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                           GENERAL COMMUNICATION, INC.






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                       PREFERRED STOCK PURCHASE AGREEMENT

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                20,000 SHARES OF SERIES B CONVERTIBLE REDEEMABLE

                            ACCRETING PREFERRED STOCK






                           Dated as of April 30, 1999

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<PAGE>

                           General Communication, Inc.
                         2550 Denali Street, Suite 1000
                             Anchorage, Alaska 99503



                                 April 30, 1999



To:      Each of the Persons Named
         on Annex A to this Agreement

Ladies and Gentlemen:

         The undersigned, General Communication, Inc. (the "Company"), an Alaska
corporation,  hereby agrees with you (sometimes  referred to herein individually
as an "Investor" and sometimes collectively as the "Investors") as follows:

         1.0  Authorization  of  Securities.  The  Company  has  authorized  the
issuance  of an  aggregate  of 35,000  and the sale of an  aggregate  of 20,000,
shares of its Series B Convertible  Redeemable  Accreting  Preferred  Stock (the
"Preferred Stock"),  having the rights,  preferences and privileges set forth in
the   Statement   of  Stock   Designation   (hereinafter   referred  to  as  the
"Designation"),  a copy of which is  attached  hereto as Annex B. The  shares of
Preferred  Stock are  convertible  into  shares  of Class A Common  Stock of the
Company (the "Class A Common  Stock") upon the terms and conditions set forth in
the Designation.  The Preferred Stock and the Class A Common Stock are sometimes
referred to collectively herein as the "Securities."

         2.0 Sale and Purchase of Preferred Stock. Upon the terms and subject to
the conditions  herein  contained,  the Company agrees to sell to the Investors,
and the  Investors  agree to  purchase  from the  Company,  at the  Closing  (as
hereinafter defined) on the Closing Date (as hereinafter defined), 20,000 shares
of Preferred Stock, such commitment allocated among the Investors in the numbers
set forth  opposite such  Investor's  name on Annex A attached  hereto,  and the
Investors shall pay to the Company an aggregate amount of Twenty Million Dollars
($20,000,000)  (the "Required  Payment"),  allocated  among the Investors as set
forth on Annex A attached hereto.

         3.0 Closing. 

                  3.1  Closing.  The closing of the sale to and purchase by each
Investor of the Preferred  Stock (the  "Closing")  shall occur at the offices of
Paul, Hastings,  Janofsky & Walker LLP in Atlanta, Georgia, at the hour of 10:00
A.M.,  eastern standard time, on April 30, 1999 or at such different time or day
as the  Investors  and the Company  shall  agree (the  "Closing  Date").  At the
Closing, the Company will deliver to each Investor a certificate  evidencing the
number of shares of Preferred  Stock set forth 


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<PAGE>
opposite such  Investor's  name on Annex A hereto,  which shall be registered in
such Investor's name as stated on the signature page hereto, against delivery to
the  Company of  payment by wire  transfer  in an amount  equal to the  Required
Payment by such Investor.

         4.0 Register of  Securities;  Restrictions  on Transfer of  Securities;
Removal of Restrictions on Transfer of Securities.

                  4.1 Register of Securities.  The Company or its duly appointed
agent shall maintain a separate  register for the shares of Preferred Stock, the
Class A Common Stock and the Class B Common  Stock (the "Class B Common  Stock,"
together  with  the  Class  A  Common  Stock,  the  "Common  Stock"),   for  the
registration  of the  issuance  and sale of all such  shares.  All  transfers of
Preferred  Stock,  or Class A Common Stock issued upon  conversion  of Preferred
Stock, shall be recorded on the register maintained by the Company or its agent,
and the  Company  shall be  entitled  to regard  the  registered  Holder of such
Securities  as the  actual  Holder of the  Securities  so  registered  until the
Company or its agent is required to record a transfer of such  Securities on its
register.  Subject to Section 4.2(c)  hereof,  the Company or its agent shall be
required  to record  any such  transfer  when it  receives  the  Security  to be
transferred,  duly and properly  endorsed by the registered Holder thereof or by
its attorney-in-fact duly authorized in writing.

                  4.2 Restrictions on Transfer.

                           (a) Each  Investor  understands  and agrees  that the
Preferred  Stock  it will  be  acquiring  has  not  been  registered  under  the
Securities Act of 1933, as amended (the "Securities  Act"), and that accordingly
such stock will not be transferable except as permitted under various exemptions
contained in the  Securities Act and any applicable  state  securities  laws, or
upon  satisfaction of the registration and prospectus  delivery  requirements of
the  Securities  Act  and  applicable   state  securities  laws.  Each  Investor
acknowledges  that it must  bear  the  economic  risk of its  investment  in the
Preferred  Stock for an  indefinite  period of time  (subject,  however,  to the
Company's obligation to redeem the Preferred Stock in accordance with Sections 4
and 5 of  the  Designation  and  to  the  Company's  obligation  to  effect  the
registration  under the Securities Act of the Class A Common Stock issuable upon
conversion of the Preferred  Stock in accordance with Section 10 hereof) because
such stock has not been registered under the Securities Act and therefore cannot
be sold,  unless such stock is  subsequently  registered  or an  exemption  from
registration is available.

                           (b) Each Investor  hereby  represents and warrants to
the Company and with respect to clause (iv) to each other  Investor  that (i) it
is  acquiring  the  Preferred  Stock it has agreed to  purchase  for  investment
purposes,  for its own  account,  and not with the view  to,  or for  resale  in
connection with, any  distribution  thereof within the meaning of the Securities
Act,  (ii) it is an  "accredited  investor"  as that term is defined in Rule 501
under the Securities  Act,  (iii) it is organized  under the laws of and has its
principal  executive  office in the state set forth on Annex {4.2(b)}A  attached
hereto, (iv) it is making an independent  investment decision and is not relying
on  representations  of or information  provided by any other Investor and (v) a
copy of the  Company's  Form  10-K as filed  with the  Securities  and  Exchange
Commission for the year ended December 31, 1998, has 


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been  made  available  to such  Investor  and such  Investor  has  been  given a
reasonable opportunity to ask questions of and receive answers from the Company,
and all persons acting on its behalf,  concerning the Company, its business, the
Preferred  Stock and other related  matters and such Investor has availed itself
of such opportunity to the full extent desired.

                           (c) Each  Investor  hereby agrees with the Company as
follows:

                                    (i)  Subject  to  Section  4.3  hereof,  the
certificates  evidencing  the  Preferred  Stock it has agreed to purchase,  each
certificate  issued in transfer  thereof,  and each  certificate  evidencing the
Class A Common Stock issued upon  conversion  of shares of the  Preferred  Stock
will bear the following legend:

            "The  securities   evidenced  by  this  certificate  have  not  been
            registered  under the Securities  Act of 1933, as amended,  or under
            any applicable  state  securities  laws. These securities may not be
            sold  or  transferred  in the  absence  of such  registration  or an
            exemption  therefrom  under such Act and under any applicable  state
            securities laws."

                                    (ii)  The  certificates   representing  such
Preferred  Stock,  each  certificate  issued  in  transfer  thereof,   and  each
certificate evidencing the Class A Common Stock issued upon conversion of shares
of the Preferred  Stock will also bear any legend  required under any applicable
state securities laws.

                                    (iii)  Absent  an   effective   registration
statement  under the  Securities  Act covering the  disposition of the Preferred
Stock or the Class A Common Stock issued in  connection  with the  conversion of
such Preferred Stock,  such Investor will not sell,  transfer,  assign,  pledge,
hypothecate or otherwise  dispose of any of such securities except in compliance
with the Securities Act and the  registration or  qualification  requirements of
any applicable state securities laws or any exemption therefrom.

                                    (iv) No  Holder  of  Preferred  Stock  shall
transfer any shares of Preferred Stock to a Direct Competitor of the Company (as
defined  below)  unless the prior  consent of the  Company  is  received,  which
consent  shall not be  unreasonably  withheld.  For purposes of this Section 4.2
(c)(iv),  "Direct Competitor of the Company" shall mean a Person which offers or
proposes  to offer  anywhere  in the State of Alaska any of the  following:  (1)
facilities-based  long distance  communications  service (including via undersea
cable),   (2)   facilities-based   competitive   local   exchange   or  wireless
communications  services,  or (3) cable television or other terrestrial video or
data  services;  including,  in each case,  Internet and  interactive  services.
Communications  services  shall  include,  in all cases,  voice,  video and data
communications.

                                    (v) The Company shall make a notation on its
records and may give  instructions  to any transfer  agent of the Class A Common
Stock or Preferred Stock in order to implement the  restrictions on transfer set
forth in this subsection (c).




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<PAGE>
                  4.3  Removal of  Securities  Act  Transfer  Restrictions.  Any
legend  endorsed  on a  certificate  evidencing  a Security  pursuant to Section
4.2(c)(i)  hereof and the stop transfer  instructions  and record notations with
respect  to such  Security  shall  be  removed  and the  Company  shall  issue a
certificate  without  such  legend to the  Holder of such  Security  (a) if such
Security is registered  under the Securities Act, or (b) if such Security may be
sold under Rule 144(k) of the Commission  under the Securities Act or (c) if the
Holder provides the Company with an opinion of counsel (which may be counsel for
the Company)  reasonably  acceptable to the Company to the effect that a sale or
transfer of such Security may be made without  registration under the Securities
Act.

         5.0  Representations  and Warranties by the Company. In order to induce
the Investors to enter into this Agreement and to purchase the Preferred  Stock,
the Company hereby covenants with, and represents and warrants to, each Investor
as follows:

                  5.1 Organization; Power; Qualification; Capital Stock.

                               (a) The Company is a corporation  duly organized,
validly existing and in good standing under the laws of the State of Alaska. The
Company has the  corporate  power and  authority to own or lease and operate its
properties  and to  carry  on its  business  as it is now  being  and  hereafter
proposed to be conducted.  The Company is duly  qualified,  in good standing and
authorized  to do business in each  jurisdiction  in which the  character of its
properties  or the  nature of its  businesses  requires  such  qualification  or
authorization.  Annex 5.1  correctly  sets  forth and  identifies  the number of
authorized shares of each class and series of capital stock of the Company,  the
par value per share,  and the number of issued  and  outstanding  shares of each
such  class  and  series  on  the  date  hereof,  after  giving  effect  to  the
transactions  contemplated  hereby.  Except as  described  on Annex 5.1 attached
hereto,   the  Company  does  not  have  outstanding  any  stock  or  securities
convertible  into or  exchangeable  for any shares of its Common Stock,  nor are
there any preemptive or similar  rights to subscribe for or to purchase,  or any
other  rights to subscribe  for or to purchase,  or any options for the purchase
of, or any agreements  providing for the issuance  (contingent or otherwise) of,
or any calls,  commitments,  or claims of any character  relating to, any Common
Stock or any stock or securities convertible into or exchangeable for any Common
Stock.  Except as set forth on Annex  5.1,  the  Company  is not  subject to any
obligation  (contingent  or otherwise)  to  repurchase  or otherwise  acquire or
retire any shares of its Common  Stock or to  register  any shares of its Common
Stock, and there are no agreements restricting the transfer of any shares of the
Company's Common Stock.

                               (b) Other than the  Preferred  Stock to be issued
to the Investors  pursuant to this  Agreement,  there are no shares of preferred
stock outstanding. The Preferred Stock has been duly authorized and, when issued
and paid for pursuant to the terms of this Agreement,  will be duly  authorized,
validly issued, fully paid and nonassessable,  will have the rights, preferences
and privileges  specified in the  Designation  and will be free and clear of all
Liens and  restrictions,  other than  Liens that might have been  created by the
Investors and  restrictions on transfer  imposed by Section 4.2 hereof;  and the
Class A Common Stock  issuable upon  conversion of the Preferred  Stock has been
duly authorized and reserved for issuance upon conversion of the 


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Preferred Stock and, when issued will be duly authorized,  validly issued, fully
paid and nonassessable  Class A Common Stock, in connection with such conversion
and clear of all Liens and  restrictions,  other than Liens that might have been
created by the Investors and restrictions imposed by Section 4.2 hereof.

                  5.2 Authorization. The Company has the corporate power and has
taken all  necessary  corporate  action to authorize  it to issue the  Preferred
Stock and to execute,  deliver and perform this Agreement and the Designation in
accordance  with their  respective  terms,  and to consummate  the  transactions
contemplated  hereby and  thereby.  This  Agreement  has been duly  executed and
delivered by the Company and is, along with the Designation,  a legal, valid and
binding  obligation of the Company  enforceable  in  accordance  with its terms,
subject,  as to enforcement of remedies,  to the following  qualifications:  (i)
certain  equitable  remedies are  discretionary  and, in particular,  may not be
available  where  damages  are  considered  an  adequate  remedy at law and (ii)
enforcement   may   be   limited   by   bankruptcy,   insolvency,   liquidation,
reorganization,  reconstruction and other similar laws affecting  enforcement of
creditors' rights generally  (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Company).

                  5.3  Subsidiaries.  The Subsidiaries of the Company are listed
in Annex 5.3 attached  hereto.  The Company owns all of the outstanding  capital
stock of each Subsidiary, except as set forth in Annex 5.3.


                  5.4   Compliance   with  Other   Documents  and   Contemplated
Transactions.  The  execution,  delivery and  performance by the Company of this
Agreement and the Designation,  each in accordance with their respective  terms,
and the consummation of the transactions contemplated hereby and thereby, do not
and will not (i) require any consent, approval, authorization, permit or license
which has not already been obtained  from, or effect any filing or  registration
which has not already been effected with, any federal, state or local regulatory
authority,  (ii) violate any Applicable  Law with respect to the Company,  (iii)
conflict with, result in a breach of, or constitute a default under the Restated
Articles  of  Incorporation  or the  Bylaws of the  Company,  under  the  Credit
Facilities,  or under any indenture,  agreement, or other instrument,  including
without  limitation the Licenses,  to which the Company or any Subsidiary of the
Company is a party or by which any such company or its  properties may be bound,
or (iv) result in or require the creation or imposition of any Lien upon or with
respect to any property now owned or hereafter acquired by the Company or any of
its Subsidiaries.

                  5.5 Business.  The Company and its Subsidiaries are engaged in
the business of providing  telecommunications and video services to residential,
commercial and government  users,  including  without  limitation,  local,  long
distance and wireless telephone services, cable television services and Internet
services.

                  5.6  Licenses,  etc.  All material  Licenses  necessary to the
operation of the Company's business have been authorized by the grantors thereof
and are in full  force and  effect,  and the  Company  is in  compliance  in all
material  respects with all of the 


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provisions  thereof.  The  Company  has  secured  all  Necessary  Authorizations
required for the operation of its business and all such Necessary Authorizations
are in full force and effect.

                  5.7  Compliance  with  Law.  The  Company  is  in  substantial
compliance with all Applicable Laws.

                  5.8 Litigation. There is no action, suit or proceeding pending
or, to the best of the Company's  knowledge,  threatened against or in any other
manner relating  directly and adversely to, the Company or any of its properties
in  any  court  or  before  any  arbitrator  of any  kind  or  before  or by any
governmental body, except as described on Annex 5.8 attached hereto, and no such
action,  suit,  proceeding or investigation (i) calls into question the validity
of this  Agreement or the  Designation,  or (ii) if determined  adversely to the
Company, would be likely to have a Materially Adverse Effect.

                     5.9  Financial  Statements.  The Company has  furnished  or
caused to be furnished to each Investor the audited  balance sheet and statement
of income for the  fiscal  year  ended  December  31,  1998  (collectively,  the
"Financials"),  which as of the date  hereof  are  complete  and  correct in all
material  respects and present  fairly in  accordance  with  generally  accepted
accounting  principles the Company's  financial position on and as at such dates
and the results of operations for the periods then ended.  There are no material
liabilities,  contingent or otherwise, of the Company which are not disclosed in
such Financials.

                  5.10 No Adverse  Change.  Since  December 31, 1998,  there has
occurred no event which is likely to have a Materially Adverse Effect.

                  5.11  Absence of Default,  etc.  The Company is in  compliance
with all the provisions of its Restated  Articles of  Incorporation  and Bylaws,
and no event has  occurred  or failed to occur,  which has not been  remedied or
waived, the occurrence or non-occurrence of which constitutes, or which with the
passage of time or giving of notice or both would  constitute a material default
by the Company  under any  material  indenture,  agreement  or other  instrument
(individually,   a  "Material   Agreement"  and   collectively,   the  "Material
Agreements"),  including  without  limiting  the  foregoing,  any License or any
judgment,  decree or order to which the Company or any of its  Subsidiaries is a
party or by which the Company or any of its Subsidiaries or their properties may
be bound or affected.  All Material Agreements are in full force and effect, and
the Company has no knowledge that any party to any Material Agreement is seeking
or  presently  intends  to seek to  terminate,  amend or  modify  such  Material
Agreement.

                  5.12  Environmental  Matters.  Except as is described on Annex
5.12 attached hereto:

                     (i)  The  Property  does  not  contain,  in,  on or  under,
            including,  without limitation, the soil and groundwater thereunder,
            any  Hazardous  Materials in violation of  Environmental  Laws or in
            amounts   that  could  give  rise  to   material   liability   under
            Environmental Laws.


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                     (ii) The  Company  is in  substantial  compliance  with all
            applicable Environmental Laws, and there is no condition which could
            interfere  with the continued  operation of any of the Properties in
            substantial  compliance  with  Environmental  Laws,  or  impair  the
            financial condition of Company.

                     (iii) The Company has not  received  from any  governmental
            authority or any other Person any  complaint,  notice of  violation,
            alleged  violation,  investigation  or advisory  action or notice of
            potential liability regarding matters of environmental protection or
            permit compliance under applicable Environmental Laws with regard to
            the  Properties,  nor is the  Company  aware  that any  governmental
            authority  is  contemplating  delivering  to the  Company  any  such
            notice.  There has been no pending or, to the  Company's  knowledge,
            threatened  complaint,  notice  of  violation,   alleged  violation,
            investigation or notice of potential  liability under  Environmental
            Laws with regard to any of the Properties.

                     (iv) Hazardous Materials have not been generated,  treated,
            stored, disposed of, at, on or under any of the Property,  except in
            substantial  compliance with all Environmental  Laws, or in a manner
            that could give rise to material liability under  Environmental Laws
            nor have any Hazardous  Materials  been  transported  or disposed of
            from  any of  the  Properties  to  any  other  location,  except  in
            substantial  compliance with all Environmental Laws, nor in a manner
            that  could  reasonably  be  anticipated  to give  rise to  material
            liability under Environmental Laws.

                     (v)  The  Company  is  not  a  party  to  any  governmental
            administrative  actions or judicial  proceedings  pending  under any
            Environmental  Law with  respect to any of the  Properties,  nor are
            there  any  consent  decrees  or  other  decrees,   consent  orders,
            administrative  orders or other orders,  or other  administrative or
            judicial  requirements  outstanding under any Environmental Law with
            respect to any of the Properties.

                     (vi)  There has been no  release  or threat of  release  of
            Hazardous  Materials  into  the  environment  at or from  any of the
            Properties,  or arising  from or relating to the  operations  of the
            Company, in violation of Environmental Laws or in amounts that could
            give rise to material liability under Environmental Laws.

                  5.13  Investment  Company Act;  Public Utility Holding Company
Act. The Company (i) is not an "investment  company" or a company "controlled by
an investment company" and (ii) is not required to register, in each case, under
the  provisions of the Investment  Company Act of 1940, as amended,  and neither
the entering into or performance  by the Company of this Agreement  violates any
provision of such Act or requires any consent,  approval or authorization of, or
registration with, the Securities and Exchange  Commission (the "Commission") or
any other governmental or public body or authority pursuant to any provisions of
such Act.  The  Company is not a "public  utility  holding  company"  within the
meaning of the Public Utility Holding  Company Act of 1935, as amended.  None of
the transactions contemplated by this Agreement (including,  without limitation,
the use of proceeds from the sale of the 


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Securities)  will  violate or result in a violation of Section 7 of the Exchange
Act or any regulation  issued pursuant thereto  including,  without  limitation,
Regulations U and X of the Board of Governors of the Federal Reserve System.

                  5.14 Securities Laws. The Company and any underwriters,  sales
agents,  representatives  or  brokers  representing  or  acting on behalf of the
Company have complied  with all material  federal and state  securities  laws in
connection with the offer and sale of share interests in the Company,  including
the Preferred Stock to be issued and sold pursuant to this Agreement. The offer,
sale and issuance of the Preferred  Stock,  including the issuance of the shares
of Class A Common Stock in connection with the conversion of the Preferred Stock
(assuming  no action is taken after the date hereof by the Holders of  Preferred
Stock to make an exemption from  registration  unavailable),  are, in each case,
exempt from the  registration  requirements  of the  Securities Act and from the
registration or  qualification  requirements of the laws of any applicable state
or other  jurisdiction,  so long as the  Investors  do not take any action which
would  cause the loss of such  exemption.  Neither the Company nor anyone on its
behalf will take any action hereafter that would or would be likely to cause the
loss of such exemption.

                  5.15  Disclosure;  SEC Filings.  There is no fact known to the
Company  which the Company has not  disclosed to the  Investors in writing which
has or will have a Materially Adverse Effect. The information  contained in this
Agreement,  the Financials and in any writing  furnished  pursuant  hereto or in
connection herewith, does not contain any untrue statement of a material fact or
omit to state any  material  fact  required  to be stated  therein  or herein or
necessary to make the statements therein or herein not misleading. Additionally,
the  Company has  delivered  or has made  available  to the  Investors  true and
complete copies of each registration statement,  report and proxy or information
statement,  including,  without  limitation,  any Annual Reports to Shareholders
incorporated by reference in any of such reports,  in form  (including  exhibits
and any  amendments  thereto)  required  to be filed with the  Commission  since
December  31,  1996  (collectively,  the  "Company  SEC  Reports").  As  of  the
respective dates the Company SEC Reports were filed, or, if any such Company SEC
Report was amended, as of the date such amendment was filed, each of the Company
SEC Reports (i) complied in all respects with all applicable requirements of the
Securities Act and the Exchange Act, and the rules and  regulations  promulgated
thereunder,  and (ii) did not contain any untrue statement of a material fact or
omit to state a material  fact  required to be stated  therein or  necessary  in
order to make the statements  therein, in light of the circumstances under which
they  were  made,  misleading.  Each of the  audited  financial  statements  and
unaudited  interim  financial  statements of the Company  (including any related
notes and  schedules)  included (or  incorporated  by  reference)  in its Annual
Reports on Form 10-K for each of the three fiscal years ended December 31, 1996,
1997 and 1998 and its  Quarterly  Reports on Form 10-Q for all  interim  periods
subsequent  thereto  fairly  present,  in  conformity  with  generally  accepted
accounting principles,  the financial position of the Company as of its date and
the results of operations  and cash flows for the period then ended  (subject to
normal  year-end  adjustments  in the case of any  unaudited  interim  financial
statements).

                  5.16 Year 2000 Compliance. The Company has (i) begun analyzing
the  operations  of the Company  and its  Subsidiaries  that could be  adversely
affected  by 


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<PAGE>
failure to become  Year 2000  compliant  (that is, that  computer  applications,
imbedded  microchips  and other  systems will be able to perform  date-sensitive
functions  prior to and after  December 31, 1999) and (ii)  developed a plan for
becoming Year 2000 compliant in a timely manner,  the implementation of which is
on schedule in all material respects.  The Company  reasonably  believes that it
will become Year 2000 compliant for its operations and those of its Subsidiaries
on a timely  basis  except  to the  extent  that a  failure  to do so could  not
reasonably  be  expected  to  have a  Materially  Adverse  Effect.  To the  best
knowledge of the  Company,  any  suppliers  and vendors that are material to the
operations of the Company or its  Subsidiaries  will be Year 2000  compliant for
their own  computer  applications  except to the extent  that a failure to do so
could reasonably be expected not to have a Materially Adverse Effect.

         6.0 Conditions Precedent to Investor's  Obligations at the Closing. The
obligation of each Investor to execute this Agreement and purchase the Preferred
Stock is subject to the prior fulfilment of the following conditions:

                  6.1  Representations   and  Warranties.   Representations  and
warranties of the Company under this Agreement  shall be true and correct in all
material  respects as of the date  hereof and any  exceptions  thereto  shall be
acceptable to the Investors.

                  6.2 Simultaneous  Purchase by Investors.  The Company shall be
contemporaneously  consummating  the sale of the Preferred  Stock to each of the
Investors listed on Annex A attached hereto.

                  6.3 No Material Adverse Change.  There shall not have occurred
(i) a change in the financial  condition,  business,  assets or prospects of the
Company or any of its Subsidiaries that constitutes a Materially  Adverse Effect
with  respect to the Company  and its  Subsidiaries  taken as a whole,  (ii) any
substantive change in local, state or federal governmental regulations affecting
the business of the Company or any of its Subsidiaries or the business  proposed
to be conducted by the Company or any of its Subsidiaries  that has a Materially
Adverse  Effect,  or  (iii)  any  threatened,   instituted  or  pending  action,
proceeding,   application  or  counterclaim  by  or  before  any   governmental,
regulatory or  administrative  agency or authority,  domestic or foreign,  which
seeks to restrain or prohibit the transactions contemplated by this Agreement or
seeks damages in connection  therewith or resulting  therefrom,  seeks to impose
any  limitations  on the ability of the Investors  effectively  to acquire or to
hold or to  exercise  full rights of  ownership  of the  Securities,  including,
without  limitation,  the right to vote the Securities in accordance  with their
terms or would  otherwise  be  reasonably  likely to have a  Materially  Adverse
Effect on the Company.

                  6.4 Designation.  The Designation  shall have been approved by
the Board as required by the Alaska Corporations Code, shall have been filed and
recorded with the Department of Commerce and Economic  Development of Alaska and
shall have become effective,  and a copy of the Amended and Restated Articles of
Incorporation,  as amended,  certified by the  Commissioner of the Department of
Commerce and  Economic  Development  of Alaska shall have been  delivered to the
Investors.



                                       9
<PAGE>
                  6.5 Board Resolutions. The Board shall have resolved to submit
for shareholder approval at the next annual meeting of the shareholders,  but in
no event later than {July} August 31, 1999, certain additional amendments to the
Amended and Restated Articles of Incorporation (the "Proposed Amendments").  The
Proposed  Amendments shall provide that so long as any shares of Preferred Stock
remain outstanding,  the Company shall not, directly or indirectly,  without the
written  consent of the Holders of a majority with respect to clause (i) and 80%
with respect to clause (ii) of the  then-outstanding  shares of Preferred  Stock
(i)  liquidate  or dissolve  the Company or (ii) permit the Company to be merged
with  or  into,  or  consolidated   with,  any  other  entity  or  sell  all  or
substantially  all of the assets of the Company,  in any case where the terms of
such merger,  consolidation or sale would significantly and adversely affect the
rights and preferences of the Preferred Stock. In addition, the Board shall have
resolved,  pursuant to Article IV,  Section 2 of the By-laws of the Company,  to
increase  the number of  directors  serving on the Board by one with the nominee
for such additional position to be designated by Prime VIII, L.P., {or} and such
other Holders of Preferred Stock as are not prohibited by law or regulation from
participating in such designation.

                  6.6   Qualification   Under   State   Securities   Laws.   All
registrations,  qualifications,  permits and approvals required under applicable
state  securities  laws  shall  have been  obtained  for the  lawful  execution,
delivery  and   performance  of  this  Agreement  and  the  performance  of  the
Designation,    including   without    limitation   all   such    registrations,
qualifications,  permits and approvals  necessary for the offer, sale, issue and
delivery of the Securities.

                  6.7 Delivery of Documents.  Each Investor  shall have received
the following:

                               (a) copies of resolutions of the Board, certified
by an  Authorized  Signatory  of the  Company,  authorizing  and  approving  the
Designation  and the matters set forth in Section  6.5  hereof,  the  execution,
delivery  and  performance  of this  Agreement,  and  all  other  documents  and
instruments to be delivered pursuant hereto and thereto;

                               (b) a copy of the Bylaws of the Company certified
by an Authorized Signatory of the Company;

                               (c) a true  and  complete  copy of  each  and any
agreements or arrangements of any kind among the shareholders of the Company, or
otherwise with respect to the ownership of the Company;

                               (d) evidence  satisfactory  to each Investor that
all Necessary  Authorizations  have been obtained or made, are in full force and
effect  and  are  not  subject  to  any  pending  or   threatened   reversal  or
cancellation,  and a certificate  of an  Authorized  Signatory of the Company so
stating;

                               (e) good  standing  certificates  for the Company
issued by the Secretary of State,  or similar  official,  of each state in which
the  Company  is   incorporated  or  qualified  to  do  business  as  a  foreign
corporation;




                                       10
<PAGE>
                               (f) this duly executed Agreement;

                               (g) {a} favorable {opinion} opinions of Sherman &
Howard  LLC,  special  counsel  for the  Company,  and {dated the  Closing  Date
substantially in the form of Annex 6.7(g) attached hereto;

                               (h) a favorable  opinion} of  Wohlforth,  Vassar,
Johnson & Brecht,  counsel for the Company,  dated the Closing Date collectively
substantially in the form of Annex {6.7(h)} 6.7(g) attached hereto;


                               (i) copies of the  documentation  relating to the
amendments to the $200,000,000  Amended and Restated Credit Agreement,  dated as
of November 14, 1997, between GCI Holdings,  as borrower,  NationsBank of Texas,
N.A., as administrative agent, Credit Lyonnais New York Branch, as documentation
agent, and TD Securities  (USA),  Inc., as syndication agent and the $50,000,000
Amended and Restated Credit  Agreement,  dated as of November 14, 1997,  between
GCI  Holdings,  Inc., a  wholly-owned  indirect  subsidiary of the Company ("GCI
Holdings"),  as borrower,  NationsBank of Texas, N.A., as administrative  agent,
Credit  Lyonnais New York Branch,  as  documentation  agent,  and TD  Securities
(USA), Inc., as syndication agent, in final form, the form, terms and conditions
of which shall be satisfactory to Investors and their counsel;

                               (j) a  certificate  representing  the  shares  of
Preferred Stock to be purchased by such Investor;

                               (k) a certificate  of incumbency  with respect to
each Authorized Signatory; and

                               (l) such additional supporting  documentation and
other  information with respect to the transactions  contemplated  hereby as the
Investors or their special counsel,  Paul, Hastings,  Janofsky & Walker LLP, may
reasonably request.

                  6.8  Proceedings  and  Documents.   All  corporate  and  other
proceedings and actions taken in connection with the  transactions  contemplated
hereby and all  certificates,  opinions,  agreements,  instruments and documents
mentioned herein or incident to any such transactions,  shall be satisfactory in
form  and  substance  to the  Investors  and to  their  special  counsel,  Paul,
Hastings, Janofsky & Walker LLP.

         7.0 Affirmative Covenants. The Company agrees, that, unless the Holders
of a Majority of the then-outstanding  shares of Preferred Stock or with respect
to  Sections  7.7,  7.8,  7.9,  7.10 or 7.16  hereof  the  Holders of 80% of the
then-outstanding  shares of Preferred Stock, otherwise agree in writing, so long
as any shares of  Preferred  Stock are  outstanding,  the Company will (and will
cause its Subsidiaries to) do the following:

                  7.1  Preservation of Existence and Similar  Matters.  Preserve
and  maintain,  or timely  obtain and  thereafter  preserve  and  maintain,  its
existence,  material 


                                       11
<PAGE>
rights,  franchises and Licenses and its material  privileges used in connection
with or  relating  to the  operation  of the  Company's  business  of  providing
telecommunications   and  video   services  to  customers,   including   without
limitation,   local,  long  distance  and  wireless  telephone  services,  cable
television services and Internet services,  and qualify and remain qualified and
authorized  to do business in each  jurisdiction  in which the  character of its
properties  or the  nature  of its  business  requires  such  qualifications  or
authorizations.  These material  rights,  franchises and Licenses shall include,
without limitation, Licenses and all other Necessary Authorizations.

                  7.2 Compliance  with  Applicable  Law.  Comply in all respects
with the  requirements of all Applicable  Laws except where  compliance is being
contested in good faith by appropriate  proceedings  and adequate  reserves have
been set aside therefor.

                  7.3  Maintenance  of  Properties.  Maintain  or  cause  to  be
maintained in the ordinary course of business in good repair,  working order and
condition  (reasonable  wear and tear excepted) all properties used or useful in
its business (whether owned or held under lease),  and from time to time make or
cause to be made all needed and  appropriate  repairs,  renewals,  replacements,
additions,  betterments and improvements  thereto;  provided,  however, that the
provisions  of this  Section 7.3 shall not prevent  the  Company  from  selling,
transferring or otherwise disposing of property.

                  7.4  Accounting  Methods  and  Financial  Records.  Maintain a
system of accounting  established and  administered in accordance with generally
accepted accounting  principles  consistently applied, keep adequate records and
books of account in which complete  entries will be made in accordance with such
accounting  principles  consistently  applied and  reflecting  all  transactions
required to be reflected by such accounting  principles.  The Company shall also
maintain a fiscal year ending on December 31.

                  7.5  Maintain  Insurance.  Maintain in full force and effect a
policy or policies of insurance issued by insurers of recognized responsibility,
insuring it and its properties and business  against such losses and risks,  and
in such amounts,  as are customary in the case of  corporations  of  established
reputation engaged in the same or a similar business and similarly situated.

                  7.6 Pay Taxes and Other  Liabilities.  Pay and  discharge  all
taxes,  assessments and governmental charges or levies imposed upon it or any of
its Subsidiaries or their income or profits or upon any properties  belonging to
them prior to the date on which penalties attach thereto,  and all lawful claims
for labor,  materials  and  supplies  which,  if unpaid,  might become a Lien or
charge  upon any of  their  properties;  except  that no such  tax,  assessment,
charge,  levy or claim  need be paid which is being  contested  in good faith by
appropriate  proceedings  and for which  adequate  reserves  shall have been set
aside  on the  appropriate  books,  but  only so long as such  tax,  assessment,
charge,  levy or claim does not become a Lien or charge  other than a  Permitted
Lien and no foreclosure,  distraint, sale or similar proceedings shall have been
commenced.  The 


                                       12
<PAGE>
Company shall timely file all information returns required by federal,  state or
local tax authorities.

                  7.7  Financial  Reports.  The  Company  shall  furnish to each
Holder of Preferred Stock:

                               (a) As  soon  as  practicable  and  in any  event
within sixty (60) days after the last day of each quarter of each fiscal year of
the Company, the consolidated balance sheet of the Company as at the end of such
quarter and the related  consolidated  statement of income and retained earnings
and related consolidated statement of cash flows of the Company for such quarter
and for the elapsed portion of the year ended with the last day of such quarter,
all of  which  shall  be  certified  by the  chief  financial  officer  or chief
accounting officer of the Company,  to be, in his opinion,  complete and correct
in all material  respects and to present  fairly,  in accordance  with generally
accepted accounting principles,  the financial position of the Company as at the
end of such  period  and the  results of  operation  for such  periods,  and the
elapsed portion of the year ended with the last day of such period, subject only
to normal year-end adjustments;

                               (b) As  soon  as  practicable  and  in any  event
within one  hundred  twenty  (120) days after the end of each fiscal year of the
Company,  the audited consolidated balance sheet of the Company as at the end of
such fiscal year and the related audited  consolidated  statements of income and
retained  earnings or deficit and related  consolidated  statement of cash flows
for the Company for such fiscal  year,  setting  forth in  comparative  form the
figures  as at the end of and for the  previous  fiscal  year and  certified  by
independent certified public accountants of national recognized standing,  whose
opinion shall be in scope and substance  reasonably  satisfactory to the Holders
of  Preferred  Stock and  include a  statement  certifying  that no Default  was
detected insofar as the terms,  provisions or conditions of the Agreement relate
to accounting  matters  during the  examination  of the  Company's  consolidated
financial statements,  and who shall have authorized the Company to deliver such
financial  statements  and opinions  thereon to the Holders of  Preferred  Stock
pursuant to this Agreement;

                               (c)  Promptly  upon the  receipt  thereof  by the
Company or the Board,  copies of all reports,  all management  letters and other
detailed  information  submitted  to the  Company  or the  Board by  independent
certified public  accountants in connection with each annual or interim audit or
review of the accounts or affairs of the Company made by such accountants;

                               (d) Promptly after the same are available, copies
of all such proxy  statements,  financial  statements and reports as the Company
shall send to its  shareholders,  and  promptly  upon the  transmission  thereof
copies of all registration statements, proxy statements and reports on Form 8-K,
Form 10-Q and Form  10-K,  which the  Company  may file with or  furnish  to the
Commission or any governmental authority at any time substituted therefor; and




                                       13
<PAGE>
                               (e) Promptly such other  information  relating to
the  finances,  properties,  business  and  affairs  of  the  Company  and  each
Subsidiary as any Holder reasonably may request from time to time.

                  7.8 Other  Reports.  The  Company  shall  also  provide to the
Holders of Preferred Stock the following:

                               (a)  Promptly  after  its  preparation  and in no
event  later than  January 31 of each year,  a copy of the annual  budget of the
Company  and its  Subsidiaries  for the fiscal  year,  including  the budget for
capital expenditures for the operations of their businesses;

                               (b) Promptly upon learning of the occurrence of a
Default or a condition  or event which with the giving of notice or the lapse of
time, or both,  would  constitute a Default,  a certificate  signed by the chief
executive  officer or chief  financial  officer of the Company  describing  such
Default,  or condition or event and stating what steps are being taken to remedy
or cure the same; and

                               (c) All such  other  notices  and  reports as are
provided under the Credit Facilities from time to time.

                  7.9 Notice of Litigation  and Other  Matters.  Provide  prompt
notice (and in any event,  notice within three (3) Business Days) to the Holders
of Preferred Stock of the following events after the Company has received notice
thereof or otherwise becomes aware of:

                               (a) The  commencement of any material  proceeding
or investigation by or before any governmental  body and any material actions or
proceedings in any court or before any  arbitrator  (i) against,  or (ii) in any
other way  relating  materially  adversely  and  directly to, the Company or any
Subsidiary or any of their properties, assets or businesses or any License;

                               (b)   Any   material    amendment   or   material
modification to the budget submitted under Section 7.8(a) hereof; and

                               (c) Any breach, waiver, amendment, or termination
of any provision of the Credit Facilities.


                  7.10  Board of  Directors.  As soon as  practicable  following
issuance of the first  share of  Preferred  Stock,  and so long as any shares of
Preferred Stock are outstanding,  the Company shall cause its Board of Directors
to include one seat the nominee for which to be designated  by Prime VIII,  L.P.
(as long as it is a Holder) and such other Holders of Preferred Stock as are not
prohibited from  participating in the designation of such board member by law or
regulation,  including  pursuant to the Bank  Holding  Company Act as defined in
Section 8.2 hereof.  Upon  designation  by Prime VIII,  L.P. (as long as it is a
Holder) and such other Holders of Preferred Stock pursuant to this Section 7.10,
the Board of Directors of the Company shall cause such  designated  


                                       14
<PAGE>
person to be  nominated  for approval by the Holders of the Common Stock at each
meeting  of  shareholders  of the  Company  at  which  members  of the  Board of
Directors are to be elected. The Company shall, upon such nomination,  recommend
the  approval of such  designee as a member of the Board.  If the Holders of the
Class A Common Stock fail to elect the person designated by Prime VIII, L.P. and
such other Holders of Preferred  Stock,  if any, the Holders of Preferred  Stock
will  have the right to  appoint  an  observer  to attend  all  meetings  of the
Company's Board of Directors.  Further,  and independent of such observer right,
at any time that the designee to the Board of Directors is not an employee of an
Investor  or any of such  Investor's  affiliates,  such  Investor  shall have an
additional  right to appoint an observer to attend all meetings of the Company's
Board. The Company shall pay all reasonable  out-of-pocket expenses for any such
observers'  attendance at Board meetings.  The Company may require all observers
to sign a reasonable confidentiality agreement.

                  7.11 Proxy  Statement.  The  Company  will (i) as  promptly as
practicable  following  the date of this  Agreement,  prepare  and file with the
Commission,  and use its commercially  reasonable efforts to have cleared by the
Commission and thereafter mail to its stockholders as promptly as practicable, a
proxy statement and a form of proxy, in connection with the vote at a meeting of
the Company's  stockholders (such proxy statement,  together with any amendments
thereof or supplements  thereto, in each case in the form or forms mailed to the
Company's  stockholders,  is called  the "Proxy  Statement"),  (ii) use its best
efforts to obtain the necessary  approvals by its  stockholders  of the Proposed
Amendments  and the  transactions  contemplated  by  this  Agreement  and  (iii)
otherwise  comply with all legal  requirements  applicable to such meeting.  The
Company will include in the Proxy Statement the  recommendation  of its Board of
Directors that  stockholders of the Company vote in favor of the approval of the
Proposed  Amendments.  The  Company  will use its best  efforts to  conduct  the
stockholders' meeting on or before {July} August 31, 1999.

                  7.12  Replacement  of  Certificates.  Upon receipt of evidence
reasonably  satisfactory  to the  Company of the loss,  theft,  destruction,  or
mutilation of any certificate  representing  any of the Securities,  issue a new
certificate   representing  such  Securities  in  lieu  of  such  lost,  stolen,
destroyed, or mutilated certificate.

                  7.13  Compliance  With  Designation  and  Bylaws.  Perform and
observe all requirements of the Company's Bylaws and the Designation,  including
without limitation its obligations to the Holders of Securities set forth in the
Designation and the Company's Bylaws.

                  7.14  Notice of Failure to Comply  with Total  Leverage  Test.
Provide prompt written notice to the Holders of shares of Preferred Stock of the
Company's  failure  to  meet  the  Total  Leverage  Ratio,  as  defined  in  the
Designation.




                                       15
<PAGE>
                  7.15 Notice of Occurrence of Triggering Event.  Provide prompt
written notice to the Holders of shares of Preferred  Stock of the occurrence of
a Triggering Event, as defined in the Designation.

                  7.16  Amendments  to or Repeal of Bylaws.  Amend or repeal any
bylaw in any manner that would  significantly and adversely affect the right and
preferences of the Preferred Stock.


         8.0 Investor Regulatory Compliance.

                  8.1  Violation of BHCA. If any Investor or an Affiliate of any
Investor  determines  that it has a BHCA Issue (as defined  below),  the Company
agrees to use  commercially  reasonable  efforts to take all such actions as are
reasonably  requested  by such  Investor or such  Affiliate  in order to, at the
option of such Investor or such  Affiliate,  (a)  effectuate  and  facilitate an
assignment  or transfer by such  Investor or such  Affiliate of all or a part of
its interest in the Company  represented  by  Preferred  Stock or Class A Common
Stock issued upon conversion of Preferred Stock to a person or entity designated
by such Investor or such Affiliate, provided that such assignment or transfer is
in compliance with applicable federal and state securities laws and the assignee
or transferee agrees to be bound by this Agreement,  or (b) amend this Agreement
or the  Designation  to enable  such  Investor  to retain  its  interest  in the
Company.

                  8.2 BHCA Issue. For purposes of this Agreement, a "BHCA Issue"
means any facts or circumstances under which any Investor or an Affiliate of any
Investor is or may be in violation  or  potential  violation of the Bank Holding
Company  Act of 1956,  as  amended  from  time to time  (and any  successor  law
thereto), or the rules and regulations promulgated thereunder (collectively, the
"Bank Holding  Company Act"),  or any assertion by any  governmental  regulatory
agency  that  any  Investor  or an  Affiliate  of any  Investor  is or may be in
violation  or potential  violation of the Bank Holding  Company Act by virtue of
such  Investor or an Affiliate  of such  Investor  holding,  or  exercising  any
significant right with respect to, any capital stock of the Company.

         9.0 Right to Demand Exchange of Preferred Stock; Reincorporation of the
Company or Change in Alaskan Law.

                               (a The  Company  shall have the right at any time
to  exchange  all,  but not less than  all,  of the  then-outstanding  shares of
Preferred Stock for a subordinated debt instrument with terms identical to those
of the Preferred Stock (a "Debt Instrument").  Prior to exchanging the Preferred
Stock for a Debt  Instrument,  the Company  must give the  Holders of  Preferred
Stock at least  thirty (30) days  written  notice of its intent to exchange  the
Preferred  Stock for a Debt  Instrument  and must  provide such Holders with the
proposed  terms of the Debt  Instrument  in order that such  Holders may confirm
that  the  terms  of the  Debt  Instrument  are  identical  to the  terms of the
Preferred Stock. The Company shall draft all documents  necessary to effect such
exchange,   including  an  appropriate  indenture,   which  documents  shall  be
satisfactory  to the Holders of Preferred  Stock and their counsel in their sole
discretion.  The Company shall pay all expenses  (including  reasonable fees and
expenses  of  counsel)  of the  Holders  incurred  in  


                                       16
<PAGE>
connection  with any such  exchange.  Upon the  surrender  by each Holder of its
shares of Preferred Stock, the Company shall issue to each surrendering Holder a
Debt Instrument with an aggregate face amount equal to the sum of (i) the number
of shares of Preferred Stock of such Holder multiplied by $1,000 per share, plus
(ii) all  accrued  and unpaid  dividends  payable  with  respect to such  shares
pursuant to the terms of Section 2 of the Designation,  whether or not earned or
declared,  to and  including  the date of exchange.  The Company  shall take all
necessary steps and actions to promptly issue Debt Instruments to all Holders of
Preferred Stock pursuant to this Section 9, including without limitation,  using
its best efforts to (i) obtain all  necessary  consents,  waivers and  approvals
from third parties,  (including,  without limitation, any financial institutions
which have issued  indebtedness to the Company)  required in order to permit the
Company to issue the Debt  Instruments  to such holders of  Preferred  Stock and
(ii)  enter  into any  subordination  agreements  or  arrangements  which may be
required by any such third parties. Following receipt of notice pursuant to this
Section 9 from the Company and until the exchange shall be effected, each Holder
shall continue to have the right to convert their shares of Preferred Stock into
shares of Class A Common Stock pursuant to the Designation.

                               (b In the event the Company is  reincorporated in
Delaware or any other  state or Alaskan law is changed  such that the Company is
permitted to issue equity  redeemable  at the option of the Holder,  the parties
hereto agree to enter into  appropriate  amendments  to this  Agreement  and the
Designation to (i) permit the Holders of Preferred Stock to demand redemption at
any time after the fourth  anniversary  of the date hereof or upon a  Triggering
Event,  as defined in the  Designation,  and (ii) to remove the  increase in the
dividend rate to 17% per annum as set forth in Section 2 of the Designation. Any
amendments  entered into pursuant to this Section 9(b) shall be  satisfactory to
the  Holders of the  Preferred  Stock and their  counsel and the Company and its
counsel{, each in their sole discretion}.

         10.0  Registration  Rights.  The Holders of shares of  Preferred  Stock
issued pursuant to this Agreement  shall have the following  rights with respect
to (i) all of the  shares  of Class A  Common  Stock  issued  or  issuable  upon
conversion  of the Preferred  Stock,  whether owned by the Investors or not, and
(ii) any securities  issued or issuable with respect to the Class A Common Stock
referred  to in clause (i) above by way of a stock  dividend or a stock split or
in connection with a combination of shares, reclassification,  recapitalization,
merger or consolidation or reorganization; provided however, that such shares of
Class A Common Stock shall only be treated as  Registrable  Securities if and so
long as (i) they cannot be sold  pursuant to Rule 144(k)  promulgated  under the
Securities  Act or any successor  provision,  (ii) they have not been sold to or
through a broker or dealer or underwriter in a public  distribution  or a public
securities transaction, or (iii) they have not been sold in a transaction exempt
from the registration and prospectus delivery requirements of the Securities Act
under  Section 4(1) thereof so that all transfer  restrictions  and  restrictive
legends  with  respect  to such  Class A  Common  Stock  are  removed  upon  the
consummation of the sale (collectively, the "Registrable Securities"):



                                       17
<PAGE>
                  10.1 Demand  Registration.  At any time after the date hereof,
any Holder or  Holders  of at least  fifteen  percent  (15%) of the  Registrable
Securities  and  any of its  permitted  successors  hereunder  (the  "Initiating
Holder" or "Initiating  Holders")  acting alone,  or together with other Holders
qualifying  as  Initiating  Holders,  shall  have the right to  request,  on two
separate  occasions,  that the Company  prepare and promptly file a registration
statement on Form S-3 (or, if such form is not then available,  Form S-2 or such
other form then available for  registration by the Company) under the Securities
Act  covering  Registrable  Securities.  Upon the receipt of such  request,  the
Company shall give prompt  written  notice to all other  Holders of  Registrable
Securities that such  registration is to be effected.  The Company shall include
in such  registration  statement  such  Registrable  Securities for which it has
received a written  request  to  register  such  Registrable  Securities  by the
Holders  thereof  within  fifteen (15) days after the receipt of written  notice
from the Company. The Company must file the registration  statement within sixty
(60) days of the expiration of the above-referenced  fifteen (15) day period and
the  Company  shall use its best  efforts  to have such  registration  statement
declared  effective  by the  Commission  within sixty (60) days after the filing
thereof.

                  If the Initiating Holder so demands, the registration pursuant
to this Section 10.1 shall be an underwritten public offering and only shares of
Registrable  Securities  which are to be  included  in the  underwriting  may be
included in such  registration.  The  Holders of a majority  of the  Registrable
Securities  held by the  Initiating  Holders and  included  in any  registration
pursuant  to this  Section  10.1  shall  have the right to select  the  managing
underwriter(s)  for  such  registration.  If the  underwriter(s)  so  designated
advises  the  Company  and the Holders  participating  in such  registration  in
writing that in their opinion, the number of Registrable Securities requested to
be included in such offering exceeds the number of Registrable  Securities which
can be sold in such offering, the Company will include in such registration such
number of Registrable Securities which in the opinion of such underwriter(s) may
be sold,  allocated  among the  Holders of  Registrable  Securities  electing to
participate  in such  registration  on a pro rata  basis,  based  upon each such
Holder's  respective   proportionate   ownership  of  the  aggregate  amount  of
Registrable  Securities  requested to be included in such registration by all of
the Holders of  Registrable  Securities.  The  Company  will not include in such
registration  pursuant  to  this  Section  10.1  any  securities  which  are not
Registrable Securities unless all Registrable Securities as to which an election
to  participate  has  been  delivered  to  the  Company  are  included  and  the
underwriter(s) do not object to the inclusion of such additional securities.

                  10.2 Prompt  Registration  of Class A Common  Stock.  Promptly
upon (and in any event not more than  thirty (30) days  after),  (i) a Mandatory
Conversion by the Company of the shares of Preferred  Stock into shares of Class
A Common Stock pursuant to Section 8(l) of the  Designation or (ii) receipt of a
notice to convert from a Holder or Holders of shares of Preferred Stock pursuant
to Section 8(m) of the Designation in connection  with the Company's  failure to
redeem  shares of Preferred  Stock  subject to Mandatory  Redemption or Optional
Redemption,  the  Company  shall  prepare  and  file,  and use its  commercially
reasonable efforts to have declared effective,  a registration statement on Form
S-3 (or such other then  applicable  form) covering all shares of Class A Common
Stock to be issued upon such conversion.  Registration  


                                       18
<PAGE>
pursuant to this Section 10.2 shall not count as a demand registration  pursuant
to Section 10.1 hereof.

                  10.3  Piggyback  Rights.  In  addition,  each time the Company
shall determine to file a registration statement under the Securities Act (other
than  pursuant to Section 10.1 or 10.2 hereof and other than on a Form S-4, Form
S-8 or any similar form covering solely an employee  benefit plan) in connection
with the proposed offer and sale for money of any of its  securities  either for
its own account or on behalf of any other  security  Holder,  the Company  shall
give prompt written notice of such  determination  to all Holders of Registrable
Securities.  Each Holder  shall  provide a written  request to the Company if it
desires to participate in such  registration  (the "Holder  Notice") stating the
number of shares of Registrable Securities to be registered, which Holder Notice
must be given  within  thirty  (30)  days  after  receipt  by the  Holder of the
Company's notice.  Upon receipt of a Holder Notice,  the Company shall cause all
shares of Registrable Securities with respect to which such Holder has requested
registration to be included in such registration  statement and registered under
the  Securities  Act,  all to the extent  requisite  to permit the sale or other
disposition by the prospective  seller or sellers of the Registrable  Securities
to be so  registered.  If the  registration  of which the Company  gives written
notice  pursuant to this  Section  10.3 is for a public  offering  involving  an
underwriting,  the Company  shall so advise the Holders as a part of its written
notice.

                  If the registration of which the Company gives notice pursuant
to this Section 10.3 is for an  underwritten  public  offering,  only a Holder's
share of Registrable  Securities which such Holder agrees may be included in the
underwriting  may be included in such  registration,  and the Company shall have
the right to designate  the  managing  underwriter(s)  in any such  underwritten
public  offering;  provided that the Company shall use its best efforts to cause
the managing  underwriter(s)  to include such  Holder's  Registrable  Securities
requested  to be  included  in  the  registration  in the  underwriting.  If the
managing   underwriter(s)   advises  the  Holders  of   Registrable   Securities
participating  in  such  registration  in  writing  that  the  total  amount  of
securities which such Holders,  the Company,  and any other  stockholders of the
Company intend to include in such offering is  sufficiently  large to materially
and adversely  affect the success of such  offering,  the Company will limit the
registration  (i) first,  to the securities the Company  intends to sell in such
registration,  and (ii) second, to Registrable  Securities as to which a request
for inclusion has been made and  securities  held by other  stockholders  having
contractual  registration  rights, pro rata among the holders thereof based upon
each holder's  percentage  ownership of the aggregate amount of securities as to
which a request for inclusion  has been made. In such case, no securities  shall
be included in the offering on behalf of  stockholders of the Company who do not
have  piggyback  registration  rights as of the date of this  Agreement.  If any
Holder of Registrable  Securities disapproves of the terms of such underwriting,
it may elect to  withdraw  therefrom  by written  notice to the Company at least
twenty  (20) days  prior to the  effective  date of the  Company's  registration
statement.



                                       19
<PAGE>
                  If a registration under Section 10.1, 10.2 or 10.3 shall be in
connection  with an  underwritten  public  offering,  each Holder of Registrable
Securities  shall be deemed to have agreed by  acquisition  of such  Registrable
Securities not to effect any sale or  distribution,  including any sale pursuant
to Rule 144 or Rule 144A, of any Registrable Security,  and to use such Holder's
reasonable best efforts not to effect any such sale or distribution of any other
Equity  Security  of  the  Company  or  of  any  security  convertible  into  or
exchangeable  or exercisable  for any Equity Security of the Company (other than
as part of such  underwritten  public  offering) within seven (7) days before or
ninety (90) days after the effective  date of such  registration  statement (and
the Company hereby also so agrees,  and agrees to use its best efforts to cause,
each  Holder of any Equity  Security , or of any  security  convertible  into or
exchangeable or exercisable for any Equity  Security,  of the Company  purchased
from the Company at any time other than in a public offering, so to agree.)

                  As a condition to the  inclusion  of the Holder's  Registrable
Securities  in any  registration  statement,  Holder will furnish to the Company
such  information  with  respect to Holder as is required to be disclosed in the
registration  statement (and the prospectus  included therein) by the applicable
rules,  regulations  and  guidelines of the  Commission.  Failure of a Holder to
furnish such  information  or agreement  shall not affect the  obligation of the
Company  under  this  Section  10  to  the  remaining   Holders  of  Registrable
Securities.  So long as any Registrable Securities are outstanding,  the Company
will not grant any  additional  registration  rights to any other  Person  which
would give such other Person the right to have securities registered in priority
to or pro rata with the Holders of Registrable Securities.

                  If,  at any time  after  giving  notice  of the  intention  to
register any securities  under this Section 10.3 and prior to the effective date
of the registration  statement filed in connection with such  registration,  the
Company  shall  determine for any reason not to register  such  securities,  the
Company may, at its election,  give notice of such  determination to the Holders
of  Registrable  Securities  and thereupon will be relieved of its obligation to
register any such securities in connection with such registration.

                  10.4 Procedure. If and whenever the Company is required by the
provisions  of  this  Section  10 to  effect  the  registration  of  Registrable
Securities  under  the  Securities  Act,  the  Company,  at its  expense  and as
expeditiously  as possible  shall, in accordance with the Securities Act and all
applicable  rules  and  regulations,  prepare  and file  with the  Commission  a
registration  statement  with  respect  to such  securities  and  shall  use its
commercially  reasonable efforts to cause such registration  statement to become
and remain effective until the securities covered by such registration statement
have been sold,  and prepare and file with the  Commission  such  amendments and
supplements to such registration  statement and the prospectus contained therein
as may be  necessary  to keep such  registration  statement  effective  and such
registration statement and prospectus accurate and complete until the securities
covered by such registration statement have been sold; provided that the Company
shall not be required to maintain the  effectiveness of any registration  (other
than a  registration  pursuant to Section 10.2 hereof which shall be  maintained
effective until all registered securities are sold or the Holders of 


                                       20
<PAGE>
Registrable  Securities  otherwise  agree in  writing to its  withdrawal)  for a
period longer than  one-hundred  eighty (180) days after the  effective  date of
such  registration  statement.  The Company shall furnish to each of the Holders
participating  in  such  registration  and to  such  Holders'  counsel  and  the
underwriters  of  securities  being  registered  such  number  of  copies of the
registration  statement and each amendment and supplement  thereto,  preliminary
prospectus,  final prospectus and such other documents as such  underwriters and
Holders may  reasonably  request in order to facilitate  the public  offering of
such  securities.  In  addition,  the Company  shall  otherwise  take such other
actions as are  necessary and  appropriate  to effect any such  registration  in
compliance  with all provisions of the  Securities Act and all applicable  state
securities  laws,   including,   without  limitation,   using  its  commercially
reasonable  efforts  to  register  or  qualify  the  securities  covered by such
registration  statement  under  such state  securities  or Blue Sky laws of such
jurisdictions as are reasonably necessary to effect the sale thereof (other than
in any  jurisdiction  where the  Company  would be required to execute a general
consent to service of process  where it has not already  filed such consent) and
such other  actions as each of the Holders  participating  in such  registration
shall  reasonably  request.  The Company shall also promptly  notify each of the
Holders  participating  in  such  registration  at any  time  when a  prospectus
relating  to  Registrable  Securities  is  required  to be  delivered  under the
Securities Act of the happening of any event as a result of which the prospectus
included  in such  registration  statement  contains  an untrue  statement  of a
material  fact or omits to state  any  facts  necessary  to make the  statements
contained  therein  not  misleading  and at the  request of any such  Holder the
Company will promptly  prepare a supplement  or amendment to such  prospectus so
that  as  thereafter  delivered  to the  purchasers  of  such  securities,  such
prospectus  will not contain an untrue  statement of a material  fact or omit to
state any fact  necessary to make the  statements  therein not  misleading.  The
Company  shall  promptly  inform  each  of the  Holders  participating  in  such
registration  of  any  and  all  correspondence  between  the  Company  and  the
Commission with respect to such registration.

                  10.5 Expenses.  As to all  registrations  under Sections 10.1,
10.2 and 10.3,  the Company shall pay all costs,  fees and expenses  incident to
the  performance  and  compliance  by the Company  with  Section 10,  including,
without  limitation,  (A) all  registration  and filing  fees;  (B) all printing
expenses;  (C) all fees and  disbursements  of counsel  and  independent  public
accountants for the Company;  (D) all blue sky fees and expenses (including fees
and expenses of counsel in connection  with blue sky surveys);  (E) all transfer
taxes;  (F) the  entire  expense  of any audits  incident  to such  registration
required  by the  rules  and  regulations  of the  Commission;  (G) the  cost of
distributing  prospectuses  in  preliminary  and  final  form  as  well  as  any
supplements  thereto;  and (H) the  fees and  expenses  of one  counsel  for the
Holders  of  the  Registrable  Securities  being  registered.   Each  Holder  of
Registrable  Securities  shall bear its  proportionate  cost of all underwriting
fees and  commissions  relating to Registrable  Securities,  such  proportionate
amount  to be equal to a  fraction,  the  numerator  of which is the  amount  of
Registrable  Securities  being  registered by such Holder and the denominator of
which is the aggregate number of Registrable  Securities being registered by all
of the Holders of Registrable Securities participating in such registration.

                  10.6 Indemnification.



                                       21
<PAGE>
                               (a) The Company  hereby  agrees to indemnify  and
hold harmless each Holder of Registrable  Securities  included in a registration
statement  pursuant  to this  Section  10 and  each of such  Holder's  partners,
employees,  affiliates, officers and directors and each person who controls such
Holder within the meaning of the Securities Act and any  underwriter (as defined
in the  Securities  Act) for such  Holder,  and any  person  who  controls  such
underwriter  within the meaning of the  Securities  Act,  from and against,  and
agrees to reimburse promptly such Holder, its partners,  employees,  affiliates,
officers,  directors  and  controlling  persons  and each such  underwriter  and
controlling  person of such  underwriter  with  respect  to, any and all claims,
actions (actual or threatened), demands, losses, damages, liabilities, costs and
expenses to which such Holder, its partners,  employees,  affiliates,  officers,
directors or controlling  persons, or any such underwriter or controlling person
of such  underwriter  may become  subject under the Securities Act or otherwise,
insofar as such claims, actions, demands, losses, damages, liabilities, costs or
expenses  arise out of or are based upon any untrue  statement or alleged untrue
statement of any material fact  contained in such  registration  statement,  any
prospectus  contained therein,  or any amendment or supplement thereto, or arise
out of or are based upon the  omission or alleged  omission  to state  therein a
material fact required to be stated  therein or necessary to make the statements
therein,  in light of the circumstances in which they were made, not misleading;
provided,  however,  that the Company will not be liable in any such case to the
extent that any such claim,  action,  demand, loss, damage,  liability,  cost or
expense is caused by an untrue statement or alleged untrue statement or omission
or  alleged  omission  so made in strict  conformity  with  written  information
furnished by such Holder,  such underwriter or such  controlling  person (as the
case may be) specifically for use in the preparation thereof.

                               (b) Each Holder of Registrable  Securities  which
are  included in a  registration  statement  pursuant to this  Section 10 hereby
agrees,  severally  only and not  jointly,  to indemnify  and hold  harmless the
Company, its employees,  Affiliates,  officers and directors and each person who
controls the Company within the meaning of the Securities Act, from and against,
and agrees to  reimburse  the  Company,  its  employees,  Affiliates,  officers,
directors and controlling  persons with respect to, any and all claims,  actions
(actual  or  threatened),  demands,  losses,  damages,  liabilities,  costs  and
expenses to which the Company,  its  officers,  directors,  or such  controlling
persons may become  subject under the  Securities  Act or otherwise,  insofar as
such claims, actions, demands, losses, damages,  liabilities,  costs or expenses
arise out of or are based  upon any untrue or alleged  untrue  statement  of any
material fact contained in such registration statement, any prospectus contained
therein,  or any amendment or supplement  thereto,  or arise out of or are based
upon the  omission or the  alleged  omission  to state  therein a material  fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the circumstances in which they were made, not misleading, in each case
to the extent,  but only to the extent,  that such untrue  statement  or alleged
untrue  statement or omission or alleged  omission was so made in reliance  upon
and in strict  conformity  with  written  information  furnished  by such Holder
specifically for use in the preparation  thereof.  Notwithstanding any provision
to the contrary  contained  herein,  the  aggregate  liability of each Holder of
Registrable  Securities  pursuant  to this  Section  10.6 shall be limited to an
amount equal to the gross proceeds  received by such Holder from the offering of
Registrable Securities registered by such Holder pursuant to this Section 10.



                                       22
<PAGE>
                               (c) Promptly after receipt by a party indemnified
pursuant to the  provisions  of  subsection  (a) or (b) of this  Section 10.6 of
notice of the  commencement  of any action  involving the subject  matter of the
foregoing indemnity provisions, such indemnified party will, if a claim therefor
is to be  made  against  the  indemnifying  party  in  writing  pursuant  to the
provisions  of  subsection  (a) or (b),  notify  the  indemnifying  party of the
commencement  thereof; but the omission so to notify the indemnifying party will
not  relieve it from any  liability  which it may have to an  indemnified  party
otherwise  than under this Section  10.6 and shall not relieve the  indemnifying
party from liability under this Section 10.6. In case any such action is brought
against any indemnified  party,  and it notifies the  indemnifying  party of the
commencement  thereof,  the  indemnifying  party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
parties  similarly  notified,  to  assume  the  defense  thereof,  with  counsel
satisfactory  to  such  indemnified  party;  provided,   however,  that  if  the
defendants  in any such  action  include  both  the  indemnified  party  and the
indemnifying  party and the indemnified  party shall have  reasonably  concluded
that  there  may be legal  defenses  available  to it and/or  other  indemnified
parties  which  are  different  from or  additional  to those  available  to the
indemnifying  party,  the  indemnified  party or parties shall have the right to
select separate counsel (in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties). Upon the permitted assumption by the indemnifying party of the defense
of such action, and approval by the indemnified party of counsel, which approval
will not be unreasonably withheld, the indemnifying party shall not be liable to
such  indemnified  party  under  subsection  (a) or (b) for any  legal  or other
expenses  subsequently incurred by such indemnified party in connection with the
defense thereof (other than reasonable  costs of  investigation)  unless (i) the
indemnified  party shall have employed  separate  counsel in connection with the
assertion of legal  defenses in accordance  with the proviso to the  immediately
preceding sentence,  (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified  party to represent the indemnified party within
a reasonable time, (iii) the indemnifying  party and its counsel do not actively
and vigorously pursue the defense of such action, or (iv) the indemnifying party
has  authorized  the  employment  of counsel  for the  indemnified  party at the
expense of the indemnifying  party. No indemnifying  party shall be liable to an
indemnified  party for any settlement of any action or claim without the consent
of the indemnifying  party and no indemnifying  party may unreasonably  withhold
its consent to any such settlement.  No indemnifying party will consent to entry
of any  judgment  or enter  into any  settlement  which  does not  include as an
unconditional  term  thereof  the giving by the  claimant or  plaintiff  to such
indemnified  party of a release from all liability with respect to such claim or
litigation.

                               (d)  If  the  indemnification   provided  for  in
subsection  (a) or (b) of this  Section  10.6 is  held by a court  of  competent
jurisdiction to be unavailable to a party to be indemnified  with respect to any
claims,  actions,  demands,  losses,  damages,  liabilities,  costs or  expenses
referred to therein, then each indemnifying party under any such subsection,  in
lieu of  indemnifying  such  indemnified  party  thereunder,  hereby  agrees  to
contribute to the amount paid or payable by such  indemnified  party as a result
of such  claims,  actions,  demands,  losses,  damages,  liabilities,  costs  or
expenses in such  proportion as is appropriate to reflect the relative  benefits
received by such indemnifying 


                                       23
<PAGE>
party on the one hand and the  indemnified  party on the other from the  related
offering.  If, however,  the allocation  provided by the  immediately  preceding
sentence is not permitted by applicable law, then each indemnifying  party shall
contribute to such amount payable by such indemnified  person in such proportion
as is  appropriate  to  reflect  not only such  relative  benefits  but also the
relative fault of the indemnifying  party on the one hand and of the indemnified
party on the other in connection with the statements or omissions which resulted
in such  claims,  actions,  demands,  losses,  damages,  liabilities,  costs  or
expenses, as well as any other relevant equitable  considerations.  The relative
benefits  received by an  indemnifying  party on the one hand and an indemnified
party on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before  deducting  expenses)  received by each party
bear to the total net proceeds  from the  offering  received by each other party
and,  with  respect to an  underwriter,  the total  underwriting  discounts  and
commissions  received by such underwriter,  and in each case as set forth in the
table on the cover page of the related  prospectus.  The  relative  fault of the
indemnifying party and of the indemnified party shall be determined by reference
to,  among other  things,  whether the untrue or alleged  untrue  statement of a
material  fact or the  omission  or alleged  omission  to state a material  fact
relates to information  supplied by the indemnifying party or by the indemnified
party and the parties'  relative  intent,  knowledge,  access to information and
opportunity to correct or prevent such statement or omission.

                               No person guilty of fraudulent  misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution  hereunder  from any person  who was not guilty of such  fraudulent
misrepresentation.

                               (e) In  addition  to its other  obligation  under
this Section 10.6, the Company further agrees to reimburse  promptly each Holder
of Registrable  Securities included in a registration statement pursuant to this
Agreement (and each of such Holder's controlling persons,  officers,  directors,
and underwriters  (and controlling  persons of such  underwriters)) on a monthly
basis for all  reasonable  legal  fees,  expenses  and other  fees and  expenses
incurred by such Holder in connection with investigating or defending any claim,
action, investigation,  inquiry or other proceeding arising out of or based upon
any statement or omission,  or any alleged statement or admission,  described in
subsection (a) of this Section 10.6,  notwithstanding  the possibility that such
payments  might later be held to be improper.  To the extent that any payment is
ultimately  held to be  improper,  each  person  receiving  such  payment  shall
promptly refund such payment.

                  10.7 Delay in  Registration.  Notwithstanding  anything to the
contrary herein,  the Company may postpone any  registration  which is requested
pursuant to this  Agreement  for a reasonable  period of time (not  exceeding 30
days) if its Board determines in good faith and a responsible officer so advises
the Holders  participating in such  registration in writing that it is advisable
to  defer  public  disclosure  of  material  corporate   developments  or  other
information,  and that such registration and the disclosures required to be made
pursuant  thereto could have a material  adverse effect on the Company or on the
public market for its securities;  provided that the right to delay registration
pursuant to this Section  10.7 shall not be exercised  more than one time during
any consecutive 12-month period.



                                       24
<PAGE>
         11. Right of First Refusal.

                  11.1 Subsequent Offerings.  Each Holder of shares of Preferred
Stock issued  pursuant  hereto or shares of Class A Common Stock into which such
shares of Preferred  Stock were converted  shall have the right of first refusal
to purchase  such Holder's pro rata share (based on the portion of all shares of
Preferred  Stock held or formerly held by such Holder) of the greater of (i) the
sum of each Holder's Class A Common Percentage of, or (ii) $5,000,000  {(divided
among such  Holders  based on their pro rata  share)} in the  aggregate  of, any
Equity  Securities that the Company may, from time to time,  propose to sell and
issue after the Closing Date, other than Equity  Securities  excluded by Section
11.2 hereof.  Each Holder's Class A Common  Percentage is the ratio of the total
number  of shares of Class A Common  Stock  which  such  Holder is  entitled  to
receive upon  conversion of its shares of Preferred Stock  immediately  prior to
the issuance of such Equity  Securities to the total number of shares of Class A
Common  Stock  outstanding  immediately  prior to the  issuance  of such  Equity
Securities.  The right to participate in subsequent  offerings  pursuant to this
Section  11.1 shall  terminate  as to a Holder as of the earlier of (i) the date
such Holder no longer owns any shares of Preferred Stock or Class A Common Stock
issued upon the conversion of Preferred  Stock or (ii) the date that is one year
after such Holder has  converted  all shares of Preferred  Stock held by it into
shares of Class A Common Stock.

                  11.2  Excluded   Securities.   The  rights  of  first  refusal
established by this Section 11 shall have no application to any of the following
Equity  Securities:  (a) shares of Common Stock issued to employees or directors
of or consultants or advisors to the Company under employee or management  stock
option  agreements or plans;  (b) the shares of Preferred  Stock issued pursuant
hereto; (c) stock issued pursuant to any rights or agreements including, without
limitation,  convertible  securities,  options and  warrants,  provided that the
rights of first refusal  established  by this Section 11 applied with respect to
the initial sale or grant by the Company of all such rights or  agreements;  (d)
any Equity  Security  issued for a  consideration  other than cash pursuant to a
merger,  consolidation,  acquisition or similar  business  combination;  (e) any
Equity Security that is issued by the Company as part of an underwritten  public
offering;  (f) shares of Common Stock issued in connection with any stock split,
stock  dividend or reverse stock split;  and (g) any Equity  Security  which the
Holders of at least 80% of the then-outstanding shares of Preferred Stock issued
pursuant  hereto or shares of Class A Common  Stock into  which  such  shares of
Preferred  Stock were  converted,  agree in writing shall not be subject to this
Section 11.

                  11.3 Exercise of Rights. If and each time the Company proposes
to issue  Equity  Securities,  it shall  give  each  such  Holder  of  shares of
Preferred  Stock or shares of Class A Common  Stock into  which  such  shares of
Preferred  Stock were  converted  written  notice (the  "Equity  Notice") of its
intention,  describing the Equity Securities (including, without limitation, the
voting  powers,  preferences  or other  special  rights and the  qualifications,
limitations or restrictions  thereof), the issuance price, the general terms and
conditions  upon which the Company  proposes to issue the same and each Holder's
applicable  pro rata  share.  Each  Holder  shall have thirty (30) days from the
giving of the Equity  Notice to agree to  purchase  its pro rata share of Equity
Securities  for the price and upon the terms  and  conditions  specified  in the
Equity Notice by giving  written  notice to the Company and stating  therein the
quantity  of  Equity  Securities  such  Holder  intends  to  purchase,  it being
understood  that each Holder may in its sole  discretion  purchase any or all of
its pro rata  share of Equity  Securities.  Each  Holder  shall  


                                       25
<PAGE>
have a right of over-allotment such that if any Holder of shares of Common Stock
fails to exercise  its rights  hereunder to purchase its entire pro rata portion
of the Equity Securities,  the other such Holders may purchase any or all of the
nonpurchasing  Holder's  portion on a pro rata basis,  within ten (10) days from
the end of such thirty (30) day period.

                  11.4 Issuance of Equity  Securities to other  Persons.  If the
Holders of shares of Preferred Stock issued pursuant hereto or shares of Class A
Common Stock into which such shares of Preferred  Stock were  converted  fail to
exercise  in full the rights of first  refusal  within  forty (40) days from the
date of the giving of the Equity  Notice to the Holders,  the Company shall have
ninety (90) days thereafter to complete the sale of any of the Equity Securities
in respect of which the Holders' rights were not exercised,  at a price and upon
general terms and conditions no more  favorable to the  purchasers  thereof than
those specified in the Company's  notice to the Holders pursuant to Section 11.3
hereof.  If the Company has not sold all of these Equity  Securities within such
ninety (90) days,  the Company  shall not  thereafter  issue or sell any of such
Equity  Securities,  without first  offering  such  securities to the Holders of
shares of  Preferred  Stock issued  pursuant  hereto or shares of Class A Common
Stock into which such shares of  Preferred  Stock were  converted  in the manner
provided above.

         12. Enforcement.

                  12.1 Remedies at Law or in Equity.  If any Default shall occur
or if any representation or warranty made by or on behalf of the Company in this
Agreement or in any certificate,  report or other instrument  delivered under or
pursuant to any term hereof shall be untrue or  misleading  in any respect as of
the  date  of  this  Agreement  or as of the  date  it was  made,  furnished  or
delivered,  the Holder of any  Security  may  proceed to protect and enforce its
rights by suit in equity or action at law, whether for the specific  performance
of any term contained in this Agreement or the  Designation or for an injunction
against  the  breach  of any such  term or in aid of the  exercise  of any power
granted in this Agreement or the  Designation,  or to enforce any other legal or
equitable  right of such  Holder of any such  Securities,  or to take any one or
more of such actions.  In the event a Holder  brings such an action  against the
Company,  the prevailing party in such dispute shall be entitled to recover from
the losing party all fees,  costs and  expenses of  enforcing  any right of such
prevailing  party under or with respect to this  Agreement  or the  Designation,
including,   without  limitation,  such  fees  and  expenses  of  attorneys  and
accountants,  which  shall  include,  without  limitation,  all fees,  costs and
expenses of appeals.

                  12.2  Cumulative  Remedies.  None  of the  rights,  powers  or
remedies  conferred  upon any  Holder of shares  of  Preferred  Stock or Class A
Common Stock shall be mutually  exclusive,  and each such right, power or remedy
shall be  cumulative  and in  addition to every  other  right,  power or remedy,
whether conferred hereby or by the Designation or now or hereafter  available at
law, in equity, by statute or otherwise.

                  12.3 No Implied Waiver.  Except as expressly  provided in this
Agreement,  no course of dealing  between the Company and the  Investors  or the
Holder of any  Security  and no delay in  exercising  any such  right,  power or
remedy conferred hereby 


                                       26
<PAGE>
or by the Designation now or hereafter existing at law, in equity, by statute or
otherwise, shall operate as a waiver of, or otherwise prejudice, any such right,
power or remedy.

         13.  Definitions.  Unless the  context  otherwise  requires,  the terms
defined in this  Section 13 shall have the  meanings  herein  specified  for all
purposes of this Agreement,  applicable to both the singular and plural forms of
any of the terms herein defined. All accounting terms defined in this Section 13
and those accounting terms used in this Agreement not defined in this Section 13
shall,  except as otherwise provided for herein, be construed in accordance with
those generally accepted  accounting  principles that the Company is required to
employ by the terms of this  Agreement.  If and so long as the  Company  has any
Subsidiary, the accounting terms defined in this Section 13 and those accounting
terms  appearing in this  Agreement  but not defined in this Section 13 shall be
determined on a consolidated basis for the Company and each of its Subsidiaries,
and the financial statements and other financial  information to be furnished by
the Company pursuant to this Agreement shall be consolidated.

                  "Affiliate" shall mean any Person which directly or indirectly
controls,  is  controlled  by, or is under common  control  with,  the indicated
Person. For purposes of this definition  "control" when used with respect to any
Person includes, without limitation, the direct or indirect beneficial ownership
of more than ten  percent  (10%) of the voting  securities  or voting  equity or
partnership  interests  of such  Person,  or the  power to  direct  or cause the
direction of the  management or policies of such Person,  whether by contract or
otherwise.

                  "Agreement" shall mean this Agreement.

                  "Applicable  Law" shall mean all provisions of  constitutions,
statutes,  rules,  regulations,  and orders of governmental bodies or regulatory
agencies applicable to the Company, including, without limitation, the Licenses,
the Communications Act of 1934, as amended,  Environmental Laws, and Title 17 of
the United States Code and all orders and decrees of all courts and  arbitrators
in  proceedings  or  actions  to which the  Company is a party or by which it is
bound.

                  "Articles"  shall have the meaning assigned to it in Section 1
hereof.

                  "Authorized Signatory" shall mean such senior personnel of the
Company as may be duly  authorized  and  designated in writing by the Company to
execute documents, agreements and instruments on behalf of the Company.

                  "BHCA Issue" shall have the meaning  assigned to it in Section
8.2 hereof.

                  "Bank Holding Company Act" shall have the meaning  assigned to
is in Section 8.2 hereof.

                  "Board" shall mean the Board of Directors of the Company.



                                       27
<PAGE>
                  "Business  Day"  shall mean a day on which  banks and  foreign
exchange  markets are open for the  transaction  of business  required  for this
Agreement in London and New York, as relevant to the determination to be made or
action to be taken.

                  "Class A Common  Stock" shall have the meaning  assigned to it
in Section 1 hereof.

                  "Class B Common  Stock" shall have the meaning  assigned to it
in Section 4.1 hereof.

                  "Common  Stock"  shall  have  the  meaning  assigned  to it in
Section 4.1 hereof.

                  "Commission"   shall   mean  the   Securities   and   Exchange
Commission.

                  "Company SEC Reports" shall have the meaning assigned to it in
Section 5.21 hereof.

                  "Credit  Facilities"  shall mean (i) that certain  $50,000,000
Amended and Restated Credit  Agreement,  dated as of November 14, 1997,  between
GCI  Holdings,  Inc., a  wholly-owned  indirect  subsidiary of the Company ("GCI
Holdings"),  as borrower,  NationsBank of Texas, N.A., as administrative  agent,
Credit  Lyonnais New York Branch,  as  documentation  agent,  and TD  Securities
(USA),  Inc., as syndication agent, as amended,  (ii) that certain  $200,000,000
Amended and Restated Credit  Agreement,  dated as of November 14, 1997,  between
GCI Holdings, as borrower,  NationsBank of Texas, N.A., as administrative agent,
Credit  Lyonnais New York Branch,  as  documentation  agent,  and TD  Securities
(USA),  Inc., as syndication  agent,  as amended,  (iii) that certain Credit and
Security Agreement dated as of January 27, 1998 among Alaska United Fiber System
Partnership,  Credit  Lyonnais New York Branch,  NationsBank of Texas,  N.A., TD
Securities  (USA),  Inc. and the other lenders referred to therein,  as amended,
and  (iv)  the  Company's  9 3/4%  Senior  Notes  in  the  principal  amount  of
$180,000,000.

                  "Debt  Instrument"  shall have the  meaning  assigned to it in
Section 9 hereof.

                  "Default"   shall  mean  a  default  or  failure  in  the  due
observance or performance of any covenant, condition or agreement on the part of
the Company or any of its  Subsidiaries  to be observed or  performed  under the
terms of this  Agreement  or the  Designation,  if such  default  or  failure in
performance shall remain unremedied for ten (10) days.

                  "Designation" shall have the meaning assigned to it in Section
1 hereof.

                  "Environmental  Laws" shall mean any and all  federal,  state,
local or municipal  laws,  rules,  orders,  regulations,  statutes,  ordinances,
codes, permit conditions,  decrees or requirements of any governmental authority
regulating, relating to or imposing liability or standards of conduct concerning
environmental protection matters, including,  without limitation, those relating
to releases,  discharges,  emissions or disposals to air, 


                                       28
<PAGE>
water,  land or ground water,  to the withdrawal or use of ground water,  to the
use,  handling  or  disposal  of  polychlorinated  biphenyals,  asbestos or urea
formaldehyde,  to the  treatment,  storage,  disposal or management of hazardous
substances (including, without limitation,  petroleum, crude oil or any fraction
thereof,  or other  hydrocarbons),  pollutants or  contaminants,  to exposure to
toxic,  hazardous  or other  controlled,  prohibited  or  regulated  substances,
including,   without   limitation,   any  provisions  under  the   Comprehensive
Environmental  Response,  Compensation and Liability Act of 1980, as amended (42
U.S.C. ss. 9601 et seq.) or the Resource  Conservation and Recovery Act of 1976,
as amended (42 U.S.C. ss. 6901, et seq.).

                  "Equity  Notice"  shall  have the  meaning  assigned  to it in
Section 11.3 hereof.

                  "Equity  Security" shall mean any stock or similar security of
the Company or any  security  (whether  stock or  indebtedness)  convertible  or
exchangeable,  with or without  consideration,  into or for any stock or similar
security or any security (whether stock or indebtedness) carrying any warrant or
right to  subscribe  to or  purchase  any stock or similar  security or any such
warrant or right.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of  1974,  as in  effect  on the  date  hereof  and as such  Act may be  amended
thereafter from time to time.

                  "ERISA   Affiliate"   shall  mean  any  Person   which  is  an
"Affiliate"  of the Company  within the  meaning of Section 414 of the  Internal
Revenue  Code and  which,  together  with the  Company,  is  treated as a single
employer for purposes of such Section 414.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

                  "FCC" shall mean the Federal Communications  Commission or any
successor agency.

                  "FCC License" shall mean any community antennae relay service,
broadcast  auxiliary  license,  earth  station  registration,   business  radio,
microwave or special safety radio service  license issued by the FCC pursuant to
the Communications Act of 1934, as amended,  and any other FCC license from time
to time necessary or advisable for the operation of the Company's business.

                  "Financials"  shall have the meaning assigned to it in Section
5.11 hereof.

                  "Hazardous  Materials"  shall  mean all  toxic  and  hazardous
substances and wastes and petroleum products.

                  "Holder" of any Security  shall mean the record or  beneficial
owner of such Security.



                                       29
<PAGE>
                  "Holder  Notice" shall have the meaning  assigned to such term
in Section 10.3 hereof.  "Initiating  Holder" shall have the meaning assigned to
such term in Section 10.1 hereof.

                  "Internal  Revenue Code" shall mean the Internal  Revenue Code
of 1986, as amended.

                  "Investor" and "Investors"  shall have the meaning assigned to
it in the introductory paragraph of this Agreement.

                  "Licenses"  shall mean any  license,  permit,  certificate  of
need, authorization,  certification, accreditation, franchise, approval or grant
of rights,  whether  based upon any  agreement,  statute,  order,  ordinance  or
otherwise granted by any governmental authority to the Company or any Subsidiary
necessary  or  appropriate  for the Company or any  Subsidiary  to engage in its
business as currently  conducted,  including,  without  limitation,  in order to
provide telecommunication, local, long distance and wireless telephone services,
cable  television  services or internet  services to residential,  commercial or
governmental users, including,  without limitation, FCC Licenses,  together with
any amendment, modification or replacement with respect thereto.

                  "Lien" shall mean with respect to any property,  any mortgage,
lien,  pledge,  charge,  security  interest  or other  encumbrance  of any kind,
whether or not filed,  recorded or  otherwise  perfected  under  applicable  law
(including any conditional sale or other title retention agreement and any lease
deemed to  constitute a security  interest and any option or other  agreement to
give any security interest).

                  "Mandatory  Redemption"  shall  mean  the  redemption  by  the
Company of the shares of Preferred  Stock on the terms and under the  conditions
set forth in Section 4 of the Designation.

                  "Mandatory Redemption Event" shall mean any event described in
Section 4 of the terms of the Preferred Stock set forth in the Designation,  the
occurrence  of which shall result in the  mandatory  redemption of the Preferred
Stock.

                  "Material  Agreement" shall have the meaning assigned to it in
Section 5.14 hereto.

                  "Materially  Adverse Effect" shall mean any materially adverse
effect upon the business operation,  assets,  liabilities,  financial condition,
results  of  operations  or  business  prospects  of the  Company  or any of its
Subsidiaries, or the ability of the Company to perform this Agreement or observe
the  terms of the  Designation,  resulting  from any act,  omission,  situation,
status, event or undertaking, either singly or taken together.



                                       30
<PAGE>
                  "Multiemployer  Plan"  shall  have the  meaning  set  forth in
Section 4001(a)(3) of ERISA.

                  "Necessary  Authorizations"  shall  mean  all  authorizations,
consents, permits, exemptions,  approvals and licenses from, and all filings and
legislations  with, and all required  reports to, any governmental or regulatory
authority,  including without limiting the foregoing the Licenses and approvals,
licenses,  filings and registrations  under the  Communications  Act of 1934, as
amended, necessary in order to enable the Company to consummate the transactions
contemplated by this Agreement.

                  "Optional Redemption" shall mean the redemption, at the option
of the Investors or the Company,  of the shares of Preferred  Stock on the terms
and on the conditions as set forth in Sections 4 and 5 of the Designation.

                  "Person" shall include any natural person, corporation, trust,
association,  company,  partnership,  joint  venture  and other  entity  and any
government, governmental agency, instrumentality or political subdivision.

                  "Plan" shall mean an employee  benefit plan within the meaning
of  Section  3(3) of ERISA or any other plan  maintained  for  employees  of any
Person or any ERISA Affiliate of such Person.

                  "Preferred  Stock"  shall have the  meaning  assigned to it in
Section 1 hereof.

                  "Property" shall mean any real property or personal  property,
plant,  building,  facility,  structure,   underground  storage  tank  or  unit,
equipment, inventory or other asset, owned, leased or operated by the Company or
any Subsidiary of the Company (including,  without limitation, any surface water
thereon or adjacent thereto, and soil and groundwater thereunder).

                  "Proposed Amendments" shall have the meaning assigned to it in
Section 6.5 hereof.

                  "Registrable Securities" shall have the meaning assigned to it
in Section 10 hereof.

                  "Reportable  Event"  shall have the meaning set forth in Title
IV of ERISA.

                  "Required  Payment"  shall have the meaning  assigned to it in
Section 2 hereof.

                  "Securities"  shall have the meaning assigned to it in Section
1 hereof.

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended.



                                       31
<PAGE>
                  "Subsidiary" shall mean (i) any corporation of which fifty-one
percent  (51%)  or more of the  voting  stock,  or any  partnership  or  limited
liability  company  of which  fifty-one  percent  (51%)  or more of  outstanding
interests,  is at any time owned by the Company,  or by one or more Subsidiaries
of the Company,  or by the Company and one or more  Subsidiaries of the Company,
and (ii) any other entity which is controlled or capable of being  controlled by
the Company or by one or more  Subsidiaries  of the Company r by the Company and
one or more Subsidiaries of the Company.


         14. Miscellaneous.

                  14.1 Waivers and  Amendments.  With the written consent of the
Holders of a  majority  of the  outstanding  shares of  Preferred  Stock or such
higher percentage as is expressly stated {herein} in this Section 14.1 or in the
Designation, the obligations of the Company and the rights of the Holders of the
Securities  under this  Agreement and the rights of the Holder of the Securities
under  the  Designation  may be  waived  (either  generally  or in a  particular
instance,  either  retroactively  or  prospectively  and either for a  specified
period of time or  indefinitely),  and with the same consent the  Company,  when
authorized by resolution of its Board, may enter into a supplementary  agreement
for the  purpose  of adding  any  provisions  to or  changing  in any  manner or
eliminating  any of the  provisions  of this  Agreement  or of any  supplemental
agreement or modifying in any manner the rights and obligations hereunder of the
Holders of the  Securities  and the  Company;  provided,  however,  that no such
waiver or  supplemental  agreement  shall (a)  affect  any of the  rights of any
Holder of a Security  created by the  Designation  (other than rights created by
Section  7 of  the  Designation)  or by the  Alaska  Corporations  Code  without
compliance  with all  applicable  provisions of the  Designation  and the Alaska
Corporations  Code, (b) reduce the aforesaid  proportion of Preferred Stock, the
Holders  of  which  are  required  to  consent  to any  waiver  or  supplemental
agreement,  without the consent of the Holders of all of the shares of Preferred
Stock or (c) adversely  affect the rights of Holders of Preferred Stock pursuant
to Section 10 {or}, 11 or 12 hereof without the written consent of Holders of at
least  80%  of  the  then  outstanding  shares  of  Preferred  Stock.  Upon  the
effectuation  of  each  such  waiver,  consent  or  agreement  of  amendment  or
modification,  the Company shall promptly give written notice thereof to all the
Holders of the shares of Preferred Stock in writing.  Neither this Agreement nor
the Designation  nor any provision  hereof or thereof,  may be amended,  waived,
discharged or terminated orally or by course of dealing, but only by a statement
in writing signed by the party against which enforcement of the change,  waiver,
discharge  or  termination  is  sought,  except to the extent  provided  in this
Section  14.1.  Specifically,   but  without  limiting  the  generality  of  the
foregoing, the failure of any Holder at any time or times to require performance
of any provision  hereof or of the Designation by the Company shall in no manner
affect the right of any Holder at a later time to enforce the same. No waiver by
any party of the breach of any term or provision  contained in this Agreement or
the  Designation  in any  one or more  instances,  shall  be  deemed  to be,  or
construed as, a further or continuing  waiver of any such breach, or a waiver of
the  breach  of any other  term or  covenant  contained  in the  Agreement,  the
Designation.

                  14.2 Rights of Holders  Inter Se.  Each  Holder of  Securities
shall have the absolute  right to exercise or refrain from  exercising any right
or  rights  which 


                                       32
<PAGE>
such Holder may have by reason of this  Agreement  or any  Security,  including,
without limitation,  the right to consent to the waiver of any obligation of the
Company under this Agreement and to enter into an agreement with the Company for
the purpose of modifying  this  Agreement or any  agreement  effecting  any such
modification,  and such Holder shall not incur any liability to any other Holder
or  Holders  of  Securities  with  respect  to  exercising  or  refraining  from
exercising any such right or rights.

                  14.3  Notices.3  All  notices,  requests,  consents  and other
communications  required or permitted hereunder shall be in writing and shall be
delivered, or mailed first class postage prepaid, registered or certified mail,

                               (a) If to the  Investors to each of them at their
                               respective  addresses  listed on Annex A attached
                               hereto.

                               or

                               (b) If to the Company, at the address first above
                               written or at such other  address as the  Company
                               may specify by written notice to Investor,

and each such notice,  request,  consent and other  communication  shall for all
purposes of the  Agreement  be treated as being  effective  or having been given
when delivered, if delivered personally,  or, if sent by mail, at the earlier of
its  actual  receipt or three (3) days  after the same has been  deposited  in a
regularly maintained receptacle for the deposit of United States mail, addressed
and postage prepaid as aforesaid.

                  14.4  Survival of  Representations  and  Warranties,  etc. All
representations  and warranties  made in, pursuant to or in connection with this
Agreement  shall  survive the  execution  and  delivery of this  Agreement,  any
investigation  at any time made by or on behalf of the  Investors,  and the sale
and purchase of the Securities and payment therefor. All statements contained in
any  certificate,  instrument or other writing  delivered by or on behalf of the
Company   pursuant  hereto  or  in  connection  with  or  contemplation  of  the
transactions herein contemplated shall constitute representations and warranties
by the  Company  hereunder.  Any  claim  against  the  Company  based  upon  any
inaccuracy  in any of the  representations  or breach  of any of the  warranties
hereunder must be asserted  against the Company,  either by written notice given
to the Company  specifying with reasonable  particularity the claimed inaccuracy
or breach or by  institution  of an action at law or suit in equity  against the
Company and the serving of the process and complaint  with respect  thereto upon
the Company, within five (5) years from the Closing Date.

                  14.5 Severability. Should any one or more of the provisions of
this  Agreement or of any agreement  entered into pursuant to this  Agreement be
determined  to be  illegal  or  unenforceable,  all  other  provisions  of  this
Agreement and of each other  agreement  entered into pursuant to this Agreement,
shall be given effect separately from the provision or provisions  determined to
be illegal or unenforceable and shall not be affected thereby.



                                       33
<PAGE>
                  14.6 Parties in Interest. All the terms and provisions of this
Agreement  shall be binding upon and inure to the benefit of and be  enforceable
by the  respective  successors  and  assigns of the parties  hereto,  whether so
expressed  or not,  and,  in  particular,  shall  inure to the benefit of and be
enforceable  by the  Holder  or  Holders  at the time of any of the  Securities.
Subject to the immediately  preceding sentence,  this Agreement shall not run to
the  benefit  of or be  enforceable  by any  Person  other  than a party to this
Agreement and its successors and assigns.

                  14.7 Headings.  The headings of the Sections and paragraphs of
this Agreement  have been inserted for  convenience of reference only and do not
constitute a part of this Agreement.

                  14.8 Choice of Law. It is the  intention  of the parties  that
the internal  substantive  laws, and not the laws of conflicts,  of the State of
New York shall govern the  enforceability  and validity of this  Agreement,  the
construction of its terms and the interpretation of the rights and duties of the
parties;  provided  that the  Designation  shall be  governed by the laws of the
State of Alaska.

                  14.9 Expenses. The Company will promptly pay all out-of-pocket
expenses of the  Investors  in  connection  with the  preparation,  negotiation,
execution  and  delivery  of  this  Agreement  and  the   Designation   and  the
transactions   contemplated  hereunder  and  thereunder,   whether  or  not  the
transactions contemplated by this Agreement are consummated,  including, but not
limited to, the fees and disbursements of Paul, Hastings, Janofsky & Walker LLP,
special counsel for Toronto Dominion Investors, Inc. and Edens Snodgrass Nichols
&  Breeland,  P.C.,  special  counsel  to Prime  VIII,  L.P.  and all  costs and
out-of-pocket  expenses of obtaining  performance  under this  Agreement and the
Designation or of preparing, negotiating, executing and delivering any amendment
of or consent or waiver under this Agreement or the Designation at the Company's
request,  including but not limited to,  reasonable fees and expenses of counsel
for the  Investors.  The Company  shall also  reimburse  each  Investor  for any
reasonable  out-of-pocket  expenses  incurred  by  it  in  connection  with  its
attendance  at any  meetings  of the Board  and/or any  shareholders'  meetings,
including without limitation, any expenses for traveling and lodging.

                  14.10  Counterparts;  Telefacsimile.  This  Agreement  and any
certificate  contemplated  hereby may be executed in any number of  counterparts
and by different parties hereto in separate  counterparts,  with the same effect
as if all parties had signed the same document.  All such counterparts  shall be
deemed an original, shall be construed together and shall constitute one and the
same  instrument.  Delivery of an executed  counterpart  of this  Agreement  any
certificate  or other  document  contemplated  hereby by facsimile  transmission
shall be as effective as delivery of a manually executed counterpart hereof.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       34
<PAGE>
               [Preferred Stock Purchase Agreement Signature Page]

                     If you are in agreement with the foregoing, please sign the
form of  acceptance  on the enclosed  counterpart  of this letter and return the
same to the  undersigned,  whereupon this letter shall become a binding contract
between you and the undersigned.

                                        Very truly yours,

                                        GENERAL COMMUNICATION, INC.


                                        By:      
                                             President

                                        and
                                             Secretary

The foregoing Agreement is hereby accepted as of the date first above written.

INVESTORS:

TORONTO DOMINION INVESTMENTS, INC.

By:
Name:
Title:


PRIME VIII, L.P.


By:
Name:
Title:




                                       
<PAGE>
                                     ANNEX A
<TABLE>
                                List of Investors

<CAPTION>
 Investors:                                                   Applicable %:               # of Shares:
 ----------                                                   -------------               ------------
         <S>                                                       <C>                     <C>  
         Toronto Dominion Investments, Inc.                        75%                     15,000

         Address for Notices:
         --------------------
         31 West 52nd Street
         New York, New York 10019-6101
         Attention: Chris Shipman

         with a copy to:

         Toronto Dominion Investments, Inc. 
         (principal executive office)
         909 Fannin Street
         Houston, Texas 77010
         Attention: Martha Gariepy


         Prime VIII, L.P.                                          25%                      5,000

         Address for Notices:
         --------------------
         3000 One American Center
         600 Congress Avenue
         Austin, Texas   78701
         Attention: [Dean Greenwood]
</TABLE>
<PAGE>
<TABLE>
                                TABLE OF CONTENTS

                             (Not Part of Agreement)
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>      <C>                                                                                                    <C>
1.       Authorization of Securities..............................................................................1

2.       Sale and Purchase of Preferred Stock.....................................................................1

3.       Closing..................................................................................................1
         3.1          Closing.....................................................................................1

4.       Register of Securities;  Restrictions  on Transfer of Securities;  Removal of  Restrictions on 
         Transfer of Securities...................................................................................2
         4.1          Register of Securities......................................................................2
         4.2          Restrictions on Transfer....................................................................2
         4.3          Removal of Securities Act Transfer Restrictions.............................................4

5.       Representations and Warranties by the Company............................................................4
         5.1          Organization; Power; Qualification; Capital Stock...........................................4
         5.2          Authorization...............................................................................5
         5.3          Subsidiaries................................................................................5
         5.4          Compliance with Other Documents and Contemplated Transactions...............................5
         5.5          Business....................................................................................5
         5.6          Licenses, etc...............................................................................5
         5.7          Compliance with Law.........................................................................6
         5.8          Litigation..................................................................................6
         5.9          Financial Statements........................................................................6
         5.10         No Adverse Change...........................................................................6
         5.11         Absence of Default, etc.....................................................................6
         5.12         Environmental Matters.......................................................................6
         5.13         Investment Company Act; Public Utility Holding Company Act..................................7
         5.14         Securities Laws.............................................................................7
         5.15         Disclosure; SEC Filings.....................................................................8
         5.16         Year 2000 Compliance........................................................................8

6.       Conditions Precedent to Investor's Obligations at the Closing............................................9
         6.1          Representations and Warranties..............................................................9
         6.2          Simultaneous Purchase by Investors..........................................................9
         6.3          No Material Adverse Change..................................................................9
         6.4          Designation.................................................................................9
         6.5          Board Resolutions...........................................................................9
         6.6          Qualification Under State Securities Laws..................................................10
         6.7          Delivery of Documents......................................................................10
         6.8          Proceedings and Documents..................................................................11

7.       Affirmative Covenants...................................................................................11


                                       i
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>      <C>                                                                                                    <C>
         7.1          Preservation of Existence and Similar Matters..............................................11
         7.2          Compliance with Applicable Law.............................................................12
         7.3          Maintenance of Properties..................................................................12
         7.4          Accounting Methods and Financial Records...................................................12
         7.5          Maintain Insurance.........................................................................12
         7.6          Pay Taxes and Other Liabilities............................................................12
         7.7          Financial Reports..........................................................................12
         7.8          Other Reports..............................................................................13
         7.9          Notice of Litigation and Other Matters.....................................................14
         7.10         Board of Directors.........................................................................14
         7.11         Proxy Statement............................................................................14
         7.12         Replacement of Certificates................................................................15
         7.13         Compliance With Designation  and Bylaws....................................................15
         7.14         Notice of Failure to Comply with Total Leverage Test.......................................15
         7.15         Notice of Occurrence of Triggering Event...................................................15
         7.16         Amendments to or Repeal of Bylaws..........................................................15

8.       Investor Regulatory Compliance..........................................................................15
         8.1          Violation of BHCA..........................................................................15
         8.2          BHCA Issue.................................................................................15

9.       Right to Demand Exchange of Preferred Stock; Reincorporation of the Company or Change in Alaskan Law....16

10.      Registration Rights.....................................................................................17
         10.1         Demand Registration........................................................................17
         10.2         Prompt Registration of Class A Common Stock................................................18
         10.3         Piggyback Rights...........................................................................18
         10.4         Procedure..................................................................................19
         10.5         Expenses...................................................................................20
         10.6         Indemnification............................................................................21
         10.7         Delay in Registration......................................................................23

11.      Right of First Refusal..................................................................................24
         11.1         Subsequent Offerings.......................................................................24
         11.2         Excluded Securities........................................................................24
         11.3         Exercise of Rights.........................................................................24
         11.4         Issuance of Equity Securities to other Persons.............................................25

12.      Enforcement.............................................................................................25
         12.1         Remedies at Law or in Equity...............................................................25
         12.2         Cumulative Remedies........................................................................25
         12.3         No Implied Waiver..........................................................................25

13.      Definitions.............................................................................................26

14.      Miscellaneous...........................................................................................30


                                       ii
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>      <C>                                                                                                    <C>
         14.1         Waivers and Amendments.....................................................................30
         14.2         Rights of Holders Inter Se.................................................................31
         14.3         Notices....................................................................................31
         14.4         Survival of Representations and Warranties, etc............................................32
         14.5         Severability...............................................................................32
         14.6         Parties in Interest........................................................................32
         14.7         Headings...................................................................................32
         14.8         Choice of Law..............................................................................32
         14.9         Expenses...................................................................................33
         14.10        Counterparts; Telefacsimile................................................................33


                                      iii
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