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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D*
Under the Securities Exchange Act of 1934
(Amendment No. ___ )
INFORMATION
TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
General Communication, Inc.
(Name of Issuer)
Class A Common Stock, no par value (Class A Common Stock)
Class B Common Stock, no par value (Class B Common Stock)
(Title of Class of Securities)
Class A Common Stock: 369385 10 9
Class B Common Stock: 369385 20 8
(CUSIP Number)
Barry A. Adelman, Esq.
Friedman Kaplan Seiler & Adelman LLP
1633 Broadway, 46th Floor
New York, NY 10019-6708
(212) 833-1107
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o
NOTE:Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting persons initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be filed for the purpose of Section 18 of the Securities Exchange Act of 1934 (Act) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
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CUSIP No. |
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Class A Common Stock 369385 10 9 Class B Common Stock 369385 20 8 |
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Page |
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2 |
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of |
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8 |
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1 |
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NAMES OF REPORTING PERSONS:
John W. Stanton |
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I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY): |
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2 |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
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(a) o |
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(b) o |
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3 |
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SEC USE ONLY: |
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o |
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4 |
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SOURCE OF FUNDS (SEE INSTRUCTIONS): |
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PF |
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5 |
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): |
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o |
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6 |
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CITIZENSHIP OR PLACE OF ORGANIZATION: |
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USA
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7 |
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SOLE VOTING POWER: |
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NUMBER OF |
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0 |
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SHARES |
8 |
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SHARED VOTING POWER: |
BENEFICIALLY |
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OWNED BY |
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Class A Common Stock: 1,275,7911
Class B Common Stock: 1,275,791 |
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EACH |
9 |
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SOLE DISPOSITIVE POWER: |
REPORTING |
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PERSON |
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0 |
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WITH |
10 |
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SHARED DISPOSITIVE POWER: |
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Class A Common Stock: 1,275,7911
Class B Common Stock: 1,275,791 |
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11 |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: |
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Class A Common Stock: 1,275,7911
Class B Common Stock: 1,275,791 |
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12 |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): |
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13 |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): |
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2.5% of Class A Common Stock2
37.7% of Class B Common Stock2 |
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): |
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IN |
1 Class B Common Stock is convertible at any time on a one-for-one basis into Class A Common Stock. The numbers of shares of Class A Common Stock shown in rows 7 through 11 above assume that the shares of Class B Common Stock owned by the Reporting Persons as tenants in common and shown in rows 7 through 11 above have been fully converted into shares of Class A Common Stock.
2 Based upon 49,884,728 shares of Class A Common Stock and 3,380,257 shares of Class B Common Stock outstanding.
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CUSIP No. |
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Class A Common Stock 369385 10 9 Class B Common Stock 369385 20 8 |
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of |
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1 |
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NAMES OF REPORTING PERSONS:
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I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
Theresa E. Gillespie |
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2 |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
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(a) o |
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(b) o |
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3 |
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SEC USE ONLY: |
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o |
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4 |
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SOURCE OF FUNDS (SEE INSTRUCTIONS): |
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PF |
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5 |
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): |
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o |
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6 |
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CITIZENSHIP OR PLACE OF ORGANIZATION: |
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USA
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7 |
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SOLE VOTING POWER: |
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NUMBER OF |
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0 |
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SHARES |
8 |
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SHARED VOTING POWER: |
BENEFICIALLY |
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OWNED BY |
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Class A Common Stock: 1,275,7911
Class B Common Stock: 1,275,791 |
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EACH |
9 |
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SOLE DISPOSITIVE POWER: |
REPORTING |
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PERSON |
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0 |
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WITH |
10 |
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SHARED DISPOSITIVE POWER: |
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Class A Common Stock: 1,275,7911
Class B Common Stock: 1,275,791 |
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11 |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: |
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Class A Common Stock: 1,275,7911
Class B Common Stock: 1,275,791 |
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12 |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): |
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o
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13 |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): |
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2.5% of Class A Common Stock2 37.7% of Class B Common Stock2 |
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): |
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IN |
1 Class B Common Stock is convertible at any time on a one-for-one basis into Class A Common Stock. The numbers of shares of Class A Common Stock shown in rows 7 through 11 above assume that the shares of Class B Common Stock owned by the Reporting Persons as tenants in common and shown in rows 7 through 11 above have been fully converted into shares of Class A Common Stock.
2 Based upon 49,884,728 shares of Class A Common Stock and 3,380,257 shares of Class B Common Stock outstanding.
Item 1. Security and Issuer
The equity securities to which this Schedule 13D relates are as follows:
1. General Communication, Inc. Class A Common Stock, no par value (Class A Common Stock);
and
2. General Communication, Inc. Class B Common Stock, no par value (Class B Common Stock).
The issuer of the Class A Common Stock and Class B Common Stock (collectively, the Company
Securities) is General Communication, Inc. (the Issuer), whose principal executive offices are
located at 2550 Denali Street, Suite 1000, Anchorage, Alaska 99503.
Item 2. Identity and Background
(a) The names of the persons filing this statement are John W. Stanton (Mr. Stanton) and
Theresa E. Gillespie (Ms. Gillespie, and together with Mr. Stanton, the Reporting Persons).
Mr. Stanton and Ms. Gillespie are husband and wife.
(b) The business address of each of the Reporting Persons is 155 108th Avenue, N.E., Suite
450, Bellevue, Washington 98004.
(c) Mr. Stantons and Ms. Gillespies principal occupations are private investors.
(d) During the past five years, neither of the Reporting Persons has been convicted in a
criminal proceeding.
(e) During the past five years, neither of the Reporting Persons has been a party to any civil
proceeding of a judicial or administrative body of competent jurisdiction as a result of which he
or she is subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) Mr. Stanton and Ms. Gillespie are United States citizens.
Item 3. Source and Amount of Funds or Other Consideration.
Mr. Stanton and Ms. Gillespie purchased the Company Securities beneficially owned by them as
tenants in common from personal funds in a private transaction for $18,498,969.50.
Item 4. Purpose of Transaction.
The Reporting Persons acquired the Company Securities for investment purposes. Each of the
Reporting Persons, however, expects to evaluate on an ongoing basis the Issuers
Page 4 of 8 Pages
financial condition, business, operations, prospects, the market price of the Company
Securities, conditions in the securities markets generally, general economic and industry
conditions and other factors. The Reporting Persons may purchase additional Company Securities or
may sell Company Securities from time to time in public or private transactions. The Reporting
Persons reserve the right to formulate other plans and/or make other proposals, and take such
actions with respect to their investment in the Issuer, including any or all of the actions set
forth in paragraphs (a) through (j) below. The Reporting Persons may at any time reconsider and
change their plans or proposals relating to the foregoing.
Neither of the Reporting Persons has any present plans or proposals which relate to or would
result in:
(a) The acquisition by any person of additional securities of the Issuer or the disposition of
securities of the Issuer.
(b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation,
involving the Issuer or any of its subsidiaries.
(c) A sale or transfer of a material amount of assets of the Issuer or of any of its
subsidiaries.
(d) Any change in the present board of directors or management of the Issuer, including any
plans or proposals to change the number or term of directors or to fill any existing vacancies on
the board.
(e) Any material change in the present capitalization or dividend policy of the Issuer.
(f) Any other material change in the Issuers business or corporate structure.
(g) Any changes in the Issuers charter, bylaws or instruments corresponding thereto or other
actions which may impede the acquisition of control of the Issuer by any person.
(h) Causing a class of securities of the Issuer to be delisted from a national securities
exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association.
(i) A class of equity securities of the Issuer becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Act.
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
(a) and (b) Mr. Stanton and Ms. Gillespie, as tenants in common, beneficially own and have
shared voting and dispositve power with respect to 1,275,791 shares of Class B
Page 5 of 8 Pages
Common Stock (representing approximately 37.7% of the outstanding Class B Common Stock) and
the 1,275,791 shares of Class A Common Stock (representing approximately 2.5% of the outstanding
Class A Common Stock) issuable upon conversion of the above-mentioned Class B Common Stock.
The above percentages are based on 49,884,728 shares of Class A Common Stock and 3,380,257
shares of Class B Common Stock outstanding on October 31, 2006, as disclosed in the Issuers
Quarterly Report on Form 10-Q/A filed on December 4, 2006.
Class B Common Stock is convertible at any time on a one-for-one basis into Class A Common
Stock. The numbers of shares of Class A Common Stock disclosed in this Item 5 assume that the
shares of Class B Common Stock owned by the Reporting Persons as tenants in common have been fully
converted into shares of Class A Common Stock.
In addition, each share of Class B Common Stock is entitled to 10 votes per share and each
share of Class A Common Stock is entitled to one vote per share. Accordingly, when these classes
of stock are aggregated, the Reporting Persons may be deemed to currently beneficially own voting
equity securities representing approximately 15.2% of the voting power with respect to a general
election of directors of the Company.
(c) On March 5, 2007 the Reporting Persons, as tenants in common, purchased 1,275,791 shares
of Class B Common Stock from Verizon Business Network Services Inc. (Verizon Business) in a
private transaction at a price of $14.50 per share, pursuant to a Stock Purchase Agreement, dated
as of March 5, 2007. On that date the Reporting Persons also entered into a Registration Rights
Agreement, dated as of March 5, 2007, with the Issuer, providing the Reporting Persons with two
demand registrations and incidental registration rights with respect to the acquired Company
Securities (including the Shares of Class A Company Stock issued or issuable upon conversion
thereof) if Rule 144 is not available for the sale of such securities by the Reporting Persons.
The foregoing descriptions of the Stock Purchase Agreement and Registration Rights Agreement do not
purport to be complete and are qualified in their entirety by reference to the copies thereof which
are filed as Exhibits 2 and 3, respectively, to this Schedule 13D, and are incorporated herein by
reference.
Except for the transactions described in this Item 5(c), the Reporting Persons have not
engaged in any transactions involving the Company Securities in the past 60 days.
(d) and (e) Not applicable.
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Item 6. |
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Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the
Issuer. |
Except as disclosed in Item 5 above and/or reflected in the agreements filed as Exhibits 2 and
3 hereto, the Reporting Persons are not a party to any contract, arrangement, understanding or
relationship with respect to any securities of the Issuer, including but not limited to the
transfer or voting of any securities of the Issuer, finders fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss, or the
Page 6 of 8 Pages
giving or withholding of proxies. None of the Company Securities held by the Reporting
Persons have been pledged or are otherwise subject to a contingency the occurrence of which would
give another person voting power or investment power over such Company Securities.
Item 7. Material to be filed as Exhibits
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Joint Filing Agreement. |
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2. |
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Stock Purchase Agreement, dated as of March 5, 2007, between
the Reporting Persons, Verizon Business and Friedman Kaplan Seiler & Adelman
LLP, as escrow agent. |
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3. |
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Registration Rights Agreement, dated as of March 5, 2007,
between the Issuer and the Reporting Persons. |
Page 7 of 8 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information
set forth in this statement is true, complete and correct.
Date: March 12, 2007
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JOHN W. STANTON
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/s/ John W. Stanton
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John W. Stanton |
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THERESA E. GILLESPIE
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/s/ Theresa E. Gillespie
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Theresa E. Gillespie |
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Page 8 of 8 Pages
Exhibit 1
JOINT FILING AGREEMENT
We, the signatories of the statement to which this Joint Filing Agreement is attached, hereby agree
that such statement is filed, and any amendments thereto filed by either or both of us will be
filed, on behalf of each of us.
Dated: March 12, 2007
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JOHN W. STANTON
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/s/ John W. Stanton
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John W. Stanton |
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THERESA E. GILLESPIE
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/s/ Theresa E. Gillespie
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Theresa E. Gillespie |
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Exhibit 2
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this Agreement) is entered into as of March 5, 2007 by and
between John W. Stanton and Theresa E. Gillespie, as tenants in common (Purchaser), Verizon
Business Network Services Inc., a Delaware corporation (Seller), and Friedman Kaplan Seiler &
Adelman LLP, as escrow agent (Escrow Agent).
Recitals
A. Seller owns, beneficially and of record, 1,275,791 shares of the Class B Common Stock (the
Shares) of General Communication, Inc., an Alaska corporation (the Company).
B. Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, the
Shares pursuant to the terms and conditions contained in this Agreement.
Agreement
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINED TERMS
Section 1.1 Definitions.
The following terms will have the following meanings in this Agreement:
Affiliate means, with respect to any Person, any other Person controlling,
controlled by or under common control with such Person, with control being the ability to direct or
cause the direction (whether through the ownership of voting securities, by contract or otherwise),
directly or indirectly, of the management and policies of a Person.
Closing means the consummation of the transactions contemplated by this Agreement,
and shall be deemed to have occurred upon release by Escrow Agent of the Purchase Price to Seller.
Company Filed Financial Statements means the financial statements included in the
Company SEC Filings.
Company SEC Filings means reports, registration statements and other documents filed
by the Company with the SEC from March 16, 2006 to the date of this Agreement that are publicly
available by means of the SECs EDGAR database.
Escrow Deposit has the meaning set forth in Section 2.1.
Filing means any registration, declaration, application or filing.
Governmental Entity means any court, arbitrator, administrative or other
governmental department, agency, commission, authority or instrumentality, domestic or foreign.
Law means any statute, law, ordinance, rule, regulation, registration, permit,
order, license, decree, judgment or procedure enacted, adopted or applied by any Governmental
Entity, including judicial decisions applying common law or interpreting any Law.
Legal Proceeding means any private or governmental action, suit, complaint,
arbitration, legal or administrative proceeding or investigation.
Liens means all liens, pledges, claims, security interests, restrictions, mortgages,
deeds of trust, tenancies and other possessory interests, conditional sale or other title retention
agreements, assessments, easements and other burdens, options or encumbrances of any kind.
Person means an individual, corporation, partnership, limited liability company,
association, trust, unincorporated organization or other entity.
Purchase Price has the meaning set forth in Section 2.2.
Securities Act means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
SEC means the U.S. Securities and Exchange Commission.
Transfer Agent means Mellon Investor Services LLC, as transfer agent for the
Companys Class B Common Stock.
ARTICLE 2
PURCHASE AND SALE; CLOSING
Section 2.1 Purchase and Sale of Shares; Escrow
Subject to the terms and conditions set forth in this Agreement, Seller hereby sells to
Purchaser and Purchaser hereby purchases from Seller all of Sellers right, title and interest in
and to the Shares. As promptly as practicable after the execution hereof, (a) Seller shall deliver
to Transfer Agent certificate(s) for the Shares, together with duly executed and medallion
signature guaranteed (by a commercial bank or member firm of the New York Stock Exchange) stock
power(s) relating to such Shares transferring the Shares to Purchaser and such other instruments
and documents as may be necessary or appropriate in Purchasers, the Companys or Transfer Agents
reasonable judgment to properly transfer the Shares to Purchaser; and (b) Purchaser shall wire
transfer the Purchase Price to Escrow Agent, to be held in escrow by Escrow Agent (the Escrow
Deposit) and released as set forth herein. Upon Escrow Agents receipt of notice from (x)
Transfer Agent (the Completed Transfer Notice) that the Shares have been re-registered into the
name of Purchaser and the certificate therefor (registered in the name of Purchaser) has been
transmitted by overnight delivery service to Purchaser at its address set forth in Section 6.6, or
(y) Purchaser that it has received from Transfer Agent a certificate for the Shares registered in
Purchasers name (the Purchaser Notice), Escrow Agent shall wire
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transfer the Purchase Price from the escrow to an account designated by Seller in written
instructions delivered to Escrow Agent and Purchaser and remit any interest earned on the Escrow
Deposit to Purchaser. Upon its receipt of (i) the Completed Transfer Notice Escrow Agent shall
promptly fax or email copies thereof to Purchaser and Seller and (ii) the Purchaser Notice, Escrow
Agent shall promptly fax or email a copy thereof to Seller. If Escrow Agent shall not have
received either the Completed Transfer Notice or the Purchaser Notice by the 15th day after the
date hereof, Escrow Agent shall return the Purchase Price (together with interest earned thereon)
to Purchaser, Seller and Purchaser shall instruct Transfer Agent to return the Shares to Seller
(and will execute such instruments and documents as may be reasonably necessary or appropriate to
restore the Shares to Seller) and this Agreement (except for Article V and Section 6.11) shall
thereafter be null and void.
Section 2.2 Purchase Price.
Purchaser will pay to Seller as the purchase price for the Shares against delivery thereof to
Purchaser an aggregate cash amount of $18,498,969.50, equal to $14.50 per Share (the Purchase
Price), at the Closing by Escrow Agents wire transfer of the Purchase Price to an account
designated by Seller in written instructions delivered to Purchaser and Escrow Agent.
Section 2.3 Registration Rights Agreement.
The Registration Rights Agreement (the form of which is attached hereto as Exhibit A),
pursuant to which the Shares may be registered for resale under certain circumstances set forth in
such agreement, executed by the Company, shall (as a condition to the effectiveness of this
Agreement) have been delivered concurrently with the execution hereof to Purchaser for execution,
to be effective as of the Closing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of Seller.
Seller represents and warrants to Purchaser that
(a) Incorporation; Authorization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state in which it is incorporated and it has
all requisite corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery by Seller of this Agreement have been duly
authorized by all requisite corporate action of such Seller.
(b) Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Seller enforceable in accordance with its terms against Seller except insofar as
enforceability may be affected by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect affecting creditors rights generally or by principles
governing the availability of equitable remedies.
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(c) No Conflicts. The execution and delivery of this Agreement do not and the
consummation by Seller of the transactions contemplated hereby will not (i) violate or conflict
with the organizational documents of Seller or (ii) violate or conflict with any Law, agreement or
other restriction of any kind to which Seller is a party or by which Seller or the Shares or
Sellers other assets are bound.
(d) Shares. Seller is the record and beneficial owner of good, valid and marketable
title to the Shares, free and clear of any Liens. Seller is not a party to or subject to, and none
of the Shares it owns is subject to, any voting trust, voting agreement, proxy or other agreement
or understanding with respect to the voting or transfer of such Shares; and there are no rights of
first refusal, buy-sell arrangements, options, warrants, rights to acquire, calls or other
commitments or contractual restrictions of any character relating to any of such Shares (other than
any such restrictions created by this Agreement and other than any restrictions on transfer arising
under the Securities Act and state securities laws). Upon payment of the Purchase Price, Purchaser
will acquire from Seller good, valid and marketable title to the Shares, free and clear of any
Liens.
(e) Consents. No consent, authorization, approval, permit, license or waiver of, or
(except for Sellers filing of a Form 4 and an amendment to its Schedule 13D with the SEC) notice
to or Filing with any Governmental Entity or Person is required on behalf of Seller in connection
with the execution, delivery or performance of this Agreement by the Seller or the consummation of
the transactions contemplated hereby.
(f) Brokers and Finders Fees. Seller has not, directly or indirectly, employed or
retained any advisor, broker or agent or incurred any liability for any advisory, brokerage,
finders fees or agents commissions or investment bankers fees or any similar charges in
connection with this Agreement.
(g) Disclaimer of Warranties. Except for the representations and warranties
specifically set forth in the Section 3.1, Seller makes no warranties, express or implied,
concerning the Seller, the Shares or the Company.
Section 3.2 Representations and Warranties of Purchaser.
Purchaser represents and warrants to Seller that:
(a) Authorization. Purchaser has the capacity to enter into this Agreement and to
carry out its obligations hereunder.
(b) Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Purchaser enforceable in accordance with its terms against Purchaser except insofar
as enforceability may be affected by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect affecting creditors rights generally or by principles
governing the availability of equitable remedies.
(c) No Conflicts. The execution and delivery of this Agreement do not and the
consummation by Purchaser of the transactions contemplated hereby will not violate or conflict with
any Law to which the Purchaser is subject, agreement or other restriction of any kind to which
Purchaser is a party or by which it or its assets are bound.
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(d) Consents. No consent, authorization, approval, permit, license or waiver of, or
(except for Purchasers filing of a Form 3 and a Schedule 13D or 13G with the SEC) notice to or
Filing with any Governmental Entity or Person is required on behalf of Purchaser in connection with
the execution, delivery or performance of this Agreement by the Purchaser or the consummation of
the transactions contemplated hereby.
(e) Investment Representations; Private Placement. Purchaser understands that the
Shares have not been registered under the Securities Act or under any state securities law or Blue
Sky Law of any jurisdiction and that the sale of the Shares by Seller pursuant to this Agreement is
intended to be exempt from registration in reliance upon federal and State exemptions for
transactions not involving a public offering.
Purchaser is acquiring the Shares pursuant to this Agreement for its own account, for
investment purposes only, and not with a view to the public resale or distribution thereof in
violation of any federal, state or foreign securities Law. Purchaser acknowledges that the Shares
must be held indefinitely unless a subsequent disposition thereof is registered or qualified under
the Securities Act and applicable state securities laws (if any) or unless an exemption from such
registration or qualification is available.
Purchaser is an accredited investor (as that term is defined in Rule 501 of Regulation D
under the Securities Act) and by reason of its business and financial experience, it has such
knowledge, sophistication and experience in business and financial matters as to be capable of
evaluating the merits and risks of the prospective investment and is able to bear the economic risk
of such investment.
(f) Purchasers Diligence. Purchaser acknowledges that copies of the Company SEC
Filings, including the Company Filed Financial Statements, are available to Purchaser on the SEC
EDGAR database. Purchaser has had an opportunity to review the Company SEC Filings and has been
given a reasonable opportunity to ask questions of and receive answers relating to the business,
financial position, results of operations, prospects and any other matters related to the Company.
Purchaser has availed itself of such opportunity to the full extent desired. Purchaser understands
the Company SEC Filings and all documents, financial statements and other information so provided.
(g) Brokers and Finders Fees. Purchaser has not, directly or indirectly, employed
or retained any advisor, broker or agent or incurred, nor will it incur, directly or indirectly,
any liability for brokerage or finders fees or agents commissions or investment bankers fees or
any similar charges in connection with this Agreement.
ARTICLE 4
COVENANTS
Section 4.1 Publicity.
Each of the parties agrees not to, and to cause each of their respective subsidiaries and
Affiliates not to, issue, or cause or permit to be issued, any press release or other public
statement regarding this Agreement or the transactions contemplated hereby without consulting
5
with the other parties prior to making such release or statement, except, if, in the judgment
of the disclosing party, such release or statement is required by Law (including the rules and
regulations of the SEC) or by any securities exchange or association on which such partys or its
subsidiaries or Affiliates securities are traded (including pursuant to any listing agreement),
in which case the party required to make the release or announcement shall allow the other party
reasonable time to comment on such release or announcement (so as to confirm the accuracy of any
statements therein regarding such other party, among other things) in advance of such issuance
ARTICLE 5
ESCROW AGENT MATTERS
Section 5.1 Investment of the Escrow Deposit.
The Escrow Deposit shall be invested and reinvested by Escrow Agent in such interest earning
investments as Escrow Agent invests from time to time other escrow funds which it may hold.
Escrow Agent shall have the right to liquidate any investments held in order to provide funds
necessary to make required payments under this Agreement. Escrow Agent, in its capacity as escrow
agent hereunder, shall not have any liability for any loss sustained as a result of any investment
made pursuant to this Agreement or as a result of any liquidation of any investment prior to its
maturity.
Section 5.2 General Instructions.
To induce Escrow Agent to act hereunder, it is further agreed by the parties that:
(a) Escrow Agent shall not be under any duty to give the Escrow Deposit held by it hereunder
any greater degree of care than it gives its own similar property and shall not be required to
invest any funds held hereunder except as directed in this Agreement. Funds held hereunder shall
be invested in accordance with this Article V.
(b) This Agreement expressly sets forth all the duties of Escrow Agent with respect to any and
all matters pertinent hereto. No implied duties or obligations shall be read into this Agreement
against Escrow Agent. Escrow Agent shall not be bound by the provisions of any agreement among the
other parties hereto except this Agreement.
(c) Escrow Agent shall not be liable, except for its own bad faith, gross negligence or
willful misconduct, and, except with respect to claims based upon such bad faith, gross negligence
or willful misconduct that are successfully asserted against Escrow Agent, the other parties hereto
shall jointly and severally indemnify and hold harmless Escrow Agent (and any successor to Escrow
Agent) from and against any and all losses, liabilities, claims, actions, damages and expenses,
including reasonable attorneys fees and disbursements, arising out of and in connection with this
Agreement. Without limiting the foregoing, Escrow Agent shall in no event be liable in connection
with its investment or reinvestment of any cash held by it hereunder in good faith, in accordance
with the terms hereof, including, without limitation, any
6
liability for any delays (not resulting from its own bad faith, gross negligence or willful
misconduct) in the investment or reinvestment of the Escrow Deposit, or any loss of interest
incident to any such delays. In the event that any party hereto is required to indemnify and hold
harmless Escrow Agent pursuant to this Section 5.2(c), such party shall have the right to seek
contribution from the other parties hereto (other than Escrow Agent) for amounts paid or payable in
respect of such indemnity to the extent permitted by law. Anything in this Agreement to the
contrary notwithstanding, in no event shall Escrow Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited to lost profits),
even if Escrow Agent has been advised of the likelihood of such loss or damage and regardless of
the form of action. The parties hereto acknowledge that the foregoing indemnities shall survive
the resignation or removal of Escrow Agent or the termination of this Agreement.
(d) Escrow Agent shall be entitled to rely upon any order, judgment, award, certification,
demand, notice, instrument or other writing or facsimile transmission delivered to it hereunder
without being required to determine the authenticity or the correctness of any fact stated therein
or the propriety or validity of the service thereof. Escrow Agent may act in reliance upon any
instrument or signature believed by it to be genuine (whether an original signature or a copy or
facsimile transmission thereof) and may assume that any person purporting to give notice or receipt
or advice or make any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
(e) The duties and obligations of Escrow Agent are as set forth in this Agreement and are
purely ministerial in nature. Escrow Agent may act pursuant to the advice of counsel with respect
to any matter relating to this Agreement and shall not be liable for any action taken or omitted in
good faith in accordance with such advice.
(f) Escrow Agent does not have any interest in the Escrow Deposit but is serving as escrow
holder only and having only possession thereof.
(g) Any payments of income from the Escrow Deposit shall be subject to withholding regulations
then in force with respect to United States taxes. Purchaser will provide Escrow Agent with
Internal Revenue Service Form W-9 or Form W-8, as applicable, for tax identification number
certification. It is understood that Escrow Agent shall be responsible for income reporting only
with respect to income earned on investment of funds which are a part of the Escrow Deposit, which
shall be reported as income of Purchaser, and is not responsible for any other reporting. This
paragraph and paragraph (c) of this Section 5.2 shall survive notwithstanding termination of this
Agreement or the resignation of Escrow Agent.
(h) Escrow Agent makes no representation as to the validity, value, genuineness or the
collectibility of any security or other documents or instrument held by or delivered to it.
(i) Escrow Agent (and any successor to Escrow Agent) may at any time resign as such by
delivering the Escrow Deposit and all earnings thereon to any successor to Escrow Agent jointly
designated by the other parties hereto in writing, or to any court of competent jurisdiction,
whereupon Escrow Agent shall be discharged of and from any and all further obligations arising in
connection with this Agreement. Escrow Agent shall promptly deliver written notice of its
resignation to the other parties hereto. The resignation of Escrow Agent will
7
take effect on the earlier of (i) the appointment of a successor (including a court of
competent jurisdiction) or (ii) the day which is 30 days after the date of delivery of its written
notice of resignation to the other Parties hereto. If at that time Escrow Agent has not received a
designation of a successor to Escrow Agent, Escrow Agents sole responsibility after that time
shall be to safe-keep the Escrow Deposit until receipt of a designation of successor to Escrow
Agent or a joint written disposition instruction by the other parties hereto or a final order of a
court of competent jurisdiction.
(j) In the event of any disagreement between Seller and Purchaser resulting in adverse claims
or demands being made in connection with the Escrow Deposit, or in the event that Escrow Agent in
good faith is in doubt as to what action it should take hereunder, Escrow Agent shall be entitled
to retain the Escrow Deposit (or such part thereof as is the subject of such disagreement) until
Escrow Agent shall have received (i) a written decision of a court of competent jurisdiction in New
York (the Court) directing the delivery of all or such part of the Escrow Deposit; or
(ii) a written agreement executed by Seller and Purchaser acting jointly directing delivery of the
Escrow Deposit or such part thereof. Any written decision referred to in (i) above shall (unless
such Court decision was sought and obtained by Escrow Agent) be accompanied by a certificate of a
duly authorized representative of the presenting party reasonably satisfactory to Escrow Agent to
the effect that said written decision is the decision of the Court and is final. Escrow Agent
shall act on such written decision of the Court without further question.
(k) Notwithstanding anything contained herein to the contrary, Seller expressly acknowledges
that Friedman Kaplan Seiler & Adelman LLP is presently serving as counsel to Purchaser.
Accordingly, neither Escrow Agents services as Escrow Agent hereunder nor any provision hereof,
either express or implied, shall restrict or inhibit Escrow Agent in any way from representing
Purchaser or any of its affiliates, or any of their officers, directors, stockholders, members,
partners or affiliates in any transaction, matter, action, dispute, controversy, arbitration, suit
or negotiation arising under this Agreement or under any other agreement or in any manner or
context whatsoever, whether or not, directly or indirectly, involving Purchaser or any of its
affiliates, or any of their respective officers, directors, stockholders, members, partners or
affiliates.
(l) Escrow Agent shall be entitled to be compensated by Purchaser at its standard hourly
charges for its services as an Escrow Agent hereunder and shall in addition be reimbursed by
Purchaser for costs and expenses normally billed by such law firm. In addition (but without
duplication), Escrow Agent shall be reimbursed for all reasonable expenses, disbursements and
advances incurred or made by Escrow Agent in performance of its duties hereunder (including
reasonable fees, expenses and disbursements of its counsel). The costs and expenses of Escrow
Agent and its counsel (unless paid pursuant to the first sentence of this Section 5.2(l)) shall be
borne jointly and severally by Purchaser and Seller. No provision of this Agreement shall be
deemed to require Escrow Agent to expend or risk its own funds or otherwise to incur any liability,
financial or otherwise, in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers if it shall have reasonable grounds for believing that repayment of
such funds or indemnity satisfactory to it against such risk or liability is not assured to it.
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(m) It is understood that Escrow Agent and the beneficiarys bank in any funds transfer may
rely solely upon any account numbers or similar identifying number provided by either of the other
parties hereto to identify (i) the beneficiary, (ii) the beneficiarys bank, or (iii) an
intermediary bank. Escrow Agent may apply any of the escrowed funds for any payment order it
executes using any such identifying number, even where its use may result in a person other than
the beneficiary being paid, or the transfer of funds to a bank other than the beneficiarys bank,
or an intermediary bank designated.
ARTICLE 6
GENERAL PROVISIONS
Section 6.1 Survival of Representations, Warranties and Covenants.
Regardless of any investigation made at any time by or on behalf of any party hereto or of any
information any party may have in respect thereof, each of the representations, warranties and
covenants made in this Agreement will survive the Closing, provided that under no circumstance
shall the aggregate amount payable by either Seller or Purchaser for breach of its representations,
warranties and covenants made in this Agreement exceed the Purchase Price (except in the case of
Sellers breach of any of its representations and warranties made in Section 3.1(d), for which the
amount of Sellers liability shall not be so limited).
Section 6.2 Amendment; Waiver.
This Agreement may not be amended except by an instrument in writing signed by the parties
hereto. Any failure of any of the parties hereto to comply with any obligation, covenant, agreement
or condition contained herein may be waived only if set forth in an instrument in writing signed by
the party or parties to be bound by such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition will not operate as a waiver of,
or estoppel with respect to, any other failure.
Section 6.3 Further Assurances.
If at any time after the Closing any further action is necessary or desirable to carry out the
intent of this Agreement, each party will take such further actions (including the execution and
delivery of instruments and documents), without additional consideration, as the other party
reasonably may request.
Section 6.4 Expenses and Obligations.
All costs and expenses incurred by the parties hereto in connection with the consummation of
the transactions contemplated hereby will be borne solely and entirely by the party that has
incurred such expenses.
Section 6.5 No Third Party Beneficiaries.
This Agreement will be binding upon and inure solely to the benefit of each party hereto and
their successors and assigns, and nothing in this Agreement, express or implied, is intended
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to confer upon any other Person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 6.6 Notices.
(a) All notices and other communications hereunder will be in writing and will be deemed given
if delivered personally, telecopied, mailed by registered or certified mail (return receipt
requested), or sent by recognized overnight courier to a party (or to the extent set forth in
Section 2.1, emailed) to the address set forth for such party below (or at such other address for a
party as will be specified by like notice):
If to Purchaser:
John W. Stanton and
Theresa E. Gillespie
155 108th Avenue, N.E., Suite 450
Bellevue, WA 98004
Facsimile: 425-458-5999
Email: john.stanton@trilogy-partners.net
With a copy, which will not constitute notice, to:
Friedman Kaplan Seiler & Adelman LLP
1633 Broadway
New York, NY 10019-6708
Attn: Barry A. Adelman, Esq.
Facsimile: 212-833-1250
Email: badelman@fklaw.com
If to Seller:
Verizon Communications Inc.
22001 Loudoun County Parkway
Ashburn, VA 20147
Attn: Stephen R. Mooney
Facsimile: (703) 886-0895
Email: stephen.mooney@verizonbusiness.com
With a copy to:
Verizon Communications Inc.
One Verizon Way
VC54S241
Basking Ridge, NJ 07920
Attn: Stuart M. Kuntz, Esq.
Facsimile: (908) 696-2063
Email: stuart.kuntz@verizon.com
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If to Escrow Agent:
Friedman Kaplan Seiler & Adelman LLP
1633 Broadway
New York, NY 10019-6708
Attn: Barry A. Adelman, Esq.
Facsimile: 212-833-1250
Email: badelman@fklaw.com
(b) Any of the above addresses may be changed at any time by notice given as provided above;
however, any such notice of change of address will be effective only upon receipt. All notices,
requests or instructions given in accordance herewith will be deemed received on the date of
delivery, if hand delivered, on the date receipt is confirmed, if telecopied, three business days
after the date of mailing, if mailed by registered or certified mail, return receipt requested, and
one business day after the date sent, if sent by recognized overnight courier.
Section 6.7 Counterparts.
This Agreement may be executed and delivered (including by facsimile transmission) in
counterparts, all of which will be considered one and the same agreement and will become effective
when one or more counterparts have been signed by each of the parties hereto and delivered to the
other parties, it being understood that all parties need not sign the same counterpart.
Section 6.8 Entire Agreement.
This Agreement constitutes the entire agreement of the parties hereto and supersedes all prior
agreements, letters of intent and understandings, both written and oral, among the parties with
respect to the subject matter hereof. There are no representations or warranties, agreements or
covenants other than those expressly set forth this Agreement.
Section 6.9 Severability.
In the event that any provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provision; provided that no such severance shall be effective if it
materially changes the economic benefit of this Agreement to any party.
Section 6.10 Governing Law.
This Agreement will be construed in accordance with and governed by the internal laws of the
State of New York (without reference to its rules as to conflicts of law).
Section 6.11 Consent to Jurisdiction.
Each party hereto hereby irrevocably and unconditionally submits to the exclusive jurisdiction
of the Federal court for the Southern District of New York and state courts located in
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the Borough of Manhattan, New York for any suit, action or proceeding among them arising out
of or relating to this Agreement and the transactions contemplated hereby and agree that it will
not bring any action or proceeding relating to this Agreement or the transactions in any court
other than the aforesaid courts. Each party hereby irrevocably and unconditionally waives to the
fullest extent permitted by law, (a) any objection that it may now or hereafter have to the
jurisdiction or venue of any such suit, action or proceeding brought in any such court; and (b) any
claim that any such suit, action or proceeding has been brought in an inconvenient forum. Final
judgment in any suit, action or proceeding brought in any such court shall be conclusive and
binding upon each party duly served with process therein and may be enforced in any jurisdiction in
which any party or any of its property is located. Any service of process to be made in such
action or proceeding may be made by delivery of process in accordance with the notice provisions
contained in Section 6.6.
Section 6.12 Attorneys Fees.
The prevailing party in any action by any party to this Agreement to enforce its rights under
this Agreement will be entitled to recover, in addition to any other relief awarded by a court of
competent jurisdiction, its reasonable costs and expenses, including attorneys fees, of preparing
for and participating in such action.
Section 6.13 Headings.
All Section headings are for reference and convenience purposes only and are not entitled to,
nor should they, be accorded substantive effect.
Section 6.14 Waiver of Jury Trial.
EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT.
Section 6.15 Parent Joinder.
For purposes of all obligations of Seller under this Agreement, including any liability
indemnity or other payment obligations of the Seller hereunder, Verizon Communications Inc. hereby
agrees to be bound by such obligations jointly and severally with the Seller and agrees that all
such obligations and all agreements of Seller herein (including, without limitation, those set
forth in Article V) may be enforced against Verizon Communications Inc. by Purchaser in accordance
with the provisions of this Agreement to the same extent as if Verizon Communications Inc. were a
party to this Agreement and bound hereby.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned parties have caused this Stock Purchase Agreement to be
signed, all as of the date first written above.
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PURCHASER: |
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/s/ John W. Stanton |
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/s/ Theresa E. Gillespie |
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John W. Stanton and Theresa E. Gillespie,
as tenants in common |
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SELLER: |
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VERIZON BUSINESS NETWORK SERVICES INC. |
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By:
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/s/ John F. Killian |
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Name:
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John F. Killian |
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Title:
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President and Chief Executive Officer |
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ESCROW AGENT: |
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FRIEDMAN KAPLAN SEILER &
ADELMAN LLP, as Escrow Agent |
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/s/ Gregg S. Lerner |
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Name:
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Gregg S. Lerner |
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Member of the Firm |
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The undersigned hereby join as parties to the foregoing Agreement for the limited purposes
provided in Section 5.15 of this Agreement.
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VERIZON COMMUNICATIONS INC. |
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/s/ John F. Killian |
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Name:
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John F. Killian |
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Authorized Representative |
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Exhibit 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this Agreement), dated as of March 5, 2007, is between
General Communication, Inc., an Alaska corporation (GCI or the Company) and John W. Stanton and
Theresa E. Gillespie, as tenants in common (together with their respective successors and assigns,
Stockholder).
RECITALS
A. Verizon Communications Inc. (Verizon), and Stockholder are parties to a Stock Purchase
Agreement, dated as of the date of this Agreement (the Stock Purchase Agreement), providing for
the purchase by Stockholder of 1,275,791 shares of the Class B Common Stock of GCI held by Verizon
(the Class B Shares), which are restricted securities (as defined in Rule 144 promulgated under
the Securities Act of 1933, as amended).
B. In connection with Stockholders acquisition of the Class B Shares, and as a condition to
the Closing of the Stock Purchase Agreement, GCI has agreed to provide the Stockholder with the
registration rights set forth herein.
AGREEMENT
In consideration of the premises and the mutual covenants contained in this Agreement, the
parties agree as follows:
1. Certain Definitions.
Action is defined in Section 7(b).
Business Day means any day other than a Saturday, Sunday or U.S. Federal holiday.
Class A Shares means the shares of the Class A Common Stock of GCI which Stockholder
may be entitled to receive upon conversion of the Class B Shares.
Commission means the Securities and Exchange Commission, or any other Federal agency
at the time administering the Securities Act or the Exchange Act.
Common Stock means the Class A Common Stock and Class B Common Stock of GCI.
Demand Notice is defined in Section 2(a).
Demand Registration is defined in Section 2(a).
Disadvantageous Condition is defined in Section 2(f).
Disclosure Documents is defined in Section 7.
1
Exchange Act means the Securities Exchange Act of 1934, as amended, or any successor
Federal statute, and the rules and regulations of the Commission promulgated thereunder, as they
each may, from time to time, be in effect.
Incidental Registration is defined in Section 3.
Indemnified Party is defined in Section 7(b).
Indemnifying Party is defined in Section 7(b).
Losses is defined in Section 7(a).
Market Value is defined in Section 5.
Registrable Class A Shares means the Class A Shares issued or issuable upon conversion
of the Class B Shares held by Stockholder and any securities issued in exchange for or in respect
of such Class A Shares, whether pursuant to a stock dividend, stock split, stock reclassification
or otherwise.
Registrable Class B Shares means the Class B Shares acquired by Stockholder under the
Stock Purchase Agreement (and which have not been converted to Class A Shares) and any securities
issued in exchange for or in respect of such Class B Shares, whether pursuant to a stock dividend,
stock split, stock reclassification or otherwise.
Registrable Shares means the Registrable Class A Shares and the Registrable Class B
Shares. Any Registrable Share will cease to be a Registrable Share when (i) a Registration
Statement covering such Registrable Share has been declared effective by the Commission, and such
Registrable Share has been disposed of pursuant to such effective Registration Statement, (ii) all
Registrable Shares may in the opinion of counsel to GCI, the form of which is reasonably acceptable
to Stockholder, be publicly resold under Rule 144 without registration under the Securities Act and
the Company is then in compliance with Rule 144(c)(i) (provided that if at any time thereafter all
Registrable Shares may not be publicly resold under Rule 144 or the Company is not in compliance
with Rule 144(c)(i) then the shares shall again be deemed Registrable Shares), or (iii) such
Registrable Share has been sold in an open market transaction pursuant to Rule 144.
Registration Statement means a registration statement of GCI on any form (to be
selected by GCI in accordance with the provisions of this Agreement) for which GCI then qualifies
and which permits the secondary resale thereunder of the number of Registrable Shares required
pursuant to this Agreement to be included therein. The term Registration Statement shall also
include all exhibits and financial statements and schedules and documents incorporated by reference
in such Registration Statement when it becomes effective under the Securities Act, and in the case
of the references to the Registration Statement as of a date subsequent to the effective date, as
amended or supplemented as of such date.
Rule 144 means Rule 144 promulgated under the Securities Act or any similar successor
rule.
2
Securities Act means the Securities Act of 1933, as amended, or any successor Federal
statute, and the rules and regulations of the Commission promulgated thereunder, as they each may,
from time to time, be in effect.
Selling Holder means Stockholder, upon its submission of a written request to register
all or some of its Registrable Shares under Section 2 or Section 3 of this Agreement.
2. Demand Registration.
(a) Subject to Section 5, Stockholder shall at any time and from time to time, have the right
to request (a Demand Registration) that GCI register under the Securities Act all or any portion
of the Registrable Shares on the terms and subject to the conditions set forth in this Agreement by
furnishing GCI with notice of such request (a Demand Notice), which sets forth the number of
Registrable Class A Shares and Registrable Class B Shares requested to be so registered and Selling
Holders plan of distribution of such Registrable Shares (which may be a very broad plan of
distribution including numerous alternative methods).
(b) Upon receipt by GCI of Selling Holders Demand Notice, GCI shall as soon as is reasonably
practicable, after the date on which the Demand Notice is given, but in no event more than sixty
(60) (or if GCI is then eligible to use Form S-3 for resale registration statements, thirty (30)
days after receipt of such written request), file with the Commission, and use its best efforts to
cause to become effective as promptly as practicable, a Registration Statement which shall cover
the Registrable Shares specified in the Demand Notice. The Registration Statement shall be on Form
S-3 if GCI is then eligible to use such form for resale registration statements. Upon written
consent of the Selling Holder, GCI may include in such Registration Statement any authorized but
unissued shares of Common Stock for sale by GCI or any issued and outstanding shares of Common
Stock for sale by others; provided, however, that then such registration shall then be deemed to be
an Incidental Registration pursuant to Section 3 but which equity securities must be included or
may be excluded in such registration shall be governed by Section 2(d) and not by Section 3.
(c) If so requested by Selling Holder requesting registration of Registrable Shares pursuant
to this Section 2 or Section 3 of this Agreement, the Registration Statement shall provide for
delayed or continuous offering of the Registrable Shares pursuant to Rule 415 promulgated under the
Securities Act or any similar rule then in effect (Shelf Offering). If so requested by Selling
Holder, the public offering or distribution of Registrable Shares under this Agreement shall be
pursuant to a firm commitment underwriting. In any such Demand Registration, the managing
underwriter shall be an investment banking firm selected and engaged by the Selling Holder and
approved by GCI, which approval shall not be unreasonably withheld. GCI shall enter into the same
underwriting agreement as shall the Selling Holder, containing representations, warranties and
agreements not substantially different from those customarily made by an issuer in underwriting
agreements with respect to secondary distributions. GCI, as a condition to fulfilling its
obligations under this Agreement, may require the underwriters to enter into an agreement in
customary form indemnifying GCI against any Losses (as defined in Section 7) that arise out of or
are based upon an untrue statement or an alleged untrue statement or omission or alleged omission
in the Registration Statement or Disclosure Documents (as defined in Section 7) made in reliance
upon and in conformity with
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written information furnished to GCI by the underwriters specifically for use in the
preparation thereof.
(d) If Selling Holder has consented to the inclusion in the Demand Registration Statement of
shares of Common Stock for sale by GCI or others and the lead managing underwriter of any
underwritten public offering in connection with a Demand Registration determines in good faith that
the aggregate number of Registrable Shares and shares of Common Stock to be offered exceeds the
number of shares that could be sold without having an adverse effect on such offering (including
the price at which the Registrable Shares may be sold), then the number of Registrable Shares and
shares of Common Stock to be offered pursuant to the Demand Registration shall be reduced, to the
extent necessary to reduce the total number of shares to be included in such offering to the amount
recommended by such lead managing underwriting, in the following order: (i) shares of Common Stock
proposed to be sold by persons other than GCI and the Selling Holder; then (ii) shares of Common
Stock proposed to be sold by GCI; and then (iii) Registrable Shares proposed to be sold by Selling
Holder.
(e) Selling Holder may, before such a Registration Statement becomes effective, withdraw its
Registrable Shares from sale, should the terms of sale not be reasonably satisfactory to Selling
Holder; however, such registration shall be deemed to have occurred for the purposes of Section 5
of this Agreement, unless such Selling Holder pays (pro rata, in proportion to the number of
Registrable Shares requested to be included) within twenty (20) days after any such withdrawal, all
of GCIs out-of-pocket expenses incurred in connection with such registration.
(f) GCI shall be entitled to postpone, for a reasonable period of time, but in no event in
excess of 60 days (i) after its receipt of a Demand Notice, the filing of any Registration
Statement, (ii) after filing of a Registration Statement but prior to its effectiveness, the
effectiveness of the Demand Registration, if at any time prior to the filing or effectiveness of
such Registration Statement, the Board of Directors of the Company determines in good faith that
such registration and offering would materially interfere with or otherwise adversely affect in any
material respect any financing, acquisition, corporate reorganization or other material transaction
or development involving GCI or its subsidiaries or would require disclosure of information that
the Board of Directors determined in its reasonable business judgment should not be disclosed (a
Disadvantageous Condition) and gives the Selling Holder notice of such determination. Any such
notice need not specify the reasons for such postponement if GCI determines, in its reasonable
business judgment, that doing so would interfere with or adversely affect such transaction or would
result in the disclosure of non-public information. In the event of such postponement, GCI shall
file, or seek effectiveness, as applicable, of such Registration Statement as soon as practicable
after the Board of Directors of GCI shall determine, in its reasonable business judgment, that such
registration and offering would not result in such Disadvantageous Condition (but in no event later
than 60 days after the date of the applicable Demand Notice or initiation of the postponement after
filing, as applicable). If GCI shall postpone the filing of any Registration Statement, Selling
Holder shall have the right to withdraw Selling Holders request for such Demand Registration by
giving notice to GCI at any time following said notice by GCI. In the event that the Selling
Holder withdraws its request in the foregoing manner, such request shall not be counted for
purposes of determining the number of
4
registrations to which Selling Holder is entitled pursuant to Section 2 and Section 3 hereof,
and GCI will pay all expenses associated with such withdrawn registration pursuant to Section 5.
(g) Notwithstanding the foregoing, in no event shall GCI be obligated to effect a registration
pursuant to this Section 2 during the period starting with the date sixty (60) days prior to GCIs
estimated date of filing of, and ending on a date six (6) months following the effective date of, a
registration statement pertaining to an underwritten public offering of equity securities for GCIs
account, provided that (i) GCI is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective and that GCIs estimate of the date of filing on
such registration statement is made in good faith, (ii) GCI shall furnish to the Selling Holder a
certificate signed by GCIs President stating that in the Board of Directors good-faith judgment,
it would be seriously detrimental to GCI or its shareholders for a Registration Statement to be
filed in the near future; and (iii) GCI effects no registration for any other securityholder during
such period; and in such event, GCIs obligations to file a Registration Statement shall be
deferred for a period not to exceed six (6) months.
(h) To the extent the Company is then a well-known seasoned issuer (as defined in Rule 405
under the Securities Act) (a WKSI) at the time any Demand Registration request is
submitted to the Company, and such Demand Registration request requests that the Company file an
automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an
automatic shelf registration) on Form S-3, the Company shall file an automatic shelf
registration statement which covers those Registrable Shares which are requested to be registered.
The Company shall use its commercially reasonable efforts to remain a WKSI (and not become an
ineligible issuer (as defined in Rule 405 under the Securities Act) during the period during which
such automatic shelf registration statement is required to remain effective. If the Company does
not pay the filing fee covering the Registrable Shares at the time the automatic shelf registration
statement is filed, the Company agrees to pay such fee at such time or times as the Registrable
Shares are to be sold. If the automatic shelf registration statement has been outstanding for at
least three years, at the end of the third year (and notwithstanding Section 5 hereof) the Company
shall refile a new automatic shelf registration statement covering the Registrable Shares, which
shall not be deemed one of the two Registration Statements pursuant to Section 5. If at any time
when the Company is required to re-evaluate its WKSI status the Company determines that it is not a
WKSI, the Company shall use its commercially reasonable efforts to refile the shelf registration
statement on Form S-3 and, if such form is not available, Form S-1, which shall not be deemed one
of the two Registration Statements pursuant to Section 5, and keep such registration statement
effective during the period during which such registration statement is required to be kept
effective.
3. Incidental Registration.
Each time that GCI proposes to register any of its Common Stock under the Securities Act in
connection with the public offering of such securities (other than (a) a registration effected
solely to implement an employee benefit or stock option plan or (b) a registration on Form S-4 or
Form S-8 (or any successor or comparable forms) or on any other Form which does not include
substantially the same information as would be required to be included in a Registration Statement
covering the sale of the Registrable Shares), GCI will give written notice to the Stockholder of
its intention to do so. Stockholder may give GCI a written request to register all
5
or some of the Registrable Shares in the registration described in GCIs written notice as set
forth in the foregoing sentence, provided that such written request is given within twenty (20)
days after receipt of any such GCI notice. Such request will state (i) the amount of the
Registrable Shares to be disposed of and the intended method of disposition of such Registrable
Shares (which may be a very broad plan of distribution including numerous alternative methods), and
(ii) any other information GCI reasonably requests to properly effect the registration of such
Registrable Shares in the proposed registration (an Incidental Registration). Upon receipt of
such request, GCI will use its best efforts promptly to cause all such Registrable Shares requested
to be registered in the Incidental Registration to be so included (in accordance with the intended
methods set forth in the request for registration), unless (i) the sale is a firmly underwritten
public offering for GCIs account and GCI determines reasonably and in good faith in writing that
the inclusion of such securities would adversely affect the offering or materially increase the
offerings costs or (ii) inclusion of such Registrable Shares is prohibited pursuant to the terms
and conditions of any other demand registration right under a registration rights agreement
granting other GCI equity security holders the right to demand registration. In the case of clause
(i) or (ii) above, such Registrable Shares and all other securities to be registered, other than
those to be offered for GCIs account or those required to be included pursuant to the terms and
conditions of any other registration rights agreement granting other GCI equity security holders
the right to request registration, shall be excluded to the extent the underwriter determines. The
total number of secondary shares included in such registration shall be shared pro rata by all
security holders having contractual registration rights based upon the amount of GCIs securities
requested by such security holders to be sold thereunder. GCIs obligations under this Section 3
shall apply to a registration to be effected for securities to be sold for GCIs account as well as
a registration statement which includes securities to be offered for the account of other holders
of GCI equity securities having contractual registration rights.
In connection with an Incidental Registration to be effected pursuant to this Section 3,
Selling Holder shall enter into the same underwriting agreement as shall GCI and the other selling
security holders, if any, provided that such underwriting agreement contains representations,
warranties and agreements on the part of the Selling Holder that are not substantially different
from those customarily made by selling-security holders in underwriting agreements with respect to
secondary distributions.
If, at any time after giving notice of GCIs intention to register any of its securities under
this Section 3 and prior to the effective date of the registration statement filed in connection
with an Incidental Registration, GCI shall determine for any reason not to register such
securities, GCI may, at its election, give notice of such determination to Selling Holder and
thereupon will be relieved of its obligation to register the Registrable Shares in connection with
such Incidental Registration.
Selling Holder may elect to withdraw its Registrable Shares from inclusion in an Incidental
Registration at any time prior to five (5) Business Days prior to the then anticipated effective
date of the applicable Registration Statement; provided that Selling Holder shall reimburse GCI for
the portion of the Commission registration fee paid or ultimately payable by GCI with respect to
the Registrable Shares so withdrawn.
6
4. Expenses of Registration.
Except as otherwise set forth in this Agreement, GCI shall pay all costs and expenses incident
to GCIs performance of or compliance with this Agreement, including, without limitation, all
expenses incurred in connection with the registration of the Registrable Shares, fees and expenses
of compliance with Securities Act or blue sky laws, printing expenses, messenger, delivery and
shipping expenses and fees and expenses of counsel for GCI and for certified public accountants and
underwriting expenses (but not fees) except that Selling Holder shall pay all fees and
disbursements of Selling Holders own attorneys and accountants, and Selling Holder shall pay all
transfer taxes and brokerage and underwriters discounts and commissions directly attributable to
the Registrable Shares being offered and sold by Selling Holder.
5. Limitations on Registration Rights.
Notwithstanding the provisions of Section 2 of this Agreement, GCI shall not be required to
effect any registration under that Section if (i) the request for registration covers an aggregate
number of Registrable Shares having an aggregate Market Value (as defined below) of less than One
Million Five Hundred Thousand Dollars ($1,500,000.00) as of the date of the Demand Notice, (ii) GCI
has previously filed two Registration Statements under the Securities Act pursuant to Section 2,
none of which is deemed an Incidental Registration pursuant to the proviso to Section 2(b), (iii)
GCI, in order to comply with such request, would be required to (A) undergo a special interim audit
or (B) prepare and file with the Commission, sooner than would otherwise be required, pro forma or
other financial statements relating to any proposed transaction, or (iv) if, in the opinion of
counsel to GCI, the form of which opinion of counsel is reasonably acceptable to Selling Holder, a
registration is not then required in order to permit resale under Rule 144 by Selling Holder of the
securities Selling Holder has requested to be registered and the Company is then in compliance with
Rule 144(c)(i) or (v) such request for registration is made prior to the date that is three months
after the effective date of GCIs most recent Registration Statement pursuant to which Registrable
Shares were to be or were sold pursuant to Section 2. The first Demand Registration under this
Agreement may be requested by Selling Holder for no less than a minimum of 15% of the Registrable
Shares. Market Value as used in this Agreement shall mean, as to each class of Registrable
Shares at any date, the average of the daily closing prices for such class of Registrable Shares,
for the ten (10) consecutive trading days before the day in question. The closing price for shares
of such class for each day shall be the last reported sale price regular way, or, in case no such
reported sale takes place on such day, the average of the reported closing bid and asked prices
regular way, in either case on the composite tape, or if the shares of such class are not quoted on
the composite tape, on the principal United States securities exchange registered under the
Exchange Act, on which shares of such class are listed or admitted to trading, or if they are not
listed or admitted to trading on any such exchange, the closing sale price (or the average of the
quoted closing bid and asked price if no sale is reported) as reported by the National Association
of Securities Dealers Automated Quotation System (NASDAQ) or any comparable system, or if the
shares of such class are not quoted on NASDAQ or any comparable system, the average of the closing
bid and asked prices as quoted on the OTC Bulletin Board, or if not quoted on the OTC Bulletin
Board, as quoted by the Pink Sheets, or if not quoted by the Pink Sheets, as furnished by any
market
7
maker in the securities of such class who is a member of the National Association of
Securities Dealers, Inc., or in the absence of such closing bid and asked price, as determined by
such other method as GCIs Board of Directors shall from time to time deem to be fair.
6. Obligations with Respect to Registration.
(a) If and whenever GCI is obligated by the provisions of this Agreement to effect the
registration of any Registrable Shares under the Securities Act, GCI shall promptly:
(i) Prepare and file with the Commission a Registration Statement with respect to such
Registrable Shares and use reasonable commercial efforts to cause such registration statement to
become effective, provided that before filing a Registration Statement, or prospectus or any
amendment or supplement thereto, GCI will furnish to counsel selected by the Selling Holder copies
of all such statements proposed to be filed, which documents shall be subject to the review of such
counsel;
(ii) Prepare and file with the Commission any amendments and supplements to the Registration
Statement and to the prospectus used in connection therewith as may be necessary to keep the
Registration Statement effective and to comply with the provisions of the Securities Act and the
rules and regulations promulgated thereunder with respect to the disposition of all Registrable
Shares covered by the Registration Statement for the period required to effect the distribution of
such Registrable Shares, but in no event shall GCI be required to do so (i) in the case of a
Registration Statement filed pursuant to Section 2, for a period after the later of (x) one year
after the effective date of the Registration Statement and (y) when all of Selling Holders
remaining Registrable Shares are (in the opinion of counsel to GCI, the form of which opinion is
reasonably acceptable to the Selling Holder) eligible for resale under Rule 144 (including, without
limitation, Rule 144(c)(i)) and (ii) in the case of a Registration Statement filed pursuant to
Section 3, for a period exceeding the greater of (A) the period required to effect the distribution
of securities for GCIs account and (B) the period during which GCI is required to keep such
Registration Statement in effect for the benefit of selling security holders other than Selling
Holder;
(iii) Notify Selling Holder and its underwriter, and confirm such advice in writing, (A) when
a Registration Statement becomes effective, (B) when any post-effective amendment to a Registration
Statement becomes effective, and (C) of any request by the Commission for additional information or
for any amendment of or supplement to a Registration Statement or any prospectus relating thereto;
and (D) of the entry of any stop order suspending the effectiveness of such Registration Statement
or of the initiation of any proceedings for that purpose;
(iv) Furnish at GCIs expense to Selling Holder such number of copies of a preliminary, final,
supplemental or amended prospectus, in conformity with the requirements of the Securities Act and
the rules and regulations promulgated thereunder, as may reasonably be required in order to
facilitate the disposition of the Registrable Shares covered by a Registration Statement, but only
while GCI is required under the provisions hereof to cause a Registration Statement to remain
effective; and
8
(v) Use its commercially reasonable efforts to register or qualify at GCIs expense the
Registrable Shares covered by a Registration Statement under such other securities or blue sky laws
of such jurisdictions in the United States as Selling Holder shall reasonably request, and do any
and all other acts and things which may be necessary to enable Selling Holder to consummate the
disposition in such jurisdictions of such Registrable Shares; provided, however, that GCI shall in
no event be required to qualify to do business as a foreign corporation or as a dealer in any
jurisdiction where it is not so qualified, to amend its articles of incorporation, to change its
capitalization or to change the composition of its assets at the time to conform with the
securities or blue sky laws of such jurisdiction, to consent to general service of process or to
subject itself to taxation in any jurisdiction where it has not theretofore done so.
(vi) Notify Selling Holder, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of which the
prospectus included in such Registration Statement contains an untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein not misleading, and,
prepare a supplement or amendment to such prospectus so that, as thereafter delivered to purchasers
of Registrable Shares, such prospectus will not contain an untrue statement of a material fact or
omit to state any fact necessary to make the statements therein not misleading;
(vii) Cause all such Registrable Shares to be listed on each securities exchange on which
similar securities issued by GCI are then listed and to be qualified for trading on each system on
which similar securities issued by GCI are from time to time qualified;
(viii) Provide a transfer agent and registrar for all such Registrable Shares not later than
the effective date of such Registration Statement and thereafter maintain such a transfer agent and
registrar;
(ix) Enter into such customary agreements (including underwriting agreements in customary
form) and take all such other actions as Selling Holder or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable Shares;
(x) Make available for inspection by any underwriter participating in any disposition pursuant
to such Registration Statement and any attorney, accountant or other agent retained by any such
underwriter, all financial and other records, pertinent corporate documents and properties of GCI,
and cause GCIs officers, directors, employees and independent accountants to supply all
information reasonably requested by any such underwriter, attorney, accountant or agent in
connection with such registration statement;
(xi) Otherwise use commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders as soon as reasonably
practicable, all earning statements as and when filed with the Commission, which earnings
statements shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
9
(xii) If Selling Holder might be deemed, in the sole and exclusive judgment of such Selling
Holder, to be an underwriter or a controlling person of GCI, permit Selling Holder to participate
in the preparation of such registration or comparable statement and to require the insertion
therein of material furnished to GCI in writing, which in the reasonable judgment of Selling Holder
and its counsel should be included;
(xiii) Following effectiveness of the Registration Statement, the Company will, not later than
three Business Days following the delivery by Selling Holder to the Company or its transfer agent
of a certificate representing such Shares containing a restrictive transfer legend, deliver or
cause to be delivered to Selling Holder a certificate representing such Shares that is free from
all restrictive and other legends and the Company will not make or permit or instruct its transfer
agent to make any notation on their records in the nature of a stop transfer or other impediment to
transfer. To the extent required by the transfer agent for such Registrable Shares, within two (2)
Business Days after a Registration Statement which covers Registrable Shares is declared effective
by the Commission, the Company shall cause legal counsel for the Company to deliver to the transfer
agent for such Registrable Shares (with copies to Selling Holder) a legal opinion to the effect
that sale of the Registrable Shares may be made without restriction and authorizing removal of
restrictive transfer legends; and
(xiv) In the event of the issuance of any stop order suspending the effectiveness of a
Registration Statement, or of any order suspending or preventing the use of any related prospectus
or suspending the qualification of any Registrable Shares included in such Registration Statement
for sale in any jurisdiction, GCI will use reasonable commercial efforts to promptly obtain the
withdrawal of such order.
(b) Notwithstanding anything to the contrary contained herein, if at any time after the filing
of a Registration Statement or after it is declared effective by the Commission, GCI determines, in
its reasonable business judgment, that such registration and offering could result in a
Disadvantageous Condition, then GCI may require the suspension by Selling Holder for not more than
30 days (and not more than an aggregate of 90 days for all suspensions during any 365 day period)
of the distribution of any of the Registrable Shares by giving notice to such Selling Holder. Any
such notice will specify the reasons for such suspension. In the event that such notice is given,
then until the Board of Directors of GCI has determined, in good faith, that such registration and
offering will no longer interfere with the matters described in the preceding sentence and has
given notice thereof to the Selling Holder, GCIs obligations under Sections 2 or 3, if the
Registration Statement has not become effective, or under Section 6(a)(ii), if the Registration
Statement has become effective, will be suspended. In the event of a suspension pursuant to this
Section 6(b) after a Registration Statement has been declared effective, the period of
effectiveness of such Registration Statement referred to in Section 6(a)(ii) will be extended by a
number of days equal to the total number of days for which the distribution of Registrable Shares
included in such Registration Statement by the Selling Holder has been suspended under this Section
6(b).
(c) Selling Holder shall cooperate with GCI in connection with the preparation of the
Registration Statement, and for so long as GCI is obligated to file and keep effective the
Registration Statement, shall provide to GCI, in writing, for use in the Registration Statement,
all such information regarding the Selling Holder and its plan of distribution of the
10
Registrable Shares as may be necessary to enable GCI to prepare the Registration Statement and
prospectus covering the Registrable Shares, to maintain the currency and effectiveness thereof and
otherwise to comply with all applicable requirements of law in connection therewith.
7. Indemnification.
(a) By GCI. GCI shall indemnify and hold harmless Selling Holder, any underwriter of
Selling Holder, each officer, director, employee or agent of Selling Holder and each other person,
if any, who controls Selling Holder or underwriter within the meaning of either the Securities Act
or the Exchange Act, against any losses, costs, claims, damages or liabilities, joint or several
(or actions in respect thereof) (Losses), incurred by or to which each such indemnified party may
become subject, under the Securities Act or otherwise, but only to the extent such Losses arise out
of or based upon (i) any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, in any preliminary prospectus (if used
prior to the effective date of such Registration Statement) or in any final prospectus or in any
post effective amendment or supplement thereto (if used during the period GCI is required to keep
the Registration Statement effective) (collectively, Disclosure Documents), (ii) any omission or
alleged omission to state in any Disclosure Document a material fact required to be stated therein
or necessary to make the statements made therein, not misleading or (iii) any violation of any
Federal or state securities laws or rules or regulations thereunder committed by GCI in connection
with the performance of its obligations under this Agreement; and GCI will reimburse each such
indemnified party for all legal or other expenses reasonably incurred by such party in connection
with investigating or defending any such claims, including, subject to such indemnified partys
compliance with the provisions of the last sentence of subsection (c) of this Section 7, any
amounts paid in settlement of any litigation, commenced or threatened, so long as GCIs counsel
agrees with the reasonableness of such settlement; provided, however, that GCI shall not be liable
to an indemnified party in any such case to the extent that any such Losses arise out of or are
based upon (i) any violation of any Federal or state securities laws, rules or regulations
committed by any of the indemnified parties (or any person who controls any of them or any agent,
broker-dealer or underwriter engaged by them) in connection with such registration or in the case
of a non-underwritten offering, any failure by the Selling Holder to give (if required by law) any
purchaser of Registrable Shares at or prior to the written confirmation of such sale a copy of the
most recent prospectus or (ii) an untrue statement or alleged untrue statement or omission or
alleged omission made in any such Disclosure Documents in reliance upon and in conformity with
written information furnished to GCI by or on behalf of such indemnified party specifically for use
in the preparation thereof, or (y) made in any prospectus used by such indemnified party if a court
of competent jurisdiction finally determines that at the time of such use such indemnified party
had actual knowledge of such untrue statement or omission or (iii) the delivery by an indemnified
party of any prospectus after such time as GCI has advised such indemnified party in writing that
the filing of a post-effective amendment or supplement thereto is required, except the prospectus
as so amended or supplemented, or the delivery of any prospectus after such time as GCIs
obligation to keep the same current and effective has expired.
11
(b) By the Selling Holder. Selling Holder shall indemnify and hold harmless GCI, its
directors, its officers and each other person, if any, who controls GCI within the meaning of
either the Securities Act or the Exchange Act, against any Losses incurred by or to which such
indemnified party may become subject under the Securities Act or otherwise, but only to the extent
such Losses arise out of or are based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in any of the Disclosure Documents or the omission or alleged omission
to state in any Disclosure Document a material fact required to be stated therein or necessary to
make the statements made therein, not misleading, if the statement or omission was in reliance upon
and in conformity with written information furnished to GCI by such indemnifying party specifically
for use in the preparation thereof, (ii) the delivery by such indemnifying party of any prospectus
after such time as GCI has advised such indemnifying party in writing that the filing of a
post-effective amendment or supplement thereto is required, except the prospectus as so amended or
supplemented, or after such time as the obligation of GCI to keep the Registration Statement
effective and current has expired or (iii) any information given or representation made by such
indemnifying party in connection with the sale of the Registrable Shares which is not contained in
and not in conformity with the prospectus (as amended or supplemented at the time of the giving of
such information or making of such representation)[ or (iv) any violation by Selling Holder of any
Federal or state securities law or rule or regulation thereunder in connection with such
registration; and Selling Holder shall reimburse each such indemnified party for all legal or other
expenses reasonably incurred by such party in connection with investigating or defending any such
claim, including, subject to such indemnified partys compliance with the provisions of the last
sentence of subsection (c) of this Section 7, any amounts paid in settlement of any litigation,
commenced or threatened; provided, however, that the indemnity agreement contained in this Section
7(b) shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action
arising pursuant to a registration if such settlement is effected without the consent of Selling
Holder; and provided further, that Selling Holder shall not be required to
undertake liability under this Section 7(b) for any amounts in excess of the proceeds to be
received by such Selling Holder from the sale of its securities pursuant to such registration, as
reduced by any damages or other amounts that such Selling Holder was otherwise required to pay
hereunder.
(c) Third Party Claims. Promptly after the receipt by any party hereto of notice of
any claim, action, suit or proceeding by any person who is not a party to this Agreement
(collectively, an Action) which is subject to indemnification hereunder, such party (Indemnified
Party) shall give reasonable written notice to the party from whom indemnification is claimed
(Indemnifying Party). The Indemnified Party shall be entitled, at the Indemnifying Partys sole
expense and liability, to exercise full control of the defense, compromise or settlement of any
such Action unless the Indemnifying Party, within a reasonable time after the giving of such notice
by the Indemnified Party, shall (i) admit in writing to the Indemnified Party, the Indemnifying
Partys liability to the Indemnified Party for such Action under the terms of this Section 7, (ii)
notify the Indemnified Party in writing of the Indemnifying Partys intention to assume the defense
thereof and (iii) retain legal counsel reasonably satisfactory to the Indemnified Party to conduct
the defense of such Action. The Indemnified Party and the Indemnifying Party shall cooperate with
the party assuming the defense, compromise or settlement of any such Action in accordance herewith
in any manner that such party reasonably may request. If the Indemnifying Party so assumes the
defense of any such
12
Action, the Indemnified Party shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof, but the fees and
expenses of such counsel shall be the Indemnified Partys sole expense unless (i) the Indemnifying
Party has agreed to pay such fees and expenses, (ii) any relief other than the payment of money
damages is sought against the Indemnified Party or (iii) the Indemnified Party shall have been
advised by its counsel that there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnifying Party, and in any such case the
fees and expenses of such separate counsel shall be borne by the Indemnifying Party. No
Indemnifying Party shall settle or compromise any such Action in which any relief other than the
payment of money damages is sought against any Indemnified Party unless the Indemnified Party
consents in writing to such compromise or settlement, which consent shall not be unreasonably
withheld. No Indemnified Party shall settle or compromise any such Action for which it is entitled
to indemnification hereunder without the Indemnifying Partys prior written consent, unless the
Indemnifying Party shall have failed, after reasonable notice thereof, to undertake control of such
Action in the manner provided above in this Section 7.
(d) GCI shall not grant any conflicting registration rights to other holders of its shares to
the extent that such rights would prevent Stockholder from timely exercising its right hereunder.
(e) Contribution. If the indemnification provided for in subsections (a) or (b) of
this Section 7 is unavailable to or insufficient to hold the Indemnified Party harmless under
subsections (a) or (b) above in respect of any Losses referred to therein for any reason other than
as specified therein, then the Indemnifying Party shall contribute to the amount paid or payable by
such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Party on the one hand and such Indemnified Party on the
other in connection with the statements or omissions which resulted in such Losses, as well as any
other relevant equitable considerations; provided, however, that the contribution obligations
contained in this Section 7(d) shall not apply to amounts paid in settlement of any loss, claim,
damage, liability or action arising pursuant to a registration if such settlement is effected
without the consent of Selling Holder; and provided further, that Selling Holder shall not be
required to make any contributions under this Section 7(d) for any amounts in excess of the
proceeds to be received by Selling Holder from the sale of its securities pursuant to such
registration, as reduced by any damages or other amounts that Selling Holder was otherwise required
to pay hereunder. The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by (or omitted to be supplied by)
GCI or the Selling Holder (or underwriter) and the parties relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The amount paid or
payable by an indemnified party as a result of the Losses referred to above in this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
13
8. Miscellaneous.
(a) Notices. All notices, requests, demands, waivers and other communications required
or permitted to be given under this Agreement shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed, certified or registered mail with postage prepaid, or
sent by telecopier (with a conforming copy by U.S. mail), as follows:
(i) if to GCI at:
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
ATTN: Chief Financial Officer
Telecopy: (907) 868-5676
With a copy to:
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
ATTN: Corporate Counsel
Telecopy: (907) 868-5676
(ii) if to Stockholder/Selling Holder:
John W. Stanton and
Theresa E. Gillespie
155 108th Avenue, N.E., Suite 450
Bellevue, WA 98004
Telecopy: 425-458-5999
With a copy, which will not constitute notice, to:
Friedman Kaplan Seiler & Adelman LLP
1633 Broadway
New York, NY 10019-6708
Attn: Barry A. Adelman, Esq.
Telecopy: 212-833-1250
or to such other person or address as any party shall specify by notice in writing to the other
party. All such notices, requests, demands, waivers and communications shall be deemed to have been
received on the date of delivery or on the third Business Day after the mailing thereof, except
that any notice of a change of address shall be effective only upon actual receipt thereof.
(b) Rule 144. The Company covenants to use its commercially reasonable best efforts
to assure that (i) so long as it remains subject to the reporting provisions of the
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Exchange Act, it will timely file the reports required to be filed by it under the Securities
Act or the Exchange Act (including, but not limited to, the reports under Sections 13 and 15(d) of
the Exchange Act referred to in subparagraph (c)(1) of Rule 144 under the Securities Act), and (ii)
will take such further action as Stockholder may reasonably request, all to the extent required
from time to time to enable Stockholder to sell Registrable Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144. Upon the request of
Stockholder, the Company will deliver to Stockholder a written statement as to whether it has
complied with such requirements.
(c) Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements and understandings, oral and written, between
the parties hereto with respect to the subject matter hereof.
(d) Binding Effect; Benefit. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns. Nothing in this
Agreement, expressed or implied is intended to confer on any person other than the parties hereto
or their respective successors and assigns (including, in the case of Stockholder or Selling
Holder, any transferee, successor or assign thereof as the holder of Registrable Shares, who shall
thereafter upon notifying GCI that it agrees to be bound by the terms hereof also be deemed a
Stockholder and (upon submission of a request to register) a Selling Holder), any rights, remedies,
obligations or liabilities under or by reason of this Agreement, other than rights conferred upon
indemnified persons under Section 7.
(e) Amendment and Modification. This Agreement may be amended or modified only by an
instrument in writing signed by or on behalf of each party and any other person then a Stockholder.
Any term or provision of this Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof.
(f) Section Headings. The section headings contained in this Agreement are inserted
for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original, and all of which together shall be deemed to be one and the same
instrument.
(h) Applicable Law. This Agreement and the legal relations between the parties hereto
shall be governed by and construed in accordance with the laws of the State of Alaska, without
regard to the conflict of laws and rules thereof.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as of the date first above
written.
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GENERAL COMMUNICATION, INC. |
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By:
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/s/ John M. Lowber |
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Name:
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John M. Lowber |
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Its:
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Senior Vice President, Chief Financial Officer |
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[STOCKHOLDER] |
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/s/ John W. Stanton |
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/s/ Theresa E. Gillespie |
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John W. Stanton and Theresa E. Gillespie, |
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as tenants in common |
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