Exhibit 2.2
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ASSET PURCHASE AGREEMENT
By and Between
ALASKA COMMUNICATIONS SYSTEMS, INC.
and
THE MUNICIPALITY OF ANCHORAGE
Dated as of October 20, 1998
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TABLE OF CONTENTS
Page
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RECITALS
1. Assets to be Acquired ........................................... 1
1.1 Included Assets ........................................... 1
1.2 Excluded Assets ........................................... 2
2. Purchase Price: Assumption of Liabilities ...................... 2
2.1 Purchase Price ............................................ 2
2.2 Payment of Purchase Price ................................. 2
2.3 Assumption of Liabilities ................................. 3
2.4 Liabilities Not Assumed ................................... 5
2.5 Cash and Net Plant Adjustment ............................. 7
2.6 The Report ................................................ 8
3. Transfer and Assignment of Assets; Liabilities .................. 9
3.1 Instruments of Conveyance and Transfer .................... 9
3.2 Assignment of Certain Contracts and Rights ................ 10
3.3 Further Assurances ........................................ 10
4. Closing ......................................................... 11
4.1 Closing Date and Time ..................................... 11
5. Representations and Warranties of the Seller .................... 12
5.1 Standing and Power ........................................ 12
5.2 Authority ................................................. 12
5.3 Financial Information ..................................... 13
5.4 Absence of Certain Changes or Events ...................... 14
5.5 Title to Properties; Absence of Liens ..................... 17
5.6 List of Properties, Contracts and Other Data .............. 18
5.7 Litigation ................................................ 20
5.8 Employee Benefit Plans .................................... 20
5.9 Government Approvals ...................................... 21
5.10 Insurance ................................................. 22
5.11 Condition of Assets ....................................... 22
5.12 Accounts Receivable and Accounts Payable .................. 23
5.13 No Defaults ............................................... 23
5.14 Compliance with Applicable Law ............................ 23
5.15 Absence of Undisclosed Liabilities ........................ 24
5.16 Taxes ..................................................... 24
5.17 Brokers ................................................... 25
5.18 Hazardous Substances ...................................... 25
5.19 Underground Storage ....................................... 26
5.20 Exclusivity of Representations and Warranties ............. 26
6. Representations and Warranties of the Buyer ..................... 27
6.1 Organization and Standing ................................. 27
6.2 Authority ................................................. 27
6.3 Financing ................................................. 28
6.4 Brokers ................................................... 28
7. Covenants of the Seller ......................................... 28
7.1 Access to Properties, Books and Records ................... 28
7.2 Conduct of Business ....................................... 29
7.3 Defeasance ................................................ 32
7.4 Consulting Agreement ...................................... 32
7.5 North Wire Center ......................................... 33
8. Covenants of the Buyer .......................................... 33
8.1 Interconnection Agreements and Employees .................. 33
8.2 As Is ..................................................... 33
8.3 Cellular Licenses ......................................... 33
9. Covenants of the Seller and the Buyer ........................... 34
9.1 Regulatory Approvals ...................................... 34
9.2 Inspection and Preservation of Records; Further
Assistance ................................................ 35
9.3 Public Announcements ...................................... 37
9.4 Intervention in Commission Hearings ....................... 37
9.5 Taxes ..................................................... 37
9.6 Allocation of Purchase Price .............................. 37
10. Conditions to Obligations of the Seller ......................... 38
10.1 Compliance with Agreement ................................. 38
10.2 Representations and Warranties ............................ 38
10.3 Certificate of the Buyer .................................. 38
10.4 Consents and Approvals .................................... 38
10.5 All Proceedings to be Satisfactory ........................ 39
10.6 Opinions of Counsel ....................................... 39
10.7 Defeasance ................................................ 39
10.8 Acceptance by the Municipal Assembly ...................... 40
10.9 Adverse Proceedings ....................................... 40
11. Conditions to Obligations of the Buyer .......................... 40
11.1 Compliance with Agreement ................................. 40
11.2 Representations and Warranties ............................ 40
11.3 Certificate of the Seller ................................. 41
11.4 Consents and Approvals .................................... 41
11.5 All Proceedings to be Satisfactory ........................ 41
11.6 Opinions of Counsel ....................................... 41
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11.7 Defeasance; Removal of Liens .............................. 42
11.8 Acceptance by the Municipal Assembly ...................... 42
11.9 Adverse Proceedings ....................................... 42
11.10 Third-Party Consents and Approvals ........................ 42
11.11 Financing ................................................. 43
12. Termination ..................................................... 43
13. Amendment and Waivers ........................................... 44
13.1 Amendments, Modifications, etc. ........................... 44
13.2 Waivers ................................................... 44
14. Survival of Representations and Warranties ...................... 45
15. Indemnification ................................................. 45
15.1 Indemnification by the Buyer .............................. 45
15.2 Indemnification by the Seller ............................. 45
15.3 Procedure for Indemnification with Respect to
Third-Party Claims ........................................ 46
15.4 Mutual Indemnification .................................... 47
16. Expenses ........................................................ 48
17. Notices ......................................................... 49
18. Assignment ...................................................... 50
19. Entire Agreement ................................................ 50
20. Specific Performance: Third-Party Beneficiaries ................ 50
21. Counterparts .................................................... 51
22. Section Headings ................................................ 51
23. Applicable Law .................................................. 51
24. Confidential Information ........................................ 51
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INDEX TO EXHIBITS AND SCHEDULES
Schedules and Exhibits Section Reference Description
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1.1 1.1 Included Assets
1.2 1.2 Excluded Assets
2.3(k) 2.3(k) Assumed Liabilities
5.2(b) 5.2(b) Seller's Conflicting
Laws, Agreements and
Orders
5.2(c) 5.2(c) Seller's Required
Approvals for Transaction
5.3 5.3 Financial Information
5.4 5.4 Material Adverse Changes
5.5 5.5 Liens and Encumbrances
on the Assets
5.6 5.6 Properties, Contracts
and other Data
5.7 5.7 Litigation
5.8 5.8 Employee Benefit Plans
5.9 5.9 Government Approvals
Required to Conduct the
Business
5.10 5.10 Insurance
5.11 5.11 Condition of the Assets
5.13 5.13 Defaults
5.14 5.14 Compliance with
Applicable Law
5.15 5.15 Absence of Undisclosed
Liabilities
5.18 5.18 Hazardous Substances
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Schedules and Exhibits Section Reference Description
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5.19 5.19 Underground Storage
6.2(a) & (b) 6.2(a) & (b) Buyer's Conflicting
Agreements and Orders
6.2(c) 6.2(c) Buyer's Required
Governmental Approvals
7.3 7.3 Revenue Bonds
Exhibit A 2.3 Form of Assumption
Agreement
Exhibit B 3.1 Form of ▇▇▇▇ of Sale and
Assignment Agreement
Exhibit C 10.6 Opinion of Counsel for
the Buyer
Exhibit D 11.6 Opinion of City Attorney
of the Seller
Exhibit E 11.6 Opinion of Special
Counsel for the Seller
Exhibit F 11.6 Opinion of Bond Counsel
for the Seller
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ASSET PURCHASE AGREEMENT
This Agreement ("Agreement"), dated as of October 20, 1998, is being
made and entered into by and between Alaska Communications Systems, Inc., a
Delaware corporation (the "Buyer"), and the Municipality of Anchorage, a
municipality located in the State of Alaska (the "Seller").
W I T N E S S E T H:
WHEREAS, the Anchorage Telephone Utility ("ATU") is a telephone
exchange provider owned by the Seller which provides a variety of
telecommunications services, including local exchange, interexchange, cellular
and other wireless services to customers in Alaska (the "Telephone Operations");
and
WHEREAS, the Seller directly or indirectly holds title to and
ownership of all real and personal property operated and managed as ATU; and
WHEREAS, the Seller wishes to sell to the Buyer, and the Buyer
wishes to purchase from the Seller, subject to the terms and conditions
hereinafter set forth, the assets, properties, rights and businesses operated or
managed as ATU, subject to all liabilities of or related to ATU (other than the
liabilities excluded pursuant to Section 2.4 hereof (the "Excluded
Liabilities")), as more particularly described herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Assets to be Acquired.
1.1 Included Assets. At the Closing (as defined in Section 4.1
hereof) and subject to the terms and conditions hereinafter set forth, the
Seller shall sell, assign, convey, transfer and deliver, or cause to be sold,
assigned, conveyed, transferred and delivered, to the
Buyer and its successors and assigns, and the Buyer shall purchase, all of the
assets, properties, rights and businesses of the Seller relating to the business
and operations managed as or by ATU or any of the subsidiaries listed in Item
(q) of Schedule 1.1 (the "Subsidiaries"), including without limitation the
assets, or categories thereof, set forth on Schedule 1.1 hereto (the "Assets"),
subject to Section 1.2 hereof.
1.2 Excluded Assets. Notwithstanding anything to the contrary
provided in Section 1.1 hereof, none of the assets set forth on Schedule 1.2
hereto (the "Excluded Assets") shall be included in the Assets to be purchased
and sold hereunder.
2. Purchase Price; Assumption of Liabilities.
2.1 Purchase Price. The aggregate purchase price for the Assets
to be transferred hereunder shall be (a) $295,000,000 subject to adjustment
as described in Section 2.5 hereof (the "Purchase Price"), and (b) the
assumption of the liabilities of ATU as provided in Section 2.3 hereof,
subject to the provisions of Section 2.4 hereof.
2.2 Payment of Purchase Price. The Purchase Price shall be payable
as follows:
(a) On or before 2:00 p.m., Anchorage, Alaska time, on or before the
date 30 days following the date on which the Municipal Assembly of the Seller
shall have accepted the Buyer's bid as contemplated by Sections 10.8 and 11.8
hereof, an amount equal to one percent (1%) of the Purchase Price (the "Down
Payment") shall be paid by the Buyer to the Seller by wire transfer of
immediately available funds to such bank account or accounts as may be
designated in writing by the Seller.
The Down Payment shall be held by the Seller and invested in a
manner mutually acceptable to the Buyer and the Seller. Any interest earned on
such investment shall accrue to
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the benefit of the Seller; provided, however, that if and only if the Buyer
should terminate this Agreement pursuant to Section 12(d) hereof, then all such
interest theretofore accrued and accruing shall be paid to the Buyer.
The principal amount of the Down Payment shall be a credit against
the Purchase Price at the Closing. In the event this Agreement is terminated
without a Closing, the disposition of the principal amount of the Down Payment
shall be as follows:
(i) If this Agreement is terminated pursuant to Section 12(a), (d)
or (f) (other than in the circumstance described in clause (iii) below)
hereof, then the Seller shall return the principal amount of the Down
Payment to the Buyer.
(ii) If this Agreement is terminated pursuant to the provisions of
Section 12(e) hereof, the Seller may retain the principal amount of the
Down Payment.
(iii) If this Agreement is terminated pursuant to the provisions of
Section 12(c) hereof, or Section 12(f) hereof and, on the date of such
termination, the conditions described in Sections 10.4 and 11.4 shall not
have been satisfied, then the Seller may retain fifty percent (50%) of the
principal amount of the Down Payment and the Seller shall return the
balance of the principal amount of the Down Payment to the Buyer.
(b) At the Closing, the sum of $295,050,000, subject to the
adjustment described in Section 2.5, which represents the balance of the
Purchase Price, shall be paid by the Buyer to the Seller by wire transfer of
immediately available funds to such bank account or accounts as may be
designated in writing by the Seller.
2.3 Assumption of Liabilities. At the Closing, and as additional
consideration for the purchase of the Assets, the Buyer shall execute and
deliver to the Seller an assumption agreement, in substantially the form of the
Assumption Agreement attached hereto as Exhibit A,
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pursuant to which the Buyer shall agree, subject to Section 2.4 hereof, to pay,
perform and discharge when due, to the extent the same are unpaid, unperformed
or undischarged on the Closing Date, all of the liabilities and obligations of
the Seller with respect to the use of the Assets and the Telephone Operations
(the "Liabilities"), including, without limitation:
(a) All liabilities and obligations reflected on the audited balance
sheet of ATU as of December 31, 1997 and the related audited statements of
revenues and expenses, retained earnings and changes in financial position for
the 12-month period then ended, including the notes thereto (the "1997 Financial
Statements") and not previously discharged;
(b) All liabilities and obligations incurred in the ordinary course
of business and consistent with past practices between January 1, 1998 and the
Closing Date;
(c) All liabilities and obligations consented to by the Buyer in
writing pursuant to this Agreement or otherwise;
(d) All liabilities and obligations which arise under the terms of
any contract, agreement, license, lease, sales order, purchase order or other
commitment which is assigned, or the benefits of which are to be provided, to
the Buyer hereunder;
(e) All liabilities and obligations incurred in the ordinary course
of business and consistent with past practices, whether occurring prior to, on
or after the Closing Date, which are not required to be reflected as liabilities
on the 1997 Financial Statements under generally accepted accounting principles,
consistently applied;
(f) All workers compensation, automobile and similar liabilities for
personal injuries, in each case to the extent such liability arises from an
injury, event or occurrence, whether occurring prior to, on or after the Closing
Date;
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(g) All insurance premiums or other amounts owing to maintain
insurance (including self-insurance), or retroactive assessments based upon
claims described in the preceding subsection (f);
(h) All liabilities and obligations arising out of litigation or
administrative proceedings, whether existing prior to, on or after the Closing
Date;
(i) All liabilities and obligations for sales, transfer or similar
taxes arising out of the transactions contemplated by this Agreement;
(j) All liabilities and obligations, whether asserted or unasserted,
known or unknown, (i) directly or indirectly arising out of or relating to any
claims or controversies pending or threatened, whether prior to, on or after the
Closing Date between the Seller and any of its employees, former employees,
employees' collective bargaining representatives or job applicants, or any
association or group of such persons, with respect to ATU (including, but not
limited to, claims or controversies asserted pursuant to any federal, state or
local constitution, statute, law, regulation, rule, collective bargaining
agreement or ordinance relating in whole or in part to the employment of labor
and equal employment opportunity) or (ii) directly or indirectly relating to any
action which the Seller took or failed to take with regard to such persons and
with respect to ATU, whether prior to, on or after the Closing Date; and
(k) The liability of Seller to the Alaska Public Employees'
Retirement System Plan ("PERS") resulting from the vesting of PERS benefits as a
result of the sale of the ATU as specified in Schedule 2.3(k) hereto.
2.4 Liabilities Not Assumed. Notwithstanding anything in this
Agreement or the Assumption Agreement to the contrary, the Buyer shall not
assume any, and the Seller shall retain and be responsible for all, of the
following liabilities and obligations of the Seller: (a) all
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liabilities and obligations arising under or in connection with all revenue
bonds issued by the Seller which are or were secured by a pledge of revenues
derived from the operation of the Assets, including, without limitation, all
liabilities and obligations incurred in connection with the issuance, defeasance
or redemption of such revenue bonds; (b) all liabilities and obligations of the
Seller for income-based taxes arising as a result of the sale by the Seller of
the Assets or the assumption by the Buyer of any liabilities in accordance with
this Agreement; (c) all liabilities and obligations of the Seller arising under
or in connection with any and all ATU Plans, as defined in Section 5.8 hereof,
and any and all Multiemployer Plans and Multiple Employer Plans, as defined in
Section 5.8 hereof, to which the Seller has made contributions; provided,
however, that the Buyer shall assume all, and the Seller shall not retain or be
responsible for any, liabilities and obligations of the Seller with respect to
medical, disability and group life benefits (other than benefits payable after
retirement) and the Multiple Employer Plans and Multiemployer Plans described in
Section 5.8(b)(iii) hereof, other than liabilities and obligations (i) under the
PERS (but excluding the Buyer's obligation to pay the amount specified in
Section 2.3(k) hereof), (ii) for penalties for the Seller's noncompliance with
applicable law, (iii) for contributions required to be made to such Multiple
Employer Plans and Multiemployer Plans prior to the Closing Date and (iv)
resulting from the full or partial withdrawal by the Seller from any Multiple
Employer Plan or Multiemployer Plan; (d) all liabilities and obligations of the
Seller required to be disclosed to the Buyer under the terms of this Agreement
of which the Seller has actual knowledge on the Closing Date but intentionally
decides not to disclose to the Buyer; (e) all liabilities and obligations of the
Seller arising in respect of or in connection with any of the assets listed on
Schedule 1.2 hereto; (f) all liabilities and obligations of the Seller, the
assumption of which by the Buyer would not be permitted by law because the
Seller is a
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governmental entity and the Buyer is not; (g) all liabilities and obligations of
the Seller for "Arbitrage payable," as such term is used in the 1997 Financial
Statements; and (h) all liabilities and obligations for all MUSA (as defined
herein) payments, the 1998 revenue distribution and the 1999 revenue
distribution (all of which the Seller is expected to pay prior to Closing). For
the purposes of this Section 2.4, the Seller shall be deemed to have actual
knowledge of a liability or obligation if, and only if, the Seller's Mayor, a
member of either the ATU Committee of Seller's Municipal Assembly or Executive
Committee, any official (elected or appointed) of the Seller with a rank of
director or higher, or any officer of ATU with the rank of division manager or
higher has actual knowledge of such liability or obligation.
2.5 Cash and Net Plant Adjustment. The Purchase Price shall be
adjusted upward (to the extent that the Cash and Net Plant Adjustment described
below is a negative number) or downward (to the extent that the Cash and Net
Plant Adjustment described below is a positive number). The Cash and Net Plant
Adjustment shall be calculated as of the Closing Date, and be equal to
$307,121,987 less the sum of (a) all cash and cash equivalents of ATU, MACtel,
Inc. ("MACtel") and ATU Long Distance, Inc. ("ATU-LD") included in the Assets as
described in item (m) of Schedule 1.1 hereto, but excluding all amounts in the
accounts of Sellers entitled "Revenue Bond Reserve Investment," and (b) the book
value of (i) "Net telephone plant" of ATU, as such term is used in the 1997
Financial Statements and the Interim Financial Statements (as defined herein),
(ii) "Property and equipment" less "accumulated depreciation" of MACtel, and
(iii) "Total Fixed Assets" of ATU-LD, in the case of (ii) and (iii) as such
terms are used in the Interim Financial Statements, included in the Assets
transferred pursuant hereto, computed in accordance with generally accepted
accounting principles applied on a consistent basis with the Interim Financial
Statements. At the Closing, the Seller shall provide to the Buyer a good faith
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estimate of the Cash and Net Plant Adjustment, certified by the Chief Financial
Officer of the Seller, and the payment on the Closing Date described in Section
2.2(b) shall be based on such good faith estimate. Within 5 days after the
Report (as defined in Section 2.6) becomes final and binding, the Seller shall
pay to the Buyer or the Buyer shall pay to the Seller without interest, the
amount of any differences between the estimated Cash and Net Plant Adjustment
and the Cash and Net Plant Adjustment as determined from the Report. Such
payment shall be by wire transfer of immediately available funds to a bank
account designated in writing by the recipient of such payment.
2.6 The Report. In order to perform the calculations required for
the adjustment called for in Section 2.5, within 30 days after the Closing Date,
the Buyer shall prepare and deliver to the Seller, or cause to be prepared and
delivered to the Seller, a report setting forth the sum of the items described
in Section 2.5(a) and (b) as of the Closing Date (the "Report"). The Report
shall be prepared in conformity with the accounting practices and procedures
used to prepare the 1997 Financial Statements and the Interim Financial
Statements (as defined in Section 5.3 hereof) and on the basis used in
calculating the Cash and Net Plant Adjustment pursuant to Section 2.5, and shall
be certified by the Chief Financial Officer of the Buyer. The Buyer shall give
the Seller and its employees and agents such assistance and access to the
assets, books and records of ATU during normal business hours as the Seller
shall reasonably request to enable the Seller to review and observe preparation
of the Report. The Seller and its employees and agents shall have the
opportunity to observe the taking of the inventory of ATU, and to examine the
work papers, schedules and other documents prepared by the Buyer, in connection
with the preparation of the Report. The Report shall be final and binding on the
Buyer and the Seller unless within 15 days after receiving such Report the
Seller
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delivers to the Buyer a written notice in reasonable detail of any objections to
such Report. If such a notice is delivered, and the Buyer and the Seller shall
negotiate in good faith with each other to resolve the objections, and if they
are able to resolve the objections, the Report shall be deemed final and binding
on the Buyer and the Seller upon such resolution. If the Buyer and the Seller
are unable to reach agreement within 30 days after such notice is delivered, the
dispute shall be resolved by a firm of independent accountants of nationally
recognized standing selected mutually by the Buyer and the Seller. The Buyer and
the Seller shall instruct such firm to resolve the dispute within 30 days, and
shall bear the fees and costs of such firm equally. The resolution of the
dispute by the firm of accountants shall be final and binding on the Buyer and
the Seller.
3. Transfer and Assignment of Assets; Liabilities.
3.1 Instruments of Conveyance and Transfer. The sale, assignment,
conveyance, transfer and delivery of the Assets shall be effected by the
Seller's execution and delivery to the Buyer, on the Closing Date, of a ▇▇▇▇ of
sale in substantially the form of the Assignment and ▇▇▇▇ of Sale attached
hereto as Exhibit B, together with such other quitclaim deeds (or the local
equivalent thereof), bills of sale, endorsements, assignments and other
instruments of transfer and conveyance in form and substance sufficient to vest
in the Buyer all of the Seller's right, title and interest in and to the Assets
and as shall reasonably be required by the Buyer or its counsel. In addition, on
the Closing Date the Seller shall transfer to the Buyer, by wire transfer of
immediately available funds to such bank account or accounts as may be
designated in writing by the Buyer, all cash and cash equivalents included in
the Assets, including without limitation all amounts in the accounts of the
Seller entitled "▇▇▇▇▇ Cash," "Equity in General Cash Pool," and "Equity in
Construction Cash Pool" but excluding all
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amounts in the accounts of the Seller entitled "Revenue Bond Reserve
Investment," and any other amounts which the Buyer and the Seller agree should
be held in such bank account or accounts as reserves, which amounts will not be
considered in calculating the Cash and Net Plant Adjustment.
3.2 Assignment of Certain Contracts and Rights. The Seller shall use
its reasonable best efforts prior to and, if necessary, after the Closing Date
to obtain such consents or approvals as may be required for the assignment or
transfer of the contracts, agreements, leases, commitments and rights to be
transferred to the Buyer hereunder; provided, however, that the Seller shall not
be required to institute any litigation, or to pay or agree to pay any amount,
in order to obtain any such consent or approval. If any such consent or approval
is not obtained, the Seller and the Buyer agree to cooperate in any reasonable
arrangements (which may include, in the case of leased property, a sublease or
license thereof or operating agreement with respect thereto) designed to provide
for the Buyer all of the benefits (and to assure that the Seller will be
effectively relieved from related liabilities) under such contract, agreement,
lease, commitment or right. Nothing in this Agreement shall be construed as an
attempt or agreement to assign (a) any contract, agreement, lease, commitment or
right which is nonassignable without the consent of the other party or parties
thereto unless such consent shall have been given, or (b) any contract or claim
as to which all the remedies for the enforcement thereof would not pass to the
Buyer as an incident of the assignments provided for by this Agreement.
3.3 Further Assurances. The Seller agrees that, at any time and from
time to time on and after the Closing Date, it will, upon the request of the
Buyer and without further consideration, take any and all commercially
reasonable steps necessary to place the Buyer in possession and operating
control of the Assets, and will do, execute, acknowledge and deliver, or
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will cause to be done, executed, acknowledged and delivered, all such further
acts, deeds, assignments, conveyances, transfers, powers of attorney or
assurances as may be reasonably required in order fully to sell, assign, convey,
transfer, grant, assure and confirm to the Buyer, or to aid and assist in the
collection of or reducing to possession by the Buyer of, all of the Assets, or
to vest in the Buyer good, valid and marketable title, subject to the
encumbrances permitted by this Agreement, to the Assets. In addition, and in no
way limiting the foregoing, for a period of five years from the Closing, the
Seller, upon the request of the Buyer and without further consideration, will
take any and all commercially reasonable steps necessary to obtain for and
deliver to the Buyer the easements and rights-of-way reasonably necessary to the
Telephone Operations as of the Closing Date. The Buyer agrees that, at any time
and from time to time on and after the Closing Date, it will, upon the request
of the Seller and without further consideration, take any and all commercially
reasonable steps necessary to assume the liabilities and obligations of the
Seller with respect to the use of the Assets and the Telephone Operations in
accordance with Section 2.3 hereof, and will do, execute, acknowledge and
deliver, or will cause to be done, executed, acknowledged and delivered, all
such further acts, deeds, assignments, conveyances, transfers, powers of
attorney or assurances as may be reasonably required in order fully to assume
such liabilities and obligations.
4. Closing.
4.1 Closing Date and Time. The closing of the transactions provided
for herein (the "Closing"), shall take place at 10:00 a.m. Anchorage, Alaska
time on the date 15 business days following the date on which the last of the
conditions contained in Sections 10 and 11 hereof has been satisfied or waived,
other than such conditions that by their terms are to be satisfied on the
Closing Date, at the offices of the Seller, Office of the ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, or at such other date, time and place as the parties hereto
may mutually agree, but in no event later than 30 days following the date on
which the last of the conditions contained in Sections 10 and 11 hereof has been
satisfied or waived, other than such conditions that by their terms are to be
satisfied on the Closing Date. At the Closing, the Buyer and the Seller shall
deliver, or cause to be delivered, to the other party or parties, such
certificates, receipts or other documents or instruments, in addition to those
specifically provided for herein, as may reasonably be requested by such other
party. The date on which the Closing occurs is referred to herein as the
"Closing Date."
5. Representations and Warranties of the Seller. For purposes of
this Section 5, each reference to "ATU" shall be deemed, to the extent
appropriate, to refer as well to each of the Subsidiaries. The Seller hereby
represents and warrants to the Buyer as follows:
5.1 Standing and Power. The Seller has full power and authority to
own the Assets and is authorized to conduct the business of the Telephone
Operations.
5.2 Authority. (a) The Seller is not a party to any agreement,
arrangement or commitment which would render the Seller unable to comply with
its obligations hereunder.
(b) Except for the acceptance of the Buyer's bid by the Municipal
Assembly of the Seller as described in Sections 10.8 and 11.8 hereof, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Seller. This Agreement constitutes the legal, valid
and binding obligation of the Seller, enforceable in accordance with its terms.
Except as disclosed in Schedule 5.2(b) hereto, neither the execution nor the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor the compliance with or fulfillment of the terms and
provisions hereof, will (i) conflict with or result in a breach or
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violation of any of the terms, conditions or provisions of the Anchorage
Municipal Code or other governance documents of the Seller or ATU, or (ii)
result in a material breach or default under any provision of any agreement,
indenture, mortgage, lien, lease or other instrument or restriction of any kind
to which the Seller or ATU is a party or by which the Seller, ATU or any of the
Assets is otherwise bound or affected, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Seller, ATU or
any of the Assets, which conflict, breach, default or violation, in any such
case, would have a material adverse effect on the Assets or the condition
(financial or other), business or operations of ATU, in each case taken as a
whole, or on the consummation of the transactions contemplated hereby, or would
result in any material liability of the Buyer, and which will not be cured,
waived or terminated prior to the Closing Date.
(c) Except as set forth in Schedule 5.2(c) hereto, no consent,
approval or authorization of, or filing or registration with, any governmental
or regulatory authority is required to be obtained by the Seller in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
5.3 Financial Information. Attached hereto as Schedule 5.3 are
complete and correct copies of (a) the 1997 Financial Statements and (b) the
unaudited balance sheets of ATU, MACtel and ATU-LD as at August 31, 1998 and the
related unaudited statements of revenues and expenses, retained earnings and
changes in financial position for the nine-month period then ended (the items
referred to in clause (b) being the "Interim Financial Statements"). The 1997
Financial Statements and the Interim Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods specified therein and fairly present the financial
condition and changes in financial
-13-
position of ATU, as applicable, ATU-LD and MACtel, as of the dates specified
therein and the results of its operations for the periods specified therein,
except that the Interim Financial Statements do not contain the notes that might
otherwise be required by generally accepted accounting principles.
5.4 Absence of Certain Changes or Events. Except as otherwise set
forth in Schedule 5.4 hereto or expressly consented to in writing by the Buyer
pursuant to this Agreement or otherwise, since May 31, 1998:
(a) Neither the Assets nor the Telephone Operations have sustained
any damage, destruction or loss, whether by reason of fire, explosion,
earthquake, casualty, requisition or taking of property by any government or
agency thereof, windstorm, embargo, riot, strike, act of God or public enemy,
flood, accident, revocation of license or right to do business, total or partial
termination, suspension, default or modification of any contract, governmental
restriction or regulation or other calamity or other similar event materially
and adversely affecting the Assets or the condition (financial or other),
business or operations of ATU, in each case taken as a whole.
(b) There have been no changes in the Assets or the condition
(financial or other), business, operations, obligations or liabilities (fixed or
contingent) of the Telephone Operations that, in the aggregate, have had or may
be reasonably expected to have (whether prior to or after the Closing Date), a
material adverse effect on the Assets or the condition (financial or other),
business or operations of ATU, in each case taken as a whole.
(c) Neither the Seller nor ATU has incurred in respect of the
Telephone Operations additional debt for borrowed money (including, without
limitation, obligations under leases for real or personal property whether or
not required to be capitalized under generally
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accepted accounting principles), nor incurred or increased in respect of the
Telephone Operations any obligation or liability (fixed, contingent or other,
including, without limitation, liabilities as a guarantor or otherwise with
respect to obligations of others), nor has the Seller or ATU forgiven or
released, in respect of the Telephone Operations any debt or claim, given any
waiver of any right of material value or voluntarily suffered any extraordinary
loss, except in any such case (i) in the ordinary course of business, (ii)
consistent with past practices, and (iii) without causing a material adverse
effect on the Assets or the condition (financial or other), business or
operations of ATU, in each case taken as a whole.
(d) Neither the Seller nor ATU has made in respect of the Telephone
Operations any payment to discharge or satisfy any material Lien (as defined
below) or paid any material obligation or liability (fixed or contingent) other
than (i) current liabilities (including the current portion of any long-term
liabilities) included in the Interim Financial Statements and (ii) current
liabilities incurred or maturing since the date of the Interim Financial
Statements in the ordinary course of business (for purposes of this Agreement,
the phrase "in the ordinary course of business" shall be deemed to include the
phrase "and consistent with past practice").
(e) ATU has not declared or made any interfund transfer, equity
distribution or other transfer or distribution of cash or property to the Seller
such that such cash or property would no longer be considered part of the
Assets, other than as described in Section 7.2(a)(iii) hereof.
(f) Neither the Seller nor ATU has mortgaged, pledged, otherwise
encumbered or subjected to Lien any of the Assets nor committed itself to do any
of the foregoing, except for Liens permitted under Section 5.5 hereof.
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(g) Neither the Seller nor ATU has, except in the ordinary course of
business in each case for fair consideration, disposed of, or agreed to dispose
of, any of the Assets nor leased or licensed to others, or agreed so to lease or
license, any of the Assets.
(h) Neither the Seller nor ATU has entered into any transaction or
contract, or an amendment thereto, in respect of the Telephone Operations or
made any commitment to do the same, except (i) in the ordinary course of
business and not requiring the payment in any case of an amount in excess of
$1,000,000 in any one year or an amount in excess of $2,500,000 over the life of
the transaction or contract, or (ii) with respect to any excluded assets set
forth on Schedule 1.2 hereto.
(i) Neither the Seller nor ATU has made any material increases in
the compensation of the employees employed by ATU or materially changed any
personnel policies or employee benefits applicable to such employees, other than
in the ordinary course of business and consistent with past practices, or
increased the number of regular, full-time employees to a number in excess of
716.
(j) Neither the Seller nor ATU has changed any of the accounting
methods, policies or practices of ATU in any material respect or, after the date
hereof, as permitted by Section 7.2.
(k) Neither the Seller nor ATU has acquired any additional Assets
which would be material to the condition (financial or other), business or
operations of ATU, in each case taken as a whole, except for Assets acquired in
the ordinary course of business and consistent with past practices.
(l) Neither the Seller nor ATU has agreed or committed to do any of
the foregoing.
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5.5 Title to Properties; Absence of Liens. Except as set forth in
Schedule 5.5 hereto, the Seller has, and shall transfer and convey to the Buyer,
good and valid (and, in the case of the real property, good and marketable)
title to all of the Assets, in each case free and clear of all mortgages, liens,
pledges, claims, charges, security interests, easements, restrictive covenants,
rights-of-way, leases, purchase agreements, options and other restrictions,
title defects, encumbrances and agreements of any nature whatsoever ("Liens"),
other than (a) Liens imposed by law in the ordinary course of business securing
obligations which are not overdue, or, if overdue, are being contested in good
faith by appropriate proceedings, (b) Liens upon leases and contracts included
in the Assets or upon property subject to such leases and contracts included in
the Assets or upon property subject to such leases and contracts granted by
lessors or parties to such contracts other than ATU or the Seller, (c)
mechanics', carriers', workers', repairmen's or other like Liens arising or
incurred in the ordinary course of business, (d) purchase money Liens arising
out of the purchase of products or services in the ordinary course of business
and consistent with past practices, (e) other Liens which in the aggregate do
not materially and adversely affect the value of the Assets taken as a whole,
and (f) Liens securing liabilities to be assumed by the Buyer pursuant to
Section 2.3 hereof. Except as set forth in Schedule 5.5 hereto, all
rights-of-way, easements, leaseholds, leasehold interests, contract rights,
licenses, permits and other intangible Assets are owned directly by the Seller
and are (and when transferred and conveyed to the Buyer will be) valid,
subsisting and in full force and effect in accordance with their terms. The
leases of real property and all amendments thereto described in Schedule 5.6
hereto constitute the entire agreements between the parties thereto, and said
leases have not been further amended or modified except as described in such
Schedule 5.6.
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5.6 List of Properties, Contracts and Other Data. Schedule 5.6
hereto contains a list setting forth with respect to the Seller, as of the date
hereof, the following:
(a) All land and improvements thereon owned by the Seller or ATU
which are included in the Assets;
(b) All leases of real or personal property to which the Seller or
ATU is a party (the "Leases"), either as lessee or lessor, which are included in
the Assets; provided, however, that Schedule 5.6 hereto does not list any lease
of personal property under which the total remaining lease payments are less
than $100,000;
(c) (i) All patents, trademarks, trade names, copyrights and
servicemarks, and all registrations therefor unexpired as of the date hereof,
all applications pending therefor on said date and all other proprietary rights
included in the Assets (collectively, the "Intellectual Property"), and (ii) all
licenses granted by or to the Seller or ATU and all other agreements to which
the Seller or ATU is a party which relate, in whole or in part, to any items of
the categories mentioned in (c)(i) above or to other proprietary rights included
in the Assets;
(d) All contracts, understandings and commitments (including,
without limitation, mortgages, indentures, loan agreements, employment
agreements, collective bargaining agreements and other employment related
contracts and agreements) to which the Seller or ATU is a party relating to the
Assets or the Telephone Operations, or to which the Seller or ATU or any of the
Assets are subject and which are not specifically referred to in (b) or (c)
above; provided, however, that Schedule 5.6 hereto does not list any contracts,
understandings or commitments under purchase orders with customers, sales
contracts, supply contracts with suppliers and other such commitments incurred
in the ordinary course of business and consistent with past practices, other
than any such contract, understanding or commitment
-18-
which (i) is a contract, understanding or commitment or group of related
contracts, understandings or commitments under which the total remaining
payments exceed $100,000 in aggregate amount, (ii) is a sales contract of an
open-ended or blanket nature, or (iii) cannot be performed in the normal course
within 180 days after the Closing Date or canceled within such period by the
Seller, or its assignee, without breach, penalty or liability; and
(e) All approvals, authorizations, consents, licenses, permits,
franchises, orders and other registrations of any federal, state or local court
or other governmental department, commission, board, bureau, agency or
instrumentality, held by the Seller and required to permit the Seller or ATU to
conduct the Telephone Operations as presently conducted.
The Seller has delivered to the Buyer a true copy of ATU's
Continuing Property Record ("CPR"), dated as of May 31, 1998. The CPR accurately
lists all items of property included in the Assets with a book value equal to or
greater than $100,000 as of that date.
Except as disclosed in Schedule 5.6 hereto, there has been no claim
that any Lease, license, patent or other proprietary right, agreement or
contract referred to in such Schedule 5.6, or any lease, license, patent or
other proprietary right, agreement or contract coming into existence after the
date hereof which, if in existence on the date hereof, would have been required
to be disclosed in such Schedule 5.6, is not valid and enforceable in accordance
with its terms for the periods stated therein, that there is under any such
Lease, license, patent or other proprietary right, agreement or contract any
existing default or event of default or event which with notice or lapse of time
or both would constitute such a default or event of default, and there is no
such existing default, event of default or event on the part of the Seller or
ATU, or, to the knowledge of the Seller, any other person.
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5.7 Litigation. Except as listed and described in Schedule 5.7
hereto, there are no actions, suits, proceedings, claims, investigations or
examinations pending or threatened which arise from the use of the Assets or the
conduct of the business of the Telephone Operations, including without
limitation actions, suits, proceedings, claims, investigations or examinations
pertaining to employment matters or labor agreements, or which question the
validity or seek to prevent the consummation of this Agreement or the
transactions contemplated hereby, whether at law or in equity, before or by any
federal, state or local court or other governmental department, commission,
board, bureau, agency or instrumentality, which, individually or in the
aggregate, if adversely determined, would result in any material adverse effect
on the condition (financial or other), business or operations of ATU, in each
case taken as a whole, or would prevent the consummation of this Agreement or
the transactions contemplated hereby.
5.8 Employee Benefit Plans. (a) A list of all ATU Plans (as defined
below) is set forth in Schedule 5.8 hereto.
(b) Except as disclosed in Schedule 5.8 hereto: (i) The ATU Plans
and any related trust agreements, group annuity contracts, insurance policies or
other agreements are in substantial compliance with the applicable provisions,
if any, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Internal Revenue Code of 1986, as amended (the "Code"), and other
applicable laws; (ii) All contributions due and payable on or before the Closing
Date in respect of the ATU Plans have been made or will be made before the
Closing Date; and (iii) The only Multiple Employer Plans and Multiemployer Plans
(as hereinafter defined in Section 5.8(c) hereof) to which ATU or the Seller
contributes or is obligated to contribute on behalf of the Employees are the
Public Employees' Retirement System
-20-
Plan and any plans administered or sponsored by the International Brotherhood of
Electrical Workers, Local No. 1547 (the "IBEW"); provided, however, that the
representations made under this Section 5.8 are subject to any amendments to any
ATU Plan, Multiple Employer Plan or Multiemployer Plan required by any
applicable statute.
For the purposes hereof, the term "ATU Plan" means any "employee
benefit plan" (as that term is defined in Section 3(3) of ERISA), as well as any
other written or formal plan or contract involving direct or indirect
compensation under which ATU has any present or future obligations or liability
on behalf of employees or former employees of the Telephone Operations or their
dependents or beneficiaries; provided, however, that such term shall exclude any
"Multiemployer Plan" or "Multiple Employer Plan." For the purposes hereof, with
respect to any employer, the term "Multiemployer Plan" means a multiemployer
pension plan or multiemployer employee welfare benefit plan within the meaning
of Section 3(37) and 4001(a)(3) of ERISA under which such employer has any
present or future obligations or liability on behalf of its employees, and
"Multiple Employer Plan" means a multiple employer plan within the meaning of
Section 413(c) of the Code under which such employer has any present or future
obligations or liability on behalf of its employees.
5.9 Government Approvals. Except as set forth in Schedule 5.9
hereto, the Seller has all approvals, authorizations, consents, licenses,
permits, franchises, orders and other registrations of any federal, state or
local court or other governmental department, commission, board, bureau, agency
or instrumentality (collectively, the "Permits"), required to permit the Seller
to conduct the Telephone Operations as presently conducted, except where the
failure to have such Permits, individually or in the aggregate, does not have a
material adverse effect on
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the Assets or the condition (financial or other), business or operations of ATU,
in each case taken as a whole.
5.10 Insurance. Schedule 5.10 hereto contains a list of all policies
and binders of insurance and self-insurance arrangements covering any of the
Assets or the Telephone Operations. No policy listed has been canceled and each
policy listed will continue in effect until the earlier of its expiration date
or the Closing Date. On the Closing Date, each such policy listed and remaining
in force will be canceled as to ATU and the Seller will notify the insurance
carriers issuing such policies of the cancellations. The Seller will direct such
insurance carriers to audit such policies and to send to the Buyer any premiums
to be refunded under such policies. In addition, the Seller shall direct its
external actuaries to determine the amounts of the uninsured reserves held in
the Seller's insurance funds allocable to ATU as of the Closing Date and shall
forthwith transfer such amounts to the Buyer, by wire transfer of immediately
available funds to such bank account or accounts as may be designated in writing
by the Buyer; provided, such funds shall not be treated as cash or cash
equivalents for purposes of the Cash and Net Plant Adjustment.
5.11 Condition of Assets. To the knowledge of the Seller, except as
set forth in Schedule 5.11 hereto, all tangible personal property, fixtures and
equipment included in the Assets, and all tangible personal property, fixtures
and equipment leased under leases included in the Assets, are (a) in good
operating condition or otherwise suitable for their intended purpose, and (b)
adequate for the conduct of the Telephone Operations as currently being
conducted, except for the Assets which are not currently being used or which are
not individually and in the aggregate material to the condition (financial or
other), business or operations of ATU, in each case taken as a whole.
-22-
5.12 Accounts Receivable and Accounts Payable. The accounts
receivable and the accounts payable of ATU shown on the 1997 Financial
Statements and the Interim Financial Statements arose from bona fide
transactions in the ordinary course of business and consistent with past
practices. The values at which accounts receivable are carried on the 1997
Financial Statements and the Interim Financial Statements reflect the accounts
receivable valuation policy of the Seller and ATU, which is consistent with past
practices and in accordance with generally accepted accounting principles
applied on a consistent basis.
5.13 No Defaults. Except as set forth in Schedule 5.13 hereto,
neither the Seller nor ATU is in violation of or in default with respect to any
contract, agreement, lease, mortgage, Permit or other instrument, or any
covenant or restriction affecting any of the real property included in the
Assets, or any order, writ or decree of any federal, state or local court or
other governmental department, commission, board, bureau, agency or
instrumentality, which violation or default, individually or in the aggregate,
would have a material adverse effect on the condition (financial or other),
business or operations of ATU, taken as a whole, or on the ability of the Seller
to perform its obligations hereunder, and there has not occurred any event
which, with notice or lapse of time or both, would constitute such a violation
or default.
5.14 Compliance with Applicable Law. Except as set forth in Schedule
5.14 hereto, the conduct of the Telephone Operations and the operation and
maintenance of the real property included in the Assets does not violate or
infringe upon any, and is in compliance with all federal, state or local
statutes, laws, regulations, rules or ordinances, except for such violations or
infringements or failures to comply which would not have a material adverse
effect on the Assets or on the condition (financial or other), business or
operations of ATU, in each case taken as a whole.
-23-
5.15 Absence of Undisclosed Liabilities. Except to the extent
disclosed, reflected or reserved against in the 1997 Financial Statements or the
Interim Financial Statements or in Schedule 5.15 hereof, ATU had as at August
31, 1998 no liabilities or obligations of any nature, whether accrued, absolute,
contingent or other (including, without limitation, liabilities as guarantor or
otherwise with respect to obligations of others) and whether due or to become
due, including, without limitation, any liabilities for Taxes (as defined in
Section 5.16 hereof), for any period prior to such date or arising out of any
transaction entered into or any set of facts existing prior to such date, other
than those liabilities or obligations that either individually or in the
aggregate would not reasonably be expected to have a material adverse effect on
the Assets or the condition (financial or other), business or operations of ATU,
in each case taken as a whole. Except for those liabilities or obligations that
are fully disclosed, reflected or reserved against in the 1997 Financial
Statements or the Interim Financial Statements or on Schedule 5.15 hereto, to
the knowledge of the Seller, there is no reasonable basis for a determination by
any court, agency, authority, arbitration panel or other tribunal that the
Seller or ATU is liable with respect to any liabilities or obligations that
either individually or in the aggregate would reasonably be expected to be
materially adverse to the Assets or the condition (financial or other), business
or operations of ATU taken as a whole.
5.16 Taxes. All taxes, assessments, fees, imposts, levies and other
charges, including, without limitation, interest and penalties, upon the Seller
and ATU in respect of the Telephone Operations, whether on property, payroll,
sales, assets, revenues, income, net income, net worth, accumulated earnings,
items of tax preference or any other base, imposed by any taxing authority,
federal, state, local or foreign ("Taxes"), that have become due and payable
have been paid, other than those not yet delinquent. The Seller and ATU have
duly filed with the
-24-
appropriate government agencies all returns and reports with respect to Taxes
required to be filed by them. No waiver of any statute of limitations relating
to Taxes has been executed or given by the Seller or ATU. The charges, accruals
and reserves shown in the 1997 Financial Statements and the Interim Financial
Statements are adequate to cover all liabilities for Taxes as of December 31,
1997 and August 31, 1998, respectively, except to the extent disclosed in notes
to such financial statements. The Seller has made available to the Buyer correct
and complete copies of all documents and materials relating to any pending
federal, state or local tax dispute concerning the Telephone Operations or in
any way affecting the Telephone Operations.
5.17 Brokers. Other than ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation which has been retained as financial advisor to the Seller pursuant
to a contract dated as of June 10, 1998 and whose fees and expenses will be paid
by the Buyer as specified in Section 16 hereof, neither the Seller nor any
officer, official (elected or appointed), director or employee of either, has
employed any finder, broker, investment banker or similar agent or other
intermediary on behalf of the Seller, ATU or the Buyer, or incurred on behalf of
the Seller, ATU or the Buyer any liability for any brokerage, finders' or
investment banking fees or commissions in connection with the negotiation or
consummation of the transactions contemplated hereby.
5.18 Hazardous Substances. Except as set forth in Schedule 5.18
hereto, the Seller and ATU have complied with respect to the Assets and the
Telephone Operations in all material respects with all Environmental Laws (as
hereinafter defined) in connection with the generation, handling, manufacturing,
processing, treatment, storage, use, transfer, release or disposal of hazardous
substances, hazardous wastes, hazardous waste constituents and reaction
byproducts, hazardous materials, pesticides, oil and other petroleum products,
and toxic substances, including asbestos and PCBs, as those terms are defined
pursuant to Environmental
-25-
Laws (collectively "Hazardous Substances"). To the best of the Seller's
knowledge, the Assets do not contain any Hazardous Substances the presence of
which could have a material adverse effect on the condition (financial or
other), business or operations of ATU, in each case taken as a whole. For
purposes of this Section 5.18, "Environmental Laws" shall be all federal, state
and local laws, rules, regulations, ordinances, programs, permits, guidances,
orders and consent decrees relating to environmental matters, including without
limitation the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Toxic Substance Act,
the Clean Water Act, the Clean Air Act and state and federal environmental
cleanup programs.
5.19 Underground Storage. Except as set forth in Schedule 5.19
hereto, to the best of the Seller's knowledge the Assets do not contain any
underground storage or treatment tanks, active or abandoned water, gas or oil
▇▇▇▇▇, or any other underground improvements or structures, other than the
foundations, footings or other supports for the buildings included in the
Assets.
5.20 Exclusivity of Representations and Warranties. Except for the
representations and warranties contained herein, the Seller makes no other
representations or warranties, express or implied, and the Seller hereby
disclaims any such representations or warranties whether by the Seller, ATU or
any of their respective directors, officials (elected or appointed), officers,
employees, agents or representatives, or any other person, with respect to this
Agreement and the transactions contemplated hereby, notwithstanding the delivery
or disclosure to the Buyer or any of its directors, officers, employees, agents
or representatives, or any other person, of any documentation or other
information by the Seller or any of its directors,
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officials (elected or appointed), officers, employees, agents or
representatives, or any other person, with respect to the foregoing.
6. Representations and Warranties of the Buyer.
The Buyer hereby represents and warrants to the Seller as follows:
6.1 Organization and Standing. The Buyer is a corporation duly
organized and validly existing under the laws of its state of incorporation. The
Buyer has full corporate power and corporate authority to acquire, own, lease
and operate the Assets to be conveyed to it, and, subject to receipt of any
required consents, approvals, licenses, or permits of third parties, including
those referred to in Section 6.2 hereof, to carry on the Telephone Operations,
to enter into this Agreement and to perform all of its obligations hereunder.
6.2 Authority. (a) The Buyer is not a party to any agreement,
arrangement or commitment which would render the Buyer unable to comply with its
obligations hereunder.
(b) The execution and delivery by the Buyer of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of the Buyer. This
Agreement constitutes the legal, valid and binding obligation of the Buyer,
enforceable in accordance with its terms. Except as disclosed in Schedule 6.2(b)
hereto, neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor the compliance with or
fulfillment of the terms and provisions hereof, will (i) conflict with or result
in a breach or violation of any of the terms, conditions or provisions of the
Articles of Incorporation or By-Laws of the Buyer, (ii) or result in a material
breach or default under any provision of, any agreement, indenture, mortgage,
lien, lease or other instrument or restriction of any kind to which the Buyer is
a party or by which the Buyer or any of its assets or properties is otherwise
bound or affected, or (iii)
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violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Buyer or any of its assets or properties, which conflict,
breach, default or violation, in any case, would have a material adverse effect
on the condition (financial or other) of the Buyer or the consummation of the
transactions contemplated hereby, or would result in any material liability of
the Seller, and which will not be cured, waived or terminated prior to the
Closing Date.
(c) Except as set forth in Schedule 6.2(c) hereto, no consent,
approval or authorization of, or filing or registration with, any governmental
or regulatory authority is required to be obtained by the Buyer in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby or thereby.
6.3 Financing. The Buyer has obtained financing commitments, in each
case as provided in the commitment letters delivered to Sellers on the date
hereof, for $77.5 million of equity and $240 million of debt (the "Debt
Commitment"), which are sufficient for the purchase of the Assets pursuant to
this Agreement and for the performance of its obligations hereunder and under
the other instruments and documents required or contemplated by this Agreement.
6.4 Brokers. Neither the Buyer, nor any officer, director or
employee of the Buyer, has employed any finder, broker, investment banker or
similar agent or other intermediary on behalf of the Buyer, or incurred on
behalf of the Buyer any liability for any brokerage, finders' or investment
banking fees or commissions, in connection with the negotiation or consummation
of the transactions contemplated hereby to whom or for which the Seller will be
responsible for payment.
7. Covenants of the Seller.
7.1 Access to Properties, Books and Records. Prior to the Closing
Date and subject to appropriate confidentiality arrangements, the Seller shall,
at the Buyer's request, afford
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or cause to be afforded to the agents, attorneys, accountants and other
authorized representatives of the Buyer, reasonable access, after prior
telephonic notice to ATU, during normal business hours to all employees,
properties, books and records relating to ATU, and shall permit such persons, at
the Buyer's expense and risk, to make copies of such books and records. In
particular, the Seller shall afford the Buyer and its authorized representatives
reasonable access to the real and tangible personal property included in the
Assets for the purpose of conducting investigations and examinations thereof,
except where contrary to law or contract and for preparation of surveys, making
appraisals and ascertaining the condition thereof and shall deliver to the Buyer
monthly financial statements of ATU, promptly after they become available. The
Seller shall cooperate with the Buyer and issue any consents and authorizations
reasonably requested by the Buyer in connection with the Buyer's examination of
governmental records pertaining to the real and personal property included in
the Assets. The Buyer will treat, and shall cause all of its agents, attorneys,
accountants and other authorized representatives to treat, all information
obtained pursuant to this Section 7.1 as confidential in accordance with Section
24 hereof. No investigation by the Buyer or any of its representatives pursuant
to this Section 7.1 shall affect any representation, warranty or closing
condition of any party hereto.
7.2 Conduct of Business. (a) Except as otherwise permitted by this
Agreement or with the prior written consent of the Buyer, prior to the Closing
Date, the Seller shall not, and the Seller shall cause ATU not to: (i) Incur in
respect of the Telephone Operations additional indebtedness (including, without
limitation, obligations under leases for real or personal property whether or
not required to be capitalized under generally accepted accounting principles);
nor incur or increase in respect of the Telephone Operations any obligation or
liability (fixed, contingent or other, including, without limitation,
liabilities as a guarantor or
-29-
otherwise with respect to obligations of others), nor forgive or release in
respect of the Telephone Operations any debt or claim, give any waiver of any
right of material value or voluntarily suffer any extraordinary loss, except in
any such case (x) in the ordinary course of business, (y) consistent with past
practices, and (z) without causing a material adverse effect on the Assets or
the condition (financial or other), business or operations of ATU, in each case
taken as a whole, and, in the case of indebtedness, which is prepayable without
penalty upon reasonable notice; (ii) Make in respect of the Telephone Operations
any payment to discharge or satisfy any material lien or encumbrance or pay any
material obligation or liability (fixed or contingent) other than (x) current
liabilities (including the current portion of any long-term liabilities)
included in the Interim Financial Statements; and (y) current liabilities
incurred or maturing since the date of the Interim Financial Statements in the
ordinary course of business; (iii) Declare or make any interfund transfer,
equity distribution or other transfer or distribution of cash or Assets to the
Seller such that such cash or property would no longer be considered part of the
Assets, other than (x) all Municipal Utility Services Assessment ("MUSA")
payments, including, without limitation, the 1.25 percent gross receipts MUSA
payment, made in accordance with Section 9.5 hereof; (y) a 1998 revenue
distribution and a 1999 revenue distribution (which in the case of the 1999
revenue distribution will be made on the day immediately prior to the Closing
Date), each in an amount no greater than $7.5 million; and (z) all
intergovernmental charges incurred in the ordinary course of business and
consistent with past practices; (iv) Mortgage, pledge, otherwise encumber or
subject to lien any of the Assets or commit to do any of the foregoing, except
for Liens permitted under Section 5.5 hereof; (v) Except in the ordinary course
of business in each case for fair consideration, dispose of, or agree to dispose
of, any of the Assets or lease or license to others, or agree so to lease or
license, any of the Assets; (vi) Enter
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into any transaction or contract, or any amendment thereto, in respect of the
Telephone Operations or make any commitment to do the same, except (x) in the
ordinary course of business and not requiring total payments in any case of an
amount in excess of $1,000,000 in any one year or an amount in excess of
$2,500,000 over the life of the transaction or contract, or (y) with respect to
any excluded assets set forth on Schedule 1.2 hereto; (vii) Enter into any new
employment, severance, consulting or other compensation agreement with any
director, officer, employee, agent or representative or other person, except as
contemplated herein; (viii) Make any material increases in the compensation of
the employees employed by ATU or materially change any personnel policies or
employee benefits applicable to such employees, other than in the ordinary
course of business and consistent with past practices, or increase the number of
regular, full-time employees to a number in excess of 716; (ix) Use any
accounting methods, policies or practices not in conformity with generally
accepted accounting principles (x) Acquire any additional Assets which would be
material to the condition (financial or other), business or operations of ATU,
in each case taken as a whole, except for Assets acquired in the ordinary course
of business and consistent with past practices; (xi) Amend, renegotiate or enter
into any collective bargaining or similar agreement; (xii) Make any material
changes in rates for current services; or (xiii) Agree or commit to do any of
the foregoing.
(b) Except as otherwise permitted by this Agreement or with the
prior written consent of the Buyer, prior to the Closing Date, the Seller shall,
and the Seller shall cause ATU to: (i) Operate the Telephone Operations as
presently operated and only in the ordinary course of business and consistent
with past practices; (ii) Not cancel or change any material existing policy of
insurance (including self-insurance) or fidelity bond relating to the Assets or
the Telephone Operations, or any policy or bond providing substantially the same
coverage, unless replaced by
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a policy or bond providing substantially the same coverage or such cancellation
or change is effective only on the Closing Date, and not change in any material
respect the Seller's and ATU's currently existing policies and practices with
respect to the maintenance of self-insurance reserves allocable to ATU; (iii)
Advise the Buyer in writing of any material adverse change or any event,
occurrence or circumstance which is likely to cause a material adverse change in
the Assets or the condition (financial or other), business or operations of ATU;
(iv) Use all commercially reasonable efforts to maintain all of the tangible
Assets in good operating condition, reasonable wear and tear excepted,
consistent with past practices, and take all commercially reasonable steps
necessary to maintain the intangible Assets; and (v) Maintain, consistent with
past practices, all inventories, spare parts, office supplies and other
expendable items included in the Assets.
7.3 Defeasance. On or prior to the Closing Date, the Seller shall
take all actions necessary to retire or defease duly and validly, by the deposit
of securities in accordance with the relevant municipal ordinances, all revenue
bonds of the Seller outstanding as of the Closing Date and relating to the
Telephone Operations or the Assets, including without limitation the revenue
bonds listed on Schedule 7.3 hereto, using for such purpose the proceeds of the
Purchase Price received from the Buyer pursuant to this Agreement.
7.4 Consulting Agreement. Subject to any required regulatory
approvals, the Buyer and the Seller agree to work together in good faith to
negotiate and execute, as soon as possible and if possible within 30 days of the
date hereof, a consulting agreement with Buyer or a consultant mutually
acceptable by Buyer and Seller, on terms mutually agreeable to the parties for
the period until Closing.
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7.5 North Wire Center. Prior to the Closing Date, the Seller and the
Buyer shall negotiate and execute a mutually acceptable lease with respect to
the Central Office located at the North Wire Center.
8. Covenants of the Buyer.
8.1 Interconnection Agreements and Employees.
(a) Buyer agrees that it shall honor ATU's interconnection
agreements as in effect at the date of this Agreement and the Closing Date,
including any reopener or adjustment provisions in those agreements.
(b) Without limiting Section 2.3 hereof, the Buyer shall recognize
any labor organization which is currently certified as the lawful bargaining
agent for and representative of ATU's employees, to include recognizing the
current collective bargaining agreement until August, 1999, including reopener
or adjustment provisions in that agreement.
8.2 As Is. The Buyer agrees and acknowledges that, notwithstanding
any other provision of this Agreement, it is acquiring and shall accept the
Assets "As Is" and "Where Is", in their present condition (including, without
limitation, their environmental condition), and subject to wear, tear, natural
deterioration, and all hazards, vandalism, casualty or catastrophe, and changes
(if any) made or that may be made by the Seller or any of its agents,
consultants, or other representatives in accordance with the terms hereof or
with the Buyer's approval, and any other changes that are not material.
8.3 Cellular Licenses. To the extent required by applicable law, the
Buyer will use commercially reasonable efforts to divest or agree to divest (or
to cause its affiliates to divest or agree to divest), within the time period
required by law, one of the two, cellular licenses
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for cellular market 0315 Alaska 1-▇▇▇▇ ▇▇▇▇▇▇▇, to the extent ownership of both
such licenses are prohibited from being owned by the same party and its
affiliates.
9. Covenants of the Seller and the Buyer.
9.1 Regulatory Approvals. The Seller and the Buyer, and their
respective Representatives (as hereinafter defined), shall cooperate and use all
reasonable efforts, in good faith, to make all registrations, filings and
applications and to give all notices and obtain all governmental and regulatory
consents, approvals, orders, qualifications and waivers necessary or desirable
for the consummation of the transactions contemplated hereby including, without
limitation, those consents, approvals, orders, qualifications and waivers set
forth in Schedules 5.2(c) and 6.2(c) hereto as soon as practicable following
execution of this Agreement. Buyer and Seller agree to each use diligent efforts
to consummate the transactions contemplated hereby within five months of the
date of this Agreement or as soon thereafter as all legal, administrative and
regulatory requirements have been fulfilled. For purposes of this Section 9.1,
with respect to the Seller, the term "Representatives" means the Municipal
Attorney of the Seller, the Seller's special counsel, LeBoeuf, Lamb, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, L.L.P., and such other counsel as shall be appointed by the Seller,
which shall represent the Seller in obtaining all approvals required by this
Section 9.1. For purposes of this Section 9.1, with respect to the Buyer, the
term "Representatives" means the attorney of the Buyer, the Buyer's counsel,
Birch, Horton, ▇▇▇▇▇▇▇ and Cherot, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP and Wachtell, Lipton,
▇▇▇▇▇ & ▇▇▇▇, and such other counsel as shall be appointed by the Buyer, which
shall represent the Buyer in obtaining all approvals required by this Section
9.1. Without limiting the generality of the foregoing, (a) the Seller and the
Buyer shall, if required by law, make (or cause to be made on their behalf) all
required filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended (the "HSR Act")
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and each shall use its reasonable efforts, in good faith, promptly to provide
any additional information or documentary material that may be requested by
either the Federal Trade Commission or the Antitrust Division of the Department
of Justice pursuant to the HSR Act, except to the extent that such request, in
the opinion of such party's counsel, is improper, and (b) the Seller and the
Buyer, and their respective Representatives, each shall use its reasonable
efforts in good faith to obtain such consents, approvals, orders, qualifications
and waivers (including reaching separate agreements or entering stipulations
with intervenors or agency staffs), and take such other actions (whether or not
in connection with such consents, approvals, orders, qualifications and
waivers), as may be necessary or desirable to permit the Closing and the
consummation of the transactions contemplated hereunder or as may be required by
the public utility or other laws or regulations of the United States of America,
the State of Alaska, the APUC or the FCC, in each case to the extent applicable;
provided, however, that nothing contained in this Section 9.1(b) shall require
the Buyer to accept or agree to any condition to the issuance of any consent,
approval, order, qualification or waiver that is materially adverse to the Buyer
or its affiliates.
9.2 Inspection and Preservation of Records; Further Assistance. On
and after the Closing Date, the Buyer will permit the Seller and its agents,
attorneys, accountants and other representatives, at all reasonable times during
regular business hours, to inspect and copy, at the Seller's expense, the books,
files, records and accounts of ATU relating to periods prior to the Closing
Date, for any reasonable purpose or purposes including, without limitation, the
preparation, review or audit of any financial statements, governmental filings
or tax returns, providing appropriate verification of documents, or preparing
for, conducting or defending any legal proceeding against any party other than
the Buyer or any of its affiliates. The Buyer shall
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maintain and preserve all of such books, files, records and accounts of ATU;
provided, however, that the Buyer may dispose of any such books, files, records
and accounts at any time and from time to time if it first shall have afforded
the Seller the opportunity, upon 30 days' prior notice and at the Seller's
expense, to take possession thereof. On and after the Closing Date, the Seller
will permit the Buyer and its agents, attorneys, accountants and other
representatives, at all reasonable times during regular business hours, to
inspect and copy, at the Buyer's expense, the books, files, records and accounts
of the Seller not included in the Assets insofar as they relate to any of the
Assets, for any reasonable purpose or purposes including, without limitation,
the preparation, review or audit of any financial statements, governmental
filings or tax returns, providing appropriate verification of documents, or
preparing for, conducting or defending any legal proceeding against any party
other than the Seller. The Seller shall maintain and preserve all such books,
files, records and accounts; provided, however, that the Seller may dispose of
any such books, files, records and accounts at any time and from time to time if
it first shall have afforded the Buyer the opportunity, upon 30 days' prior
notice and at the Buyer's expense, to take possession thereof. The Buyer and the
Seller agree to render such assistance to the Seller and the Buyer,
respectively, including permitting such other party to have access to its
employees, as may be reasonably requested in connection with obtaining
information for the purposes set forth in the four preceding sentences. The
Buyer and the Seller will treat all information obtained pursuant to this
Section 9.2 as confidential except to the extent disclosure thereof is necessary
for attainment of the purpose or purposes for which such information was
obtained or as required by law. In addition, the Seller and the Buyer agree to
provide each other with such further assistance and cooperation as may be
reasonably requested by the other party for any proper purpose, including, by
way of illustration, assisting such other party in preparing
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for, conducting or defending any legal or regulatory proceeding against any
party other than the parties hereto and their affiliates, and in connection
therewith providing such documentary or physical evidence and expert or other
testimony as may be reasonably requested; provided, however, that in each such
case, the requesting party shall pay, or reimburse the other party for, any
out-of-pocket costs or expenses incurred by such other party in providing such
assistance.
9.3 Public Announcements. The Seller and the Buyer agree that, from
the date hereof through the Closing Date, they will provide each other with a
copy of each written public announcement or press release (other than public
advertisements) relating to the execution of this Agreement or any transactions
contemplated hereby promptly after the making thereof.
9.4 Intervention in Commission Hearings. The Buyer and the Seller
agree that, notwithstanding anything in this Agreement to the contrary, no part
of this Agreement (other than Section 9.1 hereof) shall be construed to limit at
any time before or after the Closing the Seller's and the Buyer's rights to
intervene in any hearing, proceeding or docket before the APUC or the FCC.
9.5 Taxes. The Buyer agrees and acknowledges that, following the
Closing, the Buyer shall be subject to real and personal property tax
assessments under state and local tax laws with respect to the Assets on the
same basis as any other private enterprise and the Seller agrees that the Buyer
shall not be subject to the MUSA currently paid by ATU to the Seller; provided,
however, that in the year of Closing ATU shall pay the MUSA prior to Closing for
the full year and the Buyer shall not be liable for real and personal property
tax assessments under state and local tax laws until the year following the
Closing.
9.6 Allocation of Purchase Price. The Seller and the Buyer shall
cooperate and use all reasonable efforts, in good faith, to reach agreement as
to the appropriate allocation of
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the aggregate purchase price among the various Assets, to the extent and in the
manner required by law, and shall report the transactions contemplated by the
Agreement to any relevant taxing authority in conformity with such allocation.
10. Conditions to Obligations of the Seller.
The obligations of the Seller to sell the Assets hereunder are
subject to the fulfillment or waiver by the Seller, on or before the Closing
Date, of each of the following conditions:
10.1 Compliance with Agreement. The Buyer shall have performed in
all material respects all obligations which it is required to perform on or
before the Closing Date under this Agreement.
10.2 Representations and Warranties. The representations and
warranties made by the Buyer herein shall be true and correct in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of such date, except that any such
representations and warranties that are given as of a particular date prior to
the date hereof and relate solely to a particular date or period prior to the
date hereof shall be true as of such date or period.
10.3 Certificate of the Buyer. On the Closing Date, the Buyer shall
have delivered to the Seller a certificate, duly executed by an executive
officer of the Buyer, as to the fulfillment of the conditions set forth in
Sections 10.1 and 10.2 hereof.
10.4 Consents and Approvals. All authorizations, consents,
approvals, filings and registrations of or with domestic and foreign
governmental or regulatory authorities required to be obtained or made by the
Buyer or the Seller prior to the consummation of the transactions contemplated
hereby, including, without limitation, those authorizations, consents,
approvals,
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filings and registrations specifically referred to in Schedules 5.2(c) and
6.2(c) hereto and Section 9.1 hereof, shall have been obtained, approved or
permitted to go into effect, and shall be in effect on terms that are not
materially adverse to the Seller, and the waiting period under the HSR Act, if
applicable, shall have expired or been terminated.
10.5 All Proceedings to be Satisfactory. All corporate proceedings
to be taken by the Buyer in connection with the transactions contemplated hereby
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Seller and its counsel, and the Seller and its counsel shall
have received all such certified or other copies of such documents as it or they
may reasonably request.
10.6 Opinions of Counsel. The Seller shall have received the written
opinions of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, special outside counsel for the
Buyer, the Buyer's general counsel, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special counsel for the
Buyer as to matters under the Federal Communication Act, and Birch, Horton,
▇▇▇▇▇▇▇ and Cherot, special counsel for the Buyer as to matters under the laws
of the State of Alaska, each dated as of the Closing Date, substantially to the
effect, when taken together, set forth on Exhibit C. In rendering the opinions
described in the preceding sentence, counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon the opinions of other
counsel, and as to matters of fact upon certificates of government officials and
of any officers of the Buyer.
10.7 Defeasance. The Seller shall not have been legally prevented
from duly and validly redeeming or defeasing on the Closing Date, by the deposit
of cash or securities or both in accordance with the terms thereof and the
relevant municipal ordinances, all revenue bonds of the Seller outstanding as of
the Closing Date and relating to the Telephone Operations or the Assets,
including without limitation the revenue bonds listed on Schedule 7.3 hereto and
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outstanding on the Closing Date, using for such purpose the proceeds of the
Purchase Price received from the Buyer pursuant to this Agreement.
10.8 Acceptance by the Municipal Assembly. The Municipal Assembly of
the Seller shall have accepted Buyer's bid as the highest responsive bid from a
responsible bidder for ATU as contemplated by AO 98-44(S-2) and AR 98-83.
10.9 Adverse Proceedings. No preliminary or permanent injunction or
other order or decree by any federal or state court which prevents the
consummation of the transactions contemplated by this Agreement shall have been
issued and remain in effect (the Seller agrees to use its reasonable efforts to
have any such injunction, order or decree lifted) and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which prohibits the consummation of the
transactions contemplated by this Agreement.
11. Conditions to Obligations of the Buyer.
The obligations of the Buyer to purchase the Assets hereunder are
subject to the fulfillment or waiver by the Buyer, on or before the Closing
Date, of each of the following conditions:
11.1 Compliance with Agreement. The Seller shall have performed in
all material respects all obligations which it is required to perform on or
before the Closing Date under this Agreement.
11.2 Representations and Warranties. The representations and
warranties made by the Seller herein shall be true and correct in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of such time, except that any such
representations and warranties that are given as of a particular date prior to
the date hereof
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and relate solely to a particular date or period prior to the date hereof shall
be true as of such date or period.
11.3 Certificate of the Seller. On the Closing Date, the Seller
shall have delivered to the Buyer a certificate, duly executed by the Mayor or
another authorized representative of the Seller as to the fulfillment of the
conditions set forth in Sections 11.1 and 11.2 hereof.
11.4 Consents and Approvals. All authorizations, consents,
approvals, filings and registrations of or with domestic and foreign
governmental or regulatory authorities required to be obtained or made by the
Buyer or the Seller prior to the consummation of the transactions contemplated
hereby, including, without limitation, those authorizations, consents,
approvals, filings and registrations specifically referred to in Schedules
5.2(c) and 6.2(c) hereto and Section 9.1 hereof, shall have been obtained,
approved or permitted to go into effect on terms that are not materially adverse
to the Buyer and shall be in effect, and the waiting period under the HSR Act,
if applicable, shall have expired or been terminated.
11.5 All Proceedings to be Satisfactory. All Municipal and other
required proceedings to be taken by the Seller in connection with the
transactions contemplated hereby and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Buyer and its counsel, and
the Buyer and its counsel shall have received all such certified or other copies
of such documents as it or they may reasonably request.
11.6 Opinions of Counsel. The Buyer shall have received for the
benefit of the Buyer and, to the extent necessary, its financing sources the
written opinions of the Municipal Attorney of the Seller, LeBoeuf, Lamb, ▇▇▇▇▇▇
& ▇▇▇▇▇▇, L.L.P., special counsel for the Seller, and Preston, Thorgrimson,
▇▇▇▇▇ & ▇▇▇▇▇▇, bond counsel for the Seller, dated and delivered as of
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the Closing Date, substantially in the forms of Exhibits D, E and F,
respectively, hereto. In rendering such opinions, such counsel may rely, to the
extent each such counsel deems such reliance necessary or appropriate, upon the
opinions of other counsel, and as to matters of fact upon certificates of
government officials and of any officials (elected or appointed) of the Seller.
11.7 Defeasance. On the Closing Date the Seller shall have duly and
validly retired or defeased, by the deposit of securities in accordance with the
relevant municipal ordinances, all revenue bonds of the Seller outstanding as of
the Closing Date and relating to the Telephone Operations or the Assets,
including without limitation the revenue bonds listed on Schedule 7.3 hereto and
outstanding on the Closing Date, using for such purpose the proceeds of the
Purchase Price received from the Buyer pursuant to this Agreement.
11.8 Acceptance by the Municipal Assembly. The Municipal Assembly of
the Seller shall have accepted Buyer's bid as the highest responsive bid for ATU
as contemplated by AO 98-44(S-2) and AR 98-83.
11.9 Adverse Proceedings. No preliminary or permanent injunction or
other order or decree by any federal or state court which prevents the
consummation of the transactions contemplated by this Agreement shall have been
issued and remain in effect (the Buyer agrees, subject to the proviso to the
last sentence of Section 9.1, to use its reasonable efforts to have any such
injunction, order or decree lifted) and no statute, rule or regulation shall
have been enacted, by any state or federal government or governmental agency in
the United States which prohibits the consummation of the transactions
contemplated by this Agreement.
11.10 Third-Party Consents and Approvals. There shall have been
obtained all consents and approvals of third parties required to permit the
Buyer to acquire at the Closing all of the Seller's right, title and interest in
and to the Assets (without termination or acceleration)
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which are, in the Buyer's reasonable judgment, material, individually or in the
aggregate, to the Assets or to the conduct of the business of the Telephone
Operations by the Buyer, and such consents shall be in effect.
11.11 Financing. The Buyer shall have received the proceeds of the
required debt financing contemplated by the Debt Commitment.
12. Termination.
This Agreement may be terminated:
(a) by mutual written consent of the Buyer and the Seller; or
(b) by the Buyer, if the acceptance by the Municipal Assembly
described in Sections 10.8 and 11.8 hereof is not obtained on or before December
31, 1998; or
(c) by the Buyer, if any of the authorizations, consents, approvals,
filings or registrations described in Sections 10.4 and 11.4 hereof shall have
been denied, not permitted to go into effect or obtained on terms materially
adverse to the Buyer and all final appeals shall have been exhausted; or
(d) by the Buyer, if the Seller shall have breached any of its
obligations hereunder in any material respect; or
(e) by the Seller, if the Buyer shall have breached any of its
obligations hereunder in any material respect; or
(f) by either the Seller or the Buyer, by written notice to the
other party if the Closing shall not have occurred on or prior to December 31,
1999; provided, however, that the right to terminate this Agreement under this
Section 12(f) shall not be available to any party whose material breach of any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date.
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If either the Buyer or the Seller shall decide to terminate this
Agreement pursuant to this Section 12, such party shall promptly give written
notice to the other party to this Agreement of such decision. In the event of a
termination pursuant to this Section 12, the parties hereto shall be released
from all liabilities and obligations arising under this Agreement (other than
pursuant to Sections 2.2(a), 16 and 24 hereof) with respect to the matters
contemplated by this Agreement, other than for damages to the extent arising
from a prior breach of this Agreement; provided, however, that neither party
hereto shall be liable to the other party hereto as a result of any breach of a
representation or warranty contained in Sections 5 or 6. Any damages under this
paragraph of Section 12 for a breach of a representation or warranty of the
Seller shall be limited to the amount of the costs and expenses of the Seller
which the Buyer has paid or is obligated to pay under Section 16 hereof.
13. Amendment and Waivers.
13.1 Amendments, Modifications, etc. This Agreement may be amended,
modified or supplemented only by an instrument in writing executed and delivered
on behalf of each of the parties hereto, which instrument when so executed and
delivered shall thereupon become a part of this Agreement and the provisions
thereof shall be given effect as if contained in this Agreement as of the date
hereof.
13.2 Waivers. The representations, warranties, covenants or
conditions set forth in this Agreement may be waived only by a written
instrument executed by the party so waiving. The failure of any party at any
time or times to require performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce the same. No waiver by
any party of any condition, or breach of any term, covenant, agreement,
representation or warranty contained in this Agreement, in any one or more
instances, shall be deemed to be or
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construed as a waiver of any other condition or of the breach of any other term,
covenant, agreement, representation or warranty contained in this Agreement.
14. Survival of Representations and Warranties.
All representations, warranties and covenants of the parties hereto
contained in this Agreement or made pursuant hereto shall terminate on the
Closing Date, and no action or claim may be brought thereafter on the basis of
such representations, warranties and covenants, with the exception of the
covenants contained in Sections 3.2, 3.3, 6.4, 8.1, 8.2, 9.2, 9.5, 9.6, 15.1,
15.2, 15.3, 16, 18, 19, 20, 21, 22, 23 and 24 which shall survive until such
covenants have been performed.
15. Indemnification.
15.1 Indemnification by the Buyer. Subject to the terms and
conditions of this Section 15, the Buyer hereby agrees to indemnify and save
harmless the Seller and ATU and their respective affiliates, officials (elected
and appointed), directors, officers and employees (the "Seller's Indemnified
Parties") from, against, for and in respect of any and all losses, damages,
liabilities and obligations, whether absolute, accrued, contingent or otherwise
and whether a contractual, statutory, tax or any other type of liability or
obligation (including, without limitation, all reasonable costs and expenses,
including reasonable attorneys' fees, interest and penalties), suffered,
sustained, incurred or required to be paid by any of the Seller's Indemnified
Parties and arising from or relating to the use of the Assets or the conduct of
the Telephone Operations referred to herein, prior to, on or after the Closing
Date unless such liability or obligation is expressly not assumed by the Buyer
hereunder.
15.2 Indemnification by the Seller. Subject to the terms and
conditions of this Section 15, the Seller hereby agrees to indemnify and save
harmless the Buyer and, after the
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Closing Date, ATU, and their respective affiliates, directors, partners,
controlling stockholders, officers and employees (the "Buyer's Indemnified
Parties") from, against, for and in respect of any and all losses, damages,
liabilities and obligations, whether absolute, accrued, contingent or otherwise
and whether a contractual, statutory, tax or any other type of liability or
obligation (including, without limitation, all reasonable costs and expenses,
including reasonable attorneys' fees, interest and penalties), suffered,
sustained, incurred or required to be paid by any of the Buyer's Indemnified
Parties and arising from or relating to (i) any of the liabilities or
obligations described in Section 2.4 hereof, (ii) any of the Excluded Assets or
(iii) the Seller's failure to comply with any post-closing covenant.
15.3 Procedure for Indemnification with Respect to Third-Party
Claims. The liabilities and obligations of the party hereto against which
indemnification is sought hereunder (the "Indemnifying Party") with respect to
claims resulting from the assertion of liability or obligation by third parties
shall be subject to the following terms and conditions:
(a) Any Seller's Indemnified Party or Buyer's Indemnified Party
(collectively, the "Indemnified Parties") seeking indemnification hereunder
agrees to give prompt written notice to the Indemnifying Party of any claim by a
third party which might give rise to a claim based on the indemnity agreements
contained in Sections 15.1 and 15.2 hereof, stating the nature and basis of said
claim and the amount thereof, to the extent known. The Indemnifying Party shall
satisfy its obligation to indemnify the Indemnified Party under this Section 15
within 30 days after receipt of the foregoing notice unless the Indemnifying
Party shall have elected to defend in good faith such claim as provided in
subsection (b) hereof.
(b) In the event the Indemnified Party shall notify the Indemnifying
Party of any claim pursuant to subsection (a) hereof, the Indemnifying Party
shall have the right to elect
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to defend such claim (including all actions, suits, proceedings and all
proceedings on appeal or for review which counsel deem appropriate), with
counsel reasonably satisfactory to the Indemnified Party by written notice to
the Indemnified Party within 30 days after receipt of such notice. The
Indemnified Party shall make available to the Indemnifying Party and its
attorneys and accountants all books and records of the Indemnified Party
relating to such proceedings or litigation, and the parties hereto agree to
render to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such action,
suit or proceeding.
(c) So long as the Indemnifying Party is defending in good faith any
such claim, the Indemnified Party shall not compromise or settle such claim,
without the written consent of the Indemnifying Party. The Indemnifying Party
shall not, except with the consent of the Indemnified Party, enter into any
settlement or consent to entry of any judgment that provides for injunctive or
other non-monetary relief affecting the Indemnified Party or does not include as
an unconditional term thereof the giving by the person or persons asserting such
claim to all Indemnified Parties (i.e., the Seller's Indemnified Parties or the
Buyer's Indemnified Parties, as the case may be) of an unconditional release
from all liability with respect to such claim or consent to entry of any
judgment.
15.4 Mutual Indemnification. The Buyer and the Seller hereby agree
that if either the Buyer or the Seller takes any action opposing approval of the
transactions contemplated by this Agreement, either in a regulatory proceeding
relating to a consent required by Section 9.1 hereof or litigation arising
therefrom, the party hereto taking such action will indemnify the other party
hereto for all costs and expenses, including reasonable attorneys' fees,
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incurred by such party in connection with the transactions contemplated by this
Agreement, including all costs and expenses arising from such regulatory
proceeding or litigation.
16. Expenses.
Subject to the last sentence of this Section 16, the Buyer shall pay
its own expenses and the reasonable expenses of the Seller arising out of or
incidental to the transactions contemplated by this Agreement, whether or not
such transactions are consummated which shall not be materially in excess of
$1,500,000, including, without limitation, all reasonable out-of-pocket expenses
of the Seller in relation to the transactions contemplated by this Agreement,
including, but not limited to, costs of the Seller for legal, financial and
other advisors relating to solicitation of bids, contract negotiations,
regulatory approval and any litigation relating to or arising out of the
transactions contemplated by this Agreement. In addition, Buyer agrees that at
the Closing, it shall pay (i) the "Closing Fee" due to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation pursuant to the contract dated as of June 10,
1998, between the Seller and ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
and (ii) any amount due to the PERS as a result of vesting of ATU employees in
PERS in connection with the sale of ATU to the Buyer. The Buyer shall pay the
expenses of the Seller that it is obligated to pay under the terms of this
Section 16 at the Closing or upon the earlier termination of this Agreement.
Notwithstanding the foregoing:
(a) If this Agreement is terminated pursuant to Section 12(b)
hereof, the Buyer shall not be obligated to pay any expenses of the Seller; and
(b) The Buyer shall not be obligated to pay expenses of the Seller
arising as a result of any breach by the Seller of any of the terms and
provisions of this Agreement.
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17. Notices.
All notices or other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered by telex, telegram, telecopy or personally, or five days after mailing
if sent by registered or certified mail, postage prepaid, addressed as follows:
If to the Buyer:
Alaska Communications Systems, Inc..
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller:
Municipality of Anchorage
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Office of the Mayor
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Any party may change the address to which notices or other communications are to
be sent to it by giving written notice of such change in the manner provided
herein.
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18. Assignment.
This Agreement may not be assigned by any party hereto without the
prior written consent of the other party, except that the Buyer may assign its
rights and delegate its obligations hereunder to one or more direct or indirect
wholly owned subsidiaries of the Buyer or to affiliates of the Buyer, provided
that no such assignment or delegation shall relieve the Buyer of its obligations
hereunder, and provided further, that in the event of any such assignment or
delegation, the representations, warranties, covenants and agreements of the
Buyer hereunder shall be deemed, unless the context requires otherwise, to be
the representations, warranties, covenants and agreements of both the Buyer and
such subsidiary or subsidiaries or affiliates. Subject to the foregoing, this
Agreement shall bind and inure to the benefit only of the parties hereto and
their respective successors and permitted assigns.
19. Entire Agreement.
This Agreement, together with the Schedules and Exhibits hereto and
the other documents and instruments referred to herein, sets forth the entire
agreement and understanding of the parties hereto in respect of the transactions
contemplated hereby, and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof.
20. Specific Performance: Third-Party Beneficiaries.
(a) The Buyer and the Seller recognize that any breach of the terms
of this Agreement by either party may give rise to irreparable harm for which
money damages would not be an adequate remedy, and accordingly agree that, in
addition to any other remedies to which the non-breaching party may be entitled
at law or in equity, but only to the extent permitted by law, the non-breaching
party shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and shall be entitled to enforce the terms of this Agreement
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by a decree of specific performance without the necessity of proving the
inadequacy as a remedy of money damages. If the non-breaching party is granted
relief as a result of an action brought pursuant to this Section 20, the
breaching party agrees to pay all reasonable expenses of the non-breaching party
arising out of or incidental to the bringing of such action, including without
limitation all reasonable attorneys' fees.
(b) Nothing in this Agreement is intended or shall be construed to
give any person any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein, other than the
parties hereto.
21. Counterparts.
This Agreement may be executed in any number of counterparts, all of
which together shall be considered to constitute one instrument.
22. Section Headings.
All section headings are inserted for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
23. Applicable Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Alaska.
24. Confidential Information.
Each party to this Agreement agrees and covenants with the other
party to this Agreement that it shall use, and shall cause its Representatives
(as hereinafter defined in this Section 24) to use, all Proprietary Information
(as hereinafter defined in this Section 24) relating to the other party (and, if
the first party is the Buyer, ATU), acquired by either of them in the course of
negotiations with or examination of the other party (and, if the first party is
the Buyer,
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ATU), only in connection with the transactions contemplated by this Agreement
and shall cause all Proprietary Information obtained by them in the course of
such negotiations and examinations to be treated as confidential.
If either the Buyer or the Seller shall terminate this Agreement
pursuant to Section 12 hereof, each party shall cause to be delivered to the
other (or, in the case of the summaries and work papers hereinafter referred to,
destroyed) all written and other tangible Proprietary Information obtained by
it, including, without limitation, all copies and summaries thereof and all work
papers based thereon and containing such Proprietary Information, whether so
obtained before or after the execution of this Agreement, and each party agrees
that it shall not itself, and shall cause its Representatives not to, use or
disclose, directly or indirectly, any Proprietary Information so obtained, and
that it shall have, and shall cause its Representatives to have, all Proprietary
Information kept confidential and not be used in any way which is detrimental to
the other party or ATU.
Notwithstanding anything in this Section 24 to the contrary, either
party may use and disclose any Proprietary Information which (a) is already in
its possession, provided that such information is not known by the party using
or disclosing such information (the "Disclosing Party") to be subject to a
confidentiality agreement with or other obligation of secrecy to the party not
using or disclosing such information (the "Non-Disclosing Party") in violation
of this Section 24, (b) becomes generally available to the public other than as
a result of a disclosure by the Disclosing Party, or (c) becomes available to
the Disclosing Party on a non-confidential basis from a source other than the
Non-Disclosing Party or any persons affiliated in any capacity with the
Non-Disclosing Party, provided that such source is not known by the Disclosing
Party to be
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bound by a confidentiality agreement with or other obligation of secrecy to the
Non-Disclosing Party or another party.
Except as otherwise provided herein, no representation or warranty
is made as to the accuracy or completeness of the Proprietary Information.
Neither party to this Agreement nor any of its respective
Representatives shall have any liability to the other party to this Agreement or
any of its respective Representatives arising from the use of the Proprietary
Information in accordance with this Agreement.
Without prejudice to the rights and remedies otherwise available to
either party to this Agreement, each party to this Agreement shall be entitled
to equitable relief by way of injunction if the other party to this Agreement or
any of its Representatives shall breach or threaten to breach any of the
provisions of this Section 24. In addition, each party to this Agreement agrees
to indemnify and hold harmless the other party to this Agreement from and
against any claims from third parties arising as a result of the party's
violation of this Section 24.
For the purposes of this Section 24, with respect to any person, the
term "Representative" shall mean such person's affiliates (as defined in the
Rules and Regulations promulgated under the Securities Act of 1933, as amended),
and the directors, officials (elected and appointed), officers, employees,
agents and other representatives of such person and such person's affiliates.
For the purposes of this Section 24, the term "Proprietary
Information" shall mean collectively all information which the Seller and ATU
have been, are and will be providing to the Buyer and its Representatives with
respect to the transactions contemplated by this Agreement and all information
which the Buyer has been, is and will be providing to the Seller and its
Representatives with respect to the transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly
executed as of the date first above written.
ALASKA COMMUNICATIONS SYSTEMS, INC.
By: /s/ W. ▇▇▇▇▇▇ ▇▇▇▇▇, III
-------------------------------
Name: W. ▇▇▇▇▇▇ ▇▇▇▇▇, III
Title: Chairman
MUNICIPALITY OF ANCHORAGE
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Mayor
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