-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TiJlCHn6CTG0oJVHRV5l5kLxn9CfvO+KLgbFsMaM1ZXgYZhgJ4ols7Tnv/Pu3EK9 KkyVDcxB9CDpa7G6Xab6KA== 0000808461-96-000013.txt : 19960430 0000808461-96-000013.hdr.sgml : 19960430 ACCESSION NUMBER: 0000808461-96-000013 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960429 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL COMMUNICATION INC CENTRAL INDEX KEY: 0000808461 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 920072737 STATE OF INCORPORATION: AK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-15279 FILM NUMBER: 96552834 BUSINESS ADDRESS: STREET 1: 2550 DENALI ST STE 1000 CITY: ANCHORAGE STATE: AK ZIP: 99503 BUSINESS PHONE: 9072655600 MAIL ADDRESS: STREET 1: 2550 DENALI STREET STREET 2: SUITE 1000 CITY: ANCHORAGE STATE: AK ZIP: 99503 10-K/A 1 AMENDMENT TO 12/31/95 FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (Mark one) [x] ANNUAL REPORT PURSUANT TO SECTION 13 of 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required] (1) For the fiscal year ended December 31, 1995 or [ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period from ______ to _______ Commission File No. 0-15279 GENERAL COMMUNICATION, INC. (Exact name of registrant as specified in its charter) Alaska 92-0072737 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 2550 Denali Street Suite 1000 Anchorage, Alaska 99503 (Address of principal executive offices) Registrant's telephone number, including area code: (907) 265-5600 Securities Registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12 (g) of the Act: Class A common stock Class B common stock (Title of class) (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the average bid and asked prices of such stock as of the close of trading on April 15, 1996 was approximately $48,426,000. The number of shares outstanding of the registrant's common stock as of April 15, 1996, was: Class A common stock - 19,696,207 shares; and Class B common stock - 4,175,434 shares. DOCUMENTS INCORPORATED BY REFERENCE None. - ----------------------- (1) Fee paid with initial filing of Form 10-K on or about March 29, 1996. GENERAL COMMUNICATION, INC. 1995 ANNUAL REPORT ON FORM 10-K/A TABLE OF CONTENTS
Page INTRODUCTION.................................................................................................... 3 PART III......................................................................................................... 3 Item 10. Directors and Executive Officers of the Registrant ........................................... 3 Item 11. Executive Compensation ....................................................................... 7 Item 12. Security Ownership of Certain Beneficial Owners and Management .............................. 21 Item 13. Certain Relationships and Related Transactions .............................................. 30 Part IV......................................................................................................... 33 Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ......................................................................... 33
ASS008BD.WP5 Page 2 INTRODUCTION General Communication, Inc. ("Company") hereby amends the following items, financial statements, exhibits or other portions of its Annual Report for the year ended December 31, 1995 ("Annual Report") on Form 10-K as set forth in the following pages. Specifically, the information required by Part III of Form 10-K which the Company had in its Annual Report included by incorporation by reference to certain portions of the Company's definitive Proxy Statement for its annual shareholder meeting to be held in 1996 ("Proxy Statement") and which Proxy Statement is to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, is expressly filed with the Commission as an amendment to and expressly made a part of the Annual Report, i.e., Item 10, Part III, Item 11, Part III, Item 12, Part III, and Item 13, Part III of Form 10-K. In addition, the Company amends its Form 10-K for the year ended December 31, 1995 to include copies of four commercial agreements pursuant to Item 14, Part IV of Form 10-K. PART III (1) Item 10, Part III. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The following text is extracted from the draft Proxy Statement. The record date for purposes of this amendment to the Annual Report has been set as April 15, 1995 ("Record Date"): 1. DIRECTOR ELECTIONS General The board of directors of the Company ("Board") is classified into three classes: Class I, Class II, and Class III. Under the current Revised Bylaws to the Company ("Bylaws"), the number of directors is established as being not less than three nor more than twelve and may be changed from time to time by action of the Board. Presently the number of directors constituting the Board is seven. Pursuant to the Acquisition Plan, the Board intends to adopt a resolution expanding the size of the Board from seven to nine positions and allocate one new position to each of Classes II and III. The Board then would consist of Classes I, II, and III, each with three members per class. The Board intends to adopt another resolution to fill the two new positions with individuals selected by the Prime Sellers pursuant to the Voting Agreement described further elsewhere in this Form 10-K, provided the shareholders of the Company ("Shareholders") approve the Acquisition Plan. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Acquisition Plan, Voting Agreement," and "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS: Certain Transactions with Management and Others - Acquisition Plan." The Board intends to resolve further that these two new appointments would stand for election by the Shareholders at the Company's annual shareholder meeting to be held in 1996 ("Meeting") to complete the remaining one year and two year terms of their respective classes. Therefore, at the Meeting, three individuals will be elected to positions in Class I of the Board for three year terms, one individual will be elected to a position in Class II of the Board to serve the remaining one year of the three year term of that class, and one individual will be elected to a position in Class III of the Board to serve the remaining two years of the three year term of that class. The individuals so elected will serve subject to the provisions of the Bylaws and until the election and qualification of their respective successors. Management believes that its proposed nominees for election as directors are willing to serve as such, and it is intended that the proxy holders named in the accompanying form of Proxy or their substitutes will vote for the election of these nominees unless specifically instructed to the contrary. However, ASS008BD.WP5 Page 3 if any nominee at the time of the election is unable, unavailable or, for good cause, unwilling to serve and, as a consequence other nominees are designated, the proxy holders named in the Proxy or their substitutes will have discretion and authority to vote or refrain from voting in accordance with their judgment with respect to other nominees. Business Background of Directors, Nominees, and Executive Officers of the Company As of the Record Date the nominees proposed by management for election as directors at the Meeting were as follows: for Class I - John W. Gerdelman, Carter F. Page, and Robert M. Walp. Further information with respect to these nominees and all directors is set forth in the following table as of the Record Date. In addition, similar information is provided for executive officers of the Company. All executive officers are elected for annual terms, subject to their earlier death, resignation or removal in accordance with the Articles and Bylaws, until their successors are chosen and qualify. There are no family relations of first cousin or closer, among the persons named in the table, by blood, marriage, or adoption. The Board is unaware of any legal proceedings which may have occurred during the past five years and which would be material to an evaluation of the integrity or ability of any director or executive officer of the Company to serve. Furthermore, the Board is unaware of any legal proceedings which may have occurred in which any director or executive officer of the Company was or is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries. ASS008BD.WP5 Page 4 ==================================================================================================================== DIRECTORS, NOMINEES, AND EXECUTIVE OFFICERS OF THE COMPANY
Name Age Positions, Business Experience - --------------------------------------------- -------------- ------------------------------------------------------- Ronald A. Duncan (1) 43 Director, President and Chief Executive Officer of the Company since January 1, 1989. Prior to that, Mr. Duncan was the Executive Vice President and a director of the Company from 1979 through December, 1988. Donne F. Fisher (1) 57 Nominee. Director of the Company since 1980. Mr. Fisher has been a consultant to Tele-Communications, Inc. ("TCI") since December, 1995 and has been a director of TCI since 1980. Prior to becoming a consultant to TCI, he was Executive Vice President of TCI from December, 1991 to December, 1995 and had been a Senior Vice President of TCI from 1982 to December, 1995. He has served as Vice President, Treasurer and Chief Financial Officer of most of TCI's subsidiaries. TCI is a cable television company which owns and operates cable television systems primarily located in the United States. John W. Gerdelman (1) 43 Nominee. Director of the Company since July, 1994. Mr. Gerdelman has been President, Network Services for MCI Telecommunications Corporation, a wholly owned subsidiary of MCI Communications Corporation in Washington, D.C., since September, 1994. Prior to that, he was Senior Vice President for MCI Telecommunications Corporation from July, 1992 to September, 1994. Prior to that, he was President of MCI Services, Inc. in Sergeant Bluff, Iowa from July, 1989 to July, 1992. MCI through its subsidiaries provides telecommunication and related services throughout the country and internationally. Carter F. Page (1) 64 Director and Chairman of the Board of the Company since 1980. From December, 1987 to December, 1989, Mr. Page served as a consultant to WestMarc Communications, Inc., a wholly owned subsidiary of TCI ("WSMC"), in matters related to the Company. He served as President and director of WSMC from 1972 to December, 1987. Since then and to the present, he has been managing general partner of Semaphore Partners, a general partnership and investment vehicle in the communications industry. Larry E. Romrell (1) 56 Director of the Company since 1980. Mr. Romrell has been an Executive Vice President of TCI since 1994, President and director of TCI Technology Ventures, Inc. since 1994, and Senior Vice President of TCI since 1991, is the President of WSMC, and has been employed by WSMC in various capacities from 1961. ASS008BD.WP5 Page 5 James M. Schneider (1) 43 Nominee. Director of the Company since July, 1994. Mr. Schneider has been Senior Vice President Corporate Finance Consumer Markets for MCI Communications Corporation in Washington, D.C. since August, 1995. Prior to that, he was Senior Vice President Finance Consumer Markets for MCI Telecommunications Corporation since November, 1993. Prior to that, he was Corporate Controller for MCI from September, 1993 to November, 1993. Prior to that, Mr. Schneider was with the accounting firm of Price Waterhouse from 1973 to September, 1993 and was a partner in that firm from October, 1983 to September, 1993. Robert M. Walp (1) 68 Director, Vice Chairman of the Company since January 1, 1989. Prior to that, Mr. Walp served as President and Chief Executive Officer and a Director of the Company from 1979. William C. Behnke 38 Senior Vice President Marketing and Sales for the Company since January, 1994. Prior to that Mr. Behnke was Vice President of the Company and President of GCI Network Systems, Inc. from February, 1992 to January, 1994 when that corporation, a subsidiary of GCI Communication Corp. (a wholly owned subsidiary of the Company, "GCC"), was merged into GCC. Prior to that, he was Vice President of the Company and General Manager of GCI Network Systems, Inc. from June, 1989 to February, 1992. Prior to that, he was Senior Vice President for Transalaska Data Systems, Inc. from August, 1984 to June, 1989. Richard P. Dowling 52 Senior Vice President - Corporate Development for the Company since December, 1990. Prior to that, Mr. Dowling was Senior Vice President-Operations and Engineering for the Company from December, 1989 to December, 1990. Prior to that he was Vice President-Operations and Engineering for the Company from 1981 to December, 1989. G. Wilson Hughes 50 Executive Vice President and General Manager of the Company since June, 1991. Prior to that, Mr. Hughes was President and a member of the board of directors of Northern Air Cargo, Inc. from March, 1989 to June, 1991. Prior to that, he was President and a member of the board of directors of Enserch Alaska Services, Inc. from June, 1984 to December, 1988. John M. Lowber 46 Senior Vice President and Chief Financial Officer for the Company since December, 1989. Prior to that, Mr. Lowber was Vice President-Administration for the Company from 1985 to December, 1989. He has been Chief Financial Officer for the Company since January, 1987 and Secretary/Treasurer of the Company since July, 1988. Prior to joining the Company, Mr. Lowber was a senior manager at KPMG Peat Marwick. Dana L. Tindall 34 Senior Vice President-Regulatory Affairs since January, 1994. Prior to that Ms. Tindall was Vice President-Regulatory Affairs for the Company from January, 1991 to January, 1994. Prior to that, she was Director Regulatory Affairs for the Company from October, 1989 through December, 1990, and prior to that she was Manager Regulatory Affairs for the Company from 1985 to October, 1989. ASS008BD.WP5 Page 6 ============================================= ============== ======================================================= - ------------------------ 1 Messrs. Gerdelman, Page, and Walp were, as of the Record Date, Class I directors whose terms will expire at the time of the 1996 annual shareholder meeting. Messrs. Duncan and Romrell were, as of the Record Date, Class II directors whose terms will expire at the time of the 1997 annual shareholder meeting. Messrs. Fisher and Schneider were, as of the Record Date, Class III directors whose terms will expire at the time of the 1998 annual shareholder meeting. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Acquisition Plan." - ------------------------
In addition, one of the directors, Mr. Fisher, serves on the boards of directors of most of TCI's subsidiaries. Compliance with Section 16(a) of the Exchange Act Based upon a review of Exchange Act Forms 3, 4, and 5 completed and furnished to it by Shareholders, the Company is unaware of any director, officer, or beneficial owner of more than 10 percent of any class of common stock of the Company who failed to file on a timely basis, as provided in those forms, reports required under Section 16(a) of that act during the year ended December 31, 1995. (2) Item 11, Part III. EXECUTIVE COMPENSATION. The following text is extracted from the Proxy Statement: Remuneration of Directors and Executive Officers Summary Compensation. The following table sets forth a summary of the compensation paid by the Company to its chief executive officer for services in all capacities for each of the years ended December 31, 1993, 1994, and 1995, respectively. It also sets forth similar information for the four most highly compensated executive officers of the Company aside from the chief executive officer rendering services to the Company and its subsidiaries, whose aggregate salary and bonuses exceeded $100,000 for the year ended December 31, 1995 (Mr. Duncan and these four executive officers, collectively, "Named Executive Officers"). ASS008BD.WP5 Page 7 ============================================================================================================================== SUMMARY COMPENSATION TABLE
Long Term Compensation ------------------------------------ Annual Compensation Awards Payouts ------------------------- ----------- ------- (a) (b) (c) (d) (e) (f) (g) (h) (i) Other Annual Restricted Securities All Other Name & Compensa- Stock Underlying LTIP Compen- Principal Salary (1) Bonus (1) tion (2),(3) Awards Options/SARs Payouts (4) sation (5) Position Year ($) ($) ($) ($) (#) ($) ($) - ------------------------------------------------------------------------------------------------------------------------------ Ronald A. Duncan President 1995 89,550 -0- 14,736 -0- -0- -0- 144,470 and Chief Exec. Officer (6) 1994 89,550 99,960 41,322 -0- -0- -0- 110,400 1993 89,550 27,830 536,970 -0- -0- -0- 103,500 William C. Behnke 1995 110,002 -0- 41,931 -0- 50,000 -0- 20,000 Senior Vice President, 1994 109,168 136,194 90,049 -0- -0- -0- -0- Marketing and Sales (7) 1993 90,000 41,900 64,569 -0- -0- -0- -0- G. Wilson Hughes 1995 150,002 -0- 16,305 -0- 260,000 -0- 76,586 Executive Vice President 1994 150,003 89,698 15,843 -0- -0- -0- 61,059 and General Manager (8) 1993 149,547 31,666 9,342 -0- -0- -0- 58,074 John M. Lowber 1995 125,000 -0- 15,321 -0- 100,000 -0- 65,000 Senior Vice President, 1994 125,514 117,757 12,814 -0- -0- -0- 65,000 Administration, Chief 1993 125,000 32,746 177,792 -0- -0- -0- 65,000 Financial Officer, Secretary/Treasurer (9) Dana L. Tindall 1995 103,699 24,000 14,949 -0- -0- -0- -0- Senior Vice President, 1994 93,555 97,467 30,208 -0- -0- -0- -0- Regulatory Affairs (10) 1993 90,220 38,349 42,299 -0- 50,000 -0- -0- ============================================================================================================================= - ------------------------ 1 Amounts shown include cash and non-cash compensation earned and received by executive officers as well as amounts earned but deferred at the election of those officers, including employee base salary and contributions to the Stock Purchase Plan (included in column (c) of this table) and bonuses (included in column (d) of this table). Does not include Company contributions to the Stock Purchase Plan for the account of the participating employee (included in column (e) of this table). Does not include value of options granted as shown in column (g) of this table in that they were not in-the-money at the time of grant. Mr. Lowber was as of December 31, 1995, the only employee of the Company. The other individuals named in this table were as of that date employees of GCC. Management of the Company anticipated that this arrangement would continue. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Pledges of Stock of Subsidiaries." 2 Perquisites and other personal benefits, securities and property for each Named Executive Officer did not exceed the lesser of either $50,000 or 10% of the total of annual salary and bonus reported for that individual. 3 During the years ended December 31, 1993 through 1995, Messrs. Duncan, Lowber, and Hughes and Ms. Tindall participated in the Company's Stock Purchase Plan through which those persons contributed funds under a payroll deduction arrangement, and the Company matched those contributions on a dollar-for-dollar basis. The contributions by the Company were made to all employees of the Company and its subsidiaries who participated in the plan, including the identified persons. Contributions identified in this column (e) are those of the Company to the plan only. Prior to July 1, ASS008BD.WP5 Page 8 1995 employee and Company contributions were invested in Company common stock, and employee contributions received up to 100% matching, as determined by the Company each year, in Company common stock. On and after that date, employees could direct their contributions to be invested by the plan in Company common stock, MCI common stock, TCI common stock or various identified mutual funds. Also on and after that date, employee contributions directed into investments other than Company common stock are to receive Company matching contributions of up to 50 cents on the dollar as determined by the Board. The contributions are invested in the name of the plan and for the benefit of the respective participants in the plan. All securities were purchased or otherwise acquired at fair market value on the date of purchase or acquisition. See, "MATTERS TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers - Stock Purchase Plan." 4 The Company had no long term incentive plan during the three-year period ended December 31, 1995. 5 All incidental compensation to each Named Executive Officer did not for the years ended December 31, 1993 through 1995, exceed the lesser of $50,000 or 10% of total annual salary and bonus reported for the officer. 6 For 1995, column (e) includes $10,756 of Company matching contributions to the Stock Purchase Plan. For 1994, column (e) includes prepaid portion of salary for 1995 of $30,000 and $9,240 of Company matching contributions to the Stock Purchase Plan. For 1993, column (e) includes the value of options exercised (income derived), calculated as the fair market value less the exercise price of the options at $1.25 per share for 247,947 shares of Class A common stock granted in April, 1988, in the amount of $495,894 and includes prepaid portion of salary for 1994 of $30,000 and $8,994 of Company matching contributions to the Stock Purchase Plan. For 1993, 1994, and 1995 column (i), includes the deferred compensation agreement entered into between Mr. Duncan and the Company dated August 13, 1993 ("Second Duncan Deferred Compensation Agreement"). Under the Second Duncan Deferred Compensation Agreement, the Company is to pay to Mr. Duncan deferred compensation in an amount not to exceed $625,000 plus interest in addition to the regular compensation he now earns or may in the future earn. This deferred compensation is to be credited to Mr. Duncan each July 1 that he is employed by the Company in amounts as follows: Year Amount ---- ------ 1993 $100,000 1994 100,000 1995 125,000 1996 150,000 1997 150,000 ------- Total $625,000 The full amount of deferred compensation plus accrued interest will be due and payable to Mr. Duncan upon the termination of his employment with the Company, provided that, should he voluntarily terminate his employment or his employment is terminated for cause, only that portion of the deferred compensation credited as of the December 31 immediately preceding that termination plus interest will be due and payable and the remainder of the deferred compensation will be canceled. No compensation was received by Mr. Duncan under this agreement during the years ended December 31, 1993, 1994, or 1995. 7 For 1995, column (e) includes the value of options exercised (income derived) calculated as the fair market value less the exercise price of the options at $0.001 per share for 10,000 shares of Class A common stock granted in June, 1989 in the amount of $41,865. For 1994, column (e) includes the value of options exercised (income derived), calculated as the fair market value less the exercise price of the options at $.001 per share for 17,500 shares of Class A common stock granted in June, 1989 in the amount of $89,983. For 1993, column (e) includes the value of options exercised (income derived), calculated as the fair market value less the exercise price of the options at $.001 per share for 15,000 shares of Class A common stock granted in June, 1989 in the amount of $64,516. For 1995, column (i) include an allocation pursuant to a deferred compensation plan with Mr. Behnke of $20,000 of deferred compensation vesting over the five year period beginning in 1995. 8 For 1995, column (e) includes the Company's contributions to the Stock Purchase Plan for the benefit of Mr. Hughes in the amount of $12,750. ASS008BD.WP5 Page 9 For 1994, column (e) includes the Company's contributions to the Stock Purchase Plan for the benefit of Mr. Hughes in the amount of $15,000. For 1993, column (e) includes the Company's contributions to the Stock Purchase Plan for the benefit of Mr. Hughes in the amount of $8,994. For 1993 through 1995, column (i), represents the amount accrued through a deferred compensation agreement entered into between Mr. Hughes and the Company dated April 30, 1991 ("Hughes Deferred Compensation Agreement") during and for the years ended December 31, 1993, 1994, and 1995. The Company entered into the Hughes Deferred Compensation Agreement, a five year deferred bonus agreement, with Mr. Hughes dated April 30, 1991. Under the Hughes Deferred Compensation Agreement, Mr. Hughes will receive deferred compensation of $50,000 per year accrued annually on December 31 of each year of the agreement. The agreement further provides that accumulated balances on Mr. Hughes deferred compensation will accrue interest at 10% per year, compounded annually. The plan was amended to provide for deferred compensation of $65,000 in 1995 and $75,000 per year in 1996 and in subsequent years. Each contribution vests over the following three years after the corresponding contribution. The agreement provides that after five years, or upon termination of his employment with the Company, Mr. Hughes may elect to have the full balance of the deferred compensation paid in cash, in a lump sum or in monthly installments for up to ten years. The agreement provides that in the event of a deferred payment, the residual balance will continue to accrue interest. Interest accrued under the agreement in the amounts of $8,074, $11,059, and $11,585 during the years ended December 31, 1993, 1994, and 1995, respectively. The agreement is part of an employment agreement described further elsewhere in this section. See, "MATTERS TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Employment Contracts and Termination of Employment and Change of Control Arrangements." 9 For 1995, column (e) includes $12,852 of Company matching contributions to the Stock Purchase Plan. For 1994, column (e) includes $11,844 of Company matching contributions pursuant to the Company's Stock Purchase Plan. For 1993, column (e), includes the value of options exercised (income derived), calculated as the fair market value less the exercise price of the option at $1.00 per share for 75,000 shares granted in April, 1988, in the amount of $168,750 and $8,500 of Company matching contributions to the Stock Purchase Plan. For 1993, 1994, and 1995, column (i), the amount accrued through the Lowber Deferred Compensation Agreement ("Lowber Deferred Compensation Agreement") during and for the years ended December 31, 1993 through 1995, respectively. The Company entered into the Lowber Deferred Compensation Agreement providing for deferred compensation of $65,000 per year in each year of a seven year term and accruing annually on July 1 of each year of the term, the proceeds of which were used to purchase a life insurance policy which has been collaterally assigned to the Company to the extent of premiums paid by the Company. At the earlier of termination of employment or upon election by Mr. Lowber subsequent to the end of the seven year term of the agreement, the collateral assignment will be terminated with the Company. The agreement provides that if Mr. Lowber leaves the employment of the Company voluntarily, he will lose the unvested portion of the compensation. The Lowber Deferred Compensation Agreement is a part of Mr. Lowber's employment agreement with the Company described further elsewhere in this section. See, "MATTERS TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Compensation Committee Report on Executive Compensation." 10 For 1995, column (e) includes $12,802 of Company matching contributions pursuant to the Stock Purchase Plan. For 1994, column (e) includes $13,190 of Company matching contributions pursuant to the Stock Purchase Plan and the value of options exercised (income derived), calculated as the fair market value less the exercise price of $2.25 per share for 5,000 shares of Class A common stock granted December, 1989, in the amount of $15,312. For 1993, column (e) includes $6,145 of Company matching contributions pursuant to the Stock Purchase Plan and the value of options exercised (income derived), calculated as the fair market value less the exercise price of $.75 per share for 9,917 shares and $2.25 for 83 shares of Class A common stock granted in March, 1987 and December, 1989, respectively, in the total amount of $36,125. - -------------------
ASS008BD.WP5 Page 10 Option/SAR Grants. The following table sets forth information on the individual grants of stock options (whether or not in tandem with stock appreciation rights ("SARs")), and freestanding SARs made during the Company's fiscal year ended December 31, 1995 to the Named Executive Officers. There were no tandem SARs or freestanding SARs associated with the Company during this period. OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value of Assumed Annual Rates of Stock Price Appreciation for Individual Grants Option Term ----------------------------------------------------- ---------------- (a) (b) (c) (d) (e) (f) (g) Number of Securities % of Total Underlying Options/SARs Option/SARs Granted to Exercise or Expir- Granted (1) Employees Base Price (2) ation Name (#) in Fiscal Year ($/Sh) Date 5% ($) (3) 10% ($) (3) - ------------------------ ---------------- -------------------- --------------- --------------- ------------ --------------- Ronald A. Duncan -0- -0- - - - - William C. Behnke 50,0004 8.2 4.00 3/1/05 126,000 319,000 G. Wilson Hughes 260,0005 42.6 4.00 3/1/05 654,000 1,657,000 John M. Lowber 100,0006 16.4 4.00 3/1/05 252,000 638,000 Dana L. Tindall -0- -0- - - - - - ------------------------ 1 Options in Class A common stock. 2 The exercise price of the options was equal to the market price of the Class A common stock at the time of grant. 3 The potential realizable dollar value of a grant is calculated as the product of the following: (1) the difference between (i) the product of the per-share market price at the time of grant and the sum of 1 plus the adjusted stock price appreciation rate (the assumed rate of appreciation compounded annually over the term of the option) and (ii) the per-share exercise price of the option; and (2) the number of securities underlying the grant at fiscal year end. 4 The option is for 50,000 shares at $4.00 per share vesting in the following amounts on the indicated dates: (1) 5,000 shares on March 1, 1998; (2) 15,000 shares on March 1, 1999; (3) 15,000 shares on March 1, 2000; and (4) 15,000 shares on March 1, 2001. The options were granted pursuant to the Stock Option Plan and will expire if not exercised before March 1, 2005. 5 The option is for 260,000 shares at $4.00 per share vesting in the following amounts on the indicated dates: (1) 60,000 shares on June 1, 1997; (2) 60,000 shares on June 1, 1998; (3) 60,000 shares on June 1, 1999; and (4) 80,000 shares on June 1, 2000. The options were granted pursuant to the Stock Option Plan and will expire if not exercised before March 1, 2005. ASS008BD.WP5 Page 11 6 The option is for 100,000 shares at $4.00 per share vesting in the following amounts on the indicated dates: (1) 10,000 shares on March 1, 1998; (2) 30,000 shares on March 1, 1999; (3) 30,000 shares on March 1, 2000; and (4) 30,000 shares on March 1, 2001. The options were granted pursuant to the Stock Option Plan and will expire if not exercised before March 1, 2005. - ------------------------
Aggregated Option/SAR Exercises and Year-End Option/SAR Value. The following table sets forth information concerning each exercise of stock options during the year ended December 31, 1995, by each of the Named Executive Officers and the fiscal year-end value of unexercised options. There were no tandem SARs or freestanding SARs associated with the Company during this period. ASS008BD.WP5 Page 12 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
(a) (b) (c) (d) (e) Number of Securities Value of Underlying Unexercised Unexercised In-the-Money Options/SARs Options/SARs at at FY-End (#) FY-End ($) (1),(2) Shares Acquired Value on Exercise Realized (1) Exercisable/ Exercisable/ Name (#) ($) Unexercisable Unexercisable - ------------------------------- --------------------- --------------- ----------------------- ----------------------- Ronald A. Duncan -0- -0- 90,000/110,000 180,000/220,000 William C. Behnke 10,000 41,865 160,190/75,000 575,865/100,000 G. Wilson Hughes -0- -0- 200,000/310,000 650,000/422,500 John M. Lowber -0- -0- 167,500/182,500 560,000/265,000 Dana L. Tindall -0- -0- 71,400/85,000 155,600/170,000 - ----------------------- 1 The dollar values in columns (c) and (e) of the table are calculated by determining the difference between the fair market value of the securities underlying the options and the exercise price of the options at exercise or fiscal year-end, respectively. 2 An option is "in-the-money" if the fair market value of the underlying securities exceeds the exercise price of the option. - -----------------------
Long-Term Incentive Plan Awards. The Company had no long-term incentive plan in operation during the year ended December 31, 1995. Stock Purchase Plan. The Company adopted the Qualified Employee Stock Purchase Plan in December, 1986, and the plan has subsequently been amended several times by shareholder and board of director actions ("Stock Purchase Plan"). The Stock Purchase Plan is qualified under Section 401 of the Internal Revenue Code of 1986. The plan has been allocated 2.4 million shares of Class A and 240,000 shares of Class B common stock of the Company for issuance to or acquisition by the plan. Of those amounts, as of the Record Date, 620,706 shares of Class A and 68,123 shares of Class B common stock remain available for issuance or acquisition by the plan. The Stock Purchase Plan permits each employee of the Company, each employee of a subsidiary of the Company, and each employee of a subsidiary of a subsidiary of the Company, who has completed one year of service and is at least 21 years of age to elect to participate in it. Eligible employees may elect to reduce their compensation in any even dollar amount up to 10% of such compensation through contributions to the plan up to a maximum of $9,500 for 1996. This limit is adjusted annually based upon inflation, at the direction of the Internal Revenue Service. An eligible employee may contribute up to 10% ASS008BD.WP5 Page 13 of the employee's compensation with after-tax dollars, or the employee may elect a combination of salary reductions and after-tax contributions. The Company may under the plan match employee salary reductions and after tax contributions in any amount up to 100% as elected by the Company each year. However, no more than 10% of any one employee's compensation will be matched in any year. The combination of salary reductions, after tax contributions, and Company matching contributions cannot exceed 25% of any employee's compensation (determined after salary reduction) for any year. The Company's contributions will vest over six years. Prior to July 1, 1995, employee and Company contributions were invested in Company common stock and employee contributions received up to 100% matching, as determined by the Company each year, in Company common stock. On and after that date, employees could direct their contributions to be invested by the plan in Company common stock, MCI common stock, TCI common stock or various identified mutual funds. Also on and after that date, employee contributions directed into investments other than Company common stock are to receive Company matching contributions of up to 50 cents on the dollar as determined by the Board. The contributions are invested in the name of the plan for the benefit of the respective participants in the plan. The Stock Purchase Plan is administered through a plan committee whose chair is the plan administrator. The assets of the plan are invested from time to time by the plan administrator under the direction of the trustee which as of the Record Date was National Bank of Alaska. As of the Record Date, the plan administrator was Alfred J. Walker. The plan administrator and members of the committee were all employees of the Company or its subsidiaries. The plan administrator and committee members are appointed by the Board. The committee has broad administrative discretion under the terms of the plan. The purpose of the Stock Purchase Plan is to provide employees of the Company, its subsidiaries, and their subsidiaries a convenient means of investing in the Company. The plan provides an incentive to employees as shareholders of the Company to redouble their efforts to make the Company successful and thereby increase the value of their investments. Through discretionary contributions by the Company to the plan which in turn increase the stock ownership in the Company by participants in the plan, the plan provides further incentive to employees of the Company. Stock Option Plan. The Company adopted its 1986 Stock Option Plan in December, 1986, and the plan has subsequently been amended several times by shareholder and board of directors action ("Stock Option Plan"). The Stock Option Plan is a non-qualified plan under the Internal Revenue Code of 1986. The Stock Option Plan has been allocated 3,200,000 shares of Class A common stock of the Company to be subject to options granted under the plan and further subject to adjustment upon the occurrence of stock dividends, stock splits, mergers, consolidations, or certain other changes in corporate structure or capitalization. Of that amount, as of the Record Date, 2,289,900 shares were subject to outstanding options, 578,256 shares had been issued upon the exercise of options under the plan, and 331,844 shares of that stock remained available for subsequent granting of options under the plan. Through the Stock Option Plan, the Company acting through its board of directors may provide special incentives to officers, non-employee directors, and other key employees by offering them an opportunity to acquire an equity interest in the Company. An option granted under the Stock Option Plan may have an option exercise price less than, equal to, or greater than the fair market value on the date of grant of the option. Options granted pursuant to the Stock Option Plan are only exercisable if at the time of exercise the option holder is an employee, or non-employee director, of the Company. ASS008BD.WP5 Page 14 The Stock Option Plan provides that all options granted under the plan must expire not later than ten years after the date of grant. If an option expires or terminates, the shares subject to the option will be available for future grants of options under the Stock Option Plan. The plan provides that it shall continue until such time as the Board's adoption, by a simple majority vote, of a resolution suspending or terminating the plan or discontinuing granting options under the plan. However, any such suspension, termination, or discontinuance will not affect options then outstanding under the plan. No options may be granted after termination of the plan. The Stock Option Plan is administered by a committee composed of the Board. Key employees, including officers and directors and non-employee directors of the Company, are eligible to participate in the plan. The committee selects the eligible employees to whom options are granted and, subject to the terms of the Stock Option Plan, the number of shares subject to each option. Subject to the provisions of the Stock Option Plan, the committee has broad discretion in administering the plan, and is authorized to determine the times at which options will be granted and exercisable and the fair market value of the shares covered by each option at the time of grant, to prescribe the form evidencing options, to interpret the plan, and to prescribe, amend, and rescind rules and regulations relating to the plan. Unfunded Deferred Compensation Plan. In February, 1995 the Company established a non-qualified, unfunded deferred compensation plan to provide a means by which certain employees of the Company and its subsidiaries may elect to defer receipt of designated percentages or amounts of their compensation and to provide a means for certain other deferrals of compensation. Employees eligible to participate in the plan are determined by the Board. The Company may, at its discretion, contribute matching deferrals in amounts selected by the Company. Participants immediately vest in all elective deferrals and all income and gain attributable to that participation. Matching contributions and all income and gain attributable to them over a six-year period. Participants may elect to be paid in either a single lump sum payment or annual installments over a period not to exceed 10 years. Vested balances are payable upon termination of employment, unforeseen emergencies, death and total disability. Participants are general creditors of the Company with respect to deferred compensation benefits of the plan. Compensation To Directors. In July, 1995, each director of the Company (with the exceptions of Messrs. Schneider and Gerdelman) received $2,000 in director fees for the 12 month period July, 1995 -June, 1996. Messrs. Schneider and Gerdelman, as a matter of MCI Communications Corporation policy, declined to accept such remuneration for serving on a board outside of MCI and its subsidiaries. During the year ended December 31, 1995, the directors of the Company received no other direct compensation for serving in those capacities but were reimbursed for travel and out-of-pocket expenses incurred in connection with attendance at meetings of the Board. The same policy was followed during calendar year 1996 up through the Record Date, and management anticipated that such policy would continue through the balance of 1996. It is anticipated that the directors will receive similar director fees in July, 1996 for the 12 month period July 1996 - June 1997. Employment Contracts and Termination of Employment and Change of Control Arrangements The Company entered into employment agreements with Mr. Hughes in April, 1991 and with Mr. Lowber in July, 1992 and has deferred compensation agreements with Messrs. Duncan, Hughes, Behnke and Lowber, the terms of which are described elsewhere in this Proxy Statement. See footnotes 6 through 9 to the Summary Compensation Table in "MATTERS TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers - Summary Compensation." The Company has no employment agreements with Ms. Tindall, the other Named Executive Officer. ASS008BD.WP5 Page 15 The Company entered into a deferred compensation agreement with Mr. Duncan in June, 1989 ("First Duncan Deferred Compensation Agreement"). Under the First Duncan Deferred Compensation Agreement as of June 12, 1989, the Company credited an account on its books with $325,000 for the benefit of Mr. Duncan as a deferred bonus for Mr. Duncan's past service to the Company. Amounts in the account were to accrue interest at 10% per annum unless there was an investment election by Mr. Duncan to have the balance in the account treated as though it was invested in the common stock of the Company, In July, 1989, Mr. Duncan made the investment election, and the Company issued a total of 105,111 shares of Class A common stock in its name for the benefit of Mr. Duncan. The stock is not voted. The full amount of the deferred compensation will be due and payable to Mr. Duncan upon the termination of his employment with the Company. The Company entered into a Second Duncan Deferred Compensation Agreement with Mr. Duncan as further described in footnote 6 to the Summary Compensation Table found elsewhere in this Proxy Statement. See, "MATTERS TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers - Summary Compensation." In September, 1995, the Company agreed to buy back 100,000 shares of its Class A common stock to fund the vested portion subject to that second agreement. However, with the concurrence of Mr. Duncan, the Company subsequently during September-October, 1995 bought a total of only 13,750 shares under that second agreement for a total of $47,880, i.e., at a weighted average of $3.48 per share. Mr. Hughes' employment agreement provides for base compensation and in addition deferred compensation of $50,000 per year for five years accruing interest at 10% per annum, compounded annually. The plan was amended to provide for deferred compensation of $65,000 in 1995 and $75,000 per year in 1996 and in subsequent years. Each contribution vests over the following three years after the corresponding contributions. This compensation is tied to achievement of the Company's cash flow objectives with the opportunity for significant increases in the level of compensation if the Company exceeds those objectives. Mr. Hughes has also been granted stock options for 250,000 shares of Class A common stock at $1.75 per share which will vest over a period of five years, but one-half of any remaining unvested portion of the options will be vested at the option of the Company, should Mr. Hughes' employment with the Company be terminated by the Company. In September, 1995, the Company agreed to buy back 3,750 shares of its Class A common stock to fund certain of the vested portions subject to the Hughes Deferred Compensation Agreement. The total purchase price was $12,658, i.e., at $3.375 per share. Mr. Lowber's employment agreement provides for base compensation and in addition deferred compensation of $450,000 to vest over seven years at the rate of $65,000 per year, with full vesting to occur should he die, his position in the Company be terminated, or the Company terminate his employment. In addition, Mr. Lowber is to receive an annual cash bonus of $30,000 based upon Company and individual performance. The Company entered into a deferred compensation agreement with Mr. Behnke in February, 1995 ("Behnke Deferred Compensation Agreement'). Under the Behnke Deferred Compensation Agreement Mr. Behnke is to receive $20,000 per year, to vest over a five year period including the year of the allocation, and accruing interest at 10% per annum. The first allocation under the plan was made in December, 1995. Except as disclosed in this Proxy Statement, as of December 31, 1995 and the Record Date, there were no compensatory plans or arrangements including payments to be received from the Company with respect to the Named Executive Officers for the year ended December 31, 1995 where such a plan or arrangement resulted in or will result from the resignation, retirement, or any other termination of such individual's employment with the Company or its subsidiaries or from a change of control of the Company or a change in the individual's responsibilities following a change in control and where the amount involved, including all periodic payments or installments, exceeded $100,000. ASS008BD.WP5 Page 16 Report on Repricing of Options/SARs During the year ended December 31, 1995, the Company did not adjust or amend the exercise price of stock options or SARs previously awarded to any of the Named Executive Officers, whether through amendment, cancellation or replacement grants, or any other means. Compensation Committee Interlocks and Insider Participation The Compensation Committee is composed of the members of the Board, and the identity and relationships of the members of the committee to the Company are described elsewhere in this Proxy Statement. See, "MATTERS TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Business Background of Directors, Nominees, and Executive Officers of the Company," "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT" and "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." During the year ended December 31, 1995, both Messrs. Walp and Duncan, executive officers of the Company, participated in deliberations of the Compensation Committee concerning executive officer compensation but not including their respective compensations. Compensation Committee Report on Executive Compensation In January, 1994, the Board established a compensation committee composed of all of the members of the Board ("Compensation Committee"). The Board established the duties of the Compensation Committee as follows: (1) Preparing, on an annual basis for the review of and action by the Board, a statement of policies, goals, and plans for executive officer and Board member compensation, if any, and, specifically a statement of expected performance and compensation of and the criteria on which compensation is based for the chief executive officer and such other executive officers of the Company as the Board may designate for this purpose; (2) Monitoring the effect of ongoing events on and the effectiveness of existing compensation policies, goals, and plans, including but not limited to the status of the premise that all pay systems correlate with the compensation goals and policies of the Company, and, at its own direction or at the direction of the Board; (3) Monitoring compensation-related publicity and public and private sector developments on executive compensation; (4) Familiarizing itself with and monitoring the tax, accounting, corporate, and securities law ramifications of the compensation policies of the Company, including but not limited to comprehending a senior executive officer's total compensation package, its total cost to the Company and its total value to the recipient, paying close attention to salary, bonuses, individual insurance and health benefits, perquisites, loans made or guaranteed by the Company, special benefits to specific executive officers, individual pensions, and other retirement benefits; (5) Establishing the overall cap on executive compensation, the measure of performance for executive officers, either by predetermined measurements or by a subjective evaluation; and (6) Striving to make the compensation plans of the Company simple, fair, and structured so as to maximize shareholder value. ASS008BD.WP5 Page 17 For the year ended December 31, 1995, the duties of the Compensation Committee in the area of executive compensation specifically included addressing the reasonableness of compensation paid to executive officers. In doing so, the committee took into account how compensation compared to compensation paid by competing companies as well as the Company's performance and available resources. The compensation policy of the Company as established by the Compensation Committee is that a portion of the annual compensation of senior executive officers relates to and is contingent upon the performance of the Company. In addition, executive officers participating in deferred compensation agreements established by the Company are under those agreements unsecured creditors of the Company. In February, 1995 the Compensation Committee established compensation levels for all corporate officers including the Named Executive Officers. Also at that time the Compensation Committee established structured annual incentive bonus agreements with Mr. Duncan and with each of several of its executive officers, including Messrs. Behnke, Hughes and Lowber, and Ms. Tindall. The agreements included the premise that the Company's performance, or that of a division or subsidiary, as the case may be, for purposes of compensation would be measured by the Compensation Committee against goals established at that time and were reviewed and approved by the Board. The goals included targets for revenues and cash flow standards for the Company or the relevant division or subsidiary. Targeted objectives were set and measured from time to time by the Compensation Committee. Other business achievements of the Company obtained through the efforts of an executive officer were also taken into consideration in the evaluation of performance. See, "MATTERS TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers - Summary Compensation." During the year ended December 31, 1995 the Compensation Committee monitored and provided direction for the Company's Stock Purchase Plan and Stock Option Plan. Because the incentive bonus standards set by the committee for the Company for that year were not met, no incentive bonuses tied to Company performance were awarded to the Named Executive Officers and other executive officers of the Company or to the officers of the subsidiaries of the Company. In addition, the Compensation Committee reviewed compensation levels of members of management, evaluated the performance of management, and considered management succession and related matters. The Compensation Committee reviewed in detail all aspects of compensation for the Named Executive Officers and other executive officers of the Company. Corresponding duties were carried out by the boards of directors of the subsidiaries of the Company with respect to employees of those entities, and the same individuals served as directors of each of these boards. The practice of the Compensation Committee in future years will likely be to review directly the compensation and performance of Mr. Duncan as chief executive officer and to review recommendations by Mr. Duncan for the compensation of other senior executive officers. Performance Graph The following graph includes a line graph comparing the yearly percentage change in the Company's cumulative total shareholder return on its Class A common stock during the five year period from December 31, 1990 through December 31, 1995. This return is measured by dividing (1) the sum of (a) the cumulative amount of dividends for the measurement period (assuming dividend reinvestment, if any) and (b) the difference between the Company's share price at the end and the beginning of the measurement period, by (2) the share price at the beginning of that measurement period. This line graph is compared in the following graph with two other line graphs during that five year period: (1) a market ASS008BD.WP5 Page 18 index and (2) a peer index. The market index is the Center for Research in Securities Prices Index for the Nasdaq Stock Market for United States companies. It presents cumulative total returns for a broad based equity market assuming reinvestment of dividends and is based upon companies whose equity securities are traded on the Nasdaq Stock Market. The peer index is the Center for Research in Securities Prices Index for Nasdaq Telecommunications Stock. It presents cumulative total returns for the equity market in the telecommunications industry segment assuming reinvestment of dividends and is based on companies whose equity securities are traded on the Nasdaq Stock Market. The line graphs represent monthly index levels derived from compounding daily returns. In constructing each of the line graphs in the following graph, the closing price at the beginning point of the five year measurement period has been converted into a fixed investment, stated in dollars, in the Company's Class A common stock (or in the stocks represented by a given index in the cases of the two comparison indexes), with cumulative returns for each subsequent fiscal year measured as a change from that investment. Data for each succeeding fiscal year during the five-year measurement period are plotted with points showing the cumulative total return as of that point. The value of a shareholder's investment as of each point plotted on a given line graph is the number of shares held at that point multiplied by the then prevailing share price. The Company's Class B common stock is traded over-the-counter on a more limited basis, and therefore comparisons similar to those previously described for the Class A common stock are not directly available. However, the performance of Class B common stock may be analogized to that of the Class A common stock in that the Class B common stock is readily convertible to Class A common stock by request to the Company. ASS008BD.WP5 Page 19 As to the electronic filing of the Form 10-K/A with the Securities and Exchange Commission, the Performance Graph is presented in the following tabular form giving the cumulative total returns as of the last business day for each year in question: COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS PERFORMANCE GRAPH FOR GENERAL COMMUNICATION, INC. ================================= ======================= ========================== ===============================
NASDAQ Stock NASDAQ Peer Market Index Index for Measurement Period for U.S. Telecommunications (Fiscal Year Covered) Company Companies Stock - --------------------------------- ----------------------- -------------------------- ------------------------------- Measurement Point 12/31/90 $100.00 $100.00 $100.00 FYE 12/31/91 90.48 160.56 137.92 FYE 12/31/92 123.81 186.87 169.40 FYE 12/31/93 241.27 214.51 261.20 FYE 12/30/94 196.83 209.69 215.95 FYE 12/29/95 260.32 296.30 259.94 ================================= ======================= ========================== ===============================
ASS008BD.WP5 Page 20 (3) Item 12, Part III. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following text is extracted from the Proxy Statement. SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT Principal Shareholders So far as is known to management of the Company, as of the Record Date, the following persons each owned beneficially more than 5% of the outstanding shares of Class A common stock or Class B common stock of the Company. A beneficial owner includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares the following powers within 60 days of the Record Date: (1) voting power, which includes the power to vote or to direct the voting of shares of common stock of the Company; or (2) investment power, which includes the power to dispose of or to direct the disposition of, such shares of common stock of the Company. So far as is known to the Company, the persons named in the table had sole voting and investment power with respect to the shares indicated as owned by them except as otherwise stated in the footnotes to the table. Shares issuable upon exercise of outstanding options and warrants are deemed to be outstanding for the purpose of computing the percentage of ownership of persons owning such options or warrants but have not been deemed to be outstanding for the purpose of computing the percentage of ownership of any other person. ASS008BD.WP5 Page 21 ============================================================================================================== SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
Title Amount and Nature of Name and Address of Beneficial Percent Class of Beneficial Owner Ownership of Class - ------------------------------ ------------------------------- ------------------------- --------------------- Class A Ronald A. Duncan 1,281,971 (1) 6.4 Class B 2550 Denali St., Suite 1000 248,062 (1) 5.9 Anchorage, Alaska 99503 Class A General Communication, Inc. 1,688,643 8.6 Class B Employee Stock Purchase Plan 145,698 3.5 2550 Denali Street, Suite 1000 Anchorage, Alaska 99503 Class A Bufka & Rodgers, Inc. 1,116,900 5.7 Class B 425 North Martingale Road, -0- - Suite 750 Schaumburg, Illinois 60173 Class A Kearns-Tribune Corporation 300,200 1.5 Class B 400 Tribune Building 225,000 5.4 Salt Lake City, Utah 84111 Class A Bob Magness 273,992 (2) 1.4 Class B Chairman of the Board 815,048 (2) 19.5 Tele-Communications, Inc. 5619 DTC Parkway Englewood, Colorado 80111 Class A MCI Telecommunications 6,251,509 (3) 31.7 Class B Corporation 1,275,791 (3) 30.5 1801 Pennsylvania Avenue, N.W. Washington, D.C. 20006 Class A Robert M. Walp 572,845 (4) 2.9 Class B 804 P Street, No. 4 303,457 (4) 7.3 Anchorage, Alaska 99501 Class A Voting Agreement 7,638,900 (5) 38.8 Class B c/o General Communication, 2,400,591 (5) 57.5 Inc. 2550 Denali Street, Suite 1000 Anchorage, Alaska 99503 Attn: Ronald A. Duncan Class A Wellington Management Co. 1,400,800 (6) 7.1 Class B 75 State Street -0- - Boston, Massachusetts 02109 Class A TCI GCI, Inc. -0- - Class B 5619 DTC Parkway 590,043 (7) 14.1 Englewood, Colorado 80111 ============================== =============================== ========================= ===================== - ------------------- 1 Includes 18,560 shares of Class A and 8,242 shares of Class B common stock gifted by Mr. Duncan to the Amanda Miller Trust, where Ms. Miller is the daughter of Mr. Duncan's spouse, Dani Bowman, and Mr. Duncan has a reversionary interest in those shares. Includes 105,111 shares of Class A common stock of the Company held by the Company in its name but for the benefit of Mr. Duncan pursuant to the terms of the First Duncan Deferred Compensation Agreement and 13,750 ASS008BD.WP5 Page 22 shares of Class A common stock of the Company held by the Company in its name but for the benefit of Mr. Duncan pursuant to the terms of the Second Duncan Deferred Compensation Agreement. See "MATTERS TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers - Summary Compensation." Includes 852,775 shares of Class A and 233,708 shares of Class B common stock of the Company owned by Mr. Duncan but subject to a Voting Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement." Does not include 5,760 shares of Class A or 27,020 shares of Class B common stock held by Ms. Bowman, to which Mr. Duncan disavows any interest. Mr. Duncan had as of the Record Date the following interests in the shares beneficially owned by him: (1) sole power to vote or to direct the vote - no shares of Class A or Class B common stock; (2) shared power to vote or to direct the vote -852,775 shares of Class A and 233,708 shares of Class B common stock; (3) sole power to dispose or to direct the disposition - 103,341 shares of Class A and no shares of Class B common stock; and (4) shared power to dispose or to direct the disposition - 841,209 shares of Class A and 239,820 shares of Class B common stock. 2 Includes 177,324 shares of Class A common stock of the Company and 194,440 shares of Class B common stock of the Company from the Estate of Betsy Magness, in which Mr. Magness is beneficial owner and executor. Mr. Magness owns 25 percent, beneficially and of record, and another 25 percent, beneficially as executor of the Estate of Betsy Magness, of the stock of KGBB, Inc., a Colorado corporation which holds 40,000 shares of Class A common stock of the Company, and as a result may be deemed to have shared voting and investment power over those 40,000 shares. The number of shares in the table includes 20,000 shares of Class A common stock of the Company directly and beneficially owned by Mr. Magness due to his shareholdings in KGBB, Inc. 3 All of these shares are subject to a Voting Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement." MCI Telecommunications Corporation had as of the Record Date the following interests in the shares beneficially owned by it: (1) sole power to vote or to direct the vote - no shares of Class A or Class B common stock; (2) shared power to vote or to direct the vote - 6,251,509 shares of Class A common stock and 1,275,791 shares of Class B common stock; (3) sole power to dispose or to direct the disposition - 6,251,509 shares of Class A and 1,275,791 shares of Class B common stock; (4) shared power to dispose or to direct the disposition - no shares of Class A or Class B common stock. 4 Includes 534,616 shares of Class A and 301,049 shares of Class B common stock of the Company owned by Mr. Walp but subject to a Voting Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement." Mr. Walp had as of the Record Date the following interests in the shares beneficially owned by him: (1) sole power to vote or to direct the vote - no shares of Class A or Class B common stock; (2) shared power to vote or to direct the vote - 534,616 shares of Class A and 301,049 shares of Class B common stock; (3) sole power to dispose or to direct the disposition- 534,616 shares of Class A and 301,049 shares of Class B common stock; and (4) shared power to dispose or to direct the disposition - 38,229 shares of Class A and 2,408 shares of Class B common stock. 5 The Voting Agreement is described elsewhere in this Proxy Statement. Does not include shares to be issued to the Prime Sellers. See "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement." 6 Number of shares beneficially owned by the reporting person with shared dispositive power. Number of shares beneficially owned by the reporting person with shared voting power was 720,800 shares. 7 All of these shares are subject to the Voting Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement." TCI GCI, Inc. had as of the Record Date the following interests in the shares beneficially owned by it: (1) sole power to vote or to direct the vote - no shares of Class A or Class B common stock; (2) shared power to vote or to direct the vote - no shares of Class A common stock and 590,043 shares of Class B common stock; (3) sole power to dispose or to direct the disposition - no shares of Class A common stock and 590,043 shares of Class B common stock; (4) shared power to dispose or to direct disposition - no shares of Class A or Class B common stock. - ------------------
ASS008BD.WP5 Page 23 Management The following table sets forth information with respect to the beneficial ownership of shares of the Company's Class A and Class B common stock as of the Record Date by each director and nominee of the Company, by the Named Executive Officers and by all directors and executive officers of the Company as a group. Shares issuable upon exercise of outstanding options and warrants are deemed to be outstanding for the purpose of computing the percentage of ownership of the individual owning such options or warrants but have not been deemed to be outstanding for the purpose of computing the percentage of ownership of any other individual. So far as is known to the Company, the individuals identified in the table had sole voting and investment power with respect to the shares indicated as owned by them except as otherwise stated in the footnotes to the table. ASS008BD.WP5 Page 24 ==================================================================================================================== SHAREHOLDINGS OF MANAGEMENT OF THE COMPANY
Amount and Nature Title of Beneficial Percent Class Name of Beneficial Owner Ownership (1),(2) of Class (3) - ------------------------------ ---------------------------- --------------------------- ---------------------------- Class A William C. Behnke 235,274 1.2 Class B -0- - Class A Ronald A. Duncan 1,281,971 (4) 6.4 Class B 248,062 (4) 5.9 Class A Donne F. Fisher 211,307 (5) 1.0 Class B 27,688 (5) * Class A John W. Gerdelman -0- (6) - Class B -0- (6) - Class A G. Wilson Hughes 545,726 (7) 2.7 Class B 2,642 * Class A John M. Lowber 413,488 2.0 Class B 6,140 * Class A Carter F. Page 207,327 1.0 Class B 25,246 * Class A Larry E. Romrell -0- (5) * Class B 328 (5) * Class A James M. Schneider -0- (6) - Class B -0- (6) - Class A Dana L. Tindall 190,760 1.0 Class B 3,647 * Class A Robert M. Walp 572,845 (8) 2.9 Class B 303,457 (8) 7.3 Class A All Directors and 4,113,1755 (6) 19.3 Class B Executive Officers as a 699,3785 (6) 16.8 Group (13 Persons) ============================== ============================ =========================== ============================ - ------------------------ 1 Includes interests of executive officers and directors in shares of common stock of the Company held as of December 31, 1995 by the trustees the Company's Stock Purchase Plan in that allocations under the plan are made quarterly on March 31, June 30, September 30, and December 31. These shares are not immediately accessible to participants in that plan. See, "MATTERS TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers - Summary Compensation and Stock Purchase Plan." 2 Includes options and warrants granted to individual directors and executive officers as of the Record Date. 3 An asterisk (*) means the person is the beneficial owner of less than 1% of the corresponding class of common stock. 4 Includes 18,560 shares of Class A and 8,242 shares of Class B common stock gifted by Mr. Duncan to the Amanda Miller Trust, where Ms. Miller is the daughter of Mr. Duncan's spouse Dani Bowman, and Mr. Duncan has a reversionary interest in those shares. Includes 105,111 shares of Class A common stock of the Company held by the Company in its name but for the benefit of Mr. Duncan pursuant to the terms of the First Duncan Deferred Compensation Agreement and 13,750 shares of Class A common stock of the Company held by the Company in its name but for the benefit of Mr. Duncan pursuant to the terms of the Second Duncan Deferred Compensation Agreement. See, "MATTERS TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers - Summary ASS008BD.WP5 Page 25 Compensation." Includes 852,775 shares of Class A and 233,708 shares of Class B common stock of the Company owned by Mr. Duncan but subject to a Voting Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement." Does not include 5,760 shares of Class A or 27,020 shares of Class B common stock held by Ms. Bowman, to which Mr. Duncan disavows any interest. Mr. Duncan had as of the Record Date the following interest in the shares beneficially owned by him: (1) sole power to vote or to direct the vote - no shares of Class A or Class B common stock; (2) shared power to vote or to direct the vote -852,775 shares of Class A and 233,708 shares of Class B common stock; (3) sole power to dispose or to direct the disposition - 103,341 shares of Class A and no shares of Class B common stock; and (4) shared power to dispose or to direct the disposition - 841,209 shares of Class A and 239,780 shares of Class B common stock. 5 Does not include holdings of TCI GCI, Inc. in the Company, where TCI GCI, Inc. is a subsidiary of TCI and Mr. Fisher is a consultant for and Mr. Romrell is an officer of TCI. 6 Does not include holdings of MCI Telecommunications Corporation in the Company, where Messrs. Gerdelman and Schneider are officers of that corporation. 7 Includes 3,750 shares of Class A common stock of the Company held by the Company in its name but for the benefit of Mr. Hughes pursuant to the terms of the Hughes Deferred Compensation Agreement. See, "MATTERS TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers - Summary Compensation." 8 Includes 534,616 shares of Class A and 301,049 shares of Class B common stock of the Company owned by Mr. Walp but subject to a Voting Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement." Mr. Walp had as of the Record Date the following interests in the shares beneficially owned by him: (1) sole power to vote or to direct the vote - no shares of Class A or Class B common stock; (2) shared power to vote or to direct the vote - 534,616 shares of Class A and 301,049 shares of Class B common stock; (3) sole power to dispose or to direct the disposition - 534,616 shares of Class A and 301,049 shares of Class B common stock; and (4) shared power to dispose or to direct the disposition - 38,229 shares of Class A and 2,408 shares of Class B common stock. - ----------------------
Changes in Control Acquisition Plan. On March 14, 1996 the Company entered into four non-binding letters of intent as an initial step in a plan of acquisition ("Acquisition Plan") to acquire several Alaskan cable companies ("Cable Companies") that offer cable television services to more than 101,000 subscribers serving approximately 74% of households throughout the state. The total purchase price is approximately $280.7 million, and, as a part of the Acquisition Plan, the Company is to issue approximately 16.3 million share of Class A common stock to the owners of the Cable Companies valued at $105.7 million. The balance of the purchase price is to be provided by approximately $175 million of bank financing. As a part of the Acquisition Plan, the Company proposes to raise additional capital separate from the acquisitions through a sale of 2 million shares of Class A common stock ("MCI Company Shares") to MCI Telecommunications Corporation ("MCI") valued at $13 million. The Company has entered into a non-binding letter of intent with MCI on that proposed sale. Both the shares to be issued to MCI and to the Cable Company owners are valued at $6.50 per share. The letters of intent provide that the definitive terms and conditions for several proposed transactions of the Acquisition Plan ("Proposed Transactions") are to be reduced to written agreements with final closings to occur not later than December 31, 1996. As of April 29, 1996, the Company was in the process of entering into those agreements ("Purchase Agreements"), subject to, among other conditions, the prior approval of the shareholders of the Company. The Cable Companies involved in the Proposed Transactions are as follows: (1) Prime Cable of Alaska, L.P. ("Prime"); (2) Alaska Cablevision, Inc. ("Alaska Cablevision"); (3) McCaw/Rock Homer Cable System, a joint venture, and McCaw/Rock Seward Cable System, a joint venture ("McCaw/Rock Homer ASS008BD.WP5 Page 26 Cable System" and "McCaw/Rock Seward Cable System," respectively, collectively, "McCaw/Rock Cable Systems"); and (4) Alaskan Cable Network, Inc. ("Alaskan Cable"). Prime owns and operates cable television businesses located in Anchorage, Eagle River, Chugiak, Kenai, Soldotna, Bethel, Fort Richardson, and Elmendorf Air Force Base, Alaska ("Prime Alaska System"). Alaska Cablevision owns and operates cable television businesses and cable television systems located in Petersburg, Wrangell, Cordova, Valdez, Kodiak, Nome, and Kotzebue, Alaska. McCaw/Rock Homer Cable System owns and operates the cable television business and cable television system located in Homer, Alaska. McCaw/Rock Seward Cable System owns and operates the cable television business and cable television system located in Seward, Alaska. Alaskan Cable owns and operates cable television businesses and cable television systems located in Fairbanks, Juneau, Sitka and Ketchikan, Alaska. As a result of the final closing on the Proposed Transactions, there will be no material differences in the rights of shareholders of the Company. However, a substantial number of new shares of Class A common stock will be issued to certain of the Cable Companies or their principals, thus diluting the interest of existing shareholders. The Prime Purchase Agreement centers on the Company's offer to acquire all of the partnership and participation interests in Prime from the present holders of those securities who are entities affiliated with a Prime management group ("Prime Sellers"). As a result of the Proposed Transactions involving Prime, the Company would become the owner, directly or indirectly through wholly-owned subsidiaries, of 100% of the limited partner and general partner interests in Prime. Under the Prime Purchase Agreement, the Company is to deliver to the Prime Sellers at closing 11.8 million shares of its Class A common stock in payment and exchange for those security interests in Prime. Under that agreement the Prime Sellers are to have the right to require registration of those shares under the federal Securities Act of 1933, as amended ("Securities Act"), for the initial distribution to them and, if required, subsequent resales by them in the open market. Such rights are subject to restrictions on resales during the 149 day period commencing with the final closing date of the agreement. The Prime Purchase Agreement provides that Prime II Management, L.P., the manager of Prime as of the Record Date, is to enter into a management agreement ("Prime Management Agreement") with the Company whereby the limited partnership would for a fee provide management services to Prime with respect to the Prime Alaska System. The term of the Prime Management Agreement is to be nine years, but it is terminable after two years at the option of either party. The Prime Purchase Agreement is subject to a number of conditions precedent to its final closing including the obtaining of consents of various persons including state and federal regulators, shareholders of the parties involved including the Company, the Prime owners, lenders, and partners, and the Company's lenders. It is also subject to MCI purchasing the MCI Company Shares as further described below. Under the Prime letter of intent, the Company is to take such actions as are necessary to cause its Board to expand to include two additional members. The Company is to cooperate with the Prime Sellers to amend the Voting Agreement described elsewhere in this Proxy Statement in order that the Prime Sellers may become parties to that agreement and appoint two members to the Board as of the final closing on the Prime Purchase Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement." The right to designate one of those members to be elected to the Board is to continue until the Prime Sellers cease to own in the aggregate at least 10% of the outstanding Class A common stock of the Company. The other one of such two members is to continue until the Prime Management Agreement terminates. The Alaska Cablevision Purchase Agreement centers on the Company's offer to purchase all of the assets (excluding cash assets) of Alaska Cablevision. Alaska Cablevision has two affiliated ASS008BD.WP5 Page 27 companies, the McCaw/Rock Cable Systems, as described below. Under the Alaska Cablevision Purchase Agreement, the Company is to deliver to Alaska Cablevision on the final closing date as payment for the Alaska Cablevision assets $26,650,000 plus an amount equal to Alaska Cablevision's current assets as of that date payable as follows: (1) $16,650,000 plus an amount equal to Alaska Cablevision's current assets as of that date, in cash; and (2) $10,000,000 in subordinated notes of the Company convertible into shares of the Company's Class A common stock at conversion rates as set forth in the agreement. Should all of the notes be converted in accordance with the terms of the agreement, the Company would issue a total of 1,538,000 shares of Class A common stock. The notes are to bear simple, non-compounding interest at the lowest rate allowable by the Internal Revenue Service under imputed interest rules in effect as of the closing on the Alaska Cablevision Purchase Agreement. Any indebtedness on the notes not previously converted into common stock of the Company is to be due and payable in full in a single, lump sum payment on the tenth anniversary of the initial date of issuance of the notes. The notes are to be subordinated to the Company's presently existing and later incurred senior indebtedness. The notes are to be convertible on an annual basis into shares of common stock of the Company during a 15 day period each year for 10 years. Under the agreement and following the expiration of a 180 day period commencing with the final closing date on the agreement, the holders of those shares are to be entitled to one demand registration under the Securities Act per year for 10 years, and they are to have other piggyback registration rights with respect to those shares. The Alaska Cablevision Purchase Agreement is subject to a number of conditions precedent to its final closing including the obtaining of consents of various persons including state and federal regulators, shareholders of the Company and Alaska Cablevision, and the lenders of the Company and Alaska Cablevision. The McCaw/Rock Purchase Agreement centers on the Company's offer to purchase all of the assets (excluding cash assets) of the McCaw/Rock Cable Systems. Under the Agreement the Company is to deliver to McCaw/Rock Cable Systems on the final closing date as payment for the assets of those systems $4,350,000 plus an amount equal to the systems' current assets as of that date payable in cash. The agreement is subject to a number of conditions precedent to its final closing including the obtaining of consents of various persons including state and federal regulators, shareholders of the Company and of the owners of the McCaw/Rock Cable Systems, and the lenders of the Company and the systems. The Alaskan Cable Purchase Agreement centers on the Company's offer to purchase all of the assets of Alaskan Cable. Under the agreement, the Company is to deliver to Alaskan Cable on the final closing date, as payment for those assets, $70 million, payable as follows: (1) $51 million in cash; and (2) 2,923,077 shares of the Company's Class A common stock. Under the agreement the present Alaskan Cable shareholder is to have the right to require registration of those shares under the Securities Act for the initial distribution to and subsequent resales by that person and subject further to restrictions on resales during the 149 day period commencing with the final closing date of the agreement. The Alaskan Cable Purchase Agreement is subject to a number of conditions precedent to its final closing including the obtaining of consents of various persons including state and federal regulators, shareholders of the Company and Alaskan Cable, and the lenders of the Company and Alaskan Cable. The MCI Purchase Agreement centers on the purchase by MCI of the MCI Company Shares to be issued by the Company upon final closing on the agreement and the payment of the purchase price by MCI. The agreement states that MCI's obligation to purchase the shares is contingent upon the consummation of the Prime Purchase Agreement. The agreement is further subject to a number of conditions precedent to its final closing including the obtaining of all required federal, state, and local regulatory consents and approvals, as well as any consents and approvals required by the shareholders of the Company or any material agreement of the Company. Under the agreement, MCI is to have the right to require registration under the Securities Act of a portion or all of those shares. These shares would be subject to the provisions of the Voting Agreement discussed elsewhere in this Proxy Statement, See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control Voting Agreement." ASS008BD.WP5 Page 28 Should the 18.3 million shares of Class A common stock to be issued under the Acquisition Plan be issued as of the Record Date, the percent shareholdings in the Company would become as follows: (1) Prime Sellers - 28%; (2) MCI -- 23% (down from approximately 30% immediately prior to the closing on the Proposed Transactions involved in the Acquisition Plan); (3) the Company's employees and management combined -- 9%; (4) Alaskan Cable -- 7%; (5) Alaska Cablevision -- 4%; and (6) others -- 29%. The shareholdings of MCI, the Cable Companies, and certain other persons are subject to the Voting Agreement described elsewhere in this Proxy Statement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement." Voting Agreement. As a part of the agreement for the issuance of 6,251,509 shares of Class A and 1,275,791 shares of Class B common stock of the Company to MCI in 1993 ("MCI Stock"), the Company agreed to assure the corporation that it may appoint a minimum of two members to the Company's expanded seven member board of directors. On May 28, 1993, three principal shareholders, including two officers and directors of the Company (Messrs. Duncan and Walp and WSMC), entered into a voting agreement ("Voting Agreement") with MCI which provides in part, that the voting stock of these persons will be voted at shareholder meetings as a block in favor of no more than two nominees by the corporation for no more than two positions on the board of directors at any one time. The Voting Agreement similarly commits MCI and the other three parties to vote their shares for four board nominees proposed by and allocated between the other parties. As a part of the Acquisition Plan, the parties to the Voting Agreement allowed the Prime Sellers, through a designated representative, to become a party to and participant in the agreement. The agreement is to be amended to accommodate the increase of the board of directors from seven to nine positions and to provide expressly that the voting stock of the participants in the Voting Agreement will be voted at shareholder meetings as a block in favor of no more than two nominees to be presented by the Prime Sellers for no more than two positions on the board at any one time. Such right to designate an individual to one of those positions to be elected to the board is to continue until the Prime Sellers cease to own in the aggregate at least 10% of the outstanding Class A common stock of the Company. The right to select an individual to the other one of such two positions is to continue until the Prime Management Agreement terminates. As of the Record Date, Mr. Gerdelman remained as one of the recommended MCI Telecommunications Corporation selections for the Board. It is anticipated that the parties to the Voting Agreement will cast all of their votes for Messrs. Gerdelman, Page, and Walp. It is anticipated that the parties to the Voting Agreement will cast all of their votes for these two nominees, and for the nominees proposed by the Prime Sellers, provided the shareholders approve the Acquisition Plan. As of the Record Date, the voting stock of the parties to the Voting Agreement (in April, 1995 WSMC transferred its shareholdings in the Company to TCI GCI, Inc., and TCI GCI, Inc. became subject to the Voting Agreement) constituted in excess of a simple majority of the outstanding voting power of the Company. The term of the Voting Agreement will be through the completion of the annual meeting of shareholders of the Company taking place in 1997 or until there is only one party to that agreement, which ever first occurs. However, the parties may extend the term upon unanimous consent. Pledges of Stock of Subsidiaries. Should the Company default on its obligations under the Credit Agreement with its present Senior Lender, that lender may exercise the pledge of stock provisions of that agreement pertaining to the subsidiaries of the Company and thereby gain direct control of the essential operating assets through which the Company and its subsidiaries provide telecommunication services. See, "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS: Certain Transactions with Management and Others - Credit Agreement." ASS008BD.WP5 Page 29 (4) Item 13, Part III. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The following text is extracted from the Proxy Statement: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Certain Transactions with Management and Others Acquisition Plan. The Acquisition Plan includes Proposed Transactions providing that the Prime Sellers will have the right to select individuals for nominees to two positions on the board of directors of the Company. The Acquisition Plan also provides registration rights to owners of certain of the Cable Companies. The Acquisition Plan requires the Company to enter into the Prime Management Agreement with an affiliate of the Prime Sellers. These transactions are further described elsewhere in this Proxy Statement. See, "Changes in Control - Acquisition Plan" elsewhere in this Proxy Statement. MCI Agreements. In December, 1992, MCI and the Company entered into a letter of intent outlining the general terms and conditions of several proposed arrangements between them to be subsequently reduced to separate agreements ("MCI Agreements"). Under the MCI Agreements, in addition to MCI acquiring a substantial portion of the outstanding common stock of the Company and entering into the Voting Agreement to ensure that it would be able to appoint or otherwise elect at least two members to the Board, MCI and the Company have established or will establish various business arrangements between them. These arrangements include the following: (1) providing telecommunications services by each party to the other; (2) licensing of certain MCI service marks to the Company for use in Alaska; (3) leasing by MCI from the Company and the subleasing back by the Company of one-ninth of the undersea fiber optic cable linking Seward, Alaska with Pacific City, Oregon; (4) purchasing by MCI of certain service marks of the Company; (5) other communication network sharing; and (6) sharing of various marketing, engineering, and operating resources. As of the Record Date, the Company had executed access service, carrier, 1-800 collect service mark and product, and undersea fiber optic cable agreements with MCI pertaining to items (1)-(3) and was in the process of negotiating agreements pertaining to items (4)-(6). These arrangements have during the year ended December 31, 1995 resulted in revenues to MCI and its subsidiaries of approximately $8.4 million and revenues to the Company of approximately $24 million. In March, 1996, the Company and MCI amended the Contract for Alaska Access Services and the MCI Carrier Agreement, both of which agreements the parties had initially entered into effective January 1, 1993. The access agreement addresses transmission services provided by the Company to MCI for its traffic and the charges for such services. The carrier agreement addresses transmission services provided by MCI to the Company for its traffic and the charges for such services. The carrier agreement amendment is the fifth effective amendment to the agreement and extends the term of the agreement by three years. The prior amendments provided for new, expanded, or revised services by MCI to the Company and adjustments of charges for those services. The access agreement amendment is the first effective amendment to the agreement. It extends the term of the agreement by three years and reduces the rate in dollars to be charged by the Company for certain MCI traffic for the time period April 1, 1996 through July 1, 1999 and thereafter. The rate reduction, if applied to the number of minutes to be carried by the Company in 1996 and 1997, based upon minutes carried by the Company during 1995, would reduce the Company's 1996 and 1997 revenue by approximately $322,000 and $399,000, respectively. Those recent amendments to the two agreements do not otherwise change the agreements. The Company considered the amendments of both agreements together as in its best interest. With these amendments, the Company is assured that MCI, the Company's largest customer, will continue to make use of the Company's services during the extended term. ASS008BD.WP5 Page 30 As a part of the Acquisition Plan, MCI has agreed to purchase an additional 2 million shares of Class A common stock of the Company. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Acquisition Plan." Credit Agreement. In May, 1993, the Company completed a refinancing which provided a new $15 million senior facility ("Credit Agreement") with NationsBank in Dallas, Texas ("Senior Lender"). The Credit Agreement continues a number of conditions imposed under previous credit agreements entered into by the Company. In compliance with one of those conditions, the Company previously formed GCC, an Alaska corporation and wholly owned subsidiary of the Company. On November 30, 1990 all of the Company's operating assets were transferred to GCC, where all of the outstanding capital stock of GCC was pledged to the then senior lenders of the Company. This reorganization proposal was approved by the shareholders of the Company at the June 7, 1990 annual shareholders meeting. That pledge is now made to the Senior Lender and will remain in place for so long as the Credit Agreement remains in effect. As of the Record Date, the outstanding common stock of GCC remained pledged to the Senior Lender. Throughout the year ended December 31, 1995 and from that date through the Record Date, the Company was in full compliance with all terms of the Credit Agreement. See, "ANNUAL REPORT." WSMC Agreements. The Company purchased services and used some facilities of WSMC to allow the Company to provide its telecommunication services in other states in the country. The total of such purchases from WSMC by the Company during the year ended December 31, 1995 was approximately $245,000. Duncan Lease. The Company entered into a long-term capital lease agreement in 1991 with a partnership of which Mr. Duncan, the Company's president, was a 50% owner. Mr. Duncan sold his interest in the partnership in 1992 but remained a guarantor on the note used to finance acquisition of the property. During 1993, Mr. Duncan married Dani Bowman, the individual to whom he sold his interest in the partnership, and as of the Record Date, the property was owned in its entirety by the president's spouse. The property under lease consists of a building presently occupied cupied by the Company. The lease term is 15 years with monthly payments of $14,400, increasing in $800 increments at each two year anniversary of the lease. The first incremental increase occurred in 1993. If the owner sells the premises prior to the end of the tenth year of the lease, the owner will rebate to the Company one-half of the net sales price received in excess of $900,000. If the property is not sold prior to the tenth year of the lease, the owner will pay the Company the greater of one-half of the appreciated value of the property over $900,000, or $500,000. The leased asset was capitalized in 1991 at the owner's cost of $900,000 and the related obligation was recorded in the financial statements for the Company as reflected in the Annual Report. See, "ANNUAL REPORT." Indebtedness of Management On August 13, 1993 Mr. Duncan obtained a loan of $500,000 from the Company ("Duncan Loan") and executed a non-recourse promissory note to the Company which bears an interest rate equal to the variable rate paid by the Company on its Credit Agreement with its Senior Lender. Mr. Duncan is to pay off the Duncan Loan in one payment of principal and accrued interest 90 days after the termination of his employment with the Company or July 30, 1998, whichever is earlier. The money was used to pay down a portion of the indebtedness of Mr. Duncan on the WSMC Loans allowing for the release to Mr. Duncan of 223,000 shares of Class A common stock used as collateral on that loan. Those shares were then pledged as collateral to secure the Duncan Loan. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Duncan Stock Pledges." The largest outstanding balance of principal and interest on the Duncan Loan during the year ended December 31, 1995 was $585,966 on that date. As of the Record Date the outstanding balance of principal and interest on the Duncan Loan was $597,223. ASS008BD.WP5 Page 31 During 1995, the Company made payments to others on behalf of Mr. Duncan in the amount of $592. These payments, when added to advances made to Mr. Duncan in prior years totalled $15,594. Mr. Duncan reimbursed the Company $14,144 during 1995, which left a total of $1,450 outstanding at December 31, 1995. In May, 1994 Mr. Duncan received additional loans totalling $55,000 from the Company and executed two promissory notes totalling that amount. The terms were for interest to accrue at 7% per annum with principal to be paid in August, 1994. The notes were extended, and the full principal and interest in the amount of $55,686 was paid on March 6, 1995. In September, 1995, Mr. Duncan received an additional loan in the amount of $70,000. The terms were for interest to accrue at the variable rate paid by the Company on its Credit Agreement with its Senior Lender. The full principal and interest owed in the amount of $71,486 were paid in full on December 29, 1995. In April, 1993 Mr. Behnke obtained a loan from the Company in the amount of $48,000 and executed a promissory note. The note bears interest at 9% per annum, is secured by options to purchase 85,190 shares of Class A common stock of the Company, and was due on December 31, 1995. The Company extended the due date on the note to June 30, 1997. Accrued interest on the note totalled $11,540 at December 31, 1995 and $12,782 on the Record Date. In September, 1995 Mr. Behnke obtained another loan from the Company in the amount of $50,000 and executed a promissory note. The note bears interest at a rate equal to that paid by the Company to its Senior Lender pursuant to the Company's senior credit facility. The note is secured by the same options to purchase those 85,190 shares of Class A common stock and is due on June 30, 1997. Accrued interest on the note totalled $1,150 at December 31, 1995 and $2,276 on the Record Date. In August, 1994 and April, 1995 Mr. Dowling received loans from the Company of $224,359 and $86,000 respectively, and executed promissory notes secured by 160,297 shares of Company Class A and 74,028 shares of Class B common stock. The notes bear interest at 10% per annum and are payable in ten equal installments of principal and interest with the first payment on each due in August, 1996. Payment has not been made on the notes. The Company has extended the term of the notes with ten equal installments of principal and interest over a period of ten years due in August of each year with the first payment on each note due in August, 1996. Accrued interest totalled $36,476 at December 31, 1995 and $45,405 on the Record Date. Except as disclosed in this Proxy Statement, neither as a group nor individually did any director, executive officer, nominee for election as a director, any member of the immediate family of these persons, or any corporation or organization of which such director, executive officer, or nominee is an executive officer or partner and is directly or indirectly the beneficial owner of 10% or more of any class of equity securities of that corporation, or any trust or other estate in which such director, executive officer, or nominee of the Company has a substantial beneficial interest or as to which such person serves as a trustee or in a similar capacity have during the year ended December 31, 1995 nor during the portion of calendar year 1996 ended on the Record Date, an indebtedness to the Company in an amount in excess of $60,000. ASS008BD.WP5 Page 32 PART IV (5) Item 14, Part IV. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (c) Exhibits. (1) Exhibit A: Transponder Purchase Agreement for Galaxy X between Hughes Communications Galaxy, Inc. and GCI Communication Corp.; (2) Exhibit B: Galaxy X Transponder Service Agreement between Hughes Communications Satellite Services, Inc. and GCI Communication Corp.; (3) Exhibit C: Framework Agreement between National Bank of Alaska and General Communication, Inc.; and (4) Exhibit D: 1996 Call-Off Contract between National Bank of Alaska and General Communication, Inc. These four commercial agreements have been included as exhibits to this Form 10-K/A in that they were executed in the year ended December 31, 1995 but were not included in the Company's Form 10-K for that year. Portions of the agreements identified as Exhibits A, C, and D have been redacted in that they are considered confidential by the Company. The unredacted agreements have been separately filed with the Securities and Exchange Commission pursuant to Rule 101(c)(1)(i) of Regulation S-T. ASS008BD.WP5 Page 33 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENERAL COMMUNICATION, INC. By: /s/ Ronald A. Duncan Ronald A. Duncan, President (Chief Executive Officer) Date: April 25, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Signature Title Date /s/ Carter F. Page Chairman of the Board April 25, 1996 Carter F. Page and Director /s/ Robert M. Walp Vice Chairman of the Board April 23, 1996 Robert M. Walp and Director /s/ Ronald A. Duncan President and Director, April 25, 1996 Ronald A. Duncan (Chief Executive Officer) /s/ Donne F. Fisher Director April 25, 1996 Donne F. Fisher /s/ John W. Gerdelman Director April 25, 1996 John W. Gerdelman /s/ Larry E. Romrell Director April 25, 1996 Larry E. Romrell /s/ James M. Schneider Director April 25, 1996 James M. Schneider /s/ John M. Lowber Senior Vice President, April 25, 1996 John M. Lowber Chief Financial Officer, Secretary and Treasurer /s/ Alfred J. Walker Vice President and Chief April 25, 1996 Alfred J. Walker Accounting Officer ASS008BD.WP5 Page 34 EX-10 2 TRANSPONDER PURCHASE AGREEMENT EXHIBIT A TRANSPONDER PURCHASE AGREEMENT FOR GALAXY X BETWEEN HUGHES COMMUNICATIONS GALAXY, INC. AND GCI COMMUNICATION CORP. (1) - ----------------- 1 In this document "********" are used in place of redacted information. TABLE OF CONTENTS
Page 1.The Satellite 1 1.01 Satellite 1 1.02 Orbital Position 1 1.03 C-Band Transponders 1 1.04 Ku-Band Transponders 2 1.05 Specifications and Components 2 1.06 Rights To Reserves or Spares 2 2.Purchase and Sale of Transponders; Option to Purchase 2 2.01 Purchase 2 2.02 Lease with Option to Purchase 2 3.Purchase Price and Payment Schedule 4 3.01 Purchase Price Components Description 4 3.02 Purchase Price Component Amount 4 3.03 Place of Payment 7 4.Delivery and Related Matters 7 4.01 Delivery 7 4.02 Ownership, Title and Assumption of Risk 8 4.03 Acceptance 8 5. Representations and Warranties 8 5.01 Authority, No Breach 8 5.02 Corporate Action 8 5.03 Consents 8 5.04 Litigation 9 5.05 No Broker 9 6. Additional Representations, Warranties and Obligations of HCG 9 6.01 Authorization Description 9 6.02 Transponder Performance Specifications 9 6.03 Title 10 6.04 Government Regulations 10 6.05 Not a Common Carrier 10 6.06 TT&C 10 ACK/shs: GCI.GX TPA.Final i Monday, August 21, 1995 - 8:00 am 7. Additional Representations, Warranties and Obligations of Buyer 10 7.01 [Reserved] 10 7.02 Non-Interference 10 7.03 Laws 11 7.04 Additional Usage Representations and Obligations 11 8. Preemptive Rights and Inspection of Facilities 11 9. Transponder Spares, Reserve Transponders and Retained Primary Transponders 12 9.01 Use of Transponder Spares 12 9.02 Use of Reserve Transponders 12 9.03 Simultaneous ******** -- Priority with Respect to the Use of Transponder Spares 13 9.04 Simultaneous ******** -- Priority with Respect to the Use of Reserve Transponders 13 9.05 HCG's Ownership of Primary Transponders 13 9.06 Notice of Intent to Substitute a Reserve Transponder 14 10. Termination Rights 14 10.01 Termination by Buyer 14 10.02 Termination by H CG 14 10.03 H HCG's Right to Sell if Non-Payment 14 10.04 Prompt Repayment 15 10.05 Termination by Buyer or HCG 15 10.06 Right to Deny Access 15 10.07 Return of Transponders 18 10.08 Cancellation of Buyer's Ku-Band Transponder 18 10.09 Buyer's Special Option to Terminate 18 11. Force Majeure 18 11.01 Failure to Deliver 18 11.02 Failure of Performance 19 12.Limitation of Liability/******** 19 12.01 Liability of H CG 19 12.02 Confirmed ******** 19 12.03 Repayment for ******** Transponder or ******** Transponder 20 12.04 Limitation of Liability 20 12.05 Obligations of Buyer to Cooperate 21 ACK/shs: GCI.GX TPA.Final ii Monday, August 21, 1995 - 8:00 am 13. Limitations on Transfer by Buyer 21 13.01 Transfers by Buyer 21 13.02 Transfers by HCG 22 13.03 Affiliate 22 13.04 Assignment 22 14.[Reserved] 22 15. Progress Reports, Inspections and Access to Work in Progress 22 15.01 Progress Reports 22 15.02 Inspection Rights of Buyer 23 15.03 Access to Work in Progress and Selection of Transponders 23 15.04 After Delivery Reports 23 16. Confidentiality and Press Releases 23 16.01 Confidential Information 23 16.02 Press Releases 24 17. Disposition of Satellite 24 17.01 ******** 24 17.02 Disposition of Satellite 24 18. Documents 25 19. Conflicts 25 20. Miscellaneous 25 20.01 Interest 25 20.02 Applicable Law and Entire Agreement 25 20.03 Notices 25 20.04 Severability 27 20.05 Taxes 27 20.06 Successors 27 20.07 Rules of Construction 27 20.08 Survival of Representations and Warranties 27 20.09 No Third-Party Beneficiary 27 20.10 Non-Waiver of Breach 28 20.11 Counterparts 28 21. Option for ******** 28
ACK/shs: GCI.GX TPA.Final iii Monday, August 21, 1995 - 8:00 am EXHIBITS: A Galaxy Satellite Description B Galaxy X Transponder Performance Specifications ADDENDUM ACK/shs: GCI.GX TPA.Final iv Monday, August 21, 1995 - 8:00 am GALAXY X TRANSPONDER PURCHASE AGREEMENT THIS AGREEMENT (the "Agreement") is made and entered into as of this 24th day of August, 1995 (the "Execution Date"), by and between Hughes Communications Galaxy, Inc. (HCG"), a corporation organized and existing under the laws of the state of California, and GCI Communications Corp. ("Buyer"), a corporation organized and existing under the laws of the state of Alaska. RECITALS WHEREAS, HCG intends to construct, launch, and operate a satellite to be designated as Galaxy X, containing C-Band capacity an Ku-Band capacity and desires to sell transponders on such a satellite; and WHEREAS, Buyer desires to purchase and HCG desires to sell certain transponders on Galaxy X, subject to the approval of the Federal Communications Commission. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises set forth below, HCG and Buyer hereby mutually agree as follows: 1. The Satellite 1.01 Satellite. Subject to the approval of the Federal Communications Commission (FCC), HCG plans to construct and launch a satellite, referred to hereinafter as "Galaxy X" (the "Satellite" or "G-X"). Galaxy X shall be a hybrid satellite (i.e., it contains both C-Band capacity (C-Band Transponders") and Ku-Band capacity ("Ku-Band Transponders"). Collectively, the C-Band Transponders are referred to hereinafter as the "Transponders". 1.02 Orbital Position. Based on FCC approval, the orbital position of Galaxy X shall be 123(degree) West Longitude. HCG currently plans to launch Galaxy X in the fourth quarter of 1997, subject to the approval of the FCC. 1.03 C-Band Transponders. Galaxy X shall have twenty-four (24) C-Band Transponders. Twenty-two (22) of the C-Band Transponders on Galaxy X shall be designated "Primary". The remaining two (2) C-Band transponders on Galaxy X shall be designated as "Reserve". "Primary Transponders" shall mean Transponders which are not preemptible and as to which the "Owners" of the Transponders, if a "Confirmed ********" (as hereafter defined) occurs, shall have the right to preempt a Reserve Transponder in accordance with section 9.02. "Reserve Transponders" shall mean Transponders which shall be preemtable, in accordance with Section 9.02 by ACK/shs: GCI.GX TPA.Final 1 Monday, August 21, 1995 - 8:00 am Owners of Primary Transponders located on the Satellite that have suffered a Confirmed ********. Galaxy X also shall have six (6) C-Band "Transponder Spares," as defined in Section 9.01. As used in this Agreement, "Owner" shall include the actual owner of a Transponder, including HCG if there remain any unsold Transponders, or any permitted assignee of such owner's Transponder, or any lessee or licensee of HCG. The term "purchase" shall include the execution of an agreement with HCG for a long term lease. 1.04 Ku-Band Transponders. Galaxy X shall have twenty-four (24) Ku-Band Transponders. All twenty-four Ku-Band Transponders are currently planned to be designated as "Primary" (collectively, the "Primary Ku-Band Transponders"). HCG may, at HCG's sole option, designate certain Ku-Band Transponders as "Reserve". Galaxy X shall have six (6) Ku-Band Transponder Spares. 1.05 Specifications and Components. Exhibit A sets forth the design summary of the Satellite. Exhibit B sets forth the "Transponder Performance Specifications", defined as certain technical specifications for the Transponders on Galaxy X, including values for each Transponder for polarization isolation, interference between Transponders, frequency response, group delay, amplitude non-linearity, spurious outputs, phase shift, cross talk, stability, transmit EIRP, uplink saturation flux density, and G/T. HCG shall make copies of the antenna range gain contour test data available to Buyer. 1.06 Rights to Reserves or Spares. Ownership or the lease of C-Band Transponders shall not give an Owner the right to preempt or use any Primary Ku Band Transponders or Ku-Band Transponder Spares on Galaxy X. Ownership or the lease of Ku-Band Transponders shall not give an Owner the right to preempt or use any Primary or Reserve C-Band Transponders or C-Band Transponder Spares on Galaxy X. 2. Purchase and Sale of Transponders; Option to Purchase 2.01 Purchase. HCG shall sell, and Buyer shall purchase ******** Primary C Band Transponders on Galaxy X ("Buyer's G-X Transponders" or "Buyer's Transponders"), all of which are on a "Delivered" basis (as such term is defined in Sections 4.01). 2.02 Lease with Option to Purchase. Subject to Section 10.08, below, HCG shall lease to Buyer ******** Ku-Band Transponder on Galaxy X ("Buyer's Ku-Band Transponder" and sometimes collectively, "Buyer's Transponders") for a Lease Term of ********, commencing upon Delivery (Section 4.01) to Buyer, at the ******** Lease Rate of ********. Buyer shall comply with all standard lease terms and conditions covering leases of Ku-Band Capacity on Galaxy X. ACK/shs: GCI.GX TPA.Final 2 Monday, August 21, 1995 - 8:00 am (a) Buyer shall have an Option to Purchase ("Purchase Option") the ******** Ku-Band Transponder that is the subject of the Lease referenced in this Section 2.02 excercisable in the manner and on the terms and conditions as follows: (i) Buyer may exercise its Purchase Option within ******** after the Notice as defined in Section 3.02(a)(i)(1), below, by delivering written notice of its intent to exercise the Purchase Option and payment to HCG of the Downpayment required by Section 3 below on or before the Execution Date, the Base Price to Buyer shall be ********, both as defined in Section 3.02(a), for Buyer's Ku-Band Transponder; or (ii) Buyer may exercise its Purchase Option on or before the date on which a satellite designated as Galaxy IX ("Galaxy IX") commences service at the 123(degree) West Longitude orbital location ("G-IX Delivery Date, by delivering written notice of its intent to exercise the Purchase Option and payment to HCG of the downpayment required by Section 3 below on or before the G-IX Delivery Date, and thereafter making such payments as required for Buyer's Transponders generally in this Agreement. If Buyer exercises its Purchase Option on or before the G-IX Delivery date, the Base Price to Buyer shall be ********, both as defined in Section 3.02(a), for Buyer's Ku-Band Transponder; or (iii) Buyer may exercise is Purchase option on or before ******** the Delivery of Galaxy X ("G-X Delivery date") by delivering written notice of its intent to exercise the Purchase Option and payment to HCG of the Downpayment required by Section 3 below ******** after the G-X Delivery Date, and thereafter making such payments as required for Buyer's transponders generally in this Agreement. If buyer exercises its Purchase Option on or before the G-X Delivery Date, the Base Price to Buyer shall be ********, both as defined in Section 3.02(a), for Buyer's Ku-Band Transponder. If Buyer exercises any of the above choices with respect to Purchase Option of the Buyer's Ku-Band Transponder, Buyer's Ku-Band Transponder shall thereafter be subject to all the terms and conditions as the Buyer's Transponders which are the subject of Purchase in Section 2.01 above. ACK/shs: GCI.GX TPA.Final 3 Monday, August 21, 1995 - 8:00 am 3. Purchase Price and Payment Schedule 3.01 Purchase Price Component Amount. The purchase price for each of Buyer's Transponders shall consist of a "******** Price" and a ******** and, an ******** (collectively, the "Purchase Price Components"). The payment for each of these Purchase Price Components by Buyer is mandatory. The services to be provided by HCG in return for Buyer's payment of the Purchase Price Components are described in other sections of this Agreement. All prices set forth are on a per Transponder basis. 3.02 Purchase Price Component Amount. The Purchase Price Components, payment terms, certain refunds and an Option covering each of Buyer's Transponders shall be as follows: (a) The ******** Price shall be defined and payable in accordance with the following: (i) Buyer understands and agrees that at the Execution Date, ********, may have an expected useful life of ********. The Purchase contemplated by this Agreement is based upon a purchase period of ********. To accommodate Buyer's desire for flexibility and some assurance of the ******** Price per Transponder, HCG hereby grants Buyer an Option to purchase all, but not less than all, of its Buyer's G-X Transponders for a period of either ********, upon the following conditions: (1) Within ******** of the date of HCG's notice to Buyer identifying the design configuration of the satellite (the "Notice"), Buyer shall respond in writing and affirmatively accept or reject HCG's offer of Transponders for a ******** Purchase. In the event that Buyer fails to respond to any such Notice, it will be deemed agreed between the parties to this Agreement that the Buyer's Purchase of the Transponders shall be for a ******** Purchase. (2) If Buyer exercises its Option for Transponders for a ******** Purchase, all references to Transponders, Buyer's Transponders, Reserves or Spares in this Agreement shall be deemed to apply to Transponders having a ******** purchase period, and likewise the terms of the entire Agreement shall apply thereto. ACK/shs: GCI.GX TPA.Final 4 Monday, August 21, 1995 - 8:00 am (3) The "******** Price" for each of Buyer's Transponders shall be as follows: (i) for ******** Purchase: a range between ******** for all Transponders Delivered within ******** of Satellite operation, and ******** for any of Buyer's Transponders Delivered in the ********, all of Buyer's Transponders being Delivered within ******** of the commencement of operations of the Satellite. (ii) for ******** Purchase: a range between ******** for all Transponders Delivered within ******** of Satellite operation, and ******** for any of Buyer's Transponders Delivered in the ********, all of Buyer's Transponders being Delivered within ******** of the commencement of operations of the Satellite. (iii) the ******** Price for either ******** Purchase or ******** Purchase Transponders shall be paid as follows; ******** (the "Downpayment") on the Execution Date, such amount to cover ******** of the Purchase Price of all of the Buyer's transponders; and the remaining ******** as of the date of each Buyer's Transponder Delivery (as defined in Section 4.01). Any change hereafter in the scheduled launch date shall not affect this payment schedule. (A) At Buyer's election, and subject to the full satisfaction of HCG, Buyer may, on the Execution Date, pay all, but not less than all, of the Downpayment in the form of an irrevocable letter of credit, in form and substance and drawn on a bank or other financial institution acceptable to HCG in its sole discretion (the "LC"). If Buyer elects to pay the Downpayment in the form of LC, then Buyer shall pay to HCG ******** in immediately available funds on the Execution Date. Such ******** shall be returned to Buyer, if and when HCG receives the LC to HCG's satisfaction. If buyer ACK/shs: GCI.GX TPA.Final 5 Monday, August 21, 1995 - 8:00 am is given Notice and exercises its Option for a ******** Purchase for Transponders, the amount of the LC shall be increased accordingly. (B) At the time Buyer makes the election to pay the Downpayment in the form of LC, Buyer must also make an election as to the date upon which it wishes to have the LC drawn down ("Draw Down Date"), but in any event not later than the Delivery of Galaxy X, and Buyer shall present LC reflecting an appropriate increase if interest is to be paid on the Downpayment: (i) if Buyer elects a Draw Down Date on or concurrent with Delivery of Galaxy IX, HCG will accept the Downpayment without accrued interest as payment of the full amount of the Downpayment; (ii) if Buyer elects a Draw Down Date on or concurrent with the delivery of Galaxy X, Buyer shall pay HCG an additional amount as interest on the full amount of the Downpayment, at the rate of ********, computed from the Execution Date to the G-X Delivery Date (as estimated by HCG at the Execution Date). To the extent that the amount available under the LC is insufficient on the Draw Down Date, the Buyer agrees to immediately pay the difference to HCG without the necessity of notice or demand by HCG to Buyer. In any event the LC shall remain irrevocable and non-cancelable by Buyer unless and until Buyer has paid the Downpayment for Buyer's Transponders in full. (b) The ******** for each of Buyer's Transponders shall be a per month fee of ********, payable in advance on the day of Delivery and on the first day of each month thereafter. Payments for a partial month shall be prorated. If one of Buyer's Transponders becomes a ******** Transponder (as defined in Section 12.01) or ******** Transponder (as defined in Section 21), then the ******** shall cease as to such ******** Transponder or ******** Transponder. ******** ACK/shs: GCI.GX TPA.Final 6 Monday, August 21, 1995 - 8:00 am ******** for a ******** Purchase or ******** for a ******** Purchase, respectively. ******** was made for such ******** Transponder or ******** Transponder, then the ******** (as defined in Section 6.02) for such ******** Transponder or ******** Transponder ********. (c) The ******** for each of Buyer's Transponders shall be a lump sum payment to HCG of ******** of the ******** Price, payable to HCG concurrently with Delivery with respect to each of Buyer's Transponders. If one of Buyer's Transponders becomes a ******** Transponder ******** Transponder, then the payment shall be ******** Transponder ******** Transponder in accordance with Section 12.03. 3.03 Place of Payment. All payments by Buyer shall be made to HCG at its principal place of business, as designated in Section 20.03, and shall be deemed to be made only upon actual receipt by HCG. All refunds by HCG shall be made to Buyer at its principal place of business as designated in Section 20.03, and shall be deemed to be made only upon actual receipt by Buyer. 4. Delivery and Related Matters 4.01 Delivery. "Galaxy X Delivery" shall occur upon, and "Delivery", "Delivered" and "Deliver", as to Galaxy X shall mean the placing of the Satellite, containing all of Buyer's Transponders, in its assigned orbital position with ******** meeting the relevant performance specifications (all of which requirements may be met through the use of Reserve Transponders or Transponder Spares). "Buyer's Transponder(s) Delivery" shall occur upon, and "Delivery", "Delivered", and "Deliver" as to each Buyer's Transponder shall mean (i) the occurrence of Galaxy X Delivery, (ii) Buyer's acceptance of its Transponders as provided for in Section 4.03 and (iii) full payment by Buyer as provided in Section 4.02. With respect to ******** the C-Band Buyer's Transponders (which shall be hereinafter referred to as the "Delayed ********"), Buyer may ******** of such Transponders as set forth below. Buyer may, at Buyer's sole option, ******** Delivery of ******** Delayed ******** (the "First Delayed ********") to a date occurring after Galaxy X Delivery but no later than ******** by delivery of written notice to HCG ******** prior to the initial scheduled launch date, as determined by HCG in HCG;s sole discretion. With respect to ******** Delayed ********, (the "Second Delayed ********"), Buyer may, at Buyer's sole option, ******** Delivery of the Second Delayed ******** to a date occurring after Galaxy X Delivery but no later than ******** by delivery of written notice to HCG on or before the earlier of (i) ******** or (ii) ******** ACK/shs: GCI.GX TPA.Final 7 Monday, August 21, 1995 - 8:00 am ********. Such notice of election to ******** the Delivery with respect to such Delayed Transponders shall be irrevocable. 4.02 Ownership Title and Assumption of Risk. Ownership and title to Buyer's Transponders shall pass to Buyer at the time of Delivery to Buyer. A condition to HCG's obligation to deliver title to Buyer, and of Buyer's obtaining ownership, shall be the payment by Buyer of all amounts due to HCG on or prior to Delivery for such Transponder or Transponders. Any loss of or damage to Buyer's Transponders prior to Delivery shall be at the risk of HCG. Any loss of or damage to Buyer's Transponders after Delivery to Buyer will be at the risk of Buyer; provided however, that the foregoing shall not impair Buyer's other rights under Sections 4, 9 and 12 of this Agreement. 4.03 Acceptance. HCG shall test each of the Buyer's Transponders with an acceptance test plan to be prepared by HCG in advance of the launch of the Satellite and delivered to Buyer. This Agreement contemplates that ******** of Buyer's Transponders shall be designated to meet ******** specifications and ******** shall meet the "********" specifications as defined by the specifications sheet attached hereto as Exhibit "B", entitled "Transponder Performance Specifications". Acceptance of Buyer's Transponders by Buyer shall be deemed to have occurred upon completion of the following: (a) Buyer's Transponders have passed all tests set forth in the aforementioned acceptance test plan and meet the Transponder Performance Specifications; and (b) HCG has notified Buyer in writing that it has successfully completed testing Buyer's Transponders and that Buyer's Transponders are available for service. 5. Representations and Warranties HCG and Buyer each represent and warrant to the other that: 5.01 Authority. No Breach. It has the right, power and authority to enter into, and perform its obligations under, this Agreement. The execution, delivery and performance of this Agreement shall not result in the breach or nonperformance of any agreements it has with third parties. 5.02 Corporate Action. It has taken all requisite corporate action to approve execution, delivery and performance of this Agreement, and this Agreement constitutes a legal, valid and binding obligation upon itself in accordance with its terms. 5.03 Consents. The fulfillment of its obligations hereunder will not constitute a material violation of any existing applicable law, rule, regulation or order of any governmental authority. All material necessary or appropriate public or private consents, permissions, agreements, licenses, or authorizations to which it or any Transponder or the Satellite may be subject have been or shall be obtained in a timely manner; provided, however, that it shall be HCG's sole responsibility to ACK/shs: GCI.GX TPA.Final 8 Monday, August 21, 1995 - 8:00 am obtain any regulatory approvals needed to enable it to sell Transponders as provided for in this Agreement. Notwithstanding the above, HCG and Buyer acknowledge that the transactions set forth in this Agreement may be challenged before the FCC or a court of competent jurisdiction by other persons or entities not parties hereto. In such event, HCG and Buyer agree that HCG shall use its best efforts, and Buyer shall use reasonable efforts, before the FCC, and the courts if an appeal from an FCC order is taken, to support HCG's right to sell and Buyer's right to purchase Buyer's Transponders and shall fully cooperate with each other in these endeavors. Buyer alone shall have the right to determine how much and to whom it will incur legal expenses in connection with any proceeding arising out of its obligations under this Section 5.03. If, however, by written order, the FCC or a court of competent jurisdiction shall determine that HCG may not sell and Buyer may not purchase Buyer's Transponders under the terms and conditions set forth herein, then HCG and Buyer shall seek immediate review of such order before the FCC or an appellate court or shall, if possible, reconstitute the transaction to comply with such order and to provide Buyer with use of "equivalent capacity" on another HCG-operated satellite and to provide HCG with the "price provided for herein." As used herein, "equivalent capacity" shall mean the same number of Transponders purchased by Buyer pursuant to this Agreement and there is no material adverse change in the provisions of this Agreement regarding purchase price taking into account payment terms using a present value analysis, tax benefits from the form of the transactions, use of Transponder Spares and Reserve Transponders, and Transponder Performance Specifications. As used herein, "price provided for herein" shall mean the total price payable to (HCG, taking into account payment terms, using a present value analysis with a ********, and tax benefits from the form of the transactions. If an appellate court issues a written order, which is no longer subject to further judicial rehearing or review, upholding the determination of the FCC or a court or competent jurisdiction that HCG may not sell and Buyer may not purchase Buyer's Transponders, then HCG and Buyer shall, if possible, reconstitute the transaction as set out herein. 5.04 Litigation. To the best of its knowledge, there is no outstanding or threatened judgment, pending litigation or proceeding, involving or affecting the transactions provided for in this Agreement, except as has been previously or concurrently disclosed in writing by either party to the other. 5.05 No Broker. It does not know of any broker, finder, or intermediary involved in connection with the negotiations and discussions incident to the execution of this Agreement, or of any broker, finder or intermediary who might be entitled to a fee or commission upon the consummation of the transactions contemplated by this Agreement. 6. Additional Representations, Warranties and Obligations of HCG 6.01 Authorization Description. HCG has filed with the FCC an application to construct, launch and operate Galaxy X at 123(degree) West Longitude. ACK/shs: GCI.GX TPA.Final 9 Monday, August 21, 1995 - 8:00 am 6.02 Transponder Performance Specifications. Each of Buyer's Transponders, upon Delivery, shall meet the Transponder Performance Specifications throughout the duration of the ********. ******** shall mean that period of time ********. ******** as to Buyer's G-X Transponders shall mean that, if any of Buyer's G-X Transponders become ******** Transponders during the ********, then Buyer shall be entitled to the repayment set forth in Section 12.03. 6.03 Title. Upon Delivery and subject to Section 4,02, HCG shall deliver to Buyer good title to each of Buyer's Transponders free from all liens, charges, claims or encumbrances, except for any encumbrances resulting from any action taken by Buyer. 6.04 Government Regulations. HCG has or shall use its best efforts throughout the ********, and until disposition of Galaxy X pursuant to Section 17, to obtain and maintain, in all material respects, all applicable federal, state and municipal authorizations or permissions to construct, launch and operate Galaxy X, applicable to it; and to comply, in all material respects, with all such government regulations regarding the construction, launch an operation of the Satellite and Transponders applicable to it. 6.05 Not a Common Carrier. Unless required to do so by the FCC, HCG shall not hold itself out, publicly or privately, as a provider of common carrier communications services on Galaxy X and is not purporting herein to provide to Buyer or to any other party any such services with respect to Galaxy X. 6.06 TT&C. Tracking, telemetry and control ("TT&C") shall be provided by Hughes Communications Satellite Services, Inc. ("HCG"), an affiliate of HCG, for the life of the Satellite, pursuant to a separate "TT&C Service Agreement" which has been executed by HCG and Buyer concurrently herewith. ********. 7. Additional Representations. Warranties and Obligations of Buyer 7.01 [Reserved] 7.02 Non-Interference. Buyer's radio transmissions (and those of its uplinking agents) to the Satellite shall comply, in all material respects, with all FCC and all other governmental (whether international, federal, state, municipal, or otherwise) statutes, laws, rules, regulations, ordinances, codes, directives and orders, of any such governmental agency, body, or court (collectively, "Laws") applicable to it regarding the operation of the Satellite and Buyer's Transponders. Buyer shall not utilize (or permit or allow any of its uplinking agents to utilize) any of Buyer's Transponders in a manner which will or may interfere with the use of any other ACK/shs: GCI.GX TPA.Final 10 Monday, August 21, 1995 - 8:00 am Transponder or cause physical harm to any of Buyer's Transponders, any other Transponders, or to the Satellite. Further, Buyer will coordinate (and will require its uplinking agents to coordinate) with HCG, in accordance with procedures reasonably established by HCG and uniformly applied to all users of Transponders on the Satellite, its transmissions to the Satellite, so as to minimize adjacent channel and adjacent satellite interference. For purposes of this Section 7.02, interference shall also mean acts or omissions which cause a Transponder to fail to meet its Transponder Performance Specifications. Without limiting the generality of the foregoing, Buyer (and its uplinking agents) shall comply with all FCC rules and regulations regarding use of automatic transmitter identification systems (ATIS). 7.03 Laws. Buyer shall comply (and shall require its uplinking agents to comply), in all material respects, with all Laws applicable to it regarding the operation or use of the Satellite and Buyer's Transponders. 7.04 Additional Usage Representations and Obligations. (a) Buyer has not been convicted for the criminal violation of, and has not been found by the FCC or other federal, state or local governmental authority with appropriate jurisdiction (collectively, the "Governmental Authority") to have violated, any federal, state or local law or regulation as applicable concerning illegal or obscene program material or the transmission thereof (the "Obscenity Laws"), and Buyer is not aware of any pending investigation (including, without limitation, a grand jury investigation) involving Buyer's programming or any pending proceeding against Buyer for the violation of any Obscenity Laws. (b) Buyer will notify HCG as soon as it receives notification of, or becomes aware of, any pending investigation by any Governmental Authority, or any pending criminal proceeding against Buyer, which investigation or proceeding concerns transmissions by Buyer potentially in violation of any law, including without limitation, Obscenity Laws. (c) Any use of Buyer's Transponders shall comply, in all material respects, with all applicable laws regarding the operation or use of the Satellite and Buyer's Transponders (including, but not limited to, any Obscenity Laws). 8.Preemptive Rights and Inspection of Facilities Buyer recognizes that it may be necessary in unusual or abnormal situations or conditions for HCG deliberately to preempt or interrupt Buyer's use of each of its Transponders, in order to protect the overall performance of the Satellite. Such decisions shall be made by HCG in its sole discretion; provided, however, that, to the extent it is technically feasible, HCG shall preempt or interrupt the use of Transponders in the inverse order in which the Owners (or such Owner's predecessors in interest) on such Satellite executed transponder purchase agreements ACK/shs: GCI.GX TPA.Final 11 Monday, August 21, 1995 - 8:00 am for its Transponders on such Satellite. To the extent technically feasible, HCG shall give Buyer at least forty-eight (48) hours' notice of such preemption or interruption and HCG shall use its reasonable best efforts to schedule and conduct its activities during periods of such preemption or interruption so as to minimize the disruption to the use of Transponders on such Satellite. To the extent that such preemption results in a loss to Buyer of the use of Buyer's Transponders sufficient to constitute a breach of HCG's warranty obligations as set forth in Section 12, then Buyer shall have all of the rights and remedies set forth in Sections 9 and 12. 9. Transponder Spares. Reserve Transponders and Retained Primary Transponders 9.01 Use of Transponder Spares. HCG shall cause Galaxy X to contain certain redundant equipment units (individually, a "Transponder Spare"), which are designed as substitutes for equipment units the failure of which could cause a Transponder to fail to meet the Transponder Performance Specifications. HCG, as soon as possible and to the extent technically feasible, shall employ a Transponder Spare in such Satellite as a substitute for Buyer's Transponder equipment unit which has caused Buyer's Transponders to suffer a Confirmed ******** (as defined in Section 12.02) in order to enable Buyer's Transponders to meet the Transponder Performance Specifications. To the extent technically feasible, a Transponder Spare will be substituted for the faulty equipment unit on a first-needed, first-served basis to satisfy HCG's ******** obligations to Buyer and to other Owners of users of Transponders on the same Satellite which have suffered Confirmed ********; provided, however, that HCG's obligations to provide Transponder Spares shall continue until such time as all of the Transponder Spares are committed to use as substitutes for Transponders which have suffered Confirmed ********. If HCG furnishes a Transponder Spare to Buyer as a substitute for an equipment unit which has caused Buyer's Transponder to suffer a Confirmed ********, the HCG shall transfer title and ownership of the Transponder Spare to Buyer and Buyer concurrently, shall return title and ownership of its substituted Transponder equipment unit to HCG. Buyer's Transponder equipment unit which has been returned shall be made available by HCG, to the extent technically feasible, to satisfy its obligations to Owners or users on the same Satellite. HCG also shall have the right, until the Transponder Spares are needed, to utilize such Transponder Spares in any manner HCG determines. 9.02 Use of Reserve Transponders. If no Transponder Spare is available at the time that Buyer's Transponder suffers a Confirmed ******** or if the use of such Transponder Spare would not correct the failure, then HCG shall employ, as soon as possible and to the extent technically feasible, and unless any delay is requested by Buyer, a Reserve Transponder on Galaxy X as a substitute for such Transponder which has suffered a Confirmed ********; provided, however, that HCG's obligation to provide Reserve Transponders to Buyer shall continue only until such time as all of the Reserve Transponders are committed to use as substitutes for Primary Transponders which have suffered a Confirmed ********. HCG shall include in the ACK/shs: GCI.GX TPA.Final 12 Monday, August 21, 1995 - 8:00 am transponder purchase agreement of any Owner who has purchased a Reserve Transponder (or in any other agreement providing for the Transfer of a Reserve Transponder) a requirement that HCG may preempt such Reserve Transponder(s) after two (2) hours' notice from HCG. Reserve Transponders utilized as substitutes shall meet the Transponder Performance Specifications. Reserve Transponders, or any one of them, will be substituted and utilized on a first-needed, first-served basis to satisfy HCG's obligations to Buyer and to other Owners with respect to the performance of their Primary Transponders. HCG shall have the right, in its sole discretion, to utilize first a Transponder Spare prior to furnishing a Reserve Transponder to Buyer. If HCG furnishes a Reserve Transponder to Buyer, then HCG shall transfer title and ownership of such Reserve Transponder to Buyer and Buyer concurrently shall return title and ownership of its substituted Transponder to HCG. Buyer's Transponder which has been returned to HCG shall thereafter be made available by HCG, to the extent technically feasible, to satisfy its obligations to other Owners. HCG also shall have the right, until the Reserve Transponders are needed, to utilize them in any manner HCG determines. 9.03 Simultaneous ******** -- Priority with Respect to the Use of Transponder Spares. In the event that Primary Transponders of more than one Owner simultaneously suffer a Confirmed ********, then the Owner (or such Owner's predecessor in interest) who first executed a transponder purchase agreement with HCG shall have priority as to use of Transponder Spares with respect to said Owner's Primary Transponder or Transponders which have suffered a Confirmed ********, to the extent technical feasible. As used in this Section 9, the term "simultaneously" shall be deemed to mean occurring within a 24-hour period. 9.04 Simultaneous ******** - Priority with Respect to the Use of Reserve Transponders. In the event that Primary Transponders of more than one Owner simultaneously suffer a Confirmed ********, and no Transponder Spare is available or if the use of such Transponder Spare would not correct the ********, then the Owner (or such Owner's predecessor in interest) who first executed a transponder purchase agreement with HCG for the purchase of a Primary Transponder on such Satellite shall have priority as to use of a Reserve Transponder with respect to said Owner's Primary Transponder or Transponders which have suffered a Confirmed ********. 9.05 HCG's Ownership of Primary Transponders. If HCG is unable to sell all of the Primary Transponders, then HCG may retain ownership of such unsold Primary Transponders ("HCG's Transponders"). (The same provision shall apply with respect to Reserve Transponders.) In such event, HCG shall have the same rights to use HCG's Transponders as any other Owner would have, including, without limitation, the right to utilize Transponder Spares and Reserve Transponders in the event HCG's Transponders do not meet the Transponder Performance Specifications. HCG also shall have the right, but not the obligation, to utilize HCG's Transponders to satisfy HCG's warranty obligations to Buyer and to other Owners. HCG shall be deemed to have been the last entity to execute a ACK/shs: GCI.GX TPA.Final 13 Monday, August 21, 1995 - 8:00 am Transponder Purchase Agreement for purposes of determining its priority under the provisions of this Section 9 and other Sections of this Agreement; provided, however, that if HCG long term leases any unsold Primary Transponder to a third party, such third party shall, for purposes of determining its priority under the provisions of this Section 9, or elsewhere in this Agreement, be deemed to have "purchased" such Transponder and to have executed a transponder purchase agreement on the date it executed such long term lease. 9.06 Notice of Intent to Substitute a Reserve Transponder Prior to the substitution of a Reserve Transponder for Buyer in accordance with this Section 9, HCG shall notify Buyer in. advance of its intention to so substitute the Reserve Transponder and the substitution shall be made at such time as the parties mutually agree. 10. Termination Rights 10.01 Termination by Buyer. (a) If HCG does not Deliver any of Buyer's Transponders on ********, Buyer shall have the right to cancel its obligations to purchase all of its undelivered Transponders, by giving written notice to HCG on or before ********. (b) If Buyer terminates its obligations as to Buyer's Transponders due to the failure to make Delivery as set forth in this Section 10 (the "Terminated Transponders"), then Buyer shall be entitled to a full refund, without interest, of all payments made for each such Terminated Transponder, less any payments made by HCG to it on account of such Terminated Transponders pursuant to other provisions of this Agreement, and Buyer and HCG shall have no further obligations to each other as to each such Terminated Transponder. (c) Buyer shall notify HCG of its intent to terminate its obligations pursuant to this Section 10.01 on or before ********. 10.02 Termination by HCG. Notwithstanding anything else set forth in this Agreement, HCG may terminate this Agreement if Buyer shall have failed to pay any amount due and payable pursuant to the provisions of Section 3, and Buyer has been given written notice by HCG of said failure and Buyer shall have failed to pay the amount due and payable within thirty (30) business days after HCG has given such notice to Buyer. Any late payments by Buyer to HCG shall be with interest calculated at the rate set forth in Section 20.01, payable with the amount due and calculated from the date payment was due until the date it is received by HCG. ACK/shs: GCI.GX TPA.Final 14 Monday, August 21, 1995 - 8:00 am 10.03 HCG's Right to Sell if Non-Payment. If, for any reason whatsoever, Buyer does not make the payments in the amounts and on the dates set forth in Section 3 and Buyer fails to cure such default as set forth in Section 10.02, then, in addition to all of its other remedies at law or in equity, HCG shall be entitled to Transfer (as defined in Section 13.01) Buyer's Transponders immediately to whomever HCG sees fit, Buyer shall not be entitled to any equitable relief as a result thereof, and Buyer's exclusive remedy shall be limited to recovery of any payments made to it by HCG, without interest, less any claim HCG has against Buyer by reason of such Buyer's default. 10.04 Prompt Repayment. All refunds provided for in this Section 10 to be made by HCG shall be made within ******** of receipt by HCG of notice of termination by Buyer, and any late payment by HCG to Buyer shall be with interest calculated at the rate set forth in Section 20.01, payable with the amount due and calculated from the date payment was due until the date it is received by Buyer. 10.05 Termination by Buyer or HCG. Notwithstanding anything else set forth in this Agreement, either Buyer or HCG may terminate its obligations under this Agreement as to Transponders on Galaxy X if, prior to Delivery, the FCC shall have ordered the placement of Galaxy X into an orbital position further east than ******** or further west than ********, and such order shall have become a Final Order, and the parties are unable to reconstitute this Agreement pursuant to Section 5.03. As used herein, an order of the FCC becomes a "Final Order" when the FCC's action is no longer subject to administrative or judicial reconsideration, rehearing, review, stay, appeal or other similar actions which could be filed with the FCC or with any court having jurisdiction to review said action. 10.06 Right to Deny Access. (a) If, in connection with using Buyer's Transponders, (i)"User" (as defined below) is indicted or is otherwise charged as a defendant in a criminal proceeding based upon, or is convicted under, any Obscenity Law or has been found by any Governmental Authority to have violated any such law; (ii) based on any User's use of Buyer's Transponders, HCG is indicted or otherwise charged as a criminal defendant, becomes the subject of a criminal proceeding or a governmental action seeking a fine, license revocation or other sanctions, or any Governmental Authority seeks a cease and desist or other similar order or filing; (iii) the FCC has issued an order initiating a proceeding to revoke HCG's authorization to operate the Satellite; ACK/shs: GCI.GX TPA.Final 15 Monday, August 21, 1995 - 8:00 am (iv) HCG obtains a court order pursuant to Section 10.06(c) below, or a court or Governmental Authority of competent jurisdiction orders HCG to deny access to User or orders User to cease transmission; or (v) HCG receives notice (the "Illegal Programming Notice"), written or oral, from a Governmental Authority that such authority considers Buyer and/or any other User's programming to be in violation of Obscenity Laws (the "Illegal Programming"), and that if HCG does not cease transmitting such Illegal Programming, then HCG and/or its Affiliates and/or any of their executives will be indicted or otherwise charged as a criminal defendant, will become the subject of a criminal proceeding or a governmental action seeking a fine, license revocation or other sanctions, or that such Governmental Authority will seek a cease and desist or other similar order or filing (with HCG being obligated, to the extent permitted by law, to provide Buyer with a copy of such Illegal Programming Notice, if written, or with other verification, including the details thereof, if oral); then, upon notice from HCG to Buyer (the "Denial of Access Notice"), User shall cease using Buyer's Transponders immediately, in the case of a denial of access pursuant to subparagraphs (i), (ii), (iii) or (iv) above, or within 24 hours following receipt of such notice, in the case of a denial of access pursuant to subparagraph (v), above; and if User does not voluntarily cease using such capacity at the appropriate time, then HCG shall have the right to take such steps as HCG deems necessary to prevent User from accessing Buyer's Transponders. Provided, however, that if User has more than one programming service, then the denial of access by HCG shall apply only to the Transponder used to provide the Illegal Programming service; and provided further, however, that if, upon receipt of the Denial of Access Notice from HCG, User does not immediately cease transmission of such Illegal Programming service, then HCG shall have the right to take such steps as HCG deems necessary to prevent User from accessing the Transponder used to transmit such Illegal Programming service (and if, thereafter, Buyer transmits such Illegal Programming service using any of Buyer's Transponders, then HCG shall have the immediate right, without further notification, to take such steps as HCG deems necessary to prevent Buyer from accessing any of Buyer's Transponders). As used herein, "User" shall mean Buyer and any person to whom Buyer Transfers all or part of its right to use Buyer's Transponders, including without limitation, a Buyer, licensee or assignee. Buyer agrees to maintain a properly operating facsimile machine at all times to receive the Denial of Access Notice from HCG. (b) If HCG denies, or has given Buyer notice of its intent to deny, access to Buyer's Transponders pursuant to the provisions of this Section 10.06, and if Buyer does not believe the conditions set forth in this Agreement ACK/shs: GCI.GX TPA.Final 16 Monday, August 21, 1995 - 8:00 am to HCG's denial of access have been met, then Buyer shall have the immediate right to seek injunctive relief, including a temporary restraining order on notice of four (4) hours or more to HCG, to prevent the denial or continuing denial of such access by HCG. (c) HCG shall also have the right to seek (i) injunctive relief, including a temporary restraining order on notice of four (4) hours or more to Buyer, to prevent, suspend or otherwise limit User's continued access to Buyer's Transponders where HCG believes such use has resulted or will result in a violation of any Obscenity Law; or (ii) declaratory relief to establish its right to deny User's access to Buyer's Transponders under this Agreement. (d) Either party shall be entitled to oppose the other's attempt to obtain equitable relief. However, in order to enable either party to obtain a resolution of any such dispute as expeditiously as possible, both parties hereby agree that: (i) neither party will contest the jurisdiction of, or the venue of, any action for equitable relief brought by the other party in the following courts: U.S. District Court for the District of Columbia and the U.S. District Court for the Central District of California; (ii) the party opposing equitable relief (the "Opposing Party") will make itself available to accept service by telecopy or personal delivery on a 24 hour-a-day basis for five (5) consecutive days following receipt by the Opposing Party of the other party's notice of its intent to seek such equitable relief; and (iii) if either party seeks a temporary restraining order and provides notice to the Opposing Party at least four (4) hours before the scheduled court hearing, then the Opposing Party will not challenge the timeliness of such notice. (e) If it is determined by final judicial order the HCG prevented Buyer from accessing any or all of Buyer's Transponders at a time when it did not have the right to do so, pursuant to this Section 10.06, then Buyer's sole and exclusive remedy shall be HCG's payment to Buyer of liquidated damages equal to ********, per Transponder, for the terminated capacity, such ******** based on the period of time of loss of use of such capacity. (f) All remedies of HCG set forth in this Section 10.06 shall be cumulative and in addition to, and not in lieu of any other remedies available to HCG at law, in equity or otherwise, and may be enforced by HCG concurrently or from time to time. (g) In addition to any other identification obligations found elsewhere in this Agreement, Buyer shall indemnify and save HCG, its directors, officers, employees, and its Affiliates from any liability or expense arising out of or related to User's use of Buyer's Transponders under this Section 10.06. Buyer shall pay all expenses (including reasonable attorneys' fees) incurred by HCG in connection with all legal or other formal or informal proceedings, instituted by any private third party or any Governmental ACK/shs: GCI.GX TPA.Final 17 Monday, August 21, 1995 - 8:00 am Authority, and arising out of or related to User's use of Buyer's Transponders under this Section 10.06, and Buyer shall satisfy all judgments, fines, penalties, costs, or other awards which may be incurred by or rendered against HCG as a result thereof, as and to the extent permitted by law. 10.07 Return of Transponders. Upon the expiration, termination, or cancellation of this Agreement as to any Transponder for any reason whatsoever (including, without limitation, expiration of this Agreement in accordance with its terms), such Transponder shall be deemed, without any further action by any party, to be redelivered to HCG and HCG shall be entitled to immediate possession thereof. HCG shall thereafter have the right to utilize such redelivered Transponder in any manner it determines. 10.08 Cancellation of Buyer's Ku-Band Transponder. HCG shall provide Buyer with a written notice of its final decision on the ******** and the ********. Within ******** after receipt of HCG's written notice, Buyer shall have the right to cancel the lease (or, if Buyer has exercised the Purchase Option as set forth in Section 2.02, the purchase) of Buyer's Ku-Band Transponder by delivery of a written notice to do so to HCG. Such exercise shall be irrevocable. The effective date of the cancellation shall be the date on which HCG receives the notice of such cancellation. As of the effective date of such cancellation, HCG shall have no obligation to Buyer arising out of the lease or purchase of the Buyer's Ku-Band Transponder, except for the refund of any pre-paid charges with respect to such Buyer's Ku-Band Transponders. 10.09 Buyer's Special Option to Terminate. Notwithstanding anything to the contrary stated elsewhere in this Agreement, Buyer shall have the right, at its sole option, to terminate this Agreement in its entirety by delivering a written notice to do so ********. The condition precedent to such termination shall be the payment by Buyer of ******** payable to HCG concurrently with the written notice of termination. Upon such termination, neither HCG nor Buyer shall have any rights or obligations to the other under this Agreement. 11. Force Majeure 11.01 Failure to Deliver. Any failure or delay in the performance by HCG of its obligations to Deliver any Transponders shall not be a breach of this Agreement if such failure or delay results from any acts of God, governmental action (whether in its sovereign or contractual capacity) or any other circumstances reasonably beyond the control of HCG, including, but not limited to, weather or acts or omissions of Buyer or any third parties (excluding the Hughes Aircraft Company and all of its direct and indirect subsidiaries and any other affiliates of HCG or the Hughes Aircraft Company with whom HCG or the Hughes Aircraft Company contracts for any components of the Satellite or any services with respect thereto). Nothing in this ACK/shs: GCI.GX TPA.Final 18 Monday, August 21, 1995 - 8:00 am Section, however, shall be deemed to alter Buyer's absolute rights to terminate this Agreement as set forth in Section 10.01. 11.02 Failure of Performance. Any failure in the performance of the Transponders, once Delivered, shall not be a breach of this Agreement if such failure results from acts of God, governmental action (whether in its sovereign or contractual capacity) or any other circumstances reasonably beyond the control of HCG, including, but not limited to, receive earth station sun outage, weather, or acts or omissions of Buyer or any third parties (excluding the Hughes Aircraft Company and all of its direct and indirect subsidiaries, and all parties with whom HCG or Hughes Aircraft Company and all of its direct and indirect subsidiaries contract for the manufacture, construction, launch and operation of the Satellite or any components thereof), provided, however, that this provision shall not excuse HCG's obligations to provide Transponder Spares or Reserve Transponders, to the extent available and technically feasible, to satisfy its obligations as set forth in Section 9. 12. Limitation of Liability/******** 12.01 Liability of HCG. If (i) any one or more of Buyer's Transponders fails to meet the Transponder Performance Specifications during ******** (ii) such ******** is deemed to be a Confirmed ******** (as defined in Section 12.02), and (iii) HCG is unable to furnish the necessary Transponder Spare or Reserve Transponder as a substitute for Buyer's Transponder, pursuant to Section 9, then such Transponder shall be deemed to be a "******** Transponder". Buyer, unless excused by an event set forth in Section 11.02, shall be entitled to repayment as set forth in Section 12.03 for a ******** Transponder ******** Transponder (as defined in Section 21). The condition precedent to HCG's obligation to repayment as set forth in this Section 12.03 shall be the full payment by Buyer of the ******** as set forth in Section 3. 12.02 Confirmed ********. A Buyer's Transponder shall be deemed to have suffered a "Confirmed ********" if (a) it ******** to meet the Transponder Performance Specifications for a cumulative period of more than ********, (b) ******** (as defined below) ******** or (c) it ******** to meet the Transponder Performance Specifications for any period of time under circumstances that make it clearly ascertainable or predictable technically that the ******** set forth in either (a) or (b) of this Section will occur. An "outage unit" shall mean the ******** of Buyer's Transponder(s) to meet the Transponder Performance Specifications for ********. Buyer shall give HCG immediate not)notification of any such ********, as soon after commencement of any such ******** as is reasonably possible, and of the relevant facts concerning such ********. Upon HCG's verification that a Transponder(s) has suffered a Confirmed ********, such ******** shall be deemed to have commenced upon receipt by HCG of notification from Buyer, or HCG's actual knowledge, whichever first occurs, of the Confirmed ********. As used herein, ACK/shs: GCI.GX TPA.Final 19 Monday, August 21, 1995 - 8:00 am the term "day" shall mean a 24-hour period of time commencing on 12:00 midnight Eastern Time. 12.03 Repayment for ******** Transponder or ******** Transponder. Subject to the last sentence of Section 12.01, for each of Buyer's Transponders for which repayment is owing hereunder, HCG shall pay to Buyer, without interest, an amount equal to the product of a fraction, the numerator of which is the number of days from the date of such ******** until the end of the ******** and the denominator of which is the total number of days in the ********, multiplied by the ******** Price for such Transponder as set forth in Section 3. Concurrently with payment to Buyer of such repayment, Buyer shall return title and ownership of said Transponder to HCG. In addition, if the performance of Buyer's Transponder is such that, while it ******** to meet the Transponder Performance Specifications, its performance is nonetheless of some value to Buyer, then prior to accepting repayment calculated as aforesaid, Buyer shall have the right to negotiate with HCG to determine if there is a mutually agreeable reduced price upon which Buyer is willing to keep its Transponder. Any such agreement reached by Buyer and HCG shall constitute a new agreement, independent of this Agreement. 12.04 Limitation of Liability. (a) ANY AND ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE OR USE, ARE EXPRESSLY EXCLUDED AND DISCLAIMED EXCEPT TO THE EXTENT SPECIFICALLY PROVIDED FOR IN SECTION 6.02, ABOVE. IT EXPRESSLY IS AGREED THAT HCG'S SOLE OBLIGATIONS AND BUYER'S EXCLUSIVE REMEDIES FOR ANY CAUSE WHATSOEVER ARISING OUT OF OR RELATING TO THIS AGREEMENT AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY ARE LIMITED TO THOSE SET FORTH IN SECTIONS 9, 10 AND 12, HEREOF, AND ALL OTHER REMEDIES OF ANY KIND ARE EXPRESSLY EXCLUDED. (b) IN NO EVENT SHALL HCG BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER FORESEEABLE OR NOT, OCCASIONED BY ANY DEFECT IN THE TRANSPONDERS, DELAY IN DELIVERY OF THE TRANSPONDERS, FAILURE OF THE TRANSPONDERS TO PERFORM OR ANY OTHER CAUSE WHATSOEVER. HCG MAKES NO WARRANTY, EXPRESS OR IMPLIED, TO ANY OTHER PERSON OR ENTITY CONCERNING THE TRANSPONDERS AND BUYER SHALL DEFEND AND INDEMNIFY HCG FROM ANY CLAIMS MADE UNDER ANY WARRANTY OR REPRESENTATION BY BUYER TO ANY THIRD PARTY. THE LIMITATIONS OF LIABILITY SET FORTH HEREIN SHALL ALSO APPLY TO THE HUGHES AIRCRAFT COMPANY (THE MANUFACTURER OF THE SATELLITE AND THE TRANSPONDERS) AND ALL AFFILIATES THEREOF. ACK/shs: GCI.GX TPA.Final 20 Monday, August 21, 1995 - 8:00 am (c) Buyer and HCG each shall have the right to obtain injunctive relief, if necessary, in order to prevent the other party from willfully breaching its obligations under this Agreement or to compel the other party to perform its obligations under this Agreement. 12.05 Obligations of Buyer to Cooperate. If any of Buyer's Transponders fails to meet the Transponder Performance Specifications, then Buyer shall use reasonable efforts to cooperate and aid HCG in curing such failure, provided that such efforts can be done at minimal or no cost to Buyer. (a) These obligations of Buyer shall include, but not be limited to the following: (i) If there is a problem which can be compensated for by increasing the power of its transmission to the Buyer's Transponder, then Buyer shall do so, at HCG's cost and expense, to the extent it can with existing equipment, provided, however, that HCG shall not be able to require Buyer to increase the power of its transmission if, by doing so, it would cause interference with other Transponders on such Satellite which is prohibited by Section 7.02 of this Agreement, or interference with any other satellite; and (ii) Permitting HCG, at HCG's cost and expense, to upgrade Buyer's equipment, provided that Buyer shall be entitled to select and install such equipment and determine its configuration in accordance with its own existing operating procedures and technical requirements, and in accordance with applicable laws and regulations. (b) HCG shall give notice to Buyer if and when it requires the increase of power of the transmission of any other Owner pursuant to such Owner's obligation equivalent to this Section 12.05. HCG shall also give notice to Buyer when it acquires knowledge of any other Transponder user uplinking at power levels which might cause interference with Buyer's Transponders. If, after such increase in power, a Buyer's Transponder(s) no longer meets its Transponder Performance Specifications, HCG shall promptly take steps to reduce interference, if any, prohibited by Section 7.02. (c) Buyer's priority for the use of transponder Spares or Reserve Transponders under Section 9 shall be determined at the time that its Transponder would otherwise have become a ******** Transponder without Buyer's cooperation under this Section 12.05. 13. Limitations on Transfer by Buyer ACK/shs: GCI.GX TPA.Final 21 Monday, August 21, 1995 - 8:00 am 13.01 Transfers by Buyer. Buyer shall not Transfer (as defined below) its rights under this Agreement to any entity other than its affiliates, except with the written consent of HCG, which may be given or withheld in HCG's sole discretion. "Transfer" shall mean to grant, sell, assign, encumber, permit the utilization of, license, lease, sublease or otherwise convey, directly or indirectly, in whole or in part. 13.02 Transfers by HCG. HCG may Transfer its rights and/or obligations hereunder, in whole or in part, to any corporation or other entity wholly-owned, directly or indirectly, by HCG or to the Hughes Aircraft Company or any corporation or other entity wholly-owned, directly or indirectly by Hughes Aircraft Company, including, without limitation, Hughes Communications, Inc., HCG's immediate parent corporation, or any corporation or other entity wholly-owned, directly or indirectly, by Hughes Communications, Inc. Any Transfer by HCG set forth herein shall not interfere with or impact the use of Buyer's Transponders hereunder. 13.03 Affiliate. As used in this Agreement, "affiliate" shall mean any corporation or other entity controlling or controlled by or under common control with Buyer or HCG, as the case may be. 13.04 Assignment. Notwithstanding anything to the contrary in Section 13.01 above, Customer may assign its rights or obligations, in whole or in part, under this Agreement to a third party (the "Third-Party Assignee"), subject to HCG's prior written consent, which may not be unreasonably withheld; provided, however, that HCG may withhold its consent if HCG determines that the ThirdParty Assignee is not Financially Qualified, or will not be able to meet HCG's legal, technical and operational requirements as set forth in this Agreement. A condition precedent to the effectiveness of any such third-party assignment shall be the prior execution by the Third-Party Assignee of assignment and assumption agreements with respect to this Agreement, in form and substance as required by HCG. As used herein, "Financially Qualified" shall mean the Third-Party Assignee's ability to financially support it's obligations and responsibilities under the Agreement covering Customer's Transponder Capacity, as determined by HCG in its sole discretion. The foregoing notwithstanding, no assignment of this Agreement shall relieve Customer of its obligations to HCG hereunder. 14. [Reserved] 15. Progress Reports, Inspections and Access to Work in Progress 15.01 Progress Reports. Commencing ninety (90) days after the Execution Date and continuing until Delivery, HCG shall furnish to the Buyer on a monthly basis a written progress report on the status of the construction of the Satellite and a statement containing an explanation of material details, including HCG's projected Scheduled Launch Dates and projected dates of Delivery, variances from performance specifications and any remedial actions taken. HCG shall take reasonable steps to keep Buyer informed periodically of communications to HCG ACK/shs: GCI.GX TPA.Final 22 Monday, August 21, 1995 - 8:00 am from the FCC or any other governmental authority which materially affect Buyer and concern HCG, the Satellite and the Transponders or their use, and shall promptly deliver copies to Buyer of any such written communications. 15.02 Inspection Rights of Buyer. Buyer shall have the right to inspect Galaxy X and its Transponders during construction and prior to launch, upon reasonable notice to HCG and during normal business hours, and shall have the right to be present during ground and in-orbit testing. HCG shall give Buyer reasonable notice of the commencement of acceptance testing as set forth in Section 4.03, above. Buyer shall be supplied with the test data from such acceptance tests. 15.03 Access to Work in Progress and Selection of Transponders. Prior to Delivery, except for documentation and information regarded by HCG as proprietary or trade secrets, relevant and material work in progress, including test data and documentation generated through HCG's effort pursuant to this Agreement, shall be subject to examination and inspection by Buyer. To the extent that the data and documentation to be provided by Buyer hereunder are of a type normally retained by HCG, and are not to be delivered to Buyer under this Agreement, HCG shall make them available to Buyer at its request for examination at a location designated by HCG. Subject to the provision set forth above, HCG shall also deliver copies of test data and other data generated from the testing and performance of the Satellite and the Buyer's Transponders to Buyer at any time on Buyer's request and at Buyer's expense. HCG will also conduct ground tests of the G-X Transponders. From the Transponder ground test results furnished to Buyer and other Owners, Buyer and HCG jointly shall promptly select its particular Transponder(s) for Delivery; provided, however, that HCG shall, prior to Buyer's selection of its Transponder(s), designate which Transponders shall be Reserve Transponders. Such selection shall be made within three (3) days of HCG's not)notification to Buyer of such test results and the identification of those Transponders which have not yet been selected. HCG shall furnish data necessary to determine whether the Transponders satisfy or exceed the applicable Transponder Performance Specifications in order to facilitate Buyer's selection of its Transponder(s). If the in-orbit test results vary from the ground test results, then Buyer shall have the right to substitute Transponders at Buyer's discretion, but only for uncommitted Transponders on the same Satellite (i.e., Transponders that have not been sold, leased or otherwise committed by HCG to a third party). 15.04 After Delivery Reports. After delivery, Buyer shall receive monthly reports on the overall performance of Galaxy X in the form of the Galaxy satellite status reports similar to the Galaxy VII satellite services monthly report, plus information furnished to insurers. Anomalous operations shall be reported to Buyer as soon as possible. 16. Confidentiality and Press Releases ACK/shs: GCI.GX TPA.Final 23 Monday, August 21, 1995 - 8:00 am 16.01 Confidential Information. HCG and Buyer shall hold in confidence the Agreement and all Exhibits, including the financial terms and provisions hereof and all information received pursuant to Section 15, and HCG and Buyer hereby acknowledge and agree that all information related to this Agreement, not otherwise known to the public, is confidential and proprietary and is not to be disclosed to third persons without the prior written consent of both HCG and Buyer. Neither HCG, nor Buyer, shall disclose such information to any third party (other than to officers, directors, employees and agents of HCG and Buyer, each of whom is bound by this Section 16.01) except: (a) to the extent necessary to comply with law or the valid order of a governmental agency or court of competent jurisdiction, or to satisfy its obligations to other Owners of Transponders; provided, however, that the party making such disclosure shall seek confidential treatment of said information; (b) as part of its normal reporting or review procedure to regulatory agencies, its parent company, its auditors and its attorneys; (c) in order to enforce its rights and perform its obligations pursuant to this Agreement; (d) to the extent necessary to obtain appropriate insurance, to its insurance agent, provided that such agent agrees to the confidential treatment of such information; and (e) to the extent necessary to negotiate clauses that will be common to all Transponder Purchase Agreements. 16.02 Press Releases. The parties agree that no press release relating to this Agreement shall be issued without the approval of both parties. 17. Disposition of Satellite 17.01 ******** After the ******** and until the earliest of such time as (i) the ******** Galaxy X is ********, (ii) Galaxy X has ******** capable of meeting its Transponder Performance Specifications, or (iii) the ******** as the case may be) anniversary of Delivery of Galaxy X, HCG shall continue to make available to Buyer, on the terms and conditions contained herein, Transponder Spares and Reserve Transponders. 17.02 Disposition of Satellite. At the earliest of the time as (i) the ******** Galaxy X is ********, (ii) there are ******** Transponders capable of meeting its Transponder Performance Specifications, or (iii) the ******** as the case may be) ACK/shs: GCI.GX TPA.Final 24 Monday, August 21, 1995 - 8:00 am anniversary of Delivery of Galaxy X, this Agreement shall terminate, HCG shall have no further obligation to Buyer under this Agreement, and Buyer's Transponders shall be deemed, without any further action by any party, to be redelivered to HCG and HCG shall be entitled to immediate possession thereof. HCG shall thereafter have the right to utilize such redelivered Transponders in any manner it determines. HCG will, to the extent possible, provide Buyer with ninety (90) days notice prior to the disposition of Galaxy X pursuant to this Section 17.02. Upon the disposition of Galaxy X as set forth herein, Buyer's right, title and interest in all of Buyer's Transponders shall revert to HCG. 18. Documents Each party hereto agrees to execute, and if necessary, to file with the appropriate governmental entities, such documents as the other party hereto shall reasonably request in order to carry out the purpose of this Agreement. 19. Conflicts In the case of a conflict between the provisions of this Agreement and any Exhibit, the provisions of this Agreement will prevail. 20. Miscellaneous 20.01 Interest. The rate of interest referred herein shall be ********, or the highest legally permissible rate of interest, whichever is lower, and all interest or discounting shall be compounded on a yearly basis. "Pro-rata" shall mean an allocation on a straight line basis based on number of days. All present value analyses shall use a ********. 20.02 Applicable Law and Entire Agreement. The existence, validity, construction, operation and effect of this Agreement and the Exhibits and Schedules hereto, shall be determined in accordance with and be governed by the laws of the State of California. This Agreement and the Exhibits hereto, along with the TT&C Service Agreement, dated as of even date herewith, constitutes the entire agreement between the parties, and supersedes all previous understandings, commitments or representations concerning the subject matter. The parties each acknowledge that the other party has not made any representations other than those which are contained herein. This Agreement may not be amended or modified in any way, and none of its provisions may be waived, except by a writing signed by an authorized officer or the party against whom the amendment, modification or waiver is sought to been enforced. 20.03 Notices All notices and other communications from either party to the other hereunder shall be in writing and shall be deemed received upon actual receipt when personally delivered, upon actual receipt if sent by facsimile or upon the ACK/shs: GCI.GX TPA.Final 25 Monday, August 21, 1995 - 8:00 am expiration of the third business day after being deposited in the United States mails, postage prepaid, certified or registered mail, addressed to the other party as follows: TO HCG: If by mail: Hughes Communications Galaxy, Inc. Post Office Box 92424 Los Angeles, California 90009 Attention: Senior Vice President- Galaxy Satellite Services cc: Associate General Counsel If by FAX: Hughes Communications Galaxy, Inc. Attention: Senior Vice President- Galaxy Satellite Services (310) 607-4255 cc: Associate General Counsel (310) 607-4258 If by personal delivery to its principal place of business at: Hughes Communications Galaxy, Inc. 1990 East Grand Avenue El Segundo, California 90245 Attention: Senior Vice President- Galaxy Satellite Services cc: Associate General Counsel TO BUYER: If by mail: GCI Communication Corp. 2550 Denali Street, Suite 1000 Anchorage, AK 99503 Attention: Richard P. Dowling Senior Vice President If by FAX: GCI Communication Corp. Attention: Richard P. Dowling Senior Vice President (907) 265-5676 If by personal delivery to its ACK/shs: GCI.GX TPA.Final 26 Monday, August 21, 1995 - 8:00 am principal place of business at: General Communication Corp. 2550 Denali Street, Suite 1000 Anchorage, AK 99503 Attention: Richard P. Dowling Senior Vice President All payments to be made under this Agreement, if made by mail, shall be deemed to have been made on the date of receipt thereof. The parties hereto may change their addresses by giving notice thereof in conformity with this Section 20.03. 20.04 Severability. Nothing contained in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any statute, law, ordinance, order or regulation, such statute, law, ordinance, order or regulation shall prevail; provided, however, that in such event the provisions of this Agreement so affected shall be curtailed and limited only to the extent necessary to permit compliance with the minimum legal requirement, and no other provisions of this Agreement shall be affected thereby and all such other provisions shall continue in full force and effect. 20.05 Taxes. If any property or sales taxes are asserted against HCG after, or as a result of, Delivery, by any local, state, national or international, public or quasi public governmental entity, in respect of Buyer's Transponders or the sale thereof to Buyer, Buyer shall be solely responsible for such taxes. If any taxes, charges or other levies are asserted by reason of the use of the point in space or the frequency spectrum at that point in space in which the Satellite containing Buyer's Transponders is located, or the use or ownership of such Satellite (excluding any FCC license fee imposed on the Satellite itself, as compared to the Transponders, which license fee shall be paid by HCG), and such taxes are not specifically allocated among the various components of such Satellite, then HCG, Buyer and the other Owners of such Transponders shall each pay a proportionate amount of such taxes based on the number of Transponders each of them owns. 20.06 Successors. Subject to Section 13, this Agreement shall be binding on and shall inure to the benefit of any successors and assigns of the parties, provided that no assignment of this Agreement shall relieve either party hereto of its obligations to the other party. Any purported assignment by either party not in compliance with the provisions of this Agreement shall be null and void and of no force and effect. 20.07 Rules of Construction. Any ambiguities shall be resolved without reference to which party may have drafted this Agreement. The descriptive headings of the several sections and paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. ACK/shs: GCI.GX TPA.Final 27 Monday, August 21, 1995 - 8:00 am 20.08 Survival of Representations and Warranties. All representations and warranties contained herein or made by HCG or Buyer in connection herewith shall survive any independent investigation made by HCG or Buyer. 20.09 No Third-Party Beneficiary. The provisions of this Agreement are for the benefit only of the parties hereto, and no third party may seek to enforce, or benefit from, these provisions, except that both parties acknowledge and agree that the provisions of Sections 7.02, 8, 9.01, 9.02, 9.03 and 9.04, are intended for the benefit of both HCG and all other Owners. Both parties agree that any other such Owner shall have the right to enforce, as a third-party beneficiary, the provisions of Sections 7.02, 8, 9.01, 9.02, 9.03 and 9.04, against Buyer directly, in an action brought solely by such other Owner, or may join with HCG or any other Owner, in bringing an action against Buyer for violation of such Sections. 20.10 Non-Waiver of Breach. Either party hereto may specifically wave any breach of this Agreement by the other party, provided that no such waiver shall be binding or effective unless in writing and no such waiver shall constitute a continuing waiver of similar or other breaches. A waiving party, at any time, and upon notice given in writing to the breaching party, may direct future compliance with the waived term or terms of this Agreement, in which event the breaching party shall comply as directed from such time forward. 20.11 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all such counterparts together shall constitute but one and the same instrument. 21. Option for ******** Buyer shall have the option to purchase the ******** on a satellite designated as Galaxy IX by delivery of a written notice of Buyer's election to purchase such ******** (the ********) as of the Execution Date. Provided that Buyer has elected to purchase the ******** as set forth herein and has paid the ******** (as defined below) on a monthly basis, HCG shall provide, on a ******** with other HCG customers also purchasing such ********, alternate capacity on Galaxy IX equivalent to the number of the ******** Transponders at Galaxy IX's then-existing orbital location, in the event of an ******** of Galaxy X or in the event that any of Buyer's C-Band Transponders have become ******** Transponders. ******** for ******** shall be provided by ********. If no other customers have preempted Buyer's ********, and upon ********, HCG shall provide Buyer with ********. Upon providing to Buyer ******** as discussed in the foregoing sentence, HCG will switch ********. In the event that HCG provides Buyer with ACK/shs: GCI.GX TPA.Final 28 Monday, August 21, 1995 - 8:00 am ******** shall be returned to HCG ("******** Transponders") for ********. ********. If HCG provides Buyer with the number of the transponders on Galaxy IX equivalent to the number of ******** Transponders or ******** Transponders, then Buyers obligation to pay the ******** shall ********. Buyer agrees to use such capacity in accordance with HCG's then-effective terms applicable to the lease of Galaxy IX transponders and Buyer agrees to pay to HCG a ******** lease payment of ******** per each Galaxy IX transponder. The conditions precedent to Buyer's right to ******** as set forth herein shall be the ******** payment by Buyer of ******** per each of Buyer's Transponders payable concurrently with Delivery of each of Buyer's Transponders and on ******** (the ********), the availability/non-preemption of ******** Transponders and Buyer's full compliance, in all material respects, with the terms of this Agreement. The ******** shall be ********. HUGHES COMMUNICATIONS GCI COMMUNICATION GALAXY, INC. CORP. By: /s/ Carl A. Brown By: /s/ Richard P. Dowling Its:Senior Vice President Its:Senior Vice President ACK/shs: GCI.GX TPA.Final 29 Monday, August 21, 1995 - 8:00 am Exhibit A Galaxy Fleet Satellites EXHIBIT A GALAXY SATELLITE DESCRIPTION ******** --1-- Exhibit A Galaxy Fleet Satellites EXHIBIT A GALAXY SATELLITE DESCRIPTION ******** --1-- EXHIBIT B TRANSPONDER PERFORMANCE SPECIFICATIONS: GALAXY IX/Galaxy X ******** --1-- Exhibit B Transponder Performance Specifications: Galaxy IX,Galaxy X TABLE I - SPECIFIED PERFORMANCE VALUES GALAXY IX/GALAXY X ******** --2-- Exhibit B Transponder Performance Specifications: Galaxy IX/Galaxy X TABLE I, GALAXY IX/GALAXY X (Cont'd) ******** --3-- Exhibit B Transponder Performance Specifications: Galaxy IX,Galaxy X TABLE I, GALAXY IX/GALAXY X (Cont'd) ******** --4-- Exhibit B Transponder Performance Specifications: Galaxy IX,Galaxy X TABLE I, GALAXY IX/GALAXY X (Cont'd) ******** --5-- Exhibit B Transponder Performance Specifications: Galaxy IX Galaxy X Table B-1 Galaxy IX ******** ******** -6- Exhibit B Transponder Performance Specifications: Galaxy IX/Galaxy X Table B-2a Galaxy X ******** ******** -7- Exhibit B Transponder Performance Specifications: Galaxy IX/Galaxy X Table B-2b Galaxy X ******** ******** -8- ADDENDUM TO GALAXY X TRANSPONDER PURCHASE AGREEMENT BETWEEN GCI COMMUNICATION CORP. AND HUGHES COMMUNICATIONS GALAXY, INC. This document shall constitute an Addendum to that certain Galaxy X Transponder Purchase Agreement between GCI COMMUNICATION CORP. ("Buyer") and HUGHES COMMUNICATIONS GALAXY, INC. ("HCG"), dated as of August 24, 1995 ("the Agreement"). This Addendum amends the Agreement as indicated herein. If there is any inconsistency between this Addendum and the Agreement, then this Addendum shall prevail. This Addendum is being executed concurrently and is dated as of even date with, and is an integral part of, the Agreement. Any reference to the "Agreement" shall refer collectively to the Agreement and this Addendum. Terms not otherwise defined herein shall have the meanings set forth in the Agreement. 1. A NEW SECTION 22 IS ADDED HEREBY: 22. Interim Capacity. Buyer shall lease from HCG, and HCG shall lease to Buyer, ******** transponders on a satellite commonly known as "Galaxy IX", which shall be located at 123(degree) West Longitude orbital location, from the date on which transponder service on Galaxy IX shall commence (as determined by HCG in its sole discretion) through the Delivery of Galaxy X, at a ******** Lease Rate of ********. Provided that the Galaxy X Delivery has not occurred on or before September 1, 1998, then HCG shall lease to Buyer, and Buyer shall lease from HCG, another ******** transponder on Galaxy IX (thereby a total number of ********) from ********. Provided that the Galaxy X Delivery has not occurred ********, HCG shall lease to Buyer, and Buyer shall lease from HCG, another ******** transponder on Galaxy IX (thereby a total number of ********) from ********, at Buyer's sole option, through the Galaxy X Delivery. Buyer may elect to take Transponder ******** to HCG. The ******** Lease Rate for the ******** Galaxy IX transponders shall be ********. Buyer shall notify HCG in writing of its decision to elect ******** as the start date for the lease of the ******** transponder ********. If Buyer does not provide HCG with such written notice, then Buyer shall be deemed to have elected the ********. If Buyer elects or is deemed to have elected the ******** date, then Buyer shall pay to HCG ********. However, the parties agree that the ******** Lease Rate per each transponder shall ******** as ACK/shs: GX GCI Addendum.Final 1 Monday, August 21, 1995 - 11:45 am of the date on which Galaxy X ********, whichever occurs first. The lease of the Galaxy IX transponders shall be governed by the terms and conditions of the Agreement regarding use of the Transponders, including Sections 7, 8, 9, and 10 and any other then-effective HCG's standard provisions applicable to the lease or use of capacity on Galaxy IX. The condition precedent to the interim capacity on Galaxy IX as set forth in this section 22 shall be the successful launch and operation of Galaxy IX. In the event that Galaxy X is not Delivered into orbit ********, Buyer shall ********, at the ******** Lease Rate of ********. In that event, Buyer agrees to execute any and all necessary documents to convert the Purchase of Transponders on galaxy X to a Lease of the same amount and Capacity of Galaxy IX. Alternatively, Buyer shall have the right to convert the lease of such Galaxy IX transponders to a purchase. The purchase price shall be an amount representing ********. The purchase of the Galaxy IX transponders shall be governed by HCG's then-effective standard Galaxy IX purchase agreement. IN WITNESS WHEREOF, each of the parties hereto has duly executed and delivered this Addendum. GCI COMMUNICATION HUGHES COMMUNICATIONS CORP. GALAXY, INC. By: /s/ Richard P. Dowling By: /s/ Carl A. Brown Its:Senior Vice President Its:Senior Vice President Date: August 24, 1995 Date: August 24, 1995 ACK/shs: GX GCI Addendum.Final 2 Monday, August 21, 1995 - 11:45 am November 3, 1995 Mr. John Lowber GCI Communication Corp. Re: Section 13.04 of the Galaxy X Transponder Purchase Agreement Dear Mr. Lowber: Reference is made to Section 13.04 of that certain Galaxy X Transponder Purchase Agreement along with all Addendum, Appendices and Exhibits (the "Agreement") dated August 24, 1995 by and between Hughes Communications Galaxy, Inc. ("HCG") and GCI Communication Corp. ("GCI"). With respect to Section 13.04 of the Agreement, the parties hereby agree to replace the word "Customer" with the word "Buyer" throughout Section 13.04. Except as specifically provided above in the preceding sentence, all terms and provisions of the Agreement shall remain the same. Accepted and agreed to: GCI COMMUNICATION CORP. HUGHES COMMUNICATIONS GALAXY, INC. By: /s/ John M. Lowber By: /s/ A.C. Kahng Name: John M. Lowber Name: A. C. Kahng Title: SVP & CFO Title: Asst. Secretary ACK/shs EX-10 3 TRANSPONDER SERVICE AGREEMENT EXHIBIT B GALAXY X TRANSPONDER SERVICE AGREEMENT BETWEEN HUGHES COMMUNICATIONS SATELLITE SERVICES, INC. AND GCI COMMUNICATION CORP. TABLE OF CONTENTS
Article Page 1 SERVICES AND TERM 2 1.01 Terms of Agreement 2 1.02 Services 2 2 SERVICE FEE AND PAYMENTS 2 3 REPRESENTATIONS AND WARRANTIES 3 3.01 Authority, No Breach 3 3.02 Corporate Action 3 3.03 Common Clauses in Service Agreements 3 3.04 Consents 3 3.05 Litigation 3 3.06 Non-Interference 3 4 OBLIGATIONS OF CONTRACTOR 4 4.01 Satellite 4 4.02 Use of the Transponder Spares 4 4.03 Reserve Transponders 4 4.04 Government Regulations 4 4.05 Tracking, Telemetry and Control 4 5 FORCE MAJEURE 5 6 LIMITATION OF LIABILITY 5 6.01 General Limitation 5 6.02 Equitable Relief 6 7 REPORTS 6 7.01 Operational Reports 6 7.02 Anomalous Operation Notification 6 7.03 Maneuver Notification 7 7.04 Inspection Rights of Owner 7 8 CONFIDENTIALITY 7 9 APPLICABLE LAW 8 10 FURTHER NOTIFICATIONS 8 11 MODIFICATION 8 ACK/shs: GCI.GX TSA.Orig i Thursday August 17, 1995 -- 3:30 pm 12 TERMINATION 8 12.01 Contractor's Termination Rights 8 12.02 Contractor's Right to Deny Access 9 12.03 Automatic Termination 9 13 MISCELLANEOUS 9 13.01 Entire Agreement and Amendment 9 13.02 Non-Waiver of Breach 9 13.03 Notices 9 13.04 Severability 11 13.05 Counterparts 11 13.06 Successors 11 13.07 Headings 11 13.08 No Third-Party Beneficiary 11 13.09 Survival of Representations and Warranties 12 13.10 Transfer 12 13.11 Applicability to Galaxy Backup 12 ADDENDUM I Defined Terms
ACK/shs: GCI.GX TSA.Orig ii Thursday August 17, 1995 -- 3:30 pm GALAXY X TRANSPONDER SERVICE AGREEMENT This Transponder Service Agreement (the "Agreement") (all such defined terms herein are so capitalized and referenced in Addendum I) is made and entered into as of August 25, 1995 (the "Execution Date") by and between Hughes Communications Satellite Services, Inc. ("Contractor"), a California corporation, and GCI Communication Corp. ("Owner"), an Alaskan corporation. RECITALS WHEREAS, subject to the approval of the Federal Communications Commission, Hughes Communications Galaxy, Inc. ("HCG"), an Affiliate of Contractor, shall cause a domestic communications satellite, Galaxy X (the "Satellite"), to be built containing both Ku-Band capacity (the "Ku-Band Transponders") and C-Band capacity (the "C-Band Transponders"). Collectively, the Ku-Band Transponders and the C-Band Transponders are referred to hereafter as "Transponders"; WHEREAS, Owner has agreed, pursuant to a purchase agreement between Owner and HCG of even date herewith (the "Transponder Purchase Agreement") to purchase ******** of the Primary C-Band Transponders on Galaxy X and (either purchase or lease ******** Ku-Band Transponder on Galaxy X (collectively, the "Owner's Transponder"). Unless otherwise defined herein, all capitalized terms are as set forth in the Transponder Purchase Agreement; WHEREAS, HCG has caused certain redundant equipment units (collectively, the "Transponder Spares" and individually, a "Transponder Spare") to be placed on the Satellite to be used to replace Transponder equipment units that fail to meet the Transponder Performance Specifications as defined in the Transponder Purchase Agreement (the "Transponder Performance Specifications"), and HCG has agreed to make said equipment units available for use as set forth in the Transponder Purchase Agreement; WHEREAS, HCG and Owner have agreed that Contractor shall perform the satellite operational services (the "Services") for Owner on the terms and conditions specified in this agreement and Contractor is willing to perform such Services; WHEREAS, Owner has, concurrently herewith, agreed to pay for such Services pursuant to the Transponder Purchase Agreement, and HCG has assigned its right to payment for such Services under the Transponder Purchase Agreement to Contractor, and Owner is agreeable to such assignment; and WHEREAS, Owner and Contractor desire this Agreement to become effective only upon Delivery (as defined in the Transponder Purchase Agreement) of ACK/shs: GCI.GX TSA.Orig 1 Thursday August 17, 1995 -- 3:30 pm Owner's Transponder by HCG to Owner as set forth in the Transponder Purchase Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises set forth below, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, HCG and Owner hereby mutually agree as follows: ARTICLE 1. SERVICES AND TERM 1.01 Terms of Agreement. Contractor shall provide the Services set forth in Section 1.02 hereof for a continuous period from Delivery of Owner's Transponder until the Transponder Purchase Agreement is either terminated or canceled, or expires, in its entirety (the "Service Term"). 1.02 Services. The Services to be rendered by Contractor hereunder are as follows: (a) Monitoring and managing the use of electric power on the Satellite to operate Owner's Transponder; (b) Monitoring and managing the use of the Satellite's propellant so that the attitude and orbital position are maintained; (c) Monitoring and managing all other functions of the Satellite which support Owner's Transponder so as to enable Owner's Transponder to meet the C-Band Transponder Performance Specifications; (d) Monitoring and analyzing the Satellite's telemetry data; and (e) Other services provided for in this Agreement. ARTICLE 2. SERVICE FEE AND PAYMENTS The fee for the Services provided by Contractor hereunder (the "********" or "Service Fee") shall be as set forth in the Transponder Purchase Agreement, and, pursuant thereto, payment of the ******** to Contractor shall be the responsibility of HCG. ARTICLE 3. REPRESENTATIONS AND WARRANTIES Contractor and Owner each, except as expressly indicated herein, represent and warrant to, and agree with, the other that: ACK/shs: GCI.GX TSA.Orig 2 Thursday August 17, 1995 -- 3:30 pm 3.01 Authority. No Breach. It has the right, power and authority to enter into, and perform its obligations under, this Agreement. The execution, delivery and performance of this Agreement shall not result in the breach or nonperformance of any agreements it has with third parties. 3.02 Corporate Action. It has taken all requisite corporate (or partnership, as appropriate) action to approve the execution, delivery and performance of this Agreement, and this Agreement constitutes a legal, valid and binding obligation upon itself in accordance with its terms. 3.03 Common Clauses in Service Agreements. Contractor alone represents, warrants and agrees that it will require, in all service agreements between itself and all other Transponder owners on the Satellite, clauses substantially identical to, or terms the effect of which shall be as or more restrictive with respect to such owners than, the provisions of Sections 3.06,12.01 and 13.08 hereof, and Contractor will require, in all service agreements between itself and other Transponder owners on the Satellite, a clause consistent with the provisions of Sections 4.02 and 4.03 hereof. 3.04 Consents. The execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby, will not result in a material violation of, or material default under, or the occurrence of an event which with notice or lapse of time or both would constitute a material default under, or material noncompliance with, any applicable Law, any indenture, mortgage, deed of trust, loan agreement, purchase agreement, option agreement or other agreement or instrument to which it is a party or by which it or any material portion of its property is bound, its articles of incorporation or by-laws, partnership agreement, or other charter documents, as the case may be. All necessary or material appropriate public or private consents, permissions, agreements, licenses, or authorizations to which it is subject in connection with the transactions contemplated hereby, or which it must obtain by virtue of its ownership or use of or operation of any Transponder or the Satellite have been or shall be obtained in a timely manner. 3.05 Litigation. To the best of its knowledge, there is no outstanding or threatened judgment, threatened or pending litigation or proceeding, involving or affecting the transactions provided for in, or contemplated by, this Agreement, except as is concurrently being disclosed in writing by either party to the other. 3.06 Non-Interference. Owner alone represents, warrants and agrees that its radio transmissions (and those of its uplinking agents) to the Satellite shall comply, in all material respects, with all Federal Communications Commission or any successor agency thereto (collectively, the "FCC") and all other governmental (whether international, federal, state, municipal or otherwise) statutes, laws, rules, regulations, ordinances, codes, directives and orders, of any such governmental agency, body, or court (collectively, "Laws") applicable to it regarding the operation of the Satellite and Owner's Transponder and shall not interfere with the use of any ACK/shs: GCI.GX TSA.Orig 3 Thursday August 17, 1995 -- 3:30 pm other Transponder. Owner shall not utilize (or permit or allow any of its uplinking agents to utilize) any of Owner's Transponder in a manner which will or may interfere with the use of any other Transponder or cause physical harm to any of Owner's Transponder, any other Transponders, or to the Satellite. Further, Owner will coordinate (and will require its uplinking agents to coordinate) with HCG, in accordance with procedures reasonably established by HCG and uniformly applied to all owners and users of Transponders on the Satellite, its transmissions to the Satellite, so as to minimize adjacent channel and adjacent satellite interference. For purposes of this Section 3.06, interference shall also mean acts or omissions which cause a Transponder to fail to meet its transponder performance specifications. Without limiting the generality of the foregoing, Owner (and its uplinking agents) shall comply with all FCC rules and regulations regarding the use of automatic transmitter identification systems (ATIS). ARTICLE 4. OBLIGATIONS OF CONTRACTOR 4.01 Satellite. Contractor will maintain the Satellite in the orbital position which the FCC has designated or shall hereafter designate for it. 4.02 Use of the Transponder Spares. Throughout the Service Term, Contractor may employ, in conjunction with HCG, and pursuant to the specific terms and conditions in Section 9 of the Transponder Purchase Agreement, a Transponder Spare or Spares. 4.03 Reserve Transponders. Throughout the Service Term, Contractor may substitute, in conjunction with HCG, and pursuant to the specific terms and conditions in Section 9 of the Transponder Purchase Agreement, a Reserve Transponder or Reserve Transponders. Upon such substitution, such a Reserve Transponder shall be deemed to be a Owner's Transponder for the purposes of this Agreement. 4.04 Government Regulations. Contractor has or shall use its best efforts throughout the Service Term to obtain and maintain, in all material respects, all federal, state and municipal authorizations or permissions to operate the Satellite applicable to Contractor with respect to the Satellite, and to comply, in all material respects, with all such governmental regulations regarding the operation of Owner's Transponder applicable to Contractor with respect to the Satellite. 4.05 Tracking. Telemetry and Control. Contractor shall employ at least two earth stations which between them shall provide in conjunction with HCG's Operations Control Center in El Segundo, California, for all of the functions of tracking, telemetry and control ("TT&C") of the Satellite. Contractor shall notify Owner as to the operator (if other than Contractor) and the location of the two earth stations, and any changes thereto. ACK/shs: GCI.GX TSA.Orig 4 Thursday August 17, 1995 -- 3:30 pm ARTICLE 5. FORCE MAJEURE Any failure or delay of Contractor to provide Services shall not be a breach of this Agreement if such failure or delay results from any acts of God, governmental action or Law (whether in its sovereign or contractual capacity), or any other circumstances reasonably beyond the control of Contractor, including, but not limited to, earth station sun outage, weather, or acts or omissions of Owner or any third parties (excluding the Hughes Aircraft Company and all of its direct and indirect subsidiaries, and any other Affiliates of Contractor or the Hughes Aircraft Company with whom Contractor or the Hughes Aircraft Company contracts to provide the Services). ARTICLE 6. LIMITATION OF LIABILITY 6.01 General Limitation. ANY AND ALL EXPRESS AND IMPLIED WARRANTIES ARE EXPRESSLY EXCLUDED AND DISCLAIMED EXCEPT TO THE EXTENT SPECIFICALLY AND EXPRESSLY PROVIDED FOR IN THIS AGREEMENT. IT IS EXPRESSLY AGREED THAT CONTRACTOR'S SOLE OBLIGATIONS AND LIABILITIES RESULTING FROM A BREACH OF THIS AGREEMENT, AND OWNER'S EXCLUSIVE REMEDIES FOR ANY CAUSE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, LIABILITY ARISING FROM NEGLIGENCE) ARISING OUT OF OR RELATING TO THIS AGREEMENT AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY, ARE LIMITED TO THOSE SET FORTH IN SECTIONS 2 AND 6.02 HEREOF, AND ALL OTHER REMEDIES OF ANY KIND ARE EXPRESSLY EXCLUDED INCLUDING, WITHOUT LIMITATION, ALL RIGHTS AND REMEDIES OF OWNER UNDER DIVISION 10, CHAPTER 5, ARTICLE 2 AND SECTIONS 10209,10406 AND 10504 OF THE CALIFORNIA UNIFORM COMMERCIAL CODE. IN NO EVENT SHALL CONTRACTOR BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER FORESEEABLE OR NOT, OCCASIONED BY CONTRACTOR'S FAILURE TO PERFORM HEREUNDER, DELAY IN ITS PERFORMANCE, FAILURE OF THE OWNER'S TRANSPONDER TO PERFORM OR ANY OTHER CAUSE WHATSOEVER. CONTRACTOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, TO ANY OTHER PERSON OR ENTITY CONCERNING THE OWNER'S TRANSPONDER OR THE SATELLITE OR THE SERVICES, AND OWNER SHALL DEFEND AND INDEMNIFY CONTRACTOR FROM ANY CLAIMS MADE UNDER ANY WARRANTY OR REPRESENTATION BY OWNER TO ANY THIRD PARTY. THE LIMITATIONS OF LIABILITY SET FORTH HEREIN SHALL ALSO APPLY TO HUGHES AIRCRAFT COMPANY (THE MANUFACTURER OF THE SATELLITE AND OWNER'S TRANSPONDER) AND ALL AFFILIATES THEREOF. "Affiliate" means any corporation or other entity controlling, controlled by, or under common control with, Owner, Contractor, or the Hughes Aircraft Company, as the case may be. ACK/shs: GCI.GX TSA.Orig 5 Thursday August 17, 1995 -- 3:30 pm 6.02 Equitable Relief. Owner and Contractor shall each have the right to obtain injunctive relief, if necessary, in order to prevent the other party from willfully breaching its obligations under this Agreement or to compel the other party to perform its obligations under this Agreement. ARTICLE 7. REPORTS 7.01 Operational Reports. After commencement of the Services hereunder, Contractor shall provide Owner a monthly written operational report concerning the Satellite and Owner's Transponder which shall contain the following information: (a) Projected solar array life based on total Satellite power performance and communications payload requirements; (b) Projected battery life based on total Satellite power performance and communications payload requirements; (c) Projected Satellite life based on fuel remaining and its predicted utilization; (d) Configuration of Owner's Transponder and the associated Satellite supporting subsystems; (e) A statement on the expected operating life of Owner's Transponder and the basis for such a projection, taking into account the health of Owner's Transponder and its associated support subsystems; (f) The Satellite's orbital parameters; (g) Information concerning whether any Transponder Spares or Reserve C-Band Transponders have been employed on behalf of any owner or user; (h) Information concerning predicted eclipses and sun outages; and (i) Other information pertinent to the operation of Owner's Transponder and the Satellite that Owner may reasonably request. 7.02 Anomalous Operation Notification. Contractor shall notify Owner as soon as possible by telephone, with prompt written confirmation thereafter, of any significant anomalous condition which Contractor detects in Owner's Transponder or associated Satellite supporting subsystems and which have a material effect or potential material effect on the Satellite. Contractor shall also notify Owner promptly of any circumstances that make it clearly ascertainable or predictable that any of the incidents described in this Section 7.02 will occur. Any notice given to ACK/shs: GCI.GX TSA.Orig 6 Thursday August 17, 1995 -- 3:30 pm Owner under this Section 7.02 shall not relieve Contractor of any liability or obligation hereunder relating to such anomalous operation. 7.03 Maneuver Notification. To the extent operationally feasible, Contractor shall notify Owner of all Satellite maneuvers, except for routine stationkeeping, at least three days in advance of their scheduled initiation and, if such maneuver will result in a change of its assigned orbital position, promptly upon HCG's receipt of FCC authorization or direction of such maneuver. 7.04 lnspection Rights of Owner. Owner shall have the right to inspect the TT&C stations upon reasonable notice to Contractor and during normal business hours accompanied by an employee or agent of Contractor. Owner shall not have the right to inspect any TT&C station at any time or in any manner that could cause disruption to the operation of such TT&C station. Owner shall have the right to examine all test results and data relating to TT&C of or for Owner's Transponder on the Satellite. ARTICLE 8. CONFIDENTIALITY Contractor and Owner shall hold in confidence this Agreement, including the financial terms and provisions hereof, and all information provided to Owner hereby, and Contractor and Owner hereby acknowledge and agree that all information received in connection with or otherwise related to this Agreement, not otherwise known to the public, is confidential and proprietary and is not to be disclosed to third persons (other than to Affiliates, or to officers, directors, employees and agents of Contractor or Owner, each of whom is bound by this Article 8) without the prior written consent of both Contractor and Owner, except as follows: (a) to the extent necessary to comply with applicable Law, provided, that the party making such disclosure shall seek confidential treatment of such information; (b) as part of its normal reporting or review procedure to regulatory agencies, its parent company, its auditors and its attorneys, provided, the party making such disclosure to any such regulatory agency shall seek confidential treatment of such information, and, provided, that any other third party to whom disclosure is made agrees to the confidential treatment of such information; (c) in order to enforce its rights and/or perform its obligations pursuant to this Agreement; (d) to the extent necessary to obtain appropriate insurance, to its insurance agent, provided, that such agent agrees to the confidential treatment of such information; and ACK/shs: GCI.GX TSA.Orig 7 Thursday August 17, 1995 -- 3:30 pm (e) to the extent necessary to satisfy its obligations to other owners or users of the Transponders or to negotiate clauses that will be common to all transponder service agreements. ARTICLE 9. APPLICABLE LAW The existence, validity, construction, operation and effect of this Agreement shall be determined in accordance with and be governed by the laws of the State of California. ARTICLE 10. FURTHER NOTIFICATIONS Each party shall promptly notify the other party of any information delivered to or obtained by such party which would prevent the consummation of the transactions contemplated by this Agreement or would indicate a breach of the representations or warranties of any of the parties to this Agreement; provided that the failure so to notify will not constitute a waiver of such party's rights. ARTICLE 11. MODIFICATION In the event that the Transponder Purchase Agreement is modified or reconstituted in such manner as to affect provisions in this Agreement, then this Agreement shall be modified accordingly. ARTICLE 12. TERMINATION 12.01 Contractor's Termination Rights. If Owner's radio transmissions or those of its uplinking agent to or from the Satellite interfere, under standard engineering practice, with the use of any Transponder not owned by Owner located on the Satellite, or if Owner or its uplinking agent utilizes Owner's Transponder in a manner which interferes, under standard engineering practice, with the use of, or causes physical harm to, any other Transponder located on the Satellite, and such radio transmission or utilization by Owner does not cease immediately after the receipt of notice thereof from Contractor (which notice may, notwithstanding Section 13.03 hereof, be given to Owner by telephone to a telephone number provided to Contractor and maintained by Owner for the purpose of receiving such notices by Contractor, which telephone shall be continuously staffed by Owner so as to enable Owner to receive such notices at all times), Contractor shall have the right to take any and all steps necessary to terminate such radio transmission or utilization by Owner or its uplinking agent. Contractor shall have the further right to continue such steps so taken until such time as Owner's radio transmissions or those of its uplinking agent to or from the Satellite or Owner's utilization of its Transponder, as the case may be, shall not interfere, under standard engineering practice, with the use of any Transponder not owned by Owner located on the Satellite and shall not cause physical harm to any Transponder not owned by Owner on the Satellite or to the Satellite. ACK/shs: GCI.GX TSA.Orig 8 Thursday August 17, 1995 -- 3:30 pm 12.02 Contractor's Right to Deny Access. If HCG is entitled to prevent Owner from accessing any part or all of the Owner's Transponder pursuant to Section 10.06 of the Transponder Purchase Agreement, Contractor shall be entitled to take any and all steps necessary to terminate Owner's (or its uplinking agent's) radio transmission to or utilization of such Transponder. 12.03 Automatic Termination. This Agreement shall automatically terminate with respect to the Owner's Transponder if the Transponder Purchase Agreement is terminated, is canceled, or expires, with respect to such Owner's Transponder. ARTICLE 13. MISCELLANEOUS 13.01 Entire Agreement and Amendment. This Agreement and the Transponder Purchase Agreement constitute the entire agreement between the parties, and supersede all previous understandings, commitments or representations concerning the subject matter. This Agreement may not be amended or modified in any way, and none of its provisions may be waived, except by a writing signed by an authorized officer of the party against whom the amendment, modification or waiver is sought to be enforced. The parties each acknowledge that the other party has not made any representations other than those which are contained herein. 13.02 Non-Waiver of Breach. Either party hereto may specifically waive any breach of this Agreement by the other party, provided that no such waiver shall be binding or effective unless in writing and no such waiver shall constitute a continuing waiver of similar or other breaches. A waiving party, at any time and upon notice given in writing to the breaching party, may direct future compliance with the waived term or terms of this Agreement, in which event the breaching party shall comply as directed from such time forward. 13.03 Notices. (a) Each party shall provide the other party with a telephone number to be used for routine and emergency operational notifications, which telephone shall be continuously staffed so as to enable the receipt of such notices at all times. For routine notifications, any such telephonic notification shall be followed up with written notification as outlined in subparagraph (b) below. (b) All notices and other communications from either party to the other hereunder shall be in writing and shall be deemed received when actually received if personally delivered, upon acknowledgment of receipt if sent by facsimile, or upon the expiration of the third business day after being ACK/shs: GCI.GX TSA.Orig 9 Thursday August 17, 1995 -- 3:30 pm deposited in the United States mails, postage prepaid, certified or registered, addressed to the other party as follows. TO CONTRACTOR: If by mail: Hughes Communications Satellite Services, Inc. Post Office Box 92424 Worldway Postal Center Los Angeles, Califonia 90009 Attention: Senior Vice President - Galaxy Services cc: Assistant General Counsel If by FAX: Hughes Communications Satellite Services, Inc. Attention: Senior Vice President - Galaxy Services; (310) 607-4255 cc: Associate General Counsel (310) 607-4258 If by personal delivery to its principal place of business at: Hughes Communocations Satellite Services, Inc.: 1990 East Grand Avenue El Segundo, California 90245 Attention: Senior Vice President - Galaxy Services cc: Associate General Counsel TO OWNER: If by mail: GCI Communication Corp. 2550 Denali Street Suite 1000 Anchorage, AK 99503 Attention: Richard P. Dowling Senior Vice President If by FAX: GC1 Communication Corp. Attention: Richard P. Dowling Senior Vice President ACK/shs: GCI.GX TSA.Orig 10 Thursday August 17, 1995 -- 3:30 pm If by personal delivery to its principal place of business at: GCI Communication Corp. 2550 Denali Street Suite 1000 Anchorage, AK 99503 Attention: Richard P. Dowling Senior Vice President All payments to be made under this Agreement, if made by mail, shall be deemed to have been made on the date of actual receipt thereof. The parties hereto may change their addresses by giving notice thereof in conformity with this Section 13.03. l3.04 Severability. Nothing contained in this Agreement shall be construed so as to require the commission of any act contrary to any of the Laws, and wherever there is any conflict between any provision of this Agreement and any Law, such law shall prevail; provided, however, that in such event the provisions of this Agreement so affected shall be curtailed and limited only to the extent necessary to permit compliance with the minimum legal requirement, and no other provisions of this Agreement shall be affected thereby, and all such other provisions shall continue in full force and effect. Nothing contained herein shall affect the reconstitution provisions contained in Section 11 hereof. l3.05 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts together shall constitute but one and the same instrument. 13.06 Successors. Subject to the limitations on Transfer set forth in Section 13.10, this Agreement shall be binding on and shall inure to the benefit of any and all successors and assigns of the parties. 13.07 Rules of Construction and Headings. Any ambiguities shall be resolved without reference to which party may have drafted this Agreement. The description headings of the several sections and paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 13.08 No Third Party Beneficiary. The provisions of this Agreement are for the benefit only of the parties hereto and HCG, and no third party other than HCG may seek to enforce, or benefit from these provisions, except the both parties acknowledge and agree that the provisions of Section 3.06 hereof are intended for the benefit of both Contractor and all other Transponder owners and both parties agree that any other such Transponder owner shall have the right to enforce, as a third-party beneficiary, the provisions of Section 3.06 hereof, against Owner directly, in an action brought solely by such other Transponder owner, or may join with Contractor or any other Transponder owner or user in bringing an action against Owner for violation of such Sections. ACK/shs: GCI.GX TSA.Orig 11 Thursday August 17, 1995 -- 3:30 pm 13.09 Survival of Representations and Warranties. All representations and warranties contained herein or made by Contractor or Owner in connection herewith shall survive any independent investigation made by Contractor or Owner. 13.10 Transfer. (a) Except as otherwise permitted under the terms of the Transponder Purchase Agreement, Owner shall not Transfer (as defined in the Transponder Purchase Agreement) any of its rights and/or obligations under this Agreement except with the prior written consent of Contractor, which consent may be given or withheld in Contractor's sole and absolute discretion. In the event of any such Transfer by Owner, Owner shall remain fully liable along with its transferee for all its obligations under this Agreement and the Transponder Purchase Agreement. (b) Contractor may Transfer any or all of its rights and/or obligations under this Agreement to any Affiliate or any third party, provided, that no such Transfer by Contractor shall adversely affect Owner's rights or obligations hereunder, provided, further, that Contractor shall not Transfer any of its obligations under this Agreement to a non-Affiliate except with the prior written consent of Owner, which consent shall not unreasonably be withheld or delayed. In the event of any such Transfer by Contractor, Contractor shall remain fully liable for all its obligations under this Agreement. (c) Any purported Transfer by either party not in compliance with the provisions of this Agreement shall be null and void and of no force and effect. 13.11 Applicability to Galaxy IX. Pursuant to the provisions of Section 21 of the Transponder Purchase Agreement, Owner has the right to lease capacity on Galaxy IX (as defined in the Transponder Purchase Agreement) (or its replacement) under certain circumstances. Owner is still obligated to pay the ******** to the extent required under the Transponder Purchase Agreement for each such used transponder on Galaxy IX (the "Replacement Transponder") and the parties agree that the provisions of this Agreement shall apply to the Replacement Transponder, the phrase "Owner's Transponder", as used herein, shall be deemed to include Replacement Transponder, the term "Satellite" shall be deemed to include Galaxy IX, and the term "Transponders" shall mean all the transponders on any such satellite. ACK/shs: GCI.GX TSA.Orig 12 Thursday August 17, 1995 -- 3:30 pm IN WITNESS WHEREOF, each of the parties hereto has duly executed and delivered this Agreement as of the day and year first written above. "Contractor" HUGHES COMMUNICATIONS SATELLITE SERVICES, INC. By:/s/ Carl A. Brown Title:SVP "Owner" GCI COMMUNICATION CORP. By: /s/ Richard P. Dowling Title:Sr. Vice President ACK/shs: GCI.GX TSA.Orig Thursday August 17, 1995 -- 3:30 pm ADDENDUM I DEFINED TERMS TERM SECTION Affiliate...................................................................6.01 Agreement..........................................................Intro. Clause C-Band Transponders.....................................................Recitals Contractor.........................................................Intro. Clause Execution Date ....................................................Intro. Clause FCC ........................................................................3.06 HCG ....................................................................Recitals Ku-Band Transponders ...................................................Recitals Laws .......................................................................3.06 Owner .............................................................Intro. Clause Owner's Transponder .......................................................13.11 Replacement Transponder ...................................................13.11 Satellite ..............................................................Recitals Service Term ...............................................................1.01 Service Fee ...................................................................2 Services ...............................................................Recitals Transfer ..................................................................13.10 Transponders ...........................................................Recitals Transponder Performance Specifications ..................................1.02(c) Transponder Purchase Agreement .........................................Recitals Transponder Spares .....................................................Recitals Transponder Spare ......................................................Recitals ******** ......................................................................2 TT&C .......................................................................4.05 14 , 1995 Mr. Richard Dowling Senior Vice President GCI Communication Corp. 2550 Denali Street, Suite 1000 Anchorage, AK 99503 Re: Galaxy X Transponder Purchase Agreement Galaxy X Transponder Service Agreement Dear Mr. Dowling: Simultaneously with the execution of this letter, GCI Communication Corp., ("Buyer") has executed a Galaxy X Transponder Purchase Agreement (the "Agreement") with Hughes Communications Galaxy, Inc. ("HCG") and a Galaxy X Transponder Service Agreement (the "Service Agreement") with Hughes Communications Satellite Services, Inc. ("HCSS"). This letter does not supersede or amend the Agreement or the Service Agreement, but is intended to clarify the understanding of HCG and HCSS and Buyer with respect to the following provisions of the Agreement and the Service Agreement. All capitalized items not defined herein are as set forth in the Agreement and the Service Agreement. With respect to Section 7.02 of the Agreement and Section 3.06 of the Service Agreement, Buyer advises HCG and HCSS that Buyer has filed a waiver request with the FCC and that Buyer is awaiting the decision of the FCC. Buyer also advises HCG and HCSS that Buyer may file with the FCC various waiver request from time to time. Buyer's filing of such application and the operation by Buyer under the assumption that the waivers would be approved shall not constitute, or shall be deemed to constitute, a breach of the requirements as set forth in Section 7.02 of the Agreement and Section 3.06 of the Service Agreement for so long as (i) Buyer is otherwise in compliance with all Laws and (ii) Buyer does not utilize Buyer's Transponders in a manner which will or may cause interference with the use of any other Transponder or cause physical harm to any Transponder on the Satellite, the Satellite, or any other satellites. Mr. Richard Dowling , 1995 Page Two........... Buyer agrees to provide a copy of the waiver requests currently pending and any additional requests to be filed before the FCC that affect the use of Buyer's Transponders on the Satellite. Very truly yours, HUGHES COMMUNICATIONS GALAXY, INC. By:/s/ Carl A. Brown Title:SVP AGREED TO AND ACCEPTED: GCI COMMUNICATION CORP. By: /s/ Richard P. Dowling Title:Sr. Vice President EX-10 4 FRAMEWORK AGREEMENT EXHIBIT C FRAMEWORK AGREEMENT between National Bank of Alaska (NBA) and General Communication, Inc. (GCI)(1) - ------------------- (1) In this document "********" are used in place of redacted information. General Communication, Inc. (GCI) - 1 - FINAL v4.5 Framework Agreement 11/9/95 TABLE OF CONTENTS
SECTION PAGE 1. DEFINITIONS..................................................................................................5 2. STATUS.......................................................................................................6 3. STANDARDS....................................................................................................6 4. COMMENCEMENT, DURATION AND TERMINATION OF THIS AGREEMENT.....................................................7 5. SCOPE AND OBJECTIVES.........................................................................................8 6. STRATEGIC DIRECTION, TECHNICAL ARCHITECTURE AND SELECTION OF PRODUCTS.......................................9 7. ESTABLISHMENT OF A TELECOMMUNICATIONS REVIEW BOARD...........................................................9 8. SCOPE CHANGES...............................................................................................11 9. USE OF SERVICES.............................................................................................15 10. APPROVALS AND LICENSES......................................................................................15 11. WARRANTY AND BENCHMARKING...................................................................................16 12. ACQUISITION OF NEW TECHNOLOGY AND PROCESSES.................................................................16 13. ASSET AND LEASE TRANSFERS...................................................................................17 14. REMUNERATION................................................................................................18 15. TARGETS.....................................................................................................18 16. COSTS DEFINITIONS...........................................................................................19 17. MARGIN......................................................................................................21 18. RISK/REWARD INCENTIVES......................................................................................21 19. INVOICING AND SETTLEMENT....................................................................................23 20. TAX.........................................................................................................24 21. FINANCIAL AUDIT.............................................................................................26 22. SUB-CONTRACTORS.............................................................................................27 23. ASSIGNMENTS AND SUB-LETTING.................................................................................28 24. EMPLOYMENT OF FORMER NBA EMPLOYEES..........................................................................28 25. EMPLOYEE RELATIONS AND TRAINING.............................................................................28 26. CONTRACTOR'S PERSONNEL......................................................................................29 27. FATAL ACCIDENT, INJURY AND DAMAGE TO PROPERTY...............................................................29 28. INSURANCE...................................................................................................30 29. LIMITATION OF LIABILITY.....................................................................................30 30. INDEMNIFICATION.............................................................................................31 31. INDEPENDENT CONTRACTOR......................................................................................32 32. INTELLECTUAL PROPERTY RIGHTS................................................................................32 33. MINIMUM CONDITIONS OF SATISFACTION..........................................................................34 General Communication, Inc. (GCI) - 2 - FINAL v4.5 Framework Agreement 11/9/95 34. SECURITY....................................................................................................34 35. ACCESS......................................................................................................36 36. CONFIDENTIALITY.............................................................................................36 37. DATA PROTECTION.............................................................................................38 38. SECURITY AUDIT..............................................................................................38 39. COMMENCEMENT, DURATION AND TERMINATION OF CALL-OFF CONTRACTS...............................................39 40. REMEDIES....................................................................................................43 41. AUTHORITIES AND GUARANTEES..................................................................................44 42. FORCE MAJEURE...............................................................................................45 43. HEALTH AND SAFETY...........................................................................................45 44. PUBLICITY...................................................................................................45 45. NOTICES.....................................................................................................46 46. VARIATIONS..................................................................................................46 47. COMPLIANCE WITH LAWS, REGULATIONS AND ETHICS................................................................46 48. PROFESSIONAL FEES...........................................................................................47 49. SEVERABILITY................................................................................................47 50. APPLICABLE LAW AND JURISDICTION.............................................................................47 ANNEX A: GLOSSARY OF DEFINITIONS.......................................................................49 ANNEX B: SPECIMENS.....................................................................................54 ANNEX C: MINIMUM CONDITIONS OF SATISFACTION............................................................59 1. GENERAL....................................................................................60 2. BASIC SERVICE ELEMENTS.....................................................................61 3. QUALITY....................................................................................63 4. FLEXIBILITY FOR CHANGE.....................................................................64 5. PROCUREMENT................................................................................64 6. HUMAN RELATIONS AND PERSONNEL..............................................................64 7. COSTS......................................................................................65 ANNEX D: MODEL CALL-OFF CONTRACT AND SCHEDULES.........................................................67 1. DEFINITIONS................................................................................69 2. STATUS.....................................................................................69 3. PROVISION OF SERVICES......................................................................70 4. DURATION...................................................................................70 5. INVOICES AND PAYMENT.......................................................................70 6. MANAGEMENT ORGANIZATION....................................................................71 7. NO WAIVER..................................................................................71 8. SERVICE OF NOTICE..........................................................................71 General Communication, Inc. (GCI) - 3 - FINAL v4.5 Framework Agreement 11/9/95 9. FURTHER ASSURANCES.........................................................................72 10. GOVERNING LAW..............................................................................72 11. INVALIDITY.................................................................................72 12. ADDITIONAL TERMS AND CONDITIONS............................................................72 13. CONDITION PRECEDENT........................................................................72 SCHEDULE 1: SCOPE OF WORK............................................................74 SCHEDULE 2: SERVICE LEVELS...........................................................75 SCHEDULE 3: CHARGES AND BILLING INFORMATION..........................................76 SCHEDULE 4: NBA AND CONTRACTOR PREMISES..............................................77 SCHEDULE 5: INFORMATION RECORDS......................................................78 SCHEDULE 6: CONFIDENTIALITY LETTER...................................................79 SCHEDULE 7: ADDITIONAL TERMS AND CONDITIONS..........................................80 SCHEDULE 8: NBA OBLIGATIONS..........................................................81 SCHEDULE 9: LONG TERM CONTRACTS......................................................83 ANNEX E: MODEL TRANSFER AGREEMENT......................................................................83 1. INTERPRETATION.............................................................................85 2. CONDITION PRECEDENT........................................................................86 3. AGREEMENT FOR SALE AND TRANSFER............................................................86 4. TRANSFER CONSIDERATION.....................................................................87 5. COMPLETION.................................................................................87 6. CONTINUING CONTRACTS.......................................................................88 7. WARRANTIES.................................................................................89 8. NOTICES....................................................................................89 9. MISCELLANEOUS..............................................................................90 10. GOVERNING LAW..............................................................................90 SCHEDULE 1: THE TRANSFER EQUIPMENT...................................................91 SCHEDULE 2: THE TRANSFERRED SOFTWARE.................................................92 SCHEDULE 3: CONTINUING CONTRACTS.....................................................93 ANNEX F: GCI AND M&I SHARED RESPONSIBILITIES...........................................................94
General Communication, Inc. (GCI) - 4 - FINAL v4.5 Framework Agreement 11/9/95 THIS AGREEMENT is made the 31st day of October 1995. BETWEEN National Bank of Alaska whose registered offices are located at 301 West Northern Lights Blvd., Anchorage, Alaska 99503 (hereafter, "NBA") and General Communication, Inc. (GCI) whose registered offices are located at 2550 Denali St., Suite 1000, Anchorage, Alaska 99503 (hereafter, "The Contractor") WHEREAS A. NBA has determined that its interests might be best served commercially by the outsourcing of certain of its non-core Information Services (IS) activities, including telecommunications services. B. In pursuit of the objectives stated in A above, NBA has carried out extensive market research to assess objectively the capabilities of certain contractor companies. NBA now wishes to enter into individual agreements with several companies for the outsourcing of certain of the IS activities currently maintained within NBA. C. The Contractor and M&I Data Services, a division of the Marshall & Ilsley Corporation whose registered offices are located at 4900 W. Brown Deer Rd., Brown Deer, Wisconsin (hereafter, "M&I") have separately proposed to assume responsibility for certain of NBA's IS activities, including telecommunications services. D. The Contractor is prepared to provide the telecommunications services required by NBA in accordance with the terms of this Agreement. E. It is the intention of both NBA and the Contractor to agree to and record a detailed general basis of agreement in the terms set out below for incorporation into subsequent agreements between NBA and the Contractor as may be varied or altered as allowed pursuant to the terms of this Agreement. IT IS THEREFORE AGREED as follows: 1. DEFINITIONS 1.1. A glossary of definitions relating to this Agreement and attachments is appended hereto as Annex A. 1.2. "Party" shall mean either NBA or the Contractor. 1.3. "Parties" shall mean both NBA and the Contractor. General Communication, Inc. (GCI) - 5 - FINAL v4.5 Framework Agreement 11/9/95 2. STATUS 2.1. This Agreement shall operate as a framework agreement entered into between the Parties and shall specify the general terms, conditions and criteria that will apply in the event that NBA and the Contractor agree that the Contractor shall supply Services to NBA. Any subsequent agreement between NBA and the Contractor for the provision of Services shall be on the basis of the Model Call-Off Contract attached hereto in the form of Annex D together with, where appropriate, a transfer agreement in the form of the Model Transfer Agreement attached hereto as Annex E (together with a Call-Off Contract and as appropriate referred to as "Call-Off Contract") incorporating the terms of this Agreement subject to such change, addition, alteration, amendment and revision as might then be agreed between the Parties to a Call-Off Contract. 2.2. Pending and notwithstanding the execution of any Call-Off Contract, this Agreement and its associated rights and obligations takes effect upon signing by both Parties. In particular and for the avoidance of doubt, this Agreement shall cover a term of seventy-two (72) months plus an interim period extending from the date of signing of this Agreement through the commencement of the first Call-Off Contract. This Agreement is subject to the provisions of Sub-section 39.3.4 after 1996. The terms of this Agreement shall have effect as between the Parties to the extent that any of its terms are also incorporated in a Call-Off Contract and then only in the context of a Call-Off Contract. 2.3. At any given time during the term of this agreement, there shall only be one Call-Off Contract incorporating the telecommunications services to be delivered to all of NBA's sites in effect. 3. STANDARDS 3.1. It is intended by the Parties that the provision of the Services by the Contractor under a Call-off Contract to the levels specified in the Scope of Work and the Service Level Agreement requires superior performance and be to a standard which shall be interpreted and maintained in accordance with the following principles: 3.1.1. The Minimum Conditions of Satisfaction as set out in Annex C. 3.1.2. The application of high levels of professionalism, expertise and experience as are from time to time available within the telecommunications industry both within and outside of Alaska. General Communication, Inc. (GCI) - 6 - FINAL v4.5 Framework Agreement 11/9/95 3.1.3. Continuous improvement, innovation and development with regard to the quality and cost-effectiveness of the Services commensurate with the objective of delivering materially superior telecommunications services to NBA. 3.1.4. The delivery of "best-in-class" Services as defined in Annex C, Sub-section 3.3. Services will also be delivered consistent with Most Favored Nations pricing as outlined in Annex C, Sub-section 7.3. 3.1.5. The exercise of sound technical judgment on the part of the Contractor and the acquisition and exchange of technical information and best working practices among the Parties and other contractors engaged in the provision of the Services. 3.1.6. The maintenance of exemplary employee relations. 3.2. In recognition of the commitment on the part of the Contractor as expressed in Sub-section 3.1 above and, subject to the requirement that the Contractor can demonstrate to NBA's satisfaction that NBA is receiving good value for money, NBA for its part recognizes the need for the Contractor to maintain a reasonable rate of return. 3.3. In the event that the Incentive processes referred to in Section 18 do not result in a reasonable rate of return as set out in Sub-section 3.2 above the relevant Parties to a Call-Off Contract shall meet to discuss changes to such Call-Off Contract and implement such changes as may be mutually agreed to achieve the objectives of this Sub-section 3.3. 4. COMMENCEMENT, DURATION AND TERMINATION OF THIS AGREEMENT 4.1. As from the date hereof this Agreement shall remain current between the Parties both prior to and subsequent to the entry by the Contractor into any Call-Off Contract. During this time the Contractor shall continue to be represented by, or be entitled to appoint, Representatives to the Telecommunications Review Board. 4.2. This Agreement shall cover a term of seventy-two (72) months plus an interim period extending from the date of signing of this Agreement through the commencement of the first Call-Off Contract. This Agreement is subject to the provisions of Sub-section 39.3.4 after 1996. General Communication, Inc. (GCI) - 7 - FINAL v4.5 Framework Agreement 11/9/95 5. SCOPE AND OBJECTIVES 5.1. The scope of the Services shall be as specified in a Call-Off Contract subject to the conditions set out in this Section 5. 5.2. The full and complete achievement of the intent of this Agreement and the performance of the Services will be facilitated by the formation of a Telecommunications Review Board, as specified in this Agreement and in a Call-Off Contract, which shall ensure that all decisions and actions of the Parties which relate to the Services fully recognize the commitments, express objectives and the obligations of NBA and the Contractor under a Call-Off Contract. 5.3. NBA has agreed to the terms and conditions of this Agreement on the understanding that the Contractor is able to perform the Services and that the Contractor will use and show all reasonable skill and judgment consistent with such ability in the performance of the Services. All Services shall be performed in accordance with the terms of this Agreement and a Call-Off Contract and in accordance with professional telecommunications practice. 5.4. Where services provided by a Third Party under contract to NBA will be utilized by the Contractor in the provision of the Services the Contractor shall undertake to review with NBA, subject to the requirements of Section 37, the service description contained in NBA's contract with such Third Party to ensure that service levels specified therein are consistent with those required by the Contractor in order to meet the Service Levels. The Contractor shall be ultimately responsible for ensuring that such third parties meet or exceed such service levels. 5.5. The Contractor acknowledges that its provision of Services may result in certain areas of shared responsibility with M&I. Areas of shared responsibility have been identified by the Contractor and M&I and are presented in Annex F. For each shared responsibility, an explanation of single point accountability is also provided in Annex F. For those areas noted as Contractor single point accountability and those shared areas where Contractor is noted as being primarily responsible, Contractor shall have the ultimate obligation to ensure such Services are performed in accordance with this Agreement and any Call-Off Contract. General Communication, Inc. (GCI) - 8 - FINAL v4.5 Framework Agreement 11/9/95 6. STRATEGIC DIRECTION, TECHNICAL ARCHITECTURE AND SELECTION OF PRODUCTS 6.1. The Contractor will assist in the production and implementation of a telecommunications strategy aimed at cost-effective support for the NBA business strategy. The Contractor acknowledges that NBA has the ultimate authority in strategic direction and will, in the provision of the Services, comply with formally promulgated NBA IS policies and standards as amended from time to time. Both NBA and the Contractor will endeavor to inform each other in a timely manner of any fundamental policy changes or constraints which will affect the implementation of the telecommunications strategy. 6.2. In collaboration with designated NBA management personnel and M&I technical consultants, the Contractor will recommend for a Call-Off Contract and NBA will approve, at its discretion, appropriate technical architectures and products (excluding consumables) to be used in providing the Services. 6.3. In the event that the activities referred to in Sub-sections 6.1 and 6.2 are outside the Scope of Work, the Contractor may charge separately for carrying out such work but will not proceed without the prior written agreement of NBA. 7. ESTABLISHMENT OF A TELECOMMUNICATIONS REVIEW BOARD 7.1. NBA, M&I and the Contractor shall participate in a Telecommunications Review Board (the "Board") which will meet to: 7.1.1. Consider any operational matters referred by NBA management, 7.1.2. Review each Party's performance against their respective obligations to provide the Services under this Agreement and a Call-Off Contract, 7.1.3. Review and recommend for approval by the Parties any amendments or modifications to the scope or terms of this Agreement, 7.1.4. Review and recommend for adoption by the Parties minimum standards and guidelines for performance measurement against industry benchmarks, 7.1.5. Endeavor to resolve any matters of interpretation, disputes, disagreements or defaults arising under this Agreement or referred to by NBA management, General Communication, Inc. (GCI) - 9 - FINAL v4.5 Framework Agreement 11/9/95 7.1.6. Make recommendations to NBA management to stop, suspend or modify any practice or component of the Services, 7.1.7. Perform such other duties or responsibilities as are delegated by NBA and the Contractor to the Board, 7.1.8. Request from NBA management such reports and information as it considers reasonable and necessary to perform its duties, and 7.1.9. Facilitate the relationship between the Parties to ensure that the spirit of the provisions of Annex C are achieved. For the avoidance of doubt, whenever there is reference to a recommendation being made by the Board, no change shall be effected unless agreed to in writing between NBA and the Contractor; 7.2. Composition and Responsibilities 7.2.1. The Board shall comprise Representatives nominated by NBA, M&I and the Contractor pursuant to this Agreement. The Board shall be chaired by an NBA Representative. 7.2.2. If a Representative is unable to perform his or her duties or leaves the employment of either NBA or Contractor, as applicable, then the Party which has the resulting vacancy on the Board will nominate a replacement Representative within twenty (20) business days to fill such vacancy. 7.2.3. The Contractor's continued membership of the Board shall be dependent upon the existence of: 7.2.3.1. A current and subsisting Call-Off Contract to which the Contractor is party; or, 7.2.3.2. Negotiations between the Contractor and NBA with the objective of entering into a Call-Off Contract. If neither of the conditions expressed in Sub-sections 7.2.3.1 to 7.2.3.2 above shall apply the Contractor's Representative shall resign from the Board such resignation to be without prejudice to any other rights and obligations under any Call-Off Contract. 7.2.4. The Board shall be responsible for the evaluation of the Service Level Agreement as defined in Annex A and amended in a Call-Off Contract for the purpose of determining the Contractor's Risk/Reward Incentive payment as outlined in Sub-section 18.1.3. General Communication, Inc. (GCI) - 10 - FINAL v4.5 Framework Agreement 11/9/95 7.3. Nomination of Representatives 7.3.1. NBA and the Contractor shall, by written notice of nomination copied to other parties entitled to nominate Representatives, nominate within twenty (20) business days of the commencement date of this Agreement their Representatives to the Board. The Parties may change their Representatives at any time by giving written notice to each other but the Parties agree that the Representatives will have full power and authority on behalf of the Party which authorized their nomination to make recommendations and otherwise deal with all matters that are within the cognizance of the Board under this Agreement. 7.3.2. The role and/or presence of either Party's Representative shall not in any way relieve either Party of their respective obligations under a subsisting Call-Off Contract. 7.3.3. NBA retains the right to refuse participation by any individual representative on the Telecommunications Review Board. 7.4. Frequency of Meetings of the Board Meetings of the Board shall take place quarterly or otherwise as determined by the Board provided always that any Representative may request a meeting at any time upon giving twenty (20) business days notice to other Representatives. The location and manner of meetings will be determined by the Board. 7.5. Costs Each Party which has Representatives to the Board shall be responsible for all costs and other expenses associated with the attendance of their respective Representatives at Board meetings and such costs and expenses shall not form any part of Actual Costs. 8. SCOPE CHANGES 8.1. General This Agreement sets out the procedures for changing the scope of the Services. Both Parties (which in the context of this Section shall mean the Parties to this Agreement and a Call-Off Contract) recognize that the mutual success of this relationship requires that each be motivated to keep Major Changes to a minimum in order to continuously manage costs associated with Targets while maintaining or improving NBA's use of and access to improved telecommunications technologies. General Communication, Inc. (GCI) - 11 - FINAL v4.5 Framework Agreement 11/9/95 8.1.1. NBA commits to implementing as part of the NBA Partner Relations Manager's personal objectives the aim of continuously managing, in conjunction with the Contractor, the Actual Costs consistent with providing the Services in accordance with a relevant Call-Off Contract. 8.1.2. A Major Change means any event or series of events which materially increases or decreases the scope of the Services and/or the Contractor's Actual Cost. 8.1.3. It is envisioned that Major Changes will be infrequent. 8.1.4. All proposals for Major Changes shall be reviewed by the Telecommunications Review Board when so requested by NBA management. 8.1.5. The work undertaken by the Contractor in carrying out changes which are not Major Changes and in subsequently providing the Services subject to such changes, shall not result in any variation to the Target. 8.1.6. All changes shall be agreed to by the Parties and subject to Operational Change Control Procedures to be agreed between NBA and the Contractor and incorporated in the relevant Scope of Work and/or Service Level Agreement. 8.2. Major Changes 8.2.1. Either Party may raise a proposal for consideration by the other to modify, change, reduce, add to or replace the Services in a manner which that Party considers may constitute a Major Change. Such proposal shall be presented for discussion at a meeting of the NBA management chaired where appropriate by the designated NBA Partner Relations Manager as defined in Annex A. The cost of preparing and presenting the proposal shall be borne by the Party raising the proposal. In the event that NBA requests the Contractor to prepare a proposal involving significant costs in its preparation, the Contractor may request reimbursement of such costs. 8.2.2. The Contractor shall supply NBA with such information as NBA may reasonably request to substantiate any costing furnished under this Sub-section 8.2. General Communication, Inc. (GCI) - 12 - FINAL v4.5 Framework Agreement 11/9/95 8.3. Contractor's Internal Changes Subject to Operational Change Control Procedures the Contractor shall be entitled to modify, change, add to, reduce or replace the means and/or method of providing the Services, provided that any such modification, change, addition, reduction or replacement has been agreed to with the NBA Partner Relations Manager and M&I Representatives and can be achieved within the Target and does not detract from, reduce or impair the overall performance or operation of the Services, or require any material alteration to the physical interface or protocol used by NBA in using the Services. In the event that such proposed change is rejected by NBA, the Parties will meet to discuss in good faith and agree to an equitable adjustment of the Target. 8.4. Implementation of Major Changes 8.4.1. NBA shall have the right to invite quotations from Third Parties for the development, testing and implementation of any Major Change to the Services. For the avoidance of doubt within this Sub-section 8.4, Services are those defined in Annex A. NBA may at its sole discretion award such Major Change to a Third party subject to the following: 8.4.1.1. If the Services associated with the Major Change include Network Services as defined in Annex A and the Contractor can provide the Services at a cost and quality level equal to that offered by a Third Party, the Contractor will be awarded the Major Change; 8.4.1.2. If the Services associated with the Major Change include Network Services as defined in Annex A and if the Contractor cannot provide the services at a cost and quality level equal to that offered by a Third Party, the Contractor shall have the right to either: (i) sub-contract the Services with a Third Party subject to the provisions of Section 22; or (ii) serve as NBA's agent in acquiring the Services from a Third Party treating such services in accordance with Section 22, provided, however that NBA must preapprove any agreement with any Third Party in writing. 8.4.1.3. If the Services associated with the Major Change do not include Network Services as defined in Annex A and the Contractor can provide the Services at a cost and quality level equal to that offered by a Third Party, the Contractor will be awarded the Major Change, subject to the right of NBA to make adjustments to the Contrac- General Communication, Inc. (GCI) - 13 - FINAL v4.5 Framework Agreement 11/9/95 tor's Scope of Work during negotiation of a subsequent Call-Off Contract in accordance with Sub-section 39.3.4. 8.4.1.4. If the Services associated with the Major Change do not include Network Services as defined in Annex A and if the Contractor cannot provide the Services at a cost and quality level equal to that offered by a Third Party, NBA shall have the right to either: (i) permit the contractor to sub-contract the Services with a Third Party subject to the provisions of Section 22; or (ii) NBA will have the right to assume responsibility for the Services subject to the provisions of Sub-section 8.4.2. 8.4.2. If the Parties have agreed to a Major Change, then the Contractor shall carry out the implementation plan and the Target shall be adjusted in accordance with the proposal. 8.4.3. Following the completion of the implementation phase, the Service Description shall be changed so that it includes a description of the change which has been implemented. 8.5. Implementation of Related Work by a Third Party 8.5.1. NBA shall have the right to instruct a Third Party to carry out work related to (but not part of) the Services for which that Third Party has submitted a quotation acceptable to NBA. 8.5.2. In such event the Contractor shall provide such assistance as reasonably necessary for the implementing of such work as part of the Services, including, without limitation, assistance and facilities to enable the Third Party if necessary to carry out live system testing in relation to such work. The Contractor shall use all reasonable endeavors to ensure that such assistance is provided by the staff to be made available by the Contractor pursuant to the Services. 8.5.3. Subject to the Contractor's reasonable management requirements and to Operational Change Control Procedures, the Contractor shall permit the Third Party to use the Contractor Equipment and the Network for system testing purposes, under the terms of a Call-Off Contract, at times to be agreed between the Third Party and the Contractor, such agreement not to be unreasonably withheld or delayed. 8.5.4. To the extent that any activity during the development, testing, acceptance and subsequent implementation of a change by a Third Party impacts upon the Scope of Work, Actual Costs or the General Communication, Inc. (GCI) - 14 - FINAL v4.5 Framework Agreement 11/9/95 Service Levels the same shall be amended, upon mutual agreement, and the Target adjusted retroactively to the date of impact of the said change. NBA shall ensure that the Third Party performs in a manner consistent with quality standards and Operational Change Control Procedures under a Call-Off Contract. For the avoidance of doubt any responsibilities upon NBA under this Sub-section 8.5.4 shall be at an end from the date or point upon which the Contractor has agreed to such amendments and adjustments. 9. USE OF SERVICES 9.1. NBA shall undertake to use the Services in accordance with such reasonable operating instructions as may be notified in writing or orally (confirmed in writing) to NBA by the Contractor. 9.2. Without limitation to the generality of Sub-section 9.1, NBA and the Contractor shall undertake individually to use their respective best endeavors to ensure that the Services are not used: 9.2.1. For the transmission of any material which is defamatory, offensive or abusive or of an obscene or menacing character; or 9.2.2. In a manner which constitutes a violation or infringement of the rights of any person, firm or company (including but not limited to rights of copyright or confidentiality). 9.3. The Parties shall indemnify and hold each other harmless against all liabilities, claims, damages, losses and proceedings in any jurisdiction arising out of or in any way connected with their respective failure to comply with the obligations referred to in Sub-section 9.2. 10. APPROVALS AND LICENSES 10.1. Subject to Sub-section 10.2 the Contractor shall ensure, maintain, and observe all relevant regulatory, administrative, and governmental licenses, waivers, consents, registrations and approvals (collectively "Approvals") (including making any notifications) necessary for NBA and Authorized Users to make use of the Services and to allow the Contractor to provide the Services. 10.2. The Parties recognize that certain Approvals can, by their very nature, only be obtained by NBA or relate solely to NBA's ability to make use of the Services provided by the Contractor. In such event NBA shall obtain the necessary Approvals. General Communication, Inc. (GCI) - 15 - FINAL v4.5 Framework Agreement 11/9/95 10.3. The Contractor has an obligation to point out such approvals to NBA and assist NBA to comply as required. 10.4. Each Party shall indemnify the other against all claims, costs, liabilities and expenses they may suffer as a result of a Party failing to observe its obligations pursuant to this Section 10. For the avoidance of doubt the requirements set out in this Section shall not diminish or expand the obligations of any Party to a relevant Call-Off Contract. 11. WARRANTY AND BENCHMARKING 11.1. The Contractor shall implement a quality management program that is consistent with the minimum standards of ISO 9000 or similar industry quality standard and shall provide copies of all quality management documents to NBA upon request. 11.2. NBA shall have the right to compare and measure the Services provided pursuant to a Call-Off Contract against services of comparative quality and scope available from Third Parties operating in the same marketplace. In the event that a substantial and material differential shall be identified between the cost and/or quality of providing the Services compared with the costs and/or quality available from such Third Parties, the Contractor shall review NBA's conclusions and shall implement agreed to changes (if any), consistent with Section 22, to a relevant Call-Off Contract within a reasonable period of time to bring down the cost of the Services and/or to adjust the quality of the Services in line with the external marketplace. 12. ACQUISITION OF NEW TECHNOLOGY AND PROCESSES 12.1. It is envisioned that the provision of the Services in accordance with the terms of this Agreement and the Call-Off Contracts will commit the Contractor to the awareness and use where appropriate of advanced state of the art technology and processes available from time to time in the telecommunications industry world-wide. The Contractor shall commit to the evaluation of such state of art technology and processes including established technology and processes where it can be shown that its application to the Services will provide NBA with improvements in cost benefit or performance provided that where NBA requests such evaluation the Contractor may charge separately for carrying out such work and shall not proceed without the agreement of NBA. 12.2. To the extent that the Contractor shall be required to provide the Services in conjunction with Third Parties the Contractor shall investigate General Communication, Inc. (GCI) - 16 - FINAL v4.5 Framework Agreement 11/9/95 and endeavor to adopt measures to maintain the Contractor's competitiveness with such Third Parties with the objective of achieving the best level of savings consistent with the provision of Services at the quality levels envisioned under this Agreement. The processes and measures adopted by the Contractor in compliance with this objective shall be in full compliance with applicable legislation. 13. ASSET AND LEASE TRANSFERS 13.1. The Contractor shall in relation to a Call-Off Contract be entitled to identify existing NBA owned assets and leases which are in the reasonable judgment of the Contractor required for the purposes of the Services. 13.2. NBA shall endeavor to comply with the Contractor's requirements referred to in Sub-section 13.1 above provided that NBA shall be under no obligation to sell, transfer or assign any asset or lease if NBA is unable or is otherwise prejudiced to comply with the said requirements. In the event that NBA shall not for whatever reason transfer, assign or otherwise make available such an asset which the Contractor and NBA agree to is necessary for the provision of the Services, NBA shall, at its option, provide for access by the Contractor to such asset as may be reasonably necessary to provide the Services or allow the Contractor to procure an alternative asset in accordance with Sections 9 and 14. Notwithstanding the preceding sentence it is expressly acknowledged that wiring and other like fixtures integral to NBA premises will always be excluded as assets capable of transfer or sale. Furthermore NBA shall be entitled to specify that any particular asset sold, transferred or assigned may not be used by the Contractor for Third Party business purposes. 13.3. In cases where NBA and the Contractor can reach agreement in relation to the sale, transfer or assignment of an asset or lease, the Parties shall agree to a consideration based on the market value of the asset or lease or such other basis of consideration as shall optimize the transaction with the objective of reducing the Actual Cost of the Services. In the event that the consideration agreed to shall be other than at zero or nominal value the consideration shall be charged back to NBA as part of the Services at a rate sufficient to recover the full cost to the Contractor of the acquisition of the asset or lease over the agreed to remaining useful life of the asset or lease. The transfer of any such asset or lease shall be governed by the terms of Annex E. General Communication, Inc. (GCI) - 17 - FINAL v4.5 Framework Agreement 11/9/95 13.4. Where any Contractor Equipment is retained or located at a NBA location, risk in such Contractor Equipment will remain with the Contractor provided that NBA shall comply with such reasonable duties of care as the Contractor may specify in respect of such Contractor Equipment. 14. REMUNERATION 14.1. The Parties shall agree to a methodology for remuneration to the Contractor which recognizes the principles in Section 3. The elements of the remuneration shall comprise Actual Costs, a fixed Margin and Incentives based on performance relative to agreed to Targets, subject to adjustments in accordance with Sub-section 18.1.3. 14.2. For each Year, or for such other period as may be agreed between the Parties to a Call-Off Contract, a Target, Margin and Incentives will be agreed. The Parties to a Call-Off Contract shall exercise commercially reasonable efforts to reach agreement on such matters no later than September 30 in the current Year. In the event that the Parties fail to reach agreement on either the Target, the Margin or the Incentives by September 30 in the current Year the Parties shall immediately thereafter refer the disagreement to the Telecommunications Review Board for discussion and subsequent recommendation. If the Telecommunications Review Board cannot agree to a recommendation or if the Parties cannot accept the recommendation made, or otherwise agree, prior to December 31 in the current Year a failure to agree shall then exist and the relevant Call-Off Contract shall be subject to termination in accordance with Section 39. 14.3. An illustration of the way in which it is envisioned the Charges will be calculated and paid is set out in Annex B. 15. TARGETS 15.1. For each Year of a Call-Off Contract, or for such other period as may be agreed to between NBA and the Contractor, a Target as defined in Annex A will be agreed. 15.2. In 1996, NBA and the Contractor shall in respect of the Services to be provided agree to an overall Target. The Contractor shall provide the Services at a total charge to NBA which shall enable NBA to achieve its expectation of savings. The total charge to NBA, or Target, includes the Contractor's Expected Cost of Operations (CoOE) as defined in Annex A less ********, whichever is greater. General Communication, Inc. (GCI) - 18 - FINAL v4.5 Framework Agreement 11/9/95 15.3. In 1997 and beyond, NBA and the Contractor shall in respect of the Services to be provided agree to an overall Target. The Contractor shall provide the Services at a total charge to NBA which shall enable NBA to continue to achieve its expectations of savings. Under the terms of this Sub-section, the Target will include: ********. 16. COSTS DEFINITIONS 16.1. Actual Costs incurred by the Contractor in providing the Services shall comprise Direct Costs, Sub-contractor Costs and Network Services Costs as follows: 16.1.1. Direct Costs means all costs incurred by the Contractor which are solely and directly attributable to the provision of the Services pursuant to a Call-Off Contract, such costs to include by way of example but not by way of limitation: 16.1.1.1. Salaries of all employees of the Contractor which shall be deemed to include, without limitation, all personal benefits and expenses as incurred in the performance of the Services under the Call-Off Contract together with employer's insurance or other employer's social security contributions, and employer's contribution to employee pension benefits. 16.1.1.2. Costs of network, desktop and computing equipment; 16.1.1.3. Costs of software purchase, licenses and maintenance; 16.1.1.4. Costs of depreciation and lease rentals related to assets used in the provision of the Services, licenses and maintenance in respect of such assets; 16.1.1.5. Costs for designated network operation and technical services provided on-demand based upon actual time and materials required as outlined in Annex C; 16.1.2. Sub-contractor costs which will include the costs to the Contractor for services obtained from a Sub-contractor which are solely and directly attributable to the provisions of services pursuant to a Call-Off Contract, plus ******** handling fee and General Communication, Inc. (GCI) - 19 - FINAL v4.5 Framework Agreement 11/9/95 shall be included within the structure of the Contractor's monthly invoice; 16.1.3. Network Services Costs means those costs for services provided by the Contractor which are solely and directly attributable to the provision of the Services pursuant to a Call-Off Contract, such services to include by way of example but not by way of limitation; 16.1.3.1. Network Management Services including monitoring, reactive and proactive management and configuration management; 16.1.3.2. Message Toll Services (long distance); 16.1.3.3. Public or private data network services, including but not limited to private leased lines and frame relay. 16.2. The Contractor's, or Contractors Associated Companies, corporate or head office overheads shall not form any part of the Direct Costs. By way of illustration and not by way of limitation, corporate or head office services under the following generic business activities are excluded: 16.2.1. Finance and Planning 16.2.2. Marketing and Sales 16.2.3. Human Resources 16.2.4. Contracts and Procurement 16.2.5. Internal and External Audit 16.2.6. Legal 16.2.7. Public Affairs 16.2.8. Corporate, General and Executive Management 16.2.9. Corporate Offices and Associated Costs This is provided that in the case of Sub-sections 16.2.1, 16.2.3, 16.2.4 and 16.2.6 above an appropriate proportion of such overhead costs may be treated as Direct Costs for specific cases provided such costs have been identified and agreed to in writing in advance and have been incorporated in the Target for that Year. Such costs shall be determined in the manner set out in Sub-section 16.1.1.1. General Communication, Inc. (GCI) - 20 - FINAL v4.5 Framework Agreement 11/9/95 17. MARGIN 17.1 The Margin shall, over the term of this Agreement and the Call-Off Contracts, be determined for each Year at levels in accordance with the following: 17.1.1. In 1996, a margin of ********. 17.1.2. In 1997, a margin of ********. 17.1.3. In 1998 - 2001, margin increases above those referenced for the current year will occur as outlined for the following conditions: 17.1.3.1. If the current year's Target is not met, no increase will be applicable in the subsequent year; 17.1.3.2. If the current year's Target is met, an increase of ******** will be applicable in the subsequent year; or 17.1.3.3. If the current year's Target is under-run by ******** of the Target or more, an increase of ******** will be applicable in the subsequent year. 17.2. In respect of the Year 2002 and each subsequent Year, NBA and the Contractor will commence discussions with a view to agreeing to the Margin for such Year in the preceding Year. 17.3. Margins shall be applicable against all direct costs as outlined in Section 16. 17.4. The Margin will be payable in twelve amounts as part of the monthly invoices referred to in Section 19. 18. RISK/REWARD INCENTIVES 18.1. As a part of remuneration assessed in accordance with this Agreement, the Contractor shall be entitled, if the Actual Costs plus Margin incurred shall be less than the Target in a Year ("cost underrun"), to an Incentive based on the difference between the Target and the Actual Costs plus Margin incurred. The Incentive payment related to such cost underrun shall be a percentage of such cost underrun, such percentage to be determined in accordance with the provisions of Sub-sections 18.1.1 and 18.1.3. In the event that the Actual Costs plus Margin incurred shall exceed the Target in a Year ("cost overrun"), the Contractor and NBA shall share such cost overrun, by the payment by Contractor of an Incentive equal to a percentage of such cost overrun, such percentage to be in accordance with the provisions of Sub-section 18.1.2. General Communication, Inc. (GCI) - 21 - FINAL v4.5 Framework Agreement 11/9/95 18.1.1. Where there is a cost underrun, the Incentive shall be the Contractor's share of such cost underrun and paid by NBA to the Contractor, determined as follows: Agreement NBA's Contractor's Year Share Share --------- ----- ------------ 1996 **** **** 1997 **** **** 1998 **** **** 1999 **** **** 2000 **** **** 2001 **** **** 18.1.2. Where there is a cost overrun, the Incentive shall be the Contractor's share of such cost overrun and paid by the Contractor to NBA, determined as follows: Agreement NBA's Contractor's Year Share Share --------- ----- ------------ 1996 **** **** 1997 **** **** 1998 **** **** 1999 **** **** 2000 **** **** 2001 **** **** 18.1.3. Service Level Performance Evaluation 18.1.3.1. Payment of Incentives as defined in Sub-section 18.1.1 shall be subject to the Contractor's Service Level performance. 18.1.3.2. Specific Service Level performance evaluation methodology will be included in each Call-Off Contract. General Communication, Inc. (GCI) - 22 - FINAL v4.5 Framework Agreement 11/9/95 18.1.3.3. The Contractor must meet or exceed Service Levels defined in Annex C and amended in a Call-Off Contract in order to receive ******** of the Risk/Reward Incentive as defined in Sub-section 18.1.1. 18.1.3.4. The Risk/Reward Incentive that may be due the Contractor at the conclusion of a Call-Off Contract may be reduced by the Telecommunications Review Board based upon criteria outlined in the Call-Off Contract. The disbursement of any Incentive payment shall be the responsibility of the Telecommunications Review Board. 18.2. For the avoidance of doubt no payments shall by virtue of this Agreement be due from NBA to the Contractor in respect of the Services unless mutually agreed to by the Parties but shall instead be dependent upon the existence of an obligation to make payments in a Call-Off Contract between NBA and the Contractor and only to the Parties to such Call-Off Contracts. 18.3. In the event that the Contractor shall in the provision of the Services have obtained or procured services from Third Parties, NBA shall be under no obligation nor have any responsibility which would otherwise have been due to the Contractor. Furthermore the Contractor shall ensure that such payments are made in a timely manner and in accordance with a mechanism which will not in its operation prejudice the objectives of NBA under this Agreement or a Call-Off Contracts. 19. INVOICING AND SETTLEMENT The Contractor shall in respect of its remuneration for the Services submit its invoices in accordance with the provisions of a Call-Off Contract subject to the following: 19.1. Invoices submitted by the Contractor will show the Margin and applicable costs. 19.2. In addition to the requirements of Sub-section 19.1 the invoices will show cumulative Actual Costs plus Margin to the end of the latest invoicing period for which Actual Costs and Margin are available. 19.3. The basis of payment shall, subject to Sub-sections 19.4 and 19.5 below, be monthly based upon Services delivered. The Contractor shall submit the relevant invoice no later than fifteen (15) calendar days after the end of the relevant month or as otherwise mutually agreed. General Communication, Inc. (GCI) - 23 - FINAL v4.5 Framework Agreement 11/9/95 19.4. Notwithstanding Sub-section 19.3 above, payments representing Incentives referred to in Section 18 will be paid in arrears no later than ninety (90) calendar days after the end of the relevant Year by which time final adjustments for Actual Costs will also be completed. Such final adjustment will be determined as follows: Aggregate Actual Cost + Margin +/- Incentive - Actual Payments 19.5. Subject to Sub-section 19.3 above, the Contractor's invoice will be paid no later than thirty (30) calendar days following receipt of the invoice for the relevant month. 19.6. Payment of Taxes 19.6.1. All sums due to the Contractor under a Call-Off Contract are exclusive of any sales tax, and any other similar taxes which may from time to time be introduced, which shall be charged thereon in accordance with the relevant regulations in force at the time of making the taxable supply, and shall be paid by NBA. 19.6.2. Valid tax invoices shall be issued in respect of all payments due under a Call-Off Contract and shall conform with relevant fiscal requirements. 19.6.3. The Contractor shall indemnify NBA in respect of any penalties or interest charges incurred consequent upon any error or omission by the Contractor. 19.7. In the event that Charges and other amounts are not paid in accordance with the provisions of this Section 19 either Party to a Call-Off Contract may subject to ten (10) calendar days notice given in writing to the other Party, and failing receipt of moneys due within said notice period and without prejudice to any other rights or remedies available under a Call-Off Contract, charge daily compounding interest on legitimate outstanding undisputed amounts, until payment in full is received from the other Party, at a rate equal to ******** above Prime Lending Rate per annum (or as otherwise agreed between the Parties) current from time to time, whether before or after judgment. Interest shall continue to accrue unless and until payment is made notwithstanding termination of a Call-Off Contract for any cause whatsoever. General Communication, Inc. (GCI) - 24 - FINAL v4.5 Framework Agreement 11/9/95 19.8. In the event that Charges and other amounts are not paid in accordance with the provisions of this Section 19 either Party to a Call-Off Contract may subject to ten (10) calendar days notice given in writing to the other Party, and failing receipt of moneys due within said notice period and without prejudice to any other rights or remedies available under a Call-Off Contract, place the disputed amounts in an Escrow account until the dispute can be resolved. 20. TAX 20.1. The Contractor shall supply and shall ensure that any Associated Companies of the Contractor engaged in relation to the Services shall supply to NBA such information (including documentary information) in connection with its or their activities under or pursuant to the Call-Off Contract as may be required by NBA. 20.2. The Contractor shall retain, and shall ensure that Associated Companies shall retain, all information and documents as shall enable the Contractor to comply with its obligations under Sub-section 20.1. 20.3. The Contractor shall duly pay and shall ensure that each of its Associated Companies shall duly pay, all taxes which shall be properly and lawfully assessed or imposed on the Contractor or its Associated Companies by local, state or federal entities in connection with the carrying out of the Services and/or works under a Call-Off Contract or any sub-contract or purchase order hereunder. The Contractor acknowledges and shall if NBA shall so request ensure that its Associated Companies shall acknowledge that NBA is not and shall not become liable to any taxes referred to in this Sub-section 20.3. 20.4. Liabilities 20.4.1. The Contractor shall indemnify and keep NBA indemnified against all liabilities incurred as a consequence of breach by the Contractor or the Contractors Associated Companies of any of the obligations under Sub-sections 20.1 and 20.2 and in respect of all actions, proceedings, claims, damages, charges, costs and expenses whatsoever in relation thereto. 20.4.2. The Contractor shall indemnify and keep NBA indemnified against all liabilities to tax acknowledged under Sub-section 20.3 to be the liability of the Contractor. 20.5. The Contractor is deemed to have taken into account all taxes, levies or contributions having effect on the provision of the Services. If, on or after the date of award of a Call-Off Contract, there shall be any material General Communication, Inc. (GCI) - 25 - FINAL v4.5 Framework Agreement 11/9/95 change in the level or in the incidence, or any new incidence or abolitions, of any local, state or federal tax, levy or contribution which are by law payable by the Contractor or any Sub-contractor or supplier hereunder in respect of its employees working wholly on the Services and/or works or in respect of the Contractor or any Sub-contractor's or supplier's activities under a Call-Off Contract or any sub-contract or purchase order thereunder, NBA and the Contractor shall agree if any appropriate adjustments should be made to the Targets failing which a failure to agree shall be deemed to have occurred in accordance with the terms of Sub-section 39.3.4. The net amount due to, or from any Sub-contractor of the Contractor as a result of any change, new incidence or abolitions arising from the provisions of Sub-section 20.5 shall be paid to, or recovered from, the Contractor by NBA as though such increase or decrease had directly affected the Contractor. For the purpose of this Sub-section only, "tax" includes any duty or charge and any penalty or interest thereon and any other costs and charges whatsoever assessed or imposed by any competent local, state or federal entity and having effect nationally and any other authority wheresoever having jurisdiction over the Contractor or its Sub-contractors or NBA by virtue of this Agreement or a Call-Off Contract. 21. FINANCIAL AUDIT 21.1. The Contractor commits to the principle of open book accounting with the objective of verifying, on a retrospective basis, the Direct Costs and Sub-contractor Costs against which Adjustment and Margin arrangements were calculated and applied. 21.2. Subject to the incorporation of appropriate safeguards which shall be determined by the Contractor acting reasonably to prevent inappropriate access to and knowledge of sensitive information held by the Contractor, it is agreed to by the Parties that the intent of Sub-section 21.1 is to provide for visibility and clear understanding between the Parties of Direct Costs and Sub-contractors Costs. 21.3. Subject to Sub-section 21.2 NBA shall have rights to conduct audits in relation to records held by the Contractor relating to the Direct Costs and Sub-contractors Costs of goods and/or services provided for the Services. In fulfillment of these rights the Contractor undertakes to ensure equivalent audit rights in favor of NBA in respect of Associated Companies of the Contractor. In addition: General Communication, Inc. (GCI) - 26 - FINAL v4.5 Framework Agreement 11/9/95 21.3.1. Such audits shall be conducted by a designated NBA officer or an independent auditor (whose appointment shall be at NBA's expense and shall be subject to approval by the Contractor such approval not to be unreasonably withheld). The frequency of such audits shall be at NBA's discretion provided always that NBA shall give reasonable notice of such requirements to the Contractor and shall exercise reasonable endeavors to conduct such audits with the lowest levels of inconvenience and disturbance practicable being caused to the Contractor. 21.3.2. Subject to the retention of records as required by law, the Contractor shall for the purposes of this Section 21 retain records relating to the Services for a period of twenty-four (24) months after the end of the relevant Year. 21.4. Financial reporting in accordance with this Section 21 will be achieved: 21.4.1. By the submission of invoices in accordance with the Call-Off Contract 21.4.2. And in relation to the overall performance of the Contractor's obligations by means of the Telecommunications Review Board. 21.5. Any adjustment to the level or appropriateness of charges or recoveries incurred or paid pursuant to the Services shall be agreed to within a period of 30 calendar days from the submission of the NBA audit report and shall be implemented in the next available Invoice or Invoices. Such agreed to adjustments shall not incur an interest charge otherwise applicable in accordance with Sub-section 19.8. 21.6. Nothing contained in this Section 21 shall be deemed to limit the right of NBA to challenge at any time or to make enquiries concerning Charges, or to require the Contractor to demonstrate the reasonableness or otherwise of such Charges. 22. SUB-CONTRACTORS 22.1. The Contractor shall undertake to employ only such Sub-contractors as are capable of contributing effectively to the express aims of the Call-Off Contracts. 22.2. The Contractor shall have the right to appoint as a Sub-contractor: 22.2.1. Any Contractors Associated Company without NBA's consent; and 22.2.2. Any Third Party, subject to NBA's consent. General Communication, Inc. (GCI) - 27 - FINAL v4.5 Framework Agreement 11/9/95 22.3. NBA shall have the right to nominate certain Sub-contractors for the provision of the Services subject to agreement of the Contractor such agreement not to be unreasonably withheld and provided that, where the Contractor can demonstrate that the use of such Sub-contractors would materially prejudice the Contractor's ability to reduce Actual Costs, then NBA and Contractor shall agree to an appropriate adjustment to the Targets. 22.4. The Contractor's use of Sub-contractors of any type shall not relieve the Contractor from contractual obligations. 22.5. Sub-contractor costs will consist of direct costs to the Contractor for services obtained from a Sub-contractor plus a ******** handling fee. 23. ASSIGNMENTS AND SUB-LETTING 23.1. The Contractor shall not seek to assign or sub-let any of its rights, liabilities or obligations under this Agreement (if any) without NBA's prior written consent. Such consent to assign or sub-let shall not relieve the Contractor of any liability or obligation under a Call-Off Contract. 23.2. NBA reserves the right to assign or sub-let the whole or part of its rights, liabilities and obligations under this Agreement (if any) to any Associated Company of NBA upon the same terms and conditions as those agreed between the Parties without the consent of the Contractor and to any Third Party with the consent of the Contractor, such consent not to be unreasonably withheld. 24. EMPLOYMENT OF FORMER NBA EMPLOYEES 24.1. The Contractor shall be free to offer any number of relevant NBA employees new contracts of employment on its own terms. NBA will, if such NBA employees shall individually agree, provide the Contractor with appropriate HR information and material for the purpose of assisting the Contractor to choose individuals to whom offers of employment might be made. 24.2. The Contractor will use a best effort to hire at least five qualified NBA employees who will be displaced by this Agreement. This best effort will include but not be limited to, employee presentations concerning GCI opportunities and interviewing all interested NBA personnel displaced by this agreement. General Communication, Inc. (GCI) - 28 - FINAL v4.5 Framework Agreement 11/9/95 25. EMPLOYEE RELATIONS AND TRAINING 25.1. The Contractor shall implement and maintain recruitment and training programs for the purpose of ensuring that adequate levels of trained and motivated personnel are available for the provision of the Services. 25.2. The Parties shall agree to the principle of Secondment of employees as defined in Annex A for purposes associated with the Services or in connection with other relevant business of NBA. 25.3. Unless otherwise agreed between the Parties, during the term of this Agreement or a Call-Off Contract neither Party to a Call-Off Contract shall attempt to induce the other's employees to work for the other. However, should such employees of their own accord express a wish to work for a Party, then that Party shall not be prevented from engaging such employees either by direct employment or through a Third Party. 25.4. Consistent with the objectives of achieving a close business relationship between NBA and the Contractor employees of either Party shall be invited to join and participate in seminars, presentations and other forums, whether internal or external to NBA or the Contractor, which are relevant to the provision of the Services. 26. CONTRACTOR'S PERSONNEL 26.1. If at any time and for any reason the Contractor's personnel do not perform their duties to the reasonable satisfaction of NBA, the Contractor accepts that it should provide suitable replacements as soon as practicable. 26.2. The Contractor shall undertake not to deploy in the Services any personnel the Contractor may reasonably believe to be unacceptable to NBA. 27. FATAL ACCIDENT, INJURY AND DAMAGE TO PROPERTY 27.1. The Contractor shall indemnify NBA and hold NBA harmless from and against any and all liability for death, illness or injury to any Third Party or for loss of or damage to any Third Party's property and against all claims, demands, proceedings and causes of action resulting therefrom and arising out of breach of contract, breach of statutory duty or negligence on the part of the Contractor or its Sub-contractors , or agents in the provision of the Services and the performance of any of their obligations under any Call-Off Contract. General Communication, Inc. (GCI) - 29 - FINAL v4.5 Framework Agreement 11/9/95 27.2. NBA shall indemnify the Contractor and hold the Contractor harmless from and against any and all liability for death, illness or injury to any Third Party or for loss of or damage to any Third Party's property and against all claims, demands, proceedings and causes of action resulting therefrom and arising out of breach of contract, breach of statutory duty or negligence on the part of NBA, its Sub-contractors or agents (excluding the Contractor and any of its Sub-contractors or agents) in relation to the Services and the performance of any of its obligations under any Call-Off Contract. 27.3. The indemnities referred to in Sub-sections 27.1 to 27.2 above shall not be subject to the limitation of liability provisions contained in Sub-section 29.2. 28. INSURANCE 28.1. The Contractor shall maintain full and sufficient insurance coverage in respect of its liabilities under a Call-Off Contract and to fulfill any statutory requirements of government or other appropriate bodies including but not limited to the provision of personal accident insurance for their personnel. For the avoidance of doubt, it is recognized that where personnel are provided by any Sub-contractor, the Contractor may require the Sub-contractor to provide such personal accident insurance. 28.2. The Parties shall ensure that each others interests are noted in all general liability policies subject to policy terms and conditions and only to the extent necessary to provide coverage under the other Party's insurances for the liability assumed by that Party under a Call-Off Contract and shall supply evidence of all insurances required pursuant to this Section 28 to each other upon request. 28.3. The Contractor shall self-insure or maintain insurance in respect of the full replacement value of Contractor Equipment. 28.4. The Parties shall obtain from their respective underwriters a waiver of all rights of subrogation against the other Party including its employees, Associated Companies, co-venturers and Sub-Contractors, and such waiver shall be endorsed upon all such policies of insurance. 29. LIMITATION OF LIABILITY 29.1. With respect to any claim for damages arising pursuant to any Call-Off Contract the maximum liability for any claim and/or all claims against a Party for damages shall with the exception of sums due and owing in respect to Services, be limited to an amount equal in any one Year to General Communication, Inc. (GCI) - 30 - FINAL v4.5 Framework Agreement 11/9/95 $300,000 or 10% of the amount invoiced by the Contractor in the 12 months preceding the claim or claims, whichever is greater; subject always that any such claim shall be time barred and invalid if not notified by one Party to the other within a period of 12 months taken from the later of either the date when the cause of action arose or the date when the Party seeking damages ought reasonably to have been aware of the existence of such a claim and provided that in the first Year of a Call-Off Contract the reference in this Sub-section to amounts invoiced in the 12 months preceding the claim shall instead be limited by reference to $300,000 or 10% of the Target for that Year, whichever is greater. 29.2. In any event and under no circumstances, including the negligent act or omission of itself or its agents, shall either Party be liable to the other whether under this Agreement, the Call-Off Contracts or otherwise in contract, tort, breach of statutory duty or otherwise in respect of any loss of revenue, business, contracts, anticipated savings, or profits or commercial opportunities or in respect of any indirect or consequential loss whatsoever. 29.3. For the avoidance of doubt neither Party to this Agreement shall be liable under this Agreement for any default by the Parties to any Call-Off Contract , or as a result of any request to/or demand made of the Parties to a Call-Off Contract by the Parties to this Agreement. 29.4. The provisions of this Sub-section shall continue to apply notwithstanding the termination or expiry of this Agreement or relevant Call-Off Contract for any reason whatsoever. 30. INDEMNIFICATION Whenever a Party has an obligation to indemnify the other pursuant to this Framework Agreement or a Call-Off Contract the following shall apply: 30.1. The Party claiming the right to be indemnified (the "Claiming Party") shall give notice to the other Party which may have an indemnifying obligation ("Indemnifying Party"). Such notice shall set forth a description of the claim or claims which entitle the Claiming Party to such indemnification and shall recite that such claim is made pursuant to this Agreement or Call-Off Contract and shall further identify the applicable Section raising the indemnification obligation. Notice shall be given as soon as practicable after the Claiming Party has learned of the existence of a claim for indemnification. 30.2. Upon receipt of the notice set forth in Sub-section 30.1 above, the Indemnifying Party will pay promptly to the Claiming Party being indemnified the amount of all damages, deficiencies, liabilities, and costs, General Communication, Inc. (GCI) - 31 - FINAL v4.5 Framework Agreement 11/9/95 expenses, claims which the Indemnifying Party shall agree to be due and owing or, in the absence of agreement, as finally adjudged to be due and owing by a competent court of law having jurisdiction over this Agreement or the Call-Off Contracts. The Indemnifying Party shall be entitled to participate in the defense of any such claim or action and, to the extent it wishes to assume the defense thereof with legal counsel of its choosing. The Claiming Party may object to the assumption of the defense of the alleged claim subject to it waiving its rights to indemnification in respect of such claim. Upon notice by the Indemnifying Party of its election to assume the defense, the Indemnifying Party will not be liable to the Claiming Party for any legal or other expenses subsequently incurred by the Claiming Party in connection with the defense thereof. The Claiming Party may not compromise or settle any claim for which it has asserted or may assert its indemnification right without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld. The Claiming Party shall reasonably cooperate with the Indemnifying Party in conducting the defense of any claim. 30.3. Except as otherwise agreed the amount of damages, losses, deficiencies, costs and expenses incurred or suffered to which indemnification pursuant to this Agreement or Call-Off Contract relates shall be subject to the limitations referred to in Section 29. 31. INDEPENDENT CONTRACTOR In the performance of the Services pursuant to a Call-Off Contract, the Contractor shall be an independent contractor and nothing in this Agreement or any Call-Off Contract shall create or be deemed to create a partnership or, except as specifically provided in any Call-Off Contract, a relationship of principal and agent or any other relationship of a similar nature. Except as specifically provided in the Call-Off Contract, neither Party shall have the power or authority to bind the other Party in any way. 32. INTELLECTUAL PROPERTY RIGHTS 32.1. If in the course of providing the Services, NBA requests and the Contractor agrees to create any process, document or other material to the specification of NBA, not being an enhancement of an existing product (the "Property"), then the copyright or other intellectual property right and all legal and beneficial rights therein shall belong to NBA and the Contractor shall be permitted to use such Property only to the extent necessary for the provision of the Services. General Communication, Inc. (GCI) - 32 - FINAL v4.5 Framework Agreement 11/9/95 32.2. If in the course of providing the Services (other than as specified in Sub-section 32.1) the Contractor its employees or agents create any process document or other material solely in order to provide the Services and the entire costs of development have been included in Actual Costs, then copyright or other intellectual property right and all legal and beneficial rights therein shall belong to the Contractor, subject to the right for NBA to require at any time that the Contractor shall grant NBA a non-exclusive perpetual royalty-free license for the use of the Property to the exclusion of any rights to sub-license to any Third Parties. Any material development of the type envisioned in this Sub-Clause 32.2 initiated by the Contractor in the course of and as part of providing the Services shall be subject to the prior agreement of NBA. The Parties shall execute any arrangement or other instrument which may be necessary to give effect to this provisions of this Sub-section 32.2. 32.3. Save as provided for in Sub-sections 32.1 and 32.2 all copyright or intellectual rights in any process document or other material created by the Contractor its employees or agents and all legal and beneficial rights therein shall belong to the Contractor subject to the Contractor granting NBA a royalty free license to the use of such Property for the duration of the Services and solely in relation to the Services. 32.4. In the event that NBA has developed or may develop or may have had developed on its behalf certain software or other intellectual property (the NBA Software) the copyright or other intellectual property rights shall reside with NBA and all legal and beneficial rights therein shall be owned by NBA and the Contractor shall have no right to the use of such NBA Software other than for the purpose of providing the Services. 32.5. The Contractor shall indemnify NBA and hold NBA harmless from and against all actions, claims, demands, costs, charges and expenses arising in any jurisdiction from any infringement or alleged infringement of letters patent, design, copyright, trade marks or other intellectual property rights arising out of or in connection with the performance of a Call-Off Contract by the Contractor, its Sub-Contractors, or suppliers. NBA shall indemnify the Contractor against any claims, proceedings and expenses arising in any jurisdiction from infringement or alleged infringement of any letters patent, design, copyright, trademark or other intellectual property rights by reason of the use by the Contractor of NBA owned (or equipment provided by NBA) equipment. NBA Software or Third Party Software not provided or supplied by the Contractor for use in combination with Contractor Equipment, the Software or the Network. General Communication, Inc. (GCI) - 33 - FINAL v4.5 Framework Agreement 11/9/95 32.6. To the extent practicable the Contractor shall only enter into commitments with Sub-Contractors and purchase materials and equipment for use under a Call-Off Contracts from suppliers who will agree to in writing to indemnify and keep indemnified the Contractor against any claims for infringement or alleged infringement of letters patent, design, copyright, trade marks or other intellectual property rights. 32.7. If at any time an allegation of infringement of copyright is made in respect of the Software [provided by the Contractor] in the provision of the Services, or if in the Contractor's reasonable opinion such an allegation is likely to be made, the Contractor shall at its own expense either modify or replace the Software so as to avoid the infringement, without detracting from overall performance. 33. MINIMUM CONDITIONS OF SATISFACTION The Contractor agrees to provide NBA services which meet the conditions outlined in Annex C. 34. SECURITY 34.1. General 34.1.1. NBA reserves the right to establish written policies and procedures for general application to the Contractor's personnel and of all Third Party contractors on any Site which is substantially under the control of NBA. Whenever reasonably practicable, NBA shall consult with the Contractor prior to establishing such policies and procedures. Such policies and procedures may cover matters such as health and safety, reporting of disputes, familiarization and training, offshore procedures, disciplinary standards and action, inclement weather working, arrangements for coordination industrial relations matters on any site and any other similar matters considered to be appropriate by NBA. Current and appropriate NBA policies and procedures relevant to the Call-Off Contract shall be listed, but not by way of limitation, in Schedule 4 to the Call-Off Contract. 34.1.2. Each Party shall comply with and shall ensure that its employees and agents comply with security regulations and policy standards, codes of practice and other regulations in force at each others' sites and shall ensure that copies of such regulations and policies are made available to each other and their respective employees and agents. Each Party in relation to premises controlled by it reserves General Communication, Inc. (GCI) - 34 - FINAL v4.5 Framework Agreement 11/9/95 the right where there is reasonable cause to exclude any employee or agent of the other from entering onto such premises. 34.1.3. The Parties shall report forthwith to each other all identified attempts (whether successful or not) by unauthorized persons (including unauthorized persons who are employees of the Contractor or NBA) either to gain access to or interfere with the Data, the Facilities, the Network, or either Party's confidential information. 34.2. Data 34.2.1. The Contractor shall maintain fully adequate security safeguards which are no less rigorous than those requirements listed in the Scope of Work against the destruction or loss or unauthorized use or alteration of Data and Software whether the Data or Software is stored on the Contractor Equipment or on other storage media under the Contractor's management or control as part of the Services. Such safeguards shall include an obligation on the Contractor to ensure that access to Data and Software is only available to such personnel as may be specifically designated by NBA (Authorized Users or as provided for in Sub-section 34.4). 34.2.2. NBA's data (both financial and customer records) is of utmost value and any unauthorized disclosure of this information by the Contractor is a Material Breach of the agreement. 34.3. Disaster Recovery The Contractor shall assist NBA in meeting all regulatory requirements pertaining to Disaster Recovery and in cooperation with NBA and M&I implement procedures and a schedule for testing these procedures within the Scope of Work. 34.4. Authorized Access to Systems 34.4.1. A list of Authorized Users shall be maintained by NBA and coordinated with M&I so that a total uniformly applied process of security is in place. An Access Code shall be allocated to each such Authorized User. 34.4.2. The Contractor shall have the right with the agreement of NBA (not to be unreasonably withheld) to withdraw any Access Code and allocate a new Access Code to NBA where the Contractor has reason to believe the Access Code has been discovered and/or used by a person without the knowledge, consent or permission, express or implied, of NBA, their employees or agents. General Communication, Inc. (GCI) - 35 - FINAL v4.5 Framework Agreement 11/9/95 34.4.3. The Contractor shall subject to the requirements of Sub-section 35.4 have the right to withdraw any Access Code from NBA if the Call-Off Contract is terminated. 34.4.4. Any Access Code allocated to NBA by the Contractor is confidential and personal to NBA and NBA shall exercise reasonable endeavors to keep its Access Codes safeguarded. 34.4.5. NBA shall: 34.4.5.1. Use the Access Codes in accordance with the reasonable written instructions given by or on behalf of the Contractor to NBA from time to time; and 34.4.5.2. Notify the Contractor promptly orally (confirmed in writing) where there are reasonable grounds for suspecting or believing that a person has discovered or is making use of any Access Code without the knowledge, consent or permission of the Contractor, NBA, their employees or agents. 35. ACCESS 35.1. Access to Premises To enable the Parties expeditiously and properly to exercise their respective rights and obligations under a Call-Off Contract including, without limitation, the delivery, installation, inspection, maintenance, testing, disconnection, alteration or renewal of the Facilities or any part thereof, or for the purposes of audit, each Party shall permit or ensure permission for the other Party and any other authorized person(s) to have reasonable access to the Sites and the Facilities (including the Contractor's premises and systems) and shall provide each other with or ensure such facilities and cooperation as each Party shall reasonably request. 35.2. Access to Information Each Party undertakes promptly to provide the other Party (free of charge) with all such information and cooperation that may reasonably be required and which the first Party is able to provide from time to time to enable the other Party to proceed uninterruptedly with the performance of its obligations under the Contract. General Communication, Inc. (GCI) - 36 - FINAL v4.5 Framework Agreement 11/9/95 36. CONFIDENTIALITY 36.1. All information obtained relative to NBA or Third Parties connected with the business of NBA by the Contractor or Contractor's or its Sub-contractors or agents for or in connection with this Agreement and any Call-Off Contract including negotiations and site visits and during the meetings of the Telecommunications Review Board shall be considered confidential and shall not be used by the Contractor its Sub-contractors, employees or agents other than for the purposes of the Services, or divulged by the Contractor, its Sub-contractors, employees or agents to any Third Party person, firm or corporation other than in accordance with NBA's prior written instructions or consent. 36.2. All information obtained relative to the business of the Contractor by NBA or NBA's Sub-contractors or agents in connection with this Agreement and any Call-Off Contract including negotiations and site visits to the Contractor or during meetings of the Telecommunications Review Board shall be considered confidential and shall not be used by NBA or its Sub-contractors employees or agents other than for the purposes of the Services nor divulged by NBA or its Sub-contractors, employees or agents to any Third Party person firm or corporation other than in accordance with the prior written consent of the Contractor. 36.3. Provided that for the purposes of this Section 36 such information shall be deemed not to be of a confidential nature to the extent that it is: 36.3.1. Information which was in the public domain at the time of disclosure or which comes into the public domain otherwise than through the default or negligence of the recipient; or 36.3.2. Information which was known to the recipient, under no obligation of confidence, at the time of disclosure by the other; or 36.3.3. Confidential information which the receiving Party can show had been developed by or for the receiving Party at any time independently of any information disclosed to it by the disclosing Party, or by a person who had no access to or knowledge of the confidential information; 36.3.4. Confidential information the disclosure of which is required by law, subject to the notification by the receiving Party of that requirement at least two days prior to its disclosure; 36.3.5. Information which has been lawfully obtained by the recipient from a Third Party who in making such disclosure breaches no obligation of confidence to the other; General Communication, Inc. (GCI) - 37 - FINAL v4.5 Framework Agreement 11/9/95 36.3.6. Confidential information which is disclosed with the prior written permission of the disclosing Party. 36.4. Notwithstanding Sub-section 36.3 NBA and the Contractor and their respective Associated Companies shall be permitted to disclose confidential information to their respective employees, Sub-contractors and agents who are directly involved in Call-Off Contracts provided that each Party ensures that such employees, Sub-contractors and agents are made aware of, agree to abide by and duly comply with the obligations set out in this Section 36. 36.5. The obligations relating to confidentiality in this Section 36 shall remain valid and subsisting for a period of three years (3) from the effective date of termination withdrawal or removal notwithstanding termination of the Agreement or any Call-Off Contract or withdrawal or removal of the Contractor from the Telecommunications Review Board. In the event of termination of this Agreement or Call-Off Contract(s) or withdrawal or removal as aforesaid both Parties shall within thirty (30) Working Days individually return all confidential information and data which is the property of the other Party together with all copies of all material then in their possession relating to the Services which is confidential and in which it cannot claim any title or other proprietary rights. There is no time limitation on the Contractor's obligation to maintain confidentiality. 36.6. The Contractor's personnel working on NBA Sites will be required to sign a Letter of Confidentiality in the form annexed as Schedule 6 to a Call Off Contract. 36.7. Nothing in this Agreement shall imply an obligation on any Party to supply confidential information. 37. DATA PROTECTION In the course of providing the Services the Contractor will be compiling, processing and storing personal data for NBA. NBA shall be responsible for notifying the Contractor of NBA's requirements arising from the provision by the Contractor of the Services. The Parties represent and warrant that they will comply with their appropriate obligations under all data protection legislation in force from time to time. Each Party shall indemnify the other against any liabilities costs or expenses arising out of or relating to that Party's failure to comply with such legislation. General Communication, Inc. (GCI) - 38 - FINAL v4.5 Framework Agreement 11/9/95 38. SECURITY AUDIT 38.1. Without prejudice to its other obligations under this Section 38, the Contractor shall in respect of each Call-Off Contract permit the designated NBA officer or his authorized representative (the "Auditor"), upon ten (10) Working Days written notice to have access during each Working Day to the premises of the Contractor used in the provision of the Services to examine, only with respect to the provision of the Services, the arrangements made by the Contractor on behalf of NBA with respect to the security, integrity and availability of Data and documentation relating thereto and access to the Network. 38.2. The frequency of audits conducted in accordance with Sub-section 38.1 shall be at the discretion of NBA provided always that NBA shall endeavor to conduct such audits with the lowest levels of inconvenience and disturbance practicable being caused to the Contractor. 38.3. The Contractor shall ensure that the provisions of Sub-section 38.1 are facilitated by rights to be included in all contracts the Contractor shall enter into with its Associated Companies and shall also (subject to regulatory constraints) endeavor to achieve the same rights with Sub-Contractors, suppliers and agents who supply labor, services, equipment or materials in respect of the Services and which impact on security integrity and availability of the Data and documentation relating thereto or access to the Network. The Contractor shall inform NBA prior to concluding any sub-contract of any failure to achieve the same rights of audit referred to in this Sub-section. 38.4. Subject to Sub-section 38.3, NBA shall have the right singly or as a party with the Contractor to conduct an audit of Sub-Contractor's and suppliers' systems and procedures with respect to security, integrity and availability of Data and documentation related thereto and access to the Network. The selection of Sub-Contractors or suppliers to be audited shall be determined by NBA. Such audits shall be carried out at Sub-Contractors' or suppliers' premises or sites. The Contractor, Sub-Contractors and other suppliers shall make every reasonable effort to cooperate with NBA in effecting the audits. 38.5. The Contractor shall ensure that its Associated Companies shall maintain true and correct records and documentation relating thereto in connection with audit described in this Section 38. In relation to Sub-Contractors, suppliers and agents the Contractor shall endeavor to ensure the same standards referred to above. Retention of all such records and documentation by the Contractor shall be for a period of not less than 24 months. General Communication, Inc. (GCI) - 39 - FINAL v4.5 Framework Agreement 11/9/95 38.6. Any change or amendment to the systems and procedures of the Contractor, Associated Companies of the Contractor or Sub-contractors arising from the security audit report shall be agreed to within thirty (30) Working Days from the submission of the said report. 38.7. Nothing in this Section 38 shall be deemed to limit the rights of NBA to make enquiries or challenge at any time any system or procedure of the Contractor and to require the Contractor to demonstrate the reasonableness or efficiency of any system or procedure. 39. COMMENCEMENT, DURATION AND TERMINATION OF CALL-OFF CONTRACTS 39.1. The commencement, duration and termination provisions applicable to each Call-Off Contract shall be as specified in the Call-Off Contract and subject to the terms of this Agreement. 39.2. The initial term of each Call-Off Contract shall not exceed a period of twelve months (12) in total from the applicable Commencement Date. 39.3. A Call-Off Contract may be terminated by a Party or Parties as specified herein: 39.3.1. Termination for insolvency Either Party to a Call-Off Contract shall be entitled to serve written notice on the other to terminate the relevant Call-Off Contract with immediate effect in the event that a liquidator (other than for the purpose of amalgamation or reconstruction), administrative receiver, administrator or receiver is appointed in respect of the whole or a material part of the assets and/or undertaking of the other Party or the other Party enters into an arrangement or composition with its creditors, or if it becomes unable to pay its debts. 39.3.2. Termination for Material Default Either Party may terminate this Agreement or a Call Off Contract where the other Party shall be in Material Default of its obligations as defined in Annex A under this Agreement or a Call-Off Contract. In the event of Material Default the non-defaulting Party may terminate this Agreement or the relevant Call-Off Contract by serving not less than thirty days (30) notice on the other Party or such other period of notice as shall be agreed. If the material default is cured within the period specified in the notice the said notice shall lapse. For the avoidance of doubt, General Communication, Inc. (GCI) - 40 - FINAL v4.5 Framework Agreement 11/9/95 there shall be no requirement for a cure period where the material default is not capable of cure. 39.3.3. NBA's right to terminate by giving sixty days (60) notice NBA may terminate any Call-Off Contract for NBA's convenience by serving at any time upon the Contractor notice of termination not less than sixty days (60) prior to the effective date of such termination, ("termination date"). 39.3.4. Mutual termination for failure to agree to on a Target Where both Parties have failed to agree by September 30 of any Year on a Target, Incentive, or Margin for the following Year, then notice of termination will be deemed given on such date. In such case the relevant Call-Off Contract shall terminate on December 31 of the current Year. Notices given pursuant to this Sub-section 39.3. are revocable until and unless the Parties have agreed to the transition plan described in Sub-section 39.4 below. 39.4. Transition after notice of termination The Parties shall cooperate fully with one another to facilitate within the notice periods described above a smooth transition of the Services from Contractor to NBA or NBA's designated contractor. To that end the Parties shall meet in good faith as soon as practicable and in no event no later than thirty days (30) from the receipt of a notice of termination to agree to a transition plan which shall take into account interalia, the items enumerated in Sub-sections 39.5. Throughout the period of notice, the Target, Margin and Incentives, shall be those in force at the time the notice period commenced. 39.5. Compensation in the event of termination Termination of a Call-Off Contract pursuant to Sub-sections 39.3.1 through 39.3.4 shall require that compensation be paid in the following manner: 39.5.1. In the event of a termination pursuant to Sub-sections 39.3.1 or 39.3.2 where NBA is the insolvent or defaulting Party, and 39.3.3, NBA shall pay to the Contractor (i) Stranded Costs unique to NBA as defined in Sub-section 39.7.2; (ii) Residual Value of all assets relating solely to the terminated Call-Off Contract; (iii) Margins with respect to (i) and (ii) above; and (iv) payment pur- General Communication, Inc. (GCI) - 41 - FINAL v4.5 Framework Agreement 11/9/95 suant to the relevant Call-Off Contract for Services rendered prior to the termination date. 39.5.2. In the event of a termination pursuant to Sub-section 39.3.1 where the Contractor is the insolvent Party, NBA shall pay to the Contractor only payment pursuant to the relevant Call-Off Contract for Services rendered prior to the termination date. 39.5.3. In the event of a termination pursuant to Sub-section 39.3.2 where the Contractor is the defaulting Party, NBA shall pay to the Contractor: (i) Stranded Costs unique to NBA as defined in Sub-section 39.7.2 with the exception of any early termination costs associated with Contractor-branded Services; (ii) Residual Value of all assets relating solely to the terminated Call-Off Contract as defined in Sub-section 39.7.4; (iii) Margins with respect to (i) and (ii) above; and (iv) payment pursuant to the relevant Call-Off Contract for Services rendered prior to the termination date. 39.5.4. Notwithstanding the obligations contained in this Sub-section 39.5, upon receipt of notice of early termination served pursuant to Section 39.3. the Contractor shall consult with NBA and give in writing an estimate of the extent of NBA's exposure for the foregoing obligations, commitments, claims and expenses under this Sub-section 39.5 to NBA. 39.5.5. The obligations with respect to payments of the Residual Value referred to in Sub-sections 39.5.1 and 39.5.2 shall be subject to the ability of the Contractor to transfer to NBA free of charge the interests stipulated in Sub-section 39.6. 39.5.6. The obligations with respect to payments of the Residual Value referred to in Sub-sections 39.5.2 and 39.5.3 shall be subject to the ability of the Contractor to transfer to NBA free of charge the interests stipulated in Sub-section 39.6 39.6. Upon termination or expiry of any Call-Off Contract NBA shall have the right: 39.6.1. Subject to the terms of contracts with and the agreement of relevant Third Parties and upon where appropriate making the payment referred to in Sub-section 39.5, to require by notice the purchase, transfer, assignment or return to NBA or any Third Party of all equipment, leases, licenses, contracts or other assets used exclusively for the provision of the Services and of hard copy and/or machine readable copies of all NBA data and information held by the Contractor pursuant to the provision of General Communication, Inc. (GCI) - 42 - FINAL v4.5 Framework Agreement 11/9/95 the Services. NBA shall exercise such rights within thirty days (30) of the effective date of termination and the Parties shall undertake to cooperate fully to facilitate such purchase or transfer as aforesaid including where required by NBA cooperation with any Third Party. 39.6.2. Upon reasonable notice, to enter and take possession of hard copy and/or machine readable copies of all NBA data and information held by Contractor or to require the delivery of all such data or information by any Third Party holding such data or information on behalf of the Parties. 39.7. For the purposes of this Section 39: 39.7.1. Any right to terminate the Call-Off Contract and to be compensated in accordance with this Sub-section 39.7.1 may only be exercised in writing and shall be the sole right or remedy which the Parties may have except where expressly specified to the contrary. 39.7.2. Stranded Costs in this Section 39 means all costs, obligations, commitments and claims not otherwise recoverable (subject to Contractor's duty to mitigate) that the Contractor may have in good faith reasonably undertaken or incurred in connection with the relevant NBA Call-Off Contract including any additional costs incurred by the Contractor in giving effect to the agreed transition plan of the Services unless express provision for the same is made elsewhere under the relevant NBA Call-Off Contract. This includes costs related to early termination of commitments extending beyond the termination date, subject however to the requirement that Contractor shall have obtained, in all long term supplier or sub-contract arrangements, provisions for such early termination unless otherwise agreed in advance by NBA. 39.7.3. NBA will not be responsible for any costs or obligations committed to by the Contractor under this Framework Agreement and the Call-Off Contract that goes beyond the end of the current Call-Off Contract period (including but not limited to depreciation, contract cancellation penalties and personnel redeployment penalties) unless NBA has agreed to in writing, for each occurrence, at their sole discretion, to accept such long term obligations. Contractor will endeavor to provide services under this Framework Agreement and Call-Off Contracts minimizing the number and amount of long term obligations affecting NBA. General Communication, Inc. (GCI) - 43 - FINAL v4.5 Framework Agreement 11/9/95 39.7.4. Residual Value in this Section 39 is generally defined in Annex A and includes assets purchased by the Contractor in order to provide Services to NBA. In Sub-section 39.5.3, Residual Value is limited to those assets purchased by the Contractor which: (i) are located solely on NBA premises, and/or (ii) have been purchased for the sole purpose of supporting NBA's unique telecommunications needs. 40. REMEDIES Any Material Breach by the Contractor to comply with the relevant Service Level Agreement shall entitle NBA to terminate this Agreement or a relevant Call-Off Contract under the provisions of Sub-section 39.3.2. Other deviations from the relevant Service Level Agreement shall entitle NBA to invoke provisions of Sub-section 18.1.3. Failure of the Contractor to meet the conversion deadline as mutually agreed to will result in overlapping costs for Network Services which will be borne by the Contractor. The occurrence of overlapping costs will not result in any adjustment of a relevant Target. 40.1. NBA and the Contractor shall individually and in addition to the rights set out in Sub-section 40.1, be entitled if the failure or breach on the part of the other Party shall amount to a Material Breach to recover damages from the other Party in accordance with and subject to the limitations provided for in Section 29 or at the option of the Party alleging failure or breach to serve, in addition, a notice of termination in accordance with Section 39. 40.2. The Parties shall indemnify each other in accordance with the terms of Section 30 in the event that the Party seeking indemnification can demonstrate: 40.2.1. That it was induced by the other Party to act in breach of applicable law in circumstances where the existence of the alleged breach was brought to the attention of the other Party prior to the commission of the breach; 40.2.2. That the claim in respect of which indemnification is sought relates to the existence of an alleged partnership debt in circumstances where no partnership was intended or exists between the Parties or was confirmed by the Party seeking indemnification and where the responsibility for the debt would otherwise have vested solely in the Party against whom indemnification is sought. 40.3. Indemnification as set out in Sub-section 40.2 shall not be subject to the limitations set out in Sub-section 29.2. General Communication, Inc. (GCI) - 44 - FINAL v4.5 Framework Agreement 11/9/95 41. AUTHORITIES AND GUARANTEES 41.1. The Parties hereby warrant that their respective signatories to both this Agreement and any Call-Off Contract are duly authorized individuals acting pursuant to specific authorities or delegations of authority and that copies of such authorization or delegation will be produced upon request. 41.2. For the avoidance of doubt, the Contractor acknowledges that entry by NBA into the terms of this Agreement is subject to the provisions of Section 2 and that the Contractor's only recourse in relation to any breach by NBA of the terms of a Call-Off Contract is against the NBA Associated Company which was the Party to that Call-Off Contract and that under no circumstances will any such recourse be sought against NBA in its capacity as a Party to this Agreement. 42. FORCE MAJEURE 42.1. Neither Party to a Call-Off Contract shall be liable to the other for any loss or damage which may be suffered by the other due to any cause beyond either Party's reasonable control ("force majeure") including without limitation any act of God, severe Alaska weather conditions limiting travel and outside work, catastrophic failure or shortage of power supplies due to chronic unreliability of commercially supplied power, earthquake, volcanic eruptions, flood, lightning or fire, strike, lock-out, trade dispute or labor disturbance (other than within either Party's Organization or any Associated Company of that Party), the act or omission of Government, public telecommunications operators (excluding for the avoidance of doubt the Contractor or an Associated Company of the Contractor) or other competent authority, war, military operations, or riot. The Party seeking to rely on force majeure shall as a condition precedent to the availability of this defense give full particulars in writing to the other Party of the facts or circumstances giving rise to force majeure within three Working Days (3) of the occurrence and thereafter in respect of successive occurrences and shall further demonstrate that it has and is taking all reasonable measures to mitigate the events complained of. 42.2. Notwithstanding the terms of this Section 42 any failure on the part of the Contractor in any Call-Off Contract to implement disaster contingency planning and full back-up and other data safeguards in accordance with the Scope of Work against natural disaster, fire, sabotage or other similar occurrence shall not be an event of force majeure. General Communication, Inc. (GCI) - 45 - FINAL v4.5 Framework Agreement 11/9/95 42.3. In the event that force majeure shall continue for a period in excess of three months (3) either Party may give notice of immediate termination. Termination as aforesaid shall be deemed to be subject to and on the terms of Sub-sections 39.3.3 and 39.4. 43. HEALTH AND SAFETY The Parties undertake to comply in full with applicable health and safety legislation, regulations and procedures in force at the Sites, such requirements to take precedence over any provisions of Call-Off Contracts or this Agreement. 44. PUBLICITY It is accepted and agreed to that neither Party shall publish or permit to be published either alone or in conjunction with any other person any information, article, photograph, illustration or any other material of whatever kind relating to this Agreement or relative to the Call-Off Contracts or the business of the Parties without prior reference to and approval in writing from the other Party. Such consent shall apply to each specific application and relate only to that application. General Communication, Inc. (GCI) - 46 - FINAL v4.5 Framework Agreement 11/9/95 45. NOTICES 45.1. Any notice or other document which may be given by either Party under this Agreement shall be deemed to have been duly given if left at or sent by pre-paid recorded delivery post or facsimile transmission (confirmed by letter sent by pre-paid recorded delivery post) to each Party's principal or registered office as set out below as an address to which notices and other documents may be sent: NBA: National Bank of Alaska (NBA) P.O. Box 100600 Anchorage, Alaska 99510-0600 Tel: 907-265-2860 Fax: 907-265-2887 Contact: B. John Shipe Executive Vice President Contractor: General Communication, Inc. (GCI) 2550 Denali St. Suite 1000 Anchorage, Alaska 99503 Tel: 907-265-5600 Fax: 907-265-5574 Contact: Richard A. Whitney, Director Business Development 45.2. Any such communication shall be deemed to have been made to the other Party 4 days from the date of posting (if by letter) and if by facsimile transmission on the day of such transmission provided by the other Party the original of the communication is received within 4 days of the date of transmission. 46. VARIATIONS No amendment variation or other change to this Agreement shall be valid unless in writing and signed by both Parties. 47. COMPLIANCE WITH LAWS, REGULATIONS AND ETHICS 47.1. In addition to the obligations in this Agreement and generally in performing the Services both Parties accept that their individual conduct shall at all times comply with all laws, rules and regulations of gov- General Communication, Inc. (GCI) - 47 - FINAL v4.5 Framework Agreement 11/9/95 ernment and other bodies having jurisdiction over the area in which the Services are undertaken. 47.2. The Contractor agrees to at all times to comply with and abide by the terms of NBA's Policy on Business Conduct and Code of Ethics as amended from time to time. In the event of any conflict between NBA's Policy on Business Conduct and Code of Ethics and the Contractor's own code of ethics, the matter shall be referred to the Telecommunications Review Board for resolution subject to the agreed understanding that the best practice shall prevail. 48. PROFESSIONAL FEES 48.1. All expenses incurred by or on behalf of the Parties, including all fees of agents, solicitors, accountants and actuaries employed by either of the Parties in connection with the negotiation, preparation and execution of this Agreement and the Call-Off Contracts shall be borne solely by the Party which incurred them. 48.2. The expenses of the nature set forth in Sub-section 48.1 shall subject to NBA's prior written approval be reimbursed by NBA to the Contractor if incurred by the Contractor solely and directly in the implementation and or execution of a Call-Off Contract or Transfer Agreement, including those expenses related to due diligence in connection with the Transfer Agreement and such expenses shall not be deemed to be part of the Actual Costs. 49. SEVERABILITY If any provision of this Agreement or any Call-Off Contract shall be found by any court or administrative body of competent jurisdiction to be invalid or unenforceable the invalidity or unenforceability of such provision shall not affect the other provisions of this Agreement or the relevant Call-Off Contract and all provisions not affected by such invalidity or unenforceability shall remain in full force and effect. The Parties hereby agree to attempt to substitute for any invalid or unenforceable provision a valid and enforceable provision which achieves to the greatest extent possible the economic, legal and commercial objectives of the invalid or unenforceable provision. 50. APPLICABLE LAW AND JURISDICTION This Agreement shall, to the extent that any aspect or matter fails to be interpreted, conformed or adjudicated upon by the parties themselves, be dealt with in accordance with the laws of the United States and the State of Alaska. General Communication, Inc. (GCI) - 48 - FINAL v4.5 Framework Agreement 11/9/95 Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, such arbitration to take place in Anchorage, Alaska and judgment upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction thereof. IN WITNESS WHEREOF the Parties hereto have by duly authorized representatives set their hands the day and year first above written. for and on behalf of } National Bank of Alaska (NBA) } B. John Shipe Executive Vice President for and on behalf of } General Communication, Inc. (GCI) } Richard A. Whitney Director, Business Development General Communication, Inc. (GCI) - 49 - FINAL v4.5 Framework Agreement 11/9/95 ANNEX A: GLOSSARY OF DEFINITIONS General Communication, Inc. (GCI) - 50 - FINAL v4.5 Framework Agreement 11/9/95 "Access Code" means a code or protocol whereby an Authorized User is permitted access to the Facilities; "Actual Costs" means the Direct Costs, Sub-Contractor Costs and Network Services Costs actually incurred by the Contractor in respect of any relevant period; "Applications Software" means the applications software details of which are set out in the Transfer Agreement or a Call-Off Contract, which may be required to be run by the Contractor to provide the Services, as may be modified, enhanced, added to or replaced during the term of the Contract pursuant to the terms hereof and such further programs as may be developed on behalf of NBA pursuant to the terms hereof; "Associated Company" means any subsidiary of either Party hereto or their ultimate holding company or any subsidiary thereof; "Authorized User" means a person or entity who or which is an Associated Company of NBA or is a person who otherwise at the date hereof is designated by NBA as being associated with NBA or is a person or entity who subsequent to the date hereof becomes associated with NBA and which NBA and the Contractor agree should be a person or entity authorized to use the Services in accordance with and subject to the terms of the Framework Agreement and a Call-Off Contract; "Call-Off Contract" means an agreement in the nature of the model contract contained in Annex D entered into between NBA and the Contractor as may negotiated and mutually agreed; "Charges" means those charges computed in accordance with the methodology contained in the Framework Agreement or the methodology for calculating the charges for the provision of the Services as may be varied from time to time upon mutual agreement; "Commencement Date" means the date specified in the Call-Off Contract for the commencement of the Services to NBA; "Continuing Contracts" means relevant contracts between NBA and Third Parties necessary for the provision of services comparable to the Services prior to the Transfer Date; "Contract" means the Call-Off Contract; "Contractor Equipment" means the capital assets including computers, telecommunications and peripheral equipment as identified in the Transfer Agreement or the Call-Off Contract as may be extended, added to or replaced during the term of a Call-Off Contract which are owned or controlled by the Contractor and used by the Contractor or NBA in the provision of the Services; "Data" means all data processed, held or conveyed by the Contractor on behalf of NBA by means of the Facilities as part of the Services; "Direct Costs" means costs as defined in Sub-section 16.1.1; General Communication, Inc. (GCI) - 51 - FINAL v4.5 Framework Agreement 11/9/95 "Expected Cost of Operation (CoOE)" is the sum of all 1995 NBA telecommunications costs plus expected 1996 cost adjustments resulting from changes in scope of work and service levels for which the Contractor is expressly responsible and can exercise cost management as determined by a Due Diligence Audit. "Facilities" means the hardware, software and Network necessary for the provision of the Services; "HR" means human resources; "Incentive" means payment calculated as in Section 18; "Information Records" means all the data, information and records contained and/or stored in the literature, documents and computer systems, including without limitation all records of transactions, bills, invoices, statements and similar documents whether in hard copy, machine readable or other form which NBA uses as at the date hereof which are described in a Call-Off Contract and such other data and information forming part of or relating to the equipment and Third Party Contracts as the proper performance by the Contractor of its obligations under the Call-Off Contract shall require; "IS" means information services and associated and derivative products and services; "Major Change" shall be as defined in Section 8; "Margin" means an amount determined by a percentage increase to be applied to the Direct Costs of the Target for a given Year as may be varied in accordance with the terms of Section 17 of this Agreement; Material Default" occurs, but is not limited to the occurrence of one or more of the following: (i) significant or chronic deficiency by the Contractor in providing Services which substantially compromises a Service Level Agreement, (ii) the Contractor's or the Contractor's and M&I's failure to meet conversion deadlines by in excess of 120 days, (iii) either Party's unauthorized disclosure of confidential or other financial/customer data, (iv) either Party's violation of the other Party's network/data security, or (v) Major Changes made by NBA which are not in compliance with Section 8. "Material Breach" means Material Default as defined. "Network" means the telecommunications equipment and internal cabling, private leased circuits and associated software more particularly described in a Call-Off Contract as may be modified pursuant to the terms hereof; "NBA Business" means any relevant and designated business activity maintained as such and then existing within NBA which has responsibility for or interest Information Services or Telecommunications; "NBA" means NBA and all Associated Companies of NBA; "Network Services" means certain communication services to be provided by the Contractor pursuant to a Call-Off Contract; General Communication, Inc. (GCI) - 52 - FINAL v4.5 Framework Agreement 11/9/95 "Operational Change Control Procedures" means the written documentation defining the procedures to be used in making any change to the Services; "Partner Relations Manager (PRM)" means the NBA senior manager responsible for direct liaison with the Contractor's management; "PSTN" means Public Service Telephone Network; "Quarter" means a full or partial calendar quarter commencing on 1st January, 1st April, 1st July and 1st October in each Year, the first Quarter or part thereof to commence on the Commencement Date and the last Quarter ending on the termination date; "Representative" means a member of the Telecommunications Review Board; "Residual Value" means the non-depreciated book value or the remaining lease obligations related to Contractor Equipment; "Risk/Reward Incentives" means payments made by NBA or the Contractor as defined in Section 18; "Scope of Work" means the specific description of the Services as set out in Schedule 1 to the Call-Off Contract; "Secondment" means temporary assignment of an employee of one party to another party with the employment status of the employee remaining unaffected; "Service Description" means the Scope of Work and the Service Levels; "Service Level Agreement" means the quantification of acceptable NBA Service Levels based upon a defined Scope of Work which is included in a Call-Off Contract; "Service Levels" means the target levels of service to be achieved by the Contractor in providing the Services as set out in Schedule 2 to the Call-Off Contract; "Services" means the services to be provided by the Contractor to NBA as more particularly described in the Scope of Work; "Shared Network Services" means those voice, data, video, messaging and other communication services which are delivered by the Contractor over the Contractor's technology platform or the technology platform of an Associated Company of the Contractor, the infrastructure of which technology platform jointly supports the provision of the Services hereunder and the provision of similar services to Third Parties; "Software" means the software used in the provision of the Services and includes System Software and the Applications Software; "Stranded Costs" means any cost as defined in Sub-section 39.7.2; "Sub-Contractor" means a Third Party in a contractual relationship with the Contractor providing certain services which are material and necessary to the scope of work and for the avoidance of doubt, Sub-Contractor shall not mean a supplier of goods; General Communication, Inc. (GCI) - 53 - FINAL v4.5 Framework Agreement 11/9/95 "System Software" means the operating systems software, details of which are set out in the Transfer Agreement or the Call-Off Contract, required to be run and supplied by the Contractor to provide the Software platform used in the provision of the Services, as may be modified, enhanced, added to or replaced during the term of the Call-Off Contract pursuant to the terms thereof; "Target" in 1996 means the CoOE less ******** or ********, whichever is greater. In 1997 and beyond, "Target" means: (i) the sum of the Actual Costs, Margin and Risk/Reward Incentives from the previous year's performance; plus (ii) the mutually agreed to dollar value of increases or decreases in scope of work and service levels; plus (iii) other mutually agreed to adjustments, such as inflation or COLA; "Telecommunications Review Board" means the Board established pursuant to the Framework Agreement; "Third Party Contracts" means those contracts between the Contractor or NBA and Third Parties necessary to enable the Contractor to provide the Services, including but not limited to those contracts for the supply of Software, Contractor Equipment and other services; "Third Party" means a person other than NBA, an Authorized User or the Contractor; "Transfer Date" means the date specified in the Transfer Agreement; "Transfer Equipment" means the equipment and furniture listed in Schedule 1 of the Transfer Agreement located at the (Sites/locations specified therein) which are to be transferred to the Contractor; "Working Day" means days upon which Banks are normally open for business in the jurisdiction where the Contract is executed ; "Year" means each calendar year during the term of each Call-Off Contract, but the first year will run from the Commencement Date to 31st December of such year, and the last Year shall end at the date of the termination. Except where the context otherwise requires, words denoting the singular include the plural and vice versa; words denoting any gender include all genders; and words denoting persons include firms and corporations and vice versa; Unless otherwise stated, a reference to a Section, or Schedule is a reference to a section or schedule to this Agreement; Section headings are for ease of reference only and do not affect the construction of this Agreement. General Communication, Inc. (GCI) - 54 - FINAL v4.5 Framework Agreement 11/9/95 ANNEX B: SPECIMENS General Communication, Inc. (GCI) - 55 - FINAL v4.5 Framework Agreement 11/9/95 1996 TARGET SPECIMEN 1. Expected Cost of Operations (CoOE) --------- a. 1995 Annualized Costs --------- b. 1996 Expected Cost Increases --------- c. Total (1a + 1b) -------- 2. Percent of CoOE or Guarantee a. Guarantee ******** b. ******** of CoOE --------- c. Greater of 2a or 2b --------- 3. Target (1c-2c) --------- General Communication, Inc. (GCI) - 56 - FINAL v4.5 Framework Agreement 11/9/95 1997 - 2001 TARGET SPECIMEN 1. Previous Year Annual Costs --------- 2. Previous Year Margin --------- 3. Previous Year Risk/Reward Incentive --------- 4. Scope of Work Adjustments a. Increases --------- b. Decreases --------- c. Total (4a - 4b) -------- 5. Service Level Adjustments a. Increases --------- b. Decreases --------- c. Total (5a - 5b) --------- 6. Other Mutually Agreed To Adjustments a. Increases --------- b. Decreases --------- c. Total (6a - 6b) --------- 7. Target (1 + 2 + 3 + 4c + 5c + 6c) --------- General Communication, Inc. (GCI) - 57 - FINAL v4.5 Framework Agreement 11/9/95 1996 INCENTIVE SPECIMEN 1. Target --------- 2. NBA Invoiced Amounts a. Actual Costs --------- b. Margin --------- c. Total (2a + 2b) --------- 3. Under-run/Over-run (1 - 2c) --------- 4. Risk/Reward Basis* a. Risk Basis (#3 less than 0) --------- b. Reward Basis (#3 greater than 0) * Subject to Provisions of Framework Agreement, Section 18. General Communication, Inc. (GCI) - 58 - FINAL v4.5 Framework Agreement 11/9/95 INVOICE SPECIMEN Month of 1. Invoice Summary Current YTD A. Direct Costs B. Margin (Direct Costs) C. Sub-contractor Costs D. Margin (Sub-contractor Costs) E. Network Services i. Network Management ii. Long Distance iii. Transport 2. Current Month Detail A. Direct Costs B. Margin (Direct Costs) C. Sub-contractor Costs D. Margin (Sub-contractor Costs) E. Network Services i. Network Management ii. Long Distance iii. Transport General Communication, Inc. (GCI) - 59 - FINAL v4.5 Framework Agreement 11/9/95 ANNEX C: MINIMUM CONDITIONS OF SATISFACTION General Communication, Inc. (GCI) - 60 - FINAL v4.5 Framework Agreement 11/9/95 1. GENERAL 1.1. Mutual Benefit The relationship shall be to the benefit and complete satisfaction of all Parties, relying on and resulting in the full and enthusiastic participation of all Parties in achieving the agreed to outcome. 1.2. Trust and Openness The relationship shall be conducted in a spirit of trust and openness so that information on any matter having a material impact on the relationships between the Parties shall to the fullest extreme possible be disclosed to each Party. 1.3. Ownership of Actions Each aspect of the relationship shall be assigned to a nominated person or persons within each Party who shall be fully empowered and accountable for that aspect and who will make commercially reasonable efforts to ensure its successful outcome. 1.4. Effectiveness of Decision The Parties shall seek to maximize the effectiveness of decisions by minimizing interfaces and shortening decision routes. 1.5. Addressing Risk Risks and concerns of either Party shall be shared and addressed by both Parties with the aim of eliminating, or if that is impossible to quantify as far as possible, and adopt the most pragmatic cost effective way of meeting them. 1.6. Withdrawal It is recognized by the Parties that circumstances may change such that a Party might wish to withdraw in which event the other Parties shall agree to fair reasonable and timely procedures to enable this. General Communication, Inc. (GCI) - 61 - FINAL v4.5 Framework Agreement 11/9/95 2. BASIC SERVICE ELEMENTS 2.1. Minimum Services To Be Provided 2.1.1. Network Design and Deployment 2.1.1.1. Design and implement 52+ NBA LANs; 2.1.1.2. Design and implement a statewide wide area network connecting all branch LANs and other data, voice and video networks; 2.1.1.3. Design and implement a diversely routed/resilient "backbone network" connection between NBA's data network collection point in Anchorage and the M&I's facilities; 2.1.1.4. Design and develop a business case for an inter-branch voice over frame relay solution; 2.1.1.5. Design, business case and implement a Bank-wide voice communications solution; 2.1.1.6. Change management and consulting engineering to support NBA's telecommunications evolution. 2.1.2. Network Operation & Customer Support 2.1.2.1. Wide area data, voice and video network M&C/management; 2.1.2.2. LAN management (through client/server NICs); 2.1.2.3. 7/24 customer support coverage for all identified Services work orders and trouble tickets; 2.1.2.4. Change management enterprise network engineering and analysis which includes procurement and installation of all components; 2.1.2.5. PBX and key system maintenance/management. 2.1.2.6. Procurement and installation of telecom equipment. 2.1.3. Technical Services 2.1.3.1. Technical hardware maintenance and asset management; General Communication, Inc. (GCI) - 62 - FINAL v4.5 Framework Agreement 11/9/95 2.1.3.2. Move, Add, Change (MAC) support for telephony PBX/key system station equipment; 2.1.3.3. MAC for all PC/LAN hardware (servers, clients, hubs and PDS); 2.1.3.4. Switched video conference support between NBA, the IS provider and other locations (both hardware and switched video service). 2.1.3.5. Client desktop operating system support. 2.1.4. Common Carrier Services 2.1.4.1. Operate a Bank-wide voice communications service comprised of local loop, private line and other MTS services; 2.1.4.2. Operate a statewide wide area network connecting all branch LANs comprised of private leased lines or private/public frame relay service or comparable technologies. 2.2. Service Level Agreement The Contractor shall ensure that service levels for all of the services defined in Sub-section 2.1 shall be delivered at NBA's current levels of satisfaction. Specific Service Level Agreements will be developed and included in all Call-off Contracts. Minimum Service Levels consistent with the following will be maintained:
SERVICE LEVEL GOALS: ---------------------------------------------------------------------------------------- ICRE Release 96.00% ATM Availability 98.00% Option, Plus & VISA Availability 98.50% Production Processing and On-Line Availability 98.00% Report Distribution 98.00% Network Response Time - In-town Less than 2.0 seconds Network Response Time - Out-of-town Less than 4.0 seconds
General Communication, Inc. (GCI) - 63 - FINAL v4.5 Framework Agreement 11/9/95 2.3. Targets The Contractor commits to deliver the services defined in Sub-section 2.1 in accordance with the following: 2.3.1. In 1996, NBA and the Contractor shall in respect of the Services to be provided agree to an overall Target. The Contractor shall provide the Services at a total charge to NBA which shall enable NBA to achieve its expectation of savings. The total charge to NBA, or Target, includes the Contractor's Expected Cost of Operations (CoOE) as defined in Annex A less ******** , or ********, whichever is greater. 2.3.2. The resulting Target will be included in the first year Call-off Contract. 2.3.3. In 1997 and beyond, NBA and the Contractor shall in respect of the Services to be provided agree to an overall Target. The Contractor shall provide the Services at a total charge to NBA which shall enable NBA to continue to achieve its expectations of savings. Under the terms of this Sub-section, the Target includes: (i) the sum of the Actual Costs, Margin and Risk/Reward Incentives from the previous Year's performance; (ii) the mutually agreed to dollar value of increases or decreases in Scope of Work and Service Levels; plus (iii) other mutually agreed to adjustments, such as inflation or COLA. 2.3.4. Subsequent year Targets will be established jointly by NBA and the Contractor and will be included in those Call-off Contracts. 3. QUALITY 3.1. Continuous Improvement The Contractor shall commit to achieving continuous improvement in cost effectiveness, Service quality and performance levels. 3.2. Service Quality The prime measure of Service quality will be continuous satisfaction of NBA. 3.3. Benefit from Developments The Contractor shall ensure that best practices in the industry are applied in delivering "best-in-class" services to NBA. Improved tech- General Communication, Inc. (GCI) - 64 - FINAL v4.5 Framework Agreement 11/9/95 nologies, processes and methodologies will be quickly transferred and applied to the Services as soon as it is economically beneficial to do so. 3.4. Standards The Parties shall compare respective policies, technical standards and codes of practice with a view to agreeing to a common code that will reflect best practice relevant to the objectives of the Framework Agreement. 4. FLEXIBILITY FOR CHANGE 4.1. Change The Parties should be prepared to meet change in any form and to any extent and will adopt appropriate change control and review procedures to facilitate change, or in the ultimate case to enable equitable termination or withdrawal. 4.2. Goal Setting From time to time the Parties will agree to objectives and performance targets. These agreed to objectives and targets will themselves be subject to review as business conditions and requirements change. 4.3. Asset Ownership Arrangements should be agreed to such that ownership of assets including premises, infrastructure, equipment, software and procedures presents the minimum of constraint to the performance of the scope of activities and Services agreed. 5. PROCUREMENT 5.1. Procurement Ethics The Contractor shall adhere to codes of conduct and procurement ethics that NBA would use if procuring direct. 5.2. Sub-Contracts Wherever possible the Contractor will have relationships with its suppliers and Sub-contractors that are in accordance with its relationship with NBA. General Communication, Inc. (GCI) - 65 - FINAL v4.5 Framework Agreement 11/9/95 6. HUMAN RELATIONS AND PERSONNEL 6.1. HR Policy The Contractor shall have human resource policies and put them into practice that demonstrate sympathy with employees' circumstances and aspirations and provide career development, training, leave and benefits to a standard commensurate with ensuring continued Service quality. 6.2. HR Transition During the transitional period the Contractor shall work closely with NBA and strive to ensure that all employees of all Parties are treated fairly and with respect and that there is no risk to Service quality through staff dissatisfaction or loss of morale. 6.3. Employment of Former NBA Employees Where former NBA personnel join the Contractor's Organization, then the Contractor will commit to maintaining the high standards of respect and observance of family values existing in NBA. The transition of personnel will be managed through a process of planning and consultation involving the individuals to be affected in advance as appropriate and as agreed to by NBA management. Due regard will be given to the individual's personal development plans. 6.4. Contractor's Personnel The Contractor's personnel providing the Service will behave in a fashion generally consistent with that which would be expected of NBA employees performing equivalent duties and will give precedence to cost effectiveness and customers' requirements accordingly. 6.5. Secondment of Personnel The Parties shall commit to Secondment of individuals as appropriate from one party to another for the purposes of personal development, or the transfer of know-how or training. General Communication, Inc. (GCI) - 66 - FINAL v4.5 Framework Agreement 11/9/95 7. COSTS 7.1. Value for Money The Contractor should always be able to demonstrate that NBA is receiving good value for money on the Services through appropriate benchmarking and monitoring, whilst the Contractor maintains a reasonable rate of return. 7.2. Budgets Operating budgets may be drawn up by NBA and the Contractor. The keynote of such budgets shall be efficiency and cost effectiveness. A review mechanism shall be instituted by the Parties to ensure timely response to agreed to changes to the Service. 7.3. Most Favored Nations Pricing and Tariffs Network Services will be delivered based upon filed APUC/FCC tariffs or via Most Favored Nations pricing. General Communication, Inc. (GCI) - 67 - FINAL v4.5 Framework Agreement 11/9/95 ANNEX D: MODEL CALL-OFF CONTRACT AND SCHEDULES General Communication, Inc. (GCI) - 68 - FINAL v4.5 Framework Agreement 11/9/95 TABLE OF CONTENTS
SECTION PAGE PREAMBLE................................................................................................... 1. DEFINITIONS.................................................................................................70 2. STATUS......................................................................................................70 3. PROVISION OF SERVICES.......................................................................................71 4. DURATION....................................................................................................71 5. INVOICES AND PAYMENT........................................................................................71 6. MANAGEMENT ORGANIZATION.....................................................................................72 7. NO WAIVER...................................................................................................72 8. SERVICE OF NOTICE...........................................................................................73 9. FURTHER ASSURANCES..........................................................................................73 10. GOVERNING LAW...............................................................................................74 11. INVALIDITY..................................................................................................74 12. ADDITIONAL TERMS AND CONDITIONS.............................................................................74 13. CONDITION PRECEDENT.........................................................................................74 SCHEDULE 1: SCOPE OF WORK..............................................................................75 SCHEDULE 2: SERVICE LEVELS.............................................................................76 SCHEDULE 3: CHARGES AND BILLING INFORMATION............................................................77 SCHEDULE 4: NBA AND CONTRACTOR PREMISES................................................................78 SCHEDULE 5: INFORMATION RECORDS........................................................................79 SCHEDULE 6: CONFIDENTIALITY LETTER.....................................................................80 SCHEDULE 7: ADDITIONAL TERMS AND CONDITIONS............................................................81 SCHEDULE 8: NBA OBLIGATIONS............................................................................82 SCHEDULE 9: LONG TERM CONTRACTS........................................................................83
General Communication, Inc. (GCI) - 69 - FINAL v4.5 Framework Agreement 11/9/95 MODEL CALL-OFF CONTRACT THIS CONTRACT is made the day of 199[ ]. BETWEEN National Bank of Alaska whose registered offices are located at 301 West Northern Lights Blvd., Anchorage, Alaska 99503 (hereafter, "NBA") and General Communication, Inc. (GCI) whose registered offices are located at 2550 Denali St., Suite 1000, Anchorage, Alaska 99503 (hereafter, "The Contractor") WHEREAS A. By a Framework Agreement dated [ ] 1995 entered into between NBA and the Contractor terms were agreed to whereby the Contractor or an Associated Company of the Contractor would provide or ensure the provision of telecommunication services to be available to NBA and other NBA Associated Companies in substitution for the telecommunication services which were immediately prior to the execution of this Contract either provided from within NBA or acquired from Third Party contractors; B. NBA now wishes the Contractor to provide the Services and the Contractor is able to provide the Services on the terms set out below in this Contract. IT IS THEREFORE AGREED as follows: 1. DEFINITIONS 1.1. A glossary of Definitions which shall apply to the terms used in this Contract appears as Annex A to the Framework Agreement and shall be deemed to be incorporated in this Contract. 1.2. In the event of conflict between this Contract and the Framework Agreement, the order of precedence shall be this Contract and the Framework Agreement. 2. STATUS 2.1. This Contract may only be modified if such modification is in writing and signed by a duly authorized representative of each Party. 2.2. The following documents shall together form part of and shall be read with this Contract and shall represent the entire understanding be- General Communication, Inc. (GCI) - 70 - FINAL v4.5 Framework Agreement 11/9/95 tween the Parties in relation to the subject matter hereof and supersede all previous agreements and representations made by either Party, whether oral or written. 2.2.1. The Framework Agreement 2.2.2. The Transfer Agreement 2.2.3. The Schedules: Schedule 1 Scope of Work Schedule 2 Service Levels Schedule 3 Charges and Billing Information Schedule 4 NBA and Contractor Premises Schedule 5 Information Records Schedule 6 Confidentiality Letter Schedule 7 Additional Terms and Conditions Schedule 8 NBA Obligations Schedule 9 Long Term Contracts 3. PROVISION OF SERVICES The Contractor shall perform the Services in accordance with this Contract. 4. DURATION The Services shall commence at hours on (Commencement Date) and shall continue until unless extended by mutual agreement or subject to earlier termination. 5. INVOICES AND PAYMENT 5.1. In consideration of the provision of the Services NBA shall pay to the Contractor the Charges as provided for in Schedule 3. General Communication, Inc. (GCI) - 71 - FINAL v4.5 Framework Agreement 11/9/95 5.2. The invoicing address shall be: General Communication, Inc. (GCI) Accounts Payable Department 2550 Denali St. Suite 900 Anchorage, Alaska 99503 Tel: 907-265-5600 Fax: 907-265-5574 Contact: Richard A. Whitney Director, Business Development 5.3. The Contractor shall render invoices to NBA at the intervals and in the manner specified in Section 21 of the Framework Agreement. 6. MANAGEMENT ORGANIZATION 6.1. The NBA Partner Relations Manager shall be B. John Shipe, Executive Vice President, (907) 265-2860. 6.2. The Contractor Representative shall be Richard A. Whitney, Director, Business Development, (907) 265-5301. 7. NO WAIVER Failure by either Party to exercise or enforce any right conferred by the Contract shall not be deemed to be a waiver of any such right nor operate so as to bar the exercise or enforcement thereof or of any other right on any other occasion. General Communication, Inc. (GCI) - 72 - FINAL v4.5 Framework Agreement 11/9/95 8. SERVICE OF NOTICE 8.1. Any notice or other document which may be given by either Party under the Contract shall be deemed to have been duly given if left at or sent by pre-paid recorded delivery post or facsimile transmission (confirmed by letter sent by pre-paid recorded delivery post) to each Party's principal or registered office as set out below as an address to which notices, invoices and other documents may be sent: NBA: National Bank of Alaska (NBA) P.O. Box 100600 Anchorage, Alaska 99510-0600 Tel: 907-265-2860 Fax: 907-265-2887 Contact: B. John Shipe Executive Vice President Contractor: General Communication, Inc. (GCI) 2550 Denali St. Suite 1000 Anchorage, Alaska 99503 Tel: 907-265-5600 Fax: 907-265-5574 Contact: Richard A. Whitney, Director Business Development 8.2. Any such communication shall be deemed to have been made to the other Party four days (4) from the date of posting (if by letter) and if by facsimile transmission on the day of such transmission provided the original of the communication is received by the other Party within 4 days of the date of transmission. 9. FURTHER ASSURANCES The Contractor and NBA shall use all reasonable endeavors respectively to ensure that any Third Party necessary for the performance of the Services shall do, execute and perform all such further deeds, documents, assurances, acts and things as either of the Parties hereto may reasonably require by notice in writing to any other party to carry the provision of the Contract into full force and effect. General Communication, Inc. (GCI) - 73 - FINAL v4.5 Framework Agreement 11/9/95 10. GOVERNING LAW This Contract shall, to the extent that any aspect or matter fails to be interpreted, conformed or adjudicated upon by the parties themselves, be dealt with in accordance with the laws of the United States and the State of Alaska. Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, such arbitration to take place in Anchorage, Alaska and judgment upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction thereof. 11. INVALIDITY If any term or provision in the Contract shall in whole or in part be held to any extent to be illegal or unenforceable under any enactment or rule of law, that term or provision or part shall to that extent be deemed not to form part of the Contract and the enforceability of the remainder of the Contract shall not be affected. 12. ADDITIONAL TERMS AND CONDITIONS Additional terms and conditions to the Framework Agreement terms and to this Contract are set out in Schedule 7. 13. CONDITION PRECEDENT It is a condition of this Contract that NBA and the Contractor execute a Transfer Agreement on the Commencement Date. IN WITNESS WHEREOF the Parties hereto have by duly authorized representatives set their hands the day and year first above written. for and on behalf of } National Bank of Alaska (NBA) } for and on behalf of } General Communication, Inc. (GCI) } General Communication, Inc. (GCI) - 74 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 1: SCOPE OF WORK General Communication, Inc. (GCI) - 75 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 2: SERVICE LEVELS General Communication, Inc. (GCI) - 76 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 3: CHARGES AND BILLING INFORMATION General Communication, Inc. (GCI) - 77 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 4: NBA AND CONTRACTOR PREMISES General Communication, Inc. (GCI) - 78 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 5: INFORMATION RECORDS General Communication, Inc. (GCI) - 79 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 6: CONFIDENTIALITY LETTER General Communication, Inc. (GCI) - 80 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 7: ADDITIONAL TERMS AND CONDITIONS General Communication, Inc. (GCI) - 81 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 8: NBA OBLIGATIONS General Communication, Inc. (GCI) - 82 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 9: LONG TERM CONTRACTS General Communication, Inc. (GCI) - 83 - FINAL v4.5 Framework Agreement 11/9/95 ANNEX E: MODEL TRANSFER AGREEMENT General Communication, Inc. (GCI) - 84 - FINAL v4.5 Framework Agreement 11/9/95 TABLE OF CONTENTS
SECTION PAGE 1. INTERPRETATION..............................................................................................86 2. CONDITION PRECEDENT.........................................................................................87 3. AGREEMENT FOR SALE AND TRANSFER.............................................................................87 4. TRANSFER CONSIDERATION......................................................................................88 5. COMPLETION..................................................................................................88 6. CONTINUING CONTRACTS........................................................................................89 7. WARRANTIES..................................................................................................90 8. NOTICES.....................................................................................................91 9. MISCELLANEOUS...............................................................................................91 10. GOVERNING LAW...............................................................................................92 SCHEDULE 1: THE TRANSFER EQUIPMENT.....................................................................93 SCHEDULE 2: THE TRANSFERRED SOFTWARE...................................................................94 SCHEDULE 3: CONTINUING CONTRACTS.......................................................................95
General Communication, Inc. (GCI) - 85 - FINAL v4.5 Framework Agreement 11/9/95 MODEL TRANSFER AGREEMENT THIS CONTRACT is made the day of 199[ ]. BETWEEN National Bank of Alaska whose registered offices are located at 301 West Northern Lights Blvd., Anchorage, Alaska 99503 (hereafter, "NBA") and General Communication, Inc. (GCI) whose registered offices are located at 2550 Denali St., Suite 1000, Anchorage, Alaska 99503 (hereafter, "The Contractor") WHEREAS A. NBA owns and operates its own computer and data processing facilities and telecommunications network/facilities used for the provision of Information Services (IS), including telecommunications services. B. NBA has agreed to transfer to the Contractor certain assets relating to such facilities and used in the provision of such facilities on the terms set out in this Transfer Agreement. C. The Contractor has agreed to run the telecommunication facilities in accordance with the terms of an outsourcing agreement of even date herewith made between NBA and the Contractor (the "Call-Off Contract"). IT IS THEREFORE AGREED as follows: 1. INTERPRETATION 1.1. Unless otherwise stated herein capitalized words and phrases used in this Transfer Agreement shall have the same meanings as are ascribed to them in a glossary of definitions appended to the Framework Agreement as Annex A. 1.2. In the event of conflict between this Agreement and the Call-Off Contract or the Framework Agreement, the order of precedence shall be this Agreement, the Call-Off Contract and the Framework Agreement. 1.3. This Agreement may only be modified if such modification is in writing and signed by a duly authorized representative of each Party. General Communication, Inc. (GCI) - 86 - FINAL v4.5 Framework Agreement 11/9/95 1.4. The following documents shall together form part of and shall be read with this Agreement and shall represent the entire understanding between the Parties in relation to the subject matter hereof and supersede all previous agreements and representations made by either Party, whether oral or written. 1.4.1. The Framework Agreement 1.4.2. The Call-Off Contract 1.4.3. The Schedules: Schedule 1 The Transfer Equipment Schedule 2 The transferred Software Schedule 3 The Continuing Contracts 2. CONDITION PRECEDENT 2.1. It is a condition of this Transfer Agreement that the Contractor and NBA execute the Call-Off Contract on the date hereof. 2.2. If the condition precedent referred to in Sub-Clause 2.1 is not satisfied the Parties shall endeavor to cancel or reverse all (if any) transfers of Equipment, Software, leases, Continuing Contracts and other assets either contemplated or executed with the intent of restoring both Parties to their respective position and status as immediately prior to the execution of this Transfer Agreement. 3. AGREEMENT FOR SALE AND TRANSFER 3.1. Subject to the terms and conditions of this Transfer Agreement, NBA agrees to sell and/or transfer and the Contractor agrees to purchase or accept (as appropriate) on the date of sale or transfer the following: 3.1.1. The Transfer Equipment as itemized and at the prices listed in Schedule 1; and 3.1.2. Insofar as NBA is able to assign or novate the same pursuant to Clause 6 the full benefit and burden of the Continuing Contracts referred to in Schedule 3 and Software referred to in Schedule 2. 3.1.3. Subject to the provisions of this Transfer Agreement there shall be excluded from the sale hereby agreed all liabilities of whatsoever nature owing or incurred by NBA whether relating to any General Communication, Inc. (GCI) - 87 - FINAL v4.5 Framework Agreement 11/9/95 of the Transfer Equipment, transferred Software, Leases or Continuing Contracts or otherwise up to and including the effective date or dates (as appropriate) when individual assets are transferred or sold to the Contractor ("Transfer Date(s") and NBA shall indemnify the Contractor against any liability, claims, costs and expenses up to the Transfer Date(s) that the Contractor may incur in respect thereof. 3.1.4. The Contractor shall indemnify NBA in respect of any liability, claims, costs and expenses that the Contractor or NBA may incur whether relating to any of the Equipment, Software, Leases or Continuing Contracts or otherwise which arise, are arising or are incurred subsequent to the Transfer Date(s). 4. TRANSFER CONSIDERATION 4.1. As consideration for the agreement by NBA to transfer the assets to the Contractor as referred to in Clause 3 above, the Contractor hereby agrees to pay NBA the amounts shown in the relevant Schedules which shall be paid in full on the Transfer Date(s). 4.2. It is hereby agreed that the sums to be paid pursuant to this Clause 4 are exclusive of and expressed without the addition of [value added tax/local sales tax], which shall be paid by the Contractor to NBA at the applicable rate in addition to the sum payable in Clause 4.1, subject to the production by NBA of a valid tax invoice giving the requisite details of the taxable supply. 5. COMPLETION 5.1. Completion of the sale and transfer hereunder shall take place at the offices of NBA. 5.2. Upon completion NBA shall deliver to the Contractor: 5.2.1. Possession of all the Transfer Equipment capable of passing by delivery; 5.2.2. Executed documentation sufficient for the purposes of transferring title to any Transfer Equipment not capable of passing into the ownership of the Contractor by delivery; 5.2.3. Copies of documentation relating to the Continuing Contracts including service records, operating manuals and relevant technical information. General Communication, Inc. (GCI) - 88 - FINAL v4.5 Framework Agreement 11/9/95 5.3. Upon Completion, the Contractor shall deliver to NBA the sum specified in Clause 4.1. 5.4. Risk in and title to the Transfer Equipment shall be deemed to have passed to the Contractor with effect from the Transfer Date(s). 5.5. In respect of assets where risk and title shall not be capable of passing by delivery, NBA shall grant to the Contractor a license to use such assets including Software, provided that NBA is contractually entitled to make such grant and provided also that any such grant shall be made subject to all rights, liabilities and obligations to which NBA is itself subject under any agreement relating to such asset. 6. CONTINUING CONTRACTS 6.1. As soon as reasonably practicable after the Commencement Date, NBA shall to the extent it is reasonably able procure at no expense to the Contractor any Third Party authorization necessary for the Contractor to enjoy the use and the benefit of Continuing Contracts between NBA and other contractors which will notwithstanding the entry into the Contract be required for the purposes of the Services. Such authorization may including the transfer, assignment or novation of the Continuing Contracts in favor of the Contractor. The Contractor shall use reasonable endeavors to assist NBA in such matters. 6.2. NBA shall to the extent it is reasonable to do permit the Contractor to use and have the benefit of the subject of each of the Continuing Contracts in accordance with the terms of that contract in the period from the Commencement Date to the relevant Transfer Date(s). The Contractor shall observe and perform the provisions of the Continuing Contracts in all material respects and subject thereto NBA shall likewise observe and perform such provisions. 6.3. Where it shall not prove possible, be permitted or lawful to effect a transfer, assignment or novation of a Continuing Contract to the Contractor, NBA and the Contractor shall cooperate-operate in making such reasonable alternative arrangements which shall be in accordance with the terms of such Continuing Contract as may best achieve the objectives of the Contract in accordance with the following: 6.3.1. NBA shall appoint the Contractor as its agent to liaise and deal with the relevant Continuing Contract and to perform all NBA's obligations thereunder, save for those express obligations the Parties agree in writing shall continue to be performed by NBA (for the purpose of this Clause "NBA Obligations"); and General Communication, Inc. (GCI) - 89 - FINAL v4.5 Framework Agreement 11/9/95 6.3.2. If NBA, as part of the NBA Obligations, agrees to pay all or part of the costs due to the Third Party under the relevant Continuing Contract, then unless otherwise agreed, the Contractor shall receive and verify invoices thereunder and shall notify NBA in a timely fashion of sums the Contractor approves for payment by NBA and of the Third Parties to whom such payment should be made; and 6.3.3. In its capacity as agent, the Contractor shall be responsible for observing and obeying all the obligations to be performed by NBA thereunder excluding the NBA Obligations. 6.4. NBA and the Contractor shall promptly settle between themselves any pre-payment or accrual relating to the Continuing Contracts on the basis that all expenses under such contracts attributable to any period prior to the Transfer Date(s) shall be borne by NBA and all expenses attributable to the period thereafter shall be borne by the Contractor. 7. WARRANTIES The Contractor shall with the assistance of NBA satisfy itself with regard to the condition of the Equipment and all other assets transferred pursuant to this Transfer Agreement including fitness for purpose and the rights of the Contractor to own and operate the Equipment and other assets during the provision of the Services. General Communication, Inc. (GCI) - 90 - FINAL v4.5 Framework Agreement 11/9/95 8. NOTICES 8.1. Any notice or other document which may be given by either Party under this Transfer Agreement shall be deemed to have been duly given if left at or sent by pre-paid recorded delivery post or facsimile transmission (confirmed by letter sent by pre-paid recorded delivery post) to each Party's principal or registered office as set out below as an address to which notices, invoices and other documents may be sent: NBA: National Bank of Alaska (NBA) P.O. Box 100600 Anchorage, Alaska 99510-0600 Tel: 907-265-2860 Fax: 907-265-2887 Contact: B. John Shipe Executive Vice President Contractor: General Communication, Inc. (GCI) 2550 Denali St. Suite 1000 Anchorage, Alaska 99503 Tel: 907-265-5600 Fax: 907-265-5574 Contact: Richard A. Whitney, Director Business Development 8.2. Any such communication shall be deemed to have been made to the other Party four days (4) from the date of posting (if by letter) and if by facsimile transmission on the day of such transmission provided the original of the communication is received by the other Party within 4 days of the date of transmission. 9. MISCELLANEOUS 9.1. Failure by either Party to exercise or enforce any right conferred by this Transfer Agreement shall not be deemed to be a waiver of any such right nor operate so as to bar the exercise or enforcement thereof or of any other right on any other occasion. 9.2. The Contractor and NBA shall, and shall use all reasonable endeavors respectively to procure that any necessary Third Party shall do, execute and perform all such further deeds, documents, assurances, acts and things as any of the Parties hereto may reasonably require by notice in writing to any other Party to carry the provision of this Transfer Agreement into full force and effect. General Communication, Inc. (GCI) - 91 - FINAL v4.5 Framework Agreement 11/9/95 10. GOVERNING LAW This Transfer Agreement shall, to the extent that any aspect or matter fails to be interpreted, conformed or adjudicated upon by the parties themselves, be dealt with in accordance with the laws of the United States and the State of Alaska. Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, such arbitration to take place in Anchorage, Alaska and judgment upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction thereof. IN WITNESS WHEREOF the Parties hereto have by duly authorized representatives set their hands the day and year first above written. for and on behalf of } National Bank of Alaska (NBA) } for and on behalf of } General Communication, Inc. (GCI) } General Communication, Inc. (GCI) - 92 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 1: THE TRANSFER EQUIPMENT General Communication, Inc. (GCI) - 93 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 2: THE TRANSFERRED SOFTWARE General Communication, Inc. (GCI) - 94 - FINAL v4.5 Framework Agreement 11/9/95 SCHEDULE 3: CONTINUING CONTRACTS General Communication, Inc. (GCI) - 95 - FINAL v4.5 Framework Agreement 11/9/95 ANNEX F: GCI AND M&I SHARED RESPONSIBILITIES General Communication, Inc. (GCI) - 96 - FINAL v4.5 Framework Agreement 11/9/95 LAN AND WORKSTATION DEPLOYMENT, ASSIGNMENT OF RESPONSIBILITIES
Purchase Issues GCI M&I Note -------------------------- A. Who purchases pc workstations X -------------------------- -------------------------- B. Who purchases financial printers. X -------------------------- -------------------------- C. Who purchases laser printers. X -------------------------- -------------------------- D. Who purchases file server hardware X -------------------------- -------------------------- E. Who purchases file server software: -------------------------- -------------------------- 1. Novell X -------------------------- -------------------------- 2. Remote monitoring software via dial-up X -------------------------- -------------------------- 3. 3270 Communications Software X -------------------------- -------------------------- 4. Tape Backup Software X -------------------------- -------------------------- 5. Server monitoring X X# 1,4 -------------------------- -------------------------- F. Who purchases UPS system and monitoring software. X -------------------------- -------------------------- G. Who purchases Bay Network wiring hubs. X -------------------------- -------------------------- H. Who purchases Helpdesk monitoring platform and software? X -------------------------- -------------------------- I. Who purchases Branch Network infrastructure? X --------------------------
Installation & Configuration Issues GCI M&I Note -------------------------- A. Who performs site surveys to identify: -------------------------- -------------------------- 1. Room for equipment in teller windows. X -------------------------- -------------------------- 2. Placement of premises X X# 1,4 gear. -------------------------- -------------------------- 3. Placement of wiring hubs and patch X panels. -------------------------- -------------------------- 4. Placement of file server. X X# 1,4 -------------------------- -------------------------- 5. Sufficient electrical outlets and power supply. X X# 1,4 -------------------------- -------------------------- 6. Placement of financial printers. X X# 1,4 -------------------------- -------------------------- 7. Placement of laser X X# 1,4 printers. -------------------------- -------------------------- 8. Diagram of branch with equipment locations noted. X -------------------------- -------------------------- B. Loads Novell to file server X 3 -------------------------- -------------------------- C. Creates userlist, groups, and security authorization in X 3 Novell -------------------------- -------------------------- D. Loads Tape Backup Software and tests. X 3 -------------------------- -------------------------- E. Loads remote support (dial-in) software and configures. X 3 -------------------------- -------------------------- F. Load UPS monitoring software and configures. X 3 -------------------------- -------------------------- G. Loads Network Management Software and configures. X# X 1,4 -------------------------- -------------------------- H. Create Installation and Configuration standards X X# 1,4 -------------------------- -------------------------- I. Initiate asset management process prior to shipping X# X 1,4 -------------------------- -------------------------- J. Testing of pc workstations prior to shipping to branch locations X -------------------------- -------------------------- K. Testing of hubs, routers & servers prior to shipping to branch locations X --------------------------
General Communication, Inc. (GCI) - 97 - FINAL v4.5 Framework Agreement 11/9/95
Initial Installation To Include File Server, And At Least One LAN Personal Computer GCI M&I Note -------------------------- A. Install branch LAN infrastructure X -------------------------- -------------------------- 1. 10-base-T wiring X -------------------------- -------------------------- 2. Provides 10 ft. 10-base-T patch cables X -------------------------- -------------------------- 3. Installs wiring hubs. X -------------------------- -------------------------- B. Installs Business Phone lines for remote dial-in support as needed. X -------------------------- -------------------------- C. Installs file server, tape back-up, hard drive, kbd/monitor, UPS X X# 1,4 -------------------------- -------------------------- D. Installs personal computers and financial printers X X# 1,4 -------------------------- -------------------------- E. Installs laser printers X X# 1,4 -------------------------- -------------------------- F. Installs external modem for dial-up remote support X# X 1,4 -------------------------- -------------------------- G. Tests installed components - full online and application testing X X# 1,4 --------------------------
Final Installation to Include Removal of Existing Gear, and Installation of all Teller Computers, Financial Printer, Laser Printers and Other Personal Computers in the Branch. GCI M&I Note -------------------------- A. Remove existing equipment from teller windows and desks. X X# 1,4 -------------------------- -------------------------- B. Remove existing controller equipment. X -------------------------- -------------------------- C. Install Teller workstations in windows with financial printers. X X# 1,4 -------------------------- -------------------------- D. Install Desktop workstations and laser printers. X X# 1,4 -------------------------- -------------------------- E. Test each workstation to ensure end to end operability. X X# 1,4 -------------------------- -------------------------- F. Records serial# information for asset management X# X 1,4 --------------------------
General Communication, Inc. (GCI) - 98 - FINAL v4.5 Framework Agreement 11/9/95
Post-Installation Support GCI M&I Note -------------------------- A. Maintains users, groups on Novell. X -------------------------- -------------------------- B. Maintains Novell operating system software patches. X# X -------------------------- -------------------------- C. Modifies tape backup job schedules. X -------------------------- -------------------------- D. Maintains 3270 software on server/workstations. X -------------------------- -------------------------- E. Maintains Office Automation software (wordprocessing, spreads, database) NBA 2 -------------------------- -------------------------- F. Maintains Windows software configurations and patches. X# X 1,4 -------------------------- -------------------------- G. Maintains Novell client software configurations and patches. X -------------------------- -------------------------- H. Maintains 3rd party software that NBA has today NBA 2 -------------------------- -------------------------- I. Maintains M&I PCTeller software loads (disbursement of new releases) X -------------------------- -------------------------- J. Maintains M&I Salespartner software disbursement. X -------------------------- -------------------------- K. Maintains Bay Networks Optivity software and reporting programs. X -------------------------- -------------------------- L. Maintains performance statistics on servers and local area networks. X -------------------------- -------------------------- M. NBA Support calls for hardware or software are placed to whom? NBA 2 -------------------------- -------------------------- N. Equipment repair should be shipped to: -------------------------- -------------------------- 1. AT&T Personal Computers and Financial Printers X -------------------------- -------------------------- 2. Bay Networks Hubs X -------------------------- -------------------------- 3. APC UPS Units X -------------------------- -------------------------- 4. HP Laser Printers X --------------------------
Monitoring/Reporting Support GCI M&I Note -------------------------- A. Monitors Bay Networks wiring hubs and produces periodic reports X -------------------------- -------------------------- B. Monitors Routers and produces periodic reports X -------------------------- -------------------------- C. Monitors DSU/CSU equipment and produces periodic reports X -------------------------- -------------------------- D. Monitors Novell file servers and produces utilization/capacity reports X -------------------------- -------------------------- E. Monitors performance of the LAN and produces periodic reports. X -------------------------- Notes 1. GCI and M&I will perform this task on a team basis. Possibility exists for M&I to provide GCI with information and GCI staff actually do the physical work. 2. NBA will maintain a small Helpdesk team serving as SPoC. They will screen all user calls and interact with both GCI's NCC and M&I's customer support organization. This team will also support NBA's office automation and 3rd party software on behalf of users. 3. These tasks will be performed by M&I and accountability handed off to GCI upon acceptance testing. 4. Where responsibilities are shared, the "#" indicates which contractor has ultimate responsibility.
General Communication, Inc. (GCI) - 99 - FINAL v4.5 Framework Agreement 11/9/95 EX-10 5 1996 CALL-OFF CONTRACT EXHIBIT D 1996 CALL-OFF CONTRACT between National Bank of Alaska (NBA) and General Communication, Inc. (GCI)(1) - ------------------- (1) In this document "********" are used in place of redacted information. General Communication, Inc. (GCI) - 1 - FINAL 1996 Call-Off Contract 4/25/96 TABLE OF CONTENTS
SECTION PAGE 1. DEFINITIONS..................................................................................................3 2. STATUS.......................................................................................................3 3. PROVISION OF SERVICES........................................................................................4 4. DURATION.....................................................................................................4 5. INVOICES AND PAYMENT.........................................................................................4 6. MANAGEMENT ORGANIZATION......................................................................................5 7. NO WAIVER....................................................................................................5 8. SERVICE OF NOTICE............................................................................................5 9. FURTHER ASSURANCES..........................................................................................6 10. GOVERNING LAW................................................................................................6 11. INVALIDITY..................................................................................................6 12. ADDITIONAL TERMS AND CONDITIONS..............................................................................7 SCHEDULE 1: 1996 SCOPE OF WORK..........................................................................8 SCHEDULE 2: SERVICE LEVELS.............................................................................14 SCHEDULE 3: 1996 EXPECTED COST OF OPERATIONS (COOE) AND TARGET.........................................18 SCHEDULE 4: CHARGES AND BILLING INFORMATION............................................................20 SCHEDULE 5: NBA AND CONTRACTOR PREMISES................................................................22 SCHEDULE 6: AGENCY LETTER..............................................................................29 SCHEDULE 7: CONFIDENTIALITY LETTER.....................................................................31 SCHEDULE 8: ADDITIONAL TERMS AND CONDITIONS............................................................33 SCHEDULE 9: WAN DEPLOYMENT PROJECT.....................................................................35 SCHEDULE 10: LONG TERM CONTRACTS.......................................................................41 SCHEDULE 11: STANDARD LABOR, BENEFIT AND OVERHEAD RATES................................................44
General Communication, Inc. (GCI) - 2 - FINAL 1996 Call-Off Contract 4/25/96 THIS CONTRACT is made the 20th day of December 1995. BETWEEN National Bank of Alaska whose registered offices are located at 301 West Northern Lights Blvd., Anchorage, Alaska 99503 (hereafter, "NBA") and General Communication, Inc. (GCI) whose registered offices are located at 2550 Denali St., Suite 1000, Anchorage, Alaska 99503 (hereafter, "The Contractor") WHEREAS By a Framework Agreement dated 9 November 1995 entered into between NBA and the Contractor, terms were agreed to whereby the Contractor or an Associated Company of the Contractor would provide or ensure the provision of telecommunication services to be available to NBA and other NBA Associated Companies in substitution for the telecommunication services which were immediately prior to the execution of this Contract either provided from within NBA or acquired from Third Party contractors; NBA now wishes the Contractor to provide the Services and the Contractor is able to provide the Services on the terms set out below in this Contract. IT IS THEREFORE AGREED as follows: 1. DEFINITIONS 1.1. A glossary of Definitions which shall apply to the terms used in this Contract appears as Annex A to the Framework Agreement and shall be deemed to be incorporated in this Contract. 1.2. In the event of conflict between this Contract and the Framework Agreement, the order of precedence shall be this Contract and the Framework Agreement. 1.3. For the avoidance of any doubt, Services will include all telecommunications and related services described in Schedule 1. 2. STATUS 2.1. This Contract may only be modified if such modification is in writing and signed by a duly authorized representative of each Party. 2.2. The following documents shall together form part of and shall be read with this Contract and shall represent the entire understanding between the Parties in relation to the subject matter hereof and supersede General Communication, Inc. (GCI) - 3 - FINAL 1996 Call-Off Contract 4/25/96 all previous agreements and representations made by either Party, whether oral or written. 2.2.1. The Framework Agreement 2.2.2. The Schedules: Schedule 1 Scope of Work Schedule 2 Service Levels Schedule 3 1996 Expected Cost of Operation (CoOE) and Target Schedule 4 Charges and Billing Information Schedule 5 NBA and Contractor Premises Schedule 6 Agency Letter Schedule 7 Confidentiality Letter Schedule 8 Additional Terms and Conditions Schedule 9 WAN Deployment Project Schedule 10 Long Term Contracts 3. PROVISION OF SERVICES The Contractor shall perform the Services in accordance with this Contract. 4. DURATION The Services shall commence at 0001 hours on 1 January 1996 (Commencement Date) and shall continue until 2400 on 31 December 1996, unless extended by mutual agreement or subject to earlier termination. 5. INVOICES AND PAYMENT 5.1. In consideration of the provision of the Services NBA shall pay to the Contractor the Charges as provided for in Schedule 4. General Communication, Inc. (GCI) Accounts Payable Department 2550 Denali St. Suite 900 Anchorage, Alaska 99503 Tel: 907-265-5600 Fax: 907-265-5574 Contact: Richard A. Whitney Director, Business Development General Communication, Inc. (GCI) - 4 - FINAL 1996 Call-Off Contract 4/25/96 5.2. The Contractor shall render invoices to NBA at the intervals and in the manner specified in Section 21 of the Framework Agreement. 6. MANAGEMENT ORGANIZATION 6.1. The NBA Partner Relations Manager shall be B. John Shipe, Executive Vice President, (907) 265-2860. 6.2. The Contractor Representative shall be Richard A. Whitney, Director, Business Development, (907) 265-5301. 7. NO WAIVER 7.1. Failure by either Party to exercise or enforce any right conferred by the Contract shall not be deemed to be a waiver of any such right nor operate so as to bar the exercise or enforcement thereof or of any other right on any other occasion. General Communication, Inc. (GCI) - 5 - FINAL 1996 Call-Off Contract 4/25/96 8. SERVICE OF NOTICE 8.1. Any notice or other document which may be given by either Party under the Contract shall be deemed to have been duly given if left at or sent by pre-paid recorded delivery post or facsimile transmission (confirmed by letter sent by pre-paid recorded delivery post) to each Party's principal or registered office as set out below as an address to which notices, invoices and other documents may be sent: NBA: National Bank of Alaska (NBA) P.O. Box 100600 Anchorage, Alaska 99510-0600 Tel: 907-265-2860 Fax: 907-265-2887 Contact: B. John Shipe Executive Vice President Contractor: General Communication, Inc. (GCI) 2550 Denali St. Suite 1000 Anchorage, Alaska 99503 Tel: 907-265-5600 Fax: 907-265-5574 Contact: Richard A. Whitney, Director Business Development 8.2. Any such communication shall be deemed to have been made to the other Party four days (4) from the date of posting (if by letter) and if by facsimile transmission on the day of such transmission provided the original of the communication is received by the other Party within 4 days of the date of transmission. 9. FURTHER ASSURANCES The Contractor and NBA shall use all reasonable endeavors respectively to ensure that any Third Party necessary for the performance of the Services shall do, execute and perform all such further deeds, documents, assurances, acts and things as either of the Parties hereto may reasonably require by notice in writing to any other party to carry the provision of the Contract into full force and effect. General Communication, Inc. (GCI) - 6 - FINAL 1996 Call-Off Contract 4/25/96 10. GOVERNING LAW This Contract shall, to the extent that any aspect or matter fails to be interpreted, conformed or adjudicated upon by the parties themselves, be dealt with in accordance with the laws of the United States and the State of Alaska. Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, such arbitration to take place in Anchorage, Alaska and judgment upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction thereof. 11. INVALIDITY If any term or provision in the Contract shall in whole or in part be held to any extent to be illegal or unenforceable under any enactment or rule of law, that term or provision or part shall to that extent be deemed not to form part of the Contract and the enforceability of the remainder of the Contract shall not be affected. 12. ADDITIONAL TERMS AND CONDITIONS Additional terms and conditions to the Framework Agreement terms and to this Contract are set out in Schedule 8. IN WITNESS WHEREOF the Parties hereto have by duly authorized representatives set their hands the day and year first above written. for and on behalf of } National Bank of Alaska (NBA) } for and on behalf of } General Communication, Inc. (GCI) } General Communication, Inc. (GCI) - 7 - FINAL 1996 Call-Off Contract 4/25/96 SCHEDULE 1: 1996 SCOPE OF WORK General Communication, Inc. (GCI) - 8 - FINAL 1996 Call-Off Contract 4/25/96 1. INTRODUCTION 1.1. General GCI will provide the services described in this Scope of Work document at all NBA premises shown in Schedule 5. Services will include those associated with NBA's Branch Deployment, LAN upgrades and WAN Deployment as well as operational and management (O&M) services considered routine. 1.2. Assumptions All on-site work performed will be handled as trouble requests, work requests or projects; centralized network management and other network services will be delivered pro-actively and will not be documented as one of the above; Work requests or projects that are required which are extraordinary in terms of their work volume and/or time for completion will be treated as out-of-scope; 2. SCOPE 2.1 Service Transition 2.1.1. Branch Deployment Provide local coordination for overall Branch LAN/desktop equipment and service installation; Conduct site-surveys documenting all network and equipment; Configure and install file server monitoring software, LAN hubs, and Help Desk monitoring platform; Install Branch LAN infrastructure (UPS, cable plant, hubs); Coordinate and load configuration of NMS; Establish installation and configuration standards; Coordinate asset management; General Communication, Inc. (GCI) - 9 - FINAL 1996 Call-Off Contract 4/25/96 Test hubs, routers and servers prior to shipment to Branches; Install file servers, client desktops and printers in coordination with M&I; Install necessary Branch dial-up connections; Integrate equipment and services into CNCC management platform; Conduct acceptance testing of Branch LAN and desktop infrastructure; Remove, surplus terminals, printers, controllers and other legacy equipment per NBA instructions; Coordinate configuration, testing and redeployment of retained client desktops and printers into new e-mail infrastructure; 2.1.2. Upgrade Existing LAN Environments Conduct site-surveys documenting all network and equipment; Coordinate purchase, configuration and installation of all upgrade equipment, software and services; Coordinate asset management; Integrate equipment/services into CNCC management platform; Conduct acceptance testing of Branch LAN and desktop infrastructure; Remove surplus terminals, printers, controllers and other legacy equipment per NBA instructions; 2.1.3. WAN Deployment Purchase, configure and install router, multiplexer and other WAN equipment which the contractor will provide for the in-state wide area network and the backbone network General Communication, Inc. (GCI) - 10 - FINAL 1996 Call-Off Contract 4/25/96 between NBA's facilities in Anchorage, Alaska and M&I's facilities in Brown Deer, Wisconsin; Provide, install and test public and private inter-branch data, voice and video services; Integrate equipment and services into CNCC management platform; 2.1.4. Voice Service Deployment Analyze existing voice service environment and develop comprehensive implementation plan; Transition all carrier services; Modify, as appropriate, all PBX and key system leases; Consolidate, as appropriate, all LEC and IXC local loop and DAL circuits; 2.2 Operation and Management (O&M) 2.2.1. Procurement, Set-up & Installation Coordinate establishment of desktop computer configuration standards with the NBA Help Desk; Provide centralized Setup facility for all desktop and server hardware; logistics support for shipment of computer hardware to sites; Perform or coordinate physical installation of computer hardware on LANs; Maintain relationships with key vendors and service providers to assure product and service support and continued knowledge of installed equipment, systems and services. 2.2.2. Network Management Monitor network devices and associated cable plant and circuits; provide status and performance reports as required; Provide proactive management of network devices to maintain established service levels; General Communication, Inc. (GCI) - 11 - FINAL 1996 Call-Off Contract 4/25/96 Provide configuration management of desktop and service hardware; manage and maintain operating system integrity; Initiate and coordinate change management for the following: (1) desktop, server hardware and operating systems; (2) hubs and other LAN equipment and circuits; (3) routers, multiplexers, modems and other WAN equipment; (4) WAN private line circuits; (5) PBX and Key systems as applicable; (6) long distance services; (7) video conferencing systems and services. 2.2.3. Trouble Requests Provide necessary resolution and support for desktop hardware, operating system and network connectivity problems; Provide necessary resolution and support for server hardware, operating system and network connectivity problems; Respond to and resolve user telephone station equipment and voicemail and feature service problems; Provide resolution of long distance calling or other service problems; Provide necessary resolution and support for PBX hardware and service problems. Provide necessary resolution and support for ATM hardware and service problems. 2.2.4. Work Requests Move, add, change of all telephone station equipment; Move, add, change voicemail and features; Move, add, change of all desktop computer and terminal equipment; Move, add, change business telephone lines; Desktop computer hardware installations that exceed user capability; General Communication, Inc. (GCI) - 12 - FINAL 1996 Call-Off Contract 4/25/96 2.2.5. Projects Coordinate and perform telephone systems, LAN/WAN systems projects involving moving facilities and workgroups or service upgrades of an operational basis not categorized as Major Changes; 2.3. Change Management 2.3.1. Tactical Management Implement outage notification procedures in order to insure coordination between NBA, M&I and all other service providers involving all planned maintenance activity; Coordinate asset management systems, processes and procedures with NBA to provide complete inventory control of all telecommunications, server and desktop equipment, systems, circuits and software assets; Develop and maintain documentation for all equipment, system, circuit, network or software configuration, maintenance history, layout, revision level and status; 2.3.2. Strategic Planning Maintain technical expertise on all currently installed and in-use equipments, systems, circuits, services and advances in technology; Present telecommunications and desktop support plans, designs, options and technical summaries to NBA for review; Provide technical consultancy in order to strategically meet all future telecommunications and desktop computing business requirements; Continuously monitor and evaluate telecommunications technologies relevant to NBA's business requirements; advise NBA on adoption of new technologies; General Communication, Inc. (GCI) - 13 - FINAL 1996 Call-Off Contract 4/25/96 SCHEDULE 2: SERVICE LEVELS General Communication, Inc. (GCI) - 14 - FINAL 1996 Call-Off Contract 4/25/96 I. PROBLEM/WORKFLOW MANAGEMENT
- ----------------------------------- ------------ ----------- ----------- ----------- ------------ ----------- ------------ Immediate Immediate 1 Hour 4 Hour 24 Hour NBD Negotiated Task/Activity Logging Response Response Response Response Response Scheduling - ----------------------------------- ------------ ----------- ----------- ----------- ------------ ----------- ------------ A. Trouble Requests o Desktop hardware 0800 - 1800 M - F X X(2) After hours X X o LAN Server 0800 - 2100 M - F X X After hours X X(2) o Communications Hardware 0800 - 1800 M - F X X After hours X X o Communications Circuits 0800 - 1800 M - F X X After hours X X o CBX/PBX system 0800 - 2100 M - F X X After hours X X o Key System 0800 - 1800 M - F X X After hours X X(2) o Phone station equipment 0800 - 1800 M - F X X After hours X X(2) o ATMs 0800 - 1800 M - F X X After hours X X - ----------------------------- 2 May vary by location
General Communication, Inc. (GCI) - 15 - FINAL 1996 Call-Off Contract 4/25/96
- ----------------------------------- ------------ ----------- ----------- ----------- ------------ ----------- ------------ Immediate Immediate 1 Hour 4 Hour 24 Hour NBD Negotiated Task/Activity Logging Response Response Response Response Response Scheduling - ----------------------------------- ------------ ----------- ----------- ----------- ------------ ----------- ------------ B. Work Requests o Phone station equip. MAC 0800 - 1800 M - F X X After hours X X Large requests X X o Voicemail/features 0800 - 1800 M - F X X After hours X X Large requests X X o Desktop computer/printer MAC 0800 - 1800 M - F X X After hours X X Large requests X X o Business telephone lines 0800 - 1800 M - F X X After hours X X Large requests X X - ----------------------------------- ------------ ----------- ----------- ----------- ------------ ----------- ------------ C. Projects o All projects 0800 - 1800 M - F X X After hours X X Large requests X X
General Communication, Inc. (GCI) - 16 - FINAL 1996 Call-Off Contract 4/25/96 II. NETWORK SERVICES Network Services Service Level - ---------------------------------- ---------------------------- On-line Uptime (0600 - 2100 AST); seven days per week greater than 98% availability ATM availability 98% availability Backbone Service availability 99.8% availability POS availability 98.5% availability Response Time (In-town) greater than or equal to 2 seconds Response Time (Out-of-town) greater than or equal to 4 seconds III. SERVICE LEVEL PERFORMANCE CALCULATION A. Problem/Workflow Management for: Trouble Reports - TR Work Orders - WO Projects - P Monthly Performance - MP Annual Performance - AP Occurrence greater than or equal to Service Level - N1 Occurrences less than Service Level - N2 MPTR = (N1 / (N1 + N2)) * 100% MPWO = (N1 / (N1 + N2)) * 100% MPP = (N1 / (N1 + N2)) * 100% MP = (MPTR * MPWO * MPP) AP = (MPJan * MPFeb * MPMar * ... * MPDec) B. Network Services for: On-line Uptime - UP ATM Availability - ATM Backbone Service Availability - BS POS Availability - POS Monthly Performance - MP Annual Performance - AP # WAN Circuits - Ckts APUP = (((525,600 * Ckts) - Outage minutes) / (525,600 * Ckts)) * 100% MPATM = ((43,200 - Outage Minutes) / 43,200)*100% APBS = ((525,600 - Outage minutes) / 525,600) * 100% MPPOS = ((43,200 - Outage Minutes) / 43,200) *100% General Communication, Inc. (GCI) - 17 - FINAL 1996 Call-Off Contract 4/25/96 SCHEDULE 3: 1996 EXPECTED COST OF OPERATIONS (CoOE) AND TARGET General Communication, Inc. (GCI) - 18 - FINAL 1996 Call-Off Contract 4/25/96 1. Expected Cost of Operations (CoOE) a. 1995 Annualized Costs ******** b. 1996 Expected Cost Increases ******** c. Total (1a + 1b) ******** 2. ******** Percent of CoOE or Guarantee ******** 3. Target (1c-2) ******** General Communication, Inc. (GCI) - 19 - FINAL 1996 Call-Off Contract 4/25/96 SCHEDULE 4: CHARGES AND BILLING INFORMATION General Communication, Inc. (GCI) - 20 - FINAL 1996 Call-Off Contract 4/25/96 INVOICE SPECIMEN Month of 1. Invoice Summary Current YTD A. Direct Costs ------------- ------------- B. Margin (Direct Costs) ------------- ------------- C. Sub-contractor Costs ------------- ------------- D. Margin (Sub-contractor Costs) ------------- ------------- E. Network Services i. Network Management ------------- ------------- ii. Long Distance ------------- ------------- iii. Transport ------------- ------------- 2. Current Month Detail A. Direct Costs ------------- ------------- B. Margin (Direct Costs) ------------- ------------- C. Sub-contractor Costs ------------- ------------- D. Margin (Sub-contractor Costs) ------------- ------------- E. Network Services i. Network Management ------------- ------------- ii. Long Distance ------------- ------------- iii. Transport ------------- ------------- General Communication, Inc. (GCI) - 21 - FINAL 1996 Call-Off Contract 4/25/96 SCHEDULE 5: NBA AND CONTRACTOR PREMISES General Communication, Inc. (GCI) - 22 - FINAL 1996 Call-Off Contract 4/25/96 ANCHORAGE Dimond Dimond Mall 745 E. Dimond Boulevard 800 E. Dimond Boulevard Anchorage, AK 99515 Suite 116 Manger: Dan Keys Anchorage, AK 99515 (907) 267-5525 Manager: Pam Sievers (907) 267-5466 FAX (907) 267-5505 (907) 267-5383 FAX Fifth Avenue 510 L Street 630 E. Fifth Avenue Anchorage, AK 99501 Anchorage, AK 99501 Supervisor: Frances Pitts Manager: Judy Ferguson (907) 263-2565 (907) 263-2501 (907) 263-2521 FAX (907) 263-2514 FAX Fourth Avenue Frontier 446 W. Fourth Avenue 7731 E. Northern Lights Boulevard Anchorage, AK 99501 Anchorage, AK 99504 Manager: Karina Simmers Supervisor: Judy Butchart (907) 265-2734 (907) 265-2060 (907) 265-2039 FAX (907) 265-2067 FAX Huffman Main Office 1351 E. Huffman Road 301 W. Northern Lights Boulevard Anchorage, AK 99516 Anchorage, AK 99503 Manager: Amy Penrose Manager: Bob Tannahill (907) 267-5301 (907) 265-2809 (907) 267-5546 FAX (907) 265-2043 FAX Minnesota-Benson Northway Mall 1500 West Benson Boulevard 3101 Penland Parkway Anchorage, AK 99515 Anchorage, AK 99508 Manager: Jenny McClure Manager: Liza Dzurovcin (907) 257-3200 (907) 263-2590 (907) 257-3218 FAX (907) 265-2996 FAX General Communication, Inc. (GCI) - 23 - FINAL 1996 Call-Off Contract 4/25/96 Russian Jack Sand Lake 5700 DeBarr Road 6961 Jewel Lake Road Anchorage, AK 99504 Anchorage, AK 99502 Manager: Nancy Gillies Manager: Sarah Kipp (907) 263-2574 (907) 267-5420 (907) 263-2531 FAX (907) 267-5426 FAX Sears Mall Spenard 600 E. Northern Lights Boulevard 2709 Spenard Road Anchorage, AK 99503 Anchorage, AK 99509 Manager: Kathy Hagedorn Manager: Mary Webb (907) 263-2533 (907) 263-2541 (907) 263-2539 FAX (907) 265-2023 FAX FAIRBANKS Bentley College 32 College Road 794 University Avenue Fairbanks, AK 99701 Fairbanks, AK 99707 Manager: Jami Spears Manager: Vicki Kennebec (907) 459-4363 (907) 474-4101 (907) 459-4366 FAX (907) 474-4130 FAX Cushman Gaffney 613 Cushman Road 620 Gaffney Road Fairbanks, AK 99701 Fairbanks, AK 99706 Manager: Debbie Kimmell Manager: Robin Ridington (907) 459-4318 (907) 459-4373 (907) 459-4346 FAX (907) 459-4344 FAX North Pole 381 Santa Claus Lane South North Pole, AK 99705 Manager: Oscar Calvillo (907) 488-7507 (907) 488-5678 FAX General Communication, Inc. (GCI) - 24 - FINAL 1996 Call-Off Contract 4/25/96 OTHER BRANCHES Barrow Bethel 1078 Kiogak Street Bethel Native Corporation Building Barrow, AK 99723 460 Ridgecrest Manager: Joe Everhart Bethel, AK 99559 (907) 852-6200 Manager: Carolyn Walters (907) 852-3426 FAX (907) 543-3875 (907) 543-2125 FAX Cordova Cottonwood Creek Mall 515 Main Street 1701 Parks Highway Cordova, AK 99574 Wasilla, AK 99654 Manager: Jon Stavig Manager: Michelle Rodekohr (907) 424-3258 (907) 376-6797 (907) 424-5758 FAX (907) 373-0252 FAX Delta Dillingham Mile 166, Richardson Highway 512 Seward Street Delta Junction, AK 99737 Dillingham, AK 99576 Manager: Dave Durham Manager: Julie Woodworth (907) 895-4691 (907) 842-5284 (907) 895-1927 FAX (907) 842-2450 FAX Eagle River Glacier Valley 16600 Centerfield Drive 9150 Glacier Highway Eagle River, AK 99577 Juneau, AK 99801 Manager: Mark Underwood Manager: Deborah Zenger (907) 694-3129 (907) 789-9550 (907) 694-1435 FAX (907) 789-4220 FAX Glennallen Homer Mile 187.5 Glenn Highway 203 W. Pioneer Avenue Glennallen, AK 99588 Homer, AK 99603 Manager: Darby Hobson Manager: John Hoyt (907) 822-3214 (907) 235-8151 (907) 822-3288 FAX (907) 235-6181 FAX General Communication, Inc. (GCI) - 25 - FINAL 1996 Call-Off Contract 4/25/96 Juneau Kenai 123 Seward Street 11216 Kenai Spur Highway Juneau, AK 99801 Kenai, AK 99611 Manager: Roy Kyle Manager: Ron Linegar (907) 586-3324 (907) 283-7581 (907) 586-3997 FAX (907) 283-4082 FAX Ketchikan King Salmon 306 Main Street #1 King Salmon Mall Ketchikan, AK 99901 King Salmon, AK 99613 Manager: John Scoblic Manager: Bernard Brown (907) 225-2184 (907) 246-3306 (907) 225-1022 FAX (907) 246-3027 FAX Kodiak Kotzebue 202 Marine Way Lagoon Street and Second Kodiak, AK 99615 Kotzebue, AK 99752 Manager: Jim Brenner Manager: Alex Navarro (907) 486-3126 (907) 442-3257 (907) 486-5879 FAX (907) 442-2157 FAX Lake Street Branch Metlakatla 4014 Lake Street Milton Street Homer, AK 99603-7682 Metlakatla, AK 99926 Supervisor: Mary Covey Manager: Charlene Brendible (907) 235-2444 (907) 886-6363 (907) 235-5272 FAX (907) 886-5063 FAX Mill Bay Branch Nome 2645 Mill Bay Road 250 E. Front Street Kodiak, AK 99615 Nome, AK 99762 Manager: Josie Barber Manager: Mitch Erickson (907) 486-6900 (907) 443-2223 (907) 486-2586 FAX (907) 443-2742 FAX Palmer Petersburg 705 South Bailey 201 N. Nordic Drive Palmer, AK 99645 Petersburg, AK 99833 Manager: Taka Tsukada Manager: Bond Stewart (907) 745-2161 (907) 772-3833 (907) 745-6059 FAX (907) 772-4881 FAX General Communication, Inc. (GCI) - 26 - FINAL 1996 Call-Off Contract 4/25/96 Prince of Wales Seattle 1330 Craig Klawock Highway One Union Square Craig, AK 99921 600 University Street, #3420 Manager: Kurt Mattle Seattle, WA 98101 (907) 826-3040 Manager: Fred Richard (907) 3044 FAX (206) 621-9464 (206) 622-9488 FAX Seward Shoreline 908 Third Avenue 4966 N. Tongass Highway Seward, AK 99664 Ketchikan, AK 99901 Manager: Lori Draper Manager: Piere Kaptanian (907) 224-2220 (907) 247-7878 (907) 224-3711 FAX (907) 225-6868 FAX Sitka Skagway 300 Lincoln Street 6th & Broadway Sitka, AK 99835 Skagway, AK 99840 Manager: Greg West Manager: Kelly Roper (907) 747-3226 (907) 983-2265 (907) 747-8081 FAX (907) 983-2128 FAX Soldotna Tongass 44552 Sterling Highway 2415 Tongass Avenue Soldotna, AK 99669 Ketchikan, AK 99901 Manager: Kurt Eriksson Manager: Lori Freeman (907) 262-4435 (907) 225-4141 (907) 262-5114 FAX (907) 225-0218 FAX Valdez Wasilla 337 Egan Drive 581 W. Parks Highway Valdez, AK 99686 Wasilla, AK 99687 Manager: Jacquelyn Robb Manager: Jim Reaves (907) 835-4745 (907) 376-5355 (907) 835-5762 FAX (907) 376-0298 Wrangell 115 Front Street Wrangell, AK 99929 Manager: Tom Saville (907) 874-3341 (907) 874-3294 FAX General Communication, Inc. (GCI) - 27 - FINAL 1996 Call-Off Contract 4/25/96 OTHER LOCATIONS Southeast Mortgage Northland Credit (3174) 9211 Lee Smith Drive 3030 Denali Street Juneau, AK 99803 Anchorage, AK 99503 Manager: Karen King Manager: John Higgins (907) 789-7071 (907) 562-0266 (907) 789-7552 FAX (907) 562-2150 FAX Northland Credit (3174) Northland Credit (Dial-in Email) 201 Old Steese Highway, Suite 1 1700 E. Parks Highway, Suite 100 Fairbanks, AK 99701 Wasilla, AK 99654 Manager: Jim Carter Manager: Larry Timmons (907) 456-5263 (907) 376-7600 (9070 456-3677 FAX (907) 376-7557 FAX Northland Credit (Dial-in Email) Northland Mortgage (Dial-in Email) Unknown at this time, open in 1996 2605 Denali Street Juneau, AK 99803 Anchorage, AK 99503 Manager: Manager: Don Shepherd (907) xxx-xxxx (907) 274-5150 (907) xxx-xxxx FAX (907) 277-4081 FAX Northland Mortgage (Dial-in Email) Northland Mortgage (Dial-in Email) 16331 Heritage Place, #100 522 Third Street Eagle River, AK 99577 Fairbanks, AK 99701 Manager: Trish Kastner Manager: Liz Rhow (907) 694-7872 (907) 452-5007 (907) 694-7292 FAX (907) 452-6005 FAX Northland Mortgage (Dial-in Email) Northland Mortgage (Dial-in Email) 35551 Kenai Spur Highway 951 E. Bogard Road, Suite 101 Soldotna, AK 99669 Wasilla, AK 99701 Manager: Sherri Rose-Jones Manager: Lynn Berry (907) 262-3940 (907) 376-2308 (907) 262-4087 FAX (907) 376-0206 FAX Northland Mortgage (Dial-in Email) 701 S. Bailey, Suite 200 Palmer, AK 99645 Manager: Annie Davenport (907) 746-7821 (907) 746-7825 FAX General Communication, Inc. (GCI) - 28 - FINAL 1996 Call-Off Contract 4/25/96 SCHEDULE 6: AGENCY LETTER General Communication, Inc. (GCI) - 29 - FINAL 1996 Call-Off Contract 4/25/96 20 December 1996 Richard A. Whitney Director, Business Development General Communication, Inc. (GCI) 2550 Denali St., Suite 1000 Anchorage, AK. 99503 Subject: Telecommunications Letter of Agency Dear Richard: National Bank of Alaska (NBA) hereby appoints GCI as its agent for the limited purpose of ordering, implementing and maintaining telecommunications services provided by any contractor, local exchange carrier, interexchange carrier, or enhanced/alternate service provider as may be necessary for GCI to manage/provide telecommunications services to NBA. This agency relationship shall remain in effect until modified or revoked by NBA in writing. When GCI acts as agent, GCI is responsible, on behalf of NBA, for all such charges, including without limitation monthly charges, usage charges, installation charges, or applicable termination charges of the providers of telecommunications facilities, whether these charges are arranged to be billed directly to NBA or to GCI. Neither NBA nor GCI shall be precluded by this appointment from dealing with carriers or providers in arranging for telecommunications services or connections to other equipment separate from those associated with this agreement. Sincerely, B. John Shipe Executive Vice President National Bank of Alaska P.O. Box 100600 Anchorage, Alaska 99510-0600 BJS: General Communication, Inc. (GCI) - 30 - FINAL 1996 Call-Off Contract 4/25/96 SCHEDULE 7: CONFIDENTIALITY LETTER General Communication, Inc. (GCI) - 31 - FINAL 1996 Call-Off Contract 4/25/96 15 December 1995 B. John Shipe Executive Vice President National Bank of Alaska P.O. Box 100600 Anchorage, Alaska 99510-0600 Subject: Confidentiality of Information Dear John: During our recent business development and contract negotiations, we discussed many aspects of the business and operations of our companies. Certain information disclosed is confidential and has consistently been considered and treated by each of us as trade secrets. I refer particularly to information regarding customers, pricing policies, certain telecommunications service equipment, product/service/network development and general business practices associated with our outsourcing business. This information was disclosed for use solely in connection with developing and operating a strategic business relationship between our companies consistent with our Framework Agreement. I am writing to confirm the understanding which we reached and documented in our Framework Agreement that all involved employees and agents of both companies will not disclose, use for their own benefit, or otherwise appropriate such trade secrets or confidential information, except internally to the extent necessary to conduct our joint business. If I have correctly expressed our understandings, please sign and date this letter. General Communication, Inc. National Bank of Alaska Richard A. Whitney, Director B. John Shipe Business Development Executive Vice President Dated: Dated: General Communication, Inc. (GCI) - 32 - FINAL 1996 Call-Off Contract 4/25/96 SCHEDULE 8: ADDITIONAL TERMS AND CONDITIONS General Communication, Inc. (GCI) - 33 - FINAL 1996 Call-Off Contract 4/25/96 Per discussion with G. Dalton (12/13/95) the following Framework Agreement Sub-Section 15.2 is amended as follows: 15.2 In 1996, NBA and the Contractor shall in respect of the Services to be provided agree to an overall Target. The Contractor shall provide the Services at a total charge to NBA which shall enable NBA to achieve its expectation of savings. The total charge to NBA, or Target, includes the Contractor's Expected Cost of Operations (CoOE) as defined in Annex A less ********. General Communication, Inc. (GCI) - 34 - FINAL 1996 Call-Off Contract 4/25/96 SCHEDULE 9: WAN DEPLOYMENT PROJECT General Communication, Inc. (GCI) - 35 - FINAL 1996 Call-Off Contract 4/25/96 OUT OF SCOPE PROJECT NAME: WAN Deployment Project LENGTH: January 1, 1996 through March 1, 1996 VALUE: ******** Overview Engineer, furnish and install a statewide Branch Wide Area Network (WAN). This network is defined between intelligent wiring hubs located in each Branch or other defined location and the Anchorage Operations Center. The scope of work includes detail design, equipment selection, equipment/materials procurement, project planning, project management, testing, shipping, installation, integration and acceptance. Pricing Detailed pricing is included on the following pages. Project costs are summarized as follows: Deliverables (Equipment/materials) ******** Labor: ******** Expenses (Travel/Lodging): ******** TOTAL ******** Terms Equipment pricing will meet ********. All materials and labor will be invoiced at ********. Expenses will be invoiced directly. Cable plant installation pricing in Branches is currently being solicited via RFP. It will be billed on this contract on a ******** basis once firm pricing has been established. Contractor will receive a bonus should the total invoiced amount for this project underrun the project budget shown in Pricing. This bonus shall be ******** of the variance between the total invoiced amount and the project budget. All invoices will be due and payable on a Net 30 day basis. General Communication, Inc. (GCI) - 36 - FINAL 1996 Call-Off Contract 4/25/96
Description Qty Unit Price Total - ---------------------------------------------------------------------- -------- ----------------- ---------------- DELIVERABLES: NBA Branch Site (41 Category 1 site) 56/64 DSU/CSU **** **** **** Cisco 2509 router **** **** **** Miscellaneous cables, connectors **** **** **** Code operated matrix switch **** **** **** Dialup maintenance modem **** **** **** Dial restoral modem **** **** **** Equipment rack **** **** **** Miscellaneous install materials/costs (tywraps, power etc.) **** **** **** NBA Branch Site (7 category 2 sites) 56/64 DSU/CSU **** **** **** Cisco 4000 router **** **** **** Miscellaneous cables, connectors **** **** **** Code operated matrix switch **** **** **** Dialup maintenance modem **** **** **** Dial restoral modem **** **** **** Equipment rack **** **** **** Miscellaneous install materials/costs (tywraps, power etc.) **** **** ****
General Communication, Inc. (GCI) - 37 - FINAL 1996 Call-Off Contract 4/25/96
Description Qty Unit Price Total - ---------------------------------------------------------------------- -------- ----------------- ---------------- NBA Branch Site (2 category 3 sites) Cisco 2501 router **** **** **** Miscellaneous cables, connectors **** **** **** Code operated matrix switch **** **** **** Dialup maintenance modem **** **** **** Dial restoral modem **** **** **** Equipment rack **** **** **** Miscellaneous install materials/costs (tywraps, power etc.) **** **** **** NBA Branch Site (3 category 4 sites) Cisco 2509 router **** **** **** Miscellaneous cables, connectors **** **** **** Code operated matrix switch **** **** **** Dialup maintenance modem **** **** **** Dial restoral modem **** **** **** Equipment rack **** **** **** Miscellaneous install materials/costs (tywraps, power etc.) **** **** ****
General Communication, Inc. (GCI) - 38 - FINAL 1996 Call-Off Contract 4/25/96
Description Qty Unit Price Total - ---------------------------------------------------------------------- -------- ----------------- ---------------- NBA Branch Site (3 category 5 sites) Cisco 2501 router **** **** **** Miscellaneous cables, connectors **** **** **** Code operated matrix switch **** **** **** Dialup maintenance modem **** **** **** Dial restoral modem **** **** **** Equipment rack **** **** **** Miscellaneous install materials/costs (tywraps, power etc.) **** **** **** Anchorage Operation Center Cisco 4700 router **** **** **** Cisco 2512 router (16 async/2TR for dial restoral) **** **** **** Miscellaneous cables, connectors **** **** **** Code operated matrix switch **** **** **** Dialup maintenance modem **** **** **** Dial restoral modem **** **** **** Equipment rack **** **** **** Miscellaneous install materials/costs (tywraps, power etc.) **** **** **** POS Dial Restoral Dial restoral modem **** **** **** X.25 pad upgrade **** **** **** X.25 switch upgrade **** **** ****
General Communication, Inc. (GCI) - 39 - FINAL 1996 Call-Off Contract 4/25/96
Description Qty Unit Price Total - ---------------------------------------------------------------------- -------- ----------------- ---------------- M&I Data Processing Center Cisco 4500-M router **** **** **** Miscellaneous cables, connectors **** **** **** Code operated matrix switch **** **** **** Dialup maintenance modem **** **** **** Equipment rack **** **** **** Miscellaneous install materials/costs (tywraps, power etc.) **** **** **** GCI Anchorage (CNCC) Miscellaneous install materials/costs (tywraps, power etc.) **** **** **** Spares Spares @ ***** of deliverables ****** **** **** Shipping @ ***** **** ****
Description Qty MH Rate Total - --------------------------------------------------------------- ------ -------- ----------------- ---------------- LABOR: Configure and test **** **** Installation **** **** **** **** Installation travel to remote branch **** **** **** **** Engineering **** **** **** **** Project Management **** **** **** **** Clerical **** **** **** **** Documentation/CADD **** **** **** ****
General Communication, Inc. (GCI) - 40 - FINAL 1996 Call-Off Contract 4/25/96
Description Qty Unit Price Total - ---------------------------------------------------------------------- -------- ----------------- ---------------- EXPENSES: GCI Travel Expenses Airfare **** **** **** Mileage **** **** **** Lodging **** **** **** Rental Vehicle **** **** **** Per Diem **** **** **** Protocol Analyzer (rental for installation) 1 unit for 3 mos. **** **** **** BER test set (rental for installation) 4 units for 2 mos. **** **** ****
General Communication, Inc. (GCI) - 41 - FINAL 1996 Call-Off Contract 4/25/96 SCHEDULE 10: LONG TERM CONTRACTS General Communication, Inc. (GCI) - 42 - FINAL 1996 Call-Off Contract 4/25/96
Contract Term Contract Contract or Owner Start Date Depreciation Description Amount - ---------------- --------------- ------------------ ----------------------------------------- --------------- ****** GCI 1/1/96 Capital Newbridge Multiplexer Equipment GCI 1/1/96 5 years MCI-Hyperstream Frame Relay TBD
General Communication, Inc. (GCI) - 43 - FINAL 1996 Call-Off Contract 4/25/96 -----END PRIVACY-ENHANCED MESSAGE-----