EXHIBIT 2.5
ASSET PURCHASE AGREEMENT
dated as of
May , 1996
among
GENERAL COMMUNICATION, INC.
or its wholly-owned subsidiary
an Alaska corporation
("Buyer")
and
ALASKA CABLEVISION, INC.
a Delaware corporation
("Company")
REGISTRATION STATEMENT
Page II-253
TABLE OF CONTENTS
Page
Section 1. Definitions...................................................................................260
1.1 Affiliate............................................................................260
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1.2 APUC.................................................................................260
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1.3 APUC Certificate.....................................................................260
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1.4 Assets...............................................................................260
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1.5 Basic CATV Services..................................................................260
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1.6 Basic Subscriber.....................................................................261
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1.7 CATV.................................................................................261
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1.8 CATV Business........................................................................261
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1.9 CATV Instruments.....................................................................261
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1.10 CATV System(s).......................................................................261
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1.11 Closing and Closing Date.............................................................261
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1.12 COBRA................................................................................261
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1.13 Company Contracts....................................................................262
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1.14 Employees............................................................................262
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1.15 Employee Plans.......................................................................262
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1.16 Encumbrance..........................................................................262
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1.17 Equipment............................................................................262
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1.18 Equivalent Basic Subscribers or EBS's................................................262
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1.19 ERISA................................................................................263
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1.20 Excluded Assets......................................................................263
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1.21 FCC..................................................................................263
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1.22 Financial Statements.................................................................263
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1.23 Governmental Authority...............................................................263
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1.24 Intangibles..........................................................................263
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1.25 MDU Agreements.......................................................................263
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1.26 MDU Complex..........................................................................263
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1.27 Note Holdback........................................................................263
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1.28 Pay TV...............................................................................264
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1.29 Pay TV Units.........................................................................264
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1.30 Permitted Encumbrances...............................................................264
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1.31 Person...............................................................................264
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1.32 Purchase Price.......................................................................264
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1.33 Real Property........................................................................264
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1.34 Required Consents....................................................................265
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1.35 Security Interest....................................................................265
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1.36 Service Area.........................................................................265
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1.37 Subscribers..........................................................................265
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1.38 System...............................................................................265
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REGISTRATION STATEMENT
Page II-254
Section 2. Sale of Assets................................................................................265
2.1 Sale of Assets.......................................................................265
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2.2 Purchase Price.......................................................................265
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2.3 Purchase Price Adjustment............................................................266
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2.4 Convertible, Subordinated Notes......................................................268
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2.5 Note Holdback........................................................................269
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2.6 Allocation of Consideration..........................................................270
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Section 3. Company's Representations, Warranties, and Covenants..........................................270
3.1 Organization and Qualification.......................................................270
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3.2 Authority............................................................................270
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3.3 Enforceability.......................................................................270
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3.4 Cash Flow............................................................................271
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3.5 Assets...............................................................................271
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3.6 Governmental Permits.................................................................271
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3.7 Company Contracts....................................................................272
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3.8 Records..............................................................................272
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3.9 No Breach or Violation...............................................................272
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3.10 No Finders or Brokers................................................................272
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3.11 Schedules............................................................................272
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3.12 Compliance with Laws.................................................................272
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3.13 Financial Statements.................................................................273
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3.14 Tax Returns and Other Reports........................................................273
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3.15 Transfer Taxes.......................................................................273
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3.16 Real Property........................................................................274
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3.17 Employees............................................................................276
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3.18 Employee Benefits....................................................................276
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3.19 Litigation and Violations............................................................280
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3.20 Disclosure...........................................................................281
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3.21 Investment Company...................................................................281
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3.22 CATV Instruments and Company Contracts...............................................281
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3.23 FCC Compliance.......................................................................282
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3.24 APUC Compliance......................................................................282
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3.25 Patents, Trademarks, and Copyrights..................................................283
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3.26 No Other Assets or Liabilities.......................................................283
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3.27 Required Consents....................................................................283
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3.28 Overbuilds...........................................................................283
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3.29 Effect of Certificates...............................................................283
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3.30 Subscriber Numbers...................................................................284
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3.31 No Insolvency........................................................................284
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3.32 Compliance with Law..................................................................284
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3.33 Disclosure...........................................................................285
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3.34 Parent Entity........................................................................285
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REGISTRATION STATEMENT
Page II-255
Section 4. Assumed Liabilities and Excluded Assets.......................................................285
4.1 Assignment and Assumption............................................................285
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4.2 Excluded Assets......................................................................286
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Section 5. Buyer's Representations, Warranties, and Covenants............................................286
5.1 Organization and Authority...........................................................286
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5.2 Capitalization.......................................................................286
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5.3 Enforceability.......................................................................287
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5.4 Records..............................................................................287
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5.5 No Breach or Violation...............................................................287
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5.6 Compliance with Laws.................................................................287
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5.7 Financial Statements.................................................................287
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5.8 Tax Returns and Other Reports........................................................288
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5.9 Transfer Taxes.......................................................................288
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5.10 Litigation and Violations............................................................288
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5.11 Disclosure...........................................................................289
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5.12 Investment Company...................................................................289
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5.13 No Finders or Brokers................................................................289
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5.14 No Insolvency........................................................................289
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Section 6. Conduct Prior to Closing......................................................................289
6.1 Operation in Ordinary Course.........................................................289
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6.2 Agents...............................................................................290
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6.3 Company Contracts....................................................................290
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6.4 No New Buyer Securities..............................................................290
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6.5 Employees............................................................................291
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6.6 Access to Premises and Records.......................................................291
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6.7 Existing Relationships...............................................................291
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6.8 Required Consents....................................................................291
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6.9 Compliance with CLI Standards........................................................292
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6.10 MDU Agreements.......................................................................292
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6.11 Public Announcements.................................................................292
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6.12 Due Diligence........................................................................292
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6.13 Correction of any Noncompliance Prior to Closing.....................................293
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6.14 Leased Equipment.....................................................................293
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6.15 Estoppel Certificates, Franchise Forms...............................................293
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6.16 HSR Notification.....................................................................293
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6.17 No Shopping..........................................................................294
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6.18 Notification of Certain Matters......................................................294
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6.19 Risk of Loss; Condemnation...........................................................294
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6.20 Lien and Judgment Searches...........................................................295
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6.21 Transfer Taxes.......................................................................295
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6.22 Letter to Programmers................................................................295
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6.23 Updated Schedules....................................................................295
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REGISTRATION STATEMENT
Page II-256
6.24 Use of Company's Name................................................................296
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6.25 Subscriber Billing Services..........................................................296
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6.26 Satisfaction of Conditions...........................................................296
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Section 7. Closing.......................................................................................296
Section 8. Deliveries by Company at Closing..............................................................297
Section 9. Deliveries by Buyer at Closing................................................................299
Section 10. Conditions to Obligations of Buyer............................................................300
10.1 Accuracy of Representations and Compliance with Conditions...........................300
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10.2 Deliveries Complete..................................................................300
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10.3 No Adverse Change....................................................................301
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10.4 Restraint of Proceedings.............................................................301
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10.5 Inspection...........................................................................301
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10.6 Cash Flow............................................................................301
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Section 11. Conditions to Obligations of Company..........................................................302
11.1 Accuracy of Representations and Compliance with Conditions...........................302
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11.2 Deliveries Complete..................................................................302
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11.3 No Adverse Change....................................................................302
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11.4 Restraint of Proceedings.............................................................302
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Section 12. Conditions to Both Parties Obligations........................................................303
12.1 Consents.............................................................................303
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12.2 No Governmental Action...............................................................303
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12.3 Waiver of Conditions.................................................................303
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Section 13. Transactions Subsequent to Closing............................................................303
13.1 Further Actions......................................................................303
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13.2 COBRA Benefits.......................................................................303
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Section 14. Registration Rights Agreement.................................................................303
Section 15. Agreement Not to Compete......................................................................304
15.1 Agreement............................................................................304
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15.2 Breach of Agreement..................................................................304
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15.3 Enforceability.......................................................................304
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REGISTRATION STATEMENT
Page II-257
Section 16. Survival of Representations and
Warranties; Indemnification...................................................................304
16.1 Survival.............................................................................304
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16.2 Indemnity by Company.................................................................304
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16.3 Indemnity by Buyer...................................................................305
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16.4 Defense of Claims....................................................................305
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16.5 Right to Offset......................................................................306
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16.6 Determination of Indemnified Amounts.................................................307
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Section 17. Termination...................................................................................307
17.1 Mutual Consent.......................................................................307
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17.2 Default by Company...................................................................307
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17.3 Default by Buyer.....................................................................308
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Section 18. Miscellaneous.................................................................................308
18.1 Expenses.............................................................................308
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18.2 Modification.........................................................................309
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18.3 Attorneys' Fees......................................................................309
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18.4 Right to Specific Performance........................................................309
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18.5 Notice...............................................................................309
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18.6 Waiver...............................................................................310
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18.7 Binding Effect; Assignment...........................................................310
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18.8 No Third Party Beneficiaries.........................................................310
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18.9 Rights Cumulative....................................................................310
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18.10 Further Actions......................................................................310
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18.11 Severability.........................................................................311
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18.12 Captions.............................................................................311
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18.13 Counterparts.........................................................................311
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18.14 Governing Law........................................................................311
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18.15 Incorporation by Reference...........................................................311
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18.16 Construction.........................................................................311
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18.17 Confidentiality......................................................................311
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EXHIBITS
A - Registration Rights Agreement
B - ▇▇▇▇ of Sale
C - Assumption Agreement
D - Assignment of Lease
E - Guaranty
F - Non-Compete Agreement
G - Letter to Programmers
H - FIRPTA Affidavit
I - Escrow Agreement
J - Convertible Subordinated Note
REGISTRATION STATEMENT
Page II-258
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
11 - MDU Agreements
12 - Buyer's Required Consents
13 - Buyer's Tax Matters
14 - Buyer's Proceedings and Judgments
REGISTRATION STATEMENT
Page II-259
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of May
10, 1996, among General Communication, Inc., an Alaska corporation, or its
wholly-owned subsidiary ("Buyer"), and Alaska Cablevision, Inc., a Delaware
corporation ("Company"). This Agreement states the terms upon which Company
agrees to sell to Buyer, and Buyer agrees to purchase from Company, all of
Company's Assets (as defined below).
WHEREAS, Company is engaged in the business of providing cable
television services to subscribers in and around the Service Area (defined
below); and
WHEREAS, Buyer desires to purchase and Company desires to sell
all of Company's 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 Nos. 158 (Petersburg and Wrangell), 157, 191, 168, 164 and 245,
respectively for the Service Area 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 Area in which Company has 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.
1.5 Basic CATV Services. "Basic CATV Services" shall mean CATV
programming sold to Subscribers as a package and delivered to such Subscribers
by
REGISTRATION STATEMENT
Page II-260
coaxial cable, including broadcast and satellite service programming for which a
Subscriber pays a fixed monthly fee to Company, but not including Pay TV.
1.6 Basic Subscriber. "Basic Subscriber" shall mean any person
who pays Company the full monthly price (but including a subscriber who receives
a senior citizen discount but not including a subscriber who receives any other
discount) for Basic CATV Services in accordance with standard rates charged by
Company as set forth on Schedule 1, who was not solicited since March 14, 1996,
to purchase such services by any promotions, offers of discounts, or
extraordinary marketing techniques which promotions, discounts, or marketing
techniques were inconsistent with Company's previous business practices, and who
has paid in full without discount (except for senior citizen discounts) at least
one monthly payment in the ordinary course of business for CATV services, and
who is not pending disconnection for any reason (other than for non-payment of a
delinquent ▇▇▇▇ in an amount less than $10.01), and who is not delinquent in
payment, for an amount in excess of $10.00, for such CATV services. For this
purpose, a Subscriber shall be delinquent if any part of his or her account is
more than 62 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 Company in and
around the Service Area as described on Schedule 1 to this Agreement.
1.9 CATV Instruments. "CATV Instruments" shall refer to all
intangible CATV channel distribution rights owned, used, or held for use by
Company, all franchise agreements, pole attachment rights, leases, licenses,
easements, crossing permits and service agreements, as described on Schedule 2
to this Agreement.
1.10 CATV System(s). "CATV System" shall refer to a complete
CATV reception and distribution system of Company which is part of Company's
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.
1.11 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.
1.12 COBRA. "COBRA" shall be as defined in Section 3.17.
REGISTRATION STATEMENT
Page II-261
1.13 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.
1.14 Employees. "Employees" shall be as defined in Section
3.17.
1.15 Employee Plans. "Employee Plans" shall be as defined in
Section 3.18.
1.16 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).
1.17 Equipment. "Equipment" shall refer to all 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.
1.18 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 Company
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
(other than senior citizen discounts) 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 Company
to single family households for Basic CATV Services in accordance with standard
rates charged by Company at the Closing Date in such franchise area; provided,
however, that in no event shall such standard rates charged by Company 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 for which a payment in excess of $10.00 is more
than 62 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
REGISTRATION STATEMENT
Page II-262
payment of all installation charges owed and due; (c) that
portion of the ▇▇▇▇▇▇▇▇ to each discounted (other than senior citizen discounts)
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 March 14, 1996, by
any promotions, offers of discounts, or extraordinary marketing techniques which
promotions, discounts, or marketing techniques were inconsistent with Company's
previous business practices.
1.19 ERISA. "ERISA" shall be as defined in Section 3.17.
1.20 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.
1.21 FCC. "FCC" shall mean the Federal Communications
Commission.
1.22 Financial Statements. "Financial Statements" shall be as
defined in Section 3.13.
1.23 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.
1.24 Intangibles. "Intangibles" shall mean all 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.
1.25 MDU Agreements. "MDU Agreements" shall mean the fully
executed agreements required by Section 6.10 hereof.
1.26 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.
1.27 Note Holdback. "Note Holdback" shall be the GCI Notes
held in escrow, as defined in Section 2.5.
REGISTRATION STATEMENT
Page II-263
1.28 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.
1.29 Pay TV Units. "Pay TV Units" shall mean each Pay TV
service subscribed for by all Basic Subscribers.
1.30 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,
servitudes, permits, leases, other minor title defects, conditions, covenants
and restrictions, and minor imperfections or irregularities in title which are
reflected in the public records. The foregoing notwithstanding, "Permitted
Encumbrances" shall not include any item of which Company has warranted the
absence of elsewhere in this Agreement and furthermore shall not prevent or
inhibit, in any way, the conduct of Company's 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 for the period prior to the Closing Date or which are imposed or
assessed against Company for the period prior to the Closing Date; and Company
shall remain fully liable and responsible therefor and shall indemnify and hold
Buyer harmless from and against any thereof pursuant to Section 16.
1.31 Person. Any natural person, corporation, partnership,
trust, unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.32 Purchase Price. The "Purchase Price" for Company's Assets
shall be as defined in Section 2.2.
1.33 Real Property. "Real Property" shall mean all realty,
including appurtenances, improvements, and fixtures located thereon and any
other interests in real property owned by Company and used or held for use in
the CATV Business, including, without limitation, fee interests in Company's
offices and headend sites, leasehold interests, easements, wire crossing permits
and rights of entry described on Schedule 6 to this Agreement.
REGISTRATION STATEMENT
Page II-264
1.34 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 Company to
transfer and convey, and Buyer to purchase, the Assets, and for Buyer to conduct
Company's 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
of Company's Required Consents are listed on Schedule 4 and all of Buyer's
Required Consents are listed on Schedule 12 to this Agreement.
1.35 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.
1.36 Service Area. "Service Area" shall mean the area in which
Company operates the CATV Business, specifically in and around Petersburg,
Wrangell, Cordova, Valdez, Kodiak, Nome and Kotzebue, Alaska, pursuant to
applicable APUC Certificate Nos. 158 (Petersburg and Wrangell), 157, 191, 168,
164 and 245 respectively.
1.37 Subscribers. "Subscribers" shall mean all Basic
Subscribers and EBS's.
1.38 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, Company agrees to sell, convey,
transfer, assign, and deliver to Buyer, and Buyer agrees to purchase from
Company, all of the Company's 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 to Company at the
Closing Sixteen Million Six Hundred Fifty Thousand and no/100 Dollars
($16,650,000.00) in cash and Ten Million and no/100 Dollars ($10,000,000) in
Buyer's subordinated notes ("Notes") which are convertible into shares of GCI's
voting Class A common stock (the "GCI Shares"), in payment for the Assets. The
Purchase Price shall be paid by wire transfer of immediately available funds and
delivery of Notes on the Closing Date. Such
REGISTRATION STATEMENT
Page II-265
payment in cash and in Notes constitutes the Twenty-Six Million Six Hundred
Fifty Thousand and no/100 Dollars ($26,650,000.00) "Purchase Price."
2.3 Purchase Price Adjustment. The Purchase Price payable in
cash shall be:
decreased by:
(i) the Assumed Liabilities as
described in Section 4.1 (a)(i)
and (ii) which, as of the
Closing Date, are liabilities
as accrued and/or which in
accordance with GAAP should
have been accrued as
liabilities as of the Closing
Date;
and increased by:
(ii) current assets other than cash
and cash equivalents ("Current
Assets") of the Company at the
Closing Date, such as prepaid
expenses of the Company which
relate to goods and services
that are to be received by
Buyer after the Closing Date
and in respect of which Buyer
will receive a benefit, and
accounts receivable.
Receivables Adjustment. The Company's subscriber
accounts receivable which relate to the billing periods prior to the billing
period in which the Closing Date occurs, and in the event the Closing Date does
not occur on the last day of a billing period, the amount of the subscriber
accounts receivable which relate to the billing period in which the Closing Date
occurs (the "Billing Period Receivables") which are attributable to the period
prior to the Closing Date (together, subject to the immediately succeeding
sentence, herein called the "Customer Accounts Receivable"), shall be considered
Current Assets to the extent actually collected within the two month period
following the Closing Date by or for the benefit of the Buyer and shall be
included as such in the Final Adjustments Report. Billing Period Receivables
shall be prorated based on the days in the billing period before and after the
Closing Date, the portion attributable to the period before the Closing Date
shall be included in Customer Accounts Receivable and the portion attributable
to the period after the Closing Date shall not be so included.
In addition to the foregoing, to the extent the Buyer
receives payments for other accounts receivable or similar receivables (other
than Customer Accounts Receivable), which payments are attributable to the
period prior to the Closing Date in connection with the calculation of the
Preliminary Adjustments Report and/or the Final Adjustments Report, the amount
of such accounts receivable or similar receivables
REGISTRATION STATEMENT
Page II-266
actually collected (the "Other Receivables") shall be considered cash
equivalents and an adjustment shall be made to the Purchase Price, and any
additional payments shall be paid by check from Buyer to the Company.
To the extent that the Customer Accounts Receivable
and Other Receivables actually collected by Buyer within the three-month period
following the Closing Date exceed the amount of the Customer Accounts Receivable
and Other Receivables which were collected during the first two-month period
following the Closing and for which an adjustment was made pursuant to the Final
Adjustments Report, a further adjustment shall be made (the "Post-Period
Adjustment") and any additional payment shall be paid by check from Buyer to the
Company. A Post-Period Adjustment Report regarding the collections shall be
certified by an authorized officer of Buyer to be true, complete and correct as
of the date it is delivered. Any Customer Accounts Receivable and any Other
Receivables not previously assigned which Buyer does not collect within the
three-month period following the Closing Date shall, promptly after said
three-month period, be reassigned to the Company.
Buyer shall not forgive any of said receivables prior
to the end of said three-month period. All Customer Accounts Receivable and
Other Receivables collected by Buyer shall be deemed allocated to receivables in
the order in which they were incurred. At the Company's reasonable request,
Buyer's records with reference to collection of accounts receivable shall be
made available to the Company.
Preliminary Adjustments. A complete and detailed list
(the "Preliminary Adjustments Report") of all such known prorations and
adjustments in the Purchase Price shall be prepared in good faith and on a
reasonable basis by the Company. The parties hereto agree that the Preliminary
Adjustments Report shall consist of an adjustment to the Purchase Price pursuant
hereto as of the end of the last quarter prior to the Closing Date, and that the
amount of the Purchase Price delivered on the Closing Date shall be adjusted in
accordance with such Report. Buyer's representatives shall be permitted to
participate in the preparation of the report, with access to all books, records,
and other documents used in the preparation thereof. Said Preliminary
Adjustments Report shall be delivered by Company to Buyer at least five days
prior to the Closing, and subject to the provisions below, the party thereby
obligated to pay shall pay the items by increase or decrease of the Purchase
Price. In the event Buyer disagrees with any items on said list, Buyer and the
Company shall in good faith estimate such item, and the average of such two
estimates shall be utilized in making the adjustment of the Purchase Price at
the Closing Date, subject to final adjustment as provided for below. With
respect to the adjustments done pursuant to the Preliminary Adjustments Report
as of the end of the last quarter prior to the Closing Date, the amount of the
increase in the Purchase Price resulting from Customer Accounts Receivable shall
be calculated as of such date based upon (a) (95%) of the face value of Customer
Accounts Receivable which, as of such date, are one month (either 30 days or 31
days, depending upon the month in question) or less past due from the first day
REGISTRATION STATEMENT
Page II-267
of the billing period to which the amount relates; (b) 90% of the face amount of
any Customer Accounts Receivable which, as of such date, is more than one month
but not more than two months past due from the first day of the billing period
to which the amount relates; (c) 60% of the face amount of any amounts
receivable which, as of such date, are more than two months but not more than
three months past due from the first day of the billing period to which the
amount relates; and (d) 0% of the face amount of any Customer Accounts
Receivable which, as of such date, are more than three months past due from the
first day of the billing period to which the amount relates. Other Receivables
which are to be collected following the Closing Date shall also be included in
the Preliminary Adjustments Report.
Post-Closing Adjustment. Within 60 days after the
Closing Date, the Company and Buyer will prepare a report (the "Final
Adjustments Report"), prepared in good faith and on a reasonable basis, setting
forth in reasonable detail the adjustments described above including any
adjustments based on Company's and Buyer's actual collection of the Customer
Accounts Receivable and Other Receivables as of the date one day before such
Report. The Final Adjustments Report shall make such changes to the Preliminary
Adjustments Report as are necessary to recalculate as of the Closing Date all of
the adjustments and prorations to the Purchase Price set forth herein (which
were calculated in the Preliminary Adjustments Report generally as of the last
day of the quarter prior to the Closing Date).
The Company and Buyer shall provide each other with
reasonable access to all records which they have in their possession which
pertain to such collections for the period after the Closing Date, which are
necessary for a review of the Post-Period Adjustment Report.
The Purchase Price as determined pursuant to the
Preliminary Adjustments Report shall be compared to the Purchase Price as
determined pursuant to the Final Adjustments Report and, within 10 business days
following acceptance of the Final Adjustments Report by Buyer and the Company,
any adjustment amount to be paid pursuant to such report shall be paid to the
proper party from the Escrow described in Section 2.5.
To the extent the parties are unable to agree on the
Final Adjustments Report within 90 days after the Closing Date, all issues in
the Report which are not agreed upon shall be submitted to the national
accounting firm of Deloitte & Touche, LLP together with a written statement of
the issues by Buyer and by the Company, and the determination of such accounting
firm shall be final and binding on all parties.
2.4 Convertible, Subordinated Notes. As set forth in Section
2.2, Buyer shall issue Ten Million and no/100 Dollars ($10,000,000.00) in Notes
to Company as part of the Purchase Price. Such Notes shall be transferable only
to shareholders of the
REGISTRATION STATEMENT
Page II-268
Company and to their family members, heirs and assigns by operation of law and
to other limited transferees. The Notes shall be substantially in the form
attached hereto as Exhibit J. The Notes shall bear simple, non-compounding
interest at the lowest allowable IRS rate under imputed interest rules in effect
as of the Closing Date. Any indebtedness on Notes not previously converted into
GCI Shares shall be due and payable in full in a single, lump sum payment on the
tenth (10th) anniversary of their initial date of issuance ("Issuance Date").
The Notes shall be subordinated to all of Buyer's now existing and later
incurred senior indebtedness, including, without limitation, the Sixty-Two
Million Five Hundred Thousand and no/100 Dollars ($62,500,000.00) credit
facility from NationsBank of Texas, N.A., pursuant to that amended and restated
Credit Agreement dated as of April 26, 1996, as extended, increased, replaced or
re-financed, and any and all bank or similar financial institution indebtedness
assumed or later incurred as part of, or in furtherance of the purposes of, the
transactions referred to in Section 6.4 hereof. Any outstanding Notes shall be
convertible by the holders thereof on an annual basis into GCI Shares, during a
fifteen (15) day period each year for ten (10) years ("Conversion Period(s)").
The first Conversion Period shall commence on the Issuance Date, and the second
through the tenth (10th) Conversion Periods shall commence on each anniversary
of the Issuance Date, and shall conclude fifteen (15) days thereafter,
respectively. All or any portion of the then-outstanding Notes, including the
accrued interest thereon, shall be convertible into GCI Shares. The Conversion
Price on the Issuance Date and for the first Conversion Period shall be $6.50
per GCI Share and the Conversion Price for each subsequent Conversion Period
shall be an amount equal to $6.50 plus an amount per GCI Share equal to the
accrued interest on each $6.50 principal amount of the Note being converted, on
a non-compounded basis. For example, assuming a five percent (5%) annual
interest rate, the Notes would convert into GCI Shares in the following amounts:
Conversion Period Price
----------------- -----
Issuance Date $6.500
Year One (1) $6.825
Year Two (2) $7.150
Year Three (3) $7.475
Year Four (4) $7.800
Year Five (5) $8.125
Year Six (6) $8.450
Year Seven (7) $8.775
Year Eight (8) $9.100
Year Nine (9) $9.425
Year Ten (10) $9.750
2.5 Note Holdback. At the Final Closing, Company and Buyer
shall each deposit in escrow, pursuant to an escrow agreement in a form
substantially similar to Exhibit I, Notes with a principal amount of Eight
Hundred Thousand Dollars ($800,000),
REGISTRATION STATEMENT
Page II-269
or provide a letter of credit or cash in an amount equal to Eight Hundred
Thousand Dollars ($800,000) (the "Note Holdback") to secure each party's
indemnification for breaches of representations, warranties and covenants. If no
breach of this Agreement has occurred or is reasonably alleged to have occurred,
such escrowed Notes, letters of credit or cash shall be released to the party
which placed such Notes, letters of credit or cash in escrow, effective as of
one hundred eighty (180) days after the Closing Date.
2.6 Allocation of Consideration. The parties hereto agree to
use their best efforts, based upon an appraisal of the Assets to be made by an
independent appraiser, to agree upon an allocation of the Purchase Price among
the Assets, and to agree to allocate the form of consideration among such
Assets, at or before the Final Closing. The parties agree to be bound by such
allocations and to file all returns and reports with respect to the transactions
contemplated by this Agreement, including, without limitation, all federal,
state and local tax returns, on the basis of such allocation.
Section 3 Company's Representations, Warranties, and Covenants
Company, represents, warrants, and covenants to Buyer, as of
the date of this Agreement and as of the Closing, as follows:
3.1 Organization and Qualification. Company is a duly
organized corporation, validly existing and in good standing under the laws of
its place of incorporation. 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 Company is required to be so qualified or licensed.
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 to conduct its business as it is now
conducted. The copies of Company's Articles of Incorporation, as amended, which
has 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. 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 Company has been
duly authorized by all applicable corporate or partnership 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 Company, 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, assuming
REGISTRATION STATEMENT
Page II-270
all such documents, instruments, and certificates constitute legal, valid, and
binding obligations of Buyer, constitute legal, valid, and binding obligations
of Company, enforceable against Company 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. Company's actual cash flow before corporate
overhead (identified in Company's financial statements as "Administration
Expenses") and after elimination of the inter-company transactions with the
▇▇▇▇▇/Rock Systems in ▇▇▇▇▇ and ▇▇▇▇▇▇ was not less than Three Million
Sixty-Seven Thousand and no/100 Dollars ($3,067,000.00) for the year ended
December 31, 1995. Company's audited financial statements as and for the year
ended December 31, 1995, have been provided to Buyer.
3.5 Assets. Company has exclusive, good and marketable title
to (or, in the case of Assets that are leased, valid leasehold interests in) the
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, which
will be removed and released at or prior to the Closing. Except as set forth on
Schedules 2 or 3, none of the Equipment is leased by 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 the Company Contracts and to perform all the Assumed
Liabilities (defined in Section 4.1). Except as set forth on Schedule 5, the
Equipment is in good operating condition and repair, ordinary wear and tear
excepted, given the age of such equipment and the use to which it is put, and is
suitable and adequate for continued use in the manner in which it is presently
used. No Person other than Company has been granted or, to the Company's
knowledge, 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 Company 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 Company is in compliance with the
material 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.
REGISTRATION STATEMENT
Page II-271
3.7 Company Contracts. All Company Contracts are described on
Schedule 3 or Schedule 10. 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 Company is not and to Company's knowledge, each other party thereto is not
in breach or default of any terms or conditions thereunder.
3.8 Records. Company's books, as made available to Buyer,
contain current, complete, and accurate records of all meetings and actions of
Company's shareholders and directors, and, if any, committees of the directors.
All material actions and transactions taken or entered into by Company or
otherwise requiring action by its shareholders and directors have been duly
authorized or ratified as necessary and are evidenced in such minute books.
Company's books and ledgers, as made available to Buyer, contain complete and
accurate records of all issuances and transfers of its shares of common stock.
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 Company (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 Company
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 Company is a party or by which 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.
3.10 No Finders or Brokers. Company has not entered into any
contract, arrangement, or understanding with any person or firm which may result
in any obligation of Buyer or 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, except that Company shall pay all fees and
expenses due to ▇▇▇▇▇▇▇ and Associates.
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. Company is in compliance with all
applicable laws, rules, regulations, orders, ordinances, and codes of the
Governmental Authorities having jurisdiction over the business and affairs of
Company.
REGISTRATION STATEMENT
Page II-272
3.13 Financial Statements. Company has delivered to Buyer
correct and complete copies of Company's audited financial statements for each
of the two most recent fiscal years ended prior to the date of this Agreement
and will deliver to Buyer unaudited interim quarterly financial statements for
periods subsequent to the end of the most recent fiscal year end within 30 days
after the end of each such quarter (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 Company 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, Company 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 Company and which is required to be
disclosed on, or reserved against in, a balance sheet. Company has received no
notice of any fact which would form a basis for any claim by a third party
which, if asserted, could result in a liability affecting Company not disclosed
by or reserved against in the most recent balance sheet of Company. 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) Company 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 Company 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 Company.
3.14 Tax Returns and Other Reports. Company 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 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.
REGISTRATION STATEMENT
Page II-273
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 does not violate any material 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 Company has 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 Company possesses all rights needed to
operate, maintain, repair, replace, and locate all cable, lines, towers,
equipment, or other facilities owned or used by Company in the CATV Business on
the Real Property.
3.16.4 None of the improvements on the Real
Property encroaches upon the property of others.
3.16.5 Company holds good and marketable fee simple
title to the Real Property shown as being owned by Company on Schedule 6 and the
valid and enforceable right to use and possess such Real Property, subject only
to the Permitted Encumbrances. Company has 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.
3.16.6 The Real Property is in full compliance with
all material applicable health, safety, and environmental laws, rules, and
regulations ("environmental laws"). During Company's ownership or operation of
the Real Property, all activities undertaken on or affecting the Real Property
by Company or any other person has been in full compliance with all material
environmental laws. During Company's occupation of the Real Property there has
been no abatement, removal, remedial or other response actions for hazardous
substances (as defined below) at the Real Property.
3.16.6.1 Company is not aware of any
instance, prior to Company's ownership or operation, of noncompliance of the
Real Property or any activities thereon with any environmental law. Company is
not 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 Company's 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.
REGISTRATION STATEMENT
Page II-274
3.16.6.3 To Company's knowledge, the Real
Property has not in the past, and is not now, 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 No hazardous substances have
been or are being released to, from, or under the Real Property or outside the
Real Property by the Company, which substances 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 during the Company's occupancy.
3.16.6.5 No underground storage tanks,
surface impoundments, solid waste management units, tank systems, waste piles,
land treatment areas, landfills, or incinerators are located or, to Company's
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, to Company's knowledge 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 There are no "PCB Items," as
that term is defined in 40 C.F.R. section 761.3, located on the Real Property.
3.16.6.7 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 Company 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 is in place.
3.16.6.8 No building or other structure
on the Real Property contains asbestos.
3.16.6.9 Company has provided to Buyer
true, complete and correct copies of all Environmental Reports in Company's
possession or control as of the date of this Agreement relating to the Real
Property or any of it. Company 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 Company. 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 affecting the Real Property or any of it.
REGISTRATION STATEMENT
Page II-275
3.16.6.10 "Company's knowledge" as used
in this Section 3 shall refer to matters within the knowledge of Company's
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). Hazardous
Substances 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, Hazardous
Substances 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 all of Company's employees (the "Employees"). Company
has complied in all respects with all material 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. Company has no employment
agreements, either written or oral, with any person, and all Employees are
terminable at will. Company is not a party to any contract with any labor
organization and has not agreed to recognize any union or other collective
bargaining unit. No union or other collective bargaining unit has been certified
as representing any of Company's employees, and Company has not received any
requests from any party for recognition as a representative of employees for
collective bargaining purposes.
3.18 Employee Benefits.
3.18.1 Except for those plans described on Schedule
9 hereto (the "Employee Plans"), with respect to the Employees, neither Company,
nor any of their Affiliates maintain, are a party to, contribute to or are
obligated to contribute to, and the
REGISTRATION STATEMENT
Page II-276
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 other than
bonuses of a non-recurring basis which
may be paid to some employees in
connection with this transaction;
(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
(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, Company
has 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;
REGISTRATION STATEMENT
Page II-277
(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;
(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
REGISTRATION STATEMENT
Page II-278
(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
exist or has existed within the six-year period ending on the date hereof that
could result in liability to the Company:
(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 by the Company, its
officers, or employees constituting a
violation of Sections 404 or 405 of
ERISA;
(iv) to Company's knowledge, any act or
omission by any other person constituting
a violation of Sections 404 or 405 of
ERISA;
(v) any act or omission by the Company, its
officers, or employees that constitutes a
violation of Sections 406 and 407 of
ERISA and is not exempted by Section 408
of ERISA and Section 4975(d) of the Code;
or
(vi) any act or omission by the Company, its
officers, or employees constituting a
violation of Sections 503, 510 or 511 of
ERISA.
REGISTRATION STATEMENT
Page II-279
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 substantially 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 Company has 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 has been fully paid or adequately
provided for on the books and financial statements of Company. 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, (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 canceled at will by
Company 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
REGISTRATION STATEMENT
Page II-280
pending or, to Company's best knowledge, threatened against or affecting Company
which (i) seeks 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 Company. Company 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 Company.
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 Company 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. Company 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 (the "Act"), and Company 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.
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. Company is in compliance with and is not
material 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. Company is in compliance with
other material applicable requirements of all governing or regulatory
authorities (including the APUC, the FCC and the Register of Copyrights)
relating to the CATV Instruments, including, without limitation, all material
requirements for notification, filing, reporting, posting, and maintenance of
logs and records. Except as set forth on Schedule 2, Company holds 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. The APUC is not currently authorized to restrict the
Company's ability to change any rates charged for CATV services, and Company has
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.
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.
REGISTRATION STATEMENT
Page II-281
3.23 FCC Compliance. 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. 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 Company's 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
Company has received no notice, and otherwise has no reason to know, of any
claimed default or violation with respect to the foregoing. Company has 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 for each year since
January 12, 1992, 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, Company 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. Where
required, Company has been certified as in compliance with the FCC's equal
employment opportunity rules for each year since 1991 to the extent the FCC has
reviewed such filing for certification. Company is 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. Company has duly and timely filed all required
reports with the FCC. Company has delivered to Buyer copies of all current
reports and filings, and all reports and filings for the past two years, made or
filed with the FCC by Company pursuant to FCC rules and regulations. Company
shall make available to Buyer all other past reports and filings made or filed
by Company pursuant to FCC rules and regulations.
3.24 APUC Compliance. Company is duly authorized to operate
its CATV Business under APUC certificates as set forth in Schedule 2. Company
holds the APUC certificates set forth in Schedule 2. The APUC certificates are
in full force and effect, without any materially adverse modification,
amendment, revocation, suspension, termination, cancellation, reformation or
condition. To the best of Company's knowledge,
REGISTRATION STATEMENT
Page II-282
after due inquiry, there is no APUC proceeding or any APUC investigation pending
or threatened, for the purpose of modifying, revoking, terminating, suspending,
canceling or reforming any of the certificates. Company operates its Cable
Systems in accordance with all material APUC rules, regulations and orders.
3.25 Patents, Trademarks, and Copyrights. Company has timely
and accurately made all requisite filings and payments with the Register of
Copyrights and is otherwise in compliance with all applicable rules and
regulations of the Copyright Office. Company has delivered to Buyer copies of
all current reports and filings, and all reports and filings for the past two
(2) years, made or filed by Company pursuant to Copyright rules and regulations.
Company shall make available to Buyer all other past reports and filings made or
filed by Company pursuant to Copyright rules and regulations. Company does 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. Company has no assets of
any kind other than the Assets, CATV Instruments, and Company Contracts
described on the Schedules and Company has 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 except liabilities, obligations and commitments incurred in
the normal course of business since the date of the Financial Statements.
3.27 Required Consents. As further set forth in Section 6.8,
Company 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.
3.28 Overbuilds. No area presently served by Company's CATV
business is presently subject to or, to Company's best knowledge, threatened to
be subject to an overbuild situation. Company is currently the only cable
television operator providing or, to Company's best knowledge, intending to
provide cable television service in the Service Area. No person or entity other
than Company has been granted or, to the Company's knowledge, has applied for
APUC Certificates or a CATV franchise agreement in any of the communities (or
any of the unincorporated areas) presently served by Company's CATV Business.
3.29 Effect of Certificates. All certificates of Company
delivered under this Agreement shall be deemed to be additional representations
and warranties of Company.
REGISTRATION STATEMENT
Page II-283
3.30 Subscriber Numbers. As of the Closing Date, the CATV
Business together with the CATV Systems operated by the ▇▇▇▇▇/Rock ▇▇▇▇▇▇ Cable
System Joint Venture and the ▇▇▇▇▇/Rock ▇▇▇▇▇ Cable System Joint Venture will
have no fewer than 9,750 subscribers and no fewer than 4,390 Pay TV Units, none
of which were more than sixty-two (62) days delinquent in payment for service.
3.31 No Insolvency. As of even date and as of the Closing
Date, Company is not and shall not be insolvent.
3.32 Compliance with Law.
3.32.1 The ownership, leasing and use of the Assets
as they are currently owned, leased and used and the conduct of the CATV
Business as it is currently conducted do not violate any state, federal or local
laws, which violation, individually or in the aggregate, would have a material
adverse effect on a System, the CATV Business or Company. Company has received
no notice claiming a violation by Company or the CATV Business of any Legal
Requirement applicable to Company or the CATV Business as it is currently
conducted and to Company's best knowledge, there is no basis for any claim that
such a violation exists.
3.32.2 Company has complied, and the CATV 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 a 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 material legal
requirements relating to the construction, maintenance, ownership and operation
of the Assets, the Systems and the Business.
3.32.3 Notwithstanding the foregoing, Company has
used its 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 (the "1992 Cable Act") as such laws
relate to the operation of the Business. Except as provided in Schedule 8,
Company has complied in all material respects with the must carry and
retransmission consent provisions of the 1992 Cable Act. Company has 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 Company 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
REGISTRATION STATEMENT
Page II-284
the 1992 Cable Act claimed by Company with respect to any of the Systems
(collectively, "Rate Regulation Documents"). Company has received no notice from
any Governmental Authority with respect to an intention to enforce customer
service standards pursuant to the 1992 Cable Act and Company has 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. Company has 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.
3.33 Disclosure. No representation or warranty by Company in
this Agreement or in any Schedule or Exhibit to this Agreement, or any
statement, list or certificate furnished or to be furnished by Company 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 limiting the generality of the
foregoing, the information set forth in the Schedules concerning the Business is
accurate and complete in all material respects.
3.34 Parent Entity. Company is an ultimate parent entity (as
the term "ultimate parent entity" is defined in 16 C.F.R. section 801.1(a)(3)).
The total assets based on the most recent audited balance sheet of Company are
(and, immediately prior to the Closing, will be) less than $10,000,000, as
determined in accordance with 16 C.F.R. sections 801.1(b), 801.1(c), and 801.11.
Neither Seller nor any entity directly or indirectly controlled by Seller (as
the term "control" is defined in 16 C.F.R. section 801.1(b)) is engaged in
manufacturing.
Section 4 Assumed Liabilities and Excluded Assets.
4.1 Assignment and Assumption. Company will assign, and Buyer
will assume and perform, the Assumed Liabilities, which are defined as: (a)
Company's obligations to subscribers of the Business for (i) subscriber deposits
held by Company as of the Closing Date and which are refundable, (ii) subscriber
advance payments held by Company 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. Except as
set forth in Section 2.3, Buyer will not assume or have any responsibility for
any liabilities or obligations of Company other than the Assumed
REGISTRATION STATEMENT
Page II-285
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 Company, will consist of the following: (a) upon Buyer's request,
programming contracts; (except for those set forth on Schedule 3); (b) insurance
policies and rights and claims thereunder (except as otherwise provided in
Section 6.19); (c) bonds, letters of credit, surety instruments and other
similar items; (d) cash and cash equivalents; (e) Company's trademarks, trade
names, service marks, service names, logos and similar proprietary rights
(subject to Buyer's rights under Section 6.24); (f) Company's rights under any
agreement governing or evidencing an obligation of Company for borrowed money;
(g) Company's 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 Company 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 19,696,207
shares are issued and outstanding; 10,000,000 shares of Class B common stock, of
which 4,175,434 are issued and outstanding, and 1,000,000 shares of preferred
stock, of which no shares are issued and outstanding, all as of April 15, 1996.
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 proposed to be issued as
follows: (i) the proposed issuance of Two Million (2,000,000) shares of Buyer's
Class A common stock
REGISTRATION STATEMENT
Page II-286
to MCI Telecommunication Corporation ("MCI") for Thirteen Million and no/100
Dollars ($13,000,000.00), (ii) the acquisition of the ongoing cable television
business and cable television systems of Alaskan Cable Network, Inc., for not
more than Two Million Nine Hundred Twenty-Three Thousand Seventy-Seven
(2,923,077) shares of Buyer's Class A Common Stock; (iii) the acquisition of the
ongoing 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) any Buyer's Shares and Notes issued in connection
with (ii) and (iii) herein for the escrow holdbacks.
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, contains 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 12, 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 (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 Company
correct and complete copies of Buyer's audited financial statements for each of
the two most recent
REGISTRATION STATEMENT
Page II-287
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 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 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 13, 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 14, there are no suits, claims, grievances, actions, proceedings, or
governmental investigations pending or, to Buyer's best knowledge, threatened
against or affecting Buyer which
REGISTRATION STATEMENT
Page II-288
(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 (the "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. Company shall continue to
operate the CATV Business prior to the Closing Date in the ordinary course as
presently operated under its standard operating practices and generally in
accordance with its 1996 budget, including all required budgeted maintenance
capital expenditures for current maintenance, unless otherwise agreed by Buyer,
including, without limitation, payment of all expenses in a timely manner
consistent with prior business 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, Company agrees that Company,
or anyone acting on Company's 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
REGISTRATION STATEMENT
Page II-289
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, (iii) enter into or
continue any discussions, negotiations or contracts relating to the sale,
assignment, or transfer any Assets of the Company or the CATV Business except
(a) in the ordinary course of business and (b) for Company's payment of
dividends to its shareholders in cash, (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, except in the ordinary course of business. Company
shall maintain insurance on the CATV Business and the Assets until the Closing
Date consistent with past practice and policy, and Company 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. At Buyer's request and
expense, Company shall also make its budgeted capital expenditures for rebuilds,
upgrades or improvements.
6.2 Agents. Company agrees that Buyer's designated agent shall
be included in all material business discussions regarding Company's conduct of
its affairs which are other than in the ordinary or usual course of business.
6.3 Company Contracts. All Company Contracts are described on
Schedule 3 or Schedule 10. 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 Company is not and to Company's knowledge, each other party thereto is not
in breach or default of any terms or conditions thereunder.
6.4 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 acquisition of the ongoing cable
television business and cable television systems of Alaskan Cable Network, Inc.,
for not more than Two Million Nine Hundred Twenty Three Thousand Seventy Seven
(2,923,077) shares of Buyer's Class A Common Stock; (iii) the 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) any Buyer's Shares
and Notes issued in connection with (ii) and (iii) herein for the escrow
holdbacks. 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.
REGISTRATION STATEMENT
Page II-290
6.5 Employees. Company shall use its 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.
6.6 Access to Premises and Records. The parties shall cause
Company 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 Company and Buyer as shall from time to
time reasonably requested. Furthermore, Buyer shall be given the opportunity to
perform a field audit of Company's accounts with Company's 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
representatives in accordance with Section 18.17. Without limiting Buyer's
rights of access stated above, Company 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 Company's obligations under this Agreement,
including but not limited to Company's representations and warranties in Section
3.16 above.
6.7 Existing Relationships. Company shall use its 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 Company. 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.
6.8 Required Consents. Company and Buyer agree to cooperate
and use their reasonable commercial efforts to obtain all Required Consents in a
form and upon terms and conditions reasonably satisfactory to Buyer. Company
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, the payment of
any fees, or agreeing to change any terms of any CATV Instruments or Company
Contracts.
REGISTRATION STATEMENT
Page II-291
6.9 Compliance with CLI Standards. Company shall notify Buyer
at least 10 days prior to the annual CLI compliance and reporting tests, which
tests shall be made not later than June 30, 1996, and representatives of Buyer
and Company shall jointly inspect the CATV Systems to determine if the CATV
Systems are reasonably in compliance with the CLI standards under applicable FCC
rules and regulations ("CLI Standards") and to the extent the CATV Systems or
any portion thereof are not in compliance with CLI Standards, to determine the
steps to be taken by Company (including, to the extent required, the replacement
or upgrading of equipment and the institution of maintenance procedures) in
order to cause the CATV Systems to reasonably comply with CLI Standards prior to
the Closing Date ("the Remedial Steps"). If Buyer and Company fail to agree as
to whether the CATV Systems or any portion thereof reasonably complies with CLI
Standards or as to the Remedial Steps to be taken, Buyer and Company shall
jointly select a qualified engineering firm to inspect the CATV Systems (the
"Inspector"). Company shall cooperate fully with any representative of the
Inspector in making such inspection. Once the inspection is completed, the
Inspector shall, as promptly as practical after its engagement, deliver a
written report to Buyer and Company stating whether or not the CATV Systems are
in compliance and if not, recommend Remedial Steps which will cause the CATV
Systems to fully comply with CLI Standards. The Inspector's determination and
report shall be final and binding on Buyer and Company. Fees and expenses
incurred by the Inspector shall be paid by Buyer if the CATV Systems are found
by the Inspector to comply and by Company if any substantial portion of the CATV
System is found not to comply with CLI Standards.
6.10 MDU Agreements. Company represents and warrants that
agreements have been granted to Company from all MDU property owners serviced by
the Company, and that it has provided access to all such agreements which are
listed on Schedule 11 to Buyer.
6.11 Public Announcements. Except as may be required by
applicable law or regulation, neither Buyer nor Company 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 parties, which consent shall not be unreasonably withheld and shall be
promptly given. Notwithstanding the foregoing, Company acknowledges and agrees
that Buyer shall make all press releases it deems necessary under the securities
law, rules and regulations.
6.12 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 reasonably requested by any party. 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 Company 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
REGISTRATION STATEMENT
Page II-292
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.
6.13 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 3.16, 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 Company 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.
6.14 Leased Equipment. Company shall pay the remaining
balances on any leases for Equipment used in the CATV Business and deliver title
to such Equipment free and clear of all Encumbrances (other than Permitted
Encumbrances) to Buyer at the Closing.
6.15 Estoppel Certificates, Franchise Forms.
6.15.1 Company will use reasonable 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 reasonably
request.
6.15.2 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.
6.16 HSR Notification. If applicable, as soon as practicable
after the execution of this Agreement, but in any event no later than 45 days
after such execution, Company 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
REGISTRATION STATEMENT
Page II-293
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.
6.17 No Shopping. None of Company, its 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, or (b)
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.
6.18 Notification of Certain Matters. Company will promptly
notify Buyer of any fact, event, circumstance or action (a) which, if known on
the date of this 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 Company's representations or warranties under this Agreement not to
be correct and complete.
6.19 Risk of Loss; Condemnation.
6.19.1 Company 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, Company 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 thi
s Agreement. If Buyer elects so to terminate this Agreement, Buyer
and Company will be discharged of any and all obligations hereunder. If Buyer
elects to consummate the
REGISTRATION STATEMENT
Page II-294
transactions contemplated by this Agreement notwithstanding such loss or damage
and does so, there will be no adjustment in the consideration payable to Company
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 Company to Buyer, or the rights to such proceeds will be assigned
by Company to Buyer if not yet paid over to Company.
6.19.2 If, prior to the Closing, any 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 Company or Buyer that it intends to condemn all or any part of the
Assets (either such even, 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 Company, if Buyer so elects, to negotiate for,
claim, contest and receive all damages with respect to the Taking, (b) Company
will be relieved of its obligation to convey to Buyer the Assets or interests
that are the subject of the Taking, (c) at the Closing, Company will assign to
Buyer all of Company's rights to all damages payable with respect to such Taking
and will pay to Buyer all damages previously paid to Company 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.
6.20 Lien and Judgment Searches. Buyer will obtain at
Company'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 where there exist tangible Assets, and in
the state and county where Company's 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 Company may be located, with respect
to judgments, orders, writs or decrees against or affecting Company or any of
the Assets.
6.21 Transfer Taxes. Buyer and Company will share equally the
payment of any state or local sales, use, transfer, excise, documentary or
license taxes or fees.
6.22 Letter to Programmers. At Buyer's request, Company will
transmit a letter in the form of Exhibit G to all programmers from which Company
purchases programming.
6.23 Updated Schedules. Not less than five business days prior
to Closing, Company will deliver to Buyer revised copies of Schedules 1 through
11 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
REGISTRATION STATEMENT
Page II-295
Company's 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
Company) 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.
6.24 Use of Company's Name. Buyer may continue to operate the
Systems using Company's rights to the name "Cablevision" linked to the name of
the community being serviced and all derivations and abbreviations of such name
and related marks. Within one hundred eighty (180) days 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.
6.25 Subscriber Billing Services. Company will provide to
Buyer, access to its outside billing system services provider ("Transitional
Billing Services") in connection with the System and Assets acquired by Buyer
6.26 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 the law offices of ▇▇▇▇▇▇, Pepper &
Shefelman, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 o'clock
a.m. local time, on such date acceptable to Company and Buyer within five (5)
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 Company
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. Either Buyer or Company 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 Company's option, no later than
December 31,
REGISTRATION STATEMENT
Page II-296
1996, unless the APUC has earlier notified the parties that no consent will be
given to this transaction, in which case the Agreement shall be terminated at
that time, 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 Company at Closing
At Closing, Company shall deliver to Buyer:
8.1 the Bills of Sale for the Assets in the form attached as
Exhibit B;
8.2 an Assignment and Assumption of Agreement in the form
attached as Exhibit C;
8.3 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;
8.4 a Non-Compete Agreement signed by Company and the
Shareholders of the Company, excluding ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇, in the form attached as Exhibit F; shall be delivered in consideration
for the other agreements set forth herein and for no further consideration;
8.5 an affidavit of Company, under penalty of perjury, that
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 H;
8.6 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;
8.7 incumbency and specimen signature certificates, dated the
Closing Date, from Company with respect to the officers or managers of Company
executing this Agreement and any other document delivered hereunder by or on
behalf of Company;
8.8 a certificate of Company, dated the Closing Date, signed
by a proper officer of 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
REGISTRATION STATEMENT
Page II-297
of 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) 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;
8.9 a certified copy of resolutions of the boards of
directors, and if necessary, the shareholders, as applicable, of Company
authorizing the execution and delivery by Company of this Agreement and any
other agreements executed by Company pursuant hereto, and the performance of the
obligations of Company hereunder and thereunder;
8.10 an opinion of Company's counsel, dated the Closing Date,
covering matters customary with respect to the transactions contemplated by this
Agreement, in form and substance satisfactory to Buyer;
8.11 an opinion of special communications, FCC and APUC
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;
8.12 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;
8.13 to the extent in the possession of Company or its 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;
8.14 to the extent in the possession of Company or its agents,
all blueprints, schematics, drawings, maps, system design ▇▇▇▇ of materials,
engineering and technical data related to the Assets or the CATV Business;
8.15 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 Company, indicating all Security
Interests against the Assets, the CATV Systems, or the CATV Business; and
8.16 Schedules 1-11 which have been updated to reflect any
material changes from the date of execution of this Agreement to the Closing
Date; provided,
REGISTRATION STATEMENT
Page II-298
however, that if any such change has a material adverse effect on the condition,
financial or otherwise, of Company or the CATV Business, Buyer shall have the
right to terminate this Agreement with no further obligations to Company
hereunder.
8.17 Guaranty. Contemporaneously with the signing of this
Agreement, Company is causing its Shareholders to deliver the Guaranty in the
form of Exhibit E. The liability of each Shareholder under the Guaranty for any
indemnity for breach by the Company of a representation, warranty or covenant
shall be limited to an amount not to exceed such Shareholders' pro rata portion
of such liability based upon the value of the consideration received by such
Shareholder in this transaction and the maximum aggregate liability of each
Shareholder shall be limited to the amount of consideration received by such
Shareholder in this transaction.
Drafts of each of the items listed in this Section 8 shall be
delivered by Company 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 Company:
9.1 certified check or wire transfer documents evidencing
payment of the Sixteen Million Six Hundred Fifty
Thousand Dollars cash, as adjusted in accordance with
Section 2.3, constituting the Purchase Price, such
payment to be made in accordance with instructions
received from the Company at least two business days
prior to the Closing Date;
9.2 Notes in the amount of Nine Million Two Hundred
Thousand Dollars together with Eight Hundred Thousand
Dollars of Notes to be placed in escrow in accordance
with Section 2.5;
9.3 a certificate of good standing of Buyer issued by the
Secretary of State of Alaska dated in 1996;
9.4 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;
9.5 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
REGISTRATION STATEMENT
Page II-299
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;
9.6 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; and
9.7 Schedules 12-14 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 Buyer, Company shall have the right to
terminate this Agreement with no further obligations
to Buyer hereunder.
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 Company 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 Company, and Company 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
Company, at or prior to the Closing Date, shall have been delivered or taken.
REGISTRATION STATEMENT
Page II-300
10.2.1 Company has executed (or caused to be
executed) and delivered to Buyer the items set forth in Section 8.
10.2.2 Company has 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 6.15.
10.2.3 Company has delivered releases, in form
satisfactory to Buyer, of all Encumbrances affecting any of the Assets (other
than Permitted Encumbrances) and a certificate of no taxes due with respect to
Company and the Assets issued by appropriate state taxing authorities as of a
date no earlier than 10 days prior to the Closing.
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 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 thirty (30) 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
Company herein and as otherwise disclosed to Buyer prior to the date hereof.
Buyer shall notify Company within 31 days of this Agreement of the results of
such due diligence inspection.
10.6 Cash Flow. As of the Closing Date, Company's twelve (12)
month trailing operating cash flow before corporate overhead (identified in
Company's financial statements as "Administrative Expenses") together with the
twelve (12) month trailing operating cash flow before corporate overhead for the
▇▇▇▇▇/Rock ▇▇▇▇▇ Cable System Joint Venture and the ▇▇▇▇▇/Rock ▇▇▇▇▇▇ Cable
System Joint Venture shall be no less than Three Million Five Hundred Thousand
and no/100 Dollars ($3,500,000). Provided, however, if the sale of the assets of
the ▇▇▇▇▇/Rock ▇▇▇▇▇ Cable System Joint Venture and the ▇▇▇▇▇/Rock ▇▇▇▇▇▇ Cable
System Joint Venture to Buyer or an
REGISTRATION STATEMENT
Page II-301
affiliate of Buyer does not occur on about the Closing Date, Company's twelve
(12) month trailing operating cash flow before corporate overhead (identified in
Company's financial statements as "Administrative Expenses") shall be no less
than Three Million and no/100 Dollars ($3,000,000.00).
Section 11 Conditions to Obligations of Company
The obligation of Company to consummate the transactions
contemplated by this Agreement shall be subject, at Company's 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.
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
Company's reasonable satisfaction, the condition set forth in this Section 11.3
shall be deemed satisfied.
11.3.1 Buyer has executed and delivered to Company an
Assignment and Assumption of Agreement in the form attached as Exhibit C.
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 Company to realize the benefits of the
transactions contemplated herein.
REGISTRATION STATEMENT
Page II-302
Section 12 Conditions to Both Parties Obligations
12.1 Consents. All Required Consents and Buyer's 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.
13.2 COBRA Benefits. Company shall comply with all
requirements of COBRA.
Section 14 Registration Rights Agreement.
In connection with each Conversion Period and any conversion
of the Notes by the holders of such Notes during such Conversion Period, the
distribution to and, to the extent required because of affiliate status or
otherwise, subsequent resales or distributions by holders of the GCI Shares,
will be registered under the Securities Act of 1933, as amended. Any such
registration required in connection with the resale or distribution by a holder
of the GCI Shares shall be 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
the registration (other than underwriting discounts, selling commissions and
fees and expenses of counsel to holders in connection with any such resale or
distribution) and keeping any prospectus current will be paid by the Buyer.
REGISTRATION STATEMENT
Page II-303
Section 15. Agreement Not to Compete
15.1 Agreement. Company and Shareholders, excluding ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, shall provide to Buyer at Closing an
executed Non-Compete Agreement in the form attached to this Agreement as Exhibit
F, the terms and conditions of which are hereby incorporated by reference. Such
Non-Compete Agreements shall be given in consideration of the sale of Assets set
forth herein and shall not be subject to additional consideration.
15.2 Breach of Agreement. If this Section 15 is breached or
threatened to be breached, Company expressly consents 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 Company shall survive the Closing and shall terminate
on the first 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, 3.17, 3.18, 3.19 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
representations and warranties relating to the ownership of the Assets shall
continue in full force and effect without limitation. Buyer's covenants and
obligations under the Notes and with respect to the issuance, delivery and
registration of GCI Shares shall continue in full force and effect without
limitation.
16.2 Indemnity by Company. Company agrees 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), 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 Company contained in this Agreement or in any
REGISTRATION STATEMENT
Page II-304
other agreement executed and delivered by Company 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 Company for the period prior to
the Closing Date, including, without limitation, any actions taken by Company
prior to the Closing Date but which do not become effective until after the
Closing Date. No indemnification shall be required to be made by Company under
this Section as a result of any breach of any representation, warranty, covenant
or agreement of the Company until the amount of Buyer's Losses under this
Agreement exceed in the aggregate $50,000. At such time as such aggregate amount
of Buyer's Losses exceeds $50,000, Buyer may seek to recover all of its Losses,
including the first dollar thereof in accordance with the provisions of this
Section, provided, however, that no indemnification shall be required in excess
of the amount of the Notes actually received, in the aggregate, pursuant to the
Agreement. Company shall not be held liable for any unintentional error in any
representation or warranty or any unintentional inaccuracy or incompleteness of
data, information or material which it otherwise might have been liable for
hereunder if, on or before 10 business days prior to the Closing Date, the
Company shall have provided Buyer with written notices of such error, inaccuracy
or incompleteness and a written statement of the corrections necessary to cure
the same and if, notwithstanding such notice, Buyer shall have elected to close
this transaction.
16.3 Indemnity by Buyer. Buyer agrees to indemnify, defend,
and hold harmless Company and its partners, managers, officers, directors,
Affiliates, employees, attorneys, agents and shareholders (the "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
(the "Indemnitor") a notice (a "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 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
REGISTRATION STATEMENT
Page II-305
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. Company 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 Note Holdback by the amount of its
Losses if the amount of such Losses is determined before such party releases the
applicable Note Holdback. The Indemnitee shall notify the Indemnitor of its
claim for Losses to be offset against the applicable Note 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
parties shall submit the dispute to arbitration. The amount of such disputed
claim shall then continue to be subject to the Note Holdback until the dispute
is resolved. At the end of the Note Holdback period the Indemnitee shall release
to the Indemnitor the remaining balance of the applicable Note Holdback. An
arbitrator named by the accounting firm of Deloitte & Touche, LLP shall resolve
any dispute between the parties with respect to the Losses offset against the
Note 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 from the list of arbitrators maintained by the American Arbitration
Association and Indemnitor shall select an arbitrator from the list of
arbitrators maintained by the American Arbitration Association and the two (2)
arbitrators so selected shall select a third arbitrator from the list of
arbitrators maintained by the American Arbitration Association and such panel of
three (3) arbitrators shall resolve the disputed claim for Losses offset against
the Note Holdback within thirty (30) days. Nothing contained in this Section
16.5 shall be
REGISTRATION STATEMENT
Page II-306
deemed to limit a party's obligation to indemnify to the extent that the amount
to which an Indemnitee is entitled under Section 16 exceeds the amount of the
applicable Note 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 Company. 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 Company. Buyer shall have the right to
terminate this Agreement at or prior to the Closing Date in the event that
Company defaults in the performance of any material obligation hereunder or if
any representation or warranty of Company is materially false, and Company fails
to correct or satisfy such default or falsity within ten (10) days after written
notice is given to Company or such longer period as shall be required to correct
or satisfy such default or falsity, provided that Company 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 that Company has failed to cure the default within the
required period, Buyer shall be
REGISTRATION STATEMENT
Page II-307
entitled to exercise all of its rights in law or in equity by reason of the
breach by Company of this Agreement. If Company 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. Company 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, Company hereby waives 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 Company and
require the transactions contemplated by this Agreement to be consummated on the
Closing Date.
17.3 Default by Buyer. Company 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
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 Buyer has failed to cure the default within the required period,
Company shall be entitled to exercise all of its 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, Company, in addition to any
other remedies it may have 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. Company 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 Company as a result of a breach
by Buyer of the provisions of Section 18.17 of this Agreement. If Company seeks
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, Company 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, Company will bear its 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,
REGISTRATION STATEMENT
Page II-308
whether or not the transactions contemplated hereby or thereby are consummated.
Buyer will pay the fees necessary in connection with the transfer of the APUC
licenses and any FCC fees necessary in connection with any approvals which are
required to be obtained by Buyer and the Company will pay the FCC filing fees
and the transfer of the IB business radio licenses. The filing fees for any
filing mandated by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976 shall
be borne equally by Company 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, 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. Company and Buyer
acknowledge that the unique nature of the Assets to be purchased by Buyer and
the convertible Notes to be received by the Company pursuant to this Agreement
renders money damages an inadequate remedy for the breach by Company and/or
Buyer of their obligations under this Agreement, and Company and Buyer agree
that in the event of such breach, Buyer and/or Company 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 Company: Alaska Cablevision, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ Pepper & Shefelman
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
REGISTRATION STATEMENT
Page II-309
If to Buyer: General Communication, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO
and Senior Vice
President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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 Company 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 Company's 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. Company 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.
REGISTRATION STATEMENT
Page II-310
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.
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 Company 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, Company
acknowledges 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 have no
obligation to obtain Company's consent for such press releases, but shall
provide Company with copies thereof and give reasonable consideration to
Company's suggestions thereon.
REGISTRATION STATEMENT
Page II-311
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ALASKA CABLEVISION, INC.
By: /s/
Name:
Title:
GENERAL COMMUNICATION, INC.
By /s/
▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice
President
REGISTRATION STATEMENT
Page II-312
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 respective owners of all of the capital
stock of Alaska Cablevision, Inc. ("ACI"), who currently own shares of common
stock of GCI as described below (such holders collectively referred to herein as
"Sellers").
RECITALS
A. Pursuant to an Asset Purchase Agreement dated as of May
, 1996, between GCI and ACI (the "Purchase Agreement"), ACI has acquired in
aggregate Ten Million and no/100 Dollars ($10,000,000) of GCI's subordinated
notes ("Notes"), which are convertible into shares of GCI's voting Class A
common stock, no par value ("GCI Stock"). GCI understands that ACI intends to
distribute the Notes to Sellers who may then exercise the right to convert the
Notes to GCI Stock. The distribution of such shares of GCI Stock will not be
registered with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, however any Seller may require registration
of such shares in order to sell all of such shares. All such shares of GCI Stock
which Sellers may obtain following the conversion of all or any of the Notes and
any securities issued in exchange for or in respect of 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 Sellers, and
any successor affiliates permitted under Section 7(c) hereof of Sellers, as the
holders of all or any portion of the Registrable Shares. Sellers and such
permitted 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 Notes and their subsequent conversion, if any,
into Registrable Shares, all pursuant to the terms set forth in that Asset
Purchase Agreement ("APA") dated May , 1996 shall not be registered under the
Securities Act of 1933, as amended, effective with such distribution. However,
to the extent that subsequent resales or distributions by Holders are required
to be registered, GCI shall provide one (1) Registration per year to Holders
upon demand, for the ten (10) year period commencing on the Final Closing
REGISTRATION STATEMENT
Page II-313
Date. Holders hereby covenant and agree not to sell any Registrable Shares
during a one hundred and eighty (180) day stand still period following the
Closing Date (as defined in the Purchase Agreement), provided that a request for
registration pursuant to (b) below may be made during such period in order to
begin the registration process during such period. Any and all remaining
Registrable Shares may be sold following the stand still period. If further
required to permit resales of the Registrable Shares by Holders, Holders shall
at any time and from time to time, have the right to require registration under
the Securities Act of 1933, as amended ("Securities Act"), of all or any portion
of the Registrable Shares on the terms and subject to the conditions set forth
in this Agreement.
(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 a
majority in number of shares to be sold 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
REGISTRATION STATEMENT
Page II-314
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 thirty (30) days prior to GCI's estimated date of filing
of, and ending on a date four (4) 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 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
REGISTRATION STATEMENT
Page II-315
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 Alaskan Cable
Network, Inc.; and (d) the Registration Rights Agreement dated as of
, 1996, between GCI and the owners of Prime Cable of Alaska,
L.P.
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. GCI shall pay all costs and
expenses incurred in connection with the registration of the Registrable Shares,
except that each Selling Holder shall pay all fees and disbursements of such
Selling Holder's own attorneys and accountants, and all transfer taxes and
brokerage 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 of less than 150,000 shares, (ii) GCI
has previously filed ten (10) 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 ten percent (10%) of the Registrable Shares.
REGISTRATION STATEMENT
Page II-316
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 a
Registration Statement filed pursuant to Section 1, for a period of more than
thirty-six (36) months following the effective date of the Registration
Statement and (ii) 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 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
REGISTRATION STATEMENT
Page II-317
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 Registration 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
(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.
(c) Notwithstanding anything to the contrary in this
Agreement, if at any time after the filing of a Registration Statement or after
it is declared effective by the Commission, GCI determines, in its reasonable
business judgment, that such registration and the offering of Registrable Shares
covered by such registration could materially interfere with or otherwise
materially adversely affect any financing,
REGISTRATION STATEMENT
Page II-318
acquisition, corporate reorganization or other material transaction or
development involving GCI or any of its Affiliates or require GCI to disclose
matters that otherwise would not be required to be disclosed at such time, then
GCI may require the suspension by Sellers of the Distribution of any Registrable
Shares for a reasonable period of time, but not in excess of fifteen (15)
consecutive Business Days (a "Blackout Period"), by giving notice to Sellers.
Any such notice need not specify the reasons for such suspension if GCI
determines, in its reasonable business judgment, that doing so would materially
interfere with or materially adversely affect such transaction or development or
would result in the disclosure of material nonpublic information. In the event
that such notice is given, then until GCI has determined, in its reasonable
business judgment, that such registration and distribution would no longer
materially interfere with the matters disclosed in the preceding sentence and
has given notice thereof to Sellers, GCI's obligations under Sections 1 and 2
will be suspended. No more than four (4) Blackout Periods may occur, and the
number of days included in all Blackout Periods may not exceed forty-five (45)
Business Days, in any period of twelve (12) consecutive calendar months. In the
event of a suspension pursuant to this Section, then upon notice from GCI that
such suspension is no longer in effect, Sellers may recommence distribution of
Registrable Shares. GCI will give notice to Sellers of the commencement and the
termination of any Blackout Period. Each Blackout Period will begin and end when
the applicable notice is given (unless it earlier terminates pursuant to the
terms hereof). The time period mentioned in Section 5(i) will be extended by the
number of days included in all Blackout Periods during which the distribution by
Sellers under an applicable Registration Statement has been suspended.
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
9
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 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
REGISTRATION STATEMENT
Page II-320
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 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 is 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.
REGISTRATION STATEMENT
Page II-321
(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 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 Sellers, at:
Alaska Cablevision, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
REGISTRATION STATEMENT
Page II-322
with a copy to:
▇▇▇▇▇▇, Pepper & Shefelman
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) if to any Holders other
than Sellers, at the
address provided to GCI
(and if none provided, to
Sellers 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.
(c) Assignment; Binding Effect; Benefit. Sellers may
assign any of their rights under this Agreement in whole or in part to any of
their affiliates to which Sellers transfer any of the Registrable Shares,
without GCI's prior written consent (which shall include spouses, children,
heirs, beneficiaries, personal representatives and successors by operation of
law, assignees or transferees who receive a transfer by gift, by testamentary or
charitable trust, by any transfer among the Sellers, or by any transfer pursuant
to a pledge, encumbrance or hypothecation). Except for such permitted transfers,
(i) no party may assign its rights under this Agreement without the prior
written consent of GCI and (ii) this Agreement will be binding on and inure to
the benefit of, the parties 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 Sellers, any successor or assign of Sellers 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.
REGISTRATION STATEMENT
Page II-323
(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
SELLERS:
--------------------------------------
By:
Name:
Its:
--------------------------------------
By:
Name:
Its:
--------------------------------------
By:
Name:
Its:
REGISTRATION STATEMENT
Page II-324
EXHIBIT B
▇▇▇▇ OF SALE
Pursuant to the terms of that certain Asset Purchase
Agreement, by and between GENERAL COMMUNICATION, INC., and ALASKA CABLEVISION,
INC., dated May , 1996, ALASKA CABLEVISION, INC., 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.
ALASKA CABLEVISION, INC.
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-325
EXHIBIT C
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT ("Assignment") is made effective as
of , 1996, by and between ALASKA CABLEVISION, INC., a Delaware
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 May , 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.
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.
REGISTRATION STATEMENT
Page II-326
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.
4. Successors. This Assignment shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns.
5. 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:
ALASKA CABLEVISION, INC.
By:
Name:
Its:
ASSIGNEE:
GENERAL COMMUNICATION, INC.
By:
Name:
Its:
REGISTRATION STATEMENT
Page II-327
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:
Name:
Its:
REGISTRATION STATEMENT
Page II-328
EXHIBIT D
ASSIGNMENT OF LEASE
THIS ASSIGNMENT OF LEASE ("Assignment") is made effective as
of , 1996, by and between ALASKA CABLEVISION, INC., a Delaware
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 May , 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 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
REGISTRATION STATEMENT
Page II-329
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 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.
ASSIGNOR:
ALASKA CABLEVISION, INC.
By:
Its:
ASSIGNEE:
GENERAL COMMUNICATION, INC.
By:
Its:
REGISTRATION STATEMENT
Page II-330
ACKNOWLEDGMENTS
STATE OF )
) ss.
COUNTY )
The foregoing instrument was acknowledged before me this
day of , 1996, by of Alaska Cablevision, Inc., a
Delaware 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 GENERAL COMMUNICATION, INC., an Alaska corporation, on
behalf of the corporation.
NOTARY PUBLIC, STATE OF
My Commission Expires:
REGISTRATION STATEMENT
Page II-331
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.
)
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-332
ATTACHMENT 1 TO EXHIBIT D
Notice of Assignment of Lease
RECORD THIS INSTRUMENT
IN THE
RECORDING DISTRICT.
This Notice of Assignment of Lease ("Notice") is made by and
among Alaska Cablevision, Inc., a Delaware corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Assignor"), and General Communication, Inc. an
Alaska corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and
is made effective this day of , 199 .
1. Under an Assignment of Lease dated , 199 ,
Assignor has assigned and Assignee has accepted all of Assignor's right, title
and interest in the Lease, a memorandum of which was recorded in the
recording district on , in Book , Page .
2. The subject property description is as set out on the
attached Schedule A.
ALASKA CABLEVISION, INC.
DATED: By:
Its:
GENERAL COMMUNICATION, INC.
DATED: By:
Its:
REGISTRATION STATEMENT
Page II-333
STATE OF )
) ss.
COUNTY )
The foregoing instrument was acknowledged before me this
day of , 1996, by of Alaska Cablevision, Inc., a
Delaware 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 GENERAL COMMUNICATION, INC., an Alaska corporation, on
behalf of the corporation.
NOTARY PUBLIC, STATE OF
My Commission Expires:
AFTER RECORDING, RETURN THIS DOCUMENT TO:
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇
REGISTRATION STATEMENT
Page II-334
EXHIBIT E
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 May , 1996, between Buyer
and Alaska Cablevision, Inc. ("Seller"), and to induce Buyer to perform its
obligations under and to consummate the transactions described in the Agreement
the undersigned ("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 that this Guaranty is Guarantor's legal, valid,
and binding obligation, enforceable against Guarantor in accordance with its
terms.
3. Guaranty. Guarantor, severally, and not jointly, hereby
absolutely, irrevocably and unconditionally, subject to the provisions herein,
guarantees the full and prompt payment when due of any and all monies which may
become due and payable at any time (1) as a result of breaches of Seller's
representations, warranties and covenants under the Agreement, or (2) under or
pursuant to indemnification provisions therein ("Obligations"). Guarantor
further agrees that the following terms and conditions shall apply to this
Guaranty. 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 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 of Company 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;
REGISTRATION STATEMENT
Page II-335
(iii) Release, compromise or extend 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; and
(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.
(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;
(ii) Presentment, demand, notice of
dishonor, protest, and all other notices whatsoever; and
(iii) 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) Provided that, notwithstanding anything set forth
above, the guaranty of Guarantor and Guarantor's obligations hereunder shall be
limited to an amount: (a) which does not exceed such Guarantor's pro rata
portion of such liability or
REGISTRATION STATEMENT
Page II-336
liabilities based upon a percentage determined by dividing the value of the
consideration actually received by such Guarantor pursuant to the Agreement by
the aggregate value of all the consideration actually received by all Guarantors
pursuant to the Agreement (including value received by any Guarantor released or
waived pursuant to the above provisions), and (b) which does not exceed, in the
aggregate, the amount of consideration received by such Guarantor pursuant to
the Agreement.
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 , ,
Attention: ; 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
shall not affect the validity of the remainder of this Guaranty.
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.
REGISTRATION STATEMENT
Page II-337
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 , 1996.
----------------------------------------
Name:
REGISTRATION STATEMENT
Page II-338
EXHIBIT F
Non-Compete Agreement
April , 1996
Gentlemen:
Reference is made to that certain Asset Purchase Agreement dated as of
April , 1996, (the "Agreement") between Alaskan Cablevision, Inc.
("Seller") and General Communication, Inc. ("Buyer"). This letter is being
delivered to you pursuant to Section of the Agreement. Capitalized terms
used herein, unless otherwise defined herein, shall have the meanings ascribed
to them in the Agreement. The undersigned ("Shareholders") are certain of the
shareholders of the Seller (specifically excluding ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and
▇▇▇▇▇▇ ▇▇▇▇▇), holding a majority of the shares of Seller, and to induce Buyer
to perform its obligations under and to consummate the transactions described in
the Agreement, Seller and Shareholders are providing this Non-Compete Agreement.
Seller and Shareholders, severally and not jointly, agree that as of
the date hereof, through the Final Closing Date, and for a period of five (5)
years thereafter, Seller and Shareholders will not, and Seller will cause its
key employees for so long as such employees are employed by Seller, not to own,
manage, operate, joint, control, or be connected with (as an employee,
consultant, partner, officer, director, shareholder or investor, other than
through ownership of up to a five percent (5%) 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, Seller and Shareholders, each for and on behalf of
itself and Seller on behalf of its Affiliates, employees, officers and
directors, 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.
REGISTRATION STATEMENT
Page II-339
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.
Very truly yours,
ALASKA CABLEVISION, INC.
By:
Name:
Title:
SHAREHOLDERS:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-340
EXHIBIT G
LETTER TO PROGRAMMERS
[DATE]
To: Programmer from
Dear :
The purpose of this letter is to inform you of the impending sale of
systems now owned by Alaska Cablevision, Inc. ("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 May , 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-341
EXHIBIT H
AFFIDAVIT
STATE OF )
) ss.
COUNTY OF )
This Affidavit is delivered pursuant to the Asset Purchase Agreement
dated as of May , 1996, between Alaska Cablevision, Inc. ("Seller") and
General Communication, Inc., an 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 shareholders, 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-342
Dated this day of , 1996.
SELLER:
ALASKA CABLEVISION, INC.
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-343
EXHIBIT I
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is dated as of , 1996 and
entered into among National Bank of Alaska ("Escrow Agent"), Alaska Cablevision,
Inc. a Delaware corporation ("Seller"), and General Communication, Inc., an
Alaska corporation ("GCI"). Seller and GCI are collectively referred to in this
Agreement as "Transaction Parties." Seller and GCI are parties to Asset Purchase
Agreement dated as of May , 1996 ("Purchase Agreement").
For valuable consideration received, the parties agree as follows:
1. Escrow Agent. The Transaction Parties appoint and designate Escrow
Agent as escrow agent for the purposes set forth in this Agreement, and Escrow
Agent accepts such appointment on the terms provided in this Agreement.
2. Deposits with Escrow Agent. Escrow Agent will establish and maintain
an escrow account (which, together with all instruments and securities delivered
to Escrow Agent by and on behalf of Seller or GCI, are referred to collectively
as the "Escrow Fund"). Upon the execution of this Agreement, GCI shall deliver
on behalf of Seller to Escrow Agent Convertible Subordinated Notes in the
aggregate principal amount of Eight Hundred Thousand Dollars ($800,000)
("Seller's Escrow Notes"). Upon execution hereof, GCI will cause delivery to
Escrow Agent of Convertible Subordinated Notes in the aggregate principal amount
of Eight Hundred Thousand Dollars ($800,000) ("GCI Escrow Notes"). Escrow Agent
will hold and disburse the Escrow Fund in accordance with this Agreement.
3. Disbursement of Sellers' Escrow Deposit.
(a) Except as otherwise provided in this Section 3(a), Escrow
Agent will disburse the Seller's Escrow Notes to Seller on , 199
[181 days after the Closing Date] ("Escrow Disbursement Date"). If, prior to the
Escrow Disbursement Date, Escrow Agent receives a certificate signed on behalf
of GCI (a "GCI Claim Certificate") in the form of Exhibit A with completed
information concerning the nature and amount of an indemnification claim by GCI
under the Purchase Agreement ("GCI Claim Amount"), Escrow Agent will retain in
the Escrow Fund that number of the Sellers' Escrow Notes as is equal to the
certified GCI Claim Amount for disbursement in accordance with Section 3(a)(i)
or (ii) as applicable ("Retained Seller's Notes"). Escrow Agent will disburse
the remainder of the Seller's Escrow Notes that are not required to be retained
pursuant to the preceding sentence to Seller on the Escrow Disbursement Date. If
a GCI Claim Certificate is delivered to Escrow Agent prior to the Escrow
Disbursement Date, Escrow Agent will retain the Retained Seller's Notes in the
Escrow Fund pursuant to this Agreement until either:
REGISTRATION STATEMENT
Page II-344
(i) Escrow Agent receives joint written instructions
signed on behalf of Seller and GCI specifying the method for
disbursing the Retained Seller's Notes in which case the
Escrow Agent shall promptly disburse the Retained Seller's
Notes in accordance with such instructions; or
(ii) Escrow Agent receives instructions from Deloitte
and Touche, LLP, or an arbitrator with the American
Arbitration Association, pursuant to Section 15.5 of the
Purchase Agreement, or an official copy of a final,
non-appealable order issued by a court of competent
jurisdiction specifying the method for disbursement of the
Retained Seller's Notes in which case Escrow Agent shall
promptly disburse retained Seller's Notes in accordance with
such instructions.
(b) Notwithstanding anything to the contrary in this
Agreement, Escrow Agent will disburse the Seller's Escrow Notes in accordance
with any joint written instructions signed by the Transaction Parties.
(c) GCI will deliver a copy of any GCI Claim Certificate to
Seller contemporaneously with or before delivery of the GCI Claim Certificate to
Escrow Agent.
4. Disbursement of the GCI Escrow Deposit.
(a) Except as otherwise provided in this Section 4(a), Escrow
Agent will disburse the GCI Escrow Notes to GCI on the Escrow Disbursement Date.
If, prior to the Escrow Disbursement Date, Escrow Agent receives a certificate
signed on behalf of Seller (a "Seller's Claim Certificate") in the form of
Exhibit B with completed information concerning the nature and amount of an
indemnification claim by Seller under the Purchase Agreement ("Seller's Claim
Amount"), Escrow Agent shall retain in the Escrow Fund that number of GCI Escrow
Notes as is equal to the certified Seller Claim Amount for disbursement
("Retained GCI Notes"). Escrow Agent will disburse the remainder of the GCI
Escrow Notes that are not required to be retained pursuant to the preceding
sentence to GCI on the Escrow Disbursement Date. If a Seller's Claim Certificate
is delivered to Escrow Agent prior to the Escrow Disbursement Date, Escrow Agent
will retain the Retained GCI Notes, in the Escrow Fund pursuant to this
Agreement until either:
(i) Escrow Agent receives joint written instructions
signed on behalf of Seller and GCI specifying the method for
disbursing the Retained GCI Notes, in
REGISTRATION STATEMENT
Page II-345
which case such Notes shall be disbursed promptly by Escrow
Agent in accordance with such instructions; or
(ii) Escrow Agent receives instructions from Deloitte
and Touche, LLP, or an arbitrator with the American
Arbitration Association, pursuant to Section 15.5 of the
Purchase Agreement, or an official copy of a final,
non-appealable order issued by a court of competent
jurisdiction specifying the method for disbursement of the
Retained GCI Notes, in which case such Notes shall be
disbursed promptly by Escrow Agent in accordance with such
instructions.
(b) Notwithstanding anything to the contrary in this
Agreement, Escrow Agent will disburse the GCI Escrow Notes in accordance with
any joint written instructions signed by Seller and GCI.
(c) Seller will deliver a copy of any Seller's Claim
Certificate to GCI contemporaneously with or before delivery of the Seller's
Claim Certificate to Escrow Agent.
5. Rights, Duties and Liabilities of Escrow Agent.
(a) Escrow Agent will have no duty to know or determine the
performance or nonperformance of any provision of any agreement between the
Transaction Parties, including, but not limited to, the Purchase Agreement,
which will not bind Escrow Agent in any manner. Escrow Agent assumes no
responsibility for the validity or sufficiency of any document or paper or
payment deposited or called for under this Agreement, except as may be expressly
and specifically set forth in this Agreement, and the duties and
responsibilities of Escrow Agent under this Agreement are limited to those
expressly and specifically stated in this Agreement.
(b) Escrow Agent will not be personally liable for any act it
may do or omit to do under this Agreement as such agent while acting in good
faith and in the exercise of its own best judgment, and any act done or omitted
by it in accordance with the written advice of its counsel will be conclusive
evidence of such good faith unless, in any event, the same constitutes gross
negligence or willful misconduct. Escrow Agent will have the right at any time
to consult with its counsel upon any question arising under this Agreement and
will incur no liability for any delay reasonably required to obtain the advice
of counsel.
(c) Other than those notices or demands expressly provided in
this Agreement, Escrow Agent is expressly authorized to disregard any and all
notices or demands given by Seller or GCI, or by any other person, firm or
corporation, excepting only orders or process of court, and Escrow Agent is
expressly authorized to comply with and obey any and all final process, orders,
judgments, or decrees of any court, and to the extent Escrow Agent obeys or
complies with any thereof of any court, it will not be liable to any party to
this Agreement or to any other person, firm or corporation
REGISTRATION STATEMENT
Page II-346
excepting only orders or process of court, and Escrow Agent is expressly
authorized to comply with and obey any and all final process, orders, judgments,
or decrees of any court, and to the extent Escrow Agent obeys or complies with
any thereof of any court, it will not by reason of such compliance be liable to
any party to this Agreement or to any other person, firm or corporation by
reason of such compliance.
(d) In consideration of the acceptance of this Escrow by
Escrow Agent, GCI agrees for it and its successors and assigns, to pay to Escrow
Agent its charges, fees and reasonable expenses as contemplated by this
Agreement. The escrow fees or charges will be Two Thousand and no/100 Dollars
($2,000.00). Such sum is intended as compensation for Escrow Agent's ordinary
services as contemplated by this Agreement. In the event Escrow Agent renders
services not provided for in this Agreement, Escrow Agent will be entitled to
receive from the Transaction Parties reasonable compensation and reasonable
costs, if any, for such extraordinary services.
(e) Escrow Agent will be under no duty or obligation to
ascertain the identity, authority or right of Seller or GCI (or their agents) to
execute or deliver or purport to execute or deliver this Agreement or any
certificates, documents or papers or payments deposited or called for or given
under this Agreement.
(f) Escrow Agent will not be liable for the outlawing of any
rights under any statute of limitations or by reason of laches in respect of
this Agreement or any documents or papers deposited with Escrow Agent.
(g) In the event of any dispute among the parties to this
Agreement as to the facts or as to the validity or meaning of any provision of
this Agreement, or any other fact or matter relating to this Agreement or to the
transactions between Seller and GCI, Escrow Agent is instructed that it will be
under no obligation to act, except in accordance with this Agreement or under
process or order of court or, if there is no such process or order, until it has
filed or caused to be filed an appropriate action interpleading Sellers' Agent
and GCI and delivering the Escrow Fund (or the portion of the Escrow Fund in
dispute) to such court, and Escrow Agent will sustain no liability for its
failure to act pending such process of court or order or interpleader of action.
6. Modification of Agreement. The provisions of this Agreement may be
supplemented, altered, amended, modified, or revoked by writing only, signed by
GCI and Seller and approved in writing by Escrow Agent, and upon payment of all
fees, costs and expenses incident thereto.
7. Assignment of Agreement. No assignment, transfer, conveyance or
hypothecation of any right, title or interest in and to the subject matter of
this Agreement will be binding upon any party, including Escrow Agent, unless
all fees,
REGISTRATION STATEMENT
Page II-347
costs, and expenses incident thereto have been paid and then only by the assent
thereto by all parties in writing.
8. Miscellaneous.
(a) All notices and communications under this Agreement will
be in writing and will be deemed to be duly given if sent by registered mail,
return receipt requested, personal delivery or telecopier, as follows:
To Escrow Agent: National Bank of Alaska
Escrow Department
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To GCI at: General Communication, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO and Senior Vice
President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which will not constitute notice) to:
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Seller at: Alaska Cablevision, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
REGISTRATION STATEMENT
Page II-348
with a copy to:
▇▇▇▇▇▇ Pepper & Shefelman
Suite 3400
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
or at such other address or telecopy number as any of the above may have
furnished to the other parties in writing and any such notice or communication
given in the manner specified in this Section 8(a) will be deemed to have been
given as of the date received. In the event that Escrow Agent, in its sole
discretion, determines that an emergency exists, Escrow Agent may use such other
means of communication as Escrow Agent deems advisable.
(b) The undertakings and agreements contained in this
Agreement will bind and inure to the benefit of the parties to this Agreement
and their respective successors and permitted assigns.
(c) This Agreement may be executed in one or more
counterparts, each of which will be deemed an original. Whenever pursuant to
this Agreement GCI and Seller are to deliver a jointly signed writing to Escrow
Agent or jointly advise Escrow Agent in writing, such writing may in each and
all cases are signed jointly or in counterparts and such counterparts will be
deemed to be one instrument.
(d) Escrow Agent may resign and be discharged from its duties
or obligations under this Agreement by giving notice in writing of such
resignation to the Transaction Parties at least 30 days in advance of such
resignation (unless waived in writing by the Transaction Parties). Such
resignation will be effective upon the appointment by the Transaction Parties of
a successor escrow agent, which will be a federally chartered bank having
combined capital and surplus of at least $100,000,000.00; provided, that if any
such appointment of any successor agent is not effectuated within 30 days of
such written notice, Escrow Agent may file an action for interpleader and
deposit all funds with a court of competent jurisdiction, all as provided for in
Section 5(g). Any such successor escrow agent will be appointed by a written
instrument mutually satisfactory to and executed by GCI, Seller, Escrow Agent
and the successor escrow agent. Any successor escrow agent appointed under the
provisions of this Agreement will have all of the same rights, powers,
privileges, immunities and authority with respect to the matters contemplated
herein as are granted herein to the original Escrow Agent.
(e) GCI and Seller hereby jointly and severally agree to
indemnify Escrow Agent for, and to hold it harmless against, any loss, liability
or reasonable
REGISTRATION STATEMENT
Page II-349
out-of-pocket expense arising out of or in connection with this Agreement and
carrying out its duties hereunder, including the reasonable out-of-pocket costs
and expenses of defending itself against any claim of liability, except in those
cases where Escrow Agent has been guilty of gross negligence or willful
misconduct (provided, that in no event will the Transaction Parties be liable
for any allocated cost or expense of persons regularly employed by Escrow
Agent). Anything in this Agreement to the contrary notwithstanding, in no event
will Escrow Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including, but not limited to, lost profits),
even if Escrow Agent has been advised of the likelihood of such loss or damage
and regardless of the form of action.
(h) This Agreement will be governed by and construed in
accordance with the law of the State of Alaska without regard to its principles
of conflicts of laws and any action brought under this Agreement will be brought
in the courts of the State of Alaska, located in the Third Judicial District at
Anchorage. Each party hereto irrevocably waives any objection on the grounds of
venue, forum non-convenience or any similar grounds and irrevocably consents to
service of process by mail or in any other manner permitted by applicable law
and consents to the jurisdiction of such courts.
(i) Except as otherwise specified herein, each of the parties
will pay all costs and expenses incurred or to be incurred by it in negotiating
and preparing this Escrow Agreement and in closing and carrying out the
transactions contemplated by this Escrow Agreement.
(j) If any legal action or proceeding is brought for the
enforcement of this Escrow Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Escrow Agreement, the successful or prevailing party or parties will be entitled
to recover reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
The parties have caused this Agreement to be signed the day
and year first above written.
NATIONAL BANK OF ALASKA, N.A.
By
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice
President
REGISTRATION STATEMENT
Page II-350
GCI:
GENERAL COMMUNICATION, INC.
By:
Name:
Title:
TIN:
Seller:
ALASKA CABLEVISION, INC.
By:
Name:
Title:
TIN:
REGISTRATION STATEMENT
Page II-351
EXHIBIT A TO ESCROW AGREEMENT
FORM OF CLAIM CERTIFICATE
The undersigned, on behalf of General Communication, Inc. ("GCI"),
certifies as follows:
A. GCI and Alaska Cablevision, Inc. ("Seller") are parties to that
certain Asset Purchase Agreement dated as of May , 1996 ("Purchase
Agreement").
B. GCI in good faith believes that Seller has breached certain
representations, warranties, covenants or obligations made by Seller in the
Purchase Agreement or are obligated to indemnify GCI with respect to certain
claims. In particular, GCI in good faith is asserting claims against Seller
based on the following:
[reasonably detailed description of claim and reference to
portion of Purchase Agreement in question to be inserted by
GCI at time of delivery of Certificate].
C. Attached to this Certificate is a copy of GCI's notice to Seller
relating to the claim pursuant to the Purchase Agreement. GCI intends to pursue
the claim with due diligence. GCI in good faith believes the amount of its claim
described in its notice is $ .
D. GCI is furnishing this Certificate to National Bank of Alaska which
is acting as Escrow Agent pursuant to the terms of an Escrow Agreement dated
, 1996 among GCI, Seller and National Bank of Alaska. GCI has
delivered or contemporaneously is delivering a copy of this Certificate to
Seller as well.
This Certificate is signed this day of , 199 .
GENERAL COMMUNICATION, INC.
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-352
Receipt of this Certificate is acknowledged this day of
, 199 .
NATIONAL BANK OF ALASKA
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-353
EXHIBIT B TO ESCROW AGREEMENT
FORM OF CLAIM CERTIFICATE
The undersigned, on behalf of Alaska Cablevision, Inc. ("Seller")
certifies as follows:
A. Seller and General Communication, Inc. ("GCI") are parties to that
certain Asset Purchase Agreement dated as of May , 1996 ("Purchase
Agreement").
B. Seller, in good faith, believes that GCI has breached certain
representations, warranties, covenants or obligations made by GCI in the Asset
Purchase Agreement or is obligated to indemnify Seller. In particular, Seller,
in good faith, is asserting claims against GCI based on the following:
[reasonably detailed description of claim and reference to portion of Purchase
Agreement in question to be inserted by Seller at time of delivery of
Certificate].
C. Attached to this Certificate is a copy of Seller's notice to GCI
relating to the claim pursuant to the Purchase Agreement. Seller intends to
pursue the claim with due diligence. Seller, in good faith, believes the amount
of the claim described in its notice is $ .
D. Seller is furnishing this Certificate to National Bank of Alaska
which is acting as Escrow Agent pursuant to the terms of an Escrow Agreement
dated , 1996 among GCI, Seller and National Bank of Alaska. Seller has
delivered or contemporaneously is delivering a copy of this Certificate to GCI
as well.
This Certificate is signed this day of , 1996.
ALASKA CABLEVISION, INC.
By:
Name:
Title:
Receipt of this Certificate is acknowledged this day of ,
1996.
NATIONAL BANK OF ALASKA
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-354
EXHIBIT J
CONVERTIBLE SUBORDINATED NOTE
, 1996 $
FOR VALUE RECEIVED, General Communication, Inc., an Alaska
corporation, of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("GCI"),
promises to pay to Alaska Cablevision, Inc., a Delaware corporation, of ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Company"), the principal
sum of ($ ) plus
interest from , 1996, according to the terms hereof. Payments on
this Note shall be applied: first, to the payment of accrued interest; and
second to the reduction of principal of this Note.
1. Capitalized Terms. Capitalized terms used herein shall have the same
meaning ascribed to such terms under that certain Asset Purchase Agreement by
and between GCI and Company dated May , 1996 ("APA"), unless otherwise defined
herein.
2. Interest. This Note shall bear interest at the rate of
percent ( %) per annum.
3. Term. All amounts due under this Note, including principal and
interest not previously converted into GCI Shares as provided for in Section 5,
shall be due and payable in full on , 2006.
4. No Prepayment. This Note is not subject to prepayment, in full or in
part, except with the consent of both Permitted Holder and Company. Payments of
principal and interest shall be made in lawful money of the United States of
America by wire transfer of immediately available federal funds to the account
of the Permitted Holder at such banking institution as the Permitted Holder
shall designate in writing or in the absence of such designation or upon request
of the Permitted Holder by check sent to the address of the Permitted Holder.
5. Subordination. This Note shall be subordinated to all of GCI's now
existing and later incurred senior indebtedness, as defined in the APA,
including without limitation, the credit facility from NationsBank of Texas,
N.A., pursuant to that amended and restated credit agreement as of April 26,
1996, as extended, increased, replaced or refinanced, and any and all bank or
similar financial institution indebtedness assumed or later incurred as part of,
or in furtherance of the purposes of, the transactions contemplated under the
APA and related agreements. These subordination provisions are intended solely
for the purpose of defining the relative rights of the Permitted Holder on the
one hand, and the holders of the senior indebtedness, on the other hand. Nothing
contained herein is intended to or shall impair the obligation of the Company,
which is unconditional and absolute, to pay to the Permitted Holder the
principal of and interest due and payable in accordance with its terms, nor
shall anything herein prevent the Permitted Holder
REGISTRATION STATEMENT
Page II-355
from exercising all remedies otherwise permitted by applicable law or hereunder
subject to the rights of holders of senior indebtedness as provided for herein.
6. Conversion. This Note and the accrued interest shall be convertible
by the Permitted Holders hereof on an annual basis into GCI Shares during a
fifteen (15) day period each year for ten (10) years ("Conversion Period(s)").
The first Conversion Period shall commence on this date, and the second through
the tenth Conversion Periods shall commence on the day of each
of each year thereafter and shall conclude fifteen (15) days
thereafter, respectively. All or any portion of the then-outstanding
indebtedness under this Note including the accrued interest thereon shall be
convertible into GCI Shares. The Conversion Price for the first Conversion
Period is $6.50 per GCI Share and the Conversion Price for each subsequent
Conversion Period shall be an amount equal to $6.50 plus an amount per GCI share
equal to the accrued interest on each $6.50 principal amount of the indebtedness
being converted, on a non-compounded basis as set forth in Schedule 1. The
number of GCI Shares into which this Note shall be converted shall be determined
by dividing the unpaid principal amount and all accrued and unpaid interest
hereunder by the Conversion Price. The number of GCI Shares to be issued shall
be appropriately adjusted in the event of a stock dividend, any stock split or
combination of outstanding shares of the Company's stock, or any
reclassification or reorganization of the Company's stock. As of the time of any
such conversion, the Company shall issue and deliver to the Permitted Holder, or
on the Permitted Holder's written order, a certificate or certificates for the
number of shares of fully-paid and nonassessable GCI Shares issuable upon the
conversion of this Note. No fractional shares shall be issued in connection with
any exercise hereunder and the Company shall pay the amount attributable to any
fractional share in lawful money of the United States.
7. Sufficient Stock. During the period this Note or any portion thereof
remains outstanding, the Company shall at all times have authorized and reserved
for the purpose of issuance upon exercise of the conversion right set forth
herein, a sufficient number of GCI Shares to provide for the exercise of the
conversion right.
8. Assignment. This Note shall be transferred or assigned only to
Shareholders of the Company and to their family members, heirs and assigns by
operation of law and to other limited transferees as set out in Schedule 2
hereof ("Permitted Holders"), and in all other respects is not assignable,
transferable or negotiable.
REGISTRATION STATEMENT
Page II-356
9. Place and Manner of Payment. Any indebtedness outstanding hereunder
which has not been converted to GCI Shares shall be paid at maturity upon
presentment of this Note at GCI's place of business in Anchorage, Alaska, or
such other location as the parties may mutually agree. The Company waives
presentment, notice of dishonor and protest. No delay by the Permitted Holder in
exercising any rights hereunder shall be considered a waiver of such rights.
10. Default. If Default be made in the payment of this Note when it is
due and this Note is placed in the hands of an attorney for collection, or if
any suit or action is instituted to collect this Note or any part thereof, the
undersigned promises and agrees to pay in addition to the costs and
disbursements provided by statute, a reasonable sum for attorney's fees. If
default is made in the payment of any amount payable hereunder, including by
conversion, when due or following request for conversion, then all the unpaid
principal balance of this Note and all accrued interest shall bear interest at
the lower of twenty percent (20%) per year, compounded monthly, or the highest
rate allowed by applicable law, without the need for any notice or demand.
11. Waiver. The Undersigned waives demand, protest and notice of
demand.
12. Governing Law. This Note shall be governed by the laws of the State
of Alaska. Venue for any litigation concerning this Note shall be in the State
of Alaska, Third Judicial District, at Anchorage.
DATED this day of , 1996.
GENERAL COMMUNICATION, INC.
By:
Its:
REGISTRATION STATEMENT
Page II-357