ASSET PURCHASE AND CONTRIBUTION AGREEMENT DATED AS OF JUNE 4, 2012 BY AND AMONG ALASKA COMMUNICATIONS SYSTEMS GROUP, INC., ACS WIRELESS, INC., GENERAL COMMUNICATION, INC., GCI WIRELESS HOLDINGS, LLC AND THE ALASKA WIRELESS NETWORK, LLC
Exhibit 2.1
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities and Exchange Act of 1934.
DATED AS OF JUNE 4, 2012
BY AND AMONG
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.,
ACS WIRELESS, INC.,
GENERAL COMMUNICATION, INC.,
GCI WIRELESS HOLDINGS, LLC
AND
THE ALASKA WIRELESS NETWORK, LLC
TABLE OF CONTENTS
Page
SECTION 1.
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DEFINED TERMS
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1
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1.1
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Terms Defined in this Section
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1
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1.2
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Clarifications
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13
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SECTION 2.
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CONTRIBUTION OF ASSETS BY THE MEMBERS
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13
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2.1
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Agreement to Purchase and Sell
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13
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2.2
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ACS Agreement to Contribute
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14
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2.3
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GCI Agreement to Contribute
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15
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2.4
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Excluded Assets
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15
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2.5
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Assumed Liabilities
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16
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2.6
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Excluded Liabilities
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17
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2.7
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Issuance of Membership Interests
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18
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2.8
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Working Capital Loan
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18
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2.9
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Business Process Licenses
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18
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2.10
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Prepaid Costs and Expenses
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18
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2.11
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Effectiveness of Transactions
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18
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SECTION 3.
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REPRESENTATIONS AND WARRANTIES REGARDING THE PARTIES
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18
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3.1
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Organization, Standing and Authority
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19
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3.2
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Authorization and Binding Obligation
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19
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3.3
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Absence of Conflicting Agreements
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19
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3.4
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Claims and Legal Actions
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19
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3.5
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Compliance with Laws
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20
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3.6
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Solvency
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20
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SECTION 4.
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REPRESENTATIONS AND WARRANTIES REGARDING THE ASSETS
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20
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4.1
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Sufficiency of Assets
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21
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4.2
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Licenses and Contracts
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21
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4.3
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Title to and Condition of Real and Personal Property
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21
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4.4
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Intellectual Property
|
22
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4.5
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Consents
|
22
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4.6
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Licenses and FCC Matters
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22
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4.7
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Insurance and Bonds
|
23
|
4.8
|
Environmental Law
|
23
|
4.9
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Taxes and Tax Returns
|
23
|
4.10
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Conduct of Activities in Ordinary Course
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23
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4.11
|
Unions
|
24
|
4.12
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Financial Information
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24
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4.13
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Software and Hardware
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24
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- i -
TABLE OF CONTENTS
(Continued)
Page
4.14
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Assets and Liabilities of the Company
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24
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4.15
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Full Disclosure
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24
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SECTION 5.
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COVENANTS OF EACH PARTY
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24
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5.1
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Pre-Closing Covenants
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24
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5.2
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No Unauthorized Transfer of Control or Assignment of Licenses
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28
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5.3
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Rationalization Plans
|
28
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5.4
|
Further Assurances
|
28
|
5.5
|
Form 8-K Filing
|
28
|
5.6
|
Legacy GCI and ACS Wireless Plans
|
28
|
5.7
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Asset List
|
29
|
SECTION 6.
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SPECIAL COVENANTS AND AGREEMENTS
|
29
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6.1
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Consents
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29
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6.2
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Cooperation
|
30
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6.3
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Taxes, Fees and Expenses
|
31
|
6.4
|
Brokers
|
31
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6.5
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Employee Matters
|
31
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6.6
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Title Policies
|
32
|
6.7
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Risk of Loss
|
32
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6.8
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Post-Closing Access to Information
|
32
|
6.9
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Post-Closing Consents and Subsequent Transfers
|
32
|
6.10
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Confidentiality/Press Releases
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33
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6.11
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Assignments to Members
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34
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6.12
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Bulk Sales Law
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34
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6.13
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HSR Act
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34
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6.14
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Network Capacity and Maintenance
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35
|
6.15
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Payment of CETC Amounts
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35
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6.16
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Agreed Tax Treatment; Allocation
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36
|
6.17
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Forwarding Inquiries and Payments; Collection of Accounts Receivable
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36
|
6.18
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ICA Order
|
37
|
6.19
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Transaction Opinion
|
37
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SECTION 7.
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CONDITIONS TO THE OBLIGATIONS TO CLOSE
|
37
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7.1
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Conditions to Obligations of ACS Contributing Group
|
37
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7.2
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Conditions to Obligations of GCI Contributing Group
|
39
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SECTION 8.
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CLOSING AND CLOSING DELIVERIES
|
41
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8.1
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Time and Place of Closing
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41
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8.2
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Deliveries by the Members
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42
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8.3
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Deliveries by the Company
|
43
|
- ii -
TABLE OF CONTENTS
(Continued)
Page
SECTION 9.
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RIGHTS OF THE COMPANY AND THE MEMBERS ON TERMINATION OR BREACH
|
43
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9.1
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Termination Rights
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43
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9.2
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Termination Fee
|
44
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9.3
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Specific Performance
|
45
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SECTION 10.
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SURVIVAL OF REPRESENTATIONS AND WARRANTIES, AND INDEMNIFICATION
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45
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10.1
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Affiliates
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45
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10.2
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Representations and Warranties
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45
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10.3
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Indemnification by Each Parent
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45
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10.4
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Indemnification by the Company
|
47
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10.5
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Procedure for Indemnification
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47
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10.6
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Limitations
|
49
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10.7
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Recoupment and Deduction
|
50
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10.8
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Taxes
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50
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10.9
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Treatment of Indemnification Payments
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50
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10.10
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Exclusive Remedy
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50
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SECTION 11.
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MISCELLANEOUS
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51
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11.1
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Notices
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51
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11.2
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Benefit and Binding Effect
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52
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11.3
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Entire Agreement
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52
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11.4
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Waiver of Compliance; Consents
|
52
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11.5
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Severability
|
52
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11.6
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Dispute Resolution
|
53
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11.7
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Prevailing Party
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53
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11.8
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No Consequential or Indirect Damages
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53
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11.9
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Governing Law
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53
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11.10
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Selection of Forum; Venue; Service of Process
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53
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11.11
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WAIVER OF JURY TRIAL
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53
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11.12
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Counterparts
|
54
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- iii -
LIST OF EXHIBITS
Exhibit A
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–
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Operating Agreement
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Exhibit B
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–
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Loan Agreement
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Exhibit C
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–
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Instrument of Assignment
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Exhibit D
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–
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Instrument of Assumption
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Exhibit E
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–
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ACS Knowledge Group
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Exhibit F
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–
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GCI Knowledge Group
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Exhibit G
|
–
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IRU Contribution Agreement
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Exhibit H
|
–
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Arbitration Agreement
|
Exhibit I
|
–
|
Joint Maintenance Agreement
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Exhibit J
|
–
|
Transmission Service Agreement
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Exhibit K
|
–
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Additional Capacity Purchase Agreement
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LIST OF SCHEDULES
Schedule 2.1
|
–
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Purchased Assets
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Schedule 2.4
|
–
|
Excluded Assets
|
Schedule 2.5
|
–
|
Assumed Liabilities
|
Schedule 3.4
|
–
|
Claims and Legal Actions
|
Schedule 3.5
|
–
|
Compliance with Laws
|
Schedule 4.1
|
–
|
Sufficiency of Assets
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Schedule 4.2
|
–
|
Licenses and Contracts
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Schedule 4.3
|
–
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Real and Personal Property
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Schedule 4.5
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–
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Consents
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Schedule 4.6
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–
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FCC Licenses
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Schedule 4.7
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–
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Insurance and Bonds
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Schedule 4.8
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–
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Environmental Laws
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Schedule 4.11
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–
|
Collective Bargaining Agreements
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Schedule 4.12
|
–
|
Financial Information
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Schedule 5.1
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–
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Capital Budgets
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Schedule 5.7
|
–
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Assets
|
Schedule 6.4
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–
|
Brokers
|
Note: With respect to Schedules 4.1 through 4.12, ACS and ACS Member and GCI and GCI Member are delivering separate disclosure schedules with Schedule “4A” referring to ACS’s schedules, and Schedule “4B” referring to GCI’s schedules.
- iv -
This ASSET PURCHASE AND CONTRIBUTION AGREEMENT (this “Agreement”) is dated as of June 4, 2012, by and among Alaska Communications Systems Group, Inc., a Delaware corporation (“ACS”), ACS Wireless, Inc., an Alaska corporation (“ACS Member”), General Communication, Inc., an Alaska corporation (“GCI”), GCI Wireless Holdings, LLC, an Alaska limited liability company (the “GCI Member”) and The Alaska Wireless Network, LLC, a Delaware limited liability company (the “Company”). Capitalized terms used and not otherwise defined in this Agreement have the meanings given such terms in Section 1.
R E C I T A L S:
A. ACS and its Affiliates are engaged in the ACS Wireless Activities.
B. GCI and its Affiliates are engaged in the GCI Wireless Activities.
C. The ACS Contributing Group desires to sell to GCI Member, and GCI Member desires to purchase from the ACS Contributing Group, certain of the ACS Assets, on the terms and conditions hereinafter set forth.
D. ACS desires to contribute the remainder of the ACS Assets (other than the Purchased Assets) to the Company, and GCI Member and its Affiliates desire to contribute the GCI Assets and the Purchased Assets to the Company, on the terms and conditions hereinafter set forth.
E. Concurrently with the execution of this Agreement, certain of the Parties are entering into the Pre-Closing Agreements.
A G R E E M E N T S:
In consideration of the representations, warranties, covenants and agreements contained herein and other consideration the receipt and sufficiency of which are hereby acknowledged, each of ACS, ACS Member, GCI and GCI Member intending to be legally bound do hereby agree as follows:
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SECTION 1.
|
DEFINED TERMS
|
1.1 Terms Defined in this Section. The following terms shall have the following meanings in this Agreement:
“120 Day Consents” means with respect to ACS, the Consents designated in Schedule 4.5A as “120 Day Consents” and, with respect to GCI, the Consents designated in Schedule 4.5B as “120 Day Consents”.
“Accounts Receivable” means all rights of any member of a Contributing Group to payment for goods or services provided by such Person in connection with its Activities, including amounts due from customers for services provided by such Person prior to Closing.
“ACS” has the meaning given such term in the Preamble.
“ACS Assets” means the tangible and intangible assets owned, leased or held by ACS or any of its Affiliates (including the Purchased Assets) and used primarily in connection with the conduct of the ACS Wireless Activities, including the assets described in Section 2.2(a) through (k) but excluding the Excluded Assets described in Section 2.4.
“ACS Board” means the board of directors of ACS.
“ACS Contributing Group” means ACS and its Affiliates.
“ACS Member” has the meaning given such term in the Preamble.
“ACS Services Agreement” has the meaning given such term in the Operating Agreement.
“ACS Wireless Activities” means the wireless voice and data services conducted by ACS and its Affiliates, including Wireless Backhaul and Transport, spectrum and Public WiFi related thereto.
“Activities” means with respect to ACS, ACS Contributing Group or ACS Member, the ACS Wireless Activities and with respect to GCI, GCI Contributing Group or GCI Member, the GCI Wireless Activities.
“Additional Capacity Purchase Agreement” means the Additional Capacity Purchase and Contributed Pool Construction Agreement by and among the Company, GCI Communication Corp. and the ACS Member substantially in the form attached hereto as Exhibit K.
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person, except that the Company shall not be deemed to be an Affiliate of either Member. For purposes of this definition, “control” (including the terms “controlled by,” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities or partnership or other ownership interests, by contract, or otherwise.
“Affiliate Contract” means any Contract between a Party, on one hand, and one or more of such Party’s Affiliate(s), on the other hand.
“Agreement” has the meaning given such term in the Preamble.
“Allocation Schedule” has the meaning given such term in Section 6.16(b).
“Ancillary Agreements” means the Arbitration Agreement, the Operating Agreement, the Loan Agreement, the Instruments of Assignment, the Instruments of Assumption, the Facilities and Network Use Agreement, the GCI Services Agreement, the IRU Contribution Agreement, the ACS Services Agreement, the Joint Maintenance Agreement, the Additional
2
Capacity Purchase Agreement, the Transmission Service Agreement and the other agreements and instruments executed and delivered in connection with this Agreement and the Operating Agreement.
“Antitrust Division” has the meaning given such term in Section 6.13(a).
“Antitrust Law” means the Xxxxxxx Act, the Xxxxxxx Act, the HSR Act, the Federal Trade Commission Act, and all other federal, state and foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition.
“Arbitration Agreement” means that certain Arbitration Agreement among ACS, GCI, the Company and the Members substantially in the form attached hereto as Exhibit H.
“Assets” means with respect to any member of ACS Contributing Group or ACS Member, the ACS Assets and with respect to any member of GCI Contributing Group or GCI Member, the GCI Assets.
“Assumed Contracts” means, with respect to the applicable Contributing Group, (a) all Contracts listed in Schedule 4.2A or Schedule 4.2B hereto and (b) all Contracts in existence on the Closing Date that have been entered into in accordance with Section 5.1(a)(1)(ii) hereof.
“Assumed Liabilities” has the meaning given such term in Section 2.5.
“Bankruptcy Event” means, with respect to any Person, the commencement or occurrence of any of the following: (a) a voluntary or involuntary case under Title 11 of the U.S. Code (the “Bankruptcy Code”), as now constituted or hereafter amended, or under any other applicable federal, state or foreign bankruptcy or insolvency law or other similar law, in which such Person is a debtor; (b) the appointment of (or a proceeding to appoint) a trustee or receiver for a substantial portion of such Person’s property interest, or a custodian (as such term is defined in section 101 of the Bankruptcy Code); (c) an attachment, execution or other judicial seizure of (or a proceeding to attach, execute or seize) a substantial property interest of such Person; (d) a general assignment for the benefit of creditors; (e) the taking of, failure to take, or submission to any action indicating (after reasonable investigation) an inability to meet its obligations as they accrue; or (f) the general failure to pay debts as such debts become due.
“Basket Exclusions” has the meaning given such term in Section 10.6(c).
“Business Day” means any day (other than a Saturday or Sunday) on which commercial banks are not required or authorized to close in New York City, New York or Anchorage, Alaska.
“Cell Sites” means with respect to the ACS Contributing Group or the GCI Contributing Group, as applicable, the assets located at a location that radiates radio frequency signals within one or more of the FCC granted Spectrum licenses held by such Contributing Group or in a band designated for unlicensed use and intended to connect to voice or data bearing devices; for this
3
purpose the assets located at such a location generally consist of antennas, coax, distributed antenna systems, radio access node electronics, batteries and associated power equipment, power connections and telecommunications network connections and where present a tower or a shelter and used for the Company’s Wireless Business.
“CETC Cash Flow” means all revenues from the Universal Service Fund for high cost support (including all support disbursed pursuant to 47 C.F.R. § 54.307 for Wireless services, 47 C.F.R. Subpart L, the FCC’s Mobility Fund or Tribal Mobility Fund, or any successor or other provisions created hereafter to provide universal service support for Wireless services in rural, insular or high cost areas, as defined by the FCC) received by a Contributing Group after the Closing with respect to Wireless services provided prior to the Closing, regardless of whether line counts were submitted prior to or after the Closing or were associated with Wireless service provided to end users prior to Closing.
“CETC Claim Deductible” has the meaning given such term in Section 10.6(e).
“CETC Designations” has the meaning given such term in the Facilities and Network Use Agreement.
“Claimant” has the meaning given such term in Section 10.2.
“Xxxxxxx Act” means title 15 of the United States Code §§ 12-27 and title 29 of the United States Code §§ 52-53.
“Closing” has the meaning given such term in Section 8.1.
“Closing Date” has the meaning given such term in Section 8.1.
“COBRA” means Section 4980B of the Code and Section 601 et seq. of ERISA.
“Code” means the Internal Revenue Code of 1986, as amended from time to time (including corresponding provisions of subsequent revenue laws).
“Company” has the meaning given such term in the Preamble.
“Communications Act” means the Communications Act of 1934, as amended.
“Compensation Arrangement” means any plan or compensation arrangement other than an Employee Plan, whether written or unwritten, which provides to employees, former employees, officers, directors or independent contractors of a Contributing Group, any compensation or other benefits, whether deferred or not, in excess of base salary or wages and excluding overtime pay, including any bonus or incentive plan, stock rights plan, deferred compensation arrangement, life insurance, stock purchase plan, severance pay plan and any other perquisites and employee fringe benefit plan.
“Consents” means all of the consents, permits or approvals of Governmental Authorities and other Third Parties (including shareholders or members of any Party) necessary to transfer a
4
Contributing Group’s or a Member’s Assets to the Company or otherwise to consummate the Transactions.
“Contracts” means all contracts, leases, deeds, mortgages, license agreements, instruments, notes, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral, relating to a Contributing Group’s Activities or Assets and to which a member of such Contributing Group is a party or which are binding upon a member of such Contributing Group or affect such Contributing Group’s Activities or Assets.
“Contributed Assets” means certain assets of the Members and their Affiliates that are being sold, transferred, or otherwise conveyed to the Company hereunder, as specified in Sections 2.2 and 2.3, as applicable.
“Contributing Group” means ACS Contributing Group or GCI Contributing Group, as the context requires.
“Damages” has the meaning given such term in Section 10.3(a).
“Deductible” has the meaning given such term in Section 10.6(c).
“Effective Time” means 11:59 p.m., Alaska time, on the Closing Date.
“Employee Plan” means any pension, retirement, profit-sharing, deferred compensation, vacation, severance, bonus, incentive, medical, vision, dental, disability, life insurance or any other employee benefit plan as defined in Section 3(3) of ERISA to which a member of the Contributing Group or an ERISA Affiliate contributes, or which such Member or any of its ERISA Affiliates sponsor or maintain, or by which such member of the Contributing Group or any of its ERISA Affiliates is otherwise bound.
“Enforceability Exceptions” means the exceptions or limitations to the enforcement of contract terms arising in the instance of bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and the application of general principles of equity.
“Environmental Claim” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity, any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority, or any lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, release of, or exposure to, any Hazardous Substance; or (b) any actual or alleged non-compliance with any Environmental Law.
5
“Environmental Law” means any statute, code or law (including common law) pertaining to land use, air, soil, surface water, groundwater (including the protection, cleanup, removal, remediation or damage thereof), the use, handling, storage, disposal or exposure to any Hazardous Substance, or any other environmental matter, including the following statutes as the same may be amended from time to time: (a) Clean Air Act (42 U.S.C. § 7401, et seq.); (b) Clean Water Act (33 U.S.C. § 1251, et seq.); (c) Resource Conservation and Recovery Act (42 U.S.C. § 6901, et seq.); (d) Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601, et seq.); (e) Safe Drinking Water Act (42 U.S.C. 300f, et seq.); (f) Toxic Substance Control Act (15 U.S.C. § 2601, et seq.); and (g) Occupational Safety and Health Act (29 U.S.C. § 651, et seq.) and including any rule, regulation, order, permit or other standard request or procedure enacted, adopted, promulgated or applied by any Governmental Authority with respect to such matters.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder, as in effect from time to time.
“ERISA Affiliate” means a trade or business affiliated within the meaning of Sections 414(b), (c) or (m) of the Code.
“ETC Designation” means the designation by RCA as an Eligible Telecommunications Carrier for Wireless services within the State of Alaska.
“Exchange Act” means the Securities Exchange Act of 1934, and the regulations thereunder, as in effect from time to time.
“Excluded Assets” means certain assets of the Members and their Affiliates that are not being sold, transferred, or otherwise conveyed to the Company hereunder, as specified in Section 2.4 and includes, whether so specified or not, any assets used by any member of either Contributing Group primarily to provide local exchange services under the Communications Act.
“Excluded Liabilities” has the meaning given such term in Section 2.6.
“Existing NDA” means that certain Mutual Nondisclosure Agreement dated July 27, 2011, by and between ACS and GCI Communication Corp., as amended.
“FAA” means the Federal Aviation Administration.
“Facilities and Network Use Agreement” has the meaning given such term in the Operating Agreement.
“FCC” means the Federal Communications Commission.
“Federal Trade Commission Act” means title 15 of the United States Code §§ 41-58.
“Fine” has the meaning given such term in Section 10.3(d).
“First Year Budgets” has the meaning given such term in the Operating Agreement.
6
“FTC” has the meaning given such term in Section 6.13(a).
“GCI” has the meaning given such term in the Preamble.
“GCI Assets” means all the tangible and intangible assets owned, leased or held by GCI or any of its Affiliates and used primarily in connection with the GCI Wireless Activities, including the assets described in Section 2.3(a) through (k) but excluding the Purchased Assets and the Excluded Assets described in Section 2.4.
“GCI Contributing Group” means GCI and its Affiliates.
“GCI Member” has the meaning given such term in the Preamble.
“GCI Services Agreement” has the meaning given such term in the Operating Agreement.
“GCI Wireless Activities” means the wireless voice and data services conducted by GCI and its Affiliates, including Wireless Backhaul and Transport spectrum and Public WiFi related thereto.
“Governmental Authority” any government or any arbitrator, tribunal or court of competent jurisdiction, administrative agency, board, department or commission, legislative body or other governmental authority or instrumentality (in each case whether Federal, state, local, foreign, international or multinational) or entity which lawfully assumes the powers and functions of the same (including any taxing or other revenue collecting authority or other body).
“Governmental Consents” means all Consents of the FCC and any other Material Consents of Governmental Authorities required for the Transactions, as well as the declaratory ruling, or its functional equivalent, of the Federal Communications Commission specified in Section 6.1(e).
“Hazardous Substance” means any pollutant, contaminant, hazardous or toxic substance, material, constituent or waste that is defined, labeled or regulated as such by any Governmental Authority, or for which liability or standards of care are imposed, pursuant to an Environmental Law and includes asbestos and asbestos-containing materials and any material or substance that is: (a) designated as a “hazardous substance” pursuant to 33 U.S.C. § 1317; (b) defined as a “hazardous waste” pursuant to 42 U.S.C. § 6903; (c) defined as a “hazardous substance” pursuant to Section 101 of CERCLA; or (d) is so designated or defined under any other applicable Legal Requirements.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
“ICA Order” means an order issued by the SEC either (i) pursuant to Section 3(b)(2) of the Investment Company Act of 1940, as amended, (the “Investment Company Act”), declaring that as a result of and after giving effect to the Transactions, ACS is primarily engaged in a business other than that of investing, reinvesting, owning, holding or trading in securities, or,
7
alternatively, (ii) pursuant to Section 6(c) of the Investment Company Act granting ACS an exemption from all provisions of the Investment Company Act.
“Indemnifier” has the meaning given such term in Section 10.2.
“Information” has the meaning given such term in Section 6.10.
“Initial Four Year Plan” has the meaning given such term in the Operating Agreement.
“Instrument of Assignment” means the Instrument of Assignment substantially in the form of Exhibit C.
“Instrument of Assumption” means the Instrument of Assumption substantially in the form of Exhibit D.
“Intellectual Property” means all rights and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, patent applications, proprietary information, know-how and processes of a member of the applicable Contributing Group and primarily used in the conduct of such Contributing Group’s Activities.
“IRU” means an indefeasible right of use.
“IRU Contribution Agreement” means the Fiber, Facilities, and Capacity Contribution IRU Agreement by and among ACS, the Company and GCI Communication Corp. substantially in the form attached hereto as Exhibit G.
“Joint Maintenance Agreement” means the Joint Maintenance Agreement by and among ACS, the Company and GCI Communication Corp. substantially in the form attached hereto as Exhibit I.
“Knowledge” when used with respect to (i) ACS, means the actual knowledge of any fact, circumstance or condition of those officers of ACS set forth on Exhibit E and (ii) GCI, means the actual knowledge of any fact, circumstance or condition of those officers of GCI set forth on Exhibit F, and, in each case, the knowledge that such officers would have had if such officers had conducted a reasonable inquiry.
“Legal Requirements” means applicable common law and any applicable statute, ordinance, code or other law, rule, regulation, order, technical or other standard, requirement or procedure enacted, adopted, promulgated or applied by any Governmental Authority, including any applicable order, decree or judgment which may have been handed down, adopted or imposed by any Governmental Authority.
“Licenses” means all domestic wireless, business radio and other FCC licenses, and any pending applications therefor granted to a member of the applicable Contributing Group by the FCC in connection with such Contributing Group’s Activities, and all other licenses, authorizations and permits and any pending applications therefor, issued to such Person or any of its Affiliates by any Governmental Authority that are primarily used in the conduct of such
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Contributing Group’s Activities, other than FCC licenses and other licenses, authorizations and permits and any pending applications therefor related to IRU or capacity purchases.
“Liens” means all claims, charges, restrictions, mortgages, pledges, security interests, liens or other encumbrances of any nature whatsoever (whether absolute, accrued, contingent or otherwise).
“Loan Agreement” means the Loan Agreement to be entered into between the Company and GCI Holdings, Inc. in the form attached hereto as Exhibit B.
“Material Consents” means, with respect to ACS, the Consents designated in Schedule 4.5A as “Material Consents,” and, with respect to GCI, the Consents designated in Schedule 4.5B as “Material Consents.”
“Member” means either the ACS Member or the GCI Member or the ACS Member and the GCI Member, as the context requires.
“Network Assets” means with respect to the ACS Contributing Group or the GCI Contributing Group, as applicable, the assets to be contributed by such Contributing Group to the Company pursuant to the IRU Contribution Agreement.
“Network Capacity” means dark fiber capacity and IRU capacity.
“Operating Agreement” means the First Amended and Restated Operating Agreement of the Company to be entered into by ACS, the ACS Member, GCI, the GCI Member and the Company in the form attached hereto as Exhibit A.
“Outside Date” has the meaning given such term in Section 9.1(g).
“Parent” means either ACS or GCI as the context requires and references to the other Parent mean, with respect to ACS, ACS Member or ACS Contributing Group, GCI, and with respect to GCI, GCI Member or GCI Contributing Group, ACS.
“Parties” means ACS, ACS Member, GCI, GCI Member and the Company and a “Party” means any such Person.
“Permitted Liens” means:
(a) Liens for Taxes not yet due and payable;
(b) Mechanics’, carriers’, workmen’s, warehousemen’s, landlord’s, repairmen’s or other like Liens arising or incurred in the ordinary course of business consistent with past practice that secure obligations not yet due;
(c) (A) easements, rights of way, zoning ordinances, building and other similar restrictions of record and Liens affecting Real Property and any conditions that may be shown by a current, accurate survey or physical inspection made before the Closing, (B) Liens that have been placed by any developer, landlord or other Third Party on property over which
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easement rights have been granted or on any leased property and subordination or similar agreements relating thereto and (C) unrecorded easements, covenants, rights-of-way and other similar restrictions, in each case that are not, individually or in the aggregate, material to the Activities or the Assets, which do not prohibit or interfere with the current operation of any Real Property and which do not render title to any Real Property unmarketable;
(d) Deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business to the extent such deposits constitute Assets contributed to the Company;
(e) Pledges and deposits made in the ordinary course of business in compliance with any Legal Requirements and Liens arising by statute in connection with worker’s compensation, unemployment insurance, old age benefits, social security obligations, taxes, assessments, statutory obligations or other similar charges, good faith cash deposits in connection with tenders, contracts or leases to which such Person is a party or other cash deposits in any such foregoing case that is required to be made in the ordinary course of business, provided in each case that the obligation is not for borrowed money and that the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest and adequate reserves have been established therefor;
(f) Purchase money security interests for goods purchased in the ordinary course to the extent that the obligations secured by such security interests constitute Assumed Contracts; and
(g) imperfections of title or encumbrances that, individually or in the aggregate, do not impair materially, and would not reasonably be expected to impair materially, the continued use and operation of the Assets to which they relate in the conduct of the Activities as presently conducted.
“Person” means any natural person, corporation, general or limited partnership, limited liability company, joint venture, trust, association, unincorporated entity of any kind, or a Governmental Authority.
“Personal Property” means all of the equipment, leasehold improvements, plant, spare parts inventory that are owned or leased by a member of the applicable Contributing Group and primarily used in the conduct of such Contributing Group’s Activities, other than equipment, leasehold improvements, plant and spare parts inventory related to IRU or capacity purchases.
“Pre-Closing Agreements” means (a) HSPA Services Agreement dated as of June 4, 2012 by and between ACS Member and GCI Communication Corp., (b) Bilateral IRU Agreement made as of June 4, 2012 by and between ACS Cable Systems, Inc. and GCI Communication Corp., (c) Network Access Agreement made as of June 4, 2012 by and between ACS Member and GCI Communication Corp., (d) ACS to GCI Master License Agreement for Wireless Tower Space and Power Agreement dated as of May 18, 2012 by and between GCI Communication Corp. and ACS Member, and (e) GCI to ACS Master License Agreement for
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Wireless Tower Space and Power Agreement dated as of May 18, 2012 by and between GCI Communication Corp. and ACS Member.
“Prepaids” has the meaning given such term in Section 2.10.
“Proceeding” means any suit, action, proceeding, arbitration, audit, hearing, or investigation (in each case, whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority.
“Provider” has the meaning given such term in Section 6.10.
“Public WiFi” means any WiFi service established and owned by a Contributing Group that is provided for use by its customers on a Wireless device, and is password protected or has other secure authentication protocols established and managed by such Contributing Group.
“Purchase Price” has the meaning given such term in Section 2.1(b).
“Purchased Assets” has the meaning given such term in Section 2.1(a).
“RCA” means the Regulatory Commission of Alaska.
“Real Property” means all of the fee estates and buildings and other improvements thereon, leasehold interests, easements, licenses, rights to access, rights-of-way and other real property interests which are owned or leased by a member of the applicable Contributing Group and primarily used in the conduct of such Contributing Group’s Activities.
“Receiver” has the meaning given such term in Section 6.10.
“SEC” means the U.S. Securities and Exchange Commission.
“Xxxxxxx Act” means title 15 of the United States Code §§ 1-7.
“Spectrum” means all Wireless spectrum that is owned, leased, licensed or otherwise made available or allocated to a member of the applicable Contributing Group.
“Superior Proposal” means, with respect to a Parent, any offer or proposal by any Person concerning any (i) merger, consolidation, other business combination or similar transaction involving such Parent or its Activities, (ii) sale, lease, license or other disposition directly or indirectly by merger, consolidation, business combination, share exchange, joint venture or otherwise, of assets representing a majority of the consolidated assets, revenues or net income of such Parent or its Activities, (iii) issuance, sale or other disposition (including by way of merger, consolidation, business combination, share exchange, joint venture or similar transaction) of equity interests representing a majority of the voting power of such Parent or an Affiliate of such Parent that owns a significant portion of its Activities, (iv) transaction or series of transactions in which any Person (or the stockholders of such Person) would acquire beneficial ownership or the right to acquire beneficial ownership of equity interests representing a majority of the voting power of such Parent or an Affiliate of such Parent that owns a
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significant portion of its Activities or (v) any combination of the foregoing, in each case that such Parent’s board or directors determines in good faith to be more favorable to the holders of such Parent’s common stock than the transactions contemplated by this Agreement.
“Superior Proposal Fee” has the meaning given such term in Section 9.2(b).
“Tax Benefit” has the meaning given such term in Section 10.6(b).
“Tax Return” means, with respect to a Person, any federal, state, local or foreign tax return, report, declaration of estimated Tax payments, statement, information return or statement, or other similar filing, including any related or supporting information with respect to any of the foregoing and any amendment thereof, filed or to be filed by such Person with any Taxing Authority in connection with the determination, assessment, collection or administration of any Taxes.
“Tax Savings” has the meaning given such term in Section 10.6(b).
“Taxes” means (a) all Federal, state, county, local, municipal, foreign and other taxes, assessments, duties fees, regulatory impositions, price support impositions or similar charges of any kind whatsoever, including all franchise, capital, income, sales, use, ad valorem, receipts, value added, profits, license, withholding, payroll, employment, excise, premium, property, customs, net worth, capital gains, transfer, stamp, documentary, social security, environmental, alternative minimum, occupation, recapture gross receipts, universal service, recovery and other taxes and levies, and including all interest, penalties and additions imposed with respect to such amounts, and (b) any liability for any amounts described in clause (a) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or foreign Law), or as a transferee or co-vendor, agent, responsible person, by contract, by operation of law or otherwise.
“Third Party” has the meaning specified in the Operating Agreement.
“Transaction Opinion” means an opinion from a nationally recognized valuation or investment banking firm approved by each Parent in its reasonable discretion, addressed to each Parent opining that (i) the Purchase Price to be received by the selling ACS Affiliates as consideration for the Purchased Assets as set forth in Section 2.1 of this Agreement, as of the date of transfer of the Purchased Assets, represents at least reasonably equivalent value for the Purchased Assets and (ii) as set forth in Section 2.7 of this Agreement, and in accordance with the terms of the Operating Agreement, the membership interest in the Company to be received by ACS Member as consideration for transferring and delivering to the Company all of the ACS Assets (other than the Purchased Assets), as of the date of transfer of such ACS Assets, represents at least reasonably equivalent value for such assets.
“Transmission Service Agreement” means the Transmission Service Agreement by and among the Company, the ACS Member and GCI Communication Corp. substantially in the form attached hereto as Exhibit J.
“Transactions” means the transactions contemplated by this Agreement and the Ancillary Agreements.
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“Treasury Regulations” means the Treasury regulations promulgated under the Code.
“Union” has the meaning given such term in Section 4.11.
“WARN Act” has the meaning given such term in Section 6.5(c).
“Wireless” means (a) Commercial Mobile Radio Services (as defined by the Communications Act and the rules and regulations thereunder), (b) Public WiFi and (c) any additional mobile voice, text messaging and data products and services provided over wireless spectrum licensed or authorized for use by the FCC other than, in the case of clause (c), any such products or services provided by satellite directly to Wireless devices.
“Wireless Backhaul and Transport” has the meaning given such term in the Operating Agreement.
1.2 Clarifications. Words used in this Agreement, regardless of the gender and number specifically used, shall be deemed and construed to include any other gender and any other number as the context requires. As used in this Agreement, the word “including” shall be deemed to be followed by the words “without limiting the generality of the foregoing”, and the word “or” has the inclusive meaning of “and/or”. Except as specifically otherwise provided in this Agreement in a particular instance, a reference to a Section, Exhibit or Schedule is a reference to a Section of this Agreement or an Exhibit or Schedule hereto, and the terms “hereof,” “herein,” and other like terms refer to this Agreement as a whole, including the Exhibits and Schedules to this Agreement, and not solely to any particular part of this Agreement. The descriptive headings in this Agreement are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted.
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SECTION 2.
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CONTRIBUTION OF ASSETS BY THE MEMBERS
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2.1 Agreement to Purchase and Sell.
(a) Subject to the terms and conditions set forth in this Agreement, at the Closing, ACS shall cause one or more of its Affiliates to sell, assign, transfer, convey and deliver to GCI Member, and GCI Member shall purchase from such ACS Affiliate, the assets identified in Schedule 2.1 hereto (the “Purchased Assets”), free and clear of any Liens (except for Permitted Liens) and without the creation of any successor or derivative liability by operation of law or otherwise, such sale, assignment, transfer conveyance and delivery to be effected by execution and delivery of an Instrument of Assignment. The final form of Schedule 2.1 will be delivered to GCI Member by ACS Member no later than five months from the date hereof and the assets identified thereon will be identified by the categories set forth on Schedule 2.1 as of the date hereof, such list to be reasonably acceptable to the Parties. Notwithstanding the provisions of this Section 2.1 or any other provision in this Agreement, GCI Member shall not assume and shall not be responsible to pay, perform or discharge any liabilities, obligations or commitments of such ACS Affiliate of any kind or nature whatsoever, asserted or unasserted,
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known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise, provided that the GCI Member shall not take any action or fail to take any action during the period it owns the Purchased Assets that would be a violation of this Agreement if such action was taken or failed to be taken by ACS or the Company from and after the Closing.
(b) The aggregate purchase price for the Purchased Assets shall be $100 million (the “Purchase Price”). Each of the selling ACS Affiliates will be paid its portion of the Purchase Price on the Closing Date by wire transfer of immediately available funds to an account of such ACS Affiliate designated no later than three Business Days prior to the Closing Date.
2.2 ACS Agreement to Contribute. Subject to the terms and conditions set forth in this Agreement, at the Closing (immediately following the transaction set forth in Section 2.1), ACS Member shall transfer and deliver or cause to be transferred and delivered to the Company all of the ACS Assets (other than the Purchased Assets), free and clear of any Liens (except for Permitted Liens) and without the creation of any successor or derivative liability by operation of law or otherwise, such transfer and delivery to be evidenced by execution and delivery of an Instrument of Assignment, including:
(a) All Personal Property of the ACS Wireless Activities other than the Purchased Assets;
(b) All Real Property of the ACS Wireless Activities other than the Purchased Assets;
(c) All Licenses of the ACS Wireless Activities;
(d) All Assumed Contracts of the ACS Wireless Activities;
(e) All Spectrum of the ACS Wireless Activities;
(f) All Intellectual Property of the ACS Wireless Activities;
(g) All CETC Cash Flow received by or as a result of an Alaska Communications Systems Holding, Inc.’s designation as a Competitive Eligible Telecommunications Carrier within the State of Alaska;
(h) The Network Assets of the ACS Wireless Activities;
(i) The Cell Sites of the ACS Wireless Activities;
(j) All Tax Returns regarding real property, personal property and ad valorem Taxes imposed on the ACS Assets, to the extent each relates solely to the ACS Assets; and
(k) All books and records relating to the foregoing (except as expressly excluded by Section 2.4(c)), including executed copies of the Licenses and Assumed Contracts, and all filings made with or records required to be kept by the FCC; provided, however that ACS Member may retain copies of any such books, records, Contracts and filings.
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2.3 GCI Agreement to Contribute. Subject to the terms and conditions set forth in this Agreement, at the Closing (immediately following the transaction set forth in Section 2.1), GCI Member shall transfer and deliver to the Company all of the GCI Assets and all of the Purchased Assets, in each case, free and clear of any Liens (except for Permitted Liens) and without the creation of any successor or derivative liability by operation of law or otherwise, such transfer and delivery to be effected by execution and delivery of an Instrument of Assignment, including:
(a) All Personal Property of the GCI Wireless Activities;
(b) All Real Property of the GCI Wireless Activities;
(c) All Licenses of the GCI Wireless Activities;
(d) All Assumed Contracts of the GCI Wireless Activities;
(e) All Spectrum of the GCI Wireless Activities;
(f) All Intellectual Property of the GCI Wireless Activities;
(g) All CETC Cash Flow received by or as a result of a GCI Communication Corp.’s designation as a Competitive Eligible Telecommunications Carrier within the State of Alaska;
(h) The Network Assets of the GCI Wireless Activities;
(i) The Cell Sites of the GCI Wireless Activities;
(j) All Tax Returns regarding real property, personal property and ad valorem Taxes imposed on the GCI Assets, to the extent each relates solely to the GCI Assets; and
(k) All books and records relating to the foregoing (except as expressly excluded by Section 2.4(c)), including executed copies of the Licenses and Assumed Contracts, and all filings made with or records required to be kept by the FCC; provided, however that GCI Member may retain copies of any such books, records, Contracts and filings.
2.4 Excluded Assets. The Assets being contributed to the Company shall exclude the following assets:
(a) Each Contributing Group’s cash on hand as of the Closing Date and all other cash and cash equivalents in any member of such Contributing Group’s bank, savings or other depository accounts; any and all letters of credit or other similar items; and any stocks, bonds, certificates of deposit and similar investments;
(b) Any Contracts other than the Assumed Contracts;
(c) Any books and records each Member is required by any Legal Requirement to retain (subject to the right of the Company to access and to copy for a period of
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three years after the Closing Date), and such Member’s corporate minute books and other books and records related to internal corporate matters;
(d) Any claims, rights and interest in and to any refunds of federal, state or local income or other Taxes, fees or assessments for periods (or portions thereof) ending on or prior to the Closing Date or otherwise relating to the other Excluded Assets or Excluded Liabilities;
(e) All judgments, choses in action or Proceedings of each Contributing Group relating to the ownership or operation of such Contributing Group’s Assets or conduct of such Contributing Group’s Activities prior to the Closing Date;
(f) All Employee Plans, Compensation Arrangements and employment agreements unless any such Employee Plan, Compensation Arrangement or employment agreement is expressly included in the Assumed Contracts;
(g) The account books of original entry, general ledgers, and financial records;
(h) Medical records and personnel records to the extent required by Legal Requirements;
(i) Insurance policies and rights and claims thereunder;
(j) Contracts for the provision of wireless services to subscribers, Lifeline subscriber agreements and agreements with Lifeline agents;
(k) Accounts Receivable;
(l) All Tax Returns and all supporting documentation for such Tax Returns, except to the extent specifically identified in Section 2.2(h) and Section 2.3(h); and
(m) The assets set forth in Schedule 2.4A and 2.4B (which Schedules may be amended prior to Closing; provided that any such amendment does not materially reduce the aggregate value of the Assets being contributed by the applicable Contributing Group and provided further that the other Contributing Group agrees in its reasonable discretion to such amendment).
2.5 Assumed Liabilities. Upon the terms and subject to the conditions of this Agreement, the Company shall assume, effective as of the Closing, and from and after the Closing the Company shall pay, perform and discharge when due, all the following liabilities, obligations and commitments of the ACS Contributing Group and the ACS Member, or the GCI Contributing Group and the GCI Member, as applicable (the “Assumed Liabilities”), such assumption to be evidenced where appropriate by execution and delivery of an Instrument of Assumption, other than any Excluded Liabilities:
(a) All post-closing liabilities, obligations and commitments under the Assumed Contracts; and
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(b) All other liabilities, obligations and commitments of any member of the GCI Contributing Group or the ACS Contributing Group set forth on Schedule 2.5.
2.6 Excluded Liabilities. The Company shall not assume or be obligated to pay, perform or otherwise discharge any liability or obligation of the ACS Contributing Group or the ACS Member, or the GCI Contributing Group or the GCI Member, whether direct or indirect, known or unknown, absolute or contingent, not expressly assumed by the Company pursuant to Section 2.5 (all such liabilities and obligations not being assumed being herein called the “Excluded Liabilities”) and, notwithstanding anything to the contrary in Section 2.5 or by operation of law or otherwise, none of the following shall be Assumed Liabilities for purposes of this Agreement:
(a) Any liabilities in respect of Taxes for which the ACS Member, the GCI Member or any of their respective Affiliates is liable for periods ending as of the effectiveness of the transactions contemplated by Section 2.1, 2.2, or 2.3 hereof or otherwise, except to the extent provided in Section 6.3;
(b) Any accounts payable owed by or to the ACS Member or the GCI Member (as applicable) or any of their respective Affiliates other than those accounts payable that are expressly assumed by the Company pursuant to Section 2.5;
(c) Any other liabilities, obligations or commitments owed by or to the ACS Member or the GCI Member (as applicable) or any of their respective Affiliates other than those expressly assumed by the Company pursuant to Section 2.5;
(d) Any costs and expenses incurred by the ACS Contributing Group or the ACS Member, or the GCI Contributing Group or the GCI Member, in connection with its negotiation and preparation of this Agreement, the Ancillary Agreements and the Pre-Closing Agreements and its performance and compliance with the agreements and conditions contained herein and therein;
(e) Any liabilities, obligations or commitments in respect of any Excluded Assets;
(f) Any liabilities, obligations or commitments in respect of any Proceedings to which the ACS Contributing Group or the ACS Member, or the GCI Contributing Group or the GCI Member, is a party prior to the Closing;
(g) Any liabilities, obligations or commitments in respect of employees of the GCI Wireless Activities or the ACS Wireless Activities;
(h) Any liabilities, obligations or commitments resulting from any Environmental Claims (regardless of whether any representation or warranty contained in Section 4.8 is incorrect) related to the ownership or operation of Real Property prior to the Effective Time; and
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(i) Any liabilities, obligations or commitments with respect to any universal service support received from the federal or Alaska Universal Service Funds received prior to the Closing.
2.7 Issuance of Membership Interests. In consideration for the contributions to the Company by the ACS Contributing Group, the ACS Member shall receive at Closing a membership interest in the Company as set forth in, and in accordance with the terms of, the Operating Agreement. In consideration for the contributions to the Company by the GCI Contributing Group, the GCI Member shall receive at Closing a membership interest in the Company as set forth in, and in accordance with the terms of, the Operating Agreement.
2.8 Working Capital Loan. In accordance with the terms of the Operating Agreement, GCI Holdings, Inc. and the Company will enter into the Loan Agreement.
2.9 Business Process Licenses. Subject to the terms and conditions set forth in this Agreement, from and after the Closing, the members of each Contributing Group hereby grant to the Company a perpetual, royalty-free, non-exclusive license to use the business processes used by such member in connection with the Contributed Assets. The business processes and any information provided to the Company in connection therewith shall be subject to the confidentiality restrictions set forth in Section 16.20 of the Operating Agreement. The Company may not sub-license any license granted to it pursuant to this Section 2.9 without the prior written consent of the Parent of the applicable Contributing Group, other than to a wholly-owned subsidiary of the Company.
2.10 Prepaid Costs and Expenses. Any deposits or prepayments made by either Contributing Group under the Assumed Contracts or otherwise relating to the Assets or Assumed Liabilities that inure to the benefit of the Company (the “Prepaids”) shall be prorated as of the Closing Date. As promptly as practicable, but in any event within 90 days following the Closing Date, each Parent shall deliver to the Company a statement, reasonably acceptable to the other Parent, setting forth the amount of its Contributing Group’s Prepaids to the extent related to the post-Closing period and upon receipt thereof the Company shall, within 30 days reimburse the applicable Parent for the amount of its Prepaids.
2.11 Effectiveness of Transactions. All of the transactions in Sections 2.1 through 2.9 shall be effected at Closing in the order set forth in this Section 2, except that those transactions in Sections 2.2 and 2.3 shall occur simultaneously, and none of such transactions shall be effective unless all such transactions are effected.
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SECTION 3.
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REPRESENTATIONS AND WARRANTIES REGARDING THE PARTIES
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In this Section 3, any particular reference to a “Schedule 3” shall be understood (i) in the case of ACS, to refer to the corresponding “Schedule 3A”, and (ii) in the case of GCI, to refer to the corresponding “Schedule 3B.” Each of ACS and ACS Member, jointly and severally, represents and warrants to GCI and GCI Member, and each of GCI and GCI Member, jointly and severally, represents and warrants to ACS and ACS Member, as of the date hereof and as of the
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Closing Date except insofar as such representations and warranties are made as of the date hereof or any other specified date (in which case as of such date), as follows:
3.1 Organization, Standing and Authority. Such Person is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and such Person is duly qualified to conduct business in all such foreign jurisdictions in which such qualification is necessary for its conduct of its Activities. Such Person and its Affiliates have all requisite power (i) to own, lease, and use its Assets as presently owned, leased, and used, (ii) to conduct its Activities as presently conducted, and (iii) to execute, deliver, and perform this Agreement and the documents contemplated hereby according to their respective terms. Neither such Person nor any of its Affiliates is a participant in any joint venture or partnership with any other Person with respect to any part of its Activities or its Assets.
3.2 Authorization and Binding Obligation. The execution, delivery and performance of this Agreement and the Ancillary Agreements by such Person have been duly authorized by all necessary corporate or limited liability company action on the part of such Person. No approval or consent from any of its shareholders or members is required for such Person to execute, deliver or perform this Agreement or the Ancillary Agreements or to consummate the Transactions. This Agreement has been duly executed and delivered by such Person and constitutes its legal, valid, and binding obligation, enforceable against it in accordance with its terms, except to the extent such enforceability may be limited by the Enforceability Exceptions.
3.3 Absence of Conflicting Agreements. Subject to obtaining the Consents, the execution, delivery and performance of this Agreement and the Ancillary Agreements (with or without the giving of notice, the lapse of time, or both): (i) does not require the consent of any Third Party; (ii) will not conflict with any provision of the organizational documents of such Person; (iii) will not conflict with, result in a breach of, or constitute a default under, any Legal Requirements, (iv) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any material agreement, instrument, license or permit to which such Member is a party or by which such Member may be bound; and (v) will not create any Lien upon such Member’s Assets.
3.4 Claims and Legal Actions. Except as set forth in Schedule 3.4, there is no material claim, legal action, arbitration, governmental investigation or other legal, administrative or Tax proceeding, nor any order, decree or judgment, in progress or pending, or to the Knowledge of such Person, threatened, against or relating to such Person or any of its Affiliates relating to its Assets or Activities, or to such Person’s performance of its obligations under this Agreement or the consummation of the Transactions. To the best of such Person’s Knowledge there are no pending written complaints by customers or other users of such Person’s or any of its Affiliates’ services that, individually or in the aggregate, would reasonably be expected to materially and adversely affect the Assets of such Person’s Contributing Group or the financial condition of its Activities. Other than requests described in Schedule 3.4, no written requests have been received by such Person or any of its Affiliates during the preceding two year period from the FCC, any state regulatory authority or other Governmental Authority or any other
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Person challenging or questioning the right of such Person or its Affiliates to conduct its Activities and any FCC-licensed or registered facility used in conjunction with such Activities.
3.5 Compliance with Laws. Except as set forth in Schedule 3.5, such Person and its Affiliates have complied with, and to such Person’s Knowledge, the Activities and Assets of such Person or its Contributing Group are in compliance with, in all material respects, all applicable Legal Requirements and such Person and its Affiliates have not received any notice of any claim that such Person or any of its Affiliates is not in compliance with any applicable Legal Requirements, except where such non-compliance would not reasonably be expected to have a material impact, including the following Legal Requirements:
(a) Personnel Matters. The Code, ERISA and the National Labor Relations Act, as amended, or regarding employment conditions and practices (including hours, payment of wages or salaries and overtime pay as well as withholding requirements from wages or salaries), prohibitions upon employment discrimination, occupational safety and unfair labor practices;
(b) Communications Act. The Communications Act, including FCC filing requirements, notices to subscribers and FCC equal opportunity rules; and
(c) FAA and RCA Rules and Regulations. Rules and regulations of the FAA and RCA.
3.6 Solvency. After giving effect to the Transactions, such Person and each of its Affiliates that contributes Assets pursuant to this Agreement is solvent and each shall: (a) be able to pay its debts as they become due; (b) own property that has a fair saleable value greater than the amounts required to pay its debts (including a reasonable estimate of the amount of all contingent liabilities); and (c) have adequate capital to carry on its business. No transfer of property is being made and no obligation is being incurred in connection with the Transactions with the intent to hinder, delay or defraud either present or future creditors of any such Person or any of its Affiliates. In connection with the Transactions, neither such Person nor any of its Affiliates has incurred, or plans to incur, debts beyond its ability to pay as they become absolute and matured.
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SECTION 4.
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REPRESENTATIONS AND WARRANTIES REGARDING THE ASSETS
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In this Section 4, any particular reference to a “Schedule 4” shall be understood (i) in the case of ACS, to refer to the corresponding “Schedule 4A”, and (ii) in the case of GCI, to refer to the corresponding “Schedule 4B.” Each of ACS and ACS Member, jointly and severally, represents and warrants to GCI and GCI Member with respect to the ACS Wireless Activities and the ACS Assets (including the Purchased Assets), and each of GCI and GCI Member, jointly and severally, represents and warrants to ACS and ACS Member with respect to the GCI Wireless Activities and the GCI Assets (but not the Purchased Assets), as of the date hereof and as of the Closing Date except insofar as such representations and warranties are made as of the date hereof or any other specified date (in which case as of such date), as follows:
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4.1 Sufficiency of Assets. Except as set forth in Schedule 4.1 and except for the Excluded Assets and the assets and services to be made available to the Company pursuant to the Ancillary Agreements and (solely for the purposes of making this representation as of the date hereof) the Pre-Closing Agreements, the Assets (i) constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary to conduct such Person’s Activities in substantially the manner presently operated by such Person’s Contributing Group and (ii) include all of the assets of such Person and its Affiliates which are used in such Contributing Group’s Activities.
4.2 Licenses and Contracts.
(a) Schedule 4.2(a) sets forth a list organized by category, of all of the Contracts in effect on the date hereof, except for: (i) subscription agreements with subscribers for wireless services provided by such Activities in the ordinary course of business, (ii) employment contracts and miscellaneous service contracts terminable on not more than 90 days’ notice, and (iii) any Contracts included in the Excluded Assets or provided for in the Ancillary Agreements. True and complete copies of all Assumed Contracts (together with all amendments thereto) of such Person’s Activities have been delivered to the other Parent. Other than the Licenses and Contracts listed in Schedule 4.2(a) or not required to be listed thereon pursuant to the first sentence of this Section 4.2(a), such Person’s Activities require no contract or agreement to enable it to carry on its Activities in all material respects as presently conducted. All Licenses and Assumed Contracts are in full force and effect, and are in all material respects valid, binding and enforceable in accordance with their respective terms. None of the Licenses or Assumed Contracts would be materially breached by virtue of the Transactions or by virtue of the assignments thereof to the Company or as otherwise contemplated by this Agreement, provided that the Consents are obtained. Except as set forth in Schedule 4.2(a), there is not under any License or Assumed Contract any default by such Person or any of its Affiliates or, to its Knowledge, any other party thereto, or any event which, after notice or lapse of time, or both, would constitute a material default which would give any party the right to terminate such License or Assumed Contract. Except as expressly set forth in Schedule 4.2(a), such Person has not received any written notice of any intention by any party to any material License or material Assumed Contract (i) to amend the terms thereof in a manner that would materially and adversely affect such Person’s rights thereunder, or to terminate such contract, (ii) to refuse to renew the same upon expiration of its term, or (iii) to renew the same upon expiration only on terms and conditions which materially and adversely affect such Person’s rights thereunder.
(b) Except as set forth in Schedule 4.2(b), there are no Assumed Contracts in effect on the date hereof between such Person or any of its Affiliates and (i) any of its Affiliates, (ii) any of its or its Affiliates’ officers, directors, shareholders, members, managers or “associates” (as defined in the Exchange Act), or (iii) any Affiliate or “associate” (as defined in the Exchange Act) of any of the Persons listed in clause (ii).
4.3 Title to and Condition of Real and Personal Property.
(a) Except for any Real Property and Personal Property expressly included in the Excluded Assets, Schedule 4.3 contains descriptions of all the Real Property (excluding unrecorded easements, rights-of-way or rights-to-access which are not material to the operation
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of such Person’s Activities) and categorical descriptions of all material items of Personal Property which, together with the Excluded Assets, comprise all real property interests and personal property reasonably necessary to conduct such Person’s Activities in all material respects as now conducted.
(b) Such Person and its Affiliates have marketable title or leasehold interests, as the case may be, to all Real Property and Personal Property listed on Schedule 4.3 free and clear of all Liens except for Liens set forth on Schedule 4.3 and Permitted Liens.
(c) All towers, guy anchors, buildings and other improvements included in such Real Property and Personal Property are located entirely on the Real Property listed in Schedule 4.3. Such Person has delivered to the other Parent true and complete copies of all deeds, leases and material Contracts pertaining to such Real Property. All of such Person’s Real Property and Personal Property (i) is in good condition and repair (ordinary wear and tear excepted), and (ii) subject to receipt of the Consents and in the case of leased Real Property or Personal Property payment of any rent obligations in respect thereto that are not overdue, is available for immediate use in the Activities as is contemplated to be conducted by the Company subsequent to Closing. Such Person or its Affiliates have access to its Real Property to the extent necessary to conduct such Person’s Activities and to permit the Company to continue to use such Real Property following the Closing substantially as it is currently being used by such Person or any of its Affiliates. All items of plant and equipment included in such Personal Property (i) have been maintained in a manner consistent with generally accepted industry standards, and (ii) will permit such Person’s Activities in all material respects to operate in accordance with the terms of the Licenses and the Legal Requirements of the FCC or other Governmental Authority as currently in effect.
4.4 Intellectual Property. To the Knowledge of such Person neither it nor any of its Affiliates is infringing upon any patent, trademark, trade name, service xxxx, service name, copyright or similar intellectual property right owned by any other Person in the conduct of the Activities.
4.5 Consents. Except for the Consents described in Schedule 4.5, no Consent of, or filing with, any Governmental Authority is required to permit such Person or any member of its Contributing Group (i) to consummate this Agreement and the Transactions or (ii) to permit such Person to assign or transfer the Assets as contemplated hereby. Except for the Consents described in Schedule 4.5, no Consent with respect to a material Contract is required to be obtained by such Person or any member of its Contributing Group (i) to consummate this Agreement and the Transactions or (ii) to permit such Person to assign or transfer the Assets as contemplated hereby. All Consents required to operate the Assets of such Person’s Contributing Group have been transferred to the Company as of the Closing Date, other than Consents that are ministerial in nature and must be obtained by the Party owning such Assets.
4.6 Licenses and FCC Matters. Schedule 4.6 lists all of the material franchises, licenses, designations and permits required from the FCC or the RCA to enable such Person or its Affiliates to carry on its Activities as presently conducted. All required reports of such Person and its Affiliates to the FCC, including those relating to Taxes administered by the FCC, are true and correct in all material respects and have been duly filed. Such Person or its Affiliate
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has all of the material licenses, designations and permits required under all applicable FCC rules, regulations and orders to utilize all carrier frequencies generated by the operations of its Activities and to receive High Cost Universal Service Support, and is licensed in all material respects to operate all the facilities required by Legal Requirements to be licensed.
4.7 Insurance and Bonds. Such Person’s Activities and its Assets are insured against claims, loss or damage in amounts set forth in Schedule 4.7. Schedule 4.7 provides a true and complete list of all surety and performance bonds or letters of credit maintained in connection with such Person’s Activities.
4.8 Environmental Law. Except as disclosed in Schedule 4.8 hereto, to such Person’s Knowledge (i) such Person’s and its Affiliates’ operations with respect to its Activities and the use of its Real Property comply in all material respects with all applicable Environmental Laws; (ii) such Person and its Affiliates have not used such Real Property for, and have no Knowledge that such Real Property has previously been used for, the manufacture, transportation, treatment, storage or disposal of Hazardous Substances except for such use of Hazardous Substances (for backup power and ordinary maintenance) customary in the construction, maintenance and operation of such Person’s Assets and its Activities and in amounts or under circumstances that would not reasonably be expected to give rise to any material liability for remediation; and (iii) such Person’s Real Property complies in all material respects with all applicable Environmental Laws. Except as described in Schedule 4.8 hereto, to such Person’s Knowledge, no underground storage tanks have been installed by or are used by such Person at any of its Real Property. Such Person has delivered to the other Person true and complete copies of all environmental reports and studies in the possession of or reasonably available to such Person with respect to the Real Property. Such Person and its Affiliates are not, to its Knowledge, the subject of (x) any “Superfund” evaluation or investigation or proceeding in connection with its Real Property, (y) any investigation or proceeding of any Governmental Authority evaluating whether any remedial action is necessary to respond to any release of Hazardous Substances on or in connection with its Real Property, or (z) any Environmental Claim.
4.9 Taxes and Tax Returns. All Tax Returns relating to its Assets or its Activities required to have been filed have been duly and timely filed with the appropriate Governmental Authorities. All such Tax Returns are true, correct and complete and properly reflect the liabilities for Taxes for the periods, property or events covered thereby. All material Taxes due and payable with respect to its Assets or its Activities have been timely and duly paid to the appropriate Governmental Authority.
4.10 Conduct of Activities in Ordinary Course. Since June 30, 2011, through the date of this Agreement, such Person and its Affiliates have conducted their Activities and owned and maintained their Assets only in the ordinary course and have not:
(a) Suffered any material adverse change in its Activities, Assets or condition (financial or otherwise), including any damage, destruction or loss affecting such Assets, other than any material adverse change resulting from general economic conditions, governmental regulations or otherwise affecting the wireless services industry generally;
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(b) Made any material increase in compensation payable or to become payable to any employee or independent contractor of such Person’s Activities, or any bonus payment made or promised to any employee or independent contractor of such Person’s Activities except any bonus or similar payments that will be made by such Person prior to Closing, or any material change in personnel policies, insurance benefits, Compensation Arrangements or Employee Plans affecting the employees or independent contractors of such Person’s Activities except to the extent that the Company will not have any liabilities or obligations after Closing with respect to any such changes; or
(c) Made any sale, assignment, lease or other transfer of any properties used in its Activities other than in the normal and usual course of business with suitable replacements being obtained therefor.
4.11 Unions. Subject to obtaining the applicable Consent on Schedule 4.5A, none of such Person and its Affiliates are party to, bound by, or negotiating any collective bargaining agreement or other contract with a union, works council or labor organization (collectively, “Union”) that would be binding upon the Company, that would impose on the Company any duty to bargain with any Union or that would impose any successor liability or obligation on the Company or its property.
4.12 Financial Information. The revenues and expenses of the ACS Wireless Activities or the GCI Wireless Activities, as applicable, for the year ended December 31, 2011, set forth on Schedule 4.12 fairly present the revenues and expenses of the ACS Wireless Activities or the GCI Wireless Activities, as applicable, for such period.
4.13 Software and Hardware. All software and hardware used in the ACS Wireless Activities or the GCI Wireless Activities, as applicable, and included in the Contributed Assets is currently supported by the vendor of such software or hardware.
4.14 Assets and Liabilities of the Company. GCI represents and warrants that the Company (i) has been formed as a Delaware limited liability company solely for purposes of this Agreement and the transactions contemplated hereby and (ii) has conducted no business, and has no assets, liabilities, obligations or commitments other than its activities undertaken to comply with this Agreement and the Ancillary Agreements.
4.15 Full Disclosure. No representation or warranty made by such Person herein or in any certificate, document or other instrument furnished or to be furnished by such Person pursuant hereto contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact known to such Person and required to make the statements herein or therein, in light of the circumstances under which they were made, not misleading.
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SECTION 5.
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COVENANTS OF EACH PARTY
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5.1 Pre-Closing Covenants. Unless a Party shall have obtained the prior written consent of the other Parent, between the date hereof and the Closing Date, such Party shall conduct, and shall cause its Affiliates to conduct, its Activities in the ordinary course of business in accordance with its past practices (except where such conduct would conflict with the
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following covenants or with such Party’s other obligations hereunder) and shall abide by the following negative and affirmative covenants:
(a) Negative Covenants. Such Person shall not, and shall cause its Affiliates to not, do any of the following:
(1) Contracts. (i) Modify, amend in any material respect or enter into any new Affiliate Contracts affecting the Activities other than the Ancillary Agreements; or modify or amend in any material respect any Assumed Contract except (other than with respect to Affiliate Contracts) modifications or amendments in the ordinary course of business that are not materially inconsistent with the Initial Four Year Plan and First Year Budgets; (ii) enter into any new Contracts that will be binding on the Company except Contracts (other than Affiliate Contracts) entered into in the ordinary course of business that are not materially inconsistent with the Initial Four Year Plan and First Year Budgets; or (iii) enter into any modification or amendment to any Assumed Contract, or enter into any new Contract, that would require a new or additional material Consent;
(2) Disposition of Assets. Sell, assign, lease, or otherwise transfer or dispose of any of such Contributing Group’s Assets, except for assets consumed or disposed of in the ordinary course of business that are obsolete and no longer usable in such Contributing Group’s Activities or are replaced by property of equivalent kind and value and except transfers to Affiliates of such Person in order to facilitate the Transactions;
(3) Liens. Create, assume or permit to exist any Liens upon its Assets, except for Permitted Liens and except any Liens that will be removed prior to Closing;
(4) Licenses. Do any act or fail to do any act which could reasonably be expected to result in the expiration, revocation, suspension, non-renewal or materially adverse modification of any of such Person’s Licenses or CETC Designation, or fail to prosecute with due diligence any material applications to any Governmental Authority in connection with such Person’s Activities;
(5) No Inconsistent Action. Take any action which is inconsistent in any material respect with such Person’s obligations hereunder or which would reasonably be expected to materially hinder or delay the consummation of the Transactions;
(6) Offers. Sell, dispose of or offer to sell or dispose (including by way of merger or equity sale or issuance) of any of such Person’s Assets or Activities, or participate in any discussions pertaining to, or entertain offers for any such Assets or Activities or otherwise negotiate for the sale of such Assets or Activities or make information about such Assets or Activities available to any Third Party in connection with the possible sale of any such Assets or Activities provided, however, that each Party shall be permitted, in response to an unsolicited request, offer or proposal by any Person, to participate in discussions pertaining to, and entertain such offer or proposal and otherwise negotiate for such sale and make information available in connection with, such possible sale for a period of 60 days following the initiation of any such discussions, negotiations or proposal; or
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(7) Waivers. Waive any material right relating to its Activities or its Assets.
(b) Affirmative Covenants. Such Person shall do, and shall cause its Affiliates to do, the following:
(1) Access to Information. Subject to the requirements set forth in Section 6.10, allow the other Parent and its authorized representatives reasonable access upon reasonable notice at the other Parent’s expense during normal business hours to such Person’s Assets and to all other properties, equipment, books, records, Contracts and documents relating to such Person’s Assets and Activities for the purpose of audit and inspection and shall provide the other Parent with such information as it may reasonably request for the purpose of allowing the review necessary to issue the Transaction Opinion and to obtain the ICA Order (as applicable), and furnish or cause to be furnished to the other Parent or its authorized representatives all information which directly related to the Activities, of such Person as the other Parent may reasonably request. Any such audit, investigation or request for information shall be conducted in such a manner as not to interfere unreasonably with such Person’s Activities, provided, however, that (i) neither the furnishing of such information to the other Parent or its representatives nor any investigation made heretofore or hereafter by the other Parent shall affect the other Parent’s or its Affiliates right to rely on any representation or warranty made by such Party or its Affiliates in this Agreement or such Person’s or its Affiliates’ covenants set forth herein, each of which representations, warranties and covenants shall survive any furnishing of information to, or any investigation by or Knowledge of the other Party in accordance with Section 10.2 and (ii) all such information shall be subject to the confidentiality requirements set forth in Section 6.10;
(2) Maintenance of Assets. Use its commercially reasonable efforts to maintain all of its Personal Property or replacements thereof and all buildings or other improvements located on such Person’s Real Property in good condition (ordinary wear and tear excepted) in a manner consistent with generally accepted industry standards, and use all of such Person’s Personal Property and all buildings or other improvements located on such Real Property in a reasonable manner, with inventories of spare parts and expendable supplies being maintained at levels consistent with generally accepted industry standards;
(3) Maintenance of Personnel. Use its commercially reasonable efforts to maintain appropriate staff and management personnel for such Person’s Activities consistent with past and generally accepted industry practices;
(4) Insurance. Use its commercially reasonable efforts to maintain insurance policies covering its Activities and its Assets in such amounts and with such coverages as are customarily maintained by similarly situated Persons consistent with past practices;
(5) Consents. Use its commercially reasonable efforts to obtain the Consents required for each member of its Contributing Group to consummate the Transactions;
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(6) Books and Records. Maintain the books and records of its Contributing Group in accordance with past practices and generally accepted accounting principles;
(7) Notification. Promptly notify the other Parent of any fact or condition known to such Person that causes or constitutes a material breach of any representation, warranty, covenant or commitment made by such Person in this Agreement or any material change in any of the information contained in such Person’s and its Affiliates’ representations and warranties contained herein or in the Schedules hereto;
(8) Compliance with Laws. Comply in all material respects with all Legal Requirements applicable to the operation of its Activities and the ownership of its Assets;
(9) Keep Organization Intact. Use such Person’s commercially reasonable efforts to preserve intact its business and organization relating to its Activities and preserve for the Company the goodwill of its suppliers, customers and others having business relations with it;
(10) Contracts. Prior to the Closing Date, promptly notify the other Parties regarding any Contracts entered into or modified between the date hereof and the Closing Date of the type required to be listed in Schedule 4.2, and promptly provide copies of such Contracts and any amendments;
(11) CETC. Take all commercially reasonable actions necessary to assure continued receipt of CETC Cash Flow, including the filing for time periods that occur prior to Closing for which payment is to be received after Closing, and the continued filing of high cost line counts;
(12) Transition Planning. Reasonably cooperate with one another in creating joint plans for the transition of the Activities and the Assets from each Contributing Group to the Company at the Closing;
(13) Offers. Promptly notify the other Parties of any offer or proposal by any Person concerning any (i) merger, consolidation, other business combination or similar transaction involving it or its Activities, (ii) sale, lease, license or other disposition directly or indirectly by merger, consolidation, business combination, share exchange, joint venture or otherwise, of assets representing a majority of the consolidated assets, revenues or net income of it or its Activities, (iii) issuance, sale or other disposition (including by way of merger, consolidation, business combination, share exchange, joint venture or similar transaction) of equity interests representing a majority of its voting power, (iv) transaction or series of transactions in which any Person (or the stockholders of such Person) would acquire beneficial ownership or the right to acquire beneficial ownership of equity interests representing a majority of its voting power or (v) any combination of the foregoing;
(14) Systems and Software. Use its commercially reasonable efforts to maintain its systems and software used in its Activities in a manner consistent with generally accepted industry standards; and
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(15) Construction Work in Process. Continue its construction and development of its Assets in the ordinary course of business consistent with its capital budget attached as Schedule 5.1.
5.2 No Unauthorized Transfer of Control or Assignment of Licenses. Prior to receiving the FCC Consents, each Party will retain control of its licensee Affiliates, and neither Party will act or fail to act in a manner that would constitute an unauthorized assignment of one or more Licenses or an unauthorized change in control of any of a Party’s Affiliates.
5.3 Rationalization Plans. GCI shall develop and deliver to the Company a plan that identifies (or sets forth the terms and conditions for identifying after the Closing Date) redundant cell site locations contributed or to be contributed to the Company. ACS shall develop and deliver to the Company a plan that identifies (or sets forth the terms and conditions for identifying after the Closing Date) redundant CDMA assets contributed or to be contributed to the Company. Such plans will be completed by the Closing Date or as soon as reasonably practicable thereafter and each Party shall reasonably cooperate with the other Parties in the development of such plans.
5.4 Further Assurances. Each Party shall use its reasonable best efforts and negotiate in good faith to complete prior to Closing all exhibits to this Agreement and the Ancillary Agreements that were not completed at the execution of this Agreement to the reasonable satisfaction of the other Parties. Each Party shall take, and cause its Affiliates to take, such actions, and execute and deliver to the Company such further deeds, bills of sale, assignments or other transfer documents as, in the opinion of the Company, may be reasonably necessary to ensure the full and effective transfer of the Assets to the Company pursuant to this Agreement; provided that the Company shall be responsible for all fees, taxes and other costs (other than such Party’s attorneys’ fees and expenses) payable with respect to the filing or recording of any such further deeds, bills of sale, assignments or other transfer documents. For a reasonable period of time after the Closing, each Party shall continue to reasonably cooperate with the other Parties in transitioning the Activities from each Contributing Group to the Company.
5.5 Form 8-K Filing. Not less than 5 Business days prior to the Closing Date, each of ACS and GCI shall provide the other Parent with the financial statements (which shall be audited to the extent required), or other financial information, required under Item 9.01 of SEC Form 8-K for such other Parent and its Affiliates to file such report. Each of ACS and GCI shall cooperate with the other Parent and provide such information or documentation as may be necessary for it to complete the filing of SEC Form 8-K as may be required pursuant to Item 2.01 thereto to be filed in connection with the Transactions. GCI will cooperate with ACS to seek from the SEC an exemption from any applicable audited financial statement requirement under Item 9.01 of SEC Form 8-K. Notwithstanding anything else set forth herein, the Closing shall not occur until such time as (i) if required, the audited financial statements required for the filing of SEC Form 8-K have been completed or (ii) an exemption from any applicable audited financial statement requirement has been obtained. Each Parent will bear its own costs and expenses with respect to this Section 5.5.
5.6 Legacy GCI and ACS Wireless Plans. Prior to Closing (but following the expiration of the notice periods under the HSR Act or other Antitrust Laws with respect to the
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Transactions), the Company shall, to the extent commercially reasonable, prepare to implement and integrate the billing plans used in the GCI Wireless Activities and ACS Wireless Activities prior to the Closing into the billing system that will be used by the Company following the Closing.
5.7 Asset List. Prior to Closing, each Parent will, and will cause its Affiliates to, cooperate in producing a comprehensive list of its Assets. Such Asset lists will include the categories set forth on Schedule 5.7 and will be provided to the other Parent no later than five months after the date hereof.
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SECTION 6.
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SPECIAL COVENANTS AND AGREEMENTS
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6.1 Consents.
(a) As promptly as practicable after the date hereof, the appropriate Party shall request the Consent of such Third Parties whose Consents are required. Each Party shall thereafter use its commercially reasonable efforts to obtain those Consents that it requires as expeditiously as possible, subject to the other provisions of this Section 6.1. No Consent shall include any material adverse change to the terms of any Assumed Contract unless otherwise agreed to in writing by the other Parent. If notwithstanding its commercially reasonable efforts, any Party is unable to obtain any Consent for which it shall be responsible (or is unable to cause its Affiliates to obtain any such Consent), such Party shall not be liable for any breach of covenant (but such members of the other Contributing Group shall have no obligation to effect the Closing unless the condition set forth in, as the case may be, Section 7.1(c) or Section 7.2(c) hereof shall have been satisfied) except as set forth in Sections 6.9 and 9.2. Nothing herein shall require the expenditure or payment of any funds (other than in respect of normal and usual filing fees and such Party’s attorneys fees, other normal costs of doing business or costs described in Section 6.1(c)) or the giving of any other consideration by such Party in order to obtain any Consent.
(b) To the extent requested by the Parent of the other Contributing Group, each Party agrees to cooperate fully with the members of the other Contributing Group in obtaining any necessary Consents, but such cooperating Party will not be required (i) to make any payment to any Person from whom such Consent is sought or (ii) to accept any material adverse changes in, or the imposition of any material adverse condition to, any License or any Assumed Contract as a condition to obtaining any Consent. To the extent requested by the Parent of the Contributing Group responsible for obtaining any Consent, the Parties shall jointly participate in negotiations with Third Parties with respect to the Consents. Each Party shall not, and shall cause its Affiliates not to, without the prior written consent of the other Parent (which may be withheld at such Parent’s sole discretion), seek amendments or modifications to the Licenses or other Assumed Contracts which would reasonably be expected to delay or prevent obtaining any Consents necessary for the Closing.
(c) Each Party shall bear any costs required to remedy any item of noncompliance by such Person or any member of its Contributing Group with the terms of its Contracts and Licenses. The Company shall bear any costs arising with respect to the performance of the Contracts and Licenses post-Closing (other than any costs arising as a result
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of noncompliance by any other Party or a member of its Contributing Group) in accordance with the terms of any such Contracts or Licenses (including any amendments or modifications) executed or assumed by the Company.
(d) Each Party shall promptly furnish to any Third Party such accurate and complete information regarding the Company and such Party, including financial information concerning such Party and other information relating to the wireless and other operations of such Party (other than information which such Party reasonably deems to be proprietary), as such Third Party may reasonably require in connection with obtaining any Consent, and each Party shall promptly furnish to the other Party needing such Consent, a copy of any such information provided to such Third Party. Each Party shall ensure that its appropriate officers and employees shall be available to attend any scheduled hearings or meetings in connection with obtaining such Consent.
(e) The Parties shall cooperate in seeking, and use commercially reasonable efforts to obtain, a declaratory ruling, or its functional equivalent, from the FCC or other Governmental Authority as the FCC may direct, confirming that:
(1) The Company’s assets constitute the “own facilities” of Alaska Communications Systems Holdings, Inc. or one or more of its wholly-owned subsidiaries, and GCI Communication Corp., respectively, for the purposes of 47 U.S.C. § 214(e)(1)(A), and 47 C.F.R. § 54.201(d)(1);
(2) Alaska Communications Systems Holdings, Inc. and GCI Communication Corp. may remit all CETC Cash Flow to the Company in order to comply with 47 U.S.C. § 254(e)’s requirement that “a carrier that receives such support shall use that support only for the provision, maintenance, and upgrading of facilities and services for which the support is intended;” and
(3) Access by Alaska Communications Systems Holdings, Inc. or one or more of its wholly-owned subsidiaries, and GCI Communication Corp., respectively, to the Company’s facilities and services under the Facilities and Network Use Agreement constitutes “access to spectrum” in areas in which the Company holds Licenses for the purpose of 47 C.F.R. §54.1003(b).
6.2 Cooperation. The Parties shall cooperate fully with each other and their respective counsel and accountants in connection with any actions required to be taken as part of their respective obligations under this Agreement, and each Party shall execute such other documents as may be reasonably necessary to the implementation and consummation of this Agreement, and otherwise shall use its commercially reasonable efforts in good faith to do all things necessary, proper or advisable in order to consummate the Transactions in the most expeditious manner practicable (including using commercially reasonable efforts to cause the conditions to Closing set forth in Section 7 for which such Party is responsible to be satisfied as soon as reasonably practicable) and to fulfill its obligations hereunder. Without limiting the foregoing, if a Governmental Authority requires an arrangement to be addressed through another form of agreement that requires Governmental Consent, or asserts that an arrangement requires a
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Governmental Consent the Parties did not believe was required, the Parties agree to work in good faith to obtain that Consent.
6.3 Taxes, Fees and Expenses.
(a) Each Parent shall hold the Company harmless from any liability for payment or otherwise of any Taxes, without duplication, (i) of such Parent or its Affiliates or (ii) relating to the operation of such Parent’s or Affiliates’ Activities or the ownership of its Assets for any Tax period (or portion thereof) ending on or prior to the Closing Date (for purposes of this clause (ii), all real property Taxes, personal property Taxes and similar ad valorem obligations levied with respect to the Assets for a Tax period that includes (but does not end on) the Closing Date shall be apportioned between such Parent and the Company based upon the number of days of such period (which period shall include the Closing Date) included in the pre-Closing Tax period and the number of days of such Tax period after the Closing Date).
(b) Each Party shall pay, or shall reimburse the Company (to the extent the Company shall have paid) for, all sales, use, transfer, and recordation and documentary Taxes, if any, arising out of the transfer by such Person of its Assets to the Company pursuant to this Agreement. Each Parent shall pay, or shall reimburse the other Parent (to the extent such other Parent or its Affiliates shall have paid) for, 50 percent of all sales, use, transfer, and recordation and documentary taxes and fees, if any, arising out of the transfer by ACS of the Purchased Assets to GCI Member.
(c) Upon receipt of any xxxx for real or personal property Taxes or similar ad valorem Taxes relating to the ACS Assets or the GCI Assets, or upon the filing of any Tax Return with respect to any such ad valorem Taxes, ACS or GCI, as applicable, and the Company shall present a statement to the other setting forth the amount of such Taxes that is attributable to the portion of the applicable Tax period that ended on the Closing Date, with such supporting evidence as is reasonably necessary to calculate such prorated amount. The prorated amount shall be paid by the party owing it to the other within 30 days after delivery of such statement. Any payment required under this Section 6.3(c) and not made within 30 days of delivery of the relevant statement shall bear interest at LIBOR plus 2.5% until fully paid.
(d) Except as otherwise provided in this Agreement, each Member shall pay its own attorney’s fees and other expenses incurred in connection with the negotiation, authorization, preparation, execution, and performance of this Agreement, provided that ACS shall pay 1/3rd and GCI shall pay 2/3rd of any filing fee with respect to the Transactions related to the HSR Act.
6.4 Brokers. Each Party represents and warrants that, except as set forth in Schedule 6.4, neither it nor any Person acting on its behalf has incurred any liability for any finders’ or brokers’ fees or commissions in connection with the Transactions.
6.5 Employee Matters.
(a) The Company shall not be obligated to hire any employee of any Party. Nothing in this Agreement is intended to confer upon any employee of any Party or its Affiliates
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or such employee’s legal representative or heirs any rights as a third-party beneficiary or otherwise or any remedies of any kind whatsoever under or by reason of this Agreement, or the Transactions, including any rights of employment or continued employment. All rights and obligations created by this Agreement are solely among the Parties.
(b) Each Member shall retain all liabilities with respect to any employees terminated by such Member at or prior to the Effective Time.
(c) The Parties shall comply, as necessary, with the provisions of the Worker Adjustment and Retaining Notification Act, as amended, 29 U.S.C. §2101, et seq. (the “WARN Act”), as it relates to the Transactions, including providing all affected employees and other necessary persons with any notice that may be required under the WARN Act, and shall indemnify and hold harmless the Company from and against all losses arising from any noncompliance with the WARN Act.
(d) Each Parent shall indemnify and hold harmless the Company following the Closing from and against any liability the Company may incur under COBRA as a successor to the Activities of such Parent.
6.6 Title Policies. With respect to each fee estate in Real Property that is owned by any member of a Contributing Group, such Person shall, at its expense, deliver to the other Parent prior to Closing a commitment for title insurance, in form and substance reasonably satisfactory to the Company and the other Parent, showing no Liens except for Permitted Liens.
6.7 Risk of Loss. The risk of any loss, damage or impairment, confiscation or condemnation of any Person’s Assets from any cause whatsoever shall be borne by such Person at all times prior to the completion of the Closing as and to the extent provided in Section 10. In the event of any loss, damage or impairment, confiscation or condemnation, the proceeds of any claim for loss payable under any insurance policy, judgment or award with respect thereto shall be applied by such Person to repair, replace or restore such Assets to their prior condition as soon as reasonably practicable after such loss, impairment, condemnation or confiscation.
6.8 Post-Closing Access to Information. Following the Closing for a period of 24 months, each Party (i) shall allow the Company and its authorized representatives reasonable access, on reasonable notice and at the Company’s expense during normal business hours, to such Party’s books and records, for the purpose of audit, inspection or investigation relating to the business, tax and financial affairs of the Company as well as to any third-party claims made against the Company, relating to or arising from the acquisition, ownership or conduct of the operations of such Party’s Assets or Activities during the time period prior to Closing, and (ii) shall furnish or cause to be furnished to the Company or its authorized representatives all information with respect to the Assets and Activities of such Person as the Company may reasonably request. Any such audit, investigation or request for information shall be conducted in such manner as not to interfere unreasonably with such Person’s then-ongoing business.
6.9 Post-Closing Consents and Subsequent Transfers. In the event that any Party shall be unable to obtain prior to Closing any Consent required by such Party or its Affiliates to assign any of the Licenses or Assumed Contracts to be transferred by such Person to the
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Company, the Company and the Members agree that at the option of the Member not affiliated with such non-performing Party, either (1) such Member shall waive such Consent as a precondition to assignment and such License or Assumed Contract shall be assigned by such Member to the Company, or (2) such License or Assumed Contract to which such Consent relates shall not be assigned and (i) the Person required to obtain such Consent shall cause such License or Assumed Contract to remain in effect and shall use its commercially reasonable efforts to give the Company the benefit of such License or Assumed Contract to the same extent as if it had been assigned, and the Company shall perform such Person’s obligations under such License or Assumed Contract relating to the benefit obtained by the Company, and (ii) the Person that was required to obtain such Consent and the Company shall continue to cooperate to try to obtain such Consent as soon as practicable after Closing, with the provisions of Section 6.1 continuing to apply to such Consent. Upon the subsequent receipt of any such Consent to transfer any such License or Assumed Contract, or upon the subsequent waiver by the non-affiliated Member of the requirement that such Consent be obtained, such License or Assumed Contract shall be promptly assigned to the Company.
6.10 Confidentiality/Press Releases. Each Parent will hold, and will cause its Affiliates and its and their officers, directors, employees, lenders, accountants, representatives, agents, consultants and advisors to hold, in confidence all information (other than such information as may be publicly available) furnished by, or obtained from, the other Parent and its Affiliates (“Provider”) to such Parent and its Affiliates (“Receiver”) in connection with the Transactions, as well as all information concerning Provider, its Affiliates or its assets or Activities contained in any analyses, compilations, studies or other documents prepared by or on behalf of Receiver based on information provided by, or obtained from, Provider (collectively, the “Information”) in the manner set forth in the Existing NDA or, following the Closing, Section 16.20 of the Operating Agreement.
(a) If the Transactions are not consummated, each Party, as Receiver, agrees that: (i) the Information, except for that portion thereof which consists of analyses, compilations, studies or other documents prepared by or on behalf of Receiver, will be returned to Provider immediately upon Provider’s request therefor; and (ii) that portion of the Information which consists of analyses, compilations, studies or other documents prepared by or on behalf of Receiver will be destroyed by Receiver. Notwithstanding the foregoing, the Receiver may retain data or electronic records containing Information (i) for the legal department of the Receiver for compliance, evidentiary or archival purposes and (ii) for the purposes of backup, recovery, contingency planning or business continuity planning so long as such data or records are not accessible in the ordinary course of business and are not accessed except as required for backup, recovery, contingency planning or business continuity purposes.
(b) Each Parent and the Company shall consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statements with respect to the Transactions and shall not issue any such press release or make any such public statement without the prior written consent of the other Parent, except with respect to (i) any disclosures to any Governmental Authority which it is required to make under any Legal Requirement (including with respect to any such Person’s public reporting obligations under applicable securities laws), or (ii) filing this Agreement with, or disclosing the terms of
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this Agreement to, any institutional lender to such Person or any of its Affiliates or potential investor in such Person or any of its Affiliates. The Parties shall cooperate to issue a press release publicly announcing this Agreement and the Transactions and shall mutually agree upon the timing and contents of such press release. Notwithstanding the foregoing, any Party may without consulting with any other Party make additional announcements that are substantially similar in form as the mutually agreed upon press release referenced in the prior sentence.
6.11 Assignments to Members. ACS shall contribute and cause each of its Affiliates to contribute all of the ACS Assets to the ACS Member prior to the Closing. GCI shall contribute and cause each of its Affiliates to contribute all of the GCI Assets to GCI Member prior to or at the Closing.
6.12 Bulk Sales Law. Each Member shall cooperate with the Company and the other Member, be liable for, and hold the Company harmless with respect to, compliance or failed compliance with any bulk sales or other law, including with respect to Taxes, that if not complied with would create successor or derivative liability by operation of law, if applicable, of the states in which its Assets are located and its Activities are conducted.
6.13 HSR Act.
(a) Each Parent shall as promptly as practicable, but in no event later than five Business Days following the execution and delivery hereof, file with the United States Federal Trade Commission (the “FTC”) and the United States Department of Justice (the “Antitrust Division”) the notification and report form, if any, required for the Transactions and any supplemental information requested in connection therewith pursuant to the HSR Act. Any such notification and report form and supplemental information shall be in substantial compliance with the requirements of the HSR Act. To the extent permissible under applicable Legal Requirements, each Parent shall obtain all requisite approvals, clearances and authorizations for the Transactions under the HSR Act or other Antitrust Laws and use its reasonable best efforts to do each of the following with respect to matters relating to Antitrust Laws: (i) cooperate reasonably in all respects with the other Parent in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party, (ii) promptly inform the other Parent of any communication received by such Party from, or given by such Party to, the Antitrust Division, the FTC or any other Governmental Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the Transactions, (iii) permit the other Parent, or the other Parent’s legal counsel, to review any material communication given by it to, and consult with each other in advance of any meeting or conference with, the Antitrust Division, the FTC or any such other Governmental Authority or, in connection with any proceeding by a private party, with any other Person, (iv) give the other Parent the opportunity to attend and participate in such meetings and conferences to the extent allowed by applicable Legal Requirements or by the applicable Governmental Authority, (v) in the event one Parent is prohibited by applicable Legal Requirements or by the applicable Governmental Authority from participating in or attending any meetings or conferences, keep the other promptly and reasonably apprised with respect thereto, (vi) cooperate reasonably in the filing of any memoranda, white papers, filings, correspondence, or other written communications explaining or defending the Transactions, articulating any regulatory or competitive argument, and/or
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responding to requests or objections made by any Governmental Authority and (vii) furnish the other Parent with copies of all correspondence, filings, and written communications between the Parent and any Governmental Authority with respect to this Agreement and the Transactions, except that any materials containing valuation information, internal financial information, or competitively sensitive information may be designated for limited distribution as appropriate. Either Parent may, as it deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other Parent under this Section 6.13(a) as “outside counsel only.” Such materials and the information contained therein shall be given only to the outside legal counsel of the recipient and will not be disclosed by such outside counsel to employees, officers, or directors of the recipient, unless express written permission is obtained in advance from the source of the materials.
(b) Each Parent will use reasonable best efforts to resolve any objections that may be asserted by any Person with respect to the Transactions under any Antitrust Law. In connection with the foregoing, if any proceeding is instituted or threatened to be instituted challenging any Transaction as violative of any Antitrust Law, each Parent will cooperate in good faith in all respects with each other and use reasonable best efforts to contest and resist any such proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the Transactions, including by pursuing all available avenues of administrative and judicial appeal, unless by mutual agreement the Members decide that litigation is not in their respective best interests. Each Parent shall use reasonable best efforts to take such action as may be required to cause the expiration of the notice periods under the HSR Act or other Antitrust Laws with respect to such Transactions as promptly as possible after the execution of this Agreement. In connection with and without limiting the foregoing, each Parent shall use reasonable best efforts to take promptly any and all steps necessary to avoid or eliminate each and every impediment under any Antitrust Laws that may be asserted by any Governmental Authority, so as to enable the Parties to close the Transactions as expeditiously as possible.
6.14 Network Capacity and Maintenance. All network capacity included in the Contributed Assets shall be contributed pursuant to the IRU Contribution Agreement and maintenance shall be provided in accordance with the Joint Maintenance Agreement. The remedies set forth in such agreements shall be the sole and exclusive remedies for breaches of any representations, warranties and covenants with respect to such network capacity and the maintenance thereof.
6.15 Payment of CETC Amounts. After the Closing, each Party shall promptly deliver, and cause its Affiliates to promptly deliver, to the Company an amount equal to all CETC Cash Flow as and when received by it and its Affiliates for support and maintenance of the Company’s network. Each Party shall take all commercially reasonable actions necessary to assure continued receipt of CETC Cash Flow, including the continued filing of high cost line counts and any other reports required by the FCC or USAC as a condition of receipt of the CETC Cash Flow. In the event that the FCC and/or USAC do not agree to disburse the CETC Cash Flow directly to the Company, each Party shall maintain with USAC separate Service Area Codes for Wireless services and will establish financial accounts, with appropriate instructions,
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such that any payments of CETC Cash Flow received by a Contributing Group will be automatically transferred to the Company.
6.16 Agreed Tax Treatment; Allocation.
(a) The Parties acknowledge and agree that, for U.S. federal income Tax purposes and for the purpose of any corresponding state, local or foreign Taxes, (x) at the Effective Time (i) ACS will be treated as having sold the Purchased Assets to GCI in a fully taxable transaction prior to the consummation of the transactions described in (ii) and (iii) below, (ii) ACS will be treated as having contributed the ACS Assets (other than the Purchased Assets) to the Company in exchange for (A) a membership interest in the Company as set forth in, and in accordance with the terms of, the Operating Agreement, in a transaction qualifying as a tax-free contribution described in Section 721(a) of the Code, and (B) the assumption by the Company of the Assumed Liabilities relating to the ACS Assets or the ACS Wireless Activities, and (iii) GCI will be treated as having contributed the GCI Assets and the Purchased Assets to the Company in exchange for (A) a membership interest in the Company as set forth in, and in accordance with the terms of, the Operating Agreement, in a transaction qualifying as a tax-free contribution described in Section 721(a) of the Code and (B) the assumption by the Company of the Assumed GCI Liabilities relating to the GCI Assets or the GCI Wireless Activities and (y) the Parties shall report the transactions for U.S. federal and applicable state income Tax purposes in a manner consistent with the above described treatment.
(b) The Parties agree that the Purchase Price (including the Assumed Liabilities, if any, attributable to the Purchased Assets to the extent properly taken into account for U.S. federal income tax purposes) shall be allocated among the Purchased Assets in accordance with Code Section 1060 and the Treasury regulations thereunder (and any similar provision of state, local or foreign law, as appropriate) as shown on the allocation schedule (the “Allocation Schedule”). The Allocation Schedule shall be prepared by the Parties prior to the Closing Date and shall be subject to mutual agreement by ACS and GCI. ACS, GCI, the Company and their Affiliates shall file all Tax Returns (including Internal Revenue Service Form 8594) in a manner consistent with, and shall take no position in any audit, proceeding or otherwise inconsistent with, the Allocation Schedule.
6.17 Forwarding Inquiries and Payments; Collection of Accounts Receivable.
(a) For a period of 12 months from the Closing Date, each Contributing Group shall forward to the Company any e-mail, facsimile, postal mail or telephone inquiries that such Contributing Group receives to the extent relating to its Activities and not otherwise addressed pursuant to the GCI Services Agreement or the ACS Services Agreement and shall promptly after the Closing Date file complete and adequate forwarding notices with the postal officials and appropriate telephone utilities provided by the Company for the forwarding to the Company of all mail and telephone calls relating to the Assets or the Activities.
(b) To the extent (i) either Contributing Group receives any payments in respect of any of their portion of the ACS Assets or GCI Assets that relate to the post-Closing operations of the Activities, such Contributing Group shall promptly forward the same to the Company, or (ii) the Company receives any payments in respect of any of the Excluded Assets,
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the Company shall promptly forward the same to the appropriate Contributing Group, in each case to the extent not otherwise addressed pursuant to this Agreement or the Ancillary Agreements. The Parties also agree to use commercially reasonable efforts to coordinate the collection of the accounts receivable of the Activities that constitute Excluded Assets and those that arise in connection with the Activities after the Closing Date, including advance notice of any referral of unpaid accounts receivable to a collection agency or the initiation of litigation or other enhanced collection procedures.
6.18 ICA Order. ACS shall as promptly as practicable, but in no event later than 60 days following the execution and delivery hereof, file with the SEC an application for an order to be issued by the SEC either (i) pursuant to Section 3(b)(2) of the Investment Company Act, declaring that as a result of and after giving effect to the Transactions, ACS is primarily engaged in a business other than that of investing, reinvesting, owning, holding or trading in securities, or, alternatively, (ii) pursuant to Section 6(c) of the Investment Company Act granting ACS an exemption from all provisions of the Investment Company Act. ACS will use reasonable best efforts to obtain the ICA Order as soon as reasonably practicable after the date hereof.
6.19 Transaction Opinion. GCI shall use reasonable best efforts to cause the Transaction Opinion to be issued so as not to delay the Closing. Such efforts shall include entering into an engagement letter as soon as reasonably practicable with a nationally recognized investment banking or valuation firm, paying any applicable fees, providing all necessary information to such firm and requesting the Transaction Opinion from such firm.
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SECTION 7.
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CONDITIONS TO THE OBLIGATIONS TO CLOSE
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7.1 Conditions to Obligations of ACS Contributing Group. All obligations of ACS, ACS Member and the Company at the Closing hereunder are subject to the satisfaction, on or before the Closing Date, of each and every one of the following conditions, all or any of which may be waived, in whole or in part, by ACS for purposes of consummating such transactions, but without prejudice to any other right or remedy which ACS or ACS Member may have hereunder as a result of any misrepresentation by, or breach of any covenant or warranty of, GCI or GCI Member contained in this Agreement or any other certificate or instrument furnished by GCI or GCI Member hereunder:
(a) Representations and Warranties. All representations and warranties of each of GCI and GCI Member in this Agreement shall be true and correct in all respects to the extent qualified by materiality and in all material respects to the extent not so qualified at and as of the Closing Date as though such representations and warranties were made at and as of such time, except insofar as any such representation or warranty is made as of the date of this Agreement or any other specified date (in which case it shall be true and correct in all respects to the extent qualified by materiality and in all material respects to the extent not so qualified as of the date of this Agreement or such other specified date). ACS and ACS Member shall have received a certificate signed by authorized officers of GCI and GCI Member to the effect of the preceding sentence.
(b) Covenants and Conditions. Each of GCI and GCI Member shall have in all material respects performed and complied with all covenants, agreements, and conditions
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required by this Agreement to be performed or complied with by it prior to or on the Closing Date. ACS and ACS Member shall have received a certificate signed by authorized officers of GCI and GCI Member to the effect of the preceding sentence.
(c) Consents. Each of the Material Consents to be obtained by a member of the GCI Contributing Group, in form and substance reasonably acceptable to ACS, shall have been duly obtained and delivered to ACS with, as a result of obtaining such Consent, no material adverse change having been made in the terms of any License or Assumed Contract that is the subject of such Material Consent.
(d) Licenses. No FCC Licenses or ETC Designations relating to the GCI Wireless Activities shall have been revoked, canceled, expired without renewal or suspended and no Proceeding shall be pending the effect of which is reasonably likely to be to revoke, cancel, fail to renew, or suspend any FCC Licenses or ETC Designations relating to the GCI Wireless Activities.
(e) Membership Documents. The Operating Agreement and the other Ancillary Agreements shall have been duly executed and delivered by GCI, GCI Member and the other parties thereto, as applicable (other than ACS and ACS Member), and all such parties shall have become parties to the Arbitration Agreement pursuant to a joinder agreement in form and substance reasonably acceptable to the Parties, and each Ancillary Agreement shall constitute the legal, valid, and binding obligation of each of such parties, enforceable against it in accordance with its terms, except to the extent such enforceability may be limited by the Enforceability Exceptions.
(f) Lien Searches. Any lien searches that shall have been obtained by ACS, at its expense, shall disclose no Liens on any material GCI Assets other than Permitted Liens.
(g) Governmental Consents. All waiting periods under the HSR Act applicable to this Agreement or the Transactions shall have expired or been terminated and any Governmental Consents shall have been obtained.
(h) Material Adverse Change. GCI and its Affiliates shall not have suffered any material adverse change in the GCI Assets or the GCI Wireless Activities, its liabilities, condition (financial or otherwise) or results of operations, including as a result of any damage, destruction or loss affecting the GCI Assets, other than any material adverse change resulting from (i) general economic conditions, (ii) changes adversely affecting the wireless industry in which GCI operates (so long as no Parent is disproportionately affected thereby), (iii) the negotiation, announcement, execution, delivery, consummation or pendency hereof or of the Transactions, any litigation relating to this Agreement or the Transactions or any action or inaction by GCI or its Affiliates contemplated by or required by this Agreement, (iv) changes in accounting principles, (v) matters disclosed or referred to in the Schedules, or (vi) attack, outbreak, hostility, terrorist activity, act or declaration of war or act of public enemies or other geopolitical event (so long as no Parent is disproportionately affected thereby).
(i) Governmental Orders. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any order, writ, judgment, injunction, decree,
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stipulation, determination or award that is in effect and has the effect of making any material aspect of the Transactions illegal, otherwise restraining or prohibiting consummation of any material aspect of the Transactions or causing any material aspect of the Transactions to be rescinded following completion thereof.
(j) Deliveries. GCI and GCI Member shall have made or stand willing and able to make all the deliveries to the Company set forth in Section 8.2.
(k) Absence of Proceedings. There shall not be pending or threatened any Proceeding (i) challenging or seeking to restrain or prohibit the Transactions or seeking to obtain from ACS or ACS Member or any of their respective Affiliates, in connection with the Transactions, any damages that are material in relation to ACS or ACS Member (as the case may be) taken as whole, (ii) seeking to prohibit or limit the ownership or operation by the Company of any material portion of the Activities or the Assets or to compel ACS, ACS Member or the Company to dispose of or hold separate any material portion of the Activities or the Assets, in each case as a result of the Transactions, or (iii) seeking to impose any conditions or restrictions that, individually or in the aggregate, in the reasonable judgment of ACS or ACS Member, would materially impair (or would reasonably be expected to materially impair) the ability of ACS or ACS Member to consummate the Transactions or would reasonably be expected to have a material adverse effect on the economic benefits to ACS or ACS Member arising therefrom.
(l) Bankruptcy Event. No Bankruptcy Event shall have occurred and be continuing with respect to any member of the GCI Contributing Group.
(m) Investment Company Act. The ICA Order shall have been granted to ACS.
(n) Transaction Opinion. GCI shall have received the Transaction Opinion.
(o) Exhibits. All exhibits to this Agreement, the Ancillary Agreements, the Pre-Closing Agreements and the Operating Agreement that were not completed at the execution of this Agreement shall have been completed to the reasonable satisfaction of ACS.
7.2 Conditions to Obligations of GCI Contributing Group. All obligations of GCI and GCI Member at the Closing hereunder are subject to the satisfaction, on or before the Closing Date, of each and every one of the following conditions, all or any of which may be waived, in whole or in part, by GCI for purposes of consummating the Transactions, but without prejudice to any other right or remedy which GCI or GCI Member may have hereunder as a result of any misrepresentation by, or breach of any covenant or warranty of, ACS or ACS Member contained in this Agreement or any other certificate or instrument furnished by ACS, ACS Member or the Company hereunder:
(a) Representations and Warranties. All representations and warranties of each of ACS and ACS Member in this Agreement shall be true and correct in all respects to the extent qualified by materiality and in all material respects to the extent not so qualified at and as of the Closing Date as though such representations and warranties were made at and as of such time, except insofar as any such representation or warranty is made as of the date of this
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Agreement or any other specified date (in which case it shall be true and correct in all respects to the extent qualified by materiality and in all material respects to the extent not so qualified as of the date of this Agreement or such other specified date). GCI and GCI Member shall have received a certificate signed by authorized officers of ACS and ACS Member to the effect of the preceding sentence.
(b) Covenants and Conditions. Each of ACS and ACS Member shall have in all material respects performed and complied with all covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. GCI and GCI Member shall have received a certificate signed by authorized officers of ACS and ACS Member to the effect of the preceding sentence.
(c) Consents. Each of the Material Consents to be obtained by a member of the ACS Contributing Group, in form and substance reasonably acceptable to GCI, shall have been duly obtained and delivered to GCI with, as a result of obtaining such Consent, no material adverse change having been made in the terms of the License or Assumed Contract that is the subject of such Material Consent.
(d) Licenses. No FCC Licenses or ETC Designations relating to the ACS Wireless Activities shall have been revoked, cancelled, expired without renewal or suspended and no Proceeding shall be pending the effect of which is reasonably likely to be to revoke, cancel, fail to renew, or suspend any FCC Licenses or ETC Designations relating to the ACS Wireless Activities.
(e) Membership Documents. The Operating Agreement and the other Ancillary Agreements shall have been duly executed and delivered by ACS, ACS Member and the other parties thereto, as applicable (other than GCI and GCI Member), and all such parties shall have become parties to the Arbitration Agreement pursuant to a joinder agreement in form and substance reasonably acceptable to the Parties, and each Ancillary Agreement shall constitute the legal, valid, and binding obligation of each of such parties enforceable against it in accordance with its terms, except to the extent such enforceability may be limited by the Enforceability Exceptions.
(f) Lien Searches. Any lien searches that shall have been obtained by GCI, at its expense, shall disclose no Liens on any material ACS Assets other than Permitted Liens.
(g) Governmental Consents. All waiting periods under the HSR Act applicable to this Agreement or the Transactions shall have expired or been terminated and any Governmental Consents shall have been obtained.
(h) Material Adverse Change. ACS and its Affiliates shall not have suffered any material adverse change in the ACS Assets or the ACS Wireless Activities, its liabilities, condition (financial or otherwise) or results of operations, including as a result of any damage, destruction or loss affecting the ACS Assets, other than any material adverse change resulting from (i) general economic conditions, (ii) changes adversely affecting the wireless industry in which ACS operates (so long as no Parent is disproportionately affected thereby), (iii) the negotiation, announcement, execution, delivery, consummation or pendency hereof or of the
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Transactions, any litigation relating to this Agreement or the Transactions or any action or inaction by ACS or its Affiliates contemplated by or required by this Agreement, (iv) changes in accounting principles, (v) matters disclosed or referred to in the Schedules, or (vi) attack, outbreak, hostility, terrorist activity, act or declaration of war or act of public enemies or other geopolitical event (so long as no Parent is disproportionately affected thereby).
(i) Governmental Orders. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any order, writ, judgment, injunction, decree, stipulation, determination or award that is in effect and has the effect of making the Transactions illegal, otherwise restraining or prohibiting consummation of such Transactions or causing such Transactions to be rescinded following completion thereof.
(j) Deliveries. ACS and ACS Member shall have made or shall stand willing and able to make all the deliveries to the Company set forth in Section 8.2.
(k) Absence of Proceedings. There shall not be pending or threatened any Proceeding (i) challenging or seeking to restrain or prohibit the Transactions or seeking to obtain from GCI or GCI Member or any of their respective Affiliates, in connection with the Transactions, any damages that are material in relation to GCI or GCI Member (as the case may be) taken as whole, (ii) seeking to prohibit or limit the ownership or operation by the Company of any material portion of the Activities or the Assets or to compel GCI, GCI Member or the Company to dispose of or hold separate any material portion of the Activities or the Assets, in each case as a result of the Transactions, or (iii) seeking to impose any conditions or restrictions that, individually or in the aggregate, in the reasonable judgment of GCI or GCI Member, would materially impair (or would reasonably be expected to materially impair) the ability of GCI or GCI Member to consummate the Transactions or would reasonably be expected to have a material adverse effect on the economic benefits to GCI or GCI Member arising therefrom.
(l) Bankruptcy Event. No Bankruptcy Event shall have occurred and be continuing with respect to any member of the ACS Contributing Group.
(m) Transaction Opinion. GCI shall have received the Transaction Opinion.
(n) Exhibits. All exhibits to this Agreement, the Ancillary Agreements, the Pre-Closing Agreements and the Operating Agreement that were not completed at the execution of this Agreement shall have been completed to the reasonable satisfaction of GCI.
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SECTION 8.
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CLOSING AND CLOSING DELIVERIES
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8.1 Time and Place of Closing. Subject to (i) the satisfaction or, to the extent permissible by Legal Requirements, waiver (by the Parent for whose benefit the closing condition is imposed), of the closing conditions described in Section 7, and (ii) the provisions of Section 9 hereof, the closing of the Transactions (the “Closing”) will take place at the offices of GCI, 0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxx, at 10:00 a.m., local time, on the fifth Business Day following the date on which each of the conditions set forth in Section 7 is satisfied or waived by the Party entitled to waive such condition (except for any conditions that by their nature can only be satisfied on the Closing Date, but subject to the satisfaction of such
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conditions or waiver by the Party entitled to waive such conditions) (the “Closing Date”); or on such other date or other location as shall otherwise be mutually agreed upon by the Parents.
8.2 Deliveries by the Members. Prior to or on the Closing Date, and subject to the terms of Section 6.10 hereof, the appropriate Member shall deliver to the Company the following, in form and substance reasonably satisfactory to the other Member and its counsel:
(a) Transfer Documents. Duly executed Instruments of Assignment and duly executed bills of sale, deeds, motor vehicle titles, assignments of the Licenses and other Assumed Contracts and such other transfer documents which shall be sufficient to vest good and marketable title to such Member’s Assets in the name of the Company, free and clear of any Liens (except for the Permitted Liens);
(b) Consents. The original of each Consent which has been obtained relating to such Contributing Group;
(c) Secretary’s Certificate. A certificate dated as of the Closing Date, executed by the Secretary or Assistant Secretary of each of such Member: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by such Person’s board of directors and shareholders (if required), or managers and members (if required), as applicable, authorizing and approving the execution of this Agreement and the consummation of the Transactions and that such resolutions remain in full force and effect; and (ii) providing, as attachments thereto, such Person’s articles of incorporation or other organizational documents and a certificate of good standing certified by an appropriate state official, and, if appropriate, certificates of qualification as a foreign corporation certified by an appropriate state official of those states in which such Person conducts it Activities, all certified by such state officials as of a date not more than 20 days before the Closing Date and by such Person’s Secretary or Assistant Secretary as of the Closing Date, and a copy of such Person’s bylaws or operating agreement, as applicable, certified by such Person’s Secretary or Assistant Secretary as of the Closing Date;
(d) Title Insurance on Fee Estates. A commitment for an owner’s title insurance policy, in customary form for commercial property in such location, obtained by such Member at its expense, insuring the Company’s fee simple title in any fee estates included in must Member’s Real Property, in an amount equal to the fair market value of such real property, subject only to Permitted Liens, or any Liens with respect to which such Member shall agree to indemnify the Company, with the final title insurance policy being delivered as soon as practicable after the Closing;
(e) Contracts, Activities Records, Etc. Promptly after Closing, copies of all Licenses and Assumed Contracts relating to such Member or its Contributing Group, and all files and records included in such Member’s Assets; and
(f) Operating Agreement. The Operating Agreement, and any other Ancillary Agreements to which such Member is specified to be a party, duly executed by such Member.
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8.3 Deliveries by the Company. On the Closing Date, and subject to the terms of Section 6.10 hereof, the Company shall deliver to the Members the following, in form and substance reasonably satisfactory to the Members and their counsels:
(a) Assumption Agreements. Duly executed Instruments of Assumption, pursuant to which the Company shall assume and undertake to perform each Member’s obligations arising after the Effective Time under the Licenses and Assumed Contracts; and
(b) Loan Agreement. The Loan Agreement, and any other Ancillary Agreements to which the Company is specified to be a party, duly executed by the Company.
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SECTION 9.
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RIGHTS OF THE COMPANY AND THE MEMBERS ON TERMINATION OR BREACH
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9.1 Termination Rights. This Agreement shall automatically terminate on the date that is 120 days after the date of this Agreement, if (i) the Closing has not occurred and (ii) all of the 120 Day Consents have not been obtained. This Agreement may be terminated prior to the Closing:
(a) At any time by mutual written consent of both Parents;
(b) By either Parent if on and after the 121st day after the date of this Agreement, the non-terminating Parent or any of its Affiliates has failed to maintain in full force and effect any of its non-regulatory Material Consents that it or any of its Affiliates has obtained; provided, however, that a Parent shall not be permitted to terminate this Agreement pursuant to this Section 9.1(b) if (i) the failure of the other Parent or any of its Affiliates to maintain in full force and effect such Material Consent results from a material breach by such terminating Parent or any of its Affiliates of any of their representations, warranties, covenants or agreements contained herein or in any Ancillary Agreement or (ii) the Parent seeking to terminate has failed to maintain in full force and effect all of its non-regulatory Material Consents;
(c) By ACS if (A) there have been one or more breaches by GCI or the GCI Member of any of their representations, warranties, covenants or agreements contained herein or in any Ancillary Agreement that have not been waived by ACS and would result in the failure to satisfy any of the conditions set forth in Section 7.1 (Conditions to Obligations of ACS Contributing Group) and such breaches have not been cured within 10 days after written notice thereof has been received by GCI or (B) any of the conditions set forth in Section 7.1 (Conditions to Obligations of ACS Contributing Group) has become incapable of being satisfied on or before the Outside Date and has not been waived by ACS; provided, in each case that ACS and its Affiliates are not in material breach of any of their representations, warranties, covenants or agreements contained herein or in any Ancillary Agreement;
(d) By GCI if (A) there have been one or more breaches by ACS or the ACS Member of any of their representations, warranties, covenants or agreements contained herein or in any Ancillary Agreement that have not been waived by GCI and would result in the failure to satisfy any of the conditions set forth in Section 7.2 (Conditions to Obligations of GCI Contributing Group) and such breaches have not been cured within 10 days after written notice
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thereof has been received by ACS or (B) any of the conditions set forth in Section 7.2 (Conditions to Obligations of GCI Contributing Group) has become incapable of being satisfied on or before the Outside Date and has not been waived by GCI; provided, in each case that GCI and its Affiliates are not in material breach of any of their representations, warranties, covenants or agreements contained herein or in any Ancillary Agreement;
(e) By either Parent if the terminating Parent’s board of directors has received a Superior Proposal and such Parent has previously paid or pays no later than three Business Days after such termination to the other Parent the Superior Proposal Fee due under Section 9.2(b), and acceptance by the other Parent of the Superior Proposal Fee shall constitute acceptance by it of the validity of any termination of this Agreement under this Section 9.1(e);
(f) If the Closing hereunder has not taken place within 15 months and ten days of the date of this Agreement (the “Outside Date”); provided, however, that a Parent shall not be permitted to terminate this Agreement pursuant to this Section 9.1(f) if the failure to consummate the Closing by such date results from material breach by such Parent or any of its Affiliates of any of their representations, warranties, covenants or agreements contained herein or in any Ancillary Agreement.
In the event of termination by either Parent pursuant to this Section 9.1, written notice thereof shall promptly be given to the other Parent, setting forth the clause of Section 9.1 pursuant to which such Party is terminating and the facts giving rise to such Party’s termination right in reasonable detail, and this Agreement and the Transactions shall be terminated, without further action by any Party. Upon such termination: (i) if no Party is in intentional or willful material breach of any provision of this Agreement, the Parties shall not have any further liability to each other except as set forth in Section 9.2 hereof; or (ii) except as set forth in Section 9.2(c), if any Party shall be in intentional or willful material breach of any provision of this Agreement, the other Parties shall have all rights and remedies available at law or equity.
9.2 Termination Fee.
(a) If a Parent terminates this Agreement pursuant to Section 9.1(b), the Parties agree that the terminating Parent shall have suffered a loss and value of an incalculable nature and amount, unrecoverable in law, and the other Parent shall pay to the terminating Parent a fee of $5 million in immediately available funds by wire transfer no later than three Business Days after such termination.
(b) If a Parent terminates this Agreement pursuant to Section 9.1(e), the Parties agree that the other Parent shall have suffered a loss and value of an incalculable nature and amount, unrecoverable in law, and if the terminating Parent is ACS, then ACS shall pay to GCI a fee of $20 million, or if the terminating Parent is GCI, then GCI, shall pay to ACS a fee of $40 million (in either case, the “Superior Proposal Fee”), in immediately available funds by wire transfer no later than three Business Days after such termination or such sale.
(c) Notwithstanding anything to the contrary in this Agreement, upon termination of this Agreement pursuant to Section 9.1(b) or 9.1(e), a Parent’s right to receive payment of the fees pursuant to this Section 9.2 shall be the sole and exclusive remedy of such
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Parent and its Affiliates against the other Parent or any of its Affiliates or any of their respective stockholders or representatives for any and all Damages that may be suffered based upon, resulting from or arising out of the circumstances giving rise to such termination, and upon payment of the fees owed under this Section 9.2, none of the other Parties or any of its Affiliates or any of their respective stockholders or representatives shall have any further liability or obligation relating to or arising out of this Agreement or the Transactions.
9.3 Specific Performance. Prior to termination of this Agreement, in the event any Party refuses to perform under the provisions of this Agreement, monetary damages alone will not be adequate. The other Parties shall therefore be entitled, in addition to any other remedies that may be available, including money damages, to obtain specific performance of the terms of this Agreement. In the event of an action by any of the Parties to obtain specific performance of the terms of this Agreement, each other Party hereby waives the defense that there is an adequate remedy at law.
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SECTION 10.
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SURVIVAL OF REPRESENTATIONS AND WARRANTIES, AND INDEMNIFICATION
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10.1 Affiliates. The indemnification rights provided in this Section 10 shall, in any instance, extend to any Affiliate of either Parent although any indemnification claims by such Persons shall be made by and through the Claimant.
10.2 Representations and Warranties. All representations, warranties and pre-closing covenants contained in this Agreement shall be deemed continuing representations, warranties and covenants, and shall survive the Closing Date for 18 months following the Closing Date with respect to any claim by the Company or the other Parent or its Member as the Person claiming indemnification (the “Claimant”) that a Parent or its Member (the “Indemnifier”) has breached its representations or warranties contained in this Agreement or failed to comply with its pre-closing covenants contained herein; provided, however, that the representations and warranties set forth in Section 4.3(b) regarding title of Assets shall survive for the period of the applicable statute of limitations, and those set forth in Section 4.8 (Environmental Laws) relating to the pre-Closing period shall survive for five years following the Closing Date. In clarification of the foregoing, the Parties confirm that the covenants herein to be performed following the Closing, including under this Section 10, shall survive in each instance until 18 months after the required performance thereof. Any investigations by or on behalf of any Party or Knowledge of any Party shall not constitute a waiver by such Party of its rights to enforce any representation, warranty or covenant contained herein of the other Parties.
10.3 Indemnification by Each Parent. Subsequent to the Closing, and regardless of any investigation made at any time by or on behalf of the Company or a member of the other Contributing Group, or any information or Knowledge the Company or any other Party may have, each Parent and its Member as Indemnifier shall indemnify and hold the Company and the other Parent and its Member, as Claimant, harmless against and with respect to, and shall reimburse the Company and the other Parent and its Member for:
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(a) Any and all expenses, losses, liabilities or damages (“Damages”) resulting from any untrue representation, breach of warranty or nonfulfillment of any covenant contained herein by such Parent and its Member;
(b) Any and all obligations or liabilities of such Parent and its Member not assumed by the Company pursuant to the terms hereof;
(c) Any and all Damages resulting from such Parent’s and its Contributing Group’s Activities or the ownership or operation of its Assets prior to the Effective Time (including, in the case of ACS, the Purchased Assets) including any and all liabilities which relate to events occurring prior to the Effective Time arising under its Licenses and Assumed Contracts (other than Damages described in Section 10.3(e));
(d) (i) To the extent final and not subject to further appeal or requests for waiver, any and all forfeitures, fines or monetary judgments (including voluntary contributions to the U.S. Treasury paid pursuant to an FCC-approved Consent Decree or other settlement to which the FCC is a party) in excess of overpayments of High Cost Universal Service Support from the Universal Service Fund (each a “Fine”) to the extent that any such Fine results from acts or omissions of any member of the applicable Contributing Group, including but not limited to deficiencies in the customer billing address, line type, line count or other information provided by such Contributing Group, rather than from acts or omissions by the Company;
(ii) To the extent final and not subject to further appeal or requests for waiver, any decrease in CETC Cash Flow from a Contributing Group’s activities due to failure to file any required reports necessary to maintain that Contributing Group’s eligibility to receive High Cost Universal Service Support, failure to cooperate with any FCC or USAC required audit, including a Payment Quality Assurance review, or other investigation, or failure to respond to lawful process, in each case before the closing, except to the extent that such failure resulted from acts or omissions by the Company with respect to actions required of the Company by Exhibit F to Facilities and Network Use Agreement;
(e) Any and all Damages resulting from any Environmental Claims (regardless of whether any representation or warranty contained in Section 4.8 is incorrect) related to the ownership or operation of such Parent’s or its Affiliate’s Real Property (including, in the case of ACS, any Real Property included in the Purchased Assets) prior to the Effective Time;
(f) Any and all Damages resulting from any claim that a collective bargaining agreement or other contract with a Union is binding upon the Company or imposes on the Company any duty to bargain with any Union to the extent such claim relates to any collective bargaining agreement or other contract with a Union by such Parent or any of its Affiliates; and
(g) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, reasonable costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or reasonably incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity.
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10.4 Indemnification by the Company. Subsequent to the Closing, the Company shall indemnify and hold each Member harmless against and with respect to, and shall reimburse each Member for:
(a) Any and all Damages resulting from (i) the Company’s operation or ownership of the Members’ Assets or Activities on and after the Effective Time, including any and all liabilities arising under the Licenses and Assumed Contracts which relate to events occurring after the Effective Time and (ii) Assumed Liabilities;
(b) Any and all Damages resulting from the contribution to the Company by a Member of any License or Assumed Contract prior to the receipt by such Member of the Consent required for the assignment thereof, contingent upon such Consent having been waived by the other Member as a precondition to such assignment;
(c) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity; and
(d) (i) To the extent final and not subject to further appeal or requests for waiver, any and all amounts of overpayment of High Cost Universal Service Support required to be remitted to the Universal Service Administrator or the U.S. Treasury, regardless of the cause of the overpayment relating to High Cost Universal Service Support that was transferred to Company as CETC Cash Flow at the Closing; and
(ii) To the extent final and not subject to further appeal or requests for waiver, (x) any and all Fines to the extent that such Fine results from acts or omissions by the Company in the preparation of line count forms or other information supplied by Company to a Contributing Group for an FCC or USAC required submission, report or audit, Payment Quality Assurance review or other investigation or litigation with respect to High Cost Universal Service Support; and (y) favorable CETC adjustments that increase the High Cost Universal Service Support with respect to a period for which the ordinary course payment of such support occurred during the period prior to the Closing.
10.5 Procedure for Indemnification. The procedure for indemnification shall be as follows:
(a) The Claimant, as the party claiming indemnification, shall give written notice to the Indemnifier of any claim, whether between or among Parties or brought by a Third Party, within 20 days of receiving notice, or becoming aware, thereof and specifying (i) the factual basis for such claim (to the extent known by the Claimant) and (ii) if known, the amount of the claim; provided that, failure to give such notice within 20 days shall not constitute a defense to any claim for indemnification unless, and only to the extent that, such failure materially prejudices the Indemnifier except that the Indemnifier shall not be liable for any expenses incurred during the period in which the Claimant failed to give such notice. Thereafter, the Claimant shall deliver to the Indemnifier, promptly following the Claimant’s receipt thereof,
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copies of all notices and documents (including court papers) received by the Claimant relating to the claim.
(b) Following receipt of notice from the Claimant of a claim, the Indemnifier shall have 30 days to make such investigation of the claim as the Indemnifier deems necessary or desirable. For the purposes of such investigation, the Claimant agrees to make available to the Indemnifier and/or its authorized representative(s) the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnifier agree at or prior to the expiration of said 30 day period (or any mutually agreed upon extension thereof) to the validity and amount of such claim, the Indemnifier shall immediately pay to the Claimant the full amount of the claim. If the Claimant and the Indemnifier do not agree within such period (or any mutually agreed upon extension thereof), the Claimant may seek a remedy in accordance with the Arbitration Agreement.
(c) With respect to any claim by a Third Party as to which the Company or either Parent and its Member is claiming indemnification hereunder, the Indemnifier shall have the right, at its own expense, to participate in or assume control of the defense of such claim with counsel selected by the Indemnifier, and the Claimant shall cooperate fully with the Indemnifier, subject to reimbursement for actual out-of-pocket expenses incurred by the Claimant as the result of a request by the Indemnifier. Such cooperation shall include the retention and (upon the Indemnifier’s request) the provision to the Indemnifier of records and information that are reasonably relevant to such Third Party claim, and making employees available at such times and places as may be reasonably necessary to defend against such Third Party claim for the purpose of providing additional information, explanation or testimony in connection with such Third Party claim. If the Indemnifier elects to assume control of the defense of any Third Party claim, the Indemnifier shall have the right to assert any counterclaims or defenses available to Claimant against such Third Party, and the Claimant shall have the right to participate in the defense of such claim at its own expense and to employ counsel (not reasonably objected to by the Indemnifier), at its own expense, separate from the counsel employed by the Indemnifier, it being understood that the Indemnifier shall control such defense; provided that if the Claimant shall have reasonably concluded that separate counsel is required because a conflict of interest would otherwise exist, the Claimant shall have the right to select separate counsel to participate in the defense of such action on its behalf, at the expense of the Indemnifier. If the Indemnifier does not elect to assume control or otherwise participate in the defense of any Third Party claim, it shall be bound by the results obtained by the Claimant with respect to such claim. If the Indemnifier assumes the defense of a Third Party claim in accordance with this Section 10.5(c), the Indemnifier shall not be liable to the Claimant for any legal expenses subsequently incurred by the Claimant in connection with the defense thereof (other than during the period in which the Claimant shall have failed to give notice of the claim as provided above). Whether or not the Indemnifier assumes the defense of a Third Party claim, the Claimant shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party claim without the Indemnifier’s prior written consent, and the Indemnifier shall not have any indemnification obligation with respect to any settlement, compromise or discharge effected without its prior written consent.
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(d) If ACS Member reasonably believes that the Company, as Claimant, has a claim for indemnification under Section 10.3 against GCI and GCI Member and the Company has not brought such claim against GCI and GCI Member, ACS Member may send written notice to the CEO of the Company specifying in reasonable detail a description of such claim and if the CEO does not subsequently agree to cause the Company to bring such claim, ACS Member may, on behalf of the Company, bring such claim against GCI and GCI Member pursuant to the provisions of Section 10 hereof.
10.6 Limitations. The Indemnifier’s obligations to indemnify the Claimant pursuant to Section 10.3 or 10.4 shall be subject to the following limitations:
(a) The Claimant shall be entitled to indemnification only for those Damages arising with respect to any claim as to which Claimant has given the Indemnifier written notice within the appropriate time period set forth in Section 10.2 hereof for such claim.
(b) Claimant’s Damages sought to be recovered under Section 6.3, 10.3 or 10.4 hereof shall be net of any insurance proceeds actually received by Claimant with respect to the events giving rise to such Damages. If the incurrence or payment of any such Damages makes allowable to the Indemnified Party any deduction, amortization, exclusion from income or other allowance (a “Tax Benefit”) which would not, but for such adjustment, be allowable, then the indemnification payment to the Claimant under this Section 10 shall be an amount equal to (i) the amount otherwise due but for this sentence, minus (ii) the amount of Tax savings actually realized by the Claimant as a result of the Tax Benefit in the Tax year in which the Damages were incurred (a “Tax Savings”). If and to the extent that subsequent to any payment of Damages by any Indemnifier to a Claimant hereunder, such Claimant receives insurance proceeds or realizes a Tax Savings with respect to the events giving rise to such Damages, which proceeds or Tax Savings would have been netted against such Damages if they had been received prior to the Indemnifier’s payment of such Damages, then the Claimant shall remit such insurance proceeds or the amount of such Tax Savings to Indemnifier to the extent such proceeds would have been netted against such Damages.
(c) Neither ACS and its Member nor GCI and its Member shall be liable for indemnification under Section 10.3(a), 10.3(e) or 10.3(g) (to the extent relating to Section 10.3(a) or 10.3(e)) (other than with respect to claims for indemnification based upon, arising out of, with respect to or by reason of fraud or any breach of any covenant to be performed following the Closing (the “Basket Exclusions”)), until the aggregate amount of all indemnification payments for which ACS and its Member or GCI and its Member, as the case may be, is liable in respect of indemnification under such Sections (other than with respect to claims for indemnification based upon the Basket Exclusions) exceeds $1,500,000 (the “Deductible”), in which event ACS and its Member or GCI and its Member, as the case may be, shall only be required to pay such indemnification payments in excess of the Deductible.
(d) The aggregate amount of all indemnification payments for which ACS and its Member and the aggregate amount of all indemnification payments for which GCI and its Member shall be liable pursuant to Section 10.3(a), 10.3(e) and 10.3(g) (to the extent relating to Section 10.3(a) or 10.3(e)) (other than with respect to claims for indemnification based upon,
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arising out of, with respect to or by reason of the Basket Exclusions) shall not exceed $50,000,000.
(e) Neither ACS and the ACS Member nor GCI and the GCI Member shall be liable for indemnification under Section 10.3(d) or 10.3(g) (to the extent relating to Section 10.3(d)) (other than with respect to a Basket Exclusion), until the aggregate amount of all indemnification payments for which ACS and the ACS Member or GCI and the GCI Member, as the case may be, is liable in respect of indemnification under such Sections (other than with respect to claims for indemnification based upon the Basket Exclusions) exceeds $500,000 (the “CETC Claim Deductible”), in which event ACS and its Member or GCI and its Member, as the case may be, shall only be required to pay such indemnification payments in excess of the CETC Deductible.
(f) The Company shall not be liable for indemnification under Section 10.4(d) (other than with respect to a Basket Exclusion), until the aggregate amount of all indemnification payments for which the Company is liable in respect of indemnification under such Section (other than with respect to claims for indemnification based upon the Basket Exclusions) exceeds the CETC Claim Deductible, in which event the Company shall only be required to pay such indemnification payments in excess of the CETC Deductible.
10.7 Recoupment and Deduction. ACS, ACS Member, GCI, GCI Member and the Company acknowledge and agree that the transactions contemplated by this Agreement and the Ancillary Agreements (the “Transaction Agreements”) are integral parts of the same transaction and that the parties entered into each of the Transaction Agreements contingent on the parties thereto entering into all such Transaction Agreements, accordingly, the Parties desire to set forth the circumstances and the terms and conditions on which the Company shall be entitled to recoup by deducting amounts from Distributions (as defined in the Operating Agreement) that otherwise would be made to GCI Member or ACS Member as a result of indemnification payments under this Agreement. In furtherance of the foregoing, any indemnification payment finally determined to be due and payable pursuant to this Agreement shall be entitled to the benefits of the right to recoupment by deducting such obligation from such Distributions to the extent provided in Section 16.22 of the Operating Agreement.
10.8 Taxes. In the event of any inconsistency between the provisions of Section 6.3 and the provisions of Section 10 hereof, the provisions of Section 6.3 shall govern.
10.9 Treatment of Indemnification Payments. All indemnity payments made pursuant to this Section 10 shall be treated for all Tax purposes as adjustments to the contributions made by the relevant Party to the Company; provided, however, that any indemnity payment attributable to the Purchased Assets shall be treated as an adjustment to the Purchase Price.
10.10 Exclusive Remedy. Subject to Section 9.3 and Section 10.7, the Parties acknowledge and agree that, following the Closing, their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud on the part of a Party hereto in connection with the Transactions) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein, shall be pursuant to the indemnification provisions set forth in Section 6.3 or this Section 10. In furtherance of the foregoing, each Party hereby
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waives, to the fullest extent permitted under law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein it may have against the other Parties hereto and their Affiliates and each of their respective representatives arising under or based upon any law, except pursuant to the provisions set forth in Section 6.3 or this Section 10. Nothing in this Section 10.10 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any fraud.
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SECTION 11.
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MISCELLANEOUS
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11.1 Notices. All notices, demands and requests required or permitted to be given under the provisions of this Agreement shall be (i) in writing, (ii) sent by telecopy (with automatic machine confirmation), delivered by personal delivery, or sent by commercial delivery service or certified mail, return receipt requested, (iii) deemed to have been given on the date telecopied with receipt confirmed, the date of personal delivery, or the date set forth in the records of the delivery service or on the return receipt, and (iv) addressed as follows:
If to the Company:
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The Alaska Wireless Network, LLC
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c/o General Communication, Inc. | |
0000 Xxxxxx Xxxxxx, Xxxxx 0000
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Xxxxxxxxx, Xxxxxx 00000
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Attention: CEO
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Facsimile: (000) 000-0000
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with a copy (which shall
not alone constitute notice) to:
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Xxxxxxx & Xxxxxx L.L.C.
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000 00xx Xxxxxx, Xxxxx 0000
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Xxxxxx, XX 00000
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Attention: Xxxxxx X. Xxxxxx
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Facsimile: (000) 000-0000
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If to GCI or GCI Member:
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General Communication, Inc.
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0000 Xxxxxx Xxxxxx, Xxxxx 0000
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Xxxxxxxxx, Xxxxxx 00000
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Attention: General Counsel
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Facsimile: (000) 000-0000
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with a copy (which shall
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not alone constitute notice) to:
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Xxxxxxx & Xxxxxx L.L.C.
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000 00xx Xxxxxx, Xxxxx 0000
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Xxxxxx, XX 00000
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Attention: Xxxxxx X. Xxxxxx
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Facsimile: (000) 000-0000
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If to ACS or ACS Member:
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Alaska Communications Systems Group, Inc.
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000 Xxxxxxxxx Xxxxxx
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00
Xxxxxxxxx, Xxxxxx 00000
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Attention: General Counsel
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Facsimile: (000) 000-0000
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with a copy (which shall
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not alone constitute notice) to:
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Sidley Austin LLP
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000 Xxxxxxx Xxxxxx
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Xxx Xxxx, Xxx Xxxx 00000
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Attention: Xxxxxx X. Xxxxxx
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Xxxxxxx Xxxxxxxxxx
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Facsimile: (000) 000-0000
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or to any such other or additional Persons and addresses as the Person to whom notice is to be provided may from time to time designate in a writing delivered in accordance with this Section 11.1.
11.2 Benefit and Binding Effect. This Agreement shall inure solely to the benefit of the other Parties, without conferring on any other Person any rights of enforcement or other rights. No Party may assign this Agreement without the prior written consent of the other Parties. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.
11.3 Entire Agreement. This Agreement together with the Ancillary Agreements and all exhibits and schedules hereto or thereto, and all documents and certificates delivered by the Parties contemporaneously and in connection herewith, or to be delivered by the Parties pursuant hereto or in connection herewith, collectively represent the entire understanding and agreement between the Parties with respect to the subject matter hereof. This Agreement together with the Ancillary Agreements supersede all prior negotiations, letters of intent or other writings between the Parties with respect to the subject matter hereof, and cannot be amended, supplemented or modified except by a written agreement which makes specific reference to this Agreement or an Ancillary Agreement, as the case may be, and which is signed by the Party against which enforcement of any such amendment, supplement or modification is sought.
11.4 Waiver of Compliance; Consents. Except as otherwise provided in this Agreement, any failure of any Party to comply with any obligation, representation, warranty, covenant, agreement or condition herein may be waived by the Party entitled to the benefits thereof only by a written instrument signed by the Party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, representation, warranty, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any Party, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 11.4.
11.5 Severability. If any provision hereof or the application thereof to any Person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by applicable Legal Requirements.
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11.6 Dispute Resolution. Subject to Section 9.3, if a dispute of any kind arises under or in connection with, or relates to, this Agreement (including any dispute concerning its construction, performance or breach), the rights of the parties to the dispute will be governed by the Arbitration Agreement. By executing this Agreement, each Party agrees that such Party has become a party to the Arbitration Agreement, without the necessity of signing the Arbitration Agreement as a separate document.
11.7 Prevailing Party. If any Party commences any arbitration or Proceeding against another Party to interpret or enforce any of the terms of this Agreement as a result of an alleged breach by the other Party of any terms hereof, the nonprevailing Party shall pay to the prevailing Party reasonable attorneys’ fees, costs and expenses incurred in connection with the prosecution or defense of such Proceeding (including at any appellate level).
11.8 No Consequential or Indirect Damages. Except to the extent payable to a Third Party with respect to indemnification claims under Section 10.5(c), in no event shall any Party be liable under this Agreement to another Party for any punitive, incidental, indirect special or consequential damages, including any damages for business interruption, loss of use, revenue or profit, whether arising out of breach of contract, tort (including negligence) or otherwise, regardless of whether such damages were foreseeable and whether or not the breaching Party was advised of the possibility of such damages.
11.9 Governing Law. This Agreement shall be governed, construed, and enforced in accordance with the laws of the State of Delaware, without regard to conflicts of law principles thereunder.
11.10 Selection of Forum; Venue; Service of Process. Subject to Section 11.6, the Parties hereby irrevocably submit in any Proceeding arising out of or relating to this Agreement or any Transactions to the exclusive jurisdiction of the United State District Court for the District of Alaska or if jurisdiction is not available therein the jurisdiction of any court of the State of Alaska, and waive any and all objections to such jurisdiction or venue that they may have under the laws of any state or country, including any argument that jurisdiction, sites and/or venue are inconvenient or otherwise improper. Each Party further agrees that process may be served upon such Party in any manner authorized under the laws of the United States or Alaska, and waives any objections that such Party may otherwise have to such process.
11.11 WAIVER OF JURY TRIAL. SUBJECT TO SECTION 11.6, EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, INVOLVING OR OTHERWISE IN RESPECT OF THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE ANCILLARY
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AGREEMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.11.
11.12 Counterparts. This Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, shall be an original, and all of which counterparts together shall constitute one and the same fully executed instrument.
Signature page follows
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IN WITNESS WHEREOF, this Agreement has been executed by the Parties as of the date first above written.
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
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By:
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/s/ Xxxxx Xxxxxxxxx | |
Name: Xxxxx Xxxxxxxxx | |||
Title: Chief Executive Officer and President | |||
ACS WIRELESS, INC.
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By:
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/s/ Xxxxx Xxxxxxxxx | |
Name: Xxxxx Xxxxxxxxx | |||
Title: Chief Executive Officer and President | |||
GENERAL COMMUNICATION, INC.
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By:
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/s/ Xxxxxxx X. Xxxxx | |
Name: Xxxxxxx X. Xxxxx | |||
Title: Senior Vice President | |||
GCI WIRELESS HOLDINGS, LLC
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By:
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/s/ Xxxxxxx X. Xxxxx | |
Name: Xxxxxxx X. Xxxxx | |||
Title: Senior Vice President | |||
THE ALASKA WIRELESS NETWORK, LLC
By: GCI Wireless Holdings, LLC, its manager
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By:
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/s/ Xxxxxxx X. Xxxxx | |
Name: Xxxxxxx X. Xxxxx | |||
Title: Senior Vice President | |||
EXHIBIT A
Operating Agreement
See Attached.
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
EXECUTION COPY
FIRST AMENDED AND RESTATED OPERATING AGREEMENT
OF
THE ALASKA WIRELESS NETWORK, LLC
_____________________, 201__
THE OWNERSHIP INTERESTS IN THIS LIMITED LIABILITY COMPANY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR STATE SECURITIES AUTHORITIES AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED. THE SALE OR OTHER TRANSFER OF THE OWNERSHIP INTERESTS IS ALSO RESTRICTED BY CERTAIN PROVISIONS IN THIS AGREEMENT.
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
TABLE OF CONTENTS
ARTICLE 1:
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FORMATION; DEFINITIONS; INTERPRETATION
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1
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1.1
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Formation.
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1
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1.2
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Name.
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1
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1.3
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Members.
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1
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1.4
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Equity Interests.
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1
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1.5
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Registered Office and Agent.
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2
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1.6
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Principal Office.
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2
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1.7
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Foreign Qualification.
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2
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1.8
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Term.
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2
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1.9
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Definitions.
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2
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1.10
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Interpretation.
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26
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1.11
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General Appraisal Procedures.
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27
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1.12
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Put Right/Call Right Appraisal Procedures.
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28
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ARTICLE 2:
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PURPOSES AND POWERS
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29
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2.1
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Principal Purpose.
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29
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2.2
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Powers.
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29
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ARTICLE 3:
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CAPITAL OF THE COMPANY
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29
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3.1
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Capital Contributions.
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29
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3.2
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Capital Accounts.
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30
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3.3
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Transfer.
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30
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3.4
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Adjustments.
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30
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3.5
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Market Value Adjustments.
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31
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3.6
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No Withdrawal of Capital.
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31
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3.7
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No Interest on Capital.
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31
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3.8
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No Drawing Accounts.
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31
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3.9
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No Salary or Other Compensation.
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31
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3.10
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Working Capital.
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32
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3.11
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Member Cure Rights on GCI Working Capital Loan.
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32
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ARTICLE 4:
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INCOME AND LOSSES
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33
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4.1
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Allocation of Net Income and Net Loss.
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33
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4.2
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Company Minimum Gain Chargeback.
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33
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4.3
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Minimum Gain Chargeback for Member Nonrecourse Debt.
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33
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4.4
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Qualified Income Offset.
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34
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4.5
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Limit on Net Loss Allocations.
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34
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4.6
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Loss from Member Nonrecourse Debt.
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34
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4.7
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Nonrecourse Deductions.
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34
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4.8
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§ 754 Adjustments.
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34
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4.9
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Reversal of Mandatory Allocations.
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34
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4.10
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Compliance with Code.
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34
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4.11
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Tax Allocations — § 704(c).
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34
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4.12
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Special Allocation of Contributed Asset Depreciation.
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35
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4.13
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Allocation on Transfer.
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35
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i
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
ARTICLE 5:
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DISTRIBUTIONS
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35
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5.1
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Distributions Generally.
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35
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5.2
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Payment.
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36
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5.3
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Withholding.
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36
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5.4
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Distribution Limitations.
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36
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ARTICLE 6:
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MANAGEMENT
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37
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6.1
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Management; Consulting Fee.
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37
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6.2
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CEO; Other Officers; GCI Services Agreement; Employee Matters.
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38
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6.3
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Executive Board.
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39
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6.4
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Unanimous Vote of Members.
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39
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6.5
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Other Activities.
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43
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ARTICLE 7:
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ANNUAL BUDGETS AND FOUR YEAR PLANS
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44
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7.1
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Operation in Accordance with Annual Budgets and Four Year Plans; Financial Objectives.
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44
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7.2
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Initial Four Year Plan and First Year Budgets.
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45
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7.3
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Adoption of Annual Budgets, Revised Four Year Plans and Subsequent Four Year Plans.
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45
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7.4
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Circumstances Requiring Unanimous Board Approval of Annual Budgets, Four Year Plans and Revised Four Year Plans.
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48
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7.5
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GCI Member Right to [***] FCF [***].
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49
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ARTICLE 8:
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MEETINGS OF MEMBERS; MEETINGS OF THE BOARD
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50
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8.1
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Meetings of Members.
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50
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8.2
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Board Meetings.
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51
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ARTICLE 9:
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OPERATIONAL MATTERS
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52
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9.1
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Option to Accelerate Capital Investment.
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52
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9.2
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Request for Wireless Device Approval.
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54
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9.3
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Facilities and Network Use Agreement.
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54
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9.4
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Connection Attrition Adjustments.
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54
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9.5
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Connection Maintenance Adjustments.
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58
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9.6
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Network Capacity Purchases.
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59
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9.7
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Option Regarding Fixed Wireless Facilities.
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60
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ARTICLE 10:
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LIABILITY OF A MEMBER; STANDARD OF CARE; INDEMNIFICATION; AND EXCULPATION
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62
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10.1
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Limited Liability.
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62
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10.2
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Capital Contributions.
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62
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10.3
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Capital Return.
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62
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10.4
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Reliance.
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62
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10.5
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Standard of Care.
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62
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10.6
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Exculpation.
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63
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10.7
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Indemnification.
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64
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10.8
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Expense Advancement.
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64
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10.9
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Insurance.
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64
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10.10
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Indemnification of Others.
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64
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ARTICLE 11:
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ACCOUNTING AND REPORTING
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64
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11.1
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Fiscal Year.
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64
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ii
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
11.2
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Accounting Method.
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65
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11.3
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Tax Classification.
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65
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11.4
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Tax Filings.
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65
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11.5
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Company Reports.
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65
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11.6
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Financial Statement Audit.
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67
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11.7
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Books and Records.
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67
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11.8
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Banking.
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68
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11.9
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Tax Matters Partner.
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68
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11.10
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No Partnership.
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69
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11.11
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ACS Audit Rights.
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69
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11.12
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Maintenance of Insurance.
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69
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ARTICLE 12:
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DISSOLUTION
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69
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12.1
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Dissolution.
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69
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12.2
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Events of Withdrawal.
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69
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12.3
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Continuation.
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70
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ARTICLE 13:
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LIQUIDATION
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70
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13.1
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Liquidation.
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70
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13.2
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Priority of Payment.
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70
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13.3
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Liquidating Distributions.
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71
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13.4
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No Restoration Obligation.
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71
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13.5
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Liquidating Reports.
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71
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13.6
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Certificate of Cancellation.
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72
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ARTICLE 14:
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TRANSFER RESTRICTIONS
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72
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14.1
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General Restrictions.
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72
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14.2
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No Member Rights.
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72
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14.3
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Permitted Transferees.
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73
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14.4
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General Conditions on Transfers.
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73
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14.5
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Rights of Transferees.
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74
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14.6
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Admission.
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74
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14.7
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Security Interest.
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74
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14.8
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Tag Along Right; Drag Along Election.
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75
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14.9
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Right of First Offer on Asset Sales.
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77
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14.10
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Connection Termination Event.
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79
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ARTICLE 15:
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DISPUTE RESOLUTION
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82
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ARTICLE 16:
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GENERAL PROVISIONS
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82
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16.1
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Amendment.
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82
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16.2
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Representations.
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82
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16.3
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Unregistered Interests.
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83
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16.4
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Waiver of Dissolution Rights.
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83
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16.5
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Waiver of Partition Right.
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83
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16.6
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Waivers and Consents.
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84
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16.7
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Equitable Relief.
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84
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16.8
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Remedies for Breach; Limitation of Damages.
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84
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16.9
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Costs.
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84
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16.10
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Indemnification.
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85
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iii
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
16.11
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Counterparts.
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85
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16.12
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Notice
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85
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16.13
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Deemed Notice.
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86
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16.14
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Partial Invalidity.
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86
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16.15
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Entire Agreement.
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87
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16.16
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Benefit.
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87
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16.17
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Binding Effect.
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87
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16.18
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Further Assurances.
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87
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16.19
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Headings.
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87
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16.20
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Confidentiality.
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87
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16.21
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No Tax Advice.
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88
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16.22
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Coordination With Contribution Agreement and Ancillary Agreements; Recoupment of Certain Claims from Distributions.
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88
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16.23
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Governing Law.
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89
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iv
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
FIRST AMENDED AND RESTATED OPERATING AGREEMENT
OF
THE ALASKA WIRELESS NETWORK, LLC
This First Amended and Restated Operating Agreement (the “Agreement”) of The Alaska Wireless Network, LLC, a Delaware limited liability company (the “Company”), is entered into as of _____________, 201__ (the “Effective Date”), by and among the Company, GCI Wireless Holdings, LLC, an Alaska limited liability company (the “Initial GCI Member”), and ACS Wireless, Inc., an Alaska corporation (the “Initial ACS Member”), and, solely for purposes of Sections 3.10[b], 6.5, 9.6, 14.10, 15, 16.8, 16.20, and 16.22, Alaska Communications Systems Group, Inc., a Delaware corporation, and, solely for purposes of Sections 3.10[b], 6.5, 9.6, 11.11, 14.10, 15, 16.8, 16.20, and 16.22, General Communication, Inc., an Alaska corporation.
In consideration of the mutual covenants set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Members (as defined below) hereby agree as follows:
ARTICLE 1: FORMATION; DEFINITIONS; INTERPRETATION
1.1 Formation. The Company was formed as a single member Delaware limited liability company on ______________, 2012, by filing a Certificate of Formation with the Delaware Secretary of State pursuant to the Act. This Agreement amends and restates in its entirety the original Operating Agreement of the Company dated as of _____________, 2012. Unless expressly provided otherwise in this Agreement, the rights, duties and liabilities of the Company and the Members will be as provided in this Agreement and the Act. If any provisions of the Act conflict with this Agreement, the provisions of this Agreement will control, and the conflicting provision of the Act will be deemed waived, in each case to the extent permitted by the Act.
1.2 Name. The name of the Company is The Alaska Wireless Network, LLC. The business of the Company will be conducted under such name, as well as any other name or names as the Company may from time to time determine, provided that no such name may suggest that the Company is an Affiliate of either the GCI Member or the ACS Member.
1.3 Members. Unless and until a Transferee is admitted as a Member pursuant to Section 14.6, the Initial GCI Member and the Initial ACS Member shall be the sole Members of the Company within the meaning of the Act. Except as otherwise expressly provided in this Agreement, no Member may be removed as a member of the Company without such Member’s prior written approval. The address of each Member is set forth on the attached Exhibit A, as it may be amended from time to time in accordance with this Agreement.
1.4 Equity Interests. The Members agree that, as of the Effective Date, the Ownership Interests of the Members in the equity of the Company based on the agreed Fair Market Value of the Initial Capital Contributions made by the Members, expressed as a percentage, are 66⅔% for the GCI Member and 33⅓% for the ACS Member (the “Equity Interests”).
1
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
1.5 Registered Office and Agent. The initial registered office of the Company in Delaware will be at 0000 Xxxxxx Xx., Xxxxxxxxxx, XX 00000, New Castle County, and its registered agent will be The Corporation Trust Company. The Company may change its registered office and registered agent in Delaware by filing the appropriate documents with the Secretary of State of Delaware in accordance with the Act.
1.6 Principal Office. The principal office of the Company where records of the Company will be maintained initially is the GCI Member’s principal place of business in Anchorage, Alaska. The Company may change its principal office, provided that such office may not be changed to a location outside Anchorage, Alaska without the affirmative Vote of all Members.
1.7 Foreign Qualification. The Company will qualify as a foreign limited liability company under the provisions of Alaska law and will maintain such status for so long as the Company owns any real property or otherwise transacts business in the State of Alaska. The Company will also apply for any required certificate of authority to do business in any other state or jurisdiction, as required or appropriate.
1.8 Term. The term of the Company as a limited liability company under the Act commenced on the date its Certificate and the Certificate of Conversion were filed with the Delaware Secretary of State and will continue in perpetuity until a Dissolution occurs under Section 12.1 and a certificate of cancellation is filed with the Delaware Secretary of State pursuant to Section 13.6.
1.9 Definitions. The following capitalized terms, when used in this Agreement, have the meanings set forth below:
Accelerated Capital Investment:
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as defined in Section 9.1[a].
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Accelerated Capital Investment Notice:
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as defined in Section 9.1[a].
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ACI Purchase Price:
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as defined in Section 9.1[e].
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ACS:
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Alaska Communications Systems Group, Inc., a Delaware corporation, the ultimate parent company of the Initial ACS Member.
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ACS [***] Connection Adjustment:
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as defined in Section 9.4[c][i].
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ACS Actual Average Connections:
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as defined in Section 9.4[b].
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ACS Annual Connection
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Shortfall Adjustment:
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as defined in Section 9.4[b].
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ACS Connection Maintenance
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Adjustment:
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as defined in Section 9.5[a][iii].
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2
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
ACS First Partial Preferred
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Distribution:
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if the Effective Date is not on the first day of a calendar quarter, an amount equal to $12,500,000 multiplied by a fraction [a] the numerator of which is the number of Preference Period Partial First Quarter Days and [b] the denominator of which is the number of days in the calendar quarter during which the first day of the Preference Period Partial First Quarter occurs.
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ACS Forecast Average Connections:
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as defined in Section 9.4[a].
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ACS Forecast Reduction Connections:
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an amount equal to the lesser of [a] [***] and [b] the amount, if any, by which the ACS Forecast Average Connections for Fiscal Year 2013 exceeds the ACS Actual Average Connections for Fiscal Year 2013.
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ACS Full Quarter Preferred
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Distributions:
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if the Effective Date is not on the first day of a calendar quarter, the following amounts:
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[a] an amount equal to $12,500,000 with respect to each of the first seven full calendar quarters in the Preference Period Full Quarters;
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[b] with respect to the eighth full calendar quarter in the Preference Period Full Quarters, an amount equal to the sum of [i] $12,500,000 minus the amount of the ACS First Partial Preferred Distribution, and [ii] $11,250,000 multiplied by a fraction [A] the numerator of which is the number of Preference Period Partial First Quarter Days, and [B] the denominator of which is the number of days in the calendar quarter in which the Effective Date occurs; and
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[c] an amount equal to $11,250,000 with respect to each of the last seven full calendar quarters in the Preference Period Full Quarters.
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ACS Last Partial Preferred
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Distribution:
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if the Effective Date is not on the first day of a calendar quarter, an amount equal to $190,000,000 minus the sum of [a] the ACS First Partial Preferred Distribution, and [b] the aggregate amount of the ACS Full Quarter Preferred Distributions.
|
3
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
ACS Member:
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initially, the Initial ACS Member, and shall include any successors thereto by merger or consolidation (or otherwise by operation of law), any assignees or transferees of all or substantially all the assets thereof, and any transferees of the Ownership Interests thereof, in each case upon such successor, assignee or transferee being admitted as a substitute Member in accordance with the terms of this Agreement.
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ACS Preference Period Last
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Quarter Distribution:
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if the Effective Date is not on the first day of a calendar quarter, an amount equal to [a] the Equity Interest of the ACS Member, multiplied by [b] the product of [i] Adjusted FCF for the Preference Period Last Quarter, multiplied by [ii] a fraction [A] the numerator of which is the number of Preference Period Partial First Quarter Days, and [B] the denominator of which is the number of days in the Preference Period Last Quarter.
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ACS Preferred Distributions:
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an aggregate amount equal to [a] if the Effective Date is on the first day of a calendar quarter, an amount equal to $12,500,000 with respect to each of the first eight calendar quarters beginning on the Effective Date and $11,250,000 with respect to each of the next eight calendar quarters thereafter, or [b] if the Effective Date is not on the first day of a calendar quarter, the sum of [i] the ACS First Partial Preferred Distribution, [ii] the ACS Full Quarter Preferred Distributions, and [iii] the ACS Last Partial Preferred Distribution.
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ACS Services Agreement:
|
the ACS Services Agreement between the Company and ACS Wireless, Inc. attached to this Agreement as Exhibit O.
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ACS Transfer Date Connections:
|
as defined in Section 9.5[a][i].
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Act:
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the Delaware Limited Liability Company Act, as amended from time to time.
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Additional Capital Contribution:
|
means any Capital Contribution made to the Company by a Member in accordance with the terms of this Agreement other than an Initial Capital Contribution.
|
Additional Capacity Purchase Agreement:
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as defined in the Contribution Agreement.
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Adjusted ACS Forecast Average
|
4
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
Connections:
|
as defined in Section 9.4[a].
|
Adjusted Capital Account Deficit:
|
with respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant taxable year, after giving effect to the following adjustments:
|
[a] credit to such Capital Account any amounts which such Member [i] is obligated to restore to the Company upon liquidation of such Member’s interest in the Company (or which is so treated pursuant to Regulation § 1.704-1(b)(2)(ii)(c)) pursuant to the terms of this Agreement or under state law or [ii] is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations §§ 1.704-2(g)(1) and 1.704-2(i)(5); and
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[b] debit to such Capital Account the items described in §§ 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6) of the Regulations.
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|
The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of § 1.704-1(b)(2)(ii)(d) of the Regulations and will be interpreted consistently with such section.
|
|
Adjusted FCF:
|
FCF minus the sum of [a] the Consulting Fee and [b] payments required to be made in accordance with the terms of the Company Working Capital Loan or the GCI Working Capital Loan, other than, in the case of the GCI Working Capital Loan, payments financed pursuant to a refinancing of such loan.
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Affiliate:
|
with respect to any Person, any other Person that directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with such Person, except that the Company shall not be deemed to be an Affiliate of any Member.
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Affiliate Contracts:
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as defined in the Contribution Agreement.
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Affiliate Transactions:
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as defined in Section 6.4[n].
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Aggregate Purchase Price:
|
as defined in Section 14.8[c].
|
5
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
Agreement:
|
this First Amended and Restated Operating Agreement, also known as a limited liability company agreement under the Act, as amended from time to time.
|
Ancillary Agreements:
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as defined in the Contribution Agreement.
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Annual Budgets:
|
the then current Annual Cap Ex Budget or Annual Operating Budget or both, as applicable.
|
Annual Cap Ex Budget:
|
the capital expenditures budget of the Company for a given Fiscal Year, each of which will be consistent with the Four Year Plan applicable for the given Fiscal Year and will be in the form of, and contain the same scope of information included in, the First Year Cap Ex Budget.
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Annual Operating Budget:
|
the operating budget of the Company for a given Fiscal Year, each of which will be consistent with the Four Year Plan applicable for the given Fiscal Year and will be in the form of, and contain the same scope of information included in, the First Year Operating Budget.
|
Approved Affiliate Transactions:
|
the following agreements and transactions: [a] the Contribution Agreement, all Affiliate Contracts that are Assumed Contracts (as identified on the Schedules to the Contribution Agreement) to which the Company, on the one hand, and a Member or an Affiliate of a Member, on the other hand, are parties after the Effective Date, and all agreements entered into in connection with closing of the Contribution Agreement that are between a Member or an Affiliate of a Member and the Company, including all agreements related to the contribution of assets by the Members to the Company (and maintenance thereof) and the applicable Ancillary Agreements, [b] the GCI Services Agreement, subject to the terms of Section 6.4[n][x] and [y], respectively, in the case of Professional Services and Satellite Capacity Services provided under such agreement, [c] the ACS Services Agreement, [d] the Facilities and Network Use Agreement, [e] the GCI Working Capital Loan and [f] any other agreement or transaction that is approved by the unanimous Vote of the Members.
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6
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
Arbitration Agreement:
|
that certain Arbitration Agreement between the Company and the Members set forth as the attached Exhibit E, as it may be amended from time to time, and which is hereby incorporated into and made a part of this Agreement.
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Arbitrator:
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as defined in the Arbitration Agreement.
|
Arbitrator’s Expenses:
|
as defined in the Arbitration Agreement.
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ARPU:
|
average revenue per unit, with a unit for this purpose meaning a Connection.
|
Assumed Contracts:
|
as defined in the Contribution Agreement.
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Average Connections:
|
with respect to ACS or GCI, as applicable, for any applicable Fiscal Year, the sum of [a] the number of its Connections, [***] the number of [***] the [***] for the [***] of [***] that have [***] of [***], as applicable (as determined by [***] such other [***], as applicable, with respect to such Connections), and [b] the number of its [***] that have [***] of any [***] the [***] for the [***] of [***] (as determined by [***] from [***], to such other Person with respect to such Connections), in each case determined in accordance with standard industry practices and consistent with past practices, on the last day of each calendar month in such Fiscal Year divided by 12 (or divided by the number of calendar months in the applicable Fiscal Year if it is a Fiscal Year consisting of fewer than 12 months). For purposes of this definition, both [i] an [***] and [ii] any Connection to which [***] are [***] pursuant to Section 2(a)(vii) of the Facilities and Network Use Agreement shall be deemed a Connection of ACS. Also for purposes of this definition, any Connection to which [***] are [***] pursuant to Section 2(a)(vii) of the Facilities and Network Use Agreement shall be deemed a [***].
|
Bankruptcy Case:
|
as defined in Section 14.6.
|
Bankruptcy Code:
|
as defined in definition of Bankruptcy Event.
|
Bankruptcy Event:
|
means, with respect to a Person, the commencement of occurrence of any of the following:
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7
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
[a] a voluntary or involuntary case under Title 11 of the U.S. Code (the “Bankruptcy Code”), as now constituted or hereafter amended, or under any other applicable federal, state or foreign bankruptcy or insolvency law or other similar law, in which such Person is a debtor; or
|
|
[b] the appointment of (or a proceeding to appoint) a trustee or receiver for a substantial portion of such Person’s property or a custodian (as such term is defined in section 101 of the Bankruptcy Code); or
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|
[c] an attachment, execution or other judicial seizure of (or a proceeding to attach, execute or seize) a substantial property interest of such Person; or
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|
[d] a general assignment for the benefit of creditors.
|
|
Board:
|
as defined in Section 6.3[a].
|
Book Value:
|
with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:
|
[a] the initial Book Value of any asset contributed by a Member to the Company will be the asset’s Fair Market Value at the time of the contribution, which shall be the amount set forth on Exhibit B for the Initial Capital Contributions made by the Initial ACS Member and the Initial GCI Member;
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|
[b] the Book Value of all Company assets will be adjusted to equal their respective Fair Market Values, [i] as of [A] the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution, [B] the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for an interest in the Company, or [C] the issuance of an interest in return for services; and [ii] as of the liquidation of the Company within the meaning of Regulations § 1.704-1(b)(2)(ii)(g);
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[c] the Book Value of any Company asset distributed to any Member will be the Fair Market Value of the asset on the date of Distribution; and
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8
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
[d] the Book Values of Company assets will be increased or decreased to reflect any adjustment to the adjusted basis of the assets under Code §§ 734(b) or 743(b), but only to the extent that the adjustment is taken into account in determining Capital Accounts under Regulations § 1.704-1(b)(2)(iv)(m), but Book Values will not be adjusted pursuant to this provision to the extent that an adjustment under clause [b] is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment under this clause [d].
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After the Book Value of any asset has been adjusted under clause [a], clause [b] or clause [d] above, Book Value will be adjusted by the Depreciation taken into account with respect to the asset for purposes of computing Net Income and Net Loss.
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Budget Objection Notice:
|
as defined in Section 7.3[f].
|
Business Day:
|
any day (other than a Saturday or Sunday) on which commercial banks are not required or authorized to close in New York City, New York or Anchorage, Alaska.
|
Capital Account:
|
the capital account of a Member established and maintained in accordance with Section 3.2.
|
Capital Contribution:
|
any contribution of money or property by a Member to the Company, which is either an Initial Capital Contribution or an Additional Capital Contribution.
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Cause:
|
the CEO [i] commits any act of fraud (including securities fraud), theft or willful misconduct relating to the Company or any of its Subsidiaries or any Member, or [ii] is convicted of, or pleads guilty or no contest to, a misdemeanor involving fraud, deceit or embezzlement which is either in relation to the Company or is reasonably likely to have a material adverse effect on the business or reputation of the Company, or any felony or [iii] violates any material federal or state securities law or other applicable material law or regulation in connection with activities directly related to the Company and its Subsidiaries, which violation is reasonably likely to have a material adverse effect on the business or reputation of the
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9
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
Company or its Subsidiaries or [iv] breaches his or her duty of loyalty to the Company. | |
CEO:
|
as defined in Section 6.2[a].
|
Certificate:
|
the Certificate of Formation of the Company, as amended from time to time.
|
Challenged Aspects:
|
as defined in Section 7.3[g].
|
Changing Market Conditions:
|
includes material changes in market conditions that were not anticipated at the time the then-current Plans were adopted by the Company, including unanticipated (i) changes in subscriber demand, (ii) force majeure events, (iii) entrance of new competitors into the Wireless Business in Alaska and (iv) introduction of competitive technology.
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Clawback Amount:
|
as defined in Section 7.5[c].
|
Code:
|
the Internal Revenue Code of 1986, as amended from time to time (including corresponding provisions of subsequent revenue laws).
|
Commercially Sensitive Information
|
|
Policies and Procedures:
|
as set forth on Exhibit L.
|
Company:
|
The Alaska Wireless Network, LLC, as formed under the Certificate and governed by this Agreement.
|
Company Asset Sale:
|
as defined in Section 14.9[a].
|
Company Minimum Gain:
|
the amount computed under Regulations § 1.704-2(d)(1) with respect to the Company’s Nonrecourse Liabilities.
|
Company Network:
|
as defined in the Facilities and Network Use Agreement.
|
Company Working Capital Loan:
|
as defined in Section 3.10[b].
|
Connection:
|
each Wireless Device having a discrete International Mobile Subscriber Identity (IMSI), including Wireless Devices provided by a Person [i] for use by its, or any of its Affiliate’s, directors, officers, employees or consultants for business or personal use, [ii] for demonstration purposes in such Person’s, (or its
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10
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
Affiliate’s) retail stores or [iii] for other internal uses or purposes of such Person or its Affiliates, that is connected to a network operated by the Company and covered by the Facilities and Network Use Agreement or an agreement between the Company and any other Person related to use of the Company’s network for the provision of Wireless services, as the context requires. | |
Connection Maintenance
|
|
Measurement Date:
|
as defined in Section 9.5[a][iii].
|
Connection Maintenance Transfer:
|
as defined in Section 9.5[a].
|
Connection Maintenance Transfer
|
|
Date:
|
as defined in Section 9.5[a].
|
Connection Termination Event:
|
as defined in Section 14.10[a].
|
Connection Termination Date:
|
the date on which a Connection Termination Event occurs.
|
Consulting Fee:
|
as defined in Section 6.1[c].
|
Contributed Assets:
|
as defined in the Contribution Agreement.
|
Contributed Asset Depreciation:
|
any Depreciation arising from the Company’s ownership of any Contributed Asset, provided, however, that Contributed Asset Depreciation shall not include any Depreciation attributable to an increase in the Book Value of any Contributed Asset pursuant to clause [b] of the definition of Book Value.
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Contribution Agreement:
|
the Asset Purchase and Contribution Agreement entered into by GCI, the Initial GCI Member, ACS, the Initial ACS Member and the Company dated June __, 2012.
|
Control:
|
(including the terms “Controlled by” and “under common Control with”) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
|
CTE Call Right:
|
as defined in Section 14.10[b][ii].
|
CTE Notice:
|
as defined in Section 14.10[b].
|
11
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
CTE Purchase Price:
|
the price payable by [***] pursuant to the exercise of the CTE Call Right or the CTE Put Right, which shall be either [a] the price negotiated by the Members pursuant to Section 14.10[b][ii] or [iii], as applicable, or [b] the [***] of [***] as of the [***], as determined pursuant to [***].
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CTE Put Right:
|
as defined in Section 14.10[b][iii].
|
Cure Date:
|
as defined in Section 3.11[b].
|
Cure Offer:
|
as defined in Section 3.11[a].
|
Cure Offer Period:
|
as defined in Section 3.11[b].
|
Current Assets:
|
the current assets of the Company, determined in accordance with GAAP.
|
Current Liabilities:
|
the current liabilities of the Company, determined in accordance with GAAP.
|
Departing Member:
|
as defined in Section 14.10[b].
|
Depreciation:
|
for each taxable year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for the year or other period, except that if the Book Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of the year or other period, Depreciation will be an amount that bears the same ratio to the beginning Book Value as the federal income tax depreciation, amortization or other cost recovery deduction for the year or other period bears to the beginning adjusted tax basis, but if the federal income tax depreciation, amortization, or other cost recovery deduction for the year or other period is zero, Depreciation will be determined with reference to the beginning Book Value using any reasonable method selected by the Tax Matters Partner and mutually agreed to by the Members; provided, however, that the Members will not unreasonably withhold approval of a reasonable method selected by the Tax Matters Partner so long as such method does not result in a disproportionate effect on any Member.
|
Designated Budget Dispute Arbitrator:
|
as defined in the Arbitration Agreement.
|
12
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
Disclosing Party:
|
as defined in Section 16.20.
|
Disputed Expense:
|
as defined in Section 7.3[i].
|
Dissolution:
|
the happening of any of the events set forth in Section 12.1.
|
Distribution:
|
the amount of any money or the Fair Market Value of any property distributed by the Company to the Members as an operating or liquidating distribution in accordance with this Agreement.
|
Drag Along Election:
|
as defined in Section 14.8[a].
|
Effective Date:
|
as defined in the preamble, which will be the Closing Date as defined in the Contribution Agreement.
|
End User Data:
|
as defined in the Facilities and Network Use Agreement.
|
Entire Company Assumed
|
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Purchase Price:
|
as defined in Section 14.8[c][ii].
|
Equity Interests:
|
as defined in Section 1.4.
|
Exchange Offer:
|
as defined in Section 14.9[d].
|
Facilities and Network Use Agreement:
|
as defined in Section 9.3.
|
Facilities and Network Use CTE:
|
as defined in Section 14.10[b][iii].
|
Fair Market Value:
|
the cash price at which a willing seller would sell and a willing buyer would buy, both having full knowledge of the relevant facts and being under no compulsion to buy or sell, in an arm’s-length transaction without time constraints, as determined by:
|
[a] the Members by unanimous Vote in the case of a determination of Fair Market Value pursuant to: clause [a] (except as otherwise provided therein with respect to the Fair Market Value of the Initial Capital Contributions), clause [b] and clause [c] of the definition of Book Value; the definition of Distribution; clause [c] of the definition of Income; clause [c] of the definition of Loss; Section 3.2[a][ii] (but only with respect to Additional Capital Contributions); Section 3.2[b][ii]; as provided in the penultimate paragraph of
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13
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
Section 3.2; Section 13.3; or the definition of CTE Purchase Price; provided, that if the Members do not unanimously agree on Fair Market Value in any such case within 15 days after a determination of Fair Market Value is required to be made (or such longer period as the Members may agree), then Fair Market Value shall be determined by an Independent Appraiser in accordance with Section 1.11 or Section 1.12, as applicable; | |
[b] as set forth on Exhibit B in the case of a determination of Fair Market Value pursuant to: Section 1.4; as provided in clause [a] of the definition of Book Value with respect to Initial Capital Contributions; or in Section 3.2[a][ii] with respect to Initial Capital Contributions; and
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|
[c] by Majority Vote in all other instances;
|
|
provided, that the determination of the Fair Market Value of any Ownership Interest being valued pursuant to this Agreement for any purpose shall not be subject to any discount for lack of marketability or minority interest.
|
|
Fair Market Value
|
|
Determination Date:
|
as defined in Section 1.11.
|
FCF:
|
means, for any period, the consolidated net income (or loss) of the Company and its Subsidiaries determined in accordance with GAAP (“FCF Income”) plus (a) the amount of depreciation and amortization expense reducing FCF Income for such period, (b) the amount of interest expense reducing FCF Income for such period and (c) any non-cash items reducing FCF Income for such period, and minus (i) any non-cash items increasing FCF Income for such period, and (ii) any capital expenditures made in such period for tangible and intangible assets; provided, that the amount of any [***] by the [***] shall be excluded from the calculation of FCF for the purposes of determining whether any Plan is subject to unanimous Board approval pursuant to Section 7.4.
|
Final Adjusted ACS Forecast Average
|
|
Connections:
|
as defined in Section 9.4[a].
|
14
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
Financial Objectives:
|
as defined in Section 7.1[b].
|
First Year Budgets:
|
as defined in Section 7.2[b].
|
First Year Cap Ex Budget:
|
as defined in Section 7.2[b].
|
First Year Operating Budget:
|
as defined in Section 7.2[b].
|
Fiscal Year:
|
as defined in Section 11.1.
|
Fixed Wireless Facility Investment:
|
as defined in Section 9.7[a].
|
Fixed Wireless Facility Notice:
|
as defined in Section 9.7[a].
|
Four Year Plan:
|
the then current four year business plan of the Company, as the same may be revised pursuant to Article 7, each of which will be substantially in the form of, and contain the same scope of information included in, the Initial Four Year Plan.
|
FWF Option 2:
|
as defined in Section 9.7[b].
|
FWF Option 3:
|
as defined in Section 9.7[b].
|
FWF Purchase Price:
|
as defined in Section 9.7[e].
|
GAAP:
|
generally accepted accounting principles as in effect from time to time in the United States, consistently applied.
|
GCI:
|
means General Communication, Inc., an Alaska corporation, the parent company of the Initial GCI Member.
|
GCI [***] Connection Adjustment:
|
as defined in Section 9.4[c][ii].
|
GCI Connection Maintenance
|
|
Adjustment:
|
as defined in Section 9.5[a][iv].
|
GCI Member:
|
initially, the Initial GCI Member, and shall include any successors thereto by merger or consolidation (or otherwise by operation of law), any assignees or transferees of all or substantially all the assets thereof, and any transferees of the Ownership Interests thereof, in each case upon such successor, assignee or transferee being admitted as an additional or substitute Member in accordance with the terms of this Agreement.
|
15
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
GCI Preference Period Last
|
|
Quarter Distribution:
|
if the Effective Date is not on the first day of a calendar quarter, an amount equal to [a] 100% of Adjusted FCF for the Preference Period Last Quarter, minus [b] the sum of [i] the amount of any ACS Preferred Distributions made during the Preference Period Last Quarter, and [ii] the amount of the ACS Preference Period Last Quarter Distribution.
|
GCI Services Agreement:
|
as defined in Section 6.2[c].
|
GCI Transfer Date Connections:
|
as defined in Section 9.5[a][ii].
|
GCI Working Capital Loan:
|
as defined in Section 3.10[a].
|
Governmental Authority:
|
any government or any arbitrator, tribunal or court of competent jurisdiction, administrative agency, board, department or commission, legislative body or other governmental authority or instrumentality (in each case whether federal, state, local, foreign, international or multinational) or entity which lawfully assumes the powers and functions of the same (including any taxing or other revenue collecting authority or other body).
|
HSPA Services Agreement:
|
the HSPA Services Agreement dated as of June _-, 2012 by and between GCI and ACS.
|
Income:
|
for each Fiscal Year, each item of income and gain as determined, recognized and classified for federal income tax purposes, but [a] any income or gain that is exempt from federal income tax will be included as if it were an item of taxable income, [b] any income or gain attributable to the taxable disposition of any Company asset will be computed by the Company as if the adjusted basis of such asset as of the date of the disposition were equal in amount to the Company’s Book Value with respect to such asset as of such date, [c] in the event of a Distribution of any Company asset, whether or not in connection with a Liquidation of the Company, such event will for Capital Account purposes be a deemed taxable disposition of such Company asset immediately prior to such Distribution and income or gain will be computed and allocated among the Members in accordance with their Equity Interests as if such property were actually disposed of for an amount realized equal to the Fair Market Value of such asset
|
16
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
and as if the adjusted basis of such asset was equal to its Book Value at such time, and [d] in the event the Book Value of any Company asset is adjusted upwards pursuant to the definition of Book Value, the amount of such adjustment will be taken into account for Capital Account purposes as income or gain from the disposition of such Company asset and allocated among the Members. | |
Indebtedness:
|
with respect to a Person, without duplication, [i] all indebtedness for borrowed money, [ii] all indebtedness for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business and other than expense accruals and deferred compensation items arising in the ordinary course of business), [iii] all obligations evidenced by notes, bonds, debentures or other similar instruments (other than performance, surety and appeal bonds arising in the ordinary course of business in respect of which such Person’s liability remains contingent), [iv] all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), [v] all obligations under leases that have been or should be, in accordance with GAAP, recorded as capital leases, [vi] all reimbursement, payment or similar obligations, contingent or otherwise, under acceptance, letter of credit or similar facilities and [vii] any liability of others described in clauses [i] through [vi] above that the Person has guaranteed or that is otherwise its legal liability, and including in clauses [i] through [vi] above any accrued and unpaid interest or penalties thereon.
|
Indemnified Losses:
|
losses, damages, expenses (including fees and expenses of attorneys and other advisors and court costs) and liabilities.
|
Independent Appraiser:
|
a nationally recognized third-party appraiser which, as of the date of appointment (or consideration for appointment), [i] shall be qualified to appraise businesses in the Wireless industry; [ii] shall have been engaged in the appraisal or business valuation business for not less than five years; and [iii] unless the
|
17
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
Members otherwise agree, shall not be, and shall not have been at any time during the previous three years, engaged by the Company or either Member, or any of their respective Affiliates, to provide services to the Company, such Member or such Affiliate. | |
Individual Fees and Expenses:
|
as defined in the Arbitration Agreement.
|
Initial ACS Member:
|
as defined in the preamble.
|
Initial Capital Contribution:
|
as defined in Section 3.1[a].
|
Initial Four Year Period:
|
the period consisting of Fiscal Years 2013 through 2016.
|
Initial Four Year Plan:
|
as defined in Section 7.2[a].
|
Initial GCI Member:
|
as defined in the preamble.
|
Intentional Service Area Elimination:
|
as defined in Section 9.4[d].
|
Investing Member:
|
as defined in Section 9.1[a].
|
Investing Member’s Cost:
|
as defined in Section 9.1[c].
|
LIBOR:
|
the three-month London Interbank Offered Rate of interest on the first day on which an applicable interest rate is to be determined, adjusted on the first day of each calendar quarter, for dollar deposits as published in The Wall Street Journal (Eastern Edition) under “Money Rates” from time to time, or if such rate does not so appear, in such other nationally recognized publication as the Members, by Majority Vote, may, from time to time, specify. On any day when such a rate is not reported, the most recently reported rate on a preceding day will be deemed the applicable rate.
|
Liquidation:
|
the process of winding up and terminating the Company after its Dissolution.
|
Loss:
|
for each Fiscal Year, each item of loss or deduction as determined, recognized and classified for federal income tax purposes, but [a] any Code § 705(a)(2)(B) expenditure will be included as if it were a deductible expenditure, [b] any loss attributable to the taxable disposition of any Company asset will be computed by the Company as if the adjusted basis of such asset as of
|
18
Information indicated by [***] in the text has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934.
the date of the disposition were equal to the Company’s Book Value with respect to such asset as of such date, [c] in the event of a Distribution of any Company asset, whether or not in connection with a Liquidation of the Company, such event will be a deemed taxable disposition of such asset immediately prior to such Distribution and any loss will be computed and allocated among the Members in accordance with their Equity Interests as if such property were actually disposed of for an amount realized equal to the Fair Market Value of such asset and as if the adjusted basis of such asset were equal to its Book Value at such time, [d] in the event the Book Value of any Company asset is adjusted downward pursuant to the definition of Book Value, the amount of such adjustment will be taken into account as a loss from the disposition of such asset and allocated among the Members, and [e] any deductions for Depreciation with respect to a Company asset will be determined as if the adjusted basis of such asset were equal to the Book Value of such asset pursuant to the methodology described in Regulations § 1.704-1(b)(2)(iv)(g)(3). | |
Majority Vote:
|
the affirmative Vote of Members holding a majority of the outstanding Equity Interests.
|
Material Indebtedness:
|
as defined in Section 6.4[c].
|
Maximum Rate:
|
the maximum lawful rate of interest permitted by the State of Alaska.
|