EXHIBIT 2.6
ASSET PURCHASE AGREEMENT
dated as of
May , 1996
between
GENERAL COMMUNICATION, INC.
or its wholly-owned subsidiary
an Alaska corporation
("Buyer")
and
XxXXX/ROCK XXXXX CABLE SYSTEMS,
a joint venture
("Seller")
REGISTRATION STATEMENT
Page II-358
TABLE OF CONTENTS
Page
Section 1. Definitions...................................................................................365
1.1 Affiliate............................................................................365
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1.2 APUC.................................................................................365
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1.3 APUC Certificate.....................................................................365
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1.4 Assets...............................................................................365
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1.5 Basic CATV Services..................................................................365
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1.6 Basic Subscriber.....................................................................366
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1.7 CATV.................................................................................366
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1.8 CATV Business........................................................................366
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1.9 CATV Instruments.....................................................................366
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1.10 CATV System..........................................................................366
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1.11 Closing and Closing Date.............................................................366
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1.12 COBRA................................................................................366
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1.13 Current Assets.......................................................................366
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1.14 Employees............................................................................366
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1.15 Employee Plans.......................................................................367
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1.16 Encumbrance..........................................................................367
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1.17 Equipment............................................................................367
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1.18 Equivalent Basic Subscribers or EBS's................................................367
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1.19 ERISA................................................................................368
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1.20 Excluded Assets......................................................................368
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1.21 FCC..................................................................................368
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1.22 Financial Statements.................................................................368
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1.23 Governmental Authority...............................................................368
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1.24 Intangibles..........................................................................368
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1.25 MDU Agreements.......................................................................368
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1.26 MDU Complex..........................................................................368
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1.27 Pay TV...............................................................................368
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1.28 Pay TV Units.........................................................................368
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1.29 Permitted Encumbrances...............................................................368
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1.30 Person...............................................................................369
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1.31 Purchase Price.......................................................................369
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1.32 Real Property........................................................................369
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1.33 Required Consents....................................................................369
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1.34 Security Interest....................................................................370
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1.35 Seller Contracts.....................................................................370
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1.36 Service Area.........................................................................370
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1.37 Subscribers..........................................................................370
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1.38 System...............................................................................370
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REGISTRATION STATEMENT
Page II-359
Section 2. Sale of Assets................................................................................370
2.1 Sale of Assets.......................................................................370
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2.2 Purchase Price.......................................................................370
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2.3 Purchase Price Adjustment............................................................370
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2.4 Holdback.............................................................................373
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Section 3. Seller's Representations, Warranties, and Covenants...........................................373
3.1 Organization and Qualification.......................................................373
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3.2 Authority............................................................................374
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3.3 Enforceability.......................................................................374
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3.4 Cash Flow............................................................................374
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3.5 Assets...............................................................................374
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3.6 Governmental Permits.................................................................375
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3.7 Seller Contracts.....................................................................375
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3.8 Records..............................................................................375
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3.9 No Breach or Violation...............................................................375
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3.10 No Finders or Brokers................................................................376
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3.11 Schedules............................................................................376
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3.12 Compliance with Laws.................................................................376
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3.13 Financial Statements.................................................................376
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3.14 Tax Returns and Other Reports........................................................377
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3.15 Transfer Taxes.......................................................................377
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3.16 Real Property........................................................................377
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3.17 Employees............................................................................380
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3.18 Employee Benefits....................................................................380
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3.19 Litigation and Violations............................................................384
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3.20 Disclosure...........................................................................384
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3.21 Investment Company...................................................................384
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3.22 CATV Instruments and Seller Contracts................................................385
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3.23 FCC Compliance.......................................................................385
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3.24 APUC Compliance......................................................................386
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3.25 Patents, Trademarks, and Copyrights..................................................386
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3.26 No Other Assets or Liabilities.......................................................387
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3.27 Required Consents....................................................................387
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3.28 Overbuilds...........................................................................387
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3.29 Effect of Certificates...............................................................387
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3.30 Subscriber Numbers...................................................................387
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3.31 No Insolvency........................................................................387
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3.32 Compliance with Law..................................................................387
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3.33 Disclosure...........................................................................388
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3.34 Parent Entity........................................................................389
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Section 4. Assumed Liabilities and Excluded Assets.......................................................389
4.1 Assignment and Assumption............................................................389
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REGISTRATION STATEMENT
Page II-360
4.2 Excluded Assets......................................................................389
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Section 5. Buyer's Representations, Warranties, and Covenants............................................389
5.1 Organization and Authority...........................................................389
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5.2 Capitalization.......................................................................390
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5.3 Enforceability.......................................................................390
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5.4 Records..............................................................................390
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5.5 No Breach or Violation...............................................................391
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5.6 Compliance with Laws.................................................................391
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5.7 Financial Statements.................................................................391
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5.8 Tax Returns and Other Reports........................................................392
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5.9 Transfer Taxes.......................................................................392
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5.10 Litigation and Violations............................................................392
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5.11 Disclosure...........................................................................392
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5.12 Investment Company...................................................................392
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5.13 No Finders or Brokers................................................................392
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5.14 No Insolvency........................................................................393
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Section 6. Conduct Prior to Closing......................................................................393
6.1 Operation in Ordinary Course.........................................................393
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6.2 Agents...............................................................................393
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6.3 Seller Contracts.....................................................................394
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6.4 No New Buyer Securities..............................................................394
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6.5 Employees............................................................................394
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6.6 Access to Premises and Records.......................................................394
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6.7 Existing Relationships...............................................................395
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6.8 Required Consents....................................................................395
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6.9 Compliance with CLI Standards........................................................395
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6.10 MDU Agreements.......................................................................396
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6.11 Public Announcements.................................................................396
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6.12 Due Diligence........................................................................396
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6.13 Correction of any Noncompliance Prior to Closing.....................................396
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6.14 Leased Equipment.....................................................................397
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6.15 Estoppel Certificates and Franchise Forms............................................397
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6.16 HSR Notification.....................................................................397
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6.17 No Shopping..........................................................................397
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6.18 Notification of Certain Matters......................................................398
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6.19 Risk of Loss; Condemnation...........................................................398
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6.20 Lien and Judgment Searches...........................................................399
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6.21 Transfer Taxes.......................................................................399
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6.22 Letter to Programmers................................................................399
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6.23 Updated Schedules....................................................................399
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6.24 Use of Seller's Name.................................................................399
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6.25 Subscriber Billing Services..........................................................399
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REGISTRATION STATEMENT
Page II-361
6.26 Satisfaction of Conditions...........................................................400
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Section 7. Closing.......................................................................................400
Section 8. Deliveries by Seller at Closing...............................................................400
Section 9. Deliveries by Buyer at Closing................................................................402
Section 10. Conditions to Obligations of Buyer............................................................404
10.1 Accuracy of Representations and Compliance with Conditions...........................404
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10.2 Deliveries Complete..................................................................404
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10.3 No Adverse Change....................................................................404
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10.4 Restraint of Proceedings.............................................................405
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10.5 Inspection...........................................................................405
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10.6 Cash Flow............................................................................405
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Section 11. Conditions to Obligations of Seller...........................................................405
11.1 Accuracy of Representations and Compliance with Conditions...........................405
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11.2 Deliveries Complete..................................................................405
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11.3 No Adverse Change....................................................................405
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11.4 Restraint of Proceedings.............................................................406
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Section 12. Conditions to Both Parties Obligations........................................................406
12.1 Consents.............................................................................406
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12.2 No Governmental Action...............................................................406
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12.3 Waiver of Conditions.................................................................406
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Section 13. Transactions Subsequent to Closing............................................................406
13.1 Further Actions......................................................................406
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13.2 COBRA Benefits.......................................................................406
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Section 14. Agreement Not to Compete......................................................................406
14.1 Agreement............................................................................406
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14.2 Breach of Agreement..................................................................407
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14.3 Enforceability.......................................................................407
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Section 15. Survival of Representations and Warranties; Indemnification.......................................407
15.1 Survival.............................................................................407
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15.2 Indemnity by Seller..................................................................407
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15.3 Indemnity by Buyer...................................................................408
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15.4 Defense of Claims....................................................................408
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REGISTRATION STATEMENT
Page II-362
15.5 Right to Offset......................................................................409
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15.6 Determination of Indemnified Amounts.................................................409
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Section 16. Termination...................................................................................410
16.1 Mutual Consent.......................................................................410
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16.2 Default by Seller....................................................................410
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16.3 Default by Buyer.....................................................................411
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Section 17. Miscellaneous.................................................................................411
17.1 Expenses.............................................................................411
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17.2 Modification.........................................................................411
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17.3 Attorneys' Fees......................................................................412
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17.4 Right to Specific Performance........................................................412
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17.5 Notice...............................................................................412
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17.6 Waiver...............................................................................413
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17.7 Binding Effect; Assignment...........................................................413
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17.8 No Third Party Beneficiaries.........................................................413
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17.9 Rights Cumulative....................................................................413
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17.10 Further Actions......................................................................413
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17.11 Severability.........................................................................413
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17.12 Captions.............................................................................413
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17.13 Counterparts.........................................................................414
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17.14 Governing Law........................................................................414
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17.15 Incorporation by Reference...........................................................414
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17.16 Construction.........................................................................414
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17.17 Confidentiality......................................................................414
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EXHIBITS
A - Xxxx of Sale
B - Escrow Agreement
C - Assignment and Assumption Agreement
D - Assignment of Lease
E - Non-Compete Agreement
F - Guaranty
G - Letter to Programmers
H - FIRPTA Affidavit
SCHEDULES
1 - The CATV Business (including Rate Schedule)
2 - Company Contracts
3 - Company Contracts
4 - Required Consents
REGISTRATION STATEMENT
Page II-363
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-364
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of May
, 1996, among General Communication, Inc., an Alaska corporation, or its
wholly-owned subsidiary, ("Buyer"), and XxXxx/Rock Xxxxx Cable System, a joint
venture ("Seller"). This Agreement states the terms upon which Seller agrees to
sell to Buyer, and Buyer agrees to purchase from Seller, all of Seller's Assets
(as defined below).
WHEREAS, Seller 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 Seller desires to sell
all of Seller'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 No. 401 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 Sellers any right,
title or interest, including but not limited to the CATV Instruments, the
Intangibles, Seller 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 coaxial cable, including broadcast and satellite service programming for
which a Subscriber pays a fixed monthly fee to Seller, but not including Pay TV.
REGISTRATION STATEMENT
Page II-365
1.6 Basic Subscriber. "Basic Subscriber" shall mean any person
who pays Seller 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
Seller 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 Seller'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 non-payment of a
delinquent xxxx in an amount less than Ten and 01/100 Dollars ($10.01), and who
is not delinquent in payment for an amount in excess of Ten and no/100 Dollars
($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 sixty-two (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 Seller 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
Seller, 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. "CATV System" shall refer to a complete CATV
reception and distribution system of Seller which is part of Seller'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.
1.13 Current Assets. "Current Assets" shall be as defined in
Section 2.3(ii).
1.14 Employees. "Employees" shall be as defined in Section
3.17.
REGISTRATION STATEMENT
Page II-366
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 xxxxxxxx for sales by Seller
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 xxxxxxxx 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 Seller to
single family households for Basic CATV Services in accordance with standard
rates charged by Seller at the Closing Date in such franchise area; provided,
however, that in no event shall such standard rates charged by Seller at the
Closing Date be less than those set forth on Schedule 1. For purposes of the
foregoing, there shall be excluded (a) all xxxxxxxx to any discounted single
family household or bulk account for which a payment of more than ten dollars is
more than sixty-two (62) days past due from the invoice date (whether for Basic
CATV Services or Pay TV or otherwise); (b) all xxxxxxxx to any discounted single
family household or bulk account which has not paid at least one month's payment
for Basic CATV Services, including payment of all installation charges owed and
due; (c) that portion of the xxxxxxxx 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 xxxxxxxx to
REGISTRATION STATEMENT
Page II-367
any discounted single family household or bulk account which is pending
disconnection for any reason; and (e) all xxxxxxxx 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 Seller'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 Seller 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 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.
1.28 Pay TV Units. "Pay TV Units" shall mean each Pay TV
service subscribed for by all Basic Subscribers.
1.29 Permitted Encumbrances. "Permitted Encumbrances" shall
mean: (i) liens for taxes, assessments and governmental charges not yet due and
payable, or
REGISTRATION STATEMENT
Page II-368
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 Seller has warranted the
absence of elsewhere in this Agreement and furthermore shall not prevent or
inhibit in any way the conduct of Seller'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 Seller for the period prior to the Closing Date; and Seller
shall remain fully liable and responsible therefor and shall indemnify and hold
Buyer harmless from and against any thereof pursuant to Section 16.
1.30 Person. Any natural person, corporation, partnership,
trust, unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.31 Purchase Price. The "Purchase Price" for Seller's Assets
shall be as defined in Section 2.2.
1.32 Real Property. "Real Property" shall mean all realty,
including appurtenances, improvements, and fixtures located thereon and any
other interests in real property owned by Seller and used or held for use in the
CATV Business, including, without limitation, fee interests in Seller's offices
and headend sites, leasehold interests, easements, wire crossing permits and
rights of entry described on Schedule 6 to this Agreement.
1.33 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 Seller to
transfer and convey, and Buyer to purchase, the Assets, and for Buyer to conduct
Seller'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.
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Page II-369
1.34 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.
1.35 Seller Contracts. "Seller 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.
1.36 Service Area. "Service Area" shall mean the area in which
Seller operates the CATV Business, specifically in and around Homer, Alaska,
pursuant to applicable APUC Certificate No. 401.
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, Seller agrees to sell, convey, transfer,
assign, and deliver to Buyer, and Buyer agrees to purchase from Seller, all of
the Seller'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 Seller at the
Closing One Million Four Hundred Sixty-Six Thousand One Hundred Thirty-two
Dollars ($1,466,132.00) in cash less a holdback of Seventy-five Thousand Dollars
($75,000.00), and as adjusted by Section 2.3. Such payment in cash constitutes
the "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
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Page II-370
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 Seller at the
Closing Date, such as prepaid
expenses of Seller 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. Seller'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 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 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 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 Seller.
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
Seller. A Post-Period Adjustment Report
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Page II-371
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 Seller.
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 Seller's reasonable request, Buyer's
records with reference to collection of accounts receivable shall be made
available to Seller.
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 Seller. 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 Seller 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
Seller 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
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, are 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.
REGISTRATION STATEMENT
Page II-372
Post-Closing Adjustment. Within 60 days after the
Closing Date, Seller 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 Seller'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).
Seller 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 Seller, any
adjustment amount to be paid pursuant to such report shall be paid to the proper
party from the Escrow described in Section 2.4.
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 Seller and the determination of such accounting firm
shall be final and binding on all parties.
2.4 Holdback. At the Closing, Seller and Buyer shall each
deposit in escrow, pursuant to an escrow agreement in a form substantially
similar to Exhibit B, cash in the amount of Seventy-Five Thousand Dollars
($75,000) (the "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 funds, be
released to the party which placed such funds in escrow, effective as of one
hundred eighty (180) days after the Closing Date.
Section 3 Seller's Representations, Warranties, and Covenants
Seller 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. Seller is a joint venture,
duly organized, validly existing and in good standing under the laws of the
State of Alaska.
REGISTRATION STATEMENT
Page II-373
Seller 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 copy of Seller's Joint Venture Agreement, as amended, which has
been delivered to Buyer is complete and correct, and such document is in full
force and effect and has not been further amended.
3.2 Authority. Seller 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 Seller have been
duly authorized by all applicable partnership actions of Seller. 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
Seller, 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 all such documents, instruments and certificates constitute
legal, valid and binding obligations of Buyer, constitute legal, valid, and
binding obligations of Seller, enforceable against Seller 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. Seller's and XxXxx/Rock Xxxxxx Cable System's
combined actual cash flow before overhead (identified in Seller's respective
financial statements as "administration expenses") and after elimination of the
inter-company transactions with Alaska Cablevision, Inc. ("ACI") was not less
than Four Hundred Sixty-Six Thousand and no/100 Dollars ($466,000.00) for the
year ended December 31, 1995. Seller's financial statements reviewed by an
independent Certified Public Accountant as and for the year ended December 31,
1995, have been provided to Buyer.
3.5 Assets. Seller 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 Seller 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
REGISTRATION STATEMENT
Page II-374
of this Agreement and in compliance with all legal requirements and Seller
Contracts and to perform all the Assumed Liabilities (defined in Section 4.1).
Except as set forth in 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 Seller has been
granted or, to Seller's knowledge, has applied for a cable television franchise
in any area currently served by the Seller's CATV 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 Seller 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 Seller 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.
3.7 Seller Contracts. All of Seller Contracts are described on
Schedule 2 or Schedule 10. Complete and correct copies of all Seller Contracts
have been provided to Buyer. Each of Seller Contracts is in full force and
effect and constitute the valid, legal, binding and enforceable obligation of
Seller and Seller is not and to Seller's knowledge, each other party thereto is
not in breach or default of any terms or conditions thereunder.
3.8 Records. Seller's books, as made available to Buyer,
contain current, complete, and accurate records of all meetings and actions of
Seller's partners, and, if any, committees of the partners. All material actions
and transactions taken or entered into by Seller or otherwise requiring action
by its partners have been duly authorized or ratified as necessary and are
evidenced in Seller's books. Seller's books and ledgers, as made available to
Buyer, contain complete and accurate records of all issuances and transfers of
its partnership interests. The signatures appearing in such 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 Seller (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 Seller of, or (ii) constitute a default by Seller under,
or (iii) create any right of termination, cancellation, or acceleration by any
party pursuant to, any of the CATV Instruments or Seller Contracts, any statute,
ordinance, rule, or regulation, or any agreement, instrument,
REGISTRATION STATEMENT
Page II-375
judgment, or order to which Seller is a party or by which Seller, 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. Seller has not entered into any
contract, arrangement, or understanding with any person or firm which may result
in any obligation of Buyer or Seller 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 Seller shall pay all fees and
expenses due to Xxxxxxx 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,
Seller 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. Seller 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
Seller.
3.13 Financial Statements. Seller has delivered to Buyer
correct and complete copies of Seller's financial statements for each of the two
most recent fiscal years ended prior to the date of this Agreement, which were
reviewed by an independent, Certified Public Accountant, and unaudited interim
quarterly financial statements for periods subsequent to the end of the most
recent fiscal year end within thirty (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 Seller 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, Seller 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
Seller and which is required to be disclosed on, or reserved against in, a
balance sheet. Seller has received no notice of any fact which form a basis for
any claim by a third party which, if asserted, could result in a liability
affecting Seller not disclosed by or reserved against in the most recent balance
sheet of Seller. 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
REGISTRATION STATEMENT
Page II-376
course, (ii) Seller 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 Seller 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
Seller.
3.14 Tax Returns and Other Reports. Seller 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.
3.16 Real Property. With respect to all Real Property:
3.16.1 The Real Property and the improvements located
thereon and the continuation of business presently being conducted thereon do
not violate any 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 Seller 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 Seller possesses all rights needed to operate,
maintain, repair, replace, and locate all cable, lines, towers, equipment, or
other facilities owned or used by Seller 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 Seller holds good and marketable fee simple
title to the Real Property shown as being owned by Seller on Schedule 6 and the
valid and enforceable right to use and possess such Real Property, subject only
to the Permitted
REGISTRATION STATEMENT
Page II-377
Encumbrances. Seller 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 Seller's ownership or operation of
the Real Property, all activities undertaken on or affecting the Real Property
by Seller or any other person have been in full compliance with all material
environmental laws. During Seller's occupation of the Real Property there have
been no abatement, removal, remedial or other response actions for hazardous
substances (as defined below) at the Real Property.
3.16.6.1 Seller is not aware of any
instance, prior to Seller's ownership or operation, of noncompliance of the Real
Property or any activities thereon with any environmental law. Seller 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 Seller's knowledge, no
environmental claim has been asserted in the past, currently exists, or is
threatened or contemplated against Seller, or against any other person or
entity, which relates to the Real Property or any operations thereon.
3.16.6.3 To Seller'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 Seller 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 Seller'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 Seller'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 Seller's knowledge none of
the Real Property has been used at any time as a gasoline service
REGISTRATION STATEMENT
Page II-378
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 Seller and are in full force
and effect. A list of all such permits, licenses, approvals, and authorizations
is included on Schedule 2. All bonds and other security devices associated with
any permit, license, authorization, or approval are in place.
3.16.6.8 No building or other structure
on the Real Property contains asbestos.
3.16.6.9 Seller has provided to Buyer
true, complete and correct copies of all Environmental Reports in Seller's
possession or control as of the date of this Agreement relating to the Real
Property or any of it. Seller 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 Seller. 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.
3.16.6.10 "Seller's knowledge" as used in
this Section 3 shall refer to matters within the knowledge of Seller's current
partners and general managers, after due investigation of reasonably available
records of Seller 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,
REGISTRATION STATEMENT
Page II-379
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 Seller's employees (the "Employees"). Seller 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. Seller has no employment
agreements, either written or oral, with any person, and all Employees are
terminable at will. Seller 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 Seller's employees, and Seller 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 Seller,
nor any of its Affiliates maintain, is a party to, contributes to or is
obligated to contribute to, and the Employees do not receive benefits under, any
of the following (whether or not set forth in a written document):
(i) any employee pension benefit plan, as
defined in Section 3(2) of ERISA,
including (without limitation) any
multi-employer 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 on a non-recurring basis which
may be paid to some employees in
connection with this transaction;
REGISTRATION STATEMENT
Page II-380
(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, Seller
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;
(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;
REGISTRATION STATEMENT
Page II-381
(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
(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.
REGISTRATION STATEMENT
Page II-382
3.18.4 With respect to each Employee Plan that is an
employee benefit plan (as defined in section 3(3) of ERISA) and that is subject
to Part 4 of Subtitle B of Title I of ERISA, none of the following now exists or
has existed within the six-year period ending on the date hereof that could
result in liability to Seller:
(i) any act or omission by Seller, its
partners or employees 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 Seller, its
partners or employees constituting a
violation of sections 404 or 405 of
ERISA;
(iv) to Seller'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 Seller, its
partners or employees that constitutes a
violation of sections 406 and 407 of
ERISA and is not exempted by section 408
of ERISA or that constitutes a violation
of section 4975(d) of the Code; or
(vi) any act or omission by Seller, its
partners or employees constituting a
violation of sections 503, 510 or 511 of
ERISA.
3.18.5 Each Employee Plan that is an employee pension
benefit plan (as defined in section 3(2) of ERISA) and that is neither an excess
benefit plan (as defined in section 3(36) of ERISA) nor a plan exempted under
section 201(2) of ERISA meets all requirements for qualification under section
401(a) of the Code and the regulations thereunder, except to the extent that
such requirements may be satisfied by adopting retroactive amendments under
section 401(b) of the Code and the regulations thereunder. Each such Employee
Plan has been administered 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.
REGISTRATION STATEMENT
Page II-383
3.18.7 Seller has no liability to the Pension Benefit
Guaranty Corporation, to any multi-employer plan (as defined in section
4001(a)(3) of ERISA) or to any trustee under Subtitles D or E of Title IV of
ERISA. No event has occurred which, with the giving of notice under sections
4063 and 4219 of ERISA, would result in such liability.
3.18.8 All contributions, premiums or other payments
due to (or under) any Employee Plan have been fully paid or adequately provided
for on the books and financial statements of Seller. 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 Seller that cannot be canceled at will by Seller
as of the Closing Date without residual liability.
3.18.11 All employee welfare benefit plans provide
coverage for all claims relating to periods prior to the Closing Date whether
such claims are filed prior to or after the Closing Date.
3.19 Litigation and Violations. Except as set forth on
Schedule 8, there are no suits, claims, grievances, actions, proceedings, or
governmental investigations pending or, to Seller's knowledge, threatened
against or affecting Seller which (i) seek to restrain or enjoin the
consummation of the transactions contemplated by this Agreement or (ii) might
have a material adverse effect on the financial position or results of
operations of Seller. Seller 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
Seller.
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 Seller 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. Seller 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 Seller has not
relied on rule 3a-2
REGISTRATION STATEMENT
Page II-384
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 Seller Contracts.nstruments and
Seller Contracts.
3.22.1 The CATV Instruments and Seller Contracts are
currently in full force and effect, are valid under all applicable laws, and are
enforceable according to their terms. Seller is in compliance with and is not in
material violation or default under any of the CATV Instruments or Seller
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 Seller Contracts. Seller 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. Seller holds valid and continuing CATV Instruments, except as
set forth on Schedule 2, Seller 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 Seller's
ability to change any rates charged for CATV services, and Seller 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 Seller Contracts and any amendments thereto effective as of the
date of this Agreement have been delivered by Seller to Buyer.
3.23 FCC Compliance. Seller 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. Seller 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 Seller'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 Seller
has received no notice, and otherwise has no reason to know, of any claimed
default or violation with respect to the foregoing. Seller 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 000-000 XXX) at power levels at or greater
than 28 dBmV, such frequencies have been offset from standard aeronautical
frequencies as provided in FCC rules and
REGISTRATION STATEMENT
Page II-385
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. Seller will continue such
monitoring, repair, and record keeping activities with respect to the CATV
System through the Closing Date. Prior to the Closing, Seller 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, Seller has been certified as in
compliance with the FCC's equal employment opportunity rules for each year since
1991 to the extent that the FCC has reviewed such filing's certification. Seller
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.
Seller has duly and timely filed all required reports with the FCC. Seller 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 with the FCC by Seller
pursuant to FCC rules and regulations. Seller shall make available to Buyer all
other past reports and filings made or filed by Seller pursuant to FCC rules and
regulations.
3.24 APUC Compliance. Seller is duly authorized to operate its
CATV Business under APUC certificates. Seller holds the APUC certificate set
forth in Schedule 2. The APUC certificate is in full force and effect, without
any materially adverse modification, amendment, revocation, suspension,
termination, cancellation, reformation or condition. To the best of Seller's and
Seller's Partners' knowledge, 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. Seller operates its Cable System in accordance with all material
APUC rules, regulations and orders.
3.25 Patents, Trademarks, and Copyrights. Seller 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. Seller 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 Seller pursuant to Copyright rules and regulations.
Seller shall make available to Buyer all other past reports and filings made or
filed by Seller pursuant to Copyright rules and regulations. Seller 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.
REGISTRATION STATEMENT
Page II-386
3.26 No Other Assets or Liabilities. Seller has no assets of
any kind other than the Assets, CATV Instruments, and Seller Contracts described
on the Schedules and Seller has no liabilities, obligations, or commitments of
any kind other than obligations under the CATV Instruments and Seller 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,
Seller 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 Seller's CATV
business is presently subject to or, to Seller's best knowledge, threatened to
be subject to an overbuild situation. Seller is currently the only cable
television operator providing or, to Seller's best knowledge, intending to
provide cable television service in the Service Areas. No person or entity other
than Seller has been granted or to Seller'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 Seller's CATV Business.
3.29 Effect of Certificates. All certificates of Seller
delivered under this Agreement shall be deemed to be additional representations
and warranties of Seller.
3.30 Subscriber Numbers. As to Seller and the XxXxx/Rock
Xxxxxx Cable System Joint Venture and Alaska Cablevision, Inc., as of the
Closing Date, the CATV Business will have no fewer than Nine Thousand Seven
Hundred Fifty (9,750) subscribers and no fewer than Four Thousand, Three Hundred
Ninety (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 federal, state or local
laws and ordinances, which violation, individually or in the aggregate, would
have a material adverse effect on a System, the CATV Business or Seller. Seller
has received no notice claiming a violation by Seller or the CATV Business of
any legal requirement applicable to Seller or the
REGISTRATION STATEMENT
Page II-387
Business as it is currently conducted and to Seller's best knowledge, there is
no basis for any claim that such a violation exists.
3.32.2 Seller 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 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, Seller 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,
Seller has complied in all material respects with the must carry and
retransmission consent provisions of the 1992 Cable Act. Seller 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 Seller and correspondence with any Governmental
Authority relating to rate regulation generally or specific rates charged to
subscribers with respect to the Systems, including copies of any complaints
filed with the FCC with respect to any rates charged to Subscribers of the
Systems, and any other documentation supporting an exemption from the rate
regulation provisions of the 1992 Cable Act claimed by Seller with respect to
any of the Systems (collectively, "Rate Regulation Documents"). Seller 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 Seller
has not agreed with any Governmental Authority to establish customer service
standards that exceed the standards in the 1992 Cable Act. In addition, Seller
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. Seller 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 Seller in
this Agreement or in any Schedule or Exhibit to this Agreement, or any
statement, list or certificate furnished or to be furnished by Seller pursuant
to this Agreement, contains or
REGISTRATION STATEMENT
Page II-388
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 CATV Business is accurate and complete
in all material respects.
3.34 Parent Entity. Rock Associates, Inc. is the sole ultimate
parent entity of Seller, as the term "ultimate parent entity" is defined in 16
C.F.R. section 801.1(a)(3).
Section 4 Assumed Liabilities and Excluded Assets.
4.1 Assignment and Assumption. Seller will assign, and Buyer
will assume and perform, the Assumed Liabilities, which are defined as: (a)
Seller's obligation to subscribers of the Business for (i) subscriber deposits
held by Seller as of the Closing Date and which are refundable, (ii) subscriber
advance payments held by Seller 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 CATV 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 Seller 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 Seller other than the
Assumed Liabilities. In no event will Buyer assume or have any responsibility
for any liabilities or obligations associated with the Excluded Assets.
4.2 Excluded Assets. The Excluded Assets, which will be
retained by Seller, 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) Seller's trademarks, trade
names, service marks, service names, logos and similar proprietary rights
(subject to Buyer's rights under Section 6.24); (f) Seller's rights under any
agreement governing or evidencing an obligation of Seller for borrowed money;
(g) Seller'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 Seller 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
REGISTRATION STATEMENT
Page II-389
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 Xxxx Xxxxxx to acquire 100,000 shares of
Buyer's Class A common stock at $0.75 per share; (d) that June, 1989, incentive
agreement with Xxxxxxx Xxxxxx 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 to MCI Telecommunications 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; (iv) any Buyer's
Shares and Notes issued in connection with the acquisition of Alaska
Cablevision, Inc.; and (v) any Share and Note holdbacks in connection with the
transaction described in this Section 5.2.
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
Seller, contain current, complete, and accurate records of all meetings and
actions of Buyer's directors, and, if any, committees of the board of directors.
All material actions and transactions
REGISTRATION STATEMENT
Page II-390
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
Seller, 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 Seller
correct and complete copies of Buyer's audited financial statements for each of
the two most recent fiscal years ended prior to the date of this Agreement and
unaudited interim monthly financial statements for periods subsequent to the end
of the most recent fiscal year end (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
REGISTRATION STATEMENT
Page II-391
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 (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
REGISTRATION STATEMENT
Page II-392
may result in any obligation of Seller 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. Seller 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, Seller agrees that Seller, or
anyone acting on Seller'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 the date of this Agreement, would be
required to be disclosed on any Schedule to this Agreement, (ii) place or permit
to exist any lien, encumbrance, security interest, claim or charge of any kind
against the Assets or the Assets, (iii) enter into or continue any discussions,
negotiations or contracts relating to the sale, assignment, or transfer any
Assets of the Seller or the CATV Business except (a) in the ordinary course of
business and (b) for Seller'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 Seller Contract or permit any amendment to or cancellation of any
CATV Instrument or Seller 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. Seller shall maintain insurance on the CATV
Business and the Assets until the Closing Date consistent with past practice and
policy, and Seller 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, Seller shall also make
its budgeted capital expenditures for rebuilds, upgrades or improvements.
6.2 Agents. Seller agrees that Buyer's designated agent shall
be included in all material business discussions regarding Seller's conduct of
its affairs which are other than in the ordinary or usual course of business.
REGISTRATION STATEMENT
Page II-393
6.3 Seller Contracts. All Seller Contracts are described on
Schedule 3 or Schedule 10. Complete and correct copies of all Seller Contracts
have been provided to Buyer. Each Seller Contract is in full force and effect
and constitutes the valid, legal, binding and enforceable obligation of Seller
and Seller is not and to Seller'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 Telecommunications 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, (iv) the Ten Million and
no/100 Dollars ($10,000,000) in notes which are convertible into GCI's Class A
Common Stock in connection with the planned acquisition of Alaska Cablevision,
Inc., and (v) the note and share holdbacks issued as part of the transactions
described in this Section 6.4. Neither Buyer nor anyone acting on Buyer's behalf
shall enter into or continue any discussions, negotiations or contracts relating
to the sale of all or any portion of its assets or equity, except in the
ordinary course of business.
6.5 Employees. Seller 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
Seller 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 Seller and Buyer as shall from time to
time be reasonably requested. Furthermore, Buyer shall be given the opportunity
to perform a field audit of Seller's accounts with Seller'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 17.17. Without limiting Buyer's
rights of access stated above, Seller shall permit Buyer and/or such agents or
experts as Buyer shall designate, full access to the Real
REGISTRATION STATEMENT
Page II-394
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 Seller's obligations under this
Agreement, including but not limited to Seller's representations and warranties
in Section 3.16 above.
6.7 Existing Relationships. Seller 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 Seller. 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. Seller 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. Seller 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 Seller Contracts.
6.9 Compliance with CLI Standards. Seller shall notify Buyer
at least ten days prior to the annual CLI compliance and reporting tests, which
tests shall be made no later than June 30, 1996, and representatives of Buyer
and Seller 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 Seller (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 Seller 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 Seller shall
jointly select a qualified engineering firm to inspect the CATV Systems (the
"Inspector"). Seller 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 Seller stating whether or not the CATV Systems are
in compliance and if not, recommend Remedial Steps which will cause the
REGISTRATION STATEMENT
Page II-395
CATV Systems to fully comply with CLI Standards. The Inspector's determination
and report shall be final and binding on Buyer and Seller. 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 Seller if any substantial portion of the CATV
System is found not to comply with CLI Standards.
6.10 MDU Agreements. Seller represents and warrants that
agreements have been granted to Seller from all MDU property owners serviced by
Seller, and that they have provided access to all such agreements to Buyer which
are listed on Schedule 11.
6.11 Public Announcements. Except as may be required by
applicable law or regulation, neither Buyer nor Seller 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, Seller 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 Seller and Buyer are unable to resolve any such
problems or concerns by negotiating a mutually satisfactory modification to this
Agreement, the objecting party shall have the right to terminate this Agreement
within 10 days after notifying the other parties of such problems or concerns
and no party shall have any further obligations hereunder.
6.13 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 3.15, 3.16, 3.23, 3.24 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 Seller 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 Seller in order to make the representations and warranties contained
in Sections 3.23, 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.
REGISTRATION STATEMENT
Page II-396
6.14 Leased Equipment. Seller 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 and Franchise Forms
6.15.1 Seller will use its reasonable efforts to
obtain, at its expense, such estoppel certificates or similar documents from
lessors and other Persons who are parties to Seller Contracts as Buyer may
reasonably request.
6.15.2 Seller 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. To the extent applicable, as soon as
practicable after the execution of this Agreement, but in any event no later
than 45 days after such execution, Seller and Buyer will each complete and file,
or cause to be completed and filed, any notification and report required to be
filed under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"); and each such filing shall request early termination of the
waiting period imposed by the HSR Act. The parties shall use their reasonable
best efforts to respond as promptly as reasonably practicable to any inquiries
received from the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") for additional
information or documentation and to respond as promptly as reasonably
practicable to all inquiries and requests received from any other Governmental
Authority in connection with antitrust matters. Seller 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, Seller 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. Neither the Seller, its partners or any
agent or representative of any of them will, during the period commencing on the
date of this
REGISTRATION STATEMENT
Page II-397
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. Seller 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 Seller's representations or warranties under this Agreement not to
be correct and complete.
6.19 Risk of Loss; Condemnation
6.19.1 Seller 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, Seller 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
Seller either (i) to waive such defect and proceed toward consummation of the
acquisition of the Assets in accordance with terms of this Agreement or (ii)
terminate this Agreement. If Buyer elects so to terminate this Agreement, Buyer
and Seller will be discharged of any and all obligations hereunder. If Buyer
elects to consummate the transactions contemplated by this Agreement
notwithstanding such loss or damage and does so, there will be no adjustment in
the consideration payable to Seller 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 Seller to Buyer, or the rights to
such proceeds will be assigned by Seller to Buyer if not yet paid over to
Seller.
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 Seller or Buyer that it intends to condemn all or any part of the Assets
(either such event, a "Taking"), then Buyer may terminate this Agreement. If
Buyer does not elect to terminate this Agreement, then (a) Buyer will have the
sole right, in the name of Seller, if Buyer so elects, to negotiate for, claim,
contest and receive all damages with respect to the Taking, (b) Seller 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, Seller will assign to Buyer all
of Seller's rights to all damages payable with respect to such Taking and will
pay to Buyer all damages previously paid to Seller with respect to the Taking
and (d) following the Closing, Seller 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.
REGISTRATION STATEMENT
Page II-398
6.20 Lien and Judgment Searches. Buyer will obtain at Seller'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 Seller's principal office 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 Seller may be located, with respect to judgments, orders,
writs or decrees against or affecting Seller or any of the Assets.
6.21 Transfer Taxes. Seller and Buyer 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, Seller will
transmit a letter in the form of Exhibit H to all programmers from which Seller
purchases programming.
6.23 Updated Schedules. Not less than five business days prior
to Closing, Seller 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 Seller'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 Seller) 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 Seller's Name. Buyer may continue to operate the
Systems using the Seller's rights to its name and all derivations and
abbreviations of such name and related marks. Within 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 xxxx 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. Seller will provide to
Buyer, access its outside billing system services provider ("Transitional
Billing Services") in connection with the System and Assets acquired by Buyer.
REGISTRATION STATEMENT
Page II-399
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 15, 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 offices of Xxxxxx Pepper and
Shefelman, 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxxxx 00000, at 10:00
a.m. local time, on such date acceptable to Seller 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 Seller
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 Seller 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 Seller's option, no later than
December 31, 1996, unless APUC has earlier notified the parties that no consent
will be given to this transaction, in which case the Agreement will 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 Seller at Closing
At Closing, Seller shall deliver to Buyer:
8.1 the Bills of Sale for the Assets in the form attached as
Exhibit A;
8.2 the Escrow Agreement in the form attached as Exhibit B;
8.3 an Assignment and Assumption of Contracts in the form
attached as Exhibit C;
8.4 one or more Assignments of Leases in the form attached as
Exhibit D and, if requested by Buyer, short forms or memoranda of such
Assignments in recordable form;
REGISTRATION STATEMENT
Page II-400
8.5 an affidavit of Seller, under penalty of perjury, that
Seller is not a "foreign person" (as defined in the Foreign Investment in Real
Property Tax Act and applicable regulations) and that Buyer is not required to
withhold any portion of the consideration payable under this Agreement under the
provisions of such Act in the form attached as Exhibit I; and
8.6 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 Seller with respect to its partners executing this Agreement
and any other document delivered hereunder by or on behalf of Seller;
8.8 a certificate of Seller, dated the Closing Date, signed by
an authorized partner of Seller certifying that (A) except (1) as a result of
the taking by any person of any action contemplated under this Agreement or (2)
insofar as any representation or warranty relates to any specified earlier date,
all of the representations and warranties of Seller 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) Seller 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
for each joint venture partner, authorizing the execution and delivery by Seller
of this Agreement and any other agreements executed by Seller pursuant hereto,
and the performance of the obligations of Seller hereunder and thereunder,
together with a power of attorney authorizing Rock Associates, Inc. (formerly
Rock Investments, Inc.) to execute and deliver all documents and agreements
necessary and appropriate in connection with the closing of the transactions
pursuant to this Agreement;
8.10 an opinion of Seller'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 Seller, 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
REGISTRATION STATEMENT
Page II-401
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 Seller 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 Seller or the CATV Business;
8.14 to the extent in the possession of Seller or its agents,
all blueprints, schematics, drawings, maps, system design xxxx 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 Seller, 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, however, that if any such change has a material adverse effect
on the condition, financial or otherwise, of Seller or the CATV Business, Buyer
shall have the right to terminate this Agreement with no further obligations to
Seller hereunder.
8.17 Non-Compete Agreement. Contemporaneously with the signing
of this Agreement, Seller is causing Rock Associates, Inc. to provide a
Non-Compete Agreement in the form attached as Exhibit E.
8.18 Guaranty. Contemporaneously with the signing of this
Agreement, Seller is causing its Partners to deliver the Guaranty in the form of
Exhibit G. The liability of Partner under the Guaranty for any indemnity for
breach by Seller of a representation, warranty or covenant shall be limited to
an amount not to exceed the value of the consideration received by Partner in
this transaction and the maximum aggregate liability of each of Seller's
Partners on the amount of consideration received by such Partner in this
transaction.
Drafts of each of the items listed in this Section 8 shall be
delivered by Seller 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 Seller:
9.1 certified check or wire transfer documents evidencing
payment of the One Million Four Hundred Sixty-Six
Thousand One Hundred
REGISTRATION STATEMENT
Page II-402
Thirty Two Dollars cash, less the Seventy-Five
Thousand and no/100 Dollars ($75,000) described in
Section 9.2, and as adjusted in accordance with
Section 2.3, constituting the Purchase Price, such
payment to be made in accordance with instructions
received from the Seller at least two business days
prior to the Closing Date;
9.2 cash in the amount of Seventy-Five Thousand Dollars
($75,000) to be placed into escrow in accordance with
Section 2.4;
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 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
Seller 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, as applicable, 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, Seller shall have the right
to terminate this Agreement with no further
obligations to Buyer hereunder.
REGISTRATION STATEMENT
Page II-403
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 Seller 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 Seller, and Seller 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 Seller to Buyer and all actions required to have been taken by
Seller, at or prior to the Closing Date, shall have been delivered or taken.
10.2.1 Seller has executed (or caused to be executed)
and delivered to Buyer of the items set forth in Section 8.
10.2.2 Seller 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 Seller 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
Seller 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 Seller 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.
REGISTRATION STATEMENT
Page II-404
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
Seller herein and as otherwise disclosed to Buyer prior to the date hereof.
Buyer shall notify Seller within thirty-one (31) days of this Agreement of the
results of such due diligence inspection.
10.6 Cash Flow. As of the Closing Date, XxXxx/Rock Xxxxxx
Cable System Joint Venture's and ACI's twelve (12) month combined trailing
operating cash flow shall be no less than Three Million Five Hundred Thousand
and no/100 Dollars ($3,500,000.00).
Section 11 Conditions to Obligations of Seller
The obligation of Seller to consummate the transactions
contemplated by this Agreement shall be subject, at Seller'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 Seller 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
REGISTRATION STATEMENT
Page II-405
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 Seller's reasonable
satisfaction, the condition set forth in this Section 11.3 shall be deemed
satisfied.
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 Seller to realize the benefits of the
transactions contemplated herein.
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 Seller 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. Seller shall comply with all requirements
of COBRA.
Section 14 Agreement Not to Compete
14.1 Agreement. Seller and Seller's Partners shall provide to
Buyer at Closing an executed Non-Compete Agreement in the form attached to this
Agreement
REGISTRATION STATEMENT
Page II-406
as Exhibit F, the terms and conditions of which are hereby incorporated by
reference. Such Non-Compete Agreement shall be given in consideration of the
sale of Assets set forth herein and shall not be subject to additional
consideration.
14.2 Breach of Agreement. If this Section 14 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.
14.3 Enforceability. If any provision of this Section 14 is
determined to be unreasonable or unenforceable, such provision and the remainder
of this Section 14 shall not be declared invalid but rather shall be modified
and enforced to the maximum extent permitted by law.
Section 15 Survival of Representations and Warranties; Indemnification
15.1 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 Seller shall survive the Closing and shall terminate
on the first anniversary of the Closing Date. Notwithstanding the preceding
provisions of this Section 15.1, 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.
15.2 Indemnity by Seller. Seller and the joint venture
partners agree to indemnify, defend, and hold harmless Buyer and its officers,
directors, Affiliates, employees, attorneys, agents and shareholders (the
"Buyer's Indemnitees") against and in respect of any and all claims, suits,
actions, proceedings (formal and informal), investigations, judgments,
deficiencies, losses, damages, settlements, liabilities and expenses (including,
without limitation, reasonable legal fees and expenses of attorneys chosen by
the Buyer's Indemnitees) (collectively, "Losses"), as and when incurred arising
out of or based upon (1) any breach of any representation, warranty, covenant,
or agreement of Seller contained in this Agreement or in any other agreement
executed and delivered by Seller 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 Seller for the period prior to the Closing Date,
including, without limitation, any actions taken by Seller 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 Seller under this Section as a
result of any breach of any representation, warranty, covenant or agreement of
the Seller until the amount of Buyer's Losses under this Agreement
REGISTRATION STATEMENT
Page II-407
exceed, in the aggregate, $10,000. At such time as such aggregate amount of
Buyer's Losses exceeds $10,000, 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 consideration actually received, in the aggregate, pursuant
to the Agreement. Seller 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, Seller
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.
15.3 Indemnity by Buyer. Buyer agrees to indemnify, defend,
and hold harmless Seller and its partners, managers, Affiliates, employees,
attorneys, agents and shareholders (the "Seller's 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 Seller for the period on and after
the Closing Date.
15.4 Defense of Claims. No right to indemnification under this
Section 15 shall be available to any of Buyer's Indemnitee or Seller's
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 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
REGISTRATION STATEMENT
Page II-408
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.
15.5 Right to Offset. Seller 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 15) by notifying the other
that it is offsetting the amount of the Holdback by the amount of its Losses if
the amount of such Losses is determined before such party releases the
applicable Holdback. The Indemnitee shall notify the Indemnitor of its claim for
Losses to be offset against the applicable 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 Holdback until the dispute is resolved. At the end
of the Holdback period, the Indemnitee shall release to Indemnitor the remaining
balance of the applicable 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 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 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 Holdback within thirty
(30) days. Nothing contained in this Section 15.5 shall be deemed to limit a
party's obligation to indemnity to the extent that the amount to which an
Indemnitee is entitled under Section 15 exceeds the amount of the applicable
Holdback.
15.6 Determination of Indemnified Amounts. The indemnification
obligations of the parties under this Section 15 shall be subject to the
following:
15.6.1 The amount of Losses required to be paid by
the Indemnitor to indemnify the Indemnified Party pursuant to this Section 15 as
a result of any Loss suffered by the Indemnified Party shall be reduced to the
extent the amount of such Loss
REGISTRATION STATEMENT
Page II-409
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.
15.6.2 The amount of Losses required to be paid by
the Indemnitor to indemnify the Indemnified Party pursuant to this Section 15 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.
15.6.3 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 16 Termination
16.1 Mutual Consent. This Agreement may be terminated by the
written consent of Buyer and Seller. Upon such termination, no party hereto
shall have any further liability to the other, except as provided in Section
16.2.
16.2 Default by Seller. Buyer shall have the right to
terminate this Agreement at or prior to the Closing Date in the event that
Seller defaults in the performance of any material obligation hereunder or if
any representations or warranties of Seller are materially false, and Seller
fails to correct or satisfy such default or falsity within ten (10) days after
written notice is given to Seller or such longer period as shall be required to
correct or satisfy such default or falsity, provided that Seller promptly and
diligently prosecute the cure or satisfaction. If such notice is given within
ten (10) days of the Closing Date, the Closing shall be delayed for the number
of days to permit the cure of the default but in no event more than thirty (30)
days. In the event that Seller has failed to cure the default within the
required period, Buyer shall be entitled to exercise all of its rights in law or
in equity by reason of the breach by Seller of this Agreement. If Seller 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. Seller 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 Seller of any provisions of this Agreement. In the event
that Buyer seeks an injunction hereunder, Seller hereby waives any requirement
for the posting of a bond or other security. Notwithstanding anything to the
contrary contained in this Section 16.2, Buyer
REGISTRATION STATEMENT
Page II-410
shall have the right to waive any default by Seller and require the transactions
contemplated by this Agreement to be consummated on the Closing Date.
16.3 Default by Buyer. Seller 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,
Seller 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 17.17 of this Agreement, Seller, 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. Seller 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 Seller as a result of a breach by Buyer
of the provisions of Section 17.17 of this Agreement. If Seller 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 16.3, Seller 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 17 Miscellaneous
17.1 Expenses. Except as otherwise expressly provided in this
Agreement, Seller 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, whether or not the transactions contemplated hereby or
thereby are consummated. Seller shall 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. Seller will pay the
FCC filing fees with respect to the transfer of the IB business radio licenses.
Filing fees with respect to any filing mandated by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvement Act of 1976 shall be borne equally by Seller and Buyer.
17.2 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
REGISTRATION STATEMENT
Page II-411
matter, and may be modified only by a written instrument duly executed by each
party hereto.
17.3 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.
17.4 Right to Specific Performance. Seller and Buyer
acknowledge that the unique nature of the Assets to be purchased by Buyer
pursuant to this Agreement renders money damages an inadequate remedy for the
breach by Seller and Buyer of their obligations under this Agreement, and Seller
and Buyer agree that in the event of such breach, Seller and Buyer will upon
proper action instituted by it, be entitled to a decree of specific performance
of this Agreement.
17.5 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 Seller: Rock Associates, Inc.
000 Xxxx Xxxxxx Xxxxx, Xxxxx
000
Xxxxxxxx, XX 00000
Attention: Xxx Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Pepper & Shefelman
Suite 3400
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
If to Buyer: General Communication, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxx 00000
Attention: Xxxx X. Xxxxxx, CFO
and Senior Vice President
Facsimile No.: (000) 000-0000
REGISTRATION STATEMENT
Page II-412
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.
17.6 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.
17.7 Binding Effect; Assignment. The provisions of this
Agreement shall be binding upon and inure to the benefit of Seller 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 Seller's consent, assign its rights under this
Agreement to any Affiliate of Buyer.
17.8 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.
17.9 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.
17.10 Further Actions. Seller 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.
17.11 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.
17.12 Captions. The Article and Section titles used in this
Agreement are inserted as a matter of convenience and for reference only and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any of the provisions hereof.
REGISTRATION STATEMENT
Page II-413
17.13 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.
17.14 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of Alaska without giving effect to
conflict of laws.
17.15 Incorporation by Reference. The Exhibits and Schedules
attached hereto are an integral part of this Agreement and are incorporated
herein by reference.
17.16 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.
17.17 Confidentiality. The parties will hold and cause their
partners, 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, Seller acknowledge
that Buyer shall issue press releases regarding the general terms and conditions
of the transactions contemplated hereby, as required by the securities
disclosure laws, rules and regulations. Buyer shall have no obligation to obtain
Seller's consent for such press releases, but shall provide Seller with copies
thereof and give reasonable consideration to Seller's suggestions thereon.
REGISTRATION STATEMENT
Page II-414
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
XxXXX/ROCK XXXXX CABLE SYSTEM
By: Rock Associates, Inc., one
of its Joint Venturers
By: /s/
Name:
Title:
By: XxXxx Communications of
Xxxxx, Inc., one of its Joint
Venturers
By: /s/
Name:
Title:
GENERAL COMMUNICATION, INC.
By: /s/
Xxxx X. Xxxxxx, Senior Vice
President
REGISTRATION STATEMENT
Page II-415
EXHIBIT A
Xxxx of Sale
Pursuant to the terms of that certain Asset Purchase Agreement
between General Communication, Inc., an Alaska corporation, and XxXxx/Rock Xxxxx
Cable Systems, a joint venture ("Seller"), dated May , 1996, Seller 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.
XxXXX/ROCK XXXXX CABLE SYSTEMS
By:Rock Associates, Inc., one
of its joint venturers
By
Name:
Title:
REGISTRATION STATEMENT
Page II-416
EXHIBIT B
Escrow Agreement
This Escrow Agreement ("Agreement") is dated as of ,
1996 and entered into among National Bank of Alaska ("Escrow Agent") XxXxx/Rock
Homer Cable System, a joint venture ("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 funds delivered to Escrow
Agent by and on behalf of Seller or GCI and earnings thereon, are referred to
collectively as the "Escrow Fund"). Upon the execution of this Agreement, GCI
shall deliver on behalf of Seller to Escrow Agent cash in the amount of
Seventy-Five Thousand and no/100 Dollars ($75,000) ("Seller's Escrow Cash").
Upon execution hereof, GCI will cause delivery to Escrow Agent of cash in the
amount of Seventy-Five Thousand and no/100 Dollars ($75,000) ("GCI Escrow
Cash"). 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 Cash 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 amount of cash equal to the
certified GCI Claim Amount for disbursement in accordance with Section 3(a)(i)
or (ii) as applicable ("Retained Seller's Cash"). Escrow Agent will disburse the
remainder of the Seller's Escrow Cash 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 Cash in the Escrow Fund pursuant
to this Agreement until either:
REGISTRATION STATEMENT
Page II-417
(i) Escrow Agent receives joint written
instructions signed on behalf of Seller and GCI
specifying the method for disbursing the Retained
Seller's Cash in which case the Escrow Agent shall
promptly disburse the Retained Seller's Cash 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 Cash
in which case Escrow Agent shall promptly disburse
Retained Seller's Cash in accordance with such
instructions.
(b) Notwithstanding anything to the contrary in this
Agreement, Escrow Agent will disburse the Seller's Escrow Cash 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 Cash 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 amount of GCI Escrow Cash as is equal to the certified Seller Claim
Amount for disbursement ("Retained GCI Cash"). Escrow Agent will disburse the
remainder of the GCI Escrow Cash 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 Cash, in the Escrow Fund pursuant to
this Agreement until either:
REGISTRATION STATEMENT
Page II-418
(i) Escrow Agent receives joint written
instructions signed on behalf of Seller and GCI
specifying the method for disbursing the Retained GCI
Cash, in which case such Cash 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 Cash, in
which case such Cash 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 Cash 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
REGISTRATION STATEMENT
Page II-419
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 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 Seller 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.
REGISTRATION STATEMENT
Page II-420
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, 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
000 X. Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention:Xxxxxxx Xxxxxx, Vice President
Telecopy: (000) 000-0000
To GCI at: General Communication, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxx 00000-0000
Attention:Xxxx X. Xxxxxx, CFO and
Senior Vice President
Telecopy: (000) 000-0000
With a copy (which will not constitute
notice) to:
Xxxxxx, Xxxxxx, Xxxxxx, Xxxxxxx &
Xxxxxxx, P.C.
000 X Xxxxxx
Xxxxxxxxx, Xxxxxx 00000-0000
Attention:Xxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
To Seller at: XxXxx/Rock Homer Cable System
000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention:Xxx Xxxxx
Telecopy: (000) 000-0000
REGISTRATION STATEMENT
Page II-421
with a copy to:
Xxxxxx Pepper & Shefelman
Suite 3400
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:Xxxxxx Xxxxxxx
Facsimile:(000)000-0000
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 Sellers' Agent 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 thirty (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.
REGISTRATION STATEMENT
Page II-422
(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 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
Xxxxxxxx X. Xxxxxxx,
Senior Vice President
REGISTRATION STATEMENT
Page II-423
GCI:
GENERAL COMMUNICATION, INC.
By:
Name:
Title:
TIN:
Seller:
XxXXX/ROCK XXXXX CABLE SYSTEM
By:Rock Associates, Inc., one
of its joint venturers
By:
Name:
Title:
TIN:
REGISTRATION STATEMENT
Page II-424
EXHIBIT A TO ESCROW AGREEMENT
FORM OF CLAIM CERTIFICATE
The undersigned, on behalf of General Communication, Inc.
("GCI"), certifies as follows:
A. GCI and XxXxx/Rock Xxxxx Cable System ("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, XxXxx/Rock Xxxxx Cable System
("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:
Receipt of this Certificate is acknowledged this day of
, 199 .
NATIONAL BANK OF ALASKA
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-425
EXHIBIT B TO ESCROW AGREEMENT
FORM OF CLAIM CERTIFICATE
The undersigned, on behalf of XxXxx/Rock Xxxxx Cable System
("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 , 19 .
XxXXX/ROCK XXXXX CABLE SYSTEM
By:Rock Associates, Inc., one
of its joint venturers
By:
Name:
Title:
Receipt of this Certificate is acknowledged this day of
, 1996.
NATIONAL BANK OF ALASKA
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-426
EXHIBIT C
Assignment and Assumption Agreement
THIS ASSIGNMENT ("Assignment") is made effective as of
, 1996, by and between XxXXX/ROCK XXXXX CABLE SYSTEM, a joint venture, 000 Xxxx
Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 ("Assignor") and GENERAL COMMUNICATION,
INC., an Alaska corporation, 0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxx
00000 ("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-427
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
material 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:
XxXXX/ROCK XXXXX CABLE SYSTEM
By: Rock Associates, Inc., one
of its joint venturers
By:
Name:
Title:
ASSIGNEE:
GENERAL COMMUNICATION, INC.
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-428
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:
Title:
REGISTRATION STATEMENT
Page II-429
EXHIBIT D
Assignment of Lease
THIS ASSIGNMENT OF LEASE ("Assignment") is made
effective as of , 1996, by and between XxXXX/ROCK XXXXX CABLE
SYSTEM, a joint venture, 000 Xxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000
("Assignor"), and GENERAL COMMUNICATION, INC., an Alaska corporation, 0000
Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxx 00000 ("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 Assignor harmless
from, and against any liability arising from and after the date of the approval
of the Assignment.
REGISTRATION STATEMENT
Page II-430
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
material 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 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:
XxXXX/ROCK XXXXX CABLE SYSTEM
By:Rock Associates, Inc., one
of its joint venturers
By:
Name:
Title:
GENERAL COMMUNICATION, INC.
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-431
ACKNOWLEDGMENTS
STATE OF )
) ss.
COUNTY OF )
The foregoing Assignment of Lease was acknowledged before me
this day of , 1996, by of
XxXxx/Rock Xxxxx Cable System, a joint venture of Rock Associates, Inc. on
behalf of the corporation as joint venture partner.
Notary Public in and for the State of
My commission expires:
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
The foregoing Assignment of Lease was acknowledged before me
this day of , 1996, by , of
General Communication, Inc., an Alaska corporation, on behalf of said
corporation.
Notary Public in and for the State of Alaska
My commission expires:
REGISTRATION STATEMENT
Page II-432
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.
LESSOR:
XxXXX/ROCK XXXXX CABLE SYSTEM
By:Rock Associates, Inc., one
of its joint venturers
By:
Name:
Title:
STATE OF )
) ss.
COUNTY OF )
The foregoing Assignment of Lease was acknowledged before me
this day of , 1996, by of
XxXxx/Rock Xxxxx Cable System, a joint venture of Rock Associates, Inc. on
behalf of the corporation as joint venture partner.
Notary Public in and for the State of
My commission expires:
REGISTRATION STATEMENT
Page II-433
RECORD THIS INSTRUMENT
IN THE
RECORDING DISTRICT.
ATTACHMENT 1 TO EXHIBIT "D"
Notice of Assignment of Lease
This Notice of Assignment of Lease ("Notice") is made by and
among XxXxx/Rock Xxxxx Cable System, a joint venture, 000 Xxxx Xxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000 ("Assignor"), and General Communication, Inc. an
Alaska corporation, 0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxx 00000, 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 X.
XxXXX/ROCK XXXXX CABLE SYSTEM
By: Rock Associates, Inc., one
of its joint venturers
DATED: By:
Name:
Title:
GENERAL COMMUNICATION, INC.
DATED: By:
Name:
Title:
REGISTRATION STATEMENT
Page II-434
STATE OF )
) ss.
COUNTY OF )
The foregoing Assignment of Lease was acknowledged before me
this day of , 1996, by of
XxXxx/Rock Xxxxx Cable System, a joint venture of Rock Associates, Inc. on
behalf of the corporation as joint venture partner.
Notary Public in and for the State of
My commission expires:
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
The foregoing Assignment of Lease was acknowledged before me
this day of , 1996, by , of
General Communication, Inc., an Alaska corporation, on behalf of said
corporation.
Notary Public in and for the State of Alaska
My commission expires:
AFTER RECORDING, RETURN TO:
Xxxxxx, Xxxxxx, Xxxxxx,
Xxxxxxx & Xxxxxxx, P.C.
000 X Xxxxxx
Xxxxxxxxx, Xxxxxx 00000
Attn.: Xxxxxx X. Xxxxxxxx, Esq.
(000) 000-0000
REGISTRATION STATEMENT
Page II-435
EXHIBIT E
Non-Compete Agreement
, 1996
Gentlemen:
Reference is made to that certain Asset Purchase Agreement
dated as of May , 1996, (the "Agreement") among XxXxx/Rock Xxxxx Cable
System, a joint venture ("Seller") and General Communication, Inc. ("Buyer").
This letter is being delivered to you pursuant to Section 14 of the Agreement.
Capitalized terms used herein, unless otherwise defined herein, shall have the
meanings ascribed to them in the Agreement. The undersigned partner of Seller,
to induce Buyer to perform its obligations under and to consummate the
transactions described in the Agreement, is providing this Non-Compete
Agreement.
The undersigned agrees that as of the date hereof, through the
Closing Date, and for a period of five (5) years thereafter, it will not, and it
will cause its key employees for so long as such employees are employed by it,
not to, own, manage, operate, join, 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 Seller 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 Area.
If the terms or provisions of this Non-Compete Agreement are
breached or threatened to be breached, the undersigned, on its own behalf and 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.
If any provision of this Non-Compete Agreement is determined
to be unreasonable or unenforceable, such provision and the remainder of this
Non-Compete
REGISTRATION STATEMENT
Page II-436
Agreement shall not be declared invalid, but rather shall be modified and
enforced to the maximum extent permitted by law.
Very truly yours,
ROCK ASSOCIATES, INC.
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-437
EXHIBIT F
Guaranty
FOR VALUE RECEIVED, and in order to induce GENERAL
COMMUNICATION, INC., a Alaska corporation ("Buyer"), to enter into that certain
Asset Purchase Agreement ("Agreement"), dated as of May , 1996, between Buyer
and XxXXX/ROCK XXXXX CABLE SYSTEM, a joint venture ("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:
(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 Seller to secure payment of any or all of the Obligations;
(ii) Obtain the primary or secondary
obligation of any third party in addition to Guarantor with respect to any or
all of the Obligations;
(iii) Release, compromise or extend any
of the Obligations or any obligation of any nature of any other obligor with
respect to any of the Obligations;
REGISTRATION STATEMENT
Page II-438
(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 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
REGISTRATION STATEMENT
Page II-439
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. Venue for
any action shall be at Anchorage, Alaska.
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.
REGISTRATION STATEMENT
Page II-440
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
executed as of , 1996.
------------------------------
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-441
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 XxXxx/Rock Xxxxx Cable System ("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-442
EXHIBIT H
Affidavit
STATE OF )
) ss.
COUNTY OF )
This Affidavit is delivered pursuant to the Asset Purchase
Agreement dated as of May , 1996, between XxXxx/Rock Xxxxx Cable System, a
joint venture ("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 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.
Dated this day of , 1996.
SELLER:
XxXXX/ROCK XXXXX CABLE SYSTEM
By: Rock Associates, Inc., one of its
joint venturers
By:
Name:
Title:
REGISTRATION STATEMENT
Page II-443
STATE OF )
) ss.
COUNTY OF )
SUBSCRIBED AND SWORN to before me this day of
, 1996 by , on behalf of Rock Associates,
Inc. as a joint venture partner of XxXxx/Rock Xxxxx Cable System, a joint
venture.
Notary Public in and for the State of
My commission expires:
REGISTRATION STATEMENT
Page II-444