) in the case of the Fund: 79 Wellington Street West Suite 3000, Maritime Life Building Toronto-Dominion Centre Toronto, Ontario M5K 1N2 Attention: Trustees of ACS Media Income Fund c/o Philip Brown Facsimile: (416) 865-7380 (b) in the case of ACS Canada: 79 Wellington Street West Suite 3000, Maritime Life Building Toronto-Dominion Centre Toronto, Ontario M5K 1N2 Attention: Directors of ACS Media Canada Inc. c/o Philip Brown Facsimile: (416) 865-7380 (c) in the case of ACS Holdings, ACS InfoSource and Alaska Communications Systems: 6000 Telephone Avenue, MS65 Anchorage, AK 99503 U.S.A. Attention: General Counsel Facsimile: (907) 297-3153 in each case under (a), (b) or (c), with a copy to the Fund and the Company. (d) in the case of the Company: 3601 C Street Anchorage, AK 19503 U.S.A. Attention: President Facsimile: (907) 564-1422 with a copy to the Fund. (e) in the case of CIBC WM: Canadian Equity Capital Markets 161 Bay Street, 6th Floor Toronto, Ontario M5J 2S8 Attention: Kevin W. Dalton Facsimile: (416) 956-6958 in the case of RBC DS: P.O. Box 50, 200 Bay Street 4th Floor, South Tower Royal Bank Plaza Toronto, Ontario M5J 2W7 Attention: Karin Treiberg Facsimile: (416) 842-7555 in the case of Scotia: Scotia Plaza 40 King Street West P.O. Box 4085, Station "A" Toronto, Ontario M5W 2X6 Attention: Sarah B. Kavanagh Facsimile: (416) 863-7117 in the case of BMO NB: 1 First Canadian Place 4th Floor, PO Box 150 Toronto, Ontario M5X 1H3 Attention: Ashish P. Mathur Facsimile: (416) 359-5685 in the case of NBF: 130 King Street West Suite 3200, PO Box 21 Toronto, Ontario M5X 1J9 Attention: Jim Hardy Facsimile: (416) 869-6411 in the case of Westwind: 70 York Street 10th Floor Toronto, Ontario M5J 1S9 Attention: Lionel F. Conacher Facsimile: (416) 815-1808 in each case under (e), with a copy to Goodmans LLP: Suite 2400 250 Yonge Street Toronto, Ontario M5B 2M6 Attention: Allan Goodman Facsimile: (416) 979-1234 The parties may change their respective addresses for notices by notice given in the manner set out above. Any notice or other communication will be in writing, and unless delivered personally to the addressee or to a responsible officer of the addressee, as applicable, will be given by telecopy and will be deemed to have been given when (i) in the case of a notice delivered personally to a responsible officer of the addressee, when so delivered; and (ii) in the case of a notice delivered or given by telecopy, on the first business day following the day on which it is sent. 27. MISCELLANEOUS. 27.1 Except with respect to Sections 16, 17, and 22, all actions, determinations and notices on behalf of the Underwriters under this agreement or contemplated by this agreement may be carried out, made or given on behalf of the Underwriters by CIBC WM and CIBC WM will in good faith discuss with the other Underwriters the nature of any of the transactions and notices prior to giving effect to them or the delivery of them, as the case may be. 27.2 This agreement will be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. 27.3 Time will be of the essence in this agreement and, following any waiver or indulgence by any party, time will again be of the essence in this agreement. 27.4 The words "agreement", "hereof", "hereunder" and similar phrases mean and refer to the agreement formed as a result of the acceptance by the Fund of this offer by the Underwriters to purchase the Purchased Units. 27.5 All representations, warranties, covenants and agreements of the Fund, ACS Canada, the Company and the Existing Securityholders contained in this agreement or contained in documents submitted pursuant to this agreement and in connection with the transaction of purchase and sale contemplated by this agreement will survive and will continue in full force and effect for a period of three years from the Closing Date (other than Sections 8.1, 8.2, 8.3, 8.4, 8.5.1, 8.5.2, 8.5.4, 8.6, Sections 8.10 to and including 8.15, Sections 8.17, 8.19 and 8.23, Sections 9.1 to and including 9.5, Sections 9.7 (but only with respect to contraventions, breaches or defaults under organizational documents, licenses, permits and Laws) and 9.8, Section 10.1 to and including 10.5, Sections 10.11 (but only with respect to contraventions, breaches or defaults under organizational documents, licenses, permits and Laws) and 10.12, and Sections 11.1, 11.2 and 11.4 (but only with respect to contraventions, breaches or defaults under organizational documents, licenses, permits and Laws), each of which will survive and will continue in full force and effect indefinitely) for the benefit of the Underwriters, regardless of any subsequent disposition of the Purchased Units or any investigation by or on behalf of the Underwriters with respect thereto. The Underwriters will be entitled to rely on the representations and warranties of the Fund, ACS Canada, the Company, ACS Holdings, ACS InfoSource and Alaska Communications Systems contained in this agreement or delivered pursuant to this agreement notwithstanding any investigation which the Underwriters may undertake or which may be undertaken on the Underwriters' behalf. 27.6 Each of the parties to this agreement will be entitled to rely on delivery of a facsimile copy of this agreement and acceptance by each party of any such facsimile copy will be legally effective to create a valid and binding agreement between the parties to this agreement in accordance with the terms of this agreement. 27.7 Each of the parties hereto acknowledges that the obligations of the Fund under this agreement and that such obligations shall not be personally binding upon any of the trustees of the Fund, any registered or beneficial holder of Units or any beneficiary under a plan of which a holder of such Units acts as a trustee or carrier, and that resort shall not be had to, nor shall recourse be sought from, any of the foregoing or the private property of any of the foregoing in respect of any indebtedness, obligation or liability of the Fund arising hereunder, and recourse for such indebtedness, obligations or liabilities of the Fund shall be limited to, and satisfied only out of, the assets of the Fund. 27.8 This agreement may be executed in any number of counterparts, each of which when so executed will be deemed to be an original and all of which, when taken together, will constitute one and the same agreement. 27.9 To the extent permitted by applicable law, the invalidity or unenforceability of any particular provision of this agreement will not affect or limit the validity or enforceability of the remaining provisions of this agreement. 27.10 This agreement and the other documents referred to in this agreement constitute the entire agreement between the parties hereto relating to the subject matter of this agreement and supersede all prior agreements between those parties with respect to their respective rights and obligations in respect of the transactions contemplated under this agreement. 27.11 The terms and provisions of this agreement will be binding upon and enure to the benefit of the Fund, ACS Canada, the Company, and the Existing Securityholders and the Underwriters and their respective successors and assigns; provided that, except as otherwise provided in this agreement, this agreement will not be assignable by any party without the written consent of the others and any purported assignment without that consent will be invalid and of no force and effect. 27.12 The parties acknowledge and agree that the obligations of the Fund hereunder are not personally binding upon any trustee thereof, any registered or beneficial holder of units in the Fund or any annuitant under a plan of which such unitholder acts as trustee or carrier, and resort shall not be had to, nor shall recourse or satisfaction be sought from, any of the foregoing or the private property of any of the foregoing, but the property of the Fund only shall be bound by such obligations. Any obligation of the Fund set out in this agreement shall, to the extent necessary to give effect to such obligation, be deemed to constitute, subject to the provisions of the previous sentence, an obligation of the trustees of the Fund in their capacity as trustees of the Fund only. 27.13 Notwithstanding any provision of this agreement to the contrary, nothing in this agreement shall be construed to require or permit the Fund or any individual or entity acting on behalf of the Fund to take any action that would result in the Fund failing to qualify as an "investment trust" within the meaning of United States Treasury Regulations Section 301.7701-4(c). [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] If this letter accurately reflects the terms of the transactions which we are to enter into and are agreed to by you, please communicate your acceptance by executing the enclosed copies of this letter where indicated and returning them to us. Yours very truly, CIBC WORLD MARKETS INC. /s/ Kevin W. Dalton ----------------------------------------- Name: Kevin W. Dalton Title: Managing Director RBC DOMINION SECURITIES INC. /s/ Karin Treiberg ----------------------------------------- Name: Karin Treiberg Title: Vice President SCOTIA CAPITAL INC. /s/ Sarah B. Kavanagh ----------------------------------------- Name: Sarah B. Kavanagh Title: Managing Director BMO NESBITT BURNS INC. /s/ Ashish P. Mathur ----------------------------------------- Name: Ashish P. Mathur Title: Vice President NATIONAL BANK FINANCIAL INC. /s/ Jim Hardy ----------------------------------------- Name: Jim Hardy Title: Managing Director WESTWIND PARTNERS INC. /s/ Lionel F. Conacher ----------------------------------------- Name: Lionel F. Conacher Title: Managing Director Accepted and agreed to by the undersigned as of the date of this letter first written above. ACS MEDIA INCOME FUND, BY ITS TRUSTEES /s/ Mark A. Davis ----------------------------------------- Name: Mark A. Davis Title: Trustee /s/ Andre L. Hidi ----------------------------------------- Name: Andre L. Hidi Title: Trustee /s/ Alain Rheaume ----------------------------------------- Name: Alain Rheaume Title: Trustee /s/ Ronald J. Daniels ----------------------------------------- Name: Ronald J. Daniels Title: Trustee ACS MEDIA CANADA INC. /s/ Wesley E. Carson ----------------------------------------- Name: Wesley E. Carson Title: President ACS MEDIA LLC /s/ Wesley E. Carson ----------------------------------------- Name: Wesley E. Carson Title: President, Chief Executive Officer and Manager ACS MEDIA HOLDINGS LLC /s/ Kevin Hemenway ----------------------------------------- Name: Kevin Hemenway Title: Manager ACS INFOSOURCE, INC. /s/ Kevin Hemenway ----------------------------------------- Name: Kevin Hemenway Title: Director ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC. /s/ Kevin Hemenway ----------------------------------------- Name: Kevin Hemenway Title: Senior Vice President, Treasurer and Chief Financial Officer SCHEDULE 8.11 CAPITAL OF THE COMPANY Capital of the Company as of the date of this agreement and immediately before the Time of Closing: Authorized: unlimited number of membership interests Issued and Outstanding: 1 membership interest issued to ACS Media Holdings LLC Capital of the Company immediately before the Over-Allotment Closing Time (provided that the Closing occurs and there are no Defaulted Units): Authorized: unlimited number of membership interests Issued and Outstanding: 17,366,353 membership interest issued to ACS Media Holdings LLC 120,680,968 membership interest issued to ACS Media Canada Inc. SCHEDULE 23.4.9 UNDERWRITERS' CERTIFICATE In connection with the private placement in the United States of the units (the "UNITS") of ACS Media Income Fund (the "FUND") pursuant to the underwriting agreement dated April 28, 2003 among the Fund, ACS Media LLC and others and the Underwriters named therein (the "UNDERWRITING AGREEMENT"), each of the undersigned does hereby certify as follows: I. [NAME OF U.S. BROKER-DEALER AFFILIATE] is a duly registered broker or dealer with the United States Securities and Exchange Commission and is a member of and in good standing with the National Association of Securities Dealers, Inc. on the date hereof; II. each offeree was provided with a copy of the U.S. private placement memorandum (the "U.S. PLACEMENT MEMORANDUM"), including the Canadian (final) prospectus (without the compilation report referred to therein) dated April 29, 2003 for the offering of the Units in the United States; III. immediately prior to our transmitting such U.S. Placement Memorandum to such offerees, we had reasonable grounds to believe and did believe that each offeree was, and continue to believe that each such offeree who is a U.S. person purchasing Units from us is, a "qualified institutional buyer", as defined in Rule 144A under the Securities Act of 1933, as amended (the "1933 ACT"); IV. no form of general solicitation or general advertising (as those terms are used in Regulation D under the 1933 Act) was used by us, in connection with the offer or sale of the Units in the United States; and V. the offering of the Units in the United States has been conducted by us in accordance with the terms of the Underwriting Agreement. Unless otherwise defined, terms used in this certificate have the meanings given to them in the Underwriting Agreement. Dated this ________day of _______________, 2003. [UNDERWRITER] [U.S. BROKER-DEALER AFFILIATE] By: ____________________________ By: ________________________________ Name: Name: Title: Title: EX-99.1 5 v89821exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Alaska Communications Systems Group, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2003 (the "Report"), I, Charles E. Robinson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Date: May 6, 2003 /s/ Charles E. Robinson ----------------------- Charles E. Robinson Chief Executive Officer and Chairman of the Board of Alaska Communications Systems Group, Inc. EX-99.2 6 v89821exv99w2.txt EXHIBIT 99.2 EXHIBIT 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Alaska Communications Systems Group, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2003 (the "Report"), I, Kevin P. Hemenway, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Date: May 6, 2003 /s/ Kevin P. Hemenway --------------------- Kevin P. Hemenway Senior Vice President and Chief Financial Officer Alaska Communications Systems Group, Inc. -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.13

                                                                   EXHIBIT 10.13

                              ACS MEDIA INCOME FUND

                                     - and -

                              ACS MEDIA CANADA INC.

                                     - and -

                             ACS MEDIA HOLDINGS LLC

                                     - and -

                              ACS INFOSOURCE, INC.

                                     - and -

                                  ACS MEDIA LLC

                                     - and -

                  ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.

================================================================================

                              INVESTMENT AGREEMENT

================================================================================

                                 April 28, 2003

[TORYS LLP LOGO]



                              INVESTMENT AGREEMENT

            THIS AGREEMENT is made as of the 28th day of April, 2003

BETWEEN:

                       ACS MEDIA INCOME FUND, a trust formed under the laws
                       of the Province of Ontario,

                       (the "FUND"),

                       - and -

                       ACS MEDIA CANADA INC., a corporation existing under
                       the laws of the Province of Ontario,

                       ("ACS CANADA"),

                       - and -

                       ACS MEDIA HOLDINGS LLC, a limited liability company
                       existing under the laws of the State of Alaska,

                       ("ACS HOLDINGS"),

                       - and -

                       ACS INFOSOURCE, INC., a corporation existing under the
                       laws of the State of Alaska,

                       ("ACS INFOSOURCE"),

                       - and -

                       ACS MEDIA LLC, a limited liability company existing under
                       the laws of the State of Alaska,

                       (the "COMPANY"),

                       - and -

                       ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC., a
                       corporation existing under the laws of the State of
                       Delaware,

                       (the "ACSH").



RECITALS:

A.       The Fund intends to complete an offering of its trust units (the
         "UNITS") to the public under the Prospectus (as defined herein) filed
         with the securities regulatory authorities in each of the provinces and
         territories of Canada, including pursuant to the exercise (if any) of
         the over-allotment option contemplated by the Prospectus (the
         "OFFERING");

B.       the Fund will use 50% of the net proceeds of the Offering (after
         deducting certain fees and expenses of the Offering payable by the
         Fund) to subscribe for the ACS Canada Notes;

C.       the Fund will use the remaining 50% of the net proceeds of the Offering
         to subscribe for common shares of ACS Canada, representing all of the
         outstanding shares of ACS Canada;

D.       ACS InfoSource will contribute the Business to ACS Holdings in
         consideration for all of the ACS Holdings Membership Interests and for
         the ACS Holdings Note; 50% of the consideration will be in the form of
         the ACS Holdings Note and the remaining 50% of such consideration will
         be in the form of ACS Holdings Membership Interests;

E.       ACS Holdings will contribute the Business to the Company in
         consideration for all of the Company Membership Interests;

F.       the Company will enter into a note purchase agreement and a revolving
         loan agreement with Metropolitan Life Insurance Company, as
         administrative agent and the other Lenders thereunder and Guarantors
         thereto for a senior secured credit facility in an aggregate principal
         amount of $40 million (the "PROPOSED CREDIT FACILITY"). A substantial
         portion of the proceeds of the Proposed Credit Facility will be used to
         repurchase Company Membership Interests from ACS Holdings;

G.       the Company will repurchase a portion of the outstanding Company
         Membership Interests from ACS Holdings;

H.       ACS Canada will use a portion of the proceeds that it receives from the
         sale of its common shares and the ACS Canada Notes to the Fund to pay
         certain expenses relating to the Offering and will use the remainder to
         purchase approximately 87.42% of the Company Membership Interests from
         ACS Holdings;

I.       ACS InfoSource is currently a guarantor under a credit facility between
         Alaska Communications Systems Group, Inc., JPMorgan Chase Bank, as
         administrative agent, Canadian Imperial Bank of Commerce, as
         syndication agent, and Credit Suisse First Boston Corporation, as
         documentation agent, dated as of May 14, 1999 (the "CURRENT CREDIT
         FACILITY"). On the Closing Date, the lender under the Current Credit
         Facility will release all security interests granted by ACS InfoSource
         in connection with the Current Credit Facility which relate to the
         Business;

J.       immediately following the Closing, the Fund will, indirectly through
         ACS Canada, hold approximately 87.42% of the Company Membership
         Interests and ACS InfoSource will, indirectly through ACS Holdings,
         hold the balance of the Company Membership Interests; and

K.       the Underwriting Agreement provides that, as a condition to the
         completion of the Offering, the Fund, ACS Canada, the Company, ACS
         Holdings and ACS InfoSource enter into this Agreement.

         NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Agreement and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged by each of the
parties), the parties hereto agree as follows:



                                   ARTICLE 1.
                                 INTERPRETATION

1.1.     DEFINITIONS

         In this Agreement,

         "ACS CANADA COMMON SHARES" means common shares in the capital of ACS
         Canada, as subsequently consolidated or subdivided, or any other
         securities resulting from a reclassification or amendment thereto;

         "ACS CANADA NOTE INDENTURE" means the note indenture to be dated as of
         the Date of Closing between ACS Canada and CIBC Mellon Trust Company,
         in the form agreed to by the parties thereto;

         "ACS CANADA NOTES" means the notes of ACS Canada issued pursuant to the
         ACS Canada Note Indenture;

         "ACS HOLDINGS MEMBERSHIP INTERESTS" means membership interests in the
         capital of ACS Holdings, as subsequently consolidated or subdivided, or
         any other securities resulting from a reclassification or amendment
         thereto;

         "ACS HOLDINGS NOTE" means the note of ACS Holdings issued by ACS
         Holdings to ACS InfoSource;

         "ACTUAL KNOWLEDGE" means to the actual knowledge of Wesley E. Carson,
         Wayne Graham and Vicki Pedersen, after due inquiry of their direct
         reports and review of such other books, records and other assets of the
         Business as they judge, acting reasonably, to be relevant;

         "AFFILIATE" has the meaning attributed to such term in s. 1(1)
         and 1(4) of the Business Corporations Act (Ontario), R.S.O. 1990, c.
         B.16, as the same may be amended from time to time and any successor
         legislation thereto;

         "AGREEMENT", "HERETO", "HEREIN", "HEREBY", "HEREUNDER", "HEREOF", and
         similar expressions refer to this Investment Agreement and not to any
         particular Article, Section, subsection, clause, subdivision or other
         portion hereof and include any and every instrument supplemental or
         ancillary hereto;

         "ANCILLARY AGREEMENTS" means the Securityholders Agreement, the
         Exchange Agreement, the ACS Canada Note Indenture (including any ACS
         Canada Notes issued thereunder), the ACS Holdings Note and the
         guarantees by the Company in favour of the Fund and ACS InfoSource of
         obligations under the ACS Canada Note and the ACS Holdings Note,
         respectively;

         "BUSINESS" means the business currently operated by ACS InfoSource, as
         a going concern, which consists of all of the assets and liabilities of
         ACS InfoSource other than any intercompany indebtedness between ACS
         InfoSource and ACSH or its affiliates;

         "BUSINESS DAY" means any day except Saturdays, Sundays and statutory
         holidays in the Province of Ontario as specified in s. 29(1) of the
         Interpretation Act (Ontario), R.S.O. 1990, c. I.11, as amended;

         "CLAIM" has the meaning attributed to such term in Section 13.4;

         "CLOSING" means the completion of the transactions of purchase and sale
         contemplated in Articles 2 through 7 of this Agreement;

         "CLOSING TIME" means 8:00 a.m. (Toronto time) on the Date of Closing or
         such other time on such date as may be agreed upon in writing by the
         parties;



         "CODE" means the United States Internal Revenue Code of 1986, as
         amended;

         "COMPANY CONTRIBUTION" has the meaning attributed to such term in
         Section 5.1;

         "COMPANY MEMBERSHIP INTEREST PURCHASE PRICE" has the meaning attributed
         to such term in Section 7.1;

         "COMPANY MEMBERSHIP INTERESTS" means membership interests in the
         capital of the Company, as subsequently consolidated or subdivided, or
         any other securities resulting from a reclassification or amendment
         thereto;

         "COMPANY PLANS" has the meaning attributed to such term in Section
         10.6.17.1;

         "COMPANY REPURCHASE PRICE" has the meaning attributed to such term in
         Section 6.1;

         "DAMAGES" means any direct damages, direct losses, direct expenses or
         direct claims suffered by, imposed upon or asserted against an
         Indemnified Party under the Securities Laws, other Laws, at common law
         or otherwise, together with the expenses incurred in defence of same,
         such amount being correspondingly reduced by (i) any insurance proceeds
         actually received by the Indemnified Party in respect of the same
         claim, or (ii) the present value of the net benefit, if any, that will
         be received by such party in the current or any future tax period as a
         result of the payment of Damages;

         "DATE OF CLOSING" means the date on which the completion of the issue
         of Units to the public pursuant to the Offering (other than in respect
         of the Over-Allotment Option) occurs;

         "DECLARATION OF TRUST" means the declaration of trust of the Fund made
         as of the 5th day of March, 2003, as amended and restated from time to
         time;

         "DISCLOSURE LETTER" means the letter dated the date of this Agreement
         from the Company to the applicable parties hereto in respect of the
         representations and warranties related to the Business, in the form
         satisfactory to such other parties;

         "ENVIRONMENTAL LAWS" means all Laws relating to environmental and/or
         health matters, including Laws governing the labeling, use and storage
         of hazardous substances;

         "EXCHANGE AGREEMENT" means the exchange agreement to be dated the Date
         of Closing by and among the Fund, ACS Canada, ACS Holdings and the
         Company and such other persons who from time to time execute the
         exchange agreement or are deemed to be parties thereto, in the form
         agreed to by the parties thereto;

         "FUND COMMON SHARE SUBSCRIPTION PRICE" has the meaning attributed to
         such term in Section 2.1;

         "FUND NOTE SUBSCRIPTION PRICE" has the meaning attributed to such term
         in Section 3.1;

         "GOVERNMENTAL CHARGES" means all taxes, duties, levies, assessments,
         reassessments and other charges together with all related penalties,
         interest and fines, payable in respect of periods ending on or before
         the Date of Closing to any domestic or foreign government (federal,
         provincial, state, municipal or otherwise) or to any regulatory
         authority, agency, commission or board of any domestic or foreign
         government, or imposed by any court or any other law, regulation or
         rule-making entity having jurisdiction in the relevant circumstances;

         "GOVERNMENTAL ENTITY" means any (i) multinational, federal, provincial,
         state, municipal, local or other governmental or public department,
         central bank, court, commission, board, bureau, agency or
         instrumentality, domestic or foreign; (ii) any subdivision or authority
         of any of the foregoing; (iii) any quasi-governmental, self-regulatory
         organization or private body exercising any regulatory, expropriation
         or taxing authority under or for the account of its members or any of
         the



         above; or (iv) any arbitrator exercising jurisdiction over the affairs
         of the applicable Person, asset, obligation or other matter;

         "HOLDINGS CONTRIBUTION" has the meaning attributed to such term in
         Section 4.1;

         "INDEMNIFYING PARTY" means a party to this Agreement providing
         indemnification to its Indemnified Persons pursuant to Article 13;

         "INDEMNIFIED PERSONS" has the meaning attributed to such term in
         Section 13.2;

         "INTERIM PERIOD" means the period between the close of business on the
         date of this Agreement and the Closing;

         "LAWS" means any and all laws, including all federal, state, provincial
         and local statutes, codes, ordinances, decrees, rules, regulations and
         municipal by-laws and all judicial, arbitral, administrative,
         ministerial, departmental or regulatory judgments, orders, decisions,
         rulings or awards or other requirements of any other Governmental
         Entity, binding on or affecting the Person referred to in the context
         in which the term was used;

         "LIEN" mean any mortgage, charge, pledge, hypothecation, security
         interest, assignment, lien (statutory or otherwise), charge, title
         retention agreement or arrangement, restrictive covenant or other
         encumbrance of any nature, or any other arrangement or condition which,
         in substance, secures payment or performance of an obligation;

         "LITIGATION" means an action, suit, claim, proceeding or investigation,
         at law or in equity, before any Governmental Entity, by any Person;

         "MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE", with respect to
         the Business or any Person, means any effect or change on the Business
         or such Person, as the case may be, that is or is reasonably likely to
         be materially adverse to the results of operations, financial
         condition, assets, properties, capital, liabilities (contingent or
         otherwise), cash flow, income or business operations of the Business or
         such Person, as the case may be, after giving effect to this agreement
         and the transactions contemplated hereby, in each case taken as a whole
         and as a going concern and, for greater certainty, where applicable,
         applying the multiple or yield based upon which Units are priced and
         sold under the Prospectus in determining the consequential loss or
         diminution of value resulting from such effect or change;

         "MATERIAL AGREEMENTS" means, collectively, (i) the Directory Publishing
         Services Agreement between ACS InfoSource and L.M. Berry and Company,
         (ii) the Publishing Rights Agreement, the PRA Licence Agreement, the
         PRA Subscriber List Information Agreement, the PRA Directory Agreement,
         the Directory Publication and Distribution Agreement, the License
         Agreement, the Subscriber List Information License Agreement, the Data
         Services Agreement, the Billing and Collection Agreement described in
         the Prospectus, (iii) the Non-Competition Agreement among ACSH, the
         Company and others, described in the Prospectus, and (iv) the
         Transition Services Agreement among the Company, ACSH and others,
         described in the Prospectus.

         "NON-PERFORMING PARTY" has the meaning attributed to such term in
         Section 14.1;

         "ORDINARY COURSE" means, with respect to an action taken by a Person,
         that such action (i) is consistent in all material respects with past
         practices of the Person, (ii) is taken in the ordinary course of the
         normal day-to-day operations of the Person, or (iii) is consistent with
         industry practice;

         "OVER-ALLOTMENT COMPLETION DATE" means the date of the closing of the
         Transactions contemplated by the Over-Allotment Option;

         "OVER-ALLOTMENT OPTION" means the over-allotment option as described in
         the Prospectus and as more fully set out in the Underwriting Agreement;



         "PERSON" means any individual, partnership, limited partnership,
         limited liability company, joint venture, syndicate, sole
         proprietorship, company or corporation with or without share capital,
         unincorporated association, trust, trustee, executor, administrator or
         other legal personal representative, regulatory body or agency,
         government or governmental agency, authority or entity however
         designated or constituted;

         "PROPOSED CREDIT FACILITY" means the senior secured credit facility to
         be established pursuant to a note purchase agreement and a revolving
         loan agreement between the Company, Metropolitan Life Insurance
         Company, the Lenders thereunder and the Guarantors thereto;

         "PROSPECTUS" means the final prospectus of the Fund, including all
         exhibits and schedules thereto, dated the date hereof and filed with
         the securities commissions or other regulatory authorities in the
         Qualifying Jurisdictions in connection with the Offering;

         "QUALIFYING JURISDICTIONS" means, collectively, each of the provinces
         and territories of Canada;

         "REQUIRED CONSENTS" means the consents listed in the Disclosure Letter;

         "SECURITIES COMMISSION" means the applicable securities commission or
         other regulatory authority in each of the Qualifying Jurisdictions;

         "SECURITIES LAWS" means, collectively, the applicable securities laws
         of each of the Qualifying Jurisdictions and the respective regulations
         and rules made under those securities laws, together with all
         applicable policy statements, blanket orders and rulings of the
         Securities Commissions and all discretionary orders or rulings, if any,
         of the Securities Commissions made in connection with the transactions
         contemplated by the Underwriting Agreement and the securities
         legislation and policies of each other applicable jurisdiction
         (including the United States);

         "SECURITYHOLDERS AGREEMENT" means the securityholders agreement to be
         dated as of the Date of Closing by and among ACS Canada, ACS Holdings
         and the Company, in the form agreed to by the parties thereto;

         "TERMINATING PARTY" has the meaning attributed to such term in Section
         14.1;

         "UNDERWRITERS" means the underwriters of the Offering; and

         "UNDERWRITING AGREEMENT" means the underwriting agreement entered into
         by and among the Fund, ACS Canada, the Company, ACS Holdings, ACS
         InfoSource, ACSH and the Underwriters in connection with the Offering.

1.2.     SCHEDULES

         The following are the schedules attached to this Agreement:

                  Schedule "A"          -        Capital of ACS Canada
                  Schedule "B"          -        Capital of ACS Holdings
                  Schedule "C"          -        Capital of the Company

1.3.     HEADINGS

         The division of this Agreement into articles and sections and the
insertion of headings are for the convenience of reference only and will not
affect the construction or interpretation of this Agreement. Unless something in
the subject matter or context is inconsistent therewith, references herein to
"ARTICLES" or "SECTIONS" are to articles or sections of this Agreement.

1.4.     GENDER AND NUMBER

         In this Agreement, words importing the singular number only will
include the plural and vice versa, words importing the masculine gender will
include the feminine and neuter genders and vice versa



and words importing persons will include individuals, partnerships,
associations, trusts, unincorporated organizations, limited liability companies,
and corporations and vice versa.

1.5.     CURRENCY

         Except where otherwise expressly provided, all payments contemplated
herein will be paid in Canadian funds, and all references herein to dollar
amounts are references to dollars in the lawful currency of Canada.

1.6.     DAY NOT A BUSINESS DAY

         In the event that any day on or before which any action is required to
be taken hereunder is not a Business Day, then such action will be required to
be taken on or before the requisite time on the next succeeding day that is a
Business Day.

1.7.     ACCOUNTING PRINCIPLES

         Wherever in this Agreement reference is made to generally accepted
accounting principles in the United States, such reference will be deemed to be
to the requirements at the relevant time of the Financial Accounting Standards
Board, or any successor accounting body, applicable on a consolidated basis
(unless otherwise specifically provided or contemplated herein to be applicable
on an unconsolidated basis) as at the date on which such calculation is made or
required to be made in accordance with generally accepted accounting principles.
Where the character or amount of any asset or liability or item of revenue or
expense or amount of equity is required to be determined, or any consolidation
or other accounting computation is required to be made for the purpose of this
Agreement, such determination or calculation will, to the extent applicable and
except as otherwise specified herein or as otherwise agreed in writing by the
parties, be made in accordance with generally accepted accounting principles
applied on a consistent basis. Wherever in this Agreement reference is made to
generally accepted accounting principles in Canada, such reference will be
deemed to be to the requirements at the relevant time of the Canadian Institute
of Chartered Accountants, or any successor institute, applicable on a
consolidated basis (unless otherwise specifically provided or contemplated
herein to be applicable on an unconsolidated basis) as at the date on which such
calculation is made or required to be made in accordance with generally accepted
accounting principles in Canada.

1.12.    WAIVER, AMENDMENT

         Except as expressly provided in this Agreement, no amendment or waiver
of this Agreement will be binding unless executed in writing by the party to be
bound thereby. No waiver of any provision of this Agreement will constitute a
waiver of any other provision nor will any waiver of any provision of this
Agreement constitute a continuing waiver unless otherwise expressly provided.

1.9.     CONSTRUCTION

         The words "including" and "includes" where used in this Agreement will
be deemed to mean "including, without limitation" and "includes, without
limitation", respectively.

1.9.     TRANSACTION VALUE

         The parties agree that the Business has an agreed upon value of
US$231,402.750 for the purposes of the transactions contemplated in this
Agreement.

                                   ARTICLE 2.
               FUND'S SUBSCRIPTION FOR COMMON SHARES OF ACS CANADA

2.1.     PURCHASE AND SALE; SUBSCRIPTION PRICE

         Subject to the terms and conditions of this Agreement, at the Closing,
ACS Canada will issue and sell to the Fund, and the Fund will purchase from ACS
Canada, 80,271,009 ACS Canada Common Shares



at a price of $1.00 per ACS Canada Common Share for an aggregate subscription
price of $80,271,009 (the "FUND COMMON SHARE SUBSCRIPTION PRICE").

2.2.     PAYMENT OF THE FUND COMMON SHARE SUBSCRIPTION PRICE AND DELIVERY OF THE
CERTIFICATES

         The Fund Common Share Subscription Price will be paid at the Closing
by, or on behalf of, the Fund by wire transfer of immediately available funds or
by delivery of a bank draft or a certified cheque payable to, or to the order
of, ACS Canada, or as may be otherwise directed by ACS Canada in writing,
against delivery by ACS Canada of a share certificate representing the ACS
Canada Common Shares issued to the Fund, registered in the name of the Fund.

                                   ARTICLE 3.
                    FUND'S SUBSCRIPTION FOR ACS CANADA NOTES

3.1.     PURCHASE AND SALE; SUBSCRIPTION PRICE

         Subject to the terms and conditions of this Agreement, at the Closing,
ACS Canada will issue and sell to the Fund, and the Fund will purchase from ACS
Canada, $80,271,009 of ACS Canada Notes at a price of 100% of the aggregate
subscription price (the "FUND NOTE SUBSCRIPTION PRICE").

3.2.     PAYMENT OF THE FUND NOTE SUBSCRIPTION PRICE AND DELIVERY OF THE NOTES

         The Fund Note Subscription Price will be paid at the Closing by, or on
behalf of, the Fund by wire transfer of immediately available funds or by
delivery of a bank draft or a certified cheque payable to, or to the order of,
ACS Canada, or as may be otherwise directed by ACS Canada in writing, against
delivery by ACS Canada of the ACS Canada Notes issued to the Fund, registered in
the name of the Fund.

                                   ARTICLE 4.
          ACS INFOSOURCE'S CONTRIBUTION OF THE BUSINESS TO ACS HOLDINGS

4.1.     CONTRIBUTION

         Subject to the terms and conditions of this Agreement, at the Closing,
ACS InfoSource shall contribute to ACS Holdings as a going concern with all
related goodwill, all of ACS InfoSource's right, title and interest in and to
the Business (the "HOLDINGS CONTRIBUTION").

4.2.     ALLOCATION OF THE HOLDINGS CONTRIBUTION

         4.2.1.   The Holdings Contribution will be satisfied at the Closing by,
or on behalf of, ACS Holdings by delivery of a certificate representing
79,788,552 ACS Holdings Membership Interests and by the delivery of the ACS
Holdings Note in a principal amount of US$79,788,552 issued to ACS InfoSource,
each registered in the name of ACS InfoSource, against delivery by ACS
InfoSource of the documentation necessary to confirm the contribution of the
Business, in form and substance acceptable to ACS InfoSource and ACS Holdings.

         4.2.2.   50% of the Holdings Contribution Amount will be allocated to
the ACS Holdings Note and 50% of the Holdings Contribution Amount will be
allocated to the ACS Holdings Membership Interests.

                                   ARTICLE 5.
            ACS HOLDINGS' CONTRIBUTION OF THE BUSINESS TO THE COMPANY

5.1.     CONTRIBUTION



         Subject to the terms and conditions of this Agreement, at the Closing,
ACS Holdings shall contribute to the Company as a going concern with all related
goodwill, all of ACS Holdings' right, title and interest in and to the Business
(the "COMPANY CONTRIBUTION").

5.2.     SATISFACTION OF THE COMPANY CONTRIBUTION

         The Company Contribution will be satisfied at the Closing by, or on
behalf of, the Company by delivery of a certificate representing 174,382,148
Company Membership Interests, registered in the name of ACS Holdings, against
delivery by ACS Holdings of the documentation necessary to confirm the
contribution of the Business, in form and substance acceptable to ACS Holdings
and the Company.

                                   ARTICLE 6.
    THE COMPANY'S REPURCHASE OF CERTAIN OF ITS MEMBERSHIP INTERESTS FROM ACS
                                    HOLDINGS

6.1.     PURCHASE AND SALE; PURCHASE PRICE

         Subject to the terms and conditions of this Agreement, at the Closing,
ACS Holdings shall sell to the Company, and the Company shall repurchase for
cancellation all of ACS Holdings' right title and interest in and to 36,334,827
Company Membership Interests for an aggregate purchase price of US$33,250,000
(the "COMPANY REPURCHASE PRICE").

6.2.     PAYMENT OF THE COMPANY REPURCHASE PRICE AND DELIVERY OF CERTIFICATES

         The Company Repurchase Price will be paid at the Closing by, or on
behalf of, the Company by wire transfer of immediately available funds or
delivery of a bank draft or certified cheque payable to, or to the order of, ACS
Holdings, or as may be otherwise directed by ACS Holdings in writing, against
delivery by ACS Holdings of a certificate representing 36,334,827 Company
Membership Interests, together with a duly executed transfer and power of
attorney, executed in blank.

                                   ARTICLE 7.
     ACS CANADA'S PURCHASE OF COMPANY MEMBERSHIP INTERESTS FROM ACS HOLDINGS

7.1.     PURCHASE AND SALE; PURCHASE PRICE

         Subject to the terms and conditions of this Agreement, at the Closing,
ACS Holdings will sell to ACS Canada, and ACS Canada will purchase from ACS
Holdings, 120,680,968 Company Membership Interests for an aggregate purchase
price of US$160,142,018 (the "COMPANY MEMBERSHIP INTEREST PURCHASE PRICE").

7.2.     PAYMENT OF COMPANY MEMBERSHIP INTEREST PURCHASE PRICE AND DELIVERY OF
THE CERTIFICATES

         The Company Membership Interest Purchase Price will be paid at the
Closing by, or on behalf of, ACS Canada by wire transfer of immediately
available funds or by delivery of a bank draft or a certified cheque payable to,
or to the order of, ACS Holdings, or as may be otherwise directed by ACS
Holdings in writing, against delivery by ACS Holdings of a certificate
representing the 120,680,968 Company Membership Interests, together with a duly
executed transfer and power of attorney, executed in blank.

                                   ARTICLE 8.
       ACS HOLDINGS' REPURCHASE OF CERTAIN OF ITS MEMBERSHIP INTERESTS AND
                            NOTES FROM ACS INFOSOURCE

8.1.     PURCHASE AND SALE; PURCHASE PRICE



         Subject to the terms and conditions of this Agreement, at the Closing,
ACS InfoSource shall sell to ACS Holdings, and ACS Holdings shall repurchase for
cancellation, all of ACS InfoSource's right, title and interest in and to
71,842,577 ACS Holdings Membership Interests at a price of US$71,842,577 per ACS
Holdings Membership Interest and US$71,842,577 principal amount of ACS Holdings
Notes at a price of US$71,842,577 for an aggregate purchase price of
US$143,685,154 (the "ACS HOLDINGS REPURCHASE PRICE")

8.2.     PAYMENT OF THE ACS HOLDINGS REPURCHASE PRICE AND DELIVERY OF
CERTIFICATES

         The ACS Holdings Repurchase Price will be paid at the Closing by, or on
behalf of, ACS Holdings by wire transfer of immediately available funds or by
delivery of a bank draft or a certified cheque payable to, or to the order of,
ACS InfoSource, or as may be otherwise directed by ACS InfoSource in writing,
against delivery by ACS InfoSource of a certificate representing 71,842,577 ACS
Holdings Membership Interests, together with a duly executed transfer and power
of attorney, executed in blank, and by the delivery of the ACS Holdings Note in
the principal amount of US$71,842,577 (which ACS Holdings will re-issue to ACS
InfoSource the ACS Holdings Note in the principal amount of US$71,842,577).

                                   ARTICLE 9.
         TRANSACTIONS TO BE EFFECTED UPON EXERCISE OF THE OVER ALLOTMENT
                                     OPTION

9.1.     PURCHASE AND SALE TRANSACTIONS

         Upon exercise of the Over-Allotment Option, if any, the Fund, ACS
Canada, the Company, ACS Holdings and ACS InfoSource shall enter into and
implement the following transactions:

         9.1.1.   ACS Canada will issue and sell to the Fund, and the Fund will
purchase from ACS Canada, ACS Canada Common Shares at a price of $1.00 per ACS
Canada Common Share for an aggregate subscription price equal to 50% of the
aggregate proceeds received by the Fund pursuant to the exercise of the
Over-Allotment Option (net of any fees and expenses of the Offering payable by
the Fund) (the "OVER-ALLOTMENT FUND COMMON SHARE SUBSCRIPTION PRICE").

         9.1.2.   ACS Canada will issue and sell to the Fund, and the Fund will
purchase from ACS Canada, ACS Canada Notes in a principal amount equal to 50% of
the aggregate proceeds received by the Fund pursuant to the exercise of the
Over-Allotment Option (net of any fees and expenses of the Offering payable by
the Fund) of a price of 100% of such principal amount (the "OVER-ALLOTMENT FUND
NOTE SUBSCRIPTION FEE").

         9.1.3.   ACS Holdings will sell to ACS Canada, and ACS Canada will
purchase from ACS Holdings, such number of Company Membership Interests at a
price of US$1.00 per Company Membership Interest for an aggregate price equal to
the sum of the Over-Allotment Fund Common Share Subscription Price and
Over-Allotment Fund Note Subscription Price (net of any fees and expenses of the
Offering payable by ACS Canada) (the "OVER-ALLOTMENT COMPANY MEMBERSHIP INTEREST
PURCHASE PRICE").

         9.1.4.   ACS InfoSource shall sell to ACS Holdings, and ACS Holdings
shall repurchase for cancellation all of ACS InfoSource's right, title and
interest in and to ACS Holdings Membership Interests (at a price of US$1.00 per
ACS Holdings Membership Interest) and a portion of the principal amount of ACS
Holdings Notes for an aggregate purchase price equal to the Over-Allotment
Company Membership Interest Purchase Price to be allocated as between ACS
Holdings Membership Interests (the "OVER-ALLOTMENT ACS HOLDINGS MEMBERSHIP
INTERESTS REPURCHASE PRICE") and ACS Holdings Notes (THE "OVER-ALLOTMENT ACS
HOLDINGS NOTES REPURCHASE PRICE") in the same proportions as the ACS Holdings
Repurchase Price in Section 8.1.

         9.1.5.   The parties agree that any expenses attributable to the
Over-Allotment Option will be paid in the same proportion as the fees in
connection with the Closing.



9.2.     PAYMENT

         The Over-Allotment Fund Common Share Subscription Price, the
Over-Allotment Fund Note Subscription Price and the Over-Allotment Company
Membership Interest Purchase Price will be paid in the same manner as set out in
Sections 2.2, 3.2 and 7.2 respectively, in the applicable amounts. The
Over-Allotment ACS Holdings Membership Interests Repurchase Price and the
Over-Allotment ACS Holdings Notes Repurchase Price will be paid in the same
manner as set out in Section 8.2.

                                   ARTICLE 10.
                         REPRESENTATIONS AND WARRANTIES

10.1.    REPRESENTATIONS AND WARRANTIES OF THE FUND

         The Fund represents and warrants to ACS Canada as follows and
acknowledges that ACS Canada is relying upon the following representations and
warranties in completing the transactions contemplated hereby:

         10.1.1.  FORMATION AND STATUS OF THE FUND. The Fund has been properly
established and settled and is validly existing as a trust under the laws of the
Province of Ontario. The Fund is a person referred to in paragraph (r) of the
definition of "accredited investor" in Ontario Securities Commission Rule 45-501
for the purposes of the acquisition of the ACS Canada Common Shares and the ACS
Canada Notes in accordance with this Agreement. The Fund is duly qualified to
carry on its business in each jurisdiction in which the conduct of its business
or the ownership, leasing or operation of its property and assets, requires such
qualification, except to the extent that any failure to be so qualified, either
individually or in the aggregate, would not have a Material Adverse Effect.

         10.1.2.  POWER OF THE FUND AND DUE AUTHORIZATION. The Fund has the
power and capacity to enter into and perform its obligations under this
Agreement and the Ancillary Agreements to which it is a party and to carry out
the transactions contemplated in the Prospectus. Each of this Agreement and the
Ancillary Agreements to which it is a party has been, or will at the Closing
Time be, duly authorized, executed and delivered by the Fund and is, or will at
the Closing Time be, a legal, valid and binding obligation of the Fund,
enforceable against the Fund in accordance with its terms, subject to exceptions
as to applicable bankruptcy, insolvency and similar laws and the availability of
equitable remedies.

         10.1.3.  CAPITAL OF THE FUND. The Fund is authorized to issue an
unlimited number of Units, of which as at the date of this Agreement, one Unit
is issued and outstanding as a fully paid Unit of the Fund.

         10.1.4.  NO OBLIGATIONS TO ISSUE SECURITIES. Except as contemplated by
the Prospectus and the Exchange Agreement, there are no agreements, options,
warrants, rights of conversion or other rights pursuant to which the Fund is, or
may become, obligated to issue any Units or any securities convertible or
exchangeable, directly or indirectly, into any Units.

         10.1.5.  NO APPROVALS. Except as set out in the Disclosure Letter, no
consent, approval, authorization or order of, and no filing, registration or
recording with, any Governmental Entity is required in connection with the
execution and delivery of this Agreement and the Ancillary Agreements, to which
it is a party, or the performance by the Fund of its obligations hereunder and
thereunder and the consummation by the Fund of the transactions contemplated
herein and therein.

         10.1.6.  NO CONTRAVENTION. Except as set out in the Disclosure Letter,
the execution and delivery by the Fund of this Agreement and the Ancillary
Agreements to which it is a party, the performance by the Fund of its
obligations hereunder and thereunder and compliance with the other provisions
hereof and thereof does not and will not contravene, breach or result in any
default under its organizational documents or under any mortgage, indenture,
lease, agreement, other legally binding instrument, licence, permit, statute,
regulation, order, judgment, decree or Law to which the Fund is a party or by
which it is bound.

         10.1.7.  RESIDENCE OF THE FUND. The Fund is not a non-resident of
Canada within the meaning of the Income Tax Act (Canada).



10.2.    REPRESENTATIONS AND WARRANTIES OF ACS CANADA

         ACS Canada represents and warrants to each of the Fund and ACS Holdings
as follows and acknowledges that each of the Fund and ACS Holdings is relying
upon the following representations and warranties in completing the transactions
contemplated hereby:

         10.2.1.  INCORPORATION AND STATUS. ACS Canada is duly incorporated and
existing under the laws of the Province of Ontario. ACS Canada is a Person
referred to in paragraph (aa) of the definition of "accredited investor" in
Ontario Securities Commission Rule 45-501 for the purposes of the acquisition of
the Company Membership Interests in accordance with this Agreement. ACS Canada
is duly qualified to carry on its business in each jurisdiction in which the
conduct of its business or the ownership, leasing or operation of its property
and assets, requires such qualification, except to the extent that any failure
to be so qualified, either individually or in the aggregate, would not have a
Material Adverse Effect.

         10.2.2.  CORPORATE POWER OF ACS CANADA AND DUE AUTHORIZATION. ACS
Canada has the power and capacity to enter into and perform its obligations
under this Agreement and the Ancillary Agreements to which it is a party and to
carry out the transactions contemplated in the Prospectus. Each of this
Agreement and the Ancillary Agreements to which it is a party has been, or will
at the Closing Time be, duly authorized, executed and delivered by ACS Canada
and is, or will at the Closing Time be, a legal, valid and binding obligation of
ACS Canada, enforceable against ACS Canada in accordance with its terms, subject
to exceptions as to applicable bankruptcy, insolvency and similar laws and the
availability of equitable remedies.

         10.2.3.  CAPITAL OF ACS CANADA. The authorized and issued capital of
ACS Canada at the date of this Agreement and after giving effect to the Closing,
is and will be as set forth in Schedule "A". All the shares indicated on such
Schedule "A" as being issued and outstanding have been validly issued and are
outstanding as fully paid and non-assessable shares. After giving effect to the
Closing, the Fund shall have good and marketable title, to the ACS Canada Common
Shares owned by it, free of all Liens, other than any Liens created by the Fund.

         10.2.4.  NO OBLIGATION TO ISSUE SECURITIES. Except as contemplated by
this Agreement and the Exchange Agreement, there are no agreements, options,
warrants, rights of conversion or other rights pursuant to which ACS Canada is,
or may become, obligated to issue any ACS Canada Common Shares or any ACS Canada
Notes or any securities convertible or exchangeable, directly or indirectly,
into any ACS Canada Common Shares or ACS Canada Notes.

         10.2.5.  NO APPROVALS. Except as set out in the Disclosure Letter, no
consent, approval, authorization or order of, and no filing, registration or
recording with, any Governmental Entity is required in connection with the
execution and delivery of this Agreement and the Ancillary Agreements to which
it is a party or the performance by ACS Canada of its obligations hereunder and
thereunder or the consummation by ACS Canada of the transactions contemplated
herein and therein.

         10.2.6.  NO CONTRAVENTION. Except as set out in the Disclosure Letter,
the execution and delivery by ACS Canada of this Agreement and the Ancillary
Agreements to which it is a party, the performance by ACS Canada of its
obligations hereunder and thereunder and compliance with the other provisions
hereof and thereof does not and will not contravene, breach or result in any
default under its organizational documents or under any mortgage, indenture,
lease, agreement, other legally binding instrument, licence, permit, statute,
regulation, order, judgment, decree or Law to which ACS Canada is a party or by
which it is bound.

         10.2.7.  RESIDENCE OF ACS CANADA. ACS Canada is not a non-resident of
Canada within the meaning of the Income Tax Act (Canada).

10.3.    REPRESENTATIONS AND WARRANTIES OF ACS HOLDINGS

         ACS Holdings represents and warrants to the Fund, ACS Canada, ACS
InfoSource and the Company as follows and acknowledges that each of ACS Canada,
ACS InfoSource and the Company is relying upon the following representations and
warranties in completing the transactions contemplated hereby:



         10.3.1.  ORGANIZATION AND STATUS. ACS Holdings is a limited liability
company duly organized and existing under the laws of the State of Alaska. ACS
Holdings is duly qualified to carry on its business in each jurisdiction in
which the conduct of its business or the ownership, leasing or operation of its
property and assets, requires such qualification, except to the extent that any
failure to be so qualified, either individually or in the aggregate, would not
have a Material Adverse Effect.

         10.3.2.  CORPORATE POWER OF ACS HOLDINGS AND DUE AUTHORIZATION. ACS
Holdings has the power and capacity to enter into and perform its obligations
under this Agreement and the Ancillary Agreements to which it is a party and to
carry out the transactions contemplated in the Prospectus. Each of this
Agreement and the Ancillary Agreements to which it is a party has been, or will
at the Closing Time be, duly authorized, executed and delivered by or on behalf
of ACS Holdings and is, or will at the Closing Time be, a legal, valid and
binding obligation of ACS Holdings, enforceable against ACS Holdings in
accordance with its terms, subject to exceptions as to applicable bankruptcy,
insolvency and similar laws and the availability of equitable remedies.

         10.3.3.  CAPITAL OF ACS HOLDINGS. The authorized and issued capital of
ACS Holdings at the date of this Agreement and after giving effect to the
Closing, is and will be as set forth in Schedule "B". All the membership
interests indicated on such Schedule "B" as being issued and outstanding have
been validly issued and are outstanding as fully paid and non-assessable
membership interests. After giving effect to the Closing, ACS InfoSource shall
have good and marketable title to the ACS Holdings Membership Interests owned by
it, free of all Liens, other than any Liens created by ACS InfoSource.

         10.3.4.  NO OBLIGATIONS TO ISSUE SECURITIES. Except as contemplated by
this Agreement and the Exchange Agreement, there are no agreements, options,
warrants, rights of conversion or other rights pursuant to which ACS Holdings
is, or may become, obligated to issue any ACS Holdings Membership Interests or
ACS Holdings Notes or any securities convertible or exchangeable, directly or
indirectly, into any ACS Holdings Membership Interests or ACS Holdings Notes.

         10.3.5.  NO APPROVALS. Except as set out in the Disclosure Letter, no
consent, approval, authorization or order of, and no filing, registration or
recording with, any Governmental Entity is required in connection with the
execution and delivery of this Agreement and the Ancillary Agreements to which
it is a party, or the performance by ACS Holdings of its obligations hereunder
and thereunder or the consummation by ACS Holdings of the transactions
contemplated herein and therein.

         10.3.6.  NO CONTRAVENTION. Except as set out in the Disclosure Letter,
the execution and delivery by ACS Holdings of this Agreement and the Ancillary
Agreements to which it is a party, the performance by ACS Holdings of its
obligations hereunder and thereunder and compliance with other provisions hereof
and thereof does not and will not contravene, breach or result in any default
under its organizational documents or under any mortgage, indenture, lease,
agreement, other legally binding instrument, licence, permit, statute,
regulation, order, judgment, decree or Law to which ACS Holdings is a party or
by which it is bound.

10.4.    REPRESENTATIONS AND WARRANTIES OF ACS INFOSOURCE

         ACS InfoSource represents and warrants to the Fund and ACS Holdings
(other than in respect of the representation and warranty contained in Section
10.4.5) as follows and acknowledges that the Fund and ACS Holdings is relying
upon the following representations and warranties in completing the transactions
contemplated hereby:

         10.4.1.  ORGANIZATION AND STATUS. ACS InfoSource is a corporation duly
organized and existing under the laws of the State of Alaska. ACS InfoSource is
duly qualified to carry on its business in each jurisdiction in which the
conduct of its business or the ownership, leasing or operation of its property
and assets, requires such qualification, except to the extent that any failure
to be so qualified, either individually or in the aggregate, would not have a
Material Adverse Effect.

         10.4.2.  CORPORATE POWER OF ACS INFOSOURCE AND DUE AUTHORIZATION. ACS
InfoSource has the power and capacity to enter into and perform its obligations
under this Agreement and the Ancillary Agreements to which it is a party and to
carry out the transactions contemplated in the Prospectus. Each of this
Agreement and the Ancillary Agreements to which it is a party has been, or will
at the Closing Time



be, duly authorized, executed and delivered by or on behalf of ACS InfoSource
and is, or will at the Closing Time be, a legal, valid and binding obligation of
ACS InfoSource, enforceable against ACS InfoSource in accordance with its terms,
subject to exceptions as to applicable bankruptcy, insolvency and similar laws
and the availability of equitable remedies.

         10.4.3.  NO APPROVALS. Except as set out in the Disclosure Letter, no
consent, approval, authorization or order of, and no filing, registration or
recording with, any Governmental Entity is required in connection with the
execution and delivery of this Agreement and the Ancillary Agreements to which
it is a party or the performance by ACS InfoSource of its obligations hereunder
and thereunder or the consummation by ACS InfoSource of the transactions
contemplated herein and therein.

         10.4.4.  NO CONTRAVENTION. Except as set out in the Disclosure Letter,
the execution and delivery by ACS InfoSource of this Agreement and the Ancillary
Agreements to which it is a party, the performance by ACS InfoSource of any of
its obligations hereunder and thereunder and compliance with the provisions
hereof and thereof does not and will not contravene, breach or result in any
default under its organizational documents or under any mortgage, indenture,
lease, agreement, other legally binding instrument, licence, permit, statute,
regulation, order, judgment, decree or Law to which ACS InfoSource is a party or
by which it is bound.

         10.4.5.  PROSPECTUS DISCLOSURE. To the Actual Knowledge of ACS
InfoSource, as of the date of its filing with the Securities Commissions and as
of the Closing Time, the Prospectus does not contain any misrepresentation (as
that term is defined in s. 1(1) of the Securities Act (Ontario), R.S.O. 1990, c.
S.5, as amended).

10.5.    REPRESENTATIONS AND WARRANTIES OF ACSH

         ACSH represents and warrants to the Fund as follows and acknowledges
that the Fund is relying upon the following representations and warranties in
completing the transactions contemplated hereby:

         10.5.1.  ORGANIZATION AND STATUS. ACSH is a corporation duly organized
and existing under the laws of the State of Delaware. ACSH is duly qualified to
carry on its business in each jurisdiction in which the conduct of its business
or the ownership, leasing or operation of its property and assets, requires such
qualification, except to the extent that any failure to be so qualified, either
individually or in the aggregate, would not have a Material Adverse Effect.

         10.5.2.  CORPORATE POWER OF ACSH AND DUE AUTHORIZATION. ACSH has the
power and capacity to enter into and perform its obligations under this
Agreement and the Ancillary Agreements to which it is a party. This Agreement
has been duly authorized, executed and delivered by or on behalf of ACSH and is
a legal, valid and binding obligation of ACSH, enforceable against ACSH in
accordance with its terms, subject to exceptions as to applicable bankruptcy,
insolvency and similar laws and the availability of equitable remedies.

         10.5.3.  NO APPROVALS. Except as set out in the Disclosure Letter, no
consent, approval, authorization or order of, and no filing, registration or
recording with, any Governmental Entity is required in connection with the
execution and delivery of this Agreement or the performance by ACSH of its
obligations hereunder.

         10.5.4.  NO CONTRAVENTION. Except as set out in the Disclosure Letter,
the execution and delivery by ACSH of this Agreement, the performance by ACSH of
any of its obligations hereunder and compliance with the provisions hereof does
not and will not contravene, breach or result in any default under its
organizational documents or under any mortgage, indenture, lease, agreement,
other legally binding instrument, licence, permit, statute, regulation, order,
judgment, decree or Law to which ACSH is a party or by which it is bound.

         10.5.5.  PROSPECTUS DISCLOSURE. To the Actual Knowledge of ACSH, as of
the date of its filing with the Securities Commissions and as of the Closing
Time, the Prospectus does not contain any misrepresentation (as that term is
defined in s. 1(1) of the Securities Act (Ontario), R.S.O. 1990, c. S.5, as
amended).



10.6.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company represents and warrants to the Fund, ACS Holdings (other
than in respect of the representation and warranty contained in Section 10.6.19)
and ACS Canada as follows and acknowledges that each of the Fund, ACS Holdings
and ACS Canada is relying upon the following representations and warranties in
completing the transactions contemplated hereby:

         10.6.1.  ORGANIZATION AND STATUS. The Company is a limited liability
company duly organized and existing under the laws of the State of Alaska. The
Company is duly qualified to carry on its business in each jurisdiction in which
the conduct of its business or the ownership, leasing or operation of its
property and assets, requires such qualification, except to the extent that any
failure to be so qualified, either individually or in the aggregate, would not
have a Material Adverse Effect. The Company does not own an interest in any
Person.

         10.6.2.  CORPORATE POWER OF THE COMPANY AND DUE AUTHORIZATION. The
Company has the power and capacity to enter into and perform its obligations
under this Agreement and the Ancillary Agreements to which it is a party and to
carry out the transactions contemplated in the Prospectus. Each of this
Agreement and the Ancillary Agreements to which it is a party has been, or will
at the Closing Time be, duly authorized, executed and delivered by or on behalf
of the Company and is, or will at the Closing Time be, a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to exceptions as to applicable bankruptcy, insolvency
and similar laws and the availability of equitable remedies.

         10.6.3.  CAPITAL OF THE COMPANY. The authorized and issued capital of
the Company at the date of this Agreement and after giving effect to the
Closing, is and will be as set forth in Schedule "C". All the membership
interests indicated on such Schedule "C" as being issued and outstanding have
been validly issued and are outstanding as fully paid and non-assessable
membership interests. After giving effect to the Closing, ACS Canada shall have
good and marketable title to the Company Membership Interests owned by it, free
of all Liens, other than any Liens created by ACS Canada and, other than the
Securityholders Agreement and the Exchange Agreement, there are no shareholder
agreements, pooling agreements, voting trusts or other agreements with respect
to such securities.

         10.6.4.  NO OBLIGATIONS TO ISSUE SECURITIES. Except as contemplated by
this Agreement, the Underwriting Agreement, the Securityholders Agreement and
the Exchange Agreement, there are no agreements, options, warrants, rights of
conversion or other rights pursuant to which the Company is, or may become,
obligated to issue any Company Membership Interests or any securities
convertible or exchangeable, directly or indirectly, into any Company Membership
Interests.

         10.6.5.  NO CONTRAVENTION. Except as set out in the Disclosure Letter,
the execution and delivery by the Company of this Agreement and the Ancillary
Agreements to which it is a party, the performance by the Company of its
obligations hereunder and thereunder and compliance with other provisions hereof
and thereof does not and will not contravene, breach or result in any default
under its organizational documents or under any mortgage, indenture, lease,
agreement, other legally binding instrument, licence, permit, statute,
regulation, order, judgment, decree or Law to which the Company is a party or by
which it is bound.

         10.6.6.  FINANCIAL STATEMENTS. The consolidated financial statements of
ACS InfoSource contained in the Prospectus, including the footnotes thereto: (i)
are accurate, correct and complete and are in accordance with the books of
account and records of ACS InfoSource (the "FINANCIAL STATEMENTS"), and (ii)
present fairly, in all material respects, the assets, liabilities and financial
position of ACS InfoSource as at December 31, 2002, 2001 and 2000, as
applicable, in each case in accordance with generally accepted accounting
principles in the United States, as reconciled to generally accepted accounting
principles in Canada in the footnotes thereto.

         10.6.7.  CONDUCT OF BUSINESS IN ORDINARY COURSE. Except as disclosed in
the Prospectus, since December 31, 2002, the Business has been carried on in the
Ordinary Course.



         10.6.8.  OPERATION OF BUSINESS. The Material Agreements permit and
provide for the conduct of the Business substantially in the manner in which it
has been conducted since January 2001, assuming compliance by the parties with
the material terms thereof.

         10.6.9.  NO MATERIAL ADVERSE CHANGE. Except as disclosed in the
Prospectus, since December 31, 2002, there has not been any Material Adverse
Change.

         10.6.10. LITIGATION. Except as disclosed in the Prospectus and in the
Disclosure Letter, there is no Litigation pending, or, to the Actual Knowledge
of the Company, threatened against or affecting ACS InfoSource, or the Company,
or any of their properties or rights or any of its assets which would, either
individually, or in the aggregate, constitute a Material Adverse Effect or
otherwise prevent or materially delay the consummation of the transactions
contemplated hereby.

         10.6.11. ASSETS. As of the Closing, the Company has good and marketable
title to all of the assets of the Business, free and clear of all Liens except
as set forth in the Disclosure Letter except Liens that individually or
aggregated with all others would not cause a Material Adverse Effect. ACS
InfoSource owns or has the right to use (and, following Closing, the Company
will own or have the right to use) all assets (including the Licensed Software)
that are necessary for use in and operation of the Business as currently
conducted except where the failure to have any such rights either individually
or aggregated with all others would not cause a Material Adverse Effect. ACS
InfoSource does not own or have any interest (other than a leasehold interest)
in any real property.

         10.6.12. MATERIAL CONTRACTS.

                  10.6.12.1. The Disclosure Letter sets forth all of the
         material agreements or contracts (including all leases of real
         property) to which ACS InfoSource is a party.

                  10.6.12.2. As of the Closing, each agreement and contract
         disclosed in the Disclosure Letter is a valid and binding obligation of
         ACS InfoSource, and the other parties thereto (and, following Closing,
         will be a valid and binding obligation of the Company and such other
         parties) is in full force and effect and is enforceable in accordance
         with its terms, except that (i) such enforcement may be subject to
         applicable bankruptcy, insolvency or other similar laws, now or
         hereafter in effect, affecting creditors' rights generally and (ii) the
         remedy of specific performance and injunctive and other forms of
         equitable relief may be subject to equitable defences and to the
         discretion of the court before which any proceeding therefor may be
         brought. ACS InfoSource is not, nor, to the Actual Knowledge of the
         Company, is any other party thereto, in default in any material respect
         under the terms of any such agreement or contract or has any intention
         of breaching or defaulting under such agreement or contract.

         10.6.13. REQUIRED CONSENTS. Except as set out in the Disclosure Letter,
no authorization, consent or approval of, or filing with or notice to, any
Governmental Entity or other Person is required in connection with the
execution, delivery and performance by ACSH, ACS InfoSource, ACS Holdings and/or
the Company of this Agreement and the Ancillary Agreements to which ACSH, ACS
InfoSource, ACS Holdings and/or the Company is a party, or in connection with
the transfer of the Business hereunder.

         10.6.14. COMPLIANCE WITH LAWS; NO DEFAULTS.

                  10.6.14.1. Except as disclosed in the Prospectus, ACS
         InfoSource and the Company are in compliance in all material respects
         with all applicable provisions of any Law, except where such failure
         would not result in a Material Adverse Effect. Neither ACS InfoSource
         nor the Company is presently subject to any material consent,
         injunction, order, judgment or decree of any Governmental Entity or
         other Person, which resulted from a violation or threatened violation
         of applicable Laws (including Environmental Laws).

                  10.6.14.2. Each of ACS InfoSource and the Company holds, or
         will hold at the Closing Time, all permits, leases, by-laws, licences,
         waivers, exemptions, consents, certificates, registrations,
         authorizations, approvals, rights, rights of way and entitlements and
         the like which are required from any Governmental Entity or any other
         Person required or necessary to conduct the Business as currently
         conducted or as the Prospectus discloses it will be conducted, the
         failure of



         which to hold or obtain, individually or in the aggregate, would have a
         Material Adverse Effect, and all such permits, leases, by-laws,
         licences, waivers, exemptions, consents, certificates, registrations,
         authorizations, approvals, rights, rights of way and entitlements and
         the like are in full force and effect and in good standing in all
         material respects, except where such failure would not result in a
         Material Adverse Effect.

                  10.6.14.3. Except as set forth in the Disclosure Letter, ACS
         InfoSource and the Company are not in default under, and no condition
         exists that with notice or lapse of time or both would constitute a
         default under, any judgment, order, decree, consent or injunction of
         any Governmental Entity.

         10.6.15. INTELLECTUAL PROPERTY. Set forth in the Disclosure Letter is a
true and complete list of all trade marks and trade mark applications, trade
names, certification marks, patents and patent applications, copyrights and
industrial designs used by ACS InfoSource in connection with the Business (the
"INTELLECTUAL PROPERTY"), along with the offices (if any) in which the same is
registered (being the only offices where such registration is necessary to
preserve the rights thereto) and the applicable expiry dates of any
registrations. The Intellectual Property (other than computer systems software
licensed by third parties to ACS InfoSource) which is used by ACS InfoSource in
connection with the Business is owned by ACS InfoSource and ACS InfoSource has
the sole and exclusive right to use the same, except as noted in the Disclosure
Letter and except where the failure to possess such right would not result in a
Material Adverse Effect. No Person has made a claim or a demand that conduct of
the Business infringes on any Intellectual Property owned by any other person
and, to the Actual Knowledge of ACS InfoSource, ACS Holdings and the Company,
the conduct of the Business does not infringe on any Intellectual Property owned
by any other person.

         10.6.16. TAX, ETC. MATTERS. To the Actual Knowledge of the Company,
each of ACS InfoSource and the Company has paid or will pay or have made or will
make arrangements for the payment of all Governmental Charges in respect of the
Business, which are capable of forming or resulting in a Lien on the assets of
the Business. There are no proceedings either in progress, pending or to the
Actual Knowledge of the Company, threatened in connection with any Governmental
Charges in respect of the Business. Each of ACS InfoSource and the Company has
withheld or collected and remitted all material amounts required to be withheld
or collected and remitted by it in respect of any Governmental Charges.

         10.6.17. EMPLOYEE ARRANGEMENTS.

                  10.6.17.1. The Disclosure Letter lists, as of the date of this
         Agreement, all stock option plans, employment and severance agreements,
         pension, profit sharing and retirement plans and all bonus and other
         employee benefit or fringe benefit plans, including, without
         limitation, "employee benefit plans" as such term is defined under
         section 3(3) of ERISA, maintained or with respect to which
         contributions are made by ACS InfoSource or the Company or with respect
         to which ACS InfoSource or the Company have any liability
         (collectively, the "COMPANY PLANS").

                  10.6.17.2. (i) Each Company Plan which is intended to be
         qualified under section 401(a) of the U.S. Tax Code has received a
         favourable determination letter from the Internal Revenue Service that
         it is so qualified, and nothing has occurred since the date of such
         letter that could reasonably be expected to affect the qualified status
         of such Company Plan; (ii) each Company Plan has been operated in all
         material respects in accordance with its terms and the requirements of
         applicable Law; and (iii) none of ACS InfoSource and the Company have
         incurred a direct or indirect liability under, arising out of or by
         operation of Title IV of ERISA in connection with the termination of,
         or withdrawal from, any of its Company Plans or other retirement plan
         or arrangement (including, without limitation, any "EMPLOYEE PENSION
         BENEFIT PLAN" as defined in section 3(2) of ERISA that ACS InfoSource
         or the Company, or any other entity that together with any of them is
         treated as a single employer under section 414 of the U.S. Tax Code,
         maintains or ever has maintained or to which any of them contributes,
         ever has contributed, or ever has been required to contribute), and, to
         the Actual Knowledge of the Company, no fact or event exists that could
         reasonably be expected to give rise to any such liability. The
         aggregate accumulated benefit obligations of each Company Plan, as of
         the Date of Closing, will not exceed the fair market value of the
         assets of such plan.



                  10.6.17.3. All Company Plans that are subject to the Laws of
         the United States are in compliance in all material respects with such
         applicable Laws, including relevant tax Laws relating thereto, and the
         requirements of any trust deed or equivalent instrument under which
         they are established.

         10.6.18. LABOUR MATTERS. Except as set out in the Disclosure Letter,
neither of ACS InfoSource nor the Company are a party to or bound by any:

                  10.6.18.1. oral or written contract or commitment for the
         employment or retainer of any individual, including, for greater
         certainty, any contract or commitment with directors, officers,
         employees, independent contractors or agents, other than for contracts
         of indefinite hire terminable by ACS InfoSource or the Company, as
         applicable, without cause on reasonable notice;

                  10.6.18.2. oral or written contract or commitment providing
         for severance, termination or similar payments, including on a change
         of control of ACS InfoSource; or

                  10.6.18.3. contract with or commitment to any trade union,
         council of trade unions, employee bargaining agent or affiliated
         bargaining agent (collectively called "LABOUR REPRESENTATIVES") and
         neither ACS InfoSource nor the Company have conducted negotiations with
         respect to any such future contracts or commitments; no labour
         representatives hold bargaining rights with respect to any employees of
         ACS InfoSource or the Company.

         10.6.19. PROSPECTUS DISCLOSURE. To the Actual Knowledge of the Company,
as of the date of its filing with the Securities Commissions and as of the
Closing Time, the Prospectus does not contain any misrepresentation (as that
term is defined in s. 1(1) of the Securities Act (Ontario), R.S.O. 1990, c.
S.5, as amended).

10.7.    NO FINDERS' FEE

         Except as disclosed in the Disclosure Letter, each of the parties
hereto represents and warrants to the other parties that it has not taken, and
agrees that it will not take, any action that would cause such other parties to
become liable to any claim or demand for a brokerage commission, finder's fee or
other similar payment in connection with the transactions contemplated hereby,
other than with respect to any underwriter's fees as described in the
Prospectus.

10.8.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES

         The representations and warranties of each party contained in this
Agreement and in all certificates and documents delivered pursuant to or
contemplated by this Agreement will survive the Closing and continue in full
force and effect for a period ending three months after the completion of the
audit of the Company for fiscal 2003, except that:

         10.8.1. the representations and warranties set out in Sections 10.1.1,
10.1.2, 10.1.5, 10.1.6, 10.2.1, 10.2.2, 10.2.5, 10.2.6, 10.3.1, 10.3.2, 10.3.5,
10.3.6, 10.4.1, 10.4.2, 10.4.3, 10.4.4, 10.5.1, 10.5.2, 10.5.3, 10.5.4, 10.6.1,
10.6.2, and 10.6.5 will survive Closing and continue in full force and effect
without limitation of time; and

         10.8.2. the representations and warranties contained in Sections
10.4.5, 10.5.5 and 10.6.19 will survive the Closing and continue in full force
and effect for a period of three years from the date which the Underwriters
notify the Securities Commissions in accordance with Securities Laws of the
completion of the distribution of Units under the Prospectus,

and no claim for breach of representation or warranty (other than those
referenced in Section 10.8.1) will be valid unless the party against whom such
claim is made has been given reasonably detailed notice in writing specifying
the amount of the claim and the reasons therefore before the expiry of such
period.



                                   ARTICLE 11.
                               CLOSING CONDITIONS

11.1.    CONDITIONS PRECEDENT TO CLOSING

         The obligation of each of the parties to complete the transactions
contemplated in this Agreement at the Date of Closing is subject to the
satisfaction or waiver of, or compliance with, at or prior to the Closing Time,
each of the following conditions:

         11.1.1.  TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of each of the parties, as the case may be, made in or pursuant
to this Agreement or in any Ancillary Agreement as to which it is a party, will
have been true and correct in all material respects as of the date of this
Agreement and will be true and correct in all material respects as of the
Closing Time (except in each case, for those representations and warranties that
are subject to a materiality qualification, which will be true and correct in
all respects and except in respect of any representations and warranties that
are to be true and correct as a specified date, in which case they will be true
and correct as of that date only) with the same force and effect as if such
representations and warranties had been made on and as of such date, and each
party will have executed and delivered a certificate of a senior officer
(without personal liability) or, in the case of a party which is an individual,
by that individual, to that effect with respect to the representations and
warranties of such party which are contained in this Agreement or in any
Ancillary Agreement. Neither the receipt of such certificate nor the Closing
will constitute a waiver by the party receiving such certificate of any of the
representations and warranties of such party providing such certificate which
are contained in this Agreement. Upon the delivery of such certificates, the
representations and warranties of the parties in Article 10, as applicable, will
be deemed to have been made on and as of the Date of Closing with the same force
and effect as if made on and as of such date.

         11.1.2.  COMPLIANCE WITH AND PERFORMANCE OF COVENANTS. Each party, to
their knowledge, will have fulfilled or complied in all material respects with
all covenants contained in this Agreement and in any Ancillary Agreements as to
which it is a party, to be fulfilled or complied with by it at or prior to the
Closing and each party will have executed and delivered a certificate of a
senior officer (without personal liability) or, in the case of a party which is
an individual, by that individual, to that effect.

         11.1.3.  OFFERING. The Fund will have completed the sale of Units
pursuant to the Offering other than the Over-Allotment Option (in escrow pending
the completion of the Closing) on terms satisfactory to the Fund, acting
reasonably.

         11.1.4.  FINANCING. The Company will have entered into the Proposed
Credit Facility as contemplated by the Prospectus, on terms and conditions
satisfactory to the Company, acting reasonably, and the credit facilities to be
provided for under the Proposed Credit Facility will be available to be drawn
down by the Company.

         11.1.5.  RELEASE OF SECURITY. All security granted over the assets of
the Business under the Current Credit Facility, shall have been released.

         11.1.6.  REQUIRED CONSENTS. All of the Required Consents shall have
been obtained.

         11.1.7.  RELEASE OF GUARANTEE. L.M. Berry and Company shall have
released ACSH from its obligations under the Guarantee of Performance of
Contract among L.M. Berry and Company and ACSH dated July 31, 2001.

         11.1.8.  L.M. BERRY CONFIRMATION. L.M. Berry and Company shall have
provided, in form and substance acceptable to ACS Canada and the Fund, each
acting reasonably, confirmation of all amounts outstanding to L.M. Berry and
Company from the Company and confirmation to the effect that the agreements
between L.M. Berry and Company and the Company remain in full force and effect
and that neither the Company nor L.M. Berry and Company is in default under any
such agreements.

         11.1.9.  DELIVERIES. All documents relating to the due authorization
and completion of the transactions contemplated hereby, all actions and all
corporate, trust and other proceedings taken at or prior to the Closing Time on
the Date of Closing in connection with the performance by each party of its



respective obligations under this Agreement, and all other documents and
materials of any kind relating to this Agreement and carrying out the terms
hereof, will have been completed and satisfied including the following:

                  11.1.9.1. each of the parties will initiate the wire transfers
         or deliver the bank drafts, certified cheques, share certificates, note
         certificates or unit certificates, applicable to them, as specified in
         Articles 2 through 7; and

                  11.1.9.2. each party will deliver or cause to be delivered the
         certificates referred to in Sections 11.1.1 and 11.1.2.

         11.1.10. EXECUTION OF OTHER AGREEMENTS. The Ancillary Agreements will
have been executed and delivered by all parties thereto and the other
transactions contemplated by the Prospectus to be completed on or prior to the
Date of Closing will have been completed to the satisfaction of the Fund, acting
reasonably.

         11.1.11. NO ADVERSE LEGISLATION. There will not be any statute, rule or
regulation of any Governmental Entity which makes it illegal for any of the
parties to consummate the transactions contemplated hereby or any order, decree
or judgment of any Governmental Entity enjoining any party to this Agreement
from consummating any of the transactions contemplated hereby.

         11.1.12. NO LEGAL ACTION. No action or proceeding will be pending or
threatened by any Person (other than the Fund, ACS Canada, ACS Holdings, the
Company and ACS InfoSource and any of their affiliates) in any jurisdiction, to
enjoin, restrict or prohibit any of the transactions contemplated by this
Agreement or the right of the Company to conduct the Business after Closing on
substantially the same basis as heretofore operated or to seek damages in
connection with this Agreement.

                                   ARTICLE 12.
                            COVENANTS OF THE PARTIES

12.1.    COVENANT REGARDING REPRESENTATIONS, WARRANTIES AND CONDITIONS

         Except as expressly provided in this Agreement or except with the prior
written consent of the other parties hereto, prior to the Closing Time each of
the parties will do or refrain from doing all acts and things in order to ensure
that the respective representations and warranties of such party in Article 10
remain true and correct at the Closing Time as if such representations and
warranties were made at and as of such date and to satisfy or cause to be
satisfied the conditions in Article 11 which are within such party's control.

12.2.    CONDUCT OF BUSINESS PRIOR TO CLOSING

         Except as disclosed in the Disclosure Letter, during the Interim
Period, ACS InfoSource agrees that it will, and will cause the Company to, use
reasonable commercial efforts to conduct the Business only in the Ordinary
Course and in compliance in all material respects with the Current Credit
Facility.

12.3.    TRANSFER OF THE SECURITIES

         12.3.1.  ACS Canada will take all necessary steps and corporate
proceedings to cause the ACS Canada Common Shares issued by ACS Canada to be
duly and validly issued and delivered to the Fund at the Closing on the Date of
Closing and the Over-Allotment Completion Date, as the case may be, free and
clear of all Liens other than (i) the restrictions on transfer, if any,
contained in the articles of ACS Canada and (ii) Liens, if any, granted by the
Fund.

         12.3.2.  ACS Canada will take all necessary steps and corporate
proceedings to cause the ACS Canada Notes issued by ACS Canada to be duly and
validly created, issued and delivered to the Fund at the Closing on the Date of
Closing, and the Over-Allotment Completion Date, as the case may be, free and
clear of all Liens other than Liens, if any, granted by the Fund.



         12.3.3.  ACS Holdings will take all necessary steps and corporate or
other proceedings to cause the ACS Holdings Membership Interests issued by ACS
Holdings to be duly and validly issued and delivered to ACS InfoSource at the
Closing on the Date of Closing, free and clear of all Liens other than (i) the
restrictions on transfer, if any, contained in the limited liability company
agreement of ACS Holdings and (ii) Liens, if any, granted by ACS InfoSource.

         12.3.4.  ACS Holdings will take all necessary steps and corporate or
other proceedings to cause the ACS Holdings Note issued by ACS Holdings to be
duly and validly created, issued and delivered to ACS InfoSource at the Closing
on the Date of Closing, free and clear of all Liens other than Liens, if any,
granted by ACS InfoSource.

         12.3.5.  The Company will take all necessary steps and corporate or
other proceedings to cause the Company Membership Interests issued by the
Company to be duly and validly issued and delivered to ACS Holdings at the
Closing on the Date of Closing, free and clear of all Liens other than (i) the
restrictions on transfer, if any, contained in the limited liability company
agreement of the Company and (ii) Liens, if any, granted by ACS Holdings.

         12.3.6.  ACS Holdings will take all necessary steps and corporate or
other proceedings to cause or permit good title to such of the Company
Membership Interests owned by it to be duly and validly transferred and assigned
to the Company at the Closing on the Date of Closing, free and clear of all
Liens other than (i) the restrictions on transfer, if any, contained in the
limited liability company agreement of the Company and (ii) Liens, if any,
granted by the Company.

         12.3.7.  ACS Holdings will take all necessary steps and corporate or
other proceedings to cause or permit good title to such of the Company
Membership Interests owned by it to be duly and validly transferred and assigned
to ACS Canada at the Closing on the Date of Closing and the Over-Allotment
Completion Date, respectively, free and clear of all Liens other than (i) the
restrictions on transfer, if any, contained in the limited liability company
agreement of the Company and (ii) Liens, if any, granted by ACS Canada.

12.4.    FILINGS AND AUTHORIZATIONS

         Each of the parties, as promptly as practicable either before or after
the execution of this Agreement, will (i) make, or cause to be made, all such
filings and submissions under all Laws applicable to it, including, without
limitation, any required filings under the Hart Scott Rodino Act, as may be
required for it to complete the transactions contemplated in this Agreement, and
(ii) use its reasonable commercial efforts to take, or cause to be taken, all
other actions necessary in order for it to fulfill its obligations under this
Agreement. Each of the parties will co-ordinate and cooperate with one another
in exchanging such information and supplying such assistance as may be
reasonably requested by each in connection with the foregoing including,
providing each other with all notices and information supplied or filed with any
Governmental Entity and all notices and correspondence received from any
Governmental Entity.

12.5.    COOPERATION

         Each of ACS InfoSource, ACS Holdings, the Fund, ACS Canada, and the
Company will cooperate fully in good faith with each other and their respective
legal advisors, accountants and other representatives in connection with any
steps required to be taken as part of their respective obligations under this
Agreement. From time to time after the Date of Closing, each such Person will,
at the request of any other party, execute and deliver such additional
conveyances, transfers and other assurances as may be reasonably required to
effectively complete the transactions contemplated herein and to carry out the
intent of this Agreement.

                                   ARTICLE 13.
                                    REMEDIES

13.1.    INDEMNIFICATION

         If the Closing occurs, subject to Sections 10.8, 13.2 and 13.3, an
Indemnifying Party will, severally and not jointly or jointly and severally,
indemnify and save its respective Indemnified Persons



harmless of and from any Damages suffered by, imposed upon or asserted against
any of such Indemnified Persons as a result of, in respect of, connected with,
or arising out of, under, or pursuant to:

         13.1.1.  any failure of such Indemnifying Party to perform or fulfil
any of its covenants under this Agreement; or

         13.1.2.  any breach or inaccuracy of any representation or warranty
given by such Indemnifying Party to its Indemnified Persons contained in this
Agreement.

13.2.    INDEMNIFIED PERSONS

         The terms "INDEMNIFIED PERSONS" as used in Section 13.1 above shall
mean the parties set forth below:

         13.2.1.  the Fund's Indemnified Persons shall be: ACS Canada;

         13.2.2.  ACS Canada's Indemnified Persons shall be: the Fund and ACS
Holdings;

         13.2.3.  ACS Holdings' Indemnified Persons shall be: the Fund, ACS
Canada, ACS InfoSource and the Company;

         13.2.4.  the Company's Indemnified Person shall be: the Fund, ACS
Holdings and ACS Canada;

         13.2.5.  ACS InfoSource's Indemnified Persons shall be: the Fund and
ACS Holdings; and

         13.2.6.  ACSH's Indemnified Persons shall be: the Fund.

13.3.    LIMITATIONS OF LIABILITY

         The obligation of each of the Indemnifying Parties pursuant to the
indemnification provisions set forth in this Article 13 will be limited such
that:

         13.3.1.  no double recovery by any Person shall be permitted under this
Agreement and the Underwriting Agreement as a result of any action that results
in breach under both agreements; and

         13.3.2.  the total amount payable by ACSH, ACS InfoSource and ACS
Holdings under this Agreement will not exceed, in aggregate, the gross proceeds
received in the Offering by the Fund plus the value of ACS InfoSource's indirect
retained interest in ACS Media LLC plus the amount that ACSH will receive from
the Proposed Credit Facility on Closing.

13.4.    NOTICE OF CLAIM

         If an Indemnified Person wishes to make a claim for indemnification (a
"CLAIM") pursuant to this Article 13 against one or more of the Indemnifying
Party to which it is an Indemnified Person, the Indemnified Person will promptly
give notice to the Indemnifying Party of the Claim. Such notice will specify
with reasonable particularity (to the extent that the information is available):

         13.4.1.  the factual basis for the Claim; and

         13.4.2.  the amount of the Claim, or, if an amount is not then
determinable, an approximate and reasonable estimate of the potential amount of
the Claim.

13.5.    PROCEDURE FOR INDEMNIFICATION

         13.5.1.  The obligation of an Indemnifying Party to indemnify an
Indemnified Person pursuant to this Article will be subject to an initial
aggregate one time deductible of US$500,000.

         13.5.1.  Following receipt of Notice of a Claim from an Indemnified
Person, the Indemnifying Party will have 30 Business Days to make such
investigation of the Claim as the Indemnifying Party considers necessary or
desirable. For the purpose of such investigation, the Indemnified Person will
make available to the Indemnifying Party and its authorized representatives the
information relied upon by the



Indemnified Person to substantiate the Claim. If the Indemnified Person and the
Indemnifying Party agree at or prior to the expiration of such 30 Business Day
period (or any mutually agreed upon extension thereof) to the validity and
amount of the Claim, the Indemnifying Party will immediately pay to the
Indemnified Person the full agreed upon amount of the Claim.

         13.5.2.  In the event that the parties cannot agree upon the amount of
the Claim within such 30 Business Day period or there is a dispute as to if the
Claim is valid, either party may bring an action against such other party.

13.6.    INJUNCTIVE RELIEF

         Each of the parties acknowledges that irreparable harm will result to
the others if one of them breaches its obligations under this Agreement. The
parties acknowledge that such a breach may not be adequately compensable by an
award of Damages. Each of the parties agrees that any other party may apply to a
court of competent jurisdiction for an order for injunctive relief or other
equitable relief enjoining such breach at the earliest possible date.

13.7.    NO REQUIREMENT TO EXHAUST CLAIMS

         An Indemnified Party may elect to proceed with a Claim against any one
or more of its Indemnifying Parties. For greater certainty, no Indemnified
Party, in making a Claim under this Agreement, shall be required to seek or
exhaust its remedies against an Indemnifying Party as a precondition to making,
adjudicating or settling such Claim against any other Indemnifying Party.

13.8.    SUBORDINATION BY ACS HOLDINGS

         Notwithstanding any other provision of this Agreement, Claims by ACSH
and/or ACS InfoSource shall be subordinate to Claims by the Fund and/or ACS
Canada. Without limiting the generality of the foregoing:

         13.8.1. ACS Holdings further agrees to subordinate any claims (and its
rights and entitlement to the proceeds thereof) in respect of any remedies that
may be available to ACS Holdings under or pursuant to the Prospectus by virtue
of the distribution of the exchange right contemplated by the Exchange Agreement
and the securities issuable upon the exercise of the exchange right.

13.9.    CLAIMS

         Notwithstanding any other provision of this Agreement, the parties
agree that Article 13 sets out the sole and exclusive manner by which any party
to this Agreement may seek monetary compensation from any other party to this
Agreement.

                                   ARTICLE 14.
                                   TERMINATION

14.1.    TERMINATION

         This Agreement may, by notice in writing by any party given prior to or
on the Date of Closing, be terminated: (i) by mutual consent of all the parties;
or (ii) if the Closing has not been completed prior to May 30, 2003. Upon giving
the requisite notice, each of the parties hereto will be released from all
obligations hereunder, save and except for the obligations under Section 16.4,
which will survive. If a party waives compliance with any of the conditions,
obligations or covenants contained in this Agreement, subject to Article 13, the
waiver will be without prejudice to any of its rights of termination or
otherwise in the event of non-fulfillment, non-observance or non-performance of
any other condition, obligation or covenant in whole or in part.

                                   ARTICLE 15.
                                     CLOSING



15.1.    LOCATION AND TIME OF THE CLOSING

         The Closing will take place at the Closing Time on the Date of Closing
at the offices of Torys LLP in Toronto, Ontario, Canada, or at such other place,
on such other date and at such other time as may be agreed upon in writing by
the parties.

15.2.    CLOSING PROCEDURES

         Subject to satisfaction or waiver by the relevant parties of the
conditions of Closing, at the Closing Time the deliveries and payments
contemplated by this Agreement, in the case of the Closing, will be completed as
provided herein.

                                   ARTICLE 16.
                                 GENERAL MATTERS

16.1.    SEVERABILITY

         If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement will nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated by this Agreement is not affected in any manner materially adverse
to any party. Upon any determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties to this Agreement
will negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated by this Agreement are fulfilled to
the fullest extent possible.

16.2.    ENUREMENT

         This Agreement will be binding upon and enure to the benefit of the
parties to this Agreement and their respective successors and permitted assigns
from time to time.

16.3.    ASSIGNMENT

         This Agreement may not be assigned by any party hereto without the
prior written consent of each of the other parties.

16.4.    EXPENSES

         Except as otherwise expressly provided in this Agreement or the
Prospectus, all costs and expenses (including the fees and disbursements of
legal counsel, investment advisers and accountants) incurred in connection with
this Agreement, the Ancillary Agreements and the transactions contemplated
herein and therein, will be paid by ACS InfoSource.

16.5.    NOTICES

         All notices and other communications to ACSH, the Fund, ACS Canada, ACS
Holdings, the Company and ACS InfoSource under this Agreement will be in writing
and will be deemed to have been given if delivered personally or by confirmed
telecopy to the parties at the following addresses (or at any other address for
the party as is specified in like notice):

         16.5.1.  if to the Fund:



                    79 Wellington Street West
                    Suite 3000, Maritime Life Building
                    Toronto-Dominion Centre
                    Toronto, Ontario
                    M5K 1N2

                    Attention: The Trustees c/o Philip Brown
                    Fax: 416.865.7380
                    with a copy to the Company (at the address provided herein);

         16.5.2.  if to ACS Canada:

                    79 Wellington Street West
                    Suite 3000, Maritime Life Building
                    Toronto-Dominion Centre
                    Toronto, Ontario
                    M5K 1N2
                    Attention: Chief Executive Officer of ACS Canada c/o Philip
                               Brown
                    Fax: 416.865.7380

         16.5.3.  if to the Company:

                    3601 C Street
                    Anchorage, AK
                    99503
                    Attention: President
                    Fax: 907.561.6834

         16.5.4.  if to ACS Holdings:

                    600 Telephone Ave., MS 65
                    Anchorage, AK
                    99503
                    Attention: President
                    Fax: 907.297.3100

         16.5.5.  if to ACS InfoSource:

                    600 Telephone Ave., MS 65
                    Anchorage, AK
                    99503
                    Attention: President
                    Fax: 907.297.3100

         16.5.6.  if to ACSH:

                    600 Telephone Ave., MS 65
                    Anchorage, AK
                    99503
                    Attention: President
                    Fax: 907.297.3100

         Any notice given as aforesaid will be deemed to have been given at the
time delivered or faxed (provided complete transmission is confirmed) if
delivered or faxed to the recipient on a Business Day (in the city in which the
addressee is located) and before 4:30 p.m. (local time in the city in which the
addressee is located) on such Business Day, and otherwise will be deemed to be
given at 9:00 a.m. (local time in the city in which the addressee is located) on
the next following Business Day (in the city in which the addressee is located).
Any party may change its address for notice by notice to the other parties
hereto given in the manner herein provided.



16.6.    NON-MERGER

         Except as otherwise expressly provided in this Agreement, the
covenants, representations and warranties will not merge on and will survive the
Closing and, notwithstanding such Closing and any investigation made by or on
behalf of any party, will continue in full force and effect. Subject to Section
10.8 and Articles 11 and 13, Closing will not prejudice any right of one party
against any other party in respect of anything done or omitted under this
Agreement or in respect of any right to Damages or other remedies.

16.7.    GOVERNING LAW

         This Agreement will be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein.

16.8.    ATTORNMENT

         Subject to Section 14.6, each of the parties agrees that any action or
proceeding arising out of or relating to this Agreement may be instituted in the
courts of Ontario, waives any objection which it may have now or later to the
venue of that action or proceeding, irrevocably submits to the jurisdiction of
those courts in that action or proceeding, agrees to be bound by any judgment of
those courts.

16.9.    TORYS LLP ACTING FOR MORE THAN ONE PARTY

         Each of the parties to this Agreement has been advised and acknowledges
that Torys LLP is acting as counsel to and jointly representing the Fund, ACS
Canada, ACS Holdings, ACS InfoSource and the Company (each a "CLIENT" and,
collectively, "CLIENTS") and, in this role, information disclosed to Torys LLP
by one Client will not be kept confidential and will be disclosed to all Clients
and each of the parties consents to Torys LLP so acting. In addition, should a
conflict arise between any Clients, Torys LLP may not be able to continue to act
for any of such Clients.

16.10.   LIMITATION OF LIABILITY IN RESPECT OF THE FUND

         16.10.1. The trustees of the Fund, in incurring any debts, liabilities
or obligations, or in taking or omitting any other actions for or in connection
with the affairs of the Fund are, and shall be conclusively deemed to be, acting
for and on behalf of the Fund, and not in their own personal capacities. None of
the trustees of the Fund shall be subject to any personal liability for any
debts, liabilities, obligations, claims, demands, judgements, costs, charges or
expenses (including legal expenses) against or with respect to the Fund or in
respect to the affairs of the Fund. No property or assets of the trustees of the
Fund, owned in their personal capacity or otherwise, will be subject to any
levy, execution or other enforcement procedure with regard to any obligations
under this Agreement. No recourse may be had or taken, directly or indirectly,
against the trustees of the Fund in their personal capacity. The Fund shall be
solely liable therefor and resort shall be had solely to the property and assets
of the Fund for payment or performance thereof.

         16.10.2. No unitholder of the Fund as such shall be subject to any
personal liability whatsoever, in tort, contract or otherwise, to any party to
this Agreement in connection with the obligations or the affairs of the Fund or
the acts or omissions of the trustees of the Fund whether under this Agreement
or otherwise and the other parties hereto shall look solely to the property and
assets of the Fund for satisfaction of claims of any nature arising out of or in
connection therewith and the property and assets of the Fund only shall be
subject to levy or execution.

16.11.   TIME OF ESSENCE

         Time is of the essence of this Agreement.

16.12.   ENTIRE AGREEMENT



         This Agreement and the other agreements contemplated hereby constitute
the entire agreement between the parties pertaining to the subject matter
hereof. There are no warranties, conditions, or representations (including any
that may be implied by statute) and there are no agreements in connection with
such subject matter except as specifically set forth or referred to in this
Agreement or as otherwise set out in writing and delivered at Closing. No
reliance is placed on any warranty, representation, opinion, advice or assertion
of fact made by any party hereto or its directors, officers, employees or
agents, to any other party hereto or its directors, officers, employees or
agents, except to the extent that the same has been reduced to writing and
included as a term of this Agreement. Accordingly, there will be no liability,
either in tort or in contract, assessed in relation to any such warranty,
representation, opinion, advice or assertion of fact, except to the extent
aforesaid.

16.13.   COUNTERPARTS

         This Agreement may be executed in any number of counterparts, each of
which will be deemed to be an original and all of which taken together will be
deemed to constitute one and the same instrument. Counterparts may be executed
either in original or faxed form and the parties adopt any signatures received
by a receiving fax machine as original signatures of the parties; provided,
however, that any party providing its signature in such manner will promptly
forward to the other parties an original of the signed copy of this Agreement
which was so faxed.

16.14.   FURTHER ASSURANCES

         Each of the parties hereto will promptly do, make, execute or deliver,
or cause to be done, made, executed or delivered, all such further acts,
documents and things as the other party hereto may reasonably require from time
to time for the purpose of giving effect to this Agreement and will use
reasonable efforts and take all such steps as may be reasonably within its power
to implement to their full extent the provisions of this Agreement.

         IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first written above.

ACS MEDIA INCOME FUND, BY ITS ATTORNEY, ACS    ACS MEDIA CANADA INC.
MEDIA CANADA INC.

By: /s/ Wesley E. Carson                       By: /s/ Wesley E. Carson
   ---------------------                          ---------------------
   Name:  Welsey E. Carson                       Name:  Wesley E. Carson
   Title:  President                             Title:  President

ACS MEDIA HOLDINGS LLC                         ACS INFOSOURCE, INC.

By: /s/ Kevin P. Hemenway                      By: /s/ Kevin P. Hemenway
   -------------------------                      -------------------------
   Name:  Kevin P. Hemenway                      Name:  Kevin P. Hemenway
   Title:  Vice President                        Title:  Director

ACS MEDIA LLC                                  ALASKA COMMUNICATIONS SYSTEMS
                                               HOLDINGS, INC.

By: /s/ Wesley E. Carson                       By: /s/ Kevin P. Hemenway
   ---------------------                           --------------------------
   Name:  Wesley E. Carson                       Name:  Kevin P. Hemenway
   Title:  President and CEO                     Title: Chief Financial Officer



                                  SCHEDULE "A"
                              CAPITAL OF ACS CANADA

CAPITAL OF ACS CANADA AS OF THE DATE HEREOF

Authorized:                           unlimited common shares
                                      unlimited preference shares

Issued and Outstanding:               1 common share issued to the Fund
                                      no preference shares

CAPITAL OF ACS CANADA AFTER GIVING EFFECT TO CLOSING (ASSUMING NO EXERCISE OF
THE OVER-ALLOTMENT OPTION)

Authorized:                           unlimited common shares
                                      unlimited preference shares

Issued and Outstanding:               80,271,009 common shares issued to the
                                      Fund
                                      no preference shares



                                  SCHEDULE "B"
                             CAPITAL OF ACS HOLDINGS

CAPITAL OF ACS HOLDINGS AS OF THE DATE HEREOF

Authorized:                           unlimited membership interests

Issued and Outstanding:               1 membership interest issued to ACS
                                      InfoSource

CAPITAL OF ACS HOLDINGS AFTER GIVING EFFECT TO CLOSING (ASSUMING NO EXERCISE OF
THE OVER-ALLOTMENT OPTION)

Authorized:                           unlimited membership interests

Issued and Outstanding:               159,571,104 membership interests issued to
                                      ACS InfoSource



                                  SCHEDULE "C"
                             CAPITAL OF THE COMPANY

CAPITAL OF THE COMPANY AS OF THE DATE HEREOF

Authorized:                           unlimited membership interests

Issued and Outstanding:               1 membership interest issued to ACS
                                      Holdings

CAPITAL OF THE COMPANY AFTER GIVING EFFECT TO CLOSING (ASSUMING NO EXERCISE OF
THE OVER-ALLOTMENT OPTION)

Authorized:                           unlimited membership interests

Issued and Outstanding:               17,366,353 membership interests issued to
                                      ACS Holdings

EX-10.14

                                                                   EXHIBIT 10.14

                             UNDERWRITING AGREEMENT

April 28, 2003

ACS MEDIA INCOME FUND
79 Wellington Street West
Suite 3000
Toronto, Ontario
M5A 4R4

ATTENTION:        Trustees

- - and -

ACS MEDIA LLC
3601 C Street
Anchorage, Alaska
99503

ATTENTION:        President

- - and -

ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
600 Telephone Avenue, MS 65
Anchorage, Alaska
99503

ATTENTION:        General Counsel

- - and -

THE OTHER ACS PARTIES

Dear Sirs:

         We understand that ACS Media Income Fund (the "FUND") proposes to issue
and sell to the Underwriters (as defined below) previously unissued trust units
of the Fund (the "UNITS") and has prepared and filed a Preliminary Prospectus
(as amended and restated) with respect to the Units in each of the provinces and
territories of Canada (the "QUALIFYING JURISDICTIONS"). We also understand that
Alaska Communications Systems Holdings, Inc. ("ALASKA COMMUNICATIONS SYSTEMS")
is the promoter of the Fund and that the Fund intends to use the proceeds of the
sale of the Units to indirectly, through ACS Media Canada Inc. ("ACS CANADA"),
acquire a 87.4% interest in ACS Media LLC (the "COMPANY") from ACS Media
Holdings LLC ("ACS HOLDINGS"), a wholly-owned subsidiary of ACS InfoSource, Inc.
("ACS INFOSOURCE"). Upon and subject to the terms and conditions contained in
this agreement, CIBC World Markets Inc. ("CIBC WM"), RBC Dominion Securities
Inc. ("RBC DS"), Scotia Capital Inc. ("SCOTIA"), BMO Nesbitt Burns Inc. ("BMO
NB"), National Bank Financial Inc. ("NBF") and Westwind Partners Inc.
("WESTWIND") (collectively, the "UNDERWRITERS", and each, an "UNDERWRITER")
hereby severally offer to purchase from the Fund in the respective percentages
set out in Section 25 of this agreement, and the Fund hereby agrees to sell to
the Underwriters, all but not less than all of the 17,500,000 Units (the
"INITIAL UNITS") at the purchase price of $10.00 per Unit, being an aggregate
purchase price of $175,000,000.

         By acceptance of this agreement, the Fund grants to the Underwriters an
irrevocable right (the "OVER-ALLOTMENT OPTION") to purchase, severally and not
jointly, up to 1,500,000 additional Units (or such lesser amount, such that
following the exercise of the Over-Allotment Option in full, ACS Holdings will
continue to own at least 5% of the issued and outstanding Company Interests)
(the "ADDITIONAL UNITS") from the Fund on the same basis (including as to the
fee payable to the Underwriters per Additional



Unit) as the purchase of the Initial Units. If CIBC WM, on behalf of the
Underwriters, elects to exercise the Over-Allotment Option (which election may
occur on no more than one occasion), CIBC WM shall notify the Fund in writing
not later than noon on the 30th day following the Closing Date, which notice
shall specify the number of Additional Units to be purchased by the Underwriters
and the date and time at which such Additional Units are to be purchased (the
"OVER-ALLOTMENT CLOSING TIME"). Such date may be the same as the Closing Date
but not earlier than the later of (i) the Closing Date and (ii) three business
days after the delivery date of such notice, nor later than five business days
after the date of such notice. Additional Units may be purchased solely for the
purpose of covering over-allotments made in connection with the offering of the
Initial Units. If any Additional Units are purchased, each Underwriter agrees,
severally and not jointly, to purchase the number of Additional Units (subject
to such adjustments to eliminate fractional Units as CIBC WM may determine) that
bears the same proportion to the total number of Additional Units to be
purchased as the number of Initial Units set out in Section 25 opposite the name
of such Underwriter bears to the total number of Initial Units.

         The Initial Units and the Additional Units are hereinafter referred to,
collectively, as the "PURCHASED UNITS")

         In consideration of the agreement of the Underwriters to purchase the
Initial Units and to offer them to the public pursuant to the Prospectus, the
Fund agrees to pay to the Underwriters, at the Time of Closing (as defined
below), an aggregate fee of $10,062,500, being a fee equal to 5.75% of the
aggregate purchase price for the Initial Units, or $0.575 per Initial Unit.

TERMS AND CONDITIONS

         The following are additional terms and conditions of this agreement
among the Fund, ACS Canada, the Company, ACS Holdings, ACS InfoSource, Alaska
Communications Systems and the Underwriters.

1.       DEFINITIONS.

         Where used in this agreement, or in any amendment to this agreement,
         the following terms will have the following meanings, respectively:

         1.1      "ACS CANADA" means ACS Media Canada Inc., a corporation
                  existing under the laws of the Province of Ontario;

         1.2      "ACS CREDIT DOCUMENTS" means any or all of the credit
                  agreements, indentures or other similar documents to which
                  Alaska Communications Systems Group, Inc. and/or Alaska
                  Communications Systems Holdings, Inc. and/or any of their
                  respective affiliates are a party or are bound, together with
                  all instruments and other agreements entered into in
                  connection with such agreements, each as amended,
                  supplemented, or otherwise modified from time to time;

         1.3      "ACS HOLDINGS" means ACS Media Holdings LLC, a limited
                  liability company existing under the laws of the State of
                  Alaska;

         1.4      "ACS INFOSOURCE" means ACS InfoSource, Inc., a corporation
                  existing under the laws of the State of Alaska;

         1.5      "ACS NOTES" means the notes issued pursuant to the Note
                  Indenture;

         1.6      "ACS PARTIES" means, collectively, the Fund, ACS Canada, the
                  Company, ACS Holdings, ACS InfoSource and Alaska
                  Communications Systems Holdings, Inc.;

         1.7      "AFFILIATE" means an affiliated entity for purposes of Section
                  1.2 of Ontario Securities Commission Rule 45-501 [Revised] -
                  Exempt Distributions;

         1.8      "BENEFICIARIES" has the meaning given to that term in Section
                  16.8;



         1.9      "BUSINESS" means the business carried on by ACS InfoSource,
                  and to be carried on by the Fund, indirectly through the
                  Company, immediately following the Time of Closing, as
                  described in the Prospectus;

         1.10     "BUSINESS DAY" means a day other than a Saturday, a Sunday or
                  a day on which banks are not open for business either in
                  Toronto, Ontario or Anchorage, Alaska;

         1.11     "CLAIM" has the meaning given to that term in Section 16;

         1.12     "CLOSING" means the completion of the offering of the Initial
                  Units under the Prospectus and the transactions contemplated
                  in Articles 2, 3, 4, 5, 6, 7 and 8 of the Investment Agreement
                  on the Closing Date;

         1.13     "CLOSING DATE" means May 8, 2003 or any earlier or later date
                  as may be agreed to in writing by the Fund, Alaska
                  Communications Systems and the Underwriters, each acting
                  reasonably, but will in any event not be later than May 30,
                  2003;

         1.14     "CODE" means the U.S. Internal Revenue Code of 1986, as
                  amended;

         1.15     "COMPANY" means ACS Media LLC, a limited liability company
                  existing under the laws of the State of Alaska;

         1.16     "COMPANY INTERESTS" means membership interests in the capital
                  of the Company, as subsequently consolidated or subdivided, or
                  any other securities resulting from a reclassification or
                  amendment thereto;

         1.17     "CONTINUING UNDERWRITERS" has the meaning given to that term
                  in Section 25;

         1.18     "DECLARATION OF TRUST" means the declaration of trust dated
                  March 5, 2003, pursuant to which the Fund was created, as
                  amended and restated from time to time;

         1.19     "DEFAULTED UNITS" has the meaning given to that term in
                  Section 25;

         1.20     "DISCLOSURE LETTER" means the letter dated the date of this
                  agreement from the Company to the Underwriters in respect of
                  the representations and warranties related to the Company and
                  the Business, in form satisfactory to the Underwriters, and
                  which letter forms an integral part of this agreement;

         1.21     "DISTRIBUTION" means a distribution or distribution to the
                  public, as the case may be, for the purposes of the Securities
                  Laws or any of them;

         1.22     "EMPLOYMENT AGREEMENTS" means, collectively, the employment
                  agreements to be dated the Closing Date between the Company
                  and each of Wesley E. Carson, Wayne P. Graham and Vicki L.
                  Pedersen in respect of his/her services as President and Chief
                  Executive Officer, Executive Vice President and Chief
                  Financial Officer and Vice President, Operations of the
                  Company, respectively.

         1.23     "ENVIRONMENT" means soils, land surface or subsurface strata,
                  surface waters (including navigable waters, ocean waters,
                  streams, ponds, drainage basins and wetlands), groundwaters,
                  draining water supply, stream sediments, air, plant and animal
                  life, and any other environmental medium or natural resource;

         1.24     "ENVIRONMENTAL LAWS" means any U.S. federal, state, municipal
                  or local law, statute, by-law, ordinance, regulation, rule,
                  order, decree, permit agreement, judicial or administrative
                  decision, injunction or legally binding requirement of any
                  governmental authority which relates to or otherwise imposes
                  liability or standards of conduct concerning discharges,
                  spills, releases or threatened releases of noises, odours or
                  any Substances into, or the presence of noises, odours or any
                  Substances in, ambient air, ground or surface water or land,
                  municipal or other works (including sewers and storm drains)
                  or otherwise relating to



                  the manufacture, processing, generation, distribution, use,
                  treatment storage, discharge, release, disposal, clean-up,
                  transport or handling of Substances or to the protection of
                  the environment, as now or at any time hereafter in effect;

         1.25     "ENVIRONMENTAL PERMITS" means all permits, certificates,
                  consents, authorizations, registrations, licences or other
                  approvals issued by any Governmental Body pursuant to any
                  Environmental Laws;

         1.26     "EXCHANGE AGREEMENT" means the exchange agreement to be
                  entered into on the closing of the offering under the
                  Prospectus among the Fund, ACS Canada, the Company, ACS
                  Holdings and ACS InfoSource and such other Persons who from
                  time to time execute the exchange agreement or are deemed to
                  be party thereto, regarding the Exchange Rights;

         1.27     "EXCHANGE RIGHTS" means the rights granted pursuant to, and
                  referred to as the "Investor Exchange Right" in, the Exchange
                  Agreement;

         1.28     "EXISTING SECURITYHOLDERS" has the meaning given to that term
                  in Section 20;

         1.29     "FINAL MRRS DECISION DOCUMENT" means a receipt for the
                  Prospectus issued in accordance with the MRRS;

         1.30     "FINANCIAL INFORMATION" means:

                  a.       the selected consolidated financial information of
                           ACS InfoSource set forth in the Prospectus under the
                           headings "Prospectus Summary - Summary of
                           Distributable Cash Flows of the Fund", "Prospectus
                           Summary - Selected Consolidated Financial
                           Information", "Summary of Distributable Cash Flows of
                           the Fund", "Reconciliation of Income Before Income
                           Taxes to EBITDA", "Selected Consolidated Financial
                           Information" and "Consolidated Capitalization";

                  b.       the selected consolidated financial information of
                           the Fund set forth in the Prospectus under the
                           headings "Prospectus Summary - Summary of
                           Distributable Cash Flows of the Fund" and "Summary of
                           Distributable Cash Flows of the Fund";

                  c.       management's discussion and analysis of financial
                           condition and results of operations set forth in the
                           Prospectus under the heading "Management's Discussion
                           and Analysis of Financial Condition and Results of
                           Operations"; and

                  d.       the financial statements (including pro forma
                           financial statements) of the Fund and ACS InfoSource;

                  e.       in each case, included in the Prospectus, together
                           with the reports of Deloitte & Touche LLP, on those
                           financial statements, if applicable, and including
                           the notes with respect to those financial statements,
                           if applicable;

         1.31     "FUND" means ACS Media Income Fund, a trust formed under the
                  laws of the Province of Ontario;

         1.32     "GOVERNMENTAL BODY" means any (i) multinational, federal,
                  provincial, state, municipal, local or other governmental or
                  public department, central bank, court, commission, board,
                  bureau, agency or instrumentality, domestic or foreign; (ii)
                  any subdivision or authority of any of the foregoing; (iii)
                  any quasi-governmental, self-regulatory organization or
                  private body exercising any regulatory, expropriation or
                  taxing authority under or for the account of its members or
                  any of the above; or (iv) any arbitrator exercising
                  jurisdiction over the affairs of the applicable Person, asset,
                  obligation or other matter;

         1.33     "GOVERNMENTAL CHARGES" means all taxes, duties, levies,
                  assessments, reassessments and other charges together with all
                  related penalties, interest and fines, payable in respect of
                  periods ending on or before the Closing Date to any domestic
                  or foreign government



                  (federal, provincial, state, municipal or otherwise) or to any
                  regulatory authority, agency, commission or board of any
                  domestic or foreign government, or imposed by any court or any
                  other law, regulation or rule making entity having
                  jurisdiction in the relevant circumstances, applicable to any
                  of ACS InfoSource, ACS Holdings, the Company, or the Business;

         1.34     "HSR ACT" means the United States Hart-Scott-Rodino Antitrust
                  Improvements Act of 1976, as amended, and the regulations
                  promulgated thereunder;

         1.35     "INDEMNIFIED PARTY" and "Indemnified Parties" have the
                  meanings given to those terms in Section 16.1;

         1.36     "INVESTMENT AGREEMENT" means the investment agreement to be
                  entered into on the date of the Prospectus among the Fund, ACS
                  Canada, the Company, ACS Holdings, ACS InfoSource and Alaska
                  Communications Systems respecting, among other things, the
                  investment by the Fund of the proceeds of the offering under
                  the Prospectus in ACS Canada and the purchase by ACS Canada of
                  87.4% of the existing and outstanding Company Interests from
                  ACS Holdings;

         1.37     "IPO OFFERING DOCUMENTS" has the meaning given to that term in
                  Section 16.1.2;

         1.38     "LAW" means any and all laws, including all federal, state,
                  provincial and local statutes, codes, ordinances, guidelines,
                  decrees, rules, regulations and municipal by-laws and all
                  judicial, arbitral, administrative, ministerial, departmental
                  or regulatory judgments, orders, directives, decisions,
                  rulings or awards or other requirements of any other
                  Governmental Body, binding on or affecting the Person referred
                  to in the context in which the term was used;

         1.39     "LIEN" means any mortgage, charge, pledge, hypothecation,
                  security interest, assignment, Lien (statutory or otherwise),
                  charge, title retention agreement or arrangement, restrictive
                  covenant or other encumbrance of any nature, or any other
                  arrangement or condition which, in substance, secures payment
                  or performance of an obligation;

         1.40     "LLC AGREEMENT" means the limited liability company agreement
                  of the Company dated April 28, 2003;

         1.41     "LTIP" means the long-term incentive plan for the managers,
                  officers and senior management employees of the Company;

         1.42     "MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" means
                  any effect or change on the Fund, ACS Canada, the Company or
                  the Business that is or is reasonably likely to be materially
                  adverse to the results of operations, financial condition,
                  assets, properties, capital, liabilities (contingent or
                  otherwise), cash flow, income or business operations of the
                  Fund, ACS Canada, the Company or the Business, after giving
                  effect to this agreement and the transactions contemplated
                  hereby or that is materially adverse to the completion of the
                  transactions contemplated by this agreement or the Related
                  Agreements, in each case taken as a whole and as a going
                  concern and, for greater certainty, where applicable, applying
                  the multiple or yield based upon which Units are priced and
                  sold under the Prospectus and the consequential loss or
                  diminution of value resulting from such effect or change;

         1.43     "MATERIAL AGREEMENTS" means, collectively, (i) the Directory
                  Publishing Services Agreement between ACS InfoSource and L.M.
                  Berry and Company, (ii) the Publishing Rights Agreement, the
                  PRA Licence Agreement, the PRA Subscriber List Information
                  Agreement, the PRA Directory Agreement, the Directory
                  Publication and Distribution Agreement, the License Agreement,
                  the Subscriber List Information License Agreement, the Data
                  Services Agreement, the Billing and Collection Agreement, each
                  described in the Prospectus, (iii) the Non-Competition
                  Agreement among Alaska Communications Systems, the Company and
                  others, described in the Prospectus, and (iv) the Transition
                  Services



                  Agreement among the Company, Alaska Communications Systems and
                  others, described in the Prospectus;

         1.44     "MATERIAL FACT" means a fact that significantly affects, or
                  would reasonably be expected to have a significant effect on,
                  the market price or value of the Purchased Units;

         1.45     "MISREPRESENTATION" means (i) an untrue statement of a
                  material fact, or (ii) an omission to state a material fact
                  that is required to be stated or that is necessary to make a
                  statement not misleading in light of the circumstances in
                  which it was made;

         1.46     "MRRS" means the mutual reliance review system procedures
                  provided for under National Policy 43-201- Mutual Reliance
                  Review System for Prospectuses and Annual Information Forms,
                  as amended;

         1.47     "NON-U.S. UNITHOLDER" means any holder of Units that is not a
                  U.S. Unitholder.

         1.48     "NOTE INDENTURE" means the note indenture providing for the
                  issuance of the 14% unsecured, subordinated notes of ACS
                  Canada, dated the Closing Date, among ACS Canada and the Trust
                  Company, as trustee;

         1.49     "OCCUPATIONAL SAFETY AND HEALTH LAW" means any U.S. federal,
                  state, municipal or local statute, law, by-law, ordinance,
                  code, rule, regulation, order or decree regulating, relating
                  to or imposing liability or standards of conduct concerning
                  employee health and/or safety;

         1.50     "OFFERING" means the offering of trust units to the public
                  under the Prospectus, including pursuant to the exercise of
                  the Over-Allotment Option;

         1.51     "ORDINARY COURSE" means, with respect to an action taken by a
                  Person, that such action is consistent in all material
                  respects with past practices of the Person and is taken in
                  ordinary course of the normal day-to-day operations of the
                  Person;

         1.52     "PERMITTED ENCUMBRANCES" means (i) Liens for taxes,
                  assessments or governmental charges or levies on property not
                  yet due and delinquent; and (ii) easements, encroachments and
                  other minor imperfections of title which do not, individually
                  or in the aggregate, materially detract from the value of or
                  impair the use or marketability of any real property;

         1.53     "PERSON" means any individual, partnership, limited
                  partnership, limited liability company, joint venture,
                  syndicate, sole proprietorship, company or corporation with or
                  without share capital, unincorporated association, trust,
                  trustee, executor, administrator or other legal personal
                  representative, regulatory body or agency, government or
                  governmental agency, authority or entity however designated or
                  constituted;

         1.54     "PLANS" has the meaning given to that term in Section
                  13.1.18.2;

         1.55     "PRELIMINARY PROSPECTUS" means the preliminary prospectus of
                  the Fund dated March 6, 2003, as amended and restated on April
                  9, 2003, in each case approved, signed and certified in
                  accordance with the Securities Laws relating to the
                  qualification for distribution of the Purchased Units under
                  applicable Securities Laws in the Qualifying Jurisdictions;

         1.56     "PROPOSED CREDIT FACILITY" means the senior secured credit
                  facility to be established pursuant to a note purchase
                  agreement and a revolving loan agreement, in the aggregate
                  principal amount of U.S.$40 million, between the Company,
                  Metropolitan Life Insurance Company, the Lenders thereunder
                  and the Guarantors thereto;

         1.57     "PROSPECTUS" means the (final) prospectus of the Fund dated
                  the date of this agreement, approved, signed and certified in
                  accordance with the Securities Laws, relating to the
                  qualification for distribution of the Purchased Units under
                  applicable Securities Laws in the Qualifying Jurisdictions;



         1.58     "REFUSING UNDERWRITER" has the meaning given to that term in
                  Section 25;

         1.59     "RELATED AGREEMENTS" means the Declaration of Trust, the
                  Investment Agreement, the Securityholders Agreement, the
                  Proposed Credit Facility, the Exchange Agreement, the Note
                  Indenture, the LLC Agreement and the Employment Agreements;

         1.60     "RELEASE" means any discharge, including any emission,
                  release, deposit, issuance, spray, escape, spill or leak;

         1.61     "SECURITIES COMMISSION" means the applicable securities
                  commission or regulatory authority in each of the Qualifying
                  Jurisdictions;

         1.62     "SECURITIES LAWS" means, collectively, and, as the context may
                  require, the applicable securities laws of each of the
                  Qualifying Jurisdictions and the respective regulations and
                  rules made under those securities laws together with all
                  applicable policy statements, blanket orders and rulings of
                  the Securities Commissions and all discretionary orders or
                  rulings, if any, of the Securities Commissions made in
                  connection with the transactions contemplated by this
                  agreement, together with applicable published policy
                  statements of the Canadian Securities Administrators;

         1.63     "SECURITYHOLDERS AGREEMENT" means the securityholders
                  agreement to be entered into on the Closing Date, among ACS
                  Canada, ACS Holdings and the Company respecting, among other
                  things, appointment of the managers of the Company,
                  pre-emptive rights to purchase Company Interests and certain
                  approval rights of ACS Holdings over the affairs of the
                  Company;

         1.64     "STANDARD LISTING CONDITIONS" has the meaning given to that
                  term in Section 5.5.3;

         1.65     "SUBSIDIARY" means a subsidiary entity for purposes of Section
                  1.2 of Ontario Securities Commission Rule 45-501 [Revised] -
                  Exempt Distributions;

         1.66     "SUBSTANCE" means any substances or material which under any
                  Environmental Law is defined to be "hazardous", "toxic",
                  "deleterious", "caustic", "dangerous", a "contaminant", a
                  "pollutant", a "dangerous good", a "waste", a "special waste",
                  a "source of contamination" or a "source of pollutant" and any
                  substances or materials the discharge of or release to, or the
                  concentration of which in soil, sediment, ground water or
                  surface water or ambient air are regulated under any
                  Environmental Law;

         1.67     "SUPPLEMENTARY MATERIAL" means, collectively, any amendment to
                  the Prospectus or U.S. Placement Memorandum, any amendment or
                  supplemental prospectus or ancillary materials that may be
                  filed by or on behalf of the Fund under the Securities Laws
                  and the Securities Laws of the United States relating to the
                  qualification for distribution of, the Purchased Units;

         1.68     "TAX ACT" has the meaning given to that term in Section
                  13.1.18.2;

         1.69     "TIME OF CLOSING" means 8:00 a.m. (Toronto time) on the
                  Closing Date, or any other time on the Closing Date as may be
                  mutually agreed to by the Fund, Alaska Communications Systems
                  and the Underwriters;

         1.70     "TRUST COMPANY" means CIBC Mellon Trust Company;

         1.71     "TSX" means the Toronto Stock Exchange;

         1.72     "UNITED STATES" means the United States of America, its
                  territories and possessions, and any state of the United
                  States and the District of Columbia;

         1.73     "U.S. PLACEMENT MEMORANDUM" means the placement memorandum, if
                  any, of the Fund, and any amendment thereto, prepared in
                  accordance with the U.S. Securities Laws, in



                  connection with a private placement of Units in the United
                  States as contemplated by Section 23;

         1.74     "U.S. EXCHANGE ACT" has the meaning given to that term in
                  Section 23;

         1.75     "U.S. SECURITIES ACT" has the meaning given to that term in
                  Section 23;

         1.76     "U.S. SECURITIES LAWS" means the U.S. Securities Act, the U.S.
                  Exchange Act, all rules and regulations promulgated
                  thereunder, and any state securities laws; and

         1.77     "U.S. UNITHOLDER" means any holder of Units that is (i) a
                  citizen or individual resident in the United States for U.S.
                  federal tax purposes, (ii) a corporation or other entity
                  taxable as a corporation created or organized under the laws
                  of the United States or any political subdivision thereof,
                  (iii) an estate, the income of which is subject to United
                  States federal income tax regardless of the source, or (iv) a
                  trust, if a court within the United States is able to exercise
                  primary supervision over the trust's administration and one or
                  more United States persons have the authority to control all
                  its substantial decisions.

         Capitalized terms used but not defined in this agreement have the
         meanings given to them in the Prospectus.

         Unless otherwise indicated, all references to monetary amounts in this
         agreement are to lawful money of Canada.

         Any reference in this agreement to a Section, paragraph, subsection,
         subparagraph, clause or subclause will refer to a Section, paragraph,
         subsection, subparagraph, clause or subclause of this agreement.

         All words and personal pronouns relating to those words will be read
         and construed as the number and gender of the party or parties referred
         to in each case required and the verb will be construed as agreeing
         with the required word and/or pronoun.

         Wherever the words "include", "includes" or "including" are used in
         this agreement, they shall be deemed to be followed by the words
         "without limitation".

         References in this agreement to actions to be taken by the Fund, mean
         actions to be taken by the trustees of the Fund on behalf of the Fund,
         or their duly authorized agent or attorney.

2.       ATTRIBUTES OF THE PURCHASED UNITS.

The Purchased Units to be issued and sold under this agreement by the Fund will
be duly and validly created and issued by the Fund and, when issued and sold by
the Fund, those Purchased Units will have the attributes set out in the
Declaration of Trust, subject to those modifications or changes (if any) prior
to the Closing Date as may be permitted under the Declaration of Trust and
agreed to in writing by the Fund and the Underwriters.

3.       FILING OF PROSPECTUS.

         3.1      The Fund will, as soon as possible following the execution of
                  this agreement, prepare and file the Prospectus in each of the
                  Qualifying Jurisdictions with the Securities Commissions under
                  the Securities Laws, and will obtain the Final MRRS Decision
                  Document as soon as possible after the filing and, in any
                  event, not later than 5:00 p.m. (Toronto time) on April 30,
                  2003 (or such other time and/or later date as the Fund and the
                  Underwriters may agree) and will have taken all other steps
                  and proceedings that may be necessary in order to qualify the
                  Purchased Units for distribution in each of the Qualifying
                  Jurisdictions by the Underwriters and other persons who are
                  registered in a category permitting them to distribute the
                  Purchased Units under the Securities Laws and who comply with
                  the Securities Laws.



         3.2      Until the distribution of the Purchased Units is completed,
                  the Fund will promptly take, or cause to be taken, all
                  additional steps and proceedings that may from time to time be
                  required under the Securities Laws to continue to qualify the
                  distribution of the Purchased Units or, in the event that the
                  Purchased Units have, for any reason, ceased so to qualify, to
                  so qualify again the Purchased Units, as applicable, for
                  distribution.

4.       DISTRIBUTION AND CERTAIN OBLIGATIONS OF UNDERWRITERS.

         4.1      During the course of the distribution of the Purchased Units
                  to the public by or through the Underwriters, the Underwriters
                  will offer and sell those Purchased Units to the public, only
                  in those jurisdictions where they may be lawfully offered for
                  sale or sold and only at the price per Unit set out on the
                  cover page of the Prospectus. The Underwriters will comply
                  with applicable Securities Laws (including the U.S. Securities
                  Act) in connection with the offer to sell or distribution of
                  the Purchased Units. Except in the Qualifying Jurisdictions,
                  the Underwriters will not, directly or indirectly, solicit
                  offers to purchase or sell the Purchased Units or deliver the
                  Prospectus or any Supplementary Material so as to require
                  registration of those Units or filing of a prospectus with
                  respect to those Units under the laws of any jurisdiction,
                  including, without limitation, the United States. Any offer or
                  sale of the Purchased Units in the United States will be made
                  in accordance with Section 23 of this agreement. Each
                  Underwriter will cause similar undertakings to be contained in
                  any agreements among the members of the banking, selling or
                  other groups formed for the distribution of the Purchased
                  Units and will require any member of the banking, selling or
                  other group formed for the distribution of the Purchased Units
                  to comply with applicable Securities Laws (including the U.S.
                  Securities Act) and any applicable Securities Laws in the
                  United States.

         4.2      The Underwriters will complete and will use their reasonable
                  best efforts to cause members of their selling group (if any)
                  to complete the distribution of the Purchased Units as
                  promptly as possible after the Time of Closing. The
                  Underwriters will notify the Fund and the TSX, in writing,
                  when, in the Underwriters' opinion, the Underwriters and the
                  members of their selling group (if any) have ceased
                  distribution of the Purchased Units and, promptly after
                  completion of the distribution, will provide the Fund, in
                  writing, with a breakdown of the number of Purchased Units
                  distributed in each of the Qualifying Jurisdictions where that
                  breakdown is required by the Securities Commission of that
                  jurisdiction for the purpose of calculating fees payable to
                  that Securities Commission.

         4.3      No Underwriter will be liable to the Fund under this Section 4
                  with respect to a default by any of the other Underwriters but
                  will be liable to the Fund for its own default.

5.       DELIVERY OF PROSPECTUS AND RELATED MATTERS.

         5.1      The Fund will cause to be delivered to the Underwriters, at
                  those delivery points as the Underwriters reasonably request,
                  as soon as possible and in any event no later than 12:00 p.m.
                  (Toronto time) on May 1, 2003, and thereafter from time to
                  time during the distribution of the Purchased Units, as many
                  commercial copies of the Prospectus in the English language
                  and French language as the Underwriters may reasonably
                  request. The Fund will similarly cause to be delivered to the
                  Underwriters, at those delivery points as the Underwriters may
                  reasonably request, commercial copies of any Supplementary
                  Material required to be delivered to purchasers or prospective
                  purchasers of the Purchased Units. The Fund has previously
                  delivered to the Underwriters copies of the Preliminary
                  Prospectus as approved, signed and certified as required by
                  the Securities Laws. Each delivery of the Preliminary
                  Prospectus, the Prospectus or any Supplementary Material will
                  have constituted or constitute, as the case may be, consent by
                  the Fund, ACS Canada, the Company, ACS Holdings, ACS
                  InfoSource and Alaska Communications Systems to the use by the
                  Underwriters and members of their selling group (if any) of
                  those documents in connection with the distribution of the
                  Purchased Units for sale in all of the Qualifying
                  Jurisdictions, subject to the Securities Laws.




         5.2      The Fund will cause to be delivered to the Underwriters, at
                  those delivery points as the Underwriters may reasonably
                  request, copies of the U.S. Placement Memorandum. Each
                  delivery of the U.S. Placement Memorandum will constitute
                  consent by the Fund, ACS Canada, the Company, ACS Holdings,
                  ACS InfoSource and Alaska Communications Systems to the use of
                  the U.S. Placement Memorandum and any Supplementary Material
                  required to be prepared and/or filed under Securities Laws of
                  the United States by the U.S. broker affiliates of the
                  Underwriters and members of their selling group (if any) for
                  the distribution of the Purchased Units for sale by them in
                  the United States in accordance with this agreement.

         5.3      Each delivery of the Preliminary Prospectus, the Prospectus
                  and any Supplementary Material to the Underwriters by the Fund
                  in accordance with Section 5.1 will constitute a
                  representation and warranty of the Fund, ACS Canada and the
                  Company to the Underwriters that (except for information and
                  statements relating to the Underwriters and furnished by
                  them), at the respective times of delivery:

                  5.3.1    the information and statements contained in each of
                           the Preliminary Prospectus, the Prospectus and any
                           Supplementary Material:

                           5.3.1.1  are true and correct in all material
                                    respects and contain no Misrepresentation;
                                    and

                           5.3.1.2  constitute full, true and plain disclosure
                                    of all material facts relating to the
                                    Purchased Units as required by the
                                    Securities Laws; and

                  5.3.2    no material fact has been omitted from any of those
                           documents which is required to be stated in any of
                           such documents or is necessary to make the statements
                           therein not misleading in the light of the
                           circumstances in which they were made; and

                  5.3.3    each of those documents complies with applicable
                           Securities Laws, other than as to non-material
                           matters.

         5.4      Each delivery of the Preliminary Prospectus, the Prospectus
                  and any Supplementary Material to the Underwriters by the Fund
                  in accordance with Section 5.1 will constitute a
                  representation and warranty of ACS Holdings, ACS InfoSource
                  and Alaska Communications Systems to the Underwriters that
                  (except for information and statements relating to the
                  Underwriters and furnished by them), at the respective times
                  of delivery, the information and statements contained in each
                  of the Preliminary Prospectus, the Prospectus and any
                  Supplementary Material are true and correct in all material
                  respects and contain no Misrepresentation.

         5.5      The Fund will deliver to the Underwriters, without charge, in
                  Toronto, Ontario, contemporaneously with or prior to the
                  filing of the Prospectus, unless otherwise indicated:

                  5.5.1    a copy of the Prospectus in the English language and
                           a copy of the Prospectus in the French language, each
                           signed on behalf of the Fund and Alaska
                           Communications Systems, in its capacity as promoter,
                           as required by the Securities Laws of each of the
                           Qualifying Jurisdictions;

                  5.5.2    a copy of any other document required to be filed by
                           the Fund under the Securities Laws in connection with
                           the offering of the Purchased Units contemplated by
                           this agreement;

                  5.5.3    evidence satisfactory to the Underwriters of the
                           approval of the listing and posting for trading on
                           the TSX of the Purchased Units, subject only to
                           satisfaction by the Fund of customary post-closing
                           conditions imposed by the TSX in similar
                           circumstances (the "STANDARD LISTING CONDITIONS");



                  5.5.4    a "long-form" comfort letter dated the date of the
                           Prospectus, in form and substance satisfactory to the
                           Underwriters, addressed to the Underwriters, the
                           trustees of the Fund and the managers of the Company
                           from the auditors of the Fund and the Company, and
                           based on a review completed not more than three
                           business days prior to the date of the letter, with
                           respect to certain financial and accounting
                           information relating to the Fund and to the Company
                           in the Prospectus, which letter shall be in addition
                           to the auditors' report contained in the Prospectus
                           and any auditors' comfort letter addressed to the
                           Securities Commissions;

                  5.5.5    as soon as possible, but in any event
                           contemporaneously with the filing of the Prospectus
                           with the Securities Commission in the Province of
                           Quebec, an opinion of Quebec counsel to the Fund and
                           the Company, addressed to the Underwriters, the Fund
                           and the Company, and their respective counsel in form
                           and substance satisfactory to the Underwriters,
                           acting reasonably, to the effect that the French
                           language version of the Prospectus, other than the
                           Financial Information, is, in all material respects,
                           a complete and proper translation of the English
                           language version thereof;

                  5.5.6    as soon as possible, but in any event
                           contemporaneously with the filing of the Prospectus
                           with the Securities Commission in the Province of
                           Quebec, an opinion of the auditors of the Fund and
                           the Company, addressed to the Underwriters, the Fund
                           and the Company and their respective counsel in form
                           and substance satisfactory to the Underwriters,
                           acting reasonably, to the effect that the French
                           translation of the Financial Information, is, in all
                           material respects, a complete and proper translation
                           of the English language version; and

         5.6      Opinions, comfort letters and other documents substantially
                  similar to those referred to in Section 5.5 will be delivered
                  to the Underwriters, the Fund and the Company, and their
                  respective counsel, as applicable, with respect to any
                  Supplementary Material, concurrently with the execution of the
                  Supplementary Material.

6.       MATERIAL CHANGE.

         6.1      The Fund and the Company will promptly inform the Underwriters
                  in writing during the period prior to the completion of the
                  distribution of the Purchased Units of the full particulars
                  of:

                  6.1.1    any Material Adverse Change (whether actual,
                           anticipated, contemplated, proposed or threatened);

                  6.1.2    any material fact which has arisen or has been
                           discovered and would have been required to have been
                           stated in the Prospectus or any Supplementary
                           Material had that fact arisen or been discovered on,
                           or prior to, the date of any of the Prospectus or any
                           Supplementary Material; or

                  6.1.3    any change in any material fact contained in any of
                           the Prospectus or any Supplementary Material or
                           whether any event or state of facts has occurred
                           after the date of this agreement, which, in any case,
                           is of such a nature as to render any of the
                           Prospectus or any Supplementary Material untrue or
                           misleading in any material respect or to result in
                           any Misrepresentation in any of the Prospectus or any
                           Supplementary Material.

         6.2      During the period from the date hereof until the completion of
                  the distribution under the Prospectus, the Fund will comply
                  with Section 57 of the Securities Act (Ontario) and with the
                  comparable provisions of the other Securities Laws and any
                  applicable U.S. Securities Laws, and the Fund and the Company
                  will prepare, with the input of the Underwriters, and the Fund
                  will file promptly at the request of the Underwriters any
                  Supplementary Material



                  which, in the opinion of the Underwriters, acting reasonably,
                  may be necessary or advisable, and will otherwise comply with
                  all legal requirements necessary, to continue to qualify the
                  Purchased Units for distribution in each of the Qualifying
                  Jurisdictions.

         6.3      In addition to the provisions of Sections 6.1 and 6.2, the
                  Fund and the Company will, in good faith, discuss with the
                  Underwriters any change, event or fact contemplated in
                  Sections 6.1 and 6.2 which is of such a nature that there may
                  be reasonable doubt as to whether notice should be given to
                  the Underwriters under Section 6.1 and will consult with the
                  Underwriters with respect to the form and content of any
                  Supplementary Material proposed to be filed by the Fund, it
                  being understood and agreed that no such Supplementary
                  Material will be filed with any Securities Commission prior to
                  the review and approval by the Underwriters and their counsel,
                  acting reasonably.

7.       REGULATORY APPROVALS.

         7.1      The Fund and the Company will file or cause to be filed with
                  the TSX all necessary documents and will take or cause to be
                  taken all necessary steps to ensure that the Purchased Units
                  have been approved for listing and posting for trading on the
                  TSX, prior to the filing of the Prospectus with the Securities
                  Commissions, subject only to satisfaction by the Fund of the
                  Standard Listing Conditions.

         7.2      The Fund and the Company will make all necessary filings,
                  obtain all necessary regulatory consents and approvals (if
                  any) and the Fund and the Company will pay all filing fees
                  required to be paid in connection with the transactions
                  contemplated in this agreement.

         7.3      The Fund and the Company will notify the Underwriters of any
                  notice or other correspondence received by any of the ACS
                  Parties from any Governmental Body requesting any information,
                  meeting or hearing relating to the Company, the Fund, the
                  Offering or any other event or state of affairs that the Fund
                  or the Company reasonably believes may be material to the
                  Underwriters or the unitholders of the Fund.

8.       REPRESENTATIONS AND WARRANTIES OF THE FUND, ACS CANADA AND THE COMPANY.

         The Fund, ACS Canada and the Company, jointly and severally, represent
         and warrant to the Underwriters as follows and acknowledge that the
         Underwriters are relying upon the following representations and
         warranties in completing the transactions contemplated by this
         agreement:

         8.1      the Fund has been created and is existing as a trust under the
                  laws of the Province of Ontario; pursuant to the Declaration
                  of Trust, the trustees have been appointed as trustees of the
                  Fund and the trustees have the power to carry on the business
                  and affairs of the Fund as described in the Prospectus,
                  including the business proposed to be conducted as described
                  in the Prospectus, and to enter into and perform its
                  obligations under this agreement and each of the Related
                  Agreements to which it is a party;

         8.2      ACS Canada is a corporation existing under the laws of the
                  Province of Ontario and has all requisite corporate power and
                  authority to carry on its business as described in the
                  Prospectus and to enter into and perform its obligations under
                  this agreement and each of the Related Agreements to which it
                  is a party;

         8.3      the Company is a limited liability company duly organized and
                  existing under the laws of the State of Alaska and has all
                  requisite corporate power and authority to carry on its
                  business, including the business as described in the
                  Prospectus, and to own or lease and to operate its assets and
                  to enter into and perform its obligations under this agreement
                  and each of the Related Agreements to which it is a party;

         8.4      the Company does not own an interest in any Person;



         8.5      the execution, delivery and performance by each of the Fund,
                  ACS Canada and the Company of this agreement and each of the
                  Related Agreements to which it is a party, and the issuance,
                  sale and delivery of the Purchased Units by the Fund, as
                  applicable:

                  8.5.1    has been, or will at the Time of Closing be, duly
                           authorized by all necessary action of the Fund, ACS
                           Canada and the Company;

                  8.5.2    except as disclosed in Section 8.5 of the Disclosure
                           Letter, does not require the consent, approval,
                           authorization, registration or qualification of or
                           with any governmental authority, stock exchange,
                           Securities Commission or other securities regulatory
                           authority or other third party, except: (i) those
                           which have been obtained; (ii) those as may be
                           required (and will be obtained prior to the Time of
                           Closing) under applicable Securities Laws or the
                           Related Agreements; or (iii) those which have not
                           been obtained and would not result in a Material
                           Adverse Effect;

                  8.5.3    does not (or will not with the giving of notice, the
                           lapse of time or the happening of any other event or
                           condition) result in a breach or a violation of, or
                           conflict with or result in a default under, or allow
                           any other person to exercise any rights under, any of
                           the terms or provisions of the constating documents
                           or by-laws or resolutions of the trustees or
                           directors or managers (or any committee thereof), or
                           securityholders of the Fund, ACS Canada or the
                           Company or any judgement, decree, order or award of
                           any court, governmental body or arbitrator having
                           jurisdiction over the Fund, ACS Canada or the
                           Company, or any agreement, license or permit to which
                           the Fund, ACS Canada or the Company is a party or by
                           which its business may be affected, except, in each
                           case, any breach, violation, conflict, default or
                           right that would not result in a Material Adverse
                           Effect;

                  8.5.4    will not result in the violation of any Law; and

                  8.5.5    will not give rise to any Lien of any kind whatsoever
                           other than Permitted Encumbrances, in or with respect
                           to the properties or assets now owned or acquired at
                           or prior to the Time of Closing by the Fund, ACS
                           Canada or the Company or the acceleration of or the
                           maturity of any debt under any material indenture,
                           mortgage, lease, agreement or instrument binding or
                           affecting any of them or any of their properties, in
                           any case;

         8.6      this agreement and the Related Agreements to which the Fund,
                  ACS Canada or the Company is a party have been or, as the case
                  may be, will be, at the Time of Closing, duly executed and
                  delivered by or on behalf of the Fund, ACS Canada or the
                  Company and constitute or, will constitute, when so executed
                  and delivered, legal, valid and binding obligations of the
                  Fund, ACS Canada and the Company enforceable in accordance
                  with their respective terms, provided that enforceability may
                  be limited by bankruptcy, insolvency and other similar laws
                  affecting creditors' rights generally, that specific
                  performance, injunctive relief and other equitable remedies
                  may only be granted in the discretion of a court of competent
                  jurisdiction and that rights of indemnity and/or contribution
                  set out in this agreement and the Investment Agreement may be
                  limited by applicable Law;

         8.7      ACS InfoSource is conducting its Business and affairs, as
                  described in the Prospectus, in compliance in all material
                  respects with all applicable Laws, rules, regulations,
                  licences and permits and is, and the Company will be at the
                  Time of Closing, licensed, registered or qualified and has,
                  and the Company will have at the Time of Closing, all
                  necessary licences and permits in all jurisdictions in which
                  it carries on business to enable the Business, as now
                  conducted and as presently proposed to be conducted, to be
                  carried on, and to enable its assets to be owned or to be
                  leased and to be operated, except where the failure to be so
                  licensed, registered or qualified would not have a Material
                  Adverse Effect, and all such licences, registrations,
                  qualifications and permits held, or to be held at the Time of
                  Closing,



                  by the Company are valid and existing and in good standing and
                  none of them contains, or will contain at the Time of Closing,
                  any term, provision, condition or limitation which would
                  reasonably be expected to have a Material Adverse Effect;
                  neither the Fund nor the Company nor ACS InfoSource is aware
                  of any legislation, regulation, by-law or other lawful
                  requirement currently in force or proposed to be brought into
                  force by any Governmental Body with which the Company will be
                  unable to comply and which would reasonably be expected to
                  have a Material Adverse Effect;

         8.8      except as disclosed in the Prospectus, each property,
                  operation and facility comprising (currently or following
                  Closing) part of the assets of the Company:

                  8.8.1    complies and the Business is operated in compliance
                           with (i) all applicable Environmental Laws, and (ii)
                           all applicable Occupational Safety and Health Laws,
                           except where such instances, if any of
                           non-compliance, in the aggregate, would not have a
                           Material Adverse Effect; and

                  8.8.2    is not subject to any judicial, administrative or
                           other proceeding alleging the violation of any
                           Environmental Law or Occupational Safety and Health
                           Law, except where such proceedings, if any, in the
                           aggregate, would not have a Material Adverse Effect.

         8.9      except as disclosed in the Prospectus, in connection with the
                  Business or its operation:

                  8.9.1    neither ACS InfoSource nor the Company has received
                           any written notice (i) alleging that it may be in
                           violation of any Environmental Law or Occupational
                           Safety and Health Law, or (ii) threatening the
                           commencement of any proceeding relating to alleged
                           non-compliance with any Environmental Law or
                           Occupational Safety and Health Law, or (iii) alleging
                           that it is or may be responsible for any response,
                           clean-up, or corrective action, including any
                           remedial investigation/feasibility study, under any
                           Environmental Law or Occupational Safety and Health
                           Law;

                  8.9.2    neither ACS InfoSource nor the Company has received
                           any written notice that it is the subject of federal,
                           state or municipal government investigation
                           evaluating whether any investigation, remedial action
                           or other response is needed to respond to (i) a
                           spillage, disposal or release or threatened release
                           into the environment of any Substance, or (ii) any
                           alleged violation of any Occupational Safety and
                           Health Law;

                  8.9.3    neither ACS InfoSource nor the Company has filed any
                           written notice under or relating to any Environmental
                           Law or Occupational Safety and Health Law indicating
                           or reporting (i) any past or present spillage,
                           disposal or release (other than permitted releases)
                           into the environment of, or treatment, storage or
                           disposal of (other than permitted treatment, storage
                           or disposal), any Substance in excess of quantities
                           requiring notification under any Environmental Law,
                           or (ii) any violation of any Occupational Safety and
                           Health Law; and

                  8.9.4    there are no Substances on, in or under any property
                           or facilities currently or formerly, owned, operated,
                           leased or controlled by ACS InfoSource or the Company
                           in connection with the Business or comprising
                           (currently or following Closing) part of the assets
                           of the Company that, under applicable Environmental
                           Laws or Occupational Safety and Health Laws (i)
                           impose a liability in the aggregate for
                           investigation, removal, remediation, or other
                           clean-up or damage to natural resources, or (ii)
                           would have a Material Adverse Effect.

         8.10     other than as set out in Section 8.10 of the Disclosure Letter
                  and as set out in the Prospectus and the Securityholders
                  Agreement or the LLC Agreement, there is currently no, and
                  will not at the Time of Closing be any, agreement in force or
                  effect which in any manner affects



                  or will affect the voting or control of any of the securities
                  of the Fund, ACS Canada or the Company;

         8.11     the authorized and issued and outstanding capital of the
                  Company at the date of this agreement and immediately before
                  the Time of Closing and, provided that the Closing occurs, the
                  Over-Allotment Closing Time, is and shall be, as applicable,
                  as set forth in Schedule 8.11. All issued and outstanding
                  Company Interests are, and all Company Interests shown on
                  Schedule 8.11 to be issued at Closing and the Over-Allotment
                  Closing Time will be, validly issued and outstanding,
                  fully-paid and non-assessable and not subject to pre-emptive
                  rights (except as set out in the Securityholders Agreement to
                  be entered into on Closing) or rights of first refusal created
                  by statute or any agreement to which the Company (except as
                  set out in the Securityholders Agreement to be entered into on
                  Closing) is a party or by which it is bound; and with the
                  exception of the LLC Agreement and the Securityholders
                  Agreement to be entered into on Closing, and as set out in
                  Section 8.10 of the Disclosure Letter there are, and will be
                  at the Time of Closing and the Over-Allotment Closing Time, no
                  shareholder agreements, pooling agreements, voting trusts or
                  other agreements with respect to the voting of Company
                  Interests;

         8.12     except as contemplated by the Investment Agreement, the
                  Securityholders Agreement and the Exchange Agreement, there
                  are no agreements, options, warrants, rights of conversion or
                  other rights pursuant to which the Company is, or may become,
                  obligated to issue any membership interests or any securities
                  convertible or exchangeable, directly or indirectly, into
                  membership interests;

         8.13     at the Time of Closing, provided that not more than two
                  business days elapse between the initiation of the procedures
                  of Closing (including the transactions set out in Articles 2,
                  3, 4, 5, 6, 7, and 8 of the Investment Agreement) and the
                  completion of the Closing, immediately following the
                  distribution of the Company Interests to ACS Holdings, as
                  contemplated by Article 5 of the Investment Agreement, ACS
                  Holdings shall own all of the issued and outstanding Company
                  Interests as the sole registered and beneficial owner and free
                  of any Liens, other than any Liens created by or imposed under
                  this agreement and the Related Agreements as to which it is a
                  party;

         8.14     as of the Time of Closing, provided that not more than two
                  business days elapse between the initiation of the procedures
                  of Closing (including the transactions set out in Articles 2,
                  3, 4, 5, 6, 7, and 8 of the Investment Agreement) and the
                  completion of the Closing, following the completion of the
                  transactions contemplated by Articles 2, 3, 4, 5, 6, 7 and 8
                  of the Investment Agreement, assuming no exercise of the
                  Over-Allotment Option:

                  8.14.1   the authorized capital of ACS Canada will consist of
                           an unlimited number of common shares and an unlimited
                           number of preferred shares, of which 80,271,009
                           common shares and no preferred shares will be issued
                           and outstanding; and

                  8.14.2   the authorized capital of the Company will consist of
                           an unlimited number of membership interests, of which
                           138,047,321 membership interests will be issued and
                           outstanding;

         8.15     as of the Time of Closing, following the completion of the
                  transactions contemplated by Articles 2, 3, 4, 5, 6, 7 and 8
                  of the Investment Agreement, assuming no exercise of the
                  Over-Allotment Option, provided that not more than two
                  business days elapse between the initiation of the procedures
                  of Closing (including the transactions set out in Articles 2,
                  3, 4, 5, 6, 7, and 8 of the Investment Agreement) and the
                  completion of the Closing:

                  8.15.1   the Fund will be the registered and beneficial owner
                           of 80,271,009 common shares of ACS Canada, respecting
                           all of the issued and outstanding equity securities
                           of ACS Canada, on a fully-diluted basis, and ACS
                           Notes in the principal amount of $80,271,009 and will
                           hold those securities free and clear of any Liens
                           except as disclosed in Section 8.15 of the Disclosure
                           Letter;



                  8.15.2   ACS Canada will be the registered and beneficial
                           owner of 120,680,968 Company Interests of the
                           Company, representing 87.4% of the issued and
                           outstanding Company Interests, on a fully-diluted
                           basis, and will hold those securities free and clear
                           of all Liens except as disclosed in Section 8.15 of
                           the Disclosure Letter;

                  8.15.3   ACS Holdings will be the registered and beneficial
                           owner of 17,366,353 Company Interests, representing
                           12.6% of the issued and outstanding Company
                           Interests, on a fully-diluted basis, and will hold
                           these securities free and clear of all Liens except
                           as disclosed in Section 8.15 of the Disclosure
                           Letter;

         8.16     except for investments in the securities of ACS Canada,
                  including the ACS Notes, the Fund does not, directly or
                  indirectly, hold any shares, other securities, options or
                  rights to subscribe for shares or other securities of any
                  corporation, partnership or other entity;

         8.17     the Fund is authorized to issue an unlimited number of Units,
                  of which, as of the date of this agreement, one Unit is issued
                  and outstanding as a fully paid Unit of the Fund;

         8.18     the Trust Company has been duly appointed as the registrar and
                  transfer agent of the Fund with respect to its Units;

         8.19     except as contemplated by this agreement, the Declaration of
                  Trust, the Investment Agreement, the Securityholders
                  Agreement, the Exchange Agreement or as disclosed in the
                  Prospectus, no Person has any written or oral agreement,
                  option, understanding or commitment, or any right or privilege
                  capable of becoming such (i) under which the Fund, ACS Canada
                  or the Company is, or may become, obligated to issue any of
                  its securities, or (ii) for the purchase of any security
                  (including debt) of the Fund, ACS Canada or the Company;

         8.20     except as disclosed in the Prospectus, there is no material
                  action, suit, proceeding or investigation, at law or in
                  equity, by any person, nor any arbitration, administrative or
                  other proceeding by or before any Governmental Body pending,
                  or, to the best of the knowledge of the Fund or the Company,
                  threatened against or affecting the Fund, ACS Canada, ACS
                  InfoSource or the Company, or any of their respective
                  properties, rights or assets;

         8.21     the TSX has conditionally approved the listing of the
                  Purchased Units, subject to satisfaction by the Fund of the
                  Standard Listing Conditions;

         8.22     the form and terms of the certificate for the Units have been
                  approved and adopted by the trustees of the Fund and do not
                  conflict with the Declaration of Trust;

         8.23     the Purchased Units to be issued as described in this
                  agreement and in the Prospectus will, at the Time of Closing,
                  be duly created and, when issued, delivered and paid for in
                  full, will be validly issued as fully paid Units of the Fund,
                  and will not have been issued in violation of or subject to
                  any pre-emptive rights or contractual rights to purchase
                  securities issued by the Fund;

         8.24     as of the date of this agreement, the information and
                  statements contained in the Prospectus, including the industry
                  data, description of the Business and the Financial
                  Information, are true and correct in all material respects and
                  contain no Misrepresentation;

         8.25     the Financial Information with respect to the Fund has been
                  prepared in accordance with Canadian generally accepted
                  accounting principles consistently applied throughout the
                  periods indicated and is complete and accurate in all material
                  respects and presents fairly, in all material respects, the
                  financial condition and the results of operations, and cash
                  flow of the Fund as at the dates and for the periods referred
                  to in such Financial Information, and there has been no
                  Material Adverse Change in the financial position of the Fund
                  from that reflected in such Financial Information;



         8.26     the Financial Information with respect to ACS InfoSource, has
                  been prepared in accordance with United States generally
                  accepted accounting principles (except for the note disclosure
                  regarding a reconciliation to Canadian generally accepted
                  accounting principles which has been prepared in accordance
                  with Canadian generally accepted accounting principles)
                  consistently applied throughout the periods indicated and is
                  complete and accurate in all material respects and presents,
                  fairly, in all material respects, the financial condition and
                  the results of operations and cash flow of ACS InfoSource at
                  the dates and for the periods referred to in such Financial
                  Information, and there has been no Material Adverse Change in
                  the financial position of the Fund from that reflected in such
                  Financial Information;

         8.27     except as disclosed in the Prospectus, since December 31,
                  2002, the Business has been carried on in the Ordinary Course;

         8.28     the Company and ACS InfoSource and any affiliated, combined or
                  unitary group of which the Company and/or ACS InfoSource is or
                  was a member, as the case may be (a "TAX AFFILIATE"), has (i)
                  timely filed (or has had timely filed on their behalf) all
                  returns, declarations, reports, estimates, information,
                  returns, elections and statements ("RETURNS") required to be
                  filed or sent in respect of any Governmental Charges or
                  required to be filed or sent by it to any taxing authority
                  having jurisdiction since incorporation or organization to and
                  including the Time of Closing and all such Returns have been
                  prepared in accordance with the provisions of the applicable
                  legislation are true, correct and complete in all material
                  respects; (ii) timely and properly paid (or has had paid on
                  its behalf), or will pay when due, all Governmental Charges
                  and all professional fees incurred in connection such
                  Governmental Charges due or claimed to be due by an
                  Governmental Body; and (iii) has properly withheld or
                  collected and remitted all amounts required to be withheld or
                  collected and remitted by it in respect of any Governmental
                  Charges;

         8.29     there are no Liens for Governmental Charges upon any assets of
                  ACS InfoSource or the Company;

         8.30     no refinancing for any Governmental Charges has been proposed,
                  asserted or assessed against ACS InfoSource or the Company or
                  any Tax Affiliate;

         8.31     there are no proceedings either in progress, pending or, to
                  the knowledge of the Company, threatened in connection with
                  any Governmental Charges in respect of the Business which in
                  the aggregate would have a Material Adverse Effect;

         8.32     except as set out in the Financial Information, neither the
                  Fund nor the Company has outstanding any bonds, debentures,
                  notes, mortgages or other indebtedness which are material to
                  the Fund and the Company considered as a whole and, except as
                  disclosed in Section 8.32 of the Disclosure Letter or as
                  described in the Prospectus, neither the Fund nor the Company
                  has agreed to create or issue any bonds, debentures, notes,
                  mortgages or other indebtedness;

         8.33     each of ACS InfoSource and the Company has performed all
                  obligations required to be performed by it in connection with
                  all material contracts, agreements (including the Material
                  Agreements), leases or other instruments to which it is a
                  party or by which it may be bound, is entitled to all
                  benefits, rights and privileges thereunder, is not in default
                  or alleged to be in default under any such contract,
                  agreement, lease or other instrument and is not aware of any
                  material breaches thereof by any other parties thereto except
                  where such failure to perform or lack of entitlement would not
                  cause a Material Adverse Effect;

         8.34     the lease of real property to be leased by the Company as
                  disclosed in the Prospectus, is the only lease of the Company.
                  Such lease is in full force and effect and the Company holds a
                  valid, existing and binding leasehold interest under such
                  lease for the term disclosed in the Prospectus, free and clear
                  of any Liens. The Company is not in default and, to the
                  knowledge of the Company, no circumstances exist which, if
                  unremedied, would, with or without notice or lapse of time or
                  both, result in such default under such lease;



         8.35     all material equipment and other material tangible assets used
                  by ACS InfoSource (and to be used by the Company) in the
                  context of the Business are in good condition and repair,
                  ordinary wear and tear excepted, and are adequate and suitable
                  for the purposes for which they are currently being used;

         8.36     Section 8.36 of the Disclosure Letter describes all trade
                  marks and trade mark applications, trade names, certification
                  marks, patents and patent applications, copyrights and
                  industrial designs used by ACS InfoSource in connection with
                  the Business (the "INTELLECTUAL PROPERTY"), along with the
                  offices (if any) in which the same is registered (being the
                  only offices where such registration is necessary to preserve
                  the rights thereto) and the applicable expiry dates of any
                  registrations. The Intellectual Property (other than computer
                  systems software licensed by third parties to ACS InfoSource)
                  which is used by ACS InfoSource in connection with the
                  Business is owned by ACS InfoSource and ACS InfoSource has the
                  sole and exclusive right to use the same, except as noted in
                  Section 8.36 of the Disclosure Letter and except where the
                  failure to possess such right would not result in a Material
                  Adverse Effect. No Person has made a claim or a demand that
                  conduct of the Business infringes on any Intellectual Property
                  owned by any other person and, to the knowledge of ACS
                  InfoSource, ACS Holdings, the Company and the Fund, the
                  conduct of the Business does not infringe on any Intellectual
                  Property owned by any other person.

         8.37     except as set forth in Section 8.37 of the Disclosure Letter,
                  with respect to all employees and former employees of ACS
                  InfoSource (and, following Closing, the Company) and all
                  dependants and beneficiaries of such employees and former
                  employees, (i) the Company does not, and will not at the Time
                  of Closing, maintain or contribute to any nonqualified
                  deferred compensation or retirement plans, contracts or
                  arrangements; (ii) the Company does not, and will not at the
                  Time of Closing, maintain or contribute to any qualified
                  defined contribution plans (as defined in Section 3(34) of the
                  U.S. Employee Retirement Income Security Act of 1974, as
                  amended ("ERISA"), or Section 414(i) of the Code (as defined
                  below)); (iii) the Company does not, and will not at the Time
                  of Closing, maintain or contribute to any qualified defined
                  benefit plans (as defined in Section 3(35) of ERISA or Section
                  414(j) of the Code); and (iv) the Company does not, and will
                  not at the Time of Closing, maintain or contribute to any
                  employee welfare benefit plans (as defined in Section 3(1) of
                  ERISA);

         8.38     prior to and at the Time of Closing, all employee benefit
                  plans (as defined in Section 3(3) of ERISA) which the Company
                  maintains or to which it contributes (collectively, the
                  "PLANS") comply with the requirements of ERISA and the Code;

         8.39     the Underwriters have received true and complete copies of (i)
                  the most recent determination letter, if any, received by
                  either ACS InfoSource or the Company from the Internal Revenue
                  Service regarding the Plans which either ACS InfoSource or the
                  Company maintains or to which it contributes and any amendment
                  to any Plan made subsequent to any Plan amendments covered by
                  any such determination letter; (ii) the most recent financial
                  statements and annual report or return for the Plans; and
                  (iii) the most recently prepared actuarial valuation reports;

         8.40     except as set forth in Section 8.37 of the Disclosure Letter,
                  neither the Company nor ACS InfoSource contributes (and has
                  not ever contributed) to any multi-employer plan, as defined
                  in Section 3(37) of ERISA. Neither ACS, InfoSource nor the
                  Company has any actual or potential liabilities under Section
                  4201 of ERISA for any complete or partial withdrawal from a
                  multi-employer plan. Neither ACS, InfoSource nor the Company
                  has any actual or potential liability for death or medical
                  benefits after separation from employment;

         8.41     neither ACS InfoSource nor the Company nor any of their
                  respective directors, managers, officers, employees or other
                  "fiduciaries", as such term is defined in Section 3(21) of
                  ERISA, has committed any breach of fiduciary responsibility
                  imposed by ERISA or any



                  other applicable Law with respect to the Plans which would
                  subject the Company or any of its managers, officers or
                  employees to any liability under ERISA or any applicable Law;

         8.42     neither ACS InfoSource nor the Company has incurred any
                  liability for any tax or civil penalty or any disqualification
                  of any employee benefit plan (as defined in Section 3(3) of
                  ERISA) imposed by Sections 4980B and 4975 of the Code and Part
                  6 of Title I and Section 502(i) of ERISA;

         8.43     all policies, binders and insurance contracts under which the
                  Company or any of the properties or assets to be acquired by
                  the Company on Closing are insured are in full force and are
                  in amounts, with regard to deductibles and co-insurance
                  clauses, as are adequate to fully insure the Company, such
                  properties and assets and the Business and are customary in
                  the Company's industry and market and business;

         8.44     except as disclosed in the Prospectus, since December 31,
                  2002, there has not been any Material Adverse Change and, to
                  the knowledge of the Company, no event has occurred or
                  circumstance exists which results in such a Material Adverse
                  Change except for general economic changes and changes that
                  may affect the industries of the Business generally;

         8.45     none of the Fund, ACS Canada and the Company has taken, and
                  agree that none of them will take, any action that would cause
                  any of them to become liable to any claim or demand for a
                  brokerage commission, finder's fee or other similar payment in
                  connection with the transactions contemplated hereby, other
                  than with respect to any underwriters' fees as described in
                  the Prospectus;

         8.46     there has not been any reportable disagreement (within the
                  meaning of National Policy Statement No. 31 of the Canadian
                  Securities Administrators) with the auditors of the Fund or
                  the Company;

         8.47     the Material Agreements permit and provide for the conduct of
                  the Business substantially in the manner in which it has been
                  conducted since January 2001, assuming compliance by the
                  parties with the material terms thereof; and

         8.48     except under the Material Agreements and Related Agreements
                  and as disclosed in the Prospectus, none of the trustees,
                  directors, managers, officers or employees of the Fund, ACS
                  Canada or the Company, any person who owns, directly or
                  indirectly, more than 10% of any class of securities of the
                  Fund or securities of any person exchangeable for more than
                  10% of any class of securities of the Fund, or any associate
                  or affiliate of any of the foregoing, had within the three
                  years preceding the date of this agreement that is continuing,
                  or has any material interest, direct or indirect, in any
                  material transaction or any proposed material transaction with
                  the Fund, ACS Canada or the Company which, as the case may be,
                  materially affects, is material to or will materially affect
                  the Fund, ACS Canada or the Company.

9.       REPRESENTATIONS AND WARRANTIES OF ACS HOLDINGS

         ACS Holdings represents and warrants to the Underwriters as follows and
         acknowledges that the Underwriters are relying upon the following
         representations and warranties in completing the transactions
         contemplated hereby:

         9.1      ACS Holdings is a limited liability company duly organized and
                  existing under the laws of the State of Alaska. ACS Holdings
                  is duly qualified to carry on its business in each
                  jurisdiction in which the conduct of its business or the
                  ownership, leasing or operation of its property and assets
                  requires such qualification, except to the extent that the
                  failure to be so qualified would not have a Material Adverse
                  Effect;

         9.2      ACS Holdings has the corporate power and capacity to enter
                  into and perform its obligations under this agreement and the
                  Related Agreements to which it is a party and to carry out the
                  transactions contemplated by such agreements and the
                  Prospectus. Each of



                  this agreement and the Related Agreements to which it is a
                  party has been, or shall be at the Time of Closing, duly
                  authorized, executed and delivered by or on behalf of ACS
                  Holdings and is, or shall be at the Time of Closing, a legal,
                  valid and binding obligation of ACS Holdings, enforceable
                  against ACS Holdings in accordance with its terms, provided
                  that enforceability may be limited by bankruptcy, insolvency
                  and other similar laws affecting creditors' rights generally,
                  that specific performance, injunctive relief and other
                  equitable remedies may only be granted in the discretion of a
                  court of competent jurisdiction and that rights of indemnity
                  and/or contribution set out in this agreement or the
                  Investment Agreement may be limited by applicable law;

         9.3      the authorized and issued and outstanding capital of the
                  Company at the date of this agreement and immediately before
                  the Time of Closing and, provided that the Closing occurs, the
                  Over-Allotment Closing Time, is and shall be, as applicable,
                  as set forth in Schedule 8.11. All issued and outstanding
                  Company Interests are, and all Company Interests shown on
                  Schedule 8.11 to be issued at Closing and the Over-Allotment
                  Closing Time will be, validly issued and outstanding,
                  fully-paid and non-assessable and not subject to pre-emptive
                  rights (except as set out in the Securityholders Agreement to
                  be entered into on Closing) or rights of first refusal created
                  by statute or any agreement to which the Company (except as
                  set out in the Securityholders Agreement to be entered into on
                  Closing) is a party or by which it is bound; and with the
                  exception of the Securityholders Agreement and the LLC
                  Agreement to be entered into on Closing, and as set out in
                  Section 8.10 of the Disclosure Letter there are, and will be
                  at the Time of Closing and the Over-Allotment Closing Time, no
                  shareholder agreements, pooling agreements, voting trusts or
                  other agreements with respect to the voting of the Company
                  Interests;

         9.4      except as contemplated by the Investment Agreement, the
                  Securityholders Agreement and the Exchange Agreement, there
                  are no agreements, options, warrants, rights of conversion or
                  other rights pursuant to which the Company is, or may become,
                  obligated to issue any membership interests or any securities
                  convertible or exchangeable, directly or indirectly, into
                  membership interests;

         9.5      at the Time of Closing following the distribution of the
                  Company Interests contemplated by Article 5 of the Investment
                  Agreement, provided that not more than two business days
                  elapse between the initiation of the procedures of Closing
                  (including the transactions set out in Articles 2, 3, 4, 5, 6,
                  7, and 8 of the Investment Agreement) and the completion of
                  the Closing, ACS Holdings shall own all of the issued and
                  outstanding Company Interests as the sole registered and
                  beneficial owner and free of any Liens, other than any Liens
                  created by or imposed under this agreement and the Related
                  Agreements as to which it is a party; and ACS Holdings will be
                  (provided that the Closing occurs), at the Over-Allotment
                  Closing Time, the registered and beneficial owner of the
                  Company Interests to be sold and transferred by it to ACS
                  Canada under the Investment Agreement, free of any Liens other
                  than any Liens created by or imposed under this agreement and
                  the Related Agreements;

         9.6      except as disclosed in Section 8.5 of the Disclosure Letter,
                  no consent, approval, authorization or order of, and no
                  filing, registration or recording with, any Governmental Body
                  is required in connection with the execution and delivery of
                  this agreement and the Related Agreements to which ACS
                  Holdings is a party or the performance by ACS Holdings of its
                  obligations hereunder and thereunder and the consummation by
                  ACS Holdings of the transactions contemplated herein and
                  therein;

         9.7      the execution and delivery by ACS Holdings of this agreement
                  and the Related Agreements to which it is a party, the
                  performance by ACS Holdings of its obligations hereunder and
                  thereunder and compliance with the provisions hereof and
                  thereof does not and shall not contravene, breach or result in
                  any default under its organizational documents or under any
                  mortgage, indenture, lease, agreement, other legally binding
                  instrument, licence, permit or Law to which ACS Holdings is a
                  party or by which it is bound;

         9.8      other than as contemplated by this agreement, the Investment
                  Agreement and the Exchange Agreement, no Person has any
                  written or oral agreement, option or warrant or any right or



                  privilege (whether by Law, pre-emptive or contractual) capable
                  of becoming such for the purchase or acquisition, (i) from ACS
                  Holdings of any of ACS Holdings' membership interests in ACS
                  Holdings, or (ii) from ACS Holdings of any Company Interests;
                  and

         9.9      to the knowledge of ACS Holdings, as of the date of its filing
                  with the Securities Commissions and as of the Closing Time,
                  the Prospectus does not and will not contain any
                  Misrepresentation.

10.      REPRESENTATIONS AND WARRANTIES OF ACS INFOSOURCE

         ACS InfoSource represents and warrants to the Underwriters as follows
         and acknowledges that the Underwriters are relying upon the following
         representations and warranties in completing the transactions
         contemplated hereby:

         10.1     ACS InfoSource is a corporation duly organized and existing
                  under the laws of the State of Alaska. ACS InfoSource is duly
                  qualified to carry on its business in each jurisdiction in
                  which the conduct of its business or the ownership, leasing or
                  operation of its property and assets requires such
                  qualification, except to the extent that the failure to be so
                  qualified would not have a Material Adverse Effect;

         10.2     ACS InfoSource has the corporate power and capacity to enter
                  into and perform its obligations under this agreement and the
                  Related Agreements to which it is a party and to carry out the
                  transactions contemplated by such agreements and the
                  Prospectus. Each of this agreement and the Related Agreements
                  to which it is a party has been, or shall be at the Time of
                  Closing, duly authorized, executed and delivered by or on
                  behalf of ACS InfoSource and is, or shall be at the Time of
                  Closing, a legal, valid and binding obligation of ACS
                  InfoSource, enforceable against ACS InfoSource in accordance
                  with its terms, provided that enforceability may be limited by
                  bankruptcy, insolvency and other similar laws affecting
                  creditors' rights generally, that specific performance,
                  injunctive relief and other equitable remedies may only be
                  granted in the discretion of a court of competent jurisdiction
                  ant that rights of indemnity and/or contribution set out in
                  this agreement or the Investment Agreement may be limited by
                  applicable law;

         10.3     the authorized and issued and outstanding capital of the
                  Company at the date of this agreement and immediately before
                  the Time of Closing and, provided that the Closing occurs, the
                  Over-Allotment Closing Time, is and shall be, as applicable,
                  as set forth in Schedule 8.11. All issued and outstanding
                  Company Interests are, and all Company Interests shown on
                  Schedule 8.11 to be issued at Closing and the Over-Allotment
                  Closing Time will be, validly issued and outstanding,
                  fully-paid and non-assessable and not subject to pre-emptive
                  rights (except as set out in the Securityholders Agreement to
                  be entered into on Closing) or rights of first refusal created
                  by statute or any agreement to which the Company (except as
                  set out in the Securityholders Agreement to be entered into on
                  Closing) is a party or by which it is bound; and with the
                  exception of the LLC Agreement and the Securityholders
                  Agreement to be entered into on Closing, and as set out in
                  Section 8.10 of the Disclosure Letter there are, and will be
                  at the Time of Closing and the Over-Allotment Closing Time, no
                  shareholder agreements, pooling agreements, voting trusts or
                  other agreements with respect to the voting of the Company
                  Interests;

         10.4     except as contemplated by the Investment Agreement, the
                  Securityholders Agreement and the Exchange Agreement, there
                  are no agreements, options, warrants, rights of conversion or
                  other rights pursuant to which the Company is, or may become,
                  obligated to issue any membership interests or any securities
                  convertible or exchangeable, directly or indirectly, into
                  membership interests;

         10.5     at the Time of Closing, provided that not more than two
                  business days elapse between the initiation of the procedures
                  of Closing (including the transactions set out in Articles 2,
                  3, 4, 5, 6, 7, and 8 of the Investment Agreement) and the
                  completion of the Closing, immediately following the
                  distribution of the Company Interests to ACS Holdings, as
                  contemplated by Article 5 of the Investment Agreement, ACS
                  Holdings shall own all of the issued and



                  outstanding Company Interests as the sole registered and
                  beneficial owner and free of any Liens, other than any Liens
                  created by or imposed under this agreement and the Related
                  Agreements as to which it is a party;

         10.6     the Company and ACS InfoSource and any affiliated, combined or
                  unitary group of which the Company and/or ACS InfoSource is or
                  was a member, as the case may be (a "TAX AFFILIATE"), has (i)
                  timely filed (or has had timely filed on their behalf) all
                  returns, declarations, reports, estimates, information,
                  returns, elections and statements ("RETURNS") required to be
                  filed or sent in respect of any Governmental Charges or
                  required to be filed or sent by it to any taxing authority
                  having jurisdiction since incorporation or organization to and
                  including the Time of Closing and all such Returns have been
                  prepared in accordance with the provisions of the applicable
                  legislation and are true, correct and complete in all material
                  respects; (ii) timely and properly paid (or has had paid on
                  its behalf), or will pay when due, all Governmental Charges
                  and all professional fees incurred in connection such
                  Governmental Charges due or claimed to be due by any
                  Governmental Body; and (iii) has properly withheld or
                  collected and remitted all amounts required to be withheld or
                  collected and remitted by it in respect of any Governmental
                  Charges;

         10.7     there are no Liens for Governmental Charges upon any assets of
                  ACS InfoSource or the Company;

         10.8     no refinancing for any Governmental Charges has been proposed,
                  asserted or assessed against ACS InfoSource or the Company or
                  any Tax Affiliate;

         10.9     there are no proceedings either in progress, pending or, to
                  the knowledge of the Company, threatened in connection with
                  any Governmental Charges in respect of the Business which in
                  the aggregate would have a Material Adverse Effect;

         10.10    except as disclosed in Section 8.5 of the Disclosure Letter,
                  no consent, approval, authorization or order of, and no
                  filing, registration or recording with, any Governmental Body
                  is required in connection with the execution and delivery of
                  this agreement and the Related Agreements to which ACS
                  InfoSource is a party or the performance by ACS InfoSource of
                  its obligations hereunder and thereunder and the consummation
                  by ACS InfoSource of the transactions contemplated herein and
                  therein;

         10.11    the execution and delivery by ACS InfoSource of this agreement
                  and the Related Agreements to which it is a party, the
                  performance by ACS InfoSource of its obligations hereunder and
                  thereunder and compliance with the provisions hereof and
                  thereof does not and shall not contravene, breach or result in
                  any default under its organizational documents or under any
                  mortgage, indenture, lease, agreement, other legally binding
                  instrument, licence, permit or Law to which ACS InfoSource is
                  a party or by which it is bound;

         10.12    other than as contemplated by the Investment Agreement, no
                  Person has any written or oral agreement, option or warrant or
                  any right or privilege (whether by Law, pre-emptive or
                  contractual) capable of becoming such for the purchase or
                  acquisition, (i) from ACS InfoSource of any of ACS
                  InfoSource's membership interests in ACS Holdings, or (ii)
                  from ACS Holdings of any Company Interests; and

         10.13    to the knowledge of ACS InfoSource, as of the date of its
                  filing with the Securities Commissions and as of the Closing
                  Time, the Prospectus does not and will not contain any
                  Misrepresentation.

11.      REPRESENTATIONS AND WARRANTIES OF ALASKA COMMUNICATIONS SYSTEMS

         Alaska Communications Systems represents and warrants to the
         Underwriters as follows and acknowledges that the Underwriters are
         relying upon the following representations and warranties in completing
         the transactions contemplated hereby:



         11.1     Alaska Communications Systems is a corporation duly
                  amalgamated and existing under the laws of the State of
                  Delaware. Alaska Communications Systems is duly qualified to
                  carry on its business in each jurisdiction in which the
                  conduct of its business or the ownership, leasing or operation
                  of its property and assets requires such qualification, except
                  to the extent that the failure to be so qualified would not
                  have a Material Adverse Effect;

         11.2     Alaska Communications Systems has the corporate power and
                  capacity to enter into and perform its obligations under this
                  agreement and the Related Agreements to which it is a party
                  and to carry out the transactions contemplated by such
                  agreements and the Prospectus. Each of this agreement and the
                  Related Agreements to which it is a party has been, or shall
                  be at the Time of Closing, duly authorized, executed and
                  delivered by or on behalf of Alaska Communications Systems and
                  is, or shall be at the Time of Closing, a legal, valid and
                  binding obligation of Alaska Communications Systems,
                  enforceable against Alaska Communications Systems in
                  accordance with its terms, provided that enforceability may be
                  limited by bankruptcy, insolvency and other similar laws
                  affecting creditors' rights generally, that specific
                  performance, injunctive relief and other equitable remedies
                  may only be granted in the discretion of a court of competent
                  jurisdiction ant that rights of indemnity and/or contribution
                  set out in this agreement or the Investment Agreement may be
                  limited by applicable law;

         11.3     except as disclosed in Section 8.5 of the Disclosure Letter,
                  no consent, approval, authorization or order of, and no
                  filing, registration or recording with, any Governmental Body
                  is required in connection with the execution and delivery of
                  this agreement and the Related Agreements to which Alaska
                  Communications Systems is a party or the performance by Alaska
                  Communications Systems of its obligations hereunder and
                  thereunder and the consummation by Alaska Communications
                  Systems of the transactions contemplated herein and therein;

         11.4     the execution and delivery by Alaska Communications Systems of
                  this agreement and the Related Agreements to which it is a
                  party, the performance by Alaska Communications Systems of its
                  obligations hereunder and thereunder and compliance with the
                  provisions hereof and thereof does not and shall not
                  contravene, breach or result in any default under its
                  organizational documents or under any mortgage, indenture,
                  lease, agreement, other legally binding instrument, licence,
                  permit or Law to which Alaska Communications Systems is a
                  party or by which it is bound;

         11.5     to the knowledge of Alaska Communications Systems, as of the
                  date of its filing with the Securities Commissions and as of
                  the Closing Time, the Prospectus does not and will not contain
                  any Misrepresentation.

12.      COVENANTS OF THE FUND AND THE COMPANY.

         Each of the Fund and the Company, jointly and severally, covenants and
         agrees with the Underwriters that:

         12.1     it will advise the Underwriters, promptly after receiving
                  notice thereof, of the time when the Prospectus and any
                  Supplementary Material has been filed and receipts have been
                  obtained and will provide evidence satisfactory to the
                  Underwriters of each filing and the issuance of receipts;

         12.2     it will advise the Underwriters, promptly after receiving
                  notice or obtaining knowledge, of: (i) the issuance by any
                  Securities Commission of any order suspending or preventing
                  the use of the Preliminary Prospectus, the Prospectus, the
                  U.S. Placement Memorandum or any Supplementary Material; (ii)
                  the suspension of the qualification of the Purchased Units for
                  offering or sale in any of the Qualifying Jurisdictions; (iii)
                  the institution, threatening or contemplation of any
                  proceeding for any of those purposes; or (iv) any requests
                  made by any Securities Commission for amending or
                  supplementing the Prospectus or for additional information,
                  and will use its reasonable best efforts to prevent the
                  issuance of any such order and, if any such order is issued,
                  to obtain the withdrawal of the order promptly;



         12.3     it will, and will cause ACS Canada to, apply the net proceeds
                  from the issue and sale of the Purchased Units substantially
                  in accordance with the disclosure set out under the heading
                  "Use of Proceeds" in the Prospectus; and

         12.4     it will cause ACS Canada to maintain and ACS Canada shall
                  maintain, while Units are outstanding, a "substantial Canadian
                  presence" (as that term is understood for the purposes of
                  subsection 206(1.1) of the Tax Act) in order that the Units of
                  the Fund will not be considered "foreign property" for the
                  purposes of the Tax Act.

13.      CONDITIONS OF CLOSING.

         The obligation of the Underwriters to purchase the Purchased Units will
         be subject to the following:

         13.1     the Fund, ACS Canada and the Company will cause their legal
                  counsel to deliver to the Underwriters and their legal counsel
                  a legal opinion, subject to ordinary qualifications and
                  assumptions and reliance on a certificate of an officer of the
                  Fund, ACS Canada or the Company, as applicable, where
                  reasonable and appropriate, dated and delivered on the Closing
                  Date, in form and substance satisfactory to the Underwriters
                  and their legal counsel, acting reasonably, with respect to
                  those matters as the Underwriters may reasonably request
                  relating to the distribution of the Purchased Units, including
                  without limitation that:

                  13.1.1   the Fund has been created and is existing as a trust
                           under the laws of the Province of Ontario and the
                           trustees have been appointed as trustees of the Fund,
                           and the trustees have the power to carry on the
                           business and affairs of the Fund as described in the
                           Prospectus in compliance with the terms and
                           provisions of the Declaration of Trust;

                  13.1.2   ACS Canada (i) is a corporation incorporated and
                           existing under the laws of the Province of Ontario,
                           and (ii) has all requisite corporate power and
                           capacity to carry on its business and to own, lease
                           and operate its property and assets, as described in
                           the Prospectus;

                  13.1.3   the Company (i) is a limited liability company
                           organized and existing under the laws of the State of
                           Alaska, and (ii) has all requisite corporate power
                           and capacity to carry on its business and to own,
                           lease and operate its property and assets, as
                           described in the Prospectus;

                  13.1.4   the authorized capital of the Fund consists of an
                           unlimited number of Units;

                  13.1.5   the authorized capital of ACS Canada consists of an
                           unlimited number of common shares and an unlimited
                           number of preferred shares, and following completion
                           of the transactions contemplated in the Investment
                           Agreement, 80,271,009 common shares will be issued
                           and outstanding;

                  13.1.6   the authorized capital of the Company consists of an
                           unlimited number of membership interests, and
                           following completion of the transactions contemplated
                           by the Investment Agreement, 138,047,321 membership
                           interests will be issued and outstanding;

                  13.1.7   the Fund is, and following Closing will be, the
                           registered and beneficial owner of all of the issued
                           and outstanding shares in the capital of ACS Canada
                           on a fully-diluted basis;

                  13.1.8   ACS Holdings is the registered and beneficial owner
                           of all of the issued outstanding Company Interests
                           and, following completion of the transactions
                           contemplated by the Investment Agreement, ACS Canada
                           and ACS Holdings



                           will be the registered and beneficial owners of 87.4%
                           and 12.6%, respectively, of all of the issued and
                           outstanding Company Interests;

                  13.1.9   each of the Preliminary Prospectus and the
                           Prospectus, in both the French and English languages,
                           and its execution by the trustees of the Fund and the
                           filing of each of the Preliminary Prospectus and the
                           Prospectus, in both the French and English languages,
                           with the Securities Commissions have been duly
                           approved and authorized by all necessary action on
                           the part of the trustees of the Fund and each of the
                           Preliminary Prospectus and the Prospectus, in both
                           the French and English languages, have been duly
                           executed by and on behalf of the Fund;

                  13.1.10  all necessary action has been taken by the trustees
                           of the Fund to validly issue and sell to the
                           Underwriters the Purchased Units;

                  13.1.11  the Initial Units, when issued and delivered by the
                           Fund pursuant to this agreement against payment of
                           the purchase price therefor to the Fund will be
                           validly issued and outstanding as fully paid Units of
                           the Fund;

                  13.1.12  the Over-Allotment Option to purchase the Additional
                           Units has been validly created by the Fund, and upon
                           proper exercise of the option by the Underwriters and
                           payment of the purchase price therefor to the Fund,
                           the Additional Units will be validly issued and
                           outstanding as fully-paid Units of the Fund;

                  13.1.13  all necessary action has been taken by the trustees,
                           managers and directors of the Fund, ACS Canada and
                           the Company to authorize the execution and delivery
                           by the Fund, ACS Canada and the Company of this
                           agreement and the execution and delivery by the Fund,
                           ACS Canada and the Company of the Related Agreements
                           to which any of them is a party and the performance
                           of their respective obligations under those
                           agreements, and this agreement and the Related
                           Agreements to which any of them is a party have been
                           duly executed and delivered by the trustees, managers
                           and directors of the Fund, ACS Canada and the Company
                           and constitute legal, valid and binding obligations
                           of the Fund, ACS Canada and the Company enforceable
                           against them in accordance with their terms, provided
                           that enforcement may be limited by bankruptcy,
                           insolvency and other similar laws of general
                           application affecting the enforcement of creditors'
                           rights generally, specific performance, injunctive
                           relief and other equitable remedies may be granted
                           only in the discretion of a court of competent
                           jurisdiction and that rights of indemnity and/or
                           contribution set out in this agreement and the
                           Investment Agreement may be limited by applicable
                           law;

                  13.1.14  the attributes of the Units are consistent in all
                           material respects with the description thereof under
                           the headings "Description of the Fund - Units", "-
                           Issuance of Units", "- Cash Distributions", "-
                           Redemption Right" and "- Meetings of Unitholders" in
                           the Prospectus;

                  13.1.15  the form of the certificate representing the Units
                           has been approved and adopted by the trustees of the
                           Fund and does not conflict with the Declaration of
                           Trust;

                  13.1.16  the Trust Company at its principal office in the City
                           of Toronto has been appointed the transfer agent and
                           registrar for the Units;

                  13.1.17  the execution and delivery of this agreement and the
                           Related Agreements, the fulfilment of the terms of
                           those agreements by the Fund, ACS Canada and the
                           Company, as applicable, and the issuance, sale and
                           delivery of the Purchased Units:

                           13.1.17.1 do not and will not result in a breach of
                                    or default under, and do not and will not
                                    create a state of facts which, after notice
                                    or lapse



                                    of time or both, will result in a breach of
                                    or default under, and do not and will not
                                    conflict with:

                                    (i)      any of the terms, conditions or
                                             provisions of the constating
                                             documents or resolutions of the
                                             securityholders, trustees, managers
                                             or directors, or any committee of
                                             trustees, managers or directors of
                                             the Fund, ACS Canada or the
                                             Company;

                                    (ii)     based solely on such counsel's
                                             knowledge, any material indenture,
                                             mortgage, deed of trust, agreement
                                             or instrument (including the Credit
                                             Documents) to which the Fund, ACS
                                             Canada and the Company, as
                                             applicable, is a party or by which
                                             it or its properties is to be
                                             subject or be bound; or

                                    (iii)    any federal laws of Canada, or the
                                             laws of Ontario or Alaska,
                                             applicable to the Fund, ACS Canada
                                             or the Company; and

                           13.1.17.2 based solely on such counsel's knowledge,
                                    will not give rise to the acceleration of or
                                    the maturity of any debt under any material
                                    indenture, agreement or instrument
                                    (including the Credit Documents) governed by
                                    the federal laws of Canada, or the laws of
                                    Ontario or Alaska, binding or affecting any
                                    of the Fund, ACS Canada and the Company
                                    (other than those which terminate on the
                                    Closing Date or in respect of which waivers
                                    or consents have been received or will be
                                    received prior to the Time of Closing);

                  13.1.18  the Purchased Units:

                           13.1.18.1 subject to compliance with the prudent
                                    investor standards and general provisions
                                    and restrictions of the federal or Ontario
                                    statutes listed under the heading
                                    "Eligibility for Investment" in the
                                    Prospectus (and, where applicable, the
                                    regulations under those statutes) and, in
                                    certain cases, subject to the satisfaction
                                    of additional requirements relating to
                                    investment or lending policies, standards,
                                    procedures or goals and, in certain cases,
                                    subject to the filing of those policies,
                                    standards, procedures or goals, will not at
                                    the date of their issue be precluded as
                                    investments under those statutes;

                           13.1.18.2 will be qualified investments under the
                                    Income Tax Act (Canada) and the regulations
                                    thereunder (the "TAX ACT") for trusts
                                    governed by registered retirement savings
                                    plans, registered retirement income funds,
                                    deferred profit sharing plans (together, the
                                    "PLANS") and for trusts governed by
                                    registered education savings plans provided
                                    the Fund is a mutual fund trust under the
                                    Tax Act; and

                           13.1.18.3 do not constitute "foreign property" for
                                    the purposes of the tax imposed under Part
                                    XI of the Tax Act on Plans, registered
                                    investments and other tax exempt entities,
                                    including most registered pension funds or
                                    plans; and

                  13.1.19  subject to the qualifications, assumptions,
                           limitations and understandings set out therein, the
                           statements as to matters of the laws of Canada set
                           out in the Prospectus under the heading "Certain
                           Income Tax Considerations - Certain Canadian Federal
                           Income Tax Considerations" fairly describe the
                           principal Canadian federal income tax considerations
                           as at the date hereof generally applicable under the
                           Tax Act to a holder of Units who acquires such
                           securities pursuant to the offering and who, for the
                           purposes of the Tax Act, is resident in



                           Canada, holds the Units as capital property and deals
                           at arm's length with the Fund;

                  13.1.20  subject to the qualifications, assumptions,
                           limitations and understandings set out therein, the
                           statements as to matters of the laws of the United
                           States set out in the Prospectus under the heading
                           "Certain Income Tax Considerations - Certain U.S.
                           Federal Income Tax Considerations" fairly describes
                           the principal U.S. federal income tax considerations
                           as at the date hereof generally applicable to a
                           non-U.S. Unitholder who acquires such securities
                           pursuant to the offering;

         13.2     each of ACS Holdings, ACS InfoSource and Alaska Communications
                  Systems will cause its counsel, acceptable to the Underwriters
                  acting reasonably, to deliver to the Underwriters and their
                  legal counsel a legal opinion dated and delivered on the
                  Closing Date, in form and substance satisfactory to the
                  Underwriters and their legal counsel, acting reasonably, that:

                  13.2.1   ACS Holdings (i) is a limited liability company
                           organized and existing under the laws of the State of
                           Alaska, and (ii) has all requisite corporate power
                           and capacity to carry on its business and to own,
                           lease and operate its property and assets;

                  13.2.2   ach of ACS InfoSource and Alaska Communications
                           Systems: (i) is a corporation incorporated and
                           existing under the laws of the State of Alaska and
                           the State of Delaware, respectively, and (ii) has all
                           requisite corporate power and capacity to carry on
                           its business and to own, lease and operate its
                           property and assets; and

                  13.2.3   all necessary action has been taken by its managers
                           or directors, as applicable, to authorize the
                           execution and delivery by it of this agreement and
                           the Related Agreements to which it is a party and the
                           performance of its obligations under such agreements,
                           and this agreement and the Related Agreements to
                           which it is a party have been duly executed and
                           delivered by it and constitute legal, valid and
                           binding obligations of it enforceable against it in
                           accordance with their terms, provided that
                           enforcement may be limited by bankruptcy, insolvency
                           and other similar laws of general application
                           affecting the enforcement of creditors' rights
                           generally, specific performance, injunctive relief
                           and other equitable remedies may be granted only in
                           the discretion of a court of competent jurisdiction
                           and that rights of indemnity and/or contribution set
                           out in this agreement and the Investment Agreement
                           may be limited by applicable law;

                  13.2.4   neither the execution and delivery by each of ACS
                           InfoSource, ACS Holdings and Alaska Communications
                           Systems of this agreement and the Related Agreements
                           to which it is a party, nor the consummation of any
                           of the transactions contemplated thereby, nor
                           compliance with any of the terms and provisions
                           thereof, and based solely on counsel's knowledge,
                           conflict or will conflict with, or result or will
                           result in a breach of or default under (whether or
                           not after notice or lapse of time or both), any of
                           the terms, conditions or provisions of, or constitute
                           a default under, or result in any violation of, any
                           material indenture, mortgage, deed of trust,
                           agreement or instrument (including the ACS Credit
                           Documents), to which ACS InfoSource, ACS Holdings and
                           Alaska Communications Systems, as applicable, is a
                           party or by which it or its properties known to such
                           counsel is or is to be subject or be bound;

                  13.2.5   each of the Preliminary Prospectus and the
                           Prospectus, in both the French and English languages,
                           and its execution by Alaska Communications Systems,
                           in its capacity as promoter, and the filing of each
                           of the Preliminary Prospectus and the Prospectus in
                           both the French and English languages with the
                           Securities Commissions have been duly approved and
                           authorized by all necessary action on the part of the
                           board of directors of Alaska Communications Systems,
                           and each of the Preliminary Prospectus and the
                           Prospectus, in both the French and



                           English languages, have been duly executed by and on
                           behalf of Alaska Communications Systems;

         13.3     opinions of counsel to the Fund in each of the Qualifying
                  Jurisdictions addressed to the Underwriters, the Fund and the
                  Company and their respective counsel that:

                  13.3.1   subject to compliance with the prudent investor
                           standards and general provisions and restrictions of
                           the statutes listed under the heading "Eligibility
                           for Investment" in the Prospectus (and, where
                           applicable, the regulations under those statutes)
                           and, in certain cases, subject to the satisfaction of
                           additional requirements relating to investment or
                           lending policies, standards, procedures or goals and,
                           in certain cases, subject to the filing of those
                           policies, standards, procedures or goals, the
                           Purchased Units, at the date of their issue, will be
                           eligible investments or will not be precluded as
                           investments under such statutes, in form and
                           substance satisfactory to the Underwriters, acting
                           reasonably; and

                  13.3.2   all necessary documents have been filed, all
                           requisite proceedings have been taken and all other
                           legal requirements have been fulfilled under the laws
                           of each of the Qualifying Jurisdictions in order to
                           qualify the distribution of the Purchased Units
                           through investment dealers or brokers who are
                           registered under applicable legislation of the
                           Qualifying Jurisdictions and who have complied with
                           the relevant provisions of such applicable
                           legislation;

         13.4     an opinion of Quebec counsel to the Fund, addressed to the
                  Underwriters, regarding compliance with all the laws of Quebec
                  relating to the use of the French language in connection with
                  the distribution of the Purchased Units;

         13.5     if any Purchased Units are to be offered or sold in the United
                  States, the Fund will cause its U.S. counsel to deliver to the
                  Underwriters a favourable legal opinion to the effect that no
                  registration of the Purchased Units is required under the U.S.
                  Securities Act, provided that, in each case, the offer or sale
                  is made in accordance with Section 23 of this agreement and
                  all other offers and sales of Purchased Units are made in
                  accordance with the provisions of this agreement;

         13.6     the Underwriters will have received from each of their
                  counsel, Goodmans LLP and Goodwin Procter LLP, legal opinions
                  dated and delivered on the Closing Date, in form and substance
                  satisfactory to the Underwriters, with respect to those
                  matters as the Underwriters may reasonably require relating to
                  the distribution of the Purchased Units. In connection with
                  its opinion, Goodmans LLP may rely on the opinion of counsel
                  to the Fund and the Company and any underlying certificates
                  and, with respect to matters governed by the laws of
                  jurisdictions other than the Province of Ontario, on the
                  opinions of local counsel to the Fund and the Company;

         13.7     the Underwriters will have received certificates dated the
                  Closing Date signed by those senior officers of the Fund, ACS
                  Canada, ACS Holdings, ACS InfoSource, Alaska Communications
                  Systems and the Company, in form and content satisfactory to
                  the Underwriters, acting reasonably, with respect to:

                  13.7.1   the constating documents of each such entity;

                  13.7.2   the resolutions of the trustees, managers or
                           directors (as the case may be) of the Fund, ACS
                           Canada, ACS Holdings, ACS InfoSource, Alaska
                           Communications Systems and the Company relevant to
                           the allotment, issue and sale, as the case may be, of
                           the Purchased Units and the authorization of the
                           other agreements and transactions contemplated by
                           this agreement and the Related Agreements to which
                           they are a party; and



                  13.7.3   the incumbency and signatures of signing officers of
                           the Fund, ACS Canada, ACS Holdings, ACS InfoSource,
                           Alaska Communications Systems and the Company;

         13.8     the Fund and the Company will cause the auditors of the Fund
                  and of the Company to deliver to the Underwriters a comfort
                  letter, dated the Closing Date, in form and substance
                  satisfactory to the Underwriters, acting reasonably, bringing
                  forward to the Closing Date the information contained in the
                  comfort letter referred to in Section 5.5.4;

         13.9     the Fund will deliver to the Underwriters, at and as of the
                  Time of Closing, a certificate dated the Closing Date
                  addressed to the Underwriters and signed by the trustees of
                  the Fund, certifying for and on behalf of the Fund, after
                  having made due inquiries, to those matters as the
                  Underwriters may reasonably request, including to the effect
                  that:

                  13.9.1   the Fund has complied with all the covenants and
                           satisfied all the terms and conditions of this
                           agreement on its part to be complied with and
                           satisfied at or prior to the Time of Closing;

                  13.9.2   subsequent to the respective dates as at which
                           information is given in the Prospectus, there has not
                           been any Material Adverse Change in the condition
                           (financial or otherwise) or results of operations of
                           the Fund, ACS Canada or the Company, other than as
                           disclosed in the Prospectus or any Supplementary
                           Material, as the case may be;

                  13.9.3   subsequent to the respective dates as at which
                           information is given in the Prospectus, no
                           transaction out of the ordinary course of business,
                           material to the Fund, ACS Canada or the Company has
                           been entered into by the Fund, ACS Canada or the
                           Company or has been approved by the management of any
                           of them, which results in a Material Adverse Change,
                           other than as disclosed in the Prospectus or any
                           Supplementary Material, as the case may be;

                  13.9.4   the representations and warranties of the Fund
                           contained in this agreement, and in any certificates
                           of the Fund delivered pursuant to or in connection
                           with this agreement, are true and correct as at the
                           Time of Closing (except in each case, for those
                           representations and warranties that are subject to a
                           materiality qualification, which will be true and
                           correct in all respects and except in respect of any
                           representations and warranties that are to be true
                           and correct as of a specified date, in which case
                           they will be true and correct as of that date only),
                           with the same force and effect as if made on and as
                           at the Time of Closing, after giving effect to the
                           transactions contemplated by this agreement;

                  13.9.5   receipts have been issued by the appropriate
                           Securities Commissions for the Prospectus and no
                           order, ruling or determination having the effect of
                           ceasing the trading or suspending the sale of the
                           Units of the Fund has been issued and no proceedings
                           for that purpose have been instituted or are pending
                           or, to the knowledge of those officers, contemplated
                           or threatened by any regulatory authority; and

                  13.9.6   the representations and warranties of the Fund
                           arising by reason of the delivery of the Preliminary
                           Prospectus, the Prospectus and any Supplementary
                           Material are true and correct on and as at the Time
                           of Closing as if those documents had been dated the
                           Closing Date and delivered to the Underwriters on
                           that date;

                  and all of those matters will in fact be true and correct as
                  at the Time of Closing;

         13.10    ACS Canada will deliver to the Underwriters, at the Time of
                  Closing, a certificate dated the Closing Date addressed to the
                  Underwriters and signed by two senior officers of ACS Canada
                  acceptable to the Underwriters, acting reasonably, certifying
                  for and on behalf of



                  ACS Canada, after having made due inquiries, to those matters
                  as the Underwriters may reasonably request, including to the
                  effect that:

                  13.10.1  ACS Canada has complied with all the covenants and
                           satisfied all the terms and conditions of this
                           agreement on its part to be complied with and
                           satisfied at or prior to the Time of Closing;

                  13.10.2  subsequent to the respective dates as at which
                           information is given in the Prospectus, there has not
                           been any Material Adverse Change in the condition
                           (financial or otherwise) or results of operations of
                           the Fund, ACS Canada or the Company, other than as
                           disclosed in the Prospectus or any Supplementary
                           Material, as the case may be;

                  13.10.3  subsequent to the respective dates as at which
                           information is given in the Prospectus, no
                           transaction out of the ordinary course of business,
                           material to the Fund, ACS Canada or the Company has
                           been entered into by the Fund, ACS Canada or the
                           Company or has been approved by the management of any
                           of them, which results in a Material Adverse Change,
                           other than as disclosed in the Prospectus or any
                           Supplementary Material, as the case may be;

                  13.10.4  the representations and warranties of ACS Canada
                           contained in this agreement, and in any certificates
                           of the Fund delivered pursuant to or in connection
                           with this agreement, are true and correct as at the
                           Time of Closing (except in each case, for those
                           representations and warranties that are subject to a
                           materiality qualification, which will be true and
                           correct in all respects and except in respect of any
                           representations and warranties that are to be true
                           and correct as of a specified date, in which case
                           they will be true and correct as of that date only),
                           with the same force and effect as if made on and as
                           at the Time of Closing, after giving effect to the
                           transactions contemplated by this agreement;

                  13.10.5  receipts have been issued by the appropriate
                           Securities Commissions for the Prospectus and no
                           order, ruling or determination having the effect of
                           ceasing the trading or suspending the sale of the
                           Units of the Fund has been issued and no proceedings
                           for that purpose have been instituted or are pending
                           or, to the knowledge of those officers, contemplated
                           or threatened by any regulatory authority; and

                  13.10.6  the representations and warranties of ACS Canada
                           arising by reason of the delivery of the Preliminary
                           Prospectus, the Prospectus and any Supplementary
                           Material are true and correct on and as at the Time
                           of Closing as if those documents had been dated the
                           Closing Date and delivered to the Underwriters on
                           that date;

                  and all of those matters will in fact be true and correct as
                  at the Time of Closing;

         13.11    the Company will deliver to the Underwriters, at the Time of
                  Closing, a certificate dated the Closing Date addressed to the
                  Underwriters and signed by the chief executive officer and the
                  chief financial officer of the Company, certifying for and on
                  behalf of the Company, after having made due inquiries, to
                  those matters as the Underwriters may reasonably request,
                  including to the effect that:

                  13.11.1  the Fund, ACS Canada and the Company have complied
                           with all the covenants and satisfied all the terms
                           and conditions of this agreement on their respective
                           parts to be complied with and satisfied at or prior
                           to the Time of Closing;

                  13.11.2  subsequent to the respective dates as at which
                           information is given in the Prospectus, there has not
                           been any Material Adverse Change in the condition
                           (financial or otherwise) or results of operations of
                           the Fund, ACS Canada or the



                           Company, other than as disclosed in the Prospectus or
                           any Supplementary Material, as the case may be;

                  13.11.3  subsequent to the respective dates as at which
                           information is given in the Prospectus, no
                           transaction out of the ordinary course of business,
                           material to the Fund, ACS Canada or the Company, has
                           been entered into by the Fund, ACS Canada or the
                           Company or has been approved by the management of any
                           of them, which results in a Material Adverse Change,
                           other than as disclosed in the Prospectus or any
                           Supplementary Material, as the case may be;

                  13.11.4  the representations and warranties of the Company
                           contained in this agreement, and in any certificates
                           of the Company delivered pursuant to or in connection
                           with this agreement, are true and correct as at the
                           Time of Closing (except in each case, for those
                           representations and warranties that are subject to a
                           materiality qualification, which will be true and
                           correct in all respects and except in respect of any
                           representations and warranties that are to be true
                           and correct as of a specified date, in which case
                           they will be true and correct as of that date only),
                           with the same force and effect as if made on and as
                           at the Time of Closing, after giving effect to the
                           transactions contemplated by this agreement;

                  13.11.5  receipts have been issued by the appropriate
                           Securities Commissions for the Prospectus and no
                           order, ruling or determination having the effect of
                           ceasing the trading or suspending the sale of the
                           Units of the Fund has been issued and no proceedings
                           for that purpose have been instituted or are pending
                           or, to the knowledge of those officers, contemplated
                           or threatened by any regulatory authority; and

                  13.11.6  the representations and warranties of the Company
                           arising by reason of the delivery of the Preliminary
                           Prospectus, the Prospectus and any Supplementary
                           Material are true and correct on and as at the Time
                           of Closing as if those documents had been dated the
                           Closing Date and delivered to the Underwriters on
                           that date;

                  and all of those matters will in fact be true and correct as
                  at the Time of Closing;

         13.12    each of ACS Holdings, ACS InfoSource and Alaska Communications
                  Systems will deliver to the Underwriters, at the Time of
                  Closing, a certificate dated the Closing Date addressed to the
                  Underwriters and signed by its chief executive officer and the
                  chief financial officer, certifying for and on behalf of it,
                  after having made due inquiries, to those matters as the
                  Underwriters may reasonably request, including to the effect
                  that:

                  13.12.1  it has complied with all the covenants and satisfied
                           all the terms and conditions of this agreement on its
                           part to be complied with and satisfied at or prior to
                           the Time of Closing;

                  13.12.2  the representations and warranties of it contained in
                           this agreement, and in any certificates of it
                           delivered pursuant to or in connection with this
                           agreement, are true and correct as at the Time of
                           Closing in all material respects (except in the case
                           of representations or warranties that are already
                           qualified by materiality, in which case such
                           representations and warranties shall be true in all
                           respects, and except in respect of any
                           representations and warranties that are to be true
                           and correct as of a specified date, in which case
                           they will be true and correct as of that date only)
                           with the same force and effect as if made on and as
                           at the Time of Closing, after giving effect to the
                           transactions contemplated by this agreement; and

                  13.12.3  in the case of Alaska Communications Systems, the
                           representations and warranties of Alaska
                           Communications Systems arising by reason of the
                           delivery



                           of the Preliminary Prospectus, the Prospectus and any
                           Supplemental Material are true and correct on and as
                           at the Time of Closing as if those documents had been
                           dated the Closing Date and delivered to the
                           Underwriters on that date,

                  and all of those matters will in fact be true and correct as
                  at the Time of Closing;

         13.13    each of the Related Agreements shall have been executed and
                  delivered and not terminated, and the transactions
                  contemplated by the Related Agreements will be completed prior
                  to or contemporaneous with the sale of the Initial Units;
                  without limiting the generality of the foregoing, the Company
                  and the lenders under the Proposed Credit Facility shall have
                  entered into the Proposed Credit Facility on terms and
                  conditions satisfactory to the Underwriters, Alaska
                  Communications Systems and the Company, each acting
                  reasonably, and the Company shall have drawn down sufficient
                  funds under the Proposed Credit Facility to permit the Company
                  to make the payments contemplated by Article 6 of the
                  Investment Agreement and the Company shall have, in the
                  opinion of the Underwriters, the unfettered right and ability,
                  following such drawdown under the Proposed Credit Facility, to
                  operate the Business without material liquidity risk;

         13.14    all actions required to be taken by or on behalf of the Fund
                  including the passing of all requisite resolutions of the sole
                  unitholder and trustees of the Fund and all requisite filings
                  with governmental authorities, Securities Commissions or
                  courts will have occurred at or prior to the Time of Closing
                  so as to validly authorize the execution and filing of the
                  Preliminary Prospectus, the Prospectus and any Supplementary
                  Material and to create and issue the Purchased Units having
                  the attributes contemplated by the Prospectus;

         13.15    the Purchased Units will have been approved for listing and
                  posting for trading on the TSX on the business day immediately
                  preceding the Closing Date, subject only to the Standard
                  Listing Conditions; and

         13.16    the Underwriters will have received such other certificates,
                  opinions, agreements, materials or documents, in form and
                  substance satisfactory to the Underwriters, as the
                  Underwriters may reasonably request.

14.      CLOSING.

         The closing of the purchase and sale of the Initial Units or the
         Additional Units, as the case may be, will be completed at the Time of
         Closing or the Over-Allotment Closing Time at the offices of Torys LLP,
         Maritime Life Tower, Toronto-Dominion Centre, Suite 3000, Toronto,
         Ontario M5K 1N2, or at any other place determined in writing by the
         Fund and the Underwriters. At the Time of Closing, or the
         Over-Allotment Closing Time, as the case may be, the Fund will deliver
         to CIBC WM:

         14.1     for the respective accounts of the Underwriters, the Purchased
                  Units through the facilities of The Canadian Depository for
                  Securities Limited; the Fund will pay all fees and expenses
                  payable to or incurred by the Trust Company and all fees
                  payable to The Canadian Depository for Securities Limited; and

         14.2     all further documentation as may be contemplated in this
                  agreement or as counsel to the underwriters may reasonably
                  require;

         against payment by the Underwriters to the Fund of the purchase price
         for the Initial Units or the Additional Units, as the case may be, net
         of (i) the fees payable by the Fund to the Underwriters as provided in
         the second paragraph of this agreement, and (ii) the reimbursable
         expenses payable by the Fund to the Underwriters as provided for in
         Section 19 of this agreement by certified cheque, bank draft or wire
         transfer payable to, or as directed by, the Fund.

15       RESTRICTIONS ON FURTHER ISSUES OR SALES.



         15.1     For purposes of this Section 15, "TRANSFER" means, in respect
                  of a security, any sale, exchange, transfer, assignment, gift,
                  Lien, hypothecation, alienation or other transaction, whether
                  voluntary, involuntary or by operation of law, by which the
                  legal or beneficial ownership or, or any security interest or
                  other interest in, the security passes from one person to
                  another, or to the same person in a different capacity,
                  whether or not the value, and any change in ownership of the
                  legal or beneficial owner of the security or any person which
                  owns, directly or indirectly, in any manner whatsoever, such
                  legal or beneficial owner of the security, provided that the
                  defined term "Transfer" as used in this agreement shall not
                  include any Transfer to the extent that the prohibitions or
                  restrictions contained in this agreement with respect to such
                  Transfer would be prohibited by or constitute a default under
                  any of the ACS Credit Documents.

         15.2     During the period commencing the date of this agreement and
                  ending on the day which is 180 days following the Closing
                  Date, the Fund agrees that it will not, directly or
                  indirectly, without the prior written consent of CIBC WM,
                  given by instrument in writing duly authorized and executed on
                  behalf of CIBC WM, issue, offer, sell, contract to sell, grant
                  any option to purchase, transfer, assign or otherwise dispose
                  of any Units or financial instruments or any securities
                  convertible into or exchangeable for any Units, or announce
                  any intention to effect the foregoing, other than Units of the
                  Fund, or rights, options or warrants to acquire such Units,
                  issued or granted under the Exchange Agreement.

         15.3     ACS Holdings hereby covenants and agrees that, except with the
                  prior written consent of CIBC WM, given by instrument in
                  writing duly authorized and executed on behalf of CIBC WM, it
                  shall not Transfer any Exchange Rights currently held by it or
                  any Units issuable on the exercise of the Exchange Rights
                  (collectively, with the Exchange Rights, the "RESTRICTED
                  SECURITIES") until the expiry of 180 days from the closing of
                  the Offering, provided that, following the expiry of the
                  Over-Allotment Option, ACS Holdings may Transfer Restricted
                  Securities to ACS InfoSource or Alaska Communications Systems.
                  For the purposes of the foregoing, any issuance or Transfer of
                  securities in the capital of ACS Holdings or ACS InfoSource
                  that would have the same effective economic effect as a direct
                  Transfer of Restricted Securities shall be deemed to be a
                  Transfer of Restricted Securities by ACS Holdings and,
                  accordingly, each of ACS Holdings, ACS InfoSource and Alaska
                  Communications Systems hereby covenants and agrees not to
                  issue or permit the Transfer of any securities to any Person
                  that would have such effect except in accordance with the
                  terms of this agreement, and further covenants and agrees to
                  abide and be bound by the same restrictions applicable to ACS
                  Holdings under this Section 15 in respect of any Restricted
                  Securities which it receives from ACS Holdings. Without
                  limiting the generality of the foregoing, any agreement,
                  contract, option, short sale, hedging transaction, swap or
                  other arrangement of similar economic effect requiring ACS
                  Holdings to Transfer, or providing another with the right to
                  acquire, whether any such transaction is to be settled by
                  delivery of Units, other securities, cash or otherwise, shall
                  be deemed to be a Transfer of such Restricted Securities as at
                  the date such agreement, contract, option, short sale, hedging
                  transaction, swap or arrangement is entered into.

16.      INDEMNIFICATION.

         16.1     The Fund, ACS Canada and the Company jointly and severally
                  hereby agree to protect, hold harmless and indemnify each of
                  the Underwriters and their respective affiliates and their
                  respective directors, officers, employees, advisors,
                  shareholders, partners and agents (collectively, the
                  "INDEMNIFIED PARTIES" and individually an "INDEMNIFIED PARTY")
                  from and against all losses (other than losses of profit in
                  connection with the distribution of the Purchased Units),
                  claims, actions, suits, proceedings, damages, liabilities,
                  costs and expenses, including, without limitation, all amounts
                  paid to settle actions, suits, proceedings, or satisfy
                  judgements or awards and all reasonable fees, disbursements
                  and taxes of their counsel (collectively, a "CLAIM") caused by
                  or arising directly or indirectly by reason of:

                  16.1.1   any breach of or default under any representation,
                           warranty, covenant or agreement of the Fund, ACS
                           Canada or the Company in this agreement or any



                           other document to be delivered pursuant hereto or the
                           failure of the Fund, ACS Canada or the Company to
                           comply with any of its obligations hereunder or
                           thereunder;

                  16.1.2   any information or statement (except any information
                           or statement relating to the Underwriters, or any of
                           them, provided by the Underwriters) contained in any
                           of the Preliminary Prospectus, the Prospectus, the
                           U.S. Placement Memorandum or any Supplementary
                           Material or any other document or material filed or
                           delivered by or on behalf of the Fund pursuant to
                           this agreement (collectively, the "IPO OFFERING
                           DOCUMENTS") being or being alleged to be a
                           Misrepresentation

                  16.1.3   any order made or any inquiry, investigation or
                           proceeding instituted, threatened or announced by any
                           court, securities regulatory authority, stock
                           exchange or by any other competent authority, based
                           upon any Misrepresentation (except a
                           Misrepresentation relating to the Underwriters, or
                           any of them, provided by the Underwriters) contained
                           in any of the IPO Offering Documents, preventing or
                           restricting the trading in or the sale or
                           distribution of the Purchased Units; or

                  16.1.4   the Fund, ACS Canada or the Company not complying
                           prior to the completion of the distribution of the
                           Purchased Units with any requirement of any
                           Securities Laws relating to the sale of the Purchased
                           Units,

                  and will reimburse the Indemnified Parties for all reasonable
                  costs, charges and expenses, as incurred, which any of them
                  may pay or incur in connection with investigating or disputing
                  any Claim or action related thereto.

         16.2     Each of ACS Holdings, ACS InfoSource and Alaska Communications
                  Systems, subject to Sections 16.3 and 16.4, severally, and not
                  jointly, hereby agrees to protect, hold harmless and indemnify
                  each of the Indemnified Parties from and against all Claims
                  caused by or arising directly or indirectly by reason of any
                  breach of or default under any representation, warranty,
                  covenant or agreement given by it in this agreement or any
                  other document to be delivered pursuant hereto (including all
                  Related Agreements) or its failure to comply with any of its
                  obligations hereunder or thereunder, and will reimburse the
                  Indemnified Parties for all reasonable costs, charges and
                  expenses, as incurred, which any of them may pay or incur in
                  connection with investigating or disputing any Claim or action
                  related thereto.

         16.3     The obligation of each of ACS InfoSource and Alaska
                  Communications Systems to indemnify the Indemnified Parties
                  pursuant to Section 16.2 shall be limited to an amount equal
                  to, in the aggregate, the gross proceeds received in the
                  Offering, plus the value of ACS InfoSource's indirect retained
                  interest in the Company, plus the amount that Alaska
                  Communications Systems will receive from the Proposed Credit
                  Facility on Closing.

         16.4     The obligation of an indemnifying party under Section 16.1 or
                  Section 16.2 (collectively, the "INDEMNIFYING PARTIES") to
                  indemnify the Indemnified Parties pursuant to this Section 16
                  will be subject to an initial, aggregate, one-time deductible
                  of U.S.$500,000.

         16.5     The indemnities set out in Sections 16.1 and 16.2 will be in
                  addition to any liability which the Indemnifying Parties
                  thereunder may otherwise have.

         16.6     If any Claim contemplated by this Section 16 is asserted
                  against any of the Indemnified Parties, or if any potential
                  Claim contemplated by this Section 16 comes to the knowledge
                  of any of the Indemnified Parties, the Indemnified Party
                  concerned will notify in writing the Fund, ACS Canada and the
                  Company and, if applicable, one or more of ACS Holdings, ACS
                  InfoSource and Alaska Communications Systems (collectively,
                  the "NOTIFIED PARTIES" and individually a "NOTIFIED PARTY"),
                  as soon as reasonably practicable, of the nature of the Claim
                  (provided that any failure to so notify in respect of any
                  potential Claim will not affect the liability of any of the
                  Notified Parties under this Section 16 unless that delay or
                  failure prejudices the defence of the Claim or increases the
                  liability which the Notified Parties have



                  under this Section 16). The Notified Parties will, subject to
                  the following, be entitled (but not required) to assume the
                  defence on behalf of the Indemnified Party of any suit brought
                  to enforce the Claim; provided that the defence will be
                  through legal counsel selected by the Notified Parties and
                  acceptable to the Indemnified Party, acting reasonably, and no
                  admission of liability will be made by the Notified Parties or
                  the Indemnified Party without, in each case, the prior written
                  consent of all the Indemnified Parties affected and the
                  Notified Parties, in each case, which consent will not be
                  unreasonably withheld or delayed. An Indemnified Party will
                  have the right to employ separate counsel in any such suit and
                  participate in its defence but the fees and expenses of that
                  counsel will be at the expense of the Indemnified Party
                  unless:

                  16.6.1   the Notified Parties fail to assume the defence of
                           the suit on behalf of the Indemnified Party within
                           ten days of receiving notice of the suit;

                  16.6.2   the employment of that counsel has been authorized by
                           the Notified Parties; or

                  16.6.3   the named parties to the suit (including any added or
                           third parties) include the Indemnified Party and the
                           Notified Parties and the Indemnified Party has been
                           advised in writing by counsel that there are legal
                           defences available to the Indemnified Parties that
                           are different or in addition to those available to
                           any of the Notified Parties or that representation of
                           the Indemnified Party by counsel for the Notified
                           Parties or any of them is inappropriate as a result
                           of the potential or actual conflicting interests of
                           those represented;

                  (in each of the cases set out in Section 16.6.1, 16.6.2 or
                  16.6.3, the Notified Parties will not have the right to assume
                  the defence of the suit on behalf of the Indemnified Party,
                  but the Notified Parties will be liable to pay the reasonable
                  fees and expenses of separate counsel for all Indemnified
                  Parties and, in addition, of local counsel in each applicable
                  jurisdiction.) Notwithstanding the foregoing, no settlement,
                  compromise, or termination of the Claim may be made by an
                  Indemnified Party without the prior written consent of the
                  Notified Parties, which consent will not be unreasonably
                  withheld or delayed.

         16.7     The rights of indemnity contained in this Section 16 will not
                  enure to the benefit of the Underwriters if the Fund and the
                  Company have complied with the provisions of Sections 5 and 6
                  and the person asserting any Claim contemplated by this
                  Section 16 was not provided with a copy of any Prospectus or
                  Supplementary Material which corrects any Misrepresentation
                  (for the purposes of Securities Laws or any of them) which is
                  the basis of the Claim and which is required under Securities
                  Laws to be delivered to that person by the Underwriters or
                  members of their banking or selling group (if any).

         16.8     The Indemnifying Parties hereby acknowledge and agree that,
                  with respect to Sections 16 and 17, the Underwriters are
                  contracting on their own behalf and as agents for their
                  affiliates', directors, officers, employees and agents and
                  their respective affiliates, directors, officers, employees
                  and agents (collectively, the "BENEFICIARIES"). In this
                  regard, each of the Underwriters will act as trustee for the
                  Beneficiaries of the covenants of the Indemnified Parties
                  under Sections 16 and 17 with respect to the Beneficiaries and
                  accepts these trusts and will hold and enforce those covenants
                  on behalf of the Beneficiaries.

17.      CONTRIBUTION.

         In order to provide for just and equitable contribution in
         circumstances in which an indemnity provided in Section 16.1 or 16.2
         would otherwise be available in accordance with its terms but is, for
         any reason not solely attributable to any one or more of the
         Indemnified Parties, held to be unavailable to or unenforceable by the
         Indemnified Parties or enforceable otherwise than in accordance with
         its terms, the Underwriters and the applicable Indemnifying Parties
         will contribute to the aggregate of all claims, damages, liabilities,
         costs and expenses and all losses (other than losses of profits in
         connection with the distribution of the Purchased Units) of the nature
         contemplated in Section 16.1 or 16.2, as applicable, and suffered or
         incurred by the Indemnified Parties in proportions so that the
         Underwriters will be responsible for the portion



         represented by the percentage that the total fee paid to the
         Underwriters in connection with the sale of the Purchased Units bears
         to the aggregate purchase price of the Purchased Units, both as
         determined pursuant to the provisions of this agreement, and the
         Indemnifying Parties will, subject to Section 18.2, be responsible for
         the balance, whether or not they have been sued or sued separately;
         provided that the Underwriters will not in any event be liable to
         contribute, in the aggregate, any amount in excess of the total fee or
         any portion actually received.

18.      LIMITATION ON RIGHTS OF INDEMNITY AND CONTRIBUTION.

         18.1     No party who has engaged in any fraud, wilful default,
                  fraudulent misrepresentation, gross negligence, wilful
                  misconduct or reckless disregard will be entitled to claim
                  indemnification under Section 16.1 or 16.2 or contribution
                  under Section 17 from any person who has not engaged in that
                  fraud, wilful default, fraudulent misrepresentation or gross
                  negligence, wilful misconduct or reckless disregard.

         18.2     For greater certainty, the Indemnifying Parties will not have
                  any obligation to contribute pursuant to Section 17 in respect
                  of any Claim except to the extent the indemnity given by them
                  in Sections 16.1 and 16.2 would have been applicable to that
                  Claim in accordance with its terms, had that indemnity been
                  found to be enforceable and available to the Indemnified
                  Parties.

         18.3     The rights to contribution provided in Section 17 will be in
                  addition to and not in derogation of any other right to
                  contribution which the Indemnified Parties may have by statute
                  or otherwise at law provided that Sections 17 and 18.2 will
                  apply, mutatis mutandis, in respect of that other right.

         18.4     The obligations under Sections 16 and 17 shall survive the
                  completion of transactions contemplated under this agreement
                  and the Investment Agreement for a period of three (3) years,
                  provided that, in respect of any Claim brought during such
                  three (3) year period, the obligations under Sections 16 and
                  17 in respect of such Claim shall continue until final expiry
                  of any appeal periods in connection therewith, and provided
                  further that, in respect of any Claims brought at any time for
                  breach of any representation and warranty that, pursuant to
                  Section 17.5, survives indefinitely, the obligations under
                  Sections 16 and 17 survive indefinitely in connection with
                  such Claim.

19.      EXPENSES.

         19.1     Whether or not the purchase and sale of the Purchased Units is
                  completed, all expenses of or incidental to the contribution
                  by ACS InfoSource of the Business to ACS Holdings, the
                  contribution by ACS Holdings of the Business to the Company,
                  the subscription by the Fund for the common shares of ACS
                  Canada and ACS Notes, the acquisition by ACS Canada of
                  membership interests of the Company and the creation, issuance
                  and delivery of the Purchased Units and of or incidental to
                  all matters in connection with the transactions set out in
                  this agreement or the Investment Agreement will be borne by
                  the Fund (or by ACS InfoSource if the issuance and sale of the
                  Purchased Units does not close) including, without limitation:

                  19.1.1   expenses payable in connection with the qualification
                           for distribution of the Purchased Units under
                           applicable Securities Laws;

                  19.1.2   the fees, expenses and disbursements of the auditors,
                           counsel to all and any of the Fund, ACS Canada, the
                           Company, ACS Holdings, ACS InfoSource and Alaska
                           Communications Systems and all related foreign/local
                           counsel;

                  19.1.3   the fees of any experts retained in connection with
                           the sale of the Purchased Units;

                  19.1.4   the reasonable out-of-pocket expenses incurred by the
                           Underwriters, including the reasonable fees,
                           expenses, taxes and disbursements of the
                           Underwriters' legal



                           counsel and all related foreign/local counsel, and
                           any advertising, printing, courier,
                           telecommunications, data searches, roadshow
                           presentation, travel, entertainment and any other
                           reasonable expenses incurred by the Underwriters,
                           subject to a maximum aggregate amount of $400,000 (or
                           such greater amount as is agreed to by the Company in
                           writing);

                  19.1.5   all costs incurred in connection with the
                           preparation, translation, filing and printing of the
                           Preliminary Prospectus, the "green sheet", the
                           Prospectus, any Supplementary Material, the U.S.
                           Placement Memorandum and any Unit certification
                           costs;

                  19.1.6   all fees and expenses of the Trust Company; and

                  19.1.7   all expenses associated with the "road shows" and
                           marketing activities of the Fund, including all
                           travel and lodging expenses;

         including Canadian federal goods and services tax and provincial sales
         tax exigible in respect of any of the foregoing.

20.      SUBORDINATION

         Each of ACS Holdings, ACS InfoSource and Alaska Communications Systems
         (collectively, the "EXISTING SECURITYHOLDERS") covenants and agrees
         with the Underwriters, the Fund and the Company that it shall
         subordinate (the "SUBORDINATION") any entitlement, which such Existing
         Securityholder may have to make a Claim against the Fund, ACS Canada or
         the Company (including under Securities Laws by virtue of such Existing
         Securityholder having received a distribution of the Exchange Rights
         under the Prospectus), to any Claim made by the Underwriters, the Fund
         or any unitholder of the Fund (other than the Existing Securityholders)
         against the Fund, ACS Canada or the Company. The Subordination shall
         apply to all Claims by the Existing Securityholders, regardless of
         whether or not such Claims are also made by an Underwriter, the Fund or
         other unitholder of the Fund and whether or not made first in time. The
         Subordination shall apply to prevent any Existing Securityholder from
         enforcing or realizing on a judgment in respect of a Claim until the
         final adjudication or settlement of any other Claims by the
         Underwriters, the Fund or any unitholder of the Fund. The Subordination
         shall not be interpreted or constructed to in any manner limit or
         otherwise detract from any of the rights of the Fund, the Company or
         any unitholder of the Fund under this Agreement or otherwise.

21.      ALL TERMS TO BE CONDITIONS.

         Each of the Fund, ACS Canada, the Company and the Existing
         Securityholders agrees that the conditions contained in Section 13 will
         be complied with insofar as they relate to acts to be performed or
         caused to be performed by it, and that it will use its reasonable best
         efforts to cause all of those conditions to be complied with, provided
         that such conditions (except to the extent that they constitute
         representations, warranties or covenants under any other provision of
         this agreement) shall merge on the Closing. All representations,
         warranties, covenants and other terms of this agreement will be and
         will be deemed to be conditions, and any breach or failure to comply
         with any of them or any of the conditions set out in Section 13 will
         entitle the Underwriters to terminate their obligation to purchase the
         Purchased Units, by written notice to that effect given to the Fund and
         the Company at or prior to the Time of Closing. It is understood that
         the Underwriters may waive, in whole or in part, or extend the time for
         compliance with, any of those terms and conditions without prejudice to
         the rights of the Underwriters in respect of any of those terms and
         conditions or any other or subsequent breach or non-compliance,
         provided that to be binding on the Underwriters any such waiver or
         extension must be in writing.

22.      TERMINATION BY UNDERWRITERS IN CERTAIN EVENTS.

         22.1     Each Underwriter will also be entitled to terminate its
                  obligation to purchase the Purchased Units by written notice
                  to that effect given to the Fund and the Company at or prior
                  to the Time of Closing if:



                  22.1.1   any:

                           22.1.1.1 inquiry, investigation or other proceeding,
                                    or

                           22.1.1.2 order, ruling or other pronouncement
                                    (whether current or contemplated),

                           is issued, announced or threatened under or pursuant
                           to any relevant statute or by any stock exchange,
                           Governmental Body (including the Canada Customs and
                           Revenue Agency, the United States Internal Revenue
                           Service and/or the United States Treasury Department)
                           or other regulatory authority, or there is any change
                           of Law (including any Law relating to the taxation of
                           the Fund, ACS Canada and/or the Company), or in the
                           interpretation or administration thereof (in each
                           case whether current or contemplated), which, in the
                           reasonable opinion of that Underwriter, after
                           consultation with the Fund and the Company, operates
                           or could operate to prevent, suspend, hinder, delay,
                           restrict, inhibit or otherwise adversely affect the
                           trading in, or which adversely impacts the
                           distribution or the marketability of, the Purchased
                           Units or any of them;

                  22.1.2   any:

                           22.1.2.1 Material Adverse Change (actual, imminent or
                                    reasonably expected) occurs in the business,
                                    affairs, operations, assets, liabilities
                                    (contingent or otherwise), capital or
                                    ownership of the Fund, ACS Canada or the
                                    Company, howsoever caused, or

                           22.1.2.2 material fact arises or is discovered that
                                    would have been required to have been stated
                                    in the Prospectus or any Supplementary
                                    Material had that fact arisen or been
                                    discovered on, or prior to, the date of any
                                    of the Prospectus or any Supplementary
                                    Material, or

                           22.1.2.3 change occurs in any material fact contained
                                    in any of the Prospectus or any
                                    Supplementary Material or any event or state
                                    of facts occurs after the date of this
                                    agreement, which, in any case, is of such a
                                    nature as to render any of the Prospectus or
                                    any Supplementary Material untrue or
                                    misleading in any material respect or to
                                    result in any Misrepresentation in any of
                                    the Prospectus or any Supplementary
                                    Material,

                           which fact or change, as the case may be, in the
                           opinion of that Underwriter, after consultation with
                           the Fund and the Company, could reasonably be
                           expected to result in the purchasers of a material
                           number of Purchased Units exercising their right
                           under Securities Laws to withdraw from or rescind
                           their purchase thereof or sue for damages in respect
                           thereof or which has or could reasonably be expected
                           to have a significant adverse effect on the market
                           price, value or marketability of the Purchased Units
                           or any of them;

                  22.1.3   the state of the Canadian financial markets becomes
                           such that the Purchased Units cannot, in the
                           reasonable opinion of that Underwriter, be profitably
                           marketed; or

                  22.1.4   there should develop, occur or come into effect or
                           existence any event, action, state, condition or
                           major financial occurrence of national or
                           international consequence, including any act of
                           terrorism, war or like event, or any governmental
                           action, law, regulation, inquiry or other occurrence
                           of any nature which, in the reasonable opinion of
                           that Underwriter, materially adversely affects or may
                           materially affect the financial markets in Canada or
                           the United



                           States or the business, operations or affairs of the
                           Fund or the Company or the market price, value or
                           marketability of the Purchased Units or any of them.

         22.2     If this agreement is terminated by any of the Underwriters
                  pursuant to Section 22.1, there will be no further liability
                  on the part of that Underwriter or of the Fund or the Company
                  to that Underwriter, except in respect of any liability which
                  may have arisen or may later arise under Sections 16, 17, and
                  19.

         22.3     The right of the Underwriters or any of them to terminate
                  their respective obligations under this agreement is in
                  addition to all other remedies they may have in respect of any
                  default, act or failure to act of the Fund, ACS Canada, the
                  Company or any of the Existing Securityholders in respect of
                  any of the matters contemplated by this agreement. A notice of
                  termination given by one Underwriter under this Section 22
                  will not be binding upon the other Underwriters.

23.      OFFERING IN THE UNITED STATES

         23.1     For the purposes of this agreement, the following terms will
                  have the meanings indicated:

                  23.1.1   "DIRECTED SELLING EFFORTS" means directed selling
                           efforts as that term is defined in Regulation S.
                           Without limiting the foregoing, but for greater
                           clarity in this agreement, it means, subject to the
                           exclusions from the definition of directed selling
                           efforts contained in Regulation S, any activity
                           undertaken for the purpose of, or that could
                           reasonably be expected to have the effect of,
                           conditioning the market in the United States for any
                           of the Purchased Units and shall include, without
                           limitation, the placement of any advertisement in a
                           publication with a general circulation in the United
                           States that refers to the offering of any of the
                           Purchased Units;

                  23.1.2   "FOREIGN ISSUER" means a foreign issuer as that term
                           is defined in Regulation S. Without limiting the
                           foregoing, but for greater clarity in this agreement,
                           it means any issuer that is (a) the government of any
                           country, or of any political subdivision of a
                           country, other than the United States; or (b) a
                           corporation or other organization incorporated under
                           the laws of any country other than the United States,
                           except an issuer meeting the following conditions:
                           (1) more than 50 percent of the outstanding voting
                           securities of such issuer are directly or indirectly
                           owned of record by residents of the United States;
                           and (2) any of the following: (i) the majority of the
                           executive officers or directors are United States
                           citizens or residents, (ii) more than 50 percent of
                           the assets of the issuer are located in the United
                           States, or (iii) the business of the issuer is
                           administered principally in the United States;

                  23.1.3   "GENERAL SOLICITATION" and "GENERAL ADVERTISING"
                           means "general solicitation" and "general
                           advertising", respectively, as used in Rule 502(c) of
                           Regulation D, including, without limitation,
                           advertisements, articles, notices or other
                           communication published in any newspaper, magazine or
                           similar media or broadcast over television or radio,
                           or any seminar or meeting whose attendees had been
                           invited by general solicitation or general
                           advertising;

                  23.1.4   "QUALIFIED INSTITUTIONAL BUYER" means a "qualified
                           institutional buyer" as defined in Rule l44A;

                  23.1.5   "REGULATION D" means Regulation D adopted by the SEC
                           under the U.S. Securities Act;

                  23.1.6   "REGULATION S" means Regulation S adopted by the SEC
                           under the U.S. Securities Act;



                  23.1.7   "RULE 144A" means Rule 144A adopted by the SEC under
                           the U.S. Securities Act;

                  23.1.8   "SEC" means the United States Securities and Exchange
                           Commission;

                  23.1.9   "SUBSTANTIAL U.S. MARKET INTEREST" means "substantial
                           U.S. market interest" as that term is defined in
                           Regulation S;

                  23.1.10  "UNITED STATES" means the United States of America,
                           its territories and possessions, any state of the
                           United States, and the District of Columbia;

                  23.1.11  "U.S. EXCHANGE ACT" means the United States
                           Securities Exchange Act of 1934, as amended;

                  23.1.12  "U.S. PLACEMENT MEMORANDUM" means the placement
                           memorandum of the Fund in respect of the offering and
                           sale of Purchased Units in the United States, and any
                           amendment thereto, prepared in accordance with the
                           securities laws of the United States; and

                  23.1.13  "U.S. SECURITIES ACT" means the United States
                           Securities Act of 1933, as amended.

         23.2     The Underwriters may offer and sell the Purchased Units within
                  the United States on the terms and subject to the conditions
                  of this Section 23. In connection therewith, the Fund and the
                  Company jointly and severally represent, warrant and covenant
                  that:

                  23.2.1   the Fund is a Foreign Issuer and reasonably believes
                           there is no Substantial U.S. Market Interest with
                           respect to the Purchased Units;

                  23.2.2   none of the Fund, ACS Canada, the Company or any
                           person acting on its or their behalf (other than the
                           Underwriters, U.S. affiliates of the Underwriters
                           ("U.S. AFFILIATES"), or any members of the banking
                           and selling group formed by them collectively, the
                           "SELLING FIRMS", in respect of whose activities the
                           Fund and the Company make no representation), has
                           engaged or will engage in any Directed Selling
                           Efforts in the United States with respect to the
                           Purchased Units and the press release relating to the
                           filing of the Preliminary Prospectus issued by Alaska
                           Communications Systems Group, Inc. on March 6, 2003
                           does not constitute Directed Selling Efforts in the
                           United States in respect to the Purchased Units;

                  23.2.3   the Fund is not, and as a result of the sale of the
                           Purchased Units will not be, an open-end investment
                           company, unit investment trust or face amount
                           certificate company that is or is required to be
                           registered or a closed-end investment company that is
                           required to be, but is not, registered under Section
                           8 of the United States Investment Company Act of
                           1940, as amended;

                  23.2.4   none of the Fund, ACS Canada, the Company, their
                           affiliates or any person acting on its or their
                           behalf, (other than the Underwriters, U.S.
                           Affiliates, or any members of the Selling Firms, in
                           respect of whose activities the Fund and the Company
                           make no representation), has engaged in any form of
                           General Solicitation or General Advertising in
                           connection with any offer or sale of the Purchased
                           Units or any security convertible or exchangeable
                           into Purchased Units in the United States within the
                           six month period prior to the date of this agreement
                           and the press release relating to the filing of the
                           Preliminary Prospectus issued by Alaska
                           Communications Systems Group, Inc. on March 6, 2003
                           does not constitute a General Solicitation or General
                           Advertising in connection with any offer or sale of
                           the Purchased Units;



                  23.2.5   so long as any of the Purchased Units are outstanding
                           and are "restricted securities" within the meaning of
                           Rule 144(a)(3) under the U.S. Securities Act, the
                           Fund will, unless it becomes subject to and complies
                           with the reporting requirements of Section 13 or
                           Section 15(d) of the U.S. Exchange Act or the
                           information furnishing requirements of Rule 12g3-2(b)
                           thereunder, provide to any holder of those restricted
                           securities, or to any prospective purchaser of those
                           restricted securities designated by a holder, upon
                           the request of that holder or prospective purchaser,
                           at or prior to the time of sale, the information
                           required to be provided by Rule 144A(d)(4)(i) under
                           the U.S. Securities Act (so long as that requirement
                           is necessary in order to permit holders of the
                           restricted securities to effect resales under Rule
                           l44A) to a Qualified Institutional Buyer which is a
                           holder of the restricted securities;

                  23.2.6   none of the Fund, ACS Canada, the Company or their
                           affiliates: (i) will take any action for a period of
                           forty (40) days from the Closing Date that would
                           cause the registration exemptions in Regulation S,
                           Rule 144A or Rule 506 of Regulation D to be
                           unavailable for the offer and sale of Units pursuant
                           to this agreement, or (ii) has been subject to any
                           order, judgment or decree of any court of competent
                           jurisdiction temporarily, preliminarily or
                           permanently enjoining that person for failure to
                           comply with Rule 503 of Regulation D;

                  23.2.7   the Units are not, and as of the Time of Closing the
                           Units will not be, and no securities of the same
                           class as the Units are or will be, (i) listed on a
                           national securities exchange in the United States,
                           (ii) quoted in an "automated inter-dealer quotation
                           system", as such term is used in the U.S. Exchange
                           Act, or (iii) convertible or exchangeable at an
                           effective conversion premium (calculated as specified
                           in paragraph (a)(6) of Rule 144A) of less than ten
                           percent for securities so listed or quoted; and

                  23.2.8   the Fund will, within prescribed time periods,
                           prepare and file any forms or notices required under
                           the U.S. Securities Act or applicable blue sky laws.

         23.3     Each Underwriter acknowledges that the Purchased Units have
                  not been and will not be registered under the U.S. Securities
                  Act and may be offered and sold in transactions exempt from or
                  not subject to the registration requirements of the U.S.
                  Securities Act. Accordingly, each Underwriter separately and
                  not jointly represents, warrants and covenants that:

                  23.3.1   it has not offered or sold, and will not offer or
                           sell, any of the Purchased Units constituting part of
                           its allotment except in accordance with Regulation S
                           or Rule 144A;

                  23.3.2   it has not entered and will not enter into any
                           contractual arrangement with respect to the
                           distribution of the Purchased Units, except with its
                           U.S. Affiliates and other Selling Firms or with the
                           prior written consent of the Company; and

                  23.3.3   it shall use its reasonable efforts to ensure that
                           each Selling Firm complies with the provisions of
                           Sections 23.4 and 23.5 as if such provisions applied
                           to such Selling Firm.

         23.4     Each Underwriter covenants to and agrees with the Fund that:

                  23.4.1   all offers and sales of the Purchased Units in the
                           United States will be effected through a U.S.
                           Affiliate in accordance with all applicable U.S.
                           Broker-dealer requirements;

                  23.4.2   its U.S. Affiliate is a Qualified Institutional
                           Buyer;

                  23.4.3   it will not, either directly or through its U.S.
                           Affiliate, solicit offers for, or offer to sell, the
                           Purchased Units in the United States by means of any
                           form of



                           General Solicitation or General Advertising and
                           neither it nor its U.S. Affiliate, nor any persons
                           acting on its or their behalf have engaged or will
                           engage in any Directed Selling Efforts with respect
                           to the Purchased Units;

                  23.4.4   it will solicit, and will cause its U.S. Affiliate to
                           solicit, offers for the Purchased Units in the United
                           States only from, and will offer the Purchased Units
                           only to, persons it reasonably believes to be
                           Qualified Institutional Buyers in accordance with
                           Rule 144A. It also agrees that it will solicit offers
                           for the Purchased Units only from, and will offer the
                           Purchased Units only to, persons that in purchasing
                           such Purchased Units will be deemed to have
                           represented and agreed as provided in paragraphs
                           (3)(a) through (d) below (to the extent such
                           representations are applicable to the purchaser
                           concerned);

                  23.4.5   it will inform, and cause its U.S. Affiliate to
                           inform, all purchasers of the Purchased Units in the
                           United States that the Purchased Units have not been
                           and will not be registered under the U.S. Securities
                           Act and are being sold to them without registration
                           under the U.S. Securities Act in reliance on Rule
                           144A;

                  23.4.6   it will deliver, or cause to be delivered, a copy of
                           the U.S. Placement Memorandum to each person in the
                           United States purchasing Purchased Units from it;

                  23.4.7   it shall cause its U.S. Affiliate, at the request of
                           the Fund, to agree, for the benefit of the Fund, to
                           the same provisions as are contained in Sections 23.3
                           and 23.4 of this agreement;

                  23.4.8   at least one business day prior to closing, it shall
                           request CIBC WM to provide the Trust Company with a
                           list of all purchasers of the Purchased Units in the
                           United States; and

                  23.4.9   at closing it, together with its U.S. Affiliate
                           selling Purchased Units in the United States, will
                           provide a certificate, substantially in the form of
                           Schedule 23.4.9.

         23.5     It is understood and agreed by the Underwriters that the
                  Purchased Units may be offered and resold by the Underwriters,
                  its U.S. Affiliates and Selling Firms in the United States
                  pursuant to the provisions of Rule 144A to persons who are, or
                  are reasonably believed by them to be, Qualified Institutional
                  Buyers in transactions meeting the requirements of Rule 144A
                  and in compliance with any applicable state securities laws of
                  the United States, provided that by purchasing Purchased
                  Units, each purchaser shall be deemed to have represented and
                  warranted for the benefit of the Company and the Underwriters
                  that:

                  23.5.1   it is a Qualified Institutional Buyer and
                           acknowledges that the sale of Purchased Units to it
                           is being made in reliance on Rule 144A, and it is
                           acquiring such Purchased Units for its own account or
                           for the account of one or more Qualified
                           Institutional Buyers with respect to which it
                           exercises sole investment discretion;

                  23.5.2   it understands and acknowledges that the Purchased
                           Units will not be and have not been registered under
                           the U.S. Securities Act or the securities laws of any
                           state of the United States, and are therefore
                           "restricted securities" within the meaning of the
                           Rule 144, and that if in the future it shall decide
                           to resell, pledge or otherwise transfer such
                           Purchased Units, the same may be resold, pledged or
                           otherwise transferred only (A) to ACS Media Income
                           Fund, (B) in the United States, in accordance with
                           Rule 144A to a person it reasonably believes is a
                           Qualified Institutional Buyer that purchases for its
                           own account or for the account of a Qualified
                           Institutional Buyer and to whom notice is given that
                           the offer, sale or transfer is being made in reliance
                           on Rule 144A, (C) outside the United States, in
                           accordance with Rule 904 of Regulation S and in
                           compliance



                           with applicable local laws and regulations, (D) in a
                           transaction exempt from registration under the U.S.
                           Securities Act pursuant to Rule 144 and in compliance
                           with any applicable state securities laws of the
                           United States, or (E) in a transaction that does not
                           require registration under the U.S. Securities Act or
                           any applicable United States state securities laws,
                           and it has furnished to ACS Media Income Fund an
                           opinion of counsel of recognized standing reasonably
                           satisfactory to ACS Media Income Fund to that effect;

                  23.5.3   it understands that all Purchased Units sold in the
                           United States as part of this offering under the
                           Prospectus will bear a legend to the following
                           effect:

                           "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
                           REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
                           1933, AS AMENDED (THE "SECURITIES ACT") OR STATE
                           SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING
                           SUCH SECURITIES, AGREES FOR THE BENEFIT OF ACS MEDIA
                           INCOME FUND THAT SUCH SECURITIES MAY BE OFFERED, SOLD
                           OR OTHERWISE TRANSFERRED ONLY (A) TO ACS MEDIA INCOME
                           FUND, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE
                           WITH RULE 904 OF REGULATION S UNDER THE SECURITIES
                           ACT, (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH
                           RULE 144A UNDER THE SECURITIES ACT, (D) PURSUANT TO
                           THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
                           ACT PROVIDED BY RULE 144 THEREUNDER, OR (E) PURSUANT
                           TO ANOTHER EXEMPTION FROM REGISTRATION AFTER
                           PROVIDING A LEGAL OPINION SATISFACTORY TO ACS MEDIA
                           INCOME FUND.

                           A NEW CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED
                           FROM CIBC MELLON TRUST COMPANY UPON DELIVERY OF THIS
                           CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A
                           FORM SATISFACTORY TO CIBC MELLON TRUST COMPANY AND
                           ACS MEDIA INCOME FUND, TO THE EFFECT THAT THE SALE OF
                           THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN
                           COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE
                           SECURITIES ACT."

                           If the Purchased Units are being sold in compliance
                           with the requirements of Rule 904 of Regulation S,
                           the legend may be removed by providing a declaration
                           to CIBC Mellon Trust Company to the following effect
                           (or as the Fund may prescribe from time to time).

                           "The undersigned (A) acknowledges that the sale of
                           the securities to which this declaration relates is
                           being made in reliance on Rule 904 of Regulation S
                           under the U.S. Securities Act of 1933, as amended,
                           and (B) certifies that (1) it is not an "affiliate"
                           (as defined in Rule 405 under the Securities Act, as
                           amended) of ACS Media Income Fund, (2) the offer of
                           such securities was not made to a person in the
                           United States and either (a) at the time the buy
                           order was originated, the buyer was outside the
                           United States, or the seller and any person acting on
                           its behalf reasonably believed that the buyer was
                           outside the United States or (b) the transaction was
                           executed on or through the facilities of the Toronto
                           Stock Exchange and neither the seller nor any person
                           acting on its behalf knows that the transaction has
                           been prearranged with a buyer in the United States,
                           and (3) neither the seller nor any person acting on
                           its behalf engaged in any directed selling efforts in
                           connection with the offer and sale of such
                           securities. Terms used herein have the meanings given
                           to them by Regulation S."; and

                  23.5.4   it understands and acknowledges that it is making the
                           representations and warranties and agreements
                           contained herein with the intent that they may be
                           relied upon by the Fund, the Company and the
                           Underwriters in determining its



                           eligibility or (if applicable) the eligibility of
                           others on whose behalf it is contracting hereunder to
                           purchase the Purchased Units.

24.      STABILIZATION.

         In connection with the distribution of the Purchased Units, the
         Underwriters and members of their selling group (if any) may over-allot
         or effect transactions which stabilize or maintain the market price of
         the Purchased Units at levels above those which might otherwise prevail
         in the open market, in compliance with Securities Laws. Those
         stabilizing transactions, if any, may be discontinued at any time.

25.      OBLIGATIONS OF THE UNDERWRITERS TO BE SEVERAL.

         Subject to the terms and conditions of this agreement, the obligation
         of the Underwriters to purchase the Initial Units or the Additional
         Units, as the case may be, will be several and not joint. The
         percentage of the Purchased Units to be severally purchased and paid
         for by each of the Underwriters will be as follows:

                                                    
CIBC World Markets Inc.                                35%
RBC Dominion Securities Inc.                           20%
Scotia Capital Inc.                                    20%
BMO Nesbitt Burns Inc.                                 12%
National Bank Financial Inc.                           12%
Westwind Partners Inc.                                  1%



         If an Underwriter (a "REFUSING UNDERWRITER") does not complete the
         purchase and sale of the Initial Units which that Underwriter has
         agreed to purchase under this agreement (the "DEFAULTED UNITS"), CIBC
         WM may delay the closing date for not more than five days and the
         remaining Underwriters (the "CONTINUING UNDERWRITERS") will be
         entitled, at their option, to purchase all but not less than all of the
         Defaulted Units pro rata according to the number of Initial Units to
         have been acquired by the Continuing Underwriters under this agreement
         or in any proportion agreed upon, in writing, by the Continuing
         Underwriters. If no such arrangement has been made and the number of
         Defaulted Units to be purchased by the Refusing Underwriter does not
         exceed 10% of the Initial Units the Continuing Underwriters will be
         obligated to purchase the Defaulted Units on the terms set out in this
         agreement in proportion to their obligations under this agreement. If
         the number of Defaulted Units to be purchased by the Refusing
         Underwriters exceeds 10% of the Initial Units, the Continuing
         Underwriters will not be obliged to purchase the Defaulted Units and,
         if the Continuing Underwriters do not elect to purchase the Defaulted
         Units:

         25.1     the Continuing Underwriters will not be obliged to purchase
                  any of the Initial Units;

         25.2     the Fund will not be obliged to sell less than all of the
                  Initial Units; and

         25.3     the Fund and the Company will be entitled to terminate their
                  obligations under this agreement arising from their acceptance
                  of this offer, in which event there will be no further
                  liability on the part of the Continuing Underwriters or the
                  Fund, ACS Canada, the Company and the Existing Securityholders
                  except pursuant to the provisions of Sections 16, 17, and 19.

26.      NOTICE.

         Any notice or other communication required or permitted to be given
         under this agreement will be in writing and will be delivered to:

             (a)   in the case of the Fund:

                      79 Wellington Street West
                      Suite 3000, Maritime Life Building
                      Toronto-Dominion Centre
                      Toronto, Ontario M5K 1N2



                      Attention: Trustees of ACS Media Income Fund c/o Philip
                                 Brown
                      Facsimile: (416) 865-7380

             (b)   in the case of ACS Canada:

                      79 Wellington Street West
                      Suite 3000, Maritime Life Building
                      Toronto-Dominion Centre
                      Toronto, Ontario M5K 1N2

                      Attention: Directors of ACS Media Canada Inc. c/o Philip
                                 Brown
                      Facsimile: (416) 865-7380

             (c)   in the case of ACS Holdings, ACS InfoSource and Alaska
                   Communications Systems:

                      6000 Telephone Avenue, MS65
                      Anchorage, AK 99503
                      U.S.A.

                      Attention: General Counsel
                      Facsimile: (907) 297-3153

                   in each case under (a), (b) or (c), with a copy to the Fund
                   and the Company.

             (d)   in the case of the Company:

                      3601 C Street
                      Anchorage, AK 19503
                      U.S.A.

                      Attention: President
                      Facsimile: (907) 564-1422

                   with a copy to the Fund.

             (e)   in the case of CIBC WM:

                      Canadian Equity Capital Markets
                      161 Bay Street, 6th Floor
                      Toronto, Ontario M5J 2S8

                      Attention: Kevin W. Dalton
                      Facsimile: (416) 956-6958

                   in the case of RBC DS:

                      P.O. Box 50, 200 Bay Street
                      4th Floor, South Tower
                      Royal Bank Plaza
                      Toronto, Ontario M5J 2W7

                      Attention: Karin Treiberg
                      Facsimile: (416) 842-7555

                   in the case of Scotia:

                      Scotia Plaza
                      40 King Street West



                      P.O. Box 4085, Station "A"
                      Toronto, Ontario M5W 2X6

                      Attention: Sarah B. Kavanagh
                      Facsimile: (416) 863-7117

                   in the case of BMO NB:

                      1 First Canadian Place
                      4th Floor, PO Box 150
                      Toronto, Ontario M5X 1H3

                      Attention: Ashish P. Mathur
                      Facsimile: (416) 359-5685

                   in the case of NBF:

                      130 King Street West
                      Suite 3200, PO Box 21
                      Toronto, Ontario M5X 1J9

                      Attention: Jim Hardy
                      Facsimile: (416) 869-6411

                   in the case of Westwind:

                      70 York Street
                      10th Floor
                      Toronto, Ontario M5J 1S9

                      Attention: Lionel F. Conacher
                      Facsimile: (416) 815-1808

                   in each case under (e), with a copy to Goodmans LLP:

                      Suite 2400
                      250 Yonge Street
                      Toronto, Ontario M5B 2M6

                      Attention: Allan Goodman
                      Facsimile: (416) 979-1234

         The parties may change their respective addresses for notices by notice
         given in the manner set out above. Any notice or other communication
         will be in writing, and unless delivered personally to the addressee or
         to a responsible officer of the addressee, as applicable, will be given
         by telecopy and will be deemed to have been given when (i) in the case
         of a notice delivered personally to a responsible officer of the
         addressee, when so delivered; and (ii) in the case of a notice
         delivered or given by telecopy, on the first business day following the
         day on which it is sent.

27.      MISCELLANEOUS.

         27.1     Except with respect to Sections 16, 17, and 22, all actions,
                  determinations and notices on behalf of the Underwriters under
                  this agreement or contemplated by this agreement may be
                  carried out, made or given on behalf of the Underwriters by
                  CIBC WM and CIBC WM will in good faith discuss with the other
                  Underwriters the nature of any of the transactions and notices
                  prior to giving effect to them or the delivery of them, as the
                  case may be.

         27.2     This agreement will be governed by and interpreted in
                  accordance with the laws of the Province of Ontario and the
                  federal laws of Canada applicable therein.



         27.3     Time will be of the essence in this agreement and, following
                  any waiver or indulgence by any party, time will again be of
                  the essence in this agreement.

         27.4     The words "agreement", "hereof", "hereunder" and similar
                  phrases mean and refer to the agreement formed as a result of
                  the acceptance by the Fund of this offer by the Underwriters
                  to purchase the Purchased Units.

         27.5     All representations, warranties, covenants and agreements of
                  the Fund, ACS Canada, the Company and the Existing
                  Securityholders contained in this agreement or contained in
                  documents submitted pursuant to this agreement and in
                  connection with the transaction of purchase and sale
                  contemplated by this agreement will survive and will continue
                  in full force and effect for a period of three years from the
                  Closing Date (other than Sections 8.1, 8.2, 8.3, 8.4, 8.5.1,
                  8.5.2, 8.5.4, 8.6, Sections 8.10 to and including 8.15,
                  Sections 8.17, 8.19 and 8.23, Sections 9.1 to and including
                  9.5, Sections 9.7 (but only with respect to contraventions,
                  breaches or defaults under organizational documents, licenses,
                  permits and Laws) and 9.8, Section 10.1 to and including 10.5,
                  Sections 10.11 (but only with respect to contraventions,
                  breaches or defaults under organizational documents, licenses,
                  permits and Laws) and 10.12, and Sections 11.1, 11.2 and 11.4
                  (but only with respect to contraventions, breaches or defaults
                  under organizational documents, licenses, permits and Laws),
                  each of which will survive and will continue in full force and
                  effect indefinitely) for the benefit of the Underwriters,
                  regardless of any subsequent disposition of the Purchased
                  Units or any investigation by or on behalf of the Underwriters
                  with respect thereto. The Underwriters will be entitled to
                  rely on the representations and warranties of the Fund, ACS
                  Canada, the Company, ACS Holdings, ACS InfoSource and Alaska
                  Communications Systems contained in this agreement or
                  delivered pursuant to this agreement notwithstanding any
                  investigation which the Underwriters may undertake or which
                  may be undertaken on the Underwriters' behalf.

         27.6     Each of the parties to this agreement will be entitled to rely
                  on delivery of a facsimile copy of this agreement and
                  acceptance by each party of any such facsimile copy will be
                  legally effective to create a valid and binding agreement
                  between the parties to this agreement in accordance with the
                  terms of this agreement.

         27.7     Each of the parties hereto acknowledges that the obligations
                  of the Fund under this agreement and that such obligations
                  shall not be personally binding upon any of the trustees of
                  the Fund, any registered or beneficial holder of Units or any
                  beneficiary under a plan of which a holder of such Units acts
                  as a trustee or carrier, and that resort shall not be had to,
                  nor shall recourse be sought from, any of the foregoing or the
                  private property of any of the foregoing in respect of any
                  indebtedness, obligation or liability of the Fund arising
                  hereunder, and recourse for such indebtedness, obligations or
                  liabilities of the Fund shall be limited to, and satisfied
                  only out of, the assets of the Fund.

         27.8     This agreement may be executed in any number of counterparts,
                  each of which when so executed will be deemed to be an
                  original and all of which, when taken together, will
                  constitute one and the same agreement.

         27.9     To the extent permitted by applicable law, the invalidity or
                  unenforceability of any particular provision of this agreement
                  will not affect or limit the validity or enforceability of the
                  remaining provisions of this agreement.

         27.10    This agreement and the other documents referred to in this
                  agreement constitute the entire agreement between the parties
                  hereto relating to the subject matter of this agreement and
                  supersede all prior agreements between those parties with
                  respect to their respective rights and obligations in respect
                  of the transactions contemplated under this agreement.

         27.11    The terms and provisions of this agreement will be binding
                  upon and enure to the benefit of the Fund, ACS Canada, the
                  Company, and the Existing Securityholders and the Underwriters
                  and their respective successors and assigns; provided that,
                  except as otherwise



                  provided in this agreement, this agreement will not be
                  assignable by any party without the written consent of the
                  others and any purported assignment without that consent will
                  be invalid and of no force and effect.

         27.12    The parties acknowledge and agree that the obligations of the
                  Fund hereunder are not personally binding upon any trustee
                  thereof, any registered or beneficial holder of units in the
                  Fund or any annuitant under a plan of which such unitholder
                  acts as trustee or carrier, and resort shall not be had to,
                  nor shall recourse or satisfaction be sought from, any of the
                  foregoing or the private property of any of the foregoing, but
                  the property of the Fund only shall be bound by such
                  obligations. Any obligation of the Fund set out in this
                  agreement shall, to the extent necessary to give effect to
                  such obligation, be deemed to constitute, subject to the
                  provisions of the previous sentence, an obligation of the
                  trustees of the Fund in their capacity as trustees of the Fund
                  only.

         27.13    Notwithstanding any provision of this agreement to the
                  contrary, nothing in this agreement shall be construed to
                  require or permit the Fund or any individual or entity acting
                  on behalf of the Fund to take any action that would result in
                  the Fund failing to qualify as an "investment trust" within
                  the meaning of United States Treasury Regulations Section
                  301.7701-4(c).

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]



         If this letter accurately reflects the terms of the transactions which
we are to enter into and are agreed to by you, please communicate your
acceptance by executing the enclosed copies of this letter where indicated and
returning them to us.

                                      Yours very truly,
                                      CIBC WORLD MARKETS INC.
                                      /s/ Kevin W. Dalton
                                      -----------------------------------------
                                      Name:  Kevin W. Dalton
                                      Title: Managing Director

                                      RBC DOMINION SECURITIES INC.
                                      /s/ Karin Treiberg
                                      -----------------------------------------
                                      Name:  Karin Treiberg
                                      Title: Vice President

                                      SCOTIA CAPITAL INC.
                                      /s/ Sarah B. Kavanagh
                                      -----------------------------------------
                                      Name:  Sarah B. Kavanagh
                                      Title: Managing Director

                                      BMO NESBITT BURNS INC.
                                      /s/ Ashish P. Mathur
                                      -----------------------------------------
                                      Name:  Ashish P. Mathur
                                      Title: Vice President

                                      NATIONAL BANK FINANCIAL INC.
                                      /s/ Jim Hardy
                                      -----------------------------------------
                                      Name:  Jim Hardy
                                      Title: Managing Director

                                      WESTWIND PARTNERS INC.
                                      /s/ Lionel F. Conacher
                                      -----------------------------------------
                                      Name:  Lionel F. Conacher
                                      Title: Managing Director



         Accepted and agreed to by the undersigned as of the date of this letter
         first written above.

                                      ACS MEDIA INCOME FUND, BY ITS TRUSTEES
                                      /s/ Mark A. Davis
                                      -----------------------------------------
                                      Name:  Mark A. Davis
                                      Title: Trustee

                                      /s/ Andre L. Hidi
                                      -----------------------------------------
                                      Name:  Andre L. Hidi
                                      Title: Trustee

                                      /s/ Alain Rheaume
                                      -----------------------------------------
                                      Name:  Alain Rheaume
                                      Title: Trustee

                                      /s/ Ronald J. Daniels
                                      -----------------------------------------
                                      Name:  Ronald J. Daniels
                                      Title: Trustee

                                      ACS MEDIA CANADA INC.
                                      /s/ Wesley E. Carson
                                      -----------------------------------------
                                      Name:  Wesley E. Carson
                                      Title: President

                                      ACS MEDIA LLC
                                      /s/ Wesley E. Carson
                                      -----------------------------------------
                                      Name:  Wesley E. Carson
                                      Title: President, Chief Executive
                                      Officer and Manager

                                      ACS MEDIA HOLDINGS LLC
                                      /s/ Kevin Hemenway
                                      -----------------------------------------
                                      Name:  Kevin Hemenway
                                      Title: Manager

                                      ACS INFOSOURCE, INC.
                                      /s/ Kevin Hemenway
                                      -----------------------------------------
                                      Name:  Kevin Hemenway
                                      Title: Director

                                      ALASKA COMMUNICATIONS SYSTEMS HOLDINGS,
                                      INC.
                                      /s/ Kevin Hemenway
                                      -----------------------------------------
                                      Name:  Kevin Hemenway
                                      Title: Senior Vice President, Treasurer
                                      and Chief Financial Officer



                                  SCHEDULE 8.11

                             CAPITAL OF THE COMPANY

Capital of the Company as of the date of this agreement and immediately before
the Time of Closing:

        Authorized:                        unlimited number of membership
                                           interests

        Issued and Outstanding:            1 membership interest issued to ACS
                                           Media Holdings LLC

Capital of the Company immediately before the Over-Allotment Closing Time
(provided that the Closing occurs and there are no Defaulted Units):

        Authorized:                        unlimited number of membership
                                           interests

        Issued and Outstanding:            17,366,353 membership interest issued
                                           to ACS Media Holdings LLC

                                           120,680,968 membership interest
                                           issued to ACS Media Canada Inc.



                                 SCHEDULE 23.4.9

                            UNDERWRITERS' CERTIFICATE

                  In connection with the private placement in the United States
of the units (the "UNITS") of ACS Media Income Fund (the "FUND") pursuant to the
underwriting agreement dated April 28, 2003 among the Fund, ACS Media LLC and
others and the Underwriters named therein (the "UNDERWRITING AGREEMENT"), each
of the undersigned does hereby certify as follows:

         I.                [NAME OF U.S. BROKER-DEALER AFFILIATE] is a duly
                           registered broker or dealer with the United States
                           Securities and Exchange Commission and is a member of
                           and in good standing with the National Association of
                           Securities Dealers, Inc. on the date hereof;

         II.               each offeree was provided with a copy of the U.S.
                           private placement memorandum (the "U.S. PLACEMENT
                           MEMORANDUM"), including the Canadian (final)
                           prospectus (without the compilation report referred
                           to therein) dated April 29, 2003 for the offering of
                           the Units in the United States;

         III.              immediately prior to our transmitting such U.S.
                           Placement Memorandum to such offerees, we had
                           reasonable grounds to believe and did believe that
                           each offeree was, and continue to believe that each
                           such offeree who is a U.S. person purchasing Units
                           from us is, a "qualified institutional buyer", as
                           defined in Rule 144A under the Securities Act of
                           1933, as amended (the "1933 ACT");

         IV.               no form of general solicitation or general
                           advertising (as those terms are used in Regulation D
                           under the 1933 Act) was used by us, in connection
                           with the offer or sale of the Units in the United
                           States; and

         V.                the offering of the Units in the United States has
                           been conducted by us in accordance with the terms of
                           the Underwriting Agreement.

                  Unless otherwise defined, terms used in this certificate have
the meanings given to them in the Underwriting Agreement.

                  Dated this ________day of _______________, 2003.

[UNDERWRITER]                              [U.S. BROKER-DEALER AFFILIATE]

By: ____________________________           By: ________________________________
     Name:                                      Name:
     Title:                                     Title:

EX-99.1

                                                                    EXHIBIT 99.1

      CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
                                       TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alaska Communications Systems Group,
Inc. (the "Company") on Form 10-Q for the period ending March 31, 2003 (the
"Report"), I, Charles E. Robinson, Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
    the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
    respects, the financial condition and result of operations of the Company.

Date: May 6, 2003                      /s/ Charles E. Robinson
                                       -----------------------
                                       Charles E. Robinson
                                       Chief Executive Officer and
                                       Chairman of the Board of
                                       Alaska Communications Systems Group, Inc.

EX-99.2

                                                                   EXHIBIT 99.2

      CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
                                       TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alaska Communications Systems Group,
Inc. (the "Company") on Form 10-Q for the period ending March 31, 2003 (the
"Report"), I, Kevin P. Hemenway, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
    the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
    respects, the financial condition and result of operations of the Company.

Date: May 6, 2003                      /s/ Kevin P. Hemenway
                                       ---------------------
                                       Kevin P. Hemenway
                                       Senior Vice President and
                                       Chief Financial Officer
                                       Alaska Communications Systems Group, Inc.