UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark one)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 of 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [Fee Required] (1)
For the fiscal year ended December 31, 1995
or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15
OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from ______ to _______
Commission File No. 0-15279
GENERAL COMMUNICATION, INC.
(Exact name of registrant as specified in its charter)
Alaska 92-0072737
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
2550 Denali Street Suite 1000 Anchorage, Alaska 99503
(Address of principal executive offices)
Registrant's telephone number, including area code: (907) 265-5600
Securities Registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Class A common stock Class B common stock
(Title of class) (Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the average bid and asked prices of such
stock as of the close of trading on April 15, 1996 was approximately
$48,426,000.
The number of shares outstanding of the registrant's common stock as of
April 15, 1996, was:
Class A common stock - 19,696,207 shares; and
Class B common stock - 4,175,434 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None.
- -----------------------
(1) Fee paid with initial filing of Form 10-K on or about March 29, 1996.
<PAGE>
GENERAL COMMUNICATION, INC.
1995 ANNUAL REPORT ON FORM 10-K/A
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INTRODUCTION.................................................................................................... 3
PART III......................................................................................................... 3
Item 10. Directors and Executive Officers of the Registrant ........................................... 3
Item 11. Executive Compensation ....................................................................... 7
Item 12. Security Ownership of Certain Beneficial Owners and Management .............................. 21
Item 13. Certain Relationships and Related Transactions .............................................. 30
Part IV......................................................................................................... 33
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K ......................................................................... 33
</TABLE>
ASS008BD.WP5 Page 2
<PAGE>
INTRODUCTION
General Communication, Inc. ("Company") hereby amends the following
items, financial statements, exhibits or other portions of its Annual Report for
the year ended December 31, 1995 ("Annual Report") on Form 10-K as set forth in
the following pages. Specifically, the information required by Part III of Form
10-K which the Company had in its Annual Report included by incorporation by
reference to certain portions of the Company's definitive Proxy Statement for
its annual shareholder meeting to be held in 1996 ("Proxy Statement") and which
Proxy Statement is to be filed pursuant to Regulation 14A of the Securities
Exchange Act of 1934, as amended, is expressly filed with the Commission as an
amendment to and expressly made a part of the Annual Report, i.e., Item 10, Part
III, Item 11, Part III, Item 12, Part III, and Item 13, Part III of Form 10-K.
In addition, the Company amends its Form 10-K for the year ended December 31,
1995 to include copies of four commercial agreements pursuant to Item 14, Part
IV of Form 10-K.
PART III
(1) Item 10, Part III. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following text is extracted from the draft Proxy Statement. The
record date for purposes of this amendment to the Annual Report has been set as
April 15, 1995 ("Record Date"):
1. DIRECTOR ELECTIONS
General
The board of directors of the Company ("Board") is classified into
three classes: Class I, Class II, and Class III. Under the current Revised
Bylaws to the Company ("Bylaws"), the number of directors is established as
being not less than three nor more than twelve and may be changed from time to
time by action of the Board.
Presently the number of directors constituting the Board is seven.
Pursuant to the Acquisition Plan, the Board intends to adopt a
resolution expanding the size of the Board from seven to nine positions and
allocate one new position to each of Classes II and III. The Board then would
consist of Classes I, II, and III, each with three members per class. The Board
intends to adopt another resolution to fill the two new positions with
individuals selected by the Prime Sellers pursuant to the Voting Agreement
described further elsewhere in this Form 10-K, provided the shareholders of the
Company ("Shareholders") approve the Acquisition Plan. See, "SHAREHOLDINGS OF
PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Acquisition Plan,
Voting Agreement," and "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS: Certain
Transactions with Management and Others - Acquisition Plan." The Board intends
to resolve further that these two new appointments would stand for election by
the Shareholders at the Company's annual shareholder meeting to be held in 1996
("Meeting") to complete the remaining one year and two year terms of their
respective classes. Therefore, at the Meeting, three individuals will be elected
to positions in Class I of the Board for three year terms, one individual will
be elected to a position in Class II of the Board to serve the remaining one
year of the three year term of that class, and one individual will be elected to
a position in Class III of the Board to serve the remaining two years of the
three year term of that class. The individuals so elected will serve subject to
the provisions of the Bylaws and until the election and qualification of their
respective successors.
Management believes that its proposed nominees for election as
directors are willing to serve as such, and it is intended that the proxy
holders named in the accompanying form of Proxy or their substitutes will vote
for the election of these nominees unless specifically instructed to the
contrary. However,
ASS008BD.WP5 Page 3
<PAGE>
if any nominee at the time of the election is unable,
unavailable or, for good cause, unwilling to serve and, as a consequence other
nominees are designated, the proxy holders named in the Proxy or their
substitutes will have discretion and authority to vote or refrain from voting in
accordance with their judgment with respect to other nominees.
Business Background of Directors, Nominees, and Executive Officers of the
Company
As of the Record Date the nominees proposed by management for election
as directors at the Meeting were as follows: for Class I - John W. Gerdelman,
Carter F. Page, and Robert M. Walp. Further information with respect to these
nominees and all directors is set forth in the following table as of the Record
Date. In addition, similar information is provided for executive officers of the
Company. All executive officers are elected for annual terms, subject to their
earlier death, resignation or removal in accordance with the Articles and
Bylaws, until their successors are chosen and qualify. There are no family
relations of first cousin or closer, among the persons named in the table, by
blood, marriage, or adoption. The Board is unaware of any legal proceedings
which may have occurred during the past five years and which would be material
to an evaluation of the integrity or ability of any director or executive
officer of the Company to serve. Furthermore, the Board is unaware of any legal
proceedings which may have occurred in which any director or executive officer
of the Company was or is a party adverse to the Company or any of its
subsidiaries or has a material interest adverse to the Company or any of its
subsidiaries.
ASS008BD.WP5 Page 4
<PAGE>
<TABLE>
====================================================================================================================
DIRECTORS, NOMINEES, AND EXECUTIVE OFFICERS OF THE COMPANY
<CAPTION>
Name Age Positions, Business Experience
- --------------------------------------------- -------------- -------------------------------------------------------
<S> <C> <C>
Ronald A. Duncan (1) 43 Director, President and Chief Executive Officer of
the Company since January 1, 1989. Prior to that,
Mr. Duncan was the Executive Vice President and a
director of the Company from 1979 through December,
1988.
Donne F. Fisher (1) 57 Nominee. Director of the Company since 1980. Mr.
Fisher has been a consultant to Tele-Communications,
Inc. ("TCI") since December, 1995 and has been a
director of TCI since 1980. Prior to becoming a
consultant to TCI, he was Executive Vice President of
TCI from December, 1991 to December, 1995 and had
been a Senior Vice President of TCI from 1982 to
December, 1995. He has served as Vice President,
Treasurer and Chief Financial Officer of most of
TCI's subsidiaries. TCI is a cable television
company which owns and operates cable television
systems primarily located in the United States.
John W. Gerdelman (1) 43 Nominee. Director of the Company since July, 1994.
Mr. Gerdelman has been President, Network Services
for MCI Telecommunications Corporation, a wholly
owned subsidiary of MCI Communications Corporation in
Washington, D.C., since September, 1994. Prior to
that, he was Senior Vice President for MCI
Telecommunications Corporation from July, 1992 to
September, 1994. Prior to that, he was President of
MCI Services, Inc. in Sergeant Bluff, Iowa from July,
1989 to July, 1992. MCI through its subsidiaries
provides telecommunication and related services
throughout the country and internationally.
Carter F. Page (1) 64 Director and Chairman of the Board of the Company
since 1980. From December, 1987 to December, 1989,
Mr. Page served as a consultant to WestMarc
Communications, Inc., a wholly owned subsidiary of
TCI ("WSMC"), in matters related to the Company. He
served as President and director of WSMC from 1972 to
December, 1987. Since then and to the present, he has
been managing general partner of Semaphore Partners,
a general partnership and investment vehicle in the
communications industry.
Larry E. Romrell (1) 56 Director of the Company since 1980. Mr. Romrell has
been an Executive Vice President of TCI since 1994,
President and director of TCI Technology Ventures,
Inc. since 1994, and Senior Vice President of TCI
since 1991, is the President of WSMC, and has been
employed by WSMC in various capacities from 1961.
ASS008BD.WP5 Page 5
<PAGE>
James M. Schneider (1) 43 Nominee. Director of the Company since July, 1994.
Mr. Schneider has been Senior Vice President Corporate
Finance Consumer Markets for MCI Communications
Corporation in Washington, D.C. since August,
1995. Prior to that, he was Senior Vice President
Finance Consumer Markets for MCI Telecommunications
Corporation since November, 1993. Prior to that, he was
Corporate Controller for MCI from September, 1993 to
November, 1993. Prior to that, Mr. Schneider was with
the accounting firm of Price Waterhouse from 1973 to
September, 1993 and was a partner in that firm from
October, 1983 to September, 1993.
Robert M. Walp (1) 68 Director, Vice Chairman of the Company since January
1, 1989. Prior to that, Mr. Walp served as President
and Chief Executive Officer and a Director of the
Company from 1979.
William C. Behnke 38 Senior Vice President Marketing and Sales for the
Company since January, 1994. Prior to that Mr.
Behnke was Vice President of the Company and
President of GCI Network Systems, Inc. from February,
1992 to January, 1994 when that corporation, a
subsidiary of GCI Communication Corp. (a wholly owned
subsidiary of the Company, "GCC"), was merged into
GCC. Prior to that, he was Vice President of the
Company and General Manager of GCI Network Systems,
Inc. from June, 1989 to February, 1992. Prior to
that, he was Senior Vice President for Transalaska
Data Systems, Inc. from August, 1984 to June, 1989.
Richard P. Dowling 52 Senior Vice President - Corporate Development for the
Company since December, 1990. Prior to that, Mr.
Dowling was Senior Vice President-Operations and
Engineering for the Company from December, 1989 to
December, 1990. Prior to that he was Vice
President-Operations and Engineering for the Company
from 1981 to December, 1989.
G. Wilson Hughes 50 Executive Vice President and General Manager of the
Company since June, 1991. Prior to that, Mr. Hughes
was President and a member of the board of directors
of Northern Air Cargo, Inc. from March, 1989 to June,
1991. Prior to that, he was President and a member
of the board of directors of Enserch Alaska Services,
Inc. from June, 1984 to December, 1988.
John M. Lowber 46 Senior Vice President and Chief Financial Officer for
the Company since December, 1989. Prior to that, Mr.
Lowber was Vice President-Administration for the
Company from 1985 to December, 1989. He has been
Chief Financial Officer for the Company since
January, 1987 and Secretary/Treasurer of the Company
since July, 1988. Prior to joining the Company, Mr.
Lowber was a senior manager at KPMG Peat Marwick.
Dana L. Tindall 34 Senior Vice President-Regulatory Affairs since
January, 1994. Prior to that Ms. Tindall was Vice
President-Regulatory Affairs for the Company from
January, 1991 to January, 1994. Prior to that, she
was Director Regulatory Affairs for the Company from
October, 1989 through December, 1990, and prior to
that she was Manager Regulatory Affairs for the
Company from 1985 to October, 1989.
ASS008BD.WP5 Page 6
<PAGE>
============================================= ============== =======================================================
<FN>
- ------------------------
1 Messrs. Gerdelman, Page, and Walp were, as of the Record Date, Class I directors whose terms will expire
at the time of the 1996 annual shareholder meeting. Messrs. Duncan and Romrell were, as of the Record
Date, Class II directors whose terms will expire at the time of the 1997 annual shareholder meeting.
Messrs. Fisher and Schneider were, as of the Record Date, Class III directors whose terms will expire at
the time of the 1998 annual shareholder meeting. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND
MANAGEMENT: Changes in Control - Acquisition Plan."
- ------------------------
</FN>
</TABLE>
In addition, one of the directors, Mr. Fisher, serves on the boards of
directors of most of TCI's subsidiaries.
Compliance with Section 16(a) of the Exchange Act
Based upon a review of Exchange Act Forms 3, 4, and 5 completed and
furnished to it by Shareholders, the Company is unaware of any director,
officer, or beneficial owner of more than 10 percent of any class of common
stock of the Company who failed to file on a timely basis, as provided in those
forms, reports required under Section 16(a) of that act during the year ended
December 31, 1995.
(2) Item 11, Part III. EXECUTIVE COMPENSATION.
The following text is extracted from the Proxy Statement:
Remuneration of Directors and Executive Officers
Summary Compensation. The following table sets forth a summary of the
compensation paid by the Company to its chief executive officer for services in
all capacities for each of the years ended December 31, 1993, 1994, and 1995,
respectively. It also sets forth similar information for the four most highly
compensated executive officers of the Company aside from the chief executive
officer rendering services to the Company and its subsidiaries, whose aggregate
salary and bonuses exceeded $100,000 for the year ended December 31, 1995 (Mr.
Duncan and these four executive officers, collectively, "Named Executive
Officers").
ASS008BD.WP5 Page 7
<PAGE>
<TABLE>
==============================================================================================================================
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
------------------------- ----------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Annual Restricted Securities All Other
Name & Compensa- Stock Underlying LTIP Compen-
Principal Salary (1) Bonus (1) tion (2),(3) Awards Options/SARs Payouts (4) sation (5)
Position Year ($) ($) ($) ($) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald A. Duncan President 1995 89,550 -0- 14,736 -0- -0- -0- 144,470
and Chief Exec. Officer (6) 1994 89,550 99,960 41,322 -0- -0- -0- 110,400
1993 89,550 27,830 536,970 -0- -0- -0- 103,500
William C. Behnke 1995 110,002 -0- 41,931 -0- 50,000 -0- 20,000
Senior Vice President, 1994 109,168 136,194 90,049 -0- -0- -0- -0-
Marketing and Sales (7) 1993 90,000 41,900 64,569 -0- -0- -0- -0-
G. Wilson Hughes 1995 150,002 -0- 16,305 -0- 260,000 -0- 76,586
Executive Vice President 1994 150,003 89,698 15,843 -0- -0- -0- 61,059
and General Manager (8) 1993 149,547 31,666 9,342 -0- -0- -0- 58,074
John M. Lowber 1995 125,000 -0- 15,321 -0- 100,000 -0- 65,000
Senior Vice President, 1994 125,514 117,757 12,814 -0- -0- -0- 65,000
Administration, Chief 1993 125,000 32,746 177,792 -0- -0- -0- 65,000
Financial Officer,
Secretary/Treasurer (9)
Dana L. Tindall 1995 103,699 24,000 14,949 -0- -0- -0- -0-
Senior Vice President, 1994 93,555 97,467 30,208 -0- -0- -0- -0-
Regulatory Affairs (10) 1993 90,220 38,349 42,299 -0- 50,000 -0- -0-
=============================================================================================================================
<FN>
- ------------------------
1 Amounts shown include cash and non-cash compensation earned and
received by executive officers as well as amounts earned but deferred
at the election of those officers, including employee base salary and
contributions to the Stock Purchase Plan (included in column (c) of
this table) and bonuses (included in column (d) of this table). Does
not include Company contributions to the Stock Purchase Plan for the
account of the participating employee (included in column (e) of this
table). Does not include value of options granted as shown in column
(g) of this table in that they were not in-the-money at the time of
grant. Mr. Lowber was as of December 31, 1995, the only employee of the
Company. The other individuals named in this table were as of that date
employees of GCC. Management of the Company anticipated that this
arrangement would continue. See, "SHAREHOLDINGS OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT: Changes in Control - Pledges of Stock of
Subsidiaries."
2 Perquisites and other personal benefits, securities and property for
each Named Executive Officer did not exceed the lesser of either
$50,000 or 10% of the total of annual salary and bonus reported for
that individual.
3 During the years ended December 31, 1993 through 1995, Messrs. Duncan,
Lowber, and Hughes and Ms. Tindall participated in the Company's Stock
Purchase Plan through which those persons contributed funds under a
payroll deduction arrangement, and the Company matched those
contributions on a dollar-for-dollar basis. The contributions by the
Company were made to all employees of the Company and its subsidiaries
who participated in the plan, including the identified persons.
Contributions identified in this column (e) are those of the Company to
the plan only. Prior to July 1,
ASS008BD.WP5 Page 8
<PAGE>
1995 employee and Company contributions were invested in Company common
stock, and employee contributions received up to 100% matching, as
determined by the Company each year, in Company common stock. On and
after that date, employees could direct their contributions to be
invested by the plan in Company common stock, MCI common stock, TCI
common stock or various identified mutual funds. Also on and after that
date, employee contributions directed into investments other than
Company common stock are to receive Company matching contributions of
up to 50 cents on the dollar as determined by the Board. The
contributions are invested in the name of the plan and for the benefit
of the respective participants in the plan. All securities were
purchased or otherwise acquired at fair market value on the date of
purchase or acquisition. See, "MATTERS TO BE ACTED UPON AT THE MEETING:
1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive
Officers - Stock Purchase Plan."
4 The Company had no long term incentive plan during the three-year
period ended December 31, 1995.
5 All incidental compensation to each Named Executive Officer did not for
the years ended December 31, 1993 through 1995, exceed the lesser of
$50,000 or 10% of total annual salary and bonus reported for the
officer.
6 For 1995, column (e) includes $10,756 of Company matching contributions
to the Stock Purchase Plan.
For 1994, column (e) includes prepaid portion of salary for 1995 of
$30,000 and $9,240 of Company matching contributions to the Stock
Purchase Plan. For 1993, column (e) includes the value of options
exercised (income derived), calculated as the fair market value less
the exercise price of the options at $1.25 per share for 247,947 shares
of Class A common stock granted in April, 1988, in the amount of
$495,894 and includes prepaid portion of salary for 1994 of $30,000 and
$8,994 of Company matching contributions to the Stock Purchase Plan.
For 1993, 1994, and 1995 column (i), includes the deferred compensation
agreement entered into between Mr. Duncan and the Company dated August
13, 1993 ("Second Duncan Deferred Compensation Agreement"). Under the
Second Duncan Deferred Compensation Agreement, the Company is to pay to
Mr. Duncan deferred compensation in an amount not to exceed $625,000
plus interest in addition to the regular compensation he now earns or
may in the future earn. This deferred compensation is to be credited to
Mr. Duncan each July 1 that he is employed by the Company in amounts as
follows:
Year Amount
---- ------
1993 $100,000
1994 100,000
1995 125,000
1996 150,000
1997 150,000
-------
Total $625,000
The full amount of deferred compensation plus accrued interest will be
due and payable to Mr. Duncan upon the termination of his employment
with the Company, provided that, should he voluntarily terminate his
employment or his employment is terminated for cause, only that portion
of the deferred compensation credited as of the December 31 immediately
preceding that termination plus interest will be due and payable and
the remainder of the deferred compensation will be canceled. No
compensation was received by Mr. Duncan under this agreement during the
years ended December 31, 1993, 1994, or 1995.
7 For 1995, column (e) includes the value of options exercised (income
derived) calculated as the fair market value less the exercise price of
the options at $0.001 per share for 10,000 shares of Class A common
stock granted in June, 1989 in the amount of $41,865.
For 1994, column (e) includes the value of options exercised (income
derived), calculated as the fair market value less the exercise price
of the options at $.001 per share for 17,500 shares of Class A common
stock granted in June, 1989 in the amount of $89,983. For 1993, column
(e) includes the value of options exercised (income derived),
calculated as the fair market value less the exercise price of the
options at $.001 per share for 15,000 shares of Class A common stock
granted in June, 1989 in the amount of $64,516.
For 1995, column (i) include an allocation pursuant to a deferred
compensation plan with Mr. Behnke of $20,000 of deferred compensation
vesting over the five year period beginning in 1995.
8 For 1995, column (e) includes the Company's contributions to the Stock
Purchase Plan for the benefit of Mr. Hughes in the amount of $12,750.
ASS008BD.WP5 Page 9
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For 1994, column (e) includes the Company's contributions to the Stock
Purchase Plan for the benefit of Mr. Hughes in the amount of $15,000.
For 1993, column (e) includes the Company's contributions to the Stock
Purchase Plan for the benefit of Mr. Hughes in the amount of $8,994.
For 1993 through 1995, column (i), represents the amount accrued
through a deferred compensation agreement entered into between Mr.
Hughes and the Company dated April 30, 1991 ("Hughes Deferred
Compensation Agreement") during and for the years ended December 31,
1993, 1994, and 1995. The Company entered into the Hughes Deferred
Compensation Agreement, a five year deferred bonus agreement, with Mr.
Hughes dated April 30, 1991. Under the Hughes Deferred Compensation
Agreement, Mr. Hughes will receive deferred compensation of $50,000 per
year accrued annually on December 31 of each year of the agreement. The
agreement further provides that accumulated balances on Mr. Hughes
deferred compensation will accrue interest at 10% per year, compounded
annually. The plan was amended to provide for deferred compensation of
$65,000 in 1995 and $75,000 per year in 1996 and in subsequent years.
Each contribution vests over the following three years after the
corresponding contribution. The agreement provides that after five
years, or upon termination of his employment with the Company, Mr.
Hughes may elect to have the full balance of the deferred compensation
paid in cash, in a lump sum or in monthly installments for up to ten
years. The agreement provides that in the event of a deferred payment,
the residual balance will continue to accrue interest. Interest accrued
under the agreement in the amounts of $8,074, $11,059, and $11,585
during the years ended December 31, 1993, 1994, and 1995, respectively.
The agreement is part of an employment agreement described further
elsewhere in this section. See, "MATTERS TO BE ACTED UPON AT THE
MEETING: 1. DIRECTOR ELECTIONS - Employment Contracts and Termination
of Employment and Change of Control Arrangements."
9 For 1995, column (e) includes $12,852 of Company matching contributions
to the Stock Purchase Plan.
For 1994, column (e) includes $11,844 of Company matching contributions
pursuant to the Company's Stock Purchase Plan.
For 1993, column (e), includes the value of options exercised (income
derived), calculated as the fair market value less the exercise price
of the option at $1.00 per share for 75,000 shares granted in April,
1988, in the amount of $168,750 and $8,500 of Company matching
contributions to the Stock Purchase Plan.
For 1993, 1994, and 1995, column (i), the amount accrued through the
Lowber Deferred Compensation Agreement ("Lowber Deferred Compensation
Agreement") during and for the years ended December 31, 1993 through
1995, respectively. The Company entered into the Lowber Deferred
Compensation Agreement providing for deferred compensation of $65,000
per year in each year of a seven year term and accruing annually on
July 1 of each year of the term, the proceeds of which were used to
purchase a life insurance policy which has been collaterally assigned
to the Company to the extent of premiums paid by the Company. At the
earlier of termination of employment or upon election by Mr. Lowber
subsequent to the end of the seven year term of the agreement, the
collateral assignment will be terminated with the Company. The
agreement provides that if Mr. Lowber leaves the employment of the
Company voluntarily, he will lose the unvested portion of the
compensation. The Lowber Deferred Compensation Agreement is a part of
Mr. Lowber's employment agreement with the Company described further
elsewhere in this section. See, "MATTERS TO BE ACTED UPON AT THE
MEETING: 1. DIRECTOR ELECTIONS - Compensation Committee Report on
Executive Compensation."
10 For 1995, column (e) includes $12,802 of Company matching contributions
pursuant to the Stock Purchase Plan.
For 1994, column (e) includes $13,190 of Company matching contributions
pursuant to the Stock Purchase Plan and the value of options exercised
(income derived), calculated as the fair market value less the exercise
price of $2.25 per share for 5,000 shares of Class A common stock
granted December, 1989, in the amount of $15,312.
For 1993, column (e) includes $6,145 of Company matching contributions
pursuant to the Stock Purchase Plan and the value of options exercised
(income derived), calculated as the fair market value less the exercise
price of $.75 per share for 9,917 shares and $2.25 for 83 shares of
Class A common stock granted in March, 1987 and December, 1989,
respectively, in the total amount of $36,125.
- -------------------
</FN>
</TABLE>
ASS008BD.WP5 Page 10
<PAGE>
<TABLE>
Option/SAR Grants. The following table sets forth information on the
individual grants of stock options (whether or not in tandem with stock
appreciation rights ("SARs")), and freestanding SARs made during the Company's
fiscal year ended December 31, 1995 to the Named Executive Officers. There were
no tandem SARs or freestanding SARs associated with the Company during this
period.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable Value
of Assumed
Annual Rates
of Stock Price
Appreciation for
Individual Grants Option Term
----------------------------------------------------- ----------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities % of Total
Underlying Options/SARs
Option/SARs Granted to Exercise or Expir-
Granted (1) Employees Base Price (2) ation
Name (#) in Fiscal Year ($/Sh) Date 5% ($) (3) 10% ($) (3)
- ------------------------ ---------------- -------------------- --------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Duncan -0- -0- - - - -
William C. Behnke 50,0004 8.2 4.00 3/1/05 126,000 319,000
G. Wilson Hughes 260,0005 42.6 4.00 3/1/05 654,000 1,657,000
John M. Lowber 100,0006 16.4 4.00 3/1/05 252,000 638,000
Dana L. Tindall -0- -0- - - - -
<FN>
- ------------------------
1 Options in Class A common stock.
2 The exercise price of the options was equal to the market price of the
Class A common stock at the time of grant.
3 The potential realizable dollar value of a grant is calculated as the
product of the following: (1) the difference between (i) the product of
the per-share market price at the time of grant and the sum of 1 plus
the adjusted stock price appreciation rate (the assumed rate of
appreciation compounded annually over the term of the option) and (ii)
the per-share exercise price of the option; and (2) the number of
securities underlying the grant at fiscal year end.
4 The option is for 50,000 shares at $4.00 per share vesting in the
following amounts on the indicated dates: (1) 5,000 shares on March 1,
1998; (2) 15,000 shares on March 1, 1999; (3) 15,000 shares on March 1,
2000; and (4) 15,000 shares on March 1, 2001. The options were granted
pursuant to the Stock Option Plan and will expire if not exercised
before March 1, 2005.
5 The option is for 260,000 shares at $4.00 per share vesting in the
following amounts on the indicated dates: (1) 60,000 shares on June 1,
1997; (2) 60,000 shares on June 1, 1998; (3) 60,000 shares on June 1,
1999; and (4) 80,000 shares on June 1, 2000. The options were granted
pursuant to the Stock Option Plan and will expire if not exercised
before March 1, 2005.
ASS008BD.WP5 Page 11
<PAGE>
6 The option is for 100,000 shares at $4.00 per share vesting in the
following amounts on the indicated dates: (1) 10,000 shares on March 1,
1998; (2) 30,000 shares on March 1, 1999; (3) 30,000 shares on March 1,
2000; and (4) 30,000 shares on March 1, 2001. The options were granted
pursuant to the Stock Option Plan and will expire if not exercised
before March 1, 2005.
- ------------------------
</FN>
</TABLE>
Aggregated Option/SAR Exercises and Year-End Option/SAR Value. The
following table sets forth information concerning each exercise of stock options
during the year ended December 31, 1995, by each of the Named Executive Officers
and the fiscal year-end value of unexercised options. There were no tandem SARs
or freestanding SARs associated with the Company during this period.
ASS008BD.WP5 Page 12
<PAGE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUE TABLE
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
at FY-End (#) FY-End ($) (1),(2)
Shares Acquired Value
on Exercise Realized (1) Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ------------------------------- --------------------- --------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Ronald A. Duncan -0- -0- 90,000/110,000 180,000/220,000
William C. Behnke 10,000 41,865 160,190/75,000 575,865/100,000
G. Wilson Hughes -0- -0- 200,000/310,000 650,000/422,500
John M. Lowber -0- -0- 167,500/182,500 560,000/265,000
Dana L. Tindall -0- -0- 71,400/85,000 155,600/170,000
<FN>
- -----------------------
1 The dollar values in columns (c) and (e) of the table are calculated by
determining the difference between the fair market value of the
securities underlying the options and the exercise price of the options
at exercise or fiscal year-end, respectively.
2 An option is "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the option.
- -----------------------
</FN>
</TABLE>
Long-Term Incentive Plan Awards. The Company had no long-term incentive
plan in operation during the year ended December 31, 1995.
Stock Purchase Plan. The Company adopted the Qualified Employee Stock
Purchase Plan in December, 1986, and the plan has subsequently been amended
several times by shareholder and board of director actions ("Stock Purchase
Plan"). The Stock Purchase Plan is qualified under Section 401 of the Internal
Revenue Code of 1986. The plan has been allocated 2.4 million shares of Class A
and 240,000 shares of Class B common stock of the Company for issuance to or
acquisition by the plan. Of those amounts, as of the Record Date, 620,706 shares
of Class A and 68,123 shares of Class B common stock remain available for
issuance or acquisition by the plan.
The Stock Purchase Plan permits each employee of the Company, each
employee of a subsidiary of the Company, and each employee of a subsidiary of a
subsidiary of the Company, who has completed one year of service and is at least
21 years of age to elect to participate in it. Eligible employees may elect to
reduce their compensation in any even dollar amount up to 10% of such
compensation through contributions to the plan up to a maximum of $9,500 for
1996. This limit is adjusted annually based upon inflation, at the direction of
the Internal Revenue Service. An eligible employee may contribute up to 10%
ASS008BD.WP5 Page 13
<PAGE>
of the employee's compensation with after-tax dollars, or the employee may elect
a combination of salary reductions and after-tax contributions.
The Company may under the plan match employee salary reductions and
after tax contributions in any amount up to 100% as elected by the Company each
year. However, no more than 10% of any one employee's compensation will be
matched in any year. The combination of salary reductions, after tax
contributions, and Company matching contributions cannot exceed 25% of any
employee's compensation (determined after salary reduction) for any year. The
Company's contributions will vest over six years. Prior to July 1, 1995,
employee and Company contributions were invested in Company common stock and
employee contributions received up to 100% matching, as determined by the
Company each year, in Company common stock. On and after that date, employees
could direct their contributions to be invested by the plan in Company common
stock, MCI common stock, TCI common stock or various identified mutual funds.
Also on and after that date, employee contributions directed into investments
other than Company common stock are to receive Company matching contributions of
up to 50 cents on the dollar as determined by the Board. The contributions are
invested in the name of the plan for the benefit of the respective participants
in the plan.
The Stock Purchase Plan is administered through a plan committee whose
chair is the plan administrator. The assets of the plan are invested from time
to time by the plan administrator under the direction of the trustee which as of
the Record Date was National Bank of Alaska. As of the Record Date, the plan
administrator was Alfred J. Walker. The plan administrator and members of the
committee were all employees of the Company or its subsidiaries. The plan
administrator and committee members are appointed by the Board. The committee
has broad administrative discretion under the terms of the plan.
The purpose of the Stock Purchase Plan is to provide employees of the
Company, its subsidiaries, and their subsidiaries a convenient means of
investing in the Company. The plan provides an incentive to employees as
shareholders of the Company to redouble their efforts to make the Company
successful and thereby increase the value of their investments. Through
discretionary contributions by the Company to the plan which in turn increase
the stock ownership in the Company by participants in the plan, the plan
provides further incentive to employees of the Company.
Stock Option Plan. The Company adopted its 1986 Stock Option Plan in
December, 1986, and the plan has subsequently been amended several times by
shareholder and board of directors action ("Stock Option Plan"). The Stock
Option Plan is a non-qualified plan under the Internal Revenue Code of 1986.
The Stock Option Plan has been allocated 3,200,000 shares of Class A
common stock of the Company to be subject to options granted under the plan and
further subject to adjustment upon the occurrence of stock dividends, stock
splits, mergers, consolidations, or certain other changes in corporate structure
or capitalization. Of that amount, as of the Record Date, 2,289,900 shares were
subject to outstanding options, 578,256 shares had been issued upon the exercise
of options under the plan, and 331,844 shares of that stock remained available
for subsequent granting of options under the plan.
Through the Stock Option Plan, the Company acting through its board of
directors may provide special incentives to officers, non-employee directors,
and other key employees by offering them an opportunity to acquire an equity
interest in the Company. An option granted under the Stock Option Plan may have
an option exercise price less than, equal to, or greater than the fair market
value on the date of grant of the option. Options granted pursuant to the Stock
Option Plan are only exercisable if at the time of exercise the option holder is
an employee, or non-employee director, of the Company.
ASS008BD.WP5 Page 14
<PAGE>
The Stock Option Plan provides that all options granted under the plan
must expire not later than ten years after the date of grant. If an option
expires or terminates, the shares subject to the option will be available for
future grants of options under the Stock Option Plan. The plan provides that it
shall continue until such time as the Board's adoption, by a simple majority
vote, of a resolution suspending or terminating the plan or discontinuing
granting options under the plan. However, any such suspension, termination, or
discontinuance will not affect options then outstanding under the plan. No
options may be granted after termination of the plan.
The Stock Option Plan is administered by a committee composed of the
Board. Key employees, including officers and directors and non-employee
directors of the Company, are eligible to participate in the plan. The committee
selects the eligible employees to whom options are granted and, subject to the
terms of the Stock Option Plan, the number of shares subject to each option.
Subject to the provisions of the Stock Option Plan, the committee has broad
discretion in administering the plan, and is authorized to determine the times
at which options will be granted and exercisable and the fair market value of
the shares covered by each option at the time of grant, to prescribe the form
evidencing options, to interpret the plan, and to prescribe, amend, and rescind
rules and regulations relating to the plan.
Unfunded Deferred Compensation Plan. In February, 1995 the Company
established a non-qualified, unfunded deferred compensation plan to provide a
means by which certain employees of the Company and its subsidiaries may elect
to defer receipt of designated percentages or amounts of their compensation and
to provide a means for certain other deferrals of compensation. Employees
eligible to participate in the plan are determined by the Board.
The Company may, at its discretion, contribute matching deferrals in
amounts selected by the Company. Participants immediately vest in all elective
deferrals and all income and gain attributable to that participation. Matching
contributions and all income and gain attributable to them over a six-year
period. Participants may elect to be paid in either a single lump sum payment or
annual installments over a period not to exceed 10 years. Vested balances are
payable upon termination of employment, unforeseen emergencies, death and total
disability. Participants are general creditors of the Company with respect to
deferred compensation benefits of the plan.
Compensation To Directors. In July, 1995, each director of the Company
(with the exceptions of Messrs. Schneider and Gerdelman) received $2,000 in
director fees for the 12 month period July, 1995 -June, 1996. Messrs. Schneider
and Gerdelman, as a matter of MCI Communications Corporation policy, declined to
accept such remuneration for serving on a board outside of MCI and its
subsidiaries. During the year ended December 31, 1995, the directors of the
Company received no other direct compensation for serving in those capacities
but were reimbursed for travel and out-of-pocket expenses incurred in connection
with attendance at meetings of the Board. The same policy was followed during
calendar year 1996 up through the Record Date, and management anticipated that
such policy would continue through the balance of 1996. It is anticipated that
the directors will receive similar director fees in July, 1996 for the 12 month
period July 1996 - June 1997.
Employment Contracts and Termination of Employment and Change of Control
Arrangements
The Company entered into employment agreements with Mr. Hughes in
April, 1991 and with Mr. Lowber in July, 1992 and has deferred compensation
agreements with Messrs. Duncan, Hughes, Behnke and Lowber, the terms of which
are described elsewhere in this Proxy Statement. See footnotes 6 through 9 to
the Summary Compensation Table in "MATTERS TO BE ACTED UPON AT THE MEETING: 1.
DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers - Summary
Compensation." The Company has no employment agreements with Ms. Tindall, the
other Named Executive Officer.
ASS008BD.WP5 Page 15
<PAGE>
The Company entered into a deferred compensation agreement with Mr.
Duncan in June, 1989 ("First Duncan Deferred Compensation Agreement"). Under the
First Duncan Deferred Compensation Agreement as of June 12, 1989, the Company
credited an account on its books with $325,000 for the benefit of Mr. Duncan as
a deferred bonus for Mr. Duncan's past service to the Company. Amounts in the
account were to accrue interest at 10% per annum unless there was an investment
election by Mr. Duncan to have the balance in the account treated as though it
was invested in the common stock of the Company, In July, 1989, Mr. Duncan made
the investment election, and the Company issued a total of 105,111 shares of
Class A common stock in its name for the benefit of Mr. Duncan. The stock is not
voted. The full amount of the deferred compensation will be due and payable to
Mr. Duncan upon the termination of his employment with the Company. The Company
entered into a Second Duncan Deferred Compensation Agreement with Mr. Duncan as
further described in footnote 6 to the Summary Compensation Table found
elsewhere in this Proxy Statement. See, "MATTERS TO BE ACTED UPON AT THE
MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive
Officers - Summary Compensation." In September, 1995, the Company agreed to buy
back 100,000 shares of its Class A common stock to fund the vested portion
subject to that second agreement. However, with the concurrence of Mr. Duncan,
the Company subsequently during September-October, 1995 bought a total of only
13,750 shares under that second agreement for a total of $47,880, i.e., at a
weighted average of $3.48 per share.
Mr. Hughes' employment agreement provides for base compensation and in
addition deferred compensation of $50,000 per year for five years accruing
interest at 10% per annum, compounded annually. The plan was amended to provide
for deferred compensation of $65,000 in 1995 and $75,000 per year in 1996 and in
subsequent years. Each contribution vests over the following three years after
the corresponding contributions. This compensation is tied to achievement of the
Company's cash flow objectives with the opportunity for significant increases in
the level of compensation if the Company exceeds those objectives. Mr. Hughes
has also been granted stock options for 250,000 shares of Class A common stock
at $1.75 per share which will vest over a period of five years, but one-half of
any remaining unvested portion of the options will be vested at the option of
the Company, should Mr. Hughes' employment with the Company be terminated by the
Company. In September, 1995, the Company agreed to buy back 3,750 shares of its
Class A common stock to fund certain of the vested portions subject to the
Hughes Deferred Compensation Agreement. The total purchase price was $12,658,
i.e., at $3.375 per share.
Mr. Lowber's employment agreement provides for base compensation and in
addition deferred compensation of $450,000 to vest over seven years at the rate
of $65,000 per year, with full vesting to occur should he die, his position in
the Company be terminated, or the Company terminate his employment. In addition,
Mr. Lowber is to receive an annual cash bonus of $30,000 based upon Company and
individual performance.
The Company entered into a deferred compensation agreement with Mr.
Behnke in February, 1995 ("Behnke Deferred Compensation Agreement'). Under the
Behnke Deferred Compensation Agreement Mr. Behnke is to receive $20,000 per
year, to vest over a five year period including the year of the allocation, and
accruing interest at 10% per annum. The first allocation under the plan was made
in December, 1995.
Except as disclosed in this Proxy Statement, as of December 31, 1995
and the Record Date, there were no compensatory plans or arrangements including
payments to be received from the Company with respect to the Named Executive
Officers for the year ended December 31, 1995 where such a plan or arrangement
resulted in or will result from the resignation, retirement, or any other
termination of such individual's employment with the Company or its subsidiaries
or from a change of control of the Company or a change in the individual's
responsibilities following a change in control and where the amount involved,
including all periodic payments or installments, exceeded $100,000.
ASS008BD.WP5 Page 16
<PAGE>
Report on Repricing of Options/SARs
During the year ended December 31, 1995, the Company did not adjust or
amend the exercise price of stock options or SARs previously awarded to any of
the Named Executive Officers, whether through amendment, cancellation or
replacement grants, or any other means.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is composed of the members of the Board, and
the identity and relationships of the members of the committee to the Company
are described elsewhere in this Proxy Statement. See, "MATTERS TO BE ACTED UPON
AT THE MEETING: 1. DIRECTOR ELECTIONS - Business Background of Directors,
Nominees, and Executive Officers of the Company," "SHAREHOLDINGS OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT" and "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS." During the year ended December 31, 1995, both Messrs. Walp and
Duncan, executive officers of the Company, participated in deliberations of the
Compensation Committee concerning executive officer compensation but not
including their respective compensations.
Compensation Committee Report on Executive Compensation
In January, 1994, the Board established a compensation committee
composed of all of the members of the Board ("Compensation Committee"). The
Board established the duties of the Compensation Committee as follows:
(1) Preparing, on an annual basis for the review of and action
by the Board, a statement of policies, goals, and plans for executive
officer and Board member compensation, if any, and, specifically a
statement of expected performance and compensation of and the criteria
on which compensation is based for the chief executive officer and such
other executive officers of the Company as the Board may designate for
this purpose;
(2) Monitoring the effect of ongoing events on and the
effectiveness of existing compensation policies, goals, and plans,
including but not limited to the status of the premise that all pay
systems correlate with the compensation goals and policies of the
Company, and, at its own direction or at the direction of the Board;
(3) Monitoring compensation-related publicity and public and
private sector developments on executive compensation;
(4) Familiarizing itself with and monitoring the tax,
accounting, corporate, and securities law ramifications of the
compensation policies of the Company, including but not limited to
comprehending a senior executive officer's total compensation package,
its total cost to the Company and its total value to the recipient,
paying close attention to salary, bonuses, individual insurance and
health benefits, perquisites, loans made or guaranteed by the Company,
special benefits to specific executive officers, individual pensions,
and other retirement benefits;
(5) Establishing the overall cap on executive compensation,
the measure of performance for executive officers, either by
predetermined measurements or by a subjective evaluation; and
(6) Striving to make the compensation plans of the Company
simple, fair, and structured so as to maximize shareholder value.
ASS008BD.WP5 Page 17
<PAGE>
For the year ended December 31, 1995, the duties of the Compensation
Committee in the area of executive compensation specifically included addressing
the reasonableness of compensation paid to executive officers. In doing so, the
committee took into account how compensation compared to compensation paid by
competing companies as well as the Company's performance and available
resources.
The compensation policy of the Company as established by the
Compensation Committee is that a portion of the annual compensation of senior
executive officers relates to and is contingent upon the performance of the
Company. In addition, executive officers participating in deferred compensation
agreements established by the Company are under those agreements unsecured
creditors of the Company.
In February, 1995 the Compensation Committee established compensation
levels for all corporate officers including the Named Executive Officers. Also
at that time the Compensation Committee established structured annual incentive
bonus agreements with Mr. Duncan and with each of several of its executive
officers, including Messrs. Behnke, Hughes and Lowber, and Ms. Tindall. The
agreements included the premise that the Company's performance, or that of a
division or subsidiary, as the case may be, for purposes of compensation would
be measured by the Compensation Committee against goals established at that time
and were reviewed and approved by the Board. The goals included targets for
revenues and cash flow standards for the Company or the relevant division or
subsidiary. Targeted objectives were set and measured from time to time by the
Compensation Committee. Other business achievements of the Company obtained
through the efforts of an executive officer were also taken into consideration
in the evaluation of performance. See, "MATTERS TO BE ACTED UPON AT THE MEETING:
1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers -
Summary Compensation."
During the year ended December 31, 1995 the Compensation Committee
monitored and provided direction for the Company's Stock Purchase Plan and Stock
Option Plan. Because the incentive bonus standards set by the committee for the
Company for that year were not met, no incentive bonuses tied to Company
performance were awarded to the Named Executive Officers and other executive
officers of the Company or to the officers of the subsidiaries of the Company.
In addition, the Compensation Committee reviewed compensation levels of members
of management, evaluated the performance of management, and considered
management succession and related matters. The Compensation Committee reviewed
in detail all aspects of compensation for the Named Executive Officers and other
executive officers of the Company. Corresponding duties were carried out by the
boards of directors of the subsidiaries of the Company with respect to employees
of those entities, and the same individuals served as directors of each of these
boards.
The practice of the Compensation Committee in future years will likely
be to review directly the compensation and performance of Mr. Duncan as chief
executive officer and to review recommendations by Mr. Duncan for the
compensation of other senior executive officers.
Performance Graph
The following graph includes a line graph comparing the yearly
percentage change in the Company's cumulative total shareholder return on its
Class A common stock during the five year period from December 31, 1990 through
December 31, 1995. This return is measured by dividing (1) the sum of (a) the
cumulative amount of dividends for the measurement period (assuming dividend
reinvestment, if any) and (b) the difference between the Company's share price
at the end and the beginning of the measurement period, by (2) the share price
at the beginning of that measurement period. This line graph is compared in the
following graph with two other line graphs during that five year period: (1) a
market
ASS008BD.WP5 Page 18
<PAGE>
index and (2) a peer index. The market index is the Center for Research in
Securities Prices Index for the Nasdaq Stock Market for United States companies.
It presents cumulative total returns for a broad based equity market assuming
reinvestment of dividends and is based upon companies whose equity securities
are traded on the Nasdaq Stock Market. The peer index is the Center for Research
in Securities Prices Index for Nasdaq Telecommunications Stock. It presents
cumulative total returns for the equity market in the telecommunications
industry segment assuming reinvestment of dividends and is based on companies
whose equity securities are traded on the Nasdaq Stock Market. The line graphs
represent monthly index levels derived from compounding daily returns.
In constructing each of the line graphs in the following graph, the
closing price at the beginning point of the five year measurement period has
been converted into a fixed investment, stated in dollars, in the Company's
Class A common stock (or in the stocks represented by a given index in the cases
of the two comparison indexes), with cumulative returns for each subsequent
fiscal year measured as a change from that investment. Data for each succeeding
fiscal year during the five-year measurement period are plotted with points
showing the cumulative total return as of that point. The value of a
shareholder's investment as of each point plotted on a given line graph is the
number of shares held at that point multiplied by the then prevailing share
price.
The Company's Class B common stock is traded over-the-counter on a more
limited basis, and therefore comparisons similar to those previously described
for the Class A common stock are not directly available. However, the
performance of Class B common stock may be analogized to that of the Class A
common stock in that the Class B common stock is readily convertible to Class A
common stock by request to the Company.
ASS008BD.WP5 Page 19
<PAGE>
<TABLE>
As to the electronic filing of the Form 10-K/A with the Securities and
Exchange Commission, the Performance Graph is presented in the following tabular
form giving the cumulative total returns as of the last business day for each
year in question:
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
GENERAL COMMUNICATION, INC.
================================= ======================= ========================== ===============================
<CAPTION>
NASDAQ Stock NASDAQ Peer
Market Index Index for
Measurement Period for U.S. Telecommunications
(Fiscal Year Covered) Company Companies Stock
- --------------------------------- ----------------------- -------------------------- -------------------------------
<S> <C> <C> <C>
Measurement Point
12/31/90 $100.00 $100.00 $100.00
FYE 12/31/91 90.48 160.56 137.92
FYE 12/31/92 123.81 186.87 169.40
FYE 12/31/93 241.27 214.51 261.20
FYE 12/30/94 196.83 209.69 215.95
FYE 12/29/95 260.32 296.30 259.94
================================= ======================= ========================== ===============================
</TABLE>
ASS008BD.WP5 Page 20
<PAGE>
(3) Item 12, Part III. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following text is extracted from the Proxy Statement.
SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Principal Shareholders
So far as is known to management of the Company, as of the Record Date,
the following persons each owned beneficially more than 5% of the outstanding
shares of Class A common stock or Class B common stock of the Company. A
beneficial owner includes any person who, directly or indirectly, through any
contract, arrangement, understanding, relationship, or otherwise, has or shares
the following powers within 60 days of the Record Date: (1) voting power, which
includes the power to vote or to direct the voting of shares of common stock of
the Company; or (2) investment power, which includes the power to dispose of or
to direct the disposition of, such shares of common stock of the Company. So far
as is known to the Company, the persons named in the table had sole voting and
investment power with respect to the shares indicated as owned by them except as
otherwise stated in the footnotes to the table. Shares issuable upon exercise of
outstanding options and warrants are deemed to be outstanding for the purpose of
computing the percentage of ownership of persons owning such options or warrants
but have not been deemed to be outstanding for the purpose of computing the
percentage of ownership of any other person.
ASS008BD.WP5 Page 21
<PAGE>
<TABLE>
==============================================================================================================
SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
<CAPTION>
Title Amount and Nature
of Name and Address of Beneficial Percent
Class of Beneficial Owner Ownership of Class
- ------------------------------ ------------------------------- ------------------------- ---------------------
<S> <C> <C> <C>
Class A Ronald A. Duncan 1,281,971 (1) 6.4
Class B 2550 Denali St., Suite 1000 248,062 (1) 5.9
Anchorage, Alaska 99503
Class A General Communication, Inc. 1,688,643 8.6
Class B Employee Stock Purchase Plan 145,698 3.5
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Class A Bufka & Rodgers, Inc. 1,116,900 5.7
Class B 425 North Martingale Road, -0- -
Suite 750
Schaumburg, Illinois 60173
Class A Kearns-Tribune Corporation 300,200 1.5
Class B 400 Tribune Building 225,000 5.4
Salt Lake City, Utah 84111
Class A Bob Magness 273,992 (2) 1.4
Class B Chairman of the Board 815,048 (2) 19.5
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Class A MCI Telecommunications 6,251,509 (3) 31.7
Class B Corporation 1,275,791 (3) 30.5
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Class A Robert M. Walp 572,845 (4) 2.9
Class B 804 P Street, No. 4 303,457 (4) 7.3
Anchorage, Alaska 99501
Class A Voting Agreement 7,638,900 (5) 38.8
Class B c/o General Communication, 2,400,591 (5) 57.5
Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Ronald A. Duncan
Class A Wellington Management Co. 1,400,800 (6) 7.1
Class B 75 State Street -0- -
Boston, Massachusetts 02109
Class A TCI GCI, Inc. -0- -
Class B 5619 DTC Parkway 590,043 (7) 14.1
Englewood, Colorado 80111
============================== =============================== ========================= =====================
<FN>
- -------------------
1 Includes 18,560 shares of Class A and 8,242 shares of Class B common
stock gifted by Mr. Duncan to the Amanda Miller Trust, where Ms. Miller
is the daughter of Mr. Duncan's spouse, Dani Bowman, and Mr. Duncan has
a reversionary interest in those shares. Includes 105,111 shares of
Class A common stock of the Company held by the Company in its name but
for the benefit of Mr. Duncan pursuant to the terms of the First Duncan
Deferred Compensation Agreement and 13,750
ASS008BD.WP5 Page 22
<PAGE>
shares of Class A common stock of the Company held by the Company in
its name but for the benefit of Mr. Duncan pursuant to the terms of the
Second Duncan Deferred Compensation Agreement. See "MATTERS TO BE ACTED
UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors
and Executive Officers - Summary Compensation." Includes 852,775 shares
of Class A and 233,708 shares of Class B common stock of the Company
owned by Mr. Duncan but subject to a Voting Agreement. See,
"SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in
Control - Voting Agreement." Does not include 5,760 shares of Class A
or 27,020 shares of Class B common stock held by Ms. Bowman, to which
Mr. Duncan disavows any interest.
Mr. Duncan had as of the Record Date the following interests in the
shares beneficially owned by him: (1) sole power to vote or to direct
the vote - no shares of Class A or Class B common stock; (2) shared
power to vote or to direct the vote -852,775 shares of Class A and
233,708 shares of Class B common stock; (3) sole power to dispose or to
direct the disposition - 103,341 shares of Class A and no shares of
Class B common stock; and (4) shared power to dispose or to direct the
disposition - 841,209 shares of Class A and 239,820 shares of Class B
common stock.
2 Includes 177,324 shares of Class A common stock of the Company and
194,440 shares of Class B common stock of the Company from the Estate
of Betsy Magness, in which Mr. Magness is beneficial owner and
executor.
Mr. Magness owns 25 percent, beneficially and of record, and another 25
percent, beneficially as executor of the Estate of Betsy Magness, of
the stock of KGBB, Inc., a Colorado corporation which holds 40,000
shares of Class A common stock of the Company, and as a result may be
deemed to have shared voting and investment power over those 40,000
shares. The number of shares in the table includes 20,000 shares of
Class A common stock of the Company directly and beneficially owned by
Mr. Magness due to his shareholdings in KGBB, Inc.
3 All of these shares are subject to a Voting Agreement. See,
"SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in
Control - Voting Agreement."
MCI Telecommunications Corporation had as of the Record Date the
following interests in the shares beneficially owned by it: (1) sole
power to vote or to direct the vote - no shares of Class A or Class B
common stock; (2) shared power to vote or to direct the vote -
6,251,509 shares of Class A common stock and 1,275,791 shares of Class
B common stock; (3) sole power to dispose or to direct the disposition
- 6,251,509 shares of Class A and 1,275,791 shares of Class B common
stock; (4) shared power to dispose or to direct the disposition - no
shares of Class A or Class B common stock.
4 Includes 534,616 shares of Class A and 301,049 shares of Class B common
stock of the Company owned by Mr. Walp but subject to a Voting
Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND
MANAGEMENT: Changes in Control - Voting Agreement."
Mr. Walp had as of the Record Date the following interests in the
shares beneficially owned by him: (1) sole power to vote or to direct
the vote - no shares of Class A or Class B common stock; (2) shared
power to vote or to direct the vote - 534,616 shares of Class A and
301,049 shares of Class B common stock; (3) sole power to dispose or to
direct the disposition- 534,616 shares of Class A and 301,049 shares of
Class B common stock; and (4) shared power to dispose or to direct the
disposition - 38,229 shares of Class A and 2,408 shares of Class B
common stock.
5 The Voting Agreement is described elsewhere in this Proxy Statement.
Does not include shares to be issued to the Prime Sellers. See
"SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in
Control - Voting Agreement."
6 Number of shares beneficially owned by the reporting person with shared
dispositive power. Number of shares beneficially owned by the reporting
person with shared voting power was 720,800 shares.
7 All of these shares are subject to the Voting Agreement. See,
"SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in
Control - Voting Agreement."
TCI GCI, Inc. had as of the Record Date the following interests in the
shares beneficially owned by it: (1) sole power to vote or to direct
the vote - no shares of Class A or Class B common stock; (2) shared
power to vote or to direct the vote - no shares of Class A common stock
and 590,043 shares of Class B common stock; (3) sole power to dispose
or to direct the disposition - no shares of Class A common stock and
590,043 shares of Class B common stock; (4) shared power to dispose or
to direct disposition - no shares of Class A or Class B common stock.
- ------------------
</FN>
</TABLE>
ASS008BD.WP5 Page 23
<PAGE>
Management
The following table sets forth information with respect to the
beneficial ownership of shares of the Company's Class A and Class B common stock
as of the Record Date by each director and nominee of the Company, by the Named
Executive Officers and by all directors and executive officers of the Company as
a group. Shares issuable upon exercise of outstanding options and warrants are
deemed to be outstanding for the purpose of computing the percentage of
ownership of the individual owning such options or warrants but have not been
deemed to be outstanding for the purpose of computing the percentage of
ownership of any other individual. So far as is known to the Company, the
individuals identified in the table had sole voting and investment power with
respect to the shares indicated as owned by them except as otherwise stated in
the footnotes to the table.
ASS008BD.WP5 Page 24
<PAGE>
<TABLE>
====================================================================================================================
SHAREHOLDINGS OF MANAGEMENT OF THE COMPANY
<CAPTION>
Amount and Nature
Title of Beneficial Percent
Class Name of Beneficial Owner Ownership (1),(2) of Class (3)
- ------------------------------ ---------------------------- --------------------------- ----------------------------
<S> <C> <C> <C>
Class A William C. Behnke 235,274 1.2
Class B -0- -
Class A Ronald A. Duncan 1,281,971 (4) 6.4
Class B 248,062 (4) 5.9
Class A Donne F. Fisher 211,307 (5) 1.0
Class B 27,688 (5) *
Class A John W. Gerdelman -0- (6) -
Class B -0- (6) -
Class A G. Wilson Hughes 545,726 (7) 2.7
Class B 2,642 *
Class A John M. Lowber 413,488 2.0
Class B 6,140 *
Class A Carter F. Page 207,327 1.0
Class B 25,246 *
Class A Larry E. Romrell -0- (5) *
Class B 328 (5) *
Class A James M. Schneider -0- (6) -
Class B -0- (6) -
Class A Dana L. Tindall 190,760 1.0
Class B 3,647 *
Class A Robert M. Walp 572,845 (8) 2.9
Class B 303,457 (8) 7.3
Class A All Directors and 4,113,1755 (6) 19.3
Class B Executive Officers as a 699,3785 (6) 16.8
Group
(13 Persons)
============================== ============================ =========================== ============================
<FN>
- ------------------------
1 Includes interests of executive officers and directors in shares of
common stock of the Company held as of December 31, 1995 by the
trustees the Company's Stock Purchase Plan in that allocations under
the plan are made quarterly on March 31, June 30, September 30, and
December 31. These shares are not immediately accessible to
participants in that plan. See, "MATTERS TO BE ACTED UPON AT THE
MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and
Executive Officers - Summary Compensation and Stock Purchase Plan."
2 Includes options and warrants granted to individual directors and
executive officers as of the Record Date.
3 An asterisk (*) means the person is the beneficial owner of less than
1% of the corresponding class of common stock.
4 Includes 18,560 shares of Class A and 8,242 shares of Class B common
stock gifted by Mr. Duncan to the Amanda Miller Trust, where Ms. Miller
is the daughter of Mr. Duncan's spouse Dani Bowman, and Mr. Duncan has
a reversionary interest in those shares. Includes 105,111 shares of
Class A common stock of the Company held by the Company in its name but
for the benefit of Mr. Duncan pursuant to the terms of the First Duncan
Deferred Compensation Agreement and 13,750 shares of Class A common
stock of the Company held by the Company in its name but for the
benefit of Mr. Duncan pursuant to the terms of the Second Duncan
Deferred Compensation Agreement. See, "MATTERS TO BE ACTED UPON AT THE
MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and
Executive Officers - Summary
ASS008BD.WP5 Page 25
<PAGE>
Compensation." Includes 852,775 shares of Class A and 233,708 shares of
Class B common stock of the Company owned by Mr. Duncan but subject to
a Voting Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND
MANAGEMENT: Changes in Control - Voting Agreement." Does not include
5,760 shares of Class A or 27,020 shares of Class B common stock held
by Ms. Bowman, to which Mr. Duncan disavows any interest.
Mr. Duncan had as of the Record Date the following interest in the
shares beneficially owned by him: (1) sole power to vote or to direct
the vote - no shares of Class A or Class B common stock; (2) shared
power to vote or to direct the vote -852,775 shares of Class A and
233,708 shares of Class B common stock; (3) sole power to dispose or to
direct the disposition - 103,341 shares of Class A and no shares of
Class B common stock; and (4) shared power to dispose or to direct the
disposition - 841,209 shares of Class A and 239,780 shares of Class B
common stock.
5 Does not include holdings of TCI GCI, Inc. in the Company, where TCI
GCI, Inc. is a subsidiary of TCI and Mr. Fisher is a consultant for and
Mr. Romrell is an officer of TCI.
6 Does not include holdings of MCI Telecommunications Corporation in the
Company, where Messrs. Gerdelman and Schneider are officers of that
corporation.
7 Includes 3,750 shares of Class A common stock of the Company held by
the Company in its name but for the benefit of Mr. Hughes pursuant to
the terms of the Hughes Deferred Compensation Agreement. See, "MATTERS
TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration
of Directors and Executive Officers - Summary Compensation."
8 Includes 534,616 shares of Class A and 301,049 shares of Class B common
stock of the Company owned by Mr. Walp but subject to a Voting
Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND
MANAGEMENT: Changes in Control - Voting Agreement."
Mr. Walp had as of the Record Date the following interests in the
shares beneficially owned by him: (1) sole power to vote or to direct
the vote - no shares of Class A or Class B common stock; (2) shared
power to vote or to direct the vote - 534,616 shares of Class A and
301,049 shares of Class B common stock; (3) sole power to dispose or to
direct the disposition - 534,616 shares of Class A and 301,049 shares
of Class B common stock; and (4) shared power to dispose or to direct
the disposition - 38,229 shares of Class A and 2,408 shares of Class B
common stock.
- ----------------------
</FN>
</TABLE>
Changes in Control
Acquisition Plan. On March 14, 1996 the Company entered into four
non-binding letters of intent as an initial step in a plan of acquisition
("Acquisition Plan") to acquire several Alaskan cable companies ("Cable
Companies") that offer cable television services to more than 101,000
subscribers serving approximately 74% of households throughout the state. The
total purchase price is approximately $280.7 million, and, as a part of the
Acquisition Plan, the Company is to issue approximately 16.3 million share of
Class A common stock to the owners of the Cable Companies valued at $105.7
million. The balance of the purchase price is to be provided by approximately
$175 million of bank financing. As a part of the Acquisition Plan, the Company
proposes to raise additional capital separate from the acquisitions through a
sale of 2 million shares of Class A common stock ("MCI Company Shares") to MCI
Telecommunications Corporation ("MCI") valued at $13 million. The Company has
entered into a non-binding letter of intent with MCI on that proposed sale. Both
the shares to be issued to MCI and to the Cable Company owners are valued at
$6.50 per share. The letters of intent provide that the definitive terms and
conditions for several proposed transactions of the Acquisition Plan ("Proposed
Transactions") are to be reduced to written agreements with final closings to
occur not later than December 31, 1996. As of April 29, 1996, the Company was in
the process of entering into those agreements ("Purchase Agreements"), subject
to, among other conditions, the prior approval of the shareholders of the
Company.
The Cable Companies involved in the Proposed Transactions are as
follows: (1) Prime Cable of Alaska, L.P. ("Prime"); (2) Alaska Cablevision, Inc.
("Alaska Cablevision"); (3) McCaw/Rock Homer Cable System, a joint venture, and
McCaw/Rock Seward Cable System, a joint venture ("McCaw/Rock Homer
ASS008BD.WP5 Page 26
<PAGE>
Cable System" and "McCaw/Rock Seward Cable System," respectively, collectively,
"McCaw/Rock Cable Systems"); and (4) Alaskan Cable Network, Inc. ("Alaskan
Cable").
Prime owns and operates cable television businesses located in
Anchorage, Eagle River, Chugiak, Kenai, Soldotna, Bethel, Fort Richardson, and
Elmendorf Air Force Base, Alaska ("Prime Alaska System"). Alaska Cablevision
owns and operates cable television businesses and cable television systems
located in Petersburg, Wrangell, Cordova, Valdez, Kodiak, Nome, and Kotzebue,
Alaska. McCaw/Rock Homer Cable System owns and operates the cable television
business and cable television system located in Homer, Alaska. McCaw/Rock Seward
Cable System owns and operates the cable television business and cable
television system located in Seward, Alaska. Alaskan Cable owns and operates
cable television businesses and cable television systems located in Fairbanks,
Juneau, Sitka and Ketchikan, Alaska.
As a result of the final closing on the Proposed Transactions, there
will be no material differences in the rights of shareholders of the Company.
However, a substantial number of new shares of Class A common stock will be
issued to certain of the Cable Companies or their principals, thus diluting the
interest of existing shareholders.
The Prime Purchase Agreement centers on the Company's offer to acquire
all of the partnership and participation interests in Prime from the present
holders of those securities who are entities affiliated with a Prime management
group ("Prime Sellers"). As a result of the Proposed Transactions involving
Prime, the Company would become the owner, directly or indirectly through
wholly-owned subsidiaries, of 100% of the limited partner and general partner
interests in Prime. Under the Prime Purchase Agreement, the Company is to
deliver to the Prime Sellers at closing 11.8 million shares of its Class A
common stock in payment and exchange for those security interests in Prime.
Under that agreement the Prime Sellers are to have the right to require
registration of those shares under the federal Securities Act of 1933, as
amended ("Securities Act"), for the initial distribution to them and, if
required, subsequent resales by them in the open market. Such rights are subject
to restrictions on resales during the 149 day period commencing with the final
closing date of the agreement. The Prime Purchase Agreement provides that Prime
II Management, L.P., the manager of Prime as of the Record Date, is to enter
into a management agreement ("Prime Management Agreement") with the Company
whereby the limited partnership would for a fee provide management services to
Prime with respect to the Prime Alaska System. The term of the Prime Management
Agreement is to be nine years, but it is terminable after two years at the
option of either party.
The Prime Purchase Agreement is subject to a number of conditions
precedent to its final closing including the obtaining of consents of various
persons including state and federal regulators, shareholders of the parties
involved including the Company, the Prime owners, lenders, and partners, and the
Company's lenders. It is also subject to MCI purchasing the MCI Company Shares
as further described below.
Under the Prime letter of intent, the Company is to take such actions
as are necessary to cause its Board to expand to include two additional members.
The Company is to cooperate with the Prime Sellers to amend the Voting Agreement
described elsewhere in this Proxy Statement in order that the Prime Sellers may
become parties to that agreement and appoint two members to the Board as of the
final closing on the Prime Purchase Agreement. See, "SHAREHOLDINGS OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement." The right
to designate one of those members to be elected to the Board is to continue
until the Prime Sellers cease to own in the aggregate at least 10% of the
outstanding Class A common stock of the Company. The other one of such two
members is to continue until the Prime Management Agreement terminates.
The Alaska Cablevision Purchase Agreement centers on the Company's
offer to purchase all of the assets (excluding cash assets) of Alaska
Cablevision. Alaska Cablevision has two affiliated
ASS008BD.WP5 Page 27
<PAGE>
companies, the McCaw/Rock Cable Systems, as described below. Under the Alaska
Cablevision Purchase Agreement, the Company is to deliver to Alaska Cablevision
on the final closing date as payment for the Alaska Cablevision assets
$26,650,000 plus an amount equal to Alaska Cablevision's current assets as of
that date payable as follows: (1) $16,650,000 plus an amount equal to Alaska
Cablevision's current assets as of that date, in cash; and (2) $10,000,000 in
subordinated notes of the Company convertible into shares of the Company's Class
A common stock at conversion rates as set forth in the agreement. Should all of
the notes be converted in accordance with the terms of the agreement, the
Company would issue a total of 1,538,000 shares of Class A common stock. The
notes are to bear simple, non-compounding interest at the lowest rate allowable
by the Internal Revenue Service under imputed interest rules in effect as of the
closing on the Alaska Cablevision Purchase Agreement. Any indebtedness on the
notes not previously converted into common stock of the Company is to be due and
payable in full in a single, lump sum payment on the tenth anniversary of the
initial date of issuance of the notes. The notes are to be subordinated to the
Company's presently existing and later incurred senior indebtedness. The notes
are to be convertible on an annual basis into shares of common stock of the
Company during a 15 day period each year for 10 years. Under the agreement and
following the expiration of a 180 day period commencing with the final closing
date on the agreement, the holders of those shares are to be entitled to one
demand registration under the Securities Act per year for 10 years, and they are
to have other piggyback registration rights with respect to those shares. The
Alaska Cablevision Purchase Agreement is subject to a number of conditions
precedent to its final closing including the obtaining of consents of various
persons including state and federal regulators, shareholders of the Company and
Alaska Cablevision, and the lenders of the Company and Alaska Cablevision.
The McCaw/Rock Purchase Agreement centers on the Company's offer to
purchase all of the assets (excluding cash assets) of the McCaw/Rock Cable
Systems. Under the Agreement the Company is to deliver to McCaw/Rock Cable
Systems on the final closing date as payment for the assets of those systems
$4,350,000 plus an amount equal to the systems' current assets as of that date
payable in cash. The agreement is subject to a number of conditions precedent to
its final closing including the obtaining of consents of various persons
including state and federal regulators, shareholders of the Company and of the
owners of the McCaw/Rock Cable Systems, and the lenders of the Company and the
systems.
The Alaskan Cable Purchase Agreement centers on the Company's offer to
purchase all of the assets of Alaskan Cable. Under the agreement, the Company is
to deliver to Alaskan Cable on the final closing date, as payment for those
assets, $70 million, payable as follows: (1) $51 million in cash; and (2)
2,923,077 shares of the Company's Class A common stock. Under the agreement the
present Alaskan Cable shareholder is to have the right to require registration
of those shares under the Securities Act for the initial distribution to and
subsequent resales by that person and subject further to restrictions on resales
during the 149 day period commencing with the final closing date of the
agreement. The Alaskan Cable Purchase Agreement is subject to a number of
conditions precedent to its final closing including the obtaining of consents of
various persons including state and federal regulators, shareholders of the
Company and Alaskan Cable, and the lenders of the Company and Alaskan Cable.
The MCI Purchase Agreement centers on the purchase by MCI of the MCI
Company Shares to be issued by the Company upon final closing on the agreement
and the payment of the purchase price by MCI. The agreement states that MCI's
obligation to purchase the shares is contingent upon the consummation of the
Prime Purchase Agreement. The agreement is further subject to a number of
conditions precedent to its final closing including the obtaining of all
required federal, state, and local regulatory consents and approvals, as well as
any consents and approvals required by the shareholders of the Company or any
material agreement of the Company. Under the agreement, MCI is to have the right
to require registration under the Securities Act of a portion or all of those
shares. These shares would be subject to the provisions of the Voting Agreement
discussed elsewhere in this Proxy Statement, See, "SHAREHOLDINGS OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT: Changes in Control Voting Agreement."
ASS008BD.WP5 Page 28
<PAGE>
Should the 18.3 million shares of Class A common stock to be issued
under the Acquisition Plan be issued as of the Record Date, the percent
shareholdings in the Company would become as follows: (1) Prime Sellers - 28%;
(2) MCI -- 23% (down from approximately 30% immediately prior to the closing on
the Proposed Transactions involved in the Acquisition Plan); (3) the Company's
employees and management combined -- 9%; (4) Alaskan Cable -- 7%; (5) Alaska
Cablevision -- 4%; and (6) others -- 29%. The shareholdings of MCI, the Cable
Companies, and certain other persons are subject to the Voting Agreement
described elsewhere in this Proxy Statement. See, "SHAREHOLDINGS OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement."
Voting Agreement. As a part of the agreement for the issuance of
6,251,509 shares of Class A and 1,275,791 shares of Class B common stock of the
Company to MCI in 1993 ("MCI Stock"), the Company agreed to assure the
corporation that it may appoint a minimum of two members to the Company's
expanded seven member board of directors. On May 28, 1993, three principal
shareholders, including two officers and directors of the Company (Messrs.
Duncan and Walp and WSMC), entered into a voting agreement ("Voting Agreement")
with MCI which provides in part, that the voting stock of these persons will be
voted at shareholder meetings as a block in favor of no more than two nominees
by the corporation for no more than two positions on the board of directors at
any one time. The Voting Agreement similarly commits MCI and the other three
parties to vote their shares for four board nominees proposed by and allocated
between the other parties.
As a part of the Acquisition Plan, the parties to the Voting Agreement
allowed the Prime Sellers, through a designated representative, to become a
party to and participant in the agreement. The agreement is to be amended to
accommodate the increase of the board of directors from seven to nine positions
and to provide expressly that the voting stock of the participants in the Voting
Agreement will be voted at shareholder meetings as a block in favor of no more
than two nominees to be presented by the Prime Sellers for no more than two
positions on the board at any one time. Such right to designate an individual to
one of those positions to be elected to the board is to continue until the Prime
Sellers cease to own in the aggregate at least 10% of the outstanding Class A
common stock of the Company. The right to select an individual to the other one
of such two positions is to continue until the Prime Management Agreement
terminates.
As of the Record Date, Mr. Gerdelman remained as one of the recommended
MCI Telecommunications Corporation selections for the Board. It is anticipated
that the parties to the Voting Agreement will cast all of their votes for
Messrs. Gerdelman, Page, and Walp. It is anticipated that the parties to the
Voting Agreement will cast all of their votes for these two nominees, and for
the nominees proposed by the Prime Sellers, provided the shareholders approve
the Acquisition Plan. As of the Record Date, the voting stock of the parties to
the Voting Agreement (in April, 1995 WSMC transferred its shareholdings in the
Company to TCI GCI, Inc., and TCI GCI, Inc. became subject to the Voting
Agreement) constituted in excess of a simple majority of the outstanding voting
power of the Company. The term of the Voting Agreement will be through the
completion of the annual meeting of shareholders of the Company taking place in
1997 or until there is only one party to that agreement, which ever first
occurs. However, the parties may extend the term upon unanimous consent.
Pledges of Stock of Subsidiaries. Should the Company default on its
obligations under the Credit Agreement with its present Senior Lender, that
lender may exercise the pledge of stock provisions of that agreement pertaining
to the subsidiaries of the Company and thereby gain direct control of the
essential operating assets through which the Company and its subsidiaries
provide telecommunication services. See, "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS: Certain Transactions with Management and Others - Credit
Agreement."
ASS008BD.WP5 Page 29
<PAGE>
(4) Item 13, Part III. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The following text is extracted from the Proxy Statement:
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Transactions with Management and Others
Acquisition Plan. The Acquisition Plan includes Proposed Transactions
providing that the Prime Sellers will have the right to select individuals for
nominees to two positions on the board of directors of the Company. The
Acquisition Plan also provides registration rights to owners of certain of the
Cable Companies. The Acquisition Plan requires the Company to enter into the
Prime Management Agreement with an affiliate of the Prime Sellers. These
transactions are further described elsewhere in this Proxy Statement. See,
"Changes in Control - Acquisition Plan" elsewhere in this Proxy Statement.
MCI Agreements. In December, 1992, MCI and the Company entered into a
letter of intent outlining the general terms and conditions of several proposed
arrangements between them to be subsequently reduced to separate agreements
("MCI Agreements"). Under the MCI Agreements, in addition to MCI acquiring a
substantial portion of the outstanding common stock of the Company and entering
into the Voting Agreement to ensure that it would be able to appoint or
otherwise elect at least two members to the Board, MCI and the Company have
established or will establish various business arrangements between them. These
arrangements include the following: (1) providing telecommunications services by
each party to the other; (2) licensing of certain MCI service marks to the
Company for use in Alaska; (3) leasing by MCI from the Company and the
subleasing back by the Company of one-ninth of the undersea fiber optic cable
linking Seward, Alaska with Pacific City, Oregon; (4) purchasing by MCI of
certain service marks of the Company; (5) other communication network sharing;
and (6) sharing of various marketing, engineering, and operating resources. As
of the Record Date, the Company had executed access service, carrier, 1-800
collect service mark and product, and undersea fiber optic cable agreements with
MCI pertaining to items (1)-(3) and was in the process of negotiating agreements
pertaining to items (4)-(6). These arrangements have during the year ended
December 31, 1995 resulted in revenues to MCI and its subsidiaries of
approximately $8.4 million and revenues to the Company of approximately $24
million.
In March, 1996, the Company and MCI amended the Contract for Alaska
Access Services and the MCI Carrier Agreement, both of which agreements the
parties had initially entered into effective January 1, 1993. The access
agreement addresses transmission services provided by the Company to MCI for its
traffic and the charges for such services. The carrier agreement addresses
transmission services provided by MCI to the Company for its traffic and the
charges for such services. The carrier agreement amendment is the fifth
effective amendment to the agreement and extends the term of the agreement by
three years. The prior amendments provided for new, expanded, or revised
services by MCI to the Company and adjustments of charges for those services.
The access agreement amendment is the first effective amendment to the
agreement. It extends the term of the agreement by three years and reduces the
rate in dollars to be charged by the Company for certain MCI traffic for the
time period April 1, 1996 through July 1, 1999 and thereafter. The rate
reduction, if applied to the number of minutes to be carried by the Company in
1996 and 1997, based upon minutes carried by the Company during 1995, would
reduce the Company's 1996 and 1997 revenue by approximately $322,000 and
$399,000, respectively. Those recent amendments to the two agreements do not
otherwise change the agreements. The Company considered the amendments of both
agreements together as in its best interest. With these amendments, the Company
is assured that MCI, the Company's largest customer, will continue to make use
of the Company's services during the extended term.
ASS008BD.WP5 Page 30
<PAGE>
As a part of the Acquisition Plan, MCI has agreed to purchase an
additional 2 million shares of Class A common stock of the Company. See,
"SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control -
Acquisition Plan."
Credit Agreement. In May, 1993, the Company completed a refinancing
which provided a new $15 million senior facility ("Credit Agreement") with
NationsBank in Dallas, Texas ("Senior Lender"). The Credit Agreement continues a
number of conditions imposed under previous credit agreements entered into by
the Company. In compliance with one of those conditions, the Company previously
formed GCC, an Alaska corporation and wholly owned subsidiary of the Company. On
November 30, 1990 all of the Company's operating assets were transferred to GCC,
where all of the outstanding capital stock of GCC was pledged to the then senior
lenders of the Company. This reorganization proposal was approved by the
shareholders of the Company at the June 7, 1990 annual shareholders meeting.
That pledge is now made to the Senior Lender and will remain in place for so
long as the Credit Agreement remains in effect. As of the Record Date, the
outstanding common stock of GCC remained pledged to the Senior Lender.
Throughout the year ended December 31, 1995 and from that date through the
Record Date, the Company was in full compliance with all terms of the Credit
Agreement. See, "ANNUAL REPORT."
WSMC Agreements. The Company purchased services and used some
facilities of WSMC to allow the Company to provide its telecommunication
services in other states in the country. The total of such purchases from WSMC
by the Company during the year ended December 31, 1995 was approximately
$245,000.
Duncan Lease. The Company entered into a long-term capital lease
agreement in 1991 with a partnership of which Mr. Duncan, the Company's
president, was a 50% owner. Mr. Duncan sold his interest in the partnership in
1992 but remained a guarantor on the note used to finance acquisition of the
property. During 1993, Mr. Duncan married Dani Bowman, the individual to whom he
sold his interest in the partnership, and as of the Record Date, the property
was owned in its entirety by the president's spouse. The property under lease
consists of a building presently occupied cupied by the Company. The lease term
is 15 years with monthly payments of $14,400, increasing in $800 increments at
each two year anniversary of the lease. The first incremental increase occurred
in 1993. If the owner sells the premises prior to the end of the tenth year of
the lease, the owner will rebate to the Company one-half of the net sales price
received in excess of $900,000. If the property is not sold prior to the tenth
year of the lease, the owner will pay the Company the greater of one-half of the
appreciated value of the property over $900,000, or $500,000. The leased asset
was capitalized in 1991 at the owner's cost of $900,000 and the related
obligation was recorded in the financial statements for the Company as reflected
in the Annual Report. See, "ANNUAL REPORT."
Indebtedness of Management
On August 13, 1993 Mr. Duncan obtained a loan of $500,000 from the
Company ("Duncan Loan") and executed a non-recourse promissory note to the
Company which bears an interest rate equal to the variable rate paid by the
Company on its Credit Agreement with its Senior Lender. Mr. Duncan is to pay off
the Duncan Loan in one payment of principal and accrued interest 90 days after
the termination of his employment with the Company or July 30, 1998, whichever
is earlier. The money was used to pay down a portion of the indebtedness of Mr.
Duncan on the WSMC Loans allowing for the release to Mr. Duncan of 223,000
shares of Class A common stock used as collateral on that loan. Those shares
were then pledged as collateral to secure the Duncan Loan. See, "SHAREHOLDINGS
OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Duncan Stock
Pledges." The largest outstanding balance of principal and interest on the
Duncan Loan during the year ended December 31, 1995 was $585,966 on that date.
As of the Record Date the outstanding balance of principal and interest on the
Duncan Loan was $597,223.
ASS008BD.WP5 Page 31
<PAGE>
During 1995, the Company made payments to others on behalf of Mr.
Duncan in the amount of $592. These payments, when added to advances made to Mr.
Duncan in prior years totalled $15,594. Mr. Duncan reimbursed the Company
$14,144 during 1995, which left a total of $1,450 outstanding at December 31,
1995.
In May, 1994 Mr. Duncan received additional loans totalling $55,000
from the Company and executed two promissory notes totalling that amount. The
terms were for interest to accrue at 7% per annum with principal to be paid in
August, 1994. The notes were extended, and the full principal and interest in
the amount of $55,686 was paid on March 6, 1995.
In September, 1995, Mr. Duncan received an additional loan in the
amount of $70,000. The terms were for interest to accrue at the variable rate
paid by the Company on its Credit Agreement with its Senior Lender. The full
principal and interest owed in the amount of $71,486 were paid in full on
December 29, 1995.
In April, 1993 Mr. Behnke obtained a loan from the Company in the
amount of $48,000 and executed a promissory note. The note bears interest at 9%
per annum, is secured by options to purchase 85,190 shares of Class A common
stock of the Company, and was due on December 31, 1995. The Company extended the
due date on the note to June 30, 1997. Accrued interest on the note totalled
$11,540 at December 31, 1995 and $12,782 on the Record Date. In September, 1995
Mr. Behnke obtained another loan from the Company in the amount of $50,000 and
executed a promissory note. The note bears interest at a rate equal to that paid
by the Company to its Senior Lender pursuant to the Company's senior credit
facility. The note is secured by the same options to purchase those 85,190
shares of Class A common stock and is due on June 30, 1997. Accrued interest on
the note totalled $1,150 at December 31, 1995 and $2,276 on the Record Date.
In August, 1994 and April, 1995 Mr. Dowling received loans from the
Company of $224,359 and $86,000 respectively, and executed promissory notes
secured by 160,297 shares of Company Class A and 74,028 shares of Class B common
stock. The notes bear interest at 10% per annum and are payable in ten equal
installments of principal and interest with the first payment on each due in
August, 1996. Payment has not been made on the notes. The Company has extended
the term of the notes with ten equal installments of principal and interest over
a period of ten years due in August of each year with the first payment on each
note due in August, 1996. Accrued interest totalled $36,476 at December 31, 1995
and $45,405 on the Record Date.
Except as disclosed in this Proxy Statement, neither as a group nor
individually did any director, executive officer, nominee for election as a
director, any member of the immediate family of these persons, or any
corporation or organization of which such director, executive officer, or
nominee is an executive officer or partner and is directly or indirectly the
beneficial owner of 10% or more of any class of equity securities of that
corporation, or any trust or other estate in which such director, executive
officer, or nominee of the Company has a substantial beneficial interest or as
to which such person serves as a trustee or in a similar capacity have during
the year ended December 31, 1995 nor during the portion of calendar year 1996
ended on the Record Date, an indebtedness to the Company in an amount in excess
of $60,000.
ASS008BD.WP5 Page 32
<PAGE>
PART IV
(5) Item 14, Part IV. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(c) Exhibits.
(1) Exhibit A: Transponder Purchase Agreement for Galaxy
X between Hughes Communications Galaxy, Inc. and GCI
Communication Corp.;
(2) Exhibit B: Galaxy X Transponder Service Agreement
between Hughes Communications Satellite Services,
Inc. and GCI Communication Corp.;
(3) Exhibit C: Framework Agreement between National Bank
of Alaska and General Communication, Inc.; and
(4) Exhibit D: 1996 Call-Off Contract between National
Bank of Alaska and General Communication, Inc.
These four commercial agreements have been included as exhibits to this Form
10-K/A in that they were executed in the year ended December 31, 1995 but were
not included in the Company's Form 10-K for that year. Portions of the
agreements identified as Exhibits A, C, and D have been redacted in that they
are considered confidential by the Company. The unredacted agreements have been
separately filed with the Securities and Exchange Commission pursuant to Rule
101(c)(1)(i) of Regulation S-T.
ASS008BD.WP5 Page 33
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GENERAL COMMUNICATION, INC.
By: /s/ Ronald A. Duncan
Ronald A. Duncan, President
(Chief Executive Officer)
Date: April 25, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
Signature Title Date
/s/ Carter F. Page Chairman of the Board April 25, 1996
Carter F. Page and Director
/s/ Robert M. Walp Vice Chairman of the Board April 23, 1996
Robert M. Walp and Director
/s/ Ronald A. Duncan President and Director, April 25, 1996
Ronald A. Duncan (Chief Executive Officer)
/s/ Donne F. Fisher Director April 25, 1996
Donne F. Fisher
/s/ John W. Gerdelman Director April 25, 1996
John W. Gerdelman
/s/ Larry E. Romrell Director April 25, 1996
Larry E. Romrell
/s/ James M. Schneider Director April 25, 1996
James M. Schneider
/s/ John M. Lowber Senior Vice President, April 25, 1996
John M. Lowber Chief Financial Officer,
Secretary and Treasurer
/s/ Alfred J. Walker Vice President and Chief April 25, 1996
Alfred J. Walker Accounting Officer
ASS008BD.WP5 Page 34
<PAGE>
EXHIBIT A
TRANSPONDER PURCHASE AGREEMENT
FOR GALAXY X
BETWEEN
HUGHES COMMUNICATIONS GALAXY, INC.
AND
GCI COMMUNICATION CORP. (1)
- -----------------
1 In this document "********" are used in place of redacted information.
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
1.The Satellite 1
1.01 Satellite 1
1.02 Orbital Position 1
1.03 C-Band Transponders 1
1.04 Ku-Band Transponders 2
1.05 Specifications and Components 2
1.06 Rights To Reserves or Spares 2
2.Purchase and Sale of Transponders; Option to Purchase 2
2.01 Purchase 2
2.02 Lease with Option to Purchase 2
3.Purchase Price and Payment Schedule 4
3.01 Purchase Price Components Description 4
3.02 Purchase Price Component Amount 4
3.03 Place of Payment 7
4.Delivery and Related Matters 7
4.01 Delivery 7
4.02 Ownership, Title and Assumption of Risk 8
4.03 Acceptance 8
5. Representations and Warranties 8
5.01 Authority, No Breach 8
5.02 Corporate Action 8
5.03 Consents 8
5.04 Litigation 9
5.05 No Broker 9
6. Additional Representations, Warranties and Obligations
of HCG 9
6.01 Authorization Description 9
6.02 Transponder Performance Specifications 9
6.03 Title 10
6.04 Government Regulations 10
6.05 Not a Common Carrier 10
6.06 TT&C 10
ACK/shs: GCI.GX TPA.Final i Monday, August 21, 1995 - 8:00 am
<PAGE>
7. Additional Representations, Warranties and Obligations
of Buyer 10
7.01 [Reserved] 10
7.02 Non-Interference 10
7.03 Laws 11
7.04 Additional Usage Representations and Obligations 11
8. Preemptive Rights and Inspection of Facilities 11
9. Transponder Spares, Reserve Transponders and Retained
Primary Transponders 12
9.01 Use of Transponder Spares 12
9.02 Use of Reserve Transponders 12
9.03 Simultaneous ******** -- Priority with Respect
to the Use of Transponder Spares 13
9.04 Simultaneous ******** -- Priority with Respect
to the Use of Reserve Transponders 13
9.05 HCG's Ownership of Primary Transponders 13
9.06 Notice of Intent to Substitute a Reserve
Transponder 14
10. Termination Rights 14
10.01 Termination by Buyer 14
10.02 Termination by H CG 14
10.03 H HCG's Right to Sell if Non-Payment 14
10.04 Prompt Repayment 15
10.05 Termination by Buyer or HCG 15
10.06 Right to Deny Access 15
10.07 Return of Transponders 18
10.08 Cancellation of Buyer's Ku-Band Transponder 18
10.09 Buyer's Special Option to Terminate 18
11. Force Majeure 18
11.01 Failure to Deliver 18
11.02 Failure of Performance 19
12.Limitation of Liability/******** 19
12.01 Liability of H CG 19
12.02 Confirmed ******** 19
12.03 Repayment for ******** Transponder or ********
Transponder 20
12.04 Limitation of Liability 20
12.05 Obligations of Buyer to Cooperate 21
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<PAGE>
13. Limitations on Transfer by Buyer 21
13.01 Transfers by Buyer 21
13.02 Transfers by HCG 22
13.03 Affiliate 22
13.04 Assignment 22
14.[Reserved] 22
15. Progress Reports, Inspections and Access to Work
in Progress 22
15.01 Progress Reports 22
15.02 Inspection Rights of Buyer 23
15.03 Access to Work in Progress and Selection of
Transponders 23
15.04 After Delivery Reports 23
16. Confidentiality and Press Releases 23
16.01 Confidential Information 23
16.02 Press Releases 24
17. Disposition of Satellite 24
17.01 ******** 24
17.02 Disposition of Satellite 24
18. Documents 25
19. Conflicts 25
20. Miscellaneous 25
20.01 Interest 25
20.02 Applicable Law and Entire Agreement 25
20.03 Notices 25
20.04 Severability 27
20.05 Taxes 27
20.06 Successors 27
20.07 Rules of Construction 27
20.08 Survival of Representations and Warranties 27
20.09 No Third-Party Beneficiary 27
20.10 Non-Waiver of Breach 28
20.11 Counterparts 28
21. Option for ******** 28
</TABLE>
ACK/shs: GCI.GX TPA.Final iii Monday, August 21, 1995 - 8:00 am
<PAGE>
EXHIBITS:
A Galaxy Satellite Description
B Galaxy X Transponder Performance Specifications
ADDENDUM
ACK/shs: GCI.GX TPA.Final iv Monday, August 21, 1995 - 8:00 am
<PAGE>
GALAXY X TRANSPONDER PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of
this 24th day of August, 1995 (the "Execution Date"), by and between Hughes
Communications Galaxy, Inc. (HCG"), a corporation organized and existing under
the laws of the state of California, and GCI Communications Corp. ("Buyer"), a
corporation organized and existing under the laws of the state of Alaska.
RECITALS
WHEREAS, HCG intends to construct, launch, and operate a
satellite to be designated as Galaxy X, containing C-Band capacity an Ku-Band
capacity and desires to sell transponders on such a satellite; and
WHEREAS, Buyer desires to purchase and HCG desires to sell
certain transponders on Galaxy X, subject to the approval of the Federal
Communications Commission.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises set
forth below, HCG and Buyer hereby mutually agree as follows:
1. The Satellite
1.01 Satellite. Subject to the approval of the Federal
Communications Commission (FCC), HCG plans to construct and launch a satellite,
referred to hereinafter as "Galaxy X" (the "Satellite" or "G-X"). Galaxy X shall
be a hybrid satellite (i.e., it contains both C-Band capacity (C-Band
Transponders") and Ku-Band capacity ("Ku-Band Transponders"). Collectively, the
C-Band Transponders are referred to hereinafter as the "Transponders".
1.02 Orbital Position. Based on FCC approval, the orbital
position of Galaxy X shall be 123(degree) West Longitude. HCG currently plans to
launch Galaxy X in the fourth quarter of 1997, subject to the approval of the
FCC.
1.03 C-Band Transponders. Galaxy X shall have twenty-four (24)
C-Band Transponders. Twenty-two (22) of the C-Band Transponders on Galaxy X
shall be designated "Primary". The remaining two (2) C-Band transponders on
Galaxy X shall be designated as "Reserve". "Primary Transponders" shall mean
Transponders which are not preemptible and as to which the "Owners" of the
Transponders, if a "Confirmed ********" (as hereafter defined) occurs, shall
have the right to preempt a Reserve Transponder in accordance with section 9.02.
"Reserve Transponders" shall mean Transponders which shall be preemtable, in
accordance with Section 9.02 by
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<PAGE>
Owners of Primary Transponders located on the Satellite that have suffered a
Confirmed ********. Galaxy X also shall have six (6) C-Band "Transponder
Spares," as defined in Section 9.01. As used in this Agreement, "Owner" shall
include the actual owner of a Transponder, including HCG if there remain any
unsold Transponders, or any permitted assignee of such owner's Transponder, or
any lessee or licensee of HCG. The term "purchase" shall include the execution
of an agreement with HCG for a long term lease.
1.04 Ku-Band Transponders. Galaxy X shall have twenty-four (24)
Ku-Band Transponders. All twenty-four Ku-Band Transponders are currently planned
to be designated as "Primary" (collectively, the "Primary Ku-Band
Transponders"). HCG may, at HCG's sole option, designate certain Ku-Band
Transponders as "Reserve". Galaxy X shall have six (6) Ku-Band Transponder
Spares.
1.05 Specifications and Components. Exhibit A sets forth the
design summary of the Satellite. Exhibit B sets forth the "Transponder
Performance Specifications", defined as certain technical specifications for the
Transponders on Galaxy X, including values for each Transponder for polarization
isolation, interference between Transponders, frequency response, group delay,
amplitude non-linearity, spurious outputs, phase shift, cross talk, stability,
transmit EIRP, uplink saturation flux density, and G/T. HCG shall make copies of
the antenna range gain contour test data available to Buyer.
1.06 Rights to Reserves or Spares. Ownership or the lease of
C-Band Transponders shall not give an Owner the right to preempt or use any
Primary Ku Band Transponders or Ku-Band Transponder Spares on Galaxy X.
Ownership or the lease of Ku-Band Transponders shall not give an Owner the right
to preempt or use any Primary or Reserve C-Band Transponders or C-Band
Transponder Spares on Galaxy X.
2. Purchase and Sale of Transponders; Option to Purchase
2.01 Purchase. HCG shall sell, and Buyer shall purchase ********
Primary C Band Transponders on Galaxy X ("Buyer's G-X Transponders" or "Buyer's
Transponders"), all of which are on a "Delivered" basis (as such term is defined
in Sections 4.01).
2.02 Lease with Option to Purchase. Subject to Section 10.08,
below, HCG shall lease to Buyer ******** Ku-Band Transponder on Galaxy X
("Buyer's Ku-Band Transponder" and sometimes collectively, "Buyer's
Transponders") for a Lease Term of ********, commencing upon Delivery (Section
4.01) to Buyer, at the ******** Lease Rate of ********. Buyer shall comply with
all standard lease terms and conditions covering leases of Ku-Band Capacity on
Galaxy X.
ACK/shs: GCI.GX TPA.Final 2 Monday, August 21, 1995 - 8:00 am
<PAGE>
(a) Buyer shall have an Option to Purchase ("Purchase Option") the
******** Ku-Band Transponder that is the subject of the Lease referenced in
this Section 2.02 excercisable in the manner and on the terms and
conditions as follows:
(i) Buyer may exercise its Purchase Option within ******** after
the Notice as defined in Section 3.02(a)(i)(1), below, by delivering
written notice of its intent to exercise the Purchase Option and
payment to HCG of the Downpayment required by Section 3 below on or
before the Execution Date, the Base Price to Buyer shall be ********,
both as defined in Section 3.02(a), for Buyer's Ku-Band Transponder; or
(ii) Buyer may exercise its Purchase Option on or before the date
on which a satellite designated as Galaxy IX ("Galaxy IX") commences
service at the 123(degree) West Longitude orbital location ("G-IX
Delivery Date, by delivering written notice of its intent to exercise
the Purchase Option and payment to HCG of the downpayment required by
Section 3 below on or before the G-IX Delivery Date, and thereafter
making such payments as required for Buyer's Transponders generally in
this Agreement. If Buyer exercises its Purchase Option on or before the
G-IX Delivery date, the Base Price to Buyer shall be ********, both as
defined in Section 3.02(a), for Buyer's Ku-Band Transponder; or
(iii) Buyer may exercise is Purchase option on or before ********
the Delivery of Galaxy X ("G-X Delivery date") by delivering written
notice of its intent to exercise the Purchase Option and payment to HCG
of the Downpayment required by Section 3 below ******** after the G-X
Delivery Date, and thereafter making such payments as required for
Buyer's transponders generally in this Agreement. If buyer exercises
its Purchase Option on or before the G-X Delivery Date, the Base Price
to Buyer shall be ********, both as defined in Section 3.02(a), for
Buyer's Ku-Band Transponder.
If Buyer exercises any of the above choices with respect to Purchase Option
of the Buyer's Ku-Band Transponder, Buyer's Ku-Band Transponder shall thereafter
be subject to all the terms and conditions as the Buyer's Transponders which are
the subject of Purchase in Section 2.01 above.
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<PAGE>
3. Purchase Price and Payment Schedule
3.01 Purchase Price Component Amount. The purchase price for
each of Buyer's Transponders shall consist of a "******** Price" and a ********
and, an ******** (collectively, the "Purchase Price Components"). The payment
for each of these Purchase Price Components by Buyer is mandatory. The services
to be provided by HCG in return for Buyer's payment of the Purchase Price
Components are described in other sections of this Agreement. All prices set
forth are on a per Transponder basis.
3.02 Purchase Price Component Amount. The Purchase Price
Components, payment terms, certain refunds and an Option covering each of
Buyer's Transponders shall be as follows:
(a) The ******** Price shall be defined and payable in accordance with
the following:
(i) Buyer understands and agrees that at the Execution Date,
********, may have an expected useful life of ********. The Purchase
contemplated by this Agreement is based upon a purchase period of
********. To accommodate Buyer's desire for flexibility and some
assurance of the ******** Price per Transponder, HCG hereby grants
Buyer an Option to purchase all, but not less than all, of its Buyer's
G-X Transponders for a period of either ********, upon the following
conditions:
(1) Within ******** of the date of HCG's notice to Buyer
identifying the design configuration of the satellite (the
"Notice"), Buyer shall respond in writing and affirmatively accept
or reject HCG's offer of Transponders for a ******** Purchase. In
the event that Buyer fails to respond to any such Notice, it will
be deemed agreed between the parties to this Agreement that the
Buyer's Purchase of the Transponders shall be for a ********
Purchase.
(2) If Buyer exercises its Option for Transponders for a
******** Purchase, all references to Transponders, Buyer's
Transponders, Reserves or Spares in this Agreement shall be deemed
to apply to Transponders having a ******** purchase period, and
likewise the terms of the entire Agreement shall apply thereto.
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<PAGE>
(3) The "******** Price" for each of Buyer's Transponders
shall be as follows:
(i) for ******** Purchase: a range between ******** for all
Transponders Delivered within ******** of Satellite operation, and
******** for any of Buyer's Transponders Delivered in the ********, all
of Buyer's Transponders being Delivered within ******** of the
commencement of operations of the Satellite.
(ii) for ******** Purchase: a range between ******** for all
Transponders Delivered within ******** of Satellite operation, and
******** for any of Buyer's Transponders Delivered in the ********, all
of Buyer's Transponders being Delivered within ******** of the
commencement of operations of the Satellite.
(iii) the ******** Price for either ******** Purchase or ********
Purchase Transponders shall be paid as follows; ******** (the
"Downpayment") on the Execution Date, such amount to cover ******** of
the Purchase Price of all of the Buyer's transponders; and the
remaining ******** as of the date of each Buyer's Transponder Delivery
(as defined in Section 4.01). Any change hereafter in the scheduled
launch date shall not affect this payment schedule.
(A) At Buyer's election, and subject to the full
satisfaction of HCG, Buyer may, on the Execution Date, pay
all, but not less than all, of the Downpayment in the form of
an irrevocable letter of credit, in form and substance and
drawn on a bank or other financial institution acceptable to
HCG in its sole discretion (the "LC"). If Buyer elects to pay
the Downpayment in the form of LC, then Buyer shall pay to HCG
******** in immediately available funds on the Execution Date.
Such ******** shall be returned to Buyer, if and when HCG
receives the LC to HCG's satisfaction. If buyer
ACK/shs: GCI.GX TPA.Final 5 Monday, August 21, 1995 - 8:00 am
<PAGE>
is given Notice and exercises its Option for a ********
Purchase for Transponders, the amount of the LC shall be
increased accordingly.
(B) At the time Buyer makes the election to pay the
Downpayment in the form of LC, Buyer must also make an
election as to the date upon which it wishes to have the LC
drawn down ("Draw Down Date"), but in any event not later than
the Delivery of Galaxy X, and Buyer shall present LC
reflecting an appropriate increase if interest is to be paid
on the Downpayment:
(i) if Buyer elects a Draw Down Date on or concurrent
with Delivery of Galaxy IX, HCG will accept the
Downpayment without accrued interest as payment of the
full amount of the Downpayment;
(ii) if Buyer elects a Draw Down Date on or
concurrent with the delivery of Galaxy X, Buyer shall pay
HCG an additional amount as interest on the full amount of
the Downpayment, at the rate of ********, computed from
the Execution Date to the G-X Delivery Date (as estimated
by HCG at the Execution Date).
To the extent that the amount available under the LC is
insufficient on the Draw Down Date, the Buyer agrees to
immediately pay the difference to HCG without the necessity of
notice or demand by HCG to Buyer. In any event the LC shall
remain irrevocable and non-cancelable by Buyer unless and
until Buyer has paid the Downpayment for Buyer's Transponders
in full.
(b) The ******** for each of Buyer's Transponders shall be a per month
fee of ********, payable in advance on the day of Delivery and on the first
day of each month thereafter. Payments for a partial month shall be
prorated. If one of Buyer's Transponders becomes a ******** Transponder (as
defined in Section 12.01) or ******** Transponder (as defined in Section
21), then the ******** shall cease as to such ******** Transponder or
******** Transponder. ********
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<PAGE>
******** for a ******** Purchase or ******** for a ******** Purchase,
respectively. ******** was made for such ******** Transponder or ********
Transponder, then the ******** (as defined in Section 6.02) for such
******** Transponder or ******** Transponder ********.
(c) The ******** for each of Buyer's Transponders shall be a lump sum
payment to HCG of ******** of the ******** Price, payable to HCG
concurrently with Delivery with respect to each of Buyer's Transponders. If
one of Buyer's Transponders becomes a ******** Transponder ********
Transponder, then the payment shall be ******** Transponder ********
Transponder in accordance with Section 12.03.
3.03 Place of Payment. All payments by Buyer shall be made to
HCG at its principal place of business, as designated in Section 20.03, and
shall be deemed to be made only upon actual receipt by HCG. All refunds by HCG
shall be made to Buyer at its principal place of business as designated in
Section 20.03, and shall be deemed to be made only upon actual receipt by Buyer.
4. Delivery and Related Matters
4.01 Delivery. "Galaxy X Delivery" shall occur upon, and
"Delivery", "Delivered" and "Deliver", as to Galaxy X shall mean the placing of
the Satellite, containing all of Buyer's Transponders, in its assigned orbital
position with ******** meeting the relevant performance specifications (all of
which requirements may be met through the use of Reserve Transponders or
Transponder Spares). "Buyer's Transponder(s) Delivery" shall occur upon, and
"Delivery", "Delivered", and "Deliver" as to each Buyer's Transponder shall mean
(i) the occurrence of Galaxy X Delivery, (ii) Buyer's acceptance of its
Transponders as provided for in Section 4.03 and (iii) full payment by Buyer as
provided in Section 4.02. With respect to ******** the C-Band Buyer's
Transponders (which shall be hereinafter referred to as the "Delayed ********"),
Buyer may ******** of such Transponders as set forth below. Buyer may, at
Buyer's sole option, ******** Delivery of ******** Delayed ******** (the "First
Delayed ********") to a date occurring after Galaxy X Delivery but no later than
******** by delivery of written notice to HCG ******** prior to the initial
scheduled launch date, as determined by HCG in HCG;s sole discretion. With
respect to ******** Delayed ********, (the "Second Delayed ********"), Buyer
may, at Buyer's sole option, ******** Delivery of the Second Delayed ******** to
a date occurring after Galaxy X Delivery but no later than ******** by delivery
of written notice to HCG on or before the earlier of (i) ******** or (ii)
********
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<PAGE>
********. Such notice of election to ******** the Delivery with respect to such
Delayed Transponders shall be irrevocable.
4.02 Ownership Title and Assumption of Risk. Ownership and title
to Buyer's Transponders shall pass to Buyer at the time of Delivery to Buyer. A
condition to HCG's obligation to deliver title to Buyer, and of Buyer's
obtaining ownership, shall be the payment by Buyer of all amounts due to HCG on
or prior to Delivery for such Transponder or Transponders. Any loss of or damage
to Buyer's Transponders prior to Delivery shall be at the risk of HCG. Any loss
of or damage to Buyer's Transponders after Delivery to Buyer will be at the risk
of Buyer; provided however, that the foregoing shall not impair Buyer's other
rights under Sections 4, 9 and 12 of this Agreement.
4.03 Acceptance. HCG shall test each of the Buyer's Transponders
with an acceptance test plan to be prepared by HCG in advance of the launch of
the Satellite and delivered to Buyer. This Agreement contemplates that ********
of Buyer's Transponders shall be designated to meet ******** specifications and
******** shall meet the "********" specifications as defined by the
specifications sheet attached hereto as Exhibit "B", entitled "Transponder
Performance Specifications". Acceptance of Buyer's Transponders by Buyer shall
be deemed to have occurred upon completion of the following: (a) Buyer's
Transponders have passed all tests set forth in the aforementioned acceptance
test plan and meet the Transponder Performance Specifications; and (b) HCG has
notified Buyer in writing that it has successfully completed testing Buyer's
Transponders and that Buyer's Transponders are available for service.
5. Representations and Warranties
HCG and Buyer each represent and warrant to the other that:
5.01 Authority. No Breach. It has the right, power and authority
to enter into, and perform its obligations under, this Agreement. The execution,
delivery and performance of this Agreement shall not result in the breach or
nonperformance of any agreements it has with third parties.
5.02 Corporate Action. It has taken all requisite corporate
action to approve execution, delivery and performance of this Agreement, and
this Agreement constitutes a legal, valid and binding obligation upon itself in
accordance with its terms.
5.03 Consents. The fulfillment of its obligations hereunder will
not constitute a material violation of any existing applicable law, rule,
regulation or order of any governmental authority. All material necessary or
appropriate public or private consents, permissions, agreements, licenses, or
authorizations to which it or any Transponder or the Satellite may be subject
have been or shall be obtained in a timely manner; provided, however, that it
shall be HCG's sole responsibility to
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obtain any regulatory approvals needed to enable it to sell Transponders as
provided for in this Agreement. Notwithstanding the above, HCG and Buyer
acknowledge that the transactions set forth in this Agreement may be challenged
before the FCC or a court of competent jurisdiction by other persons or entities
not parties hereto. In such event, HCG and Buyer agree that HCG shall use its
best efforts, and Buyer shall use reasonable efforts, before the FCC, and the
courts if an appeal from an FCC order is taken, to support HCG's right to sell
and Buyer's right to purchase Buyer's Transponders and shall fully cooperate
with each other in these endeavors. Buyer alone shall have the right to
determine how much and to whom it will incur legal expenses in connection with
any proceeding arising out of its obligations under this Section 5.03. If,
however, by written order, the FCC or a court of competent jurisdiction shall
determine that HCG may not sell and Buyer may not purchase Buyer's Transponders
under the terms and conditions set forth herein, then HCG and Buyer shall seek
immediate review of such order before the FCC or an appellate court or shall, if
possible, reconstitute the transaction to comply with such order and to provide
Buyer with use of "equivalent capacity" on another HCG-operated satellite and to
provide HCG with the "price provided for herein." As used herein, "equivalent
capacity" shall mean the same number of Transponders purchased by Buyer pursuant
to this Agreement and there is no material adverse change in the provisions of
this Agreement regarding purchase price taking into account payment terms using
a present value analysis, tax benefits from the form of the transactions, use of
Transponder Spares and Reserve Transponders, and Transponder Performance
Specifications. As used herein, "price provided for herein" shall mean the total
price payable to (HCG, taking into account payment terms, using a present value
analysis with a ********, and tax benefits from the form of the transactions. If
an appellate court issues a written order, which is no longer subject to further
judicial rehearing or review, upholding the determination of the FCC or a court
or competent jurisdiction that HCG may not sell and Buyer may not purchase
Buyer's Transponders, then HCG and Buyer shall, if possible, reconstitute the
transaction as set out herein.
5.04 Litigation. To the best of its knowledge, there is no
outstanding or threatened judgment, pending litigation or proceeding, involving
or affecting the transactions provided for in this Agreement, except as has been
previously or concurrently disclosed in writing by either party to the other.
5.05 No Broker. It does not know of any broker, finder, or
intermediary involved in connection with the negotiations and discussions
incident to the execution of this Agreement, or of any broker, finder or
intermediary who might be entitled to a fee or commission upon the consummation
of the transactions contemplated by this Agreement.
6. Additional Representations, Warranties and Obligations of HCG
6.01 Authorization Description. HCG has filed with the FCC an
application to construct, launch and operate Galaxy X at 123(degree) West
Longitude.
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6.02 Transponder Performance Specifications. Each of Buyer's
Transponders, upon Delivery, shall meet the Transponder Performance
Specifications throughout the duration of the ********. ******** shall mean that
period of time ********. ******** as to Buyer's G-X Transponders shall mean
that, if any of Buyer's G-X Transponders become ******** Transponders during the
********, then Buyer shall be entitled to the repayment set forth in Section
12.03.
6.03 Title. Upon Delivery and subject to Section 4,02, HCG shall
deliver to Buyer good title to each of Buyer's Transponders free from all liens,
charges, claims or encumbrances, except for any encumbrances resulting from any
action taken by Buyer.
6.04 Government Regulations. HCG has or shall use its best
efforts throughout the ********, and until disposition of Galaxy X pursuant to
Section 17, to obtain and maintain, in all material respects, all applicable
federal, state and municipal authorizations or permissions to construct, launch
and operate Galaxy X, applicable to it; and to comply, in all material respects,
with all such government regulations regarding the construction, launch an
operation of the Satellite and Transponders applicable to it.
6.05 Not a Common Carrier. Unless required to do so by the FCC,
HCG shall not hold itself out, publicly or privately, as a provider of common
carrier communications services on Galaxy X and is not purporting herein to
provide to Buyer or to any other party any such services with respect to Galaxy
X.
6.06 TT&C. Tracking, telemetry and control ("TT&C") shall be
provided by Hughes Communications Satellite Services, Inc. ("HCG"), an affiliate
of HCG, for the life of the Satellite, pursuant to a separate "TT&C Service
Agreement" which has been executed by HCG and Buyer concurrently herewith.
********.
7. Additional Representations. Warranties and Obligations of Buyer
7.01 [Reserved]
7.02 Non-Interference. Buyer's radio transmissions (and those of
its uplinking agents) to the Satellite shall comply, in all material respects,
with all FCC and all other governmental (whether international, federal, state,
municipal, or otherwise) statutes, laws, rules, regulations, ordinances, codes,
directives and orders, of any such governmental agency, body, or court
(collectively, "Laws") applicable to it regarding the operation of the Satellite
and Buyer's Transponders. Buyer shall not utilize (or permit or allow any of its
uplinking agents to utilize) any of Buyer's Transponders in a manner which will
or may interfere with the use of any other
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Transponder or cause physical harm to any of Buyer's Transponders, any other
Transponders, or to the Satellite. Further, Buyer will coordinate (and will
require its uplinking agents to coordinate) with HCG, in accordance with
procedures reasonably established by HCG and uniformly applied to all users of
Transponders on the Satellite, its transmissions to the Satellite, so as to
minimize adjacent channel and adjacent satellite interference. For purposes of
this Section 7.02, interference shall also mean acts or omissions which cause a
Transponder to fail to meet its Transponder Performance Specifications. Without
limiting the generality of the foregoing, Buyer (and its uplinking agents) shall
comply with all FCC rules and regulations regarding use of automatic transmitter
identification systems (ATIS).
7.03 Laws. Buyer shall comply (and shall require its uplinking
agents to comply), in all material respects, with all Laws applicable to it
regarding the operation or use of the Satellite and Buyer's Transponders.
7.04 Additional Usage Representations and Obligations.
(a) Buyer has not been convicted for the criminal violation
of, and has not been found by the FCC or other federal, state or
local governmental authority with appropriate jurisdiction
(collectively, the "Governmental Authority") to have violated,
any federal, state or local law or regulation as applicable
concerning illegal or obscene program material or the
transmission thereof (the "Obscenity Laws"), and Buyer is not
aware of any pending investigation (including, without
limitation, a grand jury investigation) involving Buyer's
programming or any pending proceeding against Buyer for the
violation of any Obscenity Laws.
(b) Buyer will notify HCG as soon as it receives
notification of, or becomes aware of, any pending investigation
by any Governmental Authority, or any pending criminal
proceeding against Buyer, which investigation or proceeding
concerns transmissions by Buyer potentially in violation of any
law, including without limitation, Obscenity Laws.
(c) Any use of Buyer's Transponders shall comply, in all
material respects, with all applicable laws regarding the
operation or use of the Satellite and Buyer's Transponders
(including, but not limited to, any Obscenity Laws).
8.Preemptive Rights and Inspection of Facilities
Buyer recognizes that it may be necessary in unusual or abnormal
situations or conditions for HCG deliberately to preempt or interrupt Buyer's
use of each of its Transponders, in order to protect the overall performance of
the Satellite. Such decisions shall be made by HCG in its sole discretion;
provided, however, that, to the extent it is technically feasible, HCG shall
preempt or interrupt the use of Transponders in the inverse order in which the
Owners (or such Owner's predecessors in interest) on such Satellite executed
transponder purchase agreements
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for its Transponders on such Satellite. To the extent technically feasible, HCG
shall give Buyer at least forty-eight (48) hours' notice of such preemption or
interruption and HCG shall use its reasonable best efforts to schedule and
conduct its activities during periods of such preemption or interruption so as
to minimize the disruption to the use of Transponders on such Satellite. To the
extent that such preemption results in a loss to Buyer of the use of Buyer's
Transponders sufficient to constitute a breach of HCG's warranty obligations as
set forth in Section 12, then Buyer shall have all of the rights and remedies
set forth in Sections 9 and 12.
9. Transponder Spares. Reserve Transponders and Retained Primary Transponders
9.01 Use of Transponder Spares. HCG shall cause Galaxy X to contain certain
redundant equipment units (individually, a "Transponder Spare"), which are
designed as substitutes for equipment units the failure of which could cause a
Transponder to fail to meet the Transponder Performance Specifications. HCG, as
soon as possible and to the extent technically feasible, shall employ a
Transponder Spare in such Satellite as a substitute for Buyer's Transponder
equipment unit which has caused Buyer's Transponders to suffer a Confirmed
******** (as defined in Section 12.02) in order to enable Buyer's Transponders
to meet the Transponder Performance Specifications. To the extent technically
feasible, a Transponder Spare will be substituted for the faulty equipment unit
on a first-needed, first-served basis to satisfy HCG's ******** obligations to
Buyer and to other Owners of users of Transponders on the same Satellite which
have suffered Confirmed ********; provided, however, that HCG's obligations to
provide Transponder Spares shall continue until such time as all of the
Transponder Spares are committed to use as substitutes for Transponders which
have suffered Confirmed ********. If HCG furnishes a Transponder Spare to Buyer
as a substitute for an equipment unit which has caused Buyer's Transponder to
suffer a Confirmed ********, the HCG shall transfer title and ownership of the
Transponder Spare to Buyer and Buyer concurrently, shall return title and
ownership of its substituted Transponder equipment unit to HCG. Buyer's
Transponder equipment unit which has been returned shall be made available by
HCG, to the extent technically feasible, to satisfy its obligations to Owners or
users on the same Satellite. HCG also shall have the right, until the
Transponder Spares are needed, to utilize such Transponder Spares in any manner
HCG determines.
9.02 Use of Reserve Transponders. If no Transponder Spare is
available at the time that Buyer's Transponder suffers a Confirmed ******** or
if the use of such Transponder Spare would not correct the failure, then HCG
shall employ, as soon as possible and to the extent technically feasible, and
unless any delay is requested by Buyer, a Reserve Transponder on Galaxy X as a
substitute for such Transponder which has suffered a Confirmed ********;
provided, however, that HCG's obligation to provide Reserve Transponders to
Buyer shall continue only until such time as all of the Reserve Transponders are
committed to use as substitutes for Primary Transponders which have suffered a
Confirmed ********. HCG shall include in the
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transponder purchase agreement of any Owner who has purchased a Reserve
Transponder (or in any other agreement providing for the Transfer of a Reserve
Transponder) a requirement that HCG may preempt such Reserve Transponder(s)
after two (2) hours' notice from HCG. Reserve Transponders utilized as
substitutes shall meet the Transponder Performance Specifications. Reserve
Transponders, or any one of them, will be substituted and utilized on a
first-needed, first-served basis to satisfy HCG's obligations to Buyer and to
other Owners with respect to the performance of their Primary Transponders. HCG
shall have the right, in its sole discretion, to utilize first a Transponder
Spare prior to furnishing a Reserve Transponder to Buyer. If HCG furnishes a
Reserve Transponder to Buyer, then HCG shall transfer title and ownership of
such Reserve Transponder to Buyer and Buyer concurrently shall return title and
ownership of its substituted Transponder to HCG. Buyer's Transponder which has
been returned to HCG shall thereafter be made available by HCG, to the extent
technically feasible, to satisfy its obligations to other Owners. HCG also shall
have the right, until the Reserve Transponders are needed, to utilize them in
any manner HCG determines.
9.03 Simultaneous ******** -- Priority with
Respect to the Use of Transponder Spares. In the event that Primary Transponders
of more than one Owner simultaneously suffer a Confirmed ********, then the
Owner (or such Owner's predecessor in interest) who first executed a transponder
purchase agreement with HCG shall have priority as to use of Transponder Spares
with respect to said Owner's Primary Transponder or Transponders which have
suffered a Confirmed ********, to the extent technical feasible. As used in this
Section 9, the term "simultaneously" shall be deemed to mean occurring within a
24-hour period.
9.04 Simultaneous ******** - Priority with Respect to the Use of
Reserve Transponders. In the event that Primary Transponders of more than one
Owner simultaneously suffer a Confirmed ********, and no Transponder Spare is
available or if the use of such Transponder Spare would not correct the
********, then the Owner (or such Owner's predecessor in interest) who first
executed a transponder purchase agreement with HCG for the purchase of a Primary
Transponder on such Satellite shall have priority as to use of a Reserve
Transponder with respect to said Owner's Primary Transponder or Transponders
which have suffered a Confirmed ********.
9.05 HCG's Ownership of Primary Transponders. If HCG is unable
to sell all of the Primary Transponders, then HCG may retain ownership of such
unsold Primary Transponders ("HCG's Transponders"). (The same provision shall
apply with respect to Reserve Transponders.) In such event, HCG shall have the
same rights to use HCG's Transponders as any other Owner would have, including,
without limitation, the right to utilize Transponder Spares and Reserve
Transponders in the event HCG's Transponders do not meet the Transponder
Performance Specifications. HCG also shall have the right, but not the
obligation, to utilize HCG's Transponders to satisfy HCG's warranty obligations
to Buyer and to other Owners. HCG shall be deemed to have been the last entity
to execute a
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Transponder Purchase Agreement for purposes of determining its priority under
the provisions of this Section 9 and other Sections of this Agreement; provided,
however, that if HCG long term leases any unsold Primary Transponder to a third
party, such third party shall, for purposes of determining its priority under
the provisions of this Section 9, or elsewhere in this Agreement, be deemed to
have "purchased" such Transponder and to have executed a transponder purchase
agreement on the date it executed such long term lease.
9.06 Notice of Intent to Substitute a Reserve Transponder Prior
to the substitution of a Reserve Transponder for Buyer in accordance with this
Section 9, HCG shall notify Buyer in. advance of its intention to so substitute
the Reserve Transponder and the substitution shall be made at such time as the
parties mutually agree.
10. Termination Rights
10.01 Termination by Buyer.
(a) If HCG does not Deliver any of Buyer's Transponders on
********, Buyer shall have the right to cancel its obligations
to purchase all of its undelivered Transponders, by giving
written notice to HCG on or before ********.
(b) If Buyer terminates its obligations as to Buyer's
Transponders due to the failure to make Delivery as set forth in
this Section 10 (the "Terminated Transponders"), then Buyer
shall be entitled to a full refund, without interest, of all
payments made for each such Terminated Transponder, less any
payments made by HCG to it on account of such Terminated
Transponders pursuant to other provisions of this Agreement, and
Buyer and HCG shall have no further obligations to each other as
to each such Terminated Transponder.
(c) Buyer shall notify HCG of its intent to terminate its
obligations pursuant to this Section 10.01 on or before
********.
10.02 Termination by HCG. Notwithstanding anything else set forth in
this Agreement, HCG may terminate this Agreement if Buyer shall have failed to
pay any amount due and payable pursuant to the provisions of Section 3, and
Buyer has been given written notice by HCG of said failure and Buyer shall have
failed to pay the amount due and payable within thirty (30) business days after
HCG has given such notice to Buyer. Any late payments by Buyer to HCG shall be
with interest calculated at the rate set forth in Section 20.01, payable with
the amount due and calculated from the date payment was due until the date it is
received by HCG.
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10.03 HCG's Right to Sell if Non-Payment. If, for any reason
whatsoever, Buyer does not make the payments in the amounts and on the dates set
forth in Section 3 and Buyer fails to cure such default as set forth in Section
10.02, then, in addition to all of its other remedies at law or in equity, HCG
shall be entitled to Transfer (as defined in Section 13.01) Buyer's Transponders
immediately to whomever HCG sees fit, Buyer shall not be entitled to any
equitable relief as a result thereof, and Buyer's exclusive remedy shall be
limited to recovery of any payments made to it by HCG, without interest, less
any claim HCG has against Buyer by reason of such Buyer's default.
10.04 Prompt Repayment. All refunds provided for in this Section
10 to be made by HCG shall be made within ******** of receipt by HCG of notice
of termination by Buyer, and any late payment by HCG to Buyer shall be with
interest calculated at the rate set forth in Section 20.01, payable with the
amount due and calculated from the date payment was due until the date it is
received by Buyer.
10.05 Termination by Buyer or HCG. Notwithstanding anything else
set forth in this Agreement, either Buyer or HCG may terminate its obligations
under this Agreement as to Transponders on Galaxy X if, prior to Delivery, the
FCC shall have ordered the placement of Galaxy X into an orbital position
further east than ******** or further west than ********, and such order shall
have become a Final Order, and the parties are unable to reconstitute this
Agreement pursuant to Section 5.03. As used herein, an order of the FCC becomes
a "Final Order" when the FCC's action is no longer subject to administrative or
judicial reconsideration, rehearing, review, stay, appeal or other similar
actions which could be filed with the FCC or with any court having jurisdiction
to review said action.
10.06 Right to Deny Access.
(a) If, in connection with using Buyer's Transponders,
(i)"User" (as defined below) is indicted or is
otherwise charged as a defendant in a criminal proceeding
based upon, or is convicted under, any Obscenity Law or has
been found by any Governmental Authority to have violated
any such law;
(ii) based on any User's use of Buyer's Transponders,
HCG is indicted or otherwise charged as a criminal
defendant, becomes the subject of a criminal proceeding or a
governmental action seeking a fine, license revocation or
other sanctions, or any Governmental Authority seeks a cease
and desist or other similar order or filing;
(iii) the FCC has issued an order initiating a
proceeding to revoke HCG's authorization to operate the
Satellite;
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(iv) HCG obtains a court order pursuant to Section
10.06(c) below, or a court or Governmental Authority of
competent jurisdiction orders HCG to deny access to User or
orders User to cease transmission; or
(v) HCG receives notice (the "Illegal Programming
Notice"), written or oral, from a Governmental Authority
that such authority considers Buyer and/or any other User's
programming to be in violation of Obscenity Laws (the
"Illegal Programming"), and that if HCG does not cease
transmitting such Illegal Programming, then HCG and/or its
Affiliates and/or any of their executives will be indicted
or otherwise charged as a criminal defendant, will become
the subject of a criminal proceeding or a governmental
action seeking a fine, license revocation or other
sanctions, or that such Governmental Authority will seek a
cease and desist or other similar order or filing (with HCG
being obligated, to the extent permitted by law, to provide
Buyer with a copy of such Illegal Programming Notice, if
written, or with other verification, including the details
thereof, if oral);
then, upon notice from HCG to Buyer (the "Denial of Access
Notice"), User shall cease using Buyer's Transponders
immediately, in the case of a denial of access pursuant to
subparagraphs (i), (ii), (iii) or (iv) above, or within 24 hours
following receipt of such notice, in the case of a denial of
access pursuant to subparagraph (v), above; and if User does not
voluntarily cease using such capacity at the appropriate time,
then HCG shall have the right to take such steps as HCG deems
necessary to prevent User from accessing Buyer's Transponders.
Provided, however, that if User has more than one programming
service, then the denial of access by HCG shall apply only to
the Transponder used to provide the Illegal Programming service;
and provided further, however, that if, upon receipt of the
Denial of Access Notice from HCG, User does not immediately
cease transmission of such Illegal Programming service, then HCG
shall have the right to take such steps as HCG deems necessary
to prevent User from accessing the Transponder used to transmit
such Illegal Programming service (and if, thereafter, Buyer
transmits such Illegal Programming service using any of Buyer's
Transponders, then HCG shall have the immediate right, without
further notification, to take such steps as HCG deems necessary
to prevent Buyer from accessing any of Buyer's Transponders). As
used herein, "User" shall mean Buyer and any person to whom
Buyer Transfers all or part of its right to use Buyer's
Transponders, including without limitation, a Buyer, licensee or
assignee. Buyer agrees to maintain a properly operating
facsimile machine at all times to receive the Denial of Access
Notice from HCG.
(b) If HCG denies, or has given Buyer notice of its intent
to deny, access to Buyer's Transponders pursuant to the
provisions of this Section 10.06, and if Buyer does not believe
the conditions set forth in this Agreement
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to HCG's denial of access have been met, then Buyer shall have
the immediate right to seek injunctive relief, including a
temporary restraining order on notice of four (4) hours or more
to HCG, to prevent the denial or continuing denial of such
access by HCG.
(c) HCG shall also have the right to seek (i) injunctive
relief, including a temporary restraining order on notice of
four (4) hours or more to Buyer, to prevent, suspend or
otherwise limit User's continued access to Buyer's Transponders
where HCG believes such use has resulted or will result in a
violation of any Obscenity Law; or (ii) declaratory relief to
establish its right to deny User's access to Buyer's
Transponders under this Agreement.
(d) Either party shall be entitled to oppose the other's
attempt to obtain equitable relief. However, in order to enable
either party to obtain a resolution of any such dispute as
expeditiously as possible, both parties hereby agree that: (i)
neither party will contest the jurisdiction of, or the venue of,
any action for equitable relief brought by the other party in
the following courts: U.S. District Court for the District of
Columbia and the U.S. District Court for the Central District of
California; (ii) the party opposing equitable relief (the
"Opposing Party") will make itself available to accept service
by telecopy or personal delivery on a 24 hour-a-day basis for
five (5) consecutive days following receipt by the Opposing
Party of the other party's notice of its intent to seek such
equitable relief; and (iii) if either party seeks a temporary
restraining order and provides notice to the Opposing Party at
least four (4) hours before the scheduled court hearing, then
the Opposing Party will not challenge the timeliness of such
notice.
(e) If it is determined by final judicial order the HCG
prevented Buyer from accessing any or all of Buyer's
Transponders at a time when it did not have the right to do so,
pursuant to this Section 10.06, then Buyer's sole and exclusive
remedy shall be HCG's payment to Buyer of liquidated damages
equal to ********, per Transponder, for the terminated capacity,
such ******** based on the period of time of loss of use of such
capacity.
(f) All remedies of HCG set forth in this Section 10.06
shall be cumulative and in addition to, and not in lieu of any
other remedies available to HCG at law, in equity or otherwise,
and may be enforced by HCG concurrently or from time to time.
(g) In addition to any other identification obligations
found elsewhere in this Agreement, Buyer shall indemnify and
save HCG, its directors, officers, employees, and its Affiliates
from any liability or expense arising out of or related to
User's use of Buyer's Transponders under this Section 10.06.
Buyer shall pay all expenses (including reasonable attorneys'
fees) incurred by HCG in connection with all legal or other
formal or informal proceedings, instituted by any private third
party or any Governmental
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Authority, and arising out of or related to User's use of
Buyer's Transponders under this Section 10.06, and Buyer shall
satisfy all judgments, fines, penalties, costs, or other awards
which may be incurred by or rendered against HCG as a result
thereof, as and to the extent permitted by law.
10.07 Return of Transponders. Upon the expiration, termination,
or cancellation of this Agreement as to any Transponder for any reason
whatsoever (including, without limitation, expiration of this Agreement in
accordance with its terms), such Transponder shall be deemed, without any
further action by any party, to be redelivered to HCG and HCG shall be entitled
to immediate possession thereof. HCG shall thereafter have the right to utilize
such redelivered Transponder in any manner it determines.
10.08 Cancellation of Buyer's Ku-Band Transponder. HCG shall
provide Buyer with a written notice of its final decision on the ******** and
the ********. Within ******** after receipt of HCG's written notice, Buyer shall
have the right to cancel the lease (or, if Buyer has exercised the Purchase
Option as set forth in Section 2.02, the purchase) of Buyer's Ku-Band
Transponder by delivery of a written notice to do so to HCG. Such exercise shall
be irrevocable. The effective date of the cancellation shall be the date on
which HCG receives the notice of such cancellation. As of the effective date of
such cancellation, HCG shall have no obligation to Buyer arising out of the
lease or purchase of the Buyer's Ku-Band Transponder, except for the refund of
any pre-paid charges with respect to such Buyer's Ku-Band Transponders.
10.09 Buyer's Special Option to Terminate. Notwithstanding
anything to the contrary stated elsewhere in this Agreement, Buyer shall have
the right, at its sole option, to terminate this Agreement in its entirety by
delivering a written notice to do so ********. The condition precedent to such
termination shall be the payment by Buyer of ******** payable to HCG
concurrently with the written notice of termination. Upon such termination,
neither HCG nor Buyer shall have any rights or obligations to the other under
this Agreement.
11. Force Majeure
11.01 Failure to Deliver. Any failure or delay in the
performance by HCG of its obligations to Deliver any Transponders shall not be a
breach of this Agreement if such failure or delay results from any acts of God,
governmental action (whether in its sovereign or contractual capacity) or any
other circumstances reasonably beyond the control of HCG, including, but not
limited to, weather or acts or omissions of Buyer or any third parties
(excluding the Hughes Aircraft Company and all of its direct and indirect
subsidiaries and any other affiliates of HCG or the Hughes Aircraft Company with
whom HCG or the Hughes Aircraft Company contracts for any components of the
Satellite or any services with respect thereto). Nothing in this
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Section, however, shall be deemed to alter Buyer's absolute rights to terminate
this Agreement as set forth in Section 10.01.
11.02 Failure of Performance. Any failure in the performance of
the Transponders, once Delivered, shall not be a breach of this Agreement if
such failure results from acts of God, governmental action (whether in its
sovereign or contractual capacity) or any other circumstances reasonably beyond
the control of HCG, including, but not limited to, receive earth station sun
outage, weather, or acts or omissions of Buyer or any third parties (excluding
the Hughes Aircraft Company and all of its direct and indirect subsidiaries, and
all parties with whom HCG or Hughes Aircraft Company and all of its direct and
indirect subsidiaries contract for the manufacture, construction, launch and
operation of the Satellite or any components thereof), provided, however, that
this provision shall not excuse HCG's obligations to provide Transponder Spares
or Reserve Transponders, to the extent available and technically feasible, to
satisfy its obligations as set forth in Section 9.
12. Limitation of Liability/********
12.01 Liability of HCG. If (i) any one or more of Buyer's
Transponders fails to meet the Transponder Performance Specifications during
******** (ii) such ******** is deemed to be a Confirmed ******** (as defined in
Section 12.02), and (iii) HCG is unable to furnish the necessary Transponder
Spare or Reserve Transponder as a substitute for Buyer's Transponder, pursuant
to Section 9, then such Transponder shall be deemed to be a "********
Transponder". Buyer, unless excused by an event set forth in Section 11.02,
shall be entitled to repayment as set forth in Section 12.03 for a ********
Transponder ******** Transponder (as defined in Section 21). The condition
precedent to HCG's obligation to repayment as set forth in this Section 12.03
shall be the full payment by Buyer of the ******** as set forth in Section 3.
12.02 Confirmed ********. A Buyer's Transponder shall be deemed
to have suffered a "Confirmed ********" if (a) it ******** to meet the
Transponder Performance Specifications for a cumulative period of more than
********, (b) ******** (as defined below) ******** or (c) it ******** to meet
the Transponder Performance Specifications for any period of time under
circumstances that make it clearly ascertainable or predictable technically that
the ******** set forth in either (a) or (b) of this Section will occur. An
"outage unit" shall mean the ******** of Buyer's Transponder(s) to meet the
Transponder Performance Specifications for ********. Buyer shall give HCG
immediate not)notification of any such ********, as soon after commencement of
any such ******** as is reasonably possible, and of the relevant facts
concerning such ********. Upon HCG's verification that a Transponder(s) has
suffered a Confirmed ********, such ******** shall be deemed to have commenced
upon receipt by HCG of notification from Buyer, or HCG's actual knowledge,
whichever first occurs, of the Confirmed ********. As used herein,
ACK/shs: GCI.GX TPA.Final 19 Monday, August 21, 1995 - 8:00 am
<PAGE>
the term "day" shall mean a 24-hour period of time commencing on 12:00 midnight
Eastern Time.
12.03 Repayment for ******** Transponder or ********
Transponder. Subject to the last sentence of Section 12.01, for each of Buyer's
Transponders for which repayment is owing hereunder, HCG shall pay to Buyer,
without interest, an amount equal to the product of a fraction, the numerator of
which is the number of days from the date of such ******** until the end of the
******** and the denominator of which is the total number of days in the
********, multiplied by the ******** Price for such Transponder as set forth in
Section 3. Concurrently with payment to Buyer of such repayment, Buyer shall
return title and ownership of said Transponder to HCG. In addition, if the
performance of Buyer's Transponder is such that, while it ******** to meet the
Transponder Performance Specifications, its performance is nonetheless of some
value to Buyer, then prior to accepting repayment calculated as aforesaid, Buyer
shall have the right to negotiate with HCG to determine if there is a mutually
agreeable reduced price upon which Buyer is willing to keep its Transponder. Any
such agreement reached by Buyer and HCG shall constitute a new agreement,
independent of this Agreement.
12.04 Limitation of Liability.
(a) ANY AND ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING,
BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
ANY PURPOSE OR USE, ARE EXPRESSLY EXCLUDED AND DISCLAIMED EXCEPT
TO THE EXTENT SPECIFICALLY PROVIDED FOR IN SECTION 6.02, ABOVE.
IT EXPRESSLY IS AGREED THAT HCG'S SOLE OBLIGATIONS AND BUYER'S
EXCLUSIVE REMEDIES FOR ANY CAUSE WHATSOEVER ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND/OR THE TRANSACTIONS CONTEMPLATED
HEREBY ARE LIMITED TO THOSE SET FORTH IN SECTIONS 9, 10 AND 12,
HEREOF, AND ALL OTHER REMEDIES OF ANY KIND ARE EXPRESSLY
EXCLUDED.
(b) IN NO EVENT SHALL HCG BE LIABLE FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES, WHETHER FORESEEABLE OR NOT, OCCASIONED BY
ANY DEFECT IN THE TRANSPONDERS, DELAY IN DELIVERY OF THE
TRANSPONDERS, FAILURE OF THE TRANSPONDERS TO PERFORM OR ANY
OTHER CAUSE WHATSOEVER. HCG MAKES NO WARRANTY, EXPRESS OR
IMPLIED, TO ANY OTHER PERSON OR ENTITY CONCERNING THE
TRANSPONDERS AND BUYER SHALL DEFEND AND INDEMNIFY HCG FROM ANY
CLAIMS MADE UNDER ANY WARRANTY OR REPRESENTATION BY BUYER TO ANY
THIRD PARTY. THE LIMITATIONS OF LIABILITY SET FORTH HEREIN SHALL
ALSO APPLY TO THE HUGHES AIRCRAFT COMPANY (THE MANUFACTURER OF
THE SATELLITE AND THE TRANSPONDERS) AND ALL AFFILIATES THEREOF.
ACK/shs: GCI.GX TPA.Final 20 Monday, August 21, 1995 - 8:00 am
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(c) Buyer and HCG each shall have the right to obtain
injunctive relief, if necessary, in order to prevent the other
party from willfully breaching its obligations under this
Agreement or to compel the other party to perform its
obligations under this Agreement.
12.05 Obligations of Buyer to Cooperate. If any of Buyer's
Transponders fails to meet the Transponder Performance Specifications, then
Buyer shall use reasonable efforts to cooperate and aid HCG in curing such
failure, provided that such efforts can be done at minimal or no cost to Buyer.
(a) These obligations of Buyer shall include, but not be limited
to the following:
(i) If there is a problem which can be compensated for by
increasing the power of its transmission to the Buyer's
Transponder, then Buyer shall do so, at HCG's cost and expense,
to the extent it can with existing equipment, provided, however,
that HCG shall not be able to require Buyer to increase the
power of its transmission if, by doing so, it would cause
interference with other Transponders on such Satellite which is
prohibited by Section 7.02 of this Agreement, or interference
with any other satellite; and
(ii) Permitting HCG, at HCG's cost and expense, to upgrade
Buyer's equipment, provided that Buyer shall be entitled to
select and install such equipment and determine its
configuration in accordance with its own existing operating
procedures and technical requirements, and in accordance with
applicable laws and regulations.
(b) HCG shall give notice to Buyer if and when it requires the
increase of power of the transmission of any other Owner pursuant to
such Owner's obligation equivalent to this Section 12.05. HCG shall
also give notice to Buyer when it acquires knowledge of any other
Transponder user uplinking at power levels which might cause
interference with Buyer's Transponders. If, after such increase in
power, a Buyer's Transponder(s) no longer meets its Transponder
Performance Specifications, HCG shall promptly take steps to reduce
interference, if any, prohibited by Section 7.02.
(c) Buyer's priority for the use of transponder Spares or Reserve
Transponders under Section 9 shall be determined at the time that its
Transponder would otherwise have become a ******** Transponder without
Buyer's cooperation under this Section 12.05.
13. Limitations on Transfer by Buyer
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13.01 Transfers by Buyer. Buyer shall not Transfer (as defined
below) its rights under this Agreement to any entity other than its affiliates,
except with the written consent of HCG, which may be given or withheld in HCG's
sole discretion. "Transfer" shall mean to grant, sell, assign, encumber, permit
the utilization of, license, lease, sublease or otherwise convey, directly or
indirectly, in whole or in part.
13.02 Transfers by HCG. HCG may Transfer its rights and/or
obligations hereunder, in whole or in part, to any corporation or other entity
wholly-owned, directly or indirectly, by HCG or to the Hughes Aircraft Company
or any corporation or other entity wholly-owned, directly or indirectly by
Hughes Aircraft Company, including, without limitation, Hughes Communications,
Inc., HCG's immediate parent corporation, or any corporation or other entity
wholly-owned, directly or indirectly, by Hughes Communications, Inc. Any
Transfer by HCG set forth herein shall not interfere with or impact the use of
Buyer's Transponders hereunder.
13.03 Affiliate. As used in this Agreement, "affiliate" shall
mean any corporation or other entity controlling or controlled by or under
common control with Buyer or HCG, as the case may be.
13.04 Assignment. Notwithstanding anything to the contrary in
Section 13.01 above, Customer may assign its rights or obligations, in whole or
in part, under this Agreement to a third party (the "Third-Party Assignee"),
subject to HCG's prior written consent, which may not be unreasonably withheld;
provided, however, that HCG may withhold its consent if HCG determines that the
ThirdParty Assignee is not Financially Qualified, or will not be able to meet
HCG's legal, technical and operational requirements as set forth in this
Agreement. A condition precedent to the effectiveness of any such third-party
assignment shall be the prior execution by the Third-Party Assignee of
assignment and assumption agreements with respect to this Agreement, in form and
substance as required by HCG. As used herein, "Financially Qualified" shall mean
the Third-Party Assignee's ability to financially support it's obligations and
responsibilities under the Agreement covering Customer's Transponder Capacity,
as determined by HCG in its sole discretion. The foregoing notwithstanding, no
assignment of this Agreement shall relieve Customer of its obligations to HCG
hereunder.
14. [Reserved]
15. Progress Reports, Inspections and Access to Work in Progress
15.01 Progress Reports. Commencing ninety (90) days after the
Execution Date and continuing until Delivery, HCG shall furnish to the Buyer on
a monthly basis a written progress report on the status of the construction of
the Satellite and a statement containing an explanation of material details,
including HCG's projected Scheduled Launch Dates and projected dates of
Delivery, variances from performance specifications and any remedial actions
taken. HCG shall take reasonable steps to keep Buyer informed periodically of
communications to HCG
ACK/shs: GCI.GX TPA.Final 22 Monday, August 21, 1995 - 8:00 am
<PAGE>
from the FCC or any other governmental authority which materially affect Buyer
and concern HCG, the Satellite and the Transponders or their use, and shall
promptly deliver copies to Buyer of any such written communications.
15.02 Inspection Rights of Buyer. Buyer shall have the right to
inspect Galaxy X and its Transponders during construction and prior to launch,
upon reasonable notice to HCG and during normal business hours, and shall have
the right to be present during ground and in-orbit testing. HCG shall give Buyer
reasonable notice of the commencement of acceptance testing as set forth in
Section 4.03, above. Buyer shall be supplied with the test data from such
acceptance tests.
15.03 Access to Work in Progress and Selection of Transponders.
Prior to Delivery, except for documentation and information regarded by HCG as
proprietary or trade secrets, relevant and material work in progress, including
test data and documentation generated through HCG's effort pursuant to this
Agreement, shall be subject to examination and inspection by Buyer. To the
extent that the data and documentation to be provided by Buyer hereunder are of
a type normally retained by HCG, and are not to be delivered to Buyer under this
Agreement, HCG shall make them available to Buyer at its request for examination
at a location designated by HCG. Subject to the provision set forth above, HCG
shall also deliver copies of test data and other data generated from the testing
and performance of the Satellite and the Buyer's Transponders to Buyer at any
time on Buyer's request and at Buyer's expense. HCG will also conduct ground
tests of the G-X Transponders. From the Transponder ground test results
furnished to Buyer and other Owners, Buyer and HCG jointly shall promptly select
its particular Transponder(s) for Delivery; provided, however, that HCG shall,
prior to Buyer's selection of its Transponder(s), designate which Transponders
shall be Reserve Transponders. Such selection shall be made within three (3)
days of HCG's not)notification to Buyer of such test results and the
identification of those Transponders which have not yet been selected. HCG shall
furnish data necessary to determine whether the Transponders satisfy or exceed
the applicable Transponder Performance Specifications in order to facilitate
Buyer's selection of its Transponder(s). If the in-orbit test results vary from
the ground test results, then Buyer shall have the right to substitute
Transponders at Buyer's discretion, but only for uncommitted Transponders on the
same Satellite (i.e., Transponders that have not been sold, leased or otherwise
committed by HCG to a third party).
15.04 After Delivery Reports. After delivery, Buyer shall
receive monthly reports on the overall performance of Galaxy X in the form of
the Galaxy satellite status reports similar to the Galaxy VII satellite services
monthly report, plus information furnished to insurers. Anomalous operations
shall be reported to Buyer as soon as possible.
16. Confidentiality and Press Releases
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<PAGE>
16.01 Confidential Information. HCG and Buyer shall hold in
confidence the Agreement and all Exhibits, including the financial terms and
provisions hereof and all information received pursuant to Section 15, and HCG
and Buyer hereby acknowledge and agree that all information related to this
Agreement, not otherwise known to the public, is confidential and proprietary
and is not to be disclosed to third persons without the prior written consent of
both HCG and Buyer. Neither HCG, nor Buyer, shall disclose such information to
any third party (other than to officers, directors, employees and agents of HCG
and Buyer, each of whom is bound by this Section 16.01) except:
(a) to the extent necessary to comply with law or the valid order
of a governmental agency or court of competent jurisdiction, or to
satisfy its obligations to other Owners of Transponders; provided,
however, that the party making such disclosure shall seek confidential
treatment of said information;
(b) as part of its normal reporting or review procedure to
regulatory agencies, its parent company, its auditors and its
attorneys;
(c) in order to enforce its rights and perform its obligations
pursuant to this Agreement;
(d) to the extent necessary to obtain appropriate insurance, to
its insurance agent, provided that such agent agrees to the
confidential treatment of such information; and
(e) to the extent necessary to negotiate clauses that will be
common to all Transponder Purchase Agreements.
16.02 Press Releases. The parties agree that no press release
relating to this Agreement shall be issued without the approval of both parties.
17. Disposition of Satellite
17.01 ******** After the ******** and until the earliest of such
time as (i) the ******** Galaxy X is ********, (ii) Galaxy X has ********
capable of meeting its Transponder Performance Specifications, or (iii) the
******** as the case may be) anniversary of Delivery of Galaxy X, HCG shall
continue to make available to Buyer, on the terms and conditions contained
herein, Transponder Spares and Reserve Transponders.
17.02 Disposition of Satellite. At the earliest of the time as
(i) the ******** Galaxy X is ********, (ii) there are ******** Transponders
capable of meeting its Transponder Performance Specifications, or (iii) the
******** as the case may be)
ACK/shs: GCI.GX TPA.Final 24 Monday, August 21, 1995 - 8:00 am
<PAGE>
anniversary of Delivery of Galaxy X, this Agreement shall terminate, HCG shall
have no further obligation to Buyer under this Agreement, and Buyer's
Transponders shall be deemed, without any further action by any party, to be
redelivered to HCG and HCG shall be entitled to immediate possession thereof.
HCG shall thereafter have the right to utilize such redelivered Transponders in
any manner it determines. HCG will, to the extent possible, provide Buyer with
ninety (90) days notice prior to the disposition of Galaxy X pursuant to this
Section 17.02. Upon the disposition of Galaxy X as set forth herein, Buyer's
right, title and interest in all of Buyer's Transponders shall revert to HCG.
18. Documents
Each party hereto agrees to execute, and if necessary, to file with the
appropriate governmental entities, such documents as the other party hereto
shall reasonably request in order to carry out the purpose of this Agreement.
19. Conflicts
In the case of a conflict between the provisions of this Agreement and any
Exhibit, the provisions of this Agreement will prevail.
20. Miscellaneous
20.01 Interest. The rate of interest referred herein shall be
********, or the highest legally permissible rate of interest, whichever is
lower, and all interest or discounting shall be compounded on a yearly basis.
"Pro-rata" shall mean an allocation on a straight line basis based on number of
days. All present value analyses shall use a ********.
20.02 Applicable Law and Entire Agreement. The existence,
validity, construction, operation and effect of this Agreement and the Exhibits
and Schedules hereto, shall be determined in accordance with and be governed by
the laws of the State of California. This Agreement and the Exhibits hereto,
along with the TT&C Service Agreement, dated as of even date herewith,
constitutes the entire agreement between the parties, and supersedes all
previous understandings, commitments or representations concerning the subject
matter. The parties each acknowledge that the other party has not made any
representations other than those which are contained herein. This Agreement may
not be amended or modified in any way, and none of its provisions may be waived,
except by a writing signed by an authorized officer or the party against whom
the amendment, modification or waiver is sought to been enforced.
20.03 Notices All notices and other communications from either
party to the other hereunder shall be in writing and shall be deemed received
upon actual receipt when personally delivered, upon actual receipt if sent by
facsimile or upon the
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<PAGE>
expiration of the third business day after being deposited in the United States
mails, postage prepaid, certified or registered mail, addressed to the other
party as follows:
TO HCG:
If by mail: Hughes Communications Galaxy, Inc.
Post Office Box 92424
Los Angeles, California 90009
Attention: Senior Vice President-
Galaxy Satellite Services
cc: Associate General Counsel
If by FAX: Hughes Communications Galaxy, Inc.
Attention: Senior Vice President-
Galaxy Satellite Services
(310) 607-4255
cc: Associate General Counsel
(310) 607-4258
If by personal
delivery to its
principal place
of business at:
Hughes Communications Galaxy, Inc.
1990 East Grand Avenue
El Segundo, California 90245
Attention: Senior Vice President-
Galaxy Satellite Services
cc: Associate General Counsel
TO BUYER:
If by mail: GCI Communication Corp.
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Attention: Richard P. Dowling
Senior Vice President
If by FAX: GCI Communication Corp.
Attention: Richard P. Dowling
Senior Vice President
(907) 265-5676
If by personal
delivery to its
ACK/shs: GCI.GX TPA.Final 26 Monday, August 21, 1995 - 8:00 am
<PAGE>
principal place
of business at: General Communication Corp.
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Attention: Richard P. Dowling
Senior Vice President
All payments to be made under this Agreement, if made by mail, shall be deemed
to have been made on the date of receipt thereof. The parties hereto may change
their addresses by giving notice thereof in conformity with this Section 20.03.
20.04 Severability. Nothing contained in this Agreement shall be
construed so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provision of this Agreement and any
statute, law, ordinance, order or regulation, such statute, law, ordinance,
order or regulation shall prevail; provided, however, that in such event the
provisions of this Agreement so affected shall be curtailed and limited only to
the extent necessary to permit compliance with the minimum legal requirement,
and no other provisions of this Agreement shall be affected thereby and all such
other provisions shall continue in full force and effect.
20.05 Taxes. If any property or sales taxes are asserted against
HCG after, or as a result of, Delivery, by any local, state, national or
international, public or quasi public governmental entity, in respect of Buyer's
Transponders or the sale thereof to Buyer, Buyer shall be solely responsible for
such taxes. If any taxes, charges or other levies are asserted by reason of the
use of the point in space or the frequency spectrum at that point in space in
which the Satellite containing Buyer's Transponders is located, or the use or
ownership of such Satellite (excluding any FCC license fee imposed on the
Satellite itself, as compared to the Transponders, which license fee shall be
paid by HCG), and such taxes are not specifically allocated among the various
components of such Satellite, then HCG, Buyer and the other Owners of such
Transponders shall each pay a proportionate amount of such taxes based on the
number of Transponders each of them owns.
20.06 Successors. Subject to Section 13, this Agreement shall be
binding on and shall inure to the benefit of any successors and assigns of the
parties, provided that no assignment of this Agreement shall relieve either
party hereto of its obligations to the other party. Any purported assignment by
either party not in compliance with the provisions of this Agreement shall be
null and void and of no force and effect.
20.07 Rules of Construction.
Any ambiguities shall be resolved without reference to which party may have
drafted this Agreement. The descriptive headings of the several sections and
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
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<PAGE>
20.08 Survival of Representations and Warranties. All
representations and warranties contained herein or made by HCG or Buyer in
connection herewith shall survive any independent investigation made by HCG or
Buyer.
20.09 No Third-Party Beneficiary. The provisions of this
Agreement are for the benefit only of the parties hereto, and no third party may
seek to enforce, or benefit from, these provisions, except that both parties
acknowledge and agree that the provisions of Sections 7.02, 8, 9.01, 9.02, 9.03
and 9.04, are intended for the benefit of both HCG and all other Owners. Both
parties agree that any other such Owner shall have the right to enforce, as a
third-party beneficiary, the provisions of Sections 7.02, 8, 9.01, 9.02, 9.03
and 9.04, against Buyer directly, in an action brought solely by such other
Owner, or may join with HCG or any other Owner, in bringing an action against
Buyer for violation of such Sections.
20.10 Non-Waiver of Breach. Either party hereto may specifically
wave any breach of this Agreement by the other party, provided that no such
waiver shall be binding or effective unless in writing and no such waiver shall
constitute a continuing waiver of similar or other breaches. A waiving party, at
any time, and upon notice given in writing to the breaching party, may direct
future compliance with the waived term or terms of this Agreement, in which
event the breaching party shall comply as directed from such time forward.
20.11 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute but one and the same instrument.
21. Option for ********
Buyer shall have the option to purchase the ******** on a satellite
designated as Galaxy IX by delivery of a written notice of Buyer's election to
purchase such ******** (the ********) as of the Execution Date. Provided that
Buyer has elected to purchase the ******** as set forth herein and has paid the
******** (as defined below) on a monthly basis, HCG shall provide, on a ********
with other HCG customers also purchasing such ********, alternate capacity on
Galaxy IX equivalent to the number of the ******** Transponders at Galaxy IX's
then-existing orbital location, in the event of an ******** of Galaxy X or in
the event that any of Buyer's C-Band Transponders have become ********
Transponders. ******** for ******** shall be provided by ********. If no other
customers have preempted Buyer's ********, and upon ********, HCG shall provide
Buyer with ********. Upon providing to Buyer ******** as discussed in the
foregoing sentence, HCG will switch ********. In the event that HCG provides
Buyer with
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<PAGE>
******** shall be returned to HCG ("******** Transponders") for ********.
********. If HCG provides Buyer with the number of the transponders on
Galaxy IX equivalent to the number of ******** Transponders or ********
Transponders, then Buyers obligation to pay the ******** shall ********. Buyer
agrees to use such capacity in accordance with HCG's then-effective terms
applicable to the lease of Galaxy IX transponders and Buyer agrees to pay to HCG
a ******** lease payment of ******** per each Galaxy IX transponder. The
conditions precedent to Buyer's right to ******** as set forth herein shall be
the ******** payment by Buyer of ******** per each of Buyer's Transponders
payable concurrently with Delivery of each of Buyer's Transponders and on
******** (the ********), the availability/non-preemption of ********
Transponders and Buyer's full compliance, in all material respects, with the
terms of this Agreement. The ******** shall be ********.
HUGHES COMMUNICATIONS GCI COMMUNICATION
GALAXY, INC. CORP.
By: /s/ Carl A. Brown By: /s/ Richard P. Dowling
Its:Senior Vice President Its:Senior Vice President
ACK/shs: GCI.GX TPA.Final 29 Monday, August 21, 1995 - 8:00 am
<PAGE>
Exhibit A Galaxy Fleet Satellites
EXHIBIT A
GALAXY SATELLITE DESCRIPTION
********
--1--
<PAGE>
Exhibit A Galaxy Fleet Satellites
EXHIBIT A
GALAXY SATELLITE DESCRIPTION
********
--1--
<PAGE>
EXHIBIT B
TRANSPONDER PERFORMANCE SPECIFICATIONS:
GALAXY IX/Galaxy X
********
--1--
<PAGE>
Exhibit B Transponder Performance Specifications:
Galaxy IX,Galaxy X
TABLE I - SPECIFIED PERFORMANCE VALUES
GALAXY IX/GALAXY X
********
--2--
<PAGE>
Exhibit B Transponder Performance Specifications:
Galaxy IX/Galaxy X
TABLE I, GALAXY IX/GALAXY X (Cont'd)
********
--3--
<PAGE>
Exhibit B Transponder Performance Specifications:
Galaxy IX,Galaxy X
TABLE I, GALAXY IX/GALAXY X (Cont'd)
********
--4--
<PAGE>
Exhibit B Transponder Performance Specifications:
Galaxy IX,Galaxy X
TABLE I, GALAXY IX/GALAXY X (Cont'd)
********
--5--
<PAGE>
Exhibit B Transponder Performance Specifications:
Galaxy IX Galaxy X
Table B-1
Galaxy IX ********
********
-6-
<PAGE>
Exhibit B Transponder Performance Specifications:
Galaxy IX/Galaxy X
Table B-2a
Galaxy X ********
********
-7-
<PAGE>
Exhibit B Transponder Performance Specifications:
Galaxy IX/Galaxy X
Table B-2b
Galaxy X ********
********
-8-
<PAGE>
ADDENDUM TO GALAXY X
TRANSPONDER PURCHASE AGREEMENT
BETWEEN
GCI COMMUNICATION CORP.
AND
HUGHES COMMUNICATIONS GALAXY, INC.
This document shall constitute an Addendum to that certain Galaxy X
Transponder Purchase Agreement between GCI COMMUNICATION CORP. ("Buyer") and
HUGHES COMMUNICATIONS GALAXY, INC. ("HCG"), dated as of August 24, 1995 ("the
Agreement"). This Addendum amends the Agreement as indicated herein. If there is
any inconsistency between this Addendum and the Agreement, then this Addendum
shall prevail. This Addendum is being executed concurrently and is dated as of
even date with, and is an integral part of, the Agreement. Any reference to the
"Agreement" shall refer collectively to the Agreement and this Addendum. Terms
not otherwise defined herein shall have the meanings set forth in the Agreement.
1. A NEW SECTION 22 IS ADDED HEREBY:
22. Interim Capacity. Buyer shall lease from HCG, and HCG shall
lease to Buyer, ******** transponders on a satellite commonly known as "Galaxy
IX", which shall be located at 123(degree) West Longitude orbital location, from
the date on which transponder service on Galaxy IX shall commence (as determined
by HCG in its sole discretion) through the Delivery of Galaxy X, at a ********
Lease Rate of ********. Provided that the Galaxy X Delivery has not occurred on
or before September 1, 1998, then HCG shall lease to Buyer, and Buyer shall
lease from HCG, another ******** transponder on Galaxy IX (thereby a total
number of ********) from ********. Provided that the Galaxy X Delivery has not
occurred ********, HCG shall lease to Buyer, and Buyer shall lease from HCG,
another ******** transponder on Galaxy IX (thereby a total number of ********)
from ********, at Buyer's sole option, through the Galaxy X Delivery. Buyer may
elect to take Transponder ******** to HCG. The ******** Lease Rate for the
******** Galaxy IX transponders shall be ********. Buyer shall notify HCG in
writing of its decision to elect ******** as the start date for the lease of the
******** transponder ********. If Buyer does not provide HCG with such written
notice, then Buyer shall be deemed to have elected the ********. If Buyer elects
or is deemed to have elected the ******** date, then Buyer shall pay to HCG
********. However, the parties agree that the ******** Lease Rate per each
transponder shall ******** as
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<PAGE>
of the date on which Galaxy X ********, whichever occurs first. The lease of the
Galaxy IX transponders shall be governed by the terms and conditions of the
Agreement regarding use of the Transponders, including Sections 7, 8, 9, and 10
and any other then-effective HCG's standard provisions applicable to the lease
or use of capacity on Galaxy IX. The condition precedent to the interim capacity
on Galaxy IX as set forth in this section 22 shall be the successful launch and
operation of Galaxy IX.
In the event that Galaxy X is not Delivered into orbit ********, Buyer
shall ********, at the ******** Lease Rate of ********. In that event, Buyer
agrees to execute any and all necessary documents to convert the Purchase of
Transponders on galaxy X to a Lease of the same amount and Capacity of Galaxy
IX. Alternatively, Buyer shall have the right to convert the lease of such
Galaxy IX transponders to a purchase. The purchase price shall be an amount
representing ********. The purchase of the Galaxy IX transponders shall be
governed by HCG's then-effective standard Galaxy IX purchase agreement.
IN WITNESS WHEREOF, each of the parties hereto has duly executed and
delivered this Addendum.
GCI COMMUNICATION HUGHES COMMUNICATIONS
CORP. GALAXY, INC.
By: /s/ Richard P. Dowling By: /s/ Carl A. Brown
Its:Senior Vice President Its:Senior Vice President
Date: August 24, 1995 Date: August 24, 1995
ACK/shs: GX GCI Addendum.Final 2 Monday, August 21, 1995 - 11:45 am
<PAGE>
November 3, 1995
Mr. John Lowber
GCI Communication Corp.
Re: Section 13.04 of the Galaxy X Transponder Purchase
Agreement
Dear Mr. Lowber:
Reference is made to Section 13.04 of that certain Galaxy X Transponder
Purchase Agreement along with all Addendum, Appendices and Exhibits (the
"Agreement") dated August 24, 1995 by and between Hughes Communications Galaxy,
Inc. ("HCG") and GCI Communication Corp. ("GCI"). With respect to Section 13.04
of the Agreement, the parties hereby agree to replace the word "Customer" with
the word "Buyer" throughout Section 13.04. Except as specifically provided above
in the preceding sentence, all terms and provisions of the Agreement shall
remain the same.
Accepted and agreed to:
GCI COMMUNICATION CORP. HUGHES COMMUNICATIONS
GALAXY, INC.
By: /s/ John M. Lowber By: /s/ A.C. Kahng
Name: John M. Lowber Name: A. C. Kahng
Title: SVP & CFO Title: Asst. Secretary
ACK/shs
EXHIBIT B
GALAXY X TRANSPONDER SERVICE AGREEMENT
BETWEEN
HUGHES COMMUNICATIONS SATELLITE SERVICES, INC.
AND
GCI COMMUNICATION CORP.
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Article Page
<S> <C>
1 SERVICES AND TERM 2
1.01 Terms of Agreement 2
1.02 Services 2
2 SERVICE FEE AND PAYMENTS 2
3 REPRESENTATIONS AND WARRANTIES 3
3.01 Authority, No Breach 3
3.02 Corporate Action 3
3.03 Common Clauses in Service Agreements 3
3.04 Consents 3
3.05 Litigation 3
3.06 Non-Interference 3
4 OBLIGATIONS OF CONTRACTOR 4
4.01 Satellite 4
4.02 Use of the Transponder Spares 4
4.03 Reserve Transponders 4
4.04 Government Regulations 4
4.05 Tracking, Telemetry and Control 4
5 FORCE MAJEURE 5
6 LIMITATION OF LIABILITY 5
6.01 General Limitation 5
6.02 Equitable Relief 6
7 REPORTS 6
7.01 Operational Reports 6
7.02 Anomalous Operation Notification 6
7.03 Maneuver Notification 7
7.04 Inspection Rights of Owner 7
8 CONFIDENTIALITY 7
9 APPLICABLE LAW 8
10 FURTHER NOTIFICATIONS 8
11 MODIFICATION 8
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<PAGE>
12 TERMINATION 8
12.01 Contractor's Termination Rights 8
12.02 Contractor's Right to Deny Access 9
12.03 Automatic Termination 9
13 MISCELLANEOUS 9
13.01 Entire Agreement and Amendment 9
13.02 Non-Waiver of Breach 9
13.03 Notices 9
13.04 Severability 11
13.05 Counterparts 11
13.06 Successors 11
13.07 Headings 11
13.08 No Third-Party Beneficiary 11
13.09 Survival of Representations and Warranties 12
13.10 Transfer 12
13.11 Applicability to Galaxy Backup 12
ADDENDUM
I Defined Terms
</TABLE>
ACK/shs: GCI.GX TSA.Orig ii Thursday August 17, 1995 -- 3:30 pm
<PAGE>
GALAXY X TRANSPONDER SERVICE AGREEMENT
This Transponder Service Agreement (the "Agreement") (all such defined terms
herein are so capitalized and referenced in Addendum I) is made and entered into
as of August 25, 1995 (the "Execution Date") by and between Hughes
Communications Satellite Services, Inc. ("Contractor"), a California
corporation, and GCI Communication Corp. ("Owner"), an Alaskan corporation.
RECITALS
WHEREAS, subject to the approval of the Federal Communications Commission,
Hughes Communications Galaxy, Inc. ("HCG"), an Affiliate of Contractor, shall
cause a domestic communications satellite, Galaxy X (the "Satellite"), to be
built containing both Ku-Band capacity (the "Ku-Band Transponders") and C-Band
capacity (the "C-Band Transponders"). Collectively, the Ku-Band Transponders and
the C-Band Transponders are referred to hereafter as "Transponders";
WHEREAS, Owner has agreed, pursuant to a purchase agreement between Owner
and HCG of even date herewith (the "Transponder Purchase Agreement") to purchase
******** of the Primary C-Band Transponders on Galaxy X and (either purchase or
lease ******** Ku-Band Transponder on Galaxy X (collectively, the "Owner's
Transponder"). Unless otherwise defined herein, all capitalized terms are as set
forth in the Transponder Purchase Agreement;
WHEREAS, HCG has caused certain redundant equipment units (collectively, the
"Transponder Spares" and individually, a "Transponder Spare") to be placed on
the Satellite to be used to replace Transponder equipment units that fail to
meet the Transponder Performance Specifications as defined in the Transponder
Purchase Agreement (the "Transponder Performance Specifications"), and HCG has
agreed to make said equipment units available for use as set forth in the
Transponder Purchase Agreement;
WHEREAS, HCG and Owner have agreed that Contractor shall perform the
satellite operational services (the "Services") for Owner on the terms and
conditions specified in this agreement and Contractor is willing to perform such
Services;
WHEREAS, Owner has, concurrently herewith, agreed to pay for such Services
pursuant to the Transponder Purchase Agreement, and HCG has assigned its right
to payment for such Services under the Transponder Purchase Agreement to
Contractor, and Owner is agreeable to such assignment; and
WHEREAS, Owner and Contractor desire this Agreement to become effective only
upon Delivery (as defined in the Transponder Purchase Agreement) of
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<PAGE>
Owner's Transponder by HCG to Owner as set forth in the Transponder Purchase
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises set forth below, and
for other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, HCG and Owner hereby mutually agree as follows:
ARTICLE 1. SERVICES AND TERM
1.01 Terms of Agreement. Contractor shall provide the Services set
forth in Section 1.02 hereof for a continuous period from Delivery of Owner's
Transponder until the Transponder Purchase Agreement is either terminated or
canceled, or expires, in its entirety (the "Service Term").
1.02 Services. The Services to be rendered by Contractor hereunder are as
follows:
(a) Monitoring and managing the use of electric power on the Satellite
to operate Owner's Transponder;
(b) Monitoring and managing the use of the Satellite's propellant so
that the attitude and orbital position are maintained;
(c) Monitoring and managing all other functions of the Satellite which
support Owner's Transponder so as to enable Owner's Transponder to meet the
C-Band Transponder Performance Specifications;
(d) Monitoring and analyzing the Satellite's telemetry data; and
(e) Other services provided for in this Agreement.
ARTICLE 2. SERVICE FEE AND PAYMENTS
The fee for the Services provided by Contractor hereunder (the "********" or
"Service Fee") shall be as set forth in the Transponder Purchase Agreement, and,
pursuant thereto, payment of the ******** to Contractor shall be the
responsibility of HCG.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
Contractor and Owner each, except as expressly indicated herein, represent and
warrant to, and agree with, the other that:
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<PAGE>
3.01 Authority. No Breach. It has the right, power and authority to
enter into, and perform its obligations under, this Agreement. The execution,
delivery and performance of this Agreement shall not result in the breach or
nonperformance of any agreements it has with third parties.
3.02 Corporate Action. It has taken all requisite corporate (or
partnership, as appropriate) action to approve the execution, delivery and
performance of this Agreement, and this Agreement constitutes a legal, valid and
binding obligation upon itself in accordance with its terms.
3.03 Common Clauses in Service Agreements. Contractor alone represents,
warrants and agrees that it will require, in all service agreements between
itself and all other Transponder owners on the Satellite, clauses substantially
identical to, or terms the effect of which shall be as or more restrictive with
respect to such owners than, the provisions of Sections 3.06,12.01 and 13.08
hereof, and Contractor will require, in all service agreements between itself
and other Transponder owners on the Satellite, a clause consistent with the
provisions of Sections 4.02 and 4.03 hereof.
3.04 Consents. The execution and delivery of this Agreement, the
performance of its obligations hereunder, and the consummation of the
transactions contemplated hereby, will not result in a material violation of, or
material default under, or the occurrence of an event which with notice or lapse
of time or both would constitute a material default under, or material
noncompliance with, any applicable Law, any indenture, mortgage, deed of trust,
loan agreement, purchase agreement, option agreement or other agreement or
instrument to which it is a party or by which it or any material portion of its
property is bound, its articles of incorporation or by-laws, partnership
agreement, or other charter documents, as the case may be. All necessary or
material appropriate public or private consents, permissions, agreements,
licenses, or authorizations to which it is subject in connection with the
transactions contemplated hereby, or which it must obtain by virtue of its
ownership or use of or operation of any Transponder or the Satellite have been
or shall be obtained in a timely manner.
3.05 Litigation. To the best of its knowledge, there is no outstanding
or threatened judgment, threatened or pending litigation or proceeding,
involving or affecting the transactions provided for in, or contemplated by,
this Agreement, except as is concurrently being disclosed in writing by either
party to the other.
3.06 Non-Interference. Owner alone represents, warrants and agrees that
its radio transmissions (and those of its uplinking agents) to the Satellite
shall comply, in all material respects, with all Federal Communications
Commission or any successor agency thereto (collectively, the "FCC") and all
other governmental (whether international, federal, state, municipal or
otherwise) statutes, laws, rules, regulations, ordinances, codes, directives and
orders, of any such governmental agency, body, or court (collectively, "Laws")
applicable to it regarding the operation of the Satellite and Owner's
Transponder and shall not interfere with the use of any
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<PAGE>
other Transponder. Owner shall not utilize (or permit or allow any of its
uplinking agents to utilize) any of Owner's Transponder in a manner which will
or may interfere with the use of any other Transponder or cause physical harm to
any of Owner's Transponder, any other Transponders, or to the Satellite.
Further, Owner will coordinate (and will require its uplinking agents to
coordinate) with HCG, in accordance with procedures reasonably established by
HCG and uniformly applied to all owners and users of Transponders on the
Satellite, its transmissions to the Satellite, so as to minimize adjacent
channel and adjacent satellite interference. For purposes of this Section 3.06,
interference shall also mean acts or omissions which cause a Transponder to fail
to meet its transponder performance specifications. Without limiting the
generality of the foregoing, Owner (and its uplinking agents) shall comply with
all FCC rules and regulations regarding the use of automatic transmitter
identification systems (ATIS).
ARTICLE 4. OBLIGATIONS OF CONTRACTOR
4.01 Satellite. Contractor will maintain the Satellite in the orbital
position which the FCC has designated or shall hereafter designate for it.
4.02 Use of the Transponder Spares. Throughout the Service Term,
Contractor may employ, in conjunction with HCG, and pursuant to the specific
terms and conditions in Section 9 of the Transponder Purchase Agreement, a
Transponder Spare or Spares.
4.03 Reserve Transponders. Throughout the Service Term, Contractor may
substitute, in conjunction with HCG, and pursuant to the specific terms and
conditions in Section 9 of the Transponder Purchase Agreement, a Reserve
Transponder or Reserve Transponders. Upon such substitution, such a Reserve
Transponder shall be deemed to be a Owner's Transponder for the purposes of this
Agreement.
4.04 Government Regulations. Contractor has or shall use its best
efforts throughout the Service Term to obtain and maintain, in all material
respects, all federal, state and municipal authorizations or permissions to
operate the Satellite applicable to Contractor with respect to the Satellite,
and to comply, in all material respects, with all such governmental regulations
regarding the operation of Owner's Transponder applicable to Contractor with
respect to the Satellite.
4.05 Tracking. Telemetry and Control. Contractor shall employ at least
two earth stations which between them shall provide in conjunction with HCG's
Operations Control Center in El Segundo, California, for all of the functions of
tracking, telemetry and control ("TT&C") of the Satellite. Contractor shall
notify Owner as to the operator (if other than Contractor) and the location of
the two earth stations, and any changes thereto.
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<PAGE>
ARTICLE 5. FORCE MAJEURE
Any failure or delay of Contractor to provide Services shall not be a
breach of this Agreement if such failure or delay results from any acts of God,
governmental action or Law (whether in its sovereign or contractual capacity),
or any other circumstances reasonably beyond the control of Contractor,
including, but not limited to, earth station sun outage, weather, or acts or
omissions of Owner or any third parties (excluding the Hughes Aircraft Company
and all of its direct and indirect subsidiaries, and any other Affiliates of
Contractor or the Hughes Aircraft Company with whom Contractor or the Hughes
Aircraft Company contracts to provide the Services).
ARTICLE 6. LIMITATION OF LIABILITY
6.01 General Limitation. ANY AND ALL EXPRESS AND IMPLIED WARRANTIES ARE
EXPRESSLY EXCLUDED AND DISCLAIMED EXCEPT TO THE EXTENT SPECIFICALLY AND
EXPRESSLY PROVIDED FOR IN THIS AGREEMENT. IT IS EXPRESSLY AGREED THAT
CONTRACTOR'S SOLE OBLIGATIONS AND LIABILITIES RESULTING FROM A BREACH OF THIS
AGREEMENT, AND OWNER'S EXCLUSIVE REMEDIES FOR ANY CAUSE WHATSOEVER (INCLUDING,
WITHOUT LIMITATION, LIABILITY ARISING FROM NEGLIGENCE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY, ARE
LIMITED TO THOSE SET FORTH IN SECTIONS 2 AND 6.02 HEREOF, AND ALL OTHER REMEDIES
OF ANY KIND ARE EXPRESSLY EXCLUDED INCLUDING, WITHOUT LIMITATION, ALL RIGHTS AND
REMEDIES OF OWNER UNDER DIVISION 10, CHAPTER 5, ARTICLE 2 AND SECTIONS
10209,10406 AND 10504 OF THE CALIFORNIA UNIFORM COMMERCIAL CODE. IN NO EVENT
SHALL CONTRACTOR BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER
FORESEEABLE OR NOT, OCCASIONED BY CONTRACTOR'S FAILURE TO PERFORM HEREUNDER,
DELAY IN ITS PERFORMANCE, FAILURE OF THE OWNER'S TRANSPONDER TO PERFORM OR ANY
OTHER CAUSE WHATSOEVER. CONTRACTOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, TO ANY
OTHER PERSON OR ENTITY CONCERNING THE OWNER'S TRANSPONDER OR THE SATELLITE OR
THE SERVICES, AND OWNER SHALL DEFEND AND INDEMNIFY CONTRACTOR FROM ANY CLAIMS
MADE UNDER ANY WARRANTY OR REPRESENTATION BY OWNER TO ANY THIRD PARTY. THE
LIMITATIONS OF LIABILITY SET FORTH HEREIN SHALL ALSO APPLY TO HUGHES AIRCRAFT
COMPANY (THE MANUFACTURER OF THE SATELLITE AND OWNER'S TRANSPONDER) AND ALL
AFFILIATES THEREOF. "Affiliate" means any corporation or other entity
controlling, controlled by, or under common control with, Owner, Contractor, or
the Hughes Aircraft Company, as the case may be.
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<PAGE>
6.02 Equitable Relief. Owner and Contractor shall each have the right
to obtain injunctive relief, if necessary, in order to prevent the other party
from willfully breaching its obligations under this Agreement or to compel the
other party to perform its obligations under this Agreement.
ARTICLE 7. REPORTS
7.01 Operational Reports. After commencement of the Services hereunder,
Contractor shall provide Owner a monthly written operational report concerning
the Satellite and Owner's Transponder which shall contain the following
information:
(a) Projected solar array life based on total Satellite power
performance and communications payload requirements;
(b) Projected battery life based on total Satellite power performance
and communications payload requirements;
(c) Projected Satellite life based on fuel remaining and its predicted
utilization;
(d) Configuration of Owner's Transponder and the associated Satellite
supporting subsystems;
(e) A statement on the expected operating life of Owner's Transponder
and the basis for such a projection, taking into account the health of
Owner's Transponder and its associated support subsystems;
(f) The Satellite's orbital parameters;
(g) Information concerning whether any Transponder Spares or Reserve
C-Band Transponders have been employed on behalf of any owner or user;
(h) Information concerning predicted eclipses and sun outages; and
(i) Other information pertinent to the operation of Owner's Transponder
and the Satellite that Owner may reasonably request.
7.02 Anomalous Operation Notification. Contractor shall notify Owner as
soon as possible by telephone, with prompt written confirmation thereafter, of
any significant anomalous condition which Contractor detects in Owner's
Transponder or associated Satellite supporting subsystems and which have a
material effect or potential material effect on the Satellite. Contractor shall
also notify Owner promptly of any circumstances that make it clearly
ascertainable or predictable that any of the incidents described in this Section
7.02 will occur. Any notice given to
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<PAGE>
Owner under this Section 7.02 shall not relieve Contractor of any liability or
obligation hereunder relating to such anomalous operation.
7.03 Maneuver Notification. To the extent operationally feasible,
Contractor shall notify Owner of all Satellite maneuvers, except for routine
stationkeeping, at least three days in advance of their scheduled initiation
and, if such maneuver will result in a change of its assigned orbital position,
promptly upon HCG's receipt of FCC authorization or direction of such maneuver.
7.04 lnspection Rights of Owner. Owner shall have the right to inspect
the TT&C stations upon reasonable notice to Contractor and during normal
business hours accompanied by an employee or agent of Contractor. Owner shall
not have the right to inspect any TT&C station at any time or in any manner that
could cause disruption to the operation of such TT&C station. Owner shall have
the right to examine all test results and data relating to TT&C of or for
Owner's Transponder on the Satellite.
ARTICLE 8. CONFIDENTIALITY
Contractor and Owner shall hold in confidence this Agreement, including
the financial terms and provisions hereof, and all information provided to Owner
hereby, and Contractor and Owner hereby acknowledge and agree that all
information received in connection with or otherwise related to this Agreement,
not otherwise known to the public, is confidential and proprietary and is not to
be disclosed to third persons (other than to Affiliates, or to officers,
directors, employees and agents of Contractor or Owner, each of whom is bound by
this Article 8) without the prior written consent of both Contractor and Owner,
except as follows:
(a) to the extent necessary to comply with applicable Law, provided,
that the party making such disclosure shall seek confidential treatment of
such information;
(b) as part of its normal reporting or review procedure to regulatory
agencies, its parent company, its auditors and its attorneys, provided, the
party making such disclosure to any such regulatory agency shall seek
confidential treatment of such information, and, provided, that any other
third party to whom disclosure is made agrees to the confidential treatment
of such information;
(c) in order to enforce its rights and/or perform its obligations
pursuant to this Agreement;
(d) to the extent necessary to obtain appropriate insurance, to its
insurance agent, provided, that such agent agrees to the confidential
treatment of such information; and
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<PAGE>
(e) to the extent necessary to satisfy its obligations to other owners
or users of the Transponders or to negotiate clauses that will be common to
all transponder service agreements.
ARTICLE 9. APPLICABLE LAW
The existence, validity, construction, operation and effect of this
Agreement shall be determined in accordance with and be governed by the laws of
the State of California.
ARTICLE 10. FURTHER NOTIFICATIONS
Each party shall promptly notify the other party of any information
delivered to or obtained by such party which would prevent the consummation of
the transactions contemplated by this Agreement or would indicate a breach of
the representations or warranties of any of the parties to this Agreement;
provided that the failure so to notify will not constitute a waiver of such
party's rights.
ARTICLE 11. MODIFICATION
In the event that the Transponder Purchase Agreement is modified or
reconstituted in such manner as to affect provisions in this Agreement, then
this Agreement shall be modified accordingly.
ARTICLE 12. TERMINATION
12.01 Contractor's Termination Rights. If Owner's radio transmissions
or those of its uplinking agent to or from the Satellite interfere, under
standard engineering practice, with the use of any Transponder not owned by
Owner located on the Satellite, or if Owner or its uplinking agent utilizes
Owner's Transponder in a manner which interferes, under standard engineering
practice, with the use of, or causes physical harm to, any other Transponder
located on the Satellite, and such radio transmission or utilization by Owner
does not cease immediately after the receipt of notice thereof from Contractor
(which notice may, notwithstanding Section 13.03 hereof, be given to Owner by
telephone to a telephone number provided to Contractor and maintained by Owner
for the purpose of receiving such notices by Contractor, which telephone shall
be continuously staffed by Owner so as to enable Owner to receive such notices
at all times), Contractor shall have the right to take any and all steps
necessary to terminate such radio transmission or utilization by Owner or its
uplinking agent. Contractor shall have the further right to continue such steps
so taken until such time as Owner's radio transmissions or those of its
uplinking agent to or from the Satellite or Owner's utilization of its
Transponder, as the case may be, shall not interfere, under standard engineering
practice, with the use of any Transponder not owned by Owner located on the
Satellite and shall not cause physical harm to any Transponder not owned by
Owner on the Satellite or to the Satellite.
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<PAGE>
12.02 Contractor's Right to Deny Access. If HCG is entitled to prevent
Owner from accessing any part or all of the Owner's Transponder pursuant to
Section 10.06 of the Transponder Purchase Agreement, Contractor shall be
entitled to take any and all steps necessary to terminate Owner's (or its
uplinking agent's) radio transmission to or utilization of such Transponder.
12.03 Automatic Termination. This Agreement shall automatically
terminate with respect to the Owner's Transponder if the Transponder Purchase
Agreement is terminated, is canceled, or expires, with respect to such Owner's
Transponder.
ARTICLE 13. MISCELLANEOUS
13.01 Entire Agreement and Amendment. This Agreement and the
Transponder Purchase Agreement constitute the entire agreement between the
parties, and supersede all previous understandings, commitments or
representations concerning the subject matter. This Agreement may not be amended
or modified in any way, and none of its provisions may be waived, except by a
writing signed by an authorized officer of the party against whom the amendment,
modification or waiver is sought to be enforced. The parties each acknowledge
that the other party has not made any representations other than those which are
contained herein.
13.02 Non-Waiver of Breach. Either party hereto may specifically waive
any breach of this Agreement by the other party, provided that no such waiver
shall be binding or effective unless in writing and no such waiver shall
constitute a continuing waiver of similar or other breaches. A waiving party, at
any time and upon notice given in writing to the breaching party, may direct
future compliance with the waived term or terms of this Agreement, in which
event the breaching party shall comply as directed from such time forward.
13.03 Notices.
(a) Each party shall provide the other party with a telephone number to
be used for routine and emergency operational notifications, which
telephone shall be continuously staffed so as to enable the receipt of such
notices at all times. For routine notifications, any such telephonic
notification shall be followed up with written notification as outlined in
subparagraph (b) below.
(b) All notices and other communications from either party to the other
hereunder shall be in writing and shall be deemed received when actually
received if personally delivered, upon acknowledgment of receipt if sent by
facsimile, or upon the expiration of the third business day after being
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<PAGE>
deposited in the United States mails, postage prepaid, certified or
registered, addressed to the other party as follows.
TO CONTRACTOR:
If by mail: Hughes Communications Satellite Services, Inc.
Post Office Box 92424
Worldway Postal Center
Los Angeles, Califonia 90009
Attention: Senior Vice President - Galaxy
Services
cc: Assistant General Counsel
If by FAX: Hughes Communications Satellite Services, Inc.
Attention: Senior Vice President - Galaxy
Services;
(310) 607-4255
cc: Associate General Counsel
(310) 607-4258
If by personal
delivery to its
principal place
of business at: Hughes Communocations Satellite Services, Inc.:
1990 East Grand Avenue
El Segundo, California 90245
Attention: Senior Vice President - Galaxy
Services
cc: Associate General Counsel
TO OWNER:
If by mail:
GCI Communication Corp.
2550 Denali Street
Suite 1000
Anchorage, AK 99503
Attention: Richard P. Dowling
Senior Vice President
If by FAX: GC1 Communication Corp.
Attention: Richard P. Dowling
Senior Vice President
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<PAGE>
If by personal
delivery to its
principal place
of business at: GCI Communication Corp.
2550 Denali Street
Suite 1000
Anchorage, AK 99503
Attention: Richard P. Dowling
Senior Vice President
All payments to be made under this Agreement, if made by mail, shall be deemed
to have been made on the date of actual receipt thereof. The parties hereto may
change their addresses by giving notice thereof in conformity with this Section
13.03.
l3.04 Severability. Nothing contained in this Agreement shall be
construed so as to require the commission of any act contrary to any of the
Laws, and wherever there is any conflict between any provision of this Agreement
and any Law, such law shall prevail; provided, however, that in such event the
provisions of this Agreement so affected shall be curtailed and limited only to
the extent necessary to permit compliance with the minimum legal requirement,
and no other provisions of this Agreement shall be affected thereby, and all
such other provisions shall continue in full force and effect. Nothing contained
herein shall affect the reconstitution provisions contained in Section 11
hereof.
l3.05 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all such
counterparts together shall constitute but one and the same instrument.
13.06 Successors. Subject to the limitations on Transfer set forth in
Section 13.10, this Agreement shall be binding on and shall inure to the benefit
of any and all successors and assigns of the parties.
13.07 Rules of Construction and Headings. Any ambiguities shall be
resolved without reference to which party may have drafted this Agreement. The
description headings of the several sections and paragraphs of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
13.08 No Third Party Beneficiary. The provisions of this Agreement are
for the benefit only of the parties hereto and HCG, and no third party other
than HCG may seek to enforce, or benefit from these provisions, except the both
parties acknowledge and agree that the provisions of Section 3.06 hereof are
intended for the benefit of both Contractor and all other Transponder owners and
both parties agree that any other such Transponder owner shall have the right to
enforce, as a third-party beneficiary, the provisions of Section 3.06 hereof,
against Owner directly, in an action brought solely by such other Transponder
owner, or may join with Contractor or any other Transponder owner or user in
bringing an action against Owner for violation of such Sections.
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<PAGE>
13.09 Survival of Representations and Warranties. All representations
and warranties contained herein or made by Contractor or Owner in connection
herewith shall survive any independent investigation made by Contractor or
Owner.
13.10 Transfer.
(a) Except as otherwise permitted under the terms of the Transponder
Purchase Agreement, Owner shall not Transfer (as defined in the Transponder
Purchase Agreement) any of its rights and/or obligations under this
Agreement except with the prior written consent of Contractor, which consent
may be given or withheld in Contractor's sole and absolute discretion. In
the event of any such Transfer by Owner, Owner shall remain fully liable
along with its transferee for all its obligations under this Agreement and
the Transponder Purchase Agreement.
(b) Contractor may Transfer any or all of its rights and/or obligations
under this Agreement to any Affiliate or any third party, provided, that no
such Transfer by Contractor shall adversely affect Owner's rights or
obligations hereunder, provided, further, that Contractor shall not Transfer
any of its obligations under this Agreement to a non-Affiliate except with
the prior written consent of Owner, which consent shall not unreasonably be
withheld or delayed. In the event of any such Transfer by Contractor,
Contractor shall remain fully liable for all its obligations under this
Agreement.
(c) Any purported Transfer by either party not in compliance with the
provisions of this Agreement shall be null and void and of no force and
effect.
13.11 Applicability to Galaxy IX. Pursuant to the provisions of Section
21 of the Transponder Purchase Agreement, Owner has the right to lease capacity
on Galaxy IX (as defined in the Transponder Purchase Agreement) (or its
replacement) under certain circumstances. Owner is still obligated to pay the
******** to the extent required under the Transponder Purchase Agreement for
each such used transponder on Galaxy IX (the "Replacement Transponder") and the
parties agree that the provisions of this Agreement shall apply to the
Replacement Transponder, the phrase "Owner's Transponder", as used herein, shall
be deemed to include Replacement Transponder, the term "Satellite" shall be
deemed to include Galaxy IX, and the term "Transponders" shall mean all the
transponders on any such satellite.
ACK/shs: GCI.GX TSA.Orig 12 Thursday August 17, 1995 -- 3:30 pm
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has duly executed and
delivered this Agreement as of the day and year first written above.
"Contractor"
HUGHES COMMUNICATIONS
SATELLITE SERVICES, INC.
By:/s/ Carl A. Brown
Title:SVP
"Owner"
GCI COMMUNICATION CORP.
By: /s/ Richard P. Dowling
Title:Sr. Vice President
ACK/shs: GCI.GX TSA.Orig Thursday August 17, 1995 -- 3:30 pm
<PAGE>
ADDENDUM I
DEFINED TERMS
TERM SECTION
Affiliate...................................................................6.01
Agreement..........................................................Intro. Clause
C-Band Transponders.....................................................Recitals
Contractor.........................................................Intro. Clause
Execution Date ....................................................Intro. Clause
FCC ........................................................................3.06
HCG ....................................................................Recitals
Ku-Band Transponders ...................................................Recitals
Laws .......................................................................3.06
Owner .............................................................Intro. Clause
Owner's Transponder .......................................................13.11
Replacement Transponder ...................................................13.11
Satellite ..............................................................Recitals
Service Term ...............................................................1.01
Service Fee ...................................................................2
Services ...............................................................Recitals
Transfer ..................................................................13.10
Transponders ...........................................................Recitals
Transponder Performance Specifications ..................................1.02(c)
Transponder Purchase Agreement .........................................Recitals
Transponder Spares .....................................................Recitals
Transponder Spare ......................................................Recitals
******** ......................................................................2
TT&C .......................................................................4.05
14
<PAGE>
, 1995
Mr. Richard Dowling
Senior Vice President
GCI Communication Corp.
2550 Denali Street, Suite 1000
Anchorage, AK 99503
Re: Galaxy X Transponder Purchase Agreement
Galaxy X Transponder Service Agreement
Dear Mr. Dowling:
Simultaneously with the execution of this letter, GCI Communication
Corp., ("Buyer") has executed a Galaxy X Transponder Purchase Agreement (the
"Agreement") with Hughes Communications Galaxy, Inc. ("HCG") and a Galaxy X
Transponder Service Agreement (the "Service Agreement") with Hughes
Communications Satellite Services, Inc. ("HCSS"). This letter does not
supersede or amend the Agreement or the Service Agreement, but is intended to
clarify the understanding of HCG and HCSS and Buyer with respect to the
following provisions of the Agreement and the Service Agreement. All
capitalized items not defined herein are as set forth in the Agreement and the
Service Agreement.
With respect to Section 7.02 of the Agreement and Section 3.06 of the
Service Agreement, Buyer advises HCG and HCSS that Buyer has filed a waiver
request with the FCC and that Buyer is awaiting the decision of the FCC. Buyer
also advises HCG and HCSS that Buyer may file with the FCC various waiver
request from time to time. Buyer's filing of such application and the operation
by Buyer under the assumption that the waivers would be approved shall not
constitute, or shall be deemed to constitute, a breach of the requirements as
set forth in Section 7.02 of the Agreement and Section 3.06 of the Service
Agreement for so long as (i) Buyer is otherwise in compliance with all Laws and
(ii) Buyer does not utilize Buyer's Transponders in a manner which will or may
cause interference with the use of any other Transponder or cause physical harm
to any Transponder on the Satellite, the Satellite, or any other satellites.
<PAGE>
Mr. Richard Dowling
, 1995
Page Two...........
Buyer agrees to provide a copy of the waiver requests currently pending
and any additional requests to be filed before the FCC that affect the use of
Buyer's Transponders on the Satellite.
Very truly yours,
HUGHES COMMUNICATIONS GALAXY, INC.
By:/s/ Carl A. Brown
Title:SVP
AGREED TO AND ACCEPTED: GCI COMMUNICATION CORP.
By: /s/ Richard P. Dowling
Title:Sr. Vice President
EXHIBIT C
FRAMEWORK AGREEMENT
between
National Bank of Alaska (NBA)
and
General Communication, Inc. (GCI)(1)
- -------------------
(1) In this document "********" are used in place of redacted information.
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<TABLE>
TABLE OF CONTENTS
<CAPTION>
SECTION PAGE
<S> <C>
1. DEFINITIONS..................................................................................................5
2. STATUS.......................................................................................................6
3. STANDARDS....................................................................................................6
4. COMMENCEMENT, DURATION AND TERMINATION OF THIS AGREEMENT.....................................................7
5. SCOPE AND OBJECTIVES.........................................................................................8
6. STRATEGIC DIRECTION, TECHNICAL ARCHITECTURE AND SELECTION OF PRODUCTS.......................................9
7. ESTABLISHMENT OF A TELECOMMUNICATIONS REVIEW BOARD...........................................................9
8. SCOPE CHANGES...............................................................................................11
9. USE OF SERVICES.............................................................................................15
10. APPROVALS AND LICENSES......................................................................................15
11. WARRANTY AND BENCHMARKING...................................................................................16
12. ACQUISITION OF NEW TECHNOLOGY AND PROCESSES.................................................................16
13. ASSET AND LEASE TRANSFERS...................................................................................17
14. REMUNERATION................................................................................................18
15. TARGETS.....................................................................................................18
16. COSTS DEFINITIONS...........................................................................................19
17. MARGIN......................................................................................................21
18. RISK/REWARD INCENTIVES......................................................................................21
19. INVOICING AND SETTLEMENT....................................................................................23
20. TAX.........................................................................................................24
21. FINANCIAL AUDIT.............................................................................................26
22. SUB-CONTRACTORS.............................................................................................27
23. ASSIGNMENTS AND SUB-LETTING.................................................................................28
24. EMPLOYMENT OF FORMER NBA EMPLOYEES..........................................................................28
25. EMPLOYEE RELATIONS AND TRAINING.............................................................................28
26. CONTRACTOR'S PERSONNEL......................................................................................29
27. FATAL ACCIDENT, INJURY AND DAMAGE TO PROPERTY...............................................................29
28. INSURANCE...................................................................................................30
29. LIMITATION OF LIABILITY.....................................................................................30
30. INDEMNIFICATION.............................................................................................31
31. INDEPENDENT CONTRACTOR......................................................................................32
32. INTELLECTUAL PROPERTY RIGHTS................................................................................32
33. MINIMUM CONDITIONS OF SATISFACTION..........................................................................34
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34. SECURITY....................................................................................................34
35. ACCESS......................................................................................................36
36. CONFIDENTIALITY.............................................................................................36
37. DATA PROTECTION.............................................................................................38
38. SECURITY AUDIT..............................................................................................38
39. COMMENCEMENT, DURATION AND TERMINATION OF CALL-OFF CONTRACTS...............................................39
40. REMEDIES....................................................................................................43
41. AUTHORITIES AND GUARANTEES..................................................................................44
42. FORCE MAJEURE...............................................................................................45
43. HEALTH AND SAFETY...........................................................................................45
44. PUBLICITY...................................................................................................45
45. NOTICES.....................................................................................................46
46. VARIATIONS..................................................................................................46
47. COMPLIANCE WITH LAWS, REGULATIONS AND ETHICS................................................................46
48. PROFESSIONAL FEES...........................................................................................47
49. SEVERABILITY................................................................................................47
50. APPLICABLE LAW AND JURISDICTION.............................................................................47
ANNEX A: GLOSSARY OF DEFINITIONS.......................................................................49
ANNEX B: SPECIMENS.....................................................................................54
ANNEX C: MINIMUM CONDITIONS OF SATISFACTION............................................................59
1. GENERAL....................................................................................60
2. BASIC SERVICE ELEMENTS.....................................................................61
3. QUALITY....................................................................................63
4. FLEXIBILITY FOR CHANGE.....................................................................64
5. PROCUREMENT................................................................................64
6. HUMAN RELATIONS AND PERSONNEL..............................................................64
7. COSTS......................................................................................65
ANNEX D: MODEL CALL-OFF CONTRACT AND SCHEDULES.........................................................67
1. DEFINITIONS................................................................................69
2. STATUS.....................................................................................69
3. PROVISION OF SERVICES......................................................................70
4. DURATION...................................................................................70
5. INVOICES AND PAYMENT.......................................................................70
6. MANAGEMENT ORGANIZATION....................................................................71
7. NO WAIVER..................................................................................71
8. SERVICE OF NOTICE..........................................................................71
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9. FURTHER ASSURANCES.........................................................................72
10. GOVERNING LAW..............................................................................72
11. INVALIDITY.................................................................................72
12. ADDITIONAL TERMS AND CONDITIONS............................................................72
13. CONDITION PRECEDENT........................................................................72
SCHEDULE 1: SCOPE OF WORK............................................................74
SCHEDULE 2: SERVICE LEVELS...........................................................75
SCHEDULE 3: CHARGES AND BILLING INFORMATION..........................................76
SCHEDULE 4: NBA AND CONTRACTOR PREMISES..............................................77
SCHEDULE 5: INFORMATION RECORDS......................................................78
SCHEDULE 6: CONFIDENTIALITY LETTER...................................................79
SCHEDULE 7: ADDITIONAL TERMS AND CONDITIONS..........................................80
SCHEDULE 8: NBA OBLIGATIONS..........................................................81
SCHEDULE 9: LONG TERM CONTRACTS......................................................83
ANNEX E: MODEL TRANSFER AGREEMENT......................................................................83
1. INTERPRETATION.............................................................................85
2. CONDITION PRECEDENT........................................................................86
3. AGREEMENT FOR SALE AND TRANSFER............................................................86
4. TRANSFER CONSIDERATION.....................................................................87
5. COMPLETION.................................................................................87
6. CONTINUING CONTRACTS.......................................................................88
7. WARRANTIES.................................................................................89
8. NOTICES....................................................................................89
9. MISCELLANEOUS..............................................................................90
10. GOVERNING LAW..............................................................................90
SCHEDULE 1: THE TRANSFER EQUIPMENT...................................................91
SCHEDULE 2: THE TRANSFERRED SOFTWARE.................................................92
SCHEDULE 3: CONTINUING CONTRACTS.....................................................93
ANNEX F: GCI AND M&I SHARED RESPONSIBILITIES...........................................................94
</TABLE>
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THIS AGREEMENT is made the 31st day of October 1995.
BETWEEN
National Bank of Alaska whose registered offices are located at 301 West
Northern Lights Blvd., Anchorage, Alaska 99503 (hereafter, "NBA") and General
Communication, Inc. (GCI) whose registered offices are located at 2550 Denali
St., Suite 1000, Anchorage, Alaska 99503 (hereafter, "The Contractor")
WHEREAS
A. NBA has determined that its interests might be best served
commercially by the outsourcing of certain of its non-core
Information Services (IS) activities, including
telecommunications services.
B. In pursuit of the objectives stated in A above, NBA has
carried out extensive market research to assess objectively
the capabilities of certain contractor companies. NBA now
wishes to enter into individual agreements with several
companies for the outsourcing of certain of the IS activities
currently maintained within NBA.
C. The Contractor and M&I Data Services, a division of the
Marshall & Ilsley Corporation whose registered offices are
located at 4900 W. Brown Deer Rd., Brown Deer, Wisconsin
(hereafter, "M&I") have separately proposed to assume
responsibility for certain of NBA's IS activities, including
telecommunications services.
D. The Contractor is prepared to provide the telecommunications
services required by NBA in accordance with the terms of this
Agreement.
E. It is the intention of both NBA and the Contractor to agree to
and record a detailed general basis of agreement in the terms
set out below for incorporation into subsequent agreements
between NBA and the Contractor as may be varied or altered as
allowed pursuant to the terms of this Agreement.
IT IS THEREFORE AGREED as follows:
1. DEFINITIONS
1.1. A glossary of definitions relating to this Agreement and
attachments is appended hereto as Annex A.
1.2. "Party" shall mean either NBA or the Contractor.
1.3. "Parties" shall mean both NBA and the Contractor.
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2. STATUS
2.1. This Agreement shall operate as a framework agreement entered
into between the Parties and shall specify the general terms,
conditions and criteria that will apply in the event that NBA
and the Contractor agree that the Contractor shall supply
Services to NBA. Any subsequent agreement between NBA and the
Contractor for the provision of Services shall be on the basis
of the Model Call-Off Contract attached hereto in the form of
Annex D together with, where appropriate, a transfer agreement
in the form of the Model Transfer Agreement attached hereto as
Annex E (together with a Call-Off Contract and as appropriate
referred to as "Call-Off Contract") incorporating the terms of
this Agreement subject to such change, addition, alteration,
amendment and revision as might then be agreed between the
Parties to a Call-Off Contract.
2.2. Pending and notwithstanding the execution of any Call-Off
Contract, this Agreement and its associated rights and
obligations takes effect upon signing by both Parties. In
particular and for the avoidance of doubt, this Agreement
shall cover a term of seventy-two (72) months plus an interim
period extending from the date of signing of this Agreement
through the commencement of the first Call-Off Contract. This
Agreement is subject to the provisions of Sub-section 39.3.4
after 1996. The terms of this Agreement shall have effect as
between the Parties to the extent that any of its terms are
also incorporated in a Call-Off Contract and then only in the
context of a Call-Off Contract.
2.3. At any given time during the term of this agreement, there
shall only be one Call-Off Contract incorporating the
telecommunications services to be delivered to all of NBA's
sites in effect.
3. STANDARDS
3.1. It is intended by the Parties that the provision of the
Services by the Contractor under a Call-off Contract to the
levels specified in the Scope of Work and the Service Level
Agreement requires superior performance and be to a standard
which shall be interpreted and maintained in accordance with
the following principles:
3.1.1. The Minimum Conditions of Satisfaction as set out in
Annex C.
3.1.2. The application of high levels of professionalism,
expertise and experience as are from time to time
available within the telecommunications industry both
within and outside of Alaska.
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3.1.3. Continuous improvement, innovation and development
with regard to the quality and cost-effectiveness of
the Services commensurate with the objective of
delivering materially superior telecommunications
services to NBA.
3.1.4. The delivery of "best-in-class" Services as defined
in Annex C, Sub-section 3.3. Services will also be
delivered consistent with Most Favored Nations
pricing as outlined in Annex C, Sub-section 7.3.
3.1.5. The exercise of sound technical judgment on the part
of the Contractor and the acquisition and exchange of
technical information and best working practices
among the Parties and other contractors engaged in
the provision of the Services.
3.1.6. The maintenance of exemplary employee relations.
3.2. In recognition of the commitment on the part of the Contractor
as expressed in Sub-section 3.1 above and, subject to the
requirement that the Contractor can demonstrate to NBA's
satisfaction that NBA is receiving good value for money, NBA
for its part recognizes the need for the Contractor to
maintain a reasonable rate of return.
3.3. In the event that the Incentive processes referred to in
Section 18 do not result in a reasonable rate of return as set
out in Sub-section 3.2 above the relevant Parties to a
Call-Off Contract shall meet to discuss changes to such
Call-Off Contract and implement such changes as may be
mutually agreed to achieve the objectives of this Sub-section
3.3.
4. COMMENCEMENT, DURATION AND TERMINATION OF THIS AGREEMENT
4.1. As from the date hereof this Agreement shall remain current
between the Parties both prior to and subsequent to the entry
by the Contractor into any Call-Off Contract. During this time
the Contractor shall continue to be represented by, or be
entitled to appoint, Representatives to the Telecommunications
Review Board.
4.2. This Agreement shall cover a term of seventy-two (72) months
plus an interim period extending from the date of signing of
this Agreement through the commencement of the first Call-Off
Contract. This Agreement is subject to the provisions of
Sub-section 39.3.4 after 1996.
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5. SCOPE AND OBJECTIVES
5.1. The scope of the Services shall be as specified in a Call-Off
Contract subject to the conditions set out in this Section 5.
5.2. The full and complete achievement of the intent of this
Agreement and the performance of the Services will be
facilitated by the formation of a Telecommunications Review
Board, as specified in this Agreement and in a Call-Off
Contract, which shall ensure that all decisions and actions of
the Parties which relate to the Services fully recognize the
commitments, express objectives and the obligations of NBA and
the Contractor under a Call-Off Contract.
5.3. NBA has agreed to the terms and conditions of this Agreement
on the understanding that the Contractor is able to perform
the Services and that the Contractor will use and show all
reasonable skill and judgment consistent with such ability in
the performance of the Services. All Services shall be
performed in accordance with the terms of this Agreement and a
Call-Off Contract and in accordance with professional
telecommunications practice.
5.4. Where services provided by a Third Party under contract to NBA
will be utilized by the Contractor in the provision of the
Services the Contractor shall undertake to review with NBA,
subject to the requirements of Section 37, the service
description contained in NBA's contract with such Third Party
to ensure that service levels specified therein are consistent
with those required by the Contractor in order to meet the
Service Levels. The Contractor shall be ultimately responsible
for ensuring that such third parties meet or exceed such
service levels.
5.5. The Contractor acknowledges that its provision of Services may
result in certain areas of shared responsibility with M&I.
Areas of shared responsibility have been identified by the
Contractor and M&I and are presented in Annex F. For each
shared responsibility, an explanation of single point
accountability is also provided in Annex F. For those areas
noted as Contractor single point accountability and those
shared areas where Contractor is noted as being primarily
responsible, Contractor shall have the ultimate obligation to
ensure such Services are performed in accordance with this
Agreement and any Call-Off Contract.
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6. STRATEGIC DIRECTION, TECHNICAL ARCHITECTURE AND
SELECTION OF PRODUCTS
6.1. The Contractor will assist in the production and
implementation of a telecommunications strategy aimed at
cost-effective support for the NBA business strategy. The
Contractor acknowledges that NBA has the ultimate authority in
strategic direction and will, in the provision of the
Services, comply with formally promulgated NBA IS policies and
standards as amended from time to time. Both NBA and the
Contractor will endeavor to inform each other in a timely
manner of any fundamental policy changes or constraints which
will affect the implementation of the telecommunications
strategy.
6.2. In collaboration with designated NBA management personnel and
M&I technical consultants, the Contractor will recommend for a
Call-Off Contract and NBA will approve, at its discretion,
appropriate technical architectures and products (excluding
consumables) to be used in providing the Services.
6.3. In the event that the activities referred to in Sub-sections
6.1 and 6.2 are outside the Scope of Work, the Contractor may
charge separately for carrying out such work but will not
proceed without the prior written agreement of NBA.
7. ESTABLISHMENT OF A TELECOMMUNICATIONS REVIEW BOARD
7.1. NBA, M&I and the Contractor shall participate in a
Telecommunications Review Board (the "Board") which will meet
to:
7.1.1. Consider any operational matters referred by NBA
management,
7.1.2. Review each Party's performance against their
respective obligations to provide the Services under
this Agreement and a Call-Off Contract,
7.1.3. Review and recommend for approval by the Parties any
amendments or modifications to the scope or terms of
this Agreement,
7.1.4. Review and recommend for adoption by the Parties
minimum standards and guidelines for performance
measurement against industry benchmarks,
7.1.5. Endeavor to resolve any matters of interpretation,
disputes, disagreements or defaults arising under
this Agreement or referred to by NBA management,
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7.1.6. Make recommendations to NBA management to stop,
suspend or modify any practice or component of the
Services,
7.1.7. Perform such other duties or responsibilities as are
delegated by NBA and the Contractor to the Board,
7.1.8. Request from NBA management such reports and
information as it considers reasonable and necessary
to perform its duties, and
7.1.9. Facilitate the relationship between the Parties to
ensure that the spirit of the provisions of Annex C
are achieved. For the avoidance of doubt, whenever
there is reference to a recommendation being made by
the Board, no change shall be effected unless agreed
to in writing between NBA and the Contractor;
7.2. Composition and Responsibilities
7.2.1. The Board shall comprise Representatives nominated by
NBA, M&I and the Contractor pursuant to this
Agreement. The Board shall be chaired by an NBA
Representative.
7.2.2. If a Representative is unable to perform his or her
duties or leaves the employment of either NBA or
Contractor, as applicable, then the Party which has
the resulting vacancy on the Board will nominate a
replacement Representative within twenty (20)
business days to fill such vacancy.
7.2.3. The Contractor's continued membership of the Board
shall be dependent upon the existence of:
7.2.3.1. A current and subsisting Call-Off Contract
to which the Contractor is party; or,
7.2.3.2. Negotiations between the Contractor and
NBA with the objective of entering into a
Call-Off Contract.
If neither of the conditions expressed in
Sub-sections 7.2.3.1 to 7.2.3.2 above shall apply the
Contractor's Representative shall resign from the
Board such resignation to be without prejudice to any
other rights and obligations under any Call-Off
Contract.
7.2.4. The Board shall be responsible for the evaluation of
the Service Level Agreement as defined in Annex A and
amended in a Call-Off Contract for the purpose of
determining the Contractor's Risk/Reward Incentive
payment as outlined in Sub-section 18.1.3.
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7.3. Nomination of Representatives
7.3.1. NBA and the Contractor shall, by written notice of
nomination copied to other parties entitled to
nominate Representatives, nominate within twenty (20)
business days of the commencement date of this
Agreement their Representatives to the Board. The
Parties may change their Representatives at any time
by giving written notice to each other but the
Parties agree that the Representatives will have full
power and authority on behalf of the Party which
authorized their nomination to make recommendations
and otherwise deal with all matters that are within
the cognizance of the Board under this Agreement.
7.3.2. The role and/or presence of either Party's
Representative shall not in any way relieve either
Party of their respective obligations under a
subsisting Call-Off Contract.
7.3.3. NBA retains the right to refuse participation by any
individual representative on the Telecommunications
Review Board.
7.4. Frequency of Meetings of the Board
Meetings of the Board shall take place quarterly or otherwise
as determined by the Board provided always that any
Representative may request a meeting at any time upon giving
twenty (20) business days notice to other Representatives. The
location and manner of meetings will be determined by the
Board.
7.5. Costs
Each Party which has Representatives to the Board shall be
responsible for all costs and other expenses associated with
the attendance of their respective Representatives at Board
meetings and such costs and expenses shall not form any part
of Actual Costs.
8. SCOPE CHANGES
8.1. General
This Agreement sets out the procedures for changing the scope
of the Services. Both Parties (which in the context of this
Section shall mean the Parties to this Agreement and a
Call-Off Contract) recognize that the mutual success of this
relationship requires that each be motivated to keep Major
Changes to a minimum in order to continuously manage costs
associated with Targets while maintaining or improving NBA's
use of and access to improved telecommunications technologies.
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8.1.1. NBA commits to implementing as part of the NBA
Partner Relations Manager's personal objectives the
aim of continuously managing, in conjunction with the
Contractor, the Actual Costs consistent with
providing the Services in accordance with a relevant
Call-Off Contract.
8.1.2. A Major Change means any event or series of events
which materially increases or decreases the scope of
the Services and/or the Contractor's Actual Cost.
8.1.3. It is envisioned that Major Changes will be
infrequent.
8.1.4. All proposals for Major Changes shall be reviewed by
the Telecommunications Review Board when so requested
by NBA management.
8.1.5. The work undertaken by the Contractor in carrying out
changes which are not Major Changes and in
subsequently providing the Services subject to such
changes, shall not result in any variation to the
Target.
8.1.6. All changes shall be agreed to by the Parties and
subject to Operational Change Control Procedures to
be agreed between NBA and the Contractor and
incorporated in the relevant Scope of Work and/or
Service Level Agreement.
8.2. Major Changes
8.2.1. Either Party may raise a proposal for consideration
by the other to modify, change, reduce, add to or
replace the Services in a manner which that Party
considers may constitute a Major Change. Such
proposal shall be presented for discussion at a
meeting of the NBA management chaired where
appropriate by the designated NBA Partner Relations
Manager as defined in Annex A. The cost of preparing
and presenting the proposal shall be borne by the
Party raising the proposal. In the event that NBA
requests the Contractor to prepare a proposal
involving significant costs in its preparation, the
Contractor may request reimbursement of such costs.
8.2.2. The Contractor shall supply NBA with such information
as NBA may reasonably request to substantiate any
costing furnished under this Sub-section 8.2.
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8.3. Contractor's Internal Changes
Subject to Operational Change Control Procedures the
Contractor shall be entitled to modify, change, add to, reduce
or replace the means and/or method of providing the Services,
provided that any such modification, change, addition,
reduction or replacement has been agreed to with the NBA
Partner Relations Manager and M&I Representatives and can be
achieved within the Target and does not detract from, reduce
or impair the overall performance or operation of the
Services, or require any material alteration to the physical
interface or protocol used by NBA in using the Services. In
the event that such proposed change is rejected by NBA, the
Parties will meet to discuss in good faith and agree to an
equitable adjustment of the Target.
8.4. Implementation of Major Changes
8.4.1. NBA shall have the right to invite quotations from
Third Parties for the development, testing and
implementation of any Major Change to the Services.
For the avoidance of doubt within this Sub-section
8.4, Services are those defined in Annex A. NBA may
at its sole discretion award such Major Change to a
Third party subject to the following:
8.4.1.1. If the Services associated with the Major
Change include Network Services as defined
in Annex A and the Contractor can provide
the Services at a cost and quality level
equal to that offered by a Third Party,
the Contractor will be awarded the Major
Change;
8.4.1.2. If the Services associated with the Major
Change include Network Services as defined
in Annex A and if the Contractor cannot
provide the services at a cost and quality
level equal to that offered by a Third
Party, the Contractor shall have the right
to either: (i) sub-contract the Services
with a Third Party subject to the
provisions of Section 22; or (ii) serve as
NBA's agent in acquiring the Services from
a Third Party treating such services in
accordance with Section 22, provided,
however that NBA must preapprove any
agreement with any Third Party in writing.
8.4.1.3. If the Services associated with the Major
Change do not include Network Services as
defined in Annex A and the Contractor can
provide the Services at a cost and quality
level equal to that offered by a Third
Party, the Contractor will be awarded the
Major Change, subject to the right of NBA
to make adjustments to the Contrac-
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tor's Scope of Work during negotiation of
a subsequent Call-Off Contract in
accordance with Sub-section 39.3.4.
8.4.1.4. If the Services associated with the Major
Change do not include Network Services as
defined in Annex A and if the Contractor
cannot provide the Services at a cost and
quality level equal to that offered by a
Third Party, NBA shall have the right to
either: (i) permit the contractor to
sub-contract the Services with a Third
Party subject to the provisions of Section
22; or (ii) NBA will have the right to
assume responsibility for the Services
subject to the provisions of Sub-section
8.4.2.
8.4.2. If the Parties have agreed to a Major Change, then
the Contractor shall carry out the implementation
plan and the Target shall be adjusted in accordance
with the proposal.
8.4.3. Following the completion of the implementation phase,
the Service Description shall be changed so that it
includes a description of the change which has been
implemented.
8.5. Implementation of Related Work by a Third Party
8.5.1. NBA shall have the right to instruct a Third Party to
carry out work related to (but not part of) the
Services for which that Third Party has submitted a
quotation acceptable to NBA.
8.5.2. In such event the Contractor shall provide such
assistance as reasonably necessary for the
implementing of such work as part of the Services,
including, without limitation, assistance and
facilities to enable the Third Party if necessary to
carry out live system testing in relation to such
work. The Contractor shall use all reasonable
endeavors to ensure that such assistance is provided
by the staff to be made available by the Contractor
pursuant to the Services.
8.5.3. Subject to the Contractor's reasonable management
requirements and to Operational Change Control
Procedures, the Contractor shall permit the Third
Party to use the Contractor Equipment and the Network
for system testing purposes, under the terms of a
Call-Off Contract, at times to be agreed between the
Third Party and the Contractor, such agreement not to
be unreasonably withheld or delayed.
8.5.4. To the extent that any activity during the
development, testing, acceptance and subsequent
implementation of a change by a Third Party impacts
upon the Scope of Work, Actual Costs or the
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Service Levels the same shall be amended, upon mutual
agreement, and the Target adjusted retroactively to
the date of impact of the said change. NBA shall
ensure that the Third Party performs in a manner
consistent with quality standards and Operational
Change Control Procedures under a Call-Off Contract.
For the avoidance of doubt any responsibilities upon
NBA under this Sub-section 8.5.4 shall be at an end
from the date or point upon which the Contractor has
agreed to such amendments and adjustments.
9. USE OF SERVICES
9.1. NBA shall undertake to use the Services in accordance with
such reasonable operating instructions as may be notified in
writing or orally (confirmed in writing) to NBA by the
Contractor.
9.2. Without limitation to the generality of Sub-section 9.1, NBA
and the Contractor shall undertake individually to use their
respective best endeavors to ensure that the Services are not
used:
9.2.1. For the transmission of any material which is
defamatory, offensive or abusive or of an obscene or
menacing character; or
9.2.2. In a manner which constitutes a violation or
infringement of the rights of any person, firm or
company (including but not limited to rights of
copyright or confidentiality).
9.3. The Parties shall indemnify and hold each other harmless
against all liabilities, claims, damages, losses and
proceedings in any jurisdiction arising out of or in any way
connected with their respective failure to comply with the
obligations referred to in Sub-section 9.2.
10. APPROVALS AND LICENSES
10.1. Subject to Sub-section 10.2 the Contractor shall ensure,
maintain, and observe all relevant regulatory, administrative,
and governmental licenses, waivers, consents, registrations
and approvals (collectively "Approvals") (including making any
notifications) necessary for NBA and Authorized Users to make
use of the Services and to allow the Contractor to provide the
Services.
10.2. The Parties recognize that certain Approvals can, by their
very nature, only be obtained by NBA or relate solely to NBA's
ability to make use of the Services provided by the
Contractor. In such event NBA shall obtain the necessary
Approvals.
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10.3. The Contractor has an obligation to point out such approvals
to NBA and assist NBA to comply as required.
10.4. Each Party shall indemnify the other against all claims,
costs, liabilities and expenses they may suffer as a result of
a Party failing to observe its obligations pursuant to this
Section 10. For the avoidance of doubt the requirements set
out in this Section shall not diminish or expand the
obligations of any Party to a relevant Call-Off Contract.
11. WARRANTY AND BENCHMARKING
11.1. The Contractor shall implement a quality management program
that is consistent with the minimum standards of ISO 9000 or
similar industry quality standard and shall provide copies of
all quality management documents to NBA upon request.
11.2. NBA shall have the right to compare and measure the Services
provided pursuant to a Call-Off Contract against services of
comparative quality and scope available from Third Parties
operating in the same marketplace. In the event that a
substantial and material differential shall be identified
between the cost and/or quality of providing the Services
compared with the costs and/or quality available from such
Third Parties, the Contractor shall review NBA's conclusions
and shall implement agreed to changes (if any), consistent
with Section 22, to a relevant Call-Off Contract within a
reasonable period of time to bring down the cost of the
Services and/or to adjust the quality of the Services in line
with the external marketplace.
12. ACQUISITION OF NEW TECHNOLOGY AND PROCESSES
12.1. It is envisioned that the provision of the Services in
accordance with the terms of this Agreement and the Call-Off
Contracts will commit the Contractor to the awareness and use
where appropriate of advanced state of the art technology and
processes available from time to time in the
telecommunications industry world-wide. The Contractor shall
commit to the evaluation of such state of art technology and
processes including established technology and processes where
it can be shown that its application to the Services will
provide NBA with improvements in cost benefit or performance
provided that where NBA requests such evaluation the
Contractor may charge separately for carrying out such work
and shall not proceed without the agreement of NBA.
12.2. To the extent that the Contractor shall be required to provide
the Services in conjunction with Third Parties the Contractor
shall investigate
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and endeavor to adopt measures to maintain the Contractor's
competitiveness with such Third Parties with the objective of
achieving the best level of savings consistent with the
provision of Services at the quality levels envisioned under
this Agreement. The processes and measures adopted by the
Contractor in compliance with this objective shall be in full
compliance with applicable legislation.
13. ASSET AND LEASE TRANSFERS
13.1. The Contractor shall in relation to a Call-Off Contract be
entitled to identify existing NBA owned assets and leases
which are in the reasonable judgment of the Contractor
required for the purposes of the Services.
13.2. NBA shall endeavor to comply with the Contractor's
requirements referred to in Sub-section 13.1 above provided
that NBA shall be under no obligation to sell, transfer or
assign any asset or lease if NBA is unable or is otherwise
prejudiced to comply with the said requirements. In the event
that NBA shall not for whatever reason transfer, assign or
otherwise make available such an asset which the Contractor
and NBA agree to is necessary for the provision of the
Services, NBA shall, at its option, provide for access by the
Contractor to such asset as may be reasonably necessary to
provide the Services or allow the Contractor to procure an
alternative asset in accordance with Sections 9 and 14.
Notwithstanding the preceding sentence it is expressly
acknowledged that wiring and other like fixtures integral to
NBA premises will always be excluded as assets capable of
transfer or sale. Furthermore NBA shall be entitled to specify
that any particular asset sold, transferred or assigned may
not be used by the Contractor for Third Party business
purposes.
13.3. In cases where NBA and the Contractor can reach agreement in
relation to the sale, transfer or assignment of an asset or
lease, the Parties shall agree to a consideration based on the
market value of the asset or lease or such other basis of
consideration as shall optimize the transaction with the
objective of reducing the Actual Cost of the Services. In the
event that the consideration agreed to shall be other than at
zero or nominal value the consideration shall be charged back
to NBA as part of the Services at a rate sufficient to recover
the full cost to the Contractor of the acquisition of the
asset or lease over the agreed to remaining useful life of the
asset or lease. The transfer of any such asset or lease shall
be governed by the terms of Annex E.
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13.4. Where any Contractor Equipment is retained or located at a NBA
location, risk in such Contractor Equipment will remain with
the Contractor provided that NBA shall comply with such
reasonable duties of care as the Contractor may specify in
respect of such Contractor Equipment.
14. REMUNERATION
14.1. The Parties shall agree to a methodology for remuneration to
the Contractor which recognizes the principles in Section 3.
The elements of the remuneration shall comprise Actual Costs,
a fixed Margin and Incentives based on performance relative to
agreed to Targets, subject to adjustments in accordance with
Sub-section 18.1.3.
14.2. For each Year, or for such other period as may be agreed
between the Parties to a Call-Off Contract, a Target, Margin
and Incentives will be agreed. The Parties to a Call-Off
Contract shall exercise commercially reasonable efforts to
reach agreement on such matters no later than September 30 in
the current Year. In the event that the Parties fail to reach
agreement on either the Target, the Margin or the Incentives
by September 30 in the current Year the Parties shall
immediately thereafter refer the disagreement to the
Telecommunications Review Board for discussion and subsequent
recommendation. If the Telecommunications Review Board cannot
agree to a recommendation or if the Parties cannot accept the
recommendation made, or otherwise agree, prior to December 31
in the current Year a failure to agree shall then exist and
the relevant Call-Off Contract shall be subject to termination
in accordance with Section 39.
14.3. An illustration of the way in which it is envisioned the
Charges will be calculated and paid is set out in Annex B.
15. TARGETS
15.1. For each Year of a Call-Off Contract, or for such other period
as may be agreed to between NBA and the Contractor, a Target
as defined in Annex A will be agreed.
15.2. In 1996, NBA and the Contractor shall in respect of the
Services to be provided agree to an overall Target. The
Contractor shall provide the Services at a total charge to NBA
which shall enable NBA to achieve its expectation of savings.
The total charge to NBA, or Target, includes the Contractor's
Expected Cost of Operations (CoOE) as defined in Annex A less
********, whichever is greater.
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15.3. In 1997 and beyond, NBA and the Contractor shall in respect of
the Services to be provided agree to an overall Target. The
Contractor shall provide the Services at a total charge to NBA
which shall enable NBA to continue to achieve its expectations
of savings. Under the terms of this Sub-section, the Target
will include: ********.
16. COSTS DEFINITIONS
16.1. Actual Costs incurred by the Contractor in providing the
Services shall comprise Direct Costs, Sub-contractor Costs and
Network Services Costs as follows:
16.1.1. Direct Costs means all costs incurred by the
Contractor which are solely and directly attributable
to the provision of the Services pursuant to a
Call-Off Contract, such costs to include by way of
example but not by way of limitation:
16.1.1.1. Salaries of all employees of the
Contractor which shall be deemed to
include, without limitation, all personal
benefits and expenses as incurred in the
performance of the Services under the
Call-Off Contract together with employer's
insurance or other employer's social
security contributions, and employer's
contribution to employee pension benefits.
16.1.1.2. Costs of network, desktop and computing
equipment;
16.1.1.3. Costs of software purchase, licenses and
maintenance;
16.1.1.4. Costs of depreciation and lease rentals
related to assets used in the provision of
the Services, licenses and maintenance in
respect of such assets;
16.1.1.5. Costs for designated network operation and
technical services provided on-demand
based upon actual time and materials
required as outlined in Annex C;
16.1.2. Sub-contractor costs which will include the costs to
the Contractor for services obtained from a
Sub-contractor which are solely and directly
attributable to the provisions of services pursuant
to a Call-Off Contract, plus ******** handling fee
and
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shall be included within the structure of the
Contractor's monthly invoice;
16.1.3. Network Services Costs means those costs for services
provided by the Contractor which are solely and
directly attributable to the provision of the
Services pursuant to a Call-Off Contract, such
services to include by way of example but not by way
of limitation;
16.1.3.1. Network Management Services including
monitoring, reactive and proactive
management and configuration management;
16.1.3.2. Message Toll Services (long distance);
16.1.3.3. Public or private data network services,
including but not limited to private
leased lines and frame relay.
16.2. The Contractor's, or Contractors Associated Companies,
corporate or head office overheads shall not form any part of
the Direct Costs. By way of illustration and not by way of
limitation, corporate or head office services under the
following generic business activities are excluded:
16.2.1. Finance and Planning
16.2.2. Marketing and Sales
16.2.3. Human Resources
16.2.4. Contracts and Procurement
16.2.5. Internal and External Audit
16.2.6. Legal
16.2.7. Public Affairs
16.2.8. Corporate, General and Executive Management
16.2.9. Corporate Offices and Associated Costs
This is provided that in the case of Sub-sections
16.2.1, 16.2.3, 16.2.4 and 16.2.6 above an
appropriate proportion of such overhead costs may be
treated as Direct Costs for specific cases provided
such costs have been identified and agreed to in
writing in advance and have been incorporated in the
Target for that Year. Such costs shall be determined
in the manner set out in Sub-section 16.1.1.1.
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17. MARGIN
17.1 The Margin shall, over the term of this Agreement and the
Call-Off Contracts, be determined for each Year at levels in
accordance with the following:
17.1.1. In 1996, a margin of ********.
17.1.2. In 1997, a margin of ********.
17.1.3. In 1998 - 2001, margin increases above those
referenced for the current year will occur as
outlined for the following conditions:
17.1.3.1. If the current year's Target is not met,
no increase will be applicable in the
subsequent year;
17.1.3.2. If the current year's Target is met, an
increase of ******** will be applicable in
the subsequent year; or
17.1.3.3. If the current year's Target is under-run
by ******** of the Target or more, an
increase of ******** will be applicable in
the subsequent year.
17.2. In respect of the Year 2002 and each subsequent Year, NBA and
the Contractor will commence discussions with a view to
agreeing to the Margin for such Year in the preceding Year.
17.3. Margins shall be applicable against all direct costs as
outlined in Section 16.
17.4. The Margin will be payable in twelve amounts as part of the
monthly invoices referred to in Section 19.
18. RISK/REWARD INCENTIVES
18.1. As a part of remuneration assessed in accordance with this
Agreement, the Contractor shall be entitled, if the Actual
Costs plus Margin incurred shall be less than the Target in a
Year ("cost underrun"), to an Incentive based on the
difference between the Target and the Actual Costs plus Margin
incurred. The Incentive payment related to such cost underrun
shall be a percentage of such cost underrun, such percentage
to be determined in accordance with the provisions of
Sub-sections 18.1.1 and 18.1.3. In the event that the Actual
Costs plus Margin incurred shall exceed the Target in a Year
("cost overrun"), the Contractor and NBA shall share such cost
overrun, by the payment by Contractor of an Incentive equal to
a percentage of such cost overrun, such percentage to be in
accordance with the provisions of Sub-section 18.1.2.
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18.1.1. Where there is a cost underrun, the Incentive shall
be the Contractor's share of such cost underrun and
paid by NBA to the Contractor, determined as follows:
Agreement NBA's Contractor's
Year Share Share
--------- ----- ------------
1996 **** ****
1997 **** ****
1998 **** ****
1999 **** ****
2000 **** ****
2001 **** ****
18.1.2. Where there is a cost overrun, the Incentive shall be
the Contractor's share of such cost overrun and paid
by the Contractor to NBA, determined as follows:
Agreement NBA's Contractor's
Year Share Share
--------- ----- ------------
1996 **** ****
1997 **** ****
1998 **** ****
1999 **** ****
2000 **** ****
2001 **** ****
18.1.3. Service Level Performance Evaluation
18.1.3.1. Payment of Incentives as defined in
Sub-section 18.1.1 shall be subject to the
Contractor's Service Level performance.
18.1.3.2. Specific Service Level performance
evaluation methodology will be included in
each Call-Off Contract.
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18.1.3.3. The Contractor must meet or exceed Service
Levels defined in Annex C and amended in a
Call-Off Contract in order to receive
******** of the Risk/Reward Incentive as
defined in Sub-section 18.1.1.
18.1.3.4. The Risk/Reward Incentive that may be due
the Contractor at the conclusion of a
Call-Off Contract may be reduced by the
Telecommunications Review Board based upon
criteria outlined in the Call-Off
Contract. The disbursement of any
Incentive payment shall be the
responsibility of the Telecommunications
Review Board.
18.2. For the avoidance of doubt no payments shall by virtue of this
Agreement be due from NBA to the Contractor in respect of the
Services unless mutually agreed to by the Parties but shall
instead be dependent upon the existence of an obligation to
make payments in a Call-Off Contract between NBA and the
Contractor and only to the Parties to such Call-Off Contracts.
18.3. In the event that the Contractor shall in the provision of the
Services have obtained or procured services from Third
Parties, NBA shall be under no obligation nor have any
responsibility which would otherwise have been due to the
Contractor. Furthermore the Contractor shall ensure that such
payments are made in a timely manner and in accordance with a
mechanism which will not in its operation prejudice the
objectives of NBA under this Agreement or a Call-Off
Contracts.
19. INVOICING AND SETTLEMENT
The Contractor shall in respect of its remuneration for the Services
submit its invoices in accordance with the provisions of a Call-Off
Contract subject to the following:
19.1. Invoices submitted by the Contractor will show the Margin and
applicable costs.
19.2. In addition to the requirements of Sub-section 19.1 the
invoices will show cumulative Actual Costs plus Margin to the
end of the latest invoicing period for which Actual Costs and
Margin are available.
19.3. The basis of payment shall, subject to Sub-sections 19.4 and
19.5 below, be monthly based upon Services delivered. The
Contractor shall submit the relevant invoice no later than
fifteen (15) calendar days after the end of the relevant month
or as otherwise mutually agreed.
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19.4. Notwithstanding Sub-section 19.3 above, payments representing
Incentives referred to in Section 18 will be paid in arrears
no later than ninety (90) calendar days after the end of the
relevant Year by which time final adjustments for Actual Costs
will also be completed. Such final adjustment will be
determined as follows:
Aggregate Actual Cost
+
Margin
+/-
Incentive
-
Actual Payments
19.5. Subject to Sub-section 19.3 above, the Contractor's invoice
will be paid no later than thirty (30) calendar days following
receipt of the invoice for the relevant month.
19.6. Payment of Taxes
19.6.1. All sums due to the Contractor under a Call-Off
Contract are exclusive of any sales tax, and any
other similar taxes which may from time to time be
introduced, which shall be charged thereon in
accordance with the relevant regulations in force at
the time of making the taxable supply, and shall be
paid by NBA.
19.6.2. Valid tax invoices shall be issued in respect of all
payments due under a Call-Off Contract and shall
conform with relevant fiscal requirements.
19.6.3. The Contractor shall indemnify NBA in respect of any
penalties or interest charges incurred consequent
upon any error or omission by the Contractor.
19.7. In the event that Charges and other amounts are not paid in
accordance with the provisions of this Section 19 either Party
to a Call-Off Contract may subject to ten (10) calendar days
notice given in writing to the other Party, and failing
receipt of moneys due within said notice period and without
prejudice to any other rights or remedies available under a
Call-Off Contract, charge daily compounding interest on
legitimate outstanding undisputed amounts, until payment in
full is received from the other Party, at a rate equal to
******** above Prime Lending Rate per annum (or as otherwise
agreed between the Parties) current from time to time, whether
before or after judgment. Interest shall continue to accrue
unless and until payment is made notwithstanding termination
of a Call-Off Contract for any cause whatsoever.
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19.8. In the event that Charges and other amounts are not paid in
accordance with the provisions of this Section 19 either Party
to a Call-Off Contract may subject to ten (10) calendar days
notice given in writing to the other Party, and failing
receipt of moneys due within said notice period and without
prejudice to any other rights or remedies available under a
Call-Off Contract, place the disputed amounts in an Escrow
account until the dispute can be resolved.
20. TAX
20.1. The Contractor shall supply and shall ensure that any
Associated Companies of the Contractor engaged in relation to
the Services shall supply to NBA such information (including
documentary information) in connection with its or their
activities under or pursuant to the Call-Off Contract as may
be required by NBA.
20.2. The Contractor shall retain, and shall ensure that Associated
Companies shall retain, all information and documents as shall
enable the Contractor to comply with its obligations under
Sub-section 20.1.
20.3. The Contractor shall duly pay and shall ensure that each of
its Associated Companies shall duly pay, all taxes which shall
be properly and lawfully assessed or imposed on the Contractor
or its Associated Companies by local, state or federal
entities in connection with the carrying out of the Services
and/or works under a Call-Off Contract or any sub-contract or
purchase order hereunder. The Contractor acknowledges and
shall if NBA shall so request ensure that its Associated
Companies shall acknowledge that NBA is not and shall not
become liable to any taxes referred to in this Sub-section
20.3.
20.4. Liabilities
20.4.1. The Contractor shall indemnify and keep NBA
indemnified against all liabilities incurred as a
consequence of breach by the Contractor or the
Contractors Associated Companies of any of the
obligations under Sub-sections 20.1 and 20.2 and in
respect of all actions, proceedings, claims, damages,
charges, costs and expenses whatsoever in relation
thereto.
20.4.2. The Contractor shall indemnify and keep NBA
indemnified against all liabilities to tax
acknowledged under Sub-section 20.3 to be the
liability of the Contractor.
20.5. The Contractor is deemed to have taken into account all taxes,
levies or contributions having effect on the provision of the
Services. If, on or after the date of award of a Call-Off
Contract, there shall be any material
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change in the level or in the incidence, or any new incidence
or abolitions, of any local, state or federal tax, levy or
contribution which are by law payable by the Contractor or any
Sub-contractor or supplier hereunder in respect of its
employees working wholly on the Services and/or works or in
respect of the Contractor or any Sub-contractor's or
supplier's activities under a Call-Off Contract or any
sub-contract or purchase order thereunder, NBA and the
Contractor shall agree if any appropriate adjustments should
be made to the Targets failing which a failure to agree shall
be deemed to have occurred in accordance with the terms of
Sub-section 39.3.4.
The net amount due to, or from any Sub-contractor of the
Contractor as a result of any change, new incidence or
abolitions arising from the provisions of Sub-section 20.5
shall be paid to, or recovered from, the Contractor by NBA as
though such increase or decrease had directly affected the
Contractor.
For the purpose of this Sub-section only, "tax" includes any
duty or charge and any penalty or interest thereon and any
other costs and charges whatsoever assessed or imposed by any
competent local, state or federal entity and having effect
nationally and any other authority wheresoever having
jurisdiction over the Contractor or its Sub-contractors or NBA
by virtue of this Agreement or a Call-Off Contract.
21. FINANCIAL AUDIT
21.1. The Contractor commits to the principle of open book
accounting with the objective of verifying, on a retrospective
basis, the Direct Costs and Sub-contractor Costs against which
Adjustment and Margin arrangements were calculated and
applied.
21.2. Subject to the incorporation of appropriate safeguards which
shall be determined by the Contractor acting reasonably to
prevent inappropriate access to and knowledge of sensitive
information held by the Contractor, it is agreed to by the
Parties that the intent of Sub-section 21.1 is to provide for
visibility and clear understanding between the Parties of
Direct Costs and Sub-contractors Costs.
21.3. Subject to Sub-section 21.2 NBA shall have rights to conduct
audits in relation to records held by the Contractor relating
to the Direct Costs and Sub-contractors Costs of goods and/or
services provided for the Services. In fulfillment of these
rights the Contractor undertakes to ensure equivalent audit
rights in favor of NBA in respect of Associated Companies of
the Contractor. In addition:
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21.3.1. Such audits shall be conducted by a designated NBA
officer or an independent auditor (whose appointment
shall be at NBA's expense and shall be subject to
approval by the Contractor such approval not to be
unreasonably withheld). The frequency of such audits
shall be at NBA's discretion provided always that NBA
shall give reasonable notice of such requirements to
the Contractor and shall exercise reasonable
endeavors to conduct such audits with the lowest
levels of inconvenience and disturbance practicable
being caused to the Contractor.
21.3.2. Subject to the retention of records as required by
law, the Contractor shall for the purposes of this
Section 21 retain records relating to the Services
for a period of twenty-four (24) months after the end
of the relevant Year.
21.4. Financial reporting in accordance with this Section 21 will be
achieved:
21.4.1. By the submission of invoices in accordance with the
Call-Off Contract
21.4.2. And in relation to the overall performance of the
Contractor's obligations by means of the
Telecommunications Review Board.
21.5. Any adjustment to the level or appropriateness of charges or
recoveries incurred or paid pursuant to the Services shall be
agreed to within a period of 30 calendar days from the
submission of the NBA audit report and shall be implemented in
the next available Invoice or Invoices. Such agreed to
adjustments shall not incur an interest charge otherwise
applicable in accordance with Sub-section 19.8.
21.6. Nothing contained in this Section 21 shall be deemed to limit
the right of NBA to challenge at any time or to make enquiries
concerning Charges, or to require the Contractor to
demonstrate the reasonableness or otherwise of such Charges.
22. SUB-CONTRACTORS
22.1. The Contractor shall undertake to employ only such
Sub-contractors as are capable of contributing effectively to
the express aims of the Call-Off Contracts.
22.2. The Contractor shall have the right to appoint as a
Sub-contractor:
22.2.1. Any Contractors Associated Company without NBA's
consent; and
22.2.2. Any Third Party, subject to NBA's consent.
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22.3. NBA shall have the right to nominate certain Sub-contractors
for the provision of the Services subject to agreement of the
Contractor such agreement not to be unreasonably withheld and
provided that, where the Contractor can demonstrate that the
use of such Sub-contractors would materially prejudice the
Contractor's ability to reduce Actual Costs, then NBA and
Contractor shall agree to an appropriate adjustment to the
Targets.
22.4. The Contractor's use of Sub-contractors of any type shall not
relieve the Contractor from contractual obligations.
22.5. Sub-contractor costs will consist of direct costs to the
Contractor for services obtained from a Sub-contractor plus a
******** handling fee.
23. ASSIGNMENTS AND SUB-LETTING
23.1. The Contractor shall not seek to assign or sub-let any of its
rights, liabilities or obligations under this Agreement (if
any) without NBA's prior written consent. Such consent to
assign or sub-let shall not relieve the Contractor of any
liability or obligation under a Call-Off Contract.
23.2. NBA reserves the right to assign or sub-let the whole or part
of its rights, liabilities and obligations under this
Agreement (if any) to any Associated Company of NBA upon the
same terms and conditions as those agreed between the Parties
without the consent of the Contractor and to any Third Party
with the consent of the Contractor, such consent not to be
unreasonably withheld.
24. EMPLOYMENT OF FORMER NBA EMPLOYEES
24.1. The Contractor shall be free to offer any number of relevant
NBA employees new contracts of employment on its own terms.
NBA will, if such NBA employees shall individually agree,
provide the Contractor with appropriate HR information and
material for the purpose of assisting the Contractor to choose
individuals to whom offers of employment might be made.
24.2. The Contractor will use a best effort to hire at least five
qualified NBA employees who will be displaced by this
Agreement. This best effort will include but not be limited
to, employee presentations concerning GCI opportunities and
interviewing all interested NBA personnel displaced by this
agreement.
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25. EMPLOYEE RELATIONS AND TRAINING
25.1. The Contractor shall implement and maintain recruitment and
training programs for the purpose of ensuring that adequate
levels of trained and motivated personnel are available for
the provision of the Services.
25.2. The Parties shall agree to the principle of Secondment of
employees as defined in Annex A for purposes associated with
the Services or in connection with other relevant business of
NBA.
25.3. Unless otherwise agreed between the Parties, during the term
of this Agreement or a Call-Off Contract neither Party to a
Call-Off Contract shall attempt to induce the other's
employees to work for the other. However, should such
employees of their own accord express a wish to work for a
Party, then that Party shall not be prevented from engaging
such employees either by direct employment or through a Third
Party.
25.4. Consistent with the objectives of achieving a close business
relationship between NBA and the Contractor employees of
either Party shall be invited to join and participate in
seminars, presentations and other forums, whether internal or
external to NBA or the Contractor, which are relevant to the
provision of the Services.
26. CONTRACTOR'S PERSONNEL
26.1. If at any time and for any reason the Contractor's personnel
do not perform their duties to the reasonable satisfaction of
NBA, the Contractor accepts that it should provide suitable
replacements as soon as practicable.
26.2. The Contractor shall undertake not to deploy in the Services
any personnel the Contractor may reasonably believe to be
unacceptable to NBA.
27. FATAL ACCIDENT, INJURY AND DAMAGE TO PROPERTY
27.1. The Contractor shall indemnify NBA and hold NBA harmless from
and against any and all liability for death, illness or injury
to any Third Party or for loss of or damage to any Third
Party's property and against all claims, demands, proceedings
and causes of action resulting therefrom and arising out of
breach of contract, breach of statutory duty or negligence on
the part of the Contractor or its Sub-contractors , or agents
in the provision of the Services and the performance of any of
their obligations under any Call-Off Contract.
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27.2. NBA shall indemnify the Contractor and hold the Contractor
harmless from and against any and all liability for death,
illness or injury to any Third Party or for loss of or damage
to any Third Party's property and against all claims, demands,
proceedings and causes of action resulting therefrom and
arising out of breach of contract, breach of statutory duty or
negligence on the part of NBA, its Sub-contractors or agents
(excluding the Contractor and any of its Sub-contractors or
agents) in relation to the Services and the performance of any
of its obligations under any Call-Off Contract.
27.3. The indemnities referred to in Sub-sections 27.1 to 27.2 above
shall not be subject to the limitation of liability provisions
contained in Sub-section 29.2.
28. INSURANCE
28.1. The Contractor shall maintain full and sufficient insurance
coverage in respect of its liabilities under a Call-Off
Contract and to fulfill any statutory requirements of
government or other appropriate bodies including but not
limited to the provision of personal accident insurance for
their personnel. For the avoidance of doubt, it is recognized
that where personnel are provided by any Sub-contractor, the
Contractor may require the Sub-contractor to provide such
personal accident insurance.
28.2. The Parties shall ensure that each others interests are noted
in all general liability policies subject to policy terms and
conditions and only to the extent necessary to provide
coverage under the other Party's insurances for the liability
assumed by that Party under a Call-Off Contract and shall
supply evidence of all insurances required pursuant to this
Section 28 to each other upon request.
28.3. The Contractor shall self-insure or maintain insurance in
respect of the full replacement value of Contractor Equipment.
28.4. The Parties shall obtain from their respective underwriters a
waiver of all rights of subrogation against the other Party
including its employees, Associated Companies, co-venturers
and Sub-Contractors, and such waiver shall be endorsed upon
all such policies of insurance.
29. LIMITATION OF LIABILITY
29.1. With respect to any claim for damages arising pursuant to any
Call-Off Contract the maximum liability for any claim and/or
all claims against a Party for damages shall with the
exception of sums due and owing in respect to Services, be
limited to an amount equal in any one Year to
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$300,000 or 10% of the amount invoiced by the Contractor in
the 12 months preceding the claim or claims, whichever is
greater; subject always that any such claim shall be time
barred and invalid if not notified by one Party to the other
within a period of 12 months taken from the later of either
the date when the cause of action arose or the date when the
Party seeking damages ought reasonably to have been aware of
the existence of such a claim and provided that in the first
Year of a Call-Off Contract the reference in this Sub-section
to amounts invoiced in the 12 months preceding the claim shall
instead be limited by reference to $300,000 or 10% of the
Target for that Year, whichever is greater.
29.2. In any event and under no circumstances, including the
negligent act or omission of itself or its agents, shall
either Party be liable to the other whether under this
Agreement, the Call-Off Contracts or otherwise in contract,
tort, breach of statutory duty or otherwise in respect of any
loss of revenue, business, contracts, anticipated savings, or
profits or commercial opportunities or in respect of any
indirect or consequential loss whatsoever.
29.3. For the avoidance of doubt neither Party to this Agreement
shall be liable under this Agreement for any default by the
Parties to any Call-Off Contract , or as a result of any
request to/or demand made of the Parties to a Call-Off
Contract by the Parties to this Agreement.
29.4. The provisions of this Sub-section shall continue to apply
notwithstanding the termination or expiry of this Agreement or
relevant Call-Off Contract for any reason whatsoever.
30. INDEMNIFICATION
Whenever a Party has an obligation to indemnify the other pursuant to
this Framework Agreement or a Call-Off Contract the following shall
apply:
30.1. The Party claiming the right to be indemnified (the "Claiming
Party") shall give notice to the other Party which may have an
indemnifying obligation ("Indemnifying Party"). Such notice
shall set forth a description of the claim or claims which
entitle the Claiming Party to such indemnification and shall
recite that such claim is made pursuant to this Agreement or
Call-Off Contract and shall further identify the applicable
Section raising the indemnification obligation. Notice shall
be given as soon as practicable after the Claiming Party has
learned of the existence of a claim for indemnification.
30.2. Upon receipt of the notice set forth in Sub-section 30.1
above, the Indemnifying Party will pay promptly to the
Claiming Party being indemnified the amount of all damages,
deficiencies, liabilities, and costs,
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expenses, claims which the Indemnifying Party shall agree to
be due and owing or, in the absence of agreement, as finally
adjudged to be due and owing by a competent court of law
having jurisdiction over this Agreement or the Call-Off
Contracts. The Indemnifying Party shall be entitled to
participate in the defense of any such claim or action and, to
the extent it wishes to assume the defense thereof with legal
counsel of its choosing. The Claiming Party may object to the
assumption of the defense of the alleged claim subject to it
waiving its rights to indemnification in respect of such
claim. Upon notice by the Indemnifying Party of its election
to assume the defense, the Indemnifying Party will not be
liable to the Claiming Party for any legal or other expenses
subsequently incurred by the Claiming Party in connection with
the defense thereof. The Claiming Party may not compromise or
settle any claim for which it has asserted or may assert its
indemnification right without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably
withheld. The Claiming Party shall reasonably cooperate with
the Indemnifying Party in conducting the defense of any claim.
30.3. Except as otherwise agreed the amount of damages, losses,
deficiencies, costs and expenses incurred or suffered to which
indemnification pursuant to this Agreement or Call-Off
Contract relates shall be subject to the limitations referred
to in Section 29.
31. INDEPENDENT CONTRACTOR
In the performance of the Services pursuant to a Call-Off Contract, the
Contractor shall be an independent contractor and nothing in this
Agreement or any Call-Off Contract shall create or be deemed to create
a partnership or, except as specifically provided in any Call-Off
Contract, a relationship of principal and agent or any other
relationship of a similar nature. Except as specifically provided in
the Call-Off Contract, neither Party shall have the power or authority
to bind the other Party in any way.
32. INTELLECTUAL PROPERTY RIGHTS
32.1. If in the course of providing the Services, NBA requests and
the Contractor agrees to create any process, document or other
material to the specification of NBA, not being an enhancement
of an existing product (the "Property"), then the copyright or
other intellectual property right and all legal and beneficial
rights therein shall belong to NBA and the Contractor shall be
permitted to use such Property only to the extent necessary
for the provision of the Services.
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32.2. If in the course of providing the Services (other than as
specified in Sub-section 32.1) the Contractor its employees or
agents create any process document or other material solely in
order to provide the Services and the entire costs of
development have been included in Actual Costs, then copyright
or other intellectual property right and all legal and
beneficial rights therein shall belong to the Contractor,
subject to the right for NBA to require at any time that the
Contractor shall grant NBA a non-exclusive perpetual
royalty-free license for the use of the Property to the
exclusion of any rights to sub-license to any Third Parties.
Any material development of the type envisioned in this
Sub-Clause 32.2 initiated by the Contractor in the course of
and as part of providing the Services shall be subject to the
prior agreement of NBA. The Parties shall execute any
arrangement or other instrument which may be necessary to give
effect to this provisions of this Sub-section 32.2.
32.3. Save as provided for in Sub-sections 32.1 and 32.2 all
copyright or intellectual rights in any process document or
other material created by the Contractor its employees or
agents and all legal and beneficial rights therein shall
belong to the Contractor subject to the Contractor granting
NBA a royalty free license to the use of such Property for the
duration of the Services and solely in relation to the
Services.
32.4. In the event that NBA has developed or may develop or may have
had developed on its behalf certain software or other
intellectual property (the NBA Software) the copyright or
other intellectual property rights shall reside with NBA and
all legal and beneficial rights therein shall be owned by NBA
and the Contractor shall have no right to the use of such NBA
Software other than for the purpose of providing the Services.
32.5. The Contractor shall indemnify NBA and hold NBA harmless from
and against all actions, claims, demands, costs, charges and
expenses arising in any jurisdiction from any infringement or
alleged infringement of letters patent, design, copyright,
trade marks or other intellectual property rights arising out
of or in connection with the performance of a Call-Off
Contract by the Contractor, its Sub-Contractors, or suppliers.
NBA shall indemnify the Contractor against any claims,
proceedings and expenses arising in any jurisdiction from
infringement or alleged infringement of any letters patent,
design, copyright, trademark or other intellectual property
rights by reason of the use by the Contractor of NBA owned (or
equipment provided by NBA) equipment. NBA Software or Third
Party Software not provided or supplied by the Contractor for
use in combination with Contractor Equipment, the Software or
the Network.
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32.6. To the extent practicable the Contractor shall only enter into
commitments with Sub-Contractors and purchase materials and
equipment for use under a Call-Off Contracts from suppliers
who will agree to in writing to indemnify and keep indemnified
the Contractor against any claims for infringement or alleged
infringement of letters patent, design, copyright, trade marks
or other intellectual property rights.
32.7. If at any time an allegation of infringement of copyright is
made in respect of the Software [provided by the Contractor]
in the provision of the Services, or if in the Contractor's
reasonable opinion such an allegation is likely to be made,
the Contractor shall at its own expense either modify or
replace the Software so as to avoid the infringement, without
detracting from overall performance.
33. MINIMUM CONDITIONS OF SATISFACTION
The Contractor agrees to provide NBA services which meet the conditions
outlined in Annex C.
34. SECURITY
34.1. General
34.1.1. NBA reserves the right to establish written policies
and procedures for general application to the
Contractor's personnel and of all Third Party
contractors on any Site which is substantially under
the control of NBA. Whenever reasonably practicable,
NBA shall consult with the Contractor prior to
establishing such policies and procedures. Such
policies and procedures may cover matters such as
health and safety, reporting of disputes,
familiarization and training, offshore procedures,
disciplinary standards and action, inclement weather
working, arrangements for coordination industrial
relations matters on any site and any other similar
matters considered to be appropriate by NBA. Current
and appropriate NBA policies and procedures relevant
to the Call-Off Contract shall be listed, but not by
way of limitation, in Schedule 4 to the Call-Off
Contract.
34.1.2. Each Party shall comply with and shall ensure that
its employees and agents comply with security
regulations and policy standards, codes of practice
and other regulations in force at each others' sites
and shall ensure that copies of such regulations and
policies are made available to each other and their
respective employees and agents. Each Party in
relation to premises controlled by it reserves
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the right where there is reasonable cause to exclude
any employee or agent of the other from entering onto
such premises.
34.1.3. The Parties shall report forthwith to each other all
identified attempts (whether successful or not) by
unauthorized persons (including unauthorized persons
who are employees of the Contractor or NBA) either to
gain access to or interfere with the Data, the
Facilities, the Network, or either Party's
confidential information.
34.2. Data
34.2.1. The Contractor shall maintain fully adequate security
safeguards which are no less rigorous than those
requirements listed in the Scope of Work against the
destruction or loss or unauthorized use or alteration
of Data and Software whether the Data or Software is
stored on the Contractor Equipment or on other
storage media under the Contractor's management or
control as part of the Services. Such safeguards
shall include an obligation on the Contractor to
ensure that access to Data and Software is only
available to such personnel as may be specifically
designated by NBA (Authorized Users or as provided
for in Sub-section 34.4).
34.2.2. NBA's data (both financial and customer records) is
of utmost value and any unauthorized disclosure of
this information by the Contractor is a Material
Breach of the agreement.
34.3. Disaster Recovery
The Contractor shall assist NBA in meeting all regulatory
requirements pertaining to Disaster Recovery and in
cooperation with NBA and M&I implement procedures and a
schedule for testing these procedures within the Scope of
Work.
34.4. Authorized Access to Systems
34.4.1. A list of Authorized Users shall be maintained by NBA
and coordinated with M&I so that a total uniformly
applied process of security is in place. An Access
Code shall be allocated to each such Authorized User.
34.4.2. The Contractor shall have the right with the
agreement of NBA (not to be unreasonably withheld) to
withdraw any Access Code and allocate a new Access
Code to NBA where the Contractor has reason to
believe the Access Code has been discovered and/or
used by a person without the knowledge, consent or
permission, express or implied, of NBA, their
employees or agents.
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34.4.3. The Contractor shall subject to the requirements of
Sub-section 35.4 have the right to withdraw any
Access Code from NBA if the Call-Off Contract is
terminated.
34.4.4. Any Access Code allocated to NBA by the Contractor is
confidential and personal to NBA and NBA shall
exercise reasonable endeavors to keep its Access
Codes safeguarded.
34.4.5. NBA shall:
34.4.5.1. Use the Access Codes in accordance with
the reasonable written instructions given
by or on behalf of the Contractor to NBA
from time to time; and
34.4.5.2. Notify the Contractor promptly orally
(confirmed in writing) where there are
reasonable grounds for suspecting or
believing that a person has discovered or
is making use of any Access Code without
the knowledge, consent or permission of
the Contractor, NBA, their employees or
agents.
35. ACCESS
35.1. Access to Premises
To enable the Parties expeditiously and properly to exercise
their respective rights and obligations under a Call-Off
Contract including, without limitation, the delivery,
installation, inspection, maintenance, testing, disconnection,
alteration or renewal of the Facilities or any part thereof,
or for the purposes of audit, each Party shall permit or
ensure permission for the other Party and any other authorized
person(s) to have reasonable access to the Sites and the
Facilities (including the Contractor's premises and systems)
and shall provide each other with or ensure such facilities
and cooperation as each Party shall reasonably request.
35.2. Access to Information
Each Party undertakes promptly to provide the other Party
(free of charge) with all such information and cooperation
that may reasonably be required and which the first Party is
able to provide from time to time to enable the other Party to
proceed uninterruptedly with the performance of its
obligations under the Contract.
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36. CONFIDENTIALITY
36.1. All information obtained relative to NBA or Third Parties
connected with the business of NBA by the Contractor or
Contractor's or its Sub-contractors or agents for or in
connection with this Agreement and any Call-Off Contract
including negotiations and site visits and during the meetings
of the Telecommunications Review Board shall be considered
confidential and shall not be used by the Contractor its
Sub-contractors, employees or agents other than for the
purposes of the Services, or divulged by the Contractor, its
Sub-contractors, employees or agents to any Third Party
person, firm or corporation other than in accordance with
NBA's prior written instructions or consent.
36.2. All information obtained relative to the business of the
Contractor by NBA or NBA's Sub-contractors or agents in
connection with this Agreement and any Call-Off Contract
including negotiations and site visits to the Contractor or
during meetings of the Telecommunications Review Board shall
be considered confidential and shall not be used by NBA or its
Sub-contractors employees or agents other than for the
purposes of the Services nor divulged by NBA or its
Sub-contractors, employees or agents to any Third Party person
firm or corporation other than in accordance with the prior
written consent of the Contractor.
36.3. Provided that for the purposes of this Section 36 such
information shall be deemed not to be of a confidential nature
to the extent that it is:
36.3.1. Information which was in the public domain at the
time of disclosure or which comes into the public
domain otherwise than through the default or
negligence of the recipient; or
36.3.2. Information which was known to the recipient, under
no obligation of confidence, at the time of
disclosure by the other; or
36.3.3. Confidential information which the receiving Party
can show had been developed by or for the receiving
Party at any time independently of any information
disclosed to it by the disclosing Party, or by a
person who had no access to or knowledge of the
confidential information;
36.3.4. Confidential information the disclosure of which is
required by law, subject to the notification by the
receiving Party of that requirement at least two days
prior to its disclosure;
36.3.5. Information which has been lawfully obtained by the
recipient from a Third Party who in making such
disclosure breaches no obligation of confidence to
the other;
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36.3.6. Confidential information which is disclosed with the
prior written permission of the disclosing Party.
36.4. Notwithstanding Sub-section 36.3 NBA and the Contractor and
their respective Associated Companies shall be permitted to
disclose confidential information to their respective
employees, Sub-contractors and agents who are directly
involved in Call-Off Contracts provided that each Party
ensures that such employees, Sub-contractors and agents are
made aware of, agree to abide by and duly comply with the
obligations set out in this Section 36.
36.5. The obligations relating to confidentiality in this Section 36
shall remain valid and subsisting for a period of three years
(3) from the effective date of termination withdrawal or
removal notwithstanding termination of the Agreement or any
Call-Off Contract or withdrawal or removal of the Contractor
from the Telecommunications Review Board. In the event of
termination of this Agreement or Call-Off Contract(s) or
withdrawal or removal as aforesaid both Parties shall within
thirty (30) Working Days individually return all confidential
information and data which is the property of the other Party
together with all copies of all material then in their
possession relating to the Services which is confidential and
in which it cannot claim any title or other proprietary
rights. There is no time limitation on the Contractor's
obligation to maintain confidentiality.
36.6. The Contractor's personnel working on NBA Sites will be
required to sign a Letter of Confidentiality in the form
annexed as Schedule 6 to a Call Off Contract.
36.7. Nothing in this Agreement shall imply an obligation on any
Party to supply confidential information.
37. DATA PROTECTION
In the course of providing the Services the Contractor will be
compiling, processing and storing personal data for NBA. NBA shall be
responsible for notifying the Contractor of NBA's requirements arising
from the provision by the Contractor of the Services. The Parties
represent and warrant that they will comply with their appropriate
obligations under all data protection legislation in force from time to
time. Each Party shall indemnify the other against any liabilities
costs or expenses arising out of or relating to that Party's failure to
comply with such legislation.
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38. SECURITY AUDIT
38.1. Without prejudice to its other obligations under this Section
38, the Contractor shall in respect of each Call-Off Contract
permit the designated NBA officer or his authorized
representative (the "Auditor"), upon ten (10) Working Days
written notice to have access during each Working Day to the
premises of the Contractor used in the provision of the
Services to examine, only with respect to the provision of the
Services, the arrangements made by the Contractor on behalf of
NBA with respect to the security, integrity and availability
of Data and documentation relating thereto and access to the
Network.
38.2. The frequency of audits conducted in accordance with
Sub-section 38.1 shall be at the discretion of NBA provided
always that NBA shall endeavor to conduct such audits with the
lowest levels of inconvenience and disturbance practicable
being caused to the Contractor.
38.3. The Contractor shall ensure that the provisions of Sub-section
38.1 are facilitated by rights to be included in all contracts
the Contractor shall enter into with its Associated Companies
and shall also (subject to regulatory constraints) endeavor to
achieve the same rights with Sub-Contractors, suppliers and
agents who supply labor, services, equipment or materials in
respect of the Services and which impact on security integrity
and availability of the Data and documentation relating
thereto or access to the Network. The Contractor shall inform
NBA prior to concluding any sub-contract of any failure to
achieve the same rights of audit referred to in this
Sub-section.
38.4. Subject to Sub-section 38.3, NBA shall have the right singly
or as a party with the Contractor to conduct an audit of
Sub-Contractor's and suppliers' systems and procedures with
respect to security, integrity and availability of Data and
documentation related thereto and access to the Network. The
selection of Sub-Contractors or suppliers to be audited shall
be determined by NBA. Such audits shall be carried out at
Sub-Contractors' or suppliers' premises or sites. The
Contractor, Sub-Contractors and other suppliers shall make
every reasonable effort to cooperate with NBA in effecting the
audits.
38.5. The Contractor shall ensure that its Associated Companies
shall maintain true and correct records and documentation
relating thereto in connection with audit described in this
Section 38. In relation to Sub-Contractors, suppliers and
agents the Contractor shall endeavor to ensure the same
standards referred to above. Retention of all such records and
documentation by the Contractor shall be for a period of not
less than 24 months.
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38.6. Any change or amendment to the systems and procedures of the
Contractor, Associated Companies of the Contractor or
Sub-contractors arising from the security audit report shall
be agreed to within thirty (30) Working Days from the
submission of the said report.
38.7. Nothing in this Section 38 shall be deemed to limit the rights
of NBA to make enquiries or challenge at any time any system
or procedure of the Contractor and to require the Contractor
to demonstrate the reasonableness or efficiency of any system
or procedure.
39. COMMENCEMENT, DURATION AND TERMINATION OF
CALL-OFF CONTRACTS
39.1. The commencement, duration and termination provisions
applicable to each Call-Off Contract shall be as specified in
the Call-Off Contract and subject to the terms of this
Agreement.
39.2. The initial term of each Call-Off Contract shall not exceed a
period of twelve months (12) in total from the applicable
Commencement Date.
39.3. A Call-Off Contract may be terminated by a Party or Parties as
specified herein:
39.3.1. Termination for insolvency
Either Party to a Call-Off Contract shall be entitled
to serve written notice on the other to terminate the
relevant Call-Off Contract with immediate effect in
the event that a liquidator (other than for the
purpose of amalgamation or reconstruction),
administrative receiver, administrator or receiver is
appointed in respect of the whole or a material part
of the assets and/or undertaking of the other Party
or the other Party enters into an arrangement or
composition with its creditors, or if it becomes
unable to pay its debts.
39.3.2. Termination for Material Default
Either Party may terminate this Agreement or a Call
Off Contract where the other Party shall be in
Material Default of its obligations as defined in
Annex A under this Agreement or a Call-Off Contract.
In the event of Material Default the non-defaulting
Party may terminate this Agreement or the relevant
Call-Off Contract by serving not less than thirty
days (30) notice on the other Party or such other
period of notice as shall be agreed. If the material
default is cured within the period specified in the
notice the said notice shall lapse. For the avoidance
of doubt,
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there shall be no requirement for a cure period where
the material default is not capable of cure.
39.3.3. NBA's right to terminate by giving sixty days (60)
notice
NBA may terminate any Call-Off Contract for NBA's
convenience by serving at any time upon the
Contractor notice of termination not less than sixty
days (60) prior to the effective date of such
termination, ("termination date").
39.3.4. Mutual termination for failure to agree to on a
Target
Where both Parties have failed to agree by September
30 of any Year on a Target, Incentive, or Margin for
the following Year, then notice of termination will
be deemed given on such date. In such case the
relevant Call-Off Contract shall terminate on
December 31 of the current Year.
Notices given pursuant to this Sub-section 39.3. are
revocable until and unless the Parties have agreed to
the transition plan described in Sub-section 39.4
below.
39.4. Transition after notice of termination
The Parties shall cooperate fully with one another to
facilitate within the notice periods described above a smooth
transition of the Services from Contractor to NBA or NBA's
designated contractor. To that end the Parties shall meet in
good faith as soon as practicable and in no event no later
than thirty days (30) from the receipt of a notice of
termination to agree to a transition plan which shall take
into account interalia, the items enumerated in Sub-sections
39.5. Throughout the period of notice, the Target, Margin and
Incentives, shall be those in force at the time the notice
period commenced.
39.5. Compensation in the event of termination
Termination of a Call-Off Contract pursuant to Sub-sections
39.3.1 through 39.3.4 shall require that compensation be paid
in the following manner:
39.5.1. In the event of a termination pursuant to
Sub-sections 39.3.1 or 39.3.2 where NBA is the
insolvent or defaulting Party, and 39.3.3, NBA shall
pay to the Contractor (i) Stranded Costs unique to
NBA as defined in Sub-section 39.7.2; (ii) Residual
Value of all assets relating solely to the terminated
Call-Off Contract; (iii) Margins with respect to (i)
and (ii) above; and (iv) payment pur-
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suant to the relevant Call-Off Contract for Services
rendered prior to the termination date.
39.5.2. In the event of a termination pursuant to Sub-section
39.3.1 where the Contractor is the insolvent Party,
NBA shall pay to the Contractor only payment pursuant
to the relevant Call-Off Contract for Services
rendered prior to the termination date.
39.5.3. In the event of a termination pursuant to Sub-section
39.3.2 where the Contractor is the defaulting Party,
NBA shall pay to the Contractor: (i) Stranded Costs
unique to NBA as defined in Sub-section 39.7.2 with
the exception of any early termination costs
associated with Contractor-branded Services; (ii)
Residual Value of all assets relating solely to the
terminated Call-Off Contract as defined in
Sub-section 39.7.4; (iii) Margins with respect to (i)
and (ii) above; and (iv) payment pursuant to the
relevant Call-Off Contract for Services rendered
prior to the termination date.
39.5.4. Notwithstanding the obligations contained in this
Sub-section 39.5, upon receipt of notice of early
termination served pursuant to Section 39.3. the
Contractor shall consult with NBA and give in writing
an estimate of the extent of NBA's exposure for the
foregoing obligations, commitments, claims and
expenses under this Sub-section 39.5 to NBA.
39.5.5. The obligations with respect to payments of the
Residual Value referred to in Sub-sections 39.5.1 and
39.5.2 shall be subject to the ability of the
Contractor to transfer to NBA free of charge the
interests stipulated in Sub-section 39.6.
39.5.6. The obligations with respect to payments of the
Residual Value referred to in Sub-sections 39.5.2 and
39.5.3 shall be subject to the ability of the
Contractor to transfer to NBA free of charge the
interests stipulated in Sub-section 39.6
39.6. Upon termination or expiry of any Call-Off Contract NBA shall
have the right:
39.6.1. Subject to the terms of contracts with and the
agreement of relevant Third Parties and upon where
appropriate making the payment referred to in
Sub-section 39.5, to require by notice the purchase,
transfer, assignment or return to NBA or any Third
Party of all equipment, leases, licenses, contracts
or other assets used exclusively for the provision of
the Services and of hard copy and/or machine readable
copies of all NBA data and information held by the
Contractor pursuant to the provision of
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the Services. NBA shall exercise such rights within
thirty days (30) of the effective date of termination
and the Parties shall undertake to cooperate fully to
facilitate such purchase or transfer as aforesaid
including where required by NBA cooperation with any
Third Party.
39.6.2. Upon reasonable notice, to enter and take possession
of hard copy and/or machine readable copies of all
NBA data and information held by Contractor or to
require the delivery of all such data or information
by any Third Party holding such data or information
on behalf of the Parties.
39.7. For the purposes of this Section 39:
39.7.1. Any right to terminate the Call-Off Contract and to
be compensated in accordance with this Sub-section
39.7.1 may only be exercised in writing and shall be
the sole right or remedy which the Parties may have
except where expressly specified to the contrary.
39.7.2. Stranded Costs in this Section 39 means all costs,
obligations, commitments and claims not otherwise
recoverable (subject to Contractor's duty to
mitigate) that the Contractor may have in good faith
reasonably undertaken or incurred in connection with
the relevant NBA Call-Off Contract including any
additional costs incurred by the Contractor in giving
effect to the agreed transition plan of the Services
unless express provision for the same is made
elsewhere under the relevant NBA Call-Off Contract.
This includes costs related to early termination of
commitments extending beyond the termination date,
subject however to the requirement that Contractor
shall have obtained, in all long term supplier or
sub-contract arrangements, provisions for such early
termination unless otherwise agreed in advance by
NBA.
39.7.3. NBA will not be responsible for any costs or
obligations committed to by the Contractor under this
Framework Agreement and the Call-Off Contract that
goes beyond the end of the current Call-Off Contract
period (including but not limited to depreciation,
contract cancellation penalties and personnel
redeployment penalties) unless NBA has agreed to in
writing, for each occurrence, at their sole
discretion, to accept such long term obligations.
Contractor will endeavor to provide services under
this Framework Agreement and Call-Off Contracts
minimizing the number and amount of long term
obligations affecting NBA.
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39.7.4. Residual Value in this Section 39 is generally
defined in Annex A and includes assets purchased by
the Contractor in order to provide Services to NBA.
In Sub-section 39.5.3, Residual Value is limited to
those assets purchased by the Contractor which: (i)
are located solely on NBA premises, and/or (ii) have
been purchased for the sole purpose of supporting
NBA's unique telecommunications needs.
40. REMEDIES
Any Material Breach by the Contractor to comply with the relevant
Service Level Agreement shall entitle NBA to terminate this Agreement
or a relevant Call-Off Contract under the provisions of Sub-section
39.3.2. Other deviations from the relevant Service Level Agreement
shall entitle NBA to invoke provisions of Sub-section 18.1.3. Failure
of the Contractor to meet the conversion deadline as mutually agreed to
will result in overlapping costs for Network Services which will be
borne by the Contractor. The occurrence of overlapping costs will not
result in any adjustment of a relevant Target.
40.1. NBA and the Contractor shall individually and in addition to
the rights set out in Sub-section 40.1, be entitled if the
failure or breach on the part of the other Party shall amount
to a Material Breach to recover damages from the other Party
in accordance with and subject to the limitations provided for
in Section 29 or at the option of the Party alleging failure
or breach to serve, in addition, a notice of termination in
accordance with Section 39.
40.2. The Parties shall indemnify each other in accordance with the
terms of Section 30 in the event that the Party seeking
indemnification can demonstrate:
40.2.1. That it was induced by the other Party to act in
breach of applicable law in circumstances where the
existence of the alleged breach was brought to the
attention of the other Party prior to the commission
of the breach;
40.2.2. That the claim in respect of which indemnification is
sought relates to the existence of an alleged
partnership debt in circumstances where no
partnership was intended or exists between the
Parties or was confirmed by the Party seeking
indemnification and where the responsibility for the
debt would otherwise have vested solely in the Party
against whom indemnification is sought.
40.3. Indemnification as set out in Sub-section 40.2 shall not be
subject to the limitations set out in Sub-section 29.2.
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41. AUTHORITIES AND GUARANTEES
41.1. The Parties hereby warrant that their respective signatories
to both this Agreement and any Call-Off Contract are duly
authorized individuals acting pursuant to specific authorities
or delegations of authority and that copies of such
authorization or delegation will be produced upon request.
41.2. For the avoidance of doubt, the Contractor acknowledges that
entry by NBA into the terms of this Agreement is subject to
the provisions of Section 2 and that the Contractor's only
recourse in relation to any breach by NBA of the terms of a
Call-Off Contract is against the NBA Associated Company which
was the Party to that Call-Off Contract and that under no
circumstances will any such recourse be sought against NBA in
its capacity as a Party to this Agreement.
42. FORCE MAJEURE
42.1. Neither Party to a Call-Off Contract shall be liable to the
other for any loss or damage which may be suffered by the
other due to any cause beyond either Party's reasonable
control ("force majeure") including without limitation any act
of God, severe Alaska weather conditions limiting travel and
outside work, catastrophic failure or shortage of power
supplies due to chronic unreliability of commercially supplied
power, earthquake, volcanic eruptions, flood, lightning or
fire, strike, lock-out, trade dispute or labor disturbance
(other than within either Party's Organization or any
Associated Company of that Party), the act or omission of
Government, public telecommunications operators (excluding for
the avoidance of doubt the Contractor or an Associated Company
of the Contractor) or other competent authority, war, military
operations, or riot. The Party seeking to rely on force
majeure shall as a condition precedent to the availability of
this defense give full particulars in writing to the other
Party of the facts or circumstances giving rise to force
majeure within three Working Days (3) of the occurrence and
thereafter in respect of successive occurrences and shall
further demonstrate that it has and is taking all reasonable
measures to mitigate the events complained of.
42.2. Notwithstanding the terms of this Section 42 any failure on
the part of the Contractor in any Call-Off Contract to
implement disaster contingency planning and full back-up and
other data safeguards in accordance with the Scope of Work
against natural disaster, fire, sabotage or other similar
occurrence shall not be an event of force majeure.
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42.3. In the event that force majeure shall continue for a period in
excess of three months (3) either Party may give notice of
immediate termination. Termination as aforesaid shall be
deemed to be subject to and on the terms of Sub-sections
39.3.3 and 39.4.
43. HEALTH AND SAFETY
The Parties undertake to comply in full with applicable health and
safety legislation, regulations and procedures in force at the Sites,
such requirements to take precedence over any provisions of Call-Off
Contracts or this Agreement.
44. PUBLICITY
It is accepted and agreed to that neither Party shall publish or permit
to be published either alone or in conjunction with any other person
any information, article, photograph, illustration or any other
material of whatever kind relating to this Agreement or relative to the
Call-Off Contracts or the business of the Parties without prior
reference to and approval in writing from the other Party. Such consent
shall apply to each specific application and relate only to that
application.
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45. NOTICES
45.1. Any notice or other document which may be given by either
Party under this Agreement shall be deemed to have been duly
given if left at or sent by pre-paid recorded delivery post or
facsimile transmission (confirmed by letter sent by pre-paid
recorded delivery post) to each Party's principal or
registered office as set out below as an address to which
notices and other documents may be sent:
NBA: National Bank of Alaska (NBA)
P.O. Box 100600
Anchorage, Alaska 99510-0600
Tel: 907-265-2860
Fax: 907-265-2887
Contact: B. John Shipe
Executive Vice President
Contractor: General Communication, Inc. (GCI)
2550 Denali St.
Suite 1000
Anchorage, Alaska 99503
Tel: 907-265-5600
Fax: 907-265-5574
Contact: Richard A. Whitney, Director
Business Development
45.2. Any such communication shall be deemed to have been made to
the other Party 4 days from the date of posting (if by letter)
and if by facsimile transmission on the day of such
transmission provided by the other Party the original of the
communication is received within 4 days of the date of
transmission.
46. VARIATIONS
No amendment variation or other change to this Agreement shall be valid
unless in writing and signed by both Parties.
47. COMPLIANCE WITH LAWS, REGULATIONS AND ETHICS
47.1. In addition to the obligations in this Agreement and generally
in performing the Services both Parties accept that their
individual conduct shall at all times comply with all laws,
rules and regulations of gov-
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ernment and other bodies having jurisdiction over the area in
which the Services are undertaken.
47.2. The Contractor agrees to at all times to comply with and abide
by the terms of NBA's Policy on Business Conduct and Code of
Ethics as amended from time to time. In the event of any
conflict between NBA's Policy on Business Conduct and Code of
Ethics and the Contractor's own code of ethics, the matter
shall be referred to the Telecommunications Review Board for
resolution subject to the agreed understanding that the best
practice shall prevail.
48. PROFESSIONAL FEES
48.1. All expenses incurred by or on behalf of the Parties,
including all fees of agents, solicitors, accountants and
actuaries employed by either of the Parties in connection with
the negotiation, preparation and execution of this Agreement
and the Call-Off Contracts shall be borne solely by the Party
which incurred them.
48.2. The expenses of the nature set forth in Sub-section 48.1 shall
subject to NBA's prior written approval be reimbursed by NBA
to the Contractor if incurred by the Contractor solely and
directly in the implementation and or execution of a Call-Off
Contract or Transfer Agreement, including those expenses
related to due diligence in connection with the Transfer
Agreement and such expenses shall not be deemed to be part of
the Actual Costs.
49. SEVERABILITY
If any provision of this Agreement or any Call-Off Contract shall be
found by any court or administrative body of competent jurisdiction to
be invalid or unenforceable the invalidity or unenforceability of such
provision shall not affect the other provisions of this Agreement or
the relevant Call-Off Contract and all provisions not affected by such
invalidity or unenforceability shall remain in full force and effect.
The Parties hereby agree to attempt to substitute for any invalid or
unenforceable provision a valid and enforceable provision which
achieves to the greatest extent possible the economic, legal and
commercial objectives of the invalid or unenforceable provision.
50. APPLICABLE LAW AND JURISDICTION
This Agreement shall, to the extent that any aspect or matter fails to
be interpreted, conformed or adjudicated upon by the parties
themselves, be dealt with in accordance with the laws of the United
States and the State of Alaska.
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Any controversy or claim arising out of or relating to this Agreement,
or breach thereof, shall be settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association, such arbitration to take place in Anchorage, Alaska and
judgment upon the award rendered by the Arbitrator(s) may be entered in
any Court having jurisdiction thereof.
IN WITNESS WHEREOF the Parties hereto have by duly authorized
representatives set their hands the day and year first above
written.
for and on behalf of }
National Bank of Alaska (NBA) }
B. John Shipe
Executive Vice President
for and on behalf of }
General Communication, Inc. (GCI) }
Richard A. Whitney
Director, Business Development
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ANNEX A: GLOSSARY OF DEFINITIONS
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"Access Code" means a code or protocol whereby an Authorized User is permitted
access to the Facilities;
"Actual Costs" means the Direct Costs, Sub-Contractor Costs and Network Services
Costs actually incurred by the Contractor in respect of any relevant period;
"Applications Software" means the applications software details of which are set
out in the Transfer Agreement or a Call-Off Contract, which may be required to
be run by the Contractor to provide the Services, as may be modified, enhanced,
added to or replaced during the term of the Contract pursuant to the terms
hereof and such further programs as may be developed on behalf of NBA pursuant
to the terms hereof;
"Associated Company" means any subsidiary of either Party hereto or their
ultimate holding company or any subsidiary thereof;
"Authorized User" means a person or entity who or which is an Associated Company
of NBA or is a person who otherwise at the date hereof is designated by NBA as
being associated with NBA or is a person or entity who subsequent to the date
hereof becomes associated with NBA and which NBA and the Contractor agree should
be a person or entity authorized to use the Services in accordance with and
subject to the terms of the Framework Agreement and a Call-Off Contract;
"Call-Off Contract" means an agreement in the nature of the model contract
contained in Annex D entered into between NBA and the Contractor as may
negotiated and mutually agreed;
"Charges" means those charges computed in accordance with the methodology
contained in the Framework Agreement or the methodology for calculating the
charges for the provision of the Services as may be varied from time to time
upon mutual agreement;
"Commencement Date" means the date specified in the Call-Off Contract for the
commencement of the Services to NBA;
"Continuing Contracts" means relevant contracts between NBA and Third Parties
necessary for the provision of services comparable to the Services prior to the
Transfer Date;
"Contract" means the Call-Off Contract;
"Contractor Equipment" means the capital assets including computers,
telecommunications and peripheral equipment as identified in the Transfer
Agreement or the Call-Off Contract as may be extended, added to or replaced
during the term of a Call-Off Contract which are owned or controlled by the
Contractor and used by the Contractor or NBA in the provision of the Services;
"Data" means all data processed, held or conveyed by the Contractor on behalf of
NBA by means of the Facilities as part of the Services;
"Direct Costs" means costs as defined in Sub-section 16.1.1;
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"Expected Cost of Operation (CoOE)" is the sum of all 1995 NBA
telecommunications costs plus expected 1996 cost adjustments resulting from
changes in scope of work and service levels for which the Contractor is
expressly responsible and can exercise cost management as determined by a Due
Diligence Audit.
"Facilities" means the hardware, software and Network necessary for the
provision of the Services;
"HR" means human resources;
"Incentive" means payment calculated as in Section 18;
"Information Records" means all the data, information and records contained
and/or stored in the literature, documents and computer systems, including
without limitation all records of transactions, bills, invoices, statements and
similar documents whether in hard copy, machine readable or other form which NBA
uses as at the date hereof which are described in a Call-Off Contract and such
other data and information forming part of or relating to the equipment and
Third Party Contracts as the proper performance by the Contractor of its
obligations under the Call-Off Contract shall require;
"IS" means information services and associated and derivative products and
services;
"Major Change" shall be as defined in Section 8;
"Margin" means an amount determined by a percentage increase to be applied to
the Direct Costs of the Target for a given Year as may be varied in accordance
with the terms of Section 17 of this Agreement;
Material Default" occurs, but is not limited to the occurrence of one or more of
the following: (i) significant or chronic deficiency by the Contractor in
providing Services which substantially compromises a Service Level Agreement,
(ii) the Contractor's or the Contractor's and M&I's failure to meet conversion
deadlines by in excess of 120 days, (iii) either Party's unauthorized disclosure
of confidential or other financial/customer data, (iv) either Party's violation
of the other Party's network/data security, or (v) Major Changes made by NBA
which are not in compliance with Section 8.
"Material Breach" means Material Default as defined.
"Network" means the telecommunications equipment and internal cabling, private
leased circuits and associated software more particularly described in a
Call-Off Contract as may be modified pursuant to the terms hereof;
"NBA Business" means any relevant and designated business activity maintained as
such and then existing within NBA which has responsibility for or interest
Information Services or Telecommunications;
"NBA" means NBA and all Associated Companies of NBA;
"Network Services" means certain communication services to be provided by the
Contractor pursuant to a Call-Off Contract;
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"Operational Change Control Procedures" means the written documentation defining
the procedures to be used in making any change to the Services;
"Partner Relations Manager (PRM)" means the NBA senior manager responsible for
direct liaison with the Contractor's management;
"PSTN" means Public Service Telephone Network;
"Quarter" means a full or partial calendar quarter commencing on 1st January,
1st April, 1st July and 1st October in each Year, the first Quarter or part
thereof to commence on the Commencement Date and the last Quarter ending on the
termination date;
"Representative" means a member of the Telecommunications Review Board;
"Residual Value" means the non-depreciated book value or the remaining lease
obligations related to Contractor Equipment;
"Risk/Reward Incentives" means payments made by NBA or the Contractor as defined
in Section 18;
"Scope of Work" means the specific description of the Services as set out in
Schedule 1 to the Call-Off Contract;
"Secondment" means temporary assignment of an employee of one party to another
party with the employment status of the employee remaining unaffected;
"Service Description" means the Scope of Work and the Service Levels;
"Service Level Agreement" means the quantification of acceptable NBA Service
Levels based upon a defined Scope of Work which is included in a Call-Off
Contract;
"Service Levels" means the target levels of service to be achieved by the
Contractor in providing the Services as set out in Schedule 2 to the Call-Off
Contract;
"Services" means the services to be provided by the Contractor to NBA as more
particularly described in the Scope of Work;
"Shared Network Services" means those voice, data, video, messaging and other
communication services which are delivered by the Contractor over the
Contractor's technology platform or the technology platform of an Associated
Company of the Contractor, the infrastructure of which technology platform
jointly supports the provision of the Services hereunder and the provision of
similar services to Third Parties;
"Software" means the software used in the provision of the Services and includes
System Software and the Applications Software;
"Stranded Costs" means any cost as defined in Sub-section 39.7.2;
"Sub-Contractor" means a Third Party in a contractual relationship with the
Contractor providing certain services which are material and necessary to the
scope of work and for the avoidance of doubt, Sub-Contractor shall not mean a
supplier of goods;
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"System Software" means the operating systems software, details of which are set
out in the Transfer Agreement or the Call-Off Contract, required to be run and
supplied by the Contractor to provide the Software platform used in the
provision of the Services, as may be modified, enhanced, added to or replaced
during the term of the Call-Off Contract pursuant to the terms thereof;
"Target" in 1996 means the CoOE less ******** or ********, whichever is greater.
In 1997 and beyond, "Target" means: (i) the sum of the Actual Costs, Margin and
Risk/Reward Incentives from the previous year's performance; plus (ii) the
mutually agreed to dollar value of increases or decreases in scope of work and
service levels; plus (iii) other mutually agreed to adjustments, such as
inflation or COLA;
"Telecommunications Review Board" means the Board established pursuant to the
Framework Agreement;
"Third Party Contracts" means those contracts between the Contractor or NBA and
Third Parties necessary to enable the Contractor to provide the Services,
including but not limited to those contracts for the supply of Software,
Contractor Equipment and other services;
"Third Party" means a person other than NBA, an Authorized User or the
Contractor;
"Transfer Date" means the date specified in the Transfer Agreement;
"Transfer Equipment" means the equipment and furniture listed in Schedule 1 of
the Transfer Agreement located at the (Sites/locations specified therein) which
are to be transferred to the Contractor;
"Working Day" means days upon which Banks are normally open for business in the
jurisdiction where the Contract is executed ;
"Year" means each calendar year during the term of each Call-Off Contract, but
the first year will run from the Commencement Date to 31st December of such
year, and the last Year shall end at the date of the termination.
Except where the context otherwise requires, words denoting the singular include
the plural and vice versa; words denoting any gender include all genders; and
words denoting persons include firms and corporations and vice versa;
Unless otherwise stated, a reference to a Section, or Schedule is a reference to
a section or schedule to this Agreement;
Section headings are for ease of reference only and do not affect the
construction of this Agreement.
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ANNEX B: SPECIMENS
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1996 TARGET SPECIMEN
1. Expected Cost of Operations (CoOE) ---------
a. 1995 Annualized Costs ---------
b. 1996 Expected Cost Increases ---------
c. Total (1a + 1b) --------
2. Percent of CoOE or Guarantee
a. Guarantee ********
b. ******** of CoOE ---------
c. Greater of 2a or 2b ---------
3. Target (1c-2c) ---------
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1997 - 2001 TARGET SPECIMEN
1. Previous Year Annual Costs ---------
2. Previous Year Margin ---------
3. Previous Year Risk/Reward Incentive ---------
4. Scope of Work Adjustments
a. Increases ---------
b. Decreases ---------
c. Total (4a - 4b) --------
5. Service Level Adjustments
a. Increases ---------
b. Decreases ---------
c. Total (5a - 5b) ---------
6. Other Mutually Agreed To Adjustments
a. Increases ---------
b. Decreases ---------
c. Total (6a - 6b) ---------
7. Target (1 + 2 + 3 + 4c + 5c + 6c) ---------
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1996 INCENTIVE SPECIMEN
1. Target ---------
2. NBA Invoiced Amounts
a. Actual Costs ---------
b. Margin ---------
c. Total (2a + 2b) ---------
3. Under-run/Over-run (1 - 2c) ---------
4. Risk/Reward Basis*
a. Risk Basis (#3 less than 0) ---------
b. Reward Basis (#3 greater than 0)
* Subject to Provisions of Framework Agreement, Section 18.
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INVOICE SPECIMEN
Month of
1. Invoice Summary Current YTD
A. Direct Costs
B. Margin (Direct Costs)
C. Sub-contractor Costs
D. Margin (Sub-contractor Costs)
E. Network Services
i. Network Management
ii. Long Distance
iii. Transport
2. Current Month Detail
A. Direct Costs
B. Margin (Direct Costs)
C. Sub-contractor Costs
D. Margin (Sub-contractor Costs)
E. Network Services
i. Network Management
ii. Long Distance
iii. Transport
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ANNEX C: MINIMUM CONDITIONS OF SATISFACTION
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1. GENERAL
1.1. Mutual Benefit
The relationship shall be to the benefit and complete
satisfaction of all Parties, relying on and resulting in the
full and enthusiastic participation of all Parties in
achieving the agreed to outcome.
1.2. Trust and Openness
The relationship shall be conducted in a spirit of trust and
openness so that information on any matter having a material
impact on the relationships between the Parties shall to the
fullest extreme possible be disclosed to each Party.
1.3. Ownership of Actions
Each aspect of the relationship shall be assigned to a
nominated person or persons within each Party who shall be
fully empowered and accountable for that aspect and who will
make commercially reasonable efforts to ensure its successful
outcome.
1.4. Effectiveness of Decision
The Parties shall seek to maximize the effectiveness of
decisions by minimizing interfaces and shortening decision
routes.
1.5. Addressing Risk
Risks and concerns of either Party shall be shared and
addressed by both Parties with the aim of eliminating, or if
that is impossible to quantify as far as possible, and adopt
the most pragmatic cost effective way of meeting them.
1.6. Withdrawal
It is recognized by the Parties that circumstances may change
such that a Party might wish to withdraw in which event the
other Parties shall agree to fair reasonable and timely
procedures to enable this.
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2. BASIC SERVICE ELEMENTS
2.1. Minimum Services To Be Provided
2.1.1. Network Design and Deployment
2.1.1.1. Design and implement 52+ NBA LANs;
2.1.1.2. Design and implement a statewide wide area
network connecting all branch LANs and
other data, voice and video networks;
2.1.1.3. Design and implement a diversely
routed/resilient "backbone network"
connection between NBA's data network
collection point in Anchorage and the
M&I's facilities;
2.1.1.4. Design and develop a business case for an
inter-branch voice over frame relay
solution;
2.1.1.5. Design, business case and implement a
Bank-wide voice communications solution;
2.1.1.6. Change management and consulting
engineering to support NBA's
telecommunications evolution.
2.1.2. Network Operation & Customer Support
2.1.2.1. Wide area data, voice and video network
M&C/management;
2.1.2.2. LAN management (through client/server
NICs);
2.1.2.3. 7/24 customer support coverage for all
identified Services work orders and
trouble tickets;
2.1.2.4. Change management enterprise network
engineering and analysis which includes
procurement and installation of all
components;
2.1.2.5. PBX and key system maintenance/management.
2.1.2.6. Procurement and installation of telecom
equipment.
2.1.3. Technical Services
2.1.3.1. Technical hardware maintenance and asset
management;
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2.1.3.2. Move, Add, Change (MAC) support for
telephony PBX/key system station
equipment;
2.1.3.3. MAC for all PC/LAN hardware (servers,
clients, hubs and PDS);
2.1.3.4. Switched video conference support between
NBA, the IS provider and other locations
(both hardware and switched video
service).
2.1.3.5. Client desktop operating system support.
2.1.4. Common Carrier Services
2.1.4.1. Operate a Bank-wide voice communications
service comprised of local loop, private
line and other MTS services;
2.1.4.2. Operate a statewide wide area network
connecting all branch LANs comprised of
private leased lines or private/public
frame relay service or comparable
technologies.
2.2. Service Level Agreement
<TABLE>
The Contractor shall ensure that service levels for all of the
services defined in Sub-section 2.1 shall be delivered at
NBA's current levels of satisfaction. Specific Service Level
Agreements will be developed and included in all Call-off
Contracts. Minimum Service Levels consistent with the
following will be maintained:
<CAPTION>
SERVICE LEVEL GOALS:
----------------------------------------------------------------------------------------
<S> <C>
ICRE Release 96.00%
ATM Availability 98.00%
Option, Plus & VISA Availability 98.50%
Production Processing and On-Line Availability 98.00%
Report Distribution 98.00%
Network Response Time - In-town Less than 2.0 seconds
Network Response Time - Out-of-town Less than 4.0 seconds
</TABLE>
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2.3. Targets
The Contractor commits to deliver the services defined in
Sub-section 2.1 in accordance with the following:
2.3.1. In 1996, NBA and the Contractor shall in respect of
the Services to be provided agree to an overall
Target. The Contractor shall provide the Services at
a total charge to NBA which shall enable NBA to
achieve its expectation of savings. The total charge
to NBA, or Target, includes the Contractor's Expected
Cost of Operations (CoOE) as defined in Annex A less
******** , or ********, whichever is greater.
2.3.2. The resulting Target will be included in the first
year Call-off Contract.
2.3.3. In 1997 and beyond, NBA and the Contractor shall in
respect of the Services to be provided agree to an
overall Target. The Contractor shall provide the
Services at a total charge to NBA which shall enable
NBA to continue to achieve its expectations of
savings. Under the terms of this Sub-section, the
Target includes: (i) the sum of the Actual Costs,
Margin and Risk/Reward Incentives from the previous
Year's performance; (ii) the mutually agreed to
dollar value of increases or decreases in Scope of
Work and Service Levels; plus (iii) other mutually
agreed to adjustments, such as inflation or COLA.
2.3.4. Subsequent year Targets will be established jointly
by NBA and the Contractor and will be included in
those Call-off Contracts.
3. QUALITY
3.1. Continuous Improvement
The Contractor shall commit to achieving continuous
improvement in cost effectiveness, Service quality and
performance levels.
3.2. Service Quality
The prime measure of Service quality will be continuous
satisfaction of NBA.
3.3. Benefit from Developments
The Contractor shall ensure that best practices in the
industry are applied in delivering "best-in-class" services to
NBA. Improved tech-
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nologies, processes and methodologies will be quickly
transferred and applied to the Services as soon as it is
economically beneficial to do so.
3.4. Standards
The Parties shall compare respective policies, technical
standards and codes of practice with a view to agreeing to a
common code that will reflect best practice relevant to the
objectives of the Framework Agreement.
4. FLEXIBILITY FOR CHANGE
4.1. Change
The Parties should be prepared to meet change in any form and
to any extent and will adopt appropriate change control and
review procedures to facilitate change, or in the ultimate
case to enable equitable termination or withdrawal.
4.2. Goal Setting
From time to time the Parties will agree to objectives and
performance targets. These agreed to objectives and targets
will themselves be subject to review as business conditions
and requirements change.
4.3. Asset Ownership
Arrangements should be agreed to such that ownership of assets
including premises, infrastructure, equipment, software and
procedures presents the minimum of constraint to the
performance of the scope of activities and Services agreed.
5. PROCUREMENT
5.1. Procurement Ethics
The Contractor shall adhere to codes of conduct and
procurement ethics that NBA would use if procuring direct.
5.2. Sub-Contracts
Wherever possible the Contractor will have relationships with
its suppliers and Sub-contractors that are in accordance with
its relationship with NBA.
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6. HUMAN RELATIONS AND PERSONNEL
6.1. HR Policy
The Contractor shall have human resource policies and put them
into practice that demonstrate sympathy with employees'
circumstances and aspirations and provide career development,
training, leave and benefits to a standard commensurate with
ensuring continued Service quality.
6.2. HR Transition
During the transitional period the Contractor shall work
closely with NBA and strive to ensure that all employees of
all Parties are treated fairly and with respect and that there
is no risk to Service quality through staff dissatisfaction or
loss of morale.
6.3. Employment of Former NBA Employees
Where former NBA personnel join the Contractor's Organization,
then the Contractor will commit to maintaining the high
standards of respect and observance of family values existing
in NBA. The transition of personnel will be managed through a
process of planning and consultation involving the individuals
to be affected in advance as appropriate and as agreed to by
NBA management. Due regard will be given to the individual's
personal development plans.
6.4. Contractor's Personnel
The Contractor's personnel providing the Service will behave
in a fashion generally consistent with that which would be
expected of NBA employees performing equivalent duties and
will give precedence to cost effectiveness and customers'
requirements accordingly.
6.5. Secondment of Personnel
The Parties shall commit to Secondment of individuals as
appropriate from one party to another for the purposes of
personal development, or the transfer of know-how or training.
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7. COSTS
7.1. Value for Money
The Contractor should always be able to demonstrate that NBA
is receiving good value for money on the Services through
appropriate benchmarking and monitoring, whilst the Contractor
maintains a reasonable rate of return.
7.2. Budgets
Operating budgets may be drawn up by NBA and the Contractor.
The keynote of such budgets shall be efficiency and cost
effectiveness. A review mechanism shall be instituted by the
Parties to ensure timely response to agreed to changes to the
Service.
7.3. Most Favored Nations Pricing and Tariffs
Network Services will be delivered based upon filed APUC/FCC
tariffs or via Most Favored Nations pricing.
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ANNEX D: MODEL CALL-OFF CONTRACT AND SCHEDULES
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<TABLE>
TABLE OF CONTENTS
<CAPTION>
SECTION PAGE
<S> <C>
PREAMBLE...................................................................................................
1. DEFINITIONS.................................................................................................70
2. STATUS......................................................................................................70
3. PROVISION OF SERVICES.......................................................................................71
4. DURATION....................................................................................................71
5. INVOICES AND PAYMENT........................................................................................71
6. MANAGEMENT ORGANIZATION.....................................................................................72
7. NO WAIVER...................................................................................................72
8. SERVICE OF NOTICE...........................................................................................73
9. FURTHER ASSURANCES..........................................................................................73
10. GOVERNING LAW...............................................................................................74
11. INVALIDITY..................................................................................................74
12. ADDITIONAL TERMS AND CONDITIONS.............................................................................74
13. CONDITION PRECEDENT.........................................................................................74
SCHEDULE 1: SCOPE OF WORK..............................................................................75
SCHEDULE 2: SERVICE LEVELS.............................................................................76
SCHEDULE 3: CHARGES AND BILLING INFORMATION............................................................77
SCHEDULE 4: NBA AND CONTRACTOR PREMISES................................................................78
SCHEDULE 5: INFORMATION RECORDS........................................................................79
SCHEDULE 6: CONFIDENTIALITY LETTER.....................................................................80
SCHEDULE 7: ADDITIONAL TERMS AND CONDITIONS............................................................81
SCHEDULE 8: NBA OBLIGATIONS............................................................................82
SCHEDULE 9: LONG TERM CONTRACTS........................................................................83
</TABLE>
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MODEL CALL-OFF CONTRACT
THIS CONTRACT is made the day of 199[ ].
BETWEEN
National Bank of Alaska whose registered offices are located at 301 West
Northern Lights Blvd., Anchorage, Alaska 99503 (hereafter, "NBA") and General
Communication, Inc. (GCI) whose registered offices are located at 2550 Denali
St., Suite 1000, Anchorage, Alaska 99503 (hereafter, "The Contractor")
WHEREAS
A. By a Framework Agreement dated [ ] 1995 entered into between
NBA and the Contractor terms were agreed to whereby the
Contractor or an Associated Company of the Contractor would
provide or ensure the provision of telecommunication services
to be available to NBA and other NBA Associated Companies in
substitution for the telecommunication services which were
immediately prior to the execution of this Contract either
provided from within NBA or acquired from Third Party
contractors;
B. NBA now wishes the Contractor to provide the Services and the
Contractor is able to provide the Services on the terms set
out below in this Contract.
IT IS THEREFORE AGREED as follows:
1. DEFINITIONS
1.1. A glossary of Definitions which shall apply to the terms used
in this Contract appears as Annex A to the Framework Agreement
and shall be deemed to be incorporated in this Contract.
1.2. In the event of conflict between this Contract and the
Framework Agreement, the order of precedence shall be this
Contract and the Framework Agreement.
2. STATUS
2.1. This Contract may only be modified if such modification is in
writing and signed by a duly authorized representative of each
Party.
2.2. The following documents shall together form part of and shall
be read with this Contract and shall represent the entire
understanding be-
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tween the Parties in relation to the subject matter hereof and
supersede all previous agreements and representations made by
either Party, whether oral or written.
2.2.1. The Framework Agreement
2.2.2. The Transfer Agreement
2.2.3. The Schedules:
Schedule 1 Scope of Work
Schedule 2 Service Levels
Schedule 3 Charges and Billing Information
Schedule 4 NBA and Contractor Premises
Schedule 5 Information Records
Schedule 6 Confidentiality Letter
Schedule 7 Additional Terms and Conditions
Schedule 8 NBA Obligations
Schedule 9 Long Term Contracts
3. PROVISION OF SERVICES
The Contractor shall perform the Services in accordance with this
Contract.
4. DURATION
The Services shall commence at hours on (Commencement
Date) and shall continue until unless extended by mutual
agreement or subject to earlier termination.
5. INVOICES AND PAYMENT
5.1. In consideration of the provision of the Services NBA shall
pay to the Contractor the Charges as provided for in Schedule
3.
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5.2. The invoicing address shall be:
General Communication, Inc. (GCI)
Accounts Payable Department
2550 Denali St.
Suite 900
Anchorage, Alaska 99503
Tel: 907-265-5600
Fax: 907-265-5574
Contact: Richard A. Whitney
Director, Business Development
5.3. The Contractor shall render invoices to NBA at the intervals
and in the manner specified in Section 21 of the Framework
Agreement.
6. MANAGEMENT ORGANIZATION
6.1. The NBA Partner Relations Manager shall be B. John Shipe,
Executive Vice President, (907) 265-2860.
6.2. The Contractor Representative shall be Richard A. Whitney,
Director, Business Development, (907) 265-5301.
7. NO WAIVER
Failure by either Party to exercise or enforce any right conferred by
the Contract shall not be deemed to be a waiver of any such right nor
operate so as to bar the exercise or enforcement thereof or of any
other right on any other occasion.
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8. SERVICE OF NOTICE
8.1. Any notice or other document which may be given by either
Party under the Contract shall be deemed to have been duly
given if left at or sent by pre-paid recorded delivery post or
facsimile transmission (confirmed by letter sent by pre-paid
recorded delivery post) to each Party's principal or
registered office as set out below as an address to which
notices, invoices and other documents may be sent:
NBA: National Bank of Alaska (NBA)
P.O. Box 100600
Anchorage, Alaska 99510-0600
Tel: 907-265-2860
Fax: 907-265-2887
Contact: B. John Shipe
Executive Vice President
Contractor: General Communication, Inc. (GCI)
2550 Denali St.
Suite 1000
Anchorage, Alaska 99503
Tel: 907-265-5600
Fax: 907-265-5574
Contact: Richard A. Whitney, Director
Business Development
8.2. Any such communication shall be deemed to have been made to
the other Party four days (4) from the date of posting (if by
letter) and if by facsimile transmission on the day of such
transmission provided the original of the communication is
received by the other Party within 4 days of the date of
transmission.
9. FURTHER ASSURANCES
The Contractor and NBA shall use all reasonable endeavors respectively
to ensure that any Third Party necessary for the performance of the
Services shall do, execute and perform all such further deeds,
documents, assurances, acts and things as either of the Parties hereto
may reasonably require by notice in writing to any other party to carry
the provision of the Contract into full force and effect.
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10. GOVERNING LAW
This Contract shall, to the extent that any aspect or matter fails to
be interpreted, conformed or adjudicated upon by the parties
themselves, be dealt with in accordance with the laws of the United
States and the State of Alaska. Any controversy or claim arising out of
or relating to this Agreement, or breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, such arbitration to take place in
Anchorage, Alaska and judgment upon the award rendered by the
Arbitrator(s) may be entered in any Court having jurisdiction thereof.
11. INVALIDITY
If any term or provision in the Contract shall in whole or in part be
held to any extent to be illegal or unenforceable under any enactment
or rule of law, that term or provision or part shall to that extent be
deemed not to form part of the Contract and the enforceability of the
remainder of the Contract shall not be affected.
12. ADDITIONAL TERMS AND CONDITIONS
Additional terms and conditions to the Framework Agreement terms and to
this Contract are set out in Schedule 7.
13. CONDITION PRECEDENT
It is a condition of this Contract that NBA and the Contractor execute
a Transfer Agreement on the Commencement Date.
IN WITNESS WHEREOF the Parties hereto have by duly authorized
representatives set their hands the day and year first above
written.
for and on behalf of }
National Bank of Alaska (NBA) }
for and on behalf of }
General Communication, Inc. (GCI) }
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SCHEDULE 1: SCOPE OF WORK
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SCHEDULE 2: SERVICE LEVELS
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SCHEDULE 3: CHARGES AND BILLING INFORMATION
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SCHEDULE 4: NBA AND CONTRACTOR PREMISES
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SCHEDULE 5: INFORMATION RECORDS
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SCHEDULE 6: CONFIDENTIALITY LETTER
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SCHEDULE 7: ADDITIONAL TERMS AND CONDITIONS
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SCHEDULE 8: NBA OBLIGATIONS
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SCHEDULE 9: LONG TERM CONTRACTS
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ANNEX E: MODEL TRANSFER AGREEMENT
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<TABLE>
TABLE OF CONTENTS
<CAPTION>
SECTION PAGE
<S> <C>
1. INTERPRETATION..............................................................................................86
2. CONDITION PRECEDENT.........................................................................................87
3. AGREEMENT FOR SALE AND TRANSFER.............................................................................87
4. TRANSFER CONSIDERATION......................................................................................88
5. COMPLETION..................................................................................................88
6. CONTINUING CONTRACTS........................................................................................89
7. WARRANTIES..................................................................................................90
8. NOTICES.....................................................................................................91
9. MISCELLANEOUS...............................................................................................91
10. GOVERNING LAW...............................................................................................92
SCHEDULE 1: THE TRANSFER EQUIPMENT.....................................................................93
SCHEDULE 2: THE TRANSFERRED SOFTWARE...................................................................94
SCHEDULE 3: CONTINUING CONTRACTS.......................................................................95
</TABLE>
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MODEL TRANSFER AGREEMENT
THIS CONTRACT is made the day of 199[ ].
BETWEEN
National Bank of Alaska whose registered offices are located at 301 West
Northern Lights Blvd., Anchorage, Alaska 99503 (hereafter, "NBA") and General
Communication, Inc. (GCI) whose registered offices are located at 2550 Denali
St., Suite 1000, Anchorage, Alaska 99503 (hereafter, "The Contractor")
WHEREAS
A. NBA owns and operates its own computer and data processing
facilities and telecommunications network/facilities used for
the provision of Information Services (IS), including
telecommunications services.
B. NBA has agreed to transfer to the Contractor certain assets
relating to such facilities and used in the provision of such
facilities on the terms set out in this Transfer Agreement.
C. The Contractor has agreed to run the telecommunication
facilities in accordance with the terms of an outsourcing
agreement of even date herewith made between NBA and the
Contractor (the "Call-Off Contract").
IT IS THEREFORE AGREED as follows:
1. INTERPRETATION
1.1. Unless otherwise stated herein capitalized words and phrases
used in this Transfer Agreement shall have the same meanings
as are ascribed to them in a glossary of definitions appended
to the Framework Agreement as Annex A.
1.2. In the event of conflict between this Agreement and the
Call-Off Contract or the Framework Agreement, the order of
precedence shall be this Agreement, the Call-Off Contract and
the Framework Agreement.
1.3. This Agreement may only be modified if such modification is in
writing and signed by a duly authorized representative of each
Party.
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1.4. The following documents shall together form part of and shall
be read with this Agreement and shall represent the entire
understanding between the Parties in relation to the subject
matter hereof and supersede all previous agreements and
representations made by either Party, whether oral or written.
1.4.1. The Framework Agreement
1.4.2. The Call-Off Contract
1.4.3. The Schedules:
Schedule 1 The Transfer Equipment
Schedule 2 The transferred Software
Schedule 3 The Continuing Contracts
2. CONDITION PRECEDENT
2.1. It is a condition of this Transfer Agreement that the
Contractor and NBA execute the Call-Off Contract on the date
hereof.
2.2. If the condition precedent referred to in Sub-Clause 2.1 is
not satisfied the Parties shall endeavor to cancel or reverse
all (if any) transfers of Equipment, Software, leases,
Continuing Contracts and other assets either contemplated or
executed with the intent of restoring both Parties to their
respective position and status as immediately prior to the
execution of this Transfer Agreement.
3. AGREEMENT FOR SALE AND TRANSFER
3.1. Subject to the terms and conditions of this Transfer
Agreement, NBA agrees to sell and/or transfer and the
Contractor agrees to purchase or accept (as appropriate) on
the date of sale or transfer the following:
3.1.1. The Transfer Equipment as itemized and at the prices
listed in Schedule 1; and
3.1.2. Insofar as NBA is able to assign or novate the same
pursuant to Clause 6 the full benefit and burden of
the Continuing Contracts referred to in Schedule 3
and Software referred to in Schedule 2.
3.1.3. Subject to the provisions of this Transfer Agreement
there shall be excluded from the sale hereby agreed
all liabilities of whatsoever nature owing or
incurred by NBA whether relating to any
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of the Transfer Equipment, transferred Software,
Leases or Continuing Contracts or otherwise up to and
including the effective date or dates (as
appropriate) when individual assets are transferred
or sold to the Contractor ("Transfer Date(s") and NBA
shall indemnify the Contractor against any liability,
claims, costs and expenses up to the Transfer Date(s)
that the Contractor may incur in respect thereof.
3.1.4. The Contractor shall indemnify NBA in respect of any
liability, claims, costs and expenses that the
Contractor or NBA may incur whether relating to any
of the Equipment, Software, Leases or Continuing
Contracts or otherwise which arise, are arising or
are incurred subsequent to the Transfer Date(s).
4. TRANSFER CONSIDERATION
4.1. As consideration for the agreement by NBA to transfer the
assets to the Contractor as referred to in Clause 3 above, the
Contractor hereby agrees to pay NBA the amounts shown in the
relevant Schedules which shall be paid in full on the Transfer
Date(s).
4.2. It is hereby agreed that the sums to be paid pursuant to this
Clause 4 are exclusive of and expressed without the addition
of [value added tax/local sales tax], which shall be paid by
the Contractor to NBA at the applicable rate in addition to
the sum payable in Clause 4.1, subject to the production by
NBA of a valid tax invoice giving the requisite details of the
taxable supply.
5. COMPLETION
5.1. Completion of the sale and transfer hereunder shall take place
at the offices of NBA.
5.2. Upon completion NBA shall deliver to the Contractor:
5.2.1. Possession of all the Transfer Equipment capable of
passing by delivery;
5.2.2. Executed documentation sufficient for the purposes of
transferring title to any Transfer Equipment not
capable of passing into the ownership of the
Contractor by delivery;
5.2.3. Copies of documentation relating to the Continuing
Contracts including service records, operating
manuals and relevant technical information.
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5.3. Upon Completion, the Contractor shall deliver to NBA the sum
specified in Clause 4.1.
5.4. Risk in and title to the Transfer Equipment shall be deemed to
have passed to the Contractor with effect from the Transfer
Date(s).
5.5. In respect of assets where risk and title shall not be capable
of passing by delivery, NBA shall grant to the Contractor a
license to use such assets including Software, provided that
NBA is contractually entitled to make such grant and provided
also that any such grant shall be made subject to all rights,
liabilities and obligations to which NBA is itself subject
under any agreement relating to such asset.
6. CONTINUING CONTRACTS
6.1. As soon as reasonably practicable after the Commencement Date,
NBA shall to the extent it is reasonably able procure at no
expense to the Contractor any Third Party authorization
necessary for the Contractor to enjoy the use and the benefit
of Continuing Contracts between NBA and other contractors
which will notwithstanding the entry into the Contract be
required for the purposes of the Services. Such authorization
may including the transfer, assignment or novation of the
Continuing Contracts in favor of the Contractor. The
Contractor shall use reasonable endeavors to assist NBA in
such matters.
6.2. NBA shall to the extent it is reasonable to do permit the
Contractor to use and have the benefit of the subject of each
of the Continuing Contracts in accordance with the terms of
that contract in the period from the Commencement Date to the
relevant Transfer Date(s). The Contractor shall observe and
perform the provisions of the Continuing Contracts in all
material respects and subject thereto NBA shall likewise
observe and perform such provisions.
6.3. Where it shall not prove possible, be permitted or lawful to
effect a transfer, assignment or novation of a Continuing
Contract to the Contractor, NBA and the Contractor shall
cooperate-operate in making such reasonable alternative
arrangements which shall be in accordance with the terms of
such Continuing Contract as may best achieve the objectives of
the Contract in accordance with the following:
6.3.1. NBA shall appoint the Contractor as its agent to
liaise and deal with the relevant Continuing Contract
and to perform all NBA's obligations thereunder, save
for those express obligations the Parties agree in
writing shall continue to be performed by NBA (for
the purpose of this Clause "NBA Obligations"); and
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6.3.2. If NBA, as part of the NBA Obligations, agrees to pay
all or part of the costs due to the Third Party under
the relevant Continuing Contract, then unless
otherwise agreed, the Contractor shall receive and
verify invoices thereunder and shall notify NBA in a
timely fashion of sums the Contractor approves for
payment by NBA and of the Third Parties to whom such
payment should be made; and
6.3.3. In its capacity as agent, the Contractor shall be
responsible for observing and obeying all the
obligations to be performed by NBA thereunder
excluding the NBA Obligations.
6.4. NBA and the Contractor shall promptly settle between
themselves any pre-payment or accrual relating to the
Continuing Contracts on the basis that all expenses under such
contracts attributable to any period prior to the Transfer
Date(s) shall be borne by NBA and all expenses attributable to
the period thereafter shall be borne by the Contractor.
7. WARRANTIES
The Contractor shall with the assistance of NBA satisfy itself with
regard to the condition of the Equipment and all other assets
transferred pursuant to this Transfer Agreement including fitness for
purpose and the rights of the Contractor to own and operate the
Equipment and other assets during the provision of the Services.
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8. NOTICES
8.1. Any notice or other document which may be given by either
Party under this Transfer Agreement shall be deemed to have
been duly given if left at or sent by pre-paid recorded
delivery post or facsimile transmission (confirmed by letter
sent by pre-paid recorded delivery post) to each Party's
principal or registered office as set out below as an address
to which notices, invoices and other documents may be sent:
NBA: National Bank of Alaska (NBA)
P.O. Box 100600
Anchorage, Alaska 99510-0600
Tel: 907-265-2860
Fax: 907-265-2887
Contact: B. John Shipe
Executive Vice President
Contractor: General Communication, Inc. (GCI)
2550 Denali St.
Suite 1000
Anchorage, Alaska 99503
Tel: 907-265-5600
Fax: 907-265-5574
Contact: Richard A. Whitney, Director
Business Development
8.2. Any such communication shall be deemed to have been made to
the other Party four days (4) from the date of posting (if by
letter) and if by facsimile transmission on the day of such
transmission provided the original of the communication is
received by the other Party within 4 days of the date of
transmission.
9. MISCELLANEOUS
9.1. Failure by either Party to exercise or enforce any right
conferred by this Transfer Agreement shall not be deemed to be
a waiver of any such right nor operate so as to bar the
exercise or enforcement thereof or of any other right on any
other occasion.
9.2. The Contractor and NBA shall, and shall use all reasonable
endeavors respectively to procure that any necessary Third
Party shall do, execute and perform all such further deeds,
documents, assurances, acts and things as any of the Parties
hereto may reasonably require by notice in writing to any
other Party to carry the provision of this Transfer Agreement
into full force and effect.
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<PAGE>
10. GOVERNING LAW
This Transfer Agreement shall, to the extent that any aspect or matter
fails to be interpreted, conformed or adjudicated upon by the parties
themselves, be dealt with in accordance with the laws of the United
States and the State of Alaska. Any controversy or claim arising out of
or relating to this Agreement, or breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, such arbitration to take place in
Anchorage, Alaska and judgment upon the award rendered by the
Arbitrator(s) may be entered in any Court having jurisdiction thereof.
IN WITNESS WHEREOF the Parties hereto have by duly authorized
representatives set their hands the day and year first above
written.
for and on behalf of }
National Bank of Alaska (NBA) }
for and on behalf of }
General Communication, Inc. (GCI) }
General Communication, Inc. (GCI) - 92 - FINAL v4.5
Framework Agreement 11/9/95
<PAGE>
SCHEDULE 1: THE TRANSFER EQUIPMENT
General Communication, Inc. (GCI) - 93 - FINAL v4.5
Framework Agreement 11/9/95
<PAGE>
SCHEDULE 2: THE TRANSFERRED SOFTWARE
General Communication, Inc. (GCI) - 94 - FINAL v4.5
Framework Agreement 11/9/95
<PAGE>
SCHEDULE 3: CONTINUING CONTRACTS
General Communication, Inc. (GCI) - 95 - FINAL v4.5
Framework Agreement 11/9/95
<PAGE>
ANNEX F: GCI AND M&I SHARED RESPONSIBILITIES
General Communication, Inc. (GCI) - 96 - FINAL v4.5
Framework Agreement 11/9/95
<PAGE>
<TABLE>
LAN AND WORKSTATION DEPLOYMENT, ASSIGNMENT OF RESPONSIBILITIES
<CAPTION>
Purchase Issues GCI M&I Note
<S> <C> <C> <C>
--------------------------
A. Who purchases pc workstations X
--------------------------
--------------------------
B. Who purchases financial printers. X
--------------------------
--------------------------
C. Who purchases laser printers. X
--------------------------
--------------------------
D. Who purchases file server hardware X
--------------------------
--------------------------
E. Who purchases file server software:
--------------------------
--------------------------
1. Novell X
--------------------------
--------------------------
2. Remote monitoring software via dial-up X
--------------------------
--------------------------
3. 3270 Communications Software X
--------------------------
--------------------------
4. Tape Backup Software X
--------------------------
--------------------------
5. Server monitoring X X# 1,4
--------------------------
--------------------------
F. Who purchases UPS system and monitoring software. X
--------------------------
--------------------------
G. Who purchases Bay Network wiring hubs. X
--------------------------
--------------------------
H. Who purchases Helpdesk monitoring platform and software? X
--------------------------
--------------------------
I. Who purchases Branch Network infrastructure? X
--------------------------
</TABLE>
<TABLE>
<CAPTION>
Installation & Configuration Issues GCI M&I Note
<S> <C> <C> <C>
--------------------------
A. Who performs site surveys to identify:
--------------------------
--------------------------
1. Room for equipment in teller windows. X
--------------------------
--------------------------
2. Placement of premises X X# 1,4
gear.
--------------------------
--------------------------
3. Placement of wiring hubs and patch X
panels.
--------------------------
--------------------------
4. Placement of file server. X X# 1,4
--------------------------
--------------------------
5. Sufficient electrical outlets and power supply. X X# 1,4
--------------------------
--------------------------
6. Placement of financial printers. X X# 1,4
--------------------------
--------------------------
7. Placement of laser X X# 1,4
printers.
--------------------------
--------------------------
8. Diagram of branch with equipment locations noted. X
--------------------------
--------------------------
B. Loads Novell to file server X 3
--------------------------
--------------------------
C. Creates userlist, groups, and security authorization in X 3
Novell
--------------------------
--------------------------
D. Loads Tape Backup Software and tests. X 3
--------------------------
--------------------------
E. Loads remote support (dial-in) software and configures. X 3
--------------------------
--------------------------
F. Load UPS monitoring software and configures. X 3
--------------------------
--------------------------
G. Loads Network Management Software and configures. X# X 1,4
--------------------------
--------------------------
H. Create Installation and Configuration standards X X# 1,4
--------------------------
--------------------------
I. Initiate asset management process prior to shipping X# X 1,4
--------------------------
--------------------------
J. Testing of pc workstations prior to shipping to branch locations X
--------------------------
--------------------------
K. Testing of hubs, routers & servers prior to shipping to branch locations X
--------------------------
</TABLE>
General Communication, Inc. (GCI) - 97 - FINAL v4.5
Framework Agreement 11/9/95
<PAGE>
<TABLE>
<CAPTION>
Initial Installation To Include File Server, And At Least One LAN Personal Computer GCI M&I Note
<S> <C> <C> <C>
--------------------------
A. Install branch LAN infrastructure X
--------------------------
--------------------------
1. 10-base-T wiring X
--------------------------
--------------------------
2. Provides 10 ft. 10-base-T patch cables X
--------------------------
--------------------------
3. Installs wiring hubs. X
--------------------------
--------------------------
B. Installs Business Phone lines for remote dial-in support as needed. X
--------------------------
--------------------------
C. Installs file server, tape back-up, hard drive, kbd/monitor, UPS X X# 1,4
--------------------------
--------------------------
D. Installs personal computers and financial printers X X# 1,4
--------------------------
--------------------------
E. Installs laser printers X X# 1,4
--------------------------
--------------------------
F. Installs external modem for dial-up remote support X# X 1,4
--------------------------
--------------------------
G. Tests installed components - full online and application testing X X# 1,4
--------------------------
</TABLE>
<TABLE>
<CAPTION>
Final Installation to Include Removal of Existing Gear, and Installation of all
Teller Computers, Financial Printer, Laser Printers and Other Personal Computers
in the Branch.
GCI M&I Note
--------------------------
<S> <C> <C> <C>
A. Remove existing equipment from teller windows and desks. X X# 1,4
--------------------------
--------------------------
B. Remove existing controller equipment. X
--------------------------
--------------------------
C. Install Teller workstations in windows with financial printers. X X# 1,4
--------------------------
--------------------------
D. Install Desktop workstations and laser printers. X X# 1,4
--------------------------
--------------------------
E. Test each workstation to ensure end to end operability. X X# 1,4
--------------------------
--------------------------
F. Records serial# information for asset management X# X 1,4
--------------------------
</TABLE>
General Communication, Inc. (GCI) - 98 - FINAL v4.5
Framework Agreement 11/9/95
<PAGE>
<TABLE>
<CAPTION>
Post-Installation Support GCI M&I Note
--------------------------
<S> <C> <C> <C>
A. Maintains users, groups on Novell. X
--------------------------
--------------------------
B. Maintains Novell operating system software patches. X# X
--------------------------
--------------------------
C. Modifies tape backup job schedules. X
--------------------------
--------------------------
D. Maintains 3270 software on server/workstations. X
--------------------------
--------------------------
E. Maintains Office Automation software (wordprocessing, spreads, database) NBA 2
--------------------------
--------------------------
F. Maintains Windows software configurations and patches. X# X 1,4
--------------------------
--------------------------
G. Maintains Novell client software configurations and patches. X
--------------------------
--------------------------
H. Maintains 3rd party software that NBA has today NBA 2
--------------------------
--------------------------
I. Maintains M&I PCTeller software loads (disbursement of new releases) X
--------------------------
--------------------------
J. Maintains M&I Salespartner software disbursement. X
--------------------------
--------------------------
K. Maintains Bay Networks Optivity software and reporting programs. X
--------------------------
--------------------------
L. Maintains performance statistics on servers and local area networks. X
--------------------------
--------------------------
M. NBA Support calls for hardware or software are placed to whom? NBA 2
--------------------------
--------------------------
N. Equipment repair should be shipped to:
--------------------------
--------------------------
1. AT&T Personal Computers and Financial Printers X
--------------------------
--------------------------
2. Bay Networks Hubs X
--------------------------
--------------------------
3. APC UPS Units X
--------------------------
--------------------------
4. HP Laser Printers X
--------------------------
</TABLE>
<TABLE>
<CAPTION>
Monitoring/Reporting Support GCI M&I Note
--------------------------
<S> <C> <C> <C>
A. Monitors Bay Networks wiring hubs and produces periodic reports X
--------------------------
--------------------------
B. Monitors Routers and produces periodic reports X
--------------------------
--------------------------
C. Monitors DSU/CSU equipment and produces periodic reports X
--------------------------
--------------------------
D. Monitors Novell file servers and produces utilization/capacity reports X
--------------------------
--------------------------
E. Monitors performance of the LAN and produces periodic reports. X
--------------------------
<FN>
Notes
1. GCI and M&I will perform this task on a team basis.
Possibility exists for M&I to provide GCI with information
and GCI staff actually do the physical work.
2. NBA will maintain a small Helpdesk team serving as SPoC. They
will screen all user calls and interact with both GCI's NCC
and M&I's customer support organization. This team will also
support NBA's office automation and 3rd party software on
behalf of users.
3. These tasks will be performed by M&I and accountability
handed off to GCI upon acceptance testing.
4. Where responsibilities are shared, the "#" indicates which
contractor has ultimate responsibility.
</FN>
</TABLE>
General Communication, Inc. (GCI) - 99 - FINAL v4.5
Framework Agreement 11/9/95
<PAGE>
EXHIBIT D
1996 CALL-OFF CONTRACT
between
National Bank of Alaska (NBA)
and
General Communication, Inc. (GCI)(1)
- -------------------
(1) In this document "********" are used in place of redacted information.
General Communication, Inc. (GCI) - 1 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
SECTION PAGE
<S> <C>
1. DEFINITIONS..................................................................................................3
2. STATUS.......................................................................................................3
3. PROVISION OF SERVICES........................................................................................4
4. DURATION.....................................................................................................4
5. INVOICES AND PAYMENT.........................................................................................4
6. MANAGEMENT ORGANIZATION......................................................................................5
7. NO WAIVER....................................................................................................5
8. SERVICE OF NOTICE............................................................................................5
9. FURTHER ASSURANCES..........................................................................................6
10. GOVERNING LAW................................................................................................6
11. INVALIDITY..................................................................................................6
12. ADDITIONAL TERMS AND CONDITIONS..............................................................................7
SCHEDULE 1: 1996 SCOPE OF WORK..........................................................................8
SCHEDULE 2: SERVICE LEVELS.............................................................................14
SCHEDULE 3: 1996 EXPECTED COST OF OPERATIONS (COOE) AND TARGET.........................................18
SCHEDULE 4: CHARGES AND BILLING INFORMATION............................................................20
SCHEDULE 5: NBA AND CONTRACTOR PREMISES................................................................22
SCHEDULE 6: AGENCY LETTER..............................................................................29
SCHEDULE 7: CONFIDENTIALITY LETTER.....................................................................31
SCHEDULE 8: ADDITIONAL TERMS AND CONDITIONS............................................................33
SCHEDULE 9: WAN DEPLOYMENT PROJECT.....................................................................35
SCHEDULE 10: LONG TERM CONTRACTS.......................................................................41
SCHEDULE 11: STANDARD LABOR, BENEFIT AND OVERHEAD RATES................................................44
</TABLE>
General Communication, Inc. (GCI) - 2 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
THIS CONTRACT is made the 20th day of December 1995.
BETWEEN
National Bank of Alaska whose registered offices are located at 301 West
Northern Lights Blvd., Anchorage, Alaska 99503 (hereafter, "NBA") and General
Communication, Inc. (GCI) whose registered offices are located at 2550 Denali
St., Suite 1000, Anchorage, Alaska 99503 (hereafter, "The Contractor")
WHEREAS
By a Framework Agreement dated 9 November 1995 entered into between NBA and the
Contractor, terms were agreed to whereby the Contractor or an Associated Company
of the Contractor would provide or ensure the provision of telecommunication
services to be available to NBA and other NBA Associated Companies in
substitution for the telecommunication services which were immediately prior to
the execution of this Contract either provided from within NBA or acquired from
Third Party contractors; NBA now wishes the Contractor to provide the Services
and the Contractor is able to provide the Services on the terms set out below in
this Contract.
IT IS THEREFORE AGREED as follows:
1. DEFINITIONS
1.1. A glossary of Definitions which shall apply to the terms used
in this Contract appears as Annex A to the Framework Agreement
and shall be deemed to be incorporated in this Contract.
1.2. In the event of conflict between this Contract and the
Framework Agreement, the order of precedence shall be this
Contract and the Framework Agreement.
1.3. For the avoidance of any doubt, Services will include all
telecommunications and related services described in Schedule
1.
2. STATUS
2.1. This Contract may only be modified if such modification is in
writing and signed by a duly authorized representative of each
Party.
2.2. The following documents shall together form part of and shall
be read with this Contract and shall represent the entire
understanding between the Parties in relation to the subject
matter hereof and supersede
General Communication, Inc. (GCI) - 3 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
all previous agreements and representations made by either
Party, whether oral or written.
2.2.1. The Framework Agreement
2.2.2. The Schedules:
Schedule 1 Scope of Work
Schedule 2 Service Levels
Schedule 3 1996 Expected Cost of Operation
(CoOE) and Target
Schedule 4 Charges and Billing Information
Schedule 5 NBA and Contractor Premises
Schedule 6 Agency Letter
Schedule 7 Confidentiality Letter
Schedule 8 Additional Terms and Conditions
Schedule 9 WAN Deployment Project
Schedule 10 Long Term Contracts
3. PROVISION OF SERVICES
The Contractor shall perform the Services in accordance with this
Contract.
4. DURATION
The Services shall commence at 0001 hours on 1 January 1996
(Commencement Date) and shall continue until 2400 on 31 December 1996,
unless extended by mutual agreement or subject to earlier termination.
5. INVOICES AND PAYMENT
5.1. In consideration of the provision of the Services NBA shall
pay to the Contractor the Charges as provided for in Schedule
4.
General Communication, Inc. (GCI)
Accounts Payable Department
2550 Denali St.
Suite 900
Anchorage, Alaska 99503
Tel: 907-265-5600
Fax: 907-265-5574
Contact: Richard A. Whitney
Director, Business
Development
General Communication, Inc. (GCI) - 4 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
5.2. The Contractor shall render invoices to NBA at the intervals
and in the manner specified in Section 21 of the Framework
Agreement.
6. MANAGEMENT ORGANIZATION
6.1. The NBA Partner Relations Manager shall be B. John Shipe,
Executive Vice President, (907) 265-2860.
6.2. The Contractor Representative shall be Richard A. Whitney,
Director, Business Development, (907) 265-5301.
7. NO WAIVER
7.1. Failure by either Party to exercise or enforce any right
conferred by the Contract shall not be deemed to be a waiver
of any such right nor operate so as to bar the exercise or
enforcement thereof or of any other right on any other
occasion.
General Communication, Inc. (GCI) - 5 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
8. SERVICE OF NOTICE
8.1. Any notice or other document which may be given by either
Party under the Contract shall be deemed to have been duly
given if left at or sent by pre-paid recorded delivery post or
facsimile transmission (confirmed by letter sent by pre-paid
recorded delivery post) to each Party's principal or
registered office as set out below as an address to which
notices, invoices and other documents may be sent:
NBA: National Bank of Alaska (NBA)
P.O. Box 100600
Anchorage, Alaska 99510-0600
Tel: 907-265-2860
Fax: 907-265-2887
Contact: B. John Shipe
Executive Vice President
Contractor: General Communication, Inc. (GCI)
2550 Denali St.
Suite 1000
Anchorage, Alaska 99503
Tel: 907-265-5600
Fax: 907-265-5574
Contact: Richard A. Whitney,
Director Business
Development
8.2. Any such communication shall be deemed to have been made to
the other Party four days (4) from the date of posting (if by
letter) and if by facsimile transmission on the day of such
transmission provided the original of the communication is
received by the other Party within 4 days of the date of
transmission.
9. FURTHER ASSURANCES
The Contractor and NBA shall use all reasonable endeavors respectively
to ensure that any Third Party necessary for the performance of the
Services shall do, execute and perform all such further deeds,
documents, assurances, acts and things as either of the Parties hereto
may reasonably require by notice in writing to any other party to carry
the provision of the Contract into full force and effect.
General Communication, Inc. (GCI) - 6 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
10. GOVERNING LAW
This Contract shall, to the extent that any aspect or matter fails to
be interpreted, conformed or adjudicated upon by the parties
themselves, be dealt with in accordance with the laws of the United
States and the State of Alaska. Any controversy or claim arising out of
or relating to this Agreement, or breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, such arbitration to take place in
Anchorage, Alaska and judgment upon the award rendered by the
Arbitrator(s) may be entered in any Court having jurisdiction thereof.
11. INVALIDITY
If any term or provision in the Contract shall in whole or in part be
held to any extent to be illegal or unenforceable under any enactment
or rule of law, that term or provision or part shall to that extent be
deemed not to form part of the Contract and the enforceability of the
remainder of the Contract shall not be affected.
12. ADDITIONAL TERMS AND CONDITIONS
Additional terms and conditions to the Framework Agreement terms and to
this Contract are set out in Schedule 8.
IN WITNESS WHEREOF the Parties hereto have by duly authorized
representatives set their hands the day and year first above
written.
for and on behalf of }
National Bank of Alaska (NBA) }
for and on behalf of }
General Communication, Inc. (GCI) }
General Communication, Inc. (GCI) - 7 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
SCHEDULE 1: 1996 SCOPE OF WORK
General Communication, Inc. (GCI) - 8 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
1. INTRODUCTION
1.1. General
GCI will provide the services described in this Scope of Work
document at all NBA premises shown in Schedule 5. Services
will include those associated with NBA's Branch Deployment,
LAN upgrades and WAN Deployment as well as operational and
management (O&M) services considered routine.
1.2. Assumptions
All on-site work performed will be handled as trouble
requests, work requests or projects; centralized network
management and other network services will be delivered
pro-actively and will not be documented as one of the
above;
Work requests or projects that are required which are
extraordinary in terms of their work volume and/or time
for completion will be treated as out-of-scope;
2. SCOPE
2.1 Service Transition
2.1.1. Branch Deployment
Provide local coordination for overall Branch
LAN/desktop equipment and service installation;
Conduct site-surveys documenting all network and equipment;
Configure and install file server monitoring
software, LAN hubs, and Help Desk monitoring
platform;
Install Branch LAN infrastructure (UPS, cable plant, hubs);
Coordinate and load configuration of NMS;
Establish installation and configuration
standards;
Coordinate asset management;
General Communication, Inc. (GCI) - 9 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
Test hubs, routers and servers prior to shipment
to Branches;
Install file servers, client desktops and
printers in coordination with M&I;
Install necessary Branch dial-up connections;
Integrate equipment and services into CNCC
management platform;
Conduct acceptance testing of Branch LAN and
desktop infrastructure;
Remove, surplus terminals, printers, controllers
and other legacy equipment per NBA instructions;
Coordinate configuration, testing and
redeployment of retained client desktops and
printers into new e-mail infrastructure;
2.1.2. Upgrade Existing LAN Environments
Conduct site-surveys documenting all network and
equipment;
Coordinate purchase, configuration and
installation of all upgrade equipment, software
and services;
Coordinate asset management;
Integrate equipment/services into CNCC management platform;
Conduct acceptance testing of Branch LAN and
desktop infrastructure;
Remove surplus terminals, printers, controllers
and other legacy equipment per NBA instructions;
2.1.3. WAN Deployment
Purchase, configure and install router,
multiplexer and other WAN equipment which the
contractor will provide for the in-state wide
area network and the backbone network
General Communication, Inc. (GCI) - 10 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
between NBA's facilities in Anchorage, Alaska
and M&I's facilities in Brown Deer, Wisconsin;
Provide, install and test public and private
inter-branch data, voice and video services;
Integrate equipment and services into CNCC
management platform;
2.1.4. Voice Service Deployment
Analyze existing voice service environment and
develop comprehensive implementation plan;
Transition all carrier services;
Modify, as appropriate, all PBX and key system
leases;
Consolidate, as appropriate, all LEC and IXC
local loop and DAL circuits;
2.2 Operation and Management (O&M)
2.2.1. Procurement, Set-up & Installation
Coordinate establishment of desktop computer
configuration standards with the NBA Help Desk;
Provide centralized Setup facility for all
desktop and server hardware; logistics support
for shipment of computer hardware to sites;
Perform or coordinate physical installation of
computer hardware on LANs;
Maintain relationships with key vendors and
service providers to assure product and service
support and continued knowledge of installed
equipment, systems and services.
2.2.2. Network Management
Monitor network devices and associated cable
plant and circuits; provide status and
performance reports as required;
Provide proactive management of network devices
to maintain established service levels;
General Communication, Inc. (GCI) - 11 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
Provide configuration management of desktop and
service hardware; manage and maintain operating
system integrity;
Initiate and coordinate change management for
the following: (1) desktop, server hardware and
operating systems; (2) hubs and other LAN
equipment and circuits; (3) routers,
multiplexers, modems and other WAN equipment;
(4) WAN private line circuits; (5) PBX and Key
systems as applicable; (6) long distance
services; (7) video conferencing systems and
services.
2.2.3. Trouble Requests
Provide necessary resolution and support for
desktop hardware, operating system and network
connectivity problems;
Provide necessary resolution and support for
server hardware, operating system and network
connectivity problems;
Respond to and resolve user telephone station
equipment and voicemail and feature service
problems;
Provide resolution of long distance calling or
other service problems;
Provide necessary resolution and support for PBX
hardware and service problems.
Provide necessary resolution and support for ATM
hardware and service problems.
2.2.4. Work Requests
Move, add, change of all telephone station
equipment;
Move, add, change voicemail and features;
Move, add, change of all desktop computer and
terminal equipment;
Move, add, change business telephone lines;
Desktop computer hardware installations that
exceed user capability;
General Communication, Inc. (GCI) - 12 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
2.2.5. Projects
Coordinate and perform telephone systems,
LAN/WAN systems projects involving moving
facilities and workgroups or service upgrades of
an operational basis not categorized as Major
Changes;
2.3. Change Management
2.3.1. Tactical Management
Implement outage notification procedures in
order to insure coordination between NBA, M&I
and all other service providers involving all
planned maintenance activity;
Coordinate asset management systems, processes
and procedures with NBA to provide complete
inventory control of all telecommunications,
server and desktop equipment, systems, circuits
and software assets;
Develop and maintain documentation for all
equipment, system, circuit, network or software
configuration, maintenance history, layout,
revision level and status;
2.3.2. Strategic Planning
Maintain technical expertise on all currently
installed and in-use equipments, systems,
circuits, services and advances in technology;
Present telecommunications and desktop support
plans, designs, options and technical summaries
to NBA for review;
Provide technical consultancy in order to
strategically meet all future telecommunications
and desktop computing business requirements;
Continuously monitor and evaluate
telecommunications technologies relevant to
NBA's business requirements; advise NBA on
adoption of new technologies;
General Communication, Inc. (GCI) - 13 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
SCHEDULE 2: SERVICE LEVELS
General Communication, Inc. (GCI) - 14 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
<TABLE>
I. PROBLEM/WORKFLOW MANAGEMENT
<CAPTION>
- ----------------------------------- ------------ ----------- ----------- ----------- ------------ ----------- ------------
Immediate Immediate 1 Hour 4 Hour 24 Hour NBD Negotiated
Task/Activity Logging Response Response Response Response Response Scheduling
- ----------------------------------- ------------ ----------- ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
A. Trouble Requests
o Desktop hardware
0800 - 1800 M - F X X(2)
After hours X X
o LAN Server
0800 - 2100 M - F X X
After hours X X(2)
o Communications Hardware
0800 - 1800 M - F X X
After hours X X
o Communications Circuits
0800 - 1800 M - F X X
After hours X X
o CBX/PBX system
0800 - 2100 M - F X X
After hours X X
o Key System
0800 - 1800 M - F X X
After hours X X(2)
o Phone station equipment
0800 - 1800 M - F X X
After hours X X(2)
o ATMs
0800 - 1800 M - F X X
After hours X X
<FN>
- -----------------------------
2 May vary by location
</FN>
</TABLE>
General Communication, Inc. (GCI) - 15 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------- ------------ ----------- ----------- ----------- ------------ ----------- ------------
Immediate Immediate 1 Hour 4 Hour 24 Hour NBD Negotiated
Task/Activity Logging Response Response Response Response Response Scheduling
- ----------------------------------- ------------ ----------- ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
B. Work Requests
o Phone station equip. MAC
0800 - 1800 M - F X X
After hours X X
Large requests X X
o Voicemail/features
0800 - 1800 M - F X X
After hours X X
Large requests X X
o Desktop computer/printer
MAC
0800 - 1800 M - F X X
After hours X X
Large requests X X
o Business telephone lines
0800 - 1800 M - F X X
After hours X X
Large requests X X
- ----------------------------------- ------------ ----------- ----------- ----------- ------------ ----------- ------------
C. Projects
o All projects
0800 - 1800 M - F X X
After hours X X
Large requests X X
</TABLE>
General Communication, Inc. (GCI) - 16 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
II. NETWORK SERVICES
Network Services Service Level
- ---------------------------------- ----------------------------
On-line Uptime (0600 - 2100 AST);
seven days per week greater than 98% availability
ATM availability 98% availability
Backbone Service availability 99.8% availability
POS availability 98.5% availability
Response Time (In-town) greater than or equal to
2 seconds
Response Time (Out-of-town) greater than or equal to
4 seconds
III. SERVICE LEVEL PERFORMANCE CALCULATION
A. Problem/Workflow Management
for: Trouble Reports - TR
Work Orders - WO
Projects - P
Monthly Performance - MP
Annual Performance - AP
Occurrence greater than or
equal to Service Level - N1
Occurrences less than Service
Level - N2
MPTR = (N1 / (N1 + N2)) * 100%
MPWO = (N1 / (N1 + N2)) * 100%
MPP = (N1 / (N1 + N2)) * 100%
MP = (MPTR * MPWO * MPP)
AP = (MPJan * MPFeb * MPMar * ... * MPDec)
B. Network Services
for: On-line Uptime - UP
ATM Availability - ATM
Backbone Service Availability - BS
POS Availability - POS
Monthly Performance - MP
Annual Performance - AP
# WAN Circuits - Ckts
APUP = (((525,600 * Ckts) - Outage minutes) / (525,600 *
Ckts)) * 100%
MPATM = ((43,200 - Outage Minutes) / 43,200)*100%
APBS = ((525,600 - Outage minutes) / 525,600) * 100%
MPPOS = ((43,200 - Outage Minutes) / 43,200) *100%
General Communication, Inc. (GCI) - 17 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
SCHEDULE 3: 1996 EXPECTED COST OF OPERATIONS (CoOE) AND TARGET
General Communication, Inc. (GCI) - 18 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
1. Expected Cost of Operations (CoOE)
a. 1995 Annualized Costs ********
b. 1996 Expected Cost Increases ********
c. Total (1a + 1b) ********
2. ******** Percent of CoOE or Guarantee ********
3. Target (1c-2) ********
General Communication, Inc. (GCI) - 19 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
SCHEDULE 4: CHARGES AND BILLING INFORMATION
General Communication, Inc. (GCI) - 20 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
INVOICE SPECIMEN
Month of
1. Invoice Summary Current YTD
A. Direct Costs ------------- -------------
B. Margin (Direct Costs) ------------- -------------
C. Sub-contractor Costs ------------- -------------
D. Margin (Sub-contractor Costs) ------------- -------------
E. Network Services
i. Network Management ------------- -------------
ii. Long Distance ------------- -------------
iii. Transport ------------- -------------
2. Current Month Detail
A. Direct Costs ------------- -------------
B. Margin (Direct Costs) ------------- -------------
C. Sub-contractor Costs ------------- -------------
D. Margin (Sub-contractor Costs) ------------- -------------
E. Network Services
i. Network Management ------------- -------------
ii. Long Distance ------------- -------------
iii. Transport ------------- -------------
General Communication, Inc. (GCI) - 21 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
SCHEDULE 5: NBA AND CONTRACTOR PREMISES
General Communication, Inc. (GCI) - 22 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
ANCHORAGE
Dimond Dimond Mall
745 E. Dimond Boulevard 800 E. Dimond Boulevard
Anchorage, AK 99515 Suite 116
Manger: Dan Keys Anchorage, AK 99515
(907) 267-5525 Manager: Pam Sievers
(907) 267-5466 FAX (907) 267-5505
(907) 267-5383 FAX
Fifth Avenue 510 L Street
630 E. Fifth Avenue Anchorage, AK 99501
Anchorage, AK 99501 Supervisor: Frances Pitts
Manager: Judy Ferguson (907) 263-2565
(907) 263-2501 (907) 263-2521 FAX
(907) 263-2514 FAX
Fourth Avenue Frontier
446 W. Fourth Avenue 7731 E. Northern Lights
Boulevard
Anchorage, AK 99501 Anchorage, AK 99504
Manager: Karina Simmers Supervisor: Judy Butchart
(907) 265-2734 (907) 265-2060
(907) 265-2039 FAX (907) 265-2067 FAX
Huffman Main Office
1351 E. Huffman Road 301 W. Northern Lights
Boulevard
Anchorage, AK 99516 Anchorage, AK 99503
Manager: Amy Penrose Manager: Bob Tannahill
(907) 267-5301 (907) 265-2809
(907) 267-5546 FAX (907) 265-2043 FAX
Minnesota-Benson Northway Mall
1500 West Benson Boulevard 3101 Penland Parkway
Anchorage, AK 99515 Anchorage, AK 99508
Manager: Jenny McClure Manager: Liza Dzurovcin
(907) 257-3200 (907) 263-2590
(907) 257-3218 FAX (907) 265-2996 FAX
General Communication, Inc. (GCI) - 23 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
Russian Jack Sand Lake
5700 DeBarr Road 6961 Jewel Lake Road
Anchorage, AK 99504 Anchorage, AK 99502
Manager: Nancy Gillies Manager: Sarah Kipp
(907) 263-2574 (907) 267-5420
(907) 263-2531 FAX (907) 267-5426 FAX
Sears Mall Spenard
600 E. Northern Lights Boulevard 2709 Spenard Road
Anchorage, AK 99503 Anchorage, AK 99509
Manager: Kathy Hagedorn Manager: Mary Webb
(907) 263-2533 (907) 263-2541
(907) 263-2539 FAX (907) 265-2023 FAX
FAIRBANKS
Bentley College
32 College Road 794 University Avenue
Fairbanks, AK 99701 Fairbanks, AK 99707
Manager: Jami Spears Manager: Vicki Kennebec
(907) 459-4363 (907) 474-4101
(907) 459-4366 FAX (907) 474-4130 FAX
Cushman Gaffney
613 Cushman Road 620 Gaffney Road
Fairbanks, AK 99701 Fairbanks, AK 99706
Manager: Debbie Kimmell Manager: Robin Ridington
(907) 459-4318 (907) 459-4373
(907) 459-4346 FAX (907) 459-4344 FAX
North Pole
381 Santa Claus Lane South
North Pole, AK 99705
Manager: Oscar Calvillo
(907) 488-7507
(907) 488-5678 FAX
General Communication, Inc. (GCI) - 24 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
OTHER BRANCHES
Barrow Bethel
1078 Kiogak Street Bethel Native Corporation
Building
Barrow, AK 99723 460 Ridgecrest
Manager: Joe Everhart Bethel, AK 99559
(907) 852-6200 Manager: Carolyn Walters
(907) 852-3426 FAX (907) 543-3875
(907) 543-2125 FAX
Cordova Cottonwood Creek Mall
515 Main Street 1701 Parks Highway
Cordova, AK 99574 Wasilla, AK 99654
Manager: Jon Stavig Manager: Michelle Rodekohr
(907) 424-3258 (907) 376-6797
(907) 424-5758 FAX (907) 373-0252 FAX
Delta Dillingham
Mile 166, Richardson Highway 512 Seward Street
Delta Junction, AK 99737 Dillingham, AK 99576
Manager: Dave Durham Manager: Julie Woodworth
(907) 895-4691 (907) 842-5284
(907) 895-1927 FAX (907) 842-2450 FAX
Eagle River Glacier Valley
16600 Centerfield Drive 9150 Glacier Highway
Eagle River, AK 99577 Juneau, AK 99801
Manager: Mark Underwood Manager: Deborah Zenger
(907) 694-3129 (907) 789-9550
(907) 694-1435 FAX (907) 789-4220 FAX
Glennallen Homer
Mile 187.5 Glenn Highway 203 W. Pioneer Avenue
Glennallen, AK 99588 Homer, AK 99603
Manager: Darby Hobson Manager: John Hoyt
(907) 822-3214 (907) 235-8151
(907) 822-3288 FAX (907) 235-6181 FAX
General Communication, Inc. (GCI) - 25 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
Juneau Kenai
123 Seward Street 11216 Kenai Spur Highway
Juneau, AK 99801 Kenai, AK 99611
Manager: Roy Kyle Manager: Ron Linegar
(907) 586-3324 (907) 283-7581
(907) 586-3997 FAX (907) 283-4082 FAX
Ketchikan King Salmon
306 Main Street #1 King Salmon Mall
Ketchikan, AK 99901 King Salmon, AK 99613
Manager: John Scoblic Manager: Bernard Brown
(907) 225-2184 (907) 246-3306
(907) 225-1022 FAX (907) 246-3027 FAX
Kodiak Kotzebue
202 Marine Way Lagoon Street and Second
Kodiak, AK 99615 Kotzebue, AK 99752
Manager: Jim Brenner Manager: Alex Navarro
(907) 486-3126 (907) 442-3257
(907) 486-5879 FAX (907) 442-2157 FAX
Lake Street Branch Metlakatla
4014 Lake Street Milton Street
Homer, AK 99603-7682 Metlakatla, AK 99926
Supervisor: Mary Covey Manager: Charlene Brendible
(907) 235-2444 (907) 886-6363
(907) 235-5272 FAX (907) 886-5063 FAX
Mill Bay Branch Nome
2645 Mill Bay Road 250 E. Front Street
Kodiak, AK 99615 Nome, AK 99762
Manager: Josie Barber Manager: Mitch Erickson
(907) 486-6900 (907) 443-2223
(907) 486-2586 FAX (907) 443-2742 FAX
Palmer Petersburg
705 South Bailey 201 N. Nordic Drive
Palmer, AK 99645 Petersburg, AK 99833
Manager: Taka Tsukada Manager: Bond Stewart
(907) 745-2161 (907) 772-3833
(907) 745-6059 FAX (907) 772-4881 FAX
General Communication, Inc. (GCI) - 26 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
Prince of Wales Seattle
1330 Craig Klawock Highway One Union Square
Craig, AK 99921 600 University Street, #3420
Manager: Kurt Mattle Seattle, WA 98101
(907) 826-3040 Manager: Fred Richard
(907) 3044 FAX (206) 621-9464
(206) 622-9488 FAX
Seward Shoreline
908 Third Avenue 4966 N. Tongass Highway
Seward, AK 99664 Ketchikan, AK 99901
Manager: Lori Draper Manager: Piere Kaptanian
(907) 224-2220 (907) 247-7878
(907) 224-3711 FAX (907) 225-6868 FAX
Sitka Skagway
300 Lincoln Street 6th & Broadway
Sitka, AK 99835 Skagway, AK 99840
Manager: Greg West Manager: Kelly Roper
(907) 747-3226 (907) 983-2265
(907) 747-8081 FAX (907) 983-2128 FAX
Soldotna Tongass
44552 Sterling Highway 2415 Tongass Avenue
Soldotna, AK 99669 Ketchikan, AK 99901
Manager: Kurt Eriksson Manager: Lori Freeman
(907) 262-4435 (907) 225-4141
(907) 262-5114 FAX (907) 225-0218 FAX
Valdez Wasilla
337 Egan Drive 581 W. Parks Highway
Valdez, AK 99686 Wasilla, AK 99687
Manager: Jacquelyn Robb Manager: Jim Reaves
(907) 835-4745 (907) 376-5355
(907) 835-5762 FAX (907) 376-0298
Wrangell
115 Front Street
Wrangell, AK 99929
Manager: Tom Saville
(907) 874-3341
(907) 874-3294 FAX
General Communication, Inc. (GCI) - 27 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
OTHER LOCATIONS
Southeast Mortgage Northland Credit (3174)
9211 Lee Smith Drive 3030 Denali Street
Juneau, AK 99803 Anchorage, AK 99503
Manager: Karen King Manager: John Higgins
(907) 789-7071 (907) 562-0266
(907) 789-7552 FAX (907) 562-2150 FAX
Northland Credit (3174) Northland Credit
(Dial-in Email)
201 Old Steese Highway, Suite 1 1700 E. Parks Highway,
Suite 100
Fairbanks, AK 99701 Wasilla, AK 99654
Manager: Jim Carter Manager: Larry Timmons
(907) 456-5263 (907) 376-7600
(9070 456-3677 FAX (907) 376-7557 FAX
Northland Credit (Dial-in Email) Northland Mortgage
(Dial-in Email)
Unknown at this time, open in 1996 2605 Denali Street
Juneau, AK 99803 Anchorage, AK 99503
Manager: Manager: Don Shepherd
(907) xxx-xxxx (907) 274-5150
(907) xxx-xxxx FAX (907) 277-4081 FAX
Northland Mortgage (Dial-in Email) Northland Mortgage
(Dial-in Email)
16331 Heritage Place, #100 522 Third Street
Eagle River, AK 99577 Fairbanks, AK 99701
Manager: Trish Kastner Manager: Liz Rhow
(907) 694-7872 (907) 452-5007
(907) 694-7292 FAX (907) 452-6005 FAX
Northland Mortgage (Dial-in Email) Northland Mortgage
(Dial-in Email)
35551 Kenai Spur Highway 951 E. Bogard Road, Suite 101
Soldotna, AK 99669 Wasilla, AK 99701
Manager: Sherri Rose-Jones Manager: Lynn Berry
(907) 262-3940 (907) 376-2308
(907) 262-4087 FAX (907) 376-0206 FAX
Northland Mortgage (Dial-in Email)
701 S. Bailey, Suite 200
Palmer, AK 99645
Manager: Annie Davenport
(907) 746-7821
(907) 746-7825 FAX
General Communication, Inc. (GCI) - 28 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
SCHEDULE 6: AGENCY LETTER
General Communication, Inc. (GCI) - 29 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
20 December 1996
Richard A. Whitney
Director, Business Development
General Communication, Inc. (GCI)
2550 Denali St., Suite 1000
Anchorage, AK. 99503
Subject: Telecommunications Letter of Agency
Dear Richard:
National Bank of Alaska (NBA) hereby appoints GCI as its agent for the limited
purpose of ordering, implementing and maintaining telecommunications services
provided by any contractor, local exchange carrier, interexchange carrier, or
enhanced/alternate service provider as may be necessary for GCI to
manage/provide telecommunications services to NBA.
This agency relationship shall remain in effect until modified or revoked by NBA
in writing. When GCI acts as agent, GCI is responsible, on behalf of NBA, for
all such charges, including without limitation monthly charges, usage charges,
installation charges, or applicable termination charges of the providers of
telecommunications facilities, whether these charges are arranged to be billed
directly to NBA or to GCI.
Neither NBA nor GCI shall be precluded by this appointment from dealing with
carriers or providers in arranging for telecommunications services or
connections to other equipment separate from those associated with this
agreement.
Sincerely,
B. John Shipe
Executive Vice President
National Bank of Alaska
P.O. Box 100600
Anchorage, Alaska 99510-0600
BJS:
General Communication, Inc. (GCI) - 30 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
SCHEDULE 7: CONFIDENTIALITY LETTER
General Communication, Inc. (GCI) - 31 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
15 December 1995
B. John Shipe
Executive Vice President
National Bank of Alaska
P.O. Box 100600
Anchorage, Alaska 99510-0600
Subject: Confidentiality of Information
Dear John:
During our recent business development and contract negotiations, we discussed
many aspects of the business and operations of our companies. Certain
information disclosed is confidential and has consistently been considered and
treated by each of us as trade secrets. I refer particularly to information
regarding customers, pricing policies, certain telecommunications service
equipment, product/service/network development and general business practices
associated with our outsourcing business. This information was disclosed for use
solely in connection with developing and operating a strategic business
relationship between our companies consistent with our Framework Agreement.
I am writing to confirm the understanding which we reached and documented in our
Framework Agreement that all involved employees and agents of both companies
will not disclose, use for their own benefit, or otherwise appropriate such
trade secrets or confidential information, except internally to the extent
necessary to conduct our joint business.
If I have correctly expressed our understandings, please sign and date this
letter.
General Communication, Inc. National Bank of Alaska
Richard A. Whitney, Director B. John Shipe
Business Development Executive Vice President
Dated: Dated:
General Communication, Inc. (GCI) - 32 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
SCHEDULE 8: ADDITIONAL TERMS AND CONDITIONS
General Communication, Inc. (GCI) - 33 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
Per discussion with G. Dalton (12/13/95) the following Framework Agreement
Sub-Section 15.2 is amended as follows:
15.2 In 1996, NBA and the Contractor shall in respect of the
Services to be provided agree to an overall Target. The
Contractor shall provide the Services at a total charge to NBA
which shall enable NBA to achieve its expectation of savings.
The total charge to NBA, or Target, includes the Contractor's
Expected Cost of Operations (CoOE) as defined in Annex A less
********.
General Communication, Inc. (GCI) - 34 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
SCHEDULE 9: WAN DEPLOYMENT PROJECT
General Communication, Inc. (GCI) - 35 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
OUT OF SCOPE PROJECT
NAME: WAN Deployment Project
LENGTH: January 1, 1996 through March 1, 1996
VALUE: ********
Overview
Engineer, furnish and install a statewide Branch Wide Area Network (WAN). This
network is defined between intelligent wiring hubs located in each Branch or
other defined location and the Anchorage Operations Center. The scope of work
includes detail design, equipment selection, equipment/materials procurement,
project planning, project management, testing, shipping, installation,
integration and acceptance.
Pricing
Detailed pricing is included on the following pages. Project costs are
summarized as follows:
Deliverables (Equipment/materials) ********
Labor: ********
Expenses (Travel/Lodging): ********
TOTAL ********
Terms
Equipment pricing will meet ********. All materials and labor will be invoiced
at ********. Expenses will be invoiced directly. Cable plant installation
pricing in Branches is currently being solicited via RFP. It will be billed on
this contract on a ******** basis once firm pricing has been established.
Contractor will receive a bonus should the total invoiced amount for this
project underrun the project budget shown in Pricing. This bonus shall be
******** of the variance between the total invoiced amount and the project
budget.
All invoices will be due and payable on a Net 30 day basis.
General Communication, Inc. (GCI) - 36 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
<TABLE>
<CAPTION>
Description Qty Unit Price Total
- ---------------------------------------------------------------------- -------- ----------------- ----------------
<S> <C> <C> <C>
DELIVERABLES:
NBA Branch Site (41 Category 1 site)
56/64 DSU/CSU **** **** ****
Cisco 2509 router **** **** ****
Miscellaneous cables, connectors **** **** ****
Code operated matrix switch **** **** ****
Dialup maintenance modem **** **** ****
Dial restoral modem **** **** ****
Equipment rack **** **** ****
Miscellaneous install materials/costs (tywraps, power etc.) **** **** ****
NBA Branch Site (7 category 2 sites)
56/64 DSU/CSU **** **** ****
Cisco 4000 router **** **** ****
Miscellaneous cables, connectors **** **** ****
Code operated matrix switch **** **** ****
Dialup maintenance modem **** **** ****
Dial restoral modem **** **** ****
Equipment rack **** **** ****
Miscellaneous install materials/costs (tywraps, power etc.) **** **** ****
</TABLE>
General Communication, Inc. (GCI) - 37 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
<TABLE>
<CAPTION>
Description Qty Unit Price Total
- ---------------------------------------------------------------------- -------- ----------------- ----------------
<S> <C> <C> <C>
NBA Branch Site (2 category 3 sites)
Cisco 2501 router **** **** ****
Miscellaneous cables, connectors **** **** ****
Code operated matrix switch **** **** ****
Dialup maintenance modem **** **** ****
Dial restoral modem **** **** ****
Equipment rack **** **** ****
Miscellaneous install materials/costs (tywraps, power etc.) **** **** ****
NBA Branch Site (3 category 4 sites)
Cisco 2509 router **** **** ****
Miscellaneous cables, connectors **** **** ****
Code operated matrix switch **** **** ****
Dialup maintenance modem **** **** ****
Dial restoral modem **** **** ****
Equipment rack **** **** ****
Miscellaneous install materials/costs (tywraps, power etc.) **** **** ****
</TABLE>
General Communication, Inc. (GCI) - 38 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
<TABLE>
<CAPTION>
Description Qty Unit Price Total
- ---------------------------------------------------------------------- -------- ----------------- ----------------
<S> <C> <C> <C>
NBA Branch Site (3 category 5 sites)
Cisco 2501 router **** **** ****
Miscellaneous cables, connectors **** **** ****
Code operated matrix switch **** **** ****
Dialup maintenance modem **** **** ****
Dial restoral modem **** **** ****
Equipment rack **** **** ****
Miscellaneous install materials/costs (tywraps, power etc.) **** **** ****
Anchorage Operation Center
Cisco 4700 router **** **** ****
Cisco 2512 router (16 async/2TR for dial restoral) **** **** ****
Miscellaneous cables, connectors **** **** ****
Code operated matrix switch **** **** ****
Dialup maintenance modem **** **** ****
Dial restoral modem **** **** ****
Equipment rack **** **** ****
Miscellaneous install materials/costs (tywraps, power etc.) **** **** ****
POS Dial Restoral
Dial restoral modem **** **** ****
X.25 pad upgrade **** **** ****
X.25 switch upgrade **** **** ****
</TABLE>
General Communication, Inc. (GCI) - 39 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
<TABLE>
<CAPTION>
Description Qty Unit Price Total
- ---------------------------------------------------------------------- -------- ----------------- ----------------
<S> <C> <C> <C>
M&I Data Processing Center
Cisco 4500-M router **** **** ****
Miscellaneous cables, connectors **** **** ****
Code operated matrix switch **** **** ****
Dialup maintenance modem **** **** ****
Equipment rack **** **** ****
Miscellaneous install materials/costs (tywraps, power etc.) **** **** ****
GCI Anchorage (CNCC)
Miscellaneous install materials/costs (tywraps, power etc.) **** **** ****
Spares
Spares @ ***** of deliverables ****** **** ****
Shipping @ ***** **** ****
</TABLE>
<TABLE>
<CAPTION>
Description Qty MH Rate Total
- --------------------------------------------------------------- ------ -------- ----------------- ----------------
<S> <C> <C> <C> <C>
LABOR:
Configure and test **** ****
Installation **** **** **** ****
Installation travel to remote branch **** **** **** ****
Engineering **** **** **** ****
Project Management **** **** **** ****
Clerical **** **** **** ****
Documentation/CADD **** **** **** ****
</TABLE>
General Communication, Inc. (GCI) - 40 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
<TABLE>
<CAPTION>
Description Qty Unit Price Total
- ---------------------------------------------------------------------- -------- ----------------- ----------------
<S> <C> <C> <C>
EXPENSES:
GCI Travel Expenses
Airfare **** **** ****
Mileage **** **** ****
Lodging **** **** ****
Rental Vehicle **** **** ****
Per Diem **** **** ****
Protocol Analyzer (rental for installation) 1 unit for 3 mos. **** **** ****
BER test set (rental for installation) 4 units for 2 mos. **** **** ****
</TABLE>
General Communication, Inc. (GCI) - 41 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
SCHEDULE 10: LONG TERM CONTRACTS
General Communication, Inc. (GCI) - 42 - FINAL
1996 Call-Off Contract 4/25/96
<PAGE>
<TABLE>
<CAPTION>
Contract Term
Contract Contract or
Owner Start Date Depreciation Description Amount
- ---------------- --------------- ------------------ ----------------------------------------- ---------------
<S> <C> <C> <C> <C>
******
GCI 1/1/96 Capital Newbridge Multiplexer Equipment
GCI 1/1/96 5 years MCI-Hyperstream Frame Relay TBD
</TABLE>
General Communication, Inc. (GCI) - 43 - FINAL
1996 Call-Off Contract 4/25/96
