EXHIBIT 2.1
                     SECURITIES PURCHASE AND SALE AGREEMENT
                                   May 2, 1996

                                      among

                           GENERAL COMMUNICATION, INC.
                              an Alaska corporation
                                    ("Buyer")

                                       and

                         PRIME VENTURE I HOLDINGS, L.P.
                         a Delaware limited partnership
                                  ("Holdings"),

                        PRIME CABLE GROWTH PARTNERS, L.P.
                         a Delaware limited partnership
                                   ("Growth"),

                             PRIME VENTURE II, L.P.
                         a Delaware limited partnership
                                    ("PVII")

                         PRIME CABLE LIMITED PARTNERSHIP
                         a Delaware limited partnership
                                    ("PCLP")

                              AUSTIN VENTURES, L.P.
                         a Delaware limited partnership
                                     ("AV")

             WILLIAM BLAIR VENTURE PARTNERS III LIMITED PARTNERSHIP
                         an Illinois limited partnership
                                    ("WBVP")

                            CENTENNIAL FUND II, L.P.
                         a Delaware limited partnership
                                    ("CFII")

                            CENTENNIAL FUND III, L.P.
                         a Colorado limited partnership
                                    ("CFIII")


                                                          REGISTRATION STATEMENT
                                                                      Page II-13
<PAGE>
                   CENTENNIAL BUSINESS DEVELOPMENT FUND, LTD.
                         a Colorado limited partnership
                                    ("CBDF")

                            BANCBOSTON CAPITAL, INC.
                           a Massachusetts corporation
                                     ("BBC")

                      FIRST CHICAGO INVESTMENT CORPORATION
                             a Delaware corporation
                                    ("FCIC")

                           MADISON DEARBORN PARTNERS V
                         an Illinois general partnership
                                     ("MDP")

 (Holdings, Growth, PVII, PCLP, BBC, FCIC, MDP, AV, WBVP, CFII, CFIII and CBDF, 
                   collectively referred to as "Sellers"), and

                            PRIME II MANAGEMENT, L.P.
                         a Delaware limited partnership
                                    ("PIIM")

             for the purchase and sale of one hundred percent (100%)
         of all outstanding limited and general partnership interests in

                           PRIME CABLE OF ALASKA, L.P.
                         a Delaware limited partnership
                                   ("Company")

       and One Hundred Percent (100%) of the outstanding capital stock of

                               ALASKA CABLE, INC.
                             a Delaware corporation
                                     ("ACI")

                                       and

                            PRIME CABLE FUND I, INC.
                             a Delaware corporation
                                    ("PCFI")

                                                          REGISTRATION STATEMENT
                                                                      Page II-14
<PAGE>
<TABLE>
                                TABLE OF CONTENTS

<CAPTION>
                                                                                                               Page
<S>               <C>                                                                                            <C>
Section 1.        Definitions................................................................................... 21
                  1.1      ACI.................................................................................. 21
                  1.2      Affiliate............................................................................ 21
                  1.3      APUC................................................................................. 21
                  1.4      APUC Certificate..................................................................... 21
                  1.5      Assets............................................................................... 22
                  1.6      CATV................................................................................. 22
                  1.7      CATV Business....................................................................... 22
                  1.8      CATV Franchise Agreement............................................................. 22
                  1.9      CATV Instruments..................................................................... 22
                  1.10     CATV System.......................................................................... 22
                  1.11     Closing and Closing Date............................................................. 22
                  1.12     Company Contracts.................................................................... 22
                  1.13     Company Loan Agreement............................................................... 23
                  1.14     Employees............................................................................ 23
                  1.15     Environmental Law.................................................................... 23
                  1.16     Equipment............................................................................ 23
                  1.17     ERISA................................................................................ 23
                  1.18     Excluded Assets...................................................................... 23
                  1.19     FAA.................................................................................. 23
                  1.20     FCC.................................................................................. 23
                  1.21     Financial Statements................................................................. 23
                  1.22     GCI Class A Stock.................................................................... 24
                  1.23     GAAP................................................................................. 24
                  1.24     Hazardous Substances................................................................. 24
                  1.25     Inspection Termination Period........................................................ 24
                  1.26     Intangibles.......................................................................... 24
                  1.27     MDU Agreements....................................................................... 24
                  1.28     MDU Complex.......................................................................... 24
                  1.29     MCI.................................................................................. 24
                  1.30     Net Income........................................................................... 25
                  1.31     Operating Cash Flow.................................................................. 25
                  1.32     Other Required Assets................................................................ 25
                  1.33     Partnership Agreement................................................................ 25
                  1.34     Partnership Interests................................................................ 25
                  1.35     PCFI................................................................................. 25
                  1.36     Permitted Encumbrances............................................................... 25
                  1.37     Person............................................................................... 27
                  1.38     Purchase Price....................................................................... 27
                  1.39     Real Property........................................................................ 27

                                                          REGISTRATION STATEMENT
                                                                      Page II-15
<PAGE>
                  1.40     Required Consents.................................................................... 27
                  1.41     Security Interest.................................................................... 27
                  1.42     Sellers' Stock....................................................................... 27
                  1.43     Service Area......................................................................... 27
                  1.44     Escrow Holdback...................................................................... 27
                  1.45     Subscribers.......................................................................... 28

Section 2.        Purchase and Sale............................................................................. 28
                  2.1      Purchase and Sale of Securities...................................................... 28
                  2.2      Purchase Price....................................................................... 29
                  2.3      Escrow Holdback...................................................................... 29

Section 3.        Representations, Warranties, and Covenants of Sellers......................................... 29
                  3.1      Organization and Qualification....................................................... 30
                  3.2      Company's Partnership Interests...................................................... 30
                  3.3      ACI's Capitalization................................................................. 30
                  3.4      PCFI's Capitalization................................................................ 31
                  3.5      Authority............................................................................ 31
                  3.6      Enforceability....................................................................... 31
                  3.7      No Subsidiaries or Affiliates........................................................ 31
                  3.8      Cash Flow............................................................................ 31
                  3.9      Indebtedness......................................................................... 32
                  3.10     Records.............................................................................. 32
                  3.11     No Breach or Violation............................................................... 32
                  3.12     No Programming Rate Changes.......................................................... 32
                  3.13     No Finders or Brokers................................................................ 32
                  3.14     Schedules............................................................................ 32
                  3.15     Compliance with Laws................................................................. 33
                  3.16     Financial Statements................................................................. 35
                  3.17     Tax Returns and Other Reports........................................................ 36
                  3.18     Real Property........................................................................ 36
                  3.19     Employees............................................................................ 36
                  3.20     Litigation and Violations............................................................ 37
                  3.21     Disclosure........................................................................... 37
                  3.22     Investment Company................................................................... 37
                  3.23     CATV Instruments and Company Contracts............................................... 37
                  3.24     Patents, Trademarks, and Copyrights.................................................. 38
                  3.25     Assets............................................................................... 38
                  3.26     Title to Assets...................................................................... 39
                  3.27     No Other Assets or Liabilities....................................................... 39
                  3.28     Required Consents.................................................................... 39
                  3.29     Overbuilds........................................................................... 39
                  3.30     No Insolvency........................................................................ 39

                                                          REGISTRATION STATEMENT
                                                                      Page II-16
<PAGE>
Section 4.        Representations, Warranties, and Covenants of Buyer........................................... 39
                  4.1      Organization and Authority........................................................... 39
                  4.2      Capitalization....................................................................... 40
                  4.3      Enforceability....................................................................... 40
                  4.4      Cash Flow............................................................................ 41
                  4.5      Indebtedness......................................................................... 41
                  4.6      Records.............................................................................. 41
                  4.7      No Breach or Violation............................................................... 41
                  4.8      Compliance with Laws................................................................. 41
                  4.9      Financial Statements................................................................. 43
                  4.10     Tax Returns and Other Reports........................................................ 44
                  4.11     Transfer Taxes....................................................................... 44
                  4.12     Litigation and Violations............................................................ 44
                  4.13     Disclosure........................................................................... 44
                  4.14     Investment Company................................................................... 45
                  4.15     No Finders or Brokers................................................................ 45
                  4.16     Purchase for Investment.............................................................. 45
                  4.17     No Insolvency........................................................................ 45
                  4.18     No Subsidiaries or Affiliates........................................................ 45
                  4.19     Employees............................................................................ 45
                  4.20     Contracts and Rights................................................................. 45
                  4.21     Required Consents.................................................................... 46

Section 5.        Conduct Prior to Closing...................................................................... 46
                  5.1      Operation in Ordinary Course......................................................... 46
                           5.1.1 Company........................................................................ 46
                           5.1.2 Buyer.......................................................................... 47
                  5.2      Agents............................................................................... 48
                  5.3      No New Company Securities............................................................ 48
                  5.4      No New Buyer Securities.............................................................. 48
                  5.5      Employees............................................................................ 49
                  5.6      Access to Premises and Records....................................................... 49
                  5.7      Existing Relationships............................................................... 50
                  5.8      Required Consents.................................................................... 51
                  5.9      MDU Agreements....................................................................... 51
                  5.10     Buyer's Title Reports................................................................ 51
                  5.11     Compliance with HSR Act and Rules.................................................... 51
                  5.12     Use of Names and Logos............................................................... 52
                  5.13     Public Announcements................................................................. 52
                  5.14     Registration of GCI Shares........................................................... 52

Section 6.        Closing....................................................................................... 52

Section 7.        Deliveries by Sellers at Closing.............................................................. 53


                                                          REGISTRATION STATEMENT
                                                                      Page II-17
<PAGE>
Section 8.        Deliveries by Buyer at Closing................................................................ 56

Section 9.        Conditions to Obligations of Buyer............................................................ 58
                  9.1      Accuracy of Representations and Compliance with Conditions........................... 58
                  9.2      Deliveries Complete.................................................................. 58
                  9.3      No Adverse Change.................................................................... 58
                  9.4      Restraint of Proceedings............................................................. 59
                  9.5      Cash Flow, Indebtedness.............................................................. 59

Section 10.       Conditions to Obligations of Sellers.......................................................... 59
                  10.1     Accuracy of Representations and Compliance with Conditions........................... 59
                  10.2     Deliveries Complete.................................................................. 60
                  10.3     No Adverse Change.................................................................... 60
                  10.4     Restraint of Proceedings............................................................. 60
                  10.5     Cash Flow; Indebtedness.............................................................. 60
                  10.6     Director Designees Elected........................................................... 60
                  10.7     Registration Statement............................................................... 60
                  10.8     Listing of GCI Shares................................................................ 60

Section 11.       Conditions to Both Parties Obligations........................................................ 61
                  11.1     Simultaneous Closing................................................................. 61
                  11.2     Mergers.............................................................................. 61
                  11.3     Consents............................................................................. 61
                  11.4     No Governmental Action............................................................... 61

Section 12.       Transactions Subsequent to Closing............................................................ 61
                  12.1     Further Actions...................................................................... 61
                  12.2     Tax Returns.......................................................................... 61
                  12.3     COBRA Benefits....................................................................... 61
                  12.4     PIIM Records Retention............................................................... 62

Section 13.       Registration Rights Agreement................................................................. 62

Section 14.       Voting Agreement.............................................................................. 62

Section 15.       Management Agreement.......................................................................... 63

Section 16.       Agreement Not to Compete...................................................................... 63

Section 17.       Survival of Representations and Warranties; Indemnification................................... 63
                  17.1     Survival............................................................................. 63

                                                          REGISTRATION STATEMENT
                                                                      Page II-18
<PAGE>
                  17.2     Indemnity by Sellers................................................................. 63
                  17.3     Indemnity by Buyer................................................................... 64
                  17.4     Defense of Claims.................................................................... 64
                  17.5     Threshold; Maximum Indemnification Obligation........................................ 65
                  17.6     Exclusive Nature of Indemnification Remedy........................................... 65
                  17.7     Determination of Indemnified Amounts................................................. 65

Section 18.       Termination................................................................................... 66
                  18.1     Mutual Consent....................................................................... 66
                  18.2     Default by Sellers................................................................... 66
                  18.3     Default by Buyer..................................................................... 66

Section 19.       Miscellaneous................................................................................. 67
                  19.1     Expenses............................................................................. 67
                  19.2     Modification......................................................................... 67
                  19.3     Notice............................................................................... 67
                  19.4     Waiver............................................................................... 68
                  19.5     Binding Effect; Assignment........................................................... 69
                  19.6     No Third Party Beneficiaries......................................................... 69
                  19.7     Severability......................................................................... 69
                  19.8     Captions............................................................................. 69
                  19.9     Counterparts......................................................................... 69
                  19.10    Governing Law........................................................................ 69
                  19.11    Incorporation by Reference........................................................... 69
                  19.12    Confidentiality...................................................................... 69
                  19.13    Appointment of Sellers' Agent........................................................ 70


</TABLE>
                                                          REGISTRATION STATEMENT
                                                                      Page II-19
<PAGE>
EXHIBITS

         A     -  Escrow Agreement
         B     -  Registration Rights Agreement
         C     -  Voting Agreement
         D     -  Management Agreement
         E     -  Non-Compete Agreement

SCHEDULES

         A.    Sellers/Company:
               1   -       The CATV Business (including Rate Schedule)
               1A  -       Allocation of GCI Shares
               2   -       CATV Instruments
               3   -       Company Contracts
               4   -       Required Consents
               5   -       Equipment and Vehicles Owned
               6   -       Real Property Owned
               7   -       Security Interests to Be Discharged Prior to Closing
                           and Permitted
    Security Interests
               8   -       Proceedings and Judgments
               9   -       Employee Matters
               10  -       Excluded Assets
               11  -       Tax Matters
               12  -       Regulation and Environmental Matters
               13  -       Changes Prior to Closing
               14  -       Alaska Cable, Inc. Shareholders
               15  -       Other Required Assets


         B.    Buyer:
               16  -       Buyer's Required Consents
               17  -       Buyer's Proceedings and Judgments
               18  -       Buyer's Tax Matters
               19  -       Buyer's Subsidiaries and Affiliates
               20  -       Buyer's Stock Option Plans




                                                          REGISTRATION STATEMENT
                                                                      Page II-20
<PAGE>
                     SECURITIES PURCHASE AND SALE AGREEMENT



                  This Securities  Purchase and Sale Agreement  ("Agreement") is
made as of May 2, 1996, among General Communication, Inc., an Alaska corporation
("Buyer"),  Prime  Venture I  Holdings,  L.P.,  a Delaware  limited  partnership
("Holdings"),  Prime Cable Growth Partners,  L.P. a Delaware limited partnership
("Growth"),  Prime Venture II, L.P., a Delaware  limited  partnership  ("PVII"),
Prime  Cable  Limited  Partnership,  a Delaware  limited  partnership  ("PCLP"),
BancBoston Capital,  Inc., a Massachusetts  corporation  ("BBC"),  First Chicago
Investment  Corporation,  a  Delaware  corporation  ("FCIC"),  Madison  Dearborn
Partners V, an Illinois general partnership  ("MDP"),  Austin Ventures,  L.P., a
Delaware limited partnership ("AV"),  William Blair Venture Partners III Limited
Partnership, an Illinois limited partnership ("WBVP"), Centennial Fund II, L.P.,
a Delaware limited partnership  ("CFII"),  Centennial Fund III, L.P., a Colorado
limited partnership  ("CFIII"),  Centennial  Business  Development Fund, Ltd., a
Colorado limited partnership ("CBDF"),  and collectively with Holdings,  Growth,
PVII, PCLP, BBC, FCIC, MDP, AV, WBVP, CFII, CFIII and CBDF, "Sellers") and Prime
II Management,  L.P., a Delaware limited  partnership  ("PIIM").  This Agreement
states the terms upon which Sellers agree to sell to Buyer,  and Buyer agrees to
purchase from Sellers,  all of the Partnership  Interests (as defined below) and
all of the Sellers' Stock (as defined below), which shall result in Buyer owning
all of the limited and general  partnership  interests of Prime Cable of Alaska,
L.P., a Delaware limited partnership ("Company").

                  In  consideration  of the terms,  conditions,  and  agreements
contained in this Agreement, the parties agree as follows:

Section 1.        Definitions

                  1.1 ACI.  "ACI"  shall mean  Alaska  Cable,  Inc.,  a Delaware
corporation.

                  1.2  Affiliate.  "Affiliate"  shall  mean any person or entity
controlling,  controlled  by or under  common  control  with a person or entity;
"control" means the ownership,  directly or indirectly,  of equity securities or
other  ownership  interests  in a person or entity by another  person or entity,
which  represent  more than 50% of the voting power or equity  ownership in such
person or entity.

                  1.3  APUC.  "APUC"  shall  mean the  Alaska  Public  Utilities
Commission.

                  1.4  APUC  Certificate.  "APUC  Certificate"  shall  mean  the
applicable certificate of public convenience and necessity issued by APUC, being
Certificate  Nos. 246 (Bethel),  261 and 287 (Anchorage,  Eagle River,  Chugiak,
Kenai and Soldotna) for the Service Areas legally described herein.


                                                          REGISTRATION STATEMENT
                                                                      Page II-21
<PAGE>
                  1.5 Assets. "Assets" shall include all properties, privileges,
rights,  interests and claims,  real and personal,  tangible and intangible,  of
every type and description,  including leasehold interests and goodwill, if any,
that are owned by Company , including  but not limited to the CATV  Instruments,
the Intangibles,  Company Contracts,  the Equipment,  and the Real Property, but
excluding any Excluded Assets set forth on Schedule 10.

                  1.6  CATV.  "CATV" shall mean cable television.

                  1.7 CATV Business.  "CATV  Business" shall refer to all of the
Assets and business of the CATV Systems as presently conducted by Company in and
around the Service Area, as generally described on Schedule 1 to this Agreement.

                  1.8 CATV Franchise Agreement. "CATV Franchise Agreement" shall
refer to that certain CATV  Franchise  Agreement  No.  F65501-91-D0003,  between
Company and the  Operational  Contracting  Office/LGCV,  on behalf of the United
States of America, dated November 30, 1990.

                  1.9 CATV Instruments.  "CATV  Instruments"  shall refer to all
intangible  CATV channel  distribution  rights owned by Company,  all  franchise
agreements,  pole  attachment  rights,  leases,  licenses,  easements,  crossing
permits and service  agreements,  other than those which are Excluded  Assets as
described on Schedule 2 to this Agreement.

                  1.10 CATV System. "CATV System" shall refer to a complete CATV
reception and  distribution  system of Company  which is part of Company's  CATV
Business and consisting of one or more headends, equipment, Subscriber drops and
associated  electronic  equipment,  which is, or is  capable  of being,  without
modification,  operated as an  independent  system without  interconnections  to
other systems. Any systems which are interconnected or which are served in total
or in part by a common headend shall be considered a single CATV System.

                  1.11 Closing and Closing  Date.  "Closing"  shall refer to the
consummation of the transactions  contemplated by this Agreement,  to take place
at a  meeting  held at the place and on the date  (referred  to as the  "Closing
Date") specified in Section 6 of this Agreement.

                  1.12 Company Contracts. "Company Contracts" shall refer to all
contracts and  agreements  pertaining to the lawful  ownership,  operation,  and
maintenance  of the CATV  Business  other than CATV  Instruments  and other than
those  contracts  and  agreements  which are Excluded  Assets or other  Required
Assets, as described on Schedule 3 to this Agreement;  provided, that Schedule 3
need  not list any of the  foregoing  involving  payments  of less  than  $5,000
monthly, individually, or


                                                          REGISTRATION STATEMENT
                                                                      Page II-22
<PAGE>
$100,000 in the aggregate,  in any 30-day period, and which may be terminated by
Company  after  Closing at any time  without  penalty or liability to Buyer upon
notice of 30 days or less (collectively, "Immaterial Contracts");

                  1.13 Company Loan Agreement.  "Company Loan  Agreement"  means
that  certain  Amended and  Restated  Loan  Agreement  dated March 7, 1996 among
Company,  the banks named therein (the "PCOA Banks"),  Toronto Dominion (Texas),
Inc. ("TD Bank"),  Credit  Lyonnais  Cayman Island Branch,  The Chase  Manhattan
Bank,  N.A. and  NationsBank of Texas,  N.A., as managing  agents (the "Managing
Agents"),  and TD Bank, as administrative  agent for the Managing Agents and the
PCOA Banks (the "Administrative Agent").

                  1.14  Employees.  "Employees"  shall be as  defined in Section
3.19.

                  1.15 Environmental Law. "Environmental Law" means any statute,
ordinance, code, law, rule, regulation, order or other requirement,  standard or
procedure enacted,  adopted or applied by any governmental  authority (including
judicial  decisions  applying common law) relating to pollution or protection of
public health, safety or welfare or the environment, including those relating to
emissions,  discharges,  releases or threatened releases of Hazardous Substances
into the  environment  (including  ambient air,  surface water,  ground water or
land), or otherwise relating to the manufacture,  processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances.

                  1.16  Equipment.  "Equipment"  shall  refer  to  all  tangible
personalty, electronic devices, trunk and distribution coaxial and optical fiber
cable, amplifiers, power supplies, conduit, vaults and pedestals,  grounding and
pole hardware, Subscriber's devices (including, without limitation,  converters,
encoders,  transformers  behind TV sets and fittings),  "headend"  (origination,
earth stations,  transmission and distribution system) hardware, test equipment,
vehicles,  and other  personal  property  and  facilities  owned by  Company  as
described on Schedule 5 to this Agreement.

                  1.17 ERISA.  "ERISA" shall be as defined in Section 3.15.

                  1.18 Excluded Assets.  "Excluded  Assets" shall refer to those
Assets  which  will not be owned by  Company  on the  Closing  Date as listed on
Schedule 10.

                  1.19   FAA.   "FAA"   shall   mean   the   Federal    Aviation
Administration.

                  1.20  FCC.   "FCC"  shall  mean  the  Federal   Communications
Commission.

                  1.21 Financial Statements.  "Financial Statements" shall be as
defined in Section 3.16.


                                                          REGISTRATION STATEMENT
                                                                      Page II-23
<PAGE>
                  1.22 GCI Class A Stock. "GCI Class A Stock" means GCI's voting
Class A common stock, no par value.

                  1.23 GAAP.  "GAAP" shall mean, as in effect from time to time,
generally accepted accounting principles used in the United States, consistently
applied.

                  1.24 Hazardous Substances. "Hazardous Substances" means any of
the following: (i) any "hazardous waste" as defined by the Resource Conservation
and Recovery Act of 1976 (RCRA),  (42  U.S.C.section  6901 et seq.), as amended,
and rules and regulations promulgated thereunder; (ii) any "hazardous substance"
as  defined  by  the  Comprehensive  Environmental  Response,  Compensation  and
Liability  Act of 1980 (42 U.S.C.ss.  9601 et seq.)  (CERCLA),  as amended,  and
rules and regulations promulgated  thereunder;  (iii) any substance regulated by
the Toxic Substances  Control Act (42 U.S.C. ss. 2601 et seq.), as amended,  and
rules and regulations promulgated thereunder; (iv) asbestos requiring abatement,
removal or treatment pursuant to the requirements of any Environmental Laws; (v)
polychlorinated biphenyls; (vi) any substances regulated under the provisions of
Subtitle I of RCRA relating to underground  storage  tanks;  (vii) any substance
the presence,  use, treatment,  storage or disposal of which on real property is
prohibited by any legal  requirements;  and (viii) any other  substance which by
any legal requirements  requires special handling,  reporting or notification of
any  governmental  authority  in its  collection,  storage,  use,  treatment  or
disposal.

                  1.25 Inspection  Termination Period.  "Inspection  Termination
Period" means the period commencing on the date of this Agreement and continuing
for 60 days  thereafter  (or such shorter period as may be specified by Buyer by
written notice to Sellers).

                  1.26  Intangibles.   "Intangibles"   shall  mean  all  general
intangibles  owned by Company  including,  but not limited to, Subscriber lists,
accounts receivable,  claims (excluding any claims relating to Excluded Assets),
patents, copyrights, and goodwill, if any.

                  1.27 MDU Agreements. "MDU Agreements" shall mean the Company's
agreements  that exist as of the date of this Agreement to provide CATV Services
to MDU Complexes, as required by Section 5.9 hereof.

                  1.28 MDU  Complex.  "MDU  Complex"  shall mean any  apartment,
condominium, or townhome complex or mobile home park and any other multiple unit
dwelling  project subject to common  ownership  which  currently  receives cable
television service from the CATV Business.

                  1.29 MCI. "MCI" means MCI Telecommunications Corporation.


                                                          REGISTRATION STATEMENT
                                                                      Page II-24
<PAGE>
                  1.30 Net Income.  "Net Income" means, as applied to any Person
for any period, the aggregate amount of net income of such Person,  after taxes,
for such period as determined in accordance with GAAP.

                  1.31 Operating Cash Flow. "Operating Cash Flow" shall mean, as
applied  to any  Person in  respect  of any  fiscal  period,  the sum of (a) the
remainder of (i) the Net Income of such Person for such fiscal period minus (ii)
interest  income  and  extraordinary   income  (including   extraordinary  gains
resulting  from sales of assets) of such Person for such  fiscal  period and any
taxes   associated   therewith,   plus  (b)  interest   expense,   depreciation,
amortization,  bank fees,  income tax expense,  extraordinary  losses (including
losses resulting from such sale of assets, net of any tax effect), and all other
non-cash expenses  deducted in determining such Net Income,  and with respect to
Company,  management fees, expenses and other amounts under Company's management
agreement with PIIM, and partnership expenses.

                  1.32 Other Required Assets. "Other Required Assets" shall mean
those assets or properties used or held for use in connection with the operation
of the CATV  Business  and which are owned or leased by PIIM,  as  described  on
Schedule 15.

                  1.33 Partnership Agreement. "Partnership Agreement" shall mean
that  certain  Amended and  Restated  Agreement  of Limited  Partnership  of the
Company  dated as of June 30,  1989,  among PCFI,  Growth,  Holdings and ACI, as
amended by that First  Amendment  to Amended and  Restated  Agreement of Limited
Partnership dated as of August 9, 1991, and as hereafter amended.

                  1.34 Partnership Interests. "Partnership Interests" shall mean
(i) all of the issued and outstanding limited  partnership  interests in Company
owned by Holdings and Growth,  and (ii) all of the issued  profit  participation
interests in Company owned by BBC, FCIC and MDP.

                  1.35  PCFI.  "PCFI"  shall mean  Prime  Cable Fund I, Inc.,  a
Delaware corporation.

                  1.36 Permitted  Encumbrances.  "Permitted  Encumbrances" shall
mean, with respect to any Person:

                           (a) with respect to the Company, any lien in favor of
the Administrative  Agent on behalf of the Managing Agents and the PCOA Banks to
secure the Company's  obligations arising under the Company Loan Agreement;  and
with respect to Buyer, any lien in favor of NationsBank of Texas,  N.A., and the
Lenders named therein to secure Buyer's obligations under Buyer's Second Amended
and Restated Credit Agreement dated as of April 26, 1996 ("GCI Loan Agreement");



                                                          REGISTRATION STATEMENT
                                                                      Page II-25
<PAGE>
                           (b) (i) liens on real estate taxes not yet delinquent
and (ii) liens for taxes, assessments,  governmental charges or levies or claims
the  non-payment  of which  is  being  contested  in good  faith by  appropriate
proceedings  and for which  adequate  reserves shall have been set aside on such
Person's books, but only so long as no foreclosure,  distraint,  sale or similar
proceedings  have been commenced with respect  thereto and remain unstayed for a
period of thirty (30) days after their commencement;

                           (c)  liens  of  carriers,  warehousemen,   mechanics,
laborers and  materialmen  incurred in the ordinary  course of business for sums
not yet due or being  contested in good faith,  if such  reserve or  appropriate
provision, if any, as shall be required by GAAP shall have been made therefore;

                           (d) liens incurred in the ordinary course of business
in connection with worker's compensation and unemployment insurance;

                           (e) restrictions on the transfer of assets imposed by
any  intangible  CATV  channel   distribution   rights,   franchise   agreement,
certificate  of public  necessity and  convenience,  pole  attachment or conduit
right, lease, license,  easement,  crossing permit or service agreement,  by the
Communications  Act of 1934,  as amended  (the  "Communications  Act"),  and any
regulations  thereunder,  or by  any  state  or  local  statute,  regulation  or
ordinance applicable to such Person;

                           (f) easements, rights-of-way,  restrictions and other
similar encumbrances on the use of real property which do not interfere with the
ordinary  conduct of the business of such  Person,  or liens  incidental  to the
conduct of the  business of such Person or to the  ownership  of its  properties
which were not incurred in connection  with  indebtedness  for money borrowed or
other extensions of credit and which do not in the aggregate  materially detract
from  the  value  of such  properties  or  materially  impair  their  use in the
operation of the business of such Person;

                           (g) purchase  money  security  interests  arising and
perfected by operation of law only for a period not to exceed ten (10) days from
the inception thereof, and limited to liens on assets so purchased;

                           (h) liens of record as of the date of this  Agreement
listed on Schedule 7;

                           (i)  liens in favor of  landlords  to  secure  unpaid
rental payments under leases; and

                           (j) with  respect  to the  Company,  liens of lessors
with respect to capitalized lease  obligations  permitted under the Company Loan
Agreement;  and  with


                                                          REGISTRATION STATEMENT
                                                                      Page II-26
<PAGE>
respect  to  Buyer,  liens of  lessors  with  respect  to
capitalized lease obligations permitted under the GCI Loan Agreement.

                  1.37 Person. "Person" shall mean any individual,  corporation,
partnership,  limited liability  company,  trust,  unincorporated  organization,
association, governmental authority or other entity.

                  1.38 Purchase Price.  The "Purchase Price" shall be as defined
in Section 2.2.

                  1.39 Real Property.  The term "Real  Property"  shall mean (i)
all realty, including appurtenances,  improvements, and fixtures located thereon
and any other  interests in real property  owned by Company and used or held for
use in the CATV  Business,  including,  without  limitation,  fee  interests  in
Company's  offices and headend sites  described on Schedule 6 to this  Agreement
(the  "Owned  Real  Property"),  and  (ii)  leasehold  interests  and  easements
described on Schedule 2 to this Agreement (the "Leased Real Property").

                  1.40 Required  Consents.  "Required  Consents"  shall mean all
governmental franchises,  approvals,  licenses,  consents, and any and all other
authorizations or approvals and consents,  necessary and required for Sellers to
transfer  and convey,  and Buyer to  purchase,  the  Partnership  Interests  and
Sellers' Stock,  and for Buyer to conduct  Company's CATV Business at the places
and in the manner in which such CATV Business is presently conducted and will be
conducted on the Closing Date. All Required Consents are listed on Schedule 4 to
this Agreement.

                  1.41 Security  Interest.  "Security  Interest"  shall mean any
mortgage, lien, security interest,  security agreement,  pledge, option, charge,
assessment,  restrictive agreement, restriction,  encumbrance, adverse interest,
claim,  restraint  on  transfer,  or claim  against  title  with  respect to the
Partnership Interests and Sellers' Stock or any of the Assets.

                  1.42 Sellers'  Stock.  "Sellers'  Stock" shall mean all of the
issued and outstanding stock of ACI and PCFI.

                  1.43 Service Area. "Service Area" shall mean the area in which
Company  operates the CATV Business as of the Closing Date,  specifically in and
around Anchorage,  Eagle River, Chugiak, Kenai, Soldotna and Bethel, pursuant to
applicable  APUC  Certificate  Nos. 246, 261 and 287, and in Fort Richardson and
Elmendorf Air Force Base, Alaska, pursuant to the CATV Franchise.

                  1.44 Escrow Holdback. "Escrow Holdback" shall be the shares of
GCI Class A Stock,  cash or  letter of credit  held in  escrow,  as  defined  in
Section 2.3.


                                                          REGISTRATION STATEMENT
                                                                      Page II-27
<PAGE>
                  1.45  Subscribers.  "Subscribers"  shall mean all dwelling and
commercial  units,  including,   but  not  limited  to,  individual  residences,
commercial establishments,  apartment units and hotel rooms (including apartment
units,  hotel rooms and other multiple  dwelling and commercial  units for which
services are provided under bulk billing arrangements),  in respect of which the
Company provides basic cable television services for a fee.

Section 2. Purchase and Sale.

                  2.1 Purchase and Sale of Securities.  At the Closing, upon the
terms and conditions set forth in this Agreement, Sellers agree to sell, convey,
transfer,  assign,  and  deliver to Buyer,  and Buyer  agrees to  purchase  from
Sellers, all of the Partnership  Interests and Sellers' Stock, together with the
right to receive  all  unpaid  dividends  or other  distributions  payable  with
respect to the Partnership Interests and Sellers' Stock. Such sale,  conveyance,
transfer,  assignment,  and  delivery  shall be effected  (a) by the delivery by
Holdings,  Growth,  BBC,  FCIC and MDP to Buyer at the Closing of (i)  Holdings'
BBC's FCIC's,  MDP's and Growth's  respective  bills of sale for the Partnership
Interests,  and (ii) such  other  documents  or  instruments  (having  terms and
provisions  satisfactory  to Buyer  and the  applicable  Sellers)  which  may be
necessary,  or which Buyer may reasonably  request, in order to effectively vest
in Buyer good and marketable title to the Partnership Interests and the right to
receive  such unpaid  distributions,  free and clear of any  Security  Interest,
except for any Permitted  Encumbrance  described in Section 1.36(a) and (e), (b)
by the merger of ACI with and into Buyer (or at Buyer's election, a wholly-owned
subsidiary  of Buyer)  pursuant to an agreement  and plan of merger having terms
and  provisions  satisfactory  to Buyer and to the ACI Sellers to be attached to
this Agreement as Exhibit F prior to the Inspection Termination Date (as defined
in Section  5.6(c)  below),  which shall  provide,  among other things,  for the
delivery  to Buyer at Closing of (i) the stock  certificates  held by  Holdings,
Growth,  PVII,  AV, CFII,  CFIII,  CBDF and WBVP  (together,  the "ACI Sellers")
representing  all of the issued and outstanding  stock of ACI (the "ACI Stock"),
duly endorsed in blank and with all necessary documentary or transfer tax stamps
affixed  thereto,  which will be  exchanged  for a portion of the GCI Shares (as
defined in Section 2.2) as specified in accordance  with Section 2.2 below,  and
(ii)  such  other   documents  or   instruments   having  terms  and  provisions
satisfactory  to Buyer and the  applicable  Sellers which may be  necessary,  or
which Buyer may reasonably  request,  in order to effectively  vest in Buyer (or
such  subsidiary  of Buyer) good and  marketable  title to the ACI Stock and the
right to receive such unpaid dividends free and clear of any Security  Interest,
except for any Permitted  Encumbrances  described in Section 1.36(a) and (e) and
(c) by the  merger  of PCFI  with and into  Buyer  (or at  Buyer's  election,  a
wholly-owned  subsidiary  of Buyer)  pursuant to an agreement and plan of merger
having terms and provisions  satisfactory to Buyer and to PCLP to be attached to
this Agreement as Exhibit G prior to the Inspection Termination Date (as defined
in Section  5.6(c)  below),  which shall  provide,  among other things,  for the
delivery  to  Buyer  at  Closing  of (i)  the  stock  certificates  held 


                                                          REGISTRATION STATEMENT
                                                                      Page II-28
<PAGE>
by PCLP  representing all of the issued and outstanding stock of PCFI (the "PCFI
Stock"),  duly endorsed in blank and with all necessary  documentary or transfer
tax stamps  affixed  thereto,  which will be exchanged  for a portion of the GCI
Shares (as defined in Section 2.2) as specified in  accordance  with Section 2.2
below, and (ii) such other documents or instruments  having terms and provisions
satisfactory  to Buyer  and PCLP  which  may be  necessary,  or which  Buyer may
reasonably request, in order to effectively vest in Buyer (or such subsidiary of
Buyer) good and marketable title to the PCFI Stock and the right to receive such
unpaid  dividends  free  and  clear of any  Security  Interest,  except  for any
Permitted Encumbrances described in Section 1.36(a) and (e). It is the intent of
the parties to structure such mergers as tax-free  reorganizations under Section
368(a)(1)(A)  of the Internal  Revenue Code of 1986, as amended.  As a result of
the  foregoing,  Buyer will own,  directly or  indirectly  through  wholly-owned
subsidiaries,  one hundred percent (100%) of the outstanding limited partner and
general partner interests of Company.

                  2.2 Purchase Price. Buyer will and, in the case of the mergers
described in Section 2.1(b) and (c), will deliver or cause Buyer's  wholly-owned
subsidiary to, deliver to Sellers,  as their respective  interests appear as set
forth on Schedule 1A  attached  hereto,  at the  Closing  ELEVEN  MILLION  EIGHT
HUNDRED THOUSAND (11,800,000) shares of GCI Class A Stock (the "GCI Shares"), in
payment for the Partnership  Interests and in consideration  for the acquisition
of Sellers'  Stock  pursuant to said  mergers.  Such  delivery of the GCI Shares
constitutes the "Purchase Price."

                  2.3 Escrow Holdback.  At the Closing,  Sellers and Buyer shall
each deposit in escrow with a third party escrow agent acceptable to Sellers and
Buyer  either  (i)  1,093,750  shares of GCI Class A Stock,  or (ii) a letter of
credit or cash in an amount equal to Eight Million Seven Hundred Fifty  Thousand
and no/100  Dollars  ($8,750,000.00)  (the  "Escrow  Holdback"),  to secure each
party's   indemnification  for  breaches  of  representations,   warranties  and
covenants. The Escrow Holdback will be held by such escrow agent pursuant to the
terms of an escrow  agreement  (the  "Escrow  Agreement")  in the form  attached
hereto as Exhibit A, which shall provide,  among other things, that if no breach
of this Agreement has occurred,  the Escrow Holdback shall be released following
each respective  indemnitee's written  instruction,  effective as of one hundred
eighty (180) days after the Closing Date.  The  1,093,750  shares of GCI Class A
Stock delivered into escrow by Sellers as a portion of the Escrow Holdback shall
be referred to in this Agreement as the "Sellers' Indemnity Shares."

Section 3. Representations, Warranties, and Covenants of Sellers

                  Sellers,  jointly  and  severally,   represent,  warrant,  and
covenant to Buyer as follows:


                                                          REGISTRATION STATEMENT
                                                                      Page II-29
<PAGE>
                  3.1 Organization and Qualification. Each Seller and Company is
a corporation or partnership,  as applicable,  duly organized,  validly existing
and in good standing under the laws of its respective  place of incorporation or
formation,  as  applicable,  and  Company is duly  qualified  or  licensed to do
business as a foreign limited partnership and is in good standing under the laws
of each  jurisdiction  in  which  Company  is  required  to be so  qualified  or
licensed.  Company has all  requisite  power and  authority to carry on the CATV
Business  as  currently  conducted  and to own,  lease,  use,  and  operate  its
properties  and to conduct  its  business  as it is now  conducted.  The copy of
Company's Agreement of Limited Partnership, as amended, which has been delivered
to Buyer is complete and correct,  and such document is in full force and effect
and has not been further amended.

                  3.2 Company's Partnership Interests.  Company's authorized and
outstanding partnership interests are owned as follows:

                  Entity            Type of Interest      Percentage
                                                          Ownership*

                  Holdings                L.P.               4.44%
                  Growth                  L.P.              24.44%
                  ACI                     L.P.              51.11%
                  PCFI                    G.P.              20.01%

Except as provided herein,  Company's above-listed partnership interests (i) are
owned  beneficially  and of  record  by  Holdings,  Growth,  ACI  and  PCFI  and
constitute all of Company's  outstanding  partnership  interests,  (ii) are duly
authorized,  validly issued,  and (iii) are and will be at Closing,  free of any
Security  Interests,  except for  Permitted  Encumbrances  described  in Section
1.36(a) and (e).  There are no  outstanding  agreements or contracts  obligating
Company  to issue  any  additional  partnership  interest  of any  kind.  *These
percentages are subject to the profit participation  interests held by BCC, FCIC
and MDP.

                  3.3 ACI's Capitalization.  The authorized capital stock of ACI
consists  of (i) four  thousand  six  hundred  (4,600)  shares of Class A Common
Stock,  par value 10/100 Dollars  ($.10) per share,  all of which are issued and
outstanding  and owned  beneficially  and of record as set forth on Schedule 14,
and (ii)  twenty-one  (21)  shares of Class B Common  Stock,  par  value  10/100
Dollars  ($.10) per share,  all of which are  issued and  outstanding  and owned
beneficially  and of record as set forth on Schedule 14. The ACI shares are duly
authorized,  have been validly issued,  and are fully paid and nonassessable and
upon  delivery to Buyer at the Closing will be free of any  Security  Interests,
except for any  Permitted  Encumbrances  described  in Section  1.36(a) and (e).
There are no outstanding or authorized (i) securities of ACI convertible into or
exchangeable  or  exercisable  for any  shares  of its  capital  stock,  or (ii)
subscriptions,


                                                          REGISTRATION STATEMENT
                                                                      Page II-30
<PAGE>
options,   warrants,  calls,  rights,   commitments,   or  other  agreements  or
obligations of any kind  obligating  ACI to issue any  additional  shares of its
capital stock or any other  securities  convertible into or evidencing the right
to acquire or subscribe for any shares of its capital stock.

                  3.4 PCFI's  Capitalization.  The  authorized  capital stock of
PCFI consists of One Thousand  (1,000) shares of common stock,  par value 50/100
Dollars  ($.50) per share,  of which One Thousand  (1,000) shares are issued and
outstanding.  The PCFI shares are owned  beneficially  and of record by PCLP and
constitute all the  outstanding  capital stock of PCFI. The PCFI shares are duly
authorized,  have been validly issued,  and are fully paid and nonassessable and
upon delivery to Buyer at the Closing,  will be free of any Security  Interests,
except for any  Permitted  Encumbrances  described  in Section 1.36 (a) and (e).
There are no outstanding or authorized (i) securities of PCFI  convertible  into
or  exchangeable  or exercisable  for any shares of its capital  stock,  or (ii)
subscriptions,   options,  warrants,  calls,  rights,   commitments,   or  other
agreements or  obligations of any kind  obligating  PCFI to issue any additional
shares  of its  capital  stock  or any  other  securities  convertible  into  or
evidencing  the right to acquire  or  subscribe  for any  shares of its  capital
stock.

                  3.5 Authority.  Each Seller has all requisite capacity, power,
right, and authority to enter into this Agreement and to perform its obligations
under this Agreement.  Except for obtaining the Required  Consents  described in
Schedule 4, the  execution,  delivery,  and  performance  of this  Agreement  by
Sellers have been duly  authorized by all  applicable  corporate or  partnership
action of Sellers.  No  material  consent of or  authorization  from any Person,
including any governmental agency, is required to be obtained in connection with
the execution,  delivery,  and performance of this Agreement by Sellers,  except
for the Required Consents described in Schedule 4.

                  3.6   Enforceability.   This   Agreement  and  all  documents,
instruments,  and  certificates to be delivered under this Agreement  constitute
legal, valid, and binding obligations of Sellers, enforceable against Sellers in
accordance  with their  respective  terms,  except as the same may be limited by
bankruptcy,  insolvency,  reorganization,  moratorium,  or  other  similar  laws
affecting  generally the  enforcement  of creditors'  rights and remedies and by
general principles of equity,  including  limitations on the availability of the
remedy of specific  performance  or  injunctive  relief,  regardless  of whether
performance or injunctive relief is sought in a proceeding at law or in equity.

                  3.7 No  Subsidiaries  or  Affiliates.  Except  as set forth on
Schedule 10,  Company does not control,  or own any stock or other  interest in,
directly or indirectly,  any  corporation,  partnership,  association,  or other
business entity.

                  3.8 Cash Flow. Company's 1995 operating cash flow was not less
than Sixteen Million Three Hundred Thirty Thousand Dollars ($16,330,000).


                                                          REGISTRATION STATEMENT
                                                                      Page II-31
<PAGE>
                  3.9 Indebtedness.  As of February 29, 1996, Company's combined
outstanding  subordinated  and senior debt (less any  positive  working  capital
balance or plus any  working  capital  deficit,  as the case may be,  calculated
without  regard  to the  current  portion  of long  term  debt)  did not  exceed
$107,000,000 in the aggregate.

                  3.10 Records.  Company's  minute books,  as made  available to
Buyer,  contain  current,  complete,  and  accurate  records of all meetings and
actions of Company's  partners,  and, if any,  committees of the  partners.  All
material actions and transactions  taken or entered into by Company or otherwise
requiring  action by its  partners  have been duly  authorized  or  ratified  as
necessary and are evidenced in such minute books.  Company's  books and ledgers,
as made  available  to Buyer,  contain  complete  and  accurate  records  of all
issuances and transfers of its partnership  interests.  The signatures appearing
in such minute  books,  and ledgers  are the genuine  signatures  of the persons
purporting to have signed them.

                  3.11 No Breach or  Violation.  Subject only to  obtaining  the
consents and approvals  set forth on Schedule 4, the  execution,  delivery,  and
performance  of this  Agreement  by Sellers  (a) does not and will not (with the
giving of notice or  passage of time or both) (i)  conflict  with or result in a
material  breach or  violation by Sellers,  or Company of, or (ii)  constitute a
material  default  by Sellers or  Company  under,  or (iii)  create any right of
termination,  cancellation,  or  acceleration  of a material  right by any party
pursuant  to, any of the CATV  Instruments  or Company  Contracts,  any statute,
ordinance, rule, or regulation, or any agreement, instrument, judgment, or order
to which Sellers, or Company is a party or by which Sellers,  Company,  the CATV
Business, or any of the Assets is bound or may be affected, and (b) does not and
will not (with the giving of notice or passage of time or both) create or impose
any Security Interest on the Partnership  Interests or Sellers' Stock, or on any
of the Assets.

                  3.12 No  Programming  Rate  Changes.  PIIM  has no  reason  to
believe that for so long as PIIM continues to manage Company,  the rates charged
by programmers under Company's current programming  agreements will be increased
solely due to Sellers' and Buyer's consummation of the transactions contemplated
by this Agreement.

                  3.13 No Finders or Brokers. Neither any of Sellers nor Company
has entered into any contract,  arrangement, or understanding with any person or
firm which may result in any obligation of Buyer or Sellers to pay any finder's,
broker's,  or agent's fees or  commissions or other like payments as a result of
the transactions contemplated by this Agreement.

                  3.14 Schedules.  Schedules 2, 3, 5, 6 and 10 to this Agreement
list all material Assets owned, held, used, or useful for the performance of any
CATV  Instruments,  Company  Contracts  and for the  lawful  conduct of the CATV
Business,  other 


                                                          REGISTRATION STATEMENT
                                                                      Page II-32
<PAGE>
than  Immaterial  Contracts.  Schedules 1 through 15 to this Agreement are true,
accurate, and complete in all material respects.

                  3.15 Compliance with Laws. 

                       3.15.1 In General.
                                      
                              (a) Except with respect to the  regulatory  status
of the  CATV  Business  under,  or  Company's  compliance  with,  the FCC  rules
implementing  the rate regulation  provisions of the  Communications  Act (as to
which Company makes no  representations  and warranties in this Agreement  other
than in Section 3.15.2), Company has complied in all material respects with, and
is in material  compliance  with, the CATV Business has complied in all material
respects with and is in material  compliance  with, and Company has constructed,
maintained and operated,  and is  constructing,  maintaining and operating,  the
CATV Business  (including,  without  limitation,  the Real Property) in material
compliance  with all  applicable  laws  including  the  Communications  Act, the
Copyright Act of 1976, the rules and  regulations of the FCC, the APUC, the U.S.
Copyright Office, the Register of Copyrights and the Copyright Tribunal (in each
case as the same are currently in effect).

                              (b) All reports,  notices,  forms and filings, and
all fees and  payments,  required to be given to,  filed  with,  or paid to, any
governmental authority by Company under all applicable laws have been timely and
properly  given  and made by  Company,  and are  complete  and  accurate  in all
material respects, in each case as required by applicable law, including (i) all
cable  television  registration  statements,  periodic  reports and aeronautical
frequency usage notices, (ii) reports and filings required by the FAA, and (iii)
for each relevant semiannual  reporting period, with the United States Copyright
Office,  all  required  Statements  of  Account  in true  and  correct  form and
copyright royalty fee payments in correct amounts relating to the CATV Business'
carriage of television broadcast signals and other programming;

                              (c) Seller has not received any notice (written or
oral) from any  governmental  authority  or any other  Person  that it, the CATV
Business,  or its  ownership  and  operation of the CATV Business is in material
violation  of any  applicable  law,  and  Company  knows  of no  basis  for  the
allegation of any such violations; and

                              (d) Company has complied in all material  respects
with all  applicable  legal  requirements  relating to the  employment of labor,
including ERISA, continuation coverage requirements with respect to group health
plans, and those relating to wages, hours, unemployment  compensation,  worker's
compensation,  equal employment opportunity,  age and disability discrimination,
immigration  control and the payment and withholding of taxes, and no reportable
event,  within the meaning of Title IV of ERISA,  has occurred and is continuing
with respect to any "employee  benefit plan" or  "multiemployer  plan" (as those
terms are defined in ERISA)  maintained by Company 


                                                          REGISTRATION STATEMENT
                                                                      Page II-33
<PAGE>
or its  affiliates  (as defined in Section  407(d)(7) of ERISA).  No  prohibited
transaction,  within the meaning of Title I of ERISA,  has occurred with respect
to any  such  employee  benefit  plan or  multiemployer  plan,  and no  material
accumulated  funding  deficiency  (as defined in Title I of ERISA) or withdrawal
liability  (as  defined in Title IV of ERISA)  exists  with  respect to any such
employee benefit plan or multiemployer plan.

                  3.15.2 Rate Regulation Information. Included in Schedule 12 is
an accurate  description of the regulatory status of the CATV Business under the
FCC rules implementing the rate regulation provisions of the Communications Act,
described  by  community  unit,  including  (a)  whether  the local  franchising
authority  has been  certified  to  regulate  the rates  for the basic  tier and
equipment,  (b)  whether  any  complaints  have been filed  subjecting  the CATV
Business' rates for cable programming  services to regulation by the FCC in such
community unit and, if so, the date of the first such complaint, (c) the actions
that have been taken in  anticipation  of or  response  to  regulation  for each
community unit,  including rate changes initiated and forms filed with the local
franchising  authorities  or the FCC,  as the case may be, and (d) the status of
the  regulatory  response.  Company has delivered to Buyer  complete and correct
copies  of all  FCC  Forms  393  and  1200  filed  with  the  local  franchising
authorities  and/or  the FCC with  respect to the CATV  Business,  copies of all
material  correspondence  with  any  governmental  authority  relating  to  rate
regulation  generally  or  specific  rates  charged to  subscribers  to the CATV
Business,  and any documentation  which Company has used to support an exemption
from the rate regulation provisions of the Communications Act claimed by Company
with respect to the CATV Business.

                  3.15.3  Environmental.  To  Company's  knowledge  (which,  for
purposes of this  Section  3.15.3 is limited to the actual  knowledge of (a) the
officers  of PIIM in its  Austin,  Texas  offices,  (b) Dan Pike and Ron Hepler,
engineers  in  such  offices,  and  (c)  Marty  Robinson,  manager  of the  CATV
Business),  except as set forth in Schedule 12: (The foregoing individuals named
in clauses (b) and (c) above are the most knowledgeable persons with the Company
with  respect  to this  issue and have  each  familiarized  themselves  with the
Environmental  Law as pertinent to the Company's  operations within the scope of
their  authority and have each reviewed all pertinent  information  within their
control with respect to possible  violations of Environmental  Law); (i) Company
has not received any notice (written or oral) from any governmental authority or
other Person that the Person giving such notice is investigating whether, or has
determined that there are, any violations of Environmental  Laws by Company,  or
violations of Environmental  Law due to activities on, or affecting,  or related
to, the Real Property,  (ii) none of the Real Property has previously  been used
by any Person for the generation,  production, emission, manufacture,  handling,
processing,  treatment,  storage,  transportation,  disposal or discharge of any
Hazardous Substances, (iii) Company has not used, generated,  produced, emitted,
manufactured,  handled,  possessed,  treated, stored,  transported,  disposed or
discharged,  and does not presently use, generate,  produce, emit,  manufacture,
handle, possess, treat, store,  transport,  dispose or discharge,  any Hazardous
Substances on, into or from the Real Property,  (iv) Company 


                                                          REGISTRATION STATEMENT
                                                                      Page II-34
<PAGE>
is in  compliance in all material  respects with all laws  applicable to its own
(as distinguished from other Persons') use,  generation,  production,  emission,
manufacturing,  treatment, storage,  transportation,  disposal, and discharge of
any Hazardous  Substances on, into or from the Real  Property,  (v) there are no
above  ground  or  underground  storage  tanks,  or  any  Equipment   containing
polychlorinated  biphenyls,  on the Real Property,  (vi) no release of Hazardous
Substances  outside the Real Property has entered or threatens to enter any Real
Property,  nor is there any pending or threatened  claim based on  Environmental
Laws which arises from any condition of the land  surrounding any Real Property,
(vii) no Real Property has been used at any time as a gasoline  service  station
or any other facility for storing, pumping,  dispensing or producing gasoline or
any other petroleum products or wastes, (viii) no building or other structure on
any Real Property contains asbestos, and (ix) there are no incinerators,  septic
tanks or  cesspools  on the Real  Property  and all waste is  discharged  into a
public  sanitary  sewer  system.  Company has provided  Buyer with  complete and
correct  copies of (A) all  studies,  reports,  surveys  or other  materials  in
Company's  possession or of which Company has knowledge and to which Company has
access relating to the presence or alleged presence of Hazardous  Substances at,
on or  affecting  the Real  Property,  (B) all  notices  or other  materials  in
Company's  possession or of which Company has knowledge and to which Company has
access that were received from any  governmental  authority  having the power to
administer  or  enforce  any  Environmental  Laws  relating  to  current or past
ownership,  use or operation of the Real  Property or activities at or affecting
the Real  Property and (C) all  materials in  Company's  possession  or to which
Company has access  relating to any claim,  allegation  or action by any private
third party under any Environmental Law. The  representations  and warranties in
this Section 3.15.3 are the only representations and warranties given by Company
with respect to the  Environmental  Law  compliance  of the Company and the CATV
Business.

                  3.16  Financial  Statements.  Sellers have  delivered to Buyer
correct and complete copies of Company's audited  financial  statements for each
of the two most recent  fiscal  years ended prior to the date of this  Agreement
and unaudited  interim  monthly  financial  statements  for the two month period
ended February 29, 1996 (the "Financial  Statements").  The Financial Statements
were  prepared in  accordance  with  generally  accepted  accounting  principles
applied on a consistent basis throughout the periods covered thereby (except, in
the case of interim financial  statements,  subject to normal recurring year-end
adjustments and the absence of footnotes), and fairly present in accordance with
generally accepted accounting  principles the financial condition and results of
operation  of  Company as of the dates  indicated  and for the  periods  covered
thereby. Except as disclosed by, or reserved against in, its most recent balance
sheet included in the Financial Statements,  Company did not have as of the date
of such balance sheet any liability or obligation,  whether  accrued,  absolute,
fixed, or contingent  (including,  without limitation,  liabilities for taxes or
unusual forward or long-term  commitments),  which was material to the business,
results of operations,  or financial  condition of Company and which is required
to be  disclosed  on, or reserved  against  in, a balance  sheet.  Sellers  have
received  no notice of any fact  which may form a basis for 


                                                          REGISTRATION STATEMENT
                                                                      Page II-35
<PAGE>
any claim by a third  party  which,  if  asserted,  could  result in a liability
affecting  Company  not  disclosed  by or  reserved  against in the most  recent
balance  sheet  of  Company.  From the date of the  most  recent  balance  sheet
included  in the  Financial  Statements  to  and  including  the  date  of  this
Agreement,  (i) the CATV Business has been operated only in the ordinary course,
(ii)  Company has not sold or disposed of any assets  other than in the ordinary
course of business,  (iii) there has not occurred any material adverse change or
event in the business, operations, assets, liabilities,  financial condition, or
results of operations of Company compared to the business,  operations,  assets,
liabilities,  financial  condition,  or results of  operations  reflected in the
Financial  Statements,  and (iv)  there  has not  occurred  any  theft,  damage,
destruction, or loss which has had a material adverse effect on Company.

                  3.17 Tax  Returns  and  Other  Reports.  Company  has duly and
timely  filed in proper form all federal,  state,  local,  and foreign,  income,
franchise,  sales, use,  property,  excise,  payroll,  and other tax returns and
other tax reports required to be filed by law with the appropriate  governmental
authority, and, to the extent applicable, has paid or made provision for payment
of all  taxes  and  assessments  of  whatever  nature  including  penalties  and
interest,  if any,  which are due with  respect to any aspect of its business or
any of its  properties.  Except as set forth on  Schedule  11,  there are no tax
audits pending and no outstanding  agreements or waivers extending the statutory
period of limitations applicable to any relevant tax return.

                  3.18 Real Property.  With respect to all Real Property:

                           3.18.1 The Real Property has unobstructed  access for
purposes of ingress and egress to public roads or streets or private  roads over
which Company has a valid right-of-way. The Real Property is served by utilities
and services  necessary  for the present use of the Real  Property in connection
with the CATV Business.

                           3.18.2  None of the  improvements  on the Owned  Real
Property encroaches upon the property of others.

                           3.18.3  Company holds good and  marketable fee simple
title to the Owned Real Property and the valid and enforceable  right to use and
possess such Owned Real  Property,  subject only to the Permitted  Encumbrances.
Company has the valid and enforceable right to use Leased Real Property, subject
to the leases, easements, licenses, or rights-of-way described on Schedule 2.

                  3.19  Employees.  Schedule 9 contains a true and complete list
of names, and positions of all of Company's employees (the "Employees"). Company
has no employment  agreements,  either written or oral, with any person, and all
Employees are  terminable  at will.  Company is not a party to any contract with
any  labor  organization  and has not  agreed  to  recognize  any union or other
collective  bargaining  unit. No union or other  collective  bargaining unit has
been certified as representing any 


                                                          REGISTRATION STATEMENT
                                                                      Page II-36
<PAGE>
of Company's employees, and Company has not received any requests from any party
for  recognition  as a  representative  of employees for  collective  bargaining
purposes.

                  3.20  Litigation  and  Violations.  Except  as  set  forth  on
Schedule 8 and except for proceedings affecting the cable television industry or
a specific segment thereof generally,  there are no suits,  claims,  grievances,
actions,  proceedings,  or governmental  investigations  pending or, to Sellers'
best  knowledge,  threatened  against or affecting  Sellers or Company which (i)
seek to restrain or enjoin the consummation of the transactions  contemplated by
this  Agreement or (ii) might have a material  adverse  effect on the  financial
position or results of operations of Company. Company is not in violation of any
term of any judgment, decree, injunction, or order to which it is subject, which
violation  could have a material  adverse  effect on the  financial  position or
results of operations of Company.  Sellers agree to hold Buyer  harmless for any
loss suffered by Company in excess of One Hundred Sixty-Six  Thousand and no/100
Dollars ($166,000) which arises out of the litigation described on Schedule 8 at
paragraph  E. Buyer  agrees that  Sellers  shall be entitled to all  affirmative
recoveries  received  in  relation  to such  litigation.  Company  shall only be
required to pay the One Hundred Sixty-Six Thousand and no/100 Dollars ($166,000)
held in reserve for such  litigation on any third party  judgment or settlement.
Such reserve  shall not be utilized to pay any of  Company's  or Sellers'  legal
fees or costs incurred in such litigation.

                  3.21 Disclosure.  No written statement in this Agreement or in
any agreement or other  document  delivered  pursuant to this Agreement by or on
behalf of Sellers or Company contains any untrue statement of a material fact or
omits to state a  material  fact  necessary  to make the  statements  herein  or
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.

                  3.22  Investment  Company.   Company  is  not  an  "investment
company" or a company  "controlled" by an investment  company within the meaning
of the Investment  Company Act of 1940, as amended (the "Act"),  and Company has
not  relied  on rule  3a-2  under  the Act as a means of  excluding  it from the
definition of an "investment company" under the Act at any time within the three
(3) year period preceding the Closing Date.

                  3.23 CATV  Instruments  and  Company  Contracts.struments  and
Company Contracts.

                           3.23.1 The CATV Instruments and Company Contracts are
currently in full force and effect, are valid under all applicable laws, and are
enforceable  against  Company  and,  to Sellers'  knowledge,  the other party or
parties thereto,  according to their terms, except as such enforceability may be
limited  by  (i)  applicable  bankruptcy,   insolvency,  fraudulent  conveyance,
reorganization,   moratorium  or  similar  laws  affecting  the  enforcement  of
creditors' rights and remedies  generally and (ii) general principals of equity,
including principles of commercial  reasonableness,  good faith and fair dealing
and  limitations on the  availability  of the remedy of specific  enforcement or
injunctive 


                                                          REGISTRATION STATEMENT
                                                                      Page II-37
<PAGE>
relief regardless of whether  enforcement is sought in a proceeding at law or in
equity.  Company is in  compliance  in all material  respects with and is not in
material  violation  or  default  under any of the CATV  Instruments  or Company
Contracts. There is no legal action,  governmental proceeding, or investigation,
pending or, to Sellers' knowledge,  threatened,  to modify,  revoke,  terminate,
suspend,  cancel,  or reform any of the CATV  Instruments or Company  Contracts.
Company  holds  valid  and  continuing  CATV  Instruments,   Company  Contracts,
rights-of-way,  rights-of-entry,  permits,  and other rights and  authorizations
necessary to enable it to operate its CATV Business.

                           3.23.2 True, complete, and correct copies of the CATV
Instruments  and  Company  Contracts  other than  Immaterial  Contracts  and any
amendments  thereto  effective  as of the  date  of  this  Agreement  have  been
delivered by Company to Buyer.

                  3.24  Patents,   Trademarks,   and  Copyrights.   Company  has
delivered  to Buyer copies of all current  reports and filings,  and all reports
and filings for the past three (3) years,  made or filed by Company  pursuant to
Copyright rules and regulations. Company shall make available to Buyer all other
past  reports and filings made or filed by Company  pursuant to Copyright  rules
and regulations.  Company does not possess any patent, patent right,  trademark,
or copyright and is not a party to any license or royalty agreement with respect
to any patent,  trademark,  or copyright except for licenses  respecting program
material and  obligations  under the  Copyright  Act of 1976  applicable to CATV
systems generally.  The Assets are free of the rightful claim of any third party
by way of copyright infringement or the like.

                  3.25 Assets.  To Sellers'  knowledge  (which,  for purposes of
this  Section  3.25 is limited to the actual  knowledge  of (i) the  officers of
PIIM, in its Austin,  Texas offices,  (ii) Dan Pike or Ron Hepler,  engineers in
such offices, and (iii) Marty Robinson, manager of the CATV Business), except as
set forth in  Schedule  5, the  Equipment  is in good  operating  condition  and
repair, ordinary wear and tear excepted, and has been constructed and maintained
and has been and is being  operated in accordance in all material  respects with
all applicable  laws,  Company  Contracts and CATV  Instruments,  including such
Equipment's  compliance  with utility  pole and conduit  make ready,  grounding,
bonding,   spacing,   clearance,   signal  carriage  capacity,  signal  leakage,
installation  and repair,  or  engineering,  electrical,  aeronautical  or other
technical  capabilities,  specifications or requirements (including the National
Electrical  Code, and the  Communications  Act, as currently in effect,  and the
rules and regulations of the FCC and the FAA).  Except as specifically  provided
in this Section 3.25 and Section 3.15.3, (A) the Equipment is conveyed on an "AS
IS" basis, and (B) Sellers do not make any representations or warranties in this
Agreement or  otherwise,  express or implied,  including  implied  warranties of
merchantability  or  fitness  for a  particular  purpose,  with  respect  to the
physical condition or engineering  capability of the Equipment or its compliance
with applicable law, Company  Contracts or CATV  Instruments.  Company maintains
insurance on its CATV Business in amounts and of such a nature and with insurers
as is  commercially  reasonable  to protect and save it harmless  from  material


                                                          REGISTRATION STATEMENT
                                                                      Page II-38
<PAGE>
casualty  loss, and Company shall maintain such policies in such amounts duly in
force  until  the  Closing.  Except  as set  forth on  Schedule  3,  none of the
Equipment is leased or rented by Company from any other Person.

                  3.26 Title to Assets. Except as specifically  disclosed on the
Schedules  to  this  Agreement  or  otherwise   specifically  provided  in  this
Agreement,  Company  has good and  marketable  title to all of the  Assets.  The
Assets are free and clear of all Security Interests of any kind or nature except
for (i)  Permitted  Encumbrances,  and (ii)  Security  Interests  which shall be
removed and  released at or prior to Closing or which are  consented to by Buyer
in its sole discretion and are disclosed in Schedule 7.

                  3.27 No Other Assets or  Liabilities.  Except for the Excluded
Assets and the Other Required Assets,  Company does not own, use or hold for use
any material assets of any kind other than the Assets  described on Schedules 2,
3, 5 and 6; and Company has no material liabilities, obligations, or commitments
of any kind other than (i)  obligations  under the CATV  Instruments and Company
Contracts  described  on  Schedules 2 and 3, (ii)  liabilities  disclosed on the
Financial  Statements,  and (iii)  liabilities  incurred  after the date of this
Agreement in the ordinary course of business and in compliance with the terms of
this Agreement.

                  3.28  Required  Consents.  A true  and  complete  list  of all
Required Consents is set forth on Schedule 4.

                  3.29  Overbuilds.  No area presently  served by Company's CATV
Business is presently  subject to or, to Sellers' best knowledge,  threatened to
be subject to an overbuild  situation by another cable television  operator.  No
Person other than Company has been granted or has applied for APUC  Certificates
or a  CATV  franchise  agreement  in  any  of  the  communities  (or  any of the
unincorporated areas) presently served by Company's CATV business.

                  3.30 No  Insolvency.  As of even  date  and as of the  Closing
Date, Company and PIIM are not and shall not be insolvent.

                  Buyer  acknowledges  and agrees  that its sole  recourse  with
respect  to any  breach of any  representation,  warranty  or  covenant  in this
Section 3 is as provided in Section 17.

Section 4. Representations, Warranties, and Covenants of Buyer

                  Buyer  represents,  warrants,  and  covenants  to  Sellers  as
follows:

                  4.1  Organization  and Authority.  Buyer is a corporation duly
organized,  validly existing, and in good standing under the laws of Alaska; has
all requisite  capacity,  


                                                          REGISTRATION STATEMENT
                                                                      Page II-39
<PAGE>
power, right, and authority to execute, deliver, and perform this Agreement; and
has taken all action required by law, its Articles of Incorporation  and Bylaws,
and otherwise to authorize the  execution,  delivery,  and  performance  of this
Agreement.  Buyer is duly  qualified  or  licensed  to do  business as a foreign
corporation and is in good standing under the laws of each jurisdiction in which
Buyer is required to be so qualified and licensed. Buyer has all requisite power
and authority to carry on its business as currently conducted and to own, lease,
use  and  operate  its  properties  and to  conduct  its  business  as it is now
conducted. The copies of Company's Articles of Incorporation,  as amended, which
have been  delivered  to Company  are  complete  and  correct,  and each of such
document  is in full  force and  effect and have not been  further  amended.  No
material consent of or authorization from any Person, including any governmental
agency,  is required to be obtained in connection  with the execution,  delivery
and  performance  of this Agreement by Buyer,  except for the required  consents
described in Schedule 16 ("Buyer's Required Consents").

                  4.2  Capitalization.  The  authorized  capital  stock of Buyer
consists  of  50,000,000  shares of Class A common  stock,  of which  19,696,207
shares are issued and outstanding; 10,000,000 shares of Class B common stock, of
which 4,175,434 are issued and  outstanding,  and 1,000,000  shares of preferred
stock, of which no shares are issued and outstanding,  all as of April 15, 1996.
As of the Closing, the GCI Shares will be duly authorized, validly issued, fully
paid  and  nonassessable  and  free  of any  Security  Interests.  There  are no
outstanding  or  authorized  (i)  securities  of  Buyer   convertible   into  or
exchangeable  or exercisable  for any shares of its capital  stock,  except that
each  share of Class B common  stock is  convertible  into one  share of Class A
common  stock,  or  (ii)  subscriptions,   options,   warrants,  calls,  rights,
commitments,  or other agreements or obligations of any kind obligating Buyer to
issue  any  additional  shares  of its  capital  stock or any  other  securities
convertible  into or evidencing the right to acquire or subscribe for any shares
of its capital stock, except pursuant to (a) Buyer's December, 1986 Stock Option
Plan,  (b) Buyer's  December,  1986 Employee Stock Purchase Plan; (c) that June,
1989,  option  agreement  granted to John  Lowber to acquire  100,000  shares of
Buyer's Class A common stock at $0.75 per share; (d) that June, 1989,  incentive
agreement with William Behnke to acquire 85,190 shares of Buyer's Class A common
stock for $.001 per share;  and (e) those shares of Buyer's Class A common stock
to be issued in  connection  with the  transaction(s)  described  in Section 5.4
hereof.

                  4.3  Enforceability.  This  Agreement  constitutes  the legal,
valid, and binding  obligation of Buyer enforceable  against Buyer in accordance
with its terms,  except as the same may be limited  by  bankruptcy,  insolvency,
reorganization,  moratorium,  or other  similar  laws  affecting  generally  the
enforcement of creditors' rights and by general  principles of equity.  There is
no litigation  at law, in equity,  or in any other  proceeding or  investigation
pending or threatened against Buyer which might materially impair the ability of
Buyer to perform under this Agreement.


                                                          REGISTRATION STATEMENT
                                                                      Page II-40
<PAGE>
                  4.4 Cash Flow.  Buyer's 1995  operating cash flow was not less
than Nineteen Million Five Hundred Thousand Dollars  ($19,500,000).  Buyer shall
provide  Sellers with Buyer's audited  financial  statements as and for the year
ended  December 31, 1995, no later than March 31, 1996.  Such  statements  shall
present Buyer's  financial  condition  substantially  as presented to Sellers in
Buyer's unaudited documents.

                  4.5  Indebtedness.  As of February 29, 1996,  Buyer's combined
outstanding  subordinated  and senior debt (less any  positive  working  capital
balance or plus any  working  capital  deficit,  as the case may be,  calculated
without regard to the current portion of long term debt) did not exceed Fourteen
Million Dollars ($14,000,000) in the aggregate.

                  4.6  Records.  Buyer's  minute  books,  as made  available  to
Sellers,  contain  current,  complete,  and accurate records of all meetings and
actions of Buyer's directors, and, if any, committees of the board of directors.
All  material  actions  and  transactions  taken  or  entered  into by  Buyer or
otherwise  requiring action by its directors and/or  shareholders have been duly
authorized  or ratified as necessary  and are  evidenced  in such minute  books.
Buyer's books and ledgers,  as made available to Sellers,  contain  complete and
accurate  records of all  issuances and  transfers of its stock  interests.  The
signatures  appearing  in  such  minute  books,  and  ledgers  are  the  genuine
signatures of the persons purporting to have signed them.

                  4.7 No Breach or  Violation.  Subject  only to  obtaining  the
consents and approvals set forth on Schedule 16, the  execution,  delivery,  and
performance  of this  Agreement  by Buyer  (a) does not and will not  (with  the
giving of notice or passage of time or both ) (i)  conflict  with or result in a
breach or violation by Buyer of, or (ii) constitute a default by Buyer under, or
(iii) create any right of  termination,  cancellation,  or  acceleration  by any
party  pursuant to, any of its  contracts,  any  statute,  ordinance,  rule,  or
regulation, or any agreement, instrument, judgment, or order to which Buyer is a
party or by which Buyer is bound or may be  affected,  and (b) does not and will
not (with the giving of notice or passage of time or, both) create or impose any
Security Interest on the GCI Shares.

                  4.8 Compliance with Laws.

                      (a) Buyer is in material  compliance  with all  applicable
laws, rules, regulations,  orders, ordinances, and codes of the United States of
America,   its  territories  and   possessions,   and  of  any  state,   county,
municipality,  or  other  political  subdivision  or  any  agency  of any of the
foregoing having jurisdiction over Buyer's business and affairs.


                                                          REGISTRATION STATEMENT
                                                                      Page II-41
<PAGE>
                      In General.

                      Buyer has  constructed,  maintained  and operated,  and is
constructing,  maintaining  and  operating,  its  business  (including,  without
limitation,   the  real  property  owned  or  leased  by  Buyer  ("Buyer's  Real
Property"))  in material  compliance  with all  applicable  laws  including  the
Communications  Act, the rules and  regulations  of the FCC, the APUC,  (in each
case as the same are currently in effect);

                      (b) All reports,  notices, forms and filings, and all fees
and payments,  required to be given to, filed with, or paid to, any governmental
authority by Buyer under all applicable laws have been timely and properly given
and made by Buyer,  and are complete and accurate in all material  respects,  in
each case as required by applicable law;

                      (c) Buyer has not  received  any notice  (written or oral)
from any  governmental  authority or any other Person that it, or its  ownership
and operation of its business is in material  violation of any  applicable  law,
and Buyer knows of no basis for the allegation of any such violations; and

                      (d) Buyer has complied in all material  respects  with all
applicable  legal  requirements  relating to the employment of labor,  including
ERISA,  continuation  coverage  requirements with respect to group health plans,
and  those  relating  to  wages,  hours,  unemployment  compensation,   worker's
compensation,  equal employment opportunity,  age and disability discrimination,
immigration  control and the payment and withholding of taxes, and no reportable
event,  within the meaning of Title IV of ERISA,  has occurred and is continuing
with respect to any "employee  benefit plan" or  "multiemployer  plan" (as those
terms are defined in ERISA) maintained by Buyer or its affiliates (as defined in
Section  407(d)(7) of ERISA). No prohibited  transaction,  within the meaning of
Title I of ERISA, has occurred with respect to any such employee benefit plan or
multiemployer  plan, and no material  accumulated funding deficiency (as defined
in Title I of ERISA) or  withdrawal  liability (as defined in Title IV of ERISA)
exists with respect to any such employee benefit plan or multiemployer plan.

                      (e) To Buyer's knowledge,  except as set forth in Schedule
17:  (i)  Buyer  has  not  received  any  notice  (written  or  oral)  from  any
governmental  authority  or other  Person that the Person  giving such notice is
investigating  whether,  or has  determined  that there are, any  violations  of
Environmental  Laws  by  Buyer,  or  violations  of  Environmental  Law  due  to
activities on, or affecting,  or related to Buyer's Real Property,  (ii) none of
Buyer's Real Property has previously been used by any Person for the generation,
production,  emission,  manufacture,  handling, processing,  treatment, storage,
transportation,  disposal or discharge of any Hazardous Substances,  (iii) Buyer
has not used, generated,  produced, emitted,  manufactured,  handled, possessed,
treated,  stored,  transported,  disposed or discharged,  and does not presently
use, generate,  produce,  emit,  manufacture,  handle,  possess,  treat,  store,
transport,  dispose or  


                                                          REGISTRATION STATEMENT
                                                                      Page II-42
<PAGE>
discharge, any Hazardous Substances on, into or from Buyer's Real Property, (iv)
Buyer is in compliance in all material  respects with all laws applicable to its
own  (as  distinguished  from  other  Persons')  use,  generation,   production,
emission,  manufacturing,  treatment,  storage,  transportation,  disposal,  and
discharge of any Hazardous  Substances  on, into or from Buyer's Real  Property,
(v) there are no above ground or  underground  storage  tanks,  or any Equipment
containing  polychlorinated biphenyls, on Buyer's Real Property, (vi) no release
of Hazardous  Substances  outside Buyer's Real Property has entered or threatens
to enter any of Buyer's Real  Property,  nor is there any pending or  threatened
claim based on  Environmental  Laws which arises from any  condition of the land
surrounding  any of Buyer's Real Property,  (vii) no Real Property has been used
at any time as a gasoline  service  station or any other  facility  for storing,
pumping,  dispensing or producing  gasoline or any other  petroleum  products or
wastes,  (viii) no building or other  structure on any of Buyer's Real  Property
contains asbestos, and (ix) there are no incinerators, septic tanks or cesspools
on Buyer's Real  Property  and all waste is  discharged  into a public  sanitary
sewer system. Buyer has provided Sellers with complete and correct copies of (A)
all studies,  reports,  surveys or other  materials in Buyer's  possession or of
which Buyer has knowledge and to which Buyer has access relating to the presence
or alleged  presence of Hazardous  Substances  at, on or affecting  Buyer's Real
Property,  (B) all notices or other materials in Buyer's  possession or of which
Buyer has  knowledge  and to which Buyer has access that were  received from any
governmental   authority   having  the  power  to   administer  or  enforce  any
Environmental  Laws relating to current or past  ownership,  use or operation of
the real property or  activities  at or affecting  Buyer's Real Property and (C)
all materials in Buyer's possession or to which Buyer has access relating to any
claim,  allegation or action by any private third party under any  Environmental
Law.  The  representations  and  warranties  in this  Section  4.8 are the  only
representations  and warranties given by Buyer with respect to the Environmental
Law compliance of Buyer and
 its business.

                  4.9  Financial  Statements.  Buyer has  delivered  to  Sellers
correct and complete copies of Buyer's audited financial  statements for each of
the two most recent  fiscal years ended prior to the date of this  Agreement and
unaudited interim monthly financial statements for periods subsequent to the end
of the most recent fiscal year end (the "Financial  Statements").  The Financial
Statements are complete and correct,  were prepared in accordance with generally
accepted  accounting  principles  applied on a consistent  basis  throughout the
periods covered thereby (except,  in the case of interim  financial  statements,
subject to normal recurring year-end  adjustments and the absence of footnotes),
and fairly present in accordance with generally accepted  accounting  principles
the  financial  condition  and  results  of Buyer's  operations  as of the dates
indicated  and for the  periods  covered  thereby.  Except as  disclosed  by, or
reserved  against in, its most recent  balance  sheet  included in the Financial
Statements,  Buyer  did not  have  as of the  date of  such  balance  sheet  any
liability  or  obligation,   whether  accrued,  absolute,  fixed  or  contingent
(including,  without  limitation,  liabilities  for taxes or unusual  forward or
long-term  commitments),  which was  material  to Buyer's  business,  results of
operations  or financial  condition and which is required to be disclosed on, or


                                                          REGISTRATION STATEMENT
                                                                      Page II-43
<PAGE>
reserved  against in, a balance sheet.  Buyer has received no notice of any fact
which may form a basis for any claim by a third party which, if asserted,  could
result in a liability  affecting  Buyer not disclosed by or reserved  against in
Buyer's  most recent  balance  sheet.  From the date of the most recent  balance
sheet included in the Financial Statements to and including the date hereof, (i)
Buyer's business has been operated only in the ordinary  course,  (ii) Buyer has
not  sold or  disposed  of any  assets  other  than in the  ordinary  course  of
business,  (iii) there has not occurred any material  adverse change or event in
Buyer's business,  operations,  assets,  liabilities,  financial  condition,  or
results of operations compared to the business, operations, assets, liabilities,
financial  condition,  or  results  of  operations  reflected  in the  Financial
Statements, and (iv) there has not occurred any theft, damage,  destruction,  or
loss which has had a material adverse effect on Buyer.

                  4.10 Tax Returns and Other Reports.  Buyer has duly and timely
filed in proper form all federal, state, local, and foreign, income,  franchise,
sales, use, property,  excise,  payroll, and other tax returns and other reports
(whether  or not  relating  to  taxes)  required  to be  filed  by law  with the
appropriate governmental authority,  and, to the extent applicable,  has paid or
made  provision  for payment of all taxes,  fees,  and  assessments  of whatever
nature including  penalties and interest,  if any, which are due with respect to
any  aspect of its  business  or any of its  properties.  Except as set forth on
Schedule 18, there are no tax audits  pending and no  outstanding  agreements or
waivers extending the statutory period of limitations applicable to any relevant
tax return.

                  4.11  Transfer  Taxes.  There  are no  sales,  use,  transfer,
excise,  or license  taxes,  fees,  or charges  applicable  with  respect to the
transactions contemplated by this Agreement.

                  4.12  Litigation  and  Violations.  Except  as  set  forth  on
Schedule 17, there are no suits, claims, grievances,  actions,  proceedings,  or
governmental  investigations  pending or, to Buyer's best knowledge,  threatened
against or affecting Buyer which (i) seek to restrain or enjoin the consummation
of the transactions contemplated by this Agreement or (ii) might have a material
adverse effect on Buyer's financial position or results of operations.  Buyer is
not in violation of any term of any judgment,  decree,  injunction,  or order to
which it is subject, which violation could have a material adverse effect on the
financial position or results of operations of Buyer.

                  4.13 Disclosure.  No written statement in this Agreement or in
any agreement or other  document  delivered  pursuant to this Agreement by or on
behalf of Buyer  contains any untrue  statement  of a material  fact or omits to
state a material fact  necessary to make the  statements  herein or therein,  in
light of the circumstances  under which they were made, not misleading.  None of
the periodic  filings made by Buyer with the Securities and Exchange  Commission
under the  Securities  Exchange Act of 1934,  as amended,  since January 1, 1995
contains any untrue  statement  of a material  fact or 


                                                          REGISTRATION STATEMENT
                                                                      Page II-44
<PAGE>
omits to state a material  fact  necessary to make the  statements  therein,  in
light of the circumstances in which they were made, not misleading.

                  4.14 Investment Company.  Buyer is not an "investment company"
or a company  "controlled"  by an investment  company  within the meaning of the
Investment Company Act of 1940, as amended (the "Act"), and Buyer has not relied
on rule 3a-2 under the Act as a means of excluding it from the  definition of an
"investment  company" under the Act at any time within the three (3) year period
preceding the Closing Date.

                  4.15 No  Finders  or  Brokers.  Neither  Buyer  nor any of its
Affiliates have entered into any contract,  arrangement,  or understanding  with
any  person or firm  which may  result in any  obligation  of Sellers to pay any
finder's,  broker's,  or agent's fees or commissions or other like payments as a
result of the transactions contemplated by this Agreement.

                  4.16   Purchase  for   Investment.   Buyer  is  acquiring  the
Partnership  Interests  and Sellers'  Stock for  investment  and with no present
intention of  distributing  or reselling the  Partnership  Interests or Sellers'
Stock  or  any  part  thereof  in  any  transaction   that  would  constitute  a
"distribution" within the meaning of the Securities Act of 1933 as now in effect
(the "1933 Act").  Buyer  acknowledges that they understand that the Partnership
Interests and Sellers' Stock have not been registered  under the 1933 Act or any
state securities law.

                  4.17 No  Insolvency.  As of even  date  and as of the  Closing
Date, Buyer is not and shall not be insolvent.

                  4.18 No  Subsidiaries  or  Affiliates.  Except as set forth on
Schedule  19,  Buyer does not  control,  or own any stock or other  interest in,
directly or indirectly,  any  corporation,  partnership,  association,  or other
business entity.

                  4.19  Employees.  Buyer has no employment  agreements,  either
written or oral,  with any person,  and all  Employees  are  terminable at will,
except as set forth in Buyer's 1995 Proxy Statement. Buyer is not a party to any
contract with any labor  organization  and has not agreed to recognize any union
or other collective  bargaining  unit. No union or other  collective  bargaining
unit has been certified as representing any of Buyer's employees,  and Buyer has
not received any requests from any party for recognition as a representative  of
employees for collective bargaining purposes.

                  4.20  Contracts and Rights.  Buyer holds valid and  continuing
instruments, contracts, rights-of-way, rights-of-entry, permits and other rights
and authorizations necessary to enable it to operate its business.


                                                          REGISTRATION STATEMENT
                                                                      Page II-45
<PAGE>
                  4.21  Required  Consents.  A true and complete  list of all of
Buyer's Required Consents is set forth on Schedule 16.

                  Sellers  acknowledge  and agree that their sole  recourse with
respect  to any  breach of any  representation,  warranty  or  covenant  in this
Section 4 is as provide
d in Section 17.

Section 5. Conduct Prior to Closing

                  5.1 Operation in Ordinary Course.

                      5.1.1  Company.  Sellers  shall  cause PIIM to continue to
manage  Company  under its existing  management  agreement.  Sellers shall cause
Company to continue to operate the CATV Business  prior to the Closing Date only
in the ordinary  course as presently  operated  provided,  that Company shall be
entitled  to  undertake  the  upgrade of  Company's  CATV  Systems as  described
generally on Schedule 1, including, without limitation,  payment of all expenses
in a timely manner consistent with prior business practices without accelerating
or delaying any payments,  maintaining business books, records, and files all in
accordance with past practices, consistently applied, and maintaining the Assets
(including  maintenance of Company's  usual  inventories of spare  equipment and
parts  listed on  Schedule  5),  and  continuing  to  implement  procedures  for
disconnection  and  discontinuance  of service to Subscribers whose accounts are
delinquent or past due, in accordance with current practice and policy as of the
date of this  Agreement.  Without  limiting  the  generality  of the  foregoing,
Sellers agree that Company,  or anyone  acting on Company's  behalf,  shall not,
without  Buyer's  prior  written  consent,  (i)  declare,  set  aside or pay any
dividend or distribution  with respect to the Partnership  Interests of Company,
(ii)  directly or indirectly  guarantee or agree to guarantee any  obligation of
another  Person  except as permitted by the Company Loan  Agreement  (iii) enter
into or modify any material agreement, contract, or commitment which, if entered
into prior to the date of this  Agreement,  would be required to be disclosed on
any Schedule to this Agreement, except for agreements,  contracts or commitments
which (A) are entered into in the ordinary  course of the Company's  business in
accordance with the Company's 1996 budget, (B) involve payments by Company after
the  Closing not in excess of (1) $25,000  individually  or (2)  $250,000 in the
aggregate  or (C) can be  immediately  terminated  without  liability to Company
after the Closing, (iv) place or permit to exist any lien, encumbrance, security
interest,  claim or charge of any kind against the Partnership  Interests (other
than Permitted  Encumbrances  described in Section 1.36(a) and (e)) and Sellers'
Stock (other than Permitted  Encumbrances  described in Section 1.36(a) and (e))
or the Assets (other than Permitted  Encumbrances),  (v) cancel any indebtedness
owing to Company or waive any  material  rights or claims  possessed by Company,
(vi) enter into or continue any discussions,  negotiations or contracts relating
to the sale, assignment, or transfer any Assets or equity in Company or the CATV
Business,  (other than for the purposes of raising 


                                                          REGISTRATION STATEMENT
                                                                      Page II-46
<PAGE>
additional  equity  capital for Company and then only on terms  whereby such new
equity holders shall sell their equity  interests in Company to Buyer as part of
the  transaction  contemplated  by this  Agreement for no  additional  aggregate
consideration  payable  by  Buyer);  (vii)  commit any act or omit to do any act
which would cause a material breach of any CATV  Instrument or Company  Contract
or permit any material  amendment to or  cancellation  of any CATV Instrument or
Company  Contract,  (viii)  commit any material  violation of any law,  statute,
rule,  governmental  regulation or order,  (ix) except for expenditures that are
part of the Prime  Upgrade  Expense  (as  defined in Section  9.3),  purchase or
acquire any capital asset involving an expenditure which shall cause the capital
expenditure  budget of Company to be exceeded by more than ten (10%)  percent as
of the Closing Date (any such excess not exceeding  such ten (10%) percent being
referred to herein as the "Prime Cap-Ex  Excess"),  or(x) except as permitted in
the Company  Loan  Agreement,  including  without  limitation,  with  respect to
Company's  obligations  under Company's  Eurodollar  Advances and Interest Hedge
Agreements (as those terms are defined in the Company Loan  Agreement)  purchase
any debt  security  having a maturity of more than 90 days  Sellers  shall cause
Company to maintain  insurance  on the CATV  Business  and the Assets  until the
Closing Date  consistent  with past practice and policy,  and Sellers shall bear
all  uninsured  risk of loss on or prior to  Closing  with  respect  to the CATV
Business and the Assets as a result of any loss, claim, casualty, or calamity.

                      5.1.2 Buyer. Buyer shall operate its business prior to the
Closing  Date only in the  ordinary  course as  presently  operated,  including,
without  limitation,  payment of all expenses in a timely manner consistent with
prior  business  practices  without   accelerating  or  delaying  any  payments,
maintaining  business  books,  records,  and files all in  accordance  with past
practices,   consistently  applied.  Without  limiting  the  generality  of  the
foregoing,  Buyer agrees that Buyer, or anyone acting on Buyer's  behalf,  shall
not, without Sellers' prior written consent,  (i) declare,  set aside or pay any
dividend or distribution with respect to its shares of common stock; (ii) borrow
or agree to borrow or refinance any funds,  or directly or indirectly  guarantee
or agree to guarantee  any  obligation of another  person or entity,  except for
Buyer's guaranty of the GCI Loan Agreement  described at Section 1.36(a);  (iii)
enter into or modify any material agreement,  contract,  or commitment which, if
entered  into  prior to the date of this  Agreement,  would  be  required  to be
disclosed on any Schedule to this Agreement;  (iv) cancel any indebtedness owing
to Buyer or waive any  rights or claims  possessed  by Buyer;  (v) enter into or
continue  any  discussions,  negotiations  or  contracts  relating  to the sale,
assignment  or transfer  of assets or equity in Buyer,  except as  described  in
Section 5.4 hereof;  (vi) commit any act or omit to do any act which would cause
a breach of any  contract  or permit any  amendment  to or  cancellation  of any
contract;  (vii) commit any violation of any law,  statute,  rule,  governmental
regulation or order;  (viii)  purchase or acquire any capital asset involving an
expenditure which shall cause Buyer's capital  expenditure budget to be exceeded
by more than ten (10%) percent as of the Closing Date or enter into any contract
other than (A) those which are entered  into in the  ordinary  course of Buyer's
business in  accordance  with  Buyer's  1996  budget,  (B) those  


                                                          REGISTRATION STATEMENT
                                                                      Page II-47
<PAGE>
contracts  not  described in (A) or (C) hereof which  involve  payments by Buyer
after the  Closing  Date not in excess of (1) One  Hundred  Thousand  and no/100
Dollars  ($100,000)  individually,   or  (2)  One  Million  and  no/100  Dollars
($1,000,000)  in the  aggregate,  or (C) can be immediately  terminated  without
liability to Buyer after  Closing;  or (ix) purchase any debt security  having a
maturity of more than ninety (90) days.  Buyer shall  maintain  insurance on its
business until the Closing Date  consistent  with past practice and policy,  and
Buyer shall bear all risk of loss on or prior to Closing with respect to Buyer's
business as a result of any loss, claim, casualty, or calamity.

                  5.2  Agents.  Company and PIIM agree that  Buyer's  designated
agent shall be included in all material business discussions regarding Company's
conduct of its affairs.  Buyer agrees that  Sellers'  designated  agent shall be
included in all material business  discussions  regarding Buyer's conduct of its
affairs.

                  5.3 No New  Company  Securities.  Company  shall  not issue or
enter  into  any  agreement  to  issue  any  additional  partnership  interests,
securities  or warrants or options to purchase  securities  prior to the Closing
(other than for the purpose of raising additional equity capital for Company and
then only on terms  whereby  such new equity  holders  shall  sell their  equity
interests in Company to Buyer as part of the transaction contemplated herein for
no additional aggregate consideration payable by Buyer). Company shall not enter
into any executive compensation  arrangement conditioned upon the acquisition or
attempted acquisition of a significant interest of Company,  except as consented
to by Buyer.

                  5.4 No New Buyer  Securities.  Buyer  shall not issue or enter
into any  agreement  to issue any  additional  securities,  warrants  or options
(other than stock options issued in the ordinary course of business  pursuant to
its stock option plan described in Schedule 20) to purchase  securities prior to
the  Closing,  except (i) for the  proposed  issuance of Buyer's  Class A common
stock to MCI in accordance with Section 11.1, (ii) for the proposed  issuance of
shares of GCI Class A Stock as a portion  of the  purchase  price  consideration
payable by Buyer in  connection  with the  possible  acquisition  of the ongoing
cable television business and cable television systems of Rock Associates, Inc.,
on terms  acceptable to PIIM,  (iii) for the proposed  issuance of shares of GCI
Class A Stock as a portion of the purchase price consideration  payable by Buyer
in connection  with the possible  acquisition  of the ongoing  cable  television
business and cable  television  systems of Alaskan Cable Network,  Inc. on terms
acceptable to PIIM, and (iv) any Buyer's  shares issued in connection  with (ii)
and (iii)  herein for the escrow  holdbacks  required in  connection  therewith.
Neither Buyer nor anyone  acting on Buyer's  behalf shall enter into or continue
any  discussions,  negotiations or contracts  relating to the sale of all or any
portion of its  assets or equity,  except in the  ordinary  course of  business.
Buyer shall not enter into any executive  compensation  arrangement  conditioned
upon the  acquisition  or attempted  acquisition  of a  significant  interest of
Buyer, except as consented to by Sellers.


                                                          REGISTRATION STATEMENT
                                                                      Page II-48
<PAGE>
                  5.5 Employees. Sellers shall cause Company to use commercially
reasonable efforts to preserve its relationship with its employees and to pay to
those employees all salaries,  commissions, and other compensation to which they
are entitled for services rendered prior to the Closing Date.

                  5.6 Access to Premises and Records.

                          (a) Buyer's  Inspection  Rights.  Sellers  shall cause
Company to give to Buyer and its representatives full access at reasonable times
upon  reasonable  prior  notice to all the premises and books and records of the
CATV  Business and to all of the Assets,  and shall cause  Company to furnish to
Buyer  and its  representatives  all  information  regarding  the  business  and
properties  of  Company  as shall  from  time to time be  reasonably  requested.
Furthermore,  Buyer shall be given the  opportunity  to perform a field audit of
Company's  accounts with Company's  cooperation  prior to Closing.  Buyer agrees
that it will exercise this right of access solely for the purposes of completing
its investigation in connection with this Agreement and that the confidentiality
of any data or information acquired by Buyer in connection with this transaction
shall be maintained by Buyer and its  representatives in accordance with Section
19.12.  Without  limiting  Buyers' rights of access stated above,  Company shall
permit Buyer and/or such agents or experts as Buyer shall designate, full access
to the Real Property or any of it and all records  concerning  the Real Property
during  reasonable  business hours upon reasonable  prior notice for purposes of
such independent  investigation  Buyer shall desire to conduct.  At Buyers' sole
option,  such  investigation  may  include  testing  of the  soil,  groundwater,
building  components,  tanks,  containers  and equipment on the Real Property as
Buyers or Buyers' agents or experts shall deem necessary to determine or confirm
the  environmental   condition  of  the  Real  Property;   provided,  that  such
investigations do not unreasonably damage such assets or properties and that any
such damage is promptly repaired to its pre-investigation  condition by Buyer at
Buyer's expense to Sellers' reasonable satisfaction and that such investigations
do not unreasonably interfere with Company's business activities;  and provided,
further, that Buyer shall indemnify and hold harmless Company, Sellers and their
respective affiliates,  officers,  directors,  owners, employees and agents from
any damage, loss and expense arising from the conduct of any such investigation,
including  mechanic's  liens  filed by  Persons  employed  by Buyer,  reasonable
attorneys',  consultants' and other professionals' fees and other litigation and
court costs.  Performance  of such an  inspection or review shall not in any way
modify or otherwise  affect  Buyers' rights or Sellers'  obligations  under this
Agreement,  including but not limited to Sellers' representations and warranties
in Section 3.15.3 above.

                          (b) Sellers'  Inspection  Rights.  Buyer shall give to
Sellers  and their  representatives  full access at  reasonable  times to all of
Buyer's assets, properties,  premises, books and records, and each shall furnish
to Sellers and their  representatives all information regarding the business and
properties  of  Buyer  as  shall  from  time to time  be  reasonably  requested.
Furthermore,  Sellers shall, at Company's  expense,  be given the opportunity to
perform a field audit of Buyer's  accounts  with  Buyer's  cooperation  prior


                                                          REGISTRATION STATEMENT
                                                                      Page II-49
<PAGE>
to Closing.  Sellers  agree that they will  exercise this right of access solely
for the purposes of  completing  their  investigation  in  connection  with this
Agreement and that the  confidentiality  of any data or information  acquired by
Sellers in connection with this  transaction  shall be maintained by Sellers and
their  representatives  in  accordance  with  Section  19.12.  Without  limiting
Sellers'  rights of access stated above,  Buyer shall permit Sellers and/or such
agents or  experts as  Sellers  shall  designate,  full  access to Buyer's  Real
Property or any of it and all records  concerning  Buyer's Real Property  during
reasonable  business  hours upon  reasonable  prior  notice for purposes of such
independent  investigation  Sellers  shall,  at  Company's  expense,  desire  to
conduct.  At Sellers' sole option, such investigation may include testing of the
soil,  groundwater,  building  components,  tanks,  containers  and equipment on
Buyer's  Real  Property  as Sellers  or  Sellers'  agents or experts  shall deem
necessary to determine  or confirm the  environmental  condition of Buyer's Real
Property;  provided,  that such  investigations do not unreasonably  damage such
assets or  properties  and that any such  damage  is  promptly  repaired  to its
pre-investigation   condition  by  Sellers  at  Company's   expense  to  Buyer's
reasonable  satisfaction  and  that  such  investigations  do  not  unreasonably
interfere with Buyer's business activities; and provided,  further, that Sellers
shall indemnify and hold harmless Buyer and its respective affiliates, officers,
directors,  owners,  employees  and agents  from any  damage,  loss and  expense
arising from the conduct of any such investigation,  including  mechanic's liens
filed by Persons employed by Sellers,  reasonable  attorneys',  consultants' and
other  professionals' fees and other litigation and court costs.  Performance of
such an  inspection  or review shall not in any way modify or  otherwise  affect
Sellers' rights or Buyer's  obligations under this Agreement,  including but not
limited to Buyer's representations and warranties in Section 4.8(e) above.

                          (c)  Buyer's   Termination   Right.   Buyer  shall  be
entitled, at its option in its sole discretion,  to terminate this Agreement for
any  reason  whatsoever  by giving a  written  notice  ("Inspection  Termination
Notice") to Sellers on or before seven days after the last day of the Inspection
Termination Period (the "Inspection Termination Date"). If this Agreement is not
terminated  by  Buyer   pursuant  to  this  Section  5.6(c)  by  the  Inspection
Termination  Date,  this  Agreement  shall  continue in full force and effect in
accordance  with its terms. If this Agreement is terminated by Buyer pursuant to
this Section  5.6(c),  no party shall have any  liability or  obligation  to the
others under this Agreement except with respect to Sections 19.1 and 19.12 which
shall continue in effect thereafter, or arising from a breach or default of this
Agreement.

                  5.7 Existing Relationships. Sellers shall cause Company to use
commercially reasonable efforts to preserve the CATV Business as a going concern
and to  preserve  existing  relationships  with  the  APUC,  and its  suppliers,
customers,  and others  having  business  dealings  with Company Buyer shall use
commercially  reasonable efforts to preserve its business as a going concern and
to preserve its existing  relationships  with  suppliers,  customers  and others
having business dealings with it.


                                                          REGISTRATION STATEMENT
                                                                      Page II-50
<PAGE>
                  5.8  Required  Consents.  Sellers,  Company and Buyer agree to
cooperate  and use their  reasonable  commercial  efforts to obtain all Required
Consents  and all  Buyer's  Required  Consents  in a form  and  upon  terms  and
conditions  satisfactory  to Sellers and Buyer.  Sellers  will afford  Buyer the
opportunity to review,  approve, and, with Sellers' mutual approval,  revise the
form of Required Consents to be delivered to the consenting  parties referred to
in items  C.1,  D.1-5  and E.1-3 on  Schedule  4 prior to  delivery  to any such
consenting  party.  Nothing contained herein shall be deemed to require Company,
Sellers or Buyer to undertake  any  extraordinary  or  unreasonable  measures to
obtain such Required Consents,  including, without limitation, the initiation or
prosecution  of legal  proceedings,  or agreeing to change any material terms of
any CATV Instruments or Company Contracts.

                  5.9 MDU  Agreements.  Sellers  represent and warrant that they
have provided true, complete and correct copies of all MDU Agreements to Buyer.

                  5.10  Buyer's  Title  Reports.  Within ten (10) days after the
execution of this Agreement,  Buyer will order at Company's  expense,  (i) title
reports on all Real  Property  owned by Company and on easements  which  provide
access to "headend" or tower sites,  and (ii)  commitments for title reports for
all Real Property  leased by Company which is used for "headend" or tower sites.
Each title report shall contain no exceptions other than standard exceptions and
exceptions which in Buyer's  reasonable  opinion do not adversely (other than in
an immaterial  way as to any  individual  parcel) affect the good and marketable
title to or Company's  access or quiet use or enjoyment of such Real Property in
the manner the Real Property is presently used in the normal conduct of the CATV
Business.

                  5.11  Compliance  with HSR Act and  Rules.  Sellers  and Buyer
agree that each of them shall,  within 45 days after the date of this Agreement,
file or cause to be filed one or more of the  Notification and Report Forms (the
"HSR Report") mandated by the  Hart-Scott-Rodino  Antitrust  Improvements Act of
1976,  as  currently  in effect (the "HSR Act"),  and the rules and  regulations
promulgated  thereunder  (the "HSR  Rules"),  to be filed by it, or by any other
Person that is part of the same  "person" (as defined in the HSR Act and the HSR
Rules) and  coordinate  the filing of such HSR Reports  (and  exchanging  drafts
thereof)  so as to present  both HSR  Reports to the FTC and the DOJ at the time
selected by the mutual agreement of Sellers and Buyer, and to avoid  substantial
errors  or  inconsistencies  between  the  filings  in  the  description  of the
transactions contemplated by this Agreement. Each party shall timely provide all
information  lawfully requested by the FTC or DOJ as necessary to facilitate the
consummation  of  the  transactions  contemplated  by  this  Agreement.  If  the
transactions  contemplated by this Agreement are challenged by FTC or DOJ or any
other  governmental  authority,  either  Sellers  or Buyer  may  terminate  this
Agreement  immediately  upon written  notice to the other.  If this Agreement is
terminated  pursuant to this Section  5.12, no party shall have any liability or
obligation to the other under this  


                                                          REGISTRATION STATEMENT
                                                                      Page II-51
<PAGE>
Agreement  except  pursuant to  Sections  19.1 and 19.12,  which shall  continue
thereafter  to be  effective,  or  arising  from a  breach  or  default  of this
Agreement.

                  5.12 Use of Names and Logos. For a period of 90 days after the
termination  of the  Management  Agreement,  Buyer  shall be entitled to use the
trademarks,  trade  names,  service  marks,  service  names,  logos and  similar
proprietary  rights of Company to the extent  incorporated  in or on the Assets;
provided,  that Buyer shall exercise reasonable commercial efforts to remove all
such names,  marks, logos and similar proprietary rights from the Assets as soon
as reasonably practicable following the termination of the Management Agreement.
Notwithstanding  the  preceding,  Buyer  will  not  be  required  to  remove  or
discontinue  using any such name or mark  affixed to  converters  or other items
used in  subscribers'  homes or properties  or as are used in a similar  fashion
making such discontinuance or removal impracticable for Buyer.

                  5.13  Public  Announcements.  Except  as  may be  required  by
applicable  law or  regulation,  neither Buyer nor Sellers shall issue any press
release or otherwise make any public statement with respect to this Agreement or
the  transactions  contemplated  hereby without the prior written consent of the
other parties, which consent shall not be unreasonably withheld. Notwithstanding
the  foregoing,  Sellers  acknowledge  and agree that Buyer shall make all press
releases it deems necessary under the securities law, rules and regulations.

                  5.14  Registration  of GCI  Shares.  As  soon  as  practicable
following the execution and delivery of this Agreement,  Buyer shall prepare and
file  with  the  Securities  and  Exchange   Commission  (the   "Commission")  a
registration  statement (the "Registration  Statement") under the Securities Act
of 1933, as amended (the  "Securities  Act") with respect to the distribution of
the GCI Shares to Sellers pursuant to this Agreement. Buyer shall use reasonable
best efforts to cause the Registration Statement to become effective on or prior
to the  Closing  Date and  shall  prepare  and  file  with  the  Commission  any
amendments and supplements to the  Registration  Statement and to the prospectus
included as part of the  Registration  Statement as may be necessary to keep the
Registration Statement effective through the Closing Date and to comply with the
provisions  of the  Securities  Act and the  rules and  regulations  promulgated
thereunder  with  respect to the  distribution  of the GCI Shares to the Sellers
pursuant to this Agreement.  The GCI Shares are "Registrable Shares," as defined
in the Registration  Rights Agreement,  and Buyer's  obligations with respect to
the  registration  of the GCI Shares  under the  Securities  Act  following  the
Closing shall be set forth in the Registration Rights Agreement.

Section 6. Closing

                  The  Closing  shall  occur at  Sherman &  Howard's  offices in
Denver,  Colorado at 10:00 a.m.  local time, on such date  acceptable to Sellers
and Buyer  within  ten (10)  business  days  after  all  conditions  to  Closing
contained in this Agreement have been met, 


                                                          REGISTRATION STATEMENT
                                                                      Page II-52
<PAGE>
or at such different place, time, or date as may be agreed by Sellers and Buyer.
Until the Closing or earlier  termination of this  Agreement,  the parties shall
cooperate fully by exchanging  information  upon  reasonable  request and in all
other  reasonable  ways to enable all  parties to prepare for the Closing and to
determine  whether the  conditions  to the Closing have been  satisfied.  Any of
Buyer or Sellers may terminate  this Agreement upon written notice to the others
if the Closing hereunder has not occurred by October 31, 1996; or, if the APUC'S
consent shall not have been  obtained by such date,  then at Buyer's or Sellers'
option  (exercised  by delivery of written  notice of such election to the other
prior to October 31,  1996),  no later than  December 31, 1996;  and the parties
shall thereupon be relieved of any further  obligation  hereunder;,  except that
the  provisions  of Section 19.1 and 19.12 shall  survive any such  termination,
provided,  however,  if a party's  breach of this  Agreement  has  prevented the
consummation of the transactions  contemplated  hereby,  such party shall not be
entitled to terminate this Agreement  under this Section 6. The Closing Date may
be further extended by mutual consent of the parties.

Section 7. Deliveries by Sellers at Closing

                  At Closing, Sellers shall deliver to Buyer:

                  7.1      (A)         the  bills  of  sale for  the Partnership
                                       Interests,

                           (B)         the certificates  evidencing the Sellers'
                                       Stock,  duly  endorsed  in blank and with
                                       all necessary documentary or transfer tax
                                       stamps affixed thereto,

                           (C)         an  agreement  and  plan of  merger  duly
                                       executed by ACI  (having  terms which are
                                       reasonably  satisfactory to Buyer and the
                                       ACI Sellers) in  accordance  with Section
                                       2.1(b),

                           (D)         such articles or  certificates  of merger
                                       duly  executed by ACI (having terms which
                                       are reasonably  satisfactory to Buyer and
                                       the ACI  Sellers) as are  required  under
                                       Alaska  and  Delaware  law  in  order  to
                                       consummate  the  merger  contemplated  by
                                       Section 2.1(b),

                           (E)         an  agreement  and  plan of  merger  duly
                                       executed by PCFI (having  terms which are
                                       reasonably   satisfactory  to  Buyer  and
                                       PCLP) in accordance with Section 2.1(c),

                           (F)         such articles or  certificates  of merger
                                       duly executed by PCFI (having terms which
                                       are reasonably  satisfactory to Buyer and
                                       PCLP) as are  required  under  Alaska and
                                       

                                                          REGISTRATION STATEMENT
                                                                      Page II-53
<PAGE>
                                       Delaware law in order to  consummate  the
                                       merger contemplated by Section 2.1(c),

                           (G)         such  other   documents  or   instruments
                                       (having   terms   which  are   reasonably
                                       satisfactory to Buyer and Sellers), which
                                       may  be  necessary  or  which  Buyer  may
                                       reasonably    request,    in   order   to
                                       effectively   vest  in  Buyer   good  and
                                       marketable   title  to  the   Partnership
                                       Interests  and Sellers'  Stock,  free and
                                       clear of all  Security  Interests  except
                                       for  Permitted   Encumbrances  listed  in
                                       Section 1.36(a) and (e);

                  7.2      Company's,   ACI's and  PCFI's   minute   books   and
                           transfer  ledgers and such other papers,  evidence of
                           title   or   interest,    books,   records,    files,
                           correspondence,  memoranda  and  other  documents  of
                           Company as Buyer may request prior to Closing;

                  7.3      the written  resignations  dated  as  of  the Closing
                           Date, of all  managers,  officers and  directors,  as
                           applicable,  of  Company,  ACI  and  PCFI  and of all
                           agents  therefor,  including any agent for service of
                           process;

                  7.4      certificates  of good  standing  for  ACI  and  PCFI,
                           dated  within  thirty (30) days of the Closing  Date,
                           issued by the Secretary of State of Delaware;

                  7.5      incumbency  and  specimen   signature   certificates,
                           dated the Closing  Date,  from  Sellers and PIIM with
                           respect to the  officers  or  managers of Sellers and
                           PIIM  executing this Agreement and any other document
                           delivered  hereunder  by or  on  behalf  of  Sellers,
                           Company and PIIM;

                  7.6      a  certificate  of  Sellers,  dated the Closing Date,
                           signed by a proper officer of Sellers certifying that
                           (A)  except  (1) as a  result  of the  taking  by any
                           Person  of  any   action   contemplated   under  this
                           Agreement  or (2)  insofar as any  representation  or
                           warranty relates to any specified  earlier date or is
                           otherwise  inapplicable,  all of the  representations
                           and  warranties of Sellers in this Agreement are true
                           and correct in all  material  respects on the Closing
                           Date with the same force and effect as if made on and
                           as  of  the  Closing  Date,   and  (B)  Sellers  have
                           performed  and  complied  and have caused  Company to
                           perform and comply in all material  respects with all
                           of its  covenants  and  agreements  set forth in, and
                           satisfied  in all material  respects  all  conditions
                           required  to be  satisfied  by it  pursuant  to, this
                           Agreement  except as such covenants,  agreements,  


                                                          REGISTRATION STATEMENT
                                                                      Page II-54
<PAGE>
                           or  conditions  shall have been waived by Buyer at or
                           before the Closing Date;

                  7.7      a  certified  copy  of  resolutions  of the partners,
                           the  boards  of  directors,  and  if  necessary,  the
                           shareholders,  as applicable,  of Sellers authorizing
                           the   execution  and  delivery  by  Sellers  of  this
                           Agreement  and  any  other  agreements   executed  by
                           Sellers pursuant  hereto,  and the performance of the
                           obligations of Sellers hereunder and thereunder;

                  7.8      an  opinion  of  Sellers'  counsel which  is governed
                           by the Legal  Opinion  Accord of the ABA  Section  of
                           Business Law 1991,  dated the Closing Date,  covering
                           matters  customary  with respect to the  transactions
                           contemplated by this Agreement, in form and substance
                           reasonably satisfactory to Buyer;

                  7.9      an  opinion of  special  communications,  FCC counsel
                           to Sellers,  dated the Closing Date, covering matters
                           customary with respect to the APUC and FCC aspects of
                           the transactions  contemplated by this Agreement,  in
                           the form and  substance  reasonably  satisfactory  to
                           Buyer;

                  7.10     releases  or  terminations,  in  form  and  substance
                           reasonably  satisfactory  to Buyer,  of all  Security
                           Interests   (i)  with  respect  to  the   Partnership
                           Interests and Sellers'  Stock,  other than  Permitted
                           Encumbrances  described  in Section  1.36(a) and (e),
                           and (ii)  with  respect  to the  Assets  of  Company,
                           except for Permitted Encumbrances;

                  7.11     to  the  extent  in  the  possession  of  Sellers  or
                           their agents,  all contracts not terminated  pursuant
                           to this  Agreement,  all  unexpired  warranties,  any
                           leases of personal  property,  any business and other
                           licenses  and permits  related to Company or the CATV
                           Business;

                  7.12     counterparts   of    the   Escrow    Agreement,   the
                           Registration   Rights   Agreement   and  the   Voting
                           Agreement, duly executed by Sellers;

                  7.13     to  the  extent  in  the  possession  of  Sellers or
                           their agents, all blueprints,  schematics,  drawings,
                           maps,  system design bill of  materials,  engineering
                           and technical  data related to the Assets or the CATV
                           Business;

                  7.14     counterparts   of    the   Management Agreement, duly
                           executed by PIIM;



                                                          REGISTRATION STATEMENT
                                                                      Page II-55
<PAGE>
                  7.15     counterparts  of  the  Non-Compete   Agreement,  duly
                           executed  by  PIIM, Growth, Holdings and PCLP;

                  7.16     Schedules  1-15  which have  been  updated to reflect
                           any  material  changes  from the date of execution of
                           this   Agreement  to  the  Closing  Date;   provided,
                           however,  that  if any  such  change  has a  material
                           adverse  effect  on  the   condition,   financial  or
                           otherwise,  of  Company or the CATV  Business,  Buyer
                           shall have the right to terminate this Agreement with
                           no further  obligations to Sellers hereunder,  except
                           as may arise under Section 19.1 and 19.12.

                  Drafts of each of the items  listed in this Section 7 shall be
delivered  by Sellers to Buyer  within a  reasonable  time prior to Closing  for
Buyer's review and approval.

Section 8.        Deliveries by Buyer at Closing

                  At Closing, Buyer shall deliver to Sellers:

                  8.1      certificates  in  the names  and  in the  amounts set
                           forth on a certificate  delivered by Sellers to Buyer
                           prior to the Closing Date  evidencing  the GCI Shares
                           free and clear of all Security Interests;

                  8.2      (i) an agreement  and plan of merger duly executed by
                           Buyer (or a wholly-owned subsidiary of Buyer) (having
                           terms which are reasonably  satisfactory to Buyer and
                           the ACI Sellers) in accordance  with Section  2.1(b);
                           (ii) such  articles  or  certificates  of merger duly
                           executed by Buyer (or a  wholly-owned  subsidiary  of
                           Buyer)    (having   terms   which   are    reasonably
                           satisfactory  to Buyer  and the ACI  Sellers)  as are
                           required  under  Alaska and  Delaware law in order to
                           consummate the merger contemplated by Section 2.1(b);
                           (iii) an agreement  and plan of merger duly  executed
                           by Buyer  (or a  wholly-owned  subsidiary  of  Buyer)
                           (having terms which are  reasonably  satisfactory  to
                           Buyer and PCLP) in  accordance  with Section  2.1(c);
                           and (iv) such articles or certificates of merger duly
                           executed by Buyer (or a  wholly-owned  subsidiary  of
                           Buyer)    (having   terms   which   are    reasonably
                           satisfactory to Buyer and PCLP) as are required under
                           Alaska and  Delaware law in order to  consummate  the
                           merger contemplated by Section 2.1(c).

                  8.3      a certificate of good standing of Buyer issued by the
                           Commissioner of Commerce and Economic  Development of
                           Alaska dated  within  thirty (30) days of the Closing
                           Date;


                                                          REGISTRATION STATEMENT
                                                                      Page II-56
<PAGE>
                  8.4      an  incumbency  and specimen  signature  certificate,
                           dated the Closing Date,  with respect to the officers
                           of  Buyer  executing  this  Agreement  and any  other
                           document  delivered  hereunder  by  or on  behalf  of
                           Buyer;

                  8.5      a  certificate  of  Buyer,  dated the  Closing  Date,
                           signed by a proper officer of Buyer  certifying  that
                           (A)  except  (1) as a  result  of the  taking  by any
                           person  of  any   action   contemplated   under  this
                           Agreement  or (2)  insofar as any  representation  or
                           warranty  relates to any specified  earlier date, all
                           of the  representations  and  warranties  of Buyer in
                           this  Agreement  are true and correct in all material
                           respects on the Closing  Date with the same force and
                           effect as if made on and as of the Closing Date,  and
                           (B) Buyer has  performed and complied in all material
                           respects with all of its covenants and agreements set
                           forth in, and satisfied in all material  respects all
                           conditions  required to be  satisfied  by it pursuant
                           to,  this   Agreement   except  as  such   covenants,
                           agreements  or  conditions  shall have been waived by
                           Sellers at or before the Closing Date;

                  8.6      a  certified  copy of  resolutions  of the  board  of
                           directors  of Buyer  authorizing  the  execution  and
                           delivery of this  Agreement and any other  agreements
                           executed pursuant hereto,  and the performance of the
                           obligations of Buyer hereunder and thereunder;

                  8.7      counterparts   of   the   Escrow    Agreement,    the
                           Registration Rights Agreement,  the Voting Agreement,
                           the   Non-Compete   Agreement   and  the   Management
                           Agreement, duly executed by Buyer;

                  8.8      a  counterpart  of the  MCI Stock Purchase Agreement,
                           duly executed by MCI and Buyer;

                  8.9      counterparts  of  amendments  to or waiver  under the
                           Existing  Registration  Agreements,  duly executed by
                           each  of the  parties  to the  Existing  Registration
                           Rights   Agreements,   having   such   terms  as  are
                           reasonably satisfactory to Sellers;

                  8.10     an  opinion  of Buyer's  counsel,  dated the  Closing
                           Date,  covering matters customary with respect to the
                           transactions  contemplated by this Agreement, in form
                           and substance reasonably satisfactory to Sellers;

                  8.11     an opinion of special communications,  FCC counsel to
                           Buyer,  dated  the  Closing  Date,  covering  matters
                           customary with respect to the APUC and FCC aspects of
                           the transactions  contemplated by this 


                                                          REGISTRATION STATEMENT
                                                                      Page II-57
<PAGE>
                           Agreement,   in   form   and   substance   reasonably
                           satisfactory to Sellers; and

                  8.12     Schedules  16 through  20 which have been  updated to
                           reflect  any  material   changes  from  the  date  of
                           execution  of this  Agreement  to the  Closing  Date;
                           provided,  however,  that if any  such  change  has a
                           material  adverse effect on the condition,  financial
                           or otherwise,  of Buyer or its assets or  businesses,
                           Sellers  shall  have  the  right  to  terminate  this
                           Agreement  with  no  further   obligations  to  Buyer
                           hereunder,  except as may arise under  Sections  19.1
                           and 19.12.

                  Drafts of each of the items  listed in this Section 8 shall be
delivered  by Buyer to Sellers  within a  reasonable  time prior to Closing  for
Sellers' review and approval.

Section 9. Conditions to Obligations of Buyer

                  The  obligations  of  Buyer  to  consummate  the  transactions
contemplated  by  this  Agreement  shall  be  subject,  at  Buyer's  option,  to
fulfillment of each of the following conditions as of the Closing Date:

                  9.1   Accuracy  of   Representations   and   Compliance   with
Conditions.  All  representations  and  warranties of Sellers  contained in this
Agreement  shall be true and  accurate in all material  respects  when made and,
except (a) as a result of the  taking by any  Person of any action  contemplated
hereby or (b) insofar as any  representation  or warranty  specifically  relates
solely to an  earlier  date in which case it shall be true and  accurate  in all
material  respects as of such  earlier  date,  shall be true and accurate in all
material  respects as of the Closing  Date, as though such  representations  and
warranties  were then made by Sellers,  and  Sellers  shall have  performed  and
complied in all material  respects with all of its covenants and  agreements set
forth herein and satisfied in all material  respects all conditions  required to
be satisfied by it pursuant to this Agreement at or before the Closing Date.

                  9.2 Deliveries  Complete.  All documents required to have been
delivered  by Sellers to Buyer and all  actions  required  to have been taken by
Sellers, at or prior to the Closing Date, shall have been delivered or taken.

                  9.3 No Adverse Change.  Except as contemplated on Schedule 13,
(i) no material  adverse  change in the CATV  Business or the Assets  shall have
occurred  (other than  changes  which  affect the United  States  CATV  industry
considered as a whole),  and (ii) the CATV Business shall not have suffered,  on
or prior to Closing, any loss, claim, casualty, or calamity which materially and
adversely  affects the CATV  Business  or the Assets,  whether or not covered by
insurance;  provided,  however,  that if Company has repaired at its expense all
damage caused by any loss, casualty, or 


                                                          REGISTRATION STATEMENT
                                                                      Page II-58
<PAGE>
calamity prior to the Closing to Buyer's reasonable satisfaction,  the condition
set forth in this Section 9.3 shall be deemed satisfied.

                  9.4  Restraint  of  Proceedings.  No  action,  proceeding,  or
investigation shall have been instituted or threatened,  on or prior to Closing,
to set aside or modify the  authorization  of the  transactions  contemplated by
this  Agreement  or to  enjoin  or  prevent  its  consummation  or  which  would
materially  impair  the  ability  of  Buyer  to  realize  the  benefits  of  the
transactions contemplated herein.

                  9.5 Cash Flow, Indebtedness. As of the Closing Date, Company's
Operating  Cash Flow for the full months in 1996 that precede the Closing  shall
be no less than ninety percent (90%) of Company's  budgeted  Operating Cash Flow
for such period (the difference  between (A) such actual  Operating Cash Flow to
the  extent  that it is not less  than  ninety  percent  (90%) of such  budgeted
Operating Cash Flow, and (B) such budgeted  Operating Cash Flow,  being referred
to herein as the "Prime Cash Flow Shortfall"). Company's budgeted Operating Cash
Flow for 1996 is $17,600,000.  As of the Closing Date, the combined  outstanding
subordinated  and senior debt (less any positive working capital balance or plus
any working capital deficit,  as the case may be,  calculated  without regard to
the current portion of long term debt) for Company shall not exceed $108,000,000
in the  aggregate,  plus  indebtedness  in an amount equal to the sum of (X) the
aggregate  amount  not  exceeding  $7,000,000  to be spent (the  "Prime  Upgrade
Expense") on upgrading the CATV Business (the "Alaska System Upgrade"),  (Y) the
aggregate  amount of any Prime Cap-Ex Excess  excluding any  expenditures on the
Alaska System Upgrade (including in such excluded expenditures the Prime Upgrade
Expense), and (Z) the Prime Cash Flow Shortfall.

Section 10. Conditions to Obligations of Sellers

                  The  obligation  of Sellers  to  consummate  the  transactions
contemplated  by this Agreement shall be subject,  at the option of Sellers,  to
fulfillment of each of the following conditions as of the Closing Date:

                  10.1  Accuracy  of   Representations   and   Compliance   with
Conditions.  All  representations  and  warranties  of Buyer  contained  in this
Agreement  shall be true and  accurate in all material  respects  when made and,
except (a) as a result of the  taking by any  Person of any action  contemplated
hereby or (b) insofar as any  representation  or warranty  specifically  relates
solely to an  earlier  date in which case it shall be true and  accurate  in all
material  respects as of such  earlier  date,  shall be true and accurate in all
material  respects as of the Closing  Date, as though such  representations  and
warranties were then made by Buyer,  and Buyer shall have performed and complied
in all material  respects  with all of its covenants  and  agreements  set forth
herein,  and satisfied in all material  respects all  conditions  required to be
satisfied by it pursuant to this Agreement at or before the Closing Date.



                                                          REGISTRATION STATEMENT
                                                                      Page II-59
<PAGE>
                  10.2 Deliveries Complete.  All documents required to have been
delivered  by Buyer to Sellers  and all  actions  required to have been taken by
Buyer, at or prior to the Closing Date, shall have been delivered or taken.

                  10.3 No Adverse Change.  No material adverse change in Buyer's
business shall have occurred  (other than changes which affect the United States
telephone industry considered as a whole). Buyer's business operations shall not
have suffered,  on or prior to Closing, any loss, claim,  casualty,  or calamity
which  materially  and  adversely  affects  Buyer,  whether  or not  covered  by
insurance;  provided,  however,  that if Buyer has  repaired  at its expense all
damage  caused  by any loss,  casualty,  or  calamity  prior to the  Closing  to
Sellers' reasonable  satisfaction,  the condition set forth in this Section 10.3
shall be deemed satisfied.

                  10.4  Restraint  of  Proceedings.  No action,  proceeding,  or
investigation shall have been instituted or threatened,  on or prior to Closing,
to set aside or modify the  authorization  of the  transactions  contemplated by
this  Agreement  or to  enjoin  or  prevent  its  consummation  or  which  would
materially  impair  the  ability  of Sellers  to  realize  the  benefits  of the
transactions contemplated herein.

                  10.5 Cash Flow; Indebtedness.  As of the Closing Date, Buyer's
Operating  Cash Flow for the full months in 1996 that precede the Final  Closing
shall be no less than ninety  percent (90%) of Buyer's  budgeted  Operating Cash
Flow  for  such  period.  Buyer's  budgeted  Operating  Cash  Flow  for  1996 is
$24,435,000.  As of the Closing Date, the combined outstanding  subordinated and
senior  debt (less any  positive  working  capital  balance or plus any  working
capital deficit,  as the case may be,  calculated  without regard to the current
portion of long term debt) for Buyer shall not exceed  Fifty  Million and no/100
Dollars ($50,000,000.00) in the aggregate.

                  10.6  Director   Designees   Elected.   The  two  (2)  persons
designated  by Sellers to serve on Buyer's  Board of  Directors  shall have been
duly elected in accordance with Buyer's Articles of Incorporation and Bylaws, as
amended,  and applicable law as  contemplated  in the Voting  Agreement (as that
term is defined in Section 14).

                  10.7  Registration  Statement.on  The  Registration  Statement
shall have been declared  effective by the Commission on or prior to the Closing
Date and shall be effective at the time of the Closing, and the Commission shall
not have issued any stop order suspending the  effectiveness of the Registration
Statement  or any  order  suspending  or  preventing  the  use  of  any  related
prospectus.

                  10.8  Listing of GCI  Shares.The  GCI  Shares  shall have been
listed on each securities exchange on which GCI Class A Stock is then listed and
qualified  for  trading  on each  system  on  which  GCI  Class A Stock  is then
qualified for trading.


                                                          REGISTRATION STATEMENT
                                                                      Page II-60
<PAGE>
Section 11. Conditions to Both Parties Obligations

                  11.1  Simultaneous  Closing.  The closing of the  transactions
contemplated  under the GCI and MCI Stock Purchase  Agreement dated May   , 1996
(the  "MCI  Stock  Purchase  Agreement"),   shall  occur  on  the  Closing  Date
substantially  simultaneously  with the  Closing  hereunder,  whereby  MCI shall
purchase for cash Two Million shares of Buyer's Class A common stock, at a price
equal to $6.50 per share.

                  11.2 Mergers.  The mergers of ACI and PCFI with and into Buyer
(or, at Buyer's election, one or more wholly-owned  subsidiaries of Buyer) shall
have become effective under the laws of the States of Alaska and Delaware.

                  11.3 Consents. All Required Consents and GCI Required Consents
identified  on  Schedule 4 and 16 as  "Material  Required  Consents"  or waivers
thereof shall have been obtained,  on terms  reasonably  satisfactory to Sellers
and Buyer, and shall be in full force and effect as of the Closing Date.

                  11.4 No Governmental  Action.  No  investigation,  action,  or
proceeding shall have been commenced by the Department of Justice or the Federal
Trade  Commission or any other  governmental  entity  challenging  or seeking to
enjoin the consummation of the  transactions  contemplated by this Agreement and
neither Buyer nor Sellers shall have been notified of a present intention by the
Assistant Attorney General in charge of the Antitrust Division of the Department
of Justice,  the  Director  of the Bureau of  Competition  of the Federal  Trade
Commission  or any  governmental  entity  (or  their  respective  designees)  to
commence,  or recommend the commencement of, such an  investigation,  action, or
proceeding.

Section 12. Transactions Subsequent to Closing.

                  12.1 Further Actions.  At any time and from time to time after
the Closing,  each party hereto agrees,  at its own expense (except as otherwise
provided herein), to take such actions and to execute and deliver such documents
as may be reasonably  necessary to effectuate the  transactions  contemplated by
this Agreement.

                  12.2 Tax Returns.  If a short period tax return for the period
ending as of the Closing  Date is required  under the  Internal  Revenue Code of
1986, as amended,  PIIM shall cause the preparation and filing of all applicable
income tax returns for Company for the period ending as of the Closing Date, and
Buyer and  Sellers  shall  cooperate  with  PIIM by  providing  all  information
reasonably  required by PIIM in connection  with the  preparation  and filing of
such tax returns.

                  12.3  COBRA   Benefits.   Company   shall   comply   with  all
requirements of COBRA and shall provide continuation  coverage for all Employees
of Company  


                                                          REGISTRATION STATEMENT
                                                                      Page II-61
<PAGE>
terminated prior to the Closing Date who elect such continuation  coverage under
Company's  group  health plan which will  continue  in effect  after the Closing
Date.

                  12.4  PIIM  Records  Retention.  For so long  as PIIM  manages
Company  PIIM shall keep or shall  cause  Company  to keep  Company's  books and
records  relating to periods prior to the Closing Date and to be made  available
to Sellers and their  authorized  representatives  during regular business hours
for a period of not less than three (3) years  after the Closing  Date.  No such
books and records will be destroyed during such three (3) year period without at
least thirty (30) days' prior written notice to Sellers  describing the items to
be destroyed,  during which period Sellers, at their expense,  may elect to take
possession of such items.

Section 13. Registration Rights Agreement.

                  Buyer and Sellers shall execute and deliver at the Closing the
Registration  Rights  Agreement  ("Registration  Rights  Agreement") in the form
attached hereto as Exhibit B. The  distribution at Closing to Sellers of the GCI
Shares and, to the extent  required to permit  resales or  distributions  of GCI
Shares by Sellers in the open market or  otherwise to the public  subsequent  to
the Closing,  any such subsequent  resales or distributions,  will be registered
under the Securities Act of 1933, as amended,  effective with such  distribution
or resale. The Registration Rights Agreement (the "Westmarc Agreement") dated as
of January 18, 1991,  between Buyer and Westmarc  Communications,  Inc., and the
Registration  Rights Agreement dated as of March 31, 1993, between Buyer and MCI
(such Agreement and the Westmarc Agreement being referred to collectively as the
"Existing Registration Agreements"), will be amended or their provisions waived,
as  appropriate,  to provide  that  shares  covered by the  particular  Existing
Registration  Agreement will not be included in the  registration  of GCI Shares
first  referred to above and to provide that the piggyback  registration  rights
granted to Sellers (and their  assignees) in the  Registration  Rights Agreement
and the  piggyback  registration  rights  granted to TGI GCI,  as  successor  to
WestMarc and MCI pursuant to the Existing Registration  Agreements shall be pari
passu.

Section 14. Voting Agreement.

                  At the  Closing,  Buyer  shall  deliver  to  Sellers  a  fully
executed  Voting  Agreement among Buyer,  Sellers,  PIIM, MCI, Ronald A. Duncan,
Robert M. Walp and TCI GCI, Inc. in the form attached hereto as Exhibit C, which
among other  things,  shall cause  Buyer's Board of Directors to include two (2)
additional  director  positions  to be filled by  persons  to be  designated  by
Sellers to serve on Buyer's Board of Directors, as of the Closing Date.


                                                          REGISTRATION STATEMENT
                                                                      Page II-62
<PAGE>
Section 15. Management Agreement.

                  Effective  as of the  Closing  Date,  PIIM shall  enter into a
management  agreement in the form attached hereto as Exhibit D. (the "Management
Agreement")  with  Buyer,  whereby,   among  other  things,  PIIM  will  provide
management  services to Company or its  successors  with  respect to the Service
Area for a term of nine (9) years.

Section 16. Agreement Not to Compete.

                  PIIM,  Growth,  Holdings,  PCLP and Buyer will at the  Closing
enter into a Non-Compete Agreement in the form attached hereto as Exhibit E.

Section 17. Survival of Representations and Warranties; Indemnification.

                  17.1   Survival.    Except   as   otherwise   provided,    the
representations,  warranties,  and  covenants and related  indemnity  agreements
contained  in or  made  pursuant  to this  Agreement  (including  the  Schedules
attached hereto,  but excluding  covenants made by the parties to the Management
Agreement,  the Voting  Agreement,  the  Registration  Rights  Agreement and the
Non-Compete  Agreement,  which  shall be  governed in each case by the terms and
provisions  thereof) by Buyer and by Sellers shall survive the Closing and shall
terminate on the first  anniversary  of the Closing  Date.  Notwithstanding  the
preceding provisions of this Section 17.1, the representations,  warranties, and
covenants  (and related  indemnities)  in Sections 3.17 and 3.15.3 shall survive
the  Closing  for the  period of sixty  (60) days  after the  expiration  of the
relevant statute of limitations for claims related thereto.

                  17.2  Indemnity by Sellers.  Sellers,  jointly and  severally,
agree to indemnify, defend, and hold harmless Buyer and its officers, directors,
Affiliates,   employees,   attorneys,  agents  and  shareholders  (the  "Buyer's
Indemnitees")  against  and in respect of any and all  claims,  suits,  actions,
proceedings  (formal and  informal),  investigations,  judgments,  deficiencies,
losses,  damages,  settlements,  liabilities  and expenses  (including,  without
limitation,  reasonable  legal  fees and  expenses  of  attorneys  chosen by the
Buyer's  Indemnitees),  whether or not disclosed in, or on any Schedule to, this
Agreement (collectively, "Losses"), as and when incurred arising out of or based
upon any breach of any  representation,  warranty,  covenant,  or  agreement  of
Sellers  contained  in this  Agreement  or in any other  agreement  executed and
delivered  by  Sellers  hereunder  or  in  connection  herewith.  The  aggregate
liability  of the  Sellers  under  any  indemnity  for  breach by  Sellers  of a
representation,  warranty or covenant shall be limited to the Sellers' Indemnity
Shares and the  respective  liability of each Seller shall be pro rata among the
Sellers based upon the number of Sellers'  Indemnity  Shares  deposited into the
Escrow  Holdback by each such Seller as set forth on  Schedule  1A,  received by
them on the Closing Date.


                                                          REGISTRATION STATEMENT
                                                                      Page II-63
<PAGE>
                  17.3  Indemnity by Buyer.  Buyer agrees to indemnify,  defend,
and hold harmless  Sellers and their partners,  managers,  officers,  directors,
Affiliates,   employees,  attorneys,  agents  and  shareholders  (the  "Sellers'
Indemnitees")  against and in respect of any Losses as and when incurred arising
out of or based upon any breach of any  representation,  warranty,  covenant  or
agreement  of  Buyer  contained  in this  Agreement  or in any  other  agreement
executed and delivered by Buyer hereunder or in connection herewith. Anything to
the  contrary in this  Agreement  notwithstanding,  Buyer agrees that the dollar
amount of any Losses to which a Sellers' Indemnitee shall be entitled to receive
from Buyer pursuant to this Section 17.3 shall be equal to (i) the actual dollar
amount of such Losses;  divided by (ii) one (1) minus [(A) 11,800,000 divided by
(B) the  number of  shares of all  classes  of common  stock of GCI,  on a fully
diluted  basis,  which are  issued and  outstanding  as of the date on which the
Claim  Notice  with  respect  to such  Losses  is  delivered  by  such  Sellers'
Indemnitee to Buyer pursuant to Section 17.4].

                  17.4 Defense of Claims. No right to indemnification under this
Section 17 shall be available to any Buyer's  Indemnitee or Sellers'  Indemnitee
(the "Indemnified  Party") unless such Indemnified Party shall have given to the
party  obliged  to  provide  indemnification  of  such  Indemnified  Party  (the
"Indemnitor")  a notice (a "Claim Notice")  describing in reasonable  detail the
facts  giving rise to any claim for  indemnification  hereunder  promptly  after
receipt of knowledge  by officers or  management  personnel  of the  Indemnified
Party of the facts upon which such claim is based;  (but in no event  later than
fifteen  (15)  days  prior to the time any  response  to the  asserted  claim is
required)  provided,  however,  that the failure of any Indemnified  Party to so
notify the Indemnitor shall not relieve the Indemnitor from any  indemnification
liability  it may have  except to the  extent  that  failure  to so  notify  the
Indemnitor materially prejudices the Indemnitor's ability to defend against such
claim.  Upon receipt by the  Indemnitor of the Claim Notice from an  Indemnified
Party with respect to any claim of a third party, such Indemnitor may assume the
defense thereof with counsel  reasonably  satisfactory to the Indemnified Party,
and the Indemnified Party shall cooperate in the defense or prosecution  thereof
and shall  furnish such records,  information  and testimony and attend all such
conferences,  discovery  proceedings,  hearings,  trials  and  appeals as may be
reasonably requested in connection  therewith.  The Indemnified Party shall have
the right to employ its own counsel in any such case,  but the fees and expenses
of such counsel shall be at the expense of the Indemnified  Party unless (i) the
Indemnitor shall not have promptly employed counsel  reasonably  satisfactory to
such Indemnified Party to take charge of the defense of such action or (ii) such
Indemnified Party shall have reasonably  concluded that there may be one or more
legal  defenses  available  to it,  or to any  other  Indemnified  Party who has
submitted  a  Claim  Notice  to the  Indemnitor,  which  are  different  from or
additional to those available to the Indemnitor,  in either of which events such
fees and expenses  shall be borne by the  Indemnitor  (but in no event shall the
Indemnitor  be  required  to pay the fees and  expenses of more than one counsel
employed by more than one  Indemnified  Party with respect to any claim) and the
Indemnitor  shall not have the right to direct the defense of any such action on
behalf of the  Indemnified  Party.  Each party shall give written  notice to the
other of any proposed  


                                                          REGISTRATION STATEMENT
                                                                      Page II-64
<PAGE>
settlement  of any  claim.  The  Indemnitor  will  have the  right,  in its sole
discretion,  to settle any claim for monetary damages for which  indemnification
has been sought and is available  hereunder,  except that neither Indemnitor nor
the  Indemnified  Party will settle,  compromise or make any  disposition of any
claim  under this  Section  17 which  would or may  result in  liability  to the
Indemnified  Party or Indemnitor,  respectively,  without the written consent of
Indemnitee or Indemnitor, respectively.

                  17.5 Threshold;  Maximum Indemnification Obligation.  Anything
to the contrary in this  Agreement  notwithstanding,  (i) neither  Sellers (as a
group), on one hand, nor Buyer, on the other hand, shall be obligated to provide
any indemnification under this Section 17, unless the aggregate amount of Losses
for which it is obligated to provide  indemnification  exceeds $76,700, in which
event it shall be  obligated to provide  indemnification  for the full amount of
all such  Losses;  (ii) any  indemnification  to which a Person may be  entitled
under  Sections  17.2 or 17.3 shall be effective  only if any claim or demand is
asserted  within the  applicable  period  specified in Section  17.1;  and (iii)
Sellers'  liability  with  respect to all  claims  under  Section  17.2 shall be
limited to,  Sellers'  Indemnity  Shares and the  respective  liability  of each
Seller  shall be pro rata among the Sellers  based on the number of the Sellers'
Indemnity  Shares deposited into the Escrow Holdback by each Seller as set forth
on Schedule 1A, and Buyer's  liability  with respect to all claims under Section
17.3 shall be limited to Eight Million  Seven Hundred Fifty  Thousand and no/100
Dollars ($8,750,000.00).

                  17.6 Exclusive Nature of Indemnification  Remedy.  Sellers and
Buyer agree that from and after the Closing,  their sole and exclusive remedy as
against each other with respect to any Losses claimed by or suffered or incurred
by them shall be their respective rights to indemnification under Sections 17.2,
17.3 and 17.4,  as limited by the  provisions  of Section  17.5 and this Section
17.6,  and that they  otherwise  shall have no recourse  against each other with
respect to any Losses  under,  with respect to,  relating to, or arising out of,
this Agreement.

                  17.7 Determination of Indemnified Amounts. The indemnification
obligations  of the  parties  under  this  Section  17 shall be  subject  to the
following:

                           17.7.1  The amount of Losses  required  to be paid by
the Indemnitor to indemnify the Indemnified Party pursuant to this Section 17 as
a result of any Loss suffered by the  Indemnified  Party shall be reduced to the
extent  the  amount  of such  Loss is  actually  offset  by the  receipt  by the
Indemnified  Party of insurance  proceeds pursuant to the terms of the insurance
policies,  if any,  covering  such Loss or by the receipt of any recovery by the
Indemnified Party from a third party with respect to such Loss.

                           17.7.2  The amount of Losses  required  to be paid by
the Indemnitor to indemnify the Indemnified Party pursuant to this Section 17 as
a result of any Loss suffered by the  Indemnified  Party shall be reduced by the
amount of any tax  benefit  


                                                          REGISTRATION STATEMENT
                                                                      Page II-65
<PAGE>
actually  realized by the  Indemnified  Party with respect to such Loss,  to the
extent such  benefit  actually  offsets  such Loss,  provided  that such reduced
amount shall be increased by the amount of any taxes payable by such Indemnified
Party as a result of the Indemnitor's payment of such Loss.

Section 18. Termination.

                  18.1 Mutual  Consent.  This Agreement may be terminated by the
written  consent of Buyer and Sellers.  Upon such  termination,  no party hereto
shall have any further  liability  to the other,  except as provided in Sections
18.2 or 18.3, as the case may be, and Sections 19.1 and 19.12.

                  18.2  Default  by  Sellers.  Buyer  shall  have  the  right to
terminate  this  Agreement  at or prior to the  Closing  Date in the event  that
Sellers  default in the performance of any material  obligation  hereunder or if
any representation or warranty of Sellers are materially false, and Sellers fail
to correct or satisfy such default or falsity within ten (10) days after written
notice is given to Sellers or such longer period as shall be required to correct
or  satisfy  such  default  or  falsity,  provided  that  Sellers  promptly  and
diligently  prosecute the cure or  satisfaction.  If such notice is given within
ten (10) days of the Closing  Date,  the Closing shall be delayed for the number
of days to permit the cure of the  default but in no event more than thirty (30)
days.  In the event that  Sellers  have  failed to cure the  default  within the
required period, Buyer shall be entitled to exercise all of its rights in law or
in equity by reason of the breach by Sellers of this Agreement. If Sellers shall
breach or threaten to breach any of the provisions of this Agreement,  Buyer, in
addition to any other remedies it may have at law or in equity, will be entitled
to a  restraining  order,  injunction  or  other  similar  remedy  in  order  to
specifically  enforce  the  provisions  of this  Agreement.  Sellers  and  Buyer
specifically  acknowledge that money damages alone would be an inadequate remedy
for the  injuries  and damage which would be suffered and incurred by Buyer as a
result of a breach by Sellers of any provisions of this Agreement.  In the event
that Buyer seeks an injunction  hereunder,  Sellers hereby waive any requirement
for the  posting of a bond or other  security.  Notwithstanding  anything to the
contrary contained in this Section 18.2, Buyer shall have the right to waive any
default by Sellers and require the  transactions  contemplated by this Agreement
to be consummated on the Closing Date.

                  18.3  Default  by  Buyer.  Sellers  shall  have  the  right to
terminate this Agreement at or prior to the Closing Date in the event that Buyer
defaults in the  performance  of any  material  obligation  hereunder  or if any
representation  or warranty  of Buyer is  materially  false,  and Buyer fails to
correct or satisfy  such default or falsity  within ten (10) days after  written
notice is given to Buyer or such  longer  period as shall be required to correct
or satisfy such default or falsity,  provided that Buyer promptly and diligently
prosecutes  the cure or  satisfaction.  If such notice is given  within ten (10)
days of the Closing Date, the Closing shall be delayed for the number of days to
permit the cure of the default  but in no event more than  thirty (30) days.  In
the event  Buyer has  


                                                          REGISTRATION STATEMENT
                                                                      Page II-66
<PAGE>
failed to cure the default within the required period, Sellers shall be entitled
to exercise all of their rights at law or in equity by reason of Buyer's  breach
of this  Agreement.  If Buyer  shall  breach or  threaten  to breach  any of the
provisions of of this Agreement,  Sellers,  in addition to any other remedies it
may  have  at law  or in  equity,  will  be  entitled  to a  restraining  order,
injunction or other similar  equitable  remedy in order to specifically  enforce
the provisions of this  Agreement.  Sellers and Buyer  specifically  acknowledge
that money  damages  alone would be an  inadequate  remedy for the  injuries and
damage  which would be suffered  and incurred by Sellers as a result of a breach
by Buyer of the provisions of of this Agreement.  In the event that Sellers seek
an injunction hereunder,  Buyer hereby waives any requirement for the posting of
a bond or other security.  Notwithstanding anything to the contrary contained in
this Section  18.3,  Sellers  shall have the right to waive any default by Buyer
and require the transactions contemplated by this Agreement to be consummated on
the Closing Date.

Section 19. Miscellaneous

                  19.1 Expenses.  Except as otherwise expressly provided in this
Agreement,  Company will bear the  expenses of Sellers,  and Buyer will bear its
own expenses  incident to the negotiation,  preparation and consummation of this
Agreement and all other agreements  executed and delivered by it hereunder or in
connection herewith,  including all fees and expenses of its or their respective
counsel and accountants,  whether or not the transactions contemplated hereby or
thereby are  consummated.  Company shall pay all sales and other  transfer taxes
and transfer fees,  including FCC filing fees,  incurred in connection with this
Agreement.   Filing   fees  with   respect  to  any  filing   mandated   by  the
Hart-Scott-Rodino  Antitrust  Improvement  Act of 1976 shall be borne equally by
Company and Buyer.

                  19.2 Modification.  This Agreement (including the Exhibits and
Schedules  hereto)  sets  forth the entire  understanding  of the  parties  with
respect to the subject matter hereof,  supersedes all existing  agreements among
them concerning such subject matter including,  without  limitation that certain
Letter of Intent  dated March 14,  1996,  and may be modified  only by a written
instrument duly executed by each party hereto.

                  19.3 Notice.  Any notice given  pursuant to this  Agreement to
any party hereto shall be deemed to have been duly given five (5) business  days
after being mailed by registered or certified mail, return receipt requested, or
when received if hand delivered, delivered via overnight messenger service or by
facsimile during the recipient's normal business hours as follows:


                                                          REGISTRATION STATEMENT
                                                                      Page II-67
<PAGE>
                  If to Sellers:       Prime Cable
                                       One American Center
                                       600 Congress Avenue, Suite 3000
                                       Austin, Texas 78701
                                       Attention:  William P. Glasgow, 
                                                   Senior Vice President
                                       Facsimile No.: (512) 476-4869


                  With copies (which shall not constitute notice) to:

                                       Edens Snodgrass Nichols & Breeland, P.C.
                                       2800 Franklin Plaza
                                       111 Congress Avenue
                                       Austin, Texas 78701
                                       Attention: Patrick K. Breeland
                                       Facsimile: (512) 505-5911

                  and
                                       Hughes & Luce
                                       900 Franklin Plaza
                                       111 Congress Avenue
                                       Austin, Texas 78701
                                       Attention: William R. Volk
                                       Facsimile: (512) 482-6859

                  If to Buyer:         General Communication, Inc.
                                       2550 Denali Street, Suite 1000
                                       Anchorage, Alaska 99503
                                       Attention:John M. Lowber, CFO and
                                                 Senior Vice President
                                       Facsimile No.: (907) 265-5676

or at such other  address as either  party shall from time to time  designate by
written notice,  in the manner provided herein,  to the other party hereto.  All
references to days in this  Agreement  shall be deemed to refer to calendar days
unless otherwise specified.

                  19.4 Waiver. Any waiver must be in writing,  and any waiver by
any party of a breach of any provision of this Agreement shall not operate as or
be  construed  to be a waiver of any other  breach of that  provision  or of any
breach of any other  provision  of this  Agreement.  The  failure  of a party to
insist  upon  strict  adherence  to any  term of this  Agreement  on one or more
occasions  will not be  considered  a waiver or deprive  that party of the right
thereafter  to insist  upon strict  adherence  to that term or any other term of
this Agreement.


                                                          REGISTRATION STATEMENT
                                                                      Page II-68
<PAGE>

                  19.5  Binding  Effect;  Assignment.  The  provisions  of  this
Agreement  shall be binding  upon and inure to the  benefit of Sellers and Buyer
and their respective  successors and permitted  assigns.  Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assignable by
any party  without  the prior  written  consent  of the  others  Notwithstanding
anything to the contrary  contained  herein,  Buyer may,  without the consent of
Sellers,  assign its rights  under this  Agreement  to any  Affiliate  of Buyer;
provided, that General Communication,  Inc., shall at all times remain primarily
liable for all obligations of Buyer set forth herein and in any other instrument
or agreement  executed or delivered by or on Buyer's  behalf in connection  with
this Agreement.

                  19.6 No Third Party  Beneficiaries.  This  Agreement  does not
create,  and shall not be construed as creating,  any rights  enforceable by any
person not a party to this Agreement.

                  19.7  Severability.  If any  provision  of this  Agreement  is
invalid, illegal or unenforceable, the balance of this Agreement shall remain in
effect at the option of the party for whose benefit such provision was made.

                  19.8  Captions.  The Article  and Section  titles used in this
Agreement are inserted as a matter of convenience  and for reference only and in
no way define,  limit,  extend or describe  the scope of this  Agreement  or the
intent of any of the provisions hereof.

                  19.9  Counterparts.  This  Agreement  may be  executed  in any
number of  counterparts,  each of which shall be deemed an original,  but all of
which together shall constitute one and the same instrument.

                  19.10  Governing Law. This Agreement  shall be governed by and
construed  in  accordance  with the laws of  Alaska  without  giving  effect  to
conflict of laws.

                  19.11  Incorporation by Reference.  The Exhibits and Schedules
attached  hereto are an integral  part of this  Agreement  and are  incorporated
herein by reference.

                  19.12  Confidentiality.  The parties will hold and cause their
officers,   directors,    employees,    attorneys,    investors,    accountants,
representatives,  agents, consultants, and advisors to hold in strict confidence
the  provisions of this  Agreement as well as all  information  (other than such
information  as may be publicly  available)  furnished  in  connection  with the
transactions  contemplated  by this Agreement,  except as otherwise  required by
law, and except as to disclosure to the parties' respective agents, advisors and
financial  institutions;  and, if the  Closing  hereunder  shall not occur,  the
parties will (i) refrain from using any such  information  in any manner (except
in connection with any litigation among the parties arising  hereunder) and (ii)
promptly return all such  information to the party from whom it was received or,
alternatively, 


                                                          REGISTRATION STATEMENT
                                                                      Page II-69
<PAGE>
promptly  destroy all such information and verify such destruction in writing to
the party from whom it was received. Neither party shall issue any press release
or otherwise  make any public  statement  with respect to this  Agreement or the
transactions  contemplated hereby without the prior written consent of the other
party, which consent shall not be unreasonably withheld.

                  19.13   Appointment  of  Sellers'  Agent.  By  executing  this
Agreement,  each of the  Sellers  hereby  appoints  PIIM,  with  full  power  of
substitution,  as its agent and attorney-in-fact  ("Sellers' Agent"), to act for
it and in its name in connection  with all matters  relating to this  Agreement,
and each of them gives  Sellers'  Agent full power and  authority to execute and
deliver the Escrow Agreement,  and to deliver certificates for its shares of GCI
Class A Stock  representing  its  respective  portion  of the  Escrow  Holdback,
together with stock assignments or other  appropriate  instruments of assignment
therefor,  to sue and be sued on behalf of all Sellers  with  respect to matters
arising  under  this  Agreement  or the  Escrow  Agreement,  to bind  Sellers in
connection with the resolution of any dispute under this  Agreement,  to execute
amendments  to this  Agreement,  to give and receive  notices and to execute any
instruments  and documents  that Sellers'  Agent may determine  necessary in the
exercise of its authority pursuant to this power of attorney, all without notice
to any of them and with the same  effect as if they had  themselves  taken  such
action;  and  each of them  acknowledges  that  Buyer  may rely and act upon any
action taken by Sellers'  Agent and upon any  instruments  signed by it with the
same  force  and  effect as if they had  themselves  so  acted;  provided,  that
Sellers'  Agent will  provide  each  Seller with  reasonable  notice of, and the
opportunity to consult with Sellers' Agent regarding, any proposed settlement or
other  resolution of any dispute under this  Agreement;  and provided,  further.
that anything to the contrary in the foregoing  notwithstanding,  Sellers' Agent
shall have no authority  to enter into any  amendment  of this  Agreement  which
would (1)  change the form of payment  of the  Purchase  Price to  consideration
other than shares of GCI Class A Stock or decrease  the Purchase  Price  payable
hereunder  by an amount in excess of five  percent  (5%) of the stated  Purchase
Price, or (2) provide for any additional  personal liability of Sellers to Buyer
with respect to the representations, warranties, covenants or agreements made by
Sellers herein,  including,  without,  limitation extending the time periods set
forth in Section 17.1.  Each of the Sellers agrees that in any action brought by
Buyer under this Agreement relating to the Escrow Agreement,  the only necessary
party shall be Sellers' Agent.



                                                          REGISTRATION STATEMENT
                                                                      Page II-70
<PAGE>



                  IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.


                           GENERAL COMMUNICATION, INC.


                           By /s/
                              John M. Lowber, Senior Vice President

                           PRIME VENTURE I HOLDINGS, L.P.
                           By: Its General Partners

                           Prime Venture I, Inc.


                           By /s/
                           Name:
                           Its:

                           and

                           Prime II Management Group, Inc.

                           By /s/
                           Name:
                           Its:

                           PRIME CABLE GROWTH PARTNERS, L.P.
                           By: Its General Partners

                           Prime Venture I, Inc.


                           By /s/
                           Name:
                           Its:

                           and


                                                          REGISTRATION STATEMENT
                                                                      Page II-71
<PAGE>


                           Prime Venture I Holdings, L.P.
                           By: Its General Partners

                           Prime Venture I, Inc.


                           By /s/
                           Name:
                           Its:

                           Prime II Management Group, Inc.

                           By /s/
                           Name:
                           Its:

                           PRIME CABLE LIMITED PARTNERSHIP
                           By: Prime Cable G.P., Inc.
                           Its: General Partner

                           By /s/
                           Name:
                           Its:

                           BANCBOSTON CAPITAL, INC.

                           By /s/
                           Name:
                           Its:

                           FIRST CHICAGO INVESTMENT CORPORATION

                           By /s/
                           Name:
                           Its:


                                                          REGISTRATION STATEMENT
                                                                      Page II-72
<PAGE>


                           MADISON DEARBORN PARTNERS V


                           By /s/
                           Name:
                           Its:

                           PRIME VENTURE II, L.P.

                           By: Prime Investors, L.P.,
                           Its: General Partner

                           By:  Prime II Management, L.P.,
                           Its: General Partner

                           By: Prime II Management, Inc.,
                           Its General Partner


                           By /s/
                           Name:
                           Its:

                           AUSTIN VENTURES, L.P.

                           By: AV Partners, L.P.
                           Its: General Partner


                           By /s/
                           Name:
                           Its:


                                                          REGISTRATION STATEMENT
                                                                      Page II-73
<PAGE>


                           WILLIAM BLAIR VENTURE PARTNERS III
                             LIMITED PARTNERSHIP

                           By:  William Blair Venture Management Company
                           Its: General Partner


                           By /s/
                           Name:
                           Its:


                           CENTENNIAL FUND II, L.P.

                           By: Centennial Holdings II, L.P.,
                           Its: General Partner


                           By /s/
                           Name:
                           Its:

                           CENTENNIAL FUND III, L.P.

                           By: Centennial Holdings III, L.P.,
                           Its: General Partner


                           By /s/
                           Name:
                           Its: General Partner

                           CENTENNIAL BUSINESS DEVELOPMENT FUND, LTD.

                           By: Centennial Business Development Company
                           Its: General Partner


                           By /s/
                           Name:
                           Title: General Partner


                                                          REGISTRATION STATEMENT
                                                                      Page II-74
<PAGE>


                           AGREED AS TO SECTION 15:

                           PRIME II MANAGEMENT, L.P.
                           By: Prime II Management, Inc.
                           Its: General Partner


                           By /s/
                           Name:
                           Its:

                                                          REGISTRATION STATEMENT
                                                                      Page II-75
<PAGE>


                                    EXHIBIT A
                                Escrow Agreement

                  This   Escrow   Agreement   ("Agreement")   is   dated  as  of
                , 199  and entered into among  National Bank of Alaska  ("Escrow
Agent"),  Prime II Management.  L.P. ("Sellers' Agent"), as the designated agent
for the parties named on Schedule 1 attached hereto  (collectively,  "Sellers"),
and General Communication,  Inc., an Alaska corporation ("GCI"). Sellers and GCI
are  collectively  referred  to in  this  Agreement  as  "Transaction  Parties."
Sellers'  Agent,  Sellers and GCI are parties to a Securities  Purchase and Sale
Agreement dated as of May 2, 1996 ( "Purchase Agreement").

                  For valuable consideration, the parties agree as follows:

                  1. Escrow Agent. The Transaction Parties appoint and designate
Escrow Agent as escrow agent for the purposes set forth in this  Agreement,  and
Escrow Agent accepts such appointment on the terms provided in this Agreement.

                  2. Deposits with Escrow Agent. Escrow Agent will establish and
maintain an escrow  account  (which,  together with all funds,  instruments  and
securities delivered to Escrow Agent by and on behalf of Sellers or GCI, and all
earnings thereon,  are referred to collectively as the "Escrow Fund").  Upon the
execution of this  Agreement,  Sellers  will cause  delivery to Escrow Agent One
Million  Ninety Three  Thousand  Seven Hundred and Fifty  (1,093,750)  shares of
Class A common  stock,  no par value  ("GCI Class A Stock"),  of GCI  ("Sellers'
Escrow Shares").  Upon execution hereof, GCI will cause delivery to Escrow Agent
of any of (A)  One  Million  Ninety  Three  Thousand  Seven  Hundred  and  Fifty
(1,093,750)  shares of GCI Class A Stock (the "GCI  Escrow  Shares");  or (B) an
irrevocable letter of credit (in form and substance  reasonably  satisfactory to
Sellers) issued by [                ] for the benefit of the Escrow Agent in the
face amount of Eight Million Seven  Hundred  Fifty  Thousand and no/100  Dollars
($8,750,000.00)  (the "Escrow L/C"), or (C)  immediately  available funds in the
amount  of Eight  Million  Seven  Hundred  Fifty  Thousand  and  no/100  Dollars
($8,750,000.00)  (the "GCI Cash  Deposit," and together with any funds held as a
result of a draw by the Escrow Agent under the Escrow L/C,  the "Escrow  Cash").
The GCI Escrow  Shares,  the Escrow L/C or the GCI Cash  Deposit,  whichever  is
actually  delivered  to Escrow Agent by GCI  hereunder  may from time to time be
referred to as the "GCI Escrow Deposit". Escrow Agent will hold and disburse the
Escrow Fund in accordance  with this Agreement.  The  Transaction  Parties agree
that the value of a share of GCI Class A Stock for purposes of this Agreement is
Eight Dollars ($8.00) ("GCI Share Price").

                  3.  Investment  of Escrow  Fund.  Escrow Agent will invest the
Escrow Cash,  if any, and any cash  otherwise  held in the Escrow Fund,  and the
Earnings  (as  defined  in  Section  6 of this  Agreement)  from the  investment
thereof,  in  Investment  


                                                          REGISTRATION STATEMENT
                                                                      Page II-76
<PAGE>
Securities  (as  jointly  directed  by  the  Transaction  Parties)  or in  other
investments  if directed by the joint written  instructions  of the  Transaction
Parties and Escrow Agent shall separately account for the Earnings received with
respect to the Sellers' Escrow Shares and the Earnings  received with respect to
the GCI Escrow Deposit. The term "Investment Securities" means (i) United States
government  securities or securities of agencies of the United States government
which are  guaranteed by the United States  government,  (ii)  commercial  paper
issued by  corporations,  each of which will have a consolidated net worth of at
least $250 million and each of which conducts a substantial part of its business
in the United States of America,  maturing  within 180 days from the date of the
original issue thereof but in no event later than the Escrow  Disbursement  Date
except if a GCI Claim  Certificate or a Sellers' Claim  Certificate  (as defined
below) has been  delivered to Escrow Agent,  and carrying the highest  rating by
Moody's Investors Service,  Inc.  ("Moody's") or Standard and Poor's Corporation
("S&P"),  and (iii) certificates of deposit maturing within 180 days of the date
of purchase but in no event later than the Escrow  Disbursement Date except if a
GCI Claim  Certificate  or a Sellers'  Claim  Certificate  has been delivered to
Escrow Agent, which are issued by any United States national or state bank whose
long term debt  rating is rated A3 or better by  Moody's  or A- or better by S&P
and which has capital,  surplus and  undivided  profits  totaling more than $250
million.  Escrow Agent shall provide a monthly  report to Sellers'  Agent and to
GCI,  which report  shall  include a list of the holdings in the Escrow Fund and
all transactions relating thereto.

                  4.       Disbursement of Sellers' Escrow Deposit.

                           (a)  Except as  otherwise  provided  in this  Section
4(a),  Escrow Agent will disburse the Sellers'  Escrow Deposit to Sellers' Agent
(or as directed by Sellers' Agent in a written certificate delivered by Sellers'
Agent to Escrow Agent prior to the Escrow  Disbursement  Date, as defined below)
on               , 199   [181 days after the Closing Date] ("Escrow Disbursement
Date").  If, prior to the Escrow  Disbursement  Date,  Escrow  Agent  receives a
certificate  signed on behalf of GCI (a "GCI Claim  Certificate") in the form of
Exhibit A with  completed  information  concerning  the  nature and amount of an
indemnification  claim by GCI under the Purchase  Agreement ("GCI Claim Amount")
which will in no event exceed Eight Million  Seven  Hundred  Fifty  Thousand and
no/100 Dollars ($8,750,000.00), Escrow Agent will retain in the Escrow Fund that
number of the  Sellers'  Escrow  Shares,  at a price per share  equal to the GCI
Share Price (the "Retained Sellers'  Shares"),  as is equal to the certified GCI
Claim Amount for  disbursement  in  accordance  with Section  4(a)(i) or (ii) as
applicable.  Escrow  Agent will  disburse the  remainder of the Sellers'  Escrow
Shares (and all Earnings  thereon) that are not required to be retained pursuant
to the preceding sentence to Sellers' Agent on the Escrow  Disbursement Date. If
a GCI Claim  Certificate  is  delivered  to  Escrow  Agent  prior to the  Escrow
Disbursement  Date, Escrow Agent will retain the Retained Sellers' Shares in the
Escrow Fund pursuant to this Agreement until either:


                                                          REGISTRATION STATEMENT
                                                                      Page II-77
<PAGE>
                                       (i) Escrow Agent  receives  joint written
                           instructions  signed on behalf of Sellers'  Agent and
                           GCI specifying the method for disbursing the Retained
                           Sellers'  Shares in which  case such  shares  and all
                           Earnings thereon will be disbursed promptly by Escrow
                           Agent in accordance with such instructions; or

                                       (ii)  Escrow  Agent  receives an official
                           copy of a final,  non-appealable  order  issued  by a
                           court of competent jurisdiction specifying the method
                           for disbursement of the Retained  Sellers' Shares and
                           all Earnings  thereon  will be disbursed  promptly by
                           Escrow Agent in accordance with such instructions.

                           (b) Notwithstanding  anything to the contrary in this
Agreement,  Escrow Agent will disburse the Sellers'  Escrow Shares in accordance
with any joint written instructions signed by the Transaction Parties.

                           (c) All disbursements of funds, if any, in the Escrow
Fund  pursuant  to this  Section  4 will be by wire  or  interbank  transfer  of
immediately  available funds to the account or accounts designated in writing by
Sellers' Agent or GCI, as applicable.

                           (d)  GCI  will  deliver  a  copy  of  any  GCI  Claim
Certificate to Sellers' Agent  contemporaneously  with or before delivery of the
GCI Claim Certificate to Escrow Agent.

                  5.       Disbursement of the GCI Escrow Deposit.

                           (a)  Except as  otherwise  provided  in this  Section
5(a),  Escrow Agent will  disburse  the GCI Escrow  Deposit to GCI on the Escrow
Disbursement  Date.  If,  prior to the Escrow  Disbursement  Date,  Escrow Agent
receives a  certificate  signed on behalf of Sellers'  Agent (a "Sellers'  Claim
Certificate") in the form of Exhibit B with completed information concerning the
nature and amount of an indemnification claim by Sellers' Agent or Sellers under
the Purchase  Agreement  ("Sellers' Claim Amount") which will in no event exceed
Eight Million Seven Hundred Fifty Thousand and no/100  Dollars  ($8,750,000.00),
Escrow  Agent will draw all sums  available  under the Escrow L/C in  accordance
with the terms  thereof if Escrow  Agent is holding the Escrow L/C and retain in
the Escrow Fund (x) that number of the GCI Escrow  Shares,  at a price per share
equal to the GCI Share Price (the  "Retained  GCI  Shares"),  as is equal to the
certified Sellers' Claim Amount if Escrow Agent is holding GCI Escrow Shares, or
(y) an amount of the Escrow Cash equal to the Sellers'  Claim Amount  ("Retained
GCI Cash") if GCI 


                                                          REGISTRATION STATEMENT
                                                                      Page II-78
<PAGE>
originally  delivered  the Escrow L/C or the GCI Cash  Deposit as the GCI Escrow
Deposit,  for  disbursement  in  accordance  with  Section  5(a)(i)  or  (ii) as
applicable. Escrow Agent will disburse the remainder of the GCI Escrow Shares or
the  Escrow  Cash,  as the  case may be,  that is not  required  to be  retained
pursuant to the preceding sentence to GCI on the Escrow  Disbursement Date. If a
Sellers'  Claim  Certificate  is  delivered  to Escrow Agent prior to the Escrow
Disbursement  Date,  Escrow  Agent will  retain the  Retained  GCI Shares or the
Retained  GCI Cash,  as the case may be, in the  Escrow  Fund  pursuant  to this
Agreement until either:

                                       (i) Escrow Agent  receives  joint written
                           instructions  signed on behalf of Sellers'  Agent and
                           GCI specifying the method for disbursing the Retained
                           GCI Shares or the Retained GCI Cash,  as the case may
                           be, in which  case such  shares or cash,  as the case
                           may  be,  and  Earnings  thereon  will  be  disbursed
                           promptly  by  Escrow  Agent in  accordance  with such
                           instructions; or

                                       (ii)  Escrow  Agent  receives an official
                           copy of a final,  non-appealable  order  issued  by a
                           court of competent jurisdiction specifying the method
                           for  disbursement  of the  Retained GCI Shares or the
                           Retained GCI Cash,  as the case may be, in which case
                           such shares and  Earnings  thereon  will be disbursed
                           promptly  by  Escrow  Agent in  accordance  with such
                           instructions.

                           (b) Notwithstanding  anything to the contrary in this
Agreement,  Escrow Agent will disburse the GCI Escrow Deposit in accordance with
any joint written instructions signed by Sellers' Agent and GCI.

                           (c) All disbursements of funds, if any, in the Escrow
Fund  pursuant  to this  Section  5 will be by wire  or  interbank  transfer  of
immediately  available funds to the account or accounts designated in writing by
Sellers' Agent or GCI, as applicable.

                           (d)  Sellers'  Agent  will  deliver  a  copy  of  any
Sellers' Claim Certificate to GCI  contemporaneously  with or before delivery of
the Sellers' Claim Certificate to Escrow Agent.

                  6.  Disbursement  of  Earnings,  etc. The  interest,  earnings
and/or  gains  ("Earnings")  received by Escrow Agent with respect to the Escrow
Securities, the Escrow 


                                                          REGISTRATION STATEMENT
                                                                      Page II-79
<PAGE>
Cash or from the  investment  of any other cash held in the Escrow  Fund will be
reinvested by Escrow Agent as permitted in Section 3 of this  Agreement.  With a
disbursement  of all or a portion of the Escrow Fund pursuant to Sections 4 or 5
of this  Agreement,  Escrow  Agent  will  distribute  to the  Transaction  Party
receiving  such  disbursement  a  proportionate  share of the Earnings  from the
investment of that particular portion of the Escrow Fund.

                  7.       Rights, Duties and Liabilities of Escrow Agent.

                           (a)  Escrow  Agent  will  have  no  duty  to  know or
determine the  performance or  nonperformance  of any provision of any agreement
between the  Transaction  Parties,  including,  but not limited to, the Purchase
Agreement,  which will not bind Escrow Agent in any manner. Escrow Agent assumes
no  responsibility  for the validity or  sufficiency of any document or paper or
payment  deposited or called for under this Agreement except as may be expressly
and   specifically   set  forth  in  this   Agreement,   and  the   duties   and
responsibilities  of Escrow  Agent  under this  Agreement  are  limited to those
expressly and specifically stated in this Agreement.

                           (b) Escrow  Agent will not be  personally  liable for
any act it may do or omit to do under this  Agreement as such agent while acting
in good faith and in the exercise of its own best judgment,  and any act done or
omitted by it in  accordance  with the  written  advice of its  counsel  will be
conclusive  evidence  of  such  good  faith  unless,  in  any  event,  the  same
constitutes gross negligence or willful  misconduct.  Escrow Agent will have the
right at any time to consult with its counsel upon any  question  arising  under
this Agreement and will incur no liability for any delay reasonably  required to
obtain the advice of counsel.

                           (c) Other  than those  notices  or demands  expressly
provided in this  Agreement,  Escrow Agent is expressly  authorized to disregard
any and all notices or demands  given by Sellers'  Agent or GCI, or by any other
person,  firm or  corporation,  excepting  only orders or process of court,  and
Escrow Agent is expressly  authorized  to comply with and obey any and all final
process,  orders,  judgments,  or decrees of any court, and to the extent Escrow
Agent obeys or complies with any thereof of any court,  it will not be liable to
any party to this  Agreement  or to any other  person,  firm or  corporation  by
reason of such compliance.

                           (d) In consideration of the acceptance of this Escrow
by Escrow Agent,  GCI agrees for it and its  successors  and assigns,  to pay to
Escrow Agent its charges,  fees and reasonable  expenses as contemplated by this
Agreement.  The escrow fees or charges will be Two  Thousand and no/100  Dollars
($2,000.00).  Such sum is intended as compensation  for Escrow Agent's  ordinary
services as contemplated by this Agreement,  including,  without limitation, (i)
the investment of funds held in the Escrow Fund and the reinvestment thereof and
of Earnings and (ii) the  disbursement  thereof and of any of the Escrow Fund to
the Transaction Parties. In the event Escrow 


                                                          REGISTRATION STATEMENT
                                                                      Page II-80
<PAGE>
Agent renders services not provided for in this Agreement,  Escrow Agent will be
entitled to receive from the transaction  parties  reasonable  compensation  and
reasonable costs, if any, for such extraordinary services.

                           (e) Escrow Agent will be under no duty or  obligation
to ascertain the identity, authority or right of Sellers' Agent or GCI (or their
agents) to execute or deliver or purport to execute or deliver this Agreement or
any  certificates,  documents  or papers or payments  deposited or called for or
given under this Agreement.

                           (f) Escrow Agent will not be liable for the outlawing
of any rights under any statute of limitations or by reason of laches in respect
of this Agreement or any documents or papers deposited with Escrow Agent.

                           (g) In the event of any dispute  among the parties to
this Agreement as to the facts or as to the validity or meaning of any provision
of this Agreement,  or any other fact or matter relating to this Agreement or to
the transactions between Sellers' Agent and GCI, Escrow Agent is instructed that
it will be under no obligation to act,  except in accordance with this Agreement
or under  process  or order of court or, if there be no such  process  or order,
until it has  filed or caused to be filed an  appropriate  action  interpleading
Sellers'  Agent and GCI and  delivering  the Escrow  Fund( or the portion of the
Escrow  Fund in  dispute)  to such  court,  and  Escrow  Agent  will  sustain no
liability  for its  failure  to act  pending  such  process of court or order or
interpleader of action.

                  8. Modification of Agreement. The provisions of this Agreement
may be supplemented,  altered,  amended,  modified,  or revoked by writing only,
signed by GCI and Sellers'  Agent and approved in writing by Escrow  Agent,  and
upon payment of all fees, costs and expenses incident thereto.

                  9.  Assignment  of   Agreement.   No   assignment,   transfer,
conveyance  or  hypothecation  of any  right,  title or  interest  in and to the
subject  matter of this  Agreement  will be binding  upon any  party,  including
Escrow Agent,  unless all fees,  costs, and expenses  incident thereto have been
paid and then only by the assent thereto by all parties in writing.

                  10. Miscellaneous.

                           (a)  All  notices  and   communications   under  this
Agreement  will be in  writing  and will be deemed  to be duly  given if sent by
registered mail, return receipt requested,  personal delivery or telecopier,  as
follows:


1
<PAGE>
To Escrow Agent:                       National Bank of Alaska
                                       Escrow Department
                                       301 W. Northern Lights Boulevard
                                       Anchorage, Alaska 99503
                                       Attention: Michael Walton, Vice President
                                       Telecopy: (907) 265-2139

To GCI at:                             General Communication, Inc.
                                       2550 Denali Street, Suite 1000
                                       Anchorage, Alaska 99503-2781
                                       Attention:John M. Lowber,  CFO and Senior
                                       Vice President
                                       Telecopy: (907) 265-5676

                                       With a copy  (which  will not  constitute
                                       notice) to:

                                       Hartig, Rhodes, Norman, Mahoney & 
                                       Edwards, P.C.
                                       717 K Street
                                       Anchorage, Alaska 99501-3397
                                       Attention:    Bonnie J. Stratton, Esq.
                                       Telecopy: (907) 277-4352

To Sellers at:                         c/o Prime II Management, L.P.
                                       3000 One American Center
                                       600 Congress Avenue
                                       Austin, TX 78701
                                       Attention:President
                                       Telecopy: (512) 476-4869

                                       With a copy (which will not constitute 
                                       notice) similarly addressed to the 
                                       attention of:
                                       Rudolph Green

                                       and

                                       With a copy  (which  will not  constitute
                                       notice) to:

                                       Edens Snodgrass Nichols & Breeland, P.C.
                                       2800 Franklin Plaza
                                       111 Congress Avenue
                                       Austin, TX 78701
                                       Attention:    Patrick K. Breeland
                                       Telecopy: (512) 505-5911


                                                          REGISTRATION STATEMENT
                                                                      Page II-82
<PAGE>
or at such  other  address  or  telecopy  number  as any of the  above  may have
furnished to the other  parties in writing and any such notice or  communication
given in the manner  specified in this Section 10(a) will be deemed to have been
given as of the date  received.  In the event  that  Escrow  Agent,  in its sole
discretion, determines that an emergency exists, Escrow Agent may use such other
means of communication as Escrow Agent deems advisable.

                           (b) The undertakings and agreements contained in this
Agreement  will bind and inure to the benefit of the  parties to this  Agreement
and their respective successors and permitted assigns.

                           (c) This  Agreement  may be  executed  in one or more
counterparts,  each of which will be deemed an  original.  Whenever  pursuant to
this Agreement GCI and Sellers' Agent are to deliver a jointly signed writing to
Escrow Agent or jointly advise Escrow Agent in writing, such writing may in each
and all cases be signed jointly or in counterparts and such counterparts will be
deemed to be one instrument.

                           (d) Escrow  Agent may resign and be  discharged  from
its duties or  obligations  under this  Agreement by giving notice in writing of
such resignation to the Transaction  Parties at least 30 days in advance of such
resignation  (unless  waived  in  writing  by  the  Transaction  Parties).  Such
resignation will be effective upon the appointment by the Transaction Parties of
a  successor  escrow  agent,  which will be a  federally  chartered  bank having
combined capital and surplus of at least $100,000,000.00;  provided, that if any
such  appointment of any successor  agent is not  effectuated  within 30 days of
such  written  notice,  Escrow  Agent may file an action  for  interpleader  and
deposit all funds with a court of competent jurisdiction, all as provided for in
Section  7(g).  Any such  successor  escrow agent will be appointed by a written
instrument mutually  satisfactory to and executed by GCI, Sellers' Agent, Escrow
Agent and the successor escrow agent. Any successor escrow agent appointed under
the  provisions  of this  Agreement  will have all of the same  rights,  powers,
privileges,  immunities and authority  with respect to the matters  contemplated
herein as are granted herein to the original Escrow Agent.

                           (e) GCI and  Sellers'  Agent (on  behalf of  Sellers)
hereby jointly and severally agree to indemnify Escrow Agent for, and to hold it
harmless against any loss, liability or reasonable out-of-pocket expense arising
out of or in  connection  with  this  Agreement  and  carrying  out  its  duties
hereunder,   including  the  reasonable  out-of-pocket  costs  and  expenses  of
defending  itself  against any claim of  liability,  except in those cases where
Escrow  Agent  has  been  guilty  of  gross  negligence  or  willful  misconduct
(provided,  that in no event  will the  Transaction  Parties  be liable  for any
allocated  cost or expense  of  persons  regularly  employed  by Escrow  Agent).
Anything in this  Agreement  to the contrary  notwithstanding,  in no event will
Escrow Agent be liable for special,  indirect or consequential loss or damage of
any kind  whatsoever  (including,  but 


                                                          REGISTRATION STATEMENT
                                                                      Page II-83
<PAGE>
not limited  to, lost  profits),  even if Escrow  Agent has been  advised of the
likelihood of such loss or damage and regardless of the form of action.

                           (f) The  Transaction  Parties  are  providing  Escrow
Agent with their Tax  Identification  Number  (TIN) as assigned by the  Internal
Revenue Service below their  signatures to this Agreement.  All Earnings will be
allocated  and paid as  provided  herein and  reported by the  recipient  to the
Internal  Revenue Service as having been so allocated and paid.  Anything to the
contrary in this Agreement  notwithstanding,  Sellers' Escrow Shares will at all
times be owned of record and  beneficially  by Sellers and  Sellers  will at all
times be entitled to exercise  sole voting power and,  subject to Section 4, the
power to dispose of or transfer, Sellers' Escrow Shares.

                           (g) In the event funds transfer written  instructions
are given  (other than in writing at the time of  execution  of the  Agreement),
whether  in  writing  or by  telecopier,  Escrow  Agent is  authorized,  but not
obligated,  to seek confirmation of such instructions by telephone  call-back to
the person or persons  designated  on Schedule 2 to this  Agreement,  and Escrow
Agent may rely upon the  confirmations of anyone purporting to be the persons so
designated. The persons and telephone numbers for call-backs may be changed only
in a writing actually  received and acknowledged by Escrow Agent. The parties to
this  Agreement   acknowledge  that  such  security  procedure  is  commercially
reasonable.

                           (h) This  Agreement will be governed by and construed
in  accordance  with  the law of the  State  of  Alaska  without  regard  to its
principles of conflicts of laws and any action brought under this Agreement will
be brought in the courts of the State of Alaska,  located in the Third  Judicial
District at Anchorage. Each party hereto irrevocably waives any objection on the
grounds of venue,  forum  non-convenience or any similar grounds and irrevocably
consents  to  service of process  by mail or in any other  manner  permitted  by
applicable law and consents to the jurisdiction of such courts.

                           (i) Except as otherwise specified herein, each of the
parties  will pay all costs and  expenses  incurred  or to be  incurred by it in
negotiating and preparing this Escrow  Agreement and in closing and carrying out
the transactions contemplated by this Escrow Agreement.

                           (j) If any legal action or  proceeding is brought for
the  enforcement  of this Escrow  Agreement,  or because of an alleged  dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Escrow  Agreement,  the  successful or prevailing  party or parties will be
entitled to recover reasonable  attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or they may be
entitled.


                                                          REGISTRATION STATEMENT
                                                                      Page II-84
<PAGE>
                           The parties  have caused this  Agreement to be signed
the day and year first above written.

                                        NATIONAL BANK OF ALASKA, N.A.

                                        By /s/
                                          Roderick R. Shipley,
                                          Senior Vice President

                                        SELLERS' AGENT:

                                        PRIME II MANAGEMENT, L.P.
                                        By: Prime II Management, Inc.
                                        Its: General Partner
                                                              
                                        By: /s/
                                        Its:

                                        TIN: (1)


                                        GCI:

                                        GENERAL COMMUNICATION, INC.

                                        By: /s/
                                        Name:
                                        Title:

                                        TIN:


--------------------------
(1) Agent for Sellers.

                                                          REGISTRATION STATEMENT
                                                                      Page II-85
<PAGE>


                                   Schedule 1

                                     Sellers


1.                Prime Venture I Holdings, L.P.

2.                Prime Cable Growth Partners, L.P.

3.                Prime Venture II, L.P.

4.                Prime Cable Limited Partnership

5.                BancBoston Capital, Inc.

6.                First Chicago Investment Corporation

7.                Madison Dearborn Partners V

8.                Austin Ventures, L.P.

9.                William Blair Venture Partners III Limited Partnership

10.               Centennial Fund II, L.P.

11.               Centennial Fund III, L.P.

12.               Centennial Business Development Fund, Ltd.


                                                          REGISTRATION STATEMENT
                                                                      Page II-86
<PAGE>


                                   Schedule 2

                     Telephone Number(s) for Call-Banks and
           Person(s) Designated to Confirm Funds Transfer Instructions


If to GCI:

                       Name                              Telephone Number

1.                John M. Lowber                         (907) 265-5604
2.                                                       (907) 265-5600
3.                                                       (907) 265-5600



If to Sellers:

                       Name                              Telephone Number

1.                Gretchen Ellis                         (512) 476-7888
2.                Karen Miller                           (512) 476-7888
3.                Rudolph Green                          (512) 476-7888

Telephone  call-backs  will be made to each of GCI and  Sellers'  Agent if joint
instructions are required pursuant to the Agreement.


                                                          REGISTRATION STATEMENT
                                                                      Page II-87
<PAGE>


                          EXHIBIT A TO ESCROW AGREEMENT
                            FORM OF CLAIM CERTIFICATE

                  The  undersigned,  on behalf of  General  Communication,  Inc.
("GCI"), certifies as follows:

                           A.          GCI,  Sellers et al. are  parties to that
                                       certain  Securities   Purchase  and  Sale
                                       Agreement dated as of April    , 1996.

                           B.          GCI in good faith  believes  that Sellers
                                       (as  defined in the  Purchase  Agreement)
                                       have  breached  certain  representations,
                                       warranties, covenants or obligations made
                                       by Sellers in the  Purchase  Agreement or
                                       are   obligated  to  indemnify  GCI  with
                                       respect to certain claims. In particular,
                                       GCI in good  faith  is  asserting  claims
                                       against Sellers based on the following:

                                       [reasonably detailed description of claim
                                       and  reference  to  portion  of  Purchase
                                       Agreement  in  question to be inserted by
                                       GCI at time of delivery of Certificate].

                           C.          Attached to this Certificate is a copy of
                                       GCI's  notice to Sellers  relating to the
                                       claim pursuant to the Purchase Agreement.
                                       GCI  intends to pursue the claim with due
                                       diligence. GCI in good faith believes the
                                       amount  of  its  claim  described  in its
                                       notice is $              .

                           D.          GCI is  furnishing  this  Certificate  to
                                       National  Bank of Alaska  which is acting
                                       as Escrow Agent  pursuant to the terms of
                                       an      Escrow       Agreement      dated
                                                      ,  199    among GCI, Prime
                                       II Management,  L.P. (as Sellers'  Agent)
                                       and National Bank of Alaska has delivered
                                       or contemporaneously is delivering a copy
                                       of this  Certificate to Sellers' Agent as
                                       well.

                  This Certificate is signed this          day of      , 199   .

                                               General Communication, Inc.


                                                By: /s/
                                                Name:
                                                Title:


                                                          REGISTRATION STATEMENT
                                                                      Page II-88
<PAGE>
                  Receipt of this  Certificate is  acknowledged  this     day of
                  , 199   .

                                                NATIONAL BANK OF ALASKA


                                                By: /s/
                                                Name:
                                                Title:



                                                          REGISTRATION STATEMENT
                                                                      Page II-89
<PAGE>


                          EXHIBIT B TO ESCROW AGREEMENT
                            FORM OF CLAIM CERTIFICATE



                  The undersigned, on behalf of                       ("Sellers'
Agent") certifies as follows:

                  A.                      ,  General Communication, Inc. ("GCI")
et al. are parties to that certain Securities  Purchase and Sale Agreement dated
as of April    , 1996 ("Purchase Agreement").

                  B. Sellers' Agent in good faith believes that GCI has breached
certain representations, warranties, covenants or obligations made by GCI in the
Purchase Agreement or is obligated to indemnify Sellers (as that term is defined
in the Purchase  Agreement),  with  respect to certain  claims.  In  particular,
Sellers'  Agent in good  faith is  asserting  claims  against  GCI  based on the
following:

[reasonably  detailed  description of claim and reference to portion of Purchase
Agreement  in question  to be inserted by Sellers'  Agent at time of delivery of
Certificate].

                  C. Attached to this  Certificate  is a copy of Sellers'  Agent
notice to GCI relating to the claim pursuant to the Purchase Agreement. Sellers'
Agent  intends to pursue the claim with due  diligence.  Sellers'  Agent in good
faith believes the amount of the claim described in its notice is $           .

                  D. Sellers' Agent is furnishing  this  Certificate to National
Bank of  Alaska  which is acting as  Escrow  Agent  pursuant  to the terms of an
Escrow  Agreement dated                 ,  199    among GCI,  Sellers' Agent and
National Bank of Alaska.  Sellers' Agent has delivered or  contemporaneously  is
delivering a copy of this Certificate to GCI as well.

                  This    Certificate    is    signed    this           day   of
                   , 199   .


                                                PRIME II MANAGEMENT, L.P.
                                                By: Prime II Management, Inc.
                                                Its: General Partner

                                                By: 
                                                Name:
                                                Title:


                                                          REGISTRATION STATEMENT
                                                                      Page II-90
<PAGE>



                  Receipt of this  Certificate is acknowledged  this      day of
                  , 199   .

                                                NATIONAL BANK OF ALASKA

                                                By:
                                                Name:
                                                Title:


                                                          REGISTRATION STATEMENT
                                                                      Page II-91
<PAGE>


                                    EXHIBIT B
                          Registration Rights Agreement

                  This Registration Rights Agreement ("Agreement"),  dated as of
this        day of        ,  1996, is between  General  Communication,  Inc., an
Alaska  corporation  ("GCI"),  and the respective owners of: (i) all the limited
partner interests in Prime Cable of Alaska, L.P. ("Prime") held by Prime Venture
I Holdings,  L.P. ("Holdings") and Prime Cable Growth Partners, L.P. ("Growth"),
(ii) all of the capital  stock of Alaska  Cable,  Inc.  ("ACI," a Prime  limited
partner),  (iii) all of the capital stock of Prime Cable Fund I, Inc. ("PCFI," a
Prime general partner),  and (iv) all of the profit  participation  interests in
Prime (such  owners,  Prime Cable  Limited  Partnership,  the holders of all the
capital stock of PCFI and ACI, and Prime Venture I Holdings, L.P., collectively,
"Sellers").

                                    RECITALS

                  A. Sellers have  acquired in aggregate  Eleven  Million  Eight
Hundred  (11,800,000)  shares of GCI's Class A Common Stock,  no par value.  All
such  shares  of  GCI's  Class A  Common  Stock  which  Sellers  now own and any
securities issued in exchange for or in respect of such stock,  whether pursuant
to a stock  dividend,  stock split,  stock  reclassification  or  otherwise  are
collectively referred to in this Agreement as the "Registrable Shares."

                  B. GCI desires to grant registration rights to Sellers and any
successors  and  assigns of Sellers as the  holders of all or any portion of the
Registrable  Shares.  Sellers and such successors and assigns are referred to in
this Agreement as the "Holders," or, individually as a "Holder."

                                    AGREEMENT

                             In  consideration  of the  premises  and the mutual
covenants contained in this Agreement, the parties agree as follows:

                  1.       Demand Registration.

                           (a)  GCI  hereby   covenants   and  agrees  that  the
distribution  to  Holders  of the  Registrable  Shares  pursuant  to that  Prime
Securities  Purchase and Sale Agreement dated May 2, 1996 ("Prime SPA") shall be
registered  under  the  Securities  Act  of  1933,  as  amended,  pursuant  to a
registration statement (the "Original Registration Statement") that is effective
as of the date  hereof.  GCI  shall  keep the  prospectus  that is a part of the
Original  Registration  Statement for the GCI Shares  current for a period of at
least two (2) years from the date  hereof to permit  such  distribution  and, if
required,  resales of Registrable Securities by Holders, to the extent that such
sales are required to be registered. Each Holder hereby covenants and agrees (i)
not to sell any Registrable  Shares during the first ninety (90) day period (the
"First  Lock-Out  Period")  


                                                          REGISTRATION STATEMENT
                                                                      Page II-92
<PAGE>
following the Final Closing Date (as defined in the Prime SPA),  and (ii) not to
sell more than twenty percent (20%) of such Holder's  Registrable  Shares during
the  fifty-nine  (59) day period  (the  "Second  Lock-Out  Period")  immediately
following the First Lock-Out Period.  Each of the Registrable  Shares shall bear
the legend set forth on Annex 1 hereto to evidence the covenants and  agreements
set forth in the  immediately  preceding  sentence;  and once such covenants and
agreements  are no longer  applicable,  GCI will issue new  certificates  to the
holders of the  Registrable  Shares without such legends.  Any and all remaining
Registrable  Shares may be sold following the Second Lock-Out Period. If further
required to permit resales of the Registrable  Shares by Holders,  Holders shall
at any time and  from  time to time  after  the date the  Original  Registration
Statement is no longer effective,  have the right to require  registration under
the Securities Act of 1933, as amended ("Securities Act"), of all or any portion
of the  Registrable  Shares on the terms and subject to the conditions set forth
in this Agreement.

                           (b) Upon receipt by GCI of a Holder's written request
for registration,  GCI shall (i) promptly notify each other Holder in writing of
its receipt of such initial written request for  registration,  and (ii) as soon
as is  practicable,  but in no event more than sixty (60) days after  receipt of
such  written  request,   file  with  the  Securities  and  Exchange  Commission
("Commission"), and use reasonable commercial efforts to effect the registration
under  a  registration   statement  under  the  Securities  Act   ("Registration
Statement") for the Registrable  Shares specified in the initial written request
and any other  written  request  from any other  Holder  received  by GCI within
twenty (20) days of GCI giving the notice  specified  in clause (i) hereof under
the  Securities  Act in  accordance  with the  intended  method of  distribution
thereof.

                           (c)  If  so  requested   by  any  Holder   requesting
participation  in a  public  offering  or  distribution  of  Registrable  Shares
pursuant to this Section 1 or Section 2 of this  Agreement  ("Selling  Holder"),
the Registration  Statement shall provide for delayed or continuous  offering of
the Registrable Shares pursuant to Rule 415 promulgated under the Securities Act
or any similar rule then in effect  ("Shelf  Offering").  If so requested by the
Selling Holders, the public offering or distribution of Registrable Shares under
this Agreement shall be pursuant to a firm commitment underwriting, the managing
underwriter of which shall be an investment banking firm selected and engaged by
the  Selling   Holders  and  approved  by  GCI,  which  approval  shall  not  be
unreasonably  withheld.  GCI shall enter into the same underwriting agreement as
shall the Selling Holders, containing representations, warranties and agreements
not  substantially  different  from  those  customarily  made  by an  issuer  in
underwriting  agreements  with  respect to  secondary  distributions.  GCI, as a
condition to fulfilling its obligations  under this  Agreement,  may require the
underwriters  to enter into an  agreement  in customary  form  indemnifying  GCI
against any Losses (as defined in Section 6) that arise out of or are based upon
an untrue  statement  or an alleged  untrue  statement  or  omission  or alleged
omission in the Disclosure  Documents (as defined in 


                                                          REGISTRATION STATEMENT
                                                                      Page II-93
<PAGE>
Section 6) made in reliance  upon and in  conformity  with  written  information
furnished to GCI by the  underwriters  specifically  for use in the  preparation
thereof.

                           (d)  Each   Selling   Holder   may,   before  such  a
Registration  Statement becomes effective,  withdraw its Registrable Shares from
sale,  should the terms of sale not be reasonably  satisfactory  to such Selling
Holder;  if all Selling Holders who are  participating  in such  registration so
withdraw,  however,  such registration  shall be deemed to have occurred for the
purposes of Section 4 of this  Agreement,  unless such Selling  Holders pay (pro
rata,  in  proportion  to the  number  of  Registrable  Shares  requested  to be
included)  within  twenty  (20)  days  after any such  withdrawal,  all of GCI's
out-of-pocket expenses incurred in connection with such registration.

                           (e) Notwithstanding  the foregoing,  GCI shall not be
obligated to effect a  registration  pursuant to Sections 1(b) or (c) during the
period  starting with the date sixty (60) days prior to GCI's  estimated date of
filing of, and ending on a date six (6) months  following the effective date of,
a registration statement pertaining to an underwritten public offering of equity
securities  for GCI's  account,  provided that (i) GCI is actively  employing in
good faith all reasonable efforts to cause such registration statement to become
effective  and that GCI's  estimate  of the date of filing on such  registration
statement  is made in good  faith,  and (ii) GCI shall  furnish to the Holders a
certificate  signed by GCI's  President  stating that in the Board of Directors'
good-faith  judgment,   it  would  be  seriously   detrimental  to  GCI  or  its
shareholders for a Registration Statement to be filed in the near future; and in
such event, GCI's obligations to file a Registration Statement shall be deferred
for a period not to exceed six (6) months.

                  2.  Incidental  Registration.  Each time that GCI  proposes to
register any of its equity  securities  under the  Securities  Act (other than a
registration  effected  solely to implement an employee  benefit or stock option
plan or to sell shares  obtained under an employee  benefit or stock option plan
or a transaction  to which Rule 145 or any other similar rule of the  Commission
under the  Securities  Act is  applicable),  GCI will give written notice to the
Holders of its  intention  to do so. Each of the Selling  Holders may give GCI a
written  request  to  register  all or some  of its  Registrable  Shares  in the
registration  described in GCI's  written  notice as set forth in the  foregoing
sentence,  provided  that such written  request is given within twenty (20) days
after receipt of any such GCI notice.  Such request will state (i) the amount of
Registrable  Shares to be disposed of and the intended  method of disposition of
such Registrable  Shares, and (ii) any other information GCI reasonably requests
to properly effect the registration of such Registrable  Shares. Upon receipt of
such  request,  GCI  will  use its  best  efforts  promptly  to  cause  all such
Registrable  Shares  intended  to be  disposed  of to be  registered  under  the
Securities  Act so as to permit their sale or other  disposition  (in accordance
with the intended methods set forth in the request for registration), unless the
sale  is a  firmly  underwritten  public  offering  for  GCI's  account  and the
underwriter  determines  reasonably  and in  good  faith  in  writing  that  the
inclusion of such securities  would adversely  affect the offering or materially
increase  the  offering's  costs.  In which case such  securities  and 


                                                          REGISTRATION STATEMENT
                                                                      Page II-94
<PAGE>
all other securities to be registered,  other than those to be offered for GCI's
account, shall be excluded to the extent the underwriter determines.  The number
of secondary  shares included in such  registration  shall be shared pro rata by
all  security  holders  having  contractual  registration  rights based upon the
amount  of  GCI's  securities  requested  by such  security  holders  to be sold
thereunder. GCI's obligations under this Section 2 shall apply to a registration
to be  effected  for  securities  to be  sold  for  GCI's  account  as well as a
registration  statement which includes  securities to be offered for the account
of other  holders  of GCI  equity  securities  having  contractual  registration
rights.  However,  the registration rights granted pursuant to the provisions of
this Section 2 are subject to the registration rights granted by GCI pursuant to
(a) the Registration  Rights Agreement dated as of January 18, 1991, between GCI
and WestMarc Communications,  Inc.; (b) the Registration Rights Agreements dated
as of March  31,  1993,  and                 , 1996,  both  between  GCI and MCI
Telecommunications  Corporation;  (c) the Registration Rights Agreement dated as
of                ,  1996,  between GCI and the owners of Alaskan Cable Network,
Inc.; and (d) the Registration Rights Agreement dated as  of                   ,
1996, between GCI and the owners of Alaska Cablevision, Inc, the effect of which
agreements  is that all  parties  hereto and  thereto  have pro rata  piggy-back
Registration Rights.

                  In connection with a registration  to be effected  pursuant to
this  Section 2, the  Selling  Holders  shall  enter into the same  underwriting
agreement as shall GCI and the other selling security holders,  if any, provided
that  such  underwriting  agreement  contains  representations,  warranties  and
agreements  on the  part of the  Selling  Holders  that  are  not  substantially
different  from  those   customarily   made  by  selling   security  holders  in
underwriting agreements with respect to secondary distributions.

                  If, at any time  after  giving  notice of GCI's  intention  to
register any of its  securities  under this Section 2 and prior to the effective
date of the registration  statement filed in connection with such  registration,
GCI shall determine for any reason not to register such securities,  GCI may, at
its election, give notice of such determination to Holders and thereupon will be
relieved of its obligation to register the Registrable Shares in connection with
such registration.

                  3.  Expenses  of  Registration.  GCI  shall  pay all costs and
expenses  incident to GCI's  performance of or compliance  with this  Agreement,
including  without  limitation  all  expenses  incurred in  connection  with the
registration  of the  Registrable  Shares,  fees and expenses of compliance with
Securities or blue sky laws, printing expenses, messenger, delivery and shipping
expenses  fees  and  expenses  of  counsel  for  GCI and  for  certified  public
accountants and underwriting  expenses (but not fees),  except that each Selling
Holder  shall  pay all fees  and  disbursements  of such  Selling  Holder's  own
attorneys   and   accountants,   and  all  transfer   taxes  and  brokerage  and
underwriters' discounts and commissions directly attributable to the Registrable
Shares being offered and sold by such Selling Holder.


                                                          REGISTRATION STATEMENT
                                                                      Page II-95
<PAGE>
                  4.  Limitations on Registration  Rights.  Notwithstanding  the
provisions of Sections 1(b) or (c) of this Agreement,  GCI shall not be required
to  effect  any  registration  under  that  Section  if (i) the  request(s)  for
registration cover an aggregate number of Registrable Shares having an aggregate
Market Value of less than Two Million Five Hundred  Thousand and no/100  Dollars
($2,500,000.00)  as of the  date  of the  last of such  requests,  (ii)  GCI has
previously  filed  two (2)  registration  statements  under the  Securities  Act
pursuant to Section 1 (excluding the Original  Registration  Statement which was
effected in connection with the  distribution  of the Registrable  Shares to the
Sellers  pursuant  to the Prime  SPA),  (iii) GCI,  in order to comply with such
request, would be required to (A) undergo a special interim audit or (B) prepare
and file with the Commission, sooner than would otherwise be required, pro forma
or other financial statements relating to any proposed transaction,  or (iv) if,
in the opinion of counsel to GCI,  which  opinion of counsel shall be acceptable
to the Holders a  registration  is not required in order to permit resale by the
Holders in accordance with the intended method of distribution  set forth in the
requests of registration. The first demand registration under this Agreement may
be requested  only by the Holders of a minimum of  twenty-five  percent (25%) of
the Registrable Shares.  "Market Value" as used in this Agreement shall mean, as
to each  class of  Registrable  Shares at any  date,  the  average  of the daily
closing  prices  for  such  class  of  Registrable  Shares,  for  the  ten  (10)
consecutive  trading  days before the day in  question.  The  closing  price for
shares of such class for each day shall be the last  reported sale price regular
way, or, in case no such  reported  sale takes place on such day, the average of
the  reported  closing bid and asked  prices  regular way, in either case on the
composite  tape,  or if the shares of such class are not quoted on the composite
tape, on the principal United States  securities  exchange  registered under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), on which shares of
such  class are  listed or  admitted  to  trading,  or if they are not listed or
admitted to trading on any such exchange, the closing sale price (or the average
of the quoted closing bid and asked price if no sale is reported) as reported by
the National  Association  of  Securities  Dealers  Automated  Quotation  System
("NASDAQ")  or any  comparable  system,  or if the  shares of such class are not
quoted on NASDAQ or any  comparable  system,  the average of the closing bid and
asked prices as furnished  by any market maker in the  securities  of such class
who is a member of the National  Association of Securities Dealers,  Inc., or in
the absence of such closing bid and asked  price,  as  determined  by such other
method as GCI's Board of Directors shall from time to time deem to be fair.

                  5.       Obligations with Respect to Registration.

                           (a)  If  and   whenever   GCI  is  obligated  by  the
provisions  of this  Agreement  to effect the  registration  of any  Registrable
Shares under the Securities Act, GCI shall promptly:

                                       (i) Prepare and file with the  Commission
a  registration  statement  with  respect  to such  Registrable  Shares  and use
reasonable  


                                                          REGISTRATION STATEMENT
                                                                      Page II-96
<PAGE>
commercial  efforts to cause such  registration  statement to become  effective,
provided  that before  filing a  registration  statement,  or  prospectus or any
amendment or supplements  thereto,  GCI will furnish to the counsel  selected by
the Holders of a majority of the Registrable Shares covered by such registration
statement  copies of all such statements  proposed to be filed,  which documents
shall be subject to the review of such counsel;

                                       (ii) Prepare and file with the Commission
any  amendments  and  supplements  to  the  Registration  Statement  and  to the
prospectus  used  in  connection  therewith  as may be  necessary  to  keep  the
Registration  Statement  effective  and to  comply  with the  provisions  of the
Securities Act and the rules and regulations promulgated thereunder with respect
to the  disposition  of  all  Registrable  Shares  covered  by the  Registration
Statement for the period required to effect the distribution of such Registrable
Shares. However, in no event shall GCI be required to do so (i) in the case of a
Registration  Statement  filed pursuant to Sections 1(b) or (c), for a period of
more than two hundred  seventy (270) days  following  the effective  date of the
Registration  Statement and (ii) in the case of a Registration  Statement  filed
pursuant  to Section  2, for a period  exceeding  the  greater of (A) the period
required to effect the  distribution of securities for GCI's account and (B) the
period  during  which GCI is required  to keep such  Registration  Statement  in
effect for the  benefit  of  selling  security  holders  other than the  Selling
Holders;

                                       (iii)  Notify  the  Selling  Holders  and
their underwriters,  and confirm such advice in writing, (A) when a Registration
Statement  becomes  effective,  (B)  when  any  post-effective  amendment  to  a
Registration  Statement  becomes  effective,  and  (C)  of  any  request  by the
Commission for additional information or for any amendment of or supplement to a
Registration Statement or any prospectus relating thereto;

                                       (iv)  Furnish  at  GCI's  expense  to the
Selling Holders such number of copies of a preliminary,  final,  supplemental or
amended  prospectus,  in conformity with the  requirements of the Securities Act
and the rules and  regulations  promulgated  thereunder,  as may  reasonably  be
required  in order to  facilitate  the  disposition  of the  Registrable  Shares
covered by a  Registration  Statement,  but only while GCI is required under the
provisions hereof to cause a Registration Statement to remain effective;

                                       (v) Register or qualify at GCI's  expense
the  Registrable  Shares  covered by a Registration  Statement  under such other
securities  or blue sky laws of such  jurisdictions  in the United States as the
Selling  Holders  shall  reasonably  request,  and do any and all other acts and
things which may be necessary  to enable each Selling  Holder whose  Registrable
Shares are covered by such Registration  Statement to consummate the disposition
in such jurisdictions of such Registrable Shares.  Provided,  however,  that GCI
shall in no event be required to qualify to do business as a foreign 


                                                          REGISTRATION STATEMENT
                                                                      Page II-97
<PAGE>
corporation or as a dealer in any jurisdiction where it is not so qualified,  to
amend its articles of  incorporation  or to change the composition of its assets
at  the  time  to  conform  with  the  securities  or  blue  sky  laws  of  such
jurisdiction,  to take any action that would subject it to service of process in
suits  other than  those  arising  out of the offer and sale of the  Registrable
Shares covered by the Registration Statement or to subject itself to taxation in
any jurisdiction where it has not therefore done so;

                                       (vi) Notify  each  Seller of  Registrable
Shares,  at any time  when a  prospectus  relating  thereto  is  required  to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration  statement contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements  therein not misleading,  and, at the request of any such seller,
GCI will  prepare a  supplement  or amendment  to such  prospectus  so that,  as
thereafter  delivered to purchasers of Registrable  Shares, such prospectus will
not  contain an untrue  statement  of a material  fact or omit to state any fact
necessary to make the statements therein not misleading;

                                       (vii) Cause all such  Registrable  Shares
to be listed on each securities  exchange on which similar  securities issued by
GCI are then  listed and to be  qualified  for  trading on each  system on which
similar securities issued by GCI are from time to time qualified;

                                       (viii)   Provide  a  transfer  agent  and
registrar for all such  Registrable  Shares not later than the effective date of
such  registration  statement and thereafter  maintain such a transfer agent and
registrar;

                                       (ix) Enter into such customary agreements
(including  underwriting  agreements in customary  form) and take all such other
actions as the holders of a majority of the shares of  Registrable  Shares being
sold or the  underwriters,  if any,  reasonably  request in order to expedite or
facilitate the disposition of such Registrable Shares;

                                       (x) Make  available for inspection by any
underwriter  participating  in any  disposition  pursuant  to such  registration
statement  and any  attorney,  accountant  or other  agent  retained by any such
underwriter,  all financial and other records, pertinent corporate documents and
properties  of  GCI,  and  cause  GCI's  officers,   directors,   employees  and
independent  accountants to supply all information  reasonably  requested by any
such  underwriter,  attorney,  accountant  or  agent  in  connection  with  such
registration statement;

                                       (xi) Otherwise use reasonable  commercial
efforts to comply with all applicable  rules and  regulations of the Commission,
and make available to its security holders,  as soon as reasonably  practicable,
all earning  statements as and


                                                          REGISTRATION STATEMENT
                                                                      Page II-98
<PAGE>
when filed with the  Commission,  which  earnings  statements  shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

                                       (xii)  permit any  holder of  Registrable
Shares which might be deemed, in the sole and exclusive judgment of such holder,
to be an  underwriter  or a  controlling  person of GCI, to  participate  in the
preparation  of such  registration  or  comparable  statement and to require the
insertion  therein  of  material  furnished  to GCI  in  writing,  which  in the
reasonable judgment of such holder and its counsel should be included; and

                                       (xiii)  In the event of the  issuance  of
any stop order suspending the effectiveness of a registration  statement,  or of
any  order  suspending  or  preventing  the  use of any  related  prospectus  or
suspending  the  qualification  of  any  Registrable  Shares  included  in  such
registration  statement for sale in any  jurisdiction,  GCI will use  reasonable
commercial efforts to promptly obtain the withdrawal of such order.

                           (b)  GCI's  obligations  under  this  Agreement  with
respect to the Selling  Holder shall be  conditioned  upon the Selling  Holder's
compliance with the following:

                                       (i) Such Selling  Holder shall  cooperate
with GCI in connection with the preparation of the Registration  Statement,  and
for so long as GCI is  obligated  to file and keep  effective  the  Registration
Statement,  shall  provide  to GCI,  in  writing,  for  use in the  Registration
Statement,  all such  information  regarding the Selling  Holder and its plan of
distribution  of the  Registrable  Shares as may be  necessary  to enable GCI to
prepare the  Registration  Statement  and  prospectus  covering the  Registrable
Shares,  to maintain  the currency and  effectiveness  thereof and  otherwise to
comply with all applicable requirements of law in connection therewith;

                                       (ii)  During  such  time  as the  Selling
Holder may be engaged in a distribution of the Registration Shares, such Selling
Holder  shall  comply with Rules 10b-2,  10b-6 and 10b-7  promulgated  under the
Exchange Act and pursuant thereto it shall,  among other things:  (A) not engage
in  any   stabilization   activity  in  connection  with  GCI's   securities  in
contravention of such rules; (B) distribute the Registrable Shares solely in the
manner  described in the  Registration  Statement;  (C) cause to be furnished to
each  broker  through  whom the  Registrable  Shares may be  offered,  or to the
offeree if an offer is not made through a broker,  such copies of the prospectus
covering the  Registrable  Shares and any  amendment or  supplement  thereto and
documents  incorporated by reference  therein as may be required by law; and (D)
not bid for or purchase  any GCI  securities  or attempt to induce any person to
purchase any GCI securities other than as permitted under the Exchange Act;

                                       (iii)  If  the   Registration   Statement
provides for a Shelf Offering, then at least ten (10) business days prior to any
distribution of the Registrable 


                                                          REGISTRATION STATEMENT
                                                                      Page II-99
<PAGE>
Shares, any Selling Holder who is an "affiliated  purchaser" (as defined in Rule
10b-6  promulgated under the Exchange Act) of GCI shall advise GCI in writing of
the date on which the  distribution  by such Selling Holder will  commence,  the
number of the Registrable Shares to be sold and the manner of sale. Such Selling
Holder also shall inform GCI when each  distribution of such Registrable  Shares
is over; and

                                       (iv) GCI shall not grant any  conflicting
registration  rights to other  holders of its  shares,  to the extent  that such
rights would prevent Holders from timely exercising their rights hereunder.

                  6.       Indemnification.

                           (a) By GCI.  In the event of any  registration  under
the Securities Act of any Registrable  Shares  pursuant to this  Agreement,  GCI
shall  indemnify and hold harmless any Selling  Holder,  any underwriter of such
Selling  Holder,  each  officer,  director,  employee  or agent of such  Selling
Holder,  and each other  person,  if any,  who controls  such Selling  Holder or
underwriter  within the meaning of Section 15 of the Securities Act, against any
losses, costs, claims,  damages or liabilities,  joint or several (or actions in
respect thereof) ("Losses"), incurred by or to which each such indemnified party
may become  subject,  under the  Securities  Act or  otherwise,  but only to the
extent  such  Losses  arise out of or based  upon (i) any  untrue  statement  or
alleged untrue  statement of any material fact contained,  on the effective date
thereof, in any Registration  Statement under which such Registrable Shares were
registered  under the  Securities  Act, in any  preliminary  prospectus (if used
prior to the  effective  date of such  Registration  Statement)  or in any final
prospectus or in any post  effective  amendment or  supplement  thereto (if used
during the period GCI is required to keep the Registration  Statement effective)
("Disclosure Documents"), (ii) any omission or alleged omission to state therein
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  made therein not misleading or (iii) any violation of any federal or
state  securities  laws or rules or regulations  thereunder  committed by GCI in
connection  with the performance of its  obligations  under this Agreement.  GCI
will  reimburse  each such  indemnified  party  for all legal or other  expenses
reasonably  incurred by such party in connection with investigating or defending
any such claims, including,  subject to such indemnified party's compliance with
the  provisions of the last  sentence of  subsection  (c) of this Section 6, any
amounts paid in settlement of any litigation,  commenced or threatened,  so long
as GCI's counsel agrees with the  reasonableness  of such  settlement  Provided,
however,  that GCI shall not be liable to an indemnified  party in any such case
to the extent that any such Losses  arise out of or are based upon (i) an untrue
statement or alleged untrue  statement or omission or alleged  omission (x) made
in any such Disclosure Documents in reliance upon and in conformity with written
information  furnished  to  GCI  by or  on  behalf  of  such  indemnified  party
specifically for use in the preparation  thereof, (y) made in any preliminary or
summary  prospectus if a copy of the final  prospectus  was not delivered to the
person alleging any loss,  claim,  damage or liability for which Losses arise at
or prior to the written  confirmation of the sale of such 


                                                          REGISTRATION STATEMENT
                                                                     Page II-100
<PAGE>
Registrable Shares to such person and the untrue statement or omission concerned
had been corrected in such final  prospectus or (z) made in any prospectus  used
by  such  indemnified  party  if  a  court  of  competent  jurisdiction  finally
determines  that at the time of such  use  such  indemnified  party  had  actual
knowledge  of such  untrue  statement  or  omission  or (ii) the  delivery by an
indemnified  party of any  prospectus  after such time as GCI has  advised  such
indemnified  party in writing that the filing of a  post-effective  amendment or
supplement  thereto  is  required,  except  the  prospectus  as  so  amended  or
supplemented,  or the  delivery  of any  prospectus  after  such  time as  GCI's
obligation to keep the same current and effective has expired.

                           (b) By the  Selling  Holders.  In  the  event  of any
registration under the Securities Act of any Registrable Shares pursuant to this
Agreement,  each Selling Holder shall, and shall cause any underwriter  retained
by it who  participates in the offering to agree to, indemnify and hold harmless
GCI,  each  of  its  directors,  each  of  its  officers  who  have  signed  the
Registration  Statement and each other  person,  if any, who controls GCI within
the meaning of Section 15 of the Securities  Act,  against any Losses,  joint or
several, incurred by or to which such indemnified party may become subject under
the Securities Act or otherwise, but only to the extent such Losses arise out of
or are based upon (i) any untrue  statement or alleged  untrue  statement of any
material fact  contained in any of the  Disclosure  Documents or the omission or
alleged  omission to state therein a material fact required to be stated therein
or  necessary  to make  the  statements  made  therein  not  misleading,  if the
statement  or  omission  was in reliance  upon and in  conformity  with  written
information  furnished to GCI by such indemnifying party specifically for use in
the preparation  thereof,  (ii) the delivery by such  indemnifying  party of any
prospectus after such time as GCI has advised such indemnifying party in writing
that the filing of a post-effective amendment or supplement thereto is required,
except the prospectus as so amended or  supplemented,  or after such time as the
obligation of GCI to keep the Registration  Statement  effective and current has
expired or (iii) any  violation by such  indemnifying  party of its  obligations
under Section 5(b) of this Agreement or any information  given or representation
made by such  indemnifying  party in  connection  with  the sale of the  Selling
Holder's Registrable Shares which is not contained in and not in conformity with
the  prospectus  (as amended or  supplemented  at the time of the giving of such
information or making of such  representation).  Each Selling Holder shall,  and
shall cause any underwriter  retained by it who  participates in the offering to
agree to, reimburse each such indemnified  party for all legal or other expenses
reasonably  incurred by such party in connection with investigating or defending
any such claim,  including,  subject to such indemnified party's compliance with
the  provisions of the last  sentence of  subsection  (c) of this Section 6, any
amounts paid in settlement of any litigation, commenced or threatened.

                           (c) Third Party Claims. Promptly after the receipt by
any party  hereto of notice of any  claim,  action,  suit or  proceeding  by any
person who is not a party to this Agreement (collectively, an "Action") which is
subject to indemnification  hereunder,  such party  ("Indemnified  Party") shall
give reasonable written notice to the 


                                                          REGISTRATION STATEMENT
                                                                     Page II-101
<PAGE>
party  from  whom  indemnification  is  claimed   ("Indemnifying   Party").  The
Indemnified  Party shall be entitled,  at the Indemnifying  Party's sole expense
and liability, to exercise full control of the defense, compromise or settlement
of any such Action unless the Indemnifying Party, within a reasonable time after
the giving of such notice by the Indemnified  Party,  shall (i) admit in writing
to the Indemnified Party, the Indemnifying  Party's liability to the Indemnified
Party for such  Action  under  the terms of this  Section  6,  (ii)  notify  the
Indemnified Party in writing of the Indemnifying Party's intention to assume the
defense  thereof and (iii) retain legal counsel  reasonably  satisfactory to the
Indemnified  Party to conduct the defense of such Action.  The Indemnified Party
and the Indemnifying  Party shall cooperate with the party assuming the defense,
compromise or settlement of any such Action in accordance herewith in any manner
that such party reasonably may request. If the Indemnifying Party so assumes the
defense of any such Action, the Indemnified Party shall have the right to employ
separate   counsel  and  to  participate  in  (but  not  control)  the  defense,
compromise,  or  settlement  thereof.  The fees and  expenses  of such  separate
counsel  shall  be  the  Indemnified  Party's  sole  expense,   unless  (i)  the
Indemnifying  Party has  agreed to pay such fees and  expenses,  (ii) any relief
other than the payment of money damages is sought against the Indemnified  Party
or (iii) the Indemnified Party shall have been advised by its counsel that there
may be one or more legal  defenses  available to it which are different  from or
additional to those available to the  Indemnifying  Party,  and in any such case
the  fees  and  expenses  of  such  separate  counsel  shall  be  borne  by  the
Indemnifying  Party.  No  Indemnifying  Party shall admit liability or settle or
compromise  any such Action in which any relief  other than the payment of money
damages is sought against any  Indemnified  Party unless the  Indemnified  Party
consents in writing to such compromise or settlement, which consent shall not be
unreasonably  withheld. No Indemnified Party shall settle or compromise any such
Action  for  which it is  entitled  to  indemnification  hereunder  without  the
Indemnifying Party's prior written consent,  unless the Indemnifying Party shall
have failed,  after  reasonable  notice  thereof,  to undertake  control of such
Action in the manner provided above in this Section 6.

                           (d) Contribution. If the indemnification provided for
in subsections (a) or (b) of this Section 6 is unavailable to or insufficient to
hold the  Indemnified  Party  harmless  under  subsections  (a) or (b)  above in
respect of any Losses referred to therein for any reason other than as specified
therein,  then the  Indemnifying  Party shall  contribute  to the amount paid or
payable by such Indemnified  Party as a result of such Losses in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party on the
one  hand and  such  Indemnified  Party  on the  other  in  connection  with the
statements  or omissions  which  resulted in such  Losses,  as well as any other
relevant  equitable  considerations.  The relative  fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged  omission to state a material fact
relates to  information  supplied by (or  omitted to be supplied  by) GCI or the
Selling Holder (or  underwriter) and the parties'  relative  intent,  knowledge,
access to  information  and  opportunity to correct or prevent such statement or
omission.  The amount paid or 


                                                          REGISTRATION STATEMENT
                                                                     Page II-102
<PAGE>
payable by an Indemnified  Party as a result of the Losses  referred to above in
this  subsection  (d)  shall be deemed to  include  any legal or other  expenses
reasonably  incurred by such Indemnified Party in connection with  investigating
or  defending  any  such  action  or  claim.  No  person  guilty  of  fraudulent
misrepresentation  (within the meaning of Section 11(f) of the  Securities  Act)
shall be  entitled  to  contribution  from any person who was not guilty of such
fraudulent misrepresentation.

                  7.       Miscellaneous.

                           (a) Notices. All notices, requests,  demands, waivers
and other communications  required or permitted to be given under this Agreement
shall be in  writing  and shall be deemed to have been duly  given if  delivered
personally or mailed, certified or registered mail with postage prepaid, or sent
by facsimile, as follows:

                               (i)           if to GCI at:

                                             General Communication, Inc.
                                             2550 Denali Street, Suite 1000
                                             Anchorage, Alaska 99503
                                             ATTN: Chief Financial Officer
                                             Facsimile: (907) 265-5676

                              (ii)           if to Sellers, at:

                                             c/o Prime II Management, L.P.
                                             3000 One American Center
                                             600 Congress Avenue, Suite 3000
                                             Austin, Texas 78701
                                             Attn: President
                                             Facsimile: (512) 476-4869

                                             With  a  copy   (which   will   not
                                             constitute     notice)    similarly
                                             addressed to the attention of:
                                             Rudolph Green

                                             and



                                                          REGISTRATION STATEMENT
                                                                     Page II-103
<PAGE>
                                             With a copy (which will not
                                             constitute notice) to:

                                             Edens Snodgrass Nichols & Breeland,
                                             P.C.
                                             2800 Franklin Plaza
                                             111 Congress Plaza
                                             Austin, TX 78701
                                             Attention:   Patrick  K.  Breeland,
                                             Esq.
                                             Telecopy: (512) 505-5911

                              (iii)          if  to  any   Holders   other  than
                                             Sellers, at the address provided to
                                             GCI  (and  if  none  provided,   to
                                             Sellers at the above address)

or to such  other  person or  address  as any party  shall  specify by notice in
writing to the other party.  All such notices,  requests,  demands,  waivers and
communications  shall be deemed to have been received on the date of delivery or
on the third business day after the mailing thereof, except that any notice of a
change of address shall be effective only upon actual receipt thereof.

                           (b) Entire Agreement.  This Agreement constitutes the
entire agreement  between the parties hereto and supersedes all prior agreements
and understandings, oral and written, between the parties hereto with respect to
the subject matter hereof.

                           (c) Binding  Effect;  Benefit.  This Agreement  shall
inure to the  benefit  of and be  binding  upon the  parties  hereto  and  their
respective  successors  and  assigns.  Nothing in this  Agreement,  expressed or
implied is  intended to confer on any person  other than the  parties  hereto or
their respective successors and assigns (including,  in the case of Sellers, any
successor or assign of Sellers as the holder of Registrable Shares), any rights,
remedies, obligations or liabilities under or by reason of this Agreement, other
than rights conferred upon indemnified persons under Section 6.

                           (d) Amendment and Modification. This Agreement may be
amended or modified only by an  instrument in writing  signed by or on behalf of
each party and any other  person then a Holder.  Any term or  provision  of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof.

                           (e) Section Headings.  The section headings contained
in this Agreement are inserted for reference  purposes only and shall not affect
the meaning or interpretation of this Agreement.

                           (f)  Counterparts.  This Agreement may be executed in
counterparts,  each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.


                                                          REGISTRATION STATEMENT
                                                                     Page II-104
<PAGE>
                           (g)  Applicable  Law.  This  Agreement  and the legal
relations  between the parties  hereto  shall be  governed by and  construed  in
accordance with the laws of the State of Alaska,  without regard to the conflict
of laws and rules thereof.

                  IN WITNESS  THEREOF,  the parties  hereto have  executed  this
Agreement as of the date first above written.

                                             GENERAL COMMUNICATION, INC.


                                             By /s/
                                               John M. Lowber, Senior Vice 
                                               President

                                             PRIME VENTURE I HOLDINGS, L.P.
                                             By: Its General Partners

                                             Prime Venture I, Inc.

                                             By: /s/
                                             Name:
                                             Title:

                                             and

                                             Prime II Management Group, Inc.

                                             By: /s/
                                             Name:
                                             Title:

                                             PRIME CABLE GROWTH PARTNERS, L.P.
                                             By: Its General Partners

                                             Prime Venture I, Inc.

                                             By: /s/
                                             Name:
                                             Title:

                                             and



                                                          REGISTRATION STATEMENT
                                                                     Page II-105
<PAGE>


                                             Prime Venture I Holdings, L.P.
                                             By: Its General Partners

                                             Prime Venture I, Inc.

                                             By: /s/
                                             Name:
                                             Title:


                                             and

                                             Prime II Management Group, Inc.


                                             By: /s/
                                             Name: 
                                             Title:

                                             PRIME CABLE LIMITED PARTNERSHIP
                                             By: Prime Cable, G.P., Inc.
                                             Its: General Partner


                                             By: /s/
                                             Name:
                                             Title:

                                             BANCBOSTON CAPITAL, INC.


                                             By: /s/
                                             Name:
                                             Title:

                                             FIRST CHICAGO INVESTMENT
                                             CORPORATION


                                             By: /s/
                                             Name:
                                             Title:


                                                          REGISTRATION STATEMENT
                                                                     Page II-106
<PAGE>
                                             MADISON DEARBORN PARTNERS


                                             By: /s/
                                             Name:
                                             Title:

                                             PRIME VENTURE II, L.P.
                                             By: Prime Investors, L.P.
                                             Its: General Partner

                                             By: Prime II Management, L.P.
                                             Its: General Partner

                                             By: Prime II Management, Inc.
                                             Its: General Partner


                                             By: /s/
                                             Name:
                                             Title:

                                             AUSTIN VENTURES, L.P.

                                             By: AV Partners, L.P.
                                             Its: General Partner


                                             By: /s/
                                             Name:
                                             Title:

                                             WILLIAM BLAIR VENTURE PARTNERS III
                                             LIMITED PARTNERSHIP

                                             By: William Blair Venture
                                                 Management Company
                                             Its: General Partner


                                             By: /s/
                                             Name:
                                             Title: General Partner


                                                          REGISTRATION STATEMENT
                                                                     Page II-107
<PAGE>


                                             CENTENNIAL FUND II, L.P.

                                             By: Centennial Holdings II, L.P.
                                             Its: General Partner


                                             By: /s/
                                             Name:
                                             Title: General Partner


                                             CENTENNIAL FUND III, L.P.

                                             By: Centennial Holdings III, L.P.
                                             Its: General Partner


                                             By: /s/
                                             Name:
                                             Title: General Partner

                                             CENTENNIAL BUSINESS DEVELOPMENT
                                             FUND LTD.

                                             By: Centennial Business Development
                                                 Company
                                             Its: General Partner


                                             By: /s/
                                             Name:
                                             Title: General Partner




                                                          REGISTRATION STATEMENT
                                                                     Page II-108
<PAGE>


                                    EXHIBIT C
                                Voting Agreement

                  THIS VOTING AGREEMENT  ("Agreement") is entered into effective
on the      day of                  ,  1996, by and between Prime II Management,
L.P.  ("Prime"),  as the  designated  agent  for the  parties  named  on Annex 1
attached  hereto  (collectively,   "Prime  Sellers"),   MCI   Telecommunications
Corporation,  Ronald A. Duncan,  Robert M. Walp,  and TCI GCI, Inc.  (Prime,  as
designated  agent  for the  Prime  Sellers,  "Duncan,"  "Walp,"  and "TCI  GCI,"
respectively, or individually, "Party" and collectively, "Parties"), all of whom
are shareholders of General Communication,  Inc., an Alaska corporation ("GCI"),
as identified in this Agreement.

                  WHEREAS, the Parties are as of the date of this Agreement, the
owners of the amounts of GCI's Class A and Class B common  stock as set forth in
this Agreement;

                  WHEREAS,   the  Parties  desire  to  combine  their  votes  as
shareholders  of GCI in the  election  of  certain  positions  of the  Board  of
Directors  ("Board") of GCI and  specifically  to vote on certain  issues as set
forth in this Agreement;

                  WHEREAS,  the Parties desire to establish  their mutual rights
and  obligations  in regard to the Board and those certain issues to come before
the shareholders or before the Board;

                  NOW,  THEREFORE,  in consideration of the mutual covenants and
conditions contained in this Agreement, the Parties agree as follows:

                  Section 1.  Shares.  The  shares of GCI's  Class A and Class B
common stock subject to this Agreement will consist of those shares held by each
Party as set forth in this Section 1 and any  additional  shares of GCI's voting
stock acquired in any manner by any one or more of the Parties ("Shares"):

                           (1)         Prime   -                        (      )
                                       shares of Class A common stock;

                           (2)         MCI - 8,251,509  Shares of Class A common
                                       stock  and  1,275,791  Shares  of Class B
                                       common stock, which total to an aggregate
                                       of 21,009,419 votes for MCI;

                           (3)         Duncan - 852,775 Shares of Class A common
                                       stock  and  233,708  Shares  of  Class  B
                                       common stock, which total to an aggregate
                                       of 3,189,855 votes for Duncan;


                                                          REGISTRATION STATEMENT
                                                                     Page II-109
<PAGE>
                           (4)         Walp -  534,616  Shares of Class A common
                                       stock  and  301,049  Shares  of  Class  B
                                       common stock, which total to an aggregate
                                       of 3,545,106 votes for Walp; and

                           (5)         TCI  GCI -  590,043  Shares  of  Class  B
                                       common   stock,   which   totals   to  an
                                       aggregate of 5,900,430 votes for TCI GCI.

                  Section 2. Voting. (a) All of the Shares will, during the term
of this Agreement, be voted as one block in the following matters:

                           (1)         For so long as the full membership on the
                                       Board is at least eight,  the election to
                                       the Board of individuals recommended by a
                                       Party  ("Nominees"),  with the allocation
                                       of  such  recommendations  to be  in  the
                                       following  amounts  and by the  following
                                       identified Parties:

                                       (A)       For  recommendations  from MCI,
                                                 two Nominees;

                                       (B)       For recommendations from Duncan
                                                 and  Walp,   one  Nominee  from
                                                 each;

                                       (C)       For  recommendations  from  TCI
                                                 GCI, two Nominees; and

                                       (D)       For recommendations from Prime,
                                                 two (2)  nominees,  for so long
                                                 as (i) the Prime  Sellers  (and
                                                 their distributees who agree in
                                                 writing  to  be  bound  by  the
                                                 terms   of   this    Agreement)
                                                 collectively  own at least  ten
                                                 percent   of  the   issued  and
                                                 then-outstanding    shares   of
                                                 GCI's Class A common stock, and
                                                 (ii)  that  certain  Management
                                                 Agreement between Prime and GCI
                                                 dated  of  even  date  herewith
                                                 ("Prime Management  Agreement")
                                                 is in full force and effect. If
                                                 either of these  conditions are
                                                 not satisfied, then Prime shall
                                                 only be entitled  to  recommend
                                                 one  Nominee.   If  neither  of
                                                 these conditions are met, Prime
                                                 shall   not  be   entitled   to
                                                 recommend  any  Nominee at that
                                                 time;

                           (2)         To the extent possible, to cause the full
                                       membership  of the Board to be maintained
                                       at not less than eight members;

                           (3)         Other   matters  to  which  the   Parties
                                       unanimously agree.


                                                          REGISTRATION STATEMENT
                                                                     Page II-110
<PAGE>
                              (b) The Parties  will abide by the  classification
by the Board of a Nominee in accordance  with the provisions for  classification
of the Board as set forth in Article V(b) of GCI's Articles of Incorporation and
Section 2(b) of GCI's Article IV of Bylaws which  classification  was, as of the
date of this Agreement, for Nominees allocated to MCI as follows: one in Class I
and one in Class III,  and for Nominees  allocated  to Prime as follows:  one in
Class II and one in Class III, and for Nominees allocated to TCI GCI as follows:
one in Class II and one in Class III.

                              (c) The  Parties  understand  that to  insure  the
election of their  allocated  Nominees,  the Shares must  constitute  sufficient
voting power to cause those  elections  and that as new shares are issued by GCI
through the exercise of warrants and options,  acquisitions by employee  benefit
plans,  or otherwise,  the number of  outstanding  shares of voting common stock
will  increase,  making  the  percentage  which  the  Shares  represent  of  the
outstanding shares decrease.

                              (d)  The  Parties  will  take  such  action  as is
necessary to cause the election to the Board of each Party's Nominee(s).

                  Section  3.  Manner of Voting.  Votes,  for  purposes  of this
Section 3, will be as determined by written  ballot upon each matter to be voted
upon.  Should  such a matter  require  shareholder  action,  e.g.,  election  of
Nominees  to the Board or should  the Board  choose to  present  the  matter for
shareholder consent, approval or ratification, such balloting must take place so
that the results are received by GCI at its principal executive offices not less
than 120 calendar days in advance of the date of GCI's proxy statement  released
to security  holders in connection  with the previous  year's annual  meeting of
security holders.

                  Section 4. Limitation on Voting. Except as set forth in (a) of
Section 2 of this Agreement,  the Agreement will not extend to voting upon other
questions  and matters on which  shareholders  will have the right to vote under
GCI's Articles of Incorporation, GCI's Bylaws of the Company, or the laws of the
State of Alaska.

                  Section 5. Term of Agreement.  (a) The term of this  Agreement
will be  through  the  completion  of the annual  meeting of GCI's  shareholders
taking  place in June,  2001 or until there is only one Party to the  Agreement,
whichever  occurs  first;  provided that the Parties may extend the term of this
Agreement only upon unanimous vote and written amendment to this Agreement.

                              (b)  Except  as  provided  in (a)  and (d) of this
Section 5, a Party  (other than Prime) will be subject to this  Agreement  until
the Party  disposes  of more than 25% of the votes  represented  by the  Party's
holdings of common  stock which  equates to the  following  (adjusted  for stock
splits) for each party:


                                                          REGISTRATION STATEMENT
                                                                     Page II-111
<PAGE>


                  1.       MCI -  5,252,355 votes;

                  2.       Duncan - 797,464 votes;

                  3.       Walp - 886,277 votes; and

                  4.       TCI GCI - 1,475,108 votes.

                              (c) Should  one party  dispose of an amount of its
portion of the Shares in excess of the limit as set forth in (b) of this Section
5, each other Party will have the right to withdraw and  terminate  that Party's
rights and  obligations  under this  Agreement by giving  written  notice to the
other Parties.

                              (d)  Anything to the  contrary  in this  Agreement
notwithstanding  each Party shall remain a Party to this  Agreement with respect
to its obligation to vote (a) for Prime's Nominee(s) pursuant to Section 2(a)(1)
above,  and (b) to  maintain  at least an eight (8)  member  Board  pursuant  to
Section  2(a)(2)  above only,  for so long as either (i) the Prime  Sellers (and
their  distributees  who  agree in  writing  to be  bound  by the  terms of this
Agreement)  collectively  own at  least  ten  percent  (10%) of the  issued  and
then-outstanding  shares  of  GCI's  Class A  common  stock  or (ii)  the  Prime
Management  Agreement is in effect.  Upon each  request,  Prime shall,  within a
reasonable  period of time after delivery by GCI to Prime of GCI's  shareholders
list  showing  the  number  of  shares of GCI  common  stock  owned by each such
shareholder,  provide GCI with its certificate, in form and substance reasonably
satisfactory  to GCI,  confirming  the Prime  Sellers'  aggregate,  then-current
percentage ownership of GCI Class A common stock.

                  Section 6. Binding Effect.  The Parties will,  during the term
of  this  Agreement,  be  fully  subject  to its  provisions.  There  will be no
prohibition  against  transfer or other  assignment of Shares under the terms of
this Agreement.  Should a Party transfer or otherwise assign Shares, and the new
holder of those  Shares  will not have any rights  under,  nor be subject to the
terms of, this  Agreement,  except that any  assignee  which is an  affiliate or
subsidiary  entity of a Party shall be bound by, and have the  benefits of, this
Agreement;  provided,  however,  that  anything to the contrary in the foregoing
notwithstanding,  any distributee of a Prime Seller that agrees in writing to be
bound by the terms of this  Agreement  will have rights  under and be subject to
the terms of this Agreement.

                  Section  7.  GCI's  Agreement.  GCI  agrees  (i) to submit the
Nominees  selected  pursuant  to  Section  2(a)  above  in its  proxy  materials
delivered  to  GCI's  shareholders  in  connection  with  each  election  of GCI
directors;  and (ii) not to take any action  inconsistent with the agreements of
the Parties set forth herein.


                                                          REGISTRATION STATEMENT
                                                                     Page II-112
<PAGE>
                  Section 8. Notices.  Notices required or otherwise given under
this Agreement will be given by hand delivery or certified mail to the following
addresses, unless otherwise changed by a Party with notice to the other Parties:

                  To Prime:       Prime II Management, L.P.
                                  600 Congress Avenue, Suite 3000
                                  Austin, Texas 78701
                                  Attn: President

                                  With  copies   (which  shall  not   constitute
                                  notice) to:

                                  Edens Snodgrass Nichols & Breeland, P.C.
                                  2800 Franklin Plaza
                                  111 Congress Avenue
                                  Austin, Texas 78701
                                  ATTN: Patrick K. Breeland

                  To MCI:         MCI Telecommunications Corporation
                                  1133 19th Street, N.W.
                                  Washington, D.C. 20035
                                  ATTN: Douglas Maine, Chief Financial Officer

                  To Duncan:      Ronald A. Duncan
                                  President and Chief Executive Officer
                                  General Communication, Inc.
                                  2550 Denali Street, Suite 1000
                                  Anchorage, Alaska 99503

                  To Walp:        Robert A. Walp
                                  Vice Chairman
                                  General Communication, Inc.
                                  2550 Denali Street, Suite 1000
                                  Anchorage, Alaska 99503

                  To TCI GCI :    Larry E. Romrell, President
                                  TCI GCI, Inc.
                                  5619 DTC Parkway
                                  Englewood, Colorado 80111

                  Section 9. Performance. The Parties agree that damages are not
an adequate remedy for a breach of the terms of this  Agreement.  Should a Party
be in breach of a term of this  Agreement,  one or more of the other Parties may
seek the specific  performance  or  injunction  of that Party under the terms of
this  Agreement  by  bringing  an  appropriate  action in a court in  Anchorage,
Alaska.


                                                          REGISTRATION STATEMENT
                                                                     Page II-113
<PAGE>
                  Section 10. Governing Law. The terms of this Agreement will be
governed by and construed in accordance with the laws of the State of Alaska.

                  Section 11. Amendments.  This Agreement constitutes the entire
Agreement  between the Parties,  and any  amendment of it must be in writing and
approved by all Parties.

                  Section 12.  Group.  Prior to a Party filing a Schedule 13D or
an amendment to such a schedule pursuant to the Securities Exchange Act of 1934,
the Party will provide a written notice to each of the other Parties within five
days after the triggering  event under that schedule and at least two days prior
to the filing of that  schedule  or  amendment,  as the case may be, and further
provide to any other Party any information or documentation reasonably requested
by that Party in this regard.

                  Section 13.  Termination  of Prior  Agreement.  This Agreement
supersedes  and replaces in its entirety  that certain  Voting  Agreement  dated
effective as of March 31, 1993, by and between MCI, Duncan, Walp and TCI GCI, as
successor in interest to WestMarc Communications, Inc.

                  Section 14. Severability. If a court of competent jurisdiction
finds any portion of this Agreement  invalid or not enforceable,  this Agreement
shall be automatically reformed to carry out the intent of the Parties as nearly
as  possible  without  regard to the  portion  so  invalidated.  If this  entire
Agreement  is  determined  to be limited  in  duration  by a court of  competent
jurisdiction,  the Parties  agree to enter into a new  Agreement  which  carries
forward the intent of the Parties upon such termination.

                  IN  WITNESS  WHEREOF,  the  Parties  set  their  hands to this
Agreement, effective on the first date above written.

                                      PRIME II MANAGEMENT, L.P.
                                      By Prime II Management, Inc.
                                      Its General Partner

                                      By /s/
                                      Name:
                                      Its:


                                      MCI TELECOMMUNICATIONS
                                      CORPORATION

                                      By /s/
                                      Name:
                                      Its:


                                                          REGISTRATION STATEMENT
                                                                     Page II-114
<PAGE>

                                      /s/   
                                      RONALD A. DUNCAN

                                      /s/
                                      ROBERT M. WALP

                                      TCI GCI, INC.

                                      By /s/
                                      Name:
                                      Its:

                                      GENERAL COMMUNICATION, INC.


                                      By /s/
                                      Name:
                                      Its:


                                                          REGISTRATION STATEMENT
                                                                     Page II-115
<PAGE>


                                    EXHIBIT D
                              Management Agreement


                  THIS  MANAGEMENT  AGREEMENT  (the  "Agreement")  is  made  and
entered into as of                               , 1996, by and between Prime II
Management,   L.P.,  a  Delaware  limited  partnership  ("Prime"),  and  General
Communication, Inc., an Alaska corporation ("GCI").

                                    RECITALS

                  WHEREAS,  GCI has,  effective on the date hereof,  consummated
the  acquisition  of the  ownership  interests  in Prime  Cable of Alaska,  L.P.
("Company"),  which Company operates certain cable television  systems servicing
the  Municipality  of Anchorage and its  environs,  Eagle River,  Chugiak,  Fort
Richardson,  Elmendorf Air Force Base, the City of Bethel and its environs,  and
the City of Kenai and the Kenai  Peninsula  Borough,  all in the State of Alaska
(the "Alaska System"); and

                  WHEREAS,  Prime is experienced in the operation and management
of cable television systems such as the Alaska System; and

                  WHEREAS,  GCI  desires  to  retain  the  services  of Prime in
connection  with the  management  and  operation  of the Alaska  System  and, if
acquired,  the Alaska cable television  businesses and systems  currently owned,
directly  or  indirectly,  by (i) Jack  Kent  Cooke  Incorporated,  (ii)  Alaska
Cablevision,  Inc.,  (iii)  McCaw/Rock  Homer Cable  System and (iv)  McCaw/Rock
Seward Cable System (collectively, the "Systems");

                  NOW, THEREFORE,  for and in consideration of the foregoing and
the  mutual  covenants  as herein set  forth,  and for other  good and  valuable
consideration,  the receipt and sufficiency of which are hereby  acknowledged by
the execution and delivery hereof, the parties hereto agree as follows:

                                    AGREEMENT

                  Section 1.  Engagement.  GCI hereby  engages Prime to oversee,
manage and supervise the Systems'  development  and operation,  and Prime hereby
accepts such engagement,  subject to and upon the terms and conditions set forth
herein.

                  Section 2.  Management  Standards.  Prime shall use reasonable
commercial  efforts in managing,  promoting and  supervising  the Systems and in
supervising  any  persons or  entities  employed  in  connection  therewith.  In
performing its  obligations  hereunder,  Prime shall be held to that standard of
care as would be exercised by an ordinary  prudent  multiple systems operator of
cable  television  systems  operating  such  systems on its own behalf and under
similar circumstances.


                                                          REGISTRATION STATEMENT
                                                                     Page II-116
<PAGE>
                  Section 3. Term.  The term of this  Agreement  shall  commence
upon the date  hereof,  and shall  continue  in effect  for a period of nine (9)
years hereafter, unless earlier terminated as provided in Section 9 hereof.

                  Section 4. Duties and Authority of Prime. Prime shall provide,
or cause the employees of the Systems to provide, the following services for the
account  of,  and on GCI's  behalf,  and  shall  have the  following  power  and
authority with respect to the operation and management of the Systems during the
term of this Agreement:

                           (a) Engineering services for the Systems;

                           (b) Coordination and supervision of all phases of the
                  construction and expansion of the Systems,  if any, including,
                  by way of  illustration  and not in limitation,  the selection
                  and appointment of all subcontractors, equipment suppliers and
                  vendors;

                           (c)  Purchasing,  out of the Systems' funds available
                  therefore,  certain materials and supplies,  if any, necessary
                  to operate the Systems;

                           (d)  Subject  to the  provisions  of  all  applicable
                  certificates of public  convenience and necessity,  franchises
                  or ordinances or other binding  contracts or legislation,  the
                  selection  and pricing of all  programming  and services to be
                  provided to the customers of the Systems with authority hereby
                  conferred on Prime to enter into programming  contracts in its
                  name, or otherwise, on behalf of the Company;

                           (e)    Assistance    with   the    formulation    and
                  implementation   of  all  advertising,   marketing  and  sales
                  programs;

                           (f) Assistance with budgeting;

                           (g)  Maintenance  of  all  accounting,   bookkeeping,
                  billing,  collections and other financial  systems and records
                  relating  to the Systems and the  preparation  of  appropriate
                  periodic  financial  reports  and  other  information  for the
                  Systems and those  required to be  furnished to the lenders to
                  the Systems;

                           (h)  Engaging   engineers,   consultants   and  other
                  qualified professionals, as required, for the Systems;

                           (i) Preparing  and filing,  or causing to be prepared
                  and filed, as necessary,  periodic reports to governmental and
                  regulatory agencies;



                                                          REGISTRATION STATEMENT
                                                                     Page II-117
<PAGE>
                           (j) Maintenance of ancillary  records relative to the
                  Systems' operation;

                           (k)   Preparation   of  business   plans,   financial
                  projections  for the  Systems  and the  evaluation  of capital
                  expenditures proposals; and

                           (l)  Make  available,  at  the  usual  and  customary
                  allocated  costs to Company in accordance with past practices,
                  to GCI and  Company  those  Other  Required  Assets  listed on
                  Schedule  15 to the  Securities  Purchase  and Sale  Agreement
                  dated May 2,  1996,  between  GCI and the listed  Sellers,  as
                  items B, C, D, F and G, as necessary to operate the Systems.

                  Nothing in this  Agreement  shall be construed to diminish the
rights and  authority  of the  entities  owning the  Systems to retain  ultimate
control  over the  operation  of any and all Federal  Communications  Commission
licensed  facilities  used in  conjunction  with the  operation  of the Systems.
During the term of this  Agreement,  GCI and Prime  anticipate  that Prime shall
fully  coordinate  and  cooperate  with  GCI  during  a  transistioning  of  the
above-listed  responsibilities from Prime to GCI, upon mutually convenient times
and methodologies;  provided, that Prime shall at all times while this Agreement
is in effect make all decisions regarding the programming for the Systems.

                  Section 5. Systems Operating  Accounts.  Prime shall establish
and maintain  with one or more banks  reasonably  acceptable  to GCI one or more
checking accounts  ("Systems  Operating  Accounts") for the deposit of all funds
collected  by the  Systems.  Prime  shall have the right and  authority  to make
deposits to and  withdrawals  from the Systems  Operating  Accounts  and to make
payment therefrom for the discharge of Prime's responsibilities and duties under
this  Agreement,  including  the  regular  recurring  operating  expenses of the
Systems,  and to make payment to Prime of its fees earned under this  Agreement.
In no event shall Prime be responsible for the payment from its own funds of any
sums pursuant to this Agreement or otherwise in connection  with the performance
of its services hereunder. Prime may disburse or have disbursed from the Systems
Operating Accounts the regular recurring  operating expenses of the Systems,  as
well as  extraordinary  expenses,  including by way of  illustration  and not in
limitation,   (i)   salaries,    withholding   taxes,   unemployment   insurance
contributions  and other similar fees,  expenses and taxes relating to employees
of Prime or of the Systems engaged in the  construction,  expansion,  management
and  operation  of  the  Systems,  (ii)  expenses  (including  fees  charged  by
professionals)  incurred  in the  collection  of revenue or in any other  manner
connected  with the  construction,  operation,  maintenance  and  repair  of the
Systems,  (iii) costs of construction,  operation and maintenance of the Systems
and the components thereof, and (iv) costs of all materials,  equipment,  tools,
supplies and services necessary for proper operation,  maintenance and repair of
the Systems.


                                                          REGISTRATION STATEMENT
                                                                     Page II-118
<PAGE>
                  Section 6. Management Fee. For as long as this Agreement is in
effect,  GCI shall pay to Prime a management  fee (the  "Management  Fee") on an
annualized basis in the following amounts:

                           Year One                  $1,000,000.00
                           Year Two                  $  750,000.00
                           Thereafter                $  500,000.00

Such Management Fee shall be paid in equal monthly  installments on the last day
of each month.

                  Any portion of the Management Fee which shall be past due as a
result of the  operation  of Section 7.7 of that  certain  Amended and  Restated
Company Loan Agreement dated March 7, 1996, as amended from time to time,  among
Company,  the banks named therein (the "PCOA Banks"),  Toronto Dominion (Texas),
Inc. ("TD Bank"),  Credit  Lyonnais  Cayman Island Branch,  The Chase  Manhattan
Bank,  N.A. and  NationsBank of Texas,  N.A., as managing  agents (the "Managing
Agents"),  and TD Bank, as administrative  agent for the Managing Agents and the
PCOA Banks (the  "Administrative  Agent")  whereby Prime has agreed to defer its
right to receive a portion of the payments due  hereunder,  or otherwise,  shall
bear  interest  at a rate per annum  equal to  seventeen  and  one-half  percent
(17.5%) until paid.  Prime may deduct the  Management Fee and such other amounts
to  which  it may be  entitled  hereunder  from  funds  on hand  in the  Systems
Operating Accounts.  The Management Fee described in this Section is intended to
be a net fee  payable  to Prime and any  costs,  expenses,  salaries,  insurance
premiums,  fees  of  professionals,  utilities  and  other  expenses  whatsoever
incurred by Prime shall be treated as  operating  expenses of the Systems  which
Prime may  deduct,  on a monthly  basis,  from the Systems  Operating  Accounts,
including,  without  limitation,  travel and entertainment  expenses  reasonably
incurred by Prime in connection  with trips by Prime  employees on visits to and
from the  Systems.  It is not  anticipated  that such  travel and  entertainment
expenses  shall  exceed  Two  Hundred  Thousand  Dollars   ($200,000.00)  on  an
annualized basis. The foregoing notwithstanding,  Prime shall only be reimbursed
for  administrative  salaries of Prime employees who in the proper  operation of
any of the  Systems  are  required to fill,  on a  temporary  basis,  a position
normally  held by an  employee  of one of the  Systems  who has  resigned,  been
terminated,  died, become disabled or taken a vacation or leave of absence,  and
any such reimbursement  shall be at the lower of (i) Prime's actual cost or (ii)
the  cost of  obtaining  comparable  administrative  services  from  independent
parties in the same geographic location.  All rebates,  discounts or commissions
collected  by Prime or  credited to Prime's use  relating to the  purchasing  of
supplies or the  rendering of services for the Systems  shall be credited to the
Systems Operating Accounts.

                  Section 7. Indemnification by Prime. Prime shall indemnify the
Company and GCI and such parties'  officers,  directors and controlling  persons
and hold them harmless from any and all claims, damages, liabilities,  costs and
expenses  


                                                          REGISTRATION STATEMENT
                                                                     Page II-119
<PAGE>
(including reasonable attorneys' fees and court costs) incurred by reason of the
performance  of  Prime's  duties  hereunder,  to the  extent  that such  claims,
damages,  liabilities,  costs and  expenses are due to the proven  fraud,  gross
negligence,  willful  misconduct  of, or violation  of this  Agreement by Prime,
provided that, such indemnification shall extend only to actual claims, damages,
liabilities,  costs and  expense and shall not extend in the case of the Company
or GCI or their  officers,  directors  and  controlling  persons,  to  losses or
damages constituting diminution in value of any investment in GCI, the System or
the Company.

                  Section 8.  Indemnification by GCI. GCI shall indemnify Prime,
and its partners and their  respective  officers,  directors,  employees (to the
extent  that such  officers  and  employees  have been  selected  by Prime  with
reasonable  care and have been subject to the reasonable  supervision of Prime),
owners  and  control  persons   (individually,   an   "Indemnitee")   and  their
representatives  and  hold  them  harmless  from  any and all  claims,  damages,
liabilities,  costs and expenses (including reasonable attorneys',  accountants'
and other  experts'  fees and court costs) which they may incur by reason of the
performance  of Prime's duties  hereunder if the Indemnitee  acted in good faith
and in a manner it reasonably believed to be in the Systems' best interests, and
with respect to any criminal proceeding,  had no reasonable cause to believe its
conduct was unlawful, except where such claims, damages, liabilities,  costs and
expenses are due to the proven fraud,  gross negligence or willful misconduct of
such Indemnitee.

                  Section 9. Termination. This Agreement shall terminate:

                                        (i) with respect to any cable television
system owned by the Company prior to the term specified in Section 3 hereof upon
the termination or revocation of the Company's cable  television  certificate of
public convenience and necessity or franchise for such cable television system;

                                        (ii)   upon   the   sale   of   all   or
substantially  all of the assets of the Systems or the sale of all of the equity
interests of the owner of the Systems;

                                        (iii) upon  Prime's  material  breach of
this Agreement and failure to cure same or commence cure within thirty (30) days
after Prime's receipt of notice from GCI;

                                        (iv) upon GCI's material  breach of this
Agreement and failure to cure same or commence  cure (if curable)  within thirty
(30) days after GCI's receipt of notice from Prime; or

                                        (v) after the  second  anniversary  from
the date of this Agreement, at the option of either Prime or GCI.


                                                          REGISTRATION STATEMENT
                                                                     Page II-120
<PAGE>
                  If either  GCI or Prime  shall  voluntarily  or  involuntarily
enter into a bankruptcy or other insolvency  proceeding or if either party files
any  petition  or answer  seeking  for itself any  reorganization,  arrangement,
composition,  readjustment,  liquidation or similar relief from creditors  under
any present or future statute, law, or regulation of any jurisdiction, or should
either  party  petition  or apply to any  tribunal  for the  appointment  of any
receiver  or any  trustee  for it or for  all  or any  substantial  part  of its
property,  or if there is commenced  against  either  party any such  proceeding
which shall remain undischarged for a period of 60 days or more, or either party
shall seek,  approve,  consent to or acquiesce in any such  proceeding or in the
appointment  of any  trustee,  receiver,  liquidator  or  fiscal  agent  for the
respective  party or for all or any substantial part of such party's property or
should any event occur  requiring the dissolution or liquidation of either party
or should any judgment be entered  requiring such dissolution or liquidation and
not be set aside or stayed  within  thirty  (30) days  after the entry  thereof,
then,  in any such event,  the other party may terminate  this  Agreement at its
sole option and  discretion by giving the other party at least thirty (30) days'
written notice of such termination, which notice must be given within sixty (60)
days after the date such  terminating  party  receives  notice of the occurrence
giving rise to the option to terminate.  Upon  termination of this Agreement (i)
all records in the possession of Prime relating to the maintenance and operation
of the Systems  together with all supplies and other items of property  owned by
the Systems and in Prime's  possession  shall be delivered to GCI within  thirty
(30)  days of such  written  termination  notice,  and  (ii)  Prime's  right  to
compensation shall cease as of the date of termination,  provided that Section 8
hereof  providing  indemnification  to Prime shall  remain in effect,  and Prime
shall be entitled to be fully  compensated  for  services  rendered and expenses
incurred prior to the date of termination.

                  Section 10.          Miscellaneous Provisions.

                  (a)  Assignment.  Prime  shall be  entitled  to (i)  assign as
collateral  its right to receive  compensation  hereunder,  and (ii)  assign its
rights  and  obligations  hereunder  to any  partnership  of which  Prime is the
general  partner  and  owns at least  twenty-five  percent  (25%) of the  equity
ownership  thereof but may not  otherwise  assign this  Agreement  and its other
rights,  duties and  obligations  hereunder  to any person  without  GCI's prior
written consent. GCI may not assign any of its rights and obligations under this
Agreement to any person without Prime's prior written  consent;  except that GCI
may assign its rights and  obligations  under this  Agreement to an affiliate of
GCI provided that GCI shall remain  primarily liable at all times for all of its
obligations hereunder irrespective of any such assignment.

                  (b) Successors  Bound.  Subject to the provisions of paragraph
10(a) immediately  above, this Agreement shall be binding upon and insure to the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns.


                                                          REGISTRATION STATEMENT
                                                                     Page II-121
<PAGE>
                  (c) Section  Headings.  The section headings in this Agreement
are for reference  purposes only and shall not affect the interpretation of this
Agreement.

                  (d) Entire  Agreement.  This  Agreement  sets forth the entire
understanding  of the  parties  and  supersedes  any and all  prior  agreements,
memoranda,  arrangements  and  understandings  relating  to the  subject  matter
hereof.  No  representation,  warranty,  promise,  inducement  or  statement  of
intention  with respect to the subject  matter hereof has been made by any party
which is not contained in this Agreement,  and no party shall be bound by, or be
liable for,  any alleged  representation,  promise,  inducement  or statement of
intention not contained herein.

                  (e)   Counterparts.   This   Agreement   may  be  executed  in
counterparts,  each of which shall be deemed an original, but all of which shall
constitute the same instrument.

                  (f)  Governing  Law.  This  Agreement  shall be  construed  in
accordance with and governed by the internal laws, and not the law of conflicts,
of the State of Alaska. Any legal proceedings concerning this Agreement shall be
brought and  maintained  in the Third  Judicial  District,  State of Alaska,  at
Anchorage.

                  (g)  Severability.  If any provision of this  Agreement or the
application  thereof to any person,  entity or circumstance shall for any reason
or to any extent be invalid or  unenforceable,  the remainder of this  Agreement
and  the   application  of  such   provision  to  other  persons,   entities  or
circumstances shall not be affected thereby,  but, rather,  shall be enforced to
the extent  consistent  with the intent of the parties  hereto and  permitted by
law.  Furthermore,  in  lieu  of  such  an  illegal,  invalid  or  unenforceable
provision,  there  shall  be added  automatically  as part of this  Agreement  a
provision  as  similar  in  terms  to such  illegal,  invalid  or  unenforceable
provision as may be possible and be legal, valid or enforceable.

                  (h)  Attorneys'  Fees.  If  any  action,  including,   without
limitation,  arbitration,  should  arise  among the  parties  hereto  under this
Agreement,  the  prevailing  party in such action  shall be  reimbursed  for all
reasonable   expenses  incurred  in  connection  with  such  action,   including
reasonable attorneys', accountants', and other experts' fees.

                  (i) Pronouns and Number. Whenever the context so requires, the
masculine shall include the feminine and neuter,  and the singular shall include
the plural, and conversely.

                  (j) Further  Assurances.  The parties  hereto agree to execute
any and all such further agreements,  instruments or documents,  and to take any
and all such  further  action,  as may be  necessary  or desirable to carry into
effect the purpose and intent of this Agreement.


                                                          REGISTRATION STATEMENT
                                                                     Page II-122
<PAGE>
                  (k) Amendments;  Waivers.  This Agreement cannot be changed or
terminated  orally and no waiver of  compliance  with any provision or condition
hereof and no consent provided for herein shall be effective unless evidenced by
an  instrument in writing duly executed by the party hereto sought to be charged
with such waiver or consent.  No waiver of any term or provision hereof shall be
construed  as a further or  continuing  waiver of such term or  provision or any
other term or provision.

                  IN WITNESS HEREOF,  the parties have set their hands effective
as of the date first written
above.

                                          PRIME II MANAGEMENT, L.P.
                                          By Prime II Management, Inc.
                                          Its General Partner



                                          By: /s/
                                          Name:
                                          Its: Vice President

                                          GENERAL COMMUNICATION, INC.



                                          By: /s/
                                          John M. Lowber,
                                          Senior Vice President


                                                          REGISTRATION STATEMENT
                                                                     Page II-123
<PAGE>


                                    EXHIBIT E
                              Non-Compete Agreement





                                                , 1996



Gentlemen:

                  Reference is made to that certain Securities Purchase and Sale
Agreement  dated as of April        ,  1996,  (the  "Agreement")  between  Prime
Venture I  Holdings,  L.P.  ("Holdings"),  Prime  Cable  Growth  Partners,  L.P.
("Growth"),  Prime Cable Limited  Partnership  ("Prime L.P."), the other sellers
named therein  ("Sellers"),  Prime II  Management,  L.P.  ("PIIM"),  and General
Communication, Inc. ("Buyer"). This letter is being delivered to you pursuant to
Section 16 of the Agreement.  Capitalized  terms used herein,  unless  otherwise
defined herein, shall have the meanings ascribed to them in the Agreement.

                  Growth, Holdings, PCLP and PIIM agree that for a period of two
(2) years after the  termination of that Management  Agreement  between PIIM and
GCI of even date it will not, and PIIM will cause its key  employees for so long
as such  employees are employed by PIIM, not to,  directly or  indirectly,  own,
manage, operate,  control,  participate or become interested in, or be connected
with (as an employee,  consultant,  partner, officer,  director,  shareholder or
investor,  other than through  ownership of up to a  twenty-five  percent  (25%)
equity interest in any person or entity), any business competing with Company in
the provision of cable television services within the Service Areas.

                  If the terms or provisions of this  Non-Compete  Agreement are
breached or threatened to be breached,  PIIM,  Growth,  Holdings and Prime L.P.,
each for and on  behalf  of  itself  and its  Affiliates,  employees,  officers,
directors  and  shareholders,  expressly  consent that, in addition to any other
remedy Buyer may have,  Buyer may apply to any court of  competent  jurisdiction
for  injunctive  relief in order to prevent  the  continuation  of any  existing
breach or the occurrence of any threatened breach.

                  If any provision of this  Non-Compete  Agreement is determined
to be  unreasonable or  unenforceable,  such provision and the remainder of this
Non-Compete  Agreement  shall  not be  declared  invalid,  but  rather  shall be
modified and enforced to the maximum extent permitted by law.


                                                          REGISTRATION STATEMENT
                                                                     Page II-124
<PAGE>

                  Buyer may not assign any of its rights under this Agreement to
any person without the prior written consent of the parties hereto;  except that
Buyer may assign its rights under this Agreement to an affiliate of Buyer.

Very truly yours,

PRIME CABLE GROWTH PARTNERS, L.P.
By Its General Partners

Prime Venture I, Inc.

By: /s/
Name:
Its:

and

Prime Venture I Holdings, L.P.
By: Its General Partners

Prime Venture I, Inc.

By: /s/
Name:
Its:

and

Prime II Management Group, Inc.

By: /s/
Name:
Its:


                                                          REGISTRATION STATEMENT
                                                                     Page II-125
<PAGE>


PRIME VENTURE I HOLDINGS. L.P.
By Its General Partners

Prime Venture I Holdings, L.P.

By: /s/
Name:
Its:

and

Prime II Management Group, Inc.

By: /s/
Name:
Its:


PRIME CABLE LIMITED PARTNERSHIP
By Prime Cable G.P., Inc.
Its General Partner

By: /s/
Name:
Its:


PRIME II MANAGEMENT, L.P.
By Prime II Management, Inc.
Its General Partner

By: /s/
Name:
Its:

ACCEPTED AND AGREED:

General Communication, Inc.

By: /s/
Name:
Its:


                                                          REGISTRATION STATEMENT
                                                                     Page II-126
<PAGE>



                                                       EXHIBIT 2.1, Schedule 1A



<TABLE>
<CAPTION>
                                         Sellers'
                  Total                 Indemnity              Non-Indemnity
Sellers          Shares                    Shares                     Shares
-------          ------                    ------                     ------
<S>          <C>                        <C>                       <C>  
Holdings        494,905                    41,986                    452,919
Growth        2,721,974                   230,926                  2,491,048
PCLP          2,227,071                   188,938                  2,038,133
BBC             332,323                    74,530                    257,793
FCIC            301,407                    67,597                    233,810
MDP              30,916                     6,934                     23,982
ACI                 ---                       ---                        ---
PVII          1,237,262                   104,965                  1,132,297
Holdings        742,357                    62,979                    679,378
AV              989,809                    83,972                    905,837
WBVP          1,237,262                   104,965                  1,132,297
CFII            247,452                    20,993                    226,459
CFIII           742,357                    62,979                    679,378
CBDF            494,905                    41,986                    452,919
             ----------                 ---------                 ----------
             11,800,000                 1,093,750                 10,706,250

</TABLE>

                                                          REGISTRATION STATEMENT
                                                                     Page II-127
<PAGE>


                           ATTACHMENT A TO SCHEDULE 14
                         ALASKA CABLE, INC. SHAREHOLDERS


                                                        Number of
                                   Shares               Class/Series of
  Name                              Owned               Common Stock
  ----                              -----               ------------

A. Class A Common Stock
   --------------------
  
   1. Austin Ventures, L.P.        800                  Class A, Series Two

   2. William Blair Venture
      Partners III Limited
      Partnership                1,000                  Class A, Series Two

   3. Centennial Fund II, L.P.     200                  Class A, Series Two

   4. Centennial Fund III, L.P.    600                  Class A, Series Two

   5. Centennial Business
      Development Fund, Ltd.       400                  Class A, Series Two

   6. Prime Venture II, L.P.     1,000                  Class A, Series One

   7. Prime Venture I
      Holdings, L.P.               600                  Class A, Series One
                                 -----
   TOTAL                         4,600
   =====                         =====

B. Class B Common Stock
   --------------------

   1. Prime Venture II, L.P.         5                  Class B

   2. Prime Venture
      I Holdings, L.P.               5                  Class B

   3. Prime Cable Growth
      Partners, L.P.                11                  Class B
                                 -----

   TOTAL
   =====


                                                          REGISTRATION STATEMENT
                                                                     Page II-128
<PAGE>