EXHIBIT 2.8
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement"), dated as of September 13,
1996, is between General Communication, Inc., an Alaska corporation ("GCI"), and
MCI Telecommunications Corporation, a Delaware corporation ("MCI").
1. Agreement to Purchase and Sell Shares. On the terms and subject to
the conditions contained in this Agreement, on the Final Closing Date, as
defined below, GCI agrees to sell to MCI, and MCI agrees to purchase from GCI,
two million (2,000,000) shares of GCI's Class A Common Stock ("Shares"). On the
Final Closing Date, GCI shall deliver to MCI certificates representing the
Shares. The Final Closing Date ("Final Closing Date") shall occur on the fifth
(5th) business day after which all franchise transfer and other regulatory
consents have been obtained which are required for the full performance of the
Securities Purchase and Sale Agreement dated effective as of May 2, 1996 for the
purchase and sale of Prime Cable of Alaska, L.P., Alaska Cable, Inc. and Prime
Cable Fund I, Inc. (the "Prime SPA").
2. Purchase Price. The purchase price payable for the Shares shall be
Thirteen Million Dollars $13,000,000.00 ("Purchase Price"). On the Final Closing
Date MCI shall pay to GCI the Purchase Price by wire transfer of immediately
available funds to a GCI designated account.
3. Closing. Unless this Agreement and the transactions contemplated
hereby shall have been terminated, the closing ("Closing") of this Agreement
shall take place at the offices of Xxxxxx, Xxxxxx, Xxxxxx, Xxxxxxx & Xxxxxxx,
P.C., 000 X Xxxxxx, Xxxxxxxxx, Xxxxxx 00000 on or before the fifth (5th)
business day following the latest of (i) the full consummation and performance
of the Prime SPA, or (ii) the last condition precedent set forth in Section 8
shall have been satisfied or waived, or at such other time or place as MCI and
GCI shall mutually agree in writing.
4. Representations and Warranties of GCI. GCI represents and warrants
to MCI as follows:
a) Due Organization and Qualification. GCI and each
of its subsidiaries are corporations duly organized, validly existing and in
good standing under the laws of their respective jurisdictions of incorporation,
with corporate power and authority to own, lease and operate their respective
properties and to conduct their respective businesses as they are now owned,
leased and operated, and conducted. Each of GCI and its subsidiaries is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary,
REGISTRATION STATEMENT
Page II-532
except where the failure so to qualify would not have a material adverse effect
on GCI and its subsidiaries taken as a whole.
b) Authorization. GCI has the requisite corporate
power to enter into this Agreement and to perform its obligations hereunder. The
execution and delivery by GCI of, and the performance by GCI of its obligations
under this Agreement have been duly authorized by all requisite corporate action
of GCI, and this Agreement is a valid and binding agreement of GCI, enforceable
against GCI in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally, or by the principles governing the availability of
equitable remedies. None of the execution and delivery by GCI of this Agreement,
the issuance and sale by GCI of the Shares, the consummation of the transactions
contemplated hereby, or the compliance by GCI with the terms, conditions and
provisions hereof, will conflict with or result in a breach or violation of any
of the terms, conditions, or provisions of GCI's articles of incorporation or
by-laws or of any material agreement or instrument to which GCI is a party or by
which GCI or any of its material properties may be bound, or constitute, with or
without the provision of notice or the passage of time, or both, a default or
create a right of termination, cancellation or acceleration thereunder, or
result in the creation or imposition of any security interest, mortgage, lien,
charge or encumbrance of any nature whatsoever upon GCI or any of its material
properties or assets.
c) Capital Stock. As of the date hereof and after the
issuance of the Shares as contemplated by this Agreement, the authorized and
issued and outstanding capital stock of GCI will be as set forth on the attached
Exhibit A, except for such changes (i) resulting from the exercise of stock
options, (ii) the purchase of shares contemplated herein, and (iii) the purchase
and sale of securities in connection with the Cable Acquisitions (as defined
below)..
All of the outstanding shares of Class A Common Stock and Class B Common Stock
listed on the Exhibit A have been or when issued, will be validly issued and
outstanding, fully paid, nonassessable and not entitled to any preemptive
rights. Except as set forth on Schedule 4(c)(i), there are currently outstanding
no options, warrants, rights or convertible securities or other agreements or
commitments of any character providing for the issuance of capital stock of GCI
or any of its subsidiaries. Except as set forth on the attached Schedule
4(c)(ii), there are no voting trusts and other agreements or understandings to
which GCI or any subsidiary is a party, and to GCI's knowledge, no other voting
trusts exist with respect to the voting of the capital stock of GCI or any of
its subsidiaries.
Except as set forth on the attached Schedule 4(c)(iii), GCI owns the entire
equity interest in each of its subsidiaries, and all the outstanding capital
stock of each subsidiary of GCI are validly issued, fully paid and nonassessable
and are owned by GCI free and clear of all liens, charges, preemptive rights,
claims or encumbrances.
REGISTRATION STATEMENT
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d) Issuance of Shares. The Shares, when sold and
delivered by GCI to MCI pursuant to this Agreement, will have been duly
authorized and validly issued, and will be fully paid and non-assessable, not
subject to any preemptive rights and free and clear of any security interest,
lien, charge or encumbrance of any nature whatsoever.
e) SEC Reports. GCI has timely filed all forms,
reports, statements and schedules with the Commission required to be filed by it
pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act") or
other federal securities laws since June 30, 1993, and has heretofore delivered
to MCI (in the form filed with the Commission), together with any amendments or
supplements thereto, including superseding amendments, its (i) Annual Reports on
Form 10-K for the fiscal years ended December 31, 1994 and December 31, 1995,
(ii) all definitive proxy statements relating to GCI's meetings of stockholders
(whether annual or special) held since March 31, 1993 as filed with the
Securities and Exchange Commission ("Commission"), and (iii) all other reports
or registration statements filed by GCI pursuant to the Exchange Act and the
Securities Act of 1933, as amended ("Securities Act") since March 31, 1993
(collectively, "SEC Reports"). The SEC Reports (i) were prepared in compliance
with the applicable requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) did not as of their respective dates contain any
untrue statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. None of the subsidiaries
of GCI is required to file any reports, statements, forms or other documents
with the Commission.
f) Financial Statements. The audited financial
statements of GCI included or incorporated by reference in the SEC Reports and
the unaudited interim monthly financial statements for periods subsequent to
such audited financial statements (collectively, including the footnotes
thereto, "Financial Statements") are correct and complete, were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis ("GAAP") (except as otherwise stated in the Financial Statements or in the
related reports of GCI's independent accountants) and present fairly the
consolidated financial position of GCI and its subsidiaries as of the dates
thereof, and the results of operations, changes in financial position and the
statements of stockholders' equity of GCI and its subsidiaries on a consolidated
basis for the periods indicated. No event has occurred since the preparation of
the Financial Statements that would require a restatement of the Financial
Statements under GAAP. GCI has received no notice of any fact which may form a
basis for any claim by a third party which, if asserted, could result in
liability affecting GCI not disclosed by or reserved against in GCI's most
recent balance sheet. The Financial Statements reflect and at the Closing Date
will reflect, the interest of GCI in the assets, liabilities and operations of
all subsidiaries of GCI.
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Neither GCI nor any of its subsidiaries has any material liability, obligation
or commitment of any nature whatsoever (whether known or unknown, due or to
become due, accrued, fixed, contingent, liquidated, unliquidated, or otherwise)
other than liabilities, obligations or commitments (i) which are accrued or
reserved against in the consolidated balance sheet of GCI and its consolidated
subsidiaries ("Balance Sheet") as of December 31, 1995 or reflected in the notes
thereto, (ii) which (x) arose in the ordinary course of business since such date
and (y) do not or would not individually or in the aggregate have a material
adverse effect on the business, properties or financial condition of GCI and its
subsidiaries taken as a whole, or (iii) which are the type that would not be
required to be reflected on a consolidated balance sheet of GCI and its
subsidiaries or in the notes thereto if such balance sheet were prepared in
accordance with GAAP as of the date hereof or as at the Closing Date, as the
case may be. From the date of the most recent balance sheet included in the
Financial Statements to and including the date hereof, (i) GCI's business has
been operated only in the ordinary course, (ii) GCI has not sold or disposed of
any assets other than in the ordinary course of business, (iii) there has not
occurred any material adverse change or event in GCI's business, operations,
assets, liabilities, financial condition or results of operations compared to
the business, operations, assets, liabilities, financial condition or results of
operations reflected in the Financial Statements, and (iv) there has not
occurred any theft, damage, destruction or loss which has had a material adverse
effect on GCI.
g) Related Transactions. Since the date of GCI's 1995
Proxy Statement to the date hereof, GCI has not entered into or otherwise become
obligated with respect to any transactions which would require a disclosure
pursuant to Item 404 of Regulation S-K in accordance with Items 7(b) or (c) of
Schedule 14A under the Exchange Act were GCI to distribute a proxy statement as
of the date hereof and the Closing Date.
h) Litigation. Except as set forth on Schedule 4(h),
there is no claim, suit, action, governmental investigation or proceeding
pending or, to the knowledge of GCI, threatened against or affecting GCI or any
of its subsidiaries which (i) seek to restrain or enjoin the consummation of the
transactions contemplated by this Agreement, or (ii) if decided adversely to GCI
or such subsidiary would have, or would be likely to have a material adverse
effect on the business, properties or financial condition of GCI and its
subsidiaries taken as a whole. There is no outstanding order, writ, injunction
or decree or, to the knowledge of GCI, any claim or investigation of any court,
governmental agency or arbitration tribunal materially and adversely affecting
or which can reasonably be expected to materially and adversely affect GCI, any
of its subsidiaries, or their respective properties, assets or businesses,
franchises, licenses or permits under which they operate, or their ability to
operate their respective businesses in the ordinary course.
i) Governmental. No governmental consent, approval,
hearing, filing, registration or other action, including the passage of time, is
necessary for the
REGISTRATION STATEMENT
Page II-535
execution and delivery of this Agreement, the issuance and sale of the Shares,
or the consummation of the transactions contemplated by this Agreement, other
than (i) any applicable consents and/or approvals of the Federal Communications
Commission ("FCC"), and (ii) any applicable filings with and consents and/or
approvals of state public service commissions, public utility commissions or
similar state regulatory bodies ("Public Utility Commissions") under state
public utility statutes and similar laws.
j) Absence of Certain Changes. Since December 31,
1995, (i) there has not occurred or arisen any event having, and neither GCI nor
any of its subsidiaries has suffered, a material adverse effect on the business,
properties or financial condition of GCI and its subsidiaries taken as a whole,
(ii) GCI and its subsidiaries have conducted their businesses only in the
ordinary course, consistent with past practices, and (iii) neither GCI nor any
of its subsidiaries has taken any actions described in Sections 7 a) through e).
k) Fees. Neither GCI nor any of its subsidiaries has
paid or become obligated to pay any fee, commission to any broker, finder or
intermediary in connection with the transactions contemplated by this Agreement.
l) Certain Agreements. Except as set forth on the
attached Schedule 4(l), there are no contracts, agreements, arrangements or
understandings to which GCI or any of its subsidiaries, officers, agents or
representatives is a party, that create, govern or purport to govern the right
of another party to acquire GCI or an equity interest in GCI, or any subsidiary
of GCI, or to increase any such equity interest.
m) Labor Relations. Neither GCI nor any of its
subsidiaries is a party to any collective bargaining agreement. Since March 31,
1993, neither GCI nor any of its subsidiaries has (i) had any employee strikes,
work stoppages, slowdowns or lockouts, or (ii) except as set forth on the
attached Schedule 4(m)(ii), received any request for certification of bargaining
units or any other requests for collective bargaining.
n) Licenses. GCI and its subsidiaries have all
permits, licenses, waivers, authorizations, approvals and certificates of public
convenience and necessity ("Licenses") (including, without limitation, Licenses
by the FCC and Public Utility Commissions) which are necessary for GCI and its
subsidiaries to conduct their operations in the manner heretofore conducted,
except for Licenses, the failure of which to obtain would not have a material
adverse effect on the business, properties or financial condition of GCI and its
subsidiaries taken as a whole. No event has occurred, been initiated or
threatened with respect to the Licenses which permits, or after notice or lapse
of time or both would permit, revocation or termination thereof or would result
in any material impairment of the rights of the holder of any of the Licenses
except for revocations, terminations or impairments that would not, in the
aggregate, have a material adverse effect on the business, properties or
financial condition of GCI and its subsidiaries taken as a whole.
REGISTRATION STATEMENT
Page II-536
o) Employee Benefit Plans. Each employee benefit
plan, as such term is defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), of GCI or any subsidiary of GCI
("Pension Plan") and each other employee benefit plan within the meaning of
ERISA (collectively with the Pension Plans, ("Plans") complies in all material
respects with all applicable requirements of ERISA and the Internal Revenue Code
of 1986, as amended ("Code"), and other applicable laws. None of the Plans is a
multi-employer plan, as such term is defined in Section 3(37) of ERISA. Each
Pension Plan which is intended to be qualified under Section 401(a) of the Code
has been determined by the Internal Revenue Service to be qualified and nothing
has occurred since the date of any such determination or application which would
adversely affect such qualification. Neither GCI nor any subsidiary of GCI, nor
any Plan nor any of their respective directors, officers, employees or agents
has, with respect to any Plan, engaged in any "prohibited transaction," as such
term is defined in Section 4975 of the Code or Section 406 of ERISA, which could
result in any taxes or penalties or other liabilities under Section 4975 of the
Code or Section 502(i) of ERISA, except taxes, penalties or liabilities which in
the aggregate would not have a material adverse effect on the business,
properties or financial condition of GCI and its subsidiaries taken as a whole.
No liability to the Pension Benefit Guaranty Corporation has been incurred with
respect to any Pension Plan that has not been satisfied in full. No Pension Plan
has incurred an "accumulated funding deficiency" within the meaning of the Code.
There has been no "reportable event" within the meaning of Section 4043 of ERISA
with respect to any Pension Plan. All amounts required by the provisions of any
Pension Plan to be contributed have been so contributed.
p) Property and Leases. Except as set forth on the
attached Schedule 4(p), GCI and its subsidiaries have good title to all material
assets reflected on the Balance Sheet except for (i) liens for current taxes and
assessments not yet past due, (ii) inchoate mechanics' and materialmens' liens
for construction in progress, (iii) workers', repairmens', warehousemens' and
carriers' liens arising out of the ordinary course of business, and (iv) all
matters of record, liens and imperfections of title and encumbrances which
matters, liens and imperfections would not, in the aggregate, have a material
adverse effect on the business, properties or financial condition of GCI and its
subsidiaries taken as a whole.
q) Material Agreements. Schedule 4(q) attached hereto
sets forth a complete listing of all contracts and agreements existing on the
date hereof to which GCI or any of its subsidiaries is a party or by which any
of their respective properties or assets is bound other than contracts for
services purchased under tariffs, which (i) are with any customer which
accounted for more than two percent of GCI or any of its subsidiary's revenues
for the year ended December 31, 1995, (ii) involve contracts that call for
annual aggregate expenditures by GCI in excess of $5,000,000, or (iii) involve
contracts that call for aggregate expenditures by GCI during the remainder of
their respective term in excess of $10,000,000. All such contracts and
agreements
REGISTRATION STATEMENT
Page II-537
are valid and binding, in full force and effect and enforceable against the
parties thereto in accordance with their respective terms. Except as set forth
on the attached Schedule 4(q)(i), to GCI's knowledge, there is not under any
such contract or agreement any existing default, or event which, after notice of
lapse of time, or both, would constitute a default, by GCI or any of its
subsidiaries or any other party.
r) Compliance with Laws.
(i) GCI is in material compliance with all
applicable laws, rules, regulations, orders, ordinances, and codes of the United
States of America, its territories and possessions, and of any state, county,
municipality, or other political subdivision or any agency of any of the
foregoing having jurisdiction over GCI's business and affairs.
In General.
GCI has constructed, maintained and operated, and is
constructing, maintaining and operating, its business (including, without
limitation, the real property owned or leased by GCI ("GCI's Real Property")) in
material compliance with all applicable laws including the Communications Act,
the rules and regulations of the FCC, the APUC (in each case as the same are
currently in effect);
(i) All reports, notices, forms and filings,
and all fees and payments, required to be given to, filed with, or paid to, any
governmental authority by GCI under all applicable laws have been timely and
properly given and made by GCI, and are complete and accurate in all material
respects, in each case as required by applicable law;
(ii) GCI has not received any notice
(written or oral) from any governmental authority or any other Person that it,
or its ownership and operation of its business is in material violation of any
applicable law, and GCI knows of no basis for the allegation of any such
violations; and
(iii) GCI has complied in all material
respects with all applicable legal requirements relating to the employment of
labor, including ERISA, continuation coverage requirements with respect to group
health plans, and those relating to wages, hours, unemployment compensation,
worker's compensation, equal employment opportunity, age and disability
discrimination, immigration control and the payment and withholding of taxes,
and no reportable event, within the meaning of Title IV of ERISA, has occurred
and is continuing with respect to any "employee benefit plan" or "multiemployer
plan" (as those terms are defined in ERISA) maintained by GCI or its affiliates
(as defined in Section 407(d)(7) of ERISA). No prohibited transaction, within
the meaning of Title I of ERISA, has occurred with respect to any such employee
benefit plan or multiemployer plan, and no material accumulated funding
deficiency (as defined
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in Title I of ERISA) or withdrawal liability (as defined in Title IV of ERISA)
exists with respect to any such employee benefit plan or multiemployer plan.
(iv) To GCI's knowledge, except as set forth
in Schedule 4(r)(v): (i) GCI has not received any notice (written or oral) from
any governmental authority or other Person that the Person giving such notice is
investigating whether, or has determined that there are, any violations of
Environmental Laws by GCI, or violations of Environmental Law due to activities
on, or affecting, or related to GCI's Real Property, (ii) none of GCI's Real
Property has previously been used by any Person for the generation, production,
emission, manufacture, handling, processing, treatment, storage, transportation,
disposal or discharge of any Hazardous Substances, (iii) GCI has not used,
generated, produced, emitted, manufactured, handled, possessed, treated, stored,
transported, disposed or discharged, and does not presently use, generate,
produce, emit, manufacture, handle, possess, treat, store, transport, dispose or
discharge, any Hazardous Substances on, into or from GCI's Real Property, (iv)
GCI is in compliance in all material respects with all laws applicable to its
own (as distinguished from other Persons') use, generation, production,
emission, manufacturing, treatment, storage, transportation, disposal, and
discharge of any Hazardous Substances on, into or from GCI's Real Property, (v)
there are no above ground or underground storage tanks, or any Equipment
containing polychlorinated biphenyls, on GCI's Real Property, (vi) no release of
Hazardous Substances outside GCI's Real Property has entered or threatens to
enter any of GCI's Real Property, nor is there any pending or threatened claim
based on Environmental Laws which arises from any condition of the land
surrounding any of GCI's Real Property, (vii) no Real Property has been used at
any time as a gasoline service station or any other facility for storing,
pumping, dispensing or producing gasoline or any other petroleum products or
wastes, (viii) no building or other structure on any of GCI's Real Property
contains asbestos, and (ix) there are no incinerators, septic tanks or cesspools
on GCI's Real Property and all waste is discharged into a public sanitary sewer
system. GCI has provided MCI with complete and correct copies of (A) all
studies, reports, surveys or other materials in GCI's possession or of which GCI
has knowledge and to which GCI has access relating to the presence or alleged
presence of Hazardous Substances at, on or affecting GCI's Real Property, (B)
all notices or other materials in GCI's possession or of which GCI has knowledge
and to which GCI has access that were received from any governmental authority
having the power to administer or enforce any Environmental Laws relating to
current or past ownership, use or operation of the real property or activities
at or affecting GCI's Real Property and (C) all materials in GCI's possession or
to which GCI has access relating to any claim, allegation or action by any
private third party under any Environmental Law. The representations and
warranties in this Section 4(r) are the only representations and warranties
given by GCI with respect to the Environmental Law compliance of GCI and its
business.
s) Tax Returns and Other Reports. GCI has duly and
timely filed in proper form all federal, state, local, and foreign, income,
franchise, sales, use,
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property, excise, payroll, and other tax returns and other reports (whether or
not relating to taxes) required to be filed by law with the appropriate
governmental authority, and, to the extent applicable, has paid or made
provision for payment of all taxes, fees, and assessments of whatever nature
including penalties and interest, if any, which are due with respect to any
aspect of its business or any of its properties. Except as set forth on Schedule
4(s), there are no tax audits pending and no outstanding agreements or waivers
extending the statutory period of limitations applicable to any relevant tax
return.
t) Transfer Taxes. There are no sales, use, transfer,
excise, or license taxes, fees, or charges applicable with respect to the
transactions contemplated by this Agreement.
u) Disclosure. No written statement in this Agreement
or in any agreement or other document delivered pursuant to this Agreement by or
on behalf of GCI contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. None of
the periodic filings made by GCI with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, since January 1, 1995,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading.
v) Investment Company. GCI is not an "investment
company" or a company "controlled" by an investment company within the meaning
of the Investment Company Act of 1940, as amended (the "Act"), and GCI has not
relied on rule 3a-2 under the Act as a means of excluding it from the definition
of an "investment company" under the Act at any time within the three (3) year
period preceding the Closing Date.
w) No Insolvency. As of even date and as of the
Closing Date, GCI is not and shall not be insolvent.
5. Representations and Warranties of MCI. MCI represents and warrants
to GCI as follows:
a) Due Organization. MCI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with corporate power to own its properties and to conduct its business
as now owned and conducted.
b) Authorization. MCI has the requisite corporate
power to enter into this Agreement and to perform its obligations hereunder. The
execution and delivery by MCI of, and the performance by MCI of its obligations
under this Agreement have been duly authorized by all requisite corporate action
of MCI and this Agreement
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is a valid and binding agreement of MCI, enforceable against MCI in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally or by the principles governing the availability of equitable remedies.
c) Purchase for Investment; Existing Shareholder. MCI
is purchasing the Shares for investment for its own account and not with a view
to or for sale in connection with any distribution thereof within the meaning of
the Securities Act. MCI is an existing security holder of shares of issued and
outstanding common stock of GCI and no commission or other remuneration shall be
paid by MCI, directly or indirectly, in connection with MCI's purchase of
Shares.
d) No Registration of Shares. MCI understands that
(i) the Shares have not been registered under the Securities Act or under any
state securities laws and are being issued in reliance on the exemptions from
the registration and prospectus delivery requirements of the Securities Act
which are set forth in Sections 4(2) and 4(6) of the Securities Act and the
regulations promulgated thereunder and in reliance on exemptions from the
registration requirements of applicable state securities laws; and (ii) the
Shares cannot be transferred without compliance with the registration
requirements of the Securities Act and applicable state securities laws or
unless an exemption from such registration requirements is available, and (iii)
the reliance of GCI upon the aforesaid exemptions is predicated in part upon
MCI's representations and warranties.
e) Residence. The jurisdiction in which MCI's
principal executive offices are located is in the District of Columbia.
f) Accredited Investor. MCI is an "accredited
investor" as defined in Rule 501 promulgated under the Securities Act.
g) Availability of Information. GCI has made
available to MCI the opportunity to ask questions of, and to receive answers
from, GCI's officers and directors, and any other person acting on their behalf,
concerning the terms and conditions of this Agreement and the transactions
contemplated herein and to obtain any other information requested by MCI to the
extent GCI possesses such information or can acquire it without unreasonable
effort or expense. MCI has been afforded the opportunity to inspect, and to have
its auditors or other agents inspect, the books and records of GCI. The
furnishing of such information, the opportunity to inspect and any inspection so
undertaken by MCI shall not affect MCI's right to rely on the representations
and warranties of GCI set forth in this Agreement.
h) Disclosure. No written statement in this Agreement
or in any agreement or other document delivered pursuant to this Agreement by or
on behalf of MCI contains any untrue statement of a material fact or omits to
state a material fact
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Page II-541
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
i) Investment Company. MCI is not an "investment
company" or a company "controlled" by an investment company within the meaning
of the Investment Company Act of 1940, as amended (the "Act"), and MCI has not
relied on rule 3a-2 under the Act as a means of excluding it from the definition
of an "investment company" under the Act at any time within the three (3) year
period preceding the Closing Date.
j) No Insolvency. As of even date and as of the
Closing Date, MCI is not and shall not be insolvent.
6. Restrictive Legend. The certificates representing the Shares shall
bear a legend substantially to the effect of the following:
"The securities represented by this certificate have been
issued without registration under the Securities Act of 1933,
as amended, or any state securities laws and may not be
offered, sold or otherwise disposed of, unless the securities
are registered under such act and applicable state securities
laws or exemptions from the registration requirements thereof
are available for the transaction."
7. Additional Agreements. During the period from the date of this
Agreement to the Final Closing Date:
a) Interim Operations. GCI shall, and shall cause its
subsidiaries to, conduct their respective business only in the ordinary course,
and maintain, keep and preserve their respective assets and properties in good
condition and repair, ordinary wear and tear excepted.
b) Certificate and By-laws. GCI shall not, and shall
not permit any of its subsidiaries to, make or propose any change or amendment
in their respective Certificates of Incorporation or By-laws.
c) Capital Stock. Except in connection with the Cable
Acquisitions (as defined below), GCI shall not, and shall not permit any of its
subsidiaries to, issue, pledge or sell any shares of capital stock or any other
securities of any of them or issue any securities convertible into, or
exchangeable for or representing the right to purchase or receive, or enter into
any contract with respect to the issuance of, any shares of capital stock or any
other securities of any of them (other than pursuant to this Agreement or the
exercise of stock options outstanding on the date hereof), or enter into any
contract with respect to the purchase or voting of shares of their capital stock
or
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adjust, split, combine, reclassify any of their securities, or make any other
material changes in their capital structures.
d) Dividends. GCI shall not declare, set aside, pay
or make any dividend or other distribution or payment (whether in cash, stock or
property) with respect to, or purchase or redeem, any shares of capital stock.
e) Assets; Mergers; Etc. GCI shall not, and shall not
permit any of its subsidiaries to, encumber, sell, lease or otherwise dispose of
or acquire any material assets, or encumber, sell, lease or otherwise dispose of
assets having a value in excess of $3,000,000 in the aggregate, or enter into
any merger or other agreement providing for the acquisition of any material
assets of GCI or any of its subsidiaries by any third party or acquire (by
merger, consolidation, or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof or enter any
contract, agreement, commitment or arrangement to do any of the foregoing,
except under: (i) the Prime SPA, (ii) the Alaskan Cable Network Asset Purchase
Agreement, dated April 15, 1996, and (iii) the Alaska Cablevision, Inc. and
XxXxx/Rock Associates Asset Purchase Agreements, dated May 10, 1996 ((i), (ii)
and (iii) above collectively, "Cable Acquisitions").
f) Access to Information. GCI shall, and shall cause
its subsidiaries, officers, directors, employees and agents-to, afford MCI
access at all reasonable times to their officers, employees, agents, properties,
books, records and contracts, and shall furnish MCI all financial, operating and
other data and information as MCI may reasonably request.
g) Certain Filings, Consents and Arrangements. MCI
and GCI shall (i) cooperate with one another in promptly (x) determining whether
any filings are required to be made or consents, approvals, permits or
authorizations are required to be obtained under any federal or state law or
regulation or any consents, approvals or waivers are required to be obtained
from other parties to loan agreements or other contracts material to GCI's
business in connection with the transaction contemplated by this Agreement, and
(y) making any such filings, furnishing information required in connection
therewith and seeking timely response to obtain any such consents, permits,
authorizations, approvals or waivers; and (ii) as promptly as practicable, file
with the Federal Trade Commission and the Department of Justice the notification
and report forms, if required.
h) Amendments to Prime SPA. GCI shall not amend,
modify or alter, in any manner whatsoever, the Prime SPA without the prior
written consent of MCI.
REGISTRATION STATEMENT
Page II-543
8. Conditions.
a) Conditions to Obligations of MCI and GCI. The
obligations of MCI and GCI to consummate the transactions contemplated by this
Agreement are subject to the satisfaction, at or before the Final Closing Date,
of each of the following conditions:
(i) The consummation of the transactions
contemplated by this Agreement shall not be precluded by any order, decree or
preliminary or permanent injunction of a federal or state court of competent
jurisdiction; and
(ii) The consummation of the transactions
contemplated under the Prime SPA.
b) Conditions to Obligations of GCI. The obligations
of GCI to consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or before the Final Closing Date, of each of the
following conditions:
(i) The representations of MCI set forth in
this Agreement shall have been true and correct in all material respects when
made and (unless made as of a specified date) shall be true and correct in all
material respects as if made as of the Final Closing Date;
(ii) MCI shall have performed in all
material respects its agreements contained in this Agreement required to be
performed at or prior to the Final Closing Date;
(iii) GCI shall have received a certificate
of an officer of MCI, dated as of the Final Closing Date, certifying as to the
fulfillment of the matters contained in paragraphs (i) and (ii) of this Section
8 b); and
(iv) GCI shall have received from MCI the
amount of $13,000,000.00 by wire transfer of immediately available funds.
c) Conditions to Obligations of MCI. The obligations
of MCI to consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or before the Final Closing Date, of each of the
following conditions:
(i) The representations of GCI set forth in
this Agreement shall have been true and correct in all material respects when
made and (unless made as of a specified date) shall be true and correct in all
material respects as if made as of the Final Closing Date;
REGISTRATION STATEMENT
Page II-544
(ii) GCI shall have performed in all
material respects its agreements contained in this Agreement required to be
performed at or prior to the Final Closing Date;
(iii) All applicable consents and approvals
(including those of the FCC and any applicable Public Utility Commission) which
are necessary to consummate the transactions contemplated by this Agreement,
shall have been obtained;
(iv) MCI shall have received from GCI
certificates representing the Shares, registered in MCI's name and with all the
necessary documentary stock transfer stamps annexed thereto;
(v) MCI shall have received a certified copy
of GCI's articles of incorporation and by-laws, as amended as of the Final
Closing Date and a certificate of good standing for GCI from its jurisdiction of
incorporation dated as of a date on or after January 1, 1996;
(vi) MCI shall have received (a) the
Registration Rights Agreement attached as Exhibit B executed by a duly
authorized officer of GCI dated as of the Final Closing Date, and (b) the Voting
Agreement attached as Exhibit C executed by a duly authorized officer of all the
parties thereto dated as of the Final Closing Date;
(vii) MCI shall have received an opinion of
Xxxxxx, Xxxxxx, Xxxxxx, Xxxxxxx & Xxxxxxx, P.C., counsel to GCI, dated as of the
Final Closing Date in the form of Exhibit D;
(viii) MCI shall have received a certificate
of the Secretary or Assistant Secretary of GCI, dated as of the Final Closing
Date, certifying that attached thereto is a complete copy of a resolution duly
adopted by the board of directors of GCI authorizing and approving the execution
of this Agreement and the consummation of the transactions contemplated by this
Agreement;
(ix) MCI shall have received a certificate
of an officer of GCI, dated as of the Final Closing Date, certifying as to the
fulfillment of the matters contained in paragraphs (i) through (iii) of this
Section 8 c);
(x) the Prime SPA shall not have been
amended, modified or altered without the prior written consent of MCI; and
(xi) GCI shall not have issued, in the
aggregate, more than 18,000,000 shares of its Class A Common Stock in connection
with the Cable Acquisitions and the price per share for any share of Class A
Common Stock issued in connection therewith shall have been at least $6.50.
REGISTRATION STATEMENT
Page II-545
9. Termination. This Agreement and the transactions contemplated hereby
may be terminated at any time prior to the Closing Date:
a) by the mutual written consent of MCI and GCI;
b) by MCI and GCI if either is prohibited by an order
or injunction (other than an injunction on a temporary or preliminary basis) of
a court of competent jurisdiction from consummating the transactions
contemplated by this Agreement and all means of appeal and all appeals from such
order or injunction have been finally exhausted;
c) by MCI or GCI if the Final Closing Date shall not
have occurred on or before December 31, 1996; provided, however, that the right
to terminate under this paragraph c) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of the
failure of the Closing to occur on or before such date.
In the event of termination, no party hereto shall have any liability or further
obligation to the other party hereto, except that nothing herein will relieve
any party from any breach of this Agreement.
10. Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants contained herein shall survive the
execution of this Agreement and the consummation of the transactions
contemplated hereby.
11. Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. MCI shall have the right to assign to any direct or indirect subsidiary
of MCI or its parent, MCI Communications Corporation, any and all rights and
obligations of MCI under this Agreement.
12. Notices. Any notice or other communication provided for herein or
given hereunder to a party hereto shall be in writing and shall be given by
personal delivery, by telex, telecopier or by mail (registered or certified
mail, postage prepaid, return receipt requested) to the respective parties as
follows:
If to GCI:
General Communication, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxx 00000
Attn: Chief Financial Officer
REGISTRATION STATEMENT
Page II-546
If to MCI:
MCI Telecommunications Corporation
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: Vice President Corporate Development
With a copy to:
MCI Telecommunications Corporation
0000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: Office of the General Counsel (0596/003)
or to such other address with respect to a party as such party shall notify the
other in writing. Any such notice shall be deemed given upon receipt.
13. Amendment; Waiver. This Agreement may not be amended except by a
writing duly signed by the parties. No party may waive any of the terms or
conditions of this Agreement except by a duly signed writing referring to the
specific provision to be waived.
14. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Alaska, without regard
to the conflict of laws and rules thereof.
15. Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement with respect to the
transactions contemplated hereby, and supersedes all other and prior agreements
and understandings, both written and oral, among the parties to this Agreement.
16. Expenses. Each party hereto shall pay its own expenses incident to
preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
17. Captions. The Section and Paragraph captions herein are for
convenience only, do not constitute part of this Agreement, and shall not be
deemed to limit or otherwise affect any of the provisions hereof.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
REGISTRATION STATEMENT
Page II-547
19. Cable Acquisitions. GCI agrees that it will not, at any time,
issue, in the aggregate, more than 18,000,000 shares of its Class A Common Stock
in connection with the Cable Acquisitions and the price per share for any share
of Class A Common Stock issued in connection therewith shall have been at least
$6.50.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the day and year first written above.
GENERAL COMMUNICATION, INC.
By /s/
Xxxx X. Xxxxxx
Its: Senior Vice President
MCI TELECOMMUNICATIONS
CORPORATION
By /s/
Name:
Its:
REGISTRATION STATEMENT
Page II-548
ATTACHMENT
Table of Contents
I..................................................................................................................
Exhibit A - Capital Stock...............................................................550
Exhibit B - Registration Rights Agreement...............................................551
Exhibit C - Voting Agreement............................................................564
Exhibit D - Opinion of Xxxxxx Xxxxxx Xxxxxx Xxxxxxx
& Xxxxxxx, P.C.........................................................571
II.................................................................................................................
Schedule 4(c)(i) - Options, Warrants, Rights
or Convertible Securities..........................................576
Schedule 4(c)(ii) - Voting Agreements...................................................577
Schedule 4(c)(iii) - Ownership and Outstanding Capital Stock
of each GCI subsidiary............................................578
Schedule 4(h) - Pending Litigation..................................................579
Schedule 4(l) - Equity Agreements...................................................580
Schedule 4(m)(ii) - Collective Bargaining Requests......................................581
Schedule 4(p) - Asset Liens.........................................................582
Schedule 4(q) - Material Contracts..................................................583
Schedule 4(q)(i) - Existing Defaults...................................................585
Schedule 4(r)(v) - Environmental Notices...............................................586
Schedule 4(s) - Tax Audits..........................................................587
III................................................................................................................
Section 8(b)(iii) - MCI's Officer's Certificate.........................................588
Section 8((c)(i) - GCI's Officer's Certificate.........................................589
Section 8(c)(ii) - GCI's Officer's Certificate.........................................589
Section 8(c)(iii) - GCI's Officer's Certificate.........................................589
Section 8(c)(viii) - GCI's Officer's Certificate.........................................589
Section 8(c)(ix) - GCI's Officer's Certificate.........................................589
REGISTRATION STATEMENT
Page II-549
EXHIBIT A
Capital Stock
As of the date hereof and after the issuance of the Shares as
contemplated by this Agreement, the authorized and issued and outstanding
capital stock of GCI will be as follows, except for such changes resulting from
the exercise of stock options, warrants and common stock contemplated herein:
================================================================================
Authorized Shares
-----------------
Class A Common 50,000,000
Class B Common 10,000,000
Preferred 1,000,000
================================================================================
Issued Shares After Issuance After Issuance of
As of 07/15/96 of MCI Shares Prime/Rock/Xxxxx Shares
Class A Common 19,768,1501 (1) 21,768,1501 38,029,1501
Class B Common 4,159,657 4,159,657 4,159,657
Preferred -0- -0- -0-
------------------------
(1) Includes 120,111 treasury shares.
REGISTRATION STATEMENT
Page II-550
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement"), dated as of this
day of , 1996, is between General Communication, Inc., an Alaska
corporation ("GCI"), and MCI Telecommunications Corporation, a Delaware
corporation ("MCI").
RECITALS
A. MCI has acquired Two Million (2,000,000) shares of GCI's
Class A Common Stock, no par value. All such shares of GCI's Class A Common
Stock which MCI now owns and any securities issued in exchange for or in respect
of such stock, whether pursuant to a stock dividend, stock split, stock
reclassification or otherwise are collectively referred to in this Agreement as
the "Registrable Shares."
B. GCI desires to grant registration rights to MCI and any
successor or assign of MCI as the holder of all or any portion of the
Registrable Shares. MCI and such successors and assigns are referred to in this
Agreement as the "Holders," or, individually as a "Holder."
AGREEMENT
In consideration of the premises and the mutual covenants
contained in this Agreement, the parties agree as follows:
1. Demand Registration.
(a) Following the expiration of a one hundred eighty
(180) day "stand still period" after the date hereof and then only if required
to permit resales of the Registrable Shares by Holders, Holders shall at any
time and from time to time, have the right to require registration under the
Securities Act of 1933, as amended ("Securities Act"), of all or any portion of
the Registrable Shares on the terms and subject to the conditions set forth in
this Agreement.
(b) Upon receipt by GCI of a Holder's written request
for registration, GCI shall (i) promptly notify each other Holder in writing of
its receipt of such initial written request for registration, and (ii) as soon
as is practicable, but in no event more than sixty (60) days after receipt of
such written request, file with the Securities and Exchange Commission
("Commission"), and use its best efforts to cause to become effective, a
registration statement under the Securities Act ("Registration Statement") which
shall cover the Registrable Shares specified in the initial written request and
any other written request from any other Holder received by GCI within twenty
(20) days of GCI giving the notice specified in clause (i) hereof.
REGISTRATION STATEMENT
Page II-551
(c) If so requested by any Holder requesting
participation in a public offering or distribution of Registrable Shares
pursuant to this Section 1 or Section 2 of this Agreement ("Selling Holder"),
the Registration Statement shall provide for delayed or continuous offering of
the Registrable Shares pursuant to Rule 415 promulgated under the Securities Act
or any similar rule then in effect ("Shelf Offering"). If so requested by the
Selling Holders, the public offering or distribution of Registrable Shares under
this Agreement shall be pursuant to a firm commitment underwriting, the managing
underwriter of which shall be an investment banking firm selected and engaged by
the Selling Holders and approved by GCI, which approval shall not be
unreasonably withheld. GCI shall enter into the same underwriting agreement as
shall the Selling Holders, containing representations, warranties and agreements
not substantially different from those customarily made by an issuer in
underwriting agreements with respect to secondary distributions. GCI, as a
condition to fulfilling its obligations under this Agreement, may require the
underwriters to enter into an agreement in customary form indemnifying GCI
against any Losses (as defined in Section 6) that arise out of or are based upon
an untrue statement or an alleged untrue statement or omission or alleged
omission in the Disclosure Documents (as defined in Section 6) made in reliance
upon and in conformity with written information furnished to GCI by the
underwriters specifically for use in the preparation thereof.
(d) Each Selling Holder may, before such a
Registration Statement becomes effective, withdraw its Registrable Shares from
sale, should the terms of sale not be reasonably satisfactory to such Selling
Holder; if all Selling Holders who are participating in such registration so
withdraw, however, such registration shall be deemed to have occurred for the
purposes of Section 4 of this Agreement, unless such Selling Holders pay (pro
rata, in proportion to the number of Registrable Shares requested to be
included) within twenty (20) days after any such withdrawal, all of GCI's
out-of-pocket expenses incurred in connection with such registration.
(e) Notwithstanding the foregoing, GCI shall not be
obligated to effect a registration pursuant to this Section 1 during the period
starting with the date sixty (60) days prior to GCI's estimated date of filing
of, and ending on a date six (6) months following the effective date of, a
registration statement pertaining to an underwritten public offering of equity
securities for GCI's account, provided that (i) GCI is actively employing in
good faith all reasonable efforts to cause such registration statement to become
effective and that GCI's estimate of the date of filing on such registration
statement is made in good faith, and (ii) GCI shall furnish to the Holders a
certificate signed by GCI's President stating that in the Board of Directors'
good-faith judgment, it would be seriously detrimental to GCI or its
shareholders for a Registration Statement to be filed in the near future; and in
such event, GCI's obligations to file a Registration Statement shall be deferred
for a period not to exceed six (6) months.
2. Incidental Registration. Each time that GCI proposes to
register any of its equity securities under the Securities Act (other than a
registration effected
REGISTRATION STATEMENT
Page II-552
solely to implement an employee benefit or stock option plan or to sell shares
obtained under an employee benefit or stock option plan or a transaction to
which Rule 145 or any other similar rule of the Commission under the Securities
Act is applicable), GCI will give written notice to the Holders of its intention
to do so. Each of the Selling Holders may give GCI a written request to register
all or some of its Registrable Shares in the registration described in GCI's
written notice as set forth in the foregoing sentence, provided that such
written request is given within twenty (20) days after receipt of any such GCI
notice. Such request will state (i) the amount of Registrable Shares to be
disposed of and the intended method of disposition of such Registrable Shares,
and (ii) any other information GCI reasonably requests to properly effect the
registration of such Registrable Shares. Upon receipt of such request, GCI will
use its best efforts promptly to cause all such Registrable Shares intended to
be disposed of to be registered under the Securities Act so as to permit their
sale or other disposition (in accordance with the intended methods set forth in
the request for registration), unless the sale is a firmly underwritten public
offering and GCI determines reasonably and in good faith in writing that the
inclusion of such securities would adversely affect the offering or materially
increase the offering's costs. In which case such securities and all other
securities to be registered, other than those to be offered for GCI's account,
shall be excluded to the extent the underwriter determines. The total number of
secondary shares included in such registration shall be shared pro rata by all
security holders having contractual registration rights based upon the amount of
GCI's securities requested by such security holders to be sold thereunder. GCI's
obligations under this Section 2 shall apply to a registration to be effected
for securities to be sold for GCI's account as well as a registration statement
which includes securities to be offered for the account of other holders of GCI
equity securities having contractual registration rights; however, the
registration rights granted pursuant to the provisions of this Section 2 are
subject to the registration rights granted by GCI pursuant to (a) the
Registration Rights Agreement dated as of January 18, 1991, between GCI and
WestMarc Communications, Inc., (b) the Registration Rights Agreement dated as of
March 31, 1993, between GCI and MCI, (c) the Registration Rights Agreement of
even date between GCI and the owners of Prime Cable of Alaska, L.P., (d) the
Registration Rights Agreement of even date between GCI and the owners of Alaskan
Cable Network, Inc., and (e) the Registration Rights Agreement of even date
between GCI and the owners of Alaska Cablevision, Inc., the effect of which
agreements is that all parties hereto and thereto have pro rata piggy-back
registration rights.
In connection with a registration to be effected pursuant to this
Section 2, the Selling Holders shall enter into the same underwriting agreement
as shall GCI and the other selling security holders, if any, provided that such
underwriting agreement contains representations, warranties and agreements on
the part of the Selling Holders that are not substantially different from those
customarily made by selling-security holders in underwriting agreements with
respect to secondary distributions.
REGISTRATION STATEMENT
Page II-553
If, at any time after giving notice of GCI's intention to register any
of its securities under this Section 2 and prior to the effective date of the
registration statement filed in connection with such registration, GCI shall
determine for any reason not to register such securities, GCI may, at its
election, give notice of such determination to Holder and thereupon will be
relieved of its obligation to register the Registrable Shares in connection with
such registration.
3. Expenses of Registration. GCI shall pay all costs and
expenses incident to GCI's performance of or compliance with this Agreement,
including, without limitation, all expenses incurred in connection with the
registration of the Registrable Shares, fees and expenses of compliance with
Securities or blue sky laws, printing expenses, messenger, delivery and shipping
expenses and fees and expenses of counsel for GCI and for certified public
accountants and underwriting expenses (but not fees) except that each Selling
Holder shall pay all fees and disbursements of such Selling Holder's own
attorneys and accountants, and all transfer taxes and brokerage and
underwriters' discounts and commissions directly attributable to the Registrable
Shares being offered and sold by such Selling Holder.
4. Limitations on Registration Rights. Notwithstanding the
provisions of Section 1 of this Agreement, GCI shall not be required to effect
any registration under that Section if (i) the request(s) for registration cover
an aggregate number of Registrable Shares having an aggregate Market Value of
less than One Million Five Hundred Thousand Dollars ($1,500,000.00) as of the
date of the last of such requests, (ii) GCI has previously filed two (2)
registration statements under the Securities Act pursuant to Section 1, (iii)
GCI, in order to comply with such request, would be required to (A) undergo a
special interim audit or (B) prepare and file with the Commission, sooner than
would otherwise be required, pro forma or other financial statements relating to
any proposed transaction, or (iv) if, in the opinion of counsel to GCI, the form
of which opinion of counsel shall be acceptable to the Holders, a registration
is not required in order to permit resale by Holders. The first demand
registration under this Agreement may be requested only by the Holders of a
minimum of thirty percent (30%) of the Registrable Shares. "Market Value" as
used in this Agreement shall mean, as to each class of Registrable Shares at any
date, the average of the daily closing prices for such class of Registrable
Shares, for the ten (10) consecutive trading days before the day in question.
The closing price for shares of such class for each day shall be the last
reported sale price regular way, or, in case no such reported sale takes place
on such day, the average of the reported closing bid and asked prices regular
way, in either case on the composite tape, or if the shares of such class are
not quoted on the composite tape, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as amended
("Exchange Act"), on which shares of such class are listed or admitted to
trading, or if they are not listed or admitted to trading on any such exchange,
the closing sale price (or the average of the quoted closing bid and asked price
if no sale is reported) as reported by the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or any comparable system, or if
the shares
REGISTRATION STATEMENT
Page II-554
of such class are not quoted on NASDAQ or any comparable system, the average of
the closing bid and asked prices as furnished by any market maker in the
securities of such class who is a member of the National Association of
Securities Dealers, Inc., or in the absence of such closing bid and asked price,
as determined by such other method as GCI's Board of Directors shall from time
to time deem to be fair.
5. Obligations with Respect to Registration.
(a) If and whenever GCI is obligated by the
provisions of this Agreement to effect the registration of any Registrable
Shares under the Securities Act, GCI shall promptly:
(i) Prepare and file with the Commission a
registration statement with respect to such Registrable Shares and use
reasonable commercial efforts to cause such registration statement to become
effective, provided that before filing a registration statement, or prospectus
or any amendment or supplement thereto, GCI will furnish to counsel selected by
the holders of a majority of the Registrable Shares covered by such registration
statement copies of all such statements proposed to be filed, which documents
shall be subject to the review of such counsel;
(ii) Prepare and file with the Commission
any amendments and supplements to the Registration Statement and to the
prospectus used in connection therewith as may be necessary to keep the
Registration Statement effective and to comply with the provisions of the
Securities Act and the rules and regulations promulgated thereunder with respect
to the disposition of all Registrable Shares covered by the Registration
Statement for the period required to effect the distribution of such Registrable
Shares, but in no event shall GCI be required to do so (i) in the case of a
Registration Statement filed pursuant to Section 1, for a period of more than
two hundred seventy (270) days following the effective date of the Registration
Statement and (ii) in the case of a Registration Statement filed pursuant to
Section 2, for a period exceeding the greater of (A) the period required to
effect the distribution of securities for GCI's account and (B) the period
during which GCI is required to keep such Registration Statement in effect for
the benefit of selling security holders other than the Selling Holders;
(iii) Notify the Selling Holders and their
underwriter, and confirm such advice in writing, (A) when a Registration
Statement becomes effective, (B) when any post-effective amendment to a
Registration Statement becomes effective, and (C) of any request by the
Commission for additional information or for any amendment of or supplement to a
Registration Statement or any prospectus relating thereto;
(iv) Furnish at GCI's expense to the Selling
Holders such number of copies of a preliminary, final, supplemental or amended
prospectus, in conformity with the requirements of the Securities Act and the
rules and regulations
REGISTRATION STATEMENT
Page II-555
promulgated thereunder, as may reasonably be required in order to facilitate the
disposition of the Registrable Shares covered by a Registration Statement, but
only while GCI is required under the provisions hereof to cause a Registration
Statement to remain effective; and
(v) Register or qualify at GCI's expense the
Registrable Shares covered by a Registration Statement under such other
securities or blue sky laws of such jurisdictions in the United States as the
Selling Holders shall reasonably request, and do any and all other acts and
things which may be necessary to enable each Selling Holder whose Registrable
Shares are covered by such Registration Statement to consummate the disposition
in such jurisdictions of such Registrable Shares; provided, however, that GCI
shall in no event be required to qualify to do business as a foreign corporation
or as a dealer in any jurisdiction where it is not so qualified, to amend its
articles of incorporation or to change the composition of its assets at the time
to conform with the securities or blue sky laws of such jurisdiction, to take
any action that would subject it to service of process in suits other than those
arising out of the offer and sale of the Registrable Shares covered by the
Registration Statement or to subject itself to taxation in any jurisdiction
where it has not therefore done so.
(vi) Notify each Holder of Registrable
Shares, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein not misleading, and, at the request of any such seller,
GCI will prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to purchasers of Registrable Shares, such prospectus will
not contain an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading;
(vii) Cause all such Registrable Shares to
be listed on each securities exchange on which similar securities issued by GCI
are then listed and to be qualified for trading on each system on which similar
securities issued by GCI are from time to time qualified;
(viii) Provide a transfer agent and
registrar for all such Registrable Shares not later than the effective date of
such registration statement and thereafter maintain such a transfer agent and
registrar;
(ix) Enter into such customary agreements
(including underwriting agreements in customary form) and take all such other
actions as the holders of a majority of the shares of Registrable Shares being
sold or the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Shares;
REGISTRATION STATEMENT
Page II-556
(x) Make available for inspection by any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
underwriter, all financial and other records, pertinent corporate documents and
properties of GCI, and cause GCI's officers, directors, employees and
independent accountants to supply all information reasonably requested by any
such underwriter, attorney, accountant or agent in connection with such
registration statement;
(xi) Otherwise use reasonable commercial
efforts to comply with all applicable rules and regulations of the Commission,
and make available to its security holders, as soon as reasonably practicable,
all earning statements as and when filed with the Commission, which earnings
statements shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder;
(xii) permit any Holder of Registrable
Shares which might be deemed, in the sole and exclusive judgment of such Holder,
to be an underwriter or a controlling person of GCI, to participate in the
preparation of such registration or comparable statement and to require the
insertion therein of material furnished to GCI in writing, which in the
reasonable judgment of such holder and its counsel should be included; and
(xiii) In the event of the issuance of any
stop order suspending the effectiveness of a registration statement, or of any
order suspending or preventing the use of any related prospectus or suspending
the qualification of any Registrable Shares included in such registration
statement for sale in any jurisdiction, GCI will use reasonable commercial
efforts to promptly obtain the withdrawal of such order.
(b) GCI's obligations under this Agreement with
respect to the Selling Holder shall be conditioned upon the Selling Holder's
compliance with the following:
(i) Such Selling Holder shall cooperate with
GCI in connection with the preparation of the Registration Statement, and for so
long as GCI is obligated to file and keep effective the Registration Statement,
shall provide to GCI, in writing, for use in the Registration Statement, all
such information regarding the Selling Holder and its plan of distribution of
the Registrable Shares as may be necessary to enable GCI to prepare the
Registration Statement and prospectus covering the Registrable Shares, to
maintain the currency and effectiveness thereof and otherwise to comply with all
applicable requirements of law in connection therewith;
(ii) During such time as the Selling Holder
may be engaged in a distribution of the Registration Shares, such Selling Holder
shall comply with Rules 10b-2, 10b-6 and 10b-7 promulgated under the Exchange
Act and pursuant thereto it
REGISTRATION STATEMENT
Page II-557
shall, among other things: (A) not engage in any stabilization activity in
connection with GCI's securities in contravention of such rules; (B) distribute
the Registrable Shares solely in the manner described in the Registration
Statement; (C) cause to be furnished to each broker through whom the Registrable
Shares may be offered, or to the offeree if an offer is not made through a
broker, such copies of the prospectus covering the Registrable Shares and any
amendment or supplement thereto and documents incorporated by reference therein
as may be required by law; and (D) not bid for or purchase any GCI securities or
attempt to induce any person to purchase any GCI securities other than as
permitted under the Exchange Act;
(iii) If the Registration Statement provides
for a Shelf Offering, then at least ten (10) business days prior to any
distribution of the Registrable Shares, any Selling Holder who is an "affiliated
purchaser" (as defined in Rule 10b-6 promulgated under the Exchange Act) of GCI
shall advise GCI in writing of the date on which the distribution by such
Selling Holder will commence, the number of the Registrable Shares to be sold
and the manner of sale. Such Selling Holder also shall inform GCI when each
distribution of such Registrable Shares is over; and
(iv) GCI shall not grant any conflicting
registration rights to other holders of its shares, to the extent that such
rights would prevent Holders from timely exercising their rights hereunder.
6. Indemnification.
(a) By GCI. In the event of any registration under
the Securities Act of any Registrable Shares pursuant to this Agreement, GCI
shall indemnify and hold harmless any Selling Holder, any underwriter of such
Selling Holder, each officer, director, employee or agent of such Selling
Holder, and each other person, if any, who controls such Selling Holder or
underwriter within the meaning of Section 15 of the Securities Act, against any
losses, costs, claims, damages or liabilities, joint or several (or actions in
respect thereof) ("Losses"), incurred by or to which each such indemnified party
may become subject, under the Securities Act or otherwise, but only to the
extent such Losses arise out of or based upon (i) any untrue statement or
alleged untrue statement of any material fact contained, on the effective date
thereof, in any Registration Statement under which such Registrable Shares were
registered under the Securities Act, in any preliminary prospectus (if used
prior to the effective date of such Registration Statement) or in any final
prospectus or in any post effective amendment or supplement thereto (if used
during the period GCI is required to keep the Registration Statement effective)
("Disclosure Documents"), (ii) any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements made therein not misleading or (iii) any violation of any federal or
state securities laws or rules or regulations thereunder committed by GCI in
connection with the performance of its obligations under this Agreement; and GCI
will reimburse each such indemnified party for all legal or other expenses
reasonably incurred by such party
REGISTRATION STATEMENT
Page II-558
in connection with investigating or defending any such claims, including,
subject to such indemnified party's compliance with the provisions of the last
sentence of subsection (c) of this Section 6, any amounts paid in settlement of
any litigation, commenced or threatened, so long as GCI's counsel agrees with
the reasonableness of such settlement; provided, however, that GCI shall not be
liable to an indemnified party in any such case to the extent that any such
Losses arise out of or are based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission (x) made in any such Disclosure
Documents in reliance upon and in conformity with written information furnished
to GCI by or on behalf of such indemnified party specifically for use in the
preparation thereof, (y) made in any preliminary or summary prospectus if a copy
of the final prospectus was not delivered to the person alleging any loss,
claim, damage or liability for which Losses arise at or prior to the written
confirmation of the sale of such Registrable Shares to such person and the
untrue statement or omission concerned had been corrected in such final
prospectus or (z) made in any prospectus used by such indemnified party if a
court of competent jurisdiction finally determines that at the time of such use
such indemnified party had actual knowledge of such untrue statement or omission
or (ii) the delivery by an indemnified party of any prospectus after such time
as GCI has advised such indemnified party in writing that the filing of a
post-effective amendment or supplement thereto is required, except the
prospectus as so amended or supplemented, or the delivery of any prospectus
after such time as GCI's obligation to keep the same current and effective has
expired.
(b) By the Selling Holders. In the event of any
registration under the Securities Act of any Registrable Shares pursuant to this
Agreement, each Selling Holder shall, and shall cause any underwriter retained
by it who participates in the offering to agree to, indemnify and hold harmless
GCI, each of its directors, each of its officers who have signed the
Registration Statement and each other person, if any, who controls GCI within
the meaning of Section 15 of the Securities Act, against any Losses, joint or
several, incurred by or to which such indemnified party may become subject under
the Securities Act or otherwise, but only to the extent such Losses arise out of
or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any of the Disclosure Documents or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements made therein not misleading, if the
statement or omission was in reliance upon and in conformity with written
information furnished to GCI by such indemnifying party specifically for use in
the preparation thereof, (ii) the delivery by such indemnifying party of any
prospectus after such time as GCI has advised such indemnifying party in writing
that the filing of a post-effective amendment or supplement thereto is required,
except the prospectus as so amended or supplemented, or after such time as the
obligation of GCI to keep the Registration Statement effective and current has
expired or (iii) any violation by such indemnifying party of its obligations
under Section 5(b) of this Agreement or any information given or representation
made by such indemnifying party in connection with the sale of the Selling
Holder's Registrable Shares which is not contained in and not in conformity with
the prospectus (as amended or
REGISTRATION STATEMENT
Page II-559
supplemented at the time of the giving of such information or making of such
representation); and each Selling Holder shall, and shall cause any underwriter
retained by it who participates in the offering to agree to, reimburse each such
indemnified party for all legal or other expenses reasonably incurred by such
party in connection with investigating or defending any such claim, including,
subject to such indemnified party's compliance with the provisions of the last
sentence of subsection (c) of this Section 6, any amounts paid in settlement of
any litigation, commenced or threatened; provided, however, that the indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action arising pursuant to a
registration if such settlement is effected without the consent of Selling
Holder; and provided further, that no Selling Holder shall be required to
undertake liability under this Section 6(b) for any amounts in excess of the
proceeds to be received by such Selling Holder from the sale of its securities
pursuant to such registration, as reduced by any damages or other amounts that
such Selling Holder was otherwise required to pay hereunder.
(c) Third Party Claims. Promptly after the receipt by
any party hereto of notice of any claim, action, suit or proceeding by any
person who is not a party to this Agreement (collectively, an "Action") which is
subject to indemnification hereunder, such party ("Indemnified Party") shall
give reasonable written notice to the party from whom indemnification is claimed
("Indemnifying Party"). The Indemnifying Party shall be entitled, at the
Indemnifying Party's sole expense and liability, to exercise full control of the
defense, compromise or settlement of any such Action unless the Indemnifying
Party, within a reasonable time after the giving of such notice by the
Indemnified Party, shall (i) admit in writing to the Indemnified Party, the
Indemnifying Party's liability to the Indemnified Party for such Action under
the terms of this Section 6, (ii) notify the Indemnified Party in writing of the
Indemnifying Party's intention to assume the defense thereof and (iii) retain
legal counsel reasonably satisfactory to the Indemnified Party to conduct the
defense of such Action. The Indemnified Party and the Indemnifying Party shall
cooperate with the party assuming the defense, compromise or settlement of any
such Action in accordance herewith in any manner that such party reasonably may
request. If the Indemnifying Party so assumes the defense of any such Action,
the Indemnified Party shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the Indemnified Party's sole
expense unless (i) the Indemnifying Party has agreed to pay such fees and
expenses, (ii) any relief other than the payment of money damages is sought
against the Indemnified Party or (iii) the Indemnified Party shall have been
advised by its counsel that there may be one or more legal defenses available to
it which are different from or additional to those available to the Indemnifying
Party, and in any such case the fees and expenses of such separate counsel shall
be borne by the Indemnifying Party. No Indemnifying Party shall settle or
compromise any such Action in which any relief other than the payment of money
damages is sought against any Indemnified Party unless the Indemnified Party
consents in writing to such compromise or settlement, which consent shall not be
unreasonably
REGISTRATION STATEMENT
Page II-560
withheld. No Indemnified Party shall settle or compromise any such Action for
which it is entitled to indemnification hereunder without the Indemnifying
Party's prior written consent, unless the Indemnifying Party shall have failed,
after reasonable notice thereof, to undertake control of such Action in the
manner provided above in this Section 6.
(d) Contribution. If the indemnification provided for
in subsections (a) or (b) of this Section 6 is unavailable to or insufficient to
hold the Indemnified Party harmless under subsections (a) or (b) above in
respect of any Losses referred to therein for any reason other than as specified
therein, then the Indemnified Party shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses in such proportion
as is appropriate to reflect the relative fault of the Indemnified Party on the
one hand and such Indemnified Party on the other in connection with the
statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations; provided, however, that the contribution
obligations contained in this Section 6(d) shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action arising pursuant to a
registration if such settlement is effected without the consent of Selling
Holder; and provided further, that no Selling Holder shall be required to make
any contributions under this Section 6(d) for any amounts in excess of the
proceeds to be received by such Selling Holder from the sale of its securities
pursuant to such registration, as reduced by any damages or other amounts that
such Selling Holder was otherwise required to pay hereunder. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by (or omitted to be
supplied by) GCI or the Selling Holder (or underwriter) and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by an indemnified
party as a result of the Losses referred to above in this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
7. Miscellaneous.
(a) Notices. All notices, requests, demands, waivers
and other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered
personally or mailed, certified or registered mail with postage prepaid, or sent
by telecopier, as follows:
REGISTRATION STATEMENT
Page II-561
(i) if to GCI at:
General Communication, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxx 00000
ATTN: Chief Financial Officer
Telecopy: (000) 000-0000
(ii) if to MCI, at:
MCI Telecommunications Corporation
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
ATTN: Senior Vice President
and Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
MCI Telecommunications Corporation
0000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
ATTN: Office of the General Counsel
(iii) if to any Holder other than MCI, at
the address provided to GCI (and if
none provided, to MCI)
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of delivery or
on the third business day after the mailing thereof, except that any notice of a
change of address shall be effective only upon actual receipt thereof.
(b) Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto and supersedes all prior agreements
and understandings, oral and written, between the parties hereto with respect to
the subject matter hereof.
(c) Binding Effect; Benefit. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. Nothing in this Agreement, expressed or
implied is intended to confer on any person other than the parties hereto or
their respective successors and assigns (including, in the case of MCI, any
successor or assign of MCI as the holder of
REGISTRATION STATEMENT
Page II-562
Registrable Shares), any rights, remedies, obligations or liabilities under or
by reason of this Agreement, other than rights conferred upon indemnified
persons under Section 6.
(d) Amendment and Modification. This Agreement may be
amended or modified only by an instrument in writing signed by or on behalf of
each party and any other person then a Holder. Any term or provision of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof.
(e) Section Headings. The section headings contained
in this Agreement are inserted for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
(g) Applicable Law. This Agreement and the legal
relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of Alaska, without regard to the conflict
of laws and rules thereof.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GENERAL COMMUNICATION, INC.
By
Xxxx X. Xxxxxx, Senior Vice President
MCI TELECOMMUNICATIONS CORPORATION
By
Name:
Its
REGISTRATION STATEMENT
Page II-563
VOTING AGREEMENT
THIS VOTING AGREEMENT ("Agreement") is entered into effective on the
day of , 1996, by and between Prime II Management, L.P.
("Prime"), as the designated agent for the parties named on Annex 1 attached
hereto (collectively, "Prime Sellers"), MCI Telecommunications Corporation,
Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxx, and TCI GCI, Inc. (Prime, as designated agent
for the Prime Sellers, "Xxxxxx," "Xxxx," and "TCI GCI," respectively, or
individually, "Party" and collectively, "Parties"), all of whom are shareholders
of General Communication, Inc., an Alaska corporation ("GCI"), as identified in
this Agreement.
WHEREAS, the Parties are as of the date of this Agreement, the owners
of the amounts of GCI's Class A and Class B common stock as set forth in this
Agreement;
WHEREAS, the Parties desire to combine their votes as shareholders of
GCI in the election of certain positions of the Board of Directors ("Board") of
GCI and specifically to vote on certain issues as set forth in this Agreement;
WHEREAS, the Parties desire to establish their mutual rights and
obligations in regard to the Board and those certain issues to come before the
shareholders or before the Board;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained in this Agreement, the Parties agree as follows:
Section 1. Shares. The shares of GCI's Class A and Class B common stock
subject to this Agreement will consist of those shares held by each Party as set
forth in this Section 1 and any additional shares of GCI's voting stock acquired
in any manner by any one or more of the Parties ("Shares"):
(1) Prime - ( ) shares of Class A
common stock;
(2) MCI - 8,251,509 Shares of Class A common stock and
1,275,791 Shares of Class B common stock, which total
to an aggregate of 21,009,419 votes for MCI;
(3) Xxxxxx - 852,775 Shares of Class A common stock and
233,708 Shares of Class B common stock, which total
to an aggregate of 3,189,855 votes for Xxxxxx;
(4) Xxxx - 534,616 Shares of Class A common stock and
301,049 Shares of Class B common stock, which total
to an aggregate of 3,545,106 votes for Xxxx; and
REGISTRATION STATEMENT
Page II-564
(5) TCI GCI - 590,043 Shares of Class B common stock,
which totals to an aggregate of 5,900,430 votes for
TCI GCI.
Section 2. Voting. (a) All of the Shares will, during the term of this
Agreement, be voted as one block in the following matters:
(1) For so long as the full membership on the Board is at
least eight, the election to the Board of individuals
recommended by a Party ("Nominees"), with the
allocation of such recommendations to be in the
following amounts and by the following identified
Parties:
(A) For recommendations from MCI, two Nominees;
(B) For recommendations from Xxxxxx and Xxxx,
one Nominee from each;
(C) For recommendations from TCI GCI, two
Nominees; and
(D) For recommendations from Prime, two (2)
nominees, for so long as (i) the Prime
Sellers (and their distributees who agree in
writing to be bound by the terms of this
Agreement) collectively own at least ten
percent of the issued and then-outstanding
shares of GCI's Class A common stock, and
(ii) that certain Management Agreement
between Prime and GCI dated of even date
herewith ("Prime Management Agreement") is
in full force and effect. If either of these
conditions are not satisfied, then Prime
shall only be entitled to recommend one
Nominee. If neither of these conditions are
met, Prime shall not be entitled to
recommend any Nominee at that time;
(2) To the extent possible, to cause the full membership
of the Board to be maintained at not less than eight
members;
(3) Other matters to which the Parties unanimously agree.
(b) The Parties will abide by the classification by the Board
of a Nominee in accordance with the provisions for classification of the Board
as set forth in Article V(b) of GCI's Articles of Incorporation and Section 2(b)
of GCI's Article IV of Bylaws which classification was, as of the date of this
Agreement, for Nominees allocated to MCI as follows: one in Class I and one in
Class III, and for Nominees allocated to Prime as follows: one in Class II and
one in Class III, and for Nominees allocated to TCI GCI as follows: one in Class
II and one in Class III.
(c) The Parties understand that to insure the election of
their allocated Nominees, the Shares must constitute sufficient voting power to
cause those elections and that as new shares are issued by GCI through the
exercise of warrants and options,
REGISTRATION STATEMENT
Page II-565
acquisitions by employee benefit plans, or otherwise, the number of outstanding
shares of voting common stock will increase, making the percentage which the
Shares represent of the outstanding shares decrease.
(d) The Parties will take such action as is necessary to cause
the election to the Board of each Party's Nominee(s).
Section 3. Manner of Voting. Votes, for purposes of this Section 3,
will be as determined by written ballot upon each matter to be voted upon.
Should such a matter require shareholder action, e.g., election of Nominees to
the Board or should the Board choose to present the matter for shareholder
consent, approval or ratification, such balloting must take place so that the
results are received by GCI at its principal executive offices not less than 120
calendar days in advance of the date of GCI's proxy statement released to
security holders in connection with the previous year's annual meeting of
security holders.
Section 4. Limitation on Voting. Except as set forth in (a) of Section
2 of this Agreement, the Agreement will not extend to voting upon other
questions and matters on which shareholders will have the right to vote under
GCI's Articles of Incorporation, GCI's Bylaws of the Company, or the laws of the
State of Alaska.
Section 5. Term of Agreement. (a) The term of this Agreement will be
through the completion of the annual meeting of GCI's shareholders taking place
in June, 2001 or until there is only one Party to the Agreement, whichever
occurs first; provided that the Parties may extend the term of this Agreement
only upon unanimous vote and written amendment to this Agreement.
(b) Except as provided in (a) and (d) of this Section 5, a
Party (other than Prime) will be subject to this Agreement until the Party
disposes of more than 25% of the votes represented by the Party's holdings of
common stock which equates to the following (adjusted for stock splits) for each
party:
1. MCI - 5,252,355 votes;
2. Xxxxxx - 797,464 votes;
3. Xxxx - 886,277 votes; and
4. TCI GCI - 1,475,108 votes.
(c) Should one party dispose of an amount of its portion of
the Shares in excess of the limit as set forth in (b) of this Section 5, each
other Party will have the right to withdraw and terminate that Party's rights
and obligations under this Agreement by giving written notice to the other
Parties.
(d) Anything to the contrary in this Agreement notwithstanding
each Party shall remain a Party to this Agreement with respect to its obligation
to vote (a) for
REGISTRATION STATEMENT
Page II-566
Prime's Nominee(s) pursuant to Section 2(a)(1) above, and (b) to maintain at
least an eight (8) member Board pursuant to Section 2(a)(2) above only, for so
long as either (i) the Prime Sellers (and their distributees who agree in
writing to be bound by the terms of this Agreement) collectively own at least
ten percent (10%) of the issued and then-outstanding shares of GCI's Class A
common stock or (ii) the Prime Management Agreement is in effect. Upon each
request, Prime shall, within a reasonable period of time after delivery by GCI
to Prime of GCI's shareholders list showing the number of shares of GCI common
stock owned by each such shareholder, provide GCI with its certificate, in form
and substance reasonably satisfactory to GCI, confirming the Prime Sellers'
aggregate, then-current percentage ownership of GCI Class A common stock.
Section 6. Binding Effect. The Parties will, during the term of this
Agreement, be fully subject to its provisions. There will be no prohibition
against transfer or other assignment of Shares under the terms of this
Agreement. Should a Party transfer or otherwise assign Shares, and the new
holder of those Shares will not have any rights under, nor be subject to the
terms of, this Agreement, except that any assignee which is an affiliate or
subsidiary entity of a Party shall be bound by, and have the benefits of, this
Agreement; provided, however, that anything to the contrary in the foregoing
notwithstanding, any distributee of a Prime Seller that agrees in writing to be
bound by the terms of this Agreement will have rights under and be subject to
the terms of this Agreement.
Section 7. GCI's Agreement. GCI agrees (i) to submit the Nominees
selected pursuant to Section 2(a) above in its proxy materials delivered to
GCI's shareholders in connection with each election of GCI directors; and (ii)
not to take any action inconsistent with the agreements of the Parties set forth
herein.
Section 8. Notices. Notices required or otherwise given under this
Agreement will be given by hand delivery or certified mail to the following
addresses, unless otherwise changed by a Party with notice to the other Parties:
To Prime: Prime II Management, L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: President
With copies (which shall not constitute
notice) to:
Xxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxxx, P.C.
0000 Xxxxxxxx Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
ATTN: Xxxxxxx X. Xxxxxxxx
REGISTRATION STATEMENT
Page II-567
To MCI: MCI Telecommunications Corporation
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
ATTN: Xxxxxxx Maine, Chief Financial Officer
To Xxxxxx: Xxxxxx X. Xxxxxx
President and Chief Executive Officer
General Communication, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxx 00000
To Xxxx: Xxxxxx X. Xxxx
Vice Chairman
General Communication, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxx 00000
To TCI GCI : Xxxxx X. Xxxxxxx, President
TCI GCI, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Section 9. Performance. The Parties agree that damages are not an
adequate remedy for a breach of the terms of this Agreement. Should a Party be
in breach of a term of this Agreement, one or more of the other Parties may seek
the specific performance or injunction of that Party under the terms of this
Agreement by bringing an appropriate action in a court in Anchorage, Alaska.
Section 10. Governing Law. The terms of this Agreement will be governed
by and construed in accordance with the laws of the State of Alaska.
Section 11. Amendments. This Agreement constitutes the entire Agreement
between the Parties, and any amendment of it must be in writing and approved by
all Parties.
Section 12. Group. Prior to a Party filing a Schedule 13D or an
amendment to such a schedule pursuant to the Securities Exchange Act of 1934,
the Party will provide a written notice to each of the other Parties within five
days after the triggering event under that schedule and at least two days prior
to the filing of that schedule or amendment, as the case may be, and further
provide to any other Party any information or documentation reasonably requested
by that Party in this regard.
Section 13. Termination of Prior Agreement. This Agreement supersedes
and replaces in its entirety that certain Voting Agreement dated effective as of
March 31, 1993, by and between MCI, Xxxxxx, Xxxx and TCI GCI, as successor in
interest to WestMarc Communications, Inc.
REGISTRATION STATEMENT
Page II-568
Section 14. Severability. If a court of competent jurisdiction finds
any portion of this Agreement invalid or not enforceable, this Agreement shall
be automatically reformed to carry out the intent of the Parties as nearly as
possible without regard to the portion so invalidated. If this entire Agreement
is determined to be limited in duration by a court of competent jurisdiction,
the Parties agree to enter into a new Agreement which carries forward the intent
of the Parties upon such termination.
IN WITNESS WHEREOF, the Parties set their hands to this Agreement,
effective on the first date above written.
PRIME II MANAGEMENT, L.P.
By Prime II Management, Inc.
Its General Partner
By
Name:
Its:
MCI TELECOMMUNICATIONS CORPORATION
By
Name:
Its:
REGISTRATION STATEMENT
Page II-569
XXXXXX X. XXXXXX
XXXXXX X. XXXX
TCI GCI, INC.
By
Name:
Its:
GENERAL COMMUNICATION, INC.
By
Name:
Its:
REGISTRATION STATEMENT
Page II-570
EXHIBIT "D"
Form of Legal Opinion
[XXXXXX, XXXXXX LETTERHEAD]
, 1996
Anchorage
MCI Telecommunications Corporation
0000 00xx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
RE: Stock Purchase Agreement (the
"Agreement") dated as of ,
1996 between General Communication,
Inc. (the "Company") and MCI
Telecommunications Corporation (the
"Purchaser")
Our File: 6552-35
Ladies and Gentlemen:
This opinion letter is delivered to you pursuant to Paragraph 8(c)(vii)
of the Agreement. Capitalized terms used but not defined in this opinion letter
have the meanings given to them in the Agreement.
We have acted as counsel to the Company in connection with the
preparation and the execution and delivery of the Agreement and the related
documents. In that capacity we have examined the Agreement and the related
documents, including, but not limited to, the Registration Rights Agreement,
dated of even date herewith, between the
REGISTRATION STATEMENT
Page II-571
Company and the Purchaser and the Voting Agreement, dated of even date herewith,
by and between the Company, Prime II Management, L.P., as the designated agent,
the Purchaser, Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxx and TCI GCI, Inc. ("Related
Agreements") and such other documents and records, and we have made such other
investigations, as we have deemed necessary to enable us to state the opinions
expressed below. As to certain factual matters, we have relied upon the
representations of the Company and the Purchaser contained in the Agreement and
upon certificates of officers of the Company and the Purchaser.
In such examination, we have assumed the genuineness and authenticity
of all documents submitted to us as originals, the conformity with genuine and
authentic originals of all documents submitted to us as copies, the genuineness
of all signatures, the power and authority of each entity which may be a party
thereto (other than the Company and its subsidiaries), the authority of each
person signing for each such entity (other than the Company and its
subsidiaries), and the due organization, existence, qualification and
authorization to transact business of each such party (other than the Company
and its subsidiaries).
This opinion letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the American Bar
Association Section of Business Law (1991). As a consequence, it is subject to a
number of qualifications, exceptions, definitions, limitations on coverage and
other limitations, all as more particularly described in the Accord, and this
opinion letter should be read in conjunction therewith. The law covered by the
opinions expressed herein is limited to the federal law of the United States
(except as provided in the Accord) as currently in effect, and the law of the
State of Alaska (except as provided in the Accord) as currently in effect.
Furthermore, we express no opinion with respect to: (i) matters governed by the
Federal Communications Act of 1934, as amended, and the rules and regulations of
the Federal Communications Commission thereunder; or (ii) matters governed by
the Federal Aviation Act of 1958, as amended, and the rules and regulations of
the Federal Aviation Administration thereunder.
On the basis of our examination and subject to stated qualifications,
assumptions and limitations, in our opinion:
1. The Company and each of its subsidiaries are duly organized, validly
existing and in good standing under the laws of the State of Alaska, have all
requisite corporate power and authority to own their property as now owned and
carry on their business as now conducted and are qualified to do business and is
in good standing in each jurisdiction in which the conduct of their business or
the ownership of their property requires such qualification, except, in each
case, where the failure to qualify would not have a material adverse effect on
the financial condition or operations of the Company or its subsidiary.
REGISTRATION STATEMENT
Page II-572
2. The Shares are duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock having the rights, preferences, privileges
and restrictions set forth in the Articles of Incorporation, will not be subject
to any preemptive rights, and, to our knowledge, will be free and clear of any
security interest, lien, charge or encumbrance of any nature whatsoever.
3. The execution, delivery and performance by the Company of the
Agreement and the Related Agreements are within the corporate powers of the
Company, have been duly authorized by all necessary corporate action of the
Company, and do not and will not conflict with or constitute a breach of the
terms, conditions or provisions of, or constitute a default under, its Articles
of Incorporation and Bylaws or any material contract, undertaking, indenture or
other agreement or instrument by which the Company is bound or to which it or
any of its assets is subject.
4. The Company is not required, in connection with the execution,
delivery, and performance of the Agreement and the Related Agreements to give
any notice to or obtain any consent from any lender pursuant to any agreement or
instrument for borrowed money of which we have knowledge and to which the
Company is a party or by which the property of the Company is bound, except that
consent to the issuance of the Shares is required from NationsBank of Texas,
N.A. ("NationsBank"), as Administrative Lender under that certain Credit
Agreement dated as of April 26, 1996, between GCI Communication Corp. and
NationsBank.
5. Registration is not required under the Securities Act or the Alaska
Securities Act of 1959, as amended, for the issuance and delivery of the Shares.
In expressing the opinion set forth in the foregoing sentence, we have relied,
without any independent investigation, on the representations of Purchaser set
forth in Paragraphs 5 (c) and (d) of the Agreement and A.S. 45.55.900(b)(7). The
applicable exemption from the registration requirements under the Securities Act
is set forth in Section 4(2) of the Securities Act. We express no opinions as to
the necessity of registering the Shares under the laws of any state, other than
the State of Alaska, in connection with the transaction.
6. The Company is not required to make any filings with or give any
notice to, or obtain any consents, approvals, or authorizations from, any
governmental authority in connection with the execution, delivery and
performance by the company of the Agreement and the Related Agreements. The
execution, delivery, and performance by the Company of the Agreement and the
Related Agreements, do not and will not violate any law, rule, regulation or
order of any court or other governmental authority applicable to the Company.
7. The Agreement and the Related Agreements are the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforceability of those agreements
may be affected or
REGISTRATION STATEMENT
Page II-573
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by general principles of equity, whether applied in a proceeding in
equity or at law.
8. There is no pending, or to the best of our knowledge, threatened,
judicial, administrative or arbitral action, suit, proceeding or claim against
or investigation of the Company which questions the validity of the Agreement or
the Related Agreements.
The opinions expressed above are subject to and qualified in all
respects by the Accord and the following:
We have relied as to factual matters on the representations and
warranties of the Company set forth in the Agreement, certificates of officers
and other representatives of the Company and the following additional items, and
have made no other investigation or inquiry as to such factual matters:
(a) Certificates from the State of Alaska as to the existence
and good standing of the Company and its subsidiaries.
(b) Constituent Documents of the Company and its subsidiaries.
We have rendered the foregoing opinion as of the date hereof, and we do
not undertake to supplement our opinion with respect to the factual matters or
changes in the law which may hereafter occur.
You are hereby notified that (a) we do not consider you to be our
client in the matters to which this opinion letter relates, (b) neither the
Alaska Code of Professional Responsibility nor current case law clearly
articulates the circumstances under which an attorney may give a legal opinion
to a person other than the attorney's own client, (c) a court might determine
that it is improper to us to issue, and for you to rely upon, a legal opinion
issued by us when we have acted as counsel to the Company in connection with the
transactions, and (d) you may wish to obtain a legal opinion from your own legal
counsel as to the matters addressed in this opinion letter.
We express no opinions herein regarding the enforceability of
provisions involving choices or conflicts of law or of provisions of the
Registration Rights Agreement purporting to require indemnification of a party
for its own action or inaction, to the extent the action or inaction involves
negligence.
This opinion is given solely to you and may be relied upon by you only
in connection with the Agreement and may not be used or relied upon by you or
any other person or entity for any other purposes whatsoever. This opinion
letter may not be quoted, circulated or published, in whole or in part, or
furnished to or relied upon by any other party, or otherwise referred to, or be
filed with or furnished to any governmental
REGISTRATION STATEMENT
Page II-574
agency or other person or entity not involved in the Agreement without prior
written consent.
Sincerely,
XXXXXX, XXXXXX, XXXXXX,
XXXXXXX & XXXXXXX, P.C.
By:
Xxxxxx X. Xxxxx
REGISTRATION STATEMENT
Page II-575
SCHEDULE 4(c)(i)
GCI's Stock Option Plans, Warrants,
Rights or Convertible Securities
General Communication, Inc. Outstanding Options:
No. of Shares Exercise Price
------------- --------------
Shares reserved for exercise of
options issued pursuant to GCI's
Incentive Stock Option Plan 2,233,734 $.75 to $4.50 per share
Shares to be issued pursuant to
an option agreement with
Xxxxxxx X. Xxxxxx, an Officer 85,190 $.001 per share
Shares to be Issued pursuant to
an option agreement with
Xxxx X. Xxxxxx, an Officer 100,000 $.75 per share
Shares to be issued to MCI
Telecommunications Corporation 2,000,000 $6.50 per share
Shares to be issued to Prime entities 11,800,000 $6.50 per share
Shares to be issued to Xxxxx entities 2,923,077 $6.50 per share
Shares to be issuable to the Rock
entities pursuant to a $10,000,000
convertible note 1,538,462 $6.50 per share
NOTE: For additional details regarding GCI's Stock Option Plan, please refer to
the footnotes in GCI's financial statements in its SEC Forms 10K and 10Q.
REGISTRATION STATEMENT
Page II-576
SCHEDULE 4(c)(ii)
Voting Agreements
There are no voting trusts or other agreements or understandings to
which GCI or any subsidiary is a party, and to GCI's knowledge no other voting
trusts exist with respect to the voting of the capital stock of GCI or any of
its subsidiaries, except for (i) that Voting Agreement entered into as of March
31, 1993, by and between MCI Telecommunications Corporation ("MCI"), Xxxxxx X.
Xxxxxx ("Xxxxxx"), Xxxxxx X. Xxxx ("Xxxx"), and WestMarc Communications, Inc.,
all as shareholders of GCI; which is projected to be superseded and replaced in
its entirety by (ii) that Voting Agreement to be entered into as of ,
1996, by and between Prime II Management, L.P., Prime Venture I Holdings, L.P.,
Prime Cable Growth Partners, L.P., Alaska Cable, Inc., MCI, Duncan, Walp, TCI
GCI, Inc. and GCI.
REGISTRATION STATEMENT
Page II-577
SCHEDULE 4(c)(iii)
Outstanding Stock Liens
GCI owns the entire equity interest in each of its
subsidiaries, and all the outstanding capital stock of each subsidiary of GCI
are validly issued, fully paid and nonassessable and are owned by GCI free and
clear of all liens, charges, preemptive rights, claims or encumbrances, except
as follows:
1. NationsBank of Texas, N.A., as Administrative Agent under
the Credit Agreement dated as of May 14, 1993, as amended, holds the original
Stock Certificates Nos. 1, 2 and 3, for One Thousand (1,000), One Hundred
Thousand (100,000) and Ten Thousand (10,000) shares respectively, of Class A
Common Stock of GCI Communication Corp. for security purposes only, not as
purchaser. GCI is the owner of all of such One Hundred Eleven Thousand (111,000)
shares of GCI Communication Corp. stock.
2. NationsBank of Texas, N.A., as Administrative Agent under
the Credit Agreement dated as of May 14, 1993, as amended, also holds the
original Stock Certificate No. 1 for One Hundred (100) shares of GCI
Communication Services, Inc., for security purposes only, not as purchaser. GCI
is the owner of such One Hundred (100) shares.
3. National Bank of Alaska ("NBA"), as Lender under the Loan
Agreement dated December 31, 1992, holds the original Stock Certificate No. 1
for One Hundred (100) shares of the Common Stock of GCI Leasing Co., Inc. for
security purposes only, not as purchaser. GCI Communication Services, Inc., is
the owner of such 100 shares. NationsBank of Texas, N.A., as Administrative
Agent, holds a second lien on such shares.
REGISTRATION STATEMENT
Page II-578
SCHEDULE 4(h)
Pending Litigation
None.
REGISTRATION STATEMENT
Page II-579
SCHEDULE 4(l)
Contracts/Agreements to Acquire Equity
Interest in GCI or its Subsidiaries
1. The proposed Common A stock issuance to acquire (i) the ongoing
cable television and cable television systems of Prime Cable of Alaska, L.P.,
pursuant to the terms of the Securities Purchase Agreement dated as of May 2,
1996, among General Communication, Inc., Prime Venture I Holdings, L.P., Prime
Cable Growth Partners, L.P., Prime Venture II, L.P., Prime Cable Limited
Partnership, Austin Ventures, L.P., Xxxxxxx Xxxxx Venture Partners III Limited
Partnership, Centennial Fund, II, L.P., Centennial Fund III, L.P., Centennial
Business Development Fund, Ltd., BancBoston Capital, Inc., First Chicago
Investment Corporation, Madison Dearborn Partners, Prime II Management, L.P.,
Prime Cable of Alaska, L.P., Alaska Cable, Inc. and Prime Cable Fund I, Inc.
2. The proposed Common A stock issuance to acquire certain ongoing
cable television business and cable television systems pursuant to the (i) Asset
Purchase Agreements dated as of May 10, 1996, among General Communication, Inc.
and XxXxx/Rock Xxxxx Cable Systems and XxXxx/Rock Seward Cable System
respectively; and (ii) the Asset Purchase Agreement, dated May 10, 1996, among
General Communication, Inc. and Alaska Cablevision, Inc.
3. The proposed Common A stock issuance to acquire certain ongoing
cable television business and cable television systems pursuant to that Asset
Purchase Agreement, dated as of April 15, 1996, among General Communication,
Inc., Alaskan Cable Network/Fairbanks, Inc., Alaskan Cable Network/Juneau, Inc.
and Alaskan Cable Network/Ketchikan-Sitka, Inc.
REGISTRATION STATEMENT
Page II-580
SCHEDULE 4(m)(ii)
Requests for Collective Bargaining
None.
REGISTRATION STATEMENT
Page II-581
SCHEDULE 4(p)
Asset Liens
GCI and its subsidiaries have good title to all material
assets on the Balance Sheet, except as set forth in paragraph 4(p)(i) through
(iv) of the MCI Stock Purchase Agreement, and except as follows:
1. To secure a debt in the current principal amount of
$30,100,000. NationsBank of Texas, N.A., as Administrative Agent under the
Credit Agreement dated April 26, 1996, holds a security position on
substantially all of GCI's and GCI Communication Corp.'s property and equipment,
including, without limitation, the stock listed in Schedule 4(c)(iii) hereof,
all of GCI Communication Corp.'s fixtures as a transmitting utility on all of
its real properties and leasehold estates located both in Alaska and Washington.
2. To secure a debt in the current principal amount of
$7,595,595, National Bank of Alaska, as Lender under the Loan Agreement dated
December 31, 1992, holds a security interest in GCI Communication Corp.'s
undersea fiber operations, as well as a security interest in the lease payments
from MCI.
3. There is a capital lease in the current principal amount of
$766,049; RDB Partnership holds title to the building occupied by GCI
Communication Corp.
4. There is a capital lease in the current principal amount of
$143,973; the National Bank of Alaska Leasing Co. holds title to GCI
Communication Services, Inc.'s shared hub assets and contract proceeds. However,
GCISI has an option to acquire those assets at the end of the capital lease's
term.
REGISTRATION STATEMENT
Page II-582
SCHEDULE 4(q)
Material Contracts
The following is a complete listing of all contracts and
agreements existing on the date hereof for GCI and/or its subsidiaries which (i)
are with any customer which accounted for greater than 2% of GCI's or any of its
subsidiary's revenues for the year ended 12/31/95; (ii) involve contracts that
call for annual aggregate expenditures by GCI of greater than $5,000,000; or
(iii) involve contracts that call for aggregate expenditures by GCI during the
remainder of their respective terms in excess of $10,000,000:
1. Customers which account for greater than 2% of GCI or any of its subsidiary's
revenues for the year ended 12/31/95.
a. GCI Communication Services, Inc.: 2% Floor is approx.
greater than $20,000/year: Chevron Shared Hub
contract; est. $880,000 annual revenues.
b. GCI Communication Corp.: 2% Floor is approx. greater
than $1,538,000/year:
i. Carrier Agreement with MCI
Telecommunications Corporation;
ii. Service Agreement with US Sprint
Communications Company Limited Partnership
of Delaware; and
iii. Agreement with British Petroleum.
c. General Communication, Inc. and GCI Leasing Co.,
Inc.: None.
2. Contracts calling for annual aggregate expenditures by GCI or its
subsidiaries of greater than $5,000,000 annually or for aggregate expenditures
by GCI during the remainder of their respective terms of greater than
$10,000,000.
a. GCI and GCI Communication Corp.:
i. NationsBank of Texas, N.A. These entities
owe the current principal amount of $
30,100,000 to NationsBank of Texas, N.A.
as Administrative Agent under the Credit
Agreement dated April 26, 1996.
ii. National Bank of Alaska. GCI
Communication Corp. owes the current
principal amount of $7,595,595, National
Bank of
REGISTRATION STATEMENT
Page II-583
Alaska, as Lender under the Loan Agreement
dated December 31, 1992, relating to its
undersea fiber operations.
iii. MCI Telecommunications Corporation. The
lease agreement between MCI and GCI
Leasing Company, Inc., dated December 31,
1992, will result in payments exceeding
$10 Million over its term.
iv. Scientific-Atlanta, Inc. The Company's
1996 commitment under its equipment
purchase contract with Scientific-Atlanta,
Inc. exceeds $5,000,000.
x. Xxxxxx Communications Galaxy, Inc. The
Company entered into a purchase and
lease-purchase option agreement in August
1995 for the acquisition of satellite
transponders to meet its long-term
satellite capacity requirements. The
amount of the down payment required in
1996 will exceed $5 Million and the
remaining commitment will exceed $10
Million.
REGISTRATION STATEMENT
Page II-584
SCHEDULE 4(q)(i)
Existing Defaults
None.
REGISTRATION STATEMENT
Page II-585
SCHEDULE 4(r)(v)
Environmental Notices
None.
REGISTRATION STATEMENT
Page II-586
SCHEDULE 4(s)
Tax Audits
GCI's 1993 federal income tax return was selected for examination by the
Internal Revenue Service ("IRS") during 1995. The examination commenced during
the fourth quarter of 1995 and was completed in March, 1996. GCI has received a
letter from the agent conducting the examination indicating that no changes are
proposed or required.
The IRS is in the process of reviewing GCI's compliance with the federal excise
tax on telecommunication services. No substantive issues have been raised at
this time.
The Washington State Department of Revenue has notified GCI that it intends to
conduct an audit in July, 1996, of Washington state sales, use and business
occupation taxes for the period of January, 1992 through March, 1996.
Management believes these examinations will not result in material adjustments
and will not have a material impact on GCI's financial statements.
REGISTRATION STATEMENT
Page II-587
MCI's OFFICER'S CERTIFICATE
(Section 8(b)(iii))
In compliance with Section 8(b)(iii) of the Stock Purchase Agreement
dated , 1996, between GENERAL COMMUNICATION, INC. ("GCI") and MCI
TELECOMMUNICATIONS CORPORATION ("Agreement") I, the undersigned, certify as
follows:
1. I am the duly appointed and acting of MCI and
I am authorized to execute this Certificate.
2. The Final Closing Date as defined in the Agreement is
, 1996.
3. This representations of MCI set forth in the Agreement are
true and correct in all material respects as of the date when made and (unless
made as of a specified date) are true and correct in all material respects as if
made as of the Final Closing Date.
4. MCI has performed in all material respects its agreements
contained in the Agreement required to be performed at or prior to the Final
Closing Date.
Dated this day of , 1996.
MCI TELECOMMUNICATIONS CORPORATION
By:
Name:
Its:
MCI's Officer's Certificate
GCI-MCI
Page 588
GCI's OFFICER'S CERTIFICATE
(Section 8(c)(i), (ii), (iii), (viii) and (ix))
In compliance with Section 8(c)(i), (ii), (iii), (viii) and (ix) of the
Stock Purchase Agreement dated , 1996, between GENERAL
COMMUNICATION, INC. ("GCI") and MCI TELECOMMUNICATIONS CORPORATION ("Agreement")
I, Xxxx X. Xxxxxx, certify as follows:
1. I am the duly appointed and acting Secretary of GCI
authorized to execute this Certificate.
2. The Final Closing Date as defined in the Agreement is
, 1996.
3. This representations of GCI set forth in the Agreement are
true and correct in all material respects as of the date when made and (unless
made as of a specified date) are true and correct in all material respects as if
made as of the Final Closing Date.
4. GCI has performed in all material respects its agreements
contained in the Agreement required to be performed at or prior to the Final
Closing Date.
5. All applicable consents and approvals (including those of
the FCC and any applicable Public Utility Commission which are necessary to
consummate the transactions contemplated by the Agreement have been obtained.
6. Attached hereto is a complete copy of a resolution duly
adopted by the board of directors of GCI authorizing and approving the execution
of the Agreement and the consummation of the transactions contemplated by the
Agreement.
Dated this day of , 1996.
GENERAL COMMUNICATION, INC.
By:
Xxxx X. Xxxxxx, Secretary
MCI's Officer's Certificate
GCI-MCI
Page 589
