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EXHIBIT 1.1
UNDERWRITING AGREEMENT
PhoneTel Technologies, Inc.
$[110,000,000]
% Senior Notes due 2006
November , 1996
J.P. MORGAN SECURITIES INC.
CIBC WOOD GUNDY SECURITIES CORP.
ING BARINGS (U.S.) SECURITIES, INC.
SOUTHCOAST CAPITAL CORPORATION
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
PhoneTel Technologies, Inc., an Ohio corporation (the "Company"),
proposes to issue and sell to the underwriters listed on Schedule I hereto
(collectively, the "Underwriters") $[110,000,000] aggregate principal amount of
its % Senior Notes due 2006 (the "Notes"). The Notes will be issued pursuant
to the provisions of an Indenture to be dated as of November , 1996 (the
"Indenture") among the Company, the Guarantors (as hereinafter defined) and
Marine Midland Bank, as Trustee (the "Trustee"). The Notes will be
unconditionally guaranteed, jointly and severally, on a senior unsecured basis
initially by the subsidiaries of the Company listed on Schedule II hereto (each
a "Guarantor" and collectively the "Guarantors"). Such guarantees are
hereinafter referred to as the "Guarantees," and the Notes and the Guarantees
are hereinafter referred to as the "Securities." The Company and the Guarantors
are collectively referred to herein as the "Registrants."
The Registrants have prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form SB-2 (File No. 333-15211), including a prospectus, relating to
the Securities. The registration statement as amended at the time when it shall
become
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effective, including any registration statements filed pursuant to Rule 462(b)
under the Securities Act to increase the size of the offering, and including in
each case information (if any) deemed to be part of the registration statement
at the time of effectiveness pursuant to Rule 430A under the Securities Act, is
hereinafter referred to as the "Registration Statement," and the prospectus in
the form first used to confirm sales of Securities is hereinafter referred to as
the "Prospectus."
The Company is a party to (i) that certain Share Purchase Agreement,
dated as of , 1996, with Cherokee Communications, Inc. ("Cherokee") (the
"Cherokee Agreement") and (ii) that certain Asset Purchase Agreement dated as of
, 1996, with Texas Coinphone (the "Texas Coinphone Agreement" and,
together with the Cherokee Agreement, the "Acquisition Agreements"). The
acquisitions of Cherokee and Texas Coinphone are referred to herein,
collectively, as the "Pending Acquisitions."
In connection with the offering of the Securities and the
consummation of the Acquisition Agreements, the Company is (i) offering
shares of its Common Stock, $.01 par value (the "Common Stock") (the "Concurrent
Public Offering"), (ii) repaying approximately $7.8 million in indebtedness
relating to certain capital leases, (iii) repaying approximately $3.7 million in
indebtedness relating to certain seller notes, (iv) repaying approximately $43.5
million aggregate principal amount outstanding under its existing senior secured
bank credit agreement (the "Credit Agreement") and (v) entering into a new
senior secured bank credit agreement (the "New Credit Agreement").
The Company hereby agrees with each Underwriter as follows:
1. The Company hereby agrees to issue and sell the Securities to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective principal amount of Securities set forth
opposite such Underwriter's name in Schedule I hereto at a price equal to %
of the principal amount of the Notes. The public offering price of the
Securities is not in excess of the price recommended by [CIBC Wood Gundy
Securities Corp. ("CIBC")], acting as a "qualified independent underwriter"
within the meaning of Rule 2720 of the Conduct Rules of the National Association
of Securities Dealers, Inc. (the "NASD").
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2. The Company understands that the Underwriters intend (i) to make
a public offering of the Securities as soon as they deem advisable after the
Registration Statement and this Agreement have become effective and the
Indenture has been qualified under the Trust Indenture Act of 1939, as amended,
and the rules and regulations of the Commission thereunder (collectively, the
"Trust Indenture Act") and (ii) initially to offer the Securities upon the terms
set forth in the Prospectus.
The Company hereby confirms its engagement of [CIBC] and [CIBC]
hereby confirms its agreement with the Company to render services as, a
"qualified independent underwriter" within the meaning of Rule 2720 of the
Conduct Rules of the NASD with respect to the offering and sale of the
Securities. [CIBC], in its capacity as qualified independent underwriter, and
not otherwise, is referred to herein as the "QIU". As compensation for the
services of acting as the QIU hereunder, the Company agrees to pay $10,000 to
[CIBC] on the Closing Date.
3. Payment for the Securities shall be made to the Company or to its
order by check or wire transfer payable in same day funds (less the cost to J.P.
Morgan Securities Inc. of obtaining such same day funds, if any), in accordance
with written instructions to be provided by the Company at least one full
Business Day prior to the Closing Date, at the office of Cahill Gordon &
Reindel, 80 Pine Street, New York, New York at 10:00 A.M., New York City time,
on November , 1996, or at such other time on the same or such other date, not
later than the fifth Business Day thereafter, as the Underwriters and the
Company may agree upon in writing. The time and date of such payment for the
Securities are referred to herein as the "Closing Date." As used herein, the
term "Business Day" means any day other than a day on which banks are permitted
or required to be closed in New York City.
Payment for the Securities to be purchased on the Closing Date shall
be made against delivery to the account of J.P. Morgan Securities Inc., at The
Depository Trust Company, on behalf of the Underwriters, of one or more global
certificates for the Securities to be purchased on such date registered in such
names and in such denominations as the Underwriters shall request in writing not
later than two Business Days prior to the Closing Date, with any transfer taxes
payable in connection with the transfer to the Underwriters of the Securities
duly paid by the Company. The certificates for the Securities will be made
available for inspection by the Underwriters in New York, New York not later
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than 1:00 P.M., New York City time, on the Business Day prior to the Closing
Date.
4. The Company represents as to itself and the Guarantors, and each
Guarantor represents and warrants as to itself, to each of the Underwriters
that:
(a) no order preventing or suspending the use of any preliminary
prospectus filed as part of the Registration Statement has been issued by
the Commission, and each preliminary prospectus filed as part of the
Registration Statement, as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act, complied
when so filed in all material respects with the Securities Act, and did
not contain an 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 the light of the circumstances under which they
were made, not misleading, provided, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information relating to any Underwriter furnished to
any Registrant in writing by such Underwriter expressly for use therein;
(b) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of any Registrant, threatened by the
Commission; and the Registration Statement and the Prospectus (as amended
or supplemented if the Registrants shall have furnished any amendments or
supplements thereto) comply, and will comply as of the Closing Date, in
all material respects with the Securities Act and the Trust Indenture Act
and do not, and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the date of the
Prospectus and any amendment or supplement thereto, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and the Prospectus, as amended or supplemented at the Closing
Date, will 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 the light of the circumstances under
which they were made, not misleading; except that the foregoing
representations and warranties shall not apply to statements or omissions
in the Registration Statement, furnished to any Registrant in writing by
such Underwriter expressly for use therein or
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to the Statement of Eligibility on Form T-1 of the Trustee under the
Trust Indenture Act filed as an exhibit to the Registration Statement;
(c) none of the Company or any Guarantor has (i) taken, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale or resale of the Notes or (ii) since the
filing of the Registration Statement (A) sold, bid for, purchased or paid
anyone any compensation for soliciting purchases of the Notes or (B) paid
or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company;
(d) the financial statements, and the related notes thereto,
included in the Registration Statement and the Prospectus present fairly
the consolidated financial position of (i) the Company and its
subsidiaries, (ii) each of the Acquired Companies (as defined below) for
whom financial statements are included and (iii) Cherokee, and the results
of their respective operations and the changes in their respective
consolidated cash flows as of the dates and for the periods indicated, and
said financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the periods involved; the "Acquired Companies" are (1) Paramount
Communications Systems, Inc. ("Paramount"), (2) International Pay Phones,
Inc. (South Carolina) ("IPP-SC"), (3) International Pay Phones, Inc.
(Tennessee) ("IPP-TN"), (4) Payphones of America, Inc. ("POA") and (5)
Amtel Communications, Inc. and Combined Companies (Debtor-in-Possession)
("Amtel"). The financial statement schedules included in the Registration
Statement include all the information required to be stated therein; the
summary and selected financial and related statistical data included in
the Registration Statement and the Prospectus present fairly the
information shown therein and have been prepared and compiled on a basis
consistent with the audited financial statements included therein; Price
Waterhouse LLP, whose reports on the audited financial statements of the
Company and its subsidiaries as of December 31, 1994 and 1995 and for the
three years ended December 31, 1995 and the audited financial statements
of Paramount as of December 31, 1995 and for the year then ended are
included in the Registration Statement and the Prospectus, are independent
accountants with respect to the Company and its
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subsidiaries and Paramount, as required by the Securities Act; KPMG Peat
Marwick LLP, whose report on the audited financial statements of Paramount
as of December 31, 1994 and for the year then ended is included in the
Registration Statement and Prospectus, are independent accountants with
respect to Paramount, as required by the Securities Act; Miller Sherrill
Blake, CPA, PA, whose report on the audited financial statements of IPP-SC
as of December 31, 1994 and 1995 and for the two years ended December 31,
1995, is included in the Registration Statement and Prospectus, are
independent accountants with respect to IPP-SC, as required by the
Securities Act; Ernest M. Sewell, CPA, whose report on the audited
financial statements of IPP-TN as of December 31, 1994 and 1995 and for
the two years ended December 31, 1995, is included in the Registration
Statement and Prospectus, is an independent accountant with respect to
IPP-TN, as required by the Securities Act; Kerber, Eck & Braeckel LLP,
whose report on the audited financial statements of POA as of December 31,
1994 and 1995 and for the two years ended December 31, 1995, is included
in the Registration Statement and Prospectus, are independent accountants
with respect to POA, as required by the Securities Act; Harlan & Boettger,
CPAs, whose report on the audited financial statements of Amtel as of
December 31, 1994 and 1995 and for the two years ended December 31, 1995,
is included in the Registration Statement and Prospectus, are independent
accountants with respect to Amtel, as required by the Securities Act;
Deloitte & Touche LLP, whose report on the audited financial statements of
Cherokee as of December 31, 1994 and 1995 and for the two years ended
December 31, 1995, is included in the Registration Statement and
Prospectus, are independent accountants with respect to Cherokee, as
required by the Securities Act;
(e) the pro forma financial statements (including the notes thereto)
and the other pro forma financial information included in the Prospectus
and Registration Statement (i) comply as to form in all material respects
with the applicable requirements of Regulation S-X promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); (ii)
have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and include
adjustments which give effect to events that are (A) directly attributable
to the transactions referred to therein, (B) expected to have a continuing
impact on the Company, and (C) factually supportable; and (iii) have been
properly computed on the bases described therein; the assumptions used in
the preparation of the pro forma
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financial statements and other pro forma financial information included in
the Prospectus and Registration Statement are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein;
(f) each of the Company and the Guarantors makes and keeps accurate
books and records reflecting its assets and maintains internal accounting
controls which provide reasonable assurance that (i) transactions are
executed in accordance with management's authorization, (ii) transactions
are recorded as necessary to permit preparation of the Company's
consolidated financial statements in accordance with generally accepted
accounting principles and to maintain accountability for the assets of the
Company, (iii) access to the assets of the Company and each of the
Guarantors is permitted only in accordance with management's
authorization, and (iv) the recorded accountability for assets of the
Company and each of the Guarantors is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences; and
(g) the Company has no subsidiaries other than those subsidiaries
listed on Schedule II hereto and all of the subsidiaries are Guarantors;
no Guarantor is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distributions on such
Guarantor's capital stock, from repaying to the Company any loans or
advances to such Guarantor or from transferring any of such Guarantor's
property or assets to the Company or to any other Guarantor.
(h) the Company has the authorized, issued and outstanding
capitalization set forth in the Registration Statement and Prospectus
under the heading "Capitalization;" all of the outstanding shares of
capital stock of the Company and each Guarantor have been duly authorized
and validly issued and are fully paid and nonassessable; except as
described in the Prospectus, there are no outstanding rights (including,
without limitation, preemptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital
stock or other equity interest in the Company or in any Guarantor, or any
contract, commitment, agreement, understanding or arrangement of any kind
relating to the issuance of any capital stock of the Company or any such
Guarantor, any such convertible or exchangeable securities or any such
rights, warrants or
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options; the Company beneficially owns, directly or indirectly, free and
clear of any mortgage, pledge, security interest, lien, claim or other
encumbrance, all of the outstanding capital stock of each Guarantor;
(i) all offers and sales of securities of the Company prior to the
date hereof were at all relevant times duly registered under the
Securities Act or exempt from the registration requirements of the
Securities Act, and were duly registered or the subject of an available
exemption from the registration requirements of the applicable state
securities or blue sky laws;
(j) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been (A) any
change in the Company's issued capital stock, warrants or options except
pursuant to (i) the terms of the instruments governing the same, (ii) the
exercise of such options or warrants, and (iii) the arrangements relating
to the Concurrent Public Offering, or (B) any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the business, prospects, financial position, management,
stockholder's equity or results of operations of the Company and the
Guarantors, taken as a whole (a "Material Adverse Change");
(k) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, and except as disclosed
therein, (i) there have been no transactions entered into by the Company
or by any of the Guarantors, including those entered into in the ordinary
course of business, which are material to the Company and the Guarantors,
taken as a whole; and (ii) there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock;
(l) each of the Company and the Guarantors has been duly
incorporated under the laws of its jurisdiction of incorporation; each of
the Company and the Guarantors is a validly existing corporation in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement and the
Prospectus and is duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such
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qualification, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a material
adverse effect on the business, prospects, financial position, management,
stockholders' equity or results of operations of the Company and the
Guarantors, taken as a whole (a "Material Adverse Effect");
(m) this Agreement has been duly authorized, executed and delivered
by each of the Registrants;
(n) the execution and delivery of the Indenture has been duly and
validly authorized by the Company and each of the Guarantors and the
Indenture has been qualified under the Trust Indenture Act and, when
executed and delivered by the Company and each of the Guarantors (assuming
due authorization, execution and delivery thereof by the Trustee), the
Indenture will constitute a legal, valid and binding agreement of the
Company and each of the Guarantors enforceable against the Company and
each of the Guarantors in accordance with its terms except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles
of equity and the discretion of the court before which any proceeding
therefor may be brought; and the Securities and the Indenture conform in
all material respects to the descriptions thereof in the Prospectus;
(o) the Notes have been duly authorized by the Company and the
Guarantees have been duly authorized by each of the Guarantors and, when
executed and authenticated in accordance with the terms of the Indenture
and delivered to and paid for by the Underwriters, the Notes will
constitute legal, valid and binding obligations of the Company and the
Guarantees will constitute legal, valid and binding obligations of each
Guarantor, in each case enforceable in accordance with their terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles
of equity and the discretion of the court before which any proceeding
therefor may be brought;
(p) the execution and delivery of the New Credit Agreement has been
duly and validly authorized by the Company and each of the Guarantors a
party thereto and, when executed and delivered by the Company and each of
the
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Guarantors a party thereto (assuming due authorization, execution and
delivery by the other parties thereto), the New Credit Agreement will
constitute a legal, valid and binding agreement of the Company and each of
the Guarantors a party thereto enforceable against the Company and each of
such Guarantors in accordance with its terms except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought;
(q) Cherokee has duly authorized, executed and delivered the
Cherokee Agreement and such agreement is a legal, valid and binding
agreement of Cherokee; Texas Coinphone has duly executed and delivered the
Texas Coinphone Agreement and such agreement is a legal, valid and binding
agreement of Texas Coinphone;
(r) the execution and delivery by the Company and each of the
Guarantors of, and the performance by the Company and each of the
Guarantors of all of the provisions of and their respective obligations
under, this Agreement, the Indenture, the Securities (including the
Guarantees) and the New Credit Agreement, and by the Company of the
Acquisition Agreements and the consummation by the Company and each of the
Guarantors of the transactions contemplated herein and therein, and the
issuance and sale by the Company of the Common Stock in the Concurrent
Public Offering (i) have been duly authorized by all necessary corporate
action on the part of the Company and each of the Guarantors (to the
extent a party thereto), (ii) do not and will not result in any violation
of the Articles of Incorporation (or other applicable charter document) or
any shareholder's agreement or the By-laws of the Company, any Guarantor,
Cherokee or Texas Coinphone (to the extent a party thereto), (iii) except
as would not have a Material Adverse Effect, do not and will not conflict
with, or result in a breach or violation of any of the terms or provisions
of, or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or give rise to any
right to accelerate the maturity or require the prepayment of any
indebtedness or the purchase of any capital stock under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company, any Guarantor, Cherokee or Texas
Coinphone under, (A) any contract, indenture, mortgage, deed of trust,
loan
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agreement, note, lease, partnership agreement or other agreement or
instrument to which any such person is a party or by which any of them may
be bound or to which any of their respective properties or assets may be
subject, (B) (assuming, in the case of the offer and sale of the
Securities, compliance with all applicable state securities or "Blue Sky"
laws) any law or statute, rule or regulation applicable to any such person
or any of their respective properties or assets (including, without
limitation, the Communications Act of 1934, as amended (the
"Communications Act"), the Telecommunications Act of 1996 (the
"Telecommunications Act") and the rules and regulations of the Federal
Communications Commission (the "FCC") under each of the foregoing and the
rules and regulations of any state or other regulatory agency or body with
jurisdiction over telecommunications matters in the jurisdictions in which
the Company, the Guarantors, Cherokee or Texas Coinphone operate or
provide telecommunications services (a "State Regulatory Agency")) or (C)
any judgment, order or decree of any government, governmental
instrumentality, agency, body or court, domestic or foreign, having
jurisdiction over any such person or any of their respective properties or
assets and (iv) except as would not have a Material Adverse Effect, do not
and will not result in the termination or revocation of any of the
permits, licenses, approvals, orders, certificates, franchises or
authorizations of state, federal or other governmental or regulatory
authorities, including those relating to the Communications Act, the
Telecommunications Act, the rules and regulations of the FCC or the rules
and regulations of any State Regulatory Agency, owned or held by the
Company, any of the Guarantors, Cherokee or Texas Coinphone or result in
any other material impairment of the rights of the holder of such permits,
licenses, approvals, orders, certificates, franchises or authorizations;
(s) the Company, the Guarantors, Cherokee and Texas Coinphone have
good and marketable title in fee simple to all items of real property and
good title to all assets owned by them that is material to the business of
the Company and the Guarantors, taken as a whole, as currently conducted
or as proposed to be conducted upon consummation of the Pending
Acquisitions, in each case free and clear of all liens, encumbrances and
defects, except such as are described in the Prospectus or such as do not
materially affect the value of such property or asset and do not interfere
with the use made or proposed to be made of such property or asset by the
Company and the Guarantors; and any real property, buildings or personal
property held
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under lease by the Company, the Guarantors, Cherokee and Texas Coinphone
that are material to the business of the Company and the Guarantors, taken
as a whole, as currently conducted or as proposed to be conducted upon
consummation of the Pending Acquisitions, are held by them under valid,
existing and enforceable leases with such exceptions as are not material
and do not interfere with the use made or proposed to be made of such
property by the Company and the Guarantors;
(t) no authorization, approval, consent, order, registration,
qualification or license of, or filing with, any government, governmental
instrumentality, agency (including, without limitation, the FCC and any
State Regulatory Agency), body or court, domestic or foreign, or third
party is required for the valid authorization, issuance, sale and delivery
of the Securities (including the Guarantees), and the Common Stock in the
Concurrent Public Offering, or the performance by the Company or any
Guarantor of all of its respective obligations under this Agreement, the
Indenture, the Securities (including the Guarantees), the New Credit
Agreement and the Acquisition Agreements, or the consummation by the
Company and each of the Guarantors of the transactions contemplated by
this Agreement, the Acquisition Agreements, the Indenture and the New
Credit Agreement (other than, in the case of the offering of the
Securities and the Concurrent Public Offering, as has been obtained under
the Securities Act or the Trust Indenture Act or as may be required under
the securities or Blue Sky laws of the various states of the United States
of America and other jurisdictions where qualification or registration of
the Securities or the Common Stock may be required);
(u) neither the Company nor any of the Guarantors is (i) in
violation of its Articles of Incorporation (or other applicable charter
document) or By-laws, (ii) in violation of any statute, judgment, decree,
order, rule or regulation applicable to any of them or any of their
respective properties or assets (including, without limitation, the
Communications Act, the Telecommunications Act, the rules and regulations
of the FCC under each of the foregoing and the rules and regulations of
any State Regulatory Agency), except for any such violation which would
not, individually or in the aggregate, have a Material Adverse Effect, or
(iii) in breach or violation of any of the terms or provisions of, or with
the giving of notice or lapse of time, or both, would be in default under,
any contract, indenture, mortgage, deed of trust, loan agreement, note,
lease, partnership agreement, or
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other agreement or instrument to which the Company or any Guarantor is a
party or by which any of them may be bound or to which any of their
properties or assets may be subject, except for such violations or
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect;
(v) there are no legal or governmental proceedings pending to which
the Company, any of the Guarantors, Cherokee or Texas Coinphone is or may
be a party or to which any property of the Company, any of the Guarantors,
Cherokee or Texas Coinphone is or may be the subject of which, if
determined adversely to the Company or any of the Guarantors or any other
person, would individually or in the aggregate have a Material Adverse
Effect and, to the best knowledge of each Registrant, no such proceedings
are threatened or contemplated by governmental authorities or threatened
by others;
(w) there are no legal or governmental proceedings or contracts or
documents of a character required to be described or referred to in the
Registration Statement or the Prospectus, or to be filed as exhibits to
the Registration Statement, that are not described, referred to or filed
as required and the descriptions of any legal or governmental proceedings
or contracts or documents fairly summarize, in all material respects, such
legal or regulatory proceedings, contracts or documents;
(x) each of the Company, the Guarantors, Cherokee and Texas
Coinphone owns, possesses or has obtained all licenses, permits,
certificates, consents, orders, approvals and other authorizations from,
and has made all declarations and filings with, all federal, state, local
and other governmental authorities (including, without limitation, the FCC
and the State Regulatory Agencies), all self-regulatory organizations and
all courts and other tribunals, domestic or foreign, necessary to own or
lease, as the case may be, and to operate the properties and to carry on
the business of the Company and the Guarantors as conducted and as
proposed to be conducted upon consummation of the Pending Acquisitions and
each of them is in full force and effect, except in each case as otherwise
disclosed in the Registration Statement or where the failure to obtain
licenses, permits, certificates, consents, orders, approvals and other
authorizations, or to make all declarations and filings, would not,
individually or in the aggregate, have a Material Adverse Effect, and none
of the Company, the Guarantors, Cherokee or Texas Coinphone has received
any notice relating to
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revocation or modification of any such license, permit, certificate,
consent, order, approval or other authorization, except where such
revocation or modification would not, individually or in the aggregate,
have a Material Adverse Effect;
(y) no person has the right to require the Company to register any
securities for offering and sale under the Securities Act by reason of the
filing of the Registration Statement with the Commission or the issue and
sale of the Securities, or, except as disclosed in the Registration
Statement and Prospectus, by reason of the filing of the registration
statement relating to the Concurrent Public Offering;
(z) there are no employment or labor disputes or negotiations with
employees of the Company or any of the Guarantors which could have,
individually or in the aggregate, a Material Adverse Effect;
(aa) the Company and the Guarantors are in compliance with, and not
subject to any liability under, all applicable federal, state, local and
foreign laws, regulations, rules, codes, ordinances, directives, and
orders relating to pollution or to protection of public or employee health
or safety or to the environment, including, without limitation, those that
relate to any Hazardous Material (as hereinafter defined) ("Environmental
Laws"), except, in each case, where noncompliance or liability,
individually or in the aggregate, would not have a Material Adverse
Effect. The term "Hazardous Material" means any pollutant, contaminant or
waste, or any hazardous, dangerous, or toxic chemical, material, waste,
substance or constituent subject to regulation under any Environmental
Law;
(ab) the fair salable value of the assets of each Registrant exceeds
the amount that will be required to be paid on or in respect of its
existing debts and other liabilities (including contingent liabilities) as
they mature; the assets of each of the Registrants do not constitute
unreasonably small capital to carry out its business as conducted or as
proposed to be conducted; each Registrant does not intend to, and does not
believe that it will, incur debts beyond its ability to pay such debts as
they mature; upon the issuance of the Securities, the fair salable value
of the assets of each of the Registrants will exceed the amount that will
be required to be paid on or in respect of its existing debts and other
liabilities (including contingent liabilities) as
15
they mature; and upon the issuance of the Securities, the assets of each
of the Registrants will not constitute unreasonably small capital to carry
out its business as now conducted or as proposed to be conducted;
(ac) each of the Company and the Guarantors owns or legally
possesses the patents, patent licenses, trademarks, service marks, trade
names, copyrights and know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) (collectively, the "Intellectual Property")
employed by it in connection with the business conducted by it as of the
date hereof, except to the extent that the failure to own or legally
possess, any such Intellectual Property would not have, individually or in
the aggregate, a Material Adverse Effect, and neither the Company nor any
Guarantor has received any notice of infringement of or conflict with
asserted rights of others with respect to any Intellectual Property;
(ad) none of the Company or the Guarantors has any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other
plan which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or any Guarantor ever has
made a contribution and in which any employee of the Company or any
Guarantor has ever been a participant. None of the Company or the
Guarantors participates in or makes contributions to any pension profit
sharing or other plan which is subject to ERISA;
(ae) Each of the Company and the Guarantors has filed all necessary
federal, state, local and foreign income and franchise tax returns, except
where the failure to file such returns would not have a Material Adverse
Effect, and has paid all taxes shown as due thereon; there is no tax
deficiency that has been asserted against the Company or any Guarantor
that would have a Material Adverse Effect;
(af) the Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become, an "investment
company" or any "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940;
16
(ag) the Company has not done, and is not presently doing, business
with the government of Cuba or with any person or any affiliate located in
Cuba; and
(ah) the Trustee, on behalf of the holders of the Notes, on the
Closing Date and after the deposit with the Trustee of such amounts as are
required by the Indenture (the "Trust Funds"), will have a valid first
priority perfected security interest in the Trust Funds.
5. The Registrants, jointly and severally, covenant and agree with
each Underwriter as follows:
(a) to use their respective best efforts to cause the Registration
Statement to become effective (if the Registration Statement shall not
have been declared effective prior to the execution hereof) at the
earliest possible time and, if required, to file the Prospectus with the
Commission in the manner and within the time periods specified by Rule
424(b) and Rule 430A under the Securities Act;
(b) to deliver, at the expense of the Registrants, (i) five
conformed copies of the Registration Statement (as originally filed) and
each amendment thereto, including exhibits, to the Underwriters, and (ii)
during the period mentioned in Section 5(e), to each of the Underwriters
as many copies of the Prospectus (including all amendments and supplements
thereto) as the Underwriters may reasonably request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, to furnish to the Underwriters
and their counsel a copy of the proposed amendment or supplement for
review within a reasonable time prior to the proposed filing thereof and
not to file any such proposed amendment or supplement to which the
Underwriters or their counsel reasonably object;
(d) to advise the Underwriters promptly, and to confirm such advice
in writing, (i) when the Registration Statement shall become effective,
(ii) when any amendment to the Registration Statement shall have become
effective, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for any additional information, (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the
17
Registration Statement or the initiation or, to the best of the Company's
knowledge, threat of any proceeding for that purpose and (v) of the
receipt by any Registrant of any notification with respect to any
suspension of the qualification of the Securities (including any
Guarantee) for offer and sale in any jurisdiction or the initiation or, to
the best of the Company's knowledge, threat of any proceeding for such
purpose; and to use their respective best efforts to prevent the issuance
of any such stop order or notification and, if issued, to obtain promptly
the withdrawal thereof;
(e) if, during such period of time after the first date of the
public offering of the Securities as in the opinion of counsel for the
Underwriters a prospectus relating to the Securities is required by law to
be delivered in connection with sales by an Underwriter or any dealer, any
event shall occur which is known to any of the Registrants or information
shall become known to any of the Registrants as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances at the time the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with law,
forthwith to, at the sole expense of the Registrants, prepare and, subject
to Section 5(c) above, file with the Commission, and furnish to the
Underwriters and to the dealers (whose names and addresses the
Underwriters will furnish to the Registrants) to which Securities may have
been sold by the Underwriters and to any other dealers upon request such
amendments or supplements to the Prospectus as may be necessary so that
the statements in the Prospectus as so amended or supplemented will not,
in the light of the circumstances at the time the Prospectus is delivered
to a purchaser, be misleading or so that the Prospectus will comply with
law;
(f) (i) to endeavor to qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the
Underwriters shall reasonably request and to continue such qualification
in effect so long as reasonably required for distribution of the
Securities and (ii) to pay all fees and expenses (including fees and
disbursements of counsel for the Underwriters) incurred in connection with
such qualification and in connection with the determination of the
eligibility of the Securities for investment under the laws of such
jurisdictions as the Underwriters may designate; provided that no
Registrant shall be required
18
to file a general consent to service of process or to qualify as a
foreign corporation in any jurisdiction;
(g) to make generally available to the Registrants' security holders
and to the Underwriters as soon as practicable an earnings statement
(which need not be audited) covering a period of at least twelve months
beginning with the first fiscal quarter of the Registrants occurring after
the effective date of the Registration Statement which shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 of the
Commission promulgated thereunder;
(h) so long as the Securities are outstanding, to furnish to the
Underwriters copies of all reports or other communications (financial or
other) required to be furnished to holders of the Securities, and copies
of any reports and financial statements required to be furnished to or
filed with the Commission or any national securities exchange;
(i) to pay all costs and expenses incident to the performance of its
obligations hereunder, whether or not the transactions contemplated herein
are consummated or this Agreement is terminated pursuant to Section 8
hereof, including without limiting the generality of the foregoing, all
costs and expenses (i) incident to the preparation, issuance, execution,
authentication and delivery of the Securities (including any expenses of
the Trustee and the Trustee's counsel), (ii) incident to the preparation,
printing and filing under the Securities Act of the Registration
Statement, the Prospectus and any preliminary prospectus (including in
each case all exhibits, amendments and supplements thereto), (iii)
incurred in connection with the registration or qualification and
determination of eligibility for investment of the Securities under the
laws of such jurisdictions as the Underwriters may designate (including
fees and disbursements of Cahill Gordon & Reindel, counsel for the
Underwriters, in connection with such registration or qualification), (iv)
relating to any filing with, and determination of the fairness of the
underwriting terms and arrangements by, the NASD in connection with the
offering of the Securities (including the fees and expenses of [CIBC], as
QIU), (v) in connection with the printing (including word processing and
duplication costs) and delivery of this Agreement, the Indenture, all
other agreements relating to underwriting arrangements, Blue Sky
Memoranda, any legal investment surveys and the furnishing to the
Underwriters and dealers of copies of the
19
Registration Statement and the Prospectus, including mailing and shipping,
as herein provided, and (vi) payable to rating agencies in connection with
the rating of the Securities;
(j) none of the Company or the Subsidiaries will (i) take, directly
or indirectly, prior to the termination of the underwriting syndicate
contemplated by this Agreement, any action designed to cause or to result
in, or that might reasonably be expected to constitute, the stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sell, bid for, purchase
or pay anyone any compensation for soliciting purchases of the Securities
or (iii) pay or agree to pay to any person any compensation for soliciting
another to purchase any other securities of the Company;
(k) to use the net proceeds of the offering of Securities as set
forth in the Registration Statement and the Prospectus under the caption
"Use of Proceeds"; and
(l) to comply with the special offer provisions of the Indenture in
the event the Cherokee acquisition shall not have been consummated in
accordance with the terms of the Cherokee Agreement on or prior to
, 1997.
6. The several obligations of the Underwriters hereunder to purchase
the Securities are subject to the performance by the Registrants of their
obligations hereunder and to the following additional conditions:
(a) if the Registration Statement has not been declared effective
prior to the execution and delivery hereof, the Registration Statement
shall have become effective (or if a post-effective amendment is required
to be filed under the Securities Act, such post-effective amendment shall
have become effective) not later than 5:00 P.M., New York City time, on
the date hereof; and no stop order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceedings for such
purpose shall be pending before or, to the knowledge of the Company,
threatened by the Commission; and any requests for additional information
shall have been complied with to the reasonable satisfaction of the
Underwriters;
(b) each of the representations and warranties of the Registrants
contained herein shall be true and correct
20
on and as of the Closing Date as if made on and as of the Closing Date,
and the Registrants shall have complied with all agreements and all
conditions on their part to be performed or satisfied hereunder at or
prior to the Closing Date;
(c) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading,
nor shall any notice have been given of (i) any intended or potential
downgrading or (ii) any review or possible change that does not indicate
an improvement in the rating accorded any securities of or guaranteed by
any of the Registrants by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(d) since the respective dates as of which information is given in
the Prospectus, there shall not have been any Material Adverse Change,
otherwise than as set forth in the Prospectus, the effect of which in the
sole judgment of the Underwriters makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Securities on the
terms and in the manner contemplated in the Prospectus;
(e) on the Closing Date, the Underwriters shall have received from
each Registrant a certificate, addressed to the Underwriters and dated the
Closing Date, of two executive officers of each such Registrant
satisfactory to the Underwriters to the effect set forth in subsections
(a) through (c) of this Section 6 and to the further effect that since the
respective dates as of which information is given in the Prospectus there
has not occurred any Material Adverse Change, otherwise than as set forth
in the Prospectus;
(f) the Underwriters shall have received on the Closing Date a
signed opinion of Tammy L. Martin, Esq., General Counsel of the Company,
in form and substance satisfactory to Cahill Gordon & Reindel, counsel to
the Underwriters, dated the Closing Date and addressed to the
Underwriters, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Ohio with full power and authority (corporate and other) to
own, lease and operate their respective properties and to conduct
21
their respective business as described in the Registration Statement
and the Prospectus;
(ii) the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
in each jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification other than
where the failure to be so qualified or in good standing would not
have a Material Adverse Effect;
(iii) each Subsidiary has been duly incorporated and is validly
existing as a corporation under the laws of its jurisdiction of
incorporation with full power and authority (corporate and other) to
own, lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing in each jurisdiction in which it
owns or leases properties or conducts any business so as to require
such qualification other than where the failure to be so qualified
or in good standing would not have a Material Adverse Effect;
(iv) the authorized, issued and outstanding capital stock of
the Company is as set forth in the Registration Statement and the
Prospectus;
(v) all the outstanding shares of capital stock of the Company
and each Subsidiary have been duly authorized and validly issued and
are fully paid and nonassessable, and are owned beneficially by the
Company free and clear of all liens, security interests, pledges,
charges, encumbrances, shareholders' agreements, voting trusts,
defects, equities or claims of any nature whatsoever. Other than the
Subsidiaries listed on Schedule II hereto, the Company does not own,
directly or indirectly, any capital stock or other equity securities
of any other corporation or any ownership interest in any
partnership, joint venture or other association;
(vi) Neither the Company nor any of the Subsidiaries is (A) in
violation of its charter or by-laws or (B) in breach or violation of
any of the terms or provisions of, or with the giving of notice or
lapse of time, or both, would be in default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to
22
such counsel to which the Company or any of the Subsidiaries is a
party or by which it or any of them or any of their respective
properties is bound, or any applicable law or statute or any order,
rule or regulation of any court or governmental agency or body
having jurisdiction over the Company, the Subsidiaries or any of
their respective properties, except for violations and defaults
which individually or in the aggregate would not have a Material
Adverse Effect;
(vii) the Indenture has been duly and validly authorized,
executed and delivered by the Company and each of the Guarantors;
(viii) the Notes have been duly authorized by the Company and
the Guarantees have been duly authorized by each of the Guarantors;
(ix) the execution and delivery by the Company and each of the
Guarantors of, and the performance by the Company and each of the
Guarantors of their respective obligations under this Agreement, the
Indenture, the Securities (including the Guarantees), the New Credit
Agreement and the Acquisition Agreements (to the extent a party
thereto) and the consummation by the Company and each of the
Guarantors of the transactions herein and therein contemplated, and
the issuance and sale by the Company of the Common Stock in the
Concurrent Public Offering, (i) have been duly authorized by all
necessary corporate action on the part of the Company and each of
the Guarantors (to the extent applicable), (ii) do not and will not
result in any violation of the Articles of Incorporation or the
By-laws of the Company or any Guarantor and (iii) except as would
not have a Material Adverse Effect, do not and will not conflict
with, or result in a breach or violation of any of the terms or
provisions of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under,
or give rise to any right to accelerate the maturity or require the
prepayment of any indebtedness or the purchase of any capital stock
under, or result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the Company or any
Guarantor under, (A) any contract, indenture, mortgage, deed of
trust, loan agreement, note, lease, partnership agreement or other
agreement or
23
instrument known to such counsel to which the Company or any such
Guarantor is a party or by which any of them may be bound or to
which any of their respective properties or assets may be subject,
(B) any applicable law or statute, rule or regulation (other than
the securities or Blue Sky laws of the various states of the United
States of America) or (C) any judgment, order or decree known to
such counsel of any government, governmental instrumentality,
agency, body or court, domestic or foreign, having jurisdiction over
the Company or any such Guarantor or any of their respective
properties or assets;
(x) any real or personal property held under lease by the
Company or any of the Subsidiaries that are material (individually
or in the aggregate) to the Company or any Subsidiary, are held by
the Company or such Subsidiary, as the case may be, under valid,
subsisting and enforceable leases with such exceptions as would not
have a Material Adverse Effect; and
(xi) the execution and delivery of the New Credit Agreement has
been duly and validly authorized by the Company and the
Subsidiaries, to the extent applicable.
In rendering such opinion, such counsel, with regard to matters concerning
the application of laws of jurisdictions other than the federal laws of
the United States and the laws of the State of Ohio, may rely on such
opinions of local counsel as such counsel deems necessary, provided that
such opinions shall be addressed to the Underwriters and shall be
satisfactory, in form and substance, to Cahill Gordon & Reindel, counsel
to the Underwriters.
(g) the Underwriters shall have received on the Closing Date a
signed opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
the Company, in form and substance satisfactory to Cahill Gordon &
Reindel, counsel to the Underwriters, dated the Closing Date and addressed
to the Underwriters, to the effect that:
(i) assuming due authorization, execution and delivery of the
Indenture by the Company, the Guarantors and the Trustee, the
Indenture is a legal, valid and binding agreement of the Company and
each of the Guarantors, enforceable against the Company and each of
the Guarantors in accordance with its
24
terms, except that the enforcement thereof may be subject to (1)
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws now or hereafter in effect relating to
creditors' rights generally and (2) general principles of equity and
the discretion of the court before which any proceeding therefor may
be brought (regardless of whether enforcement is considered in a
proceeding in equity or at law);
(ii) assuming due authorization of the Notes by the Company and
of the Guarantees by the Guarantors, when the Notes and the
Guarantees are executed and authenticated in accordance with the
respective terms of the Indenture and delivered to and paid for by
the Underwriters, the Notes will constitute legal, valid and binding
obligations of the Company and the Guarantees will constitute legal,
valid and binding obligations of the Guarantors, in each case
enforceable in accordance with their respective terms, except that
the enforcement thereof may be subject to (1) bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or
similar laws now or hereafter in effect relating to creditors'
rights generally and (2) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought (regardless of whether enforcement is considered in a
proceeding in equity or at law);
(iii) the Securities and the Indenture conform as to legal
matters in all material respects to the descriptions thereof in the
Prospectus; the statements in the Registration Statement and
Prospectus under the headings "Prospectus Summary -- Recent
Developments -- Recent Regulatory Developments," "Risk Factors --
Government Regulation," "Business -- Government Regulations," and
"Business -- Legal Proceedings," insofar as such statements
constitute a summary of statutes, regulations, rules, legal matters,
documents or proceedings referred to therein, fairly present the
information set forth therein with respect to such statutes,
regulations, rules, legal matters, documents or proceedings;
(iv) to such counsel's knowledge, there are no legal,
regulatory or governmental proceedings pending or threatened to
which the Company, any of the Subsidiaries, Cherokee or Texas
Coinphone is or may
25
be a party or to which any property of the Company or the
Subsidiaries, Cherokee or Texas Coinphone is or may be the subject
which, if determined adversely, could individually or in the
aggregate be expected to have a Material Adverse Effect; and such
counsel does not know of any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be described or referred to in the
Registration Statement or the Prospectus which are not filed,
referred to or described as required;
(v) assuming due authorization, execution and delivery of the
New Credit Agreement by the Company, the Subsidiaries and by the
other parties thereto, the New Credit Agreement is a legal, valid
and binding agreement of the Company and the Subsidiaries party
thereto enforceable against such parties in accordance with its
terms, except that the enforcement thereof may be subject to (1)
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws now or hereafter in effect relating to
creditors' rights generally and (2) general principles of equity and
the discretion of the court before which any proceeding therefor may
be brought (regardless of whether enforcement is considered in a
proceeding in equity or at law);
(vi) the Company, each Subsidiary, Cherokee and Texas Coinphone
have obtained all consents, approvals, orders, certificates,
licenses, permits, franchises and other authorizations of and from,
and have made all declarations and filings with, all governmental
and regulatory authorities (including, without limitation, the FCC
and the State Regulatory Agencies), all self-regulatory
organizations, and all courts and other tribunals necessary to own,
lease, license, use and operate their respective properties and
assets and to conduct their respective businesses in the manner
described in the Registration Statement and Prospectus; the
approvals, certificates, licenses and permits listed on a schedule
attached to such opinion constitute all such approvals,
certificates, licenses and permits required by the FCC and the
appropriate State Regulatory Agencies; the execution and delivery by
the Company and each of the Guarantors of, and the performance by
the Company and each of the Guarantors of their respective
obligations under this Agreement, the Indenture, the Securities
(including the Guarantees), the New Credit
26
Agreement and the Acquisition Agreements (to the extent a party
thereto) and the consummation by the Company and each of the
Guarantors of the transactions herein and therein contemplated, and
the issuance and sale by the Company of the Common Stock in the
Concurrent Public Offering, will not violate any such approval,
certification, license or permit;
(vii) None of the Company or the Guarantors is subject to any
state law or regulation which limits its ability to incur
indebtedness or to execute, deliver or perform its obligations under
this Agreement, the Indenture, the Securities (including the
Guarantee) or the New Credit Agreement;
(viii) no authorization, approval, consent, order, registration,
qualification or license of, or filing with, any government,
governmental instrumentality, agency, body or court, domestic or
foreign, or third party (other than as have been obtained under the
Securities Act or the Trust Indenture Act or as may be required
under the securities or Blue Sky laws of the various states of the
United States of America) is required for the valid authorization,
issuance, sale and delivery of the Securities (including the
Guarantees), the Common Stock in the Concurrent Public Offering or
the performance by the Company and each of the Guarantors of all of
their obligations under this Agreement, the Indenture, the
Securities (including the Guarantees), the New Credit Agreement and
the Acquisition Agreements, or the consummation by the Company and
each of the Guarantors of the transactions contemplated by this
Agreement;
(ix) the Registration Statement has been declared effective
under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto has been issued; the Indenture has been duly
qualified under the Trust Indenture Act; any required filing of the
Prospectus and any supplements thereto pursuant to Rule 424(b) has
been made in a manner and within the time period required by Rule
424(b);
(x) the Registration Statement and the Prospectus and any
amendments and supplements thereto (except for the financial
statements and other financial and statistical data included therein
or omitted therefrom as to which such counsel need not
27
express an opinion) comply as to form in all material respects with
the requirements of the Securities Act and the Trust Indenture Act;
the Registrants satisfy all of the requirements to file a
Registration Statement on Form SB-2;
(xi) the Trustee, on behalf of the holders of the Notes, on the
Closing Date and upon receipt by the Trustee of a check or checks
representing the the Trust Funds, will have a valid first priority
security interest in the Trust Funds; and
(xii) the Company is not, and will not be as a result of the
consummation of any of the transactions contemplated by this
Agreement, an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company
Act of 1940.
At the time the foregoing opinion is delivered, Skadden, Arps,
Slate, Meagher & Flom LLP shall additionally state that it has
participated in conferences with officers and other representatives of the
Company and the Guarantors, representatives of the independent auditors
for each of the Company, the Acquired Companies, Cherokee and Texas
Coinphone and representatives of the Underwriters, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed, and, although it has not independently verified
and is not passing upon and assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the Prospectus and
Registration Statement (except to the extent specified in Section
6(g)(iii)), no facts have come to its attention which lead it to believe
that the Registration Statement as of its effective date contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus as of its date and as of the
Closing Date, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact required to be stated therein
or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading (it being
understood that such firm need not express an opinion with respect to the
financial statements and the other financial and statistical data included
in or omitted from the Registration Statement and the Prospectus).
28
(h) on the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment, if
any, to the Registration Statement and also on the Closing Date, each of
the independent accountants specified in Section 4(d) shall have furnished
to the Underwriters letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to the Underwriters,
containing statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus;
(i) the Underwriters shall have received on and as of the Closing
Date an opinion dated the Closing Date of Cahill Gordon & Reindel, counsel
to the Underwriters, addressed to the Underwriters and in form and
substance satisfactory to the Underwriters with respect to the validity of
the Securities, the Indenture, the Registration Statement, the Prospectus
and other related matters as the Underwriters may reasonably request, and
such counsel shall have received from the Company such papers and
information as they may reasonably request to enable them to pass upon
such matters;
(j) on or prior to the Closing Date the Company shall have furnished
to the Underwriters such further certificates and documents as the
Underwriters or their counsel, Cahill Gordon & Reindel, shall reasonably
request;
(k) on or prior to the Closing Date, the Company shall have
consummated the Concurrent Public Offering and shall have received gross
proceeds therefrom of not less than $25 million;
(l) the Trust Funds shall have been deposited with the Trustee in
accordance with the terms of the Indenture on the Closing Date.
7. The Registrants, jointly and severally, agree to indemnify and
hold harmless each Underwriter, its officers and directors, and each person, if
any, who controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, the
legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted) arising out of or based upon
29
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to any Underwriter furnished to
any Registrant in writing by such Underwriter expressly for use therein;
provided, that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting such losses, claims, damages or liabilities purchased Notes, if
a copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished such underwriter any such amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Notes to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities.
The Registrants, jointly and severally, also agree to indemnify and
hold harmless the QIU, its officers and directors, and each person, if any, who
controls the QIU within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, from and against all losses, claims, damages
and liabilities (including, without limitation, the legal fees and other
expenses incurred in connection with any suit, action or proceedings or any
claim asserted) incurred as a result of the QIU performing the duties of its
engagement pursuant to Section 2.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless each of the Registrants, each of their directors, each of their
officers who signed the Registration Statement and each person who controls any
of the Registrants within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Registrants to each Underwriter, but only with reference to information
relating to such Underwriter furnished to any Registrant in writing by such
Underwriter expressly for use in the Registration Statement, the Prospectus, any
amendment or supplement thereto, or any preliminary prospectus. For purposes of
this Section 7 and Section 4(a) and 4(b) hereof, the only written information
30
furnished by the Underwriters to any Registrant expressly for use in the
Registration Statement and the Prospectus is the information in the last
paragraph on the cover page of the Prospectus, and the paragraph preceding and
immediately following the table in the section titled "Underwriting" in the
Prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to the preceding
paragraphs, such person (the "Indemnified Person") shall promptly notify the
person against whom such indemnity may be sought (the "Indemnifying Person") in
writing, and the Indemnifying Person, upon request of the Indemnified Person,
shall retain counsel satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Person after receipt of written notices from the Indemnified Party
requesting indemnification and the retention of counsel has failed within a
reasonable time to retain counsel satisfactory to the Indemnified Person or
(iii) the named parties in any such proceeding (including any impleaded parties)
include both the Indemnifying Person and the Indemnified Person and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is understood that the
Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are
incurred; provided, however, that if indemnity may be sought pursuant to the
second paragraph of this Section 7 in respect of such proceeding, then, in
addition to such separate firm for the Underwriters and such control persons of
the Underwriters, the indemnifying party shall be liable for the fees and
expenses of not more than one separate firm (in addition to any local counsel)
for the QIU and all persons, if any, who control the QIU within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act. Any
such separate firm for the Underwriters and such control persons of Underwriters
shall be designated in writing by J.P. Morgan Securities Inc., any such separate
firm for the
31
QIU and such control persons of the QIU shall be designated in writing by [CIBC]
and any such separate firm for any of the Registrants, each director of the
Registrants, each officer of the Registrants who signed the Registration
Statement and such control persons of the Registrants shall be designated in
writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Person agrees to indemnify any Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. No Indemnifying
Person shall, without the prior written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional written release, in form and substance satisfactory to
the Indemnified Person, of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding.
If the indemnification provided for in this Section 7 is for any
reason unavailable to, or insufficient to hold harmless, an Indemnified Person
in respect of any losses, claims, damages or liabilities referred to therein,
then each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Registrants on the one hand and the Underwriters and
the QIU on the other hand from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Registrants
on the one hand and the Underwriters and the QIU on the other in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Registrants on the one hand and the
Underwriters and the QIU on the other shall be deemed to be in the same
respective proportions as the net proceeds from the offering (before deducting
expenses) received by the Company and the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover of the Prospectus (or, in the case of the QIU, the fee received by
the QIU for performing the duties of its engagement
32
pursuant to Section 2), bear to the aggregate public offering price of the
Securities. The relative fault of the Registrants on the one hand and the
Underwriters and the QIU on the other 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 Registrants, by the Underwriters or by the QIU and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Registrants and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters and the QIU were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay or has paid by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 7 are several in proportion
to the respective principal amounts of Securities set forth opposite their names
in Schedule I hereto, and not joint.
The indemnity and contribution agreements contained in this Section
7 are in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
The indemnity and contribution agreements contained in this Section
7 and the representations and warranties of the Registrants as set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by
33
or on behalf of any Underwriter or the QIU or any person controlling any
Underwriter or the QIU or by or on behalf of any Registrant, officer or director
of any Registrant or any other person controlling any Registrant and (iii)
acceptance of and payment for any of the Securities.
8. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Underwriters, by notice given to
the Company, if after the execution and delivery of this Agreement and prior to
the Closing Date (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange, the National Association of Securities Dealers, Inc. or
the Chicago Board Options Exchange, (ii) trading of any securities of or
guaranteed by any of the Registrants shall have been suspended on any exchange
or in any over-the-counter market, (iii) a general moratorium on commercial
banking activities in New York shall have been declared by either Federal or New
York State authorities, or (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
crisis that, in the judgment of the Underwriters, is material and adverse and
which, in the judgment of the Underwriters, makes it impracticable to market the
Securities on the terms and in the manner contemplated in the Prospectus.
9. If this Agreement shall be terminated by the Underwriters because
of any failure or refusal on the part of any of the Registrants to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Registrant shall be unable to perform its obligations under this
Agreement or any condition to the Underwriters' obligations cannot be fulfilled,
the Registrants agree jointly and severally to reimburse the Underwriters and
the QIU for all out-of-pocket expenses (including the reasonable fees and
expenses of their counsel) reasonably incurred by the Underwriters and the QIU
in connection with this Agreement or the offering contemplated hereunder.
10. Any action by the Underwriters hereunder may be taken by the
Underwriters jointly or by J.P. Morgan Securities Inc. alone on behalf of the
Underwriters, and any such action taken by J.P. Morgan Securities Inc. alone
shall be binding upon the Underwriters. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or telecopied. Notices to the Underwriters shall be given to the
Underwriters, c/o J.P. Morgan Securities Inc., 60 Wall Street, New York, New
York 10260 (facsimile number (212) 648-5705); Attention: Syndicate
34
Department. Notices to any Registrant shall be given to the Company at 1127
Euclid Avenue, Suite 650, Cleveland, Ohio 44115-1601 (facsimile number (216)
241-2574; Attention: General Counsel, with a copy to Skadden, Arps, Slate,
Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022, Attention:
Stephen M. Banker, Esq.
11. This Agreement shall inure to the benefit of and be binding upon
the Underwriters and the Registrants and any controlling person referred to
herein and their respective successors, heirs and legal representatives. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the
Registrants and their respective successors, heirs and legal representatives and
the controlling persons and officers and directors referred to in Section 7 and
their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
No purchaser of Securities from any Underwriter shall be deemed to be a
successor merely by reason of such purchase.
12. This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the same
instrument.
13. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS
OF LAWS PROVISIONS THEREOF.
35
If the foregoing is in accordance with your understanding, please
sign and return four counterparts hereof.
Very truly yours,
PHONETEL TECHNOLOGIES, INC.
By:
Name:
Title:
NORTHERN FLORIDA TELEPHONE
CORPORATION
PARAMOUNT COMMUNICATIONS SYSTEMS,
INC.
PAY PHONES OF AMERICA, INC.
PUBLIC TELEPHONE CORPORATION
WORLD COMMUNICATIONS, INC.
For each of the above:
By:
Name:
Title:
36
Accepted: , 1996
J.P. MORGAN SECURITIES INC.
CIBC WOOD GUNDY SECURITIES, CORP.
ING BARINGS (U.S.) SECURITIES, INC.
SOUTHCOAST CAPITAL CORPORATION
By: J.P. MORGAN SECURITIES INC.
By:____________________________
Name:
Title:
37
SCHEDULE I
Principal Amount
of Securities
Underwriter to be Purchased
- ----------- ---------------
J.P. Morgan Securities Inc. ................ $
CIBC Wood Gundy Securities, Corp............ $
ING Barings (U.S.) Securities, Inc. ........ $
SouthCoast Capital Corporation ............. $
Total ............. $ [110,000,000]
38
SCHEDULE II
Subsidiaries of the Company
Jurisdiction of
Name Incorporation
- ---- -------------
Northern Florida Telephone
Corporation ..................................... Florida
Paramount Communications Systems, Inc. ............ Florida
Payphones of America, Inc. ........................ Ohio
Public Telephone Corporation ...................... Indiana
World Communications, Inc. ........................ Missouri