=================================================================
GENERAL COMMUNICATION, INC.
----------------------------------
PREFERRED STOCK PURCHASE AGREEMENT
-----------------------------------
20,000 SHARES OF SERIES B CONVERTIBLE REDEEMABLE
ACCRETING PREFERRED STOCK
Dated as of April 30, 1999
=================================================================
General Communication, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
April 30, 1999
To: Each of the Persons Named
on Annex A to this Agreement
Ladies and Gentlemen:
The undersigned, General Communication, Inc. (the "Company"), an Alaska
corporation, hereby agrees with you (sometimes referred to herein individually
as an "Investor" and sometimes collectively as the "Investors") as follows:
1.0 Authorization of Securities. The Company has authorized the
issuance of an aggregate of 35,000 and the sale of an aggregate of 20,000,
shares of its Series B Convertible Redeemable Accreting Preferred Stock (the
"Preferred Stock"), having the rights, preferences and privileges set forth in
the Statement of Stock Designation (hereinafter referred to as the
"Designation"), a copy of which is attached hereto as Annex B. The shares of
Preferred Stock are convertible into shares of Class A Common Stock of the
Company (the "Class A Common Stock") upon the terms and conditions set forth in
the Designation. The Preferred Stock and the Class A Common Stock are sometimes
referred to collectively herein as the "Securities."
2.0 Sale and Purchase of Preferred Stock. Upon the terms and subject to
the conditions herein contained, the Company agrees to sell to the Investors,
and the Investors agree to purchase from the Company, at the Closing (as
hereinafter defined) on the Closing Date (as hereinafter defined), 20,000 shares
of Preferred Stock, such commitment allocated among the Investors in the numbers
set forth opposite such Investor's name on Annex A attached hereto, and the
Investors shall pay to the Company an aggregate amount of Twenty Million Dollars
($20,000,000) (the "Required Payment"), allocated among the Investors as set
forth on Annex A attached hereto.
3.0 Closing.
3.1 Closing. The closing of the sale to and purchase by each
Investor of the Preferred Stock (the "Closing") shall occur at the offices of
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP in Atlanta, Georgia, at the hour of 10:00
A.M., eastern standard time, on April 30, 1999 or at such different time or day
as the Investors and the Company shall agree (the "Closing Date"). At the
Closing, the Company will deliver to each Investor a certificate evidencing the
number of shares of Preferred Stock set forth
1
opposite such Investor's name on Annex A hereto, which shall be registered in
such Investor's name as stated on the signature page hereto, against delivery to
the Company of payment by wire transfer in an amount equal to the Required
Payment by such Investor.
4.0 Register of Securities; Restrictions on Transfer of Securities;
Removal of Restrictions on Transfer of Securities.
4.1 Register of Securities. The Company or its duly appointed
agent shall maintain a separate register for the shares of Preferred Stock, the
Class A Common Stock and the Class B Common Stock (the "Class B Common Stock,"
together with the Class A Common Stock, the "Common Stock"), for the
registration of the issuance and sale of all such shares. All transfers of
Preferred Stock, or Class A Common Stock issued upon conversion of Preferred
Stock, shall be recorded on the register maintained by the Company or its agent,
and the Company shall be entitled to regard the registered Holder of such
Securities as the actual Holder of the Securities so registered until the
Company or its agent is required to record a transfer of such Securities on its
register. Subject to Section 4.2(c) hereof, the Company or its agent shall be
required to record any such transfer when it receives the Security to be
transferred, duly and properly endorsed by the registered Holder thereof or by
its attorney-in-fact duly authorized in writing.
4.2 Restrictions on Transfer.
(a) Each Investor understands and agrees that the
Preferred Stock it will be acquiring has not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and that accordingly
such stock will not be transferable except as permitted under various exemptions
contained in the Securities Act and any applicable state securities laws, or
upon satisfaction of the registration and prospectus delivery requirements of
the Securities Act and applicable state securities laws. Each Investor
acknowledges that it must bear the economic risk of its investment in the
Preferred Stock for an indefinite period of time (subject, however, to the
Company's obligation to redeem the Preferred Stock in accordance with Sections 4
and 5 of the Designation and to the Company's obligation to effect the
registration under the Securities Act of the Class A Common Stock issuable upon
conversion of the Preferred Stock in accordance with Section 10 hereof) because
such stock has not been registered under the Securities Act and therefore cannot
be sold, unless such stock is subsequently registered or an exemption from
registration is available.
(b) Each Investor hereby represents and warrants to
the Company and with respect to clause (iv) to each other Investor that (i) it
is acquiring the Preferred Stock it has agreed to purchase for investment
purposes, for its own account, and not with the view to, or for resale in
connection with, any distribution thereof within the meaning of the Securities
Act, (ii) it is an "accredited investor" as that term is defined in Rule 501
under the Securities Act, (iii) it is organized under the laws of and has its
principal executive office in the state set forth on Annex {4.2(b)}A attached
hereto, (iv) it is making an independent investment decision and is not relying
on representations of or information provided by any other Investor and (v) a
copy of the Company's Form 10-K as filed with the Securities and Exchange
Commission for the year ended December 31, 1998, has
2
been made available to such Investor and such Investor has been given a
reasonable opportunity to ask questions of and receive answers from the Company,
and all persons acting on its behalf, concerning the Company, its business, the
Preferred Stock and other related matters and such Investor has availed itself
of such opportunity to the full extent desired.
(c) Each Investor hereby agrees with the Company as
follows:
(i) Subject to Section 4.3 hereof, the
certificates evidencing the Preferred Stock it has agreed to purchase, each
certificate issued in transfer thereof, and each certificate evidencing the
Class A Common Stock issued upon conversion of shares of the Preferred Stock
will bear the following legend:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
any applicable state securities laws. These securities may not be
sold or transferred in the absence of such registration or an
exemption therefrom under such Act and under any applicable state
securities laws."
(ii) The certificates representing such
Preferred Stock, each certificate issued in transfer thereof, and each
certificate evidencing the Class A Common Stock issued upon conversion of shares
of the Preferred Stock will also bear any legend required under any applicable
state securities laws.
(iii) Absent an effective registration
statement under the Securities Act covering the disposition of the Preferred
Stock or the Class A Common Stock issued in connection with the conversion of
such Preferred Stock, such Investor will not sell, transfer, assign, pledge,
hypothecate or otherwise dispose of any of such securities except in compliance
with the Securities Act and the registration or qualification requirements of
any applicable state securities laws or any exemption therefrom.
(iv) No Holder of Preferred Stock shall
transfer any shares of Preferred Stock to a Direct Competitor of the Company (as
defined below) unless the prior consent of the Company is received, which
consent shall not be unreasonably withheld. For purposes of this Section 4.2
(c)(iv), "Direct Competitor of the Company" shall mean a Person which offers or
proposes to offer anywhere in the State of Alaska any of the following: (1)
facilities-based long distance communications service (including via undersea
cable), (2) facilities-based competitive local exchange or wireless
communications services, or (3) cable television or other terrestrial video or
data services; including, in each case, Internet and interactive services.
Communications services shall include, in all cases, voice, video and data
communications.
(v) The Company shall make a notation on its
records and may give instructions to any transfer agent of the Class A Common
Stock or Preferred Stock in order to implement the restrictions on transfer set
forth in this subsection (c).
3
4.3 Removal of Securities Act Transfer Restrictions. Any
legend endorsed on a certificate evidencing a Security pursuant to Section
4.2(c)(i) hereof and the stop transfer instructions and record notations with
respect to such Security shall be removed and the Company shall issue a
certificate without such legend to the Holder of such Security (a) if such
Security is registered under the Securities Act, or (b) if such Security may be
sold under Rule 144(k) of the Commission under the Securities Act or (c) if the
Holder provides the Company with an opinion of counsel (which may be counsel for
the Company) reasonably acceptable to the Company to the effect that a sale or
transfer of such Security may be made without registration under the Securities
Act.
5.0 Representations and Warranties by the Company. In order to induce
the Investors to enter into this Agreement and to purchase the Preferred Stock,
the Company hereby covenants with, and represents and warrants to, each Investor
as follows:
5.1 Organization; Power; Qualification; Capital Stock.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Alaska. The
Company has the corporate power and authority to own or lease and operate its
properties and to carry on its business as it is now being and hereafter
proposed to be conducted. The Company is duly qualified, in good standing and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its businesses requires such qualification or
authorization. Annex 5.1 correctly sets forth and identifies the number of
authorized shares of each class and series of capital stock of the Company, the
par value per share, and the number of issued and outstanding shares of each
such class and series on the date hereof, after giving effect to the
transactions contemplated hereby. Except as described on Annex 5.1 attached
hereto, the Company does not have outstanding any stock or securities
convertible into or exchangeable for any shares of its Common Stock, nor are
there any preemptive or similar rights to subscribe for or to purchase, or any
other rights to subscribe for or to purchase, or any options for the purchase
of, or any agreements providing for the issuance (contingent or otherwise) of,
or any calls, commitments, or claims of any character relating to, any Common
Stock or any stock or securities convertible into or exchangeable for any Common
Stock. Except as set forth on Annex 5.1, the Company is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its Common Stock or to register any shares of its Common
Stock, and there are no agreements restricting the transfer of any shares of the
Company's Common Stock.
(b) Other than the Preferred Stock to be issued
to the Investors pursuant to this Agreement, there are no shares of preferred
stock outstanding. The Preferred Stock has been duly authorized and, when issued
and paid for pursuant to the terms of this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable, will have the rights, preferences
and privileges specified in the Designation and will be free and clear of all
Liens and restrictions, other than Liens that might have been created by the
Investors and restrictions on transfer imposed by Section 4.2 hereof; and the
Class A Common Stock issuable upon conversion of the Preferred Stock has been
duly authorized and reserved for issuance upon conversion of the
4
Preferred Stock and, when issued will be duly authorized, validly issued, fully
paid and nonassessable Class A Common Stock, in connection with such conversion
and clear of all Liens and restrictions, other than Liens that might have been
created by the Investors and restrictions imposed by Section 4.2 hereof.
5.2 Authorization. The Company has the corporate power and has
taken all necessary corporate action to authorize it to issue the Preferred
Stock and to execute, deliver and perform this Agreement and the Designation in
accordance with their respective terms, and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by the Company and is, along with the Designation, a legal, valid and
binding obligation of the Company enforceable in accordance with its terms,
subject, as to enforcement of remedies, to the following qualifications: (i)
certain equitable remedies are discretionary and, in particular, may not be
available where damages are considered an adequate remedy at law and (ii)
enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Company).
5.3 Subsidiaries. The Subsidiaries of the Company are listed
in Annex 5.3 attached hereto. The Company owns all of the outstanding capital
stock of each Subsidiary, except as set forth in Annex 5.3.
5.4 Compliance with Other Documents and Contemplated
Transactions. The execution, delivery and performance by the Company of this
Agreement and the Designation, each in accordance with their respective terms,
and the consummation of the transactions contemplated hereby and thereby, do not
and will not (i) require any consent, approval, authorization, permit or license
which has not already been obtained from, or effect any filing or registration
which has not already been effected with, any federal, state or local regulatory
authority, (ii) violate any Applicable Law with respect to the Company, (iii)
conflict with, result in a breach of, or constitute a default under the Restated
Articles of Incorporation or the Bylaws of the Company, under the Credit
Facilities, or under any indenture, agreement, or other instrument, including
without limitation the Licenses, to which the Company or any Subsidiary of the
Company is a party or by which any such company or its properties may be bound,
or (iv) result in or require the creation or imposition of any Lien upon or with
respect to any property now owned or hereafter acquired by the Company or any of
its Subsidiaries.
5.5 Business. The Company and its Subsidiaries are engaged in
the business of providing telecommunications and video services to residential,
commercial and government users, including without limitation, local, long
distance and wireless telephone services, cable television services and Internet
services.
5.6 Licenses, etc. All material Licenses necessary to the
operation of the Company's business have been authorized by the grantors thereof
and are in full force and effect, and the Company is in compliance in all
material respects with all of the
5
provisions thereof. The Company has secured all Necessary Authorizations
required for the operation of its business and all such Necessary Authorizations
are in full force and effect.
5.7 Compliance with Law. The Company is in substantial
compliance with all Applicable Laws.
5.8 Litigation. There is no action, suit or proceeding pending
or, to the best of the Company's knowledge, threatened against or in any other
manner relating directly and adversely to, the Company or any of its properties
in any court or before any arbitrator of any kind or before or by any
governmental body, except as described on Annex 5.8 attached hereto, and no such
action, suit, proceeding or investigation (i) calls into question the validity
of this Agreement or the Designation, or (ii) if determined adversely to the
Company, would be likely to have a Materially Adverse Effect.
5.9 Financial Statements. The Company has furnished or
caused to be furnished to each Investor the audited balance sheet and statement
of income for the fiscal year ended December 31, 1998 (collectively, the
"Financials"), which as of the date hereof are complete and correct in all
material respects and present fairly in accordance with generally accepted
accounting principles the Company's financial position on and as at such dates
and the results of operations for the periods then ended. There are no material
liabilities, contingent or otherwise, of the Company which are not disclosed in
such Financials.
5.10 No Adverse Change. Since December 31, 1998, there has
occurred no event which is likely to have a Materially Adverse Effect.
5.11 Absence of Default, etc. The Company is in compliance
with all the provisions of its Restated Articles of Incorporation and Bylaws,
and no event has occurred or failed to occur, which has not been remedied or
waived, the occurrence or non-occurrence of which constitutes, or which with the
passage of time or giving of notice or both would constitute a material default
by the Company under any material indenture, agreement or other instrument
(individually, a "Material Agreement" and collectively, the "Material
Agreements"), including without limiting the foregoing, any License or any
judgment, decree or order to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or their properties may
be bound or affected. All Material Agreements are in full force and effect, and
the Company has no knowledge that any party to any Material Agreement is seeking
or presently intends to seek to terminate, amend or modify such Material
Agreement.
5.12 Environmental Matters. Except as is described on Annex
5.12 attached hereto:
(i) The Property does not contain, in, on or under,
including, without limitation, the soil and groundwater thereunder,
any Hazardous Materials in violation of Environmental Laws or in
amounts that could give rise to material liability under
Environmental Laws.
6
(ii) The Company is in substantial compliance with all
applicable Environmental Laws, and there is no condition which could
interfere with the continued operation of any of the Properties in
substantial compliance with Environmental Laws, or impair the
financial condition of Company.
(iii) The Company has not received from any governmental
authority or any other Person any complaint, notice of violation,
alleged violation, investigation or advisory action or notice of
potential liability regarding matters of environmental protection or
permit compliance under applicable Environmental Laws with regard to
the Properties, nor is the Company aware that any governmental
authority is contemplating delivering to the Company any such
notice. There has been no pending or, to the Company's knowledge,
threatened complaint, notice of violation, alleged violation,
investigation or notice of potential liability under Environmental
Laws with regard to any of the Properties.
(iv) Hazardous Materials have not been generated, treated,
stored, disposed of, at, on or under any of the Property, except in
substantial compliance with all Environmental Laws, or in a manner
that could give rise to material liability under Environmental Laws
nor have any Hazardous Materials been transported or disposed of
from any of the Properties to any other location, except in
substantial compliance with all Environmental Laws, nor in a manner
that could reasonably be anticipated to give rise to material
liability under Environmental Laws.
(v) The Company is not a party to any governmental
administrative actions or judicial proceedings pending under any
Environmental Law with respect to any of the Properties, nor are
there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with
respect to any of the Properties.
(vi) There has been no release or threat of release of
Hazardous Materials into the environment at or from any of the
Properties, or arising from or relating to the operations of the
Company, in violation of Environmental Laws or in amounts that could
give rise to material liability under Environmental Laws.
5.13 Investment Company Act; Public Utility Holding Company
Act. The Company (i) is not an "investment company" or a company "controlled by
an investment company" and (ii) is not required to register, in each case, under
the provisions of the Investment Company Act of 1940, as amended, and neither
the entering into or performance by the Company of this Agreement violates any
provision of such Act or requires any consent, approval or authorization of, or
registration with, the Securities and Exchange Commission (the "Commission") or
any other governmental or public body or authority pursuant to any provisions of
such Act. The Company is not a "public utility holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended. None of
the transactions contemplated by this Agreement (including, without limitation,
the use of proceeds from the sale of the
7
Securities) will violate or result in a violation of Section 7 of the Exchange
Act or any regulation issued pursuant thereto including, without limitation,
Regulations U and X of the Board of Governors of the Federal Reserve System.
5.14 Securities Laws. The Company and any underwriters, sales
agents, representatives or brokers representing or acting on behalf of the
Company have complied with all material federal and state securities laws in
connection with the offer and sale of share interests in the Company, including
the Preferred Stock to be issued and sold pursuant to this Agreement. The offer,
sale and issuance of the Preferred Stock, including the issuance of the shares
of Class A Common Stock in connection with the conversion of the Preferred Stock
(assuming no action is taken after the date hereof by the Holders of Preferred
Stock to make an exemption from registration unavailable), are, in each case,
exempt from the registration requirements of the Securities Act and from the
registration or qualification requirements of the laws of any applicable state
or other jurisdiction, so long as the Investors do not take any action which
would cause the loss of such exemption. Neither the Company nor anyone on its
behalf will take any action hereafter that would or would be likely to cause the
loss of such exemption.
5.15 Disclosure; SEC Filings. There is no fact known to the
Company which the Company has not disclosed to the Investors in writing which
has or will have a Materially Adverse Effect. The information contained in this
Agreement, the Financials and in any writing furnished pursuant hereto or in
connection herewith, does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or herein or
necessary to make the statements therein or herein not misleading. Additionally,
the Company has delivered or has made available to the Investors true and
complete copies of each registration statement, report and proxy or information
statement, including, without limitation, any Annual Reports to Shareholders
incorporated by reference in any of such reports, in form (including exhibits
and any amendments thereto) required to be filed with the Commission since
December 31, 1996 (collectively, the "Company SEC Reports"). As of the
respective dates the Company SEC Reports were filed, or, if any such Company SEC
Report was amended, as of the date such amendment was filed, each of the Company
SEC Reports (i) complied in all respects with all applicable requirements of the
Securities Act and the Exchange Act, and the rules and regulations promulgated
thereunder, and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, misleading. Each of the audited financial statements and
unaudited interim financial statements of the Company (including any related
notes and schedules) included (or incorporated by reference) in its Annual
Reports on Form 10-K for each of the three fiscal years ended December 31, 1996,
1997 and 1998 and its Quarterly Reports on Form 10-Q for all interim periods
subsequent thereto fairly present, in conformity with generally accepted
accounting principles, the financial position of the Company as of its date and
the results of operations and cash flows for the period then ended (subject to
normal year-end adjustments in the case of any unaudited interim financial
statements).
5.16 Year 2000 Compliance. The Company has (i) begun analyzing
the operations of the Company and its Subsidiaries that could be adversely
affected by
8
failure to become Year 2000 compliant (that is, that computer applications,
imbedded microchips and other systems will be able to perform date-sensitive
functions prior to and after December 31, 1999) and (ii) developed a plan for
becoming Year 2000 compliant in a timely manner, the implementation of which is
on schedule in all material respects. The Company reasonably believes that it
will become Year 2000 compliant for its operations and those of its Subsidiaries
on a timely basis except to the extent that a failure to do so could not
reasonably be expected to have a Materially Adverse Effect. To the best
knowledge of the Company, any suppliers and vendors that are material to the
operations of the Company or its Subsidiaries will be Year 2000 compliant for
their own computer applications except to the extent that a failure to do so
could reasonably be expected not to have a Materially Adverse Effect.
6.0 Conditions Precedent to Investor's Obligations at the Closing. The
obligation of each Investor to execute this Agreement and purchase the Preferred
Stock is subject to the prior fulfilment of the following conditions:
6.1 Representations and Warranties. Representations and
warranties of the Company under this Agreement shall be true and correct in all
material respects as of the date hereof and any exceptions thereto shall be
acceptable to the Investors.
6.2 Simultaneous Purchase by Investors. The Company shall be
contemporaneously consummating the sale of the Preferred Stock to each of the
Investors listed on Annex A attached hereto.
6.3 No Material Adverse Change. There shall not have occurred
(i) a change in the financial condition, business, assets or prospects of the
Company or any of its Subsidiaries that constitutes a Materially Adverse Effect
with respect to the Company and its Subsidiaries taken as a whole, (ii) any
substantive change in local, state or federal governmental regulations affecting
the business of the Company or any of its Subsidiaries or the business proposed
to be conducted by the Company or any of its Subsidiaries that has a Materially
Adverse Effect, or (iii) any threatened, instituted or pending action,
proceeding, application or counterclaim by or before any governmental,
regulatory or administrative agency or authority, domestic or foreign, which
seeks to restrain or prohibit the transactions contemplated by this Agreement or
seeks damages in connection therewith or resulting therefrom, seeks to impose
any limitations on the ability of the Investors effectively to acquire or to
hold or to exercise full rights of ownership of the Securities, including,
without limitation, the right to vote the Securities in accordance with their
terms or would otherwise be reasonably likely to have a Materially Adverse
Effect on the Company.
6.4 Designation. The Designation shall have been approved by
the Board as required by the Alaska Corporations Code, shall have been filed and
recorded with the Department of Commerce and Economic Development of Alaska and
shall have become effective, and a copy of the Amended and Restated Articles of
Incorporation, as amended, certified by the Commissioner of the Department of
Commerce and Economic Development of Alaska shall have been delivered to the
Investors.
9
6.5 Board Resolutions. The Board shall have resolved to submit
for shareholder approval at the next annual meeting of the shareholders, but in
no event later than {July} August 31, 1999, certain additional amendments to the
Amended and Restated Articles of Incorporation (the "Proposed Amendments"). The
Proposed Amendments shall provide that so long as any shares of Preferred Stock
remain outstanding, the Company shall not, directly or indirectly, without the
written consent of the Holders of a majority with respect to clause (i) and 80%
with respect to clause (ii) of the then-outstanding shares of Preferred Stock
(i) liquidate or dissolve the Company or (ii) permit the Company to be merged
with or into, or consolidated with, any other entity or sell all or
substantially all of the assets of the Company, in any case where the terms of
such merger, consolidation or sale would significantly and adversely affect the
rights and preferences of the Preferred Stock. In addition, the Board shall have
resolved, pursuant to Article IV, Section 2 of the By-laws of the Company, to
increase the number of directors serving on the Board by one with the nominee
for such additional position to be designated by Prime VIII, L.P., {or} and such
other Holders of Preferred Stock as are not prohibited by law or regulation from
participating in such designation.
6.6 Qualification Under State Securities Laws. All
registrations, qualifications, permits and approvals required under applicable
state securities laws shall have been obtained for the lawful execution,
delivery and performance of this Agreement and the performance of the
Designation, including without limitation all such registrations,
qualifications, permits and approvals necessary for the offer, sale, issue and
delivery of the Securities.
6.7 Delivery of Documents. Each Investor shall have received
the following:
(a) copies of resolutions of the Board, certified
by an Authorized Signatory of the Company, authorizing and approving the
Designation and the matters set forth in Section 6.5 hereof, the execution,
delivery and performance of this Agreement, and all other documents and
instruments to be delivered pursuant hereto and thereto;
(b) a copy of the Bylaws of the Company certified
by an Authorized Signatory of the Company;
(c) a true and complete copy of each and any
agreements or arrangements of any kind among the shareholders of the Company, or
otherwise with respect to the ownership of the Company;
(d) evidence satisfactory to each Investor that
all Necessary Authorizations have been obtained or made, are in full force and
effect and are not subject to any pending or threatened reversal or
cancellation, and a certificate of an Authorized Signatory of the Company so
stating;
(e) good standing certificates for the Company
issued by the Secretary of State, or similar official, of each state in which
the Company is incorporated or qualified to do business as a foreign
corporation;
10
(f) this duly executed Agreement;
(g) {a} favorable {opinion} opinions of ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLC, special counsel for the Company, and {dated the Closing Date
substantially in the form of Annex 6.7(g) attached hereto;
(h) a favorable opinion} of Wohlforth, Vassar,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the Company, dated the Closing Date collectively
substantially in the form of Annex {6.7(h)} 6.7(g) attached hereto;
(i) copies of the documentation relating to the
amendments to the $200,000,000 Amended and Restated Credit Agreement, dated as
of November 14, 1997, between GCI Holdings, as borrower, NationsBank of Texas,
N.A., as administrative agent, Credit Lyonnais New York Branch, as documentation
agent, and TD Securities (USA), Inc., as syndication agent and the $50,000,000
Amended and Restated Credit Agreement, dated as of November 14, 1997, between
GCI Holdings, Inc., a wholly-owned indirect subsidiary of the Company ("GCI
Holdings"), as borrower, NationsBank of Texas, N.A., as administrative agent,
Credit Lyonnais New York Branch, as documentation agent, and TD Securities
(USA), Inc., as syndication agent, in final form, the form, terms and conditions
of which shall be satisfactory to Investors and their counsel;
(j) a certificate representing the shares of
Preferred Stock to be purchased by such Investor;
(k) a certificate of incumbency with respect to
each Authorized Signatory; and
(l) such additional supporting documentation and
other information with respect to the transactions contemplated hereby as the
Investors or their special counsel, Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, may
reasonably request.
6.8 Proceedings and Documents. All corporate and other
proceedings and actions taken in connection with the transactions contemplated
hereby and all certificates, opinions, agreements, instruments and documents
mentioned herein or incident to any such transactions, shall be satisfactory in
form and substance to the Investors and to their special counsel, Paul,
Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP.
7.0 Affirmative Covenants. The Company agrees, that, unless the Holders
of a Majority of the then-outstanding shares of Preferred Stock or with respect
to Sections 7.7, 7.8, 7.9, 7.10 or 7.16 hereof the Holders of 80% of the
then-outstanding shares of Preferred Stock, otherwise agree in writing, so long
as any shares of Preferred Stock are outstanding, the Company will (and will
cause its Subsidiaries to) do the following:
7.1 Preservation of Existence and Similar Matters. Preserve
and maintain, or timely obtain and thereafter preserve and maintain, its
existence, material
11
rights, franchises and Licenses and its material privileges used in connection
with or relating to the operation of the Company's business of providing
telecommunications and video services to customers, including without
limitation, local, long distance and wireless telephone services, cable
television services and Internet services, and qualify and remain qualified and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualifications or
authorizations. These material rights, franchises and Licenses shall include,
without limitation, Licenses and all other Necessary Authorizations.
7.2 Compliance with Applicable Law. Comply in all respects
with the requirements of all Applicable Laws except where compliance is being
contested in good faith by appropriate proceedings and adequate reserves have
been set aside therefor.
7.3 Maintenance of Properties. Maintain or cause to be
maintained in the ordinary course of business in good repair, working order and
condition (reasonable wear and tear excepted) all properties used or useful in
its business (whether owned or held under lease), and from time to time make or
cause to be made all needed and appropriate repairs, renewals, replacements,
additions, betterments and improvements thereto; provided, however, that the
provisions of this Section 7.3 shall not prevent the Company from selling,
transferring or otherwise disposing of property.
7.4 Accounting Methods and Financial Records. Maintain a
system of accounting established and administered in accordance with generally
accepted accounting principles consistently applied, keep adequate records and
books of account in which complete entries will be made in accordance with such
accounting principles consistently applied and reflecting all transactions
required to be reflected by such accounting principles. The Company shall also
maintain a fiscal year ending on December 31.
7.5 Maintain Insurance. Maintain in full force and effect a
policy or policies of insurance issued by insurers of recognized responsibility,
insuring it and its properties and business against such losses and risks, and
in such amounts, as are customary in the case of corporations of established
reputation engaged in the same or a similar business and similarly situated.
7.6 Pay Taxes and Other Liabilities. Pay and discharge all
taxes, assessments and governmental charges or levies imposed upon it or any of
its Subsidiaries or their income or profits or upon any properties belonging to
them prior to the date on which penalties attach thereto, and all lawful claims
for labor, materials and supplies which, if unpaid, might become a Lien or
charge upon any of their properties; except that no such tax, assessment,
charge, levy or claim need be paid which is being contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set
aside on the appropriate books, but only so long as such tax, assessment,
charge, levy or claim does not become a Lien or charge other than a Permitted
Lien and no foreclosure, distraint, sale or similar proceedings shall have been
commenced. The
12
Company shall timely file all information returns required by federal, state or
local tax authorities.
7.7 Financial Reports. The Company shall furnish to each
Holder of Preferred Stock:
(a) As soon as practicable and in any event
within sixty (60) days after the last day of each quarter of each fiscal year of
the Company, the consolidated balance sheet of the Company as at the end of such
quarter and the related consolidated statement of income and retained earnings
and related consolidated statement of cash flows of the Company for such quarter
and for the elapsed portion of the year ended with the last day of such quarter,
all of which shall be certified by the chief financial officer or chief
accounting officer of the Company, to be, in his opinion, complete and correct
in all material respects and to present fairly, in accordance with generally
accepted accounting principles, the financial position of the Company as at the
end of such period and the results of operation for such periods, and the
elapsed portion of the year ended with the last day of such period, subject only
to normal year-end adjustments;
(b) As soon as practicable and in any event
within one hundred twenty (120) days after the end of each fiscal year of the
Company, the audited consolidated balance sheet of the Company as at the end of
such fiscal year and the related audited consolidated statements of income and
retained earnings or deficit and related consolidated statement of cash flows
for the Company for such fiscal year, setting forth in comparative form the
figures as at the end of and for the previous fiscal year and certified by
independent certified public accountants of national recognized standing, whose
opinion shall be in scope and substance reasonably satisfactory to the Holders
of Preferred Stock and include a statement certifying that no Default was
detected insofar as the terms, provisions or conditions of the Agreement relate
to accounting matters during the examination of the Company's consolidated
financial statements, and who shall have authorized the Company to deliver such
financial statements and opinions thereon to the Holders of Preferred Stock
pursuant to this Agreement;
(c) Promptly upon the receipt thereof by the
Company or the Board, copies of all reports, all management letters and other
detailed information submitted to the Company or the Board by independent
certified public accountants in connection with each annual or interim audit or
review of the accounts or affairs of the Company made by such accountants;
(d) Promptly after the same are available, copies
of all such proxy statements, financial statements and reports as the Company
shall send to its shareholders, and promptly upon the transmission thereof
copies of all registration statements, proxy statements and reports on Form 8-K,
Form 10-Q and Form 10-K, which the Company may file with or furnish to the
Commission or any governmental authority at any time substituted therefor; and
13
(e) Promptly such other information relating to
the finances, properties, business and affairs of the Company and each
Subsidiary as any Holder reasonably may request from time to time.
7.8 Other Reports. The Company shall also provide to the
Holders of Preferred Stock the following:
(a) Promptly after its preparation and in no
event later than January 31 of each year, a copy of the annual budget of the
Company and its Subsidiaries for the fiscal year, including the budget for
capital expenditures for the operations of their businesses;
(b) Promptly upon learning of the occurrence of a
Default or a condition or event which with the giving of notice or the lapse of
time, or both, would constitute a Default, a certificate signed by the chief
executive officer or chief financial officer of the Company describing such
Default, or condition or event and stating what steps are being taken to remedy
or cure the same; and
(c) All such other notices and reports as are
provided under the Credit Facilities from time to time.
7.9 Notice of Litigation and Other Matters. Provide prompt
notice (and in any event, notice within three (3) Business Days) to the Holders
of Preferred Stock of the following events after the Company has received notice
thereof or otherwise becomes aware of:
(a) The commencement of any material proceeding
or investigation by or before any governmental body and any material actions or
proceedings in any court or before any arbitrator (i) against, or (ii) in any
other way relating materially adversely and directly to, the Company or any
Subsidiary or any of their properties, assets or businesses or any License;
(b) Any material amendment or material
modification to the budget submitted under Section 7.8(a) hereof; and
(c) Any breach, waiver, amendment, or termination
of any provision of the Credit Facilities.
7.10 Board of Directors. As soon as practicable following
issuance of the first share of Preferred Stock, and so long as any shares of
Preferred Stock are outstanding, the Company shall cause its Board of Directors
to include one seat the nominee for which to be designated by Prime VIII, L.P.
(as long as it is a Holder) and such other Holders of Preferred Stock as are not
prohibited from participating in the designation of such board member by law or
regulation, including pursuant to the Bank Holding Company Act as defined in
Section 8.2 hereof. Upon designation by Prime VIII, L.P. (as long as it is a
Holder) and such other Holders of Preferred Stock pursuant to this Section 7.10,
the Board of Directors of the Company shall cause such designated
14
person to be nominated for approval by the Holders of the Common Stock at each
meeting of shareholders of the Company at which members of the Board of
Directors are to be elected. The Company shall, upon such nomination, recommend
the approval of such designee as a member of the Board. If the Holders of the
Class A Common Stock fail to elect the person designated by Prime VIII, L.P. and
such other Holders of Preferred Stock, if any, the Holders of Preferred Stock
will have the right to appoint an observer to attend all meetings of the
Company's Board of Directors. Further, and independent of such observer right,
at any time that the designee to the Board of Directors is not an employee of an
Investor or any of such Investor's affiliates, such Investor shall have an
additional right to appoint an observer to attend all meetings of the Company's
Board. The Company shall pay all reasonable out-of-pocket expenses for any such
observers' attendance at Board meetings. The Company may require all observers
to sign a reasonable confidentiality agreement.
7.11 Proxy Statement. The Company will (i) as promptly as
practicable following the date of this Agreement, prepare and file with the
Commission, and use its commercially reasonable efforts to have cleared by the
Commission and thereafter mail to its stockholders as promptly as practicable, a
proxy statement and a form of proxy, in connection with the vote at a meeting of
the Company's stockholders (such proxy statement, together with any amendments
thereof or supplements thereto, in each case in the form or forms mailed to the
Company's stockholders, is called the "Proxy Statement"), (ii) use its best
efforts to obtain the necessary approvals by its stockholders of the Proposed
Amendments and the transactions contemplated by this Agreement and (iii)
otherwise comply with all legal requirements applicable to such meeting. The
Company will include in the Proxy Statement the recommendation of its Board of
Directors that stockholders of the Company vote in favor of the approval of the
Proposed Amendments. The Company will use its best efforts to conduct the
stockholders' meeting on or before {July} August 31, 1999.
7.12 Replacement of Certificates. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of any certificate representing any of the Securities, issue a new
certificate representing such Securities in lieu of such lost, stolen,
destroyed, or mutilated certificate.
7.13 Compliance With Designation and Bylaws. Perform and
observe all requirements of the Company's Bylaws and the Designation, including
without limitation its obligations to the Holders of Securities set forth in the
Designation and the Company's Bylaws.
7.14 Notice of Failure to Comply with Total Leverage Test.
Provide prompt written notice to the Holders of shares of Preferred Stock of the
Company's failure to meet the Total Leverage Ratio, as defined in the
Designation.
15
7.15 Notice of Occurrence of Triggering Event. Provide prompt
written notice to the Holders of shares of Preferred Stock of the occurrence of
a Triggering Event, as defined in the Designation.
7.16 Amendments to or Repeal of Bylaws. Amend or repeal any
bylaw in any manner that would significantly and adversely affect the right and
preferences of the Preferred Stock.
8.0 Investor Regulatory Compliance.
8.1 Violation of BHCA. If any Investor or an Affiliate of any
Investor determines that it has a BHCA Issue (as defined below), the Company
agrees to use commercially reasonable efforts to take all such actions as are
reasonably requested by such Investor or such Affiliate in order to, at the
option of such Investor or such Affiliate, (a) effectuate and facilitate an
assignment or transfer by such Investor or such Affiliate of all or a part of
its interest in the Company represented by Preferred Stock or Class A Common
Stock issued upon conversion of Preferred Stock to a person or entity designated
by such Investor or such Affiliate, provided that such assignment or transfer is
in compliance with applicable federal and state securities laws and the assignee
or transferee agrees to be bound by this Agreement, or (b) amend this Agreement
or the Designation to enable such Investor to retain its interest in the
Company.
8.2 BHCA Issue. For purposes of this Agreement, a "BHCA Issue"
means any facts or circumstances under which any Investor or an Affiliate of any
Investor is or may be in violation or potential violation of the Bank Holding
Company Act of 1956, as amended from time to time (and any successor law
thereto), or the rules and regulations promulgated thereunder (collectively, the
"Bank Holding Company Act"), or any assertion by any governmental regulatory
agency that any Investor or an Affiliate of any Investor is or may be in
violation or potential violation of the Bank Holding Company Act by virtue of
such Investor or an Affiliate of such Investor holding, or exercising any
significant right with respect to, any capital stock of the Company.
9.0 Right to Demand Exchange of Preferred Stock; Reincorporation of the
Company or Change in Alaskan Law.
(a The Company shall have the right at any time
to exchange all, but not less than all, of the then-outstanding shares of
Preferred Stock for a subordinated debt instrument with terms identical to those
of the Preferred Stock (a "Debt Instrument"). Prior to exchanging the Preferred
Stock for a Debt Instrument, the Company must give the Holders of Preferred
Stock at least thirty (30) days written notice of its intent to exchange the
Preferred Stock for a Debt Instrument and must provide such Holders with the
proposed terms of the Debt Instrument in order that such Holders may confirm
that the terms of the Debt Instrument are identical to the terms of the
Preferred Stock. The Company shall draft all documents necessary to effect such
exchange, including an appropriate indenture, which documents shall be
satisfactory to the Holders of Preferred Stock and their counsel in their sole
discretion. The Company shall pay all expenses (including reasonable fees and
expenses of counsel) of the Holders incurred in
16
connection with any such exchange. Upon the surrender by each Holder of its
shares of Preferred Stock, the Company shall issue to each surrendering Holder a
Debt Instrument with an aggregate face amount equal to the sum of (i) the number
of shares of Preferred Stock of such Holder multiplied by $1,000 per share, plus
(ii) all accrued and unpaid dividends payable with respect to such shares
pursuant to the terms of Section 2 of the Designation, whether or not earned or
declared, to and including the date of exchange. The Company shall take all
necessary steps and actions to promptly issue Debt Instruments to all Holders of
Preferred Stock pursuant to this Section 9, including without limitation, using
its best efforts to (i) obtain all necessary consents, waivers and approvals
from third parties, (including, without limitation, any financial institutions
which have issued indebtedness to the Company) required in order to permit the
Company to issue the Debt Instruments to such holders of Preferred Stock and
(ii) enter into any subordination agreements or arrangements which may be
required by any such third parties. Following receipt of notice pursuant to this
Section 9 from the Company and until the exchange shall be effected, each Holder
shall continue to have the right to convert their shares of Preferred Stock into
shares of Class A Common Stock pursuant to the Designation.
(b In the event the Company is reincorporated in
Delaware or any other state or Alaskan law is changed such that the Company is
permitted to issue equity redeemable at the option of the Holder, the parties
hereto agree to enter into appropriate amendments to this Agreement and the
Designation to (i) permit the Holders of Preferred Stock to demand redemption at
any time after the fourth anniversary of the date hereof or upon a Triggering
Event, as defined in the Designation, and (ii) to remove the increase in the
dividend rate to 17% per annum as set forth in Section 2 of the Designation. Any
amendments entered into pursuant to this Section 9(b) shall be satisfactory to
the Holders of the Preferred Stock and their counsel and the Company and its
counsel{, each in their sole discretion}.
10.0 Registration Rights. The Holders of shares of Preferred Stock
issued pursuant to this Agreement shall have the following rights with respect
to (i) all of the shares of Class A Common Stock issued or issuable upon
conversion of the Preferred Stock, whether owned by the Investors or not, and
(ii) any securities issued or issuable with respect to the Class A Common Stock
referred to in clause (i) above by way of a stock dividend or a stock split or
in connection with a combination of shares, reclassification, recapitalization,
merger or consolidation or reorganization; provided however, that such shares of
Class A Common Stock shall only be treated as Registrable Securities if and so
long as (i) they cannot be sold pursuant to Rule 144(k) promulgated under the
Securities Act or any successor provision, (ii) they have not been sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (iii) they have not been sold in a transaction exempt
from the registration and prospectus delivery requirements of the Securities Act
under Section 4(1) thereof so that all transfer restrictions and restrictive
legends with respect to such Class A Common Stock are removed upon the
consummation of the sale (collectively, the "Registrable Securities"):
17
10.1 Demand Registration. At any time after the date hereof,
any Holder or Holders of at least fifteen percent (15%) of the Registrable
Securities and any of its permitted successors hereunder (the "Initiating
Holder" or "Initiating Holders") acting alone, or together with other Holders
qualifying as Initiating Holders, shall have the right to request, on two
separate occasions, that the Company prepare and promptly file a registration
statement on Form S-3 (or, if such form is not then available, Form S-2 or such
other form then available for registration by the Company) under the Securities
Act covering Registrable Securities. Upon the receipt of such request, the
Company shall give prompt written notice to all other Holders of Registrable
Securities that such registration is to be effected. The Company shall include
in such registration statement such Registrable Securities for which it has
received a written request to register such Registrable Securities by the
Holders thereof within fifteen (15) days after the receipt of written notice
from the Company. The Company must file the registration statement within sixty
(60) days of the expiration of the above-referenced fifteen (15) day period and
the Company shall use its best efforts to have such registration statement
declared effective by the Commission within sixty (60) days after the filing
thereof.
If the Initiating Holder so demands, the registration pursuant
to this Section 10.1 shall be an underwritten public offering and only shares of
Registrable Securities which are to be included in the underwriting may be
included in such registration. The Holders of a majority of the Registrable
Securities held by the Initiating Holders and included in any registration
pursuant to this Section 10.1 shall have the right to select the managing
underwriter(s) for such registration. If the underwriter(s) so designated
advises the Company and the Holders participating in such registration in
writing that in their opinion, the number of Registrable Securities requested to
be included in such offering exceeds the number of Registrable Securities which
can be sold in such offering, the Company will include in such registration such
number of Registrable Securities which in the opinion of such underwriter(s) may
be sold, allocated among the Holders of Registrable Securities electing to
participate in such registration on a pro rata basis, based upon each such
Holder's respective proportionate ownership of the aggregate amount of
Registrable Securities requested to be included in such registration by all of
the Holders of Registrable Securities. The Company will not include in such
registration pursuant to this Section 10.1 any securities which are not
Registrable Securities unless all Registrable Securities as to which an election
to participate has been delivered to the Company are included and the
underwriter(s) do not object to the inclusion of such additional securities.
10.2 Prompt Registration of Class A Common Stock. Promptly
upon (and in any event not more than thirty (30) days after), (i) a Mandatory
Conversion by the Company of the shares of Preferred Stock into shares of Class
A Common Stock pursuant to Section 8(l) of the Designation or (ii) receipt of a
notice to convert from a Holder or Holders of shares of Preferred Stock pursuant
to Section 8(m) of the Designation in connection with the Company's failure to
redeem shares of Preferred Stock subject to Mandatory Redemption or Optional
Redemption, the Company shall prepare and file, and use its commercially
reasonable efforts to have declared effective, a registration statement on Form
S-3 (or such other then applicable form) covering all shares of Class A Common
Stock to be issued upon such conversion. Registration
18
pursuant to this Section 10.2 shall not count as a demand registration pursuant
to Section 10.1 hereof.
10.3 Piggyback Rights. In addition, each time the Company
shall determine to file a registration statement under the Securities Act (other
than pursuant to Section 10.1 or 10.2 hereof and other than on a Form ▇-▇, ▇▇▇▇
▇-▇ or any similar form covering solely an employee benefit plan) in connection
with the proposed offer and sale for money of any of its securities either for
its own account or on behalf of any other security Holder, the Company shall
give prompt written notice of such determination to all Holders of Registrable
Securities. Each Holder shall provide a written request to the Company if it
desires to participate in such registration (the "Holder Notice") stating the
number of shares of Registrable Securities to be registered, which Holder Notice
must be given within thirty (30) days after receipt by the Holder of the
Company's notice. Upon receipt of a Holder Notice, the Company shall cause all
shares of Registrable Securities with respect to which such Holder has requested
registration to be included in such registration statement and registered under
the Securities Act, all to the extent requisite to permit the sale or other
disposition by the prospective seller or sellers of the Registrable Securities
to be so registered. If the registration of which the Company gives written
notice pursuant to this Section 10.3 is for a public offering involving an
underwriting, the Company shall so advise the Holders as a part of its written
notice.
If the registration of which the Company gives notice pursuant
to this Section 10.3 is for an underwritten public offering, only a Holder's
share of Registrable Securities which such Holder agrees may be included in the
underwriting may be included in such registration, and the Company shall have
the right to designate the managing underwriter(s) in any such underwritten
public offering; provided that the Company shall use its best efforts to cause
the managing underwriter(s) to include such Holder's Registrable Securities
requested to be included in the registration in the underwriting. If the
managing underwriter(s) advises the Holders of Registrable Securities
participating in such registration in writing that the total amount of
securities which such Holders, the Company, and any other stockholders of the
Company intend to include in such offering is sufficiently large to materially
and adversely affect the success of such offering, the Company will limit the
registration (i) first, to the securities the Company intends to sell in such
registration, and (ii) second, to Registrable Securities as to which a request
for inclusion has been made and securities held by other stockholders having
contractual registration rights, pro rata among the holders thereof based upon
each holder's percentage ownership of the aggregate amount of securities as to
which a request for inclusion has been made. In such case, no securities shall
be included in the offering on behalf of stockholders of the Company who do not
have piggyback registration rights as of the date of this Agreement. If any
Holder of Registrable Securities disapproves of the terms of such underwriting,
it may elect to withdraw therefrom by written notice to the Company at least
twenty (20) days prior to the effective date of the Company's registration
statement.
19
If a registration under Section 10.1, 10.2 or 10.3 shall be in
connection with an underwritten public offering, each Holder of Registrable
Securities shall be deemed to have agreed by acquisition of such Registrable
Securities not to effect any sale or distribution, including any sale pursuant
to Rule 144 or Rule 144A, of any Registrable Security, and to use such Holder's
reasonable best efforts not to effect any such sale or distribution of any other
Equity Security of the Company or of any security convertible into or
exchangeable or exercisable for any Equity Security of the Company (other than
as part of such underwritten public offering) within seven (7) days before or
ninety (90) days after the effective date of such registration statement (and
the Company hereby also so agrees, and agrees to use its best efforts to cause,
each Holder of any Equity Security , or of any security convertible into or
exchangeable or exercisable for any Equity Security, of the Company purchased
from the Company at any time other than in a public offering, so to agree.)
As a condition to the inclusion of the Holder's Registrable
Securities in any registration statement, Holder will furnish to the Company
such information with respect to Holder as is required to be disclosed in the
registration statement (and the prospectus included therein) by the applicable
rules, regulations and guidelines of the Commission. Failure of a Holder to
furnish such information or agreement shall not affect the obligation of the
Company under this Section 10 to the remaining Holders of Registrable
Securities. So long as any Registrable Securities are outstanding, the Company
will not grant any additional registration rights to any other Person which
would give such other Person the right to have securities registered in priority
to or pro rata with the Holders of Registrable Securities.
If, at any time after giving notice of the intention to
register any securities under this Section 10.3 and prior to the effective date
of the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities, the
Company may, at its election, give notice of such determination to the Holders
of Registrable Securities and thereupon will be relieved of its obligation to
register any such securities in connection with such registration.
10.4 Procedure. If and whenever the Company is required by the
provisions of this Section 10 to effect the registration of Registrable
Securities under the Securities Act, the Company, at its expense and as
expeditiously as possible shall, in accordance with the Securities Act and all
applicable rules and regulations, prepare and file with the Commission a
registration statement with respect to such securities and shall use its
commercially reasonable efforts to cause such registration statement to become
and remain effective until the securities covered by such registration statement
have been sold, and prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus contained therein
as may be necessary to keep such registration statement effective and such
registration statement and prospectus accurate and complete until the securities
covered by such registration statement have been sold; provided that the Company
shall not be required to maintain the effectiveness of any registration (other
than a registration pursuant to Section 10.2 hereof which shall be maintained
effective until all registered securities are sold or the Holders of
20
Registrable Securities otherwise agree in writing to its withdrawal) for a
period longer than one-hundred eighty (180) days after the effective date of
such registration statement. The Company shall furnish to each of the Holders
participating in such registration and to such Holders' counsel and the
underwriters of securities being registered such number of copies of the
registration statement and each amendment and supplement thereto, preliminary
prospectus, final prospectus and such other documents as such underwriters and
Holders may reasonably request in order to facilitate the public offering of
such securities. In addition, the Company shall otherwise take such other
actions as are necessary and appropriate to effect any such registration in
compliance with all provisions of the Securities Act and all applicable state
securities laws, including, without limitation, using its commercially
reasonable efforts to register or qualify the securities covered by such
registration statement under such state securities or Blue Sky laws of such
jurisdictions as are reasonably necessary to effect the sale thereof (other than
in any jurisdiction where the Company would be required to execute a general
consent to service of process where it has not already filed such consent) and
such other actions as each of the Holders participating in such registration
shall reasonably request. The Company shall also promptly notify each of the
Holders participating in such registration at any time when a prospectus
relating to Registrable Securities 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 any facts necessary to make the statements
contained therein not misleading and at the request of any such Holder the
Company will promptly prepare a supplement or amendment to such prospectus so
that as thereafter delivered to the purchasers of such securities, 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. The
Company shall promptly inform each of the Holders participating in such
registration of any and all correspondence between the Company and the
Commission with respect to such registration.
10.5 Expenses. As to all registrations under Sections 10.1,
10.2 and 10.3, the Company shall pay all costs, fees and expenses incident to
the performance and compliance by the Company with Section 10, including,
without limitation, (A) all registration and filing fees; (B) all printing
expenses; (C) all fees and disbursements of counsel and independent public
accountants for the Company; (D) all blue sky fees and expenses (including fees
and expenses of counsel in connection with blue sky surveys); (E) all transfer
taxes; (F) the entire expense of any audits incident to such registration
required by the rules and regulations of the Commission; (G) the cost of
distributing prospectuses in preliminary and final form as well as any
supplements thereto; and (H) the fees and expenses of one counsel for the
Holders of the Registrable Securities being registered. Each Holder of
Registrable Securities shall bear its proportionate cost of all underwriting
fees and commissions relating to Registrable Securities, such proportionate
amount to be equal to a fraction, the numerator of which is the amount of
Registrable Securities being registered by such Holder and the denominator of
which is the aggregate number of Registrable Securities being registered by all
of the Holders of Registrable Securities participating in such registration.
10.6 Indemnification.
21
(a) The Company hereby agrees to indemnify and
hold harmless each Holder of Registrable Securities included in a registration
statement pursuant to this Section 10 and each of such Holder's partners,
employees, affiliates, officers and directors and each person who controls such
Holder within the meaning of the Securities Act and any underwriter (as defined
in the Securities Act) for such Holder, and any person who controls such
underwriter within the meaning of the Securities Act, from and against, and
agrees to reimburse promptly such Holder, its partners, employees, affiliates,
officers, directors and controlling persons and each such underwriter and
controlling person of such underwriter with respect to, any and all claims,
actions (actual or threatened), demands, losses, damages, liabilities, costs and
expenses to which such Holder, its partners, employees, affiliates, officers,
directors or controlling persons, or any such underwriter or controlling person
of such underwriter may become subject under the Securities Act or otherwise,
insofar as such claims, actions, demands, losses, damages, liabilities, costs or
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration statement, any
prospectus contained therein, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
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;
provided, however, that the Company will not be liable in any such case to the
extent that any such claim, action, demand, loss, damage, liability, cost or
expense is caused by an untrue statement or alleged untrue statement or omission
or alleged omission so made in strict conformity with written information
furnished by such Holder, such underwriter or such controlling person (as the
case may be) specifically for use in the preparation thereof.
(b) Each Holder of Registrable Securities which
are included in a registration statement pursuant to this Section 10 hereby
agrees, severally only and not jointly, to indemnify and hold harmless the
Company, its employees, Affiliates, officers and directors and each person who
controls the Company within the meaning of the Securities Act, from and against,
and agrees to reimburse the Company, its employees, Affiliates, officers,
directors and controlling persons with respect to, any and all claims, actions
(actual or threatened), demands, losses, damages, liabilities, costs and
expenses to which the Company, its officers, directors, or such controlling
persons may become subject under the Securities Act or otherwise, insofar as
such claims, actions, demands, losses, damages, liabilities, costs or expenses
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in such registration statement, any prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a 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, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in reliance upon
and in strict conformity with written information furnished by such Holder
specifically for use in the preparation thereof. Notwithstanding any provision
to the contrary contained herein, the aggregate liability of each Holder of
Registrable Securities pursuant to this Section 10.6 shall be limited to an
amount equal to the gross proceeds received by such Holder from the offering of
Registrable Securities registered by such Holder pursuant to this Section 10.
22
(c) Promptly after receipt by a party indemnified
pursuant to the provisions of subsection (a) or (b) of this Section 10.6 of
notice of the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim therefor
is to be made against the indemnifying party in writing pursuant to the
provisions of subsection (a) or (b), notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 10.6 and shall not relieve the indemnifying
party from liability under this Section 10.6. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
parties similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel (in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties). Upon the permitted assumption by the indemnifying party of the defense
of such action, and approval by the indemnified party of counsel, which approval
will not be unreasonably withheld, the indemnifying party shall not be liable to
such indemnified party under subsection (a) or (b) for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof (other than reasonable costs of investigation) unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the immediately
preceding sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time, (iii) the indemnifying party and its counsel do not actively
and vigorously pursue the defense of such action, or (iv) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. No indemnifying party shall be liable to an
indemnified party for any settlement of any action or claim without the consent
of the indemnifying party and no indemnifying party may unreasonably withhold
its consent to any such settlement. No indemnifying party will consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability with respect to such claim or
litigation.
(d) If the indemnification provided for in
subsection (a) or (b) of this Section 10.6 is held by a court of competent
jurisdiction to be unavailable to a party to be indemnified with respect to any
claims, actions, demands, losses, damages, liabilities, costs or expenses
referred to therein, then each indemnifying party under any such subsection, in
lieu of indemnifying such indemnified party thereunder, hereby agrees to
contribute to the amount paid or payable by such indemnified party as a result
of such claims, actions, demands, losses, damages, liabilities, costs or
expenses in such proportion as is appropriate to reflect the relative benefits
received by such indemnifying
23
party on the one hand and the indemnified party on the other from the related
offering. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount payable by such indemnified person in such proportion
as is appropriate to reflect not only such relative benefits but also the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions which resulted
in such claims, actions, demands, losses, damages, liabilities, costs or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by an indemnifying party on the one hand and an indemnified
party on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by each party
bear to the total net proceeds from the offering received by each other party
and, with respect to an underwriter, the total underwriting discounts and
commissions received by such underwriter, and in each case as set forth in the
table on the cover page of the related prospectus. The relative fault of the
indemnifying party and of the indemnified party 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 the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution hereunder from any person who was not guilty of such fraudulent
misrepresentation.
(e) In addition to its other obligation under
this Section 10.6, the Company further agrees to reimburse promptly each Holder
of Registrable Securities included in a registration statement pursuant to this
Agreement (and each of such Holder's controlling persons, officers, directors,
and underwriters (and controlling persons of such underwriters)) on a monthly
basis for all reasonable legal fees, expenses and other fees and expenses
incurred by such Holder in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or admission, described in
subsection (a) of this Section 10.6, notwithstanding the possibility that such
payments might later be held to be improper. To the extent that any payment is
ultimately held to be improper, each person receiving such payment shall
promptly refund such payment.
10.7 Delay in Registration. Notwithstanding anything to the
contrary herein, the Company may postpone any registration which is requested
pursuant to this Agreement for a reasonable period of time (not exceeding 30
days) if its Board determines in good faith and a responsible officer so advises
the Holders participating in such registration in writing that it is advisable
to defer public disclosure of material corporate developments or other
information, and that such registration and the disclosures required to be made
pursuant thereto could have a material adverse effect on the Company or on the
public market for its securities; provided that the right to delay registration
pursuant to this Section 10.7 shall not be exercised more than one time during
any consecutive 12-month period.
24
11. Right of First Refusal.
11.1 Subsequent Offerings. Each Holder of shares of Preferred
Stock issued pursuant hereto or shares of Class A Common Stock into which such
shares of Preferred Stock were converted shall have the right of first refusal
to purchase such Holder's pro rata share (based on the portion of all shares of
Preferred Stock held or formerly held by such Holder) of the greater of (i) the
sum of each Holder's Class A Common Percentage of, or (ii) $5,000,000 {(divided
among such Holders based on their pro rata share)} in the aggregate of, any
Equity Securities that the Company may, from time to time, propose to sell and
issue after the Closing Date, other than Equity Securities excluded by Section
11.2 hereof. Each Holder's Class A Common Percentage is the ratio of the total
number of shares of Class A Common Stock which such Holder is entitled to
receive upon conversion of its shares of Preferred Stock immediately prior to
the issuance of such Equity Securities to the total number of shares of Class A
Common Stock outstanding immediately prior to the issuance of such Equity
Securities. The right to participate in subsequent offerings pursuant to this
Section 11.1 shall terminate as to a Holder as of the earlier of (i) the date
such Holder no longer owns any shares of Preferred Stock or Class A Common Stock
issued upon the conversion of Preferred Stock or (ii) the date that is one year
after such Holder has converted all shares of Preferred Stock held by it into
shares of Class A Common Stock.
11.2 Excluded Securities. The rights of first refusal
established by this Section 11 shall have no application to any of the following
Equity Securities: (a) shares of Common Stock issued to employees or directors
of or consultants or advisors to the Company under employee or management stock
option agreements or plans; (b) the shares of Preferred Stock issued pursuant
hereto; (c) stock issued pursuant to any rights or agreements including, without
limitation, convertible securities, options and warrants, provided that the
rights of first refusal established by this Section 11 applied with respect to
the initial sale or grant by the Company of all such rights or agreements; (d)
any Equity Security issued for a consideration other than cash pursuant to a
merger, consolidation, acquisition or similar business combination; (e) any
Equity Security that is issued by the Company as part of an underwritten public
offering; (f) shares of Common Stock issued in connection with any stock split,
stock dividend or reverse stock split; and (g) any Equity Security which the
Holders of at least 80% of the then-outstanding shares of Preferred Stock issued
pursuant hereto or shares of Class A Common Stock into which such shares of
Preferred Stock were converted, agree in writing shall not be subject to this
Section 11.
11.3 Exercise of Rights. If and each time the Company proposes
to issue Equity Securities, it shall give each such Holder of shares of
Preferred Stock or shares of Class A Common Stock into which such shares of
Preferred Stock were converted written notice (the "Equity Notice") of its
intention, describing the Equity Securities (including, without limitation, the
voting powers, preferences or other special rights and the qualifications,
limitations or restrictions thereof), the issuance price, the general terms and
conditions upon which the Company proposes to issue the same and each Holder's
applicable pro rata share. Each Holder shall have thirty (30) days from the
giving of the Equity Notice to agree to purchase its pro rata share of Equity
Securities for the price and upon the terms and conditions specified in the
Equity Notice by giving written notice to the Company and stating therein the
quantity of Equity Securities such Holder intends to purchase, it being
understood that each Holder may in its sole discretion purchase any or all of
its pro rata share of Equity Securities. Each Holder shall
25
have a right of over-allotment such that if any Holder of shares of Common Stock
fails to exercise its rights hereunder to purchase its entire pro rata portion
of the Equity Securities, the other such Holders may purchase any or all of the
nonpurchasing Holder's portion on a pro rata basis, within ten (10) days from
the end of such thirty (30) day period.
11.4 Issuance of Equity Securities to other Persons. If the
Holders of shares of Preferred Stock issued pursuant hereto or shares of Class A
Common Stock into which such shares of Preferred Stock were converted fail to
exercise in full the rights of first refusal within forty (40) days from the
date of the giving of the Equity Notice to the Holders, the Company shall have
ninety (90) days thereafter to complete the sale of any of the Equity Securities
in respect of which the Holders' rights were not exercised, at a price and upon
general terms and conditions no more favorable to the purchasers thereof than
those specified in the Company's notice to the Holders pursuant to Section 11.3
hereof. If the Company has not sold all of these Equity Securities within such
ninety (90) days, the Company shall not thereafter issue or sell any of such
Equity Securities, without first offering such securities to the Holders of
shares of Preferred Stock issued pursuant hereto or shares of Class A Common
Stock into which such shares of Preferred Stock were converted in the manner
provided above.
12. Enforcement.
12.1 Remedies at Law or in Equity. If any Default shall occur
or if any representation or warranty made by or on behalf of the Company in this
Agreement or in any certificate, report or other instrument delivered under or
pursuant to any term hereof shall be untrue or misleading in any respect as of
the date of this Agreement or as of the date it was made, furnished or
delivered, the Holder of any Security may proceed to protect and enforce its
rights by suit in equity or action at law, whether for the specific performance
of any term contained in this Agreement or the Designation or for an injunction
against the breach of any such term or in aid of the exercise of any power
granted in this Agreement or the Designation, or to enforce any other legal or
equitable right of such Holder of any such Securities, or to take any one or
more of such actions. In the event a Holder brings such an action against the
Company, the prevailing party in such dispute shall be entitled to recover from
the losing party all fees, costs and expenses of enforcing any right of such
prevailing party under or with respect to this Agreement or the Designation,
including, without limitation, such fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.
12.2 Cumulative Remedies. None of the rights, powers or
remedies conferred upon any Holder of shares of Preferred Stock or Class A
Common Stock shall be mutually exclusive, and each such right, power or remedy
shall be cumulative and in addition to every other right, power or remedy,
whether conferred hereby or by the Designation or now or hereafter available at
law, in equity, by statute or otherwise.
12.3 No Implied Waiver. Except as expressly provided in this
Agreement, no course of dealing between the Company and the Investors or the
Holder of any Security and no delay in exercising any such right, power or
remedy conferred hereby
26
or by the Designation now or hereafter existing at law, in equity, by statute or
otherwise, shall operate as a waiver of, or otherwise prejudice, any such right,
power or remedy.
13. Definitions. Unless the context otherwise requires, the terms
defined in this Section 13 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms herein defined. All accounting terms defined in this Section 13
and those accounting terms used in this Agreement not defined in this Section 13
shall, except as otherwise provided for herein, be construed in accordance with
those generally accepted accounting principles that the Company is required to
employ by the terms of this Agreement. If and so long as the Company has any
Subsidiary, the accounting terms defined in this Section 13 and those accounting
terms appearing in this Agreement but not defined in this Section 13 shall be
determined on a consolidated basis for the Company and each of its Subsidiaries,
and the financial statements and other financial information to be furnished by
the Company pursuant to this Agreement shall be consolidated.
"Affiliate" shall mean any Person which directly or indirectly
controls, is controlled by, or is under common control with, the indicated
Person. For purposes of this definition "control" when used with respect to any
Person includes, without limitation, the direct or indirect beneficial ownership
of more than ten percent (10%) of the voting securities or voting equity or
partnership interests of such Person, or the power to direct or cause the
direction of the management or policies of such Person, whether by contract or
otherwise.
"Agreement" shall mean this Agreement.
"Applicable Law" shall mean all provisions of constitutions,
statutes, rules, regulations, and orders of governmental bodies or regulatory
agencies applicable to the Company, including, without limitation, the Licenses,
the Communications Act of 1934, as amended, Environmental Laws, and Title 17 of
the United States Code and all orders and decrees of all courts and arbitrators
in proceedings or actions to which the Company is a party or by which it is
bound.
"Articles" shall have the meaning assigned to it in Section 1
hereof.
"Authorized Signatory" shall mean such senior personnel of the
Company as may be duly authorized and designated in writing by the Company to
execute documents, agreements and instruments on behalf of the Company.
"BHCA Issue" shall have the meaning assigned to it in Section
8.2 hereof.
"Bank Holding Company Act" shall have the meaning assigned to
is in Section 8.2 hereof.
"Board" shall mean the Board of Directors of the Company.
27
"Business Day" shall mean a day on which banks and foreign
exchange markets are open for the transaction of business required for this
Agreement in London and New York, as relevant to the determination to be made or
action to be taken.
"Class A Common Stock" shall have the meaning assigned to it
in Section 1 hereof.
"Class B Common Stock" shall have the meaning assigned to it
in Section 4.1 hereof.
"Common Stock" shall have the meaning assigned to it in
Section 4.1 hereof.
"Commission" shall mean the Securities and Exchange
Commission.
"Company SEC Reports" shall have the meaning assigned to it in
Section 5.21 hereof.
"Credit Facilities" shall mean (i) that certain $50,000,000
Amended and Restated Credit Agreement, dated as of November 14, 1997, between
GCI Holdings, Inc., a wholly-owned indirect subsidiary of the Company ("GCI
Holdings"), as borrower, NationsBank of Texas, N.A., as administrative agent,
Credit Lyonnais New York Branch, as documentation agent, and TD Securities
(USA), Inc., as syndication agent, as amended, (ii) that certain $200,000,000
Amended and Restated Credit Agreement, dated as of November 14, 1997, between
GCI Holdings, as borrower, NationsBank of Texas, N.A., as administrative agent,
Credit Lyonnais New York Branch, as documentation agent, and TD Securities
(USA), Inc., as syndication agent, as amended, (iii) that certain Credit and
Security Agreement dated as of January 27, 1998 among Alaska United Fiber System
Partnership, Credit Lyonnais New York Branch, NationsBank of Texas, N.A., TD
Securities (USA), Inc. and the other lenders referred to therein, as amended,
and (iv) the Company's 9 3/4% Senior Notes in the principal amount of
$180,000,000.
"Debt Instrument" shall have the meaning assigned to it in
Section 9 hereof.
"Default" shall mean a default or failure in the due
observance or performance of any covenant, condition or agreement on the part of
the Company or any of its Subsidiaries to be observed or performed under the
terms of this Agreement or the Designation, if such default or failure in
performance shall remain unremedied for ten (10) days.
"Designation" shall have the meaning assigned to it in Section
1 hereof.
"Environmental Laws" shall mean any and all federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, permit conditions, decrees or requirements of any governmental authority
regulating, relating to or imposing liability or standards of conduct concerning
environmental protection matters, including, without limitation, those relating
to releases, discharges, emissions or disposals to air,
28
water, land or ground water, to the withdrawal or use of ground water, to the
use, handling or disposal of polychlorinated biphenyals, asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited or regulated substances,
including, without limitation, any provisions under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. ss. 9601 et seq.) or the Resource Conservation and Recovery Act of 1976,
as amended (42 U.S.C. ss. 6901, et seq.).
"Equity Notice" shall have the meaning assigned to it in
Section 11.3 hereof.
"Equity Security" shall mean any stock or similar security of
the Company or any security (whether stock or indebtedness) convertible or
exchangeable, with or without consideration, into or for any stock or similar
security or any security (whether stock or indebtedness) carrying any warrant or
right to subscribe to or purchase any stock or similar security or any such
warrant or right.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as in effect on the date hereof and as such Act may be amended
thereafter from time to time.
"ERISA Affiliate" shall mean any Person which is an
"Affiliate" of the Company within the meaning of Section 414 of the Internal
Revenue Code and which, together with the Company, is treated as a single
employer for purposes of such Section 414.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"FCC" shall mean the Federal Communications Commission or any
successor agency.
"FCC License" shall mean any community antennae relay service,
broadcast auxiliary license, earth station registration, business radio,
microwave or special safety radio service license issued by the FCC pursuant to
the Communications Act of 1934, as amended, and any other FCC license from time
to time necessary or advisable for the operation of the Company's business.
"Financials" shall have the meaning assigned to it in Section
5.11 hereof.
"Hazardous Materials" shall mean all toxic and hazardous
substances and wastes and petroleum products.
"Holder" of any Security shall mean the record or beneficial
owner of such Security.
29
"Holder Notice" shall have the meaning assigned to such term
in Section 10.3 hereof. "Initiating Holder" shall have the meaning assigned to
such term in Section 10.1 hereof.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended.
"Investor" and "Investors" shall have the meaning assigned to
it in the introductory paragraph of this Agreement.
"Licenses" shall mean any license, permit, certificate of
need, authorization, certification, accreditation, franchise, approval or grant
of rights, whether based upon any agreement, statute, order, ordinance or
otherwise granted by any governmental authority to the Company or any Subsidiary
necessary or appropriate for the Company or any Subsidiary to engage in its
business as currently conducted, including, without limitation, in order to
provide telecommunication, local, long distance and wireless telephone services,
cable television services or internet services to residential, commercial or
governmental users, including, without limitation, FCC Licenses, together with
any amendment, modification or replacement with respect thereto.
"Lien" shall mean with respect to any property, any mortgage,
lien, pledge, charge, security interest or other encumbrance of any kind,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement and any lease
deemed to constitute a security interest and any option or other agreement to
give any security interest).
"Mandatory Redemption" shall mean the redemption by the
Company of the shares of Preferred Stock on the terms and under the conditions
set forth in Section 4 of the Designation.
"Mandatory Redemption Event" shall mean any event described in
Section 4 of the terms of the Preferred Stock set forth in the Designation, the
occurrence of which shall result in the mandatory redemption of the Preferred
Stock.
"Material Agreement" shall have the meaning assigned to it in
Section 5.14 hereto.
"Materially Adverse Effect" shall mean any materially adverse
effect upon the business operation, assets, liabilities, financial condition,
results of operations or business prospects of the Company or any of its
Subsidiaries, or the ability of the Company to perform this Agreement or observe
the terms of the Designation, resulting from any act, omission, situation,
status, event or undertaking, either singly or taken together.
30
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Necessary Authorizations" shall mean all authorizations,
consents, permits, exemptions, approvals and licenses from, and all filings and
legislations with, and all required reports to, any governmental or regulatory
authority, including without limiting the foregoing the Licenses and approvals,
licenses, filings and registrations under the Communications Act of 1934, as
amended, necessary in order to enable the Company to consummate the transactions
contemplated by this Agreement.
"Optional Redemption" shall mean the redemption, at the option
of the Investors or the Company, of the shares of Preferred Stock on the terms
and on the conditions as set forth in Sections 4 and 5 of the Designation.
"Person" shall include any natural person, corporation, trust,
association, company, partnership, joint venture and other entity and any
government, governmental agency, instrumentality or political subdivision.
"Plan" shall mean an employee benefit plan within the meaning
of Section 3(3) of ERISA or any other plan maintained for employees of any
Person or any ERISA Affiliate of such Person.
"Preferred Stock" shall have the meaning assigned to it in
Section 1 hereof.
"Property" shall mean any real property or personal property,
plant, building, facility, structure, underground storage tank or unit,
equipment, inventory or other asset, owned, leased or operated by the Company or
any Subsidiary of the Company (including, without limitation, any surface water
thereon or adjacent thereto, and soil and groundwater thereunder).
"Proposed Amendments" shall have the meaning assigned to it in
Section 6.5 hereof.
"Registrable Securities" shall have the meaning assigned to it
in Section 10 hereof.
"Reportable Event" shall have the meaning set forth in Title
IV of ERISA.
"Required Payment" shall have the meaning assigned to it in
Section 2 hereof.
"Securities" shall have the meaning assigned to it in Section
1 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
31
"Subsidiary" shall mean (i) any corporation of which fifty-one
percent (51%) or more of the voting stock, or any partnership or limited
liability company of which fifty-one percent (51%) or more of outstanding
interests, is at any time owned by the Company, or by one or more Subsidiaries
of the Company, or by the Company and one or more Subsidiaries of the Company,
and (ii) any other entity which is controlled or capable of being controlled by
the Company or by one or more Subsidiaries of the Company r by the Company and
one or more Subsidiaries of the Company.
14. Miscellaneous.
14.1 Waivers and Amendments. With the written consent of the
Holders of a majority of the outstanding shares of Preferred Stock or such
higher percentage as is expressly stated {herein} in this Section 14.1 or in the
Designation, the obligations of the Company and the rights of the Holders of the
Securities under this Agreement and the rights of the Holder of the Securities
under the Designation may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a specified
period of time or indefinitely), and with the same consent the Company, when
authorized by resolution of its Board, may enter into a supplementary agreement
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of any supplemental
agreement or modifying in any manner the rights and obligations hereunder of the
Holders of the Securities and the Company; provided, however, that no such
waiver or supplemental agreement shall (a) affect any of the rights of any
Holder of a Security created by the Designation (other than rights created by
Section 7 of the Designation) or by the Alaska Corporations Code without
compliance with all applicable provisions of the Designation and the Alaska
Corporations Code, (b) reduce the aforesaid proportion of Preferred Stock, the
Holders of which are required to consent to any waiver or supplemental
agreement, without the consent of the Holders of all of the shares of Preferred
Stock or (c) adversely affect the rights of Holders of Preferred Stock pursuant
to Section 10 {or}, 11 or 12 hereof without the written consent of Holders of at
least 80% of the then outstanding shares of Preferred Stock. Upon the
effectuation of each such waiver, consent or agreement of amendment or
modification, the Company shall promptly give written notice thereof to all the
Holders of the shares of Preferred Stock in writing. Neither this Agreement nor
the Designation nor any provision hereof or thereof, may be amended, waived,
discharged or terminated orally or by course of dealing, but only by a statement
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, except to the extent provided in this
Section 14.1. Specifically, but without limiting the generality of the
foregoing, the failure of any Holder at any time or times to require performance
of any provision hereof or of the Designation by the Company shall in no manner
affect the right of any Holder at a later time to enforce the same. No waiver by
any party of the breach of any term or provision contained in this Agreement or
the Designation in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in the Agreement, the
Designation.
14.2 Rights of Holders Inter Se. Each Holder of Securities
shall have the absolute right to exercise or refrain from exercising any right
or rights which
32
such Holder may have by reason of this Agreement or any Security, including,
without limitation, the right to consent to the waiver of any obligation of the
Company under this Agreement and to enter into an agreement with the Company for
the purpose of modifying this Agreement or any agreement effecting any such
modification, and such Holder shall not incur any liability to any other Holder
or Holders of Securities with respect to exercising or refraining from
exercising any such right or rights.
14.3 Notices.3 All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered, or mailed first class postage prepaid, registered or certified mail,
(a) If to the Investors to each of them at their
respective addresses listed on Annex A attached
hereto.
or
(b) If to the Company, at the address first above
written or at such other address as the Company
may specify by written notice to Investor,
and each such notice, request, consent and other communication shall for all
purposes of the Agreement be treated as being effective or having been given
when delivered, if delivered personally, or, if sent by mail, at the earlier of
its actual receipt or three (3) days after the same has been deposited in a
regularly maintained receptacle for the deposit of United States mail, addressed
and postage prepaid as aforesaid.
14.4 Survival of Representations and Warranties, etc. All
representations and warranties made in, pursuant to or in connection with this
Agreement shall survive the execution and delivery of this Agreement, any
investigation at any time made by or on behalf of the Investors, and the sale
and purchase of the Securities and payment therefor. All statements contained in
any certificate, instrument or other writing delivered by or on behalf of the
Company pursuant hereto or in connection with or contemplation of the
transactions herein contemplated shall constitute representations and warranties
by the Company hereunder. Any claim against the Company based upon any
inaccuracy in any of the representations or breach of any of the warranties
hereunder must be asserted against the Company, either by written notice given
to the Company specifying with reasonable particularity the claimed inaccuracy
or breach or by institution of an action at law or suit in equity against the
Company and the serving of the process and complaint with respect thereto upon
the Company, within five (5) years from the Closing Date.
14.5 Severability. Should any one or more of the provisions of
this Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement,
shall be given effect separately from the provision or provisions determined to
be illegal or unenforceable and shall not be affected thereby.
33
14.6 Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, whether so
expressed or not, and, in particular, shall inure to the benefit of and be
enforceable by the Holder or Holders at the time of any of the Securities.
Subject to the immediately preceding sentence, this Agreement shall not run to
the benefit of or be enforceable by any Person other than a party to this
Agreement and its successors and assigns.
14.7 Headings. The headings of the Sections and paragraphs of
this Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
14.8 Choice of Law. It is the intention of the parties that
the internal substantive laws, and not the laws of conflicts, of the State of
New York shall govern the enforceability and validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of the
parties; provided that the Designation shall be governed by the laws of the
State of Alaska.
14.9 Expenses. The Company will promptly pay all out-of-pocket
expenses of the Investors in connection with the preparation, negotiation,
execution and delivery of this Agreement and the Designation and the
transactions contemplated hereunder and thereunder, whether or not the
transactions contemplated by this Agreement are consummated, including, but not
limited to, the fees and disbursements of Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP,
special counsel for Toronto Dominion Investors, Inc. and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, P.C., special counsel to Prime VIII, L.P. and all costs and
out-of-pocket expenses of obtaining performance under this Agreement and the
Designation or of preparing, negotiating, executing and delivering any amendment
of or consent or waiver under this Agreement or the Designation at the Company's
request, including but not limited to, reasonable fees and expenses of counsel
for the Investors. The Company shall also reimburse each Investor for any
reasonable out-of-pocket expenses incurred by it in connection with its
attendance at any meetings of the Board and/or any shareholders' meetings,
including without limitation, any expenses for traveling and lodging.
14.10 Counterparts; Telefacsimile. This Agreement and any
certificate contemplated hereby may be executed in any number of counterparts
and by different parties hereto in separate counterparts, with the same effect
as if all parties had signed the same document. All such counterparts shall be
deemed an original, shall be construed together and shall constitute one and the
same instrument. Delivery of an executed counterpart of this Agreement any
certificate or other document contemplated hereby by facsimile transmission
shall be as effective as delivery of a manually executed counterpart hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
34
[Preferred Stock Purchase Agreement Signature Page]
If you are in agreement with the foregoing, please sign the
form of acceptance on the enclosed counterpart of this letter and return the
same to the undersigned, whereupon this letter shall become a binding contract
between you and the undersigned.
Very truly yours,
GENERAL COMMUNICATION, INC.
By:
President
and
Secretary
The foregoing Agreement is hereby accepted as of the date first above written.
INVESTORS:
TORONTO DOMINION INVESTMENTS, INC.
By:
Name:
Title:
PRIME VIII, L.P.
By:
Name:
Title:
ANNEX A
List of Investors
Investors: Applicable %: # of Shares:
---------- ------------- ------------
Toronto Dominion Investments, Inc. 75% 15,000
Address for Notices:
--------------------
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Toronto Dominion Investments, Inc.
(principal executive office)
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Prime VIII, L.P. 25% 5,000
Address for Notices:
--------------------
3000 One American Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: [▇▇▇▇ ▇▇▇▇▇▇▇▇▇]
TABLE OF CONTENTS
(Not Part of Agreement)
Page
----
1. Authorization of Securities..............................................................................1
2. Sale and Purchase of Preferred Stock.....................................................................1
3. Closing..................................................................................................1
3.1 Closing.....................................................................................1
4. Register of Securities; Restrictions on Transfer of Securities; Removal of Restrictions on
Transfer of Securities...................................................................................2
4.1 Register of Securities......................................................................2
4.2 Restrictions on Transfer....................................................................2
4.3 Removal of Securities Act Transfer Restrictions.............................................4
5. Representations and Warranties by the Company............................................................4
5.1 Organization; Power; Qualification; Capital Stock...........................................4
5.2 Authorization...............................................................................5
5.3 Subsidiaries................................................................................5
5.4 Compliance with Other Documents and Contemplated Transactions...............................5
5.5 Business....................................................................................5
5.6 Licenses, etc...............................................................................5
5.7 Compliance with Law.........................................................................6
5.8 Litigation..................................................................................6
5.9 Financial Statements........................................................................6
5.10 No Adverse Change...........................................................................6
5.11 Absence of Default, etc.....................................................................6
5.12 Environmental Matters.......................................................................6
5.13 Investment Company Act; Public Utility Holding Company Act..................................7
5.14 Securities Laws.............................................................................7
5.15 Disclosure; SEC Filings.....................................................................8
5.16 Year 2000 Compliance........................................................................8
6. Conditions Precedent to Investor's Obligations at the Closing............................................9
6.1 Representations and Warranties..............................................................9
6.2 Simultaneous Purchase by Investors..........................................................9
6.3 No Material Adverse Change..................................................................9
6.4 Designation.................................................................................9
6.5 Board Resolutions...........................................................................9
6.6 Qualification Under State Securities Laws..................................................10
6.7 Delivery of Documents......................................................................10
6.8 Proceedings and Documents..................................................................11
7. Affirmative Covenants...................................................................................11
i
Page
----
7.1 Preservation of Existence and Similar Matters..............................................11
7.2 Compliance with Applicable Law.............................................................12
7.3 Maintenance of Properties..................................................................12
7.4 Accounting Methods and Financial Records...................................................12
7.5 Maintain Insurance.........................................................................12
7.6 Pay Taxes and Other Liabilities............................................................12
7.7 Financial Reports..........................................................................12
7.8 Other Reports..............................................................................13
7.9 Notice of Litigation and Other Matters.....................................................14
7.10 Board of Directors.........................................................................14
7.11 Proxy Statement............................................................................14
7.12 Replacement of Certificates................................................................15
7.13 Compliance With Designation and Bylaws....................................................15
7.14 Notice of Failure to Comply with Total Leverage Test.......................................15
7.15 Notice of Occurrence of Triggering Event...................................................15
7.16 Amendments to or Repeal of Bylaws..........................................................15
8. Investor Regulatory Compliance..........................................................................15
8.1 Violation of BHCA..........................................................................15
8.2 BHCA Issue.................................................................................15
9. Right to Demand Exchange of Preferred Stock; Reincorporation of the Company or Change in Alaskan Law....16
10. Registration Rights.....................................................................................17
10.1 Demand Registration........................................................................17
10.2 Prompt Registration of Class A Common Stock................................................18
10.3 Piggyback Rights...........................................................................18
10.4 Procedure..................................................................................19
10.5 Expenses...................................................................................20
10.6 Indemnification............................................................................21
10.7 Delay in Registration......................................................................23
11. Right of First Refusal..................................................................................24
11.1 Subsequent Offerings.......................................................................24
11.2 Excluded Securities........................................................................24
11.3 Exercise of Rights.........................................................................24
11.4 Issuance of Equity Securities to other Persons.............................................25
12. Enforcement.............................................................................................25
12.1 Remedies at Law or in Equity...............................................................25
12.2 Cumulative Remedies........................................................................25
12.3 No Implied Waiver..........................................................................25
13. Definitions.............................................................................................26
14. Miscellaneous...........................................................................................30
ii
Page
----
14.1 Waivers and Amendments.....................................................................30
14.2 Rights of Holders Inter Se.................................................................31
14.3 Notices....................................................................................31
14.4 Survival of Representations and Warranties, etc............................................32
14.5 Severability...............................................................................32
14.6 Parties in Interest........................................................................32
14.7 Headings...................................................................................32
14.8 Choice of Law..............................................................................32
14.9 Expenses...................................................................................33
14.10 Counterparts; Telefacsimile................................................................33
iii
