EXHIBIT 2.4
ASSET PURCHASE AGREEMENT
dated as of
April 15, 1996
among
GENERAL COMMUNICATION, INC.
[or its wholly-owned subsidiary]
an Alaska corporation
("Buyer")
and
ALASKAN CABLE NETWORK/FAIRBANKS, INC.
an Alaska corporation
("ACNFI")
and
ALASKAN CABLE NETWORK/JUNEAU, INC.
an Alaska corporation
("ACNJ")
and
ALASKAN CABLE NETWORK/KETCHIKAN-SITKA, INC.
an Alaska corporation
("ACNKS")
(ACNFI, ACNJ, ACNKS, collectively, "Companies" or, individually, a "Company")
REGISTRATION STATEMENT
Page II-149
TABLE OF CONTENTS
Page
Section 1. Definitions...................................................................................156
1.1 Affiliate.....................................................................................156
1.2 APUC..........................................................................................156
1.3 APUC Certificate..............................................................................156
1.4 Assets........................................................................................156
1.5 Basic CATV Services...........................................................................157
1.6 Basic Subscriber..............................................................................157
1.7 CATV..........................................................................................157
1.8 CATV Business.................................................................................157
1.9 CATV Franchise Agreement......................................................................157
1.10 CATV Instruments..............................................................................157
1.11 CATV System...................................................................................157
1.12 Closing and Closing Date......................................................................158
1.13 COBRA.........................................................................................158
1.14 Company Contracts.............................................................................158
1.15 Employees.....................................................................................158
1.16 Employee Plans................................................................................158
1.17 Encumbrance...................................................................................158
1.18 Equipment.....................................................................................158
1.19 Equivalent Basic Subscribers or EBS's.........................................................158
1.20 ERISA.........................................................................................159
1.21 Excluded Assets...............................................................................159
1.22 FCC...........................................................................................159
1.23 Financial Statements..........................................................................159
1.24 Governmental Authority........................................................................159
1.25 Intangibles...................................................................................159
1.26 Legal Requirement.............................................................................159
1.27 MDU Agreements................................................................................160
1.28 MDU Complex...................................................................................160
1.29 Operating Cash Flow...........................................................................160
1.30 Pay TV........................................................................................160
1.31 Pay Units.....................................................................................160
1.32 Permitted Encumbrances........................................................................160
1.33 Person........................................................................................161
1.34 Purchase Price................................................................................161
1.36 Required Consents.............................................................................161
1.37 Security Interest.............................................................................161
1.38 Service Area..................................................................................161
1.39 Share Holdback................................................................................161
REGISTRATION STATEMENT
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1.40 Subscribers...................................................................................161
1.41 System........................................................................................162
Section 2. Sale of Assets................................................................................162
2.1 Sale of Assets................................................................................162
2.2 Purchase Price................................................................................162
2.3 Share Holdback................................................................................162
Section 3. Companies' Representations, Warranties, and Covenants.........................................162
3.1 Organization and Qualification................................................................162
3.2 Authority.....................................................................................163
3.3 Enforceability................................................................................163
3.4 Cash Flow.....................................................................................163
3.5 Assets........................................................................................163
3.6 Governmental Permits..........................................................................164
3.7 Company Contracts.............................................................................164
3.8 Records.......................................................................................164
3.9 No Breach or Violation........................................................................164
3.10 No Finders or Brokers.........................................................................165
3.11 Schedules.....................................................................................165
3.12 Compliance with Laws..........................................................................165
3.13 Financial Statements..........................................................................165
3.14 Tax Returns and Other Reports.................................................................166
3.15 Transfer Taxes................................................................................166
3.16 Real Property.................................................................................166
3.17 Employees.....................................................................................168
3.18 Employee Benefits.............................................................................169
3.19 Litigation and Violations.....................................................................173
3.20 Disclosure....................................................................................173
3.21 Investment Company............................................................................173
3.22 CATV Instruments and Company Contracts........................................................173
3.23 FCC Compliance................................................................................174
3.24 APUC Compliance...............................................................................175
3.25 Patents, Trademarks, and Copyrights...........................................................175
3.26 No Other Assets or Liabilities................................................................175
3.27 Required Consents.............................................................................175
3.28 Overbuilds....................................................................................176
3.29 Subscriber Numbers............................................................................176
3.30 No Insolvency.................................................................................176
3.31 Compliance with Law...........................................................................176
3.32 Holding Period................................................................................177
3.33 Disclosure....................................................................................177
REGISTRATION STATEMENT
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Section 4. Assumed Liabilities and Excluded Assets.......................................................178
4.1 Assignment and Assumption.....................................................................178
4.2 Excluded Assets...............................................................................178
Section 5. Buyer's Representations, Warranties, and Covenants............................................178
5.1 Organization and Authority....................................................................178
5.2 Capitalization................................................................................178
5.3 Enforceability................................................................................179
5.4 Records.......................................................................................179
5.5 No Breach or Violation........................................................................179
5.6 Compliance with Laws..........................................................................180
5.7 Financial Statements..........................................................................180
5.8 Tax Returns and Other Reports.................................................................180
5.9 Transfer Taxes................................................................................181
5.10 Litigation and Violations.....................................................................181
5.11 Disclosure....................................................................................181
5.12 Investment Company............................................................................181
5.13 No Finders or Brokers.........................................................................181
5.14 No Insolvency.................................................................................181
Section 6. Conduct Prior to Closing......................................................................181
6.1 Operation in Ordinary Course..................................................................181
6.2 Agents........................................................................................182
6.3 Franchise Extensions..........................................................................182
6.4 Company Contracts.............................................................................182
6.5 No New Buyer Securities.......................................................................183
6.6 Employees.....................................................................................183
6.7 Access to Premises and Records................................................................183
6.8 Existing Relationships........................................................................184
6.9 Required Consents.............................................................................184
6.10 Compliance with CLI Standards.................................................................184
6.11 MDU Agreements................................................................................184
6.12 Public Announcements..........................................................................184
6.13 Due Diligence.................................................................................185
6.14 Correction of any Noncompliance Prior to Closing..............................................185
6.15 Leased Equipment..............................................................................185
6.16 Estoppel Certificates, Nondisturbance Agreements
and Franchise Renewals........................................................................185
6.17 Title Commitments and Surveys.................................................................186
6.18 HSR Notification..............................................................................187
6.19 No Shopping...................................................................................187
6.20 Notification of Certain Matters...............................................................187
6.21 Risk of Loss; Condemnation....................................................................188
6.22 Lien and Judgment Searches....................................................................188
REGISTRATION STATEMENT
Page II-152
6.23 Transfer Taxes................................................................................189
6.24 Letter to Programmers.........................................................................189
6.25 Updated Schedules.............................................................................189
6.26 Use of Companies' Names.......................................................................189
6.27 Subscriber Billing Services...................................................................189
6.28 Satisfaction of Conditions....................................................................190
Section 7. Closing.......................................................................................190
Section 8. Deliveries by Companies at Closing............................................................190
Section 9. Deliveries by Buyer at Closing................................................................193
Section 10. Conditions to Obligations of Buyer............................................................194
10.1 Accuracy of Representations and Compliance with Conditions....................................194
10.2 Deliveries Complete...........................................................................194
10.3 No Adverse Change.............................................................................194
10.4 Restraint of Proceedings......................................................................195
10.5 Inspection....................................................................................195
10.6 Cash Flow.....................................................................................195
Section 11. Conditions to Obligations of Companies........................................................195
11.1 Accuracy of Representations and Compliance with Conditions....................................195
11.2 Deliveries Complete...........................................................................195
11.3 No Adverse Change.............................................................................196
11.4 Restraint of Proceedings......................................................................196
Section 12. Conditions to Both Parties' Obligations.......................................................196
12.1 Consents......................................................................................196
12.2 No Governmental Action........................................................................196
12.3 Waiver of Conditions..........................................................................196
Section 13. Transactions Subsequent to Closing............................................................196
13.1 Further Actions...............................................................................196
13.2 COBRA Benefits................................................................................197
Section 14. Registration Rights Agreement.................................................................197
Section 15. Agreement Not to Compete......................................................................197
15.1 Agreement.....................................................................................197
15.2 Breach of Agreement...........................................................................197
15.3 Enforceability................................................................................197
Section 16. Survival of Representations and Warranties; Indemnification...................................197
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Page II-153
16.1 Survival......................................................................................197
16.2 Indemnity by Companies........................................................................198
16.3 Indemnity by Buyer............................................................................198
16.4 Defense of Claims.............................................................................198
16.5 Right to Offset...............................................................................199
16.6 Determination of Indemnified Amounts..........................................................200
Section 17. Termination...................................................................................200
17.1 Mutual Consent................................................................................200
17.2 Default by Companies..........................................................................200
17.3 Default by Buyer..............................................................................201
Section 18. Miscellaneous.................................................................................201
18.1 Expenses......................................................................................201
18.2 Modification..................................................................................202
18.3 Attorneys' Fees...............................................................................202
18.4 Right to Specific Performance.................................................................202
18.5 Notice........................................................................................202
18.6 Waiver........................................................................................203
18.7 Binding Effect; Assignment....................................................................203
18.8 No Third Party Beneficiaries..................................................................203
18.9 Rights Cumulative.............................................................................203
18.10 Further Actions...............................................................................203
18.11 Severability..................................................................................203
18.12 Captions......................................................................................203
18.13 Counterparts..................................................................................204
18.14 Governing Law.................................................................................204
18.15 Incorporation by Reference....................................................................204
18.16 Construction..................................................................................204
18.17 Confidentiality...............................................................................204
EXHIBITS
A - Registration Rights Agreement
B - ▇▇▇▇ of Sale
C - Nondisturbance and Attornment Agreements
D - Assumption Agreement
E - Assignment of Lease
F - Guaranty
G - Non-Compete Agreement
H - Letter to Programmers
I - FIRPTA Affidavit
J - Opinion of Company's Counsel
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Page II-154
K - Opinion of Company's FCC Counsel
SCHEDULES
1 - The CATV Business (including Rate Schedule)
2 - CATV Instruments
3 - Company Contracts
4 - Required Consents
5 - Equipment and Vehicles Owned
6 - Real Property Owned
7 - Security Interests to Be Discharged Prior to Closing and
Permitted Security Interests
8 - Proceedings and Judgments
9 - Employee Matters
10 - Excluded Assets
REGISTRATION STATEMENT
Page II-155
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of
April 15, 1996, among General Communication, Inc., an Alaska corporation [or its
wholly-owned subsidiary] ("Buyer"), and Alaskan Cable Network/Fairbanks, Inc.,
an Alaska corporation, ("ACNFI"), Alaskan Cable Network/Juneau, Inc. ("ACNJ"),
Alaska Cable Network/Ketchikan-Sitka, Inc. ("ACNKS") (ACNI, ACNJ and ACNKS,
collectively "Companies" or individually a "Company"). This Agreement states the
terms upon which Companies agrees to sell to Buyer, and Buyer agrees to purchase
from Companies, all of Companies' Assets (as defined below).
WHEREAS, Companies are engaged in the business of providing
cable television services to subscribers in and around the Service Areas
(defined below); and
WHEREAS, Buyer desires to purchase and Companies desire to
sell all of Companies' Assets used or useful in connection with the CATV
Business (defined below);
In consideration of the terms, conditions, and agreements
contained in this Agreement, the parties agree as follows:
Section 1 Definitions
1.1 Affiliate. "Affiliate" shall mean any person or entity
controlling, controlled by or under common control with a person or entity;
"control" means the ownership, directly or indirectly, of equity securities or
other ownership interests in a person or entity by another person or entity,
which represent more than 50% of the voting power or equity ownership in such
person or entity.
1.2 APUC. "APUC" shall mean the Alaska Public Utilities
Commission.
1.3 APUC Certificate. "APUC Certificate" shall mean the
applicable certificate of public convenience and necessity issued by APUC, being
Certificate No. 252 (Fairbanks), No. 156 (Juneau), No. 144 (Ketchikan and Sitka)
for the Service Areas legally described herein.
1.4 Assets. "Assets" shall include all properties, privileges,
rights, interests and claims, real and personal, tangible and intangible, of
every type and description, that are owned, held, used, or useful in the CATV
Business located in and around the Service Areas in which Companies have any
right, title or interest, including but not limited to the CATV Instruments, the
Intangibles, Company Contracts, the Equipment, and the Real Property, but
excluding any Excluded Assets set forth on Schedule 10.
REGISTRATION STATEMENT
Page II-156
1.5 Basic CATV Services. "Basic CATV Services" shall mean CATV
programming sold to Subscribers as a package and delivered to such Subscribers
by coaxial cable, including broadcast and satellite service programming for
which a Subscriber pays a fixed monthly fee to the applicable Company, but not
including Pay TV.
1.6 Basic Subscriber. "Basic Subscriber" shall mean any person
who on a non-seasonal basis pays Company the full monthly price (without senior
citizen or other discount) for Basic CATV Services in accordance with standard
rates charged by Companies as set forth on Schedule 1, who was not solicited
since December 31, 1995, to purchase such services by any promotions, offers of
discounts, or extraordinary marketing techniques which promotions, discounts, or
marketing techniques were inconsistent with Companies' previous business
practices, who has paid in full without discount at least one monthly ▇▇▇▇
generated in the ordinary course of business for CATV services, who is not
pending disconnection for any reason, and who is not delinquent in payment for
such CATV services. For this purpose, a Subscriber shall be delinquent if any
part of his or her account is more than 59 days past due from the invoice date.
1.7 CATV. "CATV" shall mean cable television.
1.8 CATV Business. "CATV Business" shall refer to all of the
Assets and business of the CATV Systems as presently conducted by Companies in
and around the Service Areas as described on Schedule 1 to this Agreement.
1.9 CATV Franchise Agreement. "CATV Franchise Agreements"
shall refer to (i) that certain CATV Franchise Agreement for Fort
▇▇▇▇▇▇▇▇▇▇/▇▇▇▇▇▇, No. F65501-91-00008, the Operational Contracting Office/LGCV,
on behalf of the United States of America, dated March 22, 1991; and (ii) that
certain CATV Franchise Agreement for ▇▇▇▇▇▇▇ ▇▇▇, ▇▇. ▇▇▇▇▇▇-▇▇-▇▇▇▇\▇▇▇▇▇▇, the
Operational Contracting Office/LGCV, on behalf of the United States of America,
dated December 1, 1989.
1.10 CATV Instruments. "CATV Instruments" shall refer to all
material intangible CATV channel distribution rights owned, used, or held for
use by Companies, all franchise agreements, pole attachment rights, leases,
licenses, easements, crossing permits and service agreements, as described on
Schedule 2 to this Agreement.
1.11 CATV System. "CATV System" shall refer to a complete CATV
reception and distribution system of the applicable Company which is part of
Companies' CATV Business and consisting of one or more headends, equipment,
Subscriber drops and associated electronic equipment, which is, or is capable of
being, without modification, operated as an independent system without
interconnections to other systems. Any systems which are interconnected or which
are served in total or in part by a common headend shall be considered a single
CATV System.
REGISTRATION STATEMENT
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1.12 Closing and Closing Date. "Closing" shall refer to the
consummation of the transactions contemplated by this Agreement, to take place
at a meeting held at the place and on the date ("Closing Date") specified in
Section 7 of this Agreement.
1.13 COBRA. "COBRA" shall be as defined in Section 3.17.
1.14 Company Contracts. "Company Contracts" shall refer to all
contracts and agreements pertaining to the lawful ownership, operation, and
maintenance of the CATV Business or used in the CATV Business, other than CATV
Instruments, as described on Schedule 3 to this Agreement.
1.15 Employees. "Employees" shall be as defined in Section
3.17.
1.16 Employee Plans. "Employee Plans" shall be as defined in
Section 3.18.
1.17 Encumbrance. Any mortgage, lien, security interest,
security agreement, conditional sale or other title retention agreement,
limitation, pledge, option, charge, assessment, restrictive agreement,
restriction, encumbrance, adverse interest, restriction on transfer or any
exception to or defect in title or other ownership interest (including
reservations, rights-of-way, possibilities of reverter, encroachments,
easements, rights of entry, restrictive covenants, leases and licenses).
1.18 Equipment. "Equipment" shall refer to all material
tangible personalty, electronic devices, trunk and distribution coaxial and
optical fiber cable, amplifiers, power supplies, conduit, vaults and pedestals,
grounding and pole hardware, Subscriber's devices (including, without
limitation, converters, encoders, transformers behind television sets and
fittings), "headend" (origination, earth stations, transmission and distribution
system) hardware, test equipment, vehicles, and other personal property and
facilities owned, leased, used, or held for use in the CATV Business, as
described on Schedule 5 to this Agreement.
1.19 Equivalent Basic Subscribers or EBS's. "Equivalent Basic
Subscribers" or "EBS's" shall mean at a specified date a number representing the
sum of the equivalent of Basic Subscribers of each franchise area in the CATV
Systems derived by dividing (a) the total monthly ▇▇▇▇▇▇▇▇ for sales by
Companies of Basic CATV Services for the most recent month ended prior to such
specified date to single family households which pay less than the full
non-discounted monthly price for Basic CATV Services and to bulk accounts
(provided that in no event shall such ▇▇▇▇▇▇▇▇ include more than a single
month's charges for any such single family household or single bulk account), by
(b) the full non-discounted monthly price charged by a Company to single family
households for Basic CATV Services in accordance with standard rates charged by
a Company at the Closing Date in such franchise area; provided, however, that in
no
REGISTRATION STATEMENT
Page II-158
event shall such standard rates charged by Companies at the Closing Date be less
than those set forth on Schedule 1. For purposes of the foregoing, there shall
be excluded (a) all ▇▇▇▇▇▇▇▇ to any discounted single family household or bulk
account which is more than 59 days past due from the invoice date (whether for
Basic CATV Services or Pay TV or otherwise); (b) all ▇▇▇▇▇▇▇▇ to any discounted
single family household or bulk account which has not paid at least one month's
payment for Basic CATV Services, including payment of all installation charges
owed and due; (c) that portion of the ▇▇▇▇▇▇▇▇ to each discounted single family
household or bulk account which represents an installation or other
non-recurring charge, a charge for any outlet or connection other than the first
outlet or first connection in any single family household or, with respect to a
bulk account, in any residential unit (e.g. individual apartment or rental
unit), a charge for any tiered service (whether or not included within Pay TV),
or a pass-through charge for copyright fees, sales taxes, etc.; (d) all ▇▇▇▇▇▇▇▇
to any discounted single family household or bulk account which is pending
disconnection for any reason; and (e) all ▇▇▇▇▇▇▇▇ to any discounted single
family household or bulk account which was solicited since December 31, 1995, by
any promotions, offers of discounts, or extraordinary marketing techniques which
promotions, discounts, or marketing techniques were inconsistent with Companies'
previous business practices.
1.20 ERISA. "ERISA" shall be as defined in Section 3.17.
1.21 Excluded Assets. "Excluded Assets" shall refer to those
Assets which will not be owned by Company on the Closing Date as listed on
Schedule 10.
1.22 FCC. "FCC" shall mean the Federal Communications
Commission.
1.23 Financial Statements. "Financial Statements" shall be as
defined in Section 3.13.
1.24 Governmental Authority. (a) The United States of America,
(b) any state, commonwealth, territory or possession of the United States of
America and any political subdivision thereof (including counties,
municipalities and the like), (c) any foreign (as to the United States of
America) sovereign entity and any political subdivision thereof, or (d) any
agency, authority or instrumentality of any of the foregoing, including any
court, tribunal, department, bureau, commission or board.
1.25 Intangibles. "Intangibles" shall mean all material
general intangibles including, but not limited to, Subscriber lists, accounts
receivable, claims (excluding any claims relating to Excluded Assets), patents,
copyrights, and goodwill, if any.
1.26 Legal Requirement. Any statute, ordinance, code, law,
rule, regulation, order or other requirement, standard or procedure enacted,
adopted or applied by any Governmental Authority, including judicial decisions
applying common law or interpreting any other Legal Requirement.
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Page II-159
1.27 MDU Agreements. "MDU Agreements" shall mean the fully
executed agreements required by Section 6.11 hereof.
1.28 MDU Complex. "MDU Complex" shall mean any apartment,
condominium, or townhome complex or mobile home park and any other multiple unit
dwelling project subject to common ownership which currently receives cable
television service from the CATV Business.
1.29 Operating Cash Flow. Means, for any period of
determination, for the Companies, total consolidated operating revenues for such
period minus the sum of (a) costs for such period, plus (b) operating expenses
for such period, excluding depreciation, amortization and the other non-cash
items attributable to such period and expenses related to management overhead,
all calculated for such period for the Companies' subsidiaries on a consolidated
basis in accordance with GAAP consistently applied.
1.30 Pay TV. "Pay TV" shall mean premium programming services
selected by and sold to Subscribers for monthly fees in addition to the fee for
Basic CATV Services.
1.31 Pay Units. "Pay Units" shall mean each Pay TV service
subscribed for by all Basic Subscribers.
1.32 Permitted Encumbrances. "Permitted Encumbrances" shall
mean: (i) liens for taxes, assessments and governmental charges not yet due and
payable, or the validity of which are being contested diligently and in good
faith, and installments of special assessments not yet due and payable; (ii)
statutory liens arising in connection with the ordinary course of business not
yet delinquent or the validity of which are being contested diligently and in
good faith; (iii) zoning laws and ordinances and similar governmental
regulations; (iv) rights reserved to any municipality or government, statutory
or public authority to regulate the affected property; and (v) as to Real
Property interests, any liens, encumbrances, easements, rights-of-way,
servitude, permits, leases, other minor title defects, conditions, covenants and
restrictions, and minor imperfections or irregularities in title which are both
reflected in the public records and excepted from coverage in the Schedule B to
any title policy issued pursuant to Section 6.17 hereof. The foregoing
notwithstanding, "Permitted Encumbrances" shall not include any item of which
Companies have warranted the absence elsewhere in this Agreement and furthermore
shall not prevent or inhibit in any way the conduct of Companies' CATV Business.
No implication is made from the foregoing or any reference to Permitted
Encumbrances in this Agreement or in any documents or instruments delivered in
connection herewith that Buyer shall be or shall become liable or responsible
for any liens, taxes, assessments, charges, or statutory liens described in (i)
or (ii) above accruing or arising prior to the Closing Date or which are imposed
or assessed against
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Companies; and Companies shall remain fully liable and responsible therefor and
shall indemnify and hold Buyer harmless from and against any thereof pursuant to
Section 16.
1.33 Person. Any natural person, corporation, partnership,
trust, unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.34 Purchase Price. The "Purchase Price" for Companies'
Assets shall be as defined in Section 2.2.
1.35 Real Property. "Real Property" shall mean all realty,
including appurtenances, improvements, and fixtures located thereon and any
other interests in real property owned by Companies and used or held for use in
the CATV Business, including, without limitation, fee interests in Companies'
offices and headend sites, leasehold interests, easements, wire crossing permits
and rights of entry described on Schedule 6 to this Agreement.
1.36 Required Consents. "Required Consents" shall mean all
governmental franchises, approvals, licenses, consents, and any and all other
authorizations or approvals and consents, necessary and required for Companies
to transfer and convey, and Buyer to purchase, the Assets, and for Buyer to
conduct Companies' CATV Business at the places and in the manner in which such
CATV Business is presently conducted and will be conducted on the Closing Date.
All Required Consents are listed on Schedule 4 to this Agreement.
1.37 Security Interest. "Security Interest" shall mean any
mortgage, lien, security interest, security agreement, limitation, pledge,
option, charge, assessment, restrictive agreement, restriction, encumbrance,
adverse interest, claim, restraint on transfer, or claim against title with
respect to any of the Assets.
1.38 Service Area. "Service Areas" shall mean the areas in
which Companies operate the CATV Business, specifically in and around Fairbanks,
Juneau, Ketchikan, and Sitka, Alaska, pursuant to applicable APUC Certificate
▇▇. ▇▇▇, ▇▇▇▇▇▇▇▇▇; ▇▇. ▇▇▇, Juneau, and No. 144 Ketchikan and Sitka, Alaska,
pursuant to the CATV Franchise.
1.39 Share Holdback. "Share Holdback" shall be the GCI Shares
held in escrow, as defined in Section 2.3.
1.40 Subscribers. "Subscribers" shall mean all Basic
Subscribers and EBS's.
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1.41 System. A complete cable television reception and
distribution system operated in the conduct of the Business, consisting of one
or more headends, subscriber drops and associated electronic and other
equipment, and which is, or is capable of being without modification, operated
as an independent system without interconnections to other systems. Any systems
which are interconnected or which are served in total or in part by a common
headend will be considered a single System.
Section 2 Sale of Assets.
2.1 Sale of Assets. At the Closing, upon the terms and
conditions set forth in this Agreement, Companies agree to sell, convey,
transfer, assign, and deliver to Buyer, and Buyer agrees to purchase from
Companies, all of the Companies' right, title and interest in, to and under the
Assets. Except as otherwise provided, all the Assets are intended to be
transferred to Buyer, whether or not described in the Schedules.
2.2 Purchase Price. Buyer will deliver collectively to
Companies at the Final Closing the sum total of Fifty-One Million and no/100
Dollars ($51,000,000.00) in cash and Two Million Nine Hundred Twenty-Three
Thousand Seventy-Seven (2,923,077) shares of GCI's voting Class A common stock
(the "GCI Shares"), in payment for the Assets. Such payment in cash and in GCI
Shares constitutes the Seventy Million and no/100 Dollars ($70,000,000.00)
"Purchase Price."
2.3 Share Holdback. At the Final Closing, Companies and Buyer
shall each deposit in escrow Five Hundred Thirty-Eight Thousand (538,000) GCI
Shares, or provide a letter of credit in an amount equal to five percent (5%) of
the Purchase Price (the "Share Holdback") to secure each party's indemnification
for breaches of representations, warranties and covenants. If no breach of this
Agreement has occurred, such escrowed GCI Shares or letters of credit shall be
released following each respective indemnitee's written instruction, effective
as of one hundred eighty (180) days after the Closing Date.
Section 3 Companies' Representations, Warranties, and Covenants
Companies and each of them represent, warrant, and covenant to
Buyer, as of the date of this Agreement and as of the Closing, as follows:
3.1 Organization and Qualification. Each Company is a
corporation, duly organized corporation, validly existing and in good standing
under the laws of Alaska. Each Company is duly qualified or licensed to do
business as a foreign corporation and is in good standing under the laws of each
jurisdiction in which such Company is required to be so qualified or licensed.
Each Company has all requisite power and authority to carry on the CATV Business
as currently conducted and to own, lease, use, and operate its Assets as they
are currently owned, leased and used and
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Page II-162
to conduct its business as it is now conducted. The copies of Companies'
Articles of Incorporation, as amended, which have been delivered to Buyer are
complete and correct, and each of such documents is in full force and effect and
have not been further amended.
3.2 Authority. Each Company has all requisite capacity, power,
right, capitalization, and authority to enter into this Agreement and to perform
its obligations under this Agreement. The execution, delivery, and performance
of this Agreement and all other documents and instruments to be executed and
delivered in connection herewith ("Transaction Documents") by each Company has
been duly authorized by all applicable corporate action of Company. No consent
of or authorization from any person or other entity, including any Governmental
Authority, is required to be obtained in connection with the execution,
delivery, and performance of this Agreement and of the Transaction Documents by
Companies, except for the Required Consents described in Schedule 4.
3.3 Enforceability. This Agreement, the Transaction Documents,
and all documents, instruments, and certificates to be delivered under this
Agreement constitute legal, valid, and binding obligations of Companies,
enforceable against Companies in accordance with their respective terms, except
as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting generally the enforcement of
creditors' rights and by general principles of equity.
3.4 Cash Flow. Companies' actual aggregate Operating Cash Flow
was not less than Six Million Eight Hundred Thousand and no/100 Dollars
($6,800,000.00) for the year ended December 31, 1995. Each Company shall provide
Buyer with the audited financial statements as and for the year ended December
31, 1995, no later than April 30, 1996. Such statements shall present Company's
financial condition substantially as presented to Buyer in Company's unaudited
documents.
3.5 Assets. Companies each have exclusive, good and marketable
title to (or, in the case of Assets that are leased, valid leasehold interests
in) their respective Assets (other than Real Property, as to which the
representations and warranties in Section 3.16 apply). The Assets are free and
clear of all Encumbrances of any kind or nature, except (a) Permitted
Encumbrances, (b) restrictions stated in the Governmental Permits and (c)
Encumbrances disclosed on Schedule 7. Except as set forth on Schedules 2 or 3,
none of the Equipment is leased by any Company from any other Person. The Assets
are all the assets necessary to permit Buyer to conduct the Business
substantially as it is being conducted on the date of this Agreement and in
compliance with all Legal Requirements and Company Contracts and to perform all
the Assumed Liabilities (defined in Section 4.1). All the Equipment is in good
operating condition and repair, ordinary wear and tear excepted and is suitable
and adequate for continued use in the manner in which it is presently used. No
Person other than
REGISTRATION STATEMENT
Page II-163
Companies have been granted or has applied for a cable television franchise in
any area currently served by the Business.
3.6 Governmental Permits. Complete and correct copies of the
Governmental Permits, all of which are listed on Schedule 2 or Schedule 10, have
been delivered by Companies to Buyer. The Governmental Permits are currently in
full force and effect, are not in default, and are valid under all applicable
Legal Requirements according to their terms. There is no legal action,
governmental proceeding or investigation, pending or threatened, to terminate,
suspend or modify any Governmental Permit and each Company is in compliance with
the terms and conditions of all the Governmental Permits and with other
applicable requirements of all Governmental Authorities (including the FCC and
the Register of Copyrights) relating to the Governmental Permits, including all
requirements for notification, filing, reporting, posting and maintenance of
logs and records.
3.7 Company Contracts. All Company Contracts are described on
Schedule 3. Complete and correct copies of all Company Contracts have been
provided to Buyer. Each Company Contract is in full force and effect and
constitutes the valid, legal, binding and enforceable obligation of Company and
each Company is not and to such Companies' knowledge, each other party thereto
is not in breach or default of any terms or conditions thereunder.
3.8 Records. Such Companies' corporate books, as made
available to Buyer, contain current, complete, and accurate records of all
meetings and actions of such Companies' directors, and, if any, committees of
the directors. All material actions and transactions taken or entered into by
such Company or otherwise requiring action by its directors have been duly
authorized or ratified as necessary and are evidenced in such minute books.
Companies' books and ledgers, as made available to Buyer, contain complete and
accurate records of all issuances and transfers of its stock interests. The
signatures appearing in such minute books, and ledgers are the genuine
signatures of the persons purporting to have signed them.
3.9 No Breach or Violation. Subject only to obtaining the
consents and approvals set forth on Schedule 4, the execution, delivery, and
performance of this Agreement by Companies (a) does not and will not (with the
giving of notice or passage of time or both) (i) conflict with or result in a
breach or violation by Company of, or (ii) constitute a default by Companies
under, or (iii) create any right of termination, cancellation, or acceleration
by any party pursuant to, any of the CATV Instruments or Company Contracts, any
statute, ordinance, rule, or regulation, or any agreement, instrument, judgment,
or order to which such Company is a party or by which such Company, the CATV
Business, or any of the Assets is bound or may be affected, and (b) does not and
will not (with the giving of notice or passage of time or both) create or impose
any Security Interest on any of the Assets.
REGISTRATION STATEMENT
Page II-164
3.10 No Finders or Brokers. Companies have not entered into
any contract, arrangement, or understanding with any person or firm which may
result in any obligation of Buyer or Companies to pay any finder's, broker's, or
agent's fees or commissions or other like payments as a result of the
transactions contemplated by this Agreement, except that Companies shall pay all
fees and expenses due to Lazard Freres & Co. L.L.C.
3.11 Schedules. The Schedules to this Agreement list all
Assets owned, held, used, or useful for the performance of any CATV Instruments,
Company Contracts and for the lawful conduct of the CATV Business. All Schedules
to this Agreement are true, accurate, and complete.
3.12 Compliance with Laws. Companies are in material
compliance with all applicable laws, rules, regulations, orders, ordinances, and
codes of the Governmental Authorities having jurisdiction over the business and
affairs of Companies.
3.13 Financial Statements. Companies have, delivered or will
by April 30,1996, deliver, to Buyer correct and complete copies of Companies'
audited financial statements for each of the two most recent fiscal years ended
prior to the date of this Agreement and unaudited interim monthly financial
statements for periods subsequent to the end of the most recent fiscal year end
(the "Financial Statements"). The Financial Statements are complete and correct,
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered thereby (except, in
the case of interim financial statements, subject to normal recurring year-end
adjustments and the absence of footnotes), and fairly present in accordance with
generally accepted accounting principles the financial condition and results of
operation of Companies as of the dates indicated and for the periods covered
thereby. Except as disclosed by, or reserved against in, its most recent balance
sheet included in the Financial Statements, Companies did not have as of the
date of such balance sheet any liability or obligation, whether accrued,
absolute, fixed, or contingent (including, without limitation, liabilities for
taxes or unusual forward or long-term commitments), which was material to the
business, results of operations, or financial condition of Companies and which
is required to be disclosed on, or reserved against in, a balance sheet.
Companies have received no notice of any fact which may form a basis for any
claim by a third party which, if asserted, could result in a liability affecting
Companies not disclosed by or reserved against in the most recent balance sheet
of Companies. From the date of the most recent balance sheet included in the
Financial Statements to and including the date hereof, (i) the CATV Business has
been operated only in the ordinary course, (ii) Companies has not sold or
disposed of any assets other than in the ordinary course of business, (iii)
there has not occurred any material adverse change or event in the business,
operations, assets, liabilities, financial condition, or results of operations
of Companies compared to the business, operations, assets, liabilities,
financial condition, or results of operations reflected in the Financial
REGISTRATION STATEMENT
Page II-165
Statements, and (iv) there has not occurred any theft, damage, destruction, or
loss which has had a material adverse effect on Companies.
3.14 Tax Returns and Other Reports. Companies have duly and
timely filed in proper form all federal, state, local, and foreign, income,
franchise, sales, use, property, excise, payroll, and other tax returns and
other reports (whether or not relating to taxes) required to be filed by law
with the appropriate governmental authority, and, to the extent applicable, has
paid or made provision for payment of all taxes, fees, and assessments of
whatever nature including penalties and interest, if any, which are due with
respect to any aspect of its business or any of its properties. Except as set
forth on Schedule 8, there are no tax audits pending and no outstanding
agreements or waivers extending the statutory period of limitations applicable
to any relevant tax return.
3.15 Transfer Taxes. There are no sales, use, transfer,
excise, or license taxes, fees, or charges applicable with respect to the
transactions contemplated by this Agreement.
3.16 Real Property. With respect to all Real Property:
3.16.1 The Real Property and the improvements located
thereon and the continuation of business presently being conducted thereon do
not violate any applicable laws, statutes, regulations, codes, rules, or orders.
3.16.2 The Real Property has unobstructed access for
purposes of ingress and egress to public roads or streets or private roads over
which Companies have a valid right-of-way. The Real Property is served by
utilities and services necessary for the present use of the Real Property in
connection with the CATV Business.
3.16.3 Companies possess all rights needed to
operate, maintain, repair, replace, and locate all cable, lines, towers,
equipment, or other facilities owned or used by Companies in the CATV Business.
3.16.4 None of the improvements on the Real Property
encroaches upon the property of others.
3.16.5 Companies hold good and marketable fee simple
title to the Real Property shown as being owned by Companies on Schedule 6 and
the valid and enforceable right to use and possess such Real Property, subject
only to the Permitted Encumbrances. Companies have the valid and enforceable
right to use all other Real Property, subject to the leases, easements,
licenses, or rights-of-way described on Schedule 2.
REGISTRATION STATEMENT
Page II-166
3.16.6 The Real Property is in full compliance with
all applicable health, safety, and environmental laws, rules, and regulations
("environmental laws"). During Companies' ownership or operation of the Real
Property, all activities undertaken on or affecting the Real Property by Company
or any other person have been in full compliance with all environmental laws.
During Companies' occupation of the Real Property there have been no abatement,
removal, remedial or other response actions for hazardous substances (as defined
below) at the Real Property.
3.16.6.1 Companies are not aware of any
instance, prior to Companies' ownership or operation, of noncompliance of the
Real Property or any activities thereon with any environmental law. Companies
are aware of any aspects of the Real Property or any operations thereon which
reasonably might give rise to any civil, criminal, administrative, or other
proceeding or notice thereof under any environmental law (an "environmental
claim").
3.16.6.2 To Companies' knowledge, no
environmental claim has been asserted in the past, currently exists, or is
threatened or contemplated against Company, or against any other person or
entity, which relates to the Real Property or any operations thereon.
3.16.6.3 To Companies' knowledge, the
Real Property has not in the past, is not now, and will not in the future be
subject to any investigation, assessment, or study by any person or government
agency related to potential or actual enforcement of any environmental law.
3.16.6.4 To Companies' knowledge, no
hazardous substances have been or are being released to, from, or under the Real
Property or outside the Real Property which have entered or threaten to enter
onto, into, or under the Real Property. No hazardous substances have been or are
stored, treated, handled, disposed of, created, or otherwise located on, in, or
under the Real Property.
3.16.6.5 To Companies' knowledge, no
underground storage tanks, surface impoundments, solid waste management units,
tank systems, waste piles, land treatment areas, landfills, or incinerators are
located or, to Companies' knowledge, have been located on the Real Property. For
purposes of this paragraph, the foregoing terms shall have the meanings defined
in RCRA 42 U.S.C. section 6901 et.seq. or analogous state or local laws. Without
limiting the preceding representation in this paragraph, none of the Real
Property has been used at any time as a gasoline service station or any other
station or facility for storing, pumping, dispensing, or producing gasoline or
any other petroleum product, byproduct, or waste.
3.16.6.6 To Companies' knowledge, there
are no "PCB Items," as that term is defined in 40 C.F.R. section 761.3, located
on the Real Property.
REGISTRATION STATEMENT
Page II-167
3.16.6.7 To Companies' knowledge, any and
all permits, licenses, and other authorizations or approvals required under
environmental laws to own or operate the Real Property have been secured by
Companies and are in full force and effect. A list of all such permits,
licenses, approvals, and authorizations is included on Schedule 2. All bonds and
other security devices associated with any permit, license, authorization, or
approval are in place.
3.16.6.8 To Companies' knowledge, no
building or other structure on the Real Property contains asbestos.
3.16.6.9 Companies have provided to Buyer
true, complete and correct copies of all Environmental Reports in Companies'
possession or control as of the date of this Agreement relating to the Real
Property or any of it. Companies shall provide all additional Environmental
Reports, including supplements to existing reports, relating to the Real
Property within a three (3) working days of receipt of such reports or
supplements by Companies. For purposes of this Section 3.16.6.9, "Environmental
Reports" shall mean and include any writing containing statements or opinions
about the presence or suspected presence of any Hazardous Substances on, under
or effecting the Real Property or any of it.
3.16.6.10 "Companies' knowledge" as used
in this Section 3 shall refer to matters within the knowledge of Companies'
current officers and general managers, after due investigation of reasonably
available Company records concerning the subjects herein discussed.
3.16.6.11 The term "hazardous substances"
means: (i) any "hazardous substance" or "pollutant or contaminant" as defined in
Sections 101(14) and (33) of CERCLA, 42 U.S.C. sections 9601(14) and (33); (ii)
any "hazardous material" as defined in Section 1802(2) of the Hazardous
Materials Transportation Act; (iii) any "oil" or "hazardous substance" as
defined in Sections 311(a)(1) and (14) of the federal Clean Water Act, 33 U.S.C.
sections 1321(a)(1) and (14); (iv) any "pesticide" as defined in the Federal
Insecticide, Fungicide, and Rodenticide Act, at 7 U.S.C. section 136(u); and (v)
any "byproduct," "source" or "special nuclear" material as defined in the Atomic
Energy Act of 1954, 42 U.S.C. sections 2014(e), (z) and (aa). This term also
includes any chemical, compound, material, mixture, or substance defined,
listed, or classified under any environmental law as dangerous, hazardous,
extremely hazardous, infectious, or toxic. It also includes any substance
regulated under any environmental law due to its polluting or dangerous
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, or reproductive effects. Finally, this term specifically includes, but
is not limited to, petroleum and petroleum products, asbestos and
asbestos-containing materials, and polychlorinated biphenyls ("PCBs").
3.17 Employees. Schedule 9 contains a true and complete list
of names, positions, current hourly wages or monthly salary and other
compensation amounts of
REGISTRATION STATEMENT
Page II-168
all of Companies' employees (the "Employees"). Companies have complied in all
respects with all applicable laws and regulations relating to the employment of
labor, including, without limitation, the Worker Adjustment and Retraining
Notification Act, as amended, the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), continuation coverage requirements of group health
plans ("COBRA"), and those relating to wages, hours, collective bargaining,
unemployment insurance, worker's compensation, equal employment opportunity, age
and disability discrimination, immigration control, and the payment and
withholding of taxes.
3.18 Employee Benefits.
3.18.1 Except for those plans described on Schedule 9
hereto (the "Employee Plans"), with respect to the Employees, no Company, nor
any of their Affiliates maintain, are a party to, contribute to or are obligated
to contribute to, and the Employees do not receive benefits under, any of the
following (whether or not set forth in a written document):
(i) any employee pension benefit plan, as
defined in Section 3(2) of ERISA,
including (without limitation) any
multiemployer plan, as defined in section
3(37) of ERISA;
(ii) any employee welfare benefit plan, as
defined in section 3(1) of ERISA;
(iii) any bonus, deferred compensation,
incentive, restricted stock, stock
purchase, stock option, stock
appreciation right, phantom stock,
debenture, supplemental pension, profit
sharing, royalty pool, commission or
similar plan or arrangement;
(iv) any plan, program, agreement, policy,
commitment or other arrangement relating
to severance or termination pay, whether
or not published or generally known;
(v) any plan, program, agreement, policy,
commitment or any other arrangement
relating to the provision of any benefit
described in section 3(1) of ERISA to
former employees or their survivors,
other than procedures intended to comply
with COBRA;
(vi) any plan, program, agreement, policy,
commitment or other arrangement relating
to loans or other extensions of credit,
loan guarantees, relocation assistance,
educational assistance, tuition payments
or similar benefits; or
REGISTRATION STATEMENT
Page II-169
(vii) any plan, program, agreement, policy,
commitment or any other arrangement
relating to employee benefits, executive
compensation or fringe benefits
(including without limitation any foreign
plan described in section 4(b)(4) of
ERISA).
3.18.2 Prior to the date of this Agreement, Companies
have provided to Buyer complete, accurate and current copies of each of the
following:
(i) the text (including amendments) of each
of the Employee Plans, to the extent
reduced to writing;
(ii) a description of all material elements of
each of the Employee Plans, to the extent
not previously reduced to writing;
(iii) with respect to each Employee Plan that
is an employee benefit plan (as defined
in section 3(3) of ERISA), the following:
(A) the most recent summary plan
description, as described in
section 102 of ERISA;
(B) any summary of material
modifications that has been
distributed to participants or
filed with the U.S. Department
of Labor but that has not been
incorporated in an updated
summary plan description
furnished under Subparagraph
(A) above;
(C) the annual reports, as
described in section 103 of
ERISA, for the most recent
three (3) plan years for which
an annual report has been
prepared (including any
actuarial and financial
statements, opinions and
schedules required by Form 5500
or section 103 of ERISA);
(D) where applicable, the actuarial
reports for the most recent
three (3) reporting periods for
which such a report has been
prepared; and
(E) any trust agreement, investment
management, contract with an
insurance or service provider,
administration agreement or
other contract, agreement or
insurance policy;
REGISTRATION STATEMENT
Page II-170
(iv) with respect to each Employee Plan that
is an employee pension benefit plan (as
defined in section 3(2) of ERISA) and
that is neither an excess benefit plan
(as defined in section 3(36) of ERISA)
nor a plan exempted under section 201(2)
of ERISA, the following:
(A) the most recent determination
letter concerning the plan's
qualification under section
401(a) of the Code, as issued
by the Internal Revenue
Service; and
(B) any request for a determination
concerning the plan's
qualification under section
401(a) of the Code, as filed
with the Internal Revenue
Service since the date of the
most recent determination
letter; and
(v) any handbook, manual, policy, statement
or similar written guidelines furnished
to employees, excluding any such item
that has been superseded by any
subsequent handbook, manual, policy
statement or similar written guidelines.
3.18.3 With respect to each Employee Plan that is an
employee benefit plan (as defined in section 3(3) of ERISA) and that is subject
to ERISA and the regulations thereunder, each of such requirements has in all
material respects been fully met on a timely basis.
3.18.4 With respect to each Employee Plan that is an
employee benefit plan (as defined in section 3(3) of ERISA) and that is subject
to Part 4 of Subtitle B of Title I of ERISA, none of the following now exists or
has existed within the six-year period ending on the date hereof:
(i) any act or omission constituting a
material violation of section 402 of
ERISA;
(ii) any act or omission constituting a
violation of section 403 of ERISA;
(iii) any act or omission constituting a
violation of sections 404 or 405 of
ERISA;
REGISTRATION STATEMENT
Page II-171
(iv) to Companies' knowledge, any act or
omission by any other person constituting
a violation of sections 404 or 405 of
ERISA;
(v) any act or omission that constitutes a
violation of sections 406 and 407 of
ERISA and is not exempted by section 408
of ERISA or that constitutes a violation
of section 4975(d) of the Code; or
(vi) any act or omission constituting a
violation of sections 503, 510 or 511 of
ERISA.
3.18.5 Each Employee Plan that is an employee pension
benefit plan (as defined in section 3(2) of ERISA) and that is neither an excess
benefit plan (as defined in section 3(36) of ERISA) nor a plan exempted under
section 201(2) of ERISA meets all requirements for qualification under section
401(a) of the Code and the regulations thereunder, except to the extent that
such requirements may be satisfied by adopting retroactive amendments under
section 401(b) of the Code and the regulations thereunder. Each such Employee
Plan has been administered in accordance with its terms and the applicable
provisions of ERISA and the Code and the regulations thereunder.
3.18.6 No Employee Plan to which section 412 of the
Code applies has an accumulated funding deficiency (as defined in section 412(a)
of the Code). No amendment to any such Employee Plan is precluded by any waiver,
extension or prior amendment described in section 412(f) of the Code, and no
such waiver has been requested.
3.18.7 Companies have no liability to the Pension
Benefit Guaranty Corporation, to any multiemployer plan (as defined in section
4001(a)(3) of ERISA) or to any trustee under Subtitles D or E of Title IV of
ERISA. No event has occurred which, with the giving of notice under sections
4063 and 4219 of ERISA, would result in such liability.
3.18.8 All contributions, premiums or other payments
due to (or under) any Employee Plan have been fully paid or adequately provided
for on the books and financial statements of Companies. All accruals (including,
where appropriate, proportional accruals for partial periods) have been made in
accordance with prior practices.
3.18.9 Each Employee Plan complies with, and has been
administered in compliance with, all applicable requirements of (A) the Age
Discrimination in Employment Act of 1967, as amended, and the regulations
thereunder,
REGISTRATION STATEMENT
Page II-172
(B) Title VII of the Civil Rights Act of 1964, as amended, and the regulations
thereunder and (C) the health care continuation provision of COBRA.
3.18.10 No Employee Plan provides retiree welfare
benefits to former employees of Company that cannot be cancelled at will by
Companies as of the Closing Date without residual liability.
3.18.11 All employee welfare benefit plans provide
coverage for all claims relating to periods prior to the Closing Date whether
such claims are filed prior to or after the Closing Date.
3.19 Litigation and Violations. Except as set forth on
Schedule 8, there are no suits, claims, grievances, actions, proceedings, or
governmental investigations pending or, to Companies' best knowledge, threatened
against or affecting Companies which (i) seek to restrain or enjoin the
consummation of the transactions contemplated by this Agreement or (ii) might
have a material adverse effect on the financial position or results of
operations of Companies. Companies are not in violation of any term of any
judgment, decree, injunction, or order to which it is subject, which violation
could have a material adverse effect on the financial position or results of
operations of Companies.
3.20 Disclosure. No written statement in this Agreement or in
any agreement or other document delivered pursuant to this Agreement by or on
behalf of Companies contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
3.21 Investment Company. Companies are not an "investment
company" or a company "controlled" by an investment company within the meaning
of the Investment Company Act of 1940, as amended (the "Act"), and Companies
have not relied on rule 3a-2 under the Act as a means of excluding it from the
definition of an "investment company" under the Act at any time within the three
(3) year period preceding the Closing Date.
3.22 CATV Instruments and Company Contracts.struments and
Company Contracts.
3.22.1 The CATV Instruments and Company Contracts are
currently in full force and effect, are valid under all applicable laws, and are
enforceable according to their terms. Companies are in full compliance with and
are not in violation or default under any of the CATV Instruments or Company
Contracts. There is no legal action, governmental proceeding, or investigation,
pending or threatened, to modify, revoke, terminate, suspend, cancel, or reform
any of the CATV Instruments or Company Contracts. Companies are in full
compliance with other applicable requirements of all governing or regulatory
authorities (including the APUC, the U.S. Government Contract Officer for the
CATV Franchise Agreement, the FCC and the Register of Copyrights)
REGISTRATION STATEMENT
Page II-173
relating to the CATV Instruments, including, without limitation, all
requirements for notification, filing, reporting, posting, and maintenance of
logs and records. Companies hold valid and continuing CATV Instruments, Company
Contracts, rights-of-way, rights-of-entry, permits, and other rights and
authorizations necessary to enable it to operate its CATV Business. Except for
the City and Borough of Juneau no franchise restricts Companies' ability to
change any rates charged for CATV services, and Companies have not received any
notice of any franchising authority's intention to assert that the CATV System
is not subject to effective competition. There is no pending assertion or claim
that operations pursuant to any franchise have been improperly conducted or
maintained. A request for renewal has been filed with the appropriate franchise
authorities under Section 626 of the Cable Communications Policy Act of 1984
with respect to all franchises expiring within 44 months of the date of this
Agreement.
3.22.2 True, complete, and correct copies of the CATV
Instruments and Company Contracts and any amendments thereto effective as of the
date of this Agreement have been delivered by Company to Buyer.
3.23 FCC Compliance. Each Company is duly authorized under
applicable CATV Instruments and FCC rules, regulations, and orders to distribute
the FM signals and off-air television broadcast signals presently being carried
to the Subscribers of its CATV Business, to utilize all carrier frequencies
generated by its CATV Business, and is licensed to operate all the facilities,
including, without limitation, any business radio and any cable television relay
service ("CARS") system, being operated by its CATV Business. Each Company has
provided all notices to Subscribers required by The Communications Act of 1934,
as amended (the "Communications Act") and FCC rules and regulations. The
operation of Companies CATV Business and of any FCC-licensed facility used in
conjunction with the operation of its CATV Business has been, and is, in
compliance with the Communications Act and FCC rules and regulations, and each
Company has received no notice, and otherwise has no reason to know, of any
claimed default or violation with respect to the foregoing. Companies have
obtained all required FCC clearances for the operation of the CATV System in all
necessary aeronautical frequency bands. To the extent the CATV System uses
frequencies in the aeronautical bands (108-137 and ▇▇▇-▇▇▇ ▇▇▇) at power levels
at or greater than 28 dBmV, such frequencies have been offset from standard
aeronautical frequencies as provided in FCC rules and regulations, on the
channels in the Service Area. During each calendar quarter in which Companies
have owned and operated the CATV System, at least 75% of the CATV System's plant
has been monitored for leakage, such that 100% of the plant has been so
monitored each calendar year. Each system keeps a log that records the location
of any leak of 20 uV/m or greater, the date the leak was detected, the date the
leak was repaired, and the probable cause of the leak. Company will continue
such monitoring, repair, and record keeping activities with respect to the CATV
System through the Closing Date. Prior to the Closing, Companies will have taken
the necessary measurements for calculation of the CATV System's cumulative
leakage index (CLI) and filed a CLI report in accordance with applicable FCC
rules and regulations. Company
REGISTRATION STATEMENT
Page II-174
has been certified as in compliance with the FCC's equal employment opportunity
rules for each year since 1987. Companies are in compliance with Subpart K of
FCC rules and regulations, including the network non-duplication, syndicated
exclusivity, and sports blackout requirements. The CATV System has established
appropriate record keeping procedures and is in compliance with the FCC's
Children's Television Rules. Companies have duly and timely filed all required
reports with the FCC. Companies have delivered to Buyer copies of all current
reports and filings, and all reports and filings for the past five years, made
or filed by Companies pursuant to FCC rules and regulations as listed on
Schedule 2. Companies shall make available to Buyer all other past reports and
filings made or filed by Companies pursuant to FCC rules and regulations. The
representations in this paragraph 3.23 are to the best of the Companies'
knowledge.
3.24 APUC Compliance. Companies are duly authorized to operate
their CATV Business under APUC certificates and to the best of its knowledge
each Company is in material compliance with all APUC rules, regulations and
orders. Each Company has received no notice, and otherwise has no reason to know
of any claimed default or violation with respect to the foregoing.
3.25 Patents, Trademarks, and Copyrights. Companies have
timely and accurately made all material requisite filings and payments with the
Register of Copyrights and is otherwise in compliance with all applicable rules
and regulations of the Copyright Office. Companies have delivered to Buyer
copies of all current reports and filings, and all reports and filings for the
past five (5) years, made or filed by Companies pursuant to Copyright rules and
regulations. Companies shall make available to Buyer all other past reports and
filings made or filed by Companies pursuant to Copyright rules and regulations.
Companies do not possess any patent, patent right, trademark, or copyright and
is not a party to any license or royalty agreement with respect to any patent,
trademark, or copyright except for licenses respecting program material and
obligations under the Copyright Act of 1976 applicable to CATV systems
generally. The Assets are free of the rightful claim of any third party by way
of copyright infringement or the like.
3.26 No Other Assets or Liabilities. Companies have no assets
of any kind other than the Assets, CATV Instruments, and Company Contracts
described on the Schedules and Companies have no liabilities, obligations, or
commitments of any kind other than obligations under the CATV Instruments and
Company Contracts described on the Schedules and liabilities disclosed on the
Financial Statements.
3.27 Required Consents. As further set forth in Section 6.9,
Companies and Buyer will have as of the Closing Date obtained the Required
Consents, unless Buyer agrees in writing that any Required Consent need not be
obtained until after the Closing Date. A true and complete list of all Required
Consents is set forth on Schedule 4.
REGISTRATION STATEMENT
Page II-175
3.28 Overbuilds. No area presently served by Companies' CATV
business is presently subject to or, to Companies' best knowledge, threatened to
be subject to an overbuild situation. Companies are currently the only cable
television operator providing or, to Companies' best knowledge, intending to
provide cable television service in the Service Areas. No person or entity other
than Companies have been granted or has applied for APUC Certificates or a CATV
franchise agreement in any of the communities (or any of the unincorporated
areas) presently served by Companies' CATV business.
3.29 Subscriber Numbers. As of December 31, 1995, the CATV
Business had as needed no fewer than Twenty-Five Thousand Nine Hundred Forty-Two
(25,942) current EBS's and no fewer than Fifteen Thousand Seven Hundred Eighty
(15,780) current Pay TV Units, none of which were more than sixty-two (62) days
delinquent in payment for service.
3.30 No Insolvency. As of even date and as of the Closing
Date, Companies are not and shall not be insolvent.
3.31 Compliance with Law
3.31.1 The ownership, leasing and use of the Assets
as they are currently owned, leased and used and the conduct of the Business as
it is currently conducted do not violate any Legal Requirement, which violation,
individually or in the aggregate, would have a material adverse effect on a
System, the Business or Companies. Companies have received no notice claiming a
violation by Companies or the Business of any Legal Requirement applicable to
Companies or the Business as it is currently conducted and to Companies' best
knowledge, there is no basis for any claim that such a violation exists.
3.31.2 A request for renewal has been duly and timely
filed under Section 626 of the Cable Communications Policy Act of 1984 with the
proper Governmental Authority with respect to all cable television franchises of
the Business that have expired or will expire within 36 months after the date of
this Agreement.
3.31.3 Companies have complied, and the Business is
in compliance, in all material respects, with the specifications set forth in
Part 76, Subpart K of the rules and regulations of the FCC, Section 111 of the
Copyright Act of 1976 and the rules and regulations of the U.S. Copyright
Office, the Register of Copyrights and the Copyright Royalty Tribunal, the
Communications Act of 1934, the rules and regulations of the FCC, including
provisions of any thereof pertaining to signal leakage, to utility pole make
ready and to grounding and bonding of cable television systems (in each case as
the same is currently in effect), and all other applicable Legal Requirements
relating to the construction, maintenance, ownership and operation of the
Assets, the Systems and the Business.
REGISTRATION STATEMENT
Page II-176
3.31.4 Notwithstanding the foregoing, Companies have
used their best efforts to comply in all material respects with the provisions
of the Cable Television Consumer Protection and Competition Act of 1992 and the
FCC rules and regulations promulgated thereunder ("1992 Cable Act") as such laws
relate to the operation of the Business. Except as provided in Schedule 8,
Companies have complied in all material respects with the must carry and
retransmission consent provisions of the 1992 Cable Act. Companies have used
their best efforts to establish rates charged to subscribers, effective since
September 1, 1993, that are or were allowable under rules and regulations
promulgated under the 1992 Cable Act, and any authoritative interpretation
thereof now or then in effect, whether or not such rates are or were subject to
regulation at that date by any Governmental Authority, including any local
franchising authority and/or the FCC, unless such rates were not subject to
regulation pursuant to a specific exemption from rate regulation contained in
the 1992 Cable Act other than the failure of any franchising authority to have
been certified to regulate rates. Companies have delivered to Buyer complete and
correct copies of all FCC Forms 393, 1200, 1205, 1210, 1215, 1220, 1225, 1235
and 1240 filed with respect to the System and copies of all other FCC Forms
filed by Companies and correspondence with any Governmental Authority relating
to rate regulation generally or specific rates charged to subscribers with
respect to the Systems, including copies of any complaints filed with the FCC
with respect to any rates charged to Subscribers of the Systems, and any other
documentation supporting an exemption from the rate regulation provisions of the
1992 Cable Act claimed by Companies with respect to any of the Systems
(collectively, "Rate Regulation Documents"). Companies have received no notice
from any Governmental Authority with respect to an intention to enforce customer
service standards pursuant to the 1992 Cable Act and Companies have not agreed
with any Governmental Authority to establish customer service standards that
exceed the standards in the 1992 Cable Act. In addition, Company has also
delivered to Buyer documentation for each of the Systems in which the
franchising authority has not certified to regulate rates as of the date of this
Agreement showing a determination of allowable rates using a benchmark
methodology. Companies have not made any election with respect to any cost of
service proceeding conducted in accordance with Part 76.922 of Title 47 of the
Code of Federal Regulations or any similar proceeding (a "Cost of Service
Election") with respect to any of the Systems.
3.32 Holding Period. Companies will not violate and will not
be subject to any requirement to obtain a waiver under the anti-trafficking
provisions of the 1992 Cable Act as a result of the transfer of the Systems
contemplated under this Agreement.
3.33 Disclosure. No representation or warranty by Companies in
this Agreement or in any Schedule or Exhibit to this Agreement, or any
statement, list or certificate furnished or to be furnished by Companies
pursuant to this Agreement, contains or will contain any untrue statement of
material fact, or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading in light of the circumstances in which made. Without
REGISTRATION STATEMENT
Page II-177
limiting the generality of the foregoing, the information set forth in the
Schedules concerning the Business is accurate and complete in all material
respects.
Section 4 Assumed Liabilities and Excluded Assets.
4.1 Assignment and Assumption. Companies will assign, and
Buyer will assume and perform, the Assumed Liabilities, which are defined as:
(a) Companies' obligations to subscribers of the Business for (i) subscriber
deposits held by Companies as of the Closing Date and which are refundable, (ii)
subscriber advance payments held by Companies as of the Closing Date for
services to be rendered by a System after the Closing Date and (iii) the
delivery of cable television service to subscribers of the Business after the
Closing Date; and (b) obligations accruing and relating to periods after the
Closing Date under Governmental Permits listed on Schedule 2 (to the extent that
such Governmental Permits are transferrable) and Company Contracts listed on
Schedule 3. Buyer will not assume or have any responsibility for any liabilities
or obligations of Companies other than the Assumed Liabilities. In no event will
Buyer assume or have any responsibility for any liabilities or obligations
associated with the Excluded Assets.
4.2 Excluded Assets. The Excluded Assets, which will be
retained by Companies, will consist of the following: (a) retransmission consent
agreements (except for those set forth on Schedule 3); (b) insurance policies
and rights and claims thereunder (except as otherwise provided in Section 6.21);
(c) bonds, letters of credit, surety instruments and other similar items; (d)
cash and cash equivalents; (e) Companies' trademarks, trade names, service
marks, service names, logos and similar proprietary rights (subject to Buyer's
rights under Section 6.26); (f) Companies' rights under any agreement governing
or evidencing an obligation of Companies for borrowed money; (g) Companies'
rights under any contract, license, authorization, agreement or commitment other
than those creating or evidencing Assumed Liabilities; and (h) the assets
described on Schedule 10.
Section 5 Buyer's Representations, Warranties, and Covenants
Buyer represents, warrants, and covenants to Companies as
follows:
5.1 Organization and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of Alaska; has
all requisite power, right, and authority to execute, deliver, and perform this
Agreement; and has taken all action required by law, its Articles of
Incorporation and Bylaws, and otherwise to authorize the execution, delivery,
and performance of this Agreement.
5.2 Capitalization. The authorized capital stock of Buyer
consists of 50,000,000 shares of Class A common stock, of which 19,660,199
shares are issued and outstanding; 10,000,000 shares of Class B common stock, of
which 4,175,434 are
REGISTRATION STATEMENT
Page II-178
issued and outstanding, and 1,000,000 shares of preferred stock, of which no
shares are issued and outstanding, all as of October 31, 1995. As of the
Closing, the GCI Shares will be duly authorized, validly issued, fully paid and
nonassessable and free of any Security Interests. There are no outstanding or
authorized (i) securities of Buyer convertible into or exchangeable or
exercisable for any shares of its capital stock, except that each share of Class
B common stock is convertible into one share of Class A common stock, or (ii)
subscriptions, options, warrants, calls, rights, commitments, or other
agreements or obligations of any kind obligating Buyer to issue any additional
shares of its capital stock or any other securities convertible into or
evidencing the right to acquire or subscribe for any shares of its capital
stock, except pursuant to (a) Buyer's December, 1986 Stock Option Plan, (b)
Buyer's December, 1986 Employee Stock Purchase Plan; (c) that June, 1989, option
agreement granted to ▇▇▇▇ ▇▇▇▇▇▇ to acquire 100,000 shares of Buyer's Class A
common stock at $0.75 per share; (d) that June, 1989, incentive agreement with
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to acquire 85,190 shares of Buyer's Class A common stock for
$.001 per share; and (e) those shares of Buyer's Class A common stock which may
be issued pursuant to $10,000,000 Convertible Subordinated Notes for the
purchase of Alaskan Cablevision, Inc.
5.3 Enforceability. This Agreement constitutes the legal,
valid, and binding obligation of Buyer enforceable against Buyer in accordance
with its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting generally the
enforcement of creditors' rights and by general principles of equity. There is
no litigation at law, in equity, or in any other proceeding or investigation
pending or threatened against Buyer which might materially impair the ability of
Buyer to perform under this Agreement.
5.4 Records. Buyer's minute books, as made available to
Company, contain current, complete, and accurate records of all meetings and
actions of Buyer's directors, and, if any, committees of the board of directors.
All material actions and transactions taken or entered into by Buyer or
otherwise requiring action by its directors and/or shareholders have been duly
authorized or ratified as necessary and are evidenced in such minute books.
Buyer's books and ledgers, as made available to Company, contain complete and
accurate records of all issuances and transfers of its stock interests. The
signatures appearing in such minute books, and ledgers are the genuine
signatures of the persons purporting to have signed them.
5.5 No Breach or Violation. Subject only to obtaining the
consents and approvals set forth on Schedule 4, the execution, delivery, and
performance of this Agreement by Buyer (a) does not and will not (with the
giving of notice or passage of time or both ) (i) conflict with or result in a
breach or violation by Buyer of, or (ii) constitute a default by Buyer under, or
(iii) create any right of termination, cancellation, or acceleration by any
party pursuant to, any of its contracts, any statute, ordinance, rule, or
regulation, or any agreement, instrument, judgment, or order to which Buyer is a
party or by which Buyer is bound or may be affected, and (b) does not and will
not
REGISTRATION STATEMENT
Page II-179
(with the giving of notice or passage of time or, both) create or impose any
Security Interest on the GCI Shares.
5.6 Compliance with Laws. Buyer is in compliance with all
applicable laws, rules, regulations, orders, ordinances, and codes of the
Governmental Authorities having jurisdiction over Buyer's business and affairs.
5.7 Financial Statements. Buyer has delivered to Companies
correct and complete copies of Buyer's audited financial statements for each of
the two most recent fiscal years ended prior to the date of this Agreement and
unaudited interim monthly financial statements for periods subsequent to the end
of the most recent fiscal year end ("Financial Statements"). The Financial
Statements are complete and correct, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered thereby (except, in the case of interim financial statements,
subject to normal recurring year-end adjustments and the absence of footnotes),
and fairly present in accordance with generally accepted accounting principles
the financial condition and results of Buyer's operations as of the dates
indicated and for the periods covered thereby. Except as disclosed by, or
reserved against in, its most recent balance sheet included in the Financial
Statements, Buyer did not have as of the date of such balance sheet any
liability or obligation, whether accrued, absolute, fixed or contingent
(including, without limitation, liabilities for taxes or unusual forward or
long-term commitments), which was material to Buyer's business, results of
operations or financial condition and which is required to be disclosed on, or
reserved against in, a balance sheet. Buyer has received no notice of any fact
which may form a basis for any claim by a third party which, if asserted, could
result in a material liability affecting Buyer not disclosed by or reserved
against in Buyer's most recent balance sheet. From the date of the most recent
balance sheet included in the Financial Statements to and including the date
hereof, (i) Buyer's business has been operated only in the ordinary course, (ii)
Buyer has not sold or disposed of any assets other than in the ordinary course
of business, (iii) there has not occurred any material adverse change or event
in Buyer's business, operations, assets, liabilities, financial condition, or
results of operations compared to the business, operations, assets, liabilities,
financial condition, or results of operations reflected in the Financial
Statements, and (iv) there has not occurred any theft, damage, destruction, or
loss which has had a material adverse effect on Buyer.
5.8 Tax Returns and Other Reports. Buyer has duly and timely
filed in proper form all federal, state, local, and foreign, income, franchise,
sales, use, property, excise, payroll, and other tax returns and other reports
(whether or not relating to taxes) required to be filed by law with the
appropriate governmental authority, and, to the extent applicable, has paid or
made provision for payment of all taxes, fees, and assessments of whatever
nature including penalties and interest, if any, which are due with respect to
any aspect of its business or any of its properties. Except as set forth on
Schedule
REGISTRATION STATEMENT
Page II-180
8, there are no tax audits pending and no outstanding agreements or waivers
extending the statutory period of limitations applicable to any relevant tax
return.
5.9 Transfer Taxes. There are no sales, use, transfer, excise,
or license taxes, fees, or charges applicable with respect to the transactions
contemplated by this Agreement.
5.10 Litigation and Violations. Except as set forth on
Schedule 8, there are no suits, claims, grievances, actions, proceedings, or
governmental investigations pending or, to Buyer's best knowledge, threatened
against or affecting Buyer which (i) seek to restrain or enjoin the consummation
of the transactions contemplated by this Agreement or (ii) might have a material
adverse effect on Buyer's financial position or results of operations. Buyer is
not in violation of any term of any judgment, decree, injunction, or order to
which it is subject, which violation could have a material adverse effect on the
financial position or results of operations of Buyer.
5.11 Disclosure. No written statement in this Agreement or in
any agreement or other document delivered pursuant to this Agreement by or on
behalf of Buyer contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
5.12 Investment Company. Buyer is not an "investment company"
or a company "controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended ("Act"), and Buyer has not relied on
rule 3a-2 under the Act as a means of excluding it from the definition of an
"investment company" under the Act at any time within the three (3) year period
preceding the Closing Date.
5.13 No Finders or Brokers. Neither Buyer nor any of its
Affiliates have entered into any contract, arrangement, or understanding with
any person or firm which may result in any obligation of Company to pay any
finder's, broker's, or agent's fees or commissions or other like payments as a
result of the transactions contemplated by this Agreement.
5.14 No Insolvency. As of even date and as of the Closing
Date, Buyer is not and shall not be insolvent.
Section 6 Conduct Prior to Closing
6.1 Operation in Ordinary Course. Companies shall continue to
operate the CATV Business prior to the Closing Date in the ordinary course as
presently operated and in accordance with its 1996 budget, including their
ordinary level of maintenance capital expenditures, unless otherwise agreed by
Buyer, including, without limitation, payment of all expenses in a timely manner
consistent with prior business
REGISTRATION STATEMENT
Page II-181
practices without accelerating or delaying any payments, maintaining business
books, records, and files all in accordance with past practices, consistently
applied, and maintaining the Assets (including maintenance of the inventories of
spare equipment and parts listed on Schedule 5), and continuing to implement
procedures for disconnection and discontinuance of service to Subscribers whose
accounts are delinquent or past due, in accordance with current practice and
policy as of the date of this Agreement. Without limiting the generality of the
foregoing, Companies agree that Companies, or anyone acting on Companies'
behalf, shall not, without Buyer's prior written consent, (i) enter into or
modify any material agreement, contract, or commitment which, if entered into
prior to the date of this Agreement, would be required to be disclosed on any
Schedule to this Agreement, (ii) place or permit to exist any lien, encumbrance,
security interest, claim or charge of any kind against the Assets or the Assets,
(iii) enter into or continue any discussions, negotiations or contracts relating
to the sale, assignment, or transfer any Assets of the Companies or the CATV
Business, (iv) commit any act or omit to do any act which would cause a breach
of any CATV Instrument or Company Contract or permit any amendment to or
cancellation of any CATV Instrument or Company Contract, (v) commit any
violation of any law, statute, rule, governmental regulation or order, (vi)
change the rate charged for Basic CATV Service or Pay TV or add or delete any
program service. Company shall maintain insurance on the CATV Business and the
Assets until the Closing Date consistent with past practice and policy, and
Companies shall bear all risk of loss on or prior to Closing with respect to the
CATV Business and the Assets as a result of any loss, claim, casualty, or
calamity.
6.2 Agents. Companies agree that Buyer's designated agent
shall be included in all material business discussions regarding Companies'
conduct of their affairs.
6.3 Franchise Extensions. At Buyer's option, Companies shall
cooperate with Buyer in seeking the extension of any franchises expiring prior
to December 31, 2000.
6.4 Company Contracts. All Company Contracts are described on
Schedule 3 or Schedule 10. Complete and correct copies of all Company n of this
Agreement. Any party shall have 10 days after receipt to review such completed
Schedules and due diligence materials and to notify the applicable party of any
problems or concerns arising as a result of such review. If Companies and Buyer
are unable to resolve any such problems or concerns by negotiating a mutually
satisfactory modification to this Agreement, the objecting party shall have the
right to terminate this Agreement within 10 days after notifying the other
parties of such problems or w Buyer Securities. Buyer shall not issue or enter
into any agreement to issue any additional securities, warrants or options
(other than stock options issued in the ordinary course of business pursuant to
its stock option plan) to purchase securities prior to the Closing, except (i)
for the proposed issuance of Two Million (2,000,000) shares of Buyer's Class A
Common Stock to MCI Telecommunication Corporation ("MCI") for Thirteen Million
and
REGISTRATION STATEMENT
Page II-182
no/100 Dollars ($13,000,000.00), (ii) the possible acquisition of the ongoing
cable television business and cable television systems of Rock Associates, Inc.,
for One Million Five Hundred Thirty Eight Hundred Thousand (1,538,000) shares of
Buyer's Class A Common Stock and (iii) the possible acquisition of the ongoing
cable television business and cable television systems of Prime Cable of Alaska,
L.P. ("Prime"), for not more than Eleven Million Eight Hundred Thousand
(11,800,000) shares of GCI's Class A Common Stock and (iv) the issuance of
shares in connection with any other purchase of up to $1,500,000.00. Neither
Buyer nor anyone acting on Buyer's behalf shall enter into or continue any
discussions, negotiations or contracts relating to the sale of all or any
portion of its assets or equity, except in the ordinary course of business.
6.5 No New Buyer Securities. Buyer shall not issue or enter
into any agreement to issue any additional securities, warrants or options
(other than stock options issued in the ordinary course of business pursuant to
its stock option plan) to purchase securities prior to the Closing, except (i)
for the proposed issuance of Two Million (2,000,000) shares of Buyer's Class A
Common Stock to MCI Telecommunication Corporation ("MCI") for Thirteen Million
and no/100 Dollars ($13,000,000.00), (ii) the possible acquisition of the
ongoing cable television business and cable television systems of Rock
Associates, Inc., for One Million Five Hundred Thirty Eight Hundred Thousand
(1,538,000) shares of Buyer's Class A Common Stock and (iii) the possible
acquisition of the ongoing cable television business and cable television
systems of Prime Cable of Alaska, L.P. ("Prime"), for not more than Eleven
Million Eight Hundred Thousand (11,800,000) shares of GCI's Class A Common Stock
and (iv) the issuance of shares in connection with any other purchase of up to
$1,500,000.00. Neither Buyer nor anyone acting on Buyer's behalf shall enter
into or continue any discussions, negotiations or contracts relating to the sale
of all or any portion of its assets or equity, except in the ordinary course of
business.
6.6 Employees. Companies shall use their best efforts to
preserve its relationship with its employees and to pay to those employees all
salaries, commissions, and other compensation to which they are entitled for
services rendered prior to the Closing Date.
6.7 Access to Premises and Records. The parties shall cause
Companies and Buyer to give to the parties and their representatives full access
at reasonable times to (i) all the premises and books and records of the CATV
Business and to all of the Assets and (ii) Buyer's premises, books and records,
and each shall furnish to the parties and their representatives all information
regarding the business and properties of Companies and Buyer as shall from time
to time reasonably requested. Furthermore, Buyer shall be given the opportunity
to perform a field audit of Companies' accounts with Companies' cooperation
prior to Closing. Buyer agrees that it will exercise this right of access solely
for the purposes of completing its investigation in connection with this
Agreement and that the confidentiality of any data or information acquired by
Buyer in connection with this transaction shall be maintained by Buyer and its
REGISTRATION STATEMENT
Page II-183
representatives in accordance with Section 18.17. Without limiting Buyer's
rights of access stated above, Companies shall permit Buyer and/or such agents
or experts as Buyer shall designate, full access to the Real Property or any of
it and all records concerning the Real Property during reasonable business hours
for purposes of such independent investigation Buyer shall desire to conduct. At
Buyer's sole option, such investigation may include testing of the soil,
groundwater, building components, tanks, containers and equipment on the Real
Property as Buyers or Buyer's agents or experts shall deem necessary to
determine or confirm the environmental condition of the Real Property.
Performance of such an inspection or review shall not in any way modify or
otherwise affect Buyer's rights or Companies' obligations under this Agreement,
including but not limited to Companies' representations and warranties in
Section 3.16 above.
6.8 Existing Relationships. Companies shall use their best
efforts to preserve the CATV Business as a going concern and to preserve
existing relationships with the APUC, and its suppliers, customers, and others
having business dealings with Companies, unless Buyer requests otherwise. Buyer
shall use its best efforts to preserve its business as a going concern and to
preserve its existing relationships with suppliers, customers and others having
business dealings with it.
6.9 Required Consents. Companies and Buyer agree to cooperate
and use their reasonable commercial efforts to obtain all Required Consents in a
form and upon terms and conditions satisfactory to Buyer. Companies will afford
Buyer the opportunity to review, approve, and revise the form of Required
Consents prior to delivery to any consenting party. Nothing contained herein
shall be deemed to require Buyer to undertake any extraordinary or unreasonable
measures to obtain such Required Consents, including, without limitation, the
initiation or prosecution of legal proceedings, or agreeing to change any terms
of any CATV Instruments or Company Contracts.
6.10 Compliance with CLI Standards. No later than thirty (30)
days after execution of this Agreement, representatives of Buyer and Company
shall jointly inspect the CATV Systems to determine if the CATV Systems are in
compliance with the CLI standards under applicable FCC rules and regulations
("CLI Standards"). If the CATV Systems or any portion thereof are not in
material compliance with CLI Standards, Buyer shall not be required to
consummate the transactions contemplated by this Agreement.
6.11 MDU Agreements. Companies represent and warrant that no
written permanent easement agreements have been granted to Companies from any
MDU property owners.
6.12 Public Announcements. Companies acknowledge and agree
that Buyer shall make all press releases it deems necessary under the securities
law, rules and regulations, however, except as may be required by applicable law
or regulation, neither Buyer nor Companies shall issue any press release or
otherwise make any public statement with respect to this Agreement or the
transactions contemplated hereby
REGISTRATION STATEMENT
Page II-184
without the prior written consent of the other parties, which consent shall not
be unreasonably withheld and shall be promptly given. Buyer and Company shall
provide all parties with copies of press releases in advance of publication.
6.13 Due Diligence. Within 10 days after the date of execution
of this Agreement, the parties agree to deliver fully completed Schedules and
all due diligence materials requested by any party prior to the execution of
this Agreement. Any party shall have 10 days after receipt to review such
completed Schedules and due diligence materials and to notify the applicable
party of any problems or concerns arising as a result of such review. If
Companies and Buyer are unable to resolve any such problems or concerns by
negotiating a mutually satisfactory modification to this Agreement, the
objecting party shall have the right to terminate this Agreement within 10 days
after notifying the other parties of such problems or concerns and no party
shall have any further obligations hereunder.
6.14 Correction of any Noncompliance Prior to Closing.
Notwithstanding any other provision of this Agreement, the parties acknowledge
and agree that further investigation is required to determine whether the
representations and warranties contained in Sections 3.15, 3.16, 3.17, 3.18 and
3.25 are true and correct as of the date of execution of this Agreement. To the
extent that the parties determine that any such representation and warranty is
not true and correct as of the date of execution of this Agreement, the parties
intend that Companies shall take whatever action is necessary to assure that
such representations and warranties are true and correct as of the Closing Date
and the fact that such representations and warranties were not true and correct
as of the date of execution of this Agreement shall not be deemed to be a breach
of this Agreement. With respect to any filings and associated payments required
to be made by Company in order to make the representations and warranties
contained in Sections 3.24, 3.25 and 3.27 true and correct, copies of such
filings indicating the filing date with the FCC, the APUC, or Copyright Office,
as appropriate, shall be delivered to Buyer at least ten (10) days prior to the
Closing Date.
6.15 Leased Equipment. Companies shall deliver title to the
Equipment free and clear of all Encumbrances (other than Permitted Encumbrances)
to Buyer at the Closing, except for those encumbrances set forth on Schedule 7.
6.16 Estoppel Certificates, Nondisturbance Agreements and
Franchise Renewals.
6.16.1 Each Company will use its best efforts to
obtain, at its expense, such estoppel certificates or similar documents from
lessors and other Persons who are parties to Company Contracts as Buyer may
request.
6.16.2 Each Company shall use its best efforts to
obtain with respect to each lease of Real Property set forth on Schedule 6, (i)
if such lease is
REGISTRATION STATEMENT
Page II-185
identified by Buyer as being subordinate to the rights of any holder of an
Encumbrance on the affected leased premises securing an obligation of the owner
of the fee interest in such leased premises, a nondisturbance and attornment
agreement substantially to the effect of Exhibit B (mortgagor), executed by each
holder of such an Encumbrance; and if such lease is a sublease, a nondisturbance
and attornment agreement substantially to the effect of Exhibit B (landlord),
executed by the landlord under the prime or master lease; (ii) for each lease
that has not been recorded in the public records, execution of a document
suitable for recording in the public records and sufficient after recording to
constitute a memorandum of lease.
6.16.3 Each Company will use its best efforts to
obtain, and will cooperate with Buyer to obtain, renewals or extensions, at the
option of Buyer, of any franchises which expire prior to December 31, 2000
("Extended Franchises"), for terms running at least ten (10) years after the
Closing Date and upon other terms and conditions satisfactory to Buyer.
6.16.4 Each Company will execute and deliver to the
appropriate Governmental Authority, the FCC Forms 394 prepared by Buyer with
respect to each franchise as to which such Form 394 is required within two
Business Days after it receives each such Form 394 from Buyer.
6.17 Title Commitments and Surveys.
6.17.1 After the execution of this Agreement, Buyer
will order at Buyer's expense (a) commitments for owner's title insurance
policies on all Real Property owned by Company and on easements which provide
access to each such parcel of real property, (b) commitments for lessee's title
insurance policies for all Real Property leased by such Company which is used
for headend or tower sites and on easements which provide access to each such
site and (c) an ALTA survey (including such items on Table A of the Minimum
Standard Detail Requirements and Classifications thereto that Buyer in its
reasonable judgment determines are desirable or necessary) on each parcel of
Real Property for which a title insurance policy is to be obtained. The title
commitments will evidence a commitment to issue an ALTA title insurance policy
insuring good, marketable and indefeasible fee simple (or leasehold, if
applicable) title to each parcel of the Real Property, subject only to Permitted
Encumbrances, for such amount as Buyer directs and will contain no exceptions
except for items which in Buyer's reasonable opinion do not adversely affect
(other than in an immaterial way as to any individual parcel) the good,
marketable and indefeasible title to or Buyer's access or quiet use or enjoyment
of such Real Property in the manner the Real Property is presently used or in
the normal conduct of the Business. At the Closing, Companies will cause Buyer
to receive, at Buyer's expense, title commitments re-dated to the date and time
of Closing. In the event Companies have not eliminated or caused to be
eliminated all unacceptable exceptions from such policies or commitments prior
to Closing, and Buyer elects to
REGISTRATION STATEMENT
Page II-186
proceed with the Closing, Buyer will be entitled to indemnification with respect
to such exceptions as provided in Section 16.2.
6.17.2 Title insurance policies on all Real Property
in such amounts as Buyer directs will be delivered to Buyer at Buyer's expense
within 30 days after the Closing Date evidencing title to the Real Property
vested in Buyer consistent with the commitments delivered at the Closing
pursuant to Section 8.18.
6.18 HSR Notification. As soon as practicable after the
execution of this Agreement, but in any event no later than 45 days after such
execution, Companies and Buyer will each complete and file, or cause to be
completed and filed, any notification and report required to be filed under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); and each such filing shall request early termination of the waiting
period imposed by the HSR Act. The parties shall use their reasonable best
efforts to respond as promptly as reasonably practicable to any inquiries
received from the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") for additional
information or documentation and to respond as promptly as reasonably
practicable to all inquiries and requests received from any other Governmental
Authority in connection with antitrust matters. Company and Buyer shall use
their respective reasonable best efforts to overcome any objections which may be
raised by the FTC, the Antitrust Division or any other Governmental Authority
having jurisdiction over antitrust matters. Notwithstanding the foregoing, Buyer
shall not be required to make any significant change in the operations or
activities of the business (or any material assets employed therein) of Buyer or
any of its Affiliates, if Buyer determines in good faith that such change would
be materially adverse to the operations or activities of the business (or any
material assets employed therein) of Buyer or any of its Affiliates having
significant assets, net worth, or revenue. Notwithstanding anything to the
contrary in this Agreement, if Buyer, in its sole opinion, considers a request
from a governmental agency for additional data and information in connection
with the HSR Act to be unduly burdensome, Buyer may terminate this Agreement.
Within 10 days after receipt of a statement therefor, Company will reimburse
Buyer for one-half of the filing fees payable by Buyer in connection with
Buyer's filing under the HSR Act.
6.19 No Shopping. None of Companies, their shareholders or any
agent or representative of any of them will, during the period commencing on the
date of this Agreement and ending with the earlier to occur of the Closing or
the termination of this Agreement, directly or indirectly (a) solicit or
initiate the submission of proposals or offers from any Person for, (b)
participate in any discussions pertaining to or (c) furnish any information to
any Person other than Buyer relating to, any direct or indirect acquisition or
purchase of all or any portion of the Assets.
6.20 Notification of Certain Matters. Companies will promptly
notify Buyer of any fact, event, circumstance or action (a) which, if known on
the date of this
REGISTRATION STATEMENT
Page II-187
Agreement, would have been required to be disclosed to Buyer pursuant to this
Agreement or (b) the existence or occurrence of which would cause any of
Companies' representations or warranties under this Agreement not to be correct
and complete.
6.21 Risk of Loss; Condemnation.
6.21.1 Companies will bear the risk of any loss or
damage to the Assets resulting from fire, theft or other casualty (except
reasonable wear and tear) at all times prior to the Closing. If any such loss or
damage is so substantial as to prevent normal operation of any material portion
of a System or the replacement or restoration of the lost or damaged property
within 20 days after the occurrence of the event resulting in such loss or
damage, Companies will immediately notify Buyer of that fact and Buyer, at any
time within 10 days after receipt of such notice, may elect by written notice to
Company either (i) to waive such defect and proceed toward consummation of the
acquisition of the Assets in accordance with terms of this Agreement or (ii)
terminate this Agreement. If Buyer elects so to terminate this Agreement, Buyer
and Companies will be discharged of any and all obligations hereunder. If Buyer
elects to consummate the transactions contemplated by this Agreement
notwithstanding such loss or damage and does so, there will be no adjustment in
the consideration payable to Companies on account of such loss or damage but all
insurance proceeds payable as a result of the occurrence of the event resulting
in such loss or damage will be delivered by Companies to Buyer, or the rights to
such proceeds will be assigned by Companies to Buyer if not yet paid over to
Company, and Company will pay to Buyer an amount equal to the difference between
the amount of such insurance proceeds and the full replacement cost of the
damaged or lost Assets.
6.21.2 If, prior to the Closing, any material part of
or interest in the Assets is taken or condemned as a result of the exercise of
the power of eminent domain, or if a Governmental Authority having such power
informs Companies or Buyer that it intends to condemn all or any material part
of the Assets (either such event, a "Taking"), then Buyer may terminate this
Agreement. If Buyer does not elect to terminate this Agreement, then (a) Buyer
will have the sole right, in the name of Companies, if Buyer so elects, to
negotiate for, claim, contest and receive all damages with respect to the
Taking, (b) Companies will be relieved of their obligations to convey to Buyer
the Assets or interests that are the subject of the Taking, (c) at the Closing,
Companies will assign to Buyer all of Companies' rights to all damages payable
with respect to such Taking and will pay to Buyer all damages previously paid to
Companies with respect to the Taking and (d) following the Closing, Company will
give Buyer such further assurances of such rights and assignment with respect to
the taking as Buyer may from time to time reasonably request.
6.22 Lien and Judgment Searches. Buyer will obtain at Buyer's
expense, (a) the results of a lien search conducted by a professional search
company of records in the offices of the secretaries of state in each state and
county clerks in each county
REGISTRATION STATEMENT
Page II-188
where there exist tangible Assets, and in the state and county where Companies'
principal offices are located, including copies of all financing statements or
similar notices or filings (and any continuation statements) discovered by such
search company and (b) the results of a search of the dockets of the clerk of
each federal and state court sitting in the city, county or other applicable
political subdivision where the principal office or any material assets of
Companies may be located, with respect to judgments, orders, writs or decrees
against or affecting Companies or any of the Assets.
6.23 Transfer Taxes. Buyer and Companies will be responsible
for one half of the payment of any state or local sales, use, transfer, excise,
documentary or license taxes or fees or any other charge (including filing fees)
imposed by any Governmental Authority with respect to the transfer of any of the
Assets pursuant to this Agreement.
6.24 Letter to Programmers. Not later than 30 business days
before the Closing Date, Companies will transmit a letter in the form of Exhibit
H to all programmers from which Companies purchase programming.
6.25 Updated Schedules. Not less than five business days prior
to Closing, Companies will deliver to Buyer revised copies of Schedules 1
through 10 which shall have been updated and marked to show any changes
occurring between the date of this Agreement and the date of delivery; provided,
however, that for purposes of Companies' representations and warranties and
covenants in this Agreement, all references to the Schedules will mean the
version of the Schedules attached to this Agreement on the date of signing, and
provided further that if the effect of any such updates to Schedules is to
disclose any one or more additional properties, privileges, rights, interests or
claims as Assets, Buyer, at or before Closing, will have the right (to be
exercised by written notice to Companies) to cause any one or more of such items
to be designated as and deemed to constitute Excluded Assets for all purposes
under this Agreement.
6.26 Use of Companies' Names. Buyer may continue to operate
the Systems using all the names currently being utilized by the CATV business
and all derivations and abbreviations of such names and related marks. Within
eighteen (18) months after the Closing Date, Buyer will discontinue using and
will dispose of all items of stationery, business cards and literature bearing
such names or marks. Notwithstanding the foregoing, Buyer will not be required
to remove or discontinue using any such name or ▇▇▇▇ that is affixed to
converters or other items in or to be used in subscriber homes or properties, or
as are used in a similar fashion making such removal or discontinuation
impracticable for Buyer.
6.27 Subscriber Billing Services. Companies will provide to
Buyer at no cost, upon request, access to and the right to use its billing
system computers, software and related fixed assets ("Transitional Billing
Services") in connection with the System
REGISTRATION STATEMENT
Page II-189
acquired by Buyer for a period of up to 30 days following the Closing to allow
for conversion of existing billing arrangements. Buyer will promptly notify
Companies as to whether it desires Transitional Billing Services from Companies.
6.28 Satisfaction of Conditions. Each party will use its best
efforts to satisfy, or to cause to be satisfied, the conditions to the
obligations of the other party to consummate the transactions contemplated by
this Agreement, as set forth in Section 17, provided that Buyer will not be
required to agree to any increase in the amount payable with respect to, or any
modification that makes more burdensome in any material respect, any of the
Assumed Liabilities.
Section 7 Closing
The Closing shall occur at ▇▇▇▇▇▇▇ and Howard's offices at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. local time, on
such date acceptable to Companies and Buyer within ten (10) business days after
all conditions to Closing contained in this Agreement have been met, or at such
different place, time, or date as may be agreed by Companies and Buyer. Until
the Closing or earlier termination of this Agreement, the parties shall
cooperate fully by exchanging information upon reasonable request and in all
other reasonable ways to enable all parties to prepare for the Closing and to
determine whether the conditions to the Closing have been satisfied. Any of
Buyer or Companies may terminate this Agreement upon written notice to the
others if the Closing hereunder has not occurred by October 31, 1996, or, if the
Alaska Public Utilities Commission's consent shall not have been obtained by
such date, then at Buyer's or Companies' option, no later than December 31,
1996, and the parties shall thereupon be relieved of any further obligation
hereunder; provided, however, if a party's breach of this Agreement has
prevented the consummation of the transactions contemplated hereby, such party
shall not be entitled to terminate this Agreement under this Section 7. The
Closing Date may be further extended by mutual consent of the parties.
Section 8 Deliveries by Companies at Closing
At Closing, Companies shall deliver to Buyer:
8.1 the Bills of Sale for the Assets in the form attached as
Exhibit A.
8.2 a general warranty deed in a form reasonably acceptable to
Buyer (and complying with applicable state laws) with respect to each parcel of
owned Real Property, duly executed and acknowledged and in recordable form,
warranting good and clear record and marketable and indefeasible fee simple
title to such Real Property against all persons claiming by, through or under
Company, subject only to Permitted Encumbrances, and in form sufficient to
permit the title company to issue the title policy described in Section 6.17.1
to Buyer with respect to such Real Property;
REGISTRATION STATEMENT
Page II-190
8.3 an Assignment of Company Contracts in the form attached as
Exhibit C;
8.4 one or more Assignments of Leases in the form attached as
Exhibit D and, if requested by Buyer, short forms or memoranda of such
Assignments in recordable form;
8.5 a memorandum of lease for each lease described in clause
(ii) of Section 6.16.2;
8.6 with respect to each lease described in clause (i) of
Section 6.16.2 a nondisturbance agreement in the appropriate form attached as
Exhibit C;
8.7 a Non-Compete Agreement signed by Companies, Alaskan Cable
Network, Inc., Alaskan Cable Network/Juneau Holding, Inc. and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Incorporated, the shareholder of all Companies' stock ("Owner") in the form
attached as Exhibit G;
8.8 affidavits of Companies, under penalty of perjury, that
each such Company is not a "foreign person" (as defined in the Foreign
Investment in Real Property Tax Act and applicable regulations) and that Buyer
is not required to withhold any portion of the consideration payable under this
Agreement under the provisions of such Act in the form attached as Exhibit I;
and
8.9 motor vehicle title certificates and such other transfer
instruments as Buyer may deem necessary or advisable to transfer the Assets to
Buyer and to perfect Buyer's rights in the Assets.
8.10 incumbency and specimen signature certificates, dated the
Closing Date, from each Company with respect to the officers or managers of such
Company executing this Agreement and any other document delivered hereunder by
or on behalf of Company;
8.11 a certificate of each Company, dated the Closing Date,
signed by a proper officer of such Company certifying that (A) except (1) as a
result of the taking by any person of any action contemplated under this
Agreement or (2) insofar as any representation or warranty relates to any
specified earlier date, all of the representations and warranties of such
Company in this Agreement are true and correct in all material respects on the
Closing Date with the same force and effect as if made on and as of the Closing
Date, and (B) such Company has performed and complied in all material respects
with all of its covenants and agreements set forth in, and satisfied in all
material respects all conditions required to be satisfied by it pursuant to,
this Agreement except as such covenants, agreements, or conditions shall have
been waived by Buyer at or before the Closing Date;
REGISTRATION STATEMENT
Page II-191
8.12 a certified copy of resolutions of the boards of
directors, and if necessary, the shareholders, as applicable, of each Company
authorizing the execution and delivery by each Company of this Agreement and any
other agreements executed by each Company pursuant hereto, and the performance
of the obligations of each Company hereunder and thereunder;
8.13 an opinion of each Companies' counsel, dated the Closing
Date, covering matters customary with respect to the transactions contemplated
by this Agreement, in form and substance satisfactory to Buyer;
8.14 an opinion of special communications, FCC counsel to
Company, dated the Closing Date, covering matters customary with respect to the
APUC and FCC aspects of the transactions contemplated by this Agreement, in the
form and substance satisfactory to Buyer;
8.15 releases or terminations, in form and substance
reasonably satisfactory to Buyer, of all Security Interests with respect to the
Assets and all financing statements or other instruments with respect thereto
except for the Permitted Encumbrances described in Schedule 7;
8.16 to the extent in the possession of Companies or their
agents, all contracts not terminated pursuant to this Agreement, all unexpired
warranties, any leases of personal property, any business and other licenses and
permits related to Company or the CATV Business;
8.17 to the extent in the possession of Companies or their
agents, all blueprints, schematics, drawings, maps, system design ▇▇▇▇ of
materials, engineering and technical data related to the Assets or the CATV
Business;
8.18 the title policies referred to in Section 6.17;
8.19 tax, judgment, and lien searches of the relevant public
records dated no more than fifteen (15) days prior to Closing, or dated as of
such other date acceptable to Buyer and Companies, indicating all Security
Interests against the Assets, the Assets, the CATV Systems, or the CATV
Business;
8.20 Schedules 1-10 which have been updated to reflect any
material changes from the date of execution of this Agreement to the Closing
Date; provided, however, that if any such change has a material adverse effect
on the condition, financial or otherwise, of Companies or the CATV Business,
Buyer shall have the right to terminate this Agreement with no further
obligations to Company hereunder.
8.21 Guaranty. Contemporaneously with the signing of this
Agreement, Companies are causing Owner to deliver the Guaranty in the form of
Exhibit F.
REGISTRATION STATEMENT
Page II-192
Drafts of each of the items listed in this Section 8 shall be
delivered by Companies to Buyer within a reasonable time prior to Closing for
Buyer's review and approval.
Section 9 Deliveries by Buyer at Closing
At Closing, Buyer shall deliver to Companies:
9.1 the certificates evidencing the GCI Shares free and
clear of all Security Interests;
9.2 a certificate of good standing of Buyer issued by the
Commissioner of Commerce and Economic Development of
Alaska dated not more than sixty (60) days prior to
closing, but delivered to Companies not more than
thirty (30) days prior to Closing;
9.3 an incumbency and specimen signature certificate,
dated the Closing Date, with respect to the officers
of Buyer executing this Agreement and any other
document delivered hereunder by or on behalf of
Buyer;
9.4 a certificate of Buyer, dated the Closing Date,
signed by a proper officer of Buyer certifying that
(A) except (1) as a result of the taking by any
person of any action contemplated under this
Agreement or (2) insofar as any representation or
warranty relates to any specified earlier date, all
of the representations and warranties of Buyer in
this Agreement are true and correct in all material
respects on the Closing Date with the same force and
effect as if made on and as of the Closing Date, and
(B) Buyer has performed and complied in all material
respects with all of its covenants and agreements set
forth in, and satisfied in all material respects all
conditions required to be satisfied by it pursuant
to, this Agreement except as such covenants,
agreements or conditions shall have been waived by
Company at or before the Closing Date; and
9.5 a certified copy of resolutions of the board of
directors of Buyer authorizing the execution and
delivery of this Agreement and any other agreements
executed pursuant hereto, and the performance of the
obligations of Buyer hereunder and thereunder.
REGISTRATION STATEMENT
Page II-193
Section 10 Conditions to Obligations of Buyer
The obligations of Buyer to consummate the transactions
contemplated by this Agreement shall be subject, at Buyer's option, to
fulfillment of each of the following conditions as of the Closing Date:
10.1 Accuracy of Representations and Compliance with
Conditions. All representations and warranties of Companies contained in this
Agreement shall be true and accurate in all material respects when made and,
except (a) as a result of the taking by any person of any action contemplated
hereby or (b) insofar as any representation or warranty specifically relates
solely to an earlier date in which case it shall be true and accurate in all
material respects as of such earlier date, shall be true and accurate in all
material respects as of the Closing Date, as though such representations and
warranties were then made by Companies, and Companies shall have performed and
complied in all material respects with all of its covenants and agreements set
forth herein and satisfied in all material respects all conditions required to
be satisfied by it pursuant to this Agreement at or before the Closing Date.
10.2 Deliveries Complete. All documents required to have been
delivered by Company to Buyer and all actions required to have been taken by
Companies, at or prior to the Closing Date, shall have been delivered or taken.
10.2.1 Companies have executed (or caused to be
executed) and delivered to Buyer the items set forth in Section 8.
10.2.2 Companies have delivered to Buyer: (a)
evidence, in form and substance satisfactory to Buyer, that all of the Required
Consents have been obtained or given and are in full force and effect; and (b)
to the extent obtained, the estoppel certificates or similar documents described
in Section 6.16.
10.2.3 The Extended Franchises have been obtained on
terms and conditions satisfactory to Buyer.
10.2.4 Companies have delivered releases, in form
satisfactory to Buyer, of all Encumbrances affecting any of the Assets (other
than Permitted Encumbrances).
10.2.5 Buyer has received the title insurance
commitments described in Section 6.17.
10.3 No Adverse Change. No material adverse change in the CATV
Business or the Assets shall have occurred (other than changes which affect the
United States CATV industry considered as a whole). The CATV Business shall not
have suffered, on or prior to Closing, any loss, claim, casualty, or calamity
which materially
REGISTRATION STATEMENT
Page II-194
and adversely affects the CATV Business or the Assets, whether or not covered by
insurance; provided, however, that if Company has repaired at its expense all
damage caused by any loss, casualty, or calamity prior to the Closing to Buyer's
reasonable satisfaction, the condition set forth in this Section 10.3 shall be
deemed satisfied.
10.4 Restraint of Proceedings. No action, proceeding, or
investigation shall have been instituted or threatened, on or prior to Closing,
to set aside or modify the authorization of the transactions contemplated by
this Agreement or to enjoin or prevent its consummation or which would
materially impair the ability of Buyer to realize the benefits of the
transactions contemplated herein.
10.5 Inspection. Within sixty (60) days of this Agreement, the
results and findings of a due diligence inspection of the Assets and CATV
Business by Buyer shall be satisfactory to Buyer in its reasonable discretion,
and the condition of the Assets and CATV Business shall be as represented by
Companies herein and as otherwise disclosed to Buyer prior to the date hereof.
10.6 Cash Flow. As of the Closing Date, Companies' twelve (12)
month trailing Operating Cash Flow shall be no less than Seven Million Five
Hundred Thousand and no/100 Dollars ($7,500,000.00).
Section 11 Conditions to Obligations of Companies
The obligation of Company to consummate the transactions
contemplated by this Agreement shall be subject, at Companies' option, to
fulfillment of each of the following conditions as of the Closing Date:
11.1 Accuracy of Representations and Compliance with
Conditions. All representations and warranties of Buyer contained in this
Agreement shall be true and accurate in all material respects when made and,
except (a) as a result of the taking by any person of any action contemplated
hereby or (b) insofar as any representation or warranty specifically relates
solely to an earlier date in which case it shall be true and accurate in all
material respects as of such earlier date, shall be true and accurate in all
material respects as of the Closing Date, as though such representations and
warranties were then made by Buyer, and Buyer shall have performed and complied
in all material respects with all of its covenants and agreements set forth
herein, and satisfied in all material respects all conditions required to be
satisfied by it pursuant to this Agreement at or before the Closing Date.
11.2 Deliveries Complete. All documents required to have been
delivered by Buyer to Company and all actions required to have been taken by
Buyer, at or prior to the Closing Date, shall have been delivered or taken.
REGISTRATION STATEMENT
Page II-195
11.3 No Adverse Change. No material adverse change in Buyer's
business shall have occurred (other than changes which affect the United States
telephone industry considered as a whole). Buyer's business operations shall not
have suffered, on or prior to Closing, any loss, claim, casualty, or calamity
which materially and adversely affects Buyer, whether or not covered by
insurance; provided, however, that if Buyer has repaired at its expense all
damage caused by any loss, casualty, or calamity prior to the Closing to
Companies' reasonable satisfaction, the condition set forth in this Section 11.3
shall be deemed satisfied.
11.3.1 Buyer has executed and delivered to Companies
an Assignment in the form attached as Exhibit D.
11.4 Restraint of Proceedings. No action, proceeding, or
investigation shall have been instituted or threatened, on or prior to Closing,
to set aside or modify the authorization of the transactions contemplated by
this Agreement or to enjoin or prevent its consummation or which would
materially impair the ability of Companies to realize the benefits of the
transactions contemplated herein.
Section 12 Conditions to Both Parties' Obligations
12.1 Consents. All Required Consents or waivers thereof shall
have been obtained and shall be in full force and effect as of the Closing Date.
12.2 No Governmental Action. No investigation, action, or
proceeding shall have been commenced by the Department of Justice or the Federal
Trade Commission or any other governmental entity challenging or seeking to
enjoin the consummation of the transactions contemplated by this Agreement and
neither Buyer nor Company shall have been notified of a present intention by the
Assistant Attorney General in charge of the Antitrust Division of the Department
of Justice, the Director of the Bureau of Competition of the Federal Trade
Commission or any governmental entity (or their respective designees) to
commence, or recommend the commencement of, such an investigation, action, or
proceeding.
12.3 Waiver of Conditions. Any party may waive in writing any
or all of the conditions to its obligations under this Agreement.
Section 13 Transactions Subsequent to Closing
13.1 Further Actions. At any time and from time to time after
the Closing, each party hereto agrees, at its own expense (except as otherwise
provided herein), to take such actions and to execute and deliver such documents
as may be reasonably necessary to effectuate the purposes of this Agreement.
REGISTRATION STATEMENT
Page II-196
13.2 COBRA Benefits. Companies shall comply with all
requirements of COBRA and shall provide continuation coverage for all Employees
of Companies terminated prior to the Closing Date who elect such continuation
coverage under group health plan which will continue in effect after the Closing
Date.
Section 14 Registration Rights Agreement
The distribution to and, to the extent required, subsequent
resales or distributions by Owner of the GCI Shares will be registered under the
Securities Act of 1933, as amended, upon the terms and conditions set forth in
the Registration Rights Agreement, the form of which is attached hereto as
Exhibit A, which is hereby incorporated by reference. All expenses in connection
with any registration (other than underwriting discounts, selling commissions,
costs of sale, and expenses of counsel to Owner) and keeping any prospectus
current will be paid by Buyer.
Section 15 Agreement Not to Compete.
15.1 Agreement. Companies, ACNF, ACNJ and Owner shall provide
to Buyer at Closing an executed Non-Compete Agreement in the form attached to
this Agreement as Exhibit G, the terms and conditions of which are hereby
incorporated by reference.
15.2 Breach of Agreement. If this Section 15 is breached or
threatened to be breached, the parties expressly consent that, in addition to
any other remedy Buyer may have, Buyer may apply to any court of competent
jurisdiction for injunctive relief in order to prevent the continuation of any
existing breach or the occurrence of any threatened breach.
15.3 Enforceability. If any provision of this Section 15 is
determined to be unreasonable or unenforceable, such provision and the remainder
of this Section 15 shall not be declared invalid but rather shall be modified
and enforced to the maximum extent permitted by law.
Section 16 Survival of Representations and Warranties; Indemnification
16.1 Survival. Except as otherwise provided, the
representations, warranties, and covenants and related indemnity agreements
contained in or made pursuant to this Agreement (including the Exhibits and
Schedules) by Buyer and by Companies shall survive the Closing and shall
terminate on the third anniversary of the Closing Date. Notwithstanding the
preceding provisions of this Section 16.1, the representations, warranties, and
covenants (and related indemnities) in Sections 3.15, 3.16, 3.17, 3.18 and 3.25
shall survive the Closing for the period of sixty (60) days after the expiration
of the relevant statute of limitations for claims related thereto. The
REGISTRATION STATEMENT
Page II-197
representations and warranties relating to the ownership of the Assets shall
continue in full force and effect without limitation.
16.2 Indemnity by Companies. Companies agree to indemnify,
defend, and hold harmless Buyer and its officers, directors, Affiliates,
employees, attorneys, agents and shareholders (the "Buyer's Indemnitees")
against and in respect of any and all claims, suits, actions, proceedings
(formal and informal), investigations, judgments, deficiencies, losses, damages,
settlements, liabilities and expenses (including, without limitation, reasonable
legal fees and expenses of attorneys chosen by the Buyer's Indemnitees), whether
or not disclosed in, or on any Schedule to, this Agreement (collectively,
"Losses"), as and when incurred arising out of or based upon (1) any breach of
any representation, warranty, covenant, or agreement of Companies contained in
this Agreement or in any other agreement executed and delivered by Companies
hereunder or in connection herewith, or (2) the ownership of the Assets or the
conduct of the CATV Business or any other matters relating to the business of
Companies for the period prior to the Closing Date, including, without
limitation, any actions taken by Companies prior to the Closing Date but which
do not become effective until after the Closing Date. The liability of each
seller under any indemnity for breach by such seller of a representation,
warranty or covenant shall be limited to an amount (or number of GCI Shares, if
still held by such seller) not to exceed the value of the consideration received
by such Seller under this Agreement and shall pro rata among the sellers based
upon the amount of consideration received by them in the transaction.
16.3 Indemnity by Buyer. Buyer agrees to indemnify, defend,
and hold harmless Companies and its managers, officers, directors, Affiliates,
employees, attorneys, agents and shareholders ("Sellers' Indemnitees") against
and in respect of any Losses as and when incurred arising out of or based upon
(1) any breach of any representation, warranty, covenant or agreement of Buyer
contained in this Agreement or in any other agreement executed and delivered by
Buyer hereunder or in connection herewith; or (2) the conduct of the CATV
Business or any other matters relating to the business of Company for the period
on and after the Closing Date.
16.4 Defense of Claims. No right to indemnification under this
Section 16 shall be available to any of Buyer's Indemnitee or Sellers'
Indemnitee (the "Indemnified Party") unless such Indemnified Party shall have
given to the party obliged to provide indemnification of such Indemnified Party
("Indemnitor") a notice ("Claim Notice") describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder promptly after
receipt of knowledge by officers or management personnel of the Indemnified
Party of the facts upon which such claim is based; provided, however, that the
failure of any Indemnified Party to so notify the Indemnitor shall not relieve
the Indemnitor from any indemnification liability it may have except to the
extent that failure to so notify the Indemnitor materially prejudices the
Indemnitor's ability to defend against such claim. Upon receipt by the
Indemnitor of the Claim Notice from an Indemnified Party with respect to any
claim of a third party, such Indemnitor may
REGISTRATION STATEMENT
Page II-198
assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party, and the Indemnified Party shall cooperate in the defense or
prosecution thereof and shall furnish such records, information and testimony
and attend all such conferences, discovery proceedings, hearings, trials and
appeals as may be reasonably requested in connection therewith. The Indemnified
Party shall have the right to employ its own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of the Indemnified
Party unless (i) the Indemnitor shall not have promptly employed counsel
reasonably satisfactory to such Indemnified Party to take charge of the defense
of such action or (ii) such Indemnified Party shall have reasonably concluded
that there may be one or more legal defenses available to it, or to any other
Indemnified Party who has submitted a Claim Notice to the Indemnitor, which are
different from or additional to those available to the Indemnitor, in either of
which events such fees and expenses shall be borne by the Indemnitor (but in no
event shall the Indemnitor be required to pay the fees and expenses of more than
one counsel employed by more than one Indemnified Party with respect to any
claim) and the Indemnitor shall not have the right to direct the defense of any
such action on behalf of the Indemnified Party. The Indemnified Party shall give
written notice to the Indemnitor of any proposed settlement of any claim, which
settlement the Indemnitor may reject in its reasonable judgment within ten (10)
days of receipt of such notice. The Indemnitor shall have the right, in its sole
discretion, to settle any claim for monetary damages for which indemnification
has been sought and is available hereunder.
16.5 Right to Offset. Sellers and Buyer shall have the option
to recoup all or part of its Losses (in lieu of seeking any indemnification
therefor to which it is entitled under this Section 16) by notifying the other
that it is offsetting the amount of the Share Holdback by the amount of its
Losses if the amount of such Losses is determined before such party releases the
applicable Share Holdback. The Indemnitee shall notify the Indemnitor of its
claim for Losses to be offset against the applicable Share Holdback (including
the details forming the basis of such claim) as soon as practically possible
after obtaining knowledge of the basis for its claim for Losses to be so offset.
If a party disagrees with the asserted claim for Losses to be so offset, the
Indemnitee shall be entitled to offset such Losses against the applicable Share
Holdback, but the Indemnitee shall release to the Indemnitor the remaining
balance of the applicable Share Holdback. An arbitrator shall resolve any
dispute between the parties with respect to the Losses offset against the Share
Holdback within thirty (30) days, which determination shall be binding and
conclusive; provided, however, that if the nature of the disputed claim is not
of the type which would normally be determined by a certified public accountant,
the parties shall agree within ten (10) days on another person to serve as the
arbitrator, or if the parties cannot so agree, the Indemnitee shall select an
arbitrator and Indemnitor shall select an arbitrator and the two (2) arbitrators
so selected shall select a third arbitrator and such panel of three (3)
arbitrators shall resolve the disputed claim for Losses offset against the Share
Holdback within thirty (30) days. Nothing contained in this Section 16.5 shall
be deemed to limit a party's
REGISTRATION STATEMENT
Page II-199
obligation to indemnify to the extent that the amount to which an Indemnitee is
entitled under Section 16 exceeds the amount of the applicable Share Holdback.
16.6 Determination of Indemnified Amounts. The indemnification
obligations of the parties under this Section 16 shall be subject to the
following:
16.6.1 The amount of Losses required to be paid by
the Indemnitor to indemnify the Indemnified Party pursuant to this Section 16 as
a result of any Loss suffered by the Indemnified Party shall be reduced to the
extent the amount of such Loss is actually offset by the receipt by the
Indemnified Party of insurance proceeds pursuant to the terms of the insurance
policies, if any, covering such Loss or by the receipt of any recovery by the
Indemnified Party from a third party with respect to such Loss.
16.6.2 The amount of Losses required to be paid by
the Indemnitor to indemnify the Indemnified Party pursuant to this Section 16 as
a result of any Loss suffered by the Indemnified Party shall be reduced by the
amount of any tax benefit actually realized by the Indemnified Party with
respect to such Loss, to the extent such benefit actually offsets such Loss,
provided that such reduced amount shall be increased by the amount of any taxes
payable by such Indemnified Party as a result of the Indemnitor's payment of
such Loss.
16.6.3 Amounts payable by the Indemnitor in respect
of any Losses shall be payable by the Indemnitor and shall bear interest at the
rate of ten and one-half percent (10.5%) per annum from the date the Loss for
which indemnification is sought were incurred by the Indemnified Party until the
date of payment of indemnification by the Indemnitor.
Section 17 Termination
17.1 Mutual Consent. This Agreement may be terminated by the
written consent of Buyer and Companies. Upon such termination, no party hereto
shall have any further liability to the other, except as provided in Section
17.2.
17.2 Default by Companies. Buyer shall have the right to
terminate this Agreement at or prior to the Closing Date in the event that
Companies default in the performance of any material obligation hereunder or if
any representation or warranty of Companies materially false, and Companies fail
to correct or satisfy such default or falsity within ten (10) days after written
notice is given to Companies or such longer period as shall be required to
correct or satisfy such default or falsity, provided that Companies promptly and
diligently prosecute the cure or satisfaction. If such notice is given within
ten (10) days of the Closing Date, the Closing shall be delayed for the number
of days to permit the cure of the default but in no event more than thirty (30)
days. In the event that Companies' have failed to cure the default within the
required period, Buyer shall be entitled to exercise all of its rights in law or
in equity by reason
REGISTRATION STATEMENT
Page II-200
of the breach by Companies of this Agreement. If Companies shall breach or
threaten to breach any of the provisions of this Agreement, Buyer, in addition
to any other remedies it may have at law or in equity, will be entitled to a
restraining order, injunction or other similar remedy in order to specifically
enforce the provisions of this Agreement. Companies and Buyer specifically
acknowledge that money damages alone would be an inadequate remedy for the
injuries and damage which would be suffered and incurred by Buyer as a result of
a breach by Company of any provisions of this Agreement. In the event that Buyer
seeks an injunction hereunder, Companies hereby waive any requirement for the
posting of a bond or other security. Notwithstanding anything to the contrary
contained in this Section 17.2, Buyer shall have the right to waive any default
by Companies and require the transactions contemplated by this Agreement to be
consummated on the Closing Date.
17.3 Default by Buyer. Companies shall have the right to
terminate this Agreement at or prior to the Closing Date in the event that Buyer
defaults in the performance of any material obligation hereunder or if any
representation or warranty of Buyer is materially false, and Buyer fails to
correct or satisfy such default or falsity within ten (10) days after written
notice is given to Buyer or such longer period as shall be required to correct
or satisfy such default or falsity, provided that Buyer promptly and diligently
prosecutes the cure or satisfaction. If such notice is given within ten (10)
days of the Closing Date, the Closing shall be delayed for the number of days to
permit the cure of the default but in no event more than thirty (30) days. In
the event Buyer has failed to cure the default within the required period,
Companies shall be entitled to exercise all of their rights in law by reason of
Buyer's breach of this Agreement. If Buyer shall breach or threaten to breach
the provisions of Section 18.17 of this Agreement, Companies, in addition to any
other remedies available at law, will be entitled to a restraining order,
injunction or other similar equitable remedy in order to specifically enforce
such provision of this Agreement. Companies and Buyer specifically acknowledge
that money damages alone would be an inadequate remedy for the injuries and
damage which would be suffered and incurred by Companies as a result of a breach
by Buyer of the provisions of Section 18.17 of this Agreement. If Companies seek
an injunction hereunder, Buyer hereby waives any requirement for the posting of
a bond or other security. Notwithstanding anything to the contrary contained in
this Section 17.3, Companies shall have the right to waive any default by Buyer
and require the transactions contemplated by this Agreement to be consummated on
the Closing Date.
Section 18 Miscellaneous
18.1 Expenses. Except as otherwise expressly provided in this
Agreement, Companies will bear their own expenses, and Buyer will bear its own
expenses incident to the negotiation, preparation and consummation of this
Agreement and all other agreements executed and delivered by it hereunder or in
connection herewith, including all fees and expenses of its or their respective
counsel and accountants, whether or not the transactions contemplated hereby or
thereby are
REGISTRATION STATEMENT
Page II-201
consummated. Companies shall pay all sales taxes and transfer fees, including
FCC filing fees, incurred in connection with this Agreement. Filing fees with
respect to any filing mandated by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement
Act of 1976 and any transfer taxes shall be borne equally by Companies and
Buyer.
18.2 Modification. This Agreement (including the Exhibits and
Schedules hereto) sets forth the entire understanding of the parties with
respect to the subject matter hereof, supersedes all existing agreements among
them concerning such subject matter, if any, and may be modified only by a
written instrument duly executed by each party hereto.
18.3 Attorneys' Fees. In the event of any action or suit based
upon or arising out of any alleged breach by any party of any representation,
warranty, covenant or agreement contained in this Agreement, the prevailing
party will be entitled to recover reasonable attorneys' fees and other costs of
such action or suit from the other party.
18.4 Right to Specific Performance. Companies acknowledge that
the unique nature of the Assets to be purchased by Buyer pursuant to this
Agreement renders money damages an inadequate remedy for the breach by Companies
of their obligations under this Agreement, and Companies agree that in the event
of such breach, Buyer will upon proper action instituted by it, be entitled to a
decree of specific performance of this Agreement.
18.5 Notice. Any notice given pursuant to this Agreement to
any party hereto shall be deemed to have been duly given five (5) business days
after being mailed by registered or certified mail, return receipt requested, or
when received if hand delivered, delivered via overnight messenger service or by
facsimile as follows:
If to Companies: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Inc.
Kent Farms
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, House Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer: General Communication, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO and
Senior Vice President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
REGISTRATION STATEMENT
Page II-202
or at such other address as either party shall from time to time designate by
written notice, in the manner provided herein, to the other party hereto. All
references to days in this Agreement shall be deemed to refer to calendar days
unless otherwise specified.
18.6 Waiver. Any waiver must be in writing, and any waiver by
any party of a breach of any provision of this Agreement shall not operate as or
be construed to be a waiver of any other breach of that provision or of any
breach of any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on one or more
occasions will not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement.
18.7 Binding Effect; Assignment. The provisions of this
Agreement shall be binding upon and inure to the benefit of Companies and Buyer
and their respective successors and permitted assigns. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assignable by
any party without the prior written consent of the others, which consent shall
not be unreasonably withheld. Notwithstanding anything to the contrary contained
herein, Buyer may, without Companies' consent, assign its rights under this
Agreement to any Affiliate of Buyer.
18.8 No Third Party Beneficiaries. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement.
18.9 Rights Cumulative. All rights and remedies of each of the
parties under this Agreement will be cumulative, and the exercise of one or more
rights or remedies will not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
18.10 Further Actions. Companies and Buyer will execute and
deliver to the other, from time to time at or after the Closing, for no
additional consideration and at no additional cost to the requesting party, such
further assignments, certificates, instruments, records, or other documents,
assurances or things as may be reasonably necessary to give full effect to this
Agreement and to allow each party fully to enjoy and exercise the rights
accorded and acquired by it under this Agreement.
18.11 Severability. If any provision of this Agreement is
invalid, illegal or unenforceable, the balance of this Agreement shall remain in
effect at the option of the party for whose benefit such provision was made.
18.12 Captions. The Article and Section titles used in this
Agreement are inserted as a matter of convenience and for reference only and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any of the provisions hereof.
REGISTRATION STATEMENT
Page II-203
18.13 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
18.14 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of Alaska without giving effect to
conflict of laws.
18.15 Incorporation by Reference. The Exhibits and Schedules
attached hereto are an integral part of this Agreement and are incorporated
herein by reference.
18.16 Construction. This Agreement has been negotiated by
Buyer and Companies and their respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement or any
provision of this Agreement against the party drafting this Agreement will not
apply in any construction or interpretation of this Agreement.
18.17 Confidentiality. The parties will hold and cause their
officers, directors, employees, attorneys, investors, accountants,
representatives, agents, consultants, and advisors to hold in strict confidence
the provisions of this Agreement as well as all information (other than such
information as may be publicly available) furnished in connection with the
transactions contemplated by this Agreement, except as otherwise required by
law, and except as to disclosure to the parties' agents, advisors and financial
institutions. Neither party shall issue any press release or otherwise make any
public statement with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of the other party, which consent shall
not be unreasonably withheld. Notwithstanding the foregoing, Companies
acknowledge that Buyer shall issue press releases regarding the general terms
and conditions of the transactions contemplated hereby, as required by the
securities disclosure laws, rules and regulations. Buyer shall obtain Companies'
consent for such press releases, which consent shall not be unreasonably
withheld and shall be promptly given.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ALASKAN CABLE NETWORK/FAIRBANKS, INC.
By:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ALASKAN CABLE NETWORK/JUNEAU, INC.
REGISTRATION STATEMENT
Page II-204
By: /s/
ALASKAN CABLE NETWORK/
KETCHIKAN-SITKA, INC.
By: /s/
GENERAL COMMUNICATION, INC.
By /s/
▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
REGISTRATION STATEMENT
Page II-205
EXHIBIT A
Registration Rights Agreement
This Registration Rights Agreement ("Agreement"), dated as of
this day of , 1996, is between General Communication, Inc., an
Alaska corporation ("GCI"), and the shareholder ("Owner") of all of the capital
stock of Alaskan Cable Network, Inc. ("ACNI").
RECITALS
A. Owner has acquired in aggregate Two Million Nine
Hundred Twenty-three Thousand Seventy-Seven (2,923,077) shares of GCI's voting
Class A common stock, no par value. All such shares of GCI's Class A common
stock which Owner now owns and any securities issued in exchange for or in
respect to such stock whether pursuant to a stock dividend, stock split, stock
reclassification or otherwise are collectively referred to in this Agreement as
the "Registrable Shares."
B. GCI desires to grant registration rights to Owner
and any successor or assign of Owner as the holder of all or any portion of the
Registrable Shares. Owner and such successors and assigns are referred to in
this Agreement as the "Holders," or, individually as a "Holder."
AGREEMENT
In consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
1. Demand Registration.
(a) GCI hereby covenants and agrees that
the distribution to Holders of the Registrable Shares, all pursuant to the terms
set forth in that Asset Purchase Agreement dated April 15, 1996 ("APA") shall be
registered under the Securities Act of 1933, as amended, ("Securities Act")
effective upon expiration of the First Lockout Period. To the extent that
subsequent resales by Holder are required to be registered, GCI will keep the
prospectus that is a part of the registration statement for the Registrable
Shares current for a period of at least (2) years. Holder shall covenant (i) not
to sell any Registrable Shares during the first ninety (90) day period ("First
Lock-Out Period") following the Final Closing Date, and (ii) not to sell more
than twenty percent (20%) of the Registrable Shares during the fifty-nine (59)
day period ("Second Lock-Out Period") following the First Lock-Out Period. Any
and all remaining Registrable Shares may be sold following the Second Lock-Out
Period. If Holder may be deemed an affiliate, Holder will have two (2) demand
registrations if required to permit resales by Holder.
REGISTRATION STATEMENT
Page II-206
(b) Upon receipt by GCI of a Holder's
written request for registration, GCI shall (i) promptly notify each other
Holder in writing of its receipt of such initial written request for
registration, and (ii) as soon as is practicable, but in no event more than
sixty (60) days after receipt of such written request, file with the Securities
and Exchange Commission ("Commission"), and use its best efforts to cause to
become effective, a registration statement under the Securities Act
("Registration Statement") which shall cover the Registrable Shares specified in
the initial written request and any other written request from any other Holder
received by GCI within twenty (20) days of GCI giving the notice specified in
clause (i) hereof.
(c) If so requested by any Holder
requesting participation in a public offering or distribution of Registrable
Shares pursuant to this Section 1 or Section 2 of this Agreement ("Selling
Holder"), the Registration Statement shall provide for delayed or continuous
offering of the Registrable Shares pursuant to Rule 415 promulgated under the
Securities Act or any similar rule then in effect ("Shelf Offering"). If so
requested by the Selling Holders, the public offering or distribution of
Registrable Shares under this Agreement shall be pursuant to a firm commitment
underwriting, the managing underwriter of which shall be an investment banking
firm selected and engaged by the Selling Holders and approved by GCI, which
approval shall not be unreasonably withheld. GCI shall enter into the same
underwriting agreement as shall the Selling Holders, containing representations,
warranties and agreements not substantially different from those customarily
made by an issuer in underwriting agreements with respect to secondary
distributions. GCI, as a condition to fulfilling its obligations under this
Agreement, may require the underwriters to enter into an agreement in customary
form indemnifying GCI against any Losses (as defined in Section 6) that arise
out of or are based upon an untrue statement or an alleged untrue statement or
omission or alleged omission in the Disclosure Documents (as defined in Section
6) made in reliance upon and in conformity with written information furnished to
GCI by the underwriters specifically for use in the preparation thereof.
(d) Each Selling Holder may, before such
a Registration Statement becomes effective, withdraw its Registrable Shares from
sale, should the terms of sale not be reasonably satisfactory to such Selling
Holder; if all Selling Holders who are participating in such registration so
withdraw, however, such registration shall be deemed to have occurred for the
purposes of Section 4 of this Agreement, unless such Selling Holders pay (pro
rata, in proportion to the number of Registrable Shares requested to be
included) within twenty (20) days after any such withdrawal, all of GCI's
out-of-pocket expenses incurred in connection with such registration.
(e) Notwithstanding the foregoing, GCI
shall not be obligated to effect a registration pursuant to this Section 1
during the period starting with the date sixty (60) days prior to GCI's
estimated date of filing of, and ending on a date six (6) months following the
effective date of, a registration statement pertaining to an underwritten public
offering of equity securities for GCI's account, provided that (i) GCI
REGISTRATION STATEMENT
Page II-207
is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective and that GCI's estimate of the date
of filing on such registration statement is made in good faith, and (ii) GCI
shall furnish to the Holders a certificate signed by GCI's President stating
that in the Board of Directors' good-faith judgment, it would be seriously
detrimental to GCI or its shareholders for a Registration Statement to be filed
in the near future; and in such event, GCI's obligations to file a Registration
Statement shall be deferred for a period not to exceed six (6) months.
2. Incidental Registration. Each time that GCI
proposes to register any of its equity securities under the Securities Act
(other than a registration effected solely to implement an employee benefit or
stock option plan or to sell shares obtained under an employee benefit or stock
option plan or a transaction to which Rule 145 or any other similar rule of the
Commission under the Securities Act is applicable), GCI will give written notice
to the Holders of its intention to do so. Each of the Selling Holders may give
GCI a written request to register all or some of its Registrable Shares in the
registration described in GCI's written notice as set forth in the foregoing
sentence, provided that such written request is given within twenty (20) days
after receipt of any such GCI notice. Such request will state (i) the amount of
Registrable Shares to be disposed of and the intended method of disposition of
such Registrable Shares, and (ii) any other information GCI reasonably requests
to properly effect the registration of such Registrable Shares. Upon receipt of
such request, GCI will use its best efforts promptly to cause all such
Registrable Shares intended to be disposed of to be registered under the
Securities Act so as to permit their sale or other disposition (in accordance
with the intended methods set forth in the request for registration), unless the
sale is a firmly underwritten public offering and GCI determines reasonably and
in good faith in writing that the inclusion of such securities would adversely
affect the offering or materially increase the offering's costs. In which case
such securities and all other securities to be registered, other than those to
be offered for GCI's account, shall be excluded to the extent GCI determines.
The number of secondary shares included in such registration shall be shared pro
rata by all security holders based upon the amount of GCI's securities requested
by such security holders to be sold thereunder. GCI's obligations under this
Section 2 shall apply to a registration to be effected for securities to be sold
for GCI's account as well as a registration statement which includes securities
to be offered for the account of other holders of GCI equity securities;
however, the registration rights granted pursuant to the provisions of this
Section 2 are subject to the registration rights granted by GCI pursuant to (a)
the Registration Rights Agreement dated as of January 18, 1991, between GCI and
WestMarc Communications, Inc.; (b) the Registration Rights Agreements dated as
of March 31, 1993, and , 1996, both between GCI and MCI
Telecommunications Corporation; (c) the Registration Rights Agreement dated as
of , 1996, between GCI and the owner of Prime Cable of
Alaska, L.P.; and (d) the Registration Rights Agreement dated as of
, 1996, between GCI and the owners of Alaska Cablevision, Inc.
REGISTRATION STATEMENT
Page II-208
In connection with a registration to be effected pursuant to
this Section 2, the Selling Holders shall enter into the same underwriting
agreement as shall GCI and the other selling security holders, if any, provided
that such underwriting agreement contains representations, warranties and
agreements on the part of the Selling Holders that are not substantially
different from those customarily made by selling security holders in
underwriting agreements with respect to secondary distributions.
If, at any time after giving notice of GCI's intention to
register any of its securities under this Section 2 and prior to the effective
date of the registration statement filed in connection with such registration,
GCI shall determine for any reason not to register such securities, GCI may, at
its election, give notice of such determination to Holders and thereupon will be
relieved of its obligation to register the Registrable Shares in connection with
such registration.
3. Expenses of Registration and Sale. GCI shall pay
all costs and expenses incurred in connection with the registration of the
Registrable Shares. Selling Holder shall pay all other costs and expenses
including, but not limited to fees and disbursements of such Selling Holder's
own attorneys and accountants, and all transfer taxes and brokerage printing,
advertising and underwriters' discounts and commissions attributable to the
Registrable Shares being offered and sold by such Selling Holder.
4. Limitations on Registration Rights.
Notwithstanding the provisions of Section 1 of this Agreement, GCI shall not be
required to effect any registration under that Section if (i) the request(s) for
registration cover an aggregate number of Registrable Shares having an aggregate
Market Value of less than Two Million Five Hundred Thousand Dollars ($2,500,000)
as of the date of the last of such requests, (ii) GCI has previously filed two
(2) registration statements under the Securities Act pursuant to Section 1,
(iii) GCI, in order to comply with such request, would be required to (A)
undergo a special interim audit or (B) prepare and file with the Commission,
sooner than would otherwise be required, pro forma or other financial statements
relating to any proposed transaction, or (iv) if a registration is not required
in order to permit resale by Holders. The first demand registration under this
Agreement may be requested only by the Holders of a minimum of twenty-five
percent (25%) of the Registrable Shares. "Market Value" as used in this
Agreement shall mean, as to each class of Registrable Shares at any date, the
average of the daily closing prices for such class of Registrable Shares, for
the ten (10) consecutive trading days before the day in question. The closing
price for shares of such class for each day shall be the last reported sale
price regular way, or, in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices regular way, in either
case on the composite tape, or if the shares of such class are not quoted on the
composite tape, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), on which
shares of such class are listed or admitted to trading, or if they are not
listed or admitted to trading on any such
REGISTRATION STATEMENT
Page II-209
exchange, the closing sale price (or the average of the quoted closing bid and
asked price if no sale is reported) as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or any comparable
system, or if the shares of such class are not quoted on NASDAQ or any
comparable system, the average of the closing bid and asked prices as furnished
by any market maker in the securities of such class who is a member of the
National Association of Securities Dealers, Inc., or in the absence of such
closing bid and asked price, as determined by such other method as GCI's Board
of Directors shall from time to time deem to be fair.
5. Obligations with Respect to Registration.
(a) If and whenever GCI is obligated by
the provisions of this Agreement to effect the registration of any Registrable
Shares under the Securities Act, GCI shall promptly:
(i) Prepare and file with the
Commission any amendments and supplements to the Registration Statement and to
the prospectus used in connection therewith as may be necessary to keep the
Registration Statement effective and to comply with the provisions of the
Securities Act and the rules and regulations promulgated thereunder with respect
to the disposition of all Registrable Shares covered by the Registration
Statement for the period required to effect the distribution of such Registrable
Shares. However, in no event shall GCI be required to do so (i) in the case of
the first Registration Statement filed pursuant to Section 1, for a period of
more than two (2) years following the effective date of that Registration
Statement; (ii) in the case of any subsequent Registration Statement filed
pursuant to Section 1, for a period of more than one hundred eighty (180) days
following the effective date of the Registration Statement; and (iii) in the
case of a Registration Statement filed pursuant to Section 2, for a period
exceeding the greater of (A) the period required to effect the distribution of
securities for GCI's account and (B) the period during which GCI is required to
keep such Registration Statement in effect for the benefit of selling security
holders other than the Selling Holders;
(ii)Notify the Selling Holders
and their underwriter, and confirm such advice in writing, (A) when a
Registration Statement becomes effective, (B) when any post-effective amendment
to a Registration Statement becomes effective, and (C) of any request by the
Commission for additional information or for any amendment of or supplement to a
Registration Statement or any prospectus relating thereto;
(iii) Furnish at Selling
Holders expense to the Selling Holders such number of copies of a preliminary,
final, supplemental or amended prospectus, in conformity with the requirements
of the Securities Act and the rules and regulations promulgated thereunder, as
may reasonably be required in order to facilitate the disposition of the
Registrable Shares covered by a Registration Statement, but only
REGISTRATION STATEMENT
Page II-210
while GCI is required under the provisions hereof to cause a Registration
Statement to remain effective; and
(iv)Register or qualify at
GCI's expense the Registrable Shares covered by a Registration Statement under
such other securities or blue sky laws of such jurisdictions in the United
States as the Selling Holders shall reasonably request, and do any and all other
acts and things which may be necessary to enable each Selling Holder whose
Registrable Shares are covered by such Registration Statement to consummate the
disposition in such jurisdictions of such Registrable Shares. Provided, however,
that GCI shall in no event be required to qualify to do business as a foreign
corporation or as a dealer in any jurisdiction where it is not so qualified, to
amend its articles of incorporation or to change the composition of its assets
at the time to conform with the securities or blue sky laws of such
jurisdiction, to take any action that would subject it to service of process in
suits other than those arising out of the offer and sale of the Registrable
Shares covered by the Registration Statement or to subject itself to taxation in
any jurisdiction where it has not therefore done so.
(b) GCI's obligations under this
Agreement with respect to the Selling Holder shall be conditioned upon the
Selling Holder's compliance with the following:
(i) Such Selling Holder shall
cooperate with GCI in connection with the preparation of the Registration
Statement, and for so long as GCI is obligated to file and keep effective the
Registration Statement, shall provide to GCI, in writing, for use in the
Registration Statement, all such information regarding the Selling Holder and
its plan of distribution of the Registrable Shares as may be necessary to enable
GCI to prepare the Registration Statement and prospectus covering the
Registrable Shares, to maintain the currency and effectiveness thereof and
otherwise to comply with all applicable requirements of law in connection
therewith;
(ii)During such time as the
Selling Holder may be engaged in a distribution of the Registrable Shares, such
Selling Holder shall comply with Rules 10b-2, 10b-6 and 10b-7 promulgated under
the Exchange Act and pursuant thereto it shall, among other things: (A) not
engage in any stabilization activity in connection with GCI's securities in
contravention of such rules; (B) distribute the Registrable Shares solely in the
manner described in the Registration Statement; (C) cause to be furnished to
each broker through whom the Registrable Shares may be offered, or to the
offeree if an offer is not made through a broker, such copies of the prospectus
covering the Registrable Shares and any amendment or supplement thereto and
documents incorporated by reference therein as may be required by law; and (D)
not bid for or purchase any GCI securities or attempt to induce any person to
purchase any GCI securities other than as permitted under the Exchange Act; and
REGISTRATION STATEMENT
Page II-211
(iii) If the Registration
Statement provides for a Shelf Offering, then at least ten (10) business days
prior to any distribution of the Registrable Shares, any Selling Holder who is
an "affiliated purchaser" (as defined in Rule 10b-6 promulgated under the
Exchange Act) of GCI shall advise GCI in writing of the date on which the
distribution by such Selling Holder will commence, the number of the Registrable
Shares to be sold and the manner of sale. Such Selling Holder also shall inform
GCI when each distribution of such Registrable Shares is over.
6. Indemnification.
(a) By GCI. In the event of any
registration under the Securities Act of any Registrable Shares pursuant to this
Agreement, GCI shall indemnify and hold harmless any Selling Holder, any
underwriter of such Selling Holder, each officer, director, employee or agent of
such Selling Holder, and each other person, if any, who controls such Selling
Holder or underwriter within the meaning of Section 15 of the Securities Act,
against any losses, costs, claims, damages or liabilities, joint or several (or
actions in respect thereof) ("Losses"), incurred by or to which each such
indemnified party may become subject, under the Securities Act or otherwise, but
only to the extent such Losses arise out of or based upon (i) any untrue
statement or alleged untrue statement of any material fact contained, on the
effective date thereof, in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, in any preliminary
prospectus (if used prior to the effective date of such Registration Statement)
or in any final prospectus or in any post effective amendment or supplement
thereto (if used during the period GCI is required to keep the Registration
Statement effective) ("Disclosure Documents"), (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading or (iii) any
violation of any federal or state securities laws or rules or regulations
thereunder committed by GCI in connection with the performance of its
obligations under this Agreement. GCI will reimburse each such indemnified party
for all legal or other expenses reasonably incurred by such party in connection
with investigating or defending any such claims, including, subject to such
indemnified party's compliance with the provisions of the last sentence of
subsection (c) of this Section 6, any amounts paid in settlement of any
litigation, commenced or threatened, so long as GCI's counsel agrees with the
reasonableness of such settlement Provided, however, that GCI shall not be
liable to an indemnified party in any such case to the extent that any such
Losses arise out of or are based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission (x) made in any such Disclosure
Documents in reliance upon and in conformity with written information furnished
to GCI by or on behalf of such indemnified party specifically for use in the
preparation thereof, (y) made in any preliminary or summary prospectus if a copy
of the final prospectus was not delivered to the person alleging any loss,
claim, damage or liability for which Losses arise at or prior to the written
confirmation of the sale of such Registrable Shares to such person and the
untrue statement or omission concerned had been corrected in such final
prospectus or (z) made in any prospectus used by such
REGISTRATION STATEMENT
Page II-212
indemnified party if a court of competent jurisdiction finally determines that
at the time of such use such indemnified party had actual knowledge of such
untrue statement or omission or (ii) the delivery by an indemnified party of any
prospectus after such time as GCI has advised such indemnified party in writing
that the filing of a post-effective amendment or supplement thereto is required,
except the prospectus as so amended or supplemented, or the delivery of any
prospectus after such time as GCI's obligation to keep the same current and
effective has expired.
(b) By the Selling Holders. In the event
of any registration under the Securities Act of any Registrable Shares pursuant
to this Agreement, each Selling Holder shall, and shall cause any underwriter
retained by it who participates in the offering to agree to, indemnify and hold
harmless GCI, each of its directors, each of its officers who have signed the
Registration Statement and each other person, if any, who controls GCI within
the meaning of Section 15 of the Securities Act, against any Losses, joint or
several, incurred by or to which such indemnified party may become subject under
the Securities Act or otherwise, but only to the extent such Losses arise out of
or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any of the Disclosure Documents or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements made therein not misleading, if the
statement or omission was in reliance upon and in conformity with written
information furnished to GCI by such indemnifying party specifically for use in
the preparation thereof, (ii) the delivery by such indemnifying party of any
prospectus after such time as GCI has advised such indemnifying party in writing
that the filing of a post-effective amendment or supplement thereto is required,
except the prospectus as so amended or supplemented, or after such time as the
obligation of GCI to keep the Registration Statement effective and current has
expired or (iii) any violation by such indemnifying party of its obligations
under Section 5(b) of this Agreement or any information given or representation
made by such indemnifying party in connection with the sale of the Selling
Holder's Registrable Shares which is not contained in and not in conformity with
the prospectus (as amended or supplemented at the time of the giving of such
information or making of such representation). Each Selling Holder shall, and
shall cause any underwriter retained by it who participates in the offering to
agree to, reimburse each such indemnified party for all legal or other expenses
reasonably incurred by such party in connection with investigating or defending
any such claim, including, subject to such indemnified party's compliance with
the provisions of the last sentence of subsection (c) of this Section 6, any
amounts paid in settlement of any litigation, commenced or threatened.
(c) Third Party Claims. Promptly after
the receipt by any party hereto of notice of any claim, action, suit or
proceeding by any person who is not a party to this Agreement (collectively, an
"Action") which is subject to indemnification hereunder, such party
("Indemnified Party") shall give reasonable written notice to the party from
whom indemnification is claimed ("Indemnifying Party"). The Indemnifying Party
shall be entitled, at the Indemnifying Party's sole expense and
REGISTRATION STATEMENT
Page II-213
liability, to exercise full control of the defense, compromise or settlement of
any such Action unless the Indemnifying Party, within a reasonable time after
the giving of such notice by the Indemnified Party, shall (i) admit in writing
to the Indemnified Party, the Indemnifying Party's liability to the Indemnified
Party for such Action under the terms of this Section 6, (ii) notify the
Indemnified Party in writing of the Indemnifying Party's intention to assume the
defense thereof and (iii) retain legal counsel reasonably satisfactory to the
Indemnified Party to conduct the defense of such Action. The Indemnified Party
and the Indemnifying Party shall cooperate with the party assuming the defense,
compromise or settlement of any such Action in accordance herewith in any manner
that such party reasonably may request. If the Indemnifying Party so assumes the
defense of any such Action, the Indemnified Party shall have the right to employ
separate counsel and to participate in (but not control) the defense,
compromise, or settlement thereof. The fees and expenses of such separate
counsel shall be the Indemnified Party's sole expense, unless (i) the
Indemnifying Party has agreed to pay such fees and expenses, (ii) any relief
other than the payment of money damages is sought against the Indemnified Party
or (iii) the Indemnified Party shall have been advised by its counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the Indemnifying Party, and in any such case
the fees and expenses of such separate counsel shall be borne by the
Indemnifying Party. No Indemnifying Party shall settle or compromise any such
Action in which any relief other than the payment of money damages is sought
against any Indemnified Party unless the Indemnified Party consents in writing
to such compromise or settlement, which consent shall not be unreasonably
withheld. No Indemnified Party shall settle or compromise any such Action for
which it is entitled to indemnification hereunder without the Indemnifying
Party's prior written consent, unless the Indemnifying Party shall have failed,
after reasonable notice thereof, to undertake control of such Action in the
manner provided above in this Section 6.
(d) Contribution. If the indemnification
provided for in subsections (a) or (b) of this Section 6 is unavailable to or
insufficient to hold the indemnified party harmless under subsections (a) or (b)
above in respect of any Losses referred to therein for any reason other than as
specified therein, then the indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and such indemnified party on the other in connection with
the statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by (or omitted to be supplied by) GCI or the
Selling Holder (or underwriter) and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by an indemnified party as a result of the
Losses referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably
REGISTRATION STATEMENT
Page II-214
incurred by such indemnified party in connection with investigating or defending
any such action or claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
7. Miscellaneous.
(a) Notices. All notices, requests,
demands, waivers and other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered personally or mailed, certified or registered mail with
postage prepaid, or sent by facsimile, as follows:
(i) if to GCI at:
General Communication, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Owner, at:
▇▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Inc.
Kent Farms
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) if to any Holders other than Owner, at
the address provided to GCI (and if none
provided, to Owner at the above address)
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of delivery or
on the third business day after the mailing thereof, except that any notice of a
change of address shall be effective only upon actual receipt thereof.
(b) Entire Agreement. This Agreement
constitutes the entire agreement between the parties hereto and supersedes all
prior agreements and understandings, oral and written, between the parties
hereto with respect to the subject matter hereof.
REGISTRATION STATEMENT
Page II-215
(c) Binding Effect; Benefit. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns. Nothing in this Agreement,
expressed or implied is intended to confer on any person other than the parties
hereto or their respective successors and assigns (including, in the case of
Owner, any successor or assign of Owner as the holder of Registrable Shares),
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, other than rights conferred upon indemnified persons under Section 6.
(d) Amendment and Modification. This
Agreement may be amended or modified only by an instrument in writing signed by
or on behalf of each party and any other person then a Holder. Any term or
provision of this Agreement may be waived in writing at any time by the party
which is entitled to the benefits thereof.
(e) Section Headings. The section
headings contained in this Agreement are inserted for reference purposes only
and shall not affect the meaning or interpretation of this Agreement.
(f) Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed to be an original, and
all of which together shall be deemed to be one and the same instrument.
(g) Applicable Law. This Agreement and
the legal relations between the parties hereto shall be governed by and
construed in accordance with the laws of the State of Alaska, without regard to
the conflict of laws and rules thereof.
IN WITNESS THEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GENERAL COMMUNICATION, INC.
By
▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
Owner:
-----------------------------
By
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
REGISTRATION STATEMENT
Page II-216
EXHIBIT B
▇▇▇▇ OF SALE
Pursuant to the terms of that certain Asset Purchase Agreement, by and
between GENERAL COMMUNICATION, INC., and , dated , 1996, hereby
sells, transfers and conveys title to the fixtures and equipment and other
personal property listed on the attached Schedules numbered through , free and
clear of all liens and encumbrances except those listed thereon, to GENERAL
COMMUNICATION, INC.
Dated , 1996.
By:
Its:
REGISTRATION STATEMENT
Page II-217
EXHIBIT C
NONDISTURBANCE AND ATTORNMENT AGREEMENT
THIS NONDISTURBANCE AND ATTORNMENT AGREEMENT ("Agreement") is effective
as of , 1996, among , a corporation,
("Landlord"), GENERAL COMMUNICATION, INC., an Alaska corporation, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("GCI") and ,
having an address of ("Tenant").
R E C I T A L S
A. Tenant is current lessee under that certain lease dated ,
19 , ("Lease") by and between Tenant , and
as Landlord. A true and correct copy of the Lease is attached hereto as
Exhibit A, and is herein incorporated. The Lease demises possession of
certain real property as described in the Lease ("Property") to Tenant
under the terms contained in the Lease.
B. GCI is purchasing assets of Landlord including the Property and the
Lease.
C. Landlord has agreed to assign and GCI has agreed to assume all of
Landlord's right, title and interest in and obligations under the Lease.
D. As a condition precedent to entering into purchase of the Lease, GCI
has required that Tenant certify and confirm certain matters about the Lease and
attorn to GCI upon closing.
REGISTRATION STATEMENT
Page II-218
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties agree as follows:
1. Tenant's Representations and Warranties. Tenant represents and
warrants to GCI, as of the date hereof, as follows:
1.1 The Lease, including all amendments or modifications
thereto, are described on Exhibit A, and true and correct copies thereof have
been delivered to GCI.
1.2 The Lease has not been amended in any respect except as
described in Exhibit A and is the only lease or agreement(s) between Tenant and
any person or entity affecting title or possession of the Property.
1.3 Tenant has made no agreements with Landlord or its agents
or employees concerning free rent, partial rent, rebate of rental payments or
any other type of rental concession other than as stated in Exhibit A. Tenant
has not paid any advance rent except as stated in Exhibit A.
1.4 The Lease is not in default and is in full force and
effect. As of the date hereof, Tenant is entitled to no credit and no offset or
reduction in rent and, to the best of its knowledge, does not have any claims or
defenses to enforcement of the Lease.
1.5 The Lease does not contain and Tenant does not have an
outstanding option to purchase the Property or an outstanding option to extend
or renew the term of the Lease, except the options to extend or renew the Lease
as set forth in Exhibit A.
REGISTRATION STATEMENT
Page II-219
2. Acknowledgment and Consent. Tenant acknowledges the assignment of
the lease to GCI and, to the extent required, consents thereto.
3. Tenant Not To Be Disturbed. So long as Tenant attorns to GCI and is
not in default (beyond any period given to cure such default) in the payment of
rent or additional rent or in the performance of any of the terms, covenants, or
conditions of the Lease on Tenant's part to be performed, Tenant's rights under
the Lease including but not limited to quiet enjoyment and possession of the
Property, shall not be diminished or interfered with by GCI.
4. Tenant to Attorn to GCI. Upon the effective date of the Assignment,
Tenant shall be bound to GCI under all the terms, covenants and conditions of
the Lease for the balance of the term thereof remaining and any extensions or
renewals thereof which may be effected in accordance with any option therefor in
the Lease; and Tenant shall attorn to GCI, as its Landlord, said attornment to
be effective and self-operative immediately upon GCI succeeding to the interest
of Landlord without the execution of any further instruments on the part of any
of the parties hereto. The respective rights and obligations of Tenant and GCI
upon such attornment, to the extent of the remaining balance of the term of the
Lease and any such extensions and renewals, shall be and are the same as now set
forth in the Lease. So long as the Lease and any and all extensions thereof
shall remain in force and effect, and so long as GCI shall be the owner of the
Property, Tenant attorns to GCI as owner of the Property.
REGISTRATION STATEMENT
Page II-220
5. No Modification. The terms of the Lease shall continue in full force
and effect. No modification, amendment or release of any provision of this
Agreement shall be valid or binding for any purpose whatsoever unless in writing
and executed by the parties hereto which post dates the date hereof.
6. Notices. Any notice required or permitted hereunder shall be in
writing. Any notice hereunder shall be effective upon receipt thereof. Any party
hereto may change its address by giving notice thereof to the other party.
Notices shall be sent:
If to GCI:
General Communication, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
If to Tenant:
--------------------------------
--------------------------------
--------------------------------
7. Landlord's Consent. Landlord is joining herein for the purpose of
consenting to the terms and conditions of this Agreement and agrees that Tenant
may rely upon any and all notices from GCI relating to the rights of GCI
hereunder.
8. Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns.
9. Choice of Law. This Agreement is to be governed under the laws of
the State of Alaska. Venue for any action hereunder shall be in Anchorage,
Alaska.
REGISTRATION STATEMENT
Page II-221
10. Captions and Headings. The captions and headings hereof are for
convenience only and are not to be construed as confining or limiting in any way
the scope or intent of the provisions hereof.
11. Execution in Counterparts. This Agreement may be executed by the
parties hereto individually or in separate counterparts, each of which shall be
an original and all of which shall be taken together shall constitute one and
the same Agreement.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be executed as of the date first above.
TENANT:
----------------------------------
By:
Name:
Its:
GCI: GENERAL COMMUNICATION, INC.
By:
Name:
Its:
REGISTRATION STATEMENT
Page II-222
The foregoing Agreement is hereby consented and agreed to by the
undersigned as set forth in Paragraph 7 hereof.
LANDLORD
By:
Name:
Its:
STATE OF )
ss.
COUNTY )
The foregoing instrument was acknowledged before me
this by of ,
a corporation, on behalf of the corporation.
NOTARY PUBLIC, STATE OF
My Commission Expires:
STATE OF )
ss.
COUNTY )
The foregoing instrument was acknowledged before me
this by of GENERAL COMMUNICATION,
INC., an Alaska corporation, on behalf of the corporation.
NOTARY PUBLIC, STATE OF
My Commission Expires:
STATE OF )
ss.
)
The foregoing instrument was acknowledged before me
this by of ,
a corporation, on behalf of the corporation.
NOTARY PUBLIC, STATE OF
My Commission Expires:
REGISTRATION STATEMENT
Page II-223
Exhibit A
LEASE
REGISTRATION STATEMENT
Page II-224
EXHIBIT D
ASSIGNMENT
THIS ASSIGNMENT ("Assignment") is made effective as
of , 1996, by and between ,
a corporation, ("Assignor") and GENERAL
COMMUNICATION, INC., an Alaska corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("Assignee").
R E C I T A L S
A. Assignor is a party to that certain contract by and between
Assignor, and ("Contracting Party"), effective as of ,
19 ("Contract"), a true and complete copy of which is attached hereto as
Exhibit A and incorporated herein.
B. Pursuant to Section of the Contract, Assignor has the right at
any time to assign the contract upon the written approval of Contracting Party.
C. Assignor and Assignee have entered into an Asset Purchase Agreement
dated April , 1996 (the "Asset Purchase Agreement"), whereby Assignee is
purchasing all of the assets of Assignor except those expressly excluded in the
Asset Purchase Agreement.
D. Pursuant to the Asset Purchase Agreement, Assignor has agreed to
assign and Assignee has agreed to assume all of Assignor's right, title and
interest in and obligations under the Contract.
REGISTRATION STATEMENT
Page II-225
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants contained herein, the parties agree as follows:
1. Assignment and Assumption. Subject to the required approval
of Contracting Party as provided in Section 2 below, Assignor hereby assigns and
transfers to Assignee all of Assignor's right, title and interest in the
Contract, and Assignee hereby accepts the assignment and assumes and agrees to
perform, and fully comply with, from the effective date of this Assignment, as a
direct obligation to the Contracting Party, all of the duties, obligations,
payments, covenants, terms and conditions of or applicable under the Contract.
Assignee further undertakes to defend, indemnify and hold Assignor harmless
from, and against any liability arising under the Contract, from and after the
date of approval of this Assignment.
2. Approval by Contracting Party. Assignor agrees to act
promptly and in good faith to obtain the written approval of this Assignment by
the Contracting Party as required by Section of the Contract.
3. Assignor's Warranty. Except as otherwise provided in the
Asset Purchase Agreement, Assignor hereby warrants that as of the effective date
of this Assignment the Contract is in good standing, with no claims, lawsuits,
liens, or defaults; and with all required monies, fees, and other payments
having been timely made, and that Assignor and Contracting Party are in
substantial compliance with all Contract terms.
REGISTRATION STATEMENT
Page II-226
5. Successors. This Assignment shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns.
6. Governing Law. This Assignment shall be governed by the
laws of the State of Alaska. Venue for any action hereunder shall be in
Anchorage, Alaska.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment on the date first written below.
ASSIGNOR:
By:
Its:
ASSIGNEE: GENERAL COMMUNICATION, INC.
By:
Its:
REGISTRATION STATEMENT
Page II-227
CONSENT TO ASSIGNMENT AND RELEASE
The Contracting Party hereby acknowledges and consents to the
above Assignment and agrees to render to Assignee the performance formerly due
the Assignor under the terms of the Contract. The Contracting Party hereby
releases Assignor from all obligations of the Contract from and after the date
hereof and from the date hereof agrees to look solely to Assignee for the
performance of the obligations under the Contract.
----------------------------------
By:
Its:
REGISTRATION STATEMENT
Page II-228
EXHIBIT E
ASSIGNMENT OF LEASE
THIS ASSIGNMENT OF LEASE ("Assignment") is made by and between
, a corporation,
("Assignor"), and GENERAL COMMUNICATION, INC., an Alaska corporation,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("Assignee").
R E C I T A L S
A. Assignor is the lessee under that certain Lease by and between
Assignor and ("Lessor"), dated effective as of
, 19 , ("Lease"), a true and complete copy of which is attached
hereto as Exhibit A and incorporated herein; and which Lease is made of record
by a Memorandum of Lease dated , 19 , and recorded in the
Recording District on , 19 , in Book , at Page , a
true and complete copy of which memorandum is attached hereto as Exhibit B and
incorporated herein.
B. Pursuant to Section of the Lease, Assignor has the right at
any time to assign the Lease upon the written approval of Lessor.
C. Assignor and Assignee have entered into an Asset Purchase Agreement
dated April , 1996 (the "Asset Purchase Agreement"),
whereby Assignee is purchasing all of the assets of Assignor except
those expressly excluded in the Asset Purchase Agreement.
REGISTRATION STATEMENT
Page II-229
D. Pursuant to the Asset Purchase Agreement, Assignor has agreed to
assign and Assignee has agreed to assume all of Assignor's right, title and
interest in and obligations under the Lease.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants contained herein, the parties agree as follows:
1. Assignment and Assumption. Subject to the required approval
of Lessor as provided in Section 2 below, Assignor hereby assigns, conveys and
transfers to Assignee all of Assignor's right, title and interest in the Lease,
and Assignee hereby accepts the assignment and assumes and agrees to perform,
and fully comply with, from the effective date of this Assignment, as a direct
obligation to the Lessor under the Lease, all of the duties, obligations,
payments, covenants, terms and conditions of or applicable under the Lease.
Assignee further undertakes to defend, indemnify and hold Assignor harmless
from, and against any liability arising from and after the date of the approval
of the Assignment.
2. Approval by Lessor. Assignor agrees to act promptly and in
good faith to obtain the written approval of this Assignment by the Lessee as
required by Section of the Lease.
3. Assignor's Warranty. Except as otherwise provided in the
Asset Purchase Agreement, Assignor hereby warrants that as of the effective date
of this Assignment the Lease is in good
REGISTRATION STATEMENT
Page II-230
standing, with no claims, lawsuits, liens, or defaults; and with all required
rents, fees, and other payments having been timely made, and that Assignor and
Lessor are in substantial compliance with all Lease terms.
4. Successors. This Assignment shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns.
5. Recording. The parties, in conjunction with the Lessor,
agree to execute a Notice of Assignment of the Lease suitable for recording
purposes, the form of which is attached hereto as Attachment 1.
6. Governing Law. This Assignment shall be governed by the
laws of the State of Alaska. Venue for any action hereunder shall be in
Anchorage, Alaska.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment on the date first written below.
REGISTRATION STATEMENT
Page II-231
ASSIGNOR:
By:
Its:
ASSIGNEE: GENERAL COMMUNICATION, INC.
By:
Its:
ACKNOWLEDGMENTS
---------------
STATE OF )
ss.
COUNTY )
The foregoing instrument was acknowledged before me
this by of ,
a corporation, on behalf of the corporation.
NOTARY PUBLIC, STATE OF
My Commission Expires:
STATE OF )
ss.
COUNTY )
The foregoing instrument was acknowledged before me
this by of GENERAL COMMUNICATION,
INC., an Alaska corporation, on behalf of the corporation.
NOTARY PUBLIC, STATE OF
My Commission Expires:
REGISTRATION STATEMENT
Page II-232
CONSENT TO ASSIGNMENT AND RELEASE
Lessor in the above-referenced Lease, hereby
acknowledges and consents to the above assignment and agrees to render to
Assignee the performance due under the terms of said Lease. Lessor hereby
releases Assignor from all obligations of the Lease from and after the date
hereof and from the date hereof agrees to look solely to Assignee for the
performance of Lessee's obligations under the Lease.
----------------------------------
By:
Its:
STATE OF )
ss.
COUNTY )
The foregoing instrument was acknowledged before me
this by of ,
a corporation, on behalf of the corporation.
NOTARY PUBLIC, STATE OF
My Commission Expires:
REGISTRATION STATEMENT
Page II-233
ATTACHMENT 1
to
EXHIBIT E
NOTICE OF ASSIGNMENT OF LEASE
NOTICE is hereby given that , a
corporation, ("Assignor"), as lessee under that
certain lease ("Lease") dated , 19 , by and between and
as Lessor, having an address of which Lease was made of
record by that certain Memorandum of Lease dated and recorded in
the Recording District on , 19 , in
Book , at Page , a true and complete copy of which is attached hereto as
Exhibit A, has assigned all of Assignor's right, title and interest under the
Lease to GENERAL COMMUNICATION, INC., an Alaska corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ effective as of , 199 . The
real property subject to the Lease and the Lease term are described on the
attached copy of the Memorandum of Lease.
DATED this day of , 1996.
ASSIGNOR:
By:
Its:
ASSIGNEE: GENERAL COMMUNICATION, INC.
By:
Its:
Record this document in the Recording District.
After recording, return to:
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
REGISTRATION STATEMENT
Page II-234
ACKNOWLEDGMENTS
STATE OF )
ss.
COUNTY )
The foregoing instrument was acknowledged before me
this by of ,
a corporation, on behalf of the corporation.
NOTARY PUBLIC, STATE OF
My Commission Expires:
STATE OF )
ss.
COUNTY )
The foregoing instrument was acknowledged before me
this by of GENERAL COMMUNICATION,
INC., an Alaska corporation, on behalf of the corporation.
NOTARY PUBLIC, STATE OF
My Commission Expires:
STATE OF )
ss.
)
The foregoing instrument was acknowledged before me
this by of ,
a corporation, on behalf of the corporation.
NOTARY PUBLIC, STATE OF
My Commission Expires:
REGISTRATION STATEMENT
Page II-235
EXHIBIT F
Guaranty
FOR VALUE RECEIVED, and in order to induce GENERAL COMMUNICATION, INC.,
a Alaska corporation ("Buyer"), to enter into that certain Asset Purchase
Agreement ("Agreement"), dated as of April , 1996, between Buyer and ALASKAN
CABLE NETWORK/FAIRBANKS, INC. ALASKA CABLE NETWORK/JUNEAU, INC. ("ACNJ"),
ALASKAN CABLE NETWORK/KETCHIKAN-SITKA, INC. ("ACNKS") ("collectively Sellers"),
and to induce Buyer to perform its obligations under and to consummate the
transactions described in the Agreement, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Incorporated a Nevada
corporation ("Guarantor"), agrees as follows:
1. Definitions. Capitalized terms used herein, unless
otherwise defined herein, shall have the meanings ascribed to them in the
Agreement.
2. Representations and Warranties of Guarantor. Guarantor
represents and warrants to Buyer as follows:
(a) Guarantor is a corporation duly formed,
validly existing and in good standing under
the laws of the State of Nevada, and has all
requisite power and authority to own and
operate its properties and to carry on its
business as currently conducted.
(b) Guarantor's execution and delivery of this
Guaranty and Guarantor's performance of its
obligations under this Guaranty:
(i) Are within Guarantor's corporate
power and authority;
(ii) Have been duly authorized by all
necessary corporate action of
Guarantor;
(iii) Have received all necessary
governmental approval, if required;
and
(iv) Do not and will not contravene or
conflict with any provision of any
law, regulation or rule, the
Articles of Incorporation or Bylaws
of Guarantor, any license,
agreement, or instrument to which
Guarantor is a party or by which
Guarantor or any of Guarantor's
property may be bound or affected,
or any judgment, order or decree of
any court or any federal, state, or
local
REGISTRATION STATEMENT
Page II-236
commission, board, or other
administrative agency by which
Guarantor or any of Guarantor's
property may be bound or affected.
(c) This Guaranty is Guarantor's legal, valid,
and binding obligation, enforceable against
Guarantor in accordance with its terms.
3. Guaranty. Guarantor hereby absolutely, irrevocably and
unconditionally guaranties (i) Seller's performance when due of all covenants,
agreements, and obligations of every nature under the Agreement and (ii) subject
only to the limitations thereon specifically set forth in the Agreement, the
accuracy and completeness of all of Seller's representations and warranties
under the Agreement. Without limiting the generality of the foregoing, Guarantor
hereby absolutely, irrevocably and unconditionally guaranties any and all of
Seller's indemnification obligations under Section 16 of the Agreement,
including without limitation the full and prompt payment when due of any and all
monies which may become due or payable at any time under or pursuant to such
indemnification provisions. (Seller's performance and indemnification
obligations are individually and collectively, herein the "Obligations.")
Guarantor further agrees that the following terms and conditions shall apply to
this Guaranty:
(a) This Guaranty is in all respects continuing,
absolute and unconditional.
(b) This Guaranty is a guaranty of both
performance and payment when due, and not of
collection.
(c) Buyer may, from time to time, at Buyer's
sole discretion and without notice to
Guarantor, take any or all of the following
actions:
(i) Obtain or accept a security interest
in any property to secure payment of
any or all of the Obligations;
(ii) Obtain the primary or secondary
obligation of any third party in
addition to Guarantor with respect
to any or all of the Obligations;
(iii) Release, compromise, extend, alter,
or modify any of the Obligations or
any obligation of any nature of any
other obligor with respect to any of
the Obligations;
(iv) Release, compromise, or extend any
obligation of Guarantor hereunder;
REGISTRATION STATEMENT
Page II-237
(v) Release any security interest in, or
surrender, release, or permit any
substitution or exchange for, all or
any part of any property securing
any of the Obligations or any
obligation hereunder, or release,
compromise, extend, alter, or modify
any obligation of any nature of any
obligor with respect to any such
property; and
(vi) Resort to or proceed against
Guarantor for performance or payment
of any of the Obligations whether or
not Buyer shall have proceeded
against Seller or any other obligor
primarily or secondarily obligated
with respect to any of the
Obligations, shall have resorted to
any property securing any of the
Obligations or any obligation
hereunder, or shall have pursued any
other remedy.
(d) As between Buyer and Guarantor, Buyer may
apply any amounts it receives from any
source for any Obligation (arising by
whatever means) toward the payment of any
Obligation then due and payable, in such
order of application as Buyer may from time
to time elect. Notwithstanding any
performance or payments made by or for the
account of Guarantor pursuant to this
Guaranty, Guarantor will not be subrogated
to any rights of Buyer until Buyer shall
have received full performance and payment
of all of the Obligations and Guarantor's
performance of all obligations hereunder.
Without limiting the generality of the
foregoing, Guarantor agrees and acknowledges
that if Buyer is required at any time to
return all or any part of any payment
applied by Buyer to the payment of the
Obligations or any costs or expenses covered
by this Guaranty, whether by virtue of
Seller's insolvency, bankruptcy, or
reorganization or otherwise, the Obligations
to which the returned payment was applied
shall be deemed to have continued in
existence and this Guaranty shall continue
to be effective or to be reinstated, as the
case may be, as to such Obligations, as
though such payment had not been received
and Buyer had not made such application.
(e) Guarantor hereby expressly waives:
(i) Notice of Buyer's acceptance of this
Guaranty;
REGISTRATION STATEMENT
Page II-238
(ii) Notice of the existence, creation,
release, compromise, extension,
alteration, modification,
non-performance, or nonpayment of
any or all of the Obligations;
(iii) Presentment, demand, notice of
dishonor, protest, and all other
notices whatsoever; and
(iv) All diligence in collection of or
realization upon any payments on, or
assurance of performance of, any of
the Obligations or any obligation
hereunder, or in collection on,
realization upon, or protection of
any security for, or guaranty of,
any of the Obligations or any
obligation hereunder.
(f) As between Guarantor and Buyer, Buyer may
assign or otherwise transfer the right to
receive performance of or payment upon any
of Seller's Obligations and/or from
Guarantor to any third party.
4. Notices. All notices and communications under this Guaranty
shall be in writing and shall be deemed to have been duly given when delivered
by messenger, by overnight delivery service, or by facsimile (receipt
confirmed), or mailed by first class certified mail, return receipt requested;
if to Guarantor addressed to Kent Farms, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, House Counsel, and if to Buyer, addressed to Buyer's address
set forth in the Agreement; or in each case to such other address respectively
as the party shall have specified by notice to the other.
5. Integration, Assignment, Modification, Payment of Expenses
and Construction. This Guaranty constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes any prior
written or oral agreements between Guarantor and Buyer. Guarantor may not assign
this Guaranty without Buyer's prior written consent. Subject to the foregoing,
this Guaranty will inure to Buyer's benefit, and be binding upon Guarantor, and
their respective successors and assigns. This Guaranty may be amended or
modified only by a writing signed by Guarantor and Buyer. Buyer and Guarantor
shall each pay its own costs and expenses in connection with the negotiation and
execution of this Guaranty. Guarantor agrees to pay all of Buyer's expenses
(including, without limitation, costs and expenses of litigation and reasonable
attorneys' fees) in enforcing or endeavoring to realize upon this Guaranty or in
endeavoring to collect any amount payable under this Guaranty which is not paid
when due. The unenforceability or invalidity of any provision of this Guaranty
or the Agreement shall not affect the validity of the remainder of this
Guaranty.
REGISTRATION STATEMENT
Page II-239
6. Waiver. The failure of Buyer to insist upon strict
performance of any of the terms, conditions, agreements, or covenants in this
Guaranty in any one or more instances shall not be deemed to be a waiver by
Buyer of its rights to enforce thereafter any of such terms, conditions,
agreements, or covenants. Any waiver by Buyer of any of the terms, conditions,
agreements, or covenants in this Guaranty must be in writing signed by Buyer.
7. Applicable Law. This Guaranty will be governed by, and
construed and interpreted in accordance with, the internal laws of the State of
Alaska, without regard to the conflicts of laws rules of such state.
8. Section Headings. The section headings used in this
Guaranty are for the convenience of Buyer and Guarantor only and shall not
affect the construction or interpretation of the provisions of this Guaranty.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
executed by a duly authorized officer as of April , 1996.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ INCORPORATED
By:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
REGISTRATION STATEMENT
Page II-240
EXHIBIT G
Non-Compete Agreement
April , 1996
Gentlemen:
Reference is made to that certain Asset Purchase Agreement dated as of
April , 1996, (the "Agreement") between Alaskan Cable Network/Fairbanks,
Inc. ("ACNI") Alaska Cable Network/Juneau, Inc. ("ACNJ"), Alaskan Cable
Network/Ketchikan-Sitka, Inc. ("ACNKS") ("collectively Sellers"), Alaskan Cable
Network, Inc. ("ACNI") and Alaskan Cable Network/Juneau Holding, Inc. ("ACNJH")
and General Communication, Inc. ("Buyers"). This letter is being delivered to
you pursuant to Section 15 of the Agreement. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings ascribed to them in the
Agreement.
Sellers, ACNI, ACNJH and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Incorporated ("Owner") agree
that as of the date hereof, through the Final Closing Date, and for a period of
five (5) years thereafter, they will not, and they will cause their respective
key employees for so long as such employees are employed by such entity, not to,
directly or indirectly, own, manage, operate, join, control, participate or
become interested in, or be connected with (as an employee, consultant, partner,
officer, director, shareholder or investor, other than through ownership of up
to a % equity interest in a publicly traded entity), any business competing
with Company in the provision of CATV services related to distribution, by means
of cable, microwave, fiber optic, satellite receivers, or broadcasts, both
terrestrial and spatial, of data, audio, and video signals, to businesses,
residences, multi-family dwellings, hotels, motels, trailers, and other users,
within the Service Areas.
If the terms or provisions of this Non-Compete Agreement are breached
or threatened to be breached, Sellers, ACNI, ACNJH and Owner, each for and on
behalf of itself and its Affiliates, employees, officers, directors and
shareholders, expressly consent that, in addition to any other remedy Buyer may
have, Buyer may apply to any court of competent jurisdiction for injunctive
relief in order to prevent the continuation of any existing breach or the
occurrence of any threatened breach.
If any provision of this Non-Compete Agreement is determined to be
unreasonable or unenforceable, such provision and the remainder of this
Non-Compete Agreement shall not be declared invalid, but rather shall be
modified and enforced to the maximum extent permitted by law.
REGISTRATION STATEMENT
Page II-241
Very truly yours,
ALASKAN CABLE NETWORK , INC.
By:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ALASKAN CABLE NETWORK/JUNEAU HOLDING, INC.
By:
ALASKAN CABLE NETWORK/
KETCHIKAN-SITKA, INC.
By:
ALASKAN CABLE NETWORK/FAIRBANKS, INC.
By:
ALASKAN CABLE NETWORK/JUNEAU, INC.
By:
REGISTRATION STATEMENT
Page II-242
EXHIBIT H
DATE
To: Programmer from
Dear :
The purpose of this letter is to inform you of the impending
sale of systems now owned by ("Seller") to General
Communication, Inc. ("GCI"). GCI will not assume the Seller's programming
contract currently in place to serve the systems described in the Asset Purchase
Agreement dated April , 1996, between GCI and Seller. This is not a notice
deleting your programming from these systems; GCI or its' agent will contact you
about continuation of coverage of your service.
Very truly yours,
REGISTRATION STATEMENT
Page II-243
EXHIBIT I
AFFIDAVIT
STATE OF )
ss.
COUNTY OF )
This Affidavit is delivered pursuant to the Asset Purchase Agreement
dated as of April , 1996, between , a
corporation ("Seller") and General Communication, Inc., a Alaska corporation
("Buyer"). Section 1445 of the United States Internal Revenue Code of 1986, as
amended ("IRC"), provides that a transferee of a United States real property
interest must withhold tax if the transferor is a foreign person. The
undersigned, being the duly elected of Seller and being duly
sworn, certifies and agrees on behalf of Seller as follows:
1. Seller is not a foreign person, foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
IRC and the regulations promulgated thereunder).
2. Seller's U.S. taxpayer identification number is .
3. Seller understands that this certification may be disclosed to the
Internal Revenue Service.
4. Seller hereby agrees to indemnify and hold harmless Buyer and
Buyer's partners and agents of, from and against any and all loss, liability,
interest, penalties, costs, damages, claims or causes of action which may arise
or be incurred by Buyer or Buyer's agents by reason of any failure of any
representation or warranty made in this Affidavit to be true and correct in all
respects, including but not limited to any liability for failure to withhold any
amount required under IRC section 1445.
REGISTRATION STATEMENT
Page II-244
Dated this day of , 1996.
SELLER:
-------------------------
By:
Name:
Title:
STATE OF )
ss.
COUNTY OF )
Subscribed and sworn to before me this day of , 1996.
Notary Public for the State of
My Commission Expires:
REGISTRATION STATEMENT
Page II-245
EXHIBIT J
OPINION OF SELLER'S COUNSEL
[Closing Date]
---------------------------------
---------------------------------
---------------------------------
Dear Sirs:
We have acted as counsel for ,
("Seller"), in connection with the transactions contemplated by that certain
Asset Purchase Agreement dated as of April , 1996 (the "Agreement"), between
Seller and General Communication, Inc., an Alaska corporation ("Buyer").
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Agreement.
We have participated in and are familiar with the corporate proceedings
of Seller relating to the negotiation, authorization, execution and delivery of
the Transaction Documents (as hereinafter defined). In connection with the
foregoing, we have examined the originals or copies, certified or otherwise
authenticated to our satisfaction, of (i) the Asset Purchase Agreement and
related documents ("Transaction Documents") and (ii) such corporate records,
certificates of public officials and officers of Seller, and such other
agreements, instruments and documents that we have deemed necessary as a basis
for the opinions hereinafter expressed. In such examination, we have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity with genuine and authentic originals of all documents submitted to us
as copies, and the genuineness of all signatures.
Based on the foregoing, and on the assumptions herein set forth, and
subject to the exceptions, limitations and qualifications herein above
expressed, it is my opinion that:
1. Seller is a duly organized, validly existing and
in good standing under the laws of the state of . Seller is
qualified to transact business in the state of . Seller has all
requisite power and authority to own and lease the Assets and to carry on the
CATV business as such business is currently conducted.
2. Seller has all requisite power and authority to execute and deliver
the Transaction Documents to which it is a party, to consummate the transactions
contemplated
REGISTRATION STATEMENT
Page II-246
[Closing Date]
Page __
thereby and to perform all terms and conditions of the Transaction
Documents to be performed by it.
3. The execution and delivery of the Transaction Documents by Seller,
the performance by Seller of all the terms and conditions thereof to be
performed by it, and the consummation of the transactions contemplated thereby
have been duly authorized and approved by the partners, general partner or board
of directors as applicable of Seller and no other proceedings of Seller are
necessary with respect thereto.
4. Each of the Transaction Documents has been duly executed and
delivered by Seller and constitutes the legal, valid and binding obligation of
Seller enforceable against Seller in accordance with its terms, except insofar
as enforceability may be limited or affected by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect affecting creditors' rights generally or by principles governing the
availability of equitable remedies.
5. The execution, delivery and performance by Seller of the Transaction
Documents to which it is a party will not (a) violate any provision of the
charter partnership agreement or bylaws, as applicable, of Seller, (b) violate
any provision of any statute, rule, regulation, order judgment or decree or
other restriction of any government, government agency or court to which Seller
is subject or by which any of the assets of Seller is bound or affected (except,
in each case, for those violations which would not, individually or in the
aggregate, have a material adverse effect any CATV System, the CATV Business or
Seller), (c) require, other than those obtained or made, any consent, approval,
filing, application or notice under any law, rule, regulation, order judgement
or decree applicable to the Assets or the CATV Business, or (d)(i) violate, be
in conflict with or constitute a breach of or default under (with or without the
giving of notice or the lapse of time, or both), (ii) permit or result in the
acceleration of (or give any Person the right to accelerate) the performance of
Seller under, (iv) result in the loss of a benefit under, (v) result in the
creation or imposition of any Security Interest upon any asset or (vi) require,
other than those obtained or given, any consent, authorization or approval of,
or any notice to, any Person under any instrument evidencing any of the Assets
or any note, bond, indenture, mortgage, deed of trust, lease, permit, license,
authorization, contract, instrument or other agreement to which Seller is a
party or by which Seller or any of its assets is bound or affected, except for
purposes of this clause (d) such consents, authorizations, approvals and notices
the failure of which to be obtained or given would not, and such violations,
conflicts, breaches, defaults, terminations, suspensions, modifications,
impairments, reformations, losses and accelerations which would not,
individually or in the aggregate, have a material adverse effect on any CATV
system, the CATV Business or Seller.
REGISTRATION STATEMENT
Page II-247
[Closing Date]
Page
6. The Conveyance Documents are in legal form sufficient to convey
title to the Assets to Buyer.
7. To the best of our knowledge, there is not pending (excluding
actions not served) or, to our knowledge, overtly threatened, any judicial,
administrative or arbitral action, suit, proceeding or claim against or
investigation of Seller which questions the validity of the Agreement.
8. To our knowledge, except for those obtained or made, as applicable,
no consent, approval, waiver, order or other authorization of, or registration,
declaration or filing with, any governmental body is required in connection with
the execution and delivery by Seller of the Transaction Documents or the
consummation by Seller of the transactions contemplated thereby.
9. To our knowledge, except as set forth on Schedule 8 to the Agreement
and except for proceedings affecting the CATV industry generally, there is no
unsatisfied judgment or order outstanding, or any action, proceeding, or
investigation pending or threatened in any court or quasi-judicial or
administrative agency against Seller with respect to or involving all or any
part of the CATV Business or the Assets.
10. The sale and transfer of the Assets pursuant to the Agreement will
not result in the imposition or assessment of any sales, use, transfer, excise
or license tax, fee or charge on the transfer of any of the Assets.
Respectfully submitted,
REGISTRATION STATEMENT
Page II-248
EXHIBIT K
OPINION OF SELLER'S FCC COUNSEL
[Closing Date]
General Communication, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
We are communications counsel for
("Seller"), representing Seller principally in matter before the Federal
Communications Commission ("FCC") and the United States Copyright Office
("Copyright Office") concerning the regulations by these governmental agencies
of various aspects of its operations. We have acted as special communications
counsel to Seller in connection with the sale to General Communication, Inc.
("Buyer"), of all of the assets of Seller used and useful in the operation of
its cable television ("CATV") business located in and around
pursuant to that certain Asset Purchase Agreement
dated as of April , 1996, by and between Seller and Buyer ("Agreement"). We
have agreed to render an opinion of counsel in connection therewith.
Terms used herein and not otherwise defined shall have the same meaning
and effect as used and defined in the Agreement. In connection with the
Agreement, we have examined such records of the FCC and Copyright Office, and
have conducted such investigation as we have deemed necessary for the purposes
of this opinion.
1. The Seller operates cable television systems ("Cable Systems") which
serve the communities listed on Attachment 1. Each such community has been
registered with the FCC. Pursuant to the FCC's rules and regulations, such
registrations authorized commencement of operation of the Cable System in the
specified community.
2. The Seller has filed for the Cable Systems most recent FCC Form 320,
Form 325 and Form 395A. The Cable Systems have been certified by the FCC as
being in compliance with the EEO requirements in each calendar year that the
Cable Systems have been owned by Seller(s) beginning with 1986.
REGISTRATION STATEMENT
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3. All necessary Statements of Account have been filed by Seller with
the Copyright Office, along with the royalty payments reflected as due under
those statements. We have not undertaken any independent accounting or
evaluation of the sums remitted to the Copyright Office with Seller's Statements
of Account and render no opinion in that respect. We have not reviewed and do
not offer an opinion as to Seller's compliance with former section 111(d)(1) of
the Copyright Act with regard to the requirement to file initial notices of
identity and signal carriage complement in view of the elimination of this
requirement.
4. To the best of our knowledge, after due inquiry, there have been no
inquiries received from the U.S. Copyright Office or any other party which
questions the Statements of Account or any Copyright payment made by Seller with
respect to the Cable Systems, nor are we aware of any claim, action, or demand
for Copyright infringement or for non-payment of royalties pending or threatened
against Seller with respect to the Cable Systems.
5. Seller holds the FCC licenses set forth in Schedule 2 attached to
the Agreement. Such licenses were validly issued to Seller. The FCC has given
its consent to the assignment of those licenses to Buyer. Once assigned to
Buyer, they are the only FCC licenses or certificates necessary to permit Buyer
to operate the CATV Business as it is presently operated. The FCC licenses are
in full force and effect, without any materially adverse modification,
amendment, revocation, suspension, termination, cancellation, reformation, or
condition. To the best of our knowledge, after due inquiry, there is no FCC
proceeding pending, or any FCC investigation pending or FCC proceeding
threatened, for the purpose of modifying, revoking, terminating, suspending,
canceling, or reforming any of the licenses.
6. Seller has filed all the required notifications with and has
received all necessary authorizations from, the FCC with respect to Seller's
utilization of any frequency in the 108 to 137 MHz and 225 to 400 MHz banks.
These frequencies, the geographic coordinates of the approximate center of each
Cable System area, and the authorized radius of each Cable System, are listed on
Attachment 2. The information contained on Attachment 2 was prepared by Seller
and is consistent with the information filed with the FCC. To the best of our
knowledge, after due inquiry, Seller has not received any notice of violation
concerning its use or proposed use of any frequencies in the 108 to 137 MHz and
225 to 400 MHz bands.
7. Seller has complied with all requirements of the FCC concerning
notification to the Federal Aviation Administration with respect to the
construction and/or alteration of the
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antenna structures, and has secured "no hazard" determinations for each antenna
where required.
8. The Cable Systems have established procedures to provide privacy and
A/B Notices annually to their subscribers and to each new subscriber upon
commencement of service, and to make available lockboxes upon request pursuant
to the provisions of the Communications Act. The Cable Systems have established
procedures for compliance with the FCC's restrictions with respect to
advertising during children's programming and the placement of commercials
during programming designed for children twelve years old and under does not
exceed the Commission's maximum.
9. The cable television systems are each located in areas subject to
effective competition as defined by the Communications Act and the rules and
regulations of the Federal Communications Act and the rules and regulations of
the Federal Communications Commission. To the best of our knowledge, after due
inquiry, Sellers have not received any notice of the intention of any
municipality to challenge the Seller's determination that its systems are each
subject to effective competition.
10. The CATV Business of Seller is presently being operated in
compliance with the Communications Act, the Copyright Act of 1976, FCC Rules and
Regulations, and Copyright Office rules. There is neither any outstanding order
or judgment regarding, nor any pending suit, action, administrative proceeding,
arbitration, or other proceeding or governmental investigation relating to,
Seller's compliance with the Communications Act, the Copyright Act of 1976, or
Copyright Office or FCC rules, regulations or orders.
The opinions expressed above are subject and qualified in all respects
by the following:
(a) We have assumed the genuineness and authenticity of all
documents examined by us and all signatures thereon, the legal capacity of all
parties executing such documents, and the conformity to original documents of
all copies submitted to us as certified or conformed copies or photocopies. In
rendering the opinions expressed herein, we have relied solely upon the
certificates of public officials and upon the representations, warranties,
certifications and statements of Seller as to the factual matters set forth
herein, and we have made no independent factual investigation with regard to
such matters. Except as herein provided, however, we have no actual knowledge or
notice of facts or circumstances contrary thereto.
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( b) We have assumed, without expression of opinion, that
Buyer has all requisite legal capacity, power and authority and has taken all
necessary action to enter into, be bound by, and perform its obligations under
the Agreement and the transactions contemplated therein, and the execution,
receipt, and delivery of all documents, and that no party upon whom we have
relied for purposes of this opinion has perpetrated a fraud upon Seller.
This opinion has been prepared solely for your use in connection with
the closing of the transactions contemplated under the Agreement, and should not
be quoted in full or in part or otherwise referred to, or be filed with or
furnished to any governmental agency or other person or entity not involved in
such transactions without the prior consent of this firm.
Very truly yours,
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