**** CONFIDENTIAL PORTION has been omitted pursuant to a request for
confidential treatment by the Company to, and the material has been separately
filed with, the SEC. Each omitted Confidential Portion is marked by four
asterisks.
REORGANIZATION AGREEMENT
among
GENERAL COMMUNICATION, INC.,
ALASKA DIGITEL, LLC,
THE MEMBERS OF ALASKA DIGITEL, LLC,
AKD HOLDINGS, LLC
and
THE MEMBERS OF DENALI PCS, LLC
Dated as of June 16, 2006
TABLE OF CONTENTS
Page
----
SECTION 1 DEFINITIONS.............................................................................................1
SECTION 2 TERMS OF THE REORGANIZATION.............................................................................7
2.1. Purchase of Denali..................................................................................7
2.2. Contribution to Parent; Conversion to Units.........................................................7
2.3. Contributions by GCI................................................................................8
2.4. Purchase and Redemption of Units....................................................................9
2.5. Management Agreement; Profits Interest..............................................................10
2.6. Operating Agreement.................................................................................10
2.7. Closing.............................................................................................10
SECTION 3 REPRESENTATIONS AND WARRANTIES OF AKD, PARENT AND THE AKD MEMBERS......................................11
3.1. Organization; Standing and Capitalization...........................................................11
3.2. The Transaction Agreements..........................................................................12
3.3. AKD Business Assets.................................................................................13
3.4. Financial Matters...................................................................................14
3.5. Operational Matters.................................................................................17
3.6. Employee Matters....................................................................................19
3.7. Environmental Matters...............................................................................21
3.8. Communications Regulatory Matters...................................................................22
3.9. Transactional Matters...............................................................................23
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE DENALI MEMBERS....................................................23
4.1. Organization and Standing; Capitalization...........................................................23
4.2. The Transaction Agreements..........................................................................24
4.3. No Assets...........................................................................................25
4.4. Financial Matters...................................................................................25
4.5. Operational Matters.................................................................................27
4.6. Employee Matters....................................................................................29
4.7. Environmental Matters...............................................................................29
4.8. Communications Regulatory Matters...................................................................29
4.9. Transactional Matters...............................................................................30
SECTION 5 REPRESENTATIONS AND WARRANTIES OF GCI...................................................................31
5.1. Organization and Standing...........................................................................31
5.2. Execution and Validity of Agreements................................................................31
5.3. No Violation or Approval............................................................................31
5.4. Brokers, Finders, etc...............................................................................31
5.5. No Oral Warranties..................................................................................31
SECTION 6 COVENANTS...............................................................................................32
6.1. Exclusivity; Acquisition Proposals..................................................................32
6.2. Notices and Consents................................................................................32
i
6.3. Preparation for Closing.............................................................................33
6.4. Notification of Certain Matters.....................................................................33
6.5. Other Limitations on Conduct of AKD's and Properties' Businesses....................................33
6.6. Other Limitations on Conduct of Denali's Business...................................................34
6.7. Access to Information...............................................................................35
6.8. Cooperation.........................................................................................35
6.9. Announcements.......................................................................................35
6.10. Use of Proceeds of Interim Capital Loans............................................................36
SECTION 7 CLOSING DELIVERIES......................................................................................36
7.1. Of AKD, Parent and the AKD Members..................................................................36
7.2. Of the Denali Members...............................................................................37
7.3. Of GCI..............................................................................................38
SECTION 8 CONDITIONS PRECEDENT....................................................................................38
8.1. Conditions to Obligations of AKD, Parent, the AKD Members and the Denali Members....................38
8.2. Conditions to Obligations of GCI....................................................................39
8.3. Conditions to the Obligations of Each Party.........................................................40
SECTION 9 POST-CLOSING COVENANTS..................................................................................40
9.1. Further Assurances..................................................................................40
9.2. Announcements.......................................................................................41
SECTION 10 INDEMNIFICATION........................................................................................41
10.1. Indemnification by AKD, Parent and the AKD Members..................................................41
10.2. Indemnification by the Denali Members...............................................................41
10.3. Indemnification by GCI..............................................................................41
10.4. Survival; Time Limits for Indemnification...........................................................42
10.5. Basket and Cap......................................................................................42
10.6. Defense of Claims...................................................................................43
SECTION 11 TERMINATION............................................................................................44
11.1. Right to Terminate..................................................................................44
11.2. Effect of Termination...............................................................................45
11.3. Specific Performance................................................................................45
SECTION 12 MISCELLANEOUS..........................................................................................45
12.1. Arbitration.........................................................................................45
12.2. Governing Law.......................................................................................46
12.3. Notices.............................................................................................46
12.4. Entire Agreement, Assignability, Etc................................................................47
12.5. Counterparts........................................................................................48
12.6. Representations as to Knowledge.....................................................................48
12.7. Headings, Terms.....................................................................................48
12.8. Amendments..........................................................................................48
12.9. Waivers.............................................................................................48
ii
12.10. Severability........................................................................................48
12.11. Remedies Cumulative.................................................................................49
12.12. Expenses............................................................................................49
12.13. Construction........................................................................................49
12.14. AKD Members' Agent and Denali Members' Agent........................................................49
12.15. Incorporation of Exhibits...........................................................................49
12.16. No Tax Advice.......................................................................................49
EXHIBITS
A - Management Agreement
B - Operating Agreement
C - Opinion Items for Opinion of The Bogatin Law Firm, PLC
D - Opinion Items for Opinion of Lukas, Nace, Gutierrez & Sachs,
Chartered
E - Non-Competition Agreement
SCHEDULES
1.1 - AKD Interest-Bearing Obligations
2.3.2 - Examples of Closing Adjustments
2.3.3 - Examples of Post-Closing Adjustments
4 - AKD Disclosure Schedule
5 - Denali Disclosure Schedule
7.1(n) - Persons to Execute Non-Competition Agreements
iii
THIS REORGANIZATION AGREEMENT (this "Agreement") is made as of
June 16, 2006, among General Communication, Inc., an Alaska corporation ("GCI"),
Alaska DigiTel, LLC, an Alaska limited liability company ("AKD"), PacifiCom
Holdings, L.L.C., a Delaware limited liability company ("Pacificom"), Red River
Wireless, LLC, a Delaware limited liability company ("Red River" and, together
with Pacificom, individually and collectively the "Denali Members"), Graystone
Holdings, LLC, an Alaska limited liability company ("Graystone" and, together
with Pacificom and Red River, individually and collectively, the "AKD Members"),
and AKD Holdings, LLC, a Delaware limited liability company ("Parent").
Recitals
A. AKD operates a wireless telecommunications business within the State
of Alaska.
B. Denali PCS, LLC, an Alaska limited liability company ("Denali"),
holds licenses for certain spectrum capacity.
C. GCI desires to purchase all of the outstanding Denali Interests (as
defined below) from the Denali Members and contribute cash and the Denali
Interests to AKD in exchange for AKD Common Units (as defined below) and to
purchase additional AKD Common Units from AKD all in accordance with the terms
and conditions of this Agreement.
Agreement
Accordingly, in consideration of the mutual covenants in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Parties agree as follows:
SECTION 1
DEFINITIONS
As used in this Agreement, the following terms have the
indicated meanings:
"Accountants" has the meaning given in Section 2.3.2.
"Acquisition Transaction" has the meaning given in Section
6.1.
"Adverse Consequences" means all actions, suits, proceedings,
investigations, complaints, claims, demands, orders, decrees, rulings,
injunctions, judgments, directives, notices of violation, Liabilities, liens,
losses (including loss of value), damages, penalties, fines, settlements, costs,
remediation costs, expenses and fees (including court costs and reasonable fees
and expenses of counsel and other experts), plus interest at a rate equal to two
percentage points above the prime rate quoted by AKD's principal lender from
time to time accrued from the date any Adverse Consequence becomes a liability
of or is otherwise recognized by the party suffering the Adverse Consequence as
determined in accordance with GAAP. As used in this Agreement, Adverse
Consequences are not limited to matters asserted by third parties, but include
Adverse Consequences incurred or sustained by a Party hereto other than as a
result of claims by third persons.
1
"Affiliate" means, as to any Person, another Person that
controls, is controlled by or is under common control with any Person and, as to
any natural Person, any relative by blood, marriage or adoption. For that
purpose, "control" means the power, directly or indirectly, by stock ownership,
contract, family relationship, employment, position or otherwise, to
significantly influence the business decisions of another Person.
"Agreement" has the meaning given in the Preamble.
"AKD" has the meaning given in the Preamble.
"AKD Balance Sheet Date" has the meaning given in Section
3.4.1.
"AKD Business Assets" means all assets and properties of AKD,
whether real or personal, tangible or intangible, including, without limitation,
(a) the AKD Licenses, (b) all furniture, office equipment, other equipment,
automobiles and other tangible personal property listed in Schedule 3.3.1, (c)
all of AKD's rights under the AKD Contracts, (d) all inventory, fixed assets and
leasehold improvements, (e) all notes and accounts receivable of AKD, (f) all
customer deposits, advance payments, prepaid items and expenses, deferred
charges, rights of offset and credits and claims for refund, (g) all claims,
rights and causes in action against third parties and all rights to insurance
proceeds relating to any damage, destruction or impairment of the AKD Business
Assets, (h) all Intellectual Property of AKD, including without limitation,
those items listed in Schedule 3.3.5, (i) all books of account and all customer
and supplier lists and other records related to AKD's business, (j) all goodwill
associated with the AKD Business Assets and (k) all of AKD's right, title and
ownership interest in Properties.
"AKD Common Unit" means a Common Unit (as defined in the
Operating Agreement) of membership interest in AKD.
"AKD Contracts" has the meaning given in Section 3.5.3.
"AKD Disclosure Schedule" means the schedule delivered by AKD
to GCI and attached to this Agreement setting forth exceptions to the
representations and warranties of AKD and the AKD Members in this Agreement.
"AKD Financial Statements" has the meaning given in Section
3.4.1.
"AKD Group" means AKD and its Subsidiaries.
"AKD Interest-Bearing Obligations" means the interest-bearing
obligations of the AKD Group, including, without limitation, those obligations
which are listed on Schedule 1.1 and are reflected on the Closing Adjustment
Schedule.
"AKD Licenses" has the meaning given in Section 3.8.1.
"AKD Members" has the meaning given in the Preamble.
"AKD Members' Agent" has the meaning given in Section 12.14.
2
"AKD Net Asset Value" has the meaning given in Section 2.3.1.
"AKD Net Working Capital" means the excess of the accounts
receivable and other current assets over the accounts payable, accrued expenses,
property taxes and other current liabilities of the AKD Group (other than the
current portion of any AKD Interest Bearing Obligation), in each case, as
reflected on the Closing Adjustment Schedule.
"AKD Plans" has the meaning given in Section 3.6.1.
"AKD Profits Interest Unit" means a Profits Interest Unit (as
defined in the Operating Agreement) of membership interest in AKD.
"AKD Redemption Price" has the meaning given in Section 2.4.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in Anchorage, Alaska are required or
authorized to be closed.
"Capitalized Refinancing Costs" means the fees, expenses and
costs incurred by AKD to consummate one or more credit facilities the proceeds
of which will be used to fully pay the obligations of AKD to CoBank, ACB, but
only to the extent that such fees, expenses and costs are approved by GCI, which
approval shall not be unreasonably withheld or delayed.
"Claim" has the meaning given in Section 10.6.
"Closing" has the meaning given in Section 2.7.
"Closing Adjustment Schedule" has the meaning given in Section
2.3.2.
"Closing Date" has the meaning given in Section 2.7.
"Code" means the United States Internal Revenue Code of 1986,
as amended.
"Communications Act" means the Communications Act of 1934, as
amended.
"Communications Laws" means the Communications Act and the
rules, regulations, published policies, published decisions, published orders,
published rulings, and published notices of the FCC promulgated thereunder.
"Contract" means any contract, agreement, deed, mortgage,
lease (whether or not capitalized), license, instrument, commitment, sales
order, purchase order, quotation, bid, undertaking, arrangement or
understanding, whether written or oral.
"Denali" has the meaning given in Recital B.
"Denali Balance Sheet Date" has the meaning given in Section
4.4.1.
"Denali Contracts" has the meaning given in Section 4.5.3.
3
"Denali Disclosure Schedule" means the schedule delivered by
the Denali Members to GCI and attached to this Agreement setting forth
exceptions to the representations and warranties of the Denali Members in this
Agreement.
"Denali Financial Statements" has the meaning given in Section
4.4.1.
"Denali Interest" means a membership interest in Denali.
"Denali Licenses" has the meaning given in Section 4.8.1.
"Denali Members" has the meaning given in the Preamble.
"Disagreement" has the meaning given in Section 2.3.2.
"Disputing Party" has the meaning given in Section 12.1.
"Encumbrance" means any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, any right to possession or use, any option or
other right to acquire title to or the right to possession or use, or any
adverse right or interest, charge or claim of any nature whatsoever of, on or
with respect to any asset, capital stock, property or property interest.
"Environmental Law" means all present and future statutes,
ordinances, codes, common law principles, rules, regulations, orders, decrees,
standards, procedures, permit or license requirements or other requirements of
any governmental authority relating to land use, public health, safety, welfare
or the environment, including, without limitation, the Resource Conservation and
Recovery Act, as amended, and the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended and the regulations and orders promulgated thereunder.
"FCC" means the Federal Communications Commission.
"FCC Rules" means the rules, regulations, policies,
instructions and orders of the FCC.
"Final Order" means any action or decision of the FCC as to
which (i) no request for a stay or similar request is pending, no stay is in
effect, the action or decision has not been vacated, reversed, set aside,
annulled or suspended and any deadline for filing such request that may be
designated by statute or regulation has passed without the filing of any such
request, (ii) no petition for rehearing or reconsideration or application for
review is pending and the time for the filing of any such petition or
application has passed, (iii) the FCC does not have the action or decision under
reconsideration on its own motion and the time within which it may effect such
reconsideration has passed and (iv) no appeal is pending including other
administrative or judicial review, or in effect and any deadline for filing any
such appeal that may be designated by statute or rule has passed.
4
"Fire Lake" means Fire Lake Partners, L.L.C., an Alaska
limited liability company.
"GAAP" means accounting principles generally accepted in the
United States, consistently applied.
"GCI" has the meaning given in the Preamble.
"GCI Indemnitee" has the meaning given in Section 10.1.
"Governmental Entity" means any United States or foreign
governmental or regulatory agency, commission, court, body, entity or authority.
"Graystone" has the meaning given in the Preamble.
"Hazardous Substance" means any material, substance, chemical,
element, compound, mixture, pollutant, contaminant or toxic or hazardous
material, substance or waste that is designated, defined, listed, classified or
regulated by any Environmental Law.
"Indemnifying Party" has the meaning given in Section 10.6(a).
"Indemnitee" has the meaning given in Section 10.6.
"Intellectual Property" means any right, license or other
claim to or of ownership, authorship or invention, or the right to use, any
trade mark, trade name, service mark, patent, copyright, work, Internet domain
name, Internet website, know-how, trade secret, formula, pattern, compilation,
method, technique, confidential information, client list, technical information,
program, specification or plan, whether or not registered or filed with any
governmental authority, and all filings, registrations or applications relating
to any of the foregoing.
"Interests" has the meaning given in Section 5.5
"Interim Capital Loans" means any loans in the principal
amount of up to $3 million made by CoBank, ACB or its successors to AKD pursuant
to that certain Promissory Note dated March 17, 2006.
"Knowledge" of a Party has the meaning given in Section 12.6.
"Leased Real Property" means real property leased by AKD
pursuant to the Real Property Leases.
"Liability" means any liability, debt or obligation, whether
known or unknown, absolute or contingent, arising under contract, in tort, by
statute or regulation or otherwise, accrued or unaccrued, liquidated or
unliquidated and due or to become due, and whether for the payment of money, the
provision of goods or services or the performance of any other obligation.
5
"Management Agreement" means the Management Agreement to be
entered into at the Closing between AKD and Fire Lake in the form attached as
Exhibit A.
"Non-Competition Agreements" means the Non-Competition
Agreements to be entered into at the Closing between AKD and the persons
specified in Schedule 7.1(n) in the form attached as Exhibit E.
"Operating Agreement" means the Second Amended and Restated
Operating Agreement of AKD to be entered into at the Closing among GCI, Parent,
Fire Lake and the AKD Members in the form attached as Exhibit B.
"Pacificom" has the meaning given in the Preamble.
"Parent" has the meaning given in the Preamble.
"Party" means, individually or collectively, AKD, any AKD
Member, any Denali Member, Parent or GCI.
"Person" means any individual, corporation, partnership,
trust, limited liability company, association, governmental authority or any
other entity.
"Premises" means the real property and improvements located at
3127 Commercial Drive, Anchorage, Alaska 99501, which are owned by Properties
and leased to AKD.
"Properties" means Pacificom Properties, LLC, an Alaska
limited liability company.
"Real Property Leases" has the meaning given in Section 3.3.3.
"RCA" means the Regulatory Commission of Alaska.
"Red River" has the meaning given in the Preamble.
"Regulatory Consents" has the meaning given in Section 6.2.
"Sections" has the meaning given in Section 12.7.
"Subscriber Contract" means any Contract pursuant to which AKD
provides wireless telephone services to any customer.
"Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company, limited liability partnership or other
limited or general partnership, trust, association or other business entity of
which an aggregate of at least a majority of the outstanding stock or other
interests entitled to vote in the election of the board of directors of such
corporation, managers, trustees or other controlling persons, or an equivalent
controlling interest therein, of such Person is, at the time, directly or
indirectly, owned by such Person and/or one or more subsidiaries of such Person.
6
**** CONFIDENTIAL TREATMENT
"Tax" means any federal, state or local tax or any foreign
tax, including, without limitation, any net income, gross income, profits,
premium, estimated, excise, sales, value added, services, use, occupancy, gross
receipts, franchise, license, ad valorem, severance, capital levy, production,
stamp, transfer, withholding, employment, unemployment, social security
(including FICA), payroll or property tax, customs duty, or any other
governmental charge or assessment, together with any interest, addition to tax
or penalty.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Third Party" means a Person who is not a Party or an
Affiliate of any Party.
"Transaction Agreements" means this Agreement, the Operating
Agreement, the Management Agreement, the Non-Competition Agreements and all
other instruments and agreements executed and delivered pursuant to this
Agreement.
SECTION 2
TERMS OF THE REORGANIZATION
2.1. Purchase of Denali. At the Closing, GCI shall purchase, and
the Denali Members shall sell to GCI, all of the outstanding Denali Interests,
for aggregate consideration of $**** in cash or immediately available funds, by
wire transfer to accounts designated by each Denali Member in written
instructions delivered to GCI not less than five Business Days before the
Closing Date. GCI shall pay each Denali Member an amount of cash equal to $****
multiplied by the Denali Interest owned by such Denali Member (expressed as a
percentage of all Denali Interests outstanding as of the Closing Date). Each
Denali Member shall transfer, convey and deliver all of the Denali Interest
owned by such Denali Member to GCI, with full warranty of title, free and clear
of all Encumbrances.
2.2. Contribution to Parent; Conversion to Units. At or before
the Closing, each AKD Member shall contribute ****% of such AKD Member's
membership interest in AKD to Parent in exchange for a proportionate membership
interest in Parent. Immediately thereafter, all of the issued and outstanding
membership interests of AKD shall be converted and reclassified into an
aggregate of **** AKD Common Units, which shall be allocated among Parent and
the AKD Members as follows:
Member AKD Common Units
------ ----------------
Parent **** Units
Pacificom **** Units
Red River **** Units
Graystone **** Units
The capital accounts of Parent and each AKD Member will be adjusted pursuant to
Treasury Regulation ss. 1.704-1(b)(2)(iv)(f)-(g). The Parties agree that such
adjustments will result in aggregate capital account balances for Parent and the
AKD Members totaling the AKD Net Asset Value (as determined in accordance with
Section 2.3). Immediately prior to the Closing, AKD shall distribute to Parent
7
**** CONFIDENTIAL TREATMENT
and the AKD Members all cash and cash equivalents of AKD as of the Closing Date.
Parent and the AKD Members shall be responsible for any taxes arising from such
distributions.
2.3. Contributions by GCI. At the Closing, GCI shall contribute
to AKD (a) $**** in cash or immediately available funds and (b) all of the
Denali Interest purchased by GCI pursuant to Section 2.1, and AKD shall sell and
issue to GCI a number of AKD Common Units equal to (x) $**** minus the AKD Net
Asset Value (as determined in accordance with this Section 2.3) divided by (y)
$****. GCI shall be credited with a capital account balance in AKD of $****,
representing the amount of cash and the agreed value of the Denali Interest
contributed by GCI.
2.3.1. AKD Net Asset Value. The "AKD Net Asset Value"
shall be an amount equal to the sum of (i) $****, plus (ii) the capitalized cost
of capital improvements funded with the proceeds of Interim Capital Loans that
have been authorized by GCI in accordance with Section 6.10 and capitalized on
the books of AKD in accordance with GAAP, plus (iii) the capitalized cost of
capital improvements approved by GCI that are funded with the proceeds of any
loan other than the Interim Capital Loans and capitalized on the books of AKD in
accordance with GAAP, plus (iv) the Capitalized Refinancing Costs; provided,
that (a) if the aggregate amount of AKD Interest-Bearing Obligations as of the
Closing Date (as determined in accordance with Section 2.3.2) is greater or less
than $****, then the AKD Net Asset Value shall be decreased by the amount of the
excess or increased by the positive amount of the deficit, as applicable, and
(b) if the amount of AKD Net Working Capital as of the Closing Date (as
determined in accordance with Section 2.3.2) is greater or less than $****, then
the AKD Net Asset Value shall be decreased by the positive amount of the deficit
or increased by the amount of the excess, as applicable.
2.3.2. Closing Adjustment Schedule.
(a) Not less than five Business Days before the Closing
Date, the AKD Members shall deliver to GCI a schedule signed by AKD and the AKD
Members (the "Closing Adjustment Schedule") setting forth in detail the AKD
Interest-Bearing Obligations and the AKD Net Working Capital as of the Closing
Date. The Closing Adjustment Schedule shall be prepared by AKD and the AKD
Members in good faith and in a manner consistent with GAAP and the balance
sheets included in the AKD Financial Statements. AKD and the AKD Members shall
provide GCI with such other information concerning the Closing Adjustment
Schedule as GCI may reasonably request. The Closing Adjustment Schedule will be
prepared as of the Closing Date but will be consistent in form with the AKD
Interest-Bearing Obligations and the AKD Net Working Capital as of May 31, 2006
set forth on Schedule 2.3.2 attached hereto and incorporated herein by this
reference.
(b) The Closing Adjustment Schedule shall be final and
binding upon the Parties hereto for all purposes, unless GCI shall notify the
AKD Members' Agent in writing, not later than thirty (30) days from the Closing
Date, of a disagreement with the AKD Interest-Bearing Obligations or AKD Net
Working Capital reflected in the Closing Adjustment Schedule, in which event the
provisions of Section 2.3.2(c) below shall apply. Such notice of disagreement
shall specify all items as to which there is disagreement, and an explanation of
the basis for any disagreement. During the 30-day review period, GCI shall have
full access to the AKD Group's books and records during normal business hours
8
**** CONFIDENTIAL TREATMENT
and upon reasonable notice, and to the employees, representatives and agents of
AKD who prepared, or assisted in the preparation of, the Closing Adjustment
Schedule. GCI's failure to timely notify AKD in writing of the existence of such
a disagreement shall be deemed, for all purposes, GCI's acceptance of the
Closing Adjustment Schedule.
(c) In the event and to the extent that GCI shall timely
notify the AKD Members' Agent in writing, as provided in Section 2.3.2(b) above,
of a disagreement with the Closing Adjustment Schedule (the "Disagreement"), GCI
and the AKD Members' Agent shall attempt, in good faith, to resolve such
Disagreement. In the event that the parties are unable to resolve such
Disagreement within ten Business Days from the date of receipt by the AKD
Members' Agent of notice from GCI of the Disagreement, GCI and the AKD Members'
Agent shall jointly select one of the "Big Four" accounting firms, or any
successors thereto, to resolve the Disagreement (the "Accountants"). Each of GCI
and the AKD Members' Agent shall submit to the Accountants its proposal
concerning what the Closing Adjustment Schedule should be, and the parties shall
submit to the Accountants all relevant financial data, and the Disagreement
shall be submitted for final and binding arbitration and resolution before
representatives of the Accountants. In resolving the Disagreement, the
Accountants shall only consider those items or amounts in the Closing Adjustment
Schedule as to which GCI has disagreed. After completing their review of the
Disagreement, the Accountants shall resolve each item in dispute and confirm
their conclusion (and the resulting Closing Adjustment Schedule) in writing to
the AKD Members' Agent and GCI, and the decision of the Accountants regarding
such adjustment shall be final and binding upon the parties hereto for all
purposes and enforceable in any court of competent jurisdiction. The fees and
costs of the Accountants, if any, in connection with such arbitration shall be
paid by the nonprevailing party (either the AKD Members or GCI), whose identity
shall be determined by the Accountants.
(d) Upon determination of the final Closing Adjustment
Schedule, appropriate adjustments shall be made to the AKD Net Asset Value, the
number of AKD Common Units issued pursuant to Section 2.3 and the capital
account balances of Parent and the AKD Members under Section 2.2 to offset any
changes from the Closing Adjustment Schedule. Schedule 1.3 of the Operating
Agreement will thereafter be amended to reflect the adjusted amount of AKD
Common Units issued to GCI and Schedule 4.1 of the Operating Agreement will
thereafter be amended to reflect the adjusted capital account balances of Parent
and the AKD Members.
2.3.3. Examples. The examples set forth on Schedule
2.3.3 illustrate the impact of a post-Closing adjustment to the AKD Net Asset
Value on the number of AKD Common Units issued to GCI pursuant to this Section
2.3.
2.4. Purchase and Redemption of Units. At the Closing, GCI shall
purchase from AKD **** AKD Common Units, and AKD shall use the proceeds from the
sale of such additional AKD Common Units to redeem a like number of AKD Common
Units from Parent and the AKD Members in accordance with this Section 2.4. AKD
shall first redeem the fractional AKD Common Units issued to the AKD Members
pursuant to Section 2.2 and shall use the balance of such proceeds to redeem AKD
Common Units from Parent. The price for the purchase and redemption of AKD
Common Units pursuant to this Section 2.4 shall be an amount per AKD Common Unit
9
**** CONFIDENTIAL TREATMENT
equal to the AKD Net Asset Value (as adjusted pursuant to Section 2.3.2) divided
by **** (the "AKD Redemption Price"), payable in cash or immediately available
funds to an account designated by AKD (in the case of the purchase by GCI) and
by Parent and the AKD Members (in the case of the redemption by AKD) not less
than five Business Days before the Closing Date.
2.4.1. Post-Closing Adjustment. If the AKD Redemption
Price is increased or decreased as a result of a post-Closing adjustment to the
AKD Net Asset Value pursuant to Section 2.3, then the amount of cash paid by GCI
to AKD and by AKD to Parent and the AKD Members pursuant to this Section 2.4
shall be proportionately adjusted with appropriate payments to be made by GCI or
Parent and the AKD Members within five Business Days after the Closing
Adjustment Schedule has been finalized in accordance with Section 2.3.
2.4.2. Examples. The examples set forth on Schedule
2.3.3 illustrate the impact of a post-Closing adjustment to the AKD Net Asset
Value on the AKD Redemption Price paid pursuant to this Section 2.4.
2.4.3. Tax Election. The parties agree to cause AKD to
make an election under Section 754 of the Code for its taxable year that
includes the Closing Date.
2.5. Management Agreement; Profits Interest. At the Closing, AKD
and Fire Lake shall enter into the Management Agreement. AKD shall grant and
issue to Fire Lake a number of AKD Profits Interest Units constituting a ****%
interest (as adjusted pursuant to the terms and conditions of the Operating
Agreement) in the profits and losses of AKD following the Closing Date, after
giving effect to the issuance of AKD Common Units to the AKD Members and GCI
pursuant to Sections 2.2 and 2.3. Fire Lake shall execute a counterpart of the
Operating Agreement, and Schedule 1.3 of the Operating Agreement shall reflect
the AKD Profits Interest Units of Fire Lake and the admission of Fire Lake as a
member of AKD. If the number of AKD Common Units issued to GCI is increased or
decreased as a result of a post-Closing adjustment to the AKD Net Asset Value
pursuant to Section 2.2, then the number of AKD Profits Interest Units issued to
Fire Lake pursuant to this Section 2.5 shall be proportionately adjusted. The
examples set forth on Schedule 2.3.3 illustrate the impact of a post-Closing
adjustment to the AKD Net Asset Value on the number of AKD Profits Interest
Units issued to Fire Lake pursuant to this Section 2.5.
2.6. Operating Agreement. At the Closing, GCI, Parent, Fire Lake
and the AKD Members shall enter into the Operating Agreement. Schedule 1.3 and
Schedule 4.1 of the Operating Agreement shall reflect the number of AKD Common
Units owned and capital account balances of GCI and Parent and the AKD Profits
Interest Units owned by Fire Lake after giving effect to the transactions
described in Sections 2.1, 2.2, 2.3, 2.4 and 2.5.
2.7. Closing. The consummation of the transaction contemplated
by this Agreement (the "Closing") will be held by e-mail or facsimile
transmission and wire transfer at 10:00 a.m. Alaska time on the third Business
Day after the satisfaction or waiver of all of the conditions set forth in
Section 8, unless another date or time is agreed by the Parties. At or before
the Closing, each Party will deliver to the others by e-mail or facsimile
transmission scanned executed originals of each Transaction Agreement to which
it is a party and will deliver to the other Parties paper copies, facsimiles or
10
**** CONFIDENTIAL TREATMENT
e-mails of scanned copies of all other documents and instruments that it is
required to deliver at or before the Closing. The documents and agreements so
delivered shall for all purposes be deemed originals thereof and the signatures
of the Parties thereon shall be deemed original signatures. Promptly following
the Closing, each Party shall deliver by overnight courier to the appropriate
other Party or Parties the executed originals of all Transaction Agreements and
all other original documents required to be delivered by it at or before the
Closing. The failure of any Party to deliver executed originals after the
Closing shall not affect the validity of any action taken at the Closing. The
date on which the Closing actually occurs shall be the "Closing Date." The
transactions described in Sections 2.1, 2.2, 2.3 and 2.4 shall be deemed to
occur in immediate succession and shall be effective as of 12:01 a.m., Alaska
time, on the Closing Date.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF AKD, PARENT
AND THE AKD MEMBERS
AKD, Parent and the AKD Members jointly and severally
represent and warrant to GCI that, except as disclosed in the AKD Disclosure
Schedule (which is numbered to correspond to the section numbers in this Section
3):
3.1. Organization; Standing and Capitalization
3.1.1. Organization and Standing of AKD. AKD is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Alaska. AKD is qualified to do business and in
good standing as a foreign limited liability company in the jurisdictions listed
in Schedule 3.1.1, which are all of the jurisdictions where such qualification
is required. AKD has the requisite limited liability company power and authority
to own its assets and carry on its business as presently being conducted.
Complete and correct copies of the articles of organization, operating
agreement, minute books and membership records of AKD have been delivered to
GCI.
3.1.2. Organization and Standing of Properties.
Properties is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of Alaska. Properties is not
required to qualify to do business as a foreign limited liability company in any
jurisdiction. Properties has the requisite limited liability company power and
authority to own its assets and carry on its business as presently being
conducted. Complete and correct copies of the articles of organization,
operating agreement, minute books and membership records of Properties have been
delivered to GCI.
3.1.3. Capitalization. As of the date of this Agreement,
all of the issued and outstanding membership interests of AKD are duly
authorized, validly issued, fully paid and nonassessable and are owned of record
and beneficially by the AKD Members, free and clear of Encumbrances, as follows:
Member Points Membership Interest
------ ------ -------------------
Pacificom **** ****% Class A Membership Interest
Red River **** ****% Class A Membership Interest
11
**** CONFIDENTIAL TREATMENT
Graystone **** ****% Class B Membership Interest
As of the Closing Date, after giving effect to the reclassification of
membership interests contemplated by Section 2.2 but before giving effect to the
other transactions contemplated by Article 2, all of the issued and outstanding
AKD Common Units will be duly authorized, validly issued, fully paid and
nonassessable and owned of record and beneficially by Parent and the AKD
Members, free and clean of Encumbrances, as described in Section 2.2. Except as
disclosed on Schedule 3.1.3, there are no outstanding options, warrants,
convertible securities or other rights to acquire any membership interest or any
other security from AKD. No membership interests or other securities of AKD have
been issued in violation of any preemptive or similar right of any Person or
have been transferred in violation of, or are currently subject to, any right of
first refusal or similar right of any Person. All of the issued and outstanding
ownership interests of AKD were issued in compliance with applicable law,
including, without limitation, federal and state securities laws. No securities
of AKD are subject to any voting trust or other voting agreement.
3.1.4. Subsidiaries. AKD owns all of the issued and
outstanding membership interest of Properties, free and clear of any
Encumbrance. There are no outstanding options, warrants, convertible securities
or other rights to acquire any membership interest or other security from
Properties. Other than Properties, AKD does not own, directly or indirectly, any
capital stock of, any partnership, equity or other ownership interest in or any
security issued by any other corporation, organization, association, entity,
business enterprise or other Person. Properties has no material assets other
than its ownership of the Premises, has no material Liabilities other than the
AKD Interest-Bearing Obligations and has not conducted any sort of business
other than leasing the Premises to AKD.
3.2. The Transaction Agreements.
3.2.1. Execution and Validity. AKD has the requisite
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized and approved by all necessary action of the members
and managers of AKD as required by the articles of organization and operating
agreement of AKD and the Alaska Limited Liability Company Act. Parent and each
AKD Member has the requisite power and authority to execute and deliver each of
the Transaction Agreements to which it is a party and to perform its obligations
thereunder, and the execution, delivery and performance by Parent or such AKD
Member of this Agreement and the other Transaction Agreements to which it is a
party and the consummation by Parent or such AKD Member of the transactions
contemplated hereby and thereby have been duly and validly authorized and
approved by all necessary action of the owners and managers of Parent and such
AKD Member as required by applicable documents and law. This Agreement has been
duly executed and delivered by AKD, Parent and each AKD Member and constitutes,
and each of the other Transaction Agreements to which AKD, Parent or any AKD
Member is a party will be duly executed and delivered by AKD, Parent or such AKD
Member at Closing and will constitute, the legal, valid and binding obligation
of AKD, Parent or such AKD Member, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, moratorium, reorganization and similar laws
12
of general applicability affecting the rights and remedies of creditors and to
general principles of equity.
3.2.2. No Violation or Approval. The execution, delivery
and performance by AKD, Parent and the AKD Members of the Transaction Agreements
to which they are parties and the consummation of the transactions contemplated
by the Transaction Agreements do not and will not constitute or result in (a) a
violation of any order, judgment or decree of any court or governmental agency
or body having jurisdiction over any entity in the AKD Group, Parent, any AKD
Member, or any of the AKD Business Assets, or (b) a breach of or default under,
or the acceleration of any obligation or creation of any Encumbrance under
(whether immediately, upon the passage of time or after the giving of notice),
or otherwise require a consent or waiver under, any agreement, instrument,
lease, contract, mortgage, deed or license to which any entity in the AKD Group,
Parent or any AKD Member is a party or by which any entity in the AKD Group,
Parent or any AKD Member or any of their assets are bound or affected or (c) a
violation of or a conflict with the articles of organization or operating
agreement of any entity in the AKD Group, Parent or any AKD Member. Except as
described on Schedule 3.2.2, no notice to, or consent, approval, order or
authorization of, or declaration or filing with, any governmental authority or
entity or other Person is required to be obtained or made by any entity in the
AKD Group, Parent or any AKD Member in connection with the execution, delivery
and performance of or the consummation of the transactions contemplated by any
of the Transaction Agreements.
3.3. AKD Business Assets.
3.3.1. Description. The AKD Business Assets and the
Leased Real Property constitute all of the assets, properties and rights used by
any entity in the AKD Group to conduct its business and necessary to conduct its
business as currently conducted. Schedule 3.3.1 is a true and complete list of
all depreciable tangible AKD Business Assets (including tangible AKD Business
Assets leased by any entity in the AKD Group under leases that are required to
be capitalized for accounting purposes), that reflects the in-service dates of
such tangible AKD Business Assets, the depreciation methods and periods of such
tangible AKD Business Assets and the net book value of such tangible AKD
Business Assets as of May 31, 2006. Except as described in Schedule 3.3.1,
neither any AKD Member nor any Affiliate of an AKD Member owns or leases any
assets used in AKD's business.
3.3.2. Title. AKD has good and marketable title to all
of the AKD Business Assets, free and clear of Encumbrances except Encumbrances
securing current Taxes not yet due and payable.
3.3.3. Real Property. Schedule 3.3.3 contains a true and
complete list of all leases and other agreements or arrangements pursuant to
which any entity in the AKD Group occupies or uses any real property (the "Real
Property Leases") and a description of the real property subject to each. All of
the Real Property Leases are in full force and effect, and will continue to be
in full force and effect following the consummation of the transactions
contemplated hereby, and neither AKD nor, to knowledge of the AKD Members, any
other Person is in default under any Real Property Lease. Without limiting the
generality of the foregoing, AKD is current in the performance of its
maintenance obligations under all Real Property Leases. The Leased Real Property
13
constitutes all of the real property, buildings and improvements used by AKD in
its business. Properties has good and marketable title to the Premises, free and
clear of all Encumbrances. AKD owns no real property (other than its indirect
ownership of the Premises through Properties). Each parcel of Leased Real
Property is supplied with utilities and other services necessary for the
operation thereof. The Leased Real Property is free from material defects, has
been maintained in accordance with normal industry practice, is in good
operating condition and repair, subject to ordinary wear and tear reasonably to
be expected in a business of the type operated by AKD, and is suitable for the
purposes for which it presently is used. The Leased Real Property complies in
all material respects with applicable laws, rules and regulations and all
applicable declarations and covenants, has received all approvals of
governmental authorities (including permits) required in connection with the
occupation and operation thereof and has been occupied, operated and maintained
in accordance with applicable law. AKD enjoys peaceful and undisturbed
possession of all Leased Real Property.
3.3.4. Condition. The tangible AKD Business Assets,
taken as a whole, are in good operating condition and repair, subject to
ordinary wear and tear reasonably to be expected in a business of the type
operated by AKD, and are suitable for the purposes for which they are currently
used.
3.3.5. Intellectual Property. Schedule 3.3.5 contains a
true and complete list of all Intellectual Property used in or related to any
entity in the AKD Group's business and all registrations or filings with respect
thereto. Each entity in the AKD Group owns or possesses adequate licenses or
other rights to use, free and clear of any Encumbrance, all Intellectual
Property listed in Schedule 3.3.5, which includes all Intellectual Property
necessary to operate each entity in the AKD Group's business as currently
conducted. Any Intellectual Property provided to any entity in the AKD Group by
a technology vendor is used under a valid license and AKD is in compliance with
such license. Each entity in the AKD Group has taken commercially reasonable
actions to maintain and protect each item of Intellectual Property that it owns
or uses. No entity in the AKD Group has interfered with, infringed upon,
misappropriated or otherwise violated any other Person's Intellectual Property,
and, to the knowledge of each entity in the AKD Group and the AKD Members, no
Person has any Intellectual Property that interferes or would be likely to
interfere with any entity in the AKD Group's use of any of its Intellectual
Property. No proceeding is pending or, to the knowledge of any entity in the AKD
Group or any AKD Member, threatened, alleging any such interference. No royalty
or similar fee of any kind is payable by any entity in the AKD Group for the use
of any of the Intellectual Property listed on Schedule 3.3.5, and no entity in
the AKD Group has granted any Person any interest, as licensee or otherwise, in
or to any of such Intellectual Property.
3.4. Financial Matters.
3.4.1. Financial Statements. Attached to this Agreement
as Schedule 3.4.1 are (a) the audited consolidated balance sheet of the AKD
Group as of December 31, 2005 (the "AKD Balance Sheet Date"), and the related
audited statements of income, members' equity and cash flows for the fiscal year
then ended, and (b) the unaudited consolidated balance sheet of the AKD Group as
of May 31, 2006, and the related unaudited statements of income, members' equity
and cash flows for the period covered thereby (collectively, the "AKD Financial
14
Statements"). The AKD Financial Statements were prepared from the books and
records of AKD, which are correct and complete. The AKD Financial Statements
present fairly and accurately the financial position of the AKD Group and the
results of its operations as of the respective dates and for the periods
presented therein and have been prepared in accordance with GAAP.
3.4.2. No Undisclosed Liabilities. The AKD Group have no
Liabilities except (i) Liabilities set forth on the balance sheets included in
the AKD Financial Statements, and (ii) Liabilities which have arisen after the
AKD Balance Sheet Date in the ordinary course of business, consistent with
historical practice (none of which Liabilities arises out of or relates to any
breach of contract, breach of warranty, tort, infringement or violation of law).
No entity in the AKD Group is a guarantor or otherwise liable for any Liability
of any other Person.
3.4.3. Absence of Changes. Since the AKD Balance Sheet
Date, the AKD Group has not undergone any adverse change in its business,
condition (financial or otherwise) or prospects, or suffered any damage,
destruction or loss (whether or not covered by insurance). Since the Balance
Sheet Date, the AKD Group has operated only in the ordinary course of business,
consistent in all respects with historical practice, and no change has been made
or transaction entered into in anticipation of the transactions contemplated
hereby. Without limiting the generality of the foregoing, since the AKD Balance
Sheet Date, the AKD Group has not:
(a) made any loan, advance or other extension of credit
to any AKD Member or any officer, director or employee of any entity in the AKD
Group or any Affiliate of any thereof;
(b) increased or experienced any adverse change in any
assumption underlying any method of calculating bad debts, contingencies or
other reserves from that reflected in the AKD Financial Statements;
(c) cancelled, compromised, written down, written off or
waived any claim or right of substantial value;
(d) sold, transferred, distributed or otherwise disposed
of any of its assets except for sales of equipment for fair consideration in the
ordinary course of business which has either been replaced by comparable
equipment or is no longer necessary for the operation of AKD's business;
(e) made any capital expenditure or commitment for
additions to property, plant or equipment, except for capital expenditures or
commitments (i) set forth on Schedule 3.4.3(e) or (ii) approved in advance by
GCI, which approval shall not be unreasonably withheld or delayed;
(f) made or agreed to make any increase in the
compensation payable or benefits provided to any of the officers or directors of
any entity in the AKD Group;
(g) lost any key employee or key sales representative or
consultant of AKD;
15
(h) paid any severance or termination pay to any
officer, director or employee of any entity in the AKD Group;
(i) entered into, added to or modified any Plan or any
other arrangement or practice relating to employees, other than (A)
contributions made in accordance with its normal practice or (B) the extension
of coverage to employees who became eligible after the AKD Balance Sheet Date;
(j) changed the methods of accounting or accounting
principles or practices of any entity in the AKD Group set forth in or reflected
by the AKD Financial Statements;
(k) entered into any contract or received any payment as
a result of which any entity in the AKD Group would be required to provide goods
or services to any Person after the Closing without receiving full payment for
those goods or services at or after the time they are provided;
(l) entered into any transaction or contract, or amended
or terminated any transaction or contract, with respect to the business of any
entity in the AKD Group, except normal transactions or contracts consistent in
nature and scope with prior practices and entered into in the ordinary course of
business in arm's-length transactions, none of which transactions or contracts,
or amendments or terminations thereof, could reasonably be expected to have a
material adverse effect upon the business of any entity in the AKD Group or the
financial condition or prospects thereof;
(m) terminated or been advised of the termination of or
material reduction in its relationship with any material customer or supplier;
(n) changed in any material respect the business
policies or practices of any entity in the AKD Group or failed to operate the
business of any entity in the AKD Group in good faith and in the ordinary
course; or
(o) agreed, whether in writing or not, to do any of the
foregoing.
3.4.4. Taxes. Each entity in the AKD Group has filed all
Tax Returns that it has been required to file. All such Tax Returns were correct
and complete in all material respects. All Taxes owed by each entity in the AKD
Group (whether or not required to be shown on a Tax Return) have been paid. No
entity in the AKD Group is currently the beneficiary of any extension of time
within which to file any Tax Return. No entity in the AKD Group has received
notice from an authority in a jurisdiction where it does not file Tax Returns
that it may be subject to taxation by that jurisdiction. Each entity in the AKD
Group has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other Person. Schedule 3.4.4 lists all Tax Returns
filed by each entity in the AKD Group since January 1, 1999 (complete copies of
which have been delivered to GCI) and indicates those Tax Returns that have been
audited or are currently being audited or for which any member of the AKD Group
has received notice of a proposed audit. No entity in the AKD Group has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency. No entity in the AKD Group
16
has any liability for the Taxes of any Person under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise. No entity in the AKD Group
has been a member of an affiliated group filing a consolidated federal income
Tax Return (or any other consolidated, combined or unitary income Tax Return).
The reserves for Taxes in the AKD Financial Statements are adequate. No entity
in the AKD Group is subject to any agreements that could result in any "excess
parachute payments" under Code Section 280G. No entity in the AKD Group has
agreed to or is otherwise required to make any adjustments pursuant to Code
Section 481(a) or any similar provision of state, local or foreign law by reason
of a change in accounting method. No taxing authority has proposed any such
adjustment or change in accounting method with respect to any entity in the AKD
Group. There is no application pending with any taxing authority requesting
permission for any change in accounting method of any entity in the AKD Group.
No entity in the AKD Group has participated in any investment or transaction
that (i) constituted a "tax shelter" within the meaning of Section 6111(c)(1) of
the Code; or (ii) would constitute a "reportable transaction" within the meaning
of Treasury Regulation Section 1.6011-4, whether entered into before or after
the effective date of such Treasury Regulation. None of the assets of any entity
in the AKD Group are subject to any liens in respect of Taxes, except liens that
are expressly permitted under the terms of this Agreement.
3.4.5. Accounts Receivable. The accounts receivable of
each entity in the AKD Group (i) are validly existing, (ii) are enforceable by
the AKD Group in accordance with the terms of the instruments or documents
creating them, subject to bankruptcy, insolvency, moratorium, reorganization and
similar laws of general applicability affecting the rights and remedies of
creditors and to general principles of equity, (iii) are owned by the applicable
entity in the AKD Group free and clear of all Encumbrances, (iv) represent
monies due for, and have arisen solely out of, bona fide performance of services
and other business transactions in the ordinary course of business consistent
with past practices and (v) are collectible within one year after the Closing
Date at the full recorded amount thereof less any allowance for uncollectible
accounts receivable that is reflected in the Final Closing Adjustment Schedule.
There are no refunds, discounts or other adjustments payable with respect to any
such accounts receivable, and there are no defenses, rights of set-off,
counterclaims, assignments, restrictions, encumbrances, or conditions
enforceable by third parties on or affecting any account receivable.
3.5. Operational Matters.
3.5.1. Compliance With Law. Each entity in the AKD Group
has conducted its operations in material compliance with applicable laws. The
AKD Members have no knowledge of and the AKD Group has not received notice of
any violations of law relating to any entity in the AKD Group, AKD's operations
or the AKD Business Assets. Neither any AKD Member, any entity in the AKD Group
nor, to the knowledge of AKD, Parent and the AKD Members any officer, employee
or agent of any entity in the AKD Group has directly or indirectly given or
agreed to give any gift, contribution, payment or similar benefit to any
supplier, customer, governmental official or employee or other Person who was,
is or may be in a position to help or hinder any entity in the AKD Group or made
or agreed to make any contribution, or reimbursed any political gift or
contribution made by any other Person, to any candidate for United States
federal, state, local or foreign public office, in any case, which would subject
17
**** CONFIDENTIAL TREATMENT
any entity in the AKD Group to any Liability or the failure to make which in the
future could adversely affect the business or prospects of any entity in the AKD
Group.
3.5.2. Litigation. There are no actions, claims, suits,
audits, examinations, investigations or proceedings pending or, to the knowledge
of AKD or any of the AKD Members, threatened against any entity in the AKD
Group, whether by a private Person or a governmental agency or body, nor is
there any reasonable basis for any such action, claim, suit, audit, examination,
proceeding or investigation. No judgments, orders, decrees, citations, fines or
penalties have been entered or assessed against any entity in the AKD Group.
3.5.3. Contracts. Schedule 3.5.3 contains a true and
complete list of all Contracts to which or by which any entity in the AKD Group
is a party or otherwise bound (other than the Real Property Leases and
Subscriber Contracts) that: (a) have a duration of twelve (12) months or more
and that are not terminable without penalty upon 30 days or less prior written
notice; (b) require or could reasonably be expected to require any party thereto
to pay $5,000 or more; (c) are between any entity in the AKD Group and any
Governmental Entity; (d) have or may have the effect of prohibiting or impairing
any business practice of any entity in the AKD Group; (e) under which any entity
in the AKD Group is restricted from providing services to customers or potential
customers in any geographic area, during any period of time or in any segment of
a market; or (f) contain any restrictive covenant or confidential or secrecy
agreement other than such an agreement relating solely to information about a
customer's business or any entity in the AKD Group's services to such customer
(Contracts described in (a) through (f) above are referred to collectively as
the "AKD Contracts"). The AKD Members have made available to GCI a true and
complete copy of each AKD Contract. Neither AKD nor, to the knowledge of AKD or
any AKD Member, any other party is in default under or in breach or violation of
any AKD Contract, nor has an event occurred that (with or without notice, lapse
of time or both) would constitute a default or breach or violation by AKD, or to
the knowledge of AKD or any AKD Member, any other party, under any AKD Contract.
Subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws affecting the enforcement of creditors
rights generally and to general principles of equity, each AKD Contract is
legal, valid, binding, enforceable and in full force and effect, and subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting the enforcement of creditors rights
generally and to general principles of equity, will continue to be legal, valid,
binding, enforceable and in full force and effect following the consummation of
the transactions contemplated hereby.
3.5.4. Subscriber Contracts. As of May 31, 2006, AKD had
legal, valid, binding and enforceable Subscriber Contracts with **** customers
to provide wireless telephone services (of which Subscriber Contracts, **** were
for pre-paid wireless services and **** were for post-paid wireless services).
As of the Closing Date, AKD will have legal, valid, binding and enforceable
Subscriber Contracts with no less than **** customers to provide wireless
telephone services (of which Subscriber Contracts, at least **** will be for
pre-paid wireless services and **** will be for post-paid wireless services).
The consummation of the transactions contemplated hereby will have no effect on
whether each such Subscriber Contract in effect as of the Closing Date will
continue to be legal, valid, binding, enforceable and in full force and effect
following the Closing Date. The AKD Members have made available to GCI a true
and complete copy of each general form of Subscriber Contract used by AKD (and
18
not each Subscriber Contract with every individual customer). At the Closing,
AKD shall deliver a certificate signed on behalf of AKD by an authorized person
stating (i) the total number of wireless telephone subscribers of AKD, (ii) the
number of subscribers for pre-paid wireless services and (iii) the number of
subscribers for post-paid wireless services, in each case, as of the end of the
month immediately preceding the Closing Date.
3.5.5. Transactions With Affiliates. Except as disclosed
on Schedule 3.5.5, no AKD Member, no director, officer or employee of any entity
in the AKD Group and no Affiliate of any thereof is currently a party to any AKD
Contract or has been a party to any material transaction with any entity in the
AKD Group since December 31, 2004.
3.5.6. Insurance. Schedule 3.5.6 is a true and complete
list of all insurance policies (including self-insurance arrangements)
maintained by any entity in the AKD Group (including coverage limits,
deductibles, named insureds and policy periods), all of which policies are in
full force and effect. No insurance company with which any entity in the AKD
Group has had a policy has ever terminated or declined to renew such insurance.
3.5.7. Books and Records. The AKD Members have made
available to GCI true and correct copies of all books and records of each entity
in the AKD Group.
3.5.8. Bank Accounts; Powers of Attorney. Schedule 3.5.8
is a true and complete list of all bank accounts, securities accounts and other
financial accounts maintained by or for the benefit of any entity in the AKD
Group, including the name of the institution at which the account is maintained,
the name and number of the account, the purpose of the account and the names and
capacities of all persons authorized to sign on the account. Schedule 3.5.8 also
lists all powers of attorney or similar instruments signed by any entity in the
AKD Group authorizing any person to act on its behalf with respect to any
matter.
3.6. Employee Matters.
3.6.1. AKD Plans. Schedule 3.6.1 is a true and complete
list of all of the following that are now or have ever been maintained or
contributed to by AKD or any entity in the AKD Group or any other entity that is
a member of a "controlled group" with AKD, as determined under ERISA Section
4001(a)(14) (collectively, the "AKD Plans"): (a) any nonqualified deferred
compensation or retirement plan or arrangement which is an "Employee Pension
Benefit Plan" as defined in Section 3(2) of ERISA; (b) any qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan; (c) any qualified defined benefit retirement plan or arrangement which is
an Employee Pension Benefit Plan (including any "Multiemployer Plan", as defined
in Section 3(37) of ERISA); or (d) any "Employee Welfare Benefit Plan" as
defined in Section 3(1) of ERISA. No AKD Plan is a Multiemployer Plan, and no
AKD Plan is subject to the provisions of Title IV of ERISA. No AKD Plan is
maintained in connection with any trust described in Code Section 501(c)(9).
There have been no prohibited transactions with respect to any AKD Plan. No
"Fiduciary" (as defined in ERISA Section 3(21)) has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such AKD Plan. No entity in
the AKD Group currently maintains or contributes to any AKD Plan providing
health or medical benefits for current or future retired or terminated
19
employees, their spouses or their dependents (other than in accordance with Code
Section 4980B). Each AKD Plan has been maintained and administered in compliance
with its terms and with all applicable legal requirements, including but not
limited to ERISA, the Code, and the Consolidated Omnibus Budget Reconciliation
Act of 1985. Nothing done or omitted to be done and no transaction or holding of
any asset under or in connection with any AKD Plan has made or will make any
entity in the AKD Group, or any employee, officer or director of any entity in
the AKD Group, or any fiduciary with respect to such AKD Plan, subject to any
Liability under Title I of ERISA or any Liability for any tax under Code Section
4972 or Code Sections 4975 through 4980B, inclusive. No condition exists that
would prevent any entity in the AKD Group from amending or terminating any AKD
Plan to the extent permitted by applicable law. To the knowledge of the AKD
Members and based upon the requirements of Code Section 409A and the guidance
issued by the Internal Revenue Service, including Notice 2005-1 and the proposed
regulations published on October 4, 2005, each AKD Plan that is a "nonqualified
deferred compensation plan" as defined in Code Section 409A(d)(1) has been
operated in material compliance with Code Section 409A. Each entity in the AKD
Group has established and implemented such policies, programs, procedures,
contracts and systems as are necessary to bring each entity in the AKD Group
into compliance with HIPAA; Title II, Subtitle F, Sections 261-264, Public Law
104-91; and the Standards for Privacy of Individually Identifiable Health
Information, 45 C.F.R. Parts 160-164 as of the effective dates of such laws,
except where the failure to do so would not reasonably be expected to have a
material adverse effect.
3.6.2. Employees. Schedule 3.6.2 is a true and complete
list of all employees of any entity in the AKD Group and shows for each such
employee: (i) his or her position and title; (ii) his or her date of hire; (iii)
his or her salary; (iv) his or her unpaid wages, accrued vacation time and
accrued personal time as of May 31, 2006; and (v) any bonuses paid to him or her
with respect to the fiscal year ended December 31, 2005 or earned by or promised
to him or her with respect to the current fiscal year.
3.6.3. Labor Relations. There is no dispute or
controversy between any entity in the AKD Group and any of its employees. No
entity in the AKD Group is a party to any collective bargaining agreement with
respect to any of its employees, none of its employees is represented by a labor
union and, to the knowledge of AKD and the AKD Members, there is no labor union
organizing activity by or among its employees.
3.6.4. Certain Agreements. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (a) result in any payment (including, without limitation, severance,
unemployment compensation, parachute payment, bonus or otherwise) becoming due
to any employee or any other Person from any entity in the AKD Group under any
AKD Plan, agreement or otherwise, (b) increase any benefits otherwise payable to
any employee under any AKD Plan or agreement, or (c) result in the acceleration
of the time of payment or vesting of any such benefits. None of the employees of
any entity in the AKD Group is subject to any covenant against competition or
similar agreement that would limit his or her ability to participate in all
aspects of any entity in the AKD Group's business at any present or future
location.
20
3.7. Environmental Matters.
3.7.1. Compliance. Each entity in the AKD Group is
conducting and at all times has conducted its business and operations, and has
occupied, used and operated all real property and facilities presently or
previously owned, occupied, used or operated by any entity in the AKD Group, in
compliance (in all material respects) with all Environmental Laws and so as not
to give rise to Liability under any Environmental Laws or to any adverse impact
on any entity in the AKD Group's business or activities. Neither any entity in
the AKD Group nor the AKD Members have any knowledge of pending or proposed
changes to any Environmental Laws that would require any changes in any of any
entity in the AKD Group's premises, facilities, equipment, operations or
procedures or affect any entity in the AKD Group's business or its cost of
conducting its business as now conducted. To the knowledge of AKD, Parent and
the AKD Members, no conditions, circumstances or activities have existed or
currently exist (including, without limitation, off-site disposal or treatment
of Hazardous Substances) which could give rise to any Liability pursuant to any
Environmental Laws. Other than the Leased Real Property, neither any entity in
the AKD Group nor its predecessors have at any time owned, occupied, used or
operated any real property or facilities.
3.7.2. Waste Materials. Any chemicals and chemical
compounds and mixtures which are included among the assets of any entity in the
AKD Group are required for the conduct of any entity in the AKD Group's
business, have not been and are not intended to be discarded or abandoned, and
are not waste or waste materials. No entity in the AKD Group has generated,
handled, used, transported or disposed of Hazardous Substances. All waste
materials which are generated as part of the business of any entity in the AKD
Group are handled, stored, treated and disposed of in accordance with applicable
Environmental Laws.
3.7.3. Tanks; Asbestos. Any underground storage tanks
ever located at the Leased Real Property have been removed in compliance with
all applicable Environmental Laws, all remediation required in connection with
such removal has been completed in accordance with applicable Environmental Laws
and all governmental agencies having jurisdictions have approved such removal
and remediation and issued appropriate certificates reflecting that no further
action is required. All above ground storage tanks located at the Leased Real
Property comply with applicable Environmental Laws and are appropriate and
adequate for the conduct of each entity in the AKD Group's business. No real
properties or facilities presently or previously owned, occupied, used or
operated by any entity in the AKD Group or any predecessor have been used at any
time as a gasoline service station or as a facility for storing, pumping,
dispensing or producing gasoline or any other petroleum products or any other
Hazardous Substances. No building or other structure on any of the real property
owned, occupied, used or operated by any entity in the AKD Group contains
asbestos or asbestos-containing materials. There are not nor have there been any
incinerators, septic tanks, leach fields, cesspools or wells (including without
limitation dry, drinking, industrial, agricultural and monitoring wells) on any
real property owned, occupied, used or operated by any entity in the AKD Group.
3.7.4. Environmental Assessments. The AKD Members have
delivered to GCI correct and complete copies of all documents, correspondence,
reports or other materials in their possession or control concerning the
environmental condition of any real property currently or formerly used or
21
occupied by any entity in the AKD Group, including, without limitation, all
environmental site assessments.
3.8. Communications Regulatory Matters.
3.8.1. AKD Licenses. AKD is fully qualified under the
Communications Laws to be an FCC licensee. Schedule 3.8.1 lists all licenses and
authorizations issued by the FCC or the RCA to any entity in the AKD Group (the
"AKD Licenses"), together with the name of the licensee or authorization holder,
the expiration date of the AKD Licenses and, where applicable, the relevant FCC
market designation. AKD validly holds the AKD Licenses which represent all the
FCC authorizations required in connection with the ownership and operation of
the AKD wireless telecommunications business as it is presently being conducted.
The AKD Licenses are not subject to any conditions outside of the ordinary
course. No person other than AKD has any right, title or interest (legal or
beneficial) in or to, or any right or license to use, the AKD Licenses. The AKD
Licenses have been granted to AKD by Final Order and are in full force and
effect.
3.8.2. Compliance. Except as disclosed in Schedule
3.8.2, AKD is in material compliance with the Communications Laws, including
without limitation those relating to: (i) the Communications Assistance for Law
Enforcement Act (CALEA); (ii) E-911 Phase I and Phase II compliance; (iii)
number porting, number pooling and related number usage and utilization reports;
(iv) Telecommunications Relay Service obligations; (v) universal service
obligations; (vi) the payment of regulatory fees; (vii) Text Telephone Devices
(TTY); (viii) the submission of quarterly, semi-annual, annual or other periodic
reports or filings with the FCC or other Governmental Entity or administrative
body (e.g. the National Exchange Carrier Association (NECA) and the Universal
Service Administrative Company (USAC)); (ix) compliance with the National
Environmental Protection Act (NEPA) provisions applicable to telecommunications
carriers; (x) compliance with any spectrum clearing or incumbent relocation cost
sharing obligations; and (xi) compliance with FCC and FAA antenna registration
and painting and lighting requirements.
3.8.3. Proceedings. There are no objections, petitions
to deny, complaints (formal or informal) competing applications or other
proceedings pending before the FCC or any other Governmental Entity having
jurisdiction over AKD or the AKD Licenses relating to AKD or the AKD Licenses.
AKD has not received any notice of any claim of default with respect to any of
the AKD Licenses. Except for proceedings affecting the wireless industry
generally, and except as disclosed on Schedule 3.8.3, there is not pending or,
to the knowledge of AKD, threatened against AKD or the AKD Licenses any action,
petition, objection or other pleading, or any proceeding with the FCC or any
other Governmental Entity, which contests the validity of, or seeks the
revocation, forfeiture, non-renewal modification or suspension of, the AKD
Licenses, or which would adversely affect the ability of AKD to consummate the
transactions contemplated by this Agreement.
3.8.4. Filings. All documents required to be filed
during the ownership of the AKD Licenses by AKD with the FCC or any other
Governmental Entity have been timely filed or the time period for such filing
has not lapsed, except where such failure to timely file would not reasonably be
expected to result in the revocation, cancellation, forfeiture, non-renewal or
22
suspension of any authorization or license or the imposition of any monetary
forfeiture. All of such filings were complete and correct in all material
respects when filed.
3.8.5. Build-Out. AKD is not in breach or otherwise in
violation of any FCC build-out requirements with respect to any FCC
authorization held by it. Each FCC licensed station has been built out at least
to the minimum extent required by the Communications Laws. Any and all FCC
notifications or filings associated with the build-out were timely filed and
were true complete and correct when filed. There has been no discontinuance of
service subsequent to the completion of construction and certification that
would cause the AKD Licenses to be deemed forfeited or automatically cancelled
by the FCC.
3.9. Transactional Matters.
3.9.1. Brokers, Finders, etc. All negotiations relating
to this Agreement and the transactions contemplated hereby have been carried on
without the intervention of any Person acting on behalf of any entity in the AKD
Group or any AKD Member in such manner as to give rise to any valid claim
against any entity in the AKD Group, any AKD Member or GCI for any brokerage or
finder's commission, fee or similar compensation.
3.9.2. Disclosure. The representations and warranties of
each entity in the AKD Group and the AKD Members in this Agreement, including
the Schedules hereto, taken as a whole, do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained not misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE DENALI MEMBERS
The Denali Members jointly and severally represent and warrant
to GCI that, except as disclosed in the Denali Disclosure Schedule (which is
numbered to correspond to the section numbers in this Section 4):
4.1. Organization and Standing; Capitalization.
4.1.1. Organization and Standing of Denali. Denali is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Alaska. Denali is qualified to do business and in
good standing as a foreign limited liability company in the jurisdictions listed
in Schedule 4.1.1, which are all of the jurisdictions where such qualification
is required. Denali has the requisite limited liability company power and
authority to own its assets and carry on its business as presently being
conducted. Complete and correct copies of the articles of organization,
operating agreement and membership records of Denali have been delivered to GCI.
4.1.2. Subsidiaries. Denali does not own, directly or
indirectly, any capital stock of, any partnership, equity or other ownership
interest in or any security issued by any other corporation, organization,
association, entity, business enterprise or other Person.
23
**** CONFIDENTIAL TREATMENT
4.1.3. Capitalization. All of the issued and outstanding
Denali Interests are duly authorized, validly issued, fully paid and
nonassessable and are owned of record and beneficially by the Denali Members,
free and clear of Encumbrances, as follows:
Member Percentage Interest
------ -------------------
Pacificom ****%
Red River ****%
There are no outstanding options, warrants, convertible securities or other
rights to acquire any membership interest or any other security from Denali. No
membership interests or other securities of Denali have been issued in violation
of any preemptive or similar right of any Person or have been transferred in
violation of, or are currently subject to, any right of first refusal or similar
right of any Person. All of the issued and outstanding ownership interests of
Denali were issued in compliance with applicable law, including, without
limitation, federal and state securities laws. No securities of Denali are
subject to any voting trust or other voting agreement.
4.2. The Transaction Agreements.
4.2.1. Execution and Validity. Each Denali Member has
the requisite power and authority to execute and deliver each of the Transaction
Agreements to which it is a party and to perform its obligations thereunder, and
the execution, delivery and performance by such Denali Member of this Agreement
and the other Transaction Agreements to which it is a party and the consummation
by such Denali Member of the transactions contemplated hereby and thereby have
been duly and validly authorized and approved by all necessary action of the
owners and managers of such Denali Member as required by applicable documents
and law. This Agreement has been duly executed and delivered by each Denali
Member and constitutes, and each of the other Transaction Agreements to which
any Denali Member is a party will be duly executed and delivered by such Denali
Member at Closing and will constitute, the legal, valid and binding obligation
of such Denali Member, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, moratorium, reorganization and similar laws of general
applicability affecting the rights and remedies of creditors and to general
principles of equity.
4.2.2. No Violation or Approval. The execution, delivery
and performance by each Denali Member of the Transaction Agreements to which
such Denali Member is a party and the consummation of the transactions
contemplated by the Transaction Agreements do not and will not constitute or
result in (a) a violation of any order, judgment or decree of any court or
governmental agency or body having jurisdiction over Denali, any Denali Member,
or any of their respective assets, or (b) a breach of or default under, or the
acceleration of any obligation or creation of any Encumbrance under (whether
immediately, upon the passage of time or after the giving of notice), or
otherwise require a consent or waiver under, any agreement, instrument, lease,
contract, mortgage, deed or license to which Denali or any Denali Member is a
party or by which Denali or any Denali Member or any of their assets are bound
or affected or (c) a violation of or a conflict with the articles of
organization or operating agreement of Denali. Except as described on Schedule
4.2.2, no notice to, or consent, approval, order or authorization of, or
declaration or filing with, any governmental authority or entity or other Person
is required to be obtained or made by Denali or any Denali Member in connection
24
with the execution, delivery and performance of or the consummation of the
transactions contemplated by any of the Transaction Agreements.
4.3. No Assets. Denali does not own, lease or use any assets or
properties other than the Denali Contracts and the Denali Licenses.
4.4. Financial Matters.
4.4.1. Financial Statements. Attached to this Agreement
as Schedule 4.4.1 are (a) the unaudited balance sheet of Denali as of December
31, 2005 (the "Denali Balance Sheet Date"), and the related audited statements
of income, members' equity and cash flows for the fiscal year then ended, and
(b) the unaudited balance sheets of Denali as of May 31, 2006, and the related
audited statement of income, members' equity and cash flows for the quarter then
ended (collectively, the "Denali Financial Statements"). The Denali Financial
Statements were prepared from the books and records of Denali, which are correct
and complete. The Denali Financial Statements present fairly and accurately the
financial position of Denali and the results of its operations as of the
respective dates and for the periods presented therein and have been prepared in
accordance with GAAP.
4.4.2. No Undisclosed Liabilities. Denali has no
Liabilities except (i) Liabilities set forth on the balance sheet included in
the Denali Financial Statements, and (ii) Liabilities which have arisen after
the Denali Balance Sheet Date in the ordinary course of business, consistent
with historical practice (none of which Liabilities arises out of or relates to
any breach of contract, breach of warranty, tort, infringement or violation of
law). Denali is not a guarantor or otherwise liable for any Liability of any
other Person.
4.4.3. Absence of Changes. Since the Denali Balance
Sheet Date, Denali has not undergone any adverse change in its business,
condition (financial or otherwise) or prospects, or suffered any damage,
destruction or loss (whether or not covered by insurance). Since the Denali
Balance Sheet Date, Denali has operated only in the ordinary course of business,
consistent in all respects with historical practice, and no change has been made
or transaction entered into in anticipation of the transactions contemplated
hereby. Without limiting the generality of the foregoing, since the Denali
Balance Sheet Date, Denali has not:
(a) made any loan, advance or other extension of credit
to any Denali Member or any officer, director or employee of Denali or any
Affiliate of any thereof;
(b) increased or experienced any adverse change in any
assumption underlying any method of calculating bad debts, contingencies or
other reserves from that reflected in the Denali Financial Statements;
(c) cancelled, compromised, written down, written off or
waived any claim or right of substantial value;
(d) sold, transferred, distributed or otherwise disposed
of any of its assets except for sales of equipment for fair consideration in the
ordinary course of business which has either been replaced by comparable
equipment or is no longer necessary for the operation of Denali's business;
25
(e) made any capital expenditure or commitment for
additions to property, plant or equipment;
(f) made or agreed to make any increase in the
compensation payable or benefits provided to any of the officers or directors of
Denali;
(g) paid any severance or termination pay to any
officer, director or employee of Denali;
(h) changed the methods of accounting or accounting
principles or practices of Denali set forth in or reflected by the Financial
Statements;
(i) entered into any contract or received any payment as
a result of which Denali would be required to provide goods or services to any
Person after the Closing without receiving full payment for those goods or
services at or after the time they are provided;
(j) entered into any transaction or contract, or amended
or terminated any transaction or contract, with respect to the business of
Denali, except normal transactions or contracts consistent in nature and scope
with prior practices and entered into in the ordinary course of business in
arm's-length transactions, none of which transactions or contracts, or
amendments or terminations thereof, could reasonably be expected to have a
material adverse effect upon the business of Denali or the financial condition
or prospects thereof;
(k) terminated or been advised of the termination of or
material reduction in its relationship with any material customer or supplier;
(l) changed in any material respect the business
policies or practices of Denali or failed to operate the business of Denali in
good faith and in the ordinary course; or
(m) agreed, whether in writing or not, to do any of the
foregoing.
4.4.4. Taxes. Denali has filed all Tax Returns that it
has been required to file. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by Denali (whether or not required to be shown
on a Tax Return) have been paid. Denali is not currently the beneficiary of any
extension of time within which to file any Tax Return. Denali has not received
notice from an authority in a jurisdiction where it does not file Tax Returns
that it may be subject to taxation by that jurisdiction. Denali has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other Person. Schedule 4.4.4 lists all Tax Returns filed by
Denali since January 1, 1999 (complete copies of which have been delivered to
GCI) and indicates those Tax Returns that have been audited or are currently
being audited or for which Denali has received notice of a proposed audit.
Denali has not waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency. Denali
has no liability for the Taxes of any Person under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise. Denali has never been a
member of an affiliated group filing a consolidated federal income Tax Return
(or any other consolidated, combined or unitary income Tax Return). The reserves
for Taxes in the Denali Financial Statements are adequate. Denali is not subject
26
to any agreements that could result in any "excess parachute payments" under
Code Section 280G. Denali has not agreed to and is not otherwise required to
make any adjustments pursuant to Code Section 481(a) or any similar provision of
state, local or foreign law by reason of a change in accounting method. No
taxing authority has proposed any such adjustment or change in accounting method
with respect to Denali. There is no application pending with any taxing
authority requesting permission for any change in accounting method of Denali.
Denali has not participated in any investment or transaction that (i)
constituted a "tax shelter" within the meaning of Section 6111(c)(1) of the
Code; or (ii) would constitute a "reportable transaction" within the meaning of
Treasury Regulation Section 1.6011-4, whether entered into before or after the
effective date of such Treasury Regulation. None of Denali's assets are subject
to any liens in respect of Taxes, except liens that are expressly permitted
under the terms of this Agreement.
4.4.5. Accounts Receivable. The accounts receivable of
Denali (i) are validly existing, (ii) are enforceable by Denali in accordance
with the terms of the instruments or documents creating them, (iii) are owned by
Denali free and clear of all Encumbrances, (iv) represent monies due for, and
have arisen solely out of, bona fide performance of services and other business
transactions in the ordinary course of business consistent with past practices
and (v) are collectible within one year after the Closing Date at the full
recorded amount thereof less any allowance for uncollectible accounts receivable
that is reflected in the Final Closing Adjustment Schedule. There are no
refunds, discounts or other adjustments payable with respect to any such
accounts receivable, and there are no defenses, rights of set-off,
counterclaims, assignments, restrictions, encumbrances, or conditions
enforceable by third parties on or affecting any account receivable.
4.5. Operational Matters.
4.5.1. Compliance With Law. Denali has conducted its
operations in material compliance with applicable laws. The Denali Members have
no knowledge of and Denali has not received notice of any violations of law
relating to Denali, Denali's operations or the Denali Contributed Assets.
Neither any Denali Member, Denali nor any officer, employee or agent of Denali
has directly or indirectly given or agreed to give any gift, contribution,
payment or similar benefit to any supplier, customer, governmental official or
employee or other Person who was, is or may be in a position to help or hinder
Denali or made or agreed to make any contribution, or reimbursed any political
gift or contribution made by any other Person, to any candidate for United
States federal, state, local or foreign public office, in any case, which would
subject Denali to any Liability or the failure to make which in the future could
adversely affect the business or prospects of Denali.
4.5.2. Litigation. There are no actions, claims, suits,
audits, examinations, investigations or proceedings pending or, to the knowledge
of Denali or the Denali Members, threatened against Denali, whether by a private
Person or a governmental agency or body, nor is there any reasonable basis for
any such action, claim, suit, audit, examination, proceeding or investigation.
No judgments, orders, decrees, citations, fines or penalties have been entered
or assessed against Denali.
27
4.5.3. Contracts. Schedule 4.5.3 contains a true and
complete list of all Contracts to which or by which Denali is a party or
otherwise bound that: (a) have a duration of twelve (12) months or more and that
are not terminable without penalty upon 30 days or less prior written notice;
(b) require or could reasonably be expected to require any party thereto to pay
$5,000 or more; (c) are between Denali and any Governmental Entity; (d) have or
may have the effect of prohibiting or impairing any business practice of Denali
or any entity in the AKD Group; (e) under which Denali or any entity in the AKD
Group is restricted from providing services to customers or potential customers
in any geographic area, during any period of time or in any segment of a market;
or (f) contain any restrictive covenant or confidential or secrecy agreement
other than such an agreement relating solely to information about a customer's
business or Denali or any entity in the AKD Group's services to such customer
(Contracts described in (a) through (f) above are referred to collectively as
the "Denali Contracts"). The Denali Members have made available to GCI a true
and complete copy of each Contract. Neither Denali nor, to the knowledge of
Denali or any Denali Member, any other party is in default under or in breach or
violation of any Denali Contract, nor has an event occurred that (with or
without notice, lapse of time or both) would constitute a default or breach or
violation by Denali, or to the knowledge of Denali or any Denali Members, any
other party, under any Denali Contract. Subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or such laws
affecting the enforcement of creditors rights generally and to general
principles of equity, each Denali Contract is legal, valid, binding, enforceable
and in full force and effect, and subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting the
enforcement of creditors rights generally and to general principles of equity,
will continue to be legal, valid, binding, enforceable and in full force and
effect following the consummation of the transactions contemplated hereby.
4.5.4. Transactions With Affiliates. No Denali Member,
no director, officer, manager or employee of Denali and no Affiliate of any
thereof is currently a party to any Denali Contract or has been a party to any
material transaction with Denali since December 31, 2004.
4.5.5. Insurance. Schedule 4.5.5 is a true and complete
list of all insurance policies (including self-insurance arrangements)
maintained by Denali (including coverage limits, deductibles, named insureds and
policy periods), all of which policies are in full force and effect. No
insurance company with which Denali has had a policy has ever terminated or
declined to renew such insurance
4.5.6. Books and Records. The Denali Members have made
available to GCI true and correct copies of all books and records of Denali.
4.5.7. Bank Accounts; Powers of Attorney. Schedule 4.5.7
is a true and complete list of all bank accounts, securities accounts and other
financial accounts maintained by or for the benefit of Denali, including the
name of the institution at which the account is maintained, the name and number
of the account, the purpose of the account and the names and capacities of all
persons authorized to sign on the account. Schedule 4.5.7 also lists all powers
of attorney or similar instruments signed by Denali authorizing any person to
act on its behalf with respect to any matter.
28
4.6. Employee Matters. Denali has no employees and has never had
any employees since its inception. Neither Denali nor any other entity that is a
member of a controlled group with Denali, as determined under ERISA Section
4001(a)(14), has ever maintained or contributed to any of the following: (a) any
nonqualified deferred compensation or retirement plan or arrangement which is an
"Employee Pension Benefit Plan" as defined in Section 3(2) of ERISA; (b) any
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan; (c) any qualified defined benefit retirement plan
or arrangement which is an Employee Pension Benefit Plan (including any
"Multiemployer Plan", as defined in Section 3(37) of ERISA); or (d) any
"Employee Welfare Benefit Plan" as defined in Section 3(1) of ERISA.
4.7. Environmental Matters. Denali is conducting and at all
times has conducted its business and operations, and has occupied, used and
operated all real property and facilities presently or previously owned,
occupied, used or operated by Denali, in compliance (in all material respects)
with all Environmental Laws and so as not to give rise to Liability under any
Environmental Laws or to any adverse impact on Denali's business or activities.
Neither Denali nor any Denali Members have any knowledge of pending or proposed
changes to any Environmental Laws that would require any changes in any of
Denali's premises, facilities, equipment, operations or procedures or affect
Denali's business or its cost of conducting its business as now conducted. No
conditions, circumstances or activities have existed or currently exist
(including, without limitation, off-site disposal or treatment of Hazardous
Substances) which could give rise to any Liability pursuant to any Environmental
Laws. Neither Denali nor its predecessors have at any time owned, occupied, used
or operated any real property or facilities.
4.8. Communications Regulatory Matters.
4.8.1. Denali Licenses. Denali is fully qualified under
the Communications Laws to be an FCC licensee. Schedule 4.8.1 lists all licenses
and authorizations issued by the FCC or the RCA to Denali (the "Denali
Licenses"), together with the name of the licensee or authorization holder, the
expiration date of the Denali Licenses and, where applicable, the relevant FCC
market designation. Denali validly holds the Denali Licenses which represent all
the FCC authorizations required in connection with the ownership and operation
of the Denali wireless telecommunications business as it is presently being
conducted. The Denali Licenses are not subject to any conditions outside of the
ordinary course. No person other than Denali has any right, title or interest
(legal or beneficial) in or to, or any right or license to use, the Denali
Licenses. The Denali Licenses have been granted to Denali by Final Order and are
in full force and effect.
4.8.2. Compliance. Denali is in material compliance with
the Communications Laws, including without limitation those relating to: (i) the
Communications Assistance for Law Enforcement Act (CALEA); (ii) E-911 Phase I
and Phase II compliance; (iii) number porting, number pooling and related number
usage and utilization reports; (iv) Telecommunications Relay Service
obligations; (v) universal service obligations; (vi) the payment of regulatory
fees; (vii) Text Telephone Devices (TTY); (viii) the submission of quarterly,
semi-annual, annual or other periodic reports or filings with the FCC or other
Governmental Entity or administrative body (e.g. the National Exchange Carrier
29
Association (NECA) and the Universal Service Administrative Company (USAC));
(ix) compliance with the National Environmental Protection Act (NEPA) provisions
applicable to telecommunications carriers; (x) compliance with any spectrum
clearing or incumbent relocation cost sharing obligations; and (xi) compliance
with FCC and FAA antenna registration and painting and lighting requirements.
4.8.3. Proceedings. There are no objections, petitions
to deny, complaints (formal or informal) competing applications or other
proceedings pending before the FCC or any other Governmental Entity having
jurisdiction over Denali or the Denali Licenses relating to Denali or the Denali
Licenses. Denali has not received any notice of any claim of default with
respect to any of the Denali Licenses. Except for proceedings affecting the
wireless industry generally, and except as disclosed on Schedule 4.8.3, there is
not pending or, to the knowledge of Denali, threatened against Denali or the
Denali Licenses any action, petition, objection or other pleading, or any
proceeding with the FCC or any other Governmental Entity, which contests the
validity of, or seeks the revocation, forfeiture, non-renewal modification or
suspension of, the Denali Licenses, or which would adversely affect the ability
of Denali to consummate the transactions contemplated by this Agreement.
4.8.4. Filings. All documents required to be filed
during the ownership of the Denali Licenses by Denali with the FCC or any other
Governmental Entity have been timely filed or the time period for such filing
has not lapsed, except where such failure to timely file would not reasonably be
expected to result in the revocation, cancellation, forfeiture, non-renewal or
suspension of any authorization or license or the imposition of any monetary
forfeiture. All of such filings were complete and correct in all material
respects when filed.
4.8.5. Build-Out. Denali is not in breach or otherwise
in violation of any FCC build-out requirements with respect to any FCC
authorization held by it. Each FCC licensed station has been built out at least
to the minimum extent required by the Communications Laws. Any and all FCC
notifications or filings associated with the build-out were timely filed and
were true complete and correct when filed. There has been no discontinuance of
service subsequent to the completion of construction and certification that
would cause the Denali Licenses to be deemed forfeited or automatically
cancelled by the FCC.
4.9. Transactional Matters.
4.9.1. Brokers, Finders, etc. All negotiations relating
to this Agreement and the transactions contemplated hereby have been carried on
without the intervention of any Person acting on behalf of Denali or any Denali
Member in such manner as to give rise to any valid claim against Denali, any
Denali Member or GCI for any brokerage or finder's commission, fee or similar
compensation.
4.9.2. Disclosure. The representations and warranties of
the Denali Members in this Agreement, including the Schedules hereto, taken as a
whole, do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained not
misleading.
30
SECTION 5
REPRESENTATIONS AND WARRANTIES OF GCI
GCI represents and warrants to AKD, Parent, the AKD Members and the
Denali Members that:
5.1. Organization and Standing. GCI is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Alaska. GCI has the requisite corporate power and authority to execute and
deliver each of the Transaction Agreements to which it is a party and to perform
its obligations thereunder. The execution, delivery and performance by GCI of
this Agreement and the other Transaction Agreements to which it is a party, and
the consummation by GCI of the transactions contemplated hereby and thereby,
have been duly and validly authorized and approved by all necessary corporate
action on the part of GCI.
5.2. Execution and Validity of Agreements. This Agreement has
been duly executed and delivered by GCI and constitutes, and each of the other
Transaction Agreements to which GCI is a party will be duly executed and
delivered at Closing and will constitute, the legal, valid and binding
obligation of GCI, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, moratorium, reorganization and similar laws of general
applicability affecting the rights and remedies of creditors and to general
principles of equity, regardless of whether enforcement is sought in proceedings
in equity or at law.
5.3. No Violation or Approval. The execution, delivery and
performance by GCI of each of the Transaction Agreements to which it is a party
and the consummation of the transactions contemplated thereby does not and will
not result in (a) a violation of any law, rule or regulation, order, judgment or
decree applicable to GCI or any order, judgment or decree of any court or any
governmental agency or body having jurisdiction over GCI or its properties or
assets, (b) a breach or a default under (whether immediately, upon the passage
of time or after giving notice), or the acceleration of any payment under any
material agreement, instrument, lease, contract, mortgage, or license to which
GCI is a party or by which it or any of its properties or assets is bound, or
(c) a violation of or a conflict with its charter or bylaws. No consent,
approval, order or authorization of, or declaration or filing with, any
governmental authority or entity or other party is required to be, and has not
been, obtained or made by GCI in connection with the execution, delivery and
performance of or the consummation of the transactions contemplated by any of
the Transaction Agreements.
5.4. Brokers, Finders, etc. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the intervention of any Person acting on behalf of GCI in such manner as to give
rise to any valid claim against any AKD, the AKD Members or the Denali Members
for any brokerage or finder's commission, fee or similar compensation.
5.5. No Oral Warranties. Except for the warranties and
representations expressly set forth in this Agreement, GCI is relying solely on
its own expertise and that of its consultants, employees, agents, servants and
representatives in connection with its acquisition of the Denali Interests and
the AKD Common Units (collectively, the "Interests"). GCI has or will conduct
31
such investigation, analysis and inspection of AKD, Denali and their respective
businesses as it deems necessary or appropriate and shall rely upon such
investigation, analysis and inspection in connection with the acquisition of the
Interests. GCI acknowledges and agrees that neither Denali, AKD, Parent, the AKD
Members and/or the Denali Members, on the one hand, nor their respective
officers, directors, members, employees, servants, agents, attorneys or
representatives have made any oral agreements, warranties or representations,
and that none of Denali, AKD, Parent, the AKD Members and/or the Denali Members
are liable or bound by any oral or written statement, agreement, information,
warranty or representation with respect to the Interests, AKD, Denali of the
business or assts of AKD or Denali made by any Person whatsoever, unless such
statement, agreement, information, warranty or representation is expressly set
forth in this Agreement. In connection with its acquisition of the Interests,
GCI is not relying on any oral statements or representations made or given by
any Person whomsoever. The parties agree that this Section 5.5 shall in no way
diminish or otherwise impair GCI's ability (a) to seek indemnification for any
breach of any representation or warranty herein or (b) to enforce its rights
under this Agreement or the documents and instruments delivered pursuant to this
Agreement.
SECTION 6
COVENANTS
6.1. Exclusivity; Acquisition Proposals. Unless and until this
Agreement shall have been terminated pursuant to Section 11, none of any entity
in the AKD Group, Parent, the AKD Members or the Denali Members shall take or
cause or permit to be taken, directly or indirectly, any of the following
actions with any Person other than GCI and its designees or agents: (a) solicit,
encourage, initiate or participate in any negotiations, inquiries or discussions
with respect to any offer or proposal to acquire the business or assets of any
entity in the AKD Group or Denali, whether by merger, consolidation, other
business combination, purchase of assets or stock, tender or exchange offer or
otherwise (each of the foregoing an "Acquisition Transaction"); (b) disclose any
information not customarily disclosed to any Person who is or may be requesting
such information for purposes of a possible Acquisition Transaction; (c) agree
to or execute any letter of intent, terms sheet or agreement relating to an
Acquisition Transaction; or (d) make or authorize any public statement or
solicitation with respect to any Acquisition Transaction or any offer or
proposal relating to an Acquisition Transaction other than with respect to the
transactions contemplated hereby.
6.2. Notices and Consents.
(a) Each entity in the AKD Group, Parent, the AKD
Members and the Denali Members shall cooperate with each other and use, and
shall cause their respective Affiliates to use, their respective reasonable best
efforts to prepare and file as promptly as reasonably practicable all
documentation to effect all necessary notices, reports and other filings
(including all applications required to be filed with the FCC and the RCA) and
to obtain as promptly as reasonably practicable all consents, registrations,
approvals, permits and authorizations necessary or advisable to be obtained from
any Third Party and/or any Governmental Entity in order to consummate the
transactions contemplated by this Agreement (collectively, the "Regulatory
Consents"). GCI will provide reasonable cooperation to the forgoing Parties to
obtain such Regulatory Consents. None of GCI, any entity in the AKD Group,
32
Parent, the AKD Members or the Denali Members shall agree to participate in any
substantive meeting or discussion with any such Governmental Entity in respect
of any filing, investigation or inquiry concerning this Agreement or the
transactions contemplated by this Agreement unless it consults with the other
Parties reasonably in advance and, to the extent permitted by such Governmental
Entity, gives the other Parties the opportunity to attend and participate.
(b) GCI, each entity in the AKD Group, Parent, the AKD
Members and the Denali Members each shall, upon request by the other, furnish
the other with all information concerning itself, its Subsidiaries, directors,
officers, members and members and such other matters as may be reasonably
necessary or advisable in connection with any statement, filing, notice or
application made by or on behalf of any entity in the AKD Group or Denali to any
Governmental Entity in connection with the transactions contemplated by this
Agreement.
(c) Subject to applicable Law and the instructions of
any Governmental Entity, GCI, each entity in the AKD Group, Parent, the AKD
Members and the Denali Members each shall keep the others apprised of the status
of matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notices or other
communications received by such Person from any Governmental Entity with respect
to such transactions.
6.3. Preparation for Closing. Each of the Parties will use
commercially reasonable efforts to take all actions necessary, proper or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including the satisfaction, but not the waiver,
of the conditions precedent set forth in Section 7) and the other Transaction
Agreements.
6.4. Notification of Certain Matters. Between the date of this
Agreement and the Closing Date, each Party shall give prompt notice in writing
to the other Parties of: (a) any information that indicates that any of such
Party's representations or warranties contained herein was not true and correct
in all material respects as of the date hereof or will not be true and correct
in all material respects at and as of the Closing Date (except for changes
permitted or contemplated by this Agreement), (b) the occurrence of any event
that will result, or has a reasonable prospect of resulting, in the failure of
any condition specified in Section 8 hereof to be satisfied, (c) any notice or
other communication from any Person indicating that such Person will not or may
not grant any consent or approval required in connection with the transactions
contemplated by this Agreement or that such transactions otherwise may violate
the rights of or confer remedies upon such Person and (d) any other material
development that occurs after the date of this Agreement and affects the
accuracy of the representations, warranties, covenants or Disclosure Schedule
contained herein. No notice given under this Section 6.4 will be deemed to amend
or supplement any Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant of any Party.
6.5. Other Limitations on Conduct of AKD's and Properties'
Businesses. AKD, Parent and the AKD Members hereby covenant and agree with GCI
that, prior to the earlier of the termination of this Agreement pursuant to
Section 11 or the Closing Date, unless the prior written consent of GCI shall
33
have been obtained and except as otherwise contemplated herein, they shall
operate the business of each entity in the AKD Group only in the usual, regular
and ordinary course of business consistent with historical practice, incurring
only ordinary and necessary business expenses consistent with historical
practice. Without limiting the foregoing, unless the prior written consent of
GCI shall have been obtained and except as otherwise contemplated herein, prior
to the earlier of the termination of this Agreement pursuant to Section 11 or
the Closing Date AKD, Parent and the AKD Members shall: (a) use commercially
reasonable efforts to preserve intact the business and assets of each entity in
the AKD Group, including present operations, facilities, employee relationships
and relationships with lessors, licensors, suppliers and customers; (b) comply
with all applicable laws and regulations, and maintain the licenses,
registrations, rights and franchises of each entity in the AKD Group; (c) not
declare, set aside or pay any dividend or make any distribution with respect to
the membership interests of any entity in the AKD Group or redeem, purchase, or
otherwise acquire any such membership interests, except for the distributions
contemplated by Section 2.2; (d) not enter into any material contracts,
obligations, commitments or agreements (including without limitation any
material modification or amendment to any such contract, commitment or
agreement) other than in the ordinary course of business; (e) not sell, dispose
of or otherwise transfer or encumber any assets, except in the ordinary course
of business consistent with past practice; (f) not increase the compensation,
benefits or any other form of remuneration to officers or employees, other than
in connection with promotions and performance reviews in accordance with past
practice, and not award any bonuses or other extraordinary compensation to any
officers or employees, except such as are paid in full in cash prior to the
Closing; (g) not modify, alter or amend the terms or provisions of any AKD Plan;
(h) maintain in full force and effect all insurance policies in effect on the
date hereof or replacement policies providing comparable coverage if available
on commercially reasonable terms; (i) not authorize for issuance, issue or
obligate any entity in the AKD Group to issue any membership interests or any
options, warrants, convertible securities or other rights to acquire any
membership interests; (j) cause any entity in the AKD Group to pay and discharge
all liabilities when due and not cause any entity in the AKD Group to accelerate
the collections of receivables beyond their normal, stated terms; (k) not allow
any entity in the AKD Group to hire additional management employees; and (l) not
knowingly take any action that would (i) adversely affect the ability of any
entity in the AKD Group to obtain any necessary approvals of any third parties
or any governmental authorities required for the transactions contemplated
hereby or materially increase the period of time necessary to obtain such
approvals, or (ii) adversely affect any entity in the AKD Group's ability to
perform its covenants and agreements under this Agreement or any other
Transaction Agreement. Prior to Closing, AKD intends to acquire the interest of
all Persons who are participants under that certain Profits Participation Plan
and to terminate such Profit Participation Plan, and nothing contained in this
Section 6.5 shall restrict the right of AKD to take such actions or require the
consent of GCI prior to taking such actions.
6.6. Other Limitations on Conduct of Denali's Business. The
Denali Members hereby covenant and agree with GCI that, prior to the earlier of
the termination of this Agreement pursuant to Section 11 or the Closing Date,
unless the prior written consent of GCI shall have been obtained and except as
otherwise contemplated herein, they shall cause Denali to operate its business
only in the usual, regular and ordinary course of business consistent with
historical practice, incurring only ordinary and necessary business expenses
consistent with historical practice. Without limiting the foregoing, unless the
34
prior written consent of GCI shall have been obtained and except as otherwise
contemplated herein, prior to the earlier of the termination of this Agreement
pursuant to Section 11 or the Closing Date the Denali Members shall cause Denali
to: (a) use commercially reasonable efforts to preserve intact its business and
assets, including present operations, facilities, employee relationships and
relationships with lessors, licensors, suppliers and customers; (b) comply with
all applicable laws and regulations, and maintain its licenses, registrations,
rights and franchises; (c) not declare, set aside or pay any dividend or make
any distribution with respect to its membership interests or redeem, purchase,
or otherwise acquire any such membership interests; (d) not enter into any
material contracts, obligations, commitments or agreements (including without
limitation any material modification or amendment to any such contract,
commitment or agreement) other than in the ordinary course of business; (e) not
sell, dispose of or otherwise transfer or encumber any assets, except in the
ordinary course of business consistent with past practice; (f) not increase the
compensation, benefits or any other form of remuneration to its officers or
employees, other than in connection with promotions and performance reviews in
accordance with past practice, and not award any bonuses or other extraordinary
compensation to any officers or employees, except such as are paid in full in
cash prior to the Closing; (g) maintain in full force and effect all insurance
policies in effect on the date hereof or replacement policies providing
comparable coverage if available on commercially reasonable terms; (h) not
authorize for issuance, issue or obligate itself to issue any membership
interests or any options, warrants, convertible securities or other rights to
acquire any membership interests; (i) pay and discharge all liabilities when due
and not accelerate the collections of receivables beyond their normal, stated
terms; and (j) not knowingly take any action that would (i) adversely affect its
ability to obtain any necessary approvals of any third parties or any
governmental authorities required for the transactions contemplated hereby or
materially increase the period of time necessary to obtain such approvals, or
(ii) adversely affect its ability to perform its covenants and agreements under
this Agreement or any other Transaction Agreement.
6.7. Access to Information. Each entity in the AKD Group shall
afford, and the Denali Members shall cause Denali to afford, GCI and its
accountants, counsel and other representatives reasonable access during normal
business hours prior to the Closing Date to (a) all of their financial
statements, properties, books, contracts, commitments and records and (b) all
other information concerning their business and assets as GCI may reasonably
request. No information or knowledge obtained after the date hereof in any
investigation pursuant to this Section 6.7 shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the Parties to consummate the transactions contemplated hereby.
6.8. Cooperation. Each of the Parties, upon the reasonable
request from time to time of any other Party, shall take and cooperate with the
other Parties in taking such actions as may be reasonably necessary or desirable
to consummate the transactions contemplated hereby and to comply with the terms
of this Agreement.
6.9. Announcements. Prior to the Closing, except as may be
required by law or applicable stock exchange rules, no Party to this Agreement
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of the other
Parties, which approval will not be unreasonably withheld or delayed. If GCI
believes that it is required by law or applicable stock exchange rules to make
35
**** CONFIDENTIAL TREATMENT
such a public announcement, it shall promptly advise the other Parties and use
reasonable efforts, consistent with its legal obligations or obligations under
stock exchange rules, to allow the other Parties an opportunity to review and
comment upon the announcement before the announcement is made.
6.10. Use of Proceeds of Interim Capital Loans. All proceeds
from the **** will be used by **** for **** to be made by **** by ****, which
****. **** will not make **** on the **** following the **** without ****.
SECTION 7
CLOSING DELIVERIES
7.1. Of AKD, Parent and the AKD Members. At the Closing, AKD,
Parent and the AKD Members shall make the following deliveries, unless waived by
GCI:
(a) Parent and each AKD Member shall deliver a
counterpart of the Operating Agreement, duly executed by such Person and duly
executed by Fire Lake.
(b) AKD shall deliver to GCI an amended version of
Schedule 1.3 and Schedule 4.1 of the Operating Agreement reflecting the AKD
Common Units issued to GCI pursuant to Sections 2.3 and 2.4.
(c) Parent and each AKD Member shall deliver instruments
of assignment in form and substance reasonably satisfactory to GCI transferring
to AKD the number of AKD Common Units to be redeemed by AKD from Parent or such
AKD Member pursuant to Section 2.4, with full warranty of title, duly executed
by such Person.
(d) AKD shall deliver to Parent and the AKD Members cash
or immediately available funds, by wire transfer as contemplated by Section 2.4
(e) The AKD Members shall cause Fire Lake to deliver a
counterpart of the Management Agreement, duly executed by Fire Lake.
(f) AKD shall deliver evidence in form and substance
reasonably satisfactory to GCI that the Management Agreement between AKD and
Poplar Associates LLC has been terminated effective as of the Closing Date,
without Liability or further obligation of AKD.
(g) AKD shall deliver a counterpart of the Management
Agreement, duly executed by AKD.
(h) AKD shall deliver payoff letters in form and
substance reasonably satisfactory to GCI with respect to any Liabilities of AKD
that are to be paid off at the Closing with the GCI capital contributions made
pursuant to Section 2.3.
(i) AKD, Parent and the AKD Members shall deliver
counterparts of any other Transaction Agreements to which AKD, Parent or the AKD
Members are a party, duly executed by such Party.
36
(j) AKD shall deliver an opinion of The Bogatin Law
Firm, PLC, counsel to AKD, the AKD Members and the Denali Members, covering the
matters set forth on the attached Exhibit C. Such opinion shall be dated as of
the Closing Date and shall be in form and substance reasonably satisfactory to
GCI and its counsel.
(k) AKD shall deliver an opinion of Lukas, Nace,
Gutierrez & Sachs, Chartered, counsel to AKD, the AKD Members and the Denali
Members, covering the matters set forth on the attached Exhibit D. Such opinion
shall be dated as of the Closing Date and shall be in form and substance
reasonably satisfactory to GCI and its counsel.
(l) AKD, Parent and each AKD Member shall deliver a
certificate signed on behalf of AKD, Parent or such AKD Member by an authorized
person, confirming that the conditions precedent to the obligations of GCI under
Section 8.2.2 have been fulfilled, insofar as those conditions relate to the
representations and warranties made by or to the obligations and covenants of
AKD, Parent or such AKD Member.
(m) AKD shall deliver the certificate regarding wireless
telephone subscribers contemplated by Section 3.5.4.
(n) AKD shall deliver a Non-Competition Agreement
executed by each of the persons specified in Schedule 7.1(n) in the form
attached as Exhibit E.
(o) AKD shall deliver such certificates or other
documents as may be reasonably requested by GCI, including without limitation
certificates of legal existence, good standing and certified charter documents
from the Alaska Department of Commerce, Community, and Economic Development and
certificates of officers or member AKD with respect to minutes, resolutions,
bylaws and any other relevant matters concerning the authorization of the
transactions contemplated hereby.
7.2. Of the Denali Members. At the Closing, each Denali Member
shall make the following deliveries, unless waived by GCI:
(a) Each Denali Member shall deliver instruments of
assignment in form and substance reasonably satisfactory to GCI transferring to
GCI such Denali Member's Denali Interest, with full warranty of title, duly
executed by such Denali Member.
(b) The Denali Members shall cause Denali to deliver
instruments of assignment in form and substance reasonably satisfactory to GCI
transferring to AKD the Denali Licenses, with full warranty of title, duly
executed by Denali.
(c) Each Denali Member shall deliver counterparts of any
other Transaction Agreements to which such Denali Member is a party, duly
executed by such Denali Member.
(d) Each Denali Member shall deliver a certificate
signed by such Denali Member on behalf of such Denali Member by an authorized
person, confirming that the conditions precedent to the obligations of GCI under
37
Section 8.2.3 have been fulfilled, insofar as those conditions relate to the
representations and warranties made by or to the obligations and covenants of
such Denali Member.
(e) The Denali Members shall deliver such certificates
or other documents as may be reasonably requested by GCI, including without
limitation certificates of legal existence, good standing and certified charter
documents from the Alaska Department of Commerce, Community, and Economic
Development and certificates of officers or member Denali with respect to
minutes, resolutions, bylaws and any other relevant matters concerning the
authorization of the transactions contemplated hereby.
7.3. Of GCI. At the Closing, GCI shall make the following
deliveries, unless waived by the AKD Members' Agent and the Denali Members'
Agent:
(a) GCI shall deliver to the Denali Members cash or
immediately available funds, by wire transfer as contemplated by Section 2.1.
(b) GCI shall deliver to AKD cash or immediately
available funds, by wire transfer as contemplated by Section 2.3.
(c) GCI shall deliver to AKD instruments of assignment
in form and substance reasonably satisfactory to the AKD Members' Agent
transferring to AKD the Denali Interest purchased by GCI pursuant to Section
2.1, with full warranty of title, duly executed by GCI.
(d) GCI shall deliver to AKD cash or immediately
available funds, by wire transfer as contemplated by Section 2.4.
(e) GCI shall deliver counterparts of any other
Transaction Agreements to which GCI a party, duly executed by GCI.
(f) GCI shall deliver a certificate signed by GCI by an
authorized officer, confirming that the conditions precedent to the obligations
of AKD, the AKD Members and the Denali Members under Section 8.1.2 have been
fulfilled.
(g) GCI shall deliver such certificates or other
documents as may be reasonably requested by the AKD Members' Agent or the Denali
Members' Agent, including without limitation certificates of legal existence,
good standing and certified charter documents from the Alaska Department of
Commerce, Community, and Economic Development and certificates of officers of
GCI with respect to minutes, resolutions, bylaws and any other relevant matters
concerning the authorization of the transactions contemplated hereby.
SECTION 8
CONDITIONS PRECEDENT
8.1. Conditions to Obligations of AKD, Parent, the AKD Members
and the Denali Members The obligations of AKD, Parent, the AKD Members and the
Denali Members to consummate the transactions contemplated by this Agreement are
subject to the satisfaction, prior to or contemporaneously with the Closing, of
the following conditions, which may be waived in whole or in part by a written
38
instrument signed by the AKD Members' Agent and the Denali
Members' Agent:
8.1.1. Closing Deliveries by GCI. GCI shall have
tendered delivery of all items required to be delivered by GCI under Section 7.
8.1.2. Representations; Covenants; Closing Certificates.
The representations and warranties of GCI contained in Section 5, if qualified
by reference to materiality, shall be correct and complete, and if not so
qualified, shall be correct and complete in all material respects, as of the
Closing Date. GCI shall have complied with all covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
8.1.3. General. All instruments and legal and corporate
proceedings on the part of GCI in connection with the transactions contemplated
by this Agreement and the other Transaction Agreements shall be reasonably
satisfactory in form and substance to AKD, the AKD Members and the Denali
Members.
8.2. Conditions to Obligations of GCI. The obligations of GCI to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction, prior to or contemporaneously with the Closing, of the
following conditions, which may be waived in whole or in part by GCI in writing:
8.2.1. Closing Deliveries by AKD, Parent, the AKD
Members and the Denali Members. AKD, Parent, the AKD Members and the Denali
Members shall have tendered delivery of all items required to be delivered by
them under Section 7.
8.2.2. Representations and Covenants of AKD, Parent and
the AKD Members. The representations and warranties of AKD, Parent and the AKD
Members contained in Section 3, if qualified by reference to materiality, shall
be correct and complete, and if not so qualified, shall be correct and complete
in all material respects, as of the Closing Date. AKD, Parent and each AKD
Member shall have complied with all covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
8.2.3. Representations and Covenants of the Denali
Members. The representations and warranties of the Denali Members contained in
Section 4, if qualified by reference to materiality, shall be correct and
complete, and if not so qualified, shall be correct and complete in all material
respects, as of the Closing Date. Each Denali Member shall have complied with
all covenants required by this Agreement to be performed or complied with by it
on or prior to the Closing Date.
8.2.4. General. All instruments and legal and limited
liability company proceedings on the part of AKD, Parent, the AKD Members and
the Denali Members in connection with the transactions contemplated by this
Agreement and the other Transaction Agreements shall be reasonably satisfactory
in form and substance to GCI.
39
8.3. Conditions to the Obligations of Each Party. The
obligations of each of the Parties to consummate the transactions contemplated
by this Agreement shall be subject to the following additional conditions:
8.3.1. Regulatory Consents. All Regulatory Consents
shall have been granted without the imposition of any adverse condition on GCI,
any entity in the AKD Group, Denali or any of their Affiliates and all such
Regulatory Consents shall be in full force and effect as of the Closing Date.
8.3.2. Other Consents. Each entity in the AKD Group,
Parent, the AKD Members and the Denali Members shall have given, made or
obtained all notices, consents, approvals, orders, authorizations, declarations
or filings to, of or with any Person required to be given, made or obtained by
any such Party in connection with the execution, delivery and performance of, or
consummation of the transactions contemplated by, any of the Transaction
Agreements.
8.3.3. No Litigation. No temporary restraining order,
preliminary or permanent injunction or other order by any federal or state court
or governmental body prohibiting, preventing or materially restraining the
consummation of the transactions contemplated by this Agreement shall have been
issued and shall not have expired or been withdrawn or reversed and there shall
be no pending or threatened litigation or other proceeding seeking to prohibit,
prevent or materially restrict or impose any material limitations on the
consummation of such transactions. The Parties hereto shall use their
commercially reasonable efforts to cause any such temporary restraining order,
preliminary or permanent injunction or other order to be vacated or lifted as
promptly as possible.
SECTION 9
POST-CLOSING COVENANTS
9.1. Further Assurances. Each of the Parties, before, at and
after the Closing Date, upon the reasonable request from time to time of any
other Party and without further consideration, shall do each and every act and
thing as may be necessary or reasonably desirable to fully and effectively
consummate, evidence and confirm the transactions contemplated hereby,
including: (a) executing, acknowledging and delivering assurances, assignments,
powers of attorney and other documents and instruments; (b) furnishing
information and copies of documents, books and records; (c) filing reports,
returns, applications, filings and other documents and instruments with
governmental authorities; (d) assisting in responding to any inquiry or claim of
any Person with respect to a transaction occurring prior to the Closing; (e)
assisting in good faith in any litigation, threatened litigation or claim and
cooperating therein with other Parties and their advisors and representatives,
including providing relevant documents and evidence and maintaining
confidentiality in connection with such litigation or threatened litigation or
claims, in each case, other than litigation, threatened litigation or claims in
which the Party requesting such cooperation is adverse to the Party from whom
such cooperation is requested; and (f) cooperating with the other Parties (at
such other Parties' expense except as provided in this Agreement) in exercising
any right or pursuing any claim, whether by litigation or otherwise, other than
rights and claims running against the Party from which such cooperation is
requested.
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9.2. Announcements. Following the Closing, except as may be
required by law, no Party to this Agreement shall issue any press release or
make any public announcement relating to the subject matter of this Agreement
without the prior written approval of the other Parties, which approval will not
be unreasonably withheld or delayed. If GCI believes that it is required by law
to make such a public announcement, it shall promptly advise the other Parties
and use reasonable efforts, consistent with its legal obligations, to allow the
other Parties an opportunity to review and comment upon the announcement before
the announcement is made.
SECTION 10
INDEMNIFICATION
10.1. Indemnification by AKD, Parent and the AKD Members.
Subject to the limitations set forth in this Section 10, AKD, Parent and the AKD
Members hereby agree, jointly and severally, to indemnify and hold harmless GCI,
AKD, any employee benefit plan of GCI or AKD and each of their respective
officers, directors, employees and Affiliates (each, in such capacity, a "GCI
Indemnitee"), from, against and in respect of any and all Adverse Consequences
arising from, or otherwise related to, directly or indirectly, any of the
following:
(a) Any breach of any representation or warranty made by
AKD, Parent or the AKD Members in this Agreement or any other Transaction
Agreement (as each such representation or warranty would be read if all
qualifications as to materiality or knowledge or words of similar import were
deleted therefrom); and
(b) Any breach or default in performance by AKD, Parent
or any AKD Member of any covenant or other agreement in this Agreement or any
other Transaction Agreement.
10.2. Indemnification by the Denali Members. Subject to the
limitations set forth in this Section 10, the Denali Members hereby agree,
jointly and severally, to indemnify and hold harmless each GCI Indemnitee from,
against and in respect of any and all Adverse Consequences arising from, or
otherwise related to, directly or indirectly, any of the following:
(a) Any breach of any representation or warranty made by
the Denali Members in this Agreement or any other Transaction Agreement (as each
such representation or warranty would be read if all qualifications as to
materiality or knowledge or words of similar import were deleted therefrom); and
(b) Any breach or default in performance by any Denali
Member of any covenant or other agreement in this Agreement or any other
Transaction Agreement.
10.3. Indemnification by GCI. Subject to the limitations set
forth in this Section 10, GCI hereby agrees to indemnify and hold harmless AKD,
Parent, the AKD Members and the Denali Members, and each of their respective
officers, directors, employees and Affiliates, from, against and in respect of
any and all Adverse Consequences arising from, or otherwise related to, directly
or indirectly, any of the following:
(a) Any breach of any representation or warranty made by
GCI in this Agreement or any other Transaction Agreement (as each such
representation or warranty would be read if all qualifications as to materiality
41
**** CONFIDENTIAL TREATMENT
or knowledge or words of similar import were deleted therefrom); and
(b) Any breach or default in performance by GCI of any
covenant or other agreement in this Agreement or any other Transaction
Agreement.
10.4. Survival; Time Limits for Indemnification. The
representations and warranties made in this Agreement, or in any certificate or
other document delivered pursuant to this Agreement or in connection with this
Agreement, will survive the Closing Date as follows (even if the damaged party
knew or had reason to know of any misrepresentation or breach of warranty at the
time of Closing): (a) the representations and warranties contained in Sections
3.1, 3.2, 3.3.2, 3.9.2, 4.1, 4.2, 4.3 and 4.9.2 hereof shall not terminate and
shall survive the Closing Date indefinitely; (b) the representations and
warranties contained in Sections 3.4.4, 3.6, 3.7, 3.8, 4.4.4, 4.6, 4.7 and 4.8
hereof shall survive the Closing Date for a period of three years and shall
terminate on the third anniversary of the Closing Date; and (c) all other
representations and warranties in this Agreement or in any certificate or other
document delivered pursuant to this Agreement or in connection with this
Agreement survive the Closing Date for a period of two years and shall terminate
on the second anniversary of the Closing Date. The covenants of the Parties made
in this Agreement will survive the Closing Date indefinitely. Each Party shall
promptly notify the others of any facts or other circumstances of which such
Party becomes aware or has any knowledge that could give rise to a claim for
indemnification under this Agreement by any Party. No Party will have any
obligation to indemnify any Person pursuant to this Agreement with respect to
any breach of a representation or warranty unless a notice of such breach is
given to the Party against whom indemnification is sought on or prior to the
last day of the applicable survival period, except that if a Party has a
reasonable basis to believe that an indemnifiable claim will arise and gives
notice to the other Party concerning such matter within the survival period,
then all rights of such Party to seek indemnification with respect to such
matter will survive the expiration of such period for a period of 180 days. If
an indemnifiable claim has not arisen prior to the expiration of that 180-day
period but the Party continues to have a reasonable basis to believe that an
indemnifiable claim will arise and gives notice to such effect to the other
party prior to the end of such 180-day period, then all rights of the Party to
seek indemnification with respect to such matter will survive for one additional
period of 180 days. If an indemnifiable claim does not arise prior to the end of
the second 180-day period, the rights of the Party to seek indemnification will
terminate at the expiration thereof. If a Party is obligated to indemnify
another Party against a particular breach, the indemnity obligation shall extend
to all Adverse Consequences, whether occurring before or after the survival
period.
10.5. Basket and Cap.
10.5.1. Tipping Basket. AKD, Parent, the AKD Members and
the Denali Members (as a group) will have no obligation to indemnify any GCI
Indemnitee from and against any Adverse Consequences under Section 10.1 or 10.2
until the GCI Indemnitees (as a group) have suffered Adverse Consequences in the
aggregate amount of $**** or more arising from, or otherwise related to,
directly or indirectly, any of the items set forth in Section 10.1 or 10.2. If
and when the aggregate of such Adverse Consequences exceeds $****, the GCI
Indemnitees shall be entitled to indemnification against all Adverse
Consequences incurred under Section 10.1 or 10.2, including the initial $**** of
Adverse Consequences.
42
**** CONFIDENTIAL TREATMENT
10.5.2. Indemnification Cap. The aggregate
indemnification obligations of AKD, Parent, the AKD Members and the Denali
Members under Sections 10.1 and 10.2 shall not exceed the sum of (x) $**** plus
(y) the aggregate purchase price for the AKD Common Units purchased by GCI from
AKD pursuant to Section 2.4.
10.5.3. Exceptions. Notwithstanding anything to the
contrary in this Agreement, there shall be no limitation on any GCI Indemnitee's
right to indemnification from and against any Adverse Consequences arising
directly or indirectly out of (a) any breach of any representation, warranty or
covenant of AKD, Parent, an AKD Member or a Denali Member that involves an
intentional misrepresentation or the commission of fraud by AKD, Parent or such
AKD Member or Denali Member or (b) any act or omission or other matter arising
prior to Closing that involves a claim by a third party for material
misrepresentation, fraud, gross negligence or intentional misconduct, and each
GCI Indemnitee shall have all remedies available to it at law and in equity with
respect to any such breach, act, omission or matter.
10.6. Defense of Claims. The procedures to be followed with
respect to the defense and settlement of any claim made by a Third Party which,
if true, would give rise to a right on the part of a Party to be indemnified
against resulting Adverse Consequences (an "Indemnitee"), in whole or in part,
under this Section 10 (a "Claim") shall be as follows:
(a) Unless in the reasonable judgment of the Party
seeking indemnification under this Section 10 (i) there is a conflict between
the positions of the Party against whom indemnification is sought under this
Section 10 (the "Indemnifying Party") and the Indemnitee in conducting the
defense of such Claim or (ii) legitimate legal or business considerations would
require the Indemnitee to defend or respond to such Claim in a manner different
from the Indemnifying Party, the Indemnifying Party shall, by giving notice
thereof to the Indemnitee confirming the Indemnifying Party's obligation under
this Section 10 to indemnify the Indemnitee in respect of such Claim, be
entitled to assume and control such defense with counsel chosen by it. The
Indemnitee shall be entitled to participate therein after such assumption, but
the costs of such participation (other than the costs of providing witnesses or
documents at the request of the Indemnifying Party or in response to legal
process) following such assumption shall be at the expense of the Indemnitee.
Upon assuming such defense, the Indemnifying Party shall have full right to
enter into any compromise or settlement which is dispositive of the matter
involved; provided that, except for the settlement of a Claim that involves no
obligation of the Indemnitee other than the payment of money for which full
indemnification is provided hereunder, the Indemnifying Party shall not settle
or compromise any Claim without the prior written consent of the Indemnitee,
which consent will not be unreasonably withheld or delayed; and provided,
further, that the Indemnifying Party may not consent to entry of any judgment or
enter into any settlement in respect of a Claim which does not include an
unconditional release of the Indemnitee from all liability in respect of such
Claim.
(b) With respect to a Claim as to which the Indemnifying
Party does not have the right to assume the defense under Section 10.6(a) or
shall not have exercised its right to assume the defense, the Indemnitee shall
assume and control the defense of such Claim with counsel chosen by it and the
Indemnifying Party shall be obligated to pay all reasonable attorneys' fees and
expenses of the Indemnitee incurred in connection with such defense. The
Indemnifying Party shall be entitled to participate in the defense of such Claim
43
at its own expense. Notwithstanding the foregoing, the Indemnitee shall not be
required to defend any Claim under this Section 10.6(b) unless (i) the
Indemnifying Party confirms its obligation under this Section 10 to indemnify
the Indemnitee in respect of such Claim by written notice to the Indemnitee and
(ii) if requested by the Indemnitee, the Indemnifying Party provides reasonable
assurance to the Indemnitee of the Indemnifying Party's financial ability to
indemnify the Indemnitee against the costs of defense and any liability that may
result from such Claim, including providing a bond or other security therefor if
reasonably requested by the Indemnitee. If the Indemnitee is not required to
defend any Claim under the immediately preceding sentence, it shall owe no
duties to the Indemnifying Party with respect to such Claim, and may defend,
fail to defend or settle such Claim without affecting its right to indemnity
hereunder. If the Indemnitee is required to defend any such Claims under this
Section 10.6(b), it shall not settle or compromise the Claim without the prior
written consent of the Indemnifying Party, which consent will not be
unreasonably withheld or delayed.
(c) If in the reasonable judgment of the Indemnitee it
would be materially harmed or otherwise prejudiced by not entering into a
proposed settlement or compromise as to which the Indemnifying Party withholds
consent, the Indemnitee may enter into such settlement or compromise, but such
settlement or compromise shall not be conclusive as to the existence or amount
of the liability of the Indemnifying Party to the Indemnitee or any Third Party.
(d) Both the Indemnifying Party and the Indemnitee shall
cooperate fully with one another in connection with the defense, compromise or
settlement of any Claim, including without limitation making available to the
other all pertinent information and witnesses within its control at reasonable
intervals during normal business hours.
SECTION 11
TERMINATION
11.1. Right to Terminate. The parties may terminate this
Agreement as provided below:
(a) GCI, the AKD Members' Agent and the Denali Members'
Agent may terminate this Agreement by mutual written consent at any time prior
to the Closing.
(b) GCI may terminate this Agreement by giving written
notice to the AKD Members' Agent and the Denali Members' Agent at any time prior
to the Closing (i) in the event AKD, any AKD Member or any Denali Member has
breached any representation, warranty or covenant contained in this Agreement in
a way that would result in the nonfulfillment of the conditions to the
obligations of GCI hereunder, GCI has notified such Party of the breach, and the
breach has not been cured within 10 days after the notice of breach or such
longer period as agreed by the parties or (ii) if the Closing has not occurred
on or before June 1, 2007 because of the failure of any condition precedent to
the obligations of GCI to consummate the Closing (unless the failure results
primarily from GCI breaching any representation, warranty or covenant contained
in this Agreement).
44
(c) The AKD Members' Agent or the Denali Members' Agent
may terminate this Agreement by giving written notice to GCI at any time prior
to the Closing (i) in the event GCI has breached any representation, warranty or
covenant contained in this Agreement in a way that would result in the
nonfulfillment of the conditions to the obligations of AKD, the AKD Members and
the Denali Members hereunder, the AKD Members' Agent or the Denali Members'
Agent has notified GCI of the breach, and the breach has not been cured within
10 days after the notice of breach or such longer period as agreed by the
parties or (ii) if the Closing has not occurred on or before June 1, 2007
because of the failure of any condition precedent to the obligations of AKD,
Parent, the AKD Members or the Denali Members to consummate the Closing (unless
the failure results primarily from AKD, any AKD Member or any Denali Member
breaching any representation, warranty or covenant contained in this Agreement).
11.2. Effect of Termination. The termination of this Agreement
by a party pursuant to Section 11.1(b) or (c) will in no way limit any
obligation or liability of any other Party based on or arising from a breach or
default by such other Party with respect to any of its representations,
warranties, covenants or agreements contained in this Agreement prior to the
termination, and the terminating party will be entitled to seek all relief to
which it is entitled under applicable law.
11.3. Specific Performance. In view of (a) the complexities and
uncertainties in measuring actual damages to be sustained by reason of the
failure of a Party to perform this Agreement strictly in accordance with the
specific terms hereof, and (b) the uniqueness of the transactions contemplated
herein, each of the Parties acknowledges and agrees that: (i) the remedy at law
for a breach of this Agreement would be inadequate, and (ii) the other Parties
would be irreparably damaged if any Party fails to perform the provisions of
this Agreement strictly in accordance with their specific terms. Therefore, it
is expressly agreed that, in addition to any other remedy to which a
nonbreaching Party may be entitled, at law or in equity, the nonbreaching
Parties shall be entitled to injunctive relief to prevent breaches of the
provisions of this Agreement and to specifically enforce the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction thereof.
SECTION 12
MISCELLANEOUS
12.1. Arbitration. The Parties will attempt in good faith to
resolve any controversy or claim arising out of or relating to this Agreement or
any other Transaction Agreement through discussions between the senior
management of the Parties. If these discussions are unsuccessful, the Parties
agree that any action asserting a claim by one Party against any other Party or
Parties hereto (collectively, the "Disputing Parties") arising out of or
relating to this Agreement or any other Transaction Agreement shall, on the
written notice by one Disputing Party to the others, be submitted to binding
arbitration to be held in Seattle, Washington. The arbitration shall be
conducted by and in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The Disputing Parties shall hold an initial
meeting within thirty (30) days from receipt of notice from the requesting Party
of a request for arbitration. Unless otherwise agreed in writing, they will
45
jointly appoint a mutually acceptable arbitrator not affiliated with any of the
Disputing Parties. If they are unable to agree upon such appointment within
thirty (30) days of the initial meeting, the Disputing Parties shall obtain an
odd numbered list of not less than five (5) potential arbitrators from the
Superior Court for the Third Judicial District, State of Alaska. Each Disputing
Party shall alternatively strike a single name from the list until only one name
remains, with such person to be the arbitrator. The Disputing Party requesting
the arbitration shall strike the first name. Each Disputing Party shall pay an
equal share of the costs related to the arbitration, unless the arbitrator's
decision provides otherwise. Each Disputing Party shall bear its own costs to
prepare for and participate in the arbitration. Each Disputing Party shall
produce at the request of any other Disputing Party, at least thirty (30) days
in advance of the hearing, all documents to be submitted at the hearing and such
other documents as are relevant to the issues or likely to lead to relevant
information. The arbitrator shall promptly render a written decision, in
accordance with Alaska law and supported by substantial evidence in the record.
The prevailing Party shall be entitled to recover reasonable attorneys' fees,
costs, charges and expended or incurred therein, if the arbitrator's decision so
provides. Failure to apply Alaska law, or entry of a decision that is not based
on substantial evidence in the record, shall be additional grounds for modifying
or vacating an arbitration decision. Judgment on any arbitration award shall be
entered in any court of competent jurisdiction. In any subsequent arbitration,
the decision in any prior arbitration of this Agreement shall not be deemed
conclusive of the rights among the parties hereunder.
12.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Alaska without giving
effect to any choice or conflict of laws rule or provision that would cause the
application of the domestic substantive laws of any other jurisdiction.
12.3. Notices. All notices and other communications required or
permitted hereunder shall be in writing (including any facsimile transmission or
similar writing), and may be given by any means selected by the sender. Each
such notice or other communication shall be effective (i) if sent by facsimile
to the recipient's fax number given below, when such facsimile is transmitted
and the sender's facsimile machine confirms transmission, (ii) if sent by
reputable overnight courier to the recipient's address given below, one Business
Day after being delivered to such courier or (iii) if sent by any other means,
when actually received.
To GCI:
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Attention : Corporate Counsel
Fax No. : (907) 868-5676
With a copy to:
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Attention : General Manager & Executive Vice President
Fax No. : (907) 868-5676
46
To AKD, Parent or any AKD Member:
Pacificom Holdings, LLC
c/o Wireless Partners
5350 Poplar Avenue, Suite 875
Memphis, TN 38117
Attention: Stephen M. Roberts
Fax No.: (901) 763-3369
With a copy to:
The Bogatin Law Firm, PLC
1661 International Place Drive, Suite 300
Memphis, Tennessee 38120-1431
Attention: Jack S. Magids
Fax No. (901) 767-2803
To any Denali Member:
Pacificom Holdings, LLC
c/o Wireless Partners
5350 Poplar Avenue, Suite 875
Memphis, TN 38117
Attention: Stephen M. Roberts
Fax No.: (901) 763-3369
With a copy to:
The Bogatin Law Firm, PLC
1661 International Place Drive, Suite 300
Memphis, Tennessee 38120-1431
Attention: Jack S. Magids
Fax No. (901) 767-2803
Any Party may change its address or facsimile number to be used for purposes of
this Section 12.3 by notice to the other Parties; provided that no such change
shall require any Party to give any notice to any AKD Member other than to the
AKD Members' Agent or to any Denali Member other than to the Denali Members'
Agent.
12.4. Entire Agreement, Assignability, Etc. This Agreement
(including the Schedules and Exhibits attached hereto) (i) constitutes the
entire agreement, and supersedes all other prior agreements and understandings,
both written and oral, among the Parties, or any of them, with respect to the
transactions and matters contemplated hereby, including the Amended and Restated
Memorandum of Understanding dated January 26, 2006 among GCI, AKD and Denali, as
47
amended, and (ii) is not intended to confer upon any Person other than the
Parties hereto any rights or remedies hereunder. No Party may assign its rights
or delegate its duties under this Agreement without the consent of the other
Parties, and any purported assignment or delegation without such consent shall
be null and void.
12.5. Counterparts. This Agreement may be executed in any number
of counterparts, no one of which need be signed by all Parties, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument. This Agreement may be executed or delivered by facsimile.
12.6. Representations as to Knowledge. Whenever any statement in
this Agreement is made "to its knowledge" or words of similar intent or effect,
(a) an individual will be deemed to have knowledge of a particular fact or other
matter if (i) that individual is actually aware of that fact or matter, or (ii)
a prudent individual could be expected to discover or otherwise become aware of
that fact or matter in the course of conducting a reasonably comprehensive
investigation regarding the accuracy of any representation or warranty contained
in this Agreement; and (b) a Person (other than an individual) will be deemed to
have knowledge of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, general partner,
registered agent, general manager, director of engineering, executor or trustee
of that Person (or in any similar capacity) has, or at any time had, knowledge
of that fact or other matter (as set forth in (i) and (ii) above), and any such
individual (and any Party to this Agreement) will be deemed to have conducted a
reasonably comprehensive investigation regarding the accuracy of the
representations and warranties made herein by that Person or individual.
12.7. Headings, Terms. The section headings contained in this
Agreement are inserted for convenience only and will not affect in any way the
meaning or interpretation of this Agreement. Defined terms are applicable to
both singular and plural forms. All pronouns will be deemed to refer to the
masculine, feminine or neuter, as the identity of the Person may require. The
singular or plural includes the other, as the context requires or permits. The
word include (and any variation) is used in an illustrative sense rather than a
limiting sense. The word day means a calendar day. All references to "Sections"
are to sections of this Agreement unless indicated otherwise.
12.8. Amendments. This Agreement may be amended only by a
written instrument signed by GCI, the AKD Members' Agent and the Denali Members'
Agent.
12.9. Waivers. No waiver by any Party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, will be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence, and
no waiver will be effective unless set forth in writing and signed by the Party
against whom such waiver is asserted.
12.10. Severability. The invalidity or unenforceability of any
term or provision of this Agreement shall not affect the validity or
enforceability of the remaining terms and provisions hereof.
48
12.11. Remedies Cumulative. Subject to Section 12.1, all
remedies of the Parties under this Agreement or any other Transaction Agreement
are cumulative with each other and with any other remedies available at law, in
equity or by contract. Any decision to pursue one remedy shall not prevent a
Party from pursuing any other remedy at the same or any subsequent time.
12.12. Expenses. Except as otherwise provided in this Agreement,
each Party will bear all costs and expenses (including all legal, accounting ad
tax related fees and expenses) incurred by it in connection with this Agreement
and the transactions contemplated hereby.
12.13. Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed as
if drafted jointly by the Parties and no presumption or burden of proof will
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. The Parties intend that each representation,
warranty and covenant contained herein will have independent significance. If
any Party breaches any representation, warranty or covenant contained herein in
any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached will not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty or covenant.
12.14. AKD Members' Agent and Denali Members' Agent. Pacificom
shall act as the "AKD Members' Agent," and Pacificom shall act as the Denali
Members' Agent under this Agreement. Parent and each AKD Member hereby
authorizes and appoints the AKD Members' Agent, and each Denali Member hereby
authorizes and appoints the Denali Members' Agent, as his or its exclusive agent
and attorney-in-fact to act on behalf of such Person with respect to all matters
which are the subject of this Agreement, including, without limitation, (a)
receiving or giving all notices, instructions, other communications, consents or
agreements that may be necessary, required or given hereunder, (b) agreeing to
any amendment of this Agreement or any other Transaction Agreement or waiving
any right or remedy of Parent and the AKD Members or the Denali Members (as the
case may be) hereunder or thereunder, and (c) asserting, settling, compromising,
waiving or defending, or determining not to assert, settle, compromise or
defend, (i) any claim which Parent or any AKD Member or Denali Member (as the
case may be) may assert, or have the right to assert, against GCI, or (ii) any
claim which GCI may assert, or have the right to assert, against Parent or any
AKD Member or any Denali Member (as the case may be). Neither Parent nor any AKD
Member shall act with respect to any of the matters which are the subject of
this Agreement except through the AKD Members' Agent, and no Denali Member shall
act with respect to any of the matters which are the subject of this Agreement
except though the Denali Members' Agent.
12.15. Incorporation of Exhibits. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
12.16. No Tax Advice. Each Party hereby acknowledges that any
tax advice express or implicit in the provisions of this Agreement is not
intended or written to be used, and cannot be used, by any taxpayer for the
purpose of avoiding penalties that may be imposed on any taxpayer by the
49
Internal Revenue Service. Each Party should seek advice based on its particular
circumstances from an independent tax advisor.
50
IN WITNESS WHEREOF, the Parties have duly executed this
Reorganization Agreement as of the date first above written.
GENERAL COMMUNICATION, INC.
By: /s/ William C. Behnke
Name: William C. Behnke
Title: Senior Vice President
ALASKA DIGITEL, LLC
By: /s/ William M Yardell, III
Name: William M Yardell, III
Title: President
AKD HOLDINGS, LLC
By: /s/ William M Yardell, III
Name: William M Yardell, III
Title: President
PACIFICOM HOLDINGS, LLC
By: /s/ William M Yardell, III
Name: William M Yardell, III
Title: Chief Manager
RED RIVER WIRELESS, LLC
By: /s/ William M Yardell, III
Name: William M Yardell, III
Title: Chief Manager
GRAYSTONE HOLDINGS, LLC
By: /s/ J. Michael Keenan
Name: J. Michael Keenan
Title: Exec. V.P.
51
Exhibit A
[This exhibit does not contain information material to an investment decision
that is not otherwise disclosed in the agreement and is not included in the
filing of the agreement with the SEC as being not material to investor
decisions.]
Exhibit B
SECOND AMENDED AND RESTATED OPERATING AGREEMENT
OF
ALASKA DIGITEL, LLC
This Second Amended and Restated Operating Agreement is made as of the [ ] day
of [ ], 2006 (the "Effective Date"), by and among General Communication, Inc.,
an Alaska corporation ("GCI"), Pacificom Holdings, L.L.C., a Delaware limited
liability company ("Pacificom"), Red River Wireless, LLC, a Delaware limited
liability company ("Red River"), Graystone Holdings, LLC, an Alaska limited
liability company ("Graystone"), AKD Holdings, LLC, a Delaware limited liability
company ("AKD Holdings") and Fire Lake Partners, L.L.C., an Alaska limited
liability company ("Fire Lake"), such parties being all of the Members of Alaska
Digitel, LLC, an Alaska limited liability company (the "Company"), on the
Effective Date.
In consideration of the mutual covenants contained in this Agreement and
intending to be legally bound, the parties agree as follows:
ARTICLE 1. FORMATION AND DEFINITIONS
1.1 Formation. The Company was formed on September 17, 1996 by filing
Articles of Organization with the Alaska Department of Commerce, Community, and
Economic Development under the Act.
1.2 Name. The name of the Company is Alaska Digitel, LLC. The business
of the Company will be conducted under such name, and any other name or names as
the Company may from time to time determine.
1.3 Members and Units. The name and address of each Member and its
number of Units held as of the Effective Date are set forth in Schedule 1.3.
1.4 Office and Agent.
[a] The registered office of the Company in Alaska is 508 West 2nd Avenue,
Third Floor, Anchorage, Alaska 99501 and its registered agent is John H.
Tindall. The Company may change its registered office or registered agent
in Alaska in accordance with the Act.
[b] The principal office of the Company is at 3127 Commercial Drive,
Anchorage, Alaska 99501. The Company may change its principal office upon
the affirmative Vote of Members owning more than 50% of the outstanding
Units.
1.5 Foreign Qualification. The Company will apply for a certificate of
authority to do business in any other state or jurisdiction, as required or
appropriate from time to time, and will file such other certificates and
instruments as may be required or appropriate from time to time in connection
with its formation, existence and operation.
1.6 Term. The Company became effective as a limited liability company on
the date its Articles of Organization were filed with the Alaska Department of
Commerce, Community, and Economic Development and will continue in effect,
unless and until a Dissolution occurs and Articles of Dissolution are filed in
accordance with the Act.
1.7 Effective Date; Amendment and Restatement. This Agreement will
become effective on the Effective Date and as of such date, amends and restates
in its entirety the Amended and Restated Operating Agreement of the Company
dated March 31, 2004, as amended by amendments dated April 7, 2004, January 9,
2006 and [ ], 2006 (as amended, the "Former Operating Agreement"), which shall
be null, void and of no further force or effect.
1.8 Definitions. The following terms used in this Agreement have the
corresponding meanings set forth below:
Act: the Alaska Revised Limited Liability Company Act, as amended from
time to time.
Additional Contribution: a capital contribution (other than the Initial
Contribution) that a Member makes to the Company with respect to
any Units issued to such Member, as described in Section 4.2.
Adjusted Capital Account Deficit: as to any Member, the deficit balance
(if any) in such Member's Capital Account as of the end of the
Fiscal Year, after [a] crediting to such Capital Account any
amount that such Member is obligated to restore pursuant to this
Agreement or is deemed obligated to restore pursuant to the
minimum gain chargeback provisions of the ss. 704(b) Regulations
and [b] charging to such Capital Account any adjustments,
allocations or distributions described in the qualified income
offset provisions of the ss. 704(b) Regulations that are required
to be charged to such Capital Account pursuant to this Agreement.
Adjusted Initial Capital Account: as defined in Section 14.1[a].
Affiliate: with respect to any Person, any Person that directly or
indirectly Controls, is Controlled by, or is under common Control
with, such Person. Notwithstanding the foregoing, for purposes of
this Agreement (except for purposes of the definition of Third
Party), neither the Company nor any of its direct or indirect
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subsidiaries will be deemed to be an Affiliate of any Member.
Agreement: this Operating Agreement, also known as a limited liability
company agreement, as amended from time to time.
AKD Call Period: as defined in Section 14.1[d].
AKD Holdings: as defined in the preamble.
AKD Holdings Contribution Agreement: as defined in Section 4.1.
AKD Holdings Member: AKD Holdings and any successor to or Transferee
of Units from AKD Holdings who is admitted as a Member pursuant
to Article 13. If at any time there is more than one AKD Holdings
Member, any allocations and Distributions to the AKD Holdings
Member under this Agreement or any other rights or obligations of
the AKD Holdings Member under this Agreement will be allocated
among such AKD Holdings Members based upon the number of Units
owned by each AKD Holdings Member as a percentage of the total
number of Units owned by all AKD Holdings Members.
AKD Net Asset Value as defined in the Reorganization Agreement.
AKD Redemption Price: as defined in the Reorganization Agreement.
Annual Budget: shall mean, as at any time, the Company's then-effective
annual operating and capital budget approved or otherwise in
effect pursuant to Section 7.5.
Appraised Unit Value as defined in Section 14.3.
Articles: the Articles of Organization referred to in Section 1.1, as
amended from time to time.
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Authorized Valuation Methodology: as defined in Section 14.3[a].
Available Cash: as of any relevant date, the aggregate cash or cash
equivalents of the Company on hand or on deposit with banks or
financial institutions or held in any other form by the Company,
less [i] the current portion of indebtedness of the Company, [ii]
payments required to be paid by the Company within one year after
the date of calculation, and [iii] reasonable reserves for
working capital and contingent liabilities of the Company as
reasonably determined by the Board of Managers.
Bankruptcy: a Person will be deemed bankrupt if: [a] any proceeding is
commenced against such Person as "debtor" for any relief under
bankruptcy or insolvency laws, or laws relating to the relief of
debtors, reorganizations, civil rehabilitations, arrangements,
compositions, or extensions, or such Person becomes subject to
procedures for provisional or final attachment in respect of all
or a material portion of its assets, and [i] such proceeding is
not dismissed or stayed within 120 days after such proceeding has
commenced, or [ii] an order for relief against such Person is
granted, or [b] such Person commences any proceeding for relief
under bankruptcy or insolvency laws or laws relating to the
relief of debtors, reorganizations, civil rehabilitations,
arrangements, compositions, or extensions.
Board of Managers: the governing body of the Company that has the power
and authority set forth in Section 7.1, comprised of all of the
Managers, as and when acting in their capacity as the Board of
Managers of the Company as provided in this Agreement.
Budget Committee: as defined in Section 7.5.
Business Day: any day other than a Saturday, a Sunday or a day on which
banking institutions in Anchorage, Alaska are required or
authorized to be closed.
Call Notice: as defined in Section 14.1[a].
Capital Account: the capital account of a Member established and
4
maintained in accordance with Section 4.3.
Capital Contribution: any contribution (or deemed contribution) of
money or property by a Member to the Company that is either an
Initial Contribution or an Additional Contribution.
Change of Control: with respect to any subject Person means the first
to occur of the following events: [i] any sale, lease, exchange,
or other transfer (in one or a series of related transactions) of
all or substantially all of the assets of the subject Person to
any Person or group of related Persons as determined pursuant to
Section 13(d) of the Securities Exchange Act of 1934, other than
to one or more of its Affiliates; or [ii] any event pursuant to
which any Person other than any Affiliates of the subject Person
acquires beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934) of more
than 50% of the combined voting power of the then-outstanding
voting securities of the subject Person; provided that no Change
of Control with respect to the Company shall occur as a result of
any of the transactions contemplated by the Reorganization
Agreement.
Code: The Internal Revenue Code of 1986, as amended from time to time,
and the corresponding provisions of any subsequent revenue laws.
Commercially Reasonable Efforts: reasonable efforts made by any party
that will not require such party to undertake extraordinary or
unreasonable measures to obtain any consents, approvals or other
authorizations or to achieve other desired results, including
requiring such party to make any material expenditures (other
than normal filing fees or the like) or to accept any material
changes in the terms of a contract, license or other instrument
for which a consent, approval or authorization is sought.
Common Units: Units denominated as such and having the rights set forth
in Section 3.2.
Company: as defined in the preamble.
Confidential Information: as defined in Section 15.3[b].
5
Control: including with correlative meanings, the terms "controlling",
"controlled by" and "under common control with", as used with
respect to any Person means 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.
Damages: as defined in Section 9.1.
Dissolution: the happening of any of the events described in Section
11.1.
Distribution: the amount of any money or the Fair Market Value of any
property distributed by the Company to a Member as an operating
or liquidating Distribution in accordance with this Agreement,
reduced by the amount of any Company liabilities assumed by the
distributee or to which the distributed property is subject.
EBITDA Multiplier: as defined in the Management Agreement and as
adjusted from time to time pursuant to Section 5.1(d) of the
Management Agreement.
Effective Date: as defined in the preamble.
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. The Fair
Market Value any asset will be the fair market value thereof as
determined in good faith by the Board of Managers or, if
requested by Notice given by any Member, as determined in
accordance with the valuation procedure set forth in Section
14.3, which determination will be conclusive and binding;
provided that any determination of the Fair Market Value of Units
for purposes of determining the Appraised Unit Value of such
Units will be governed in all respects by the provisions of
Article 14.
15% Coupon: as defined in Section 14.1[a].
Fire Lake: as defined in the preamble.
6
Fire Lake Member: Fire Lake and any successor to or Transferee of
Units from Fire Lake who is admitted as a Member pursuant to
Article 13. If at any time there is more than one Fire Lake
Member, any allocations and Distributions to the Fire Lake Member
under this Agreement or any other rights or obligations of the
Fire Lake Member under this Agreement will be allocated among
such Fire Lake Members based upon the number of Units owned by
each Fire Lake Member as a percentage of the total number of
Units owned by all Fire Lake Members.
First GCI Call Period: as defined in Section 14.1[a].
Fiscal Year: the fiscal and taxable year of the Company, including both
12-month and short fiscal or taxable years; until changed as
provided in this Agreement, each Fiscal Year will begin on
January 1 of each year and end on December 31 of such year,
provided that the first Fiscal Year will begin on the Effective
Date and the last Fiscal Year will end on the date on which
Liquidation of the Company is completed.
Former Operating Agreement: as defined in Section 1.7.
GAAP: generally accepted accounting principles as in effect from time
to time in the United States of America, consistently applied.
GCI: as defined in the preamble.
GCI Member: GCI and any successor to or Transferee of Units from GCI
who is admitted as a Member pursuant to Article 13. If at any
time there is more than one GCI Member, any allocations and
Distributions to the GCI Member under this Agreement or any other
rights or obligations of the GCI Member under this Agreement will
be allocated among such GCI Members based upon the number of
Units owned by each GCI Member as a percentage of the total
number of Units owned by all GCI Members.
GCI Requested Financial Information: as defined in Section 10.5.
7
Governmental Approvals: any consent, approval or authorization of,
notice to, declaration of, or filing with, any Governmental
Authority.
Governmental Authority: any foreign, domestic, federal, territorial,
state or local governmental authority, quasi-governmental
authority, court, government or self-regulatory organization,
commission, tribunal, organization or any regulatory,
administrative or other agency, or any political or other
subdivision, department or branch of any of the foregoing.
Graystone: as defined in the preamble.
Graystone Member: Graystone and any successor to or Transferee of Units
from Graystone who is admitted as a Member pursuant to Article
13. If at any time there is more than one Graystone Member, any
allocations and Distributions to the Graystone Member under this
Agreement or any other rights or obligations of the Graystone
Member under this Agreement will be allocated among such
Graystone Members based upon the number of Units owned by each
Graystone Member as a percentage of the total number of Units
owned by all Graystone Members.
Indemnified Persons: as defined in Section 9.1.
Initial Contribution: the initial Capital Contribution made (or deemed
made) by a Member to the Company with respect to any Units issued
to such Member, as described in Schedule 4.1.
IRS Notice: as defined in Section 3.4[b].
Lien: a mortgage, lien, pledge, collateral assignment, charge, title
retention agreement, levy, execution, attachment, garnishment,
security interest or other encumbrance.
Limited Owner: as defined in Section 11.3.
Liquidation: the process of winding up and terminating the Company
after its Dissolution.
Losses: as defined in Section 5.1.
8
Management Agreement: The Management Agreement entered into by and
between the Company and Fire Lake as of the date hereof in the
form attached hereto as Exhibit C.
Manager: an individual appointed to serve on the Board of Managers in
accordance with Section 7.2.
Members: each of the GCI Member, the Pacificom Member, the Red River
Member, the Graystone Member, the Fire Lake Member and any other
Person admitted as a Member pursuant to Article 13.
Non-GCI Members: each of the AKD Holdings Member, the Pacificom Member,
the Red River Member and the Graystone Member.
Notice: any written notice actually delivered pursuant to Section 16.12
or deemed delivered pursuant to Section 16.13.
Original Profits Interest Units: as defined in Section 3.3[a].
Pacificom: as defined in the preamble.
Pacificom Member: Pacificom and any successor to or Transferee of Units
from Pacificom who is admitted as a Member pursuant to Article
13. If at any time there is more than one Pacificom Member, any
allocations and Distributions to the Pacificom Member under this
Agreement or any other rights or obligations of the Pacificom
Member under this Agreement will be allocated among such
Pacificom Members based upon the number of Units owned by each
Pacificom Member as a percentage of the total number of Units
owned by all Pacificom Members.
Person: an individual, corporation, partnership, limited liability
company, trust, unincorporated organization or other entity.
Presumed Tax Liability: for any Member for a Fiscal Year and any Fiscal
Year prior thereto, an amount equal to the product of [a] the
amount of taxable income allocated to such Member for that Fiscal
9
Year and all Fiscal Years prior thereto and [b] the Presumed Tax
Rate.
Presumed Tax Rate: the highest combined federal and state income tax
rate applicable during such Fiscal Year to a natural person
residing in Alaska, taxable at the highest marginal federal
income tax rate and the highest marginal Alaska income tax rates,
determined without regard to the adjustments provided for in
Sections 67 and 68 of the Code.
Proceeding: any threatened, pending, ongoing or completed action, suit
or proceeding, whether formal or informal, and whether civil,
administrative, investigative or criminal.
Profits: as defined in Section 5.1.
Profits Interest Units: Units denominated as such and having the rights
set forth in Section 3.3.
Put Notice: as defined in Section 14.2[a].
Qualified Appraiser as defined in Section 14.3[a].
Red River: as defined in the preamble.
Red River Member: Red River and any successor to or Transferee of
Units from Red River who is admitted as a Member pursuant to
Article 13. If at any time there is more than one Red River
Member, any allocations and Distributions to the Red River Member
under this Agreement or any other rights or obligations of the
Red River Member under this Agreement will be allocated among
such Red River Members based upon the number of Units owned by
each Red River Member as a percentage of the total number of
Units owned by all Red River Members.
Regulations: the Treasury Regulations (including temporary or proposed
regulations) promulgated under the Code, as amended from time to
time (including corresponding provisions of succeeding
regulations).
Regulatory Allocations: as defined in Section 5.12.
10
Reorganization Agreement: the Reorganization Agreement dated as of June
[ ], 2006 among the initial Members, the Company, and the members
of Denali PCS, LLC.
Representatives: as defined in Section 15.3[a].
Safe Harbor Units: as defined in Section 3.4[b].
Second GCI Call Period: as defined in Section 14.1[b].
Tax Distribution: as defined in Section 6.5.
Tax Matters Partner: as defined in Section 10.9.
Third Party: means, with respect to any Person, any other Person that
is not an Affiliate of such Person.
Transfer: a direct or indirect sale, exchange, assignment, transfer or
other disposition of a Unit or any interest therein (including
the creation of a Lien on all or any part of a Unit), whether
voluntary, involuntary or by operation of law.
Transferee: a Person to whom a Unit is Transferred in compliance with
this Agreement.
Transferor: a Person who Transfers a Unit in compliance with this
Agreement.
Unit: as defined in Section 3.1.
Vote: the action of the Members made in accordance with the voting
requirements set forth in Article 7 or any other applicable
provision of this Agreement, either at a meeting or by written
consent without a meeting.
Withdrawal: the occurrence of an event which terminates membership in
the Company, as provided in Section 11.2.
ARTICLE 2. PURPOSES AND POWERS
2.1 Principal Purposes. Subject to the provisions of this Agreement, the
purpose of the Company is [a] to provide wireless communication services; and
11
**** CONFIDENTIAL TREATMENT
[b] to do any and all other acts or things that may be incidental, advisable or
necessary to carry on the business of the Company as contemplated by this
Agreement.
2.2 Other Purposes. The Company may engage in activities related or
incidental to its principal purpose, as well as any other lawful business or
investment activity as may be approved by the unanimous Vote of the Members.
2.3 Powers. Subject to the provisions of this Agreement, the Company has
all the powers granted to a limited liability company under the Act, as well as
all powers necessary or convenient to or for the furtherance of the purpose
specified in Section 2.1 that are not expressly prohibited to the Company by
applicable law.
ARTICLE 3. UNITS
3.1 Classes of Units. The ownership of the Company shall be divided into
and represented by Units. There shall be two classes of Units: Common Units and
Profits Interest Units. References in this Agreement to "Units" shall include
all Units outstanding as of the relevant date, without regard to class. The
Company shall be authorized to issue a total of 3,830 Units, consisting of ****
Common Units and **** Profits Interest Units, subject to the adjustments
provided for in Sections 3.2 and 3.3 below. The Units owned by each Member are
set forth in Schedule 1.3 (subject to the adjustments contemplated by Section
3.2 and 3.3 below). Each time Units are issued, cancelled, forfeited or
transferred in accordance with the terms and conditions of this Agreement, the
Company shall attach a revised Schedule 1.3 to this Agreement and send a copy
thereof to all Members. No consent of any Member shall be needed to make such
revisions to Schedule 1.3.
3.2 Common Units.
[a] Issuance. The Company has issued on the Effective Date **** Common
Units to the GCI Member, **** Common Units to AKD Holdings, **** Common
Units to the Pacificom Member, **** Common Units to the Red River Member
and **** Common Units to the Graystone Member for the Capital Contributions
set forth in Section 4.1; provided that Section 2.3 of the Reorganization
Agreement provides for an adjustment to the number of Common Units issued
on the Effective Date to the GCI Member based on the value of the Company
as of the Effective Date as determined in accordance with the terms and
conditions of the Reorganization Agreement (such value is referred to in
the Reorganization Agreement as the AKD Net Asset Value); and provided
further that Section 2.4 of the Reorganization Agreement provides that at
the closing of the transactions contemplated by the Reorganization
Agreement, GCI shall purchase from the Company an additional **** Common
Units, with the proceeds from the sale of such additional Common Units to
be used by the Company to redeem a like number of Common Units first from
the Pacificom Member, the Red River Member and the Graystone Member and
then from the AKD Holdings Member. The number of Common Units held by the
Non-GCI Members and the GCI Member following the transactions and
adjustments contemplated by Sections 2.2, 2.3 and 2.4 of the Reorganization
Agreement shall automatically be adjusted as appropriate to reflect that
total number of Common Units finally determined to be held by the Non-GCI
12
**** CONFIDENTIAL TREATMENT
Members and the GCI Member pursuant to the terms and conditions of Sections
2.2, 2.3 and 2.4 of the Reorganization Agreement. The adjustments to the
number of Common Units issued to the GCI Member based on the AKD Net Asset
Value pursuant to Section 2.3 of the Reorganization Agreement shall be made
to be effective retroactively as of the date of the original issuance. The
Company shall make appropriate revisions to Schedule 1.3 to reflect the
number of Common Units held by the Non-GCI Members or the GCI Member
following the transactions contemplated by Sections 2.2, 2.3 and 2.4 of the
Reorganization Agreement, which revisions do not need to be approved by the
Members. Exhibit D provides some examples of the operation of the Sections
2.2, 2.3 and 2.4 of the Reorganization Agreement and the accompanying
adjustments to the total number of Common Units held by each Member. Except
as set forth above, the Company shall have no authority to issue additional
Common Units.
[b] Rights. The holders of the Common Units shall have the voting and
economic rights set forth in the other Articles of this Agreement.
3.3 Profits Interest Units.
[a] Issuance. The Company has issued on the Effective Date a total of ****
Profits Interest Units to Fire Lake (the "Original Profits Interest
Units"); provided that if the transactions and adjustments contemplated by
Sections 2.2, 2.3 and 2.4 of the Reorganization Agreement result in the
Company having more or less than **** Common Units issued and outstanding,
then the number of the Original Profits Interest Units shall be
automatically adjusted to equal a number of Profits Interest Units equal to
[i] the total adjusted number of Common Units issued and outstanding
divided by **** (rounded to two decimal places), minus [ii] the total
adjusted number of Common Units issued and outstanding. Exhibit D provides
some examples of the operation of the Sections 2.2, 2.3 and 2.4 of the
Reorganization Agreement and the accompanying adjustments to the number of
Original Profits Interest Units. Except for the adjustment contemplated by
Section 3.3[c] below, the Company shall have no authority to grant
additional Profits Interest Units.
[b] Rights. Profits Interest Units shall constitute an interest in the
future Profits and Losses of the Company and shall not entitle the holder
thereof to any portion of the value of the Company as of the date that the
Profits Interest Units are issued. The holders of Profits Interest Units
shall have the voting and economic rights set forth in the other Articles
of this Agreement. It is the intent of the Members and the Company that
Profits Interest Units shall represent an interest in the Company that
qualifies as a "profits interest" within the meaning of IRS Revenue
Procedure 93-27, 1993-2 C.B. 343, or any successor authority thereto, and
such profits interest shall have no Capital Account as of the date that any
such Profits Interest Units are issued.
[c] Adjustment of Profits Interest Units. In the event that the Management
Agreement terminates for any reason, GCI exercises its rights to purchase
the Units of the Non-GCI Members and the Fire Lake Member pursuant to
Section 14.1 below or if there is a Change of Control transaction with
13
respect to the Company, then subject to any forfeiture provisions contained
in Section 14.1 below, the number of Profits Interest Units issued to Fire
Lake pursuant to Section 3.3[a] shall be deemed to have been retroactively
adjusted as of the date of the original issuance to equal the amount of the
Original Profits Interest Units multiplied by the applicable EBITDA
Multiplier. By way of example, assuming that the number of Original Profits
Interest Units remains at 230 pursuant to Section 3.3[a], then if there is
an adjusting event and the EBITDA Multiplier is equal to 1.5, then Fire
Lake will be deemed to have owned 345 Profits Interest Units from the
Effective Date. The Company will then make appropriate adjustments to the
Capital Accounts of the Members to reflect this adjustment, which
adjustments will not need to be approved by the Members. The Company shall
also make appropriate revisions to Schedule 1.3, which revisions will not
need to be approved by the Members.
3.4 Code Section 83(b) Election and Safe Harbor.
[a] General. Each Member that acquires an interest in the Company that is
subject to vesting agrees that within 30 days after such Person becomes a
Member, the Person who is performing the services to which the vesting
requirement relates shall file an election with the Internal Revenue
Service under Section 83(b) of the Code and the regulations promulgated
thereunder with respect to that interest (and with respect to any other
interest in the Company that is subject to vesting based upon services to
be performed by that Person).
[b] Safe Harbor Election. By executing this Agreement, each Member
authorizes and directs the Company to elect to have the "Safe Harbor"
described in the proposed Revenue Procedure set forth in Internal Revenue
Service Notice 2005-43 (the "IRS Notice") apply to any Units transferred to
a service provider by the Company on or after the effective date of such
Revenue Procedure (or any substantially similar Revenue Procedure or other
guidance issued by the Internal Revenue Service) in connection with
services provided to the Company. For purposes of making such Safe Harbor
election, the Board of Managers is hereby designated as the "partner who
has responsibility for federal income tax reporting" by the Company and,
accordingly, that execution of such Safe Harbor election by the Board of
Managers constitutes execution of a "Safe Harbor Election" in accordance
with Section 3.03(1) of the IRS Notice with respect to such Units ("Safe
Harbor Units"). The Company and each Member hereby agree to comply with all
requirements of the Safe Harbor described in the IRS Notice (and any
substantially similar Revenue Procedure or other guidance issued by the
Internal Revenue Service), including, without limitation, the requirement
that each Member shall prepare and file all federal income tax returns
reporting the income tax effects of each Safe Harbor Units issued by the
Company in a manner consistent with the requirements of the IRS Notice (an
any substantially similar Revenue Procedure or other guidance issued by the
Internal Revenue Service).
[c] Failure to Comply. Any Member or former Member that fails to comply
with the requirements set forth in Section 3.4[a] or Section 3.4[b] shall
indemnify and hold harmless the Company and each adversely affected Member
and former Member from and against any and all losses, liabilities, taxes,
damages, judgments, fines, costs, penalties, amounts paid in settlement and
14
reasonable out-of-pocket costs and expenses incurred in connection
therewith (including, without limitation, costs and expenses of suits and
proceedings, and reasonable fees and disbursements of counsel), in each
case resulting from such Member's or former Member's failure to comply with
such requirements. The Board of Managers may offset distributions to which
a Person is otherwise entitled under this Agreement against such Person's
obligation to indemnify the Company and any other Person under this Section
3.4[c] (and any amount so offset with respect to such Person's obligation
to indemnify a Person other than the Company shall be paid over to such
other Person by the Company). A Member's obligations to comply with the
requirements of Section 3.4[a] or Section 3.4[b] and to indemnify the
Company and any Member or former Member under this Section 3.4[c] shall
survive such Member's ceasing to be a Member of the Company and/or the
termination, dissolution, liquidation and winding up of the Company, and,
for purposes of this Section 3.4[c], the Company shall be treated as
continuing in existence. The Company and any Member or former Member may
pursue and enforce all rights and remedies it may have against each Member
or former Member under this Section 3.4[c], including [i] instituting a
lawsuit to collect such indemnification and contribution, with interest
calculated at a rate equal to the prime rate plus three percentage points
per annum (but not in excess of the highest rate per annum permitted by
law), compounded on the last day of each fiscal quarter and [ii] specific
performance and/or immediate injunctive or other equitable relief from any
court of competent jurisdiction (without the necessity of showing actual
money damages, or posting any bond or other security) in order to enforce
or prevent any violation of the provisions of Section 3.4[a] or Section
3.4[b].
[d] Certain Amendments. Each Member authorizes the Board of Managers to
amend Section 3.4[a] and Section 3.4[b] to the extent necessary to achieve
substantially the same tax treatment with respect to any interest in the
Company transferred by the Company to a service provider in connection with
services provided to the Company as set forth in Section 4 of the IRS
Notice (e.g., to reflect changes from the rules set forth in the IRS Notice
in subsequent Internal Revenue Service guidance), provided that such
amendment is not materially adverse to any Member (as compared with the
after-tax consequences that would result if the provisions of the IRS
Notice applied to all interests in the Company transferred to a service
provider by the Company in connection with services provided to the
Company).
3.5 Reacquired Units. Any Units reacquired by the Company shall
automatically be cancelled and shall not be deemed issued or outstanding. Units
reacquired by the Company shall not be available for reissuance.
3.6 Certificates. The Company may issue certificates representing any or
all of the outstanding Units, in the discretion of the Board of Managers.
ARTICLE 4. CAPITAL OF THE COMPANY
4.1 Initial Contributions. By execution of this Agreement: [a] AKD
Holdings acknowledges and agrees that all of the Class A Membership Interest and
Class B Membership Interest and accompanying Class A Points, Class B Points and
Voting Points (as such terms are defined in the Former Operating Agreement)
granted to Pacificom, Red River and Graystone pursuant to the Former Operating
15
**** CONFIDENTIAL TREATMENT
Agreement and transferred to AKD Holdings pursuant to that certain Contribution
Agreement dated as of the date hereof by and among the Non-GCI Members (the "AKD
Holdings Contribution Agreement") are hereby converted and reclassified into the
**** Common Units (and accompanying voting and economic rights set forth in this
Agreement) issued to AKD Holdings pursuant to Section 3.2[a]; [b] Red River
acknowledges and agrees that all of its Class A Membership Interest and
accompanying Class A Points and Voting Points (as such terms are defined in the
Former Operating Agreement) granted pursuant to the Former Operating Agreement
and not transferred to AKD Holdings pursuant to the AKD Holdings Contribution
Agreement are hereby converted and reclassified into the **** Common Units (and
accompanying voting and economic rights set forth in this Agreement) issued to
Red River pursuant to Section 3.2[a]; [c] Pacificom acknowledges and agrees that
all of its Class A Membership Interest and accompanying Class A Points and
Voting Points (as such terms are defined in the Former Operating Agreement)
granted pursuant to the Former Operating Agreement and not transferred to AKD
Holdings pursuant to the AKD Holdings Contribution Agreement are hereby
converted and reclassified into the **** Common Units (and accompanying voting
and economic rights set forth in this Agreement) issued to Pacificom pursuant to
Section 3.2[a]; and [d] Graystone acknowledges and agrees that all of its Class
B Membership Interest and accompanying Class B Points and Voting Points (as such
terms are defined in the Former Operating Agreement) granted pursuant to the
Former Operating Agreement and not transferred to AKD Holdings pursuant to the
AKD Holdings Contribution Agreement are hereby converted and reclassified into
the **** Common Units (and accompanying voting and economic rights set forth in
this Agreement) issued to Graystone pursuant to Section 3.2[a].
Contemporaneously with or prior to the execution of this Agreement, GCI will
make or will have made the Capital Contribution to the Company contemplated to
be made by GCI with respect to its Units pursuant to Section 2.3 of the
Reorganization Agreement. The agreed Fair Market Value of GCI's contribution as
specified in Schedule 4.1 will be credited to GCI's Capital Account with respect
to such Units, and such agreed Fair Market Value will be deemed to be the amount
of GCI's Initial Capital Contribution. The Capital Account of the Non-GCI
Members will be adjusted as of the Effective Date pursuant to Treasury
Regulation ss. 1.704-1(b)(2)(iv)(f)-(g) which will result in the Capital Account
balances specified in Schedule 4.1, and such agreed amounts will be deemed to be
the amount of such Non-GCI Member's Initial Capital Contribution.
Notwithstanding the forgoing, Schedule 4.1 shall be amended as appropriate to
adjust the Non-GCI Members' and the GCI Member's Capital Account as appropriate
to reflect [i] the adjustments made to the AKD Net Asset Value pursuant to
Section 2.3 of the Reorganization Agreement and the resulting change in the
number of Common Units owned by the GCI Member pursuant to the terms and
conditions of Section 2.3 of the Reorganization Agreement and [ii] the issuance
of Common Units and accompanying redemptions pursuant to Section 2.4 of the
Reorganization Agreement and any adjustments made to the AKD Redemption Price
(as defined in the Reorganization Agreement) pursuant to Section 2.4 of the
Reorganization Agreement and any resulting change in the number of Common Units
owned by the Members. Exhibit D provides some examples of the operation of
Sections 2.2, 2.3 and 2.4 of the Reorganization Agreement and the accompanying
adjustments to the Capital Accounts of each Member.
16
4.2 Additional Contributions Except as required by law and except for
the adjustments contemplated by Section 4.1 above, no Additional Contributions
will be required or permitted to be made by any Member except upon the unanimous
Vote of the Members.
4.3 Capital Accounts. A Capital Account will be maintained for each
Member and credited, charged and otherwise adjusted as required by ss. 704(b) of
the Code and the ss. 704(b) Regulations. Each Member's Capital Account will be:
[a] Credited with [i] the amount of money contributed by the Member as an
Initial Contribution or an Additional Contribution, [ii] the Fair Market
Value of assets contributed by the Member as an Initial Contribution or
Additional Contribution (net of liabilities that the Company assumes or
takes subject to that were not taken into account in determining the Fair
Market Value of such assets), [iii] the Member's allocable share of Profits
and [iv] all other items properly credited to such Capital Account as
required by the ss. 704(b) Regulations;
[b] Charged with [i] the amount of money distributed to the Member by the
Company, [ii] the Fair Market Value of assets distributed to the Member by
the Company (net of liabilities that the Member assumes or takes subject to
that were not taken into account in determining the Fair Market Value of
such assets), [iii] the Member's allocable share of Losses and [iv] all
other items properly charged to such Capital Account as required by the ss.
704(b) Regulations; and
[c] Otherwise adjusted as required by the ss. 704(b) Regulations.
Any unrealized appreciation or depreciation with respect to any asset
distributed in kind will be allocated among the Members in accordance with
the provisions of Article 4 as though such asset had been sold for its Fair
Market Value on the date of Distribution and the Members' Capital Accounts
will be adjusted to reflect both the deemed realization of such
appreciation or depreciation and the Distribution of such property.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
the ss. 704(b) Regulations and will be interpreted and applied in a manner
consistent with such Regulations and any amendment or successor provision
thereto. The Members will cause appropriate modifications to be made if
unanticipated events might otherwise cause this Agreement not to comply
with the ss. 704(b) Regulations, so long as such modifications do not cause
a material change in the relative economic benefits of the Members under
this Agreement.
4.4 Adjustments. The Members intend to comply with the ss. 704(b)
Regulations in all respects, and the Capital Accounts of the Members will be
adjusted to the full extent that the ss. 704(b) Regulations may apply (including
applying the concepts of qualified income offsets and minimum gain chargebacks).
17
4.5 Transfer. If any Units are Transferred in accordance with this
Agreement, the Capital Account of the Transferor that is attributable to the
Transferred Units will carry over to the Transferee.
4.6 Market Value Adjustments. Appropriate Capital Account adjustments
will be made upon any Transfer of any Units, including those that apply upon the
constructive liquidation of the Company under ss. 708(b) of the Code, all in
accordance with the ss. 704(b) Regulations. Similarly, if optional basis
adjustments are made under ss. 734 or ss. 743 of the Code, appropriate Capital
Account adjustments will be made as required by the ss. 704(b) Regulations.
4.7 No Withdrawal of Capital. Except as specifically provided in this
Agreement, no Member will be entitled to withdraw all or any part of its Capital
Contribution from the Company prior to the Company's Dissolution and Liquidation
or, when such withdrawal of capital is permitted, to demand a Distribution of
property other than money or as otherwise provided in this Agreement.
4.8 No Interest on Capital. No Member will be entitled to receive
interest on such Member's Capital Account or Capital Contribution.
4.9 No Drawing Accounts. The Company will not maintain a drawing account
for any Member. All Distributions to Members will be governed by Article 6
(relating to Distributions not in Liquidation of the Company) and by Article 12
(relating to Liquidation).
ARTICLE 5. PROFITS AND LOSSES
5.1 Determination. The terms "Profits" and "Losses" mean, respectively,
the net profits and losses of the Company determined for each Fiscal Year in
accordance with the method of accounting adopted by the Company for federal
income tax purposes, except that such net profit or loss will be determined [a]
by including as an item of income any income that is exempt from taxation, [b]
by deducting as an expense any expenditure of the Company not deductible in
computing its taxable income and not properly chargeable to any Capital Account,
or deemed not deductible in computing its taxable income and not properly
chargeable to any Capital Account in accordance with the ss. 704(b) Regulations
and [c] by calculating the gain, loss, depreciation and amortization on property
that is reflected in the Capital Accounts at a book basis different from the
basis of such property for federal income tax purposes based on the book basis
of such property in accordance with the ss. 704(b) Regulations. Any allocation
of Profits or Losses will be considered a pro rata allocation of each item
entering into the computation of Profits and Losses.
5.2 Allocation of Profits and Losses Generally. Except as otherwise
provided in this Agreement, the Profits or Losses of the Company, including
items of income, gain, loss and deduction for each Fiscal Year, will be
allocated to the Members in proportion to their Units, without distinction as to
class or series; provided that [a] no portion of the Profits or Losses
attributable to the realization of the value of the Company as of the date that
a Profits Interest Unit is issued shall be allocated to that Profits Interest
Unit and [b] no portion of any item of income, gain, loss or deduction
18
recognized prior to the issuance of a Unit shall be allocated to that Unit. The
intent of the foregoing is to provide that each Profits Interest Unit shall
participate to the same extent as a Common Unit in Profits and Losses
attributable to operations of the Company after the date that the Profits
Interest Unit is issued, but that a Profits Interest Unit shall participate to
the same extent as a Common Unit in gain from the disposition of all or
substantially all assets of the Company only to the extent that such gain
reflects an increase in the fair market value of the assets of the Company from
the date of the issuance of the Profits Interest Unit.
5.3 Nonrecourse Deductions. Losses attributable to any Company
nonrecourse liability (for which no Member or related Person (within the meaning
of the ss. 752 Regulations) bears the economic risk of loss) will be allocated
in the same manner as Losses are allocated pursuant to Section 5.2, and Losses
of the Company attributable to any Member nonrecourse liability (that is
nonrecourse to the Company, but for which one or more Members or related Persons
bear the economic risk of loss) will be allocated in accordance with the ss.
704(b) Regulations to those Members bearing (or who, because of their
relationship to Persons who bear such economic risk of loss, are deemed to bear)
the economic risk of loss for the liability. The allocation of liabilities to a
property, the determination of nonrecourse deductions, the effect of property
revaluations and all other issues affecting the allocation of nonrecourse
deductions will be determined in accordance with the ss. 704(b) Regulations.
5.4 Minimum Gain Chargeback. Notwithstanding the general rule on
allocation of Profits stated in Section 5.2, if there is a net decrease in
Company minimum gain for any Fiscal Year, each Member will be allocated items of
Profits for such year equal to such Member's share of the net decrease in
Company minimum gain. If there is a net decrease in Member nonrecourse debt
minimum gain for any Fiscal Year, each Member having a share of such minimum
gain will be allocated items of Profits equal to such Member's share of such net
decrease in Company nonrecourse debt minimum gain. The determination of net
decreases in Company minimum gain and Member nonrecourse debt minimum gain,
allocations of such net decreases, exceptions to minimum gain chargebacks and
all other issues affecting the minimum gain chargeback requirements will be
determined in accordance with the ss. 704(b) Regulations.
5.5 Tax Allocations.Allocation of items of income, gain, loss and
deduction of the Company for federal income tax purposes for a Fiscal Year will
be allocated, as nearly as is practicable, in accordance with the manner in
which such items are reflected in the allocations of Profits and Losses among
the Members for such Fiscal Year. To the extent possible, principles identical
to those that apply to allocations for federal income tax purposes will apply
for state and local income tax purposes.
5.6 Qualified Income Offset. Notwithstanding any other provision of this
Agreement to the contrary (except Section 5.4, which will be applied first), if
in any Fiscal Year or other period a Member unexpectedly receives an adjustment,
allocation or Distribution described in the qualified income offset provisions
of the ss. 704(b) Regulations, such Member will be specially allocated items of
income in an amount and manner sufficient to eliminate, to the extent required
19
by the ss. 704(b) Regulations, the Adjusted Capital Account Deficit of such
Member as quickly as possible.
5.7 Limit on Loss Allocations. Notwithstanding the provisions of Section
5.2 or any other provision of this Agreement to the contrary, Losses (or items
thereof) will not be allocated to a Member if such allocation would cause or
increase a Member's Adjusted Capital Account Deficit and will be reallocated to
the Members (other than any such Member to which the limitations of this Section
5.7 apply), subject to the limitations of this Section 5.7.
5.8 ss. 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Company asset under ss. 734(b) or ss. 743(b) of the Code is
required to be taken into account in determining Capital Accounts under the ss.
704(b) Regulations, the amount of the adjustment to the Capital Accounts will be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases the basis), and the gain or loss will be
specially allocated to the Members in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted under the ss. 704(b)
Regulations.
5.9 Contributed Property. All items of gain, loss and deduction with
respect to property that is reflected in the Capital Accounts of the Members at
a basis different from such property's adjusted tax basis will be allocated,
solely for tax purposes, among the Members to take into account the variation
between the adjusted tax basis of the property and the basis reflected in the
Member's Capital Account according to the principles of the ss. 704(c)
Regulations. For example, if there is built-in gain with respect to certain
property at the time of such property's contribution to the Company, upon the
Company's sale of that property the pre-contribution taxable gain (as
subsequently adjusted under the ss. 704(c) Regulations during the period such
property was held by the Company) would be allocated to the contributing Member
(and such pre-contribution gain would not again create a Capital Account
adjustment because the property was credited to Capital Account upon
contribution at its Fair Market Value). Except as limited by the following
sentence, the allocation of tax items with respect to ss. 704(c) property to
Members that do not reflect a basis difference with respect to such property in
their Capital Accounts will, to the extent possible, be equal to the allocation
of the corresponding book items made to such Members with respect to such
property. All tax allocations made under this Section 5.9 will be made in
accordance with ss. 704(c) of the Code, and the method of making such
allocations will be determined by the Members, acting together.
5.10 Tax Credits.To the extent that the federal income tax basis of an
asset is allocated to the Members in accordance with the Regulations promulgated
under ss. 46 of the Code, any tax credit attributable to such tax basis will be
allocated to the Members in the same ratio as such tax basis. With respect to
any other tax credit, to the extent that a Company expenditure gives rise to an
allocation of loss or deduction, any tax credit attributable to such expenditure
will be allocated to the Members in the same ratio as such loss or deduction.
Consistent principles will apply in determining the Members' interests in tax
credits that arise from taxable or non-taxable receipts of the Company. All
allocations of tax credits will be made as of the time such credit arises. Any
20
recapture of a tax credit will be allocated, to the extent possible, to the
Members in the same manner as the tax credit was allocated to them. Except as
otherwise specifically provided in the ss. 704(b) Regulations (such as the
adjustments required when there is an upward or downward adjustment in the tax
basis of investment credit property), allocations of tax credits and their
recapture will not be reflected by any adjustment to Capital Accounts.
5.11 Gross Income Allocation. In the event any Member has a deficit
Capital Account at the end of any Company Fiscal Year that is in excess of the
sum of [i] the amount such Member is obligated to restore to the Company
pursuant to any provision of this Agreement, [ii] the amount such Member is
deemed to be obligated to restore pursuant to the penultimate sentence of
Treasury Regulations Section 1.704-2(g)(1) and [iii] the amount such Member is
deemed to be obligated to restore pursuant to the penultimate sentence of
Treasury Regulations Section 1.704-2(i)(5), each such Member shall be specially
allocated items of Company income and gain in the amount of such excess as
quickly as possible; provided, however, that an allocation pursuant to this
Section 5.11 shall be made only if and to the extent that such Member would have
a deficit Capital Account in excess of such sum after all other allocations
provided for in this Article 5 have been tentatively made as if Section 5.6 and
this Section 5.11 were not in the Agreement.
5.12 Curative Allocations. The allocations set forth in Sections 5.3,
5.4, 5.6, 5.8 and 5.11 (the "Regulatory Allocations") are intended to comply
with certain requirements of the Treasury Regulations. It is the intent of the
Members that, to the extent possible, all Regulatory Allocations shall be offset
either with other Regulatory Allocations or with special allocations of other
items of Company income, gain, loss or deduction pursuant to this Section 5.12.
Therefore, notwithstanding, any other provision of this Article 5 (other than
the Regulatory Allocations), the Board of Managers shall make such offsetting
special allocations of Company income, gain, loss or deduction in whatever
manner it determines appropriate so that, after such offsetting allocations are
made, each Member's Capital Account balance is, to the extent possible, equal to
the Capital Account balance such Member would have had if the Regulatory
Allocations were not part of the Agreement and all Company items were allocated
pursuant to Section 5.2. In exercising its discretion under this Section 5.12,
the Board of Managers shall take into account any future Regulatory Allocations
under Section 5.4 that, although not yet made, are likely to offset Regulatory
Allocations made under Section 5.3.
5.13 Allocation on Transfer. If any Unit is Transferred during any
Fiscal Year of the Company (whether by liquidation or Transfer of a Unit or
otherwise), the books of the Company will be closed as of the effective date of
Transfer. The Profits or Losses attributed to the period from the first day of
such Fiscal Year through the effective date of Transfer will be allocated to the
Transferor and the Profits or Losses attributed to the period commencing on the
day after the effective date of Transfer will be allocated to the Transferee. In
lieu of an interim closing of the books of the Company and with the agreement of
the Transferor and the Transferee, the Company may allocate Profits and Losses
for such Fiscal Year between the Transferor and the Transferee based on a daily
proration of items for such Fiscal Year or any other reasonable method of
allocation (including an allocation of extraordinary Company items, as
determined by the Company, based on when such items are recognized for federal
income tax purposes).
21
ARTICLE 6. DISTRIBUTIONS
6.1 Distributions Generally. Except for liquidating Distributions under
Section 12.3 and except as otherwise provided by Section 6.5, the Company will
make all Distributions of Available Cash to the Members in proportion to their
Units, without distinction as to class, subject to the limitation that
Distributions in respect of Profits Interest Units shall relate only to Profits
earned and increases in value of the Company after the date that such Profits
Interest Units are issued. Except as provided by Section 6.5, the timing and
amount of Distributions shall be determined by the Board of Managers.
6.2 Payment. All Distributions will be made to Members owning Units on
the date of record, such date being the Business Day immediately preceding the
date of Distribution, as reflected on the books of the Company.
6.3 Withholding. If required by the Code or by state or local law, the
Company will withhold any required amount from Distributions to a Member for
payment to the appropriate taxing authority. Any amount so withheld from a
Member will be treated as a Distribution by the Company to such Member. Each
Member will timely file any agreement that is required by any taxing authority
in order to avoid any withholding obligation that otherwise would be imposed on
the Company.
6.4 Distribution Limitations. Notwithstanding any other provision of
this Agreement, the Company will not make any Distribution to the Members if,
after the Distribution, the liabilities of the Company (other than liabilities
to Members on account of their Units) would exceed the Fair Market Value of the
Company's assets. With respect to any property that is subject to a liability
for which the recourse of creditors is limited to the specific property, such
property will be included in assets only to the extent the property's Fair
Market Value exceeds its associated liability, and such liability will be
excluded from the Company's liabilities. Notwithstanding any other provision of
this Agreement, the Company will not make a Distribution to any Member if such
Distribution would cause or increase any Member's Adjusted Capital Account
Deficit.
6.5 Tax Distribution. For each Fiscal Year the Company will, during such
Fiscal Year or the immediately subsequent Fiscal Year, but not later than 90
days following the end of each Fiscal Year, to the extent that there is
Available Cash distribute to each Member, with respect to such Fiscal Year, a
distribution in an amount equal to such Member's Presumed Tax Liability for such
Fiscal Year (a "Tax Distribution"). Any amount distributed pursuant to this
Section 6.5 will be deemed to be an advance distribution of amounts otherwise
distributable to the Members pursuant to Sections 6.1 and will reduce the
amounts that would subsequently otherwise be distributable to the Members
pursuant to such provisions in the order they would otherwise have been
distributable. The Board of Managers may distribute Tax Distributions quarterly
on an estimated basis prior to the end of a Fiscal Year, but if the amounts so
distributed as estimated Tax Distributions exceed the amount of Tax
Distributions to which such Member is entitled to for such Fiscal Year, the
Member will promptly after the end of the Fiscal Year return such excess to the
Company and the excess will be treated as a distribution to such Member pursuant
to Section 6.1, as applicable until it is returned.
22
ARTICLE 7. MANAGEMENT
7.1 Management. Management of the Company will be vested exclusively in
the Board of Managers. Except as otherwise provided in this Agreement: [a] the
Board of Managers has complete and unrestricted power and authority to manage
the business, properties and activities of the Company in its sole and exclusive
discretion, [b] no Person dealing with the Company will be required to inquire
into the authority of the Board of Managers (or any designee of the Board of
Managers) to take any action or make any decision, [c] notwithstanding any
powers granted to members of a limited liability company under the Act, no
Member will take part in the operations, management or control of the Company's
business, transact any business in the Company's name, or have the power to sign
documents for or otherwise bind the Company except for such actions that are
specifically authorized by the Board of Managers or as otherwise provided by
this Agreement, and [d] the Board of Managers has the rights, authority and
powers of a "manager" under the Act with respect to the Company business and
assets as provided in the Act as in effect on the Effective Date. Without
limiting the foregoing, the Board of Managers has all of the responsibilities
and authority of the board of directors of an Alaska business corporation,
subject to the express provisions of this Agreement; provided, that the
reference to Alaska business corporations is not intended and will not be
construed to subject the Company to any restriction or limitation or to subject
the Managers to any duty or liability applicable to Alaska corporations or their
directors that is not otherwise applicable to an Alaska limited liability
company or its managers or agents. Concurrently with the execution of this
Agreement, the Company shall enter into the Management Agreement, pursuant to
which Fire Lake will perform certain management duties for the Company as
described therein. Notwithstanding any other provision of this Agreement to the
contrary, the Company will not take any of the following actions, and neither
the Board of Managers nor Fire Lake acting under the Management Agreement shall
have any authority to take any of the following actions on behalf of the
Company, without the written consent of the GCI Member: [i] cause or permit the
Company to engage in any business other than the business described in Section
2.1; [ii] except as provided in the current Annual Budget, cause or permit the
Company to purchase or otherwise acquire additional assets having an aggregate
cost of $250,000 or more in any transaction or series of related transactions;
[iii] cause or permit the Company to merge or consolidate with any Person; [iv]
except as provided in the current Annual Budget, cause or permit the Company to
sell, lease or otherwise dispose of assets having an aggregate value of $250,000
or more in any transaction or series of related transactions; [v] cause or
permit the Company to engage in, enter into or amend any contract, arrangement
or transaction in which any Member or any Affiliate of a Member has a direct or
indirect interest; [vi] cause or permit the Company to authorize, issue or enter
into any agreement providing for any issuance (contingent or otherwise) of any
additional Units or other securities, except as contemplated by Article 3 above;
[vii] cause or permit the Company to authorize or permit any mandatory or
permissive Additional Contributions or to admit any additional Members (other
than in connection with a Transfer of Units made in accordance with the
provisions of Article 13, which will be governed in all respects by the
provisions of Article 13); [viii] cause or permit the Company to redeem any
Units or make any other extraordinary distributions not contemplated by Article
6, except as contemplated by Article 3 above; [ix] cause or permit the Company
23
to incur or guarantee any indebtedness (other than the incurrence of trade
payables in the ordinary course of business) or incur or guarantee any Lien,
except for indebtedness or Liens provided in the Annual Budget and except for
indebtedness or Liens contemplated by the Reorganization Agreement; [x] cause or
permit the Company to approve any deviation from the Annual Budget then in
effect of 10% or greater from an approved line item or budget category or to
engage in any transaction which has not been budgeted for in the Annual Budget
then in effect; [xi] cause or permit the Company to liquidate, wind up,
dissolve, or cease to continue as an ongoing business concern (other than in
connection with any events of Dissolution specified in Section 11.1, which will
be governed in all respects by the provisions of Section 11.1), effect a
recapitalization or reorganization in any form of transaction, commence any
bankruptcy or insolvency proceeding, acquiesce to the appointment of a receiver,
trustee, custodian or liquidator or admit the material allegations of a petition
filed against the Company in any bankruptcy or insolvency proceeding; [xii]
cause or permit the Company to change from a limited liability company to a
different organizational form; [xiii] cause or permit any direct or indirect
subsidiary of the Company to do any of the foregoing in respect of the
subsidiary; or [xiv] enter into an agreement or otherwise commit to do any of
the foregoing.
7.2 Appointment of Board of Managers. The Board of Managers will
initially consist of five (5) Managers. The number of Managers on the Board of
Managers shall be fixed from time to time by the Board of Managers, but shall
not be less than four Managers or more than eight Managers. The GCI Member shall
at all times have the sole right to appoint and remove one Manager and the AKD
Holdings Member shall have the sole right to appoint and remove the remaining
members of the Board of Managers. The AKD Holdings Member may not appoint as a
Manager, any Person who serves on the board of directors or comparable governing
body of a communications company that competes with GCI. The AKD Holdings Member
will elect a sufficient number of Managers deemed independent from GCI under
applicable laws, regulations or stock exchange rules to allow GCI to comply with
any such applicable laws, regulations or stock exchange rules. The name of the
initial Manager appointed by GCI Member will be John M. Lowber and the names of
the initial Managers appointed by the AKD Holdings Member will be Stephen
Roberts, William M. Yandell III, James D. Lackie and John Tindall. Each Manager
is entitled to appoint an alternate to serve in his or her absence at any
meeting of the Board of Managers. Each Manager will serve on the Board of
Managers until his or her resignation or removal by the Member that appointed
such Manager. Either the GCI Member or the AKD Holdings Member may, at any time,
remove a Manager appointed by such Member and appoint a substitute Manager by
delivering Notice of such removal and appointment to the other Members. Any
vacancy on the Board of Managers resulting from the death, disability or
resignation of a Manager will be filled by the Member that appointed such
Manager. No compensation will be paid to any Manager for serving in such
capacity, except that Managers will be entitled to reimbursement for reasonable
expenses incurred in connection with such service.
7.3 Procedural Requirements -- Meetings Of Members and the Board of
Managers.
[a] Action by Members. Except as otherwise expressly provided in this
Agreement, [i] all actions requiring the approval of the Members will be
deemed approved if Members owning more than 50% of the outstanding Units as
of the record date for the meeting or written consent Vote in favor of
approval, [ii] all Units will vote together as a single voting group, and
[iii] each Unit will have one vote.
24
[b] Action by Board of Managers. Except as otherwise expressly provided in
this Agreement, the act of the majority of the Managers present at a
meeting at which a quorum is present shall be the act of the Board of
Managers.
[c] Meetings of Members and the Board of Managers.
[i] Annual Meeting of Members. An annual meeting of the Members will
be held on such date and at time as may be determined by the
Board of Managers. The purpose of the annual meeting is to review
the Company's operations for the preceding Fiscal Year and to
transact such other business as may come before the meeting. The
failure to hold any annual meeting has no adverse effect on the
continuance of the Company.
[ii] Special Meetings. Special meetings of the Members, for any
purpose or purposes, may be called by the Board of Managers or by
any Member or Members owning at least 10% of the Units then
outstanding.
[iii] Meetings of the Board of Managers. The Board of Managers will
meet from time to time at the request of any Manager.
[iv] Place. The person calling a meeting of Members or of the Board of
Managers may designate the place of the meeting. If the place so
designated for a meeting of Members is not in the Anchorage,
Alaska metropolitan area and for a meeting of the Board of
Managers is not in the Anchorage, Alaska or Memphis, Tennessee
metropolitan area, then such location must be agreed in the case
of a Member meeting, by Members who own more than 50% of the
Units then outstanding, and in the case of a Board of Managers
meeting, by all of the Managers. If no designation is made by a
person calling a meeting of Members or the Board of Managers, the
place of meeting will be the Company's principal place of
business.
[v] Notice. Notice of any Board of Managers or Members meeting must
be given not less than three Business Days nor more than 30 days
before the date of the meeting. Such Notice must state the place,
day and hour of the meeting and, in the case of a special Members
meeting, the purpose for which the meeting is called.
[vi] Waiver of Notice. Any Member or Manager may waive, in writing,
any Notice required to be given to such Member or Manager,
whether before or after the meeting or other event to which such
Notice relates. Attendance by a Member or Manager at a meeting
will constitute a waiver of notice of the meeting, unless the
25
Member or Manager attends the meeting for the sole and express
purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called.
[vii] Record Date. For the purpose of determining Members entitled to
Notice of and to vote at any meeting of Members, or to sign any
written consent, the last Business Day before the day on which
such Notice or consent is first transmitted to the Members will
be the record date. Any such determination of Members entitled to
vote at any meeting of Members will apply to any adjournment of a
meeting.
[viii] Quorum. A quorum at any meeting of Members will consist of
Members who own more than 90% of the outstanding Units on the
record date for the meeting (which Members may be in attendance
in person, by proxy, by telephone or by video conference). A
quorum at any meeting of the Board of Managers will consist of a
majority of the number of directors fixed by the Board of
Managers pursuant to Section 7.2 (which Managers may be in
attendance in person, by proxy, by telephone or by video
conference). Any Board of Managers or Members meeting at which a
quorum is not present may be adjourned to a specified place, day
and hour without further Notice.
[ix] Proxies. At any meeting of Members or the Board of Managers, a
Member or a Manager may vote in person or by written proxy given
to another Member or Manager. Such proxy must be signed by the
Member or Manager, or by a duly authorized attorney-in-fact, and
must be filed with the Company before or at the time of the
meeting. No proxy will be valid after eleven months from the date
of its signing unless otherwise provided in the proxy. Attendance
at the meeting by the Member or Manager giving the proxy will
revoke the proxy during the period of attendance.
[x] Meetings by Telephone or Video. The Members and the Managers may
participate in a meeting by means of conference telephone or
video or similar communications equipment by which all Members or
Managers participating in the meeting can hear each other at the
same time. Such participation will constitute presence in person
at the meeting and waiver of any required Notice. The Company
will take all reasonable steps to ensure that Members and
Managers are able to participate by telephone or video conference
in meetings of Members and meetings of the Board of Managers,
respectively.
[xi] Observers. The Board of Managers will permit any individuals
designated by the GCI Member or the AKD Holdings Member to be
observers at any meetings of the Board of Managers, except that
the AKD Holdings Member can not designate any person to be an
observer if such person serves on the board of directors or
comparable governing body of a communications company that
competes with GCI.
26
[d] Action Without a Meeting. Any action required or permitted to be taken
at a meeting of Members may be taken without a meeting if the action is
evidenced by one or more written consents describing the action taken,
signed by Members whose aggregate Units would enable them to approve the
action at a meeting of the Members at which all Members were present and
voted. Any action required or permitted to be taken at a meeting of
Managers may be taken without a meeting if, and will be effective when, the
action is evidenced by one or more written consents describing the action
taken, signed by all Managers. Action so taken is effective when sufficient
Members or Managers approving the action have signed the consent, unless
the consent specifies a different effective date. If any action is taken by
a written consent that is not signed by all Members, Notice of the action,
accompanied by a copy of the written consent, will be sent to each Member
who did not sign.
7.4 Officers. The Board of Managers may from time to time appoint
executive officers of the Company and designate their authority and duties to
manage the day-to-day operations of the Company. Unless otherwise determined by
the Board of Managers, if the title of an officer is one commonly used for
officers of a business corporation formed under the Alaska Corporation Code, the
assignment of such title will constitute the delegation to such person of the
authorities and duties that are normally associated with that office. Such
officers will take all actions which are necessary and appropriate to conduct
the day-to-day operations of the Company's business, subject to the supervision
of the Board of Managers and the provisions of this Agreement. No compensation
will be paid to any officers for serving in such capacity, unless such
compensation is paid pursuant to an employment agreement approved by all members
of the Board of Managers.
7.5 Annual Budget. The Board of Managers or a committee duly appointed
by the Board of Managers, which committee must include the Manager appointed by
the GCI Member under Section 7.2 (the "Budget Committee") will require the
appropriate officers, employees and representatives of the Company to prepare
and present an Annual Budget for the Company and its subsidiaries at least
ninety (90) calendar days in advance of the beginning of the applicable Fiscal
Year.
[a] Each Annual Budget shall cover a one-year period corresponding to a
Fiscal Year, provided that the first Annual Budget shall cover the 12-month
period commencing January 1, 2006. Each Annual Budget shall include an
income statement prepared on an accrual basis which shall show in
reasonable detail the revenues and expenses projected for the operations of
the Company and its subsidiaries for the forthcoming Fiscal Year and a cash
flow statement which shall show in reasonable detail the receipts and
disbursements projected for the operations of Company and its subsidiaries
for the forthcoming Fiscal Year, the amount of any corresponding cash
deficiency or surplus, and contemplated borrowings under credit facilities,
if any.
[b] Such Annual Budget shall be prepared on a basis consistent with the
financial statements of the Company and its subsidiaries and GAAP. The
Board of Managers or the Budget Committee shall review and discuss the
proposed Annual Budget in consultation with the appropriate officers,
employees and representatives of the Company. The proposed Annual Budget
shall be deemed approved if all of the Managers then in office approve the
27
Annual Budget, or if approved by all of the members of the Budget
Committee. If such approval is obtained, then such Annual Budget shall for
all purposes of this Agreement constitute the Annual Budget and shall
supersede any previously approved Annual Budget. If such approval is not
obtained, then, until a new budget is approved, the Annual Budget for the
Company for the immediately preceding Fiscal Year will remain in effect,
adjusted (without duplication) to reflect the following increases or
decreases: [i] the operation of escalation or de-escalation provisions in
contracts then in effect solely as a result of the passage of time or
contracts entered into pursuant to an approved Annual Budget or the
occurrence of events beyond the control of the Company, to the extent such
contracts are still in effect; [ii] elections made in any prior year under
contracts contemplated by the Annual Budget for the prior year regardless
of which party to such contracts makes such election; [iii] the effect of
the existence of any multi-year contract entered into in accordance with a
previous budget to the extent not fully reflected in the prior year's
Annual Budget; [iv] increases or decreases in expenses attributable to the
annualized effect of employee additions or reductions during the prior year
contemplated by the Annual Budget for the prior year; [v] interest expense
attributable to any loans; [vi] increases or decreases in overhead expenses
in an amount equal to the total of overhead expenses reflected in the
Annual Budget for the prior year (excluding non-recurring items) multiplied
by the percentage increase or decrease in the U.S. Department of Labor
Bureau of Labor Statistics Consumer Price Index for all Urban Consumers or
a successor index for the prior Fiscal Year (but in no event will such
change be more than 10% of the corresponding items in the prior Annual
Budget); and [vii] decreases in expenses attributable to non-recurring
items reflected in the prior year's Annual Budget.
[c] The initial Annual Budget shall be attached hereto as Exhibit E.
7.6 Curative Provision. To the extent the GCI Member's management rights
in the Company exceed any allowable control requirements for ownership of
wireless communications carriers under any agreement or understanding to which
GCI may be bound or under any law or regulation of any Governmental Authority to
which GCI may be subject, the Members will negotiate in good faith an amendment
to this Agreement that will contain curative provisions regarding voting
interests in the Company.
ARTICLE 8. LIABILITY OF A MEMBER
8.1 Limited Liability. Except as otherwise provided in the Act, the
debts, obligations and liabilities of the Company (whether arising in contract,
tort or otherwise) will be solely the debts, obligations and liabilities of the
Company, and no Member (or former Member) of the Company is liable or will be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of such status. No Manager or Officer of the Company nor any
officer, director, employee or agent of any Member will have any personal
liability for the performance of any obligation of any Member under this
Agreement.
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8.2 Capital Contribution. Each Member is liable to the Company for [a]
the Initial Contribution deemed to be made under Section 4.1 and [b] subject to
Section 8.3, any Capital Contribution or Distribution that has been wrongfully
or erroneously returned or made to such Person in violation of the Act, the
Articles or this Agreement.
8.3 Capital Return. Any Member who has received the return of all or any
part of such Member's Capital Contribution will have no liability to return such
Distribution to the Company after the expiration of the applicable period of
time specified by the Act or other applicable law unless Notice of an obligation
to return is given to such Person within such time period; provided that if such
return of capital has occurred without violation of the Act, the Articles or
this Agreement, such obligation to return capital will apply only to the extent
necessary to discharge the Company's liability to its creditors who reasonably
relied on such obligation in extending credit prior to such return of capital.
8.4 Reliance. Any Member will be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements by [a] any of the Company's other Members, Board of
Managers or Officers or [b] any other Person who has been selected with
reasonable care as to matters such Member reasonably believes are within such
other Person's professional or expert competence. Matters as to which such
reliance may be made include the value and amount of assets, liabilities,
Profits and Losses of the Company, as well as other facts pertinent to the
existence and amount of assets from which Distributions to Members might
properly be made.
ARTICLE 9. INDEMNIFICATION
9.1 General. To the full extent permitted by law, the Company will
indemnify, defend and hold harmless each Member (and each such Member's
shareholders, directors, officers, partners, members, employees, Affiliates and
agents), Manager and each Officer of the Company (collectively, "Indemnified
Persons") from and against any and all claims, damages, causes of action,
losses, expenses (including reasonable fees and expenses of attorneys and other
advisors and any court costs incurred by such Indemnified Person) and
liabilities (collectively, "Damages") arising from or in connection with the
business or affairs of the Company, the preservation of the business and
property of the Company or the defense or disposition of any claim, demand or
Proceeding in which such Indemnified Person may be involved or with which such
Indemnified Person may be threatened to be involved, as a party or otherwise
because such Person was a Member, Manager or Officer (or was a shareholder,
director, officer, partner, member, employee, Affiliate or agent of a Member) or
acted or failed to act with respect to the business or affairs of the Company if
[a] such Person acted in good faith, [b] such Person reasonably believed that
its conduct in an official capacity was in the Company's best interests or, if
the conduct was not in an official capacity, that its conduct was at least not
opposed to the Company's best interests and [c] such Person, in the case of any
criminal Proceeding, had no reasonable cause to believe its conduct was
unlawful. The termination of any action or Proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent will
not of itself create a presumption that indemnification is not available under
this Agreement.
29
9.2 Exception. Notwithstanding the general rule stated in Section 9.1,
the Company will not indemnify any Person in connection with [a] any Proceeding
by or in right of the Company in which such Person was adjudged liable to the
Company, or [b] in connection with any Proceeding charging improper personal
benefit to such Person (or another Person of which such Person is or was a
shareholder, director, officer, partner, member, employee or agent) (whether or
not involving action in an official capacity) in which such Person was adjudged
liable on the basis that personal benefit was improperly received.
9.3 Expense Advancement. With respect to the reasonable expenses
incurred by an Indemnified Person who is a party to a Proceeding, the Company
may provide funds to such Person (and, in the case of a Member, to the
shareholders, directors, officers, partners, members, employees, Affiliates and
agents of such Person) in advance of the final disposition of the Proceeding if
[a] such Person furnishes the Company with such Person's written affirmation of
a good-faith belief that it has met the standard of conduct described in Section
9.1, [b] such Person agrees in writing to repay the advance if it is determined
that it has not met such standard of conduct and [c] the Company determines
that, based on then known facts, indemnification is permissible under this
Article.
9.4 Insurance. The indemnification provisions of this Article do not
limit any Person's right to recover under any insurance policy maintained by the
Company. If, with respect to any loss, damage, expense or liability described in
Section 9.1, any Person receives an insurance policy indemnification payment
that, together with any indemnification payment made by the Company, exceeds the
amount of such loss, damage, expense or liability, then such Person will
immediately repay such excess to the Company.
9.5 Indemnification of Others. To the same extent that the Company will
indemnify and advance expenses to a Member, the Company may indemnify and
advance expenses to any employee or agent of the Company. In addition, the
Company, in its discretion, may indemnify and advance expenses to any employee
or agent to a greater extent than a Member.
9.6 Exculpation. No Indemnified Person will be liable to the Company or
any other Member for any Damages incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Company and in a manner reasonably believed to be within the scope of the
authority conferred on the applicable Member, Manager or Officer by this
Agreement, except that an Indemnified Person will be liable to the Company for
any such Damages incurred by reason of such Indemnified Person's willful
misconduct.
9.7 Rights Not Exclusive. The rights accruing to each Indemnified Person
under this Article 9 will not exclude any other right to which such Indemnified
Person may be lawfully entitled.
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ARTICLE 10. ACCOUNTING AND REPORTING
10.1 Fiscal Year. For income tax and accounting purposes, the fiscal
year of the Company will be the Fiscal Year.
10.2 Tax Accounting Method. For income tax purposes, the Company will
use the accrual method of accounting, unless otherwise required by the Code. The
Tax Matters Partner will have the authority to adopt all other accounting
methods for tax purposes.
10.3 Tax Elections. Notwithstanding any other provision of this
Agreement, no Member, Manager or employee of the Company may take any action
(including, but not limited to, the filing of a U.S. Treasury Form 8832 Entity
Classification Election) which would cause the Company to be characterized as an
entity other than a partnership for U.S. federal income tax purposes without the
consent of the GCI Member. The Tax Matters Partner will have the authority to
make any other tax elections, and to revoke any such election, as the Tax
Matters Partner may from time to time determine. Notwithstanding the preceding
sentence, following any Transfer (within the meaning of ss. 754 of the Code) of
a Unit, the Tax Matters Partner will make the election under ss. 754 of the
Code.
10.4 Returns. At the expense of the Company, the Tax Matters Partner
will cause the preparation and timely filing of all tax returns required to be
filed by the Company pursuant to the Code, as well as all other tax returns
required in each jurisdiction in which the Company does business.
10.5 Reports; Annual Financial Statements; Regulatory Reporting
Obligations. The Company will prepare or will cause the preparation of within
the time frames requested by the GCI Member from time to time, such financial
statements of the Company and other financial information prepared in accordance
with GAAP as GCI may require (the "GCI Requested Financial Information"), as
reasonably determined by GCI, to enable it to consolidate the Company's results
of operations with GCI's results of operations for purposes of U.S. financial
accounting reporting rules and regulations and to meet on a timely basis, GCI's
reporting or other obligations under applicable law, the rules and regulations
promulgated thereunder and interpretations thereof by the applicable regulatory
authority or its staff, including, without limitation, the U.S. Securities Act
of 1933, as amended, and the U.S. Securities Exchange Act of 1934, as amended.
The Company will provide such GCI Requested Financial Information to GCI within
10 to 13 days of each fiscal year, quarter or month end, as applicable, or such
shorter time period as may be required by GCI pursuant to the preceding
sentence. The Company shall within the time frame requested by the GCI Member
from time to time, take such action or produce such other information,
statements and reports, as may be required by applicable stock exchange or stock
associations rules or by applicable law, the rules and regulations promulgated
thereunder or interpretations thereof by the applicable regulatory authority or
its staff, as reasonably determined by the GCI Member to timely meet its or its
Affiliates' disclosure, reporting or other obligations under the rules of any
stock exchange or stock association on which its shares are listed and under any
applicable law and the rules and regulations promulgated thereunder or
31
interpretations thereof by the applicable regulatory authority or its staff,
including, without limitation, the U.S. Securities Act of 1933, as amended, the
U.S. Securities Exchange Act of 1934, as amended, and the Sarbanes-Oxley Act of
2002, as amended.
10.6 Books and Records.
[a] The following books and records of the Company will be kept at its
principal office: [i] a current list of the full name and last known
business, residence or mailing address of each Member; [ii] originals of
the Articles and of this Agreement, as amended (as well as any signed
powers of attorney pursuant to which any such document was executed); [iii]
a copy of the Company's federal, state and local income tax returns and
reports and annual financial statements of the Company, for the ten most
recent years; and [iv] minutes, or minutes of action or written consent, of
every meeting of Members of the Company.
[b] The Company will keep at the Company's principal office separate books
of account for the Company which will show a true and accurate record of
all costs and expenses incurred, all credits made and received, and all
income derived in connection with the operation of the Company in
accordance with GAAP consistently applied as to the Company's financial
position and results of operations.
[c] Each Member will have the right, at any time with reasonable Notice to
the Board of Managers and at such Member's sole expense, to examine, copy
and audit the Company's books and records during normal business hours. All
books and records (including bills and invoices), reports and returns of
the Company required by this Article will be maintained in a commercially
reasonable manner as reasonably determined by the Board of Managers.
10.7 Information.
[a] Each Member has the right, from time to time and upon reasonable demand
for any purpose reasonably related to such Person's interest as a Member of
the Company, to obtain from the Company: [i] a current list of the full
name and last known business, residence or mailing address of each Member;
[ii] a copy of the Articles and of this Agreement, as amended (as well as
any signed powers of attorney pursuant to which any such document was
executed); [iii] a copy of the Company's federal, state and local income
tax returns and reports and annual financial statements of the Company, for
the six most recent years; [iv] minutes, or minutes of action or written
consent, of every meeting of the Members of the Company and the Board of
Managers; [v] true and full information regarding the amount of money and a
description and statement of the agreed value of any other property or
services contributed or to be contributed by each Member, and the date on
which each became a Member; [vi] true and full information regarding the
status of the business and financial condition of the Company; and [vii]
other information regarding the affairs of the Company as is just and
reasonable. Any demand by a Member under this 10.7 must be by Notice to the
Company, and must state the purpose of the demand. Any inspection or
32
copying of the Company's books and records under this 10.7 will be during
normal business hours, and at the expense of the Member making the demand.
[b] The Board of Managers will cause the Company to provide to each Member
[i] not more than ten days following the end of the fiscal quarter, an
estimate of any taxable income or gain to be allocated to such Member for
such fiscal quarter and [ii] not more than 75 days after each Fiscal Year
end, such information for such Fiscal Year as the Member reasonably
requires to prepare tax returns or reports required to be filed by it or
one or more of its Affiliates, including federal and state tax information
and projections and estimates.
10.8 Banking. The Company may establish and maintain one or more
accounts or safe deposit boxes at banks or other financial institutions. The
Company may authorize one or more individuals to sign checks on and withdraw
funds from such bank or financial accounts and to have access to such safe
deposit boxes, and may place such limitations and restrictions on such authority
as the Company deems advisable. No funds of the Company will be commingled with
funds of any Member or any other Person.
10.9 Tax Matters; Tax Matters Partner. Until further action by the
Company, the GCI Member (or any Transferee of a majority of the Units owned by
such Member) is designated as the Tax Matters Partner under ss. 6231(a)(7) of
the Code. The Tax Matters Partner will take no action that is reasonably
expected to have a material adverse effect on one or more of the Members unless
such action is approved by the unanimous Vote of the Members. The Tax Matters
Partner will be responsible for notifying all Members of ongoing tax
Proceedings, both administrative and judicial, and will represent the Company
throughout any such Proceeding. The Members will furnish the Tax Matters Partner
with such information as it may reasonably request to provide the Internal
Revenue Service with sufficient information to allow proper notice to the
Members. If an administrative Proceeding with respect to a partnership item
under the Code has begun, and the Tax Matters Partner so requests, each Member
will notify the Tax Matters Partner of its treatment of any partnership item on
its federal income tax return, if any, which is inconsistent with the treatment
of that item on the partnership return for the Company. Any settlement agreement
with the Internal Revenue Service will be binding upon the Members only as
provided in the Code. The Tax Matters Partner will not bind any other Member to
any extension of the statute of limitations or to a settlement agreement without
such Member's written consent. Any Member who enters into a settlement agreement
with respect to any partnership item will notify the other Members of such
settlement agreement and its terms within 30 days after the date of settlement.
If the Tax Matters Partner does not file a petition for readjustment of the
partnership items in the Tax Court, federal District Court or Claims Court
within the 90-day period following a notice of a final partnership
administrative adjustment, any notice partner or 5-percent group (as such terms
are defined in the Code) may institute such action within the following 60 days.
The Tax Matters Partner will timely notify the other Members in writing of its
decision. Any notice partner or 5-percent group will notify the other Members of
its filing of any petition for readjustment.
33
10.10 Classification of Company as Partnership for Tax Purposes, Not
State Law. The Company will be classified as a partnership for federal (and, as
appropriate, state and local) income tax purposes. This characterization, solely
for tax purposes, does not create or imply a general partnership or limited
partnership among the Members for state law or any other purpose. Instead, the
Members acknowledge the status of the Company as a limited liability company
formed under the Act. All duties and obligations of the Members to each other
are expressly set forth in this Agreement. Without limiting the foregoing, the
Members do not owe to each other or to the Company the duties that a general
partner owes to a partnership and its other partners nor do the Managers owe
such duties to each other, the Company or its Members, it being acknowledged
that the duties owed by the Managers to each other and the Company are as set
forth in Article 9. The Members do not have any express or implied fiduciary
duties to the Company or each other except the fiduciary duties, if any, that
shareholders in an Alaska corporation might have to each other or the
corporation.
ARTICLE 11. DISSOLUTION
11.1 Dissolution. Dissolution of the Company will occur upon the
happening of any of the following events:
[a] The affirmative Vote of Members owning more than 90% of the outstanding
Common Units;
[b] The sale, lease or other disposition of all or substantially all of the
assets of the Company in any transaction or series of transactions;
[c] Entry of a decree of judicial dissolution under the Act;
[d] an event of Withdrawal (as defined in Section 11.2) of a Member and the
election of the remaining Members to dissolve in accordance with Section
11.3; or
[e] if either the GCI Member or any Non-GCI Member has materially breached
a material provision of this Agreement and such breach has not been cured
within 30 days after receipt of a Notice from the non-breaching Member
providing reasonable detail concerning the nature of the breach, then upon
the election of the non-breaching Member.
11.2 Events of Withdrawal. An event of Withdrawal of a Member occurs
when any of the following occurs:
[a] with respect to any Member, upon the Transfer of all of such Member's
Units (which may only be done as otherwise permitted under this Agreement
and which Transfer is treated as a resignation);
[b] with respect to any Member, upon the voluntary withdrawal, retirement
or resignation of the Member by Notice to the Company;
34
[c] with respect to any Member that is a corporation, upon filing of
articles of dissolution of the corporation;
[d] with respect to any Member that is a partnership, a limited liability
company or a similar entity, upon dissolution and liquidation of such
entity (but not solely by reason of a technical termination under ss.
708(b)(1)(B) of the Code); or
[e] with respect to any Member, the Bankruptcy of the Member.
Within 10 days following the happening of any event of Withdrawal with respect
to a Member, such Member must give Notice of the date and the nature of such
event to the Company.
11.3 Continuation. In the event of Withdrawal of a Member, the Company
will be continued unless the remaining Members (including the Permitted
Transferee of a withdrawing Member, if applicable) unanimously elect to
dissolve. If the Company is so continued, any Member as to which an event of
Withdrawal specified in Sections 11.2[b] through 11.2[e] has occurred, or such
Member's Transferee or other successor-in-interest (as the case may be) if a
Member has made a Transfer in violation of this Agreement and such Transfer is
found not to be null and void, will, without further act, become a "Limited
Owner" of its own Units or the Units of the withdrawn Member. A Limited Owner
has no right: [a] to participate or interfere in the management or
administration of the Company's business or affairs, including by virtue of
appointment of one or more Managers, [b] to vote or agree on any matter
affecting the Company or any Member, [c] to require any information on account
of Company transactions or [iv] except as provided in the next succeeding
sentence, to inspect the Company's books and records. The only rights of a
Limited Owner are: [i] to obtain the information specified in Section 10.7 if it
executes a confidentiality agreement (in form and substance satisfactory to the
Board of Managers) concerning such information if not already bound by Section
10.7, [ii] to receive the allocations and Distributions to which the Units of
the Limited Owner are entitled and [iii] to receive all necessary tax reporting
information. Neither the Company, the Board of Managers nor the Members will owe
any fiduciary duty of any nature to a Limited Owner. However, each Limited Owner
will be subject to all of the obligations, restrictions and other terms
contained in this Agreement as if it were a Member.
ARTICLE 12. LIQUIDATION
12.1 Liquidation. Upon Dissolution of the Company, the Company
immediately will proceed to wind up its affairs and liquidate pursuant to this
Section 12.1. If there is only one remaining Member, that Member will act as the
liquidating trustee. Otherwise, any Person appointed by the affirmative Vote of
Members owning more than 50% of the outstanding Units will act as the
liquidating trustee. The Liquidation of the Company will be accomplished in a
businesslike manner as determined by the liquidating trustee. A reasonable time
will be allowed for the orderly Liquidation of the Company and the discharge of
liabilities to creditors so as to enable the Company to minimize any losses
attendant upon Liquidation. Any gain or loss on disposition of any Company
assets in Liquidation will be allocated to Members in accordance with the
provisions of Article 5. Any liquidating trustee is entitled to reasonable
35
compensation for services actually performed, and may contract for such
assistance in the liquidating process as such Person deems necessary or
desirable. Until the filing of a certificate canceling the Articles under
Section 12.8, and without affecting the liability of the Members and without
imposing liability on the liquidating trustee, the liquidating trustee may
settle and close the Company's business, prosecute and defend suits, dispose of
its property, discharge or make provision for its liabilities, and make
Distributions in accordance with the priorities set forth in this Article.
12.2 [Reserved].
12.3 Priority of Payment. The assets of the Company will be distributed
in Liquidation in the following order:
[a] First, to creditors by the payment or provision for payment of the
debts and liabilities of the Company and the expenses of Liquidation,
including the setting up of any reserves that are reasonably necessary for
any contingent, conditional or unmatured liabilities or obligations of the
Company;
[b] Second, to the Members that own Units in proportion to the positive
balances in their respective Capital Accounts, measured immediately
following the Capital Account adjustments arising from the transactions
contemplated by Sections 2.2, 2.3 and 2.4 of the Reorganization Agreement;
and
[c] Third, to the Members that own Units in proportion to the positive
balances in their respective Capital Accounts for their Units after such
Capital Accounts have been adjusted to account for the distributions
contemplated by Section 12.3[b] and after such Capital Accounts have been
adjusted for all allocations of Profits and Losses and items thereof for
the Fiscal Year during which such Liquidation occurs.
12.4 Liquidating Distributions. Liquidating Distributions will be made
by distributing the assets of the Company in kind to the Members in proportion
to the amounts distributable to them pursuant to Section 12.3, valuing such
assets at their Fair Market Value (net of liabilities secured by such property
that the Member takes subject to or assumes that were not taken into account in
determining the Fair Market Value of such assets) on the date of Distribution.
Notwithstanding the preceding sentence, but only upon the affirmative Vote of
Members owning more than 50% of the outstanding Units, liquidating Distributions
may be made by selling the assets of the Company and distributing the net
proceeds. Each Member receiving a liquidating Distribution in kind agrees to
save and hold harmless the other Members from any and all liabilities assumed by
such Member or to which assets distributed to such Member are taken subject by
such Member. Appropriate and customary prorations and adjustments will be made
incident to any Distribution in kind. The Members will look solely to the assets
of the Company for the return of their Capital Contributions, and if the assets
of the Company remaining after the payment or discharge of the debts and
liabilities of the Company are insufficient to return such contributions, they
will have no recourse against any other Member. The Members acknowledge that
Section 12.3 may establish Distribution priorities on Liquidation different from
36
those set forth in the Act, as in effect at the time of any Distribution; and,
in such event, it is the Members' intention that the provisions of Section 12.3
will control, to the extent possible.
12.5 No Restoration Obligation. Except as otherwise specifically
provided in Sections 8.2 and 8.3, nothing contained in this Agreement imposes on
any Member an obligation to make an Additional Contribution in order to restore
a deficit Capital Account upon Liquidation of the Company.
12.6 Timing. Final Distributions in Liquidation will be made by the
later of [a] the date that all necessary consents from any governmental
authorities or third parties are obtained to make an in kind Distribution of any
assets, or [b] the end of the Company's Fiscal Year in which such actual
Liquidation occurs (or, if later, within 90 days after such event) in the manner
required to comply with the ss. 704(b) Regulations. Payments or Distributions in
Liquidation may be made to a liquidating trust established by the Company for
the benefit of those entitled to payments under Section 12.3, in any manner
consistent with this Agreement and the ss. 704(b) Regulations.
12.7 Liquidating Reports. A report will be submitted with each
liquidating Distribution to Members made pursuant to Section 12.4, showing the
collections, disbursements and Distributions during the period that is
subsequent to any previous report. A final report, showing cumulative
collections, disbursements and Distributions, will be submitted upon completion
of the Liquidation.
12.8 Articles of Dissolution. Upon Dissolution of the Company and the
completion of the winding up of its business, the Company will file Articles of
Dissolution (to cancel the Articles) with the Alaska Department of Commerce,
Community, and Economic Development pursuant to the Act. At such time, the
Company will also file an application for withdrawal of its certificate of
authority in any jurisdiction where it is then qualified to do business.
ARTICLE 13. TRANSFER RESTRICTIONS
13.1 General Rule. Except as otherwise provided in Section 13.2, no
Member may directly or indirectly Transfer (including by a direct or indirect
Transfer of equity interests in or voting rights with respect to the Member,
except that a Transfer of equity interests in the GCI Member or a Non-GCI Member
will not constitute a Transfer of any Units held by such Member) any of its
Common Units without the approval of all members of the Board of Managers,
subject in all cases to satisfaction of the conditions set forth in Section 13.4
below. The Profits Interest Units shall not be transferable, except as provided
in Article 14 below. Any attempt to Transfer Units in violation of this
Agreement will be void ab initio, the Company will not register such attempted
Transfer in its records and any purported Transferee will not be recognized as
the holder of such Units.
13.2 Permitted Transfers. Any transfer of Common Units contemplated by
Section 2.4 of the Reorganization Agreement will be permitted without approval
of all members of the Board of Managers. In addition, a Transfer of Common Units
37
to a Person that is an Affiliate of a Member will be permitted without approval
of all members of the Board of Managers, so long as any such Person that is an
Affiliate of such Member continues to be an Affiliate of such Member at all
times while it owns any Common Units. If at any time an Affiliate of a Member to
whom a Member has Transferred Common Units under this Section 13.2 ceases to be
an Affiliate of such Member, prior to such cessation such Person will Transfer
its Common Units back to such Member or to an Affiliate of such Member. Any
Transfer of Common Units under this Section 13.2 shall be subject to the
satisfaction of the conditions set forth in Section 13.4.
13.3 Permitted Pledges. Any pledge of Common Units pursuant to a bona
fide loan transaction or any hedging transaction affecting all or any part of a
Member's Common Units will not in itself constitute a Transfer hereunder or
cause the Member to cease to be a Member provided that [a] the Member owning
such Common Units gives Notice to the other Members of such pledge or hedge at
least ten days prior to effecting it and [b] the pledgee or counterparty to the
hedging transaction, as applicable, agrees in writing to be bound by and comply
with all provisions of this Agreement applicable to the Member effecting such
pledge or hedge. Any transfer of title to, or beneficial interest in, any Common
Units to a pledgee upon foreclosure or to a counterparty to a hedging
transaction upon physical settlement of such hedging transaction will be subject
to the transfer restrictions under this Article 13. Any Transfer of Units under
this Section 13.3 shall be subject to the satisfaction of the conditions set
forth in Section 13.4.
13.4 General Conditions on Transfer. No Transfer of a Unit will be
effective unless all the conditions set forth below are satisfied:
[a] Unless waived by each nontransferring Member, the Transferor signs and
delivers to the Company an undertaking in form and substance satisfactory
to the Company to pay all reasonable expenses incurred by the Company in
connection with the Transfer (including reasonable fees of counsel and
accountants and the costs to be incurred with any additional accounting
required in connection with the Transfer, and the cost and fees
attributable to preparing, filing and recording such amendments to the
Articles or other organizational documents or filings as may be required by
law);
[b] Unless waived by each nontransferring Member, the Transferor delivers
to the Company [i] an opinion of counsel for the Transferor reasonably
satisfactory in form and substance to the Company to the effect that,
assuming the accuracy of the statement of the Transferee described in [ii]
below, the Transfer of the Units as proposed does not violate requirements
for registration under applicable federal and state securities laws and
[ii] a statement of the Transferee in form and substance reasonably
satisfactory to the Company making appropriate representations and
warranties with respect to compliance with the applicable federal and state
securities laws and as to any other matter reasonably required by the
Company;
[c] The Transferor signs and delivers to the Company a copy of the
assignment of the Units to the Transferee (substantially in the form of the
attached Exhibit A), which assignment will provide that the Transferor will
continue to be liable for the performance of its liabilities under this
Agreement; and
38
**** CONFIDENTIAL TREATMENT
[d] Unless the Transferee is already a Member, the Transferee signs and
delivers to the Company an agreement (substantially in the form of the
attached Exhibit B) to be bound by this Agreement.
The Transfer of the Units will be effective as of 12:01 a.m. (Alaska Time) on
the first day on which all of the above conditions have been satisfied. The
Company will amend Schedule 1.3 as of the effective time of any Transfer of any
Units to give effect to such Transfer. No consent of any Member will be
necessary to make any such amendment to Schedule 1.3.
13.5 Rights of Transferees. Any Transferee acquiring Units in compliance
with this Agreement will become a Member automatically on the effective date of
the Transfer
ARTICLE 14. LIQUIDITY RIGHTS.
14.1 ****.
[a] **** - ****. At **** following the **** and **** on the **** following
the **** of ****, the **** may **** the **** to **** the ****, of the ****
by the ****, at **** [i] the **** accordance **** of ****, or [ii] the ****
the **** following the ****. The **** must **** this **** this **** at ****
the ****. Upon **** by the **** of the **** of the **** will be **** and
**** or **** in ****.
[b] **** - ****. At **** the **** and **** on the **** following the ****
of ****, the **** may **** the **** to **** the ****, of the **** by the
****, at **** [i] the **** accordance **** of ****, or [ii] the **** the
****. The **** must **** this **** the **** at **** the ****. Upon **** by
the **** of the ****, [A] **** that the **** the ****, the **** from the
**** and the **** the **** the **** in **** for a **** the **** of such
****; and [B] **** that the **** the **** of the **** by the **** and ****
in the ****.
[c] **** - ****. At **** of the ****, the **** may **** the **** the ****,
of the **** the **** the **** of such ****. The **** must **** to the ****
the **** of the ****. Upon the **** of such **** by the **** of the ****,
the **** from the **** and the **** the **** of the **** the **** in ****
for a **** the **** of such ****.
39
**** CONFIDENTIAL TREATMENT
[d] **** - ****. At **** at **** on the **** following the **** following
the ****, the **** may **** the **** the ****, of the **** by the ****, at
a **** the **** of such ****. The **** this **** the **** the **** of the
****. As a **** the ****, concurrent with the ****, the **** the **** with
**** to the **** that the **** have the **** the **** at the time the ****
or that the **** has the **** a **** the **** at the **** of such ****. If
the **** the **** set forth in this Section 14.1[d], the ****, within
****of the **** any **** that it has to **** the **** pursuant to Section
14.1[a], 14.1[b] or 14.1[c] (in each case including ****, which shall ****
the **** set forth in this Section 14.1[d].
[e] **** The **** of **** and **** under this Section 14.1 **** at such
**** and **** to such **** in ****.
14.2 ****.
[a] ****. At **** the **** following the ****, the **** may **** the ****,
of the **** by the ****, at a **** the **** of such ****. The **** this
**** the **** this **** at **** following the ****. At the **** the ****
the **** of the ****, the **** may **** the ****, of the **** the **** in
**** a **** the **** of such Profits Interest Units.
[b] ****. At **** the **** following the ****, the **** may **** the ****
or the **** the ****, at a **** the **** of such ****. The **** this **** a
**** whichever of the **** or the **** that **** in the **** following the
**** following the ****. In order ****, the **** reasonably satisfied that
the **** in the **** then **** for the **** or **** at the **** of such
****. The ****, as applicable, will cooperate in all respects **** that the
**** and, if necessary, the **** or the **** to procure **** for such a
****.
[c] ****. The **** of **** and **** under this Section 14.2 **** at such
**** and **** to such **** in ****.
14.3 Determination of Appraised Unit Value. For purposes of this
Agreement, "Appraised Unit Value" with respect to Common Units shall mean the
Fair Market Value of all, but not less than all, of the Common Units owned by
the Member whose Common Units are **** and if applicable, the Fair Market Value
of all, but not less than all, of the Profits Interest Units owned by the Fire
Lake Member, in each case with no discount or premium for the fact that such
Units represent a minority or a controlling interest in the Company. When the
Appraised Unit Value of Common Units and/or Profits Interest Units are to be
determined **** each will be determined as agreed by the GCI Member and the AKD
Holdings Member or if the GCI Member and the AKD Holdings Member fail to agree
on the Appraised Unit Value and such failure to agree continues for 10 Business
Days after the **** has been delivered, then as determined pursuant to the
following appraisal procedure:
[a] Each of the GCI Member and the AKD Holdings Member will, within 10
Business Days after the deadline for the GCI Member and the AKD Holdings
Member to agree on the Appraised Unit Value, appoint a Qualified Appraiser
who will be required as part of its appointment to determine, using an
Authorized Valuation Methodology, the Appraised Unit Value of the Common
Units and/or the Profits Interest Units and deliver its written independent
appraisal thereof to the GCI Member and the AKD Holdings Member within 30
40
days after its appointment. If either the GCI Member or the AKD Holdings
Member fail to appoint a Qualified Appraiser within the period provided
above, the one Qualified Appraiser appointed will proceed to make the
appraisal alone and its appraisal will be the applicable Appraised Unit
Value, which will be final and binding upon the Members. "Qualified
Appraiser" shall mean a Person experienced in valuing assets owned by the
Company and who has no prior business relationship with any Member of the
Company within the two years prior to its engagement, and the Members will
agree not to hire such Person for six-months following the engagement.
"Authorized Valuation Methodology" shall mean one or more valuation
methodologies customarily used in the evaluation and appraisal of wireless
communications assets, except that any such valuation methodology must be
based on an earnings before interest, taxes, depreciation and amortization
analysis and shall not be based on a revenue or subscriber count analysis.
[b] If the higher of the two appraisals with respect to the Common Units
and/or the Profits Interest Units is less than 110% of the lower appraisal,
the Appraised Unit Value with respect to such Units will be the average of
the two appraisals. If the higher appraisal with respect to the Common
Units and/or the Profits Interest Units is more than 110% of the lower
appraisal, a third Qualified Appraiser, who will be required as part of its
appointment to determine, using one or more Authorized Valuation
Methodologies, the Appraised Unit Value for such Units within 30 days after
its selection and deliver its written independent appraisal thereof to the
GCI Member and the AKD Holdings Member, must be selected by the two initial
Qualified Appraisers within five Business Days after both initial
appraisals have been completed and delivered to the GCI Member and the AKD
Holdings Member. The Appraised Unit Value with respect to such Units will
be the average of the third appraisal and the one of the first two
appraisals that is closest in amount to the third appraisal.
[c] In the event of the inability or unwillingness of any Qualified
Appraiser to act, a new Qualified Appraiser must be appointed in its place
within 14 days, such appointment being made in the same manner as provided
above for the appointment of the Qualified Appraiser who is being replaced.
[d] The expense of the Qualified Appraiser appointed by the AKD Holdings
Member will be borne by the AKD Holdings Member. The expense of the
Qualified Appraiser appointed by the GCI Member will be borne by the GCI
Member. The expense of a third Qualified Appraiser will be borne half by
the AKD Holdings Member and half by the GCI Member. Notwithstanding the
forgoing, the AKD Holdings Member shall be required to pay the expenses of
all Qualified Appraisers if [i] the Appraised Unit Value is determined
under Section 14.1[a], or [ii] if the Appraised Unit Value determined under
Section 14.1[b] is finally determined to be less than the amount set forth
in Section 14.1[b][ii].
[e] In connection with any appraisals performed pursuant to and in
accordance with this Agreement, all of the applicable appraisers will be
subject to a duty of confidentiality, and all of the parties will cooperate
with all applicable appraisers and will provide such appraisers with all
necessary and appropriate information reasonably requested by such
appraisers in connection with such appraisals.
41
**** CONFIDENTIAL TREATMENT
14.4 Closing Procedures.
[a] Unless otherwise agreed by the applicable parties, the closing of the
purchase and sale of Common Units and/or Profits Interest Units **** will
be completed at 10:00 a.m. local time on a date designated by the Member
that provides the applicable **** that is within 15 days after [i]
delivering such **** or if a determination of the Appraised Unit Value is
made pursuant to Section 14.3, after such determination is made, or [ii]
such longer period as is reasonably required to satisfy all of the
conditions set forth in Section 14.4[c]. At the closing, the applicable
selling Members will deliver to the applicable purchasing Member a written
instrument of assignment, substantially in the form attached hereto as
Exhibit A, transferring their respective Units to the purchasing Member
free and clear of Liens, and the purchasing Member will pay the applicable
purchase price. The closing will be consummated at the principal executive
offices of the Company unless the GCI Member and the AKD Holdings Member
otherwise agree.
[b] The Member transferring any Common Units and/or Profits Interest Units
pursuant to Section 14.1 or Section 14.2 shall be deemed to have
represented and warranted that: [i] the purchaser will receive good and
valid title to the applicable Units free and clear of all Liens of any
nature whatsoever; and [ii] all of such Units can be purchased and sold
without any notice to, or consent, approval, order or authorization of, or
declaration or filing with, any other Person other than those already
obtained and except for any required Governmental Approvals.
[c] The closing of any purchase and sale of Units will be subject to the
satisfaction of the following conditions, it being agreed that the parties
will use Commercially Reasonable Efforts to cause such conditions to be
met: [i] all material consents, notices, approvals, including Governmental
Approvals expressly required with respect to the transactions to be
consummated at such closing will have been obtained; and [ii] there will be
no preliminary or permanent injunction or other order by any court of
competent jurisdiction restricting, preventing or prohibiting the
consummation of the transactions to be consummated at such closing.
[d] Unless the applicable parties agree otherwise, the purchase price on
any purchase and sale of Units will be payable by wire transfer of same day
funds to an account at a bank designated by the applicable party, such
designation to be made no less than two Business Days prior to the
applicable closing.
[e] Except for Sections 13.4[a] and 13.4[b], each of which shall be deemed
to have been waived, all conditions set forth in Section 13.4 must also be
satisfied.
[f] Notwithstanding the failure of any Member to assign or deliver
certificates representing Units on the applicable closing date as required
by this Section 14.4, from and after the applicable closing date, the
purchaser of the applicable Units shall for all purposes be deemed the
record and beneficial owner of such Units, the selling Member shall have
only the right to receive the applicable purchase price for such Units,
without interest, and any certificates representing the applicable Units
shall represent only the right to receive the applicable purchase price,
without interest, upon surrender thereof to the purchaser.
42
ARTICLE 15. CERTAIN BUSINESS MATTERS
15.1 Distribution of Assets in Kind. Any distribution of assets by the
Company other than cash will be subject to the receipt of any regulatory or
other approvals and waivers deemed necessary by the Board of Managers. Any
distribution of assets will be made in accordance with the provisions of Article
6.
15.2 Other Business Ventures. Except as provided for in the Management
Agreement, each of the Members and their respective Affiliates may engage in or
possess interests in other businesses or ventures of any nature without regard
to whether such businesses or ventures are or may be deemed to be competitive in
any way with the business of the Company or of any Person in which the Company
holds an equity interest. Except as provided for in the Management Agreement, no
Member will have any obligation to offer any business or investment opportunity
to the Company.
15.3 Confidentiality.
[a] Each Member covenants and agrees that so long as he is a Member and
thereafter, it will not [i] disclose to any other Person any Confidential
Information (hereinafter defined), except for disclosures to Members,
Managers, key employees, independent accountants and attorneys of the
Company as may be necessary or appropriate in the performance of a Member's
duties hereunder; or [ii] use any Confidential Information for any purpose
other than the Company's business. Each Member covenants and agrees to
cause its respective officers, directors and other representatives,
including, without limitation, each Manager appointed by such Member to the
Board of Managers (collectively, "Representatives") to observe all terms of
this Agreement and shall be responsible for any breach of this Section 15.3
by any of its Representatives.
[b] The term "Confidential Information" means and includes any and all
non-public and proprietary information regarding the assets, liabilities,
operations, business, affairs, financing, services, products and trade
secrets of the Company, any of its Affiliates or any of their respective
officers, directors, shareholders, partners, members, employees or agents.
The term "Confidential Information" shall include, without limitation, all
financial statements, financial information, projections, forecasts,
business plans, methods, ideas, concepts, materials, documents, records,
computer programs, customer lists, referral sources, work, models,
processes, designs, drawings, plans, inventions, devices, parts,
improvements, other physical and intellectual property or other information
in any form whatsoever; provided, however, the term "Confidential
Information" shall not include any information which [i] at the time of
disclosure or thereafter is generally available to and known by the public
(other than as a result of its disclosure by a Member or its
Representatives in breach of this Section 15.3), [ii] was available to the
Member on a non-confidential basis prior to disclosure by the Company,
[iii] becomes available to the Member on a non-confidential basis from a
Third Party who is not bound by a confidentiality agreement with the
Company, or is not otherwise prohibited from transmitting the information
to such Member, or [iv] GCI may need to disclose under any applicable law
or stock exchange rule as a consequence of it being a public reporting
company under the Securities Exchange Act of 1934.
43
[c] The Confidential Information shall remain the property of the Company;
no rights, to use, license or otherwise exploit the Confidential
Information are granted to any Member by implication or otherwise; and no
Member shall by virtue of the disclosure of the Confidential Information
and/or the Member's use of the Confidential Information acquire any rights
with respect thereto, all of which rights shall remain exclusively with the
Company.
[d] Each Member acknowledges and agrees that the Company would be
irreparably damaged by any unauthorized disclosure or use of any
Confidential Information by a Member or its Representatives. Accordingly,
without prejudice to the rights and remedies otherwise available to the
Company, each Member agrees that the Company shall be entitled, without the
requirement of posting a bond or other security, to equitable relief,
including an injunction or specific performance, from any court of
competent jurisdiction, wherever located, in the event of any breach or
threatened breach of the provisions of this Section 15.3 by a Member or its
Representatives. Such remedies shall not be deemed to be exclusive remedies
but shall be in addition to all other remedies available at law or equity
to the Company.
[e] In the event that a Member or any of its Representatives become legally
compelled (by deposition, interrogatory, request for documents, subpoena,
civil investigation, demand, order or other legal process) to disclose any
Confidential Information, or is legally required or requested by any
regulatory or self-regulatory organization to disclose any Confidential
Information, such Member and its Representatives may do so without
liability, provided Recipient [i] promptly notifies the Company prior to
any such disclosure, [ii] cooperates with the Company in any attempts it
may make to obtain a protective order or other appropriate assurance that
confidential treatment will be afforded the Confidential Information and
[iii] strictly limit any such disclosure to that which is expressly
required by the terms of the legal action or regulatory or self regulatory
organization compelling such disclosure.
[f] The obligations of this Section 15.3 shall survive the termination of
this Agreement and any Dissolution and Liquidation of the Company.
ARTICLE 16. GENERAL PROVISIONS
16.1 Amendment. Except as otherwise provided in this Agreement, this
Agreement may be amended in a writing signed by Members who own more than 50% of
the outstanding Units; provided, however, that [a] no amendment that would
require any Member to make an additional Capital Contribution to the Company or
impose personal liability on a Member for any debt, obligation or liability of
the Company shall be effective unless set forth in a writing signed by such
Member; [b] no amendment that would change adversely the rights and or
obligations of the holders of a Profits Interest Unit in a manner that is
different than its effect on the rights or obligations of the holders of Common
Units shall be effective unless approved by the holders of two-thirds of the
outstanding Profits Interest Units; [c] except for an amendment required in
connection with the admission of an additional Member in accordance with the
terms of this Agreement, modify or alter the method of determining, the order of
priority or the interest of a Member in [i] allocations of Profits or Losses,
[ii] allocations or Distributions of Available Cash, or [iii] allocation or
Distribution of proceeds resulting from the Liquidation of the Company, unless
44
such amendment receives the affirmative vote or written consent of each Member
adversely affected thereby; or [d] amend the provisions of Sections 7.1 or 7.2
unless approved by the holders of 90% of the Common Units. Any duly adopted
amendment to this Agreement is binding on, and inures to the benefit of, each
Person who holds a Unit at the time of such amendment, without the requirement
that such Person sign the amendment or any republication or restatement of this
Agreement.
16.2 Representations. Each Member hereby represents and warrants to each
other Member that, as of the signing of this Agreement:
[a] Such Member is duly organized, validly existing and in good standing
under the laws of the jurisdiction where it purports to be organized, and
is a United States Person;
[b] Such Member has full power and authority as a corporation or limited
liability company to enter into and perform its obligations under this
Agreement;
[c] All actions on the part of such Member necessary to authorize the
signing and delivery of this Agreement, and the performance by such Member
of its obligations hereunder, have been duly taken;
[d] This Agreement has been duly signed and delivered by a duly authorized
officer or other representative of such Member and constitutes the legal,
valid and binding obligation of such Member enforceable in accordance with
its terms, except as such enforceability may be affected by applicable
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally, and except that the availability of equitable remedies is
subject to judicial discretion;
[e] No consent or approval of any other Person is required in connection
with the signing, delivery and performance of this Agreement and the
Reorganization Agreement by such Member; and
[f] The signing, delivery and performance of this Agreement and the
Reorganization Agreement do not violate the organizational documents of
such Member or any material agreement to which such Member is a party or by
which such Member is bound.
16.3 Unregistered Interests. Each Member [a] acknowledges that the Units
are being offered and sold without registration under the Securities Act of
1933, as amended, or under similar provisions of state law, [b] represents and
warrants that such Member is acquiring the Units for such Member's own account,
for investment, and without a view to the distribution of the Units, [c]
represents and warrants that it is an "accredited investor" as defined in Rule
501(a) of the Regulation D under the Securities Act of 1933 and [d] agrees not
to Transfer, or to attempt to Transfer, all or any part of its Units without
registration under the Securities Act of 1933, as amended, and any applicable
state securities laws, unless the Transfer is exempt from such registration
requirements.
16.4 Waiver of Alternative Withdrawal Rights. Each Member hereby waives
and renounces any alternative rights that might otherwise be provided by law
upon the withdrawal of such Person and accepts the provisions under this
Agreement as such Person's sole entitlement upon the happening of such event.
45
16.5 Waiver of Partition Right. Each Member hereby waives and renounces
any right that it might otherwise have prior to Dissolution and Liquidation to
institute or maintain any action for partition with respect to any property held
by the Company.
16.6 Waivers Generally. No course of dealing will be deemed to amend or
discharge any provision of this Agreement. No delay in the exercise of any right
will operate as a waiver of such right. No single or partial exercise of any
right will preclude its further exercise. A waiver of any right on any one
occasion will not be construed as a bar to, or waiver of, any such right on any
other occasion.
16.7 Equitable Relief. If any Member proposes or refuses to Transfer all
or any part of its Units in violation of the terms of this Agreement, the
Company or any Member may apply to any court of competent jurisdiction for an
injunctive order prohibiting or requiring such proposed Transfer, and the
Company or any Member may institute and maintain any action or Proceeding
against the Person proposing or refusing to make such Transfer to compel the
specific performance of this Agreement. Any attempted Transfer in violation of
this Agreement is null and void, and of no force and effect. The Person against
whom such action or Proceeding is brought hereby irrevocably waives the claim or
defense that an adequate remedy at law exists, and such Person will not urge in
any such action or proceeding the claim or defense that such remedy at law
exists. The prevailing party in any such proceeding shall be entitled to recover
its costs and expenses, including reasonable attorneys' fees, of preparing for
and participating in the proceeding.
16.8 Arbitration. The Members will attempt in good faith to resolve any
controversy or claim arising out of or relating to this Agreement through
discussions between the senior management of the Members. If these discussions
are unsuccessful, except as provided in Section 16.7, the Members agree that any
action asserting a claim by one Member against another Member hereto arising out
of or relating to this Agreement shall, on the written notice by one Member to
the others, be submitted to binding arbitration to be held in Seattle,
Washington. The arbitration shall be conducted by and in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The
parties shall hold an initial meeting within thirty (30) days from receipt of
notice from the requesting party of a request for arbitration. Unless otherwise
agreed in writing, they will jointly appoint a mutually acceptable arbitrator
not affiliated with either party. If they are unable to agree upon such
appointment within thirty (30) days of the initial meeting, the parties shall
obtain an odd numbered list of not less than five (5) potential arbitrators from
the Superior Court for the Third Judicial District, State of Alaska. Each party
shall alternatively strike a single name from the list until only one name
remains, with such person to be the arbitrator. The party requesting the
arbitration shall strike the first name. Each party shall pay one-half (1/2) of
the costs related to the arbitration, unless the arbitrator's decision provides
otherwise. Each party shall bear its own costs to prepare for and participate in
the arbitration. Each party shall produce at the request of the other party, at
least thirty (30) days in advance of the hearing, all documents to be submitted
at the hearing and such other documents as are relevant to the issues or likely
to lead to relevant information. The arbitrator shall promptly render a written
decision, in accordance with Alaska law and supported by substantial evidence in
46
the record. The prevailing party shall be entitled to recover reasonable
attorneys' fees, costs, charges and expended or incurred therein, if the
arbitrator's decision so provides. Failure to apply Alaska law, or entry of a
decision that is not based on substantial evidence in the record, shall be
additional grounds for modifying or vacating an arbitration decision. Judgment
on any arbitration award shall be entered in any court of competent
jurisdiction. In any subsequent arbitration, the decision in any prior
arbitration of this Agreement shall not be deemed conclusive of the rights among
the parties hereunder.
16.9 Remedies for Breach. The rights and remedies of the Members set
forth in this Agreement are neither mutually exclusive nor exclusive of any
right or remedy provided by law, in equity or otherwise, and all legal remedies
(such as monetary damages) as well as all equitable remedies (such as specific
performance) will be available for any breach or threatened breach of any
provision of this Agreement.
16.10 Costs. If the Company or any Member retains counsel for the
purpose of enforcing or preventing the breach or any threatened breach of any
provisions of this Agreement or for any other remedy relating to it, then the
prevailing party will be entitled to be reimbursed by the nonprevailing party
for all costs and expenses so incurred (including reasonable attorney's fees,
costs of bonds and fees and expenses for expert witnesses.
16.11 Counterparts. This Agreement may be signed in multiple
counterparts, the signature pages of which may be detached and reattached to
another identical counterpart. Each counterpart will be considered an original
instrument, but all of them in the aggregate will constitute one agreement.
16.12 Notice. All Notices under this Agreement will be in writing and
will be either delivered or sent addressed as follows: [a] if to the Company, at
the Company's principal office in Anchorage, Alaska, and [b] if to any Member,
at such Person's address as then appearing in the records of the Company. In
computing time periods, the day Notice is given will be included.
16.13 Deemed Notice. Any Notices given to the Company or any Member in
accordance with this Agreement will be deemed to have been duly given: [a] on
the date of receipt if personally delivered, [b] five days after being sent by
U.S. mail, postage prepaid, [c] on the date of receipt, if sent by registered or
certified U.S. mail, postage prepaid, [d] on the date of receipt, if sent by
facsimile or telecopier transmission (with telephonic confirmation by the
recipient) or [e] one Business Day after having been sent by a nationally
recognized overnight courier service.
16.14 Partial Invalidity. Wherever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law. However, if for any reason any one or more of the provisions of
this Agreement are held to be invalid, illegal or unenforceable in any respect,
such action will not affect any other provision of this Agreement. In such
event, this Agreement will be construed as if such invalid, illegal or
unenforceable provision had never been contained in it.
16.15 Entire Agreement. This Agreement (including its Schedules and
Exhibits) contains the entire agreement and understanding of the Members
concerning its subject matter.
16.16 Benefit. Except as otherwise set forth in Section 9.1, this
Agreement and the rights and obligations of the Members hereunder will inure
47
solely to the benefit of the Members and their Transferees and the Company,
without conferring on any other Person any rights of enforcement or other
rights.
16.17 Further Assurances. Each Member will sign and deliver, without
additional consideration, such other documents of further assurance as may
reasonably be necessary to give effect to the provisions of this Agreement.
16.18 Headings. Article and section titles have been inserted for
convenience of reference only. They are not intended to affect the meaning or
interpretation of this Agreement.
16.19 Terms. Terms used with initial capital letters will have the
meanings specified, applicable to both singular and plural forms, for all
purposes of this Agreement. All pronouns (and any variations) will be deemed to
refer to the masculine, feminine or neuter, as the identity of the Person may
require. The singular or plural includes the other, as the context requires or
permits. The word "include" (and any variation) is used in an illustrative sense
rather than a limiting sense. The word "day" means a calendar day, unless a
Business Day is specified.
16.20 Governing Law. This Agreement will be governed by, and construed
in accordance with, the laws of the State of Alaska. Any conflict or apparent
conflict between this Agreement and the Act will be resolved in favor of this
Agreement, except as otherwise required by the Act.
16.21 No Tax Advice. All Members acknowledge that any tax advice express
or implicit in the provision of this Agreement are not intended or written to be
used, and cannot be used, by any taxpayer for the purpose of avoiding penalties
that may be imposed on tax payer by the Internal Revenue Service. Each Member
should seek advice based on its particular circumstances from an independent tax
advisor.
[Signature Page Follows]
48
IN WITNESS WHEREOF, the undersigned have caused this Operating Agreement
of Alaska Digitel, LLC, to be duly executed and delivered, effective from the
date first above mentioned, notwithstanding the actual date of signing.
GENERAL COMMUNICATION, INC.
By:
Name:
Title:
AKD HOLDINGS, LLC
By:
Name:
Title:
PACIFICOM HOLDINGS, L.L.C.
By:
Name:
Title:
FIRE LAKE PARTNERS, L.L.C.
By:
Name:
Title:
RED RIVER WIRELESS, LLC
By:
Name:
Title:
GRAYSTONE HOLDINGS, LLC
By:
Name:
Title:
LIST OF SCHEDULES
Schedule
1.3 Names and Addresses of Members
4.1 Initial Capital Contributions
LIST OF EXHIBITS
Exhibit
A Form of Assignment of Units
B Form of Transferee's Agreement
C Form of Management Agreement
D Examples of Adjustments to Common Units and Profits Interest
Units Outstanding
E Initial Budget
**** CONFIDENTIAL TREATMENT
SCHEDULE 1.3
Names, Addresses and Unit Ownership
of Members
Members Unit Ownership
General Communication, Inc. **** Common Units
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Fax: (907) 868-5676
Attn: Corporate Counsel
With a copy of any Notice to:
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Fax: (907) 868-5676
Attn: General Manager & Executive Vice President
AKD Holdings, LLC **** Common Units
5350 Poplar Avenue, Suite 875
Memphis, TN 38119
Fax: (901) 763-3369
Attn: Stephen M. Roberts
With a copy of any Notice to:
Jack S. Magids, Esq.
The Bogatin Law Firm, PLC
1661 International Place Drive, Suite 300
Memphis, Tennessee 38120-1431
Fax: (901) 767-2803
**** CONFIDENTIAL TREATMENT
Members Unit Ownership
Red River Wireless, LLC **** Common Units
5350 Poplar Avenue, Suite 875
Memphis, TN 38119
Fax: (901) 763-3369
Attn: Stephen M. Roberts
With a copy of any Notice to:
Jack S. Magids, Esq.
The Bogatin Law Firm, PLC
1661 International Place Drive, Suite 300
Memphis, Tennessee 38120-1431
Fax: (901) 767-2803
Graystone Holdings, LLC **** Common Units
5350 Poplar Avenue, Suite 875
Memphis, TN 38119
Fax: (901) 763-3369
Attn: J. Michael Keenan
With a copy of any Notice to:
Jack S. Magids, Esq.
The Bogatin Law Firm, PLC
1661 International Place Drive, Suite 300
Memphis, Tennessee 38120-1431
Fax: (901) 767-2803
Pacificom Holdings, L.L.C. **** Common Units
5350 Poplar Avenue, Suite 875
Memphis, TN 38119
Fax: (901) 763-3369
Attn: Stephen M. Roberts
With a copy of any Notice to:
Jack S. Magids, Esq.
The Bogatin Law Firm, PLC
1661 International Place Drive, Suite 300
Memphis, Tennessee 38120-1431
Fax: (901) 767-2803
52
**** CONFIDENTIAL TREATMENT
Members Unit Ownership
Fire Lake Partners, L.L.C. **** Profits Interest Units
3127 Commercial Drive
Anchorage, AK 99501
Fax:
Attn: Stephen M. Roberts
With a copy of any Notice to:
Jack S. Magids, Esq.
The Bogatin Law Firm, PLC
1661 International Place Drive, Suite 300
Memphis, Tennessee 38120-1431
Fax: (901) 767-2803
53
**** CONFIDENTIAL TREATMENT
SCHEDULE 4.1
Initial Capital Contributions
Agreed Fair Market Value
Members of Deemed Initial Contribution
General Communication, Inc. ****
AKD Holdings, LLC ****
Red River Wireless, LLC ****
Graystone Holdings, LLC ****
Pacificom Holdings, L.L.C. ****
Fire Lake Partners, L.L.C. ****
- -----------------
(1) **** under the Reorganization Agreement in accordance with Section 4.1.
EXHIBIT A
Form of
Assignment of Units
The undersigned Transferor hereby transfers and assigns Units in Alaska
Digitel, LLC, a Alaska limited liability company, to ,
as Transferee. The Capital Account of the Transferor that is attributable to the
transferred Units will carry over to the Transferee. The Units transferred is
subject to all of the terms and conditions of that certain Second Amended and
Restated Operating Agreement of , dated as of , as
such Agreement may be amended ("Operating Agreement"). The Transferor shall
remain liable for all of its liabilities under the Operating Agreement.
Transferor:
By:
Name:
Title:
Date:
EXHIBIT B
Form of
Transferee's Agreement
As a Transferee of Units in Alaska Digitel, LLC, a Alaska limited liability
company governed by a Second Amended and Restated Operating Agreement dated as
of , the undersigned agrees to be bound as a party to such
Agreement (which, as it may be amended, is hereby incorporated by reference).
The Transferee acknowledges and agrees that, unless admitted as a Member of the
limited liability company as provided in such Agreement, the Transferee will
have only the limited rights of an assignee as specified by law.
Transferee:
By:
Name:
Title:
Date:
Address:
- ---------------------------
- ---------------------------
- ---------------------------
Taxpayer ID Number:
- ---------------------------
Telephone Number:
- ---------------------------
Fax Number:
- ---------------------------
EXHIBIT C
Form of Management Agreement
[This exhibit does not contain information material to an investment decision
that is not otherwise disclosed in the agreement and is not included in the
filing of the agreement with the SEC as being not material to investor
decisions.]
EXHIBIT D
Examples of Adjustments to Common Units and Profits Interest Units Outstanding
See attached Schedule 2.3.3 to the Reorganization Agreement.
EXHIBIT E
Initial Budget
[To be inserted at the Closing under the Reorganization Agreement.]
SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
ALASKA DIGITEL, LLC
[ ], 2006
THE UNITS 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 ACCEPTABLE TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED. THE SALE OR OTHER TRANSFER OF THE UNITS IS ALSO
RESTRICTED BY PROVISIONS OF THIS AGREEMENT.
TABLE OF CONTENTS
Page
ARTICLE 1. FORMATION AND DEFINITIONS....................................................................1
1.1 Formation..........................................................................................1
1.2 Name...............................................................................................1
1.3 Members and Units..................................................................................1
1.4 Office and Agent...................................................................................1
1.5 Foreign Qualification..............................................................................1
1.6 Term...............................................................................................2
1.7 Effective Date; Amendment and Restatement..........................................................2
1.8 Definitions........................................................................................2
ARTICLE 2. PURPOSES AND POWERS..........................................................................11
2.1 Principal Purposes.................................................................................11
2.2 Other Purposes.....................................................................................11
2.3 Powers.............................................................................................11
ARTICLE 3. UNITS........................................................................................11
3.1 Classes of Units...................................................................................11
3.2 Common Units.......................................................................................12
3.3 Profits Interest Units.............................................................................12
3.4 Code Section 83(b) Election and Safe Harbor........................................................13
3.5 Reacquired Units...................................................................................15
3.6 Certificates.......................................................................................15
ARTICLE 4. CAPITAL OF THE COMPANY.......................................................................15
4.1 Initial Contributions..............................................................................15
4.2 Additional Contributions...........................................................................16
4.3 Capital Accounts...................................................................................16
4.4 Adjustments........................................................................................17
4.5 Transfer...........................................................................................17
4.6 Market Value Adjustments...........................................................................17
4.7 No Withdrawal of Capital...........................................................................17
4.8 No Interest on Capital.............................................................................17
4.9 No Drawing Accounts................................................................................17
ARTICLE 5. PROFITS AND LOSSES...........................................................................17
5.1 Determination......................................................................................17
5.2 Allocation of Profits and Losses Generally.........................................................18
5.3 Nonrecourse Deductions.............................................................................18
5.4 Minimum Gain Chargeback............................................................................18
5.5 Tax Allocations....................................................................................18
5.6 Qualified Income Offset............................................................................19
5.7 Limit on Loss Allocations..........................................................................19
5.8 ss. 754 Adjustments................................................................................19
5.9 Contributed Property...............................................................................19
5.10 Tax Credits........................................................................................19
5.11 Gross Income Allocation............................................................................20
5.12 Curative Allocations...............................................................................20
5.13 Allocation on Transfer.............................................................................20
ARTICLE 6. DISTRIBUTIONS................................................................................21
6.1 Distributions Generally............................................................................21
6.2 Payment............................................................................................21
6.3 Withholding........................................................................................21
6.4 Distribution Limitations...........................................................................21
6.5 Tax Distribution...................................................................................21
ARTICLE 7. MANAGEMENT...................................................................................22
7.1 Management.........................................................................................22
7.2 Appointment of Board of Managers...................................................................23
7.3 Procedural Requirements............................................................................23
7.4 Officers...........................................................................................26
7.5 Annual Budget......................................................................................26
7.6 Curative Provision.................................................................................27
ARTICLE 8. LIABILITY OF A MEMBER........................................................................27
8.1 Limited Liability..................................................................................27
8.2 Capital Contribution...............................................................................27
8.3 Capital Return.....................................................................................27
8.4 Reliance...........................................................................................28
ARTICLE 9. INDEMNIFICATION..............................................................................28
9.1 General............................................................................................28
9.2 Exception..........................................................................................28
9.3 Expense Advancement................................................................................28
9.4 Insurance..........................................................................................29
9.5 Indemnification of Others..........................................................................29
9.6 Exculpation........................................................................................29
9.7 Rights Not Exclusive...............................................................................29
ARTICLE 10. ACCOUNTING AND REPORTING.....................................................................29
10.1 Fiscal Year........................................................................................29
10.2 Tax Accounting Method..............................................................................29
10.3 Tax Elections......................................................................................29
10.4 Returns............................................................................................30
10.5 Reports; Annual Financial Statements; Regulatory Reporting Obligations.............................30
10.6 Books and Records..................................................................................30
10.7 Information........................................................................................31
10.8 Banking............................................................................................31
10.9 Tax Matters; Tax Matters Partner...................................................................31
10.10 Classification of Company as Partnership for Tax Purposes, Not State Law...........................32
ii
ARTICLE 11. DISSOLUTION..................................................................................32
11.1 Dissolution........................................................................................32
11.2 Events of Withdrawal...............................................................................33
11.3 Continuation.......................................................................................33
ARTICLE 12. LIQUIDATION..................................................................................34
12.1 Liquidation........................................................................................34
12.2 [Reserved].........................................................................................34
12.3 Priority of Payment................................................................................34
12.4 Liquidating Distributions..........................................................................35
12.5 No Restoration Obligation..........................................................................35
12.6 Timing.............................................................................................35
12.7 Liquidating Reports................................................................................35
12.8 Articles of Dissolution............................................................................35
ARTICLE 13. TRANSFER RESTRICTIONS........................................................................36
13.1 General Rule.......................................................................................36
13.2 Permitted Transfers................................................................................36
13.3 Permitted Pledges..................................................................................36
13.4 General Conditions on Transfer.....................................................................36
13.5 Rights of Transferees..............................................................................37
ARTICLE 14. LIQUIDITY RIGHTS.............................................................................37
14.1 Call Rights........................................................................................37
14.2 Put Rights.........................................................................................38
14.3 Determination of Appraised Unit Value..............................................................38
14.4 Closing Procedures.................................................................................40
ARTICLE 15. CERTAIN BUSINESS MATTERS.....................................................................41
15.1 Distribution of Assets in Kind.....................................................................41
15.2 Other Business Ventures............................................................................41
15.3 Confidentiality....................................................................................41
ARTICLE 16. GENERAL PROVISIONS...........................................................................42
16.1 Amendment..........................................................................................42
16.2 Representations....................................................................................43
16.3 Unregistered Interests.............................................................................43
16.4 Waiver of Alternative Withdrawal Rights............................................................43
16.5 Waiver of Partition Right..........................................................................44
16.6 Waivers Generally..................................................................................44
16.7 Equitable Relief...................................................................................44
16.8 Arbitration........................................................................................44
16.9 Remedies for Breach................................................................................45
16.10 Costs..............................................................................................45
16.11 Counterparts.......................................................................................45
16.12 Notice.............................................................................................45
16.13 Deemed Notice......................................................................................45
iii
16.14 Partial Invalidity.................................................................................45
16.15 Entire Agreement...................................................................................45
16.16 Benefit............................................................................................45
16.17 Further Assurances.................................................................................46
16.18 Headings...........................................................................................46
16.19 Terms..............................................................................................46
16.20 Governing Law......................................................................................46
16.21 No Tax Advice......................................................................................46
Exhibit C
[This exhibit does not contain information material to an investment decision
that is not otherwise disclosed in the agreement and is not included in the
filing of the agreement with the SEC as being not material to investor
decisions.]
Exhibit D
[This exhibit does not contain information material to an investment decision
that is not otherwise disclosed in the agreement and is not included in the
filing of the agreement with the SEC as being not material to investor
decisions.]
Exhibit E
**** CONFIDENTIAL TREATMENT
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is made and
entered into as of this day of , 200 by and among
, an individual residing in the State of
("Seller"), Alaska Digitel, LLC, an Alaska limited liability company ("AKD"),
and General Communication, Inc., an Alaska corporation ("GCI").
R E C I T A L S
A. GCI, AKD, AKD Holdings, LLC, a Delaware limited liability
company, the members of AKD and the members of Denali PCS, LLC, an Alaska
limited liability company, are parties to that certain Reorganization Agreement
dated as of June , 2006 (the "Reorganization Agreement"), pursuant to which,
among other things, GCI will acquire a majority interest in AKD and AKD will
redeem certain membership interests of the members of AKD.
B. This Agreement is a Noncompetition Agreement referred to in
Section 7.1(o) of the Reorganization Agreement and, pursuant to the
Reorganization Agreement, must be entered into by the parties hereto as a
condition to the consummation of the transactions contemplated by the
Reorganization Agreement. The execution and performance of this Agreement is
**** and **** the transactions contemplated by the Reorganization Agreement.
C. Seller is a member of , which owns a membership
interest in AKD, and accordingly, Seller will benefit from the transactions
contemplated by the Reorganization Agreement. Seller is also a member of Fire
Lake Partners, LLC, an Alaska limited liability company that will enter into a
Management Services Agreement with AKD upon closing of the transactions
contemplated by the Reorganization Agreement (the "Management Services
Agreement"). In return for the consideration provided under the Reorganization
Agreement and the Management Services Agreement, Seller is willing to refrain
from competing with GCI, AKD and their respective subsidiaries as provided
herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and
the agreements hereinafter set forth, GCI's willingness to consummate the
transactions contemplated by the Reorganization Agreement and the Management
Services Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto covenant and
agree as follows:
1. Covenant Against Competition; Confidentiality and
Nondisclosure. Seller acknowledges that (i) GCI, AKD and their respective
subsidiaries are engaged in the Business (as defined below); (ii) Seller is one
of a limited number of persons who has developed the Business of AKD and will
continue to provide management services to AKD after the transactions
contemplated by the Reorganization Agreement; (iii) Seller's work for AKD has
brought Seller into close contact with many confidential matters of AKD not
readily available to the public; and (iv) GCI would not have consummated the
transactions contemplated by the Reorganization Agreement unless Seller entered
1
**** CONFIDENTIAL TREATMENT
into this Agreement. For purposes of this Agreement, "Business" means the
provision of any of the following services provided by, or of services which
compete with any of the following services provided by, or which would result in
a loss of business with respect to any of the following services by, GCI, AKD
and each of their respective subsidiaries, affiliates, successors and assigns
(collectively, the "GCI Parties"): the sale, resale or provision of wireless
telecommunications services, the ownership, licensing, sublicensing, acquisition
or disposition of licenses for spectrum capacity, and any other business which
constitutes a reasonable extension of the foregoing. Accordingly, Seller
covenants and agrees that, from the date of this Agreement **** date **** (the
"Restricted Period"), except as contemplated by the Management Services
Agreement, Seller will not, within the Geographic Area (as defined in Section
1(d) below), without the prior written consent of GCI, (i) engage in the
Business for Seller's own account; (ii) enter into the employ of, or render
services to or for, any entity that competes with any GCI Party, with respect to
the Business (referred to herein as a "Restricted Entity"); or (iii) become
interested in any Restricted Entity in any capacity, including as an individual,
partner, shareholder, officer, director, principal, agent, trustee, employee or
consultant; provided, however, that Seller may own, directly or indirectly,
solely as a passive investment, securities of any entity traded on any national
securities exchange or automated quotation system if Seller is not a controlling
person of, or a member of a group which controls, such entity and does not,
directly or indirectly, "beneficially own" (as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) five percent (5%) or more of any
class of securities of such Restricted Entity.
(b) During the Restricted Period, Seller shall keep
secret and retain in strictest confidence, and shall not use for the benefit of
Seller or others except in connection with the business and affairs of the GCI
Parties, all confidential information relating to the Business and to any GCI
Party, including, without limitation, trade secrets, "know-how," client lists,
subscriber lists, details of contracts, pricing policies, operational methods,
marketing plans or strategies, business acquisition, disposition or
reorganization plans, requisition forms or procedures, software programs, new
personnel acquisition plans, technical processes, designs and design projects,
inventions and research projects, technical services, and other confidential
business affairs relating to, arising from or in connection with the Business
and learned by Seller heretofore or hereafter, and shall not disclose them to
anyone outside of the GCI Parties, either during or after retention as an
employee by any GCI Party, except as required by law or with GCI's express
written consent or as reasonably necessary in the course of Seller's services to
a GCI Party.
For purposes of this Agreement, confidential
information shall not include any information (i) which is or becomes so
generally known as to be part of the public domain, (ii) which is lawfully
received from a third party, without restriction, (iii) which was known by the
Seller without restriction on disclosure prior to receipt from the GCI Party, or
(iv) which is disclosed pursuant to subpoena, court order or similar legal
process where the party whose confidential information is to be disclosed has
had a reasonable opportunity to appear and object to disclosure.
In the event that Seller is requested or required (by
oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process) to disclose any
confidential information as described in this Section 1(b), Seller agrees to
provide GCI with prompt notice of such request(s) so that it may seek an
appropriate protective order and/or waive Seller's compliance with the
provisions of this Agreement. If in the absence of a protective order or the
2
**** CONFIDENTIAL TREATMENT
receipt of a waiver hereunder, Seller is nonetheless, in the opinion of Seller's
counsel, compelled to disclose information concerning any GCI Party to any
tribunal or else stand liable for contempt or suffer other censure or penalty,
Seller may disclose such information to such tribunal without liability
hereunder.
(c) During the Restricted Period, except as
contemplated by the Management Services Agreement, Seller shall not, directly or
indirectly, (other than for purposes of the Business of any GCI Party) (i) for
purposes of conducting Business, solicit any customer or client of any GCI Party
with whom the Seller has had contact in the Business, (ii) for purposes of
conducting Business in the Geographic Area, solicit any person or entity that is
or has been a customer or client of any GCI Party, (iii) solicit or encourage to
leave the employment or service of any GCI Party any employee or consultant of
such GCI Party, or (iv) hire or retain any employee or consultant who is
employed or retained by, or who, **** the date of solicitation or encouragement,
has left the employment or service of, any GCI Party to engage in the Business
or any business substantially similar to the Business in the Geographic Area.
(d) The parties agree that for purposes of this
Agreement, "Geographic Area" shall mean ****.
2. Rights and Remedies Upon Breach of the Restrictive
Covenants.
(a) Seller recognizes that GCI and AKD may not have
an adequate remedy at law to protect their rights hereunder. Accordingly, Seller
agrees that in the event of a breach of this Agreement by Seller, GCI, AKD or
any other GCI Party shall have the right to an injunction without bond in any
court of competent jurisdiction permanently enjoining Seller from a violation of
Section 1 of this Agreement (the "Restrictive Covenants").
(b) Seller recognizes and agrees that in the event of
a violation of any of the Restrictive Covenants, the period during which Seller
shall not compete shall be suspended during the period Seller is engaged in
conduct constituting such violation and shall resume after such violation has
been remedied.
(c) The remedies set forth in Section 2(a) above
shall not limit, eliminate, prohibit or restrict any other rights that GCI, AKD
or any other GCI Party may have under law for violation by Seller of this
Agreement and shall not be mutually exclusive and any one or all may be pursued
without the pursuit of one impairing or precluding the pursuit of another except
as otherwise provided by law.
3. Severability of Restrictive and Other Covenants. The
parties agree that the provisions of each of the preceding sections of this
Agreement are independent of and severable from each other and the invalidity of
any section or any portion thereof shall not affect the validity or hinder the
enforceability of the remaining provisions of this Agreement. The parties
expressly agree and declare that the time limitation and geographic scope set
forth in Section 1 of this Agreement are reasonable, are properly required for
the adequate protection of the Business of the GCI Parties and that in the event
such time limitation and/or geographic scope is deemed to be unreasonable by the
final decision of an arbitrator or a court of competent jurisdiction, each of
3
the parties agrees to submit to such revision or modification thereof as said
arbitrator or court shall deem reasonable.
4. Notices. All notices and other communications required or
permitted hereunder shall be in writing (including any facsimile transmission or
similar writing), and may be given by any means selected by the sender. Each
such notice or other communication shall be effective (i) if sent by facsimile
to the recipient's fax number given below, when such facsimile is transmitted
and the sender's facsimile machine confirms transmission, (ii) if sent by
reputable overnight courier to the recipient's address given below, one business
day after being delivered to such courier or (iii) if sent by any other means,
when actually received.
(a) If to GCI:
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Attention : General Manager
& Executive Vice President
Fax No. : (907) 868-5676
(b) If to AKD:
Pacificom Holdings, LLC
c/o Wireless Partners
5350 Poplar Avenue, Suite 875
Memphis, TN 38117
Attention: Stephen M. Roberts
Fax No.: (901) 763-3369
(b) If to Seller:
------------------------------------
------------------------------------
Facsimile:
------------------------
or to such other address or facsimile number as any of the persons designated
above may have specified in a notice or communication duly given to the other
designated person as provided herein.
5. Assignability. This Agreement shall be binding upon and
inure to the benefit of GCI, AKD and each of their respective successors and
assigns. This Agreement shall not be assignable by Seller.
6. Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof.
7. Waivers, Amendments and Further Agreements. Neither this
Agreement nor any term or condition of this Agreement, including without
4
limitation the terms and conditions of this Section 7, may be waived, modified
or amended in whole or in part as against any of the parties except by written
instrument executed by each of the parties expressly stating that it is intended
to operate as a waiver, modification or amendment of this Agreement or the
applicable term or condition of this Agreement. Each of the parties hereto
agrees to execute all such further instruments and documents and to take all
such further action as the other party may reasonably require in order to
effectuate the terms and purposes of this Agreement.
8. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
9. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Alaska.
10. Attorneys' Fees. In the event litigation arising out of or
related to this Agreement, the substantially prevailing party shall be entitled
to reimbursement of its reasonable attorneys' fees and costs of suit in addition
to such other relief as may be granted, including but not limited to such fees
and costs incurred in collections and in enforcement and appeal of any judgment
that may be rendered (except to the extent determined otherwise by the
applicable tribunal).
IN WITNESS WHEREOF, the parties hereto have executed or caused
to be executed this Agreement as of the date first above written.
GENERAL COMMUNICATION, INC.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
ALASKA DIGITEL, LLC
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
SELLER
-------------------------------------
5
Schedule 1.1
[This exhibit does not contain information material to an investment decision
that is not otherwise disclosed in the agreement and is not included in the
filing of the agreement with the SEC as being not material to investor
decisions.]
Schedule 2.3.2
[This exhibit does not contain information material to an investment decision
that is not otherwise disclosed in the agreement and is not included in the
filing of the agreement with the SEC as being not material to investor
decisions.]
Schedule 2.3.3
[This exhibit does not contain information material to an investment decision
that is not otherwise disclosed in the agreement and is not included in the
filing of the agreement with the SEC as being not material to investor
decisions.]
Schedule 4
[This exhibit does not contain information material to an investment decision
that is not otherwise disclosed in the agreement and is not included in the
filing of the agreement with the SEC as being not material to investor
decisions.]
Schedule 5
[This exhibit does not contain information material to an investment decision
that is not otherwise disclosed in the agreement and is not included in the
filing of the agreement with the SEC as being not material to investor
decisions.]
Schedule 7.1(n)
[This exhibit does not contain information material to an investment decision
that is not otherwise disclosed in the agreement and is not included in the
filing of the agreement with the SEC as being not material to investor
decisions.]