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EXHIBIT 10.01
HYPERION TELECOMMUNICATIONS, INC.
$200,000,000 of
12 7/8% Senior Exchangeable Redeemable Preferred Stock due 2007
Purchase Agreement
BEAR, STEARNS & CO. INC.
HYPERION TELECOMMUNICATIONS, INC.
$200,000,000 of
12 7/8% Senior Exchangeable Redeemable Preferred Stock due 2007
PURCHASE AGREEMENT
October 1, 1997
New York, New York
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
Ladies & Gentlemen:
Hyperion Telecommunications, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to Bear, Stearns & Co. Inc. ("Bear
Stearns") (the "Initial Purchaser") 200,000 shares of its 127/8% Senior
Exchangeable Redeemable Preferred Stock due 2007, liquidation preference $1,000
per share, (the "Preferred Stock") subject to the terms and conditions set forth
herein. The Preferred Stock is to be authorized and issued pursuant to the
provisions of a Certificate of Designation of the Voting Power, Designation
Preferences and Relative, Participating, Optional or Other Special Rights and
Qualifications, Limitations and Restrictions (the "Certificate of Designation")
to be filed with the Secretary of State of the State of Delaware. The Transfer
Agent for the Preferred Stock will be American Stock Transfer & Trust Company.
The Preferred Stock and the New Preferred Stock (as defined below) issuable in
exchange therefor are collectively referred to herein as the "Securities." Under
certain circumstances set forth in the Certificate of Designation, the
Securities may be exchanged for the Company's 127/8% Senior Subordinated
Debentures due 2007 (the "Exchange Debentures"). The Exchange Debentures and the
New Exchange Debentures (as defined below) issuable in exchange therefor are
collectively referred to herein as the "Debentures." The Preferred Stock is more
fully described in the Offering Memorandum referred to below. Capitalized terms
used but not otherwise defined herein shall have the meanings given to such
terms in the Indenture.
1. Issuance of Securities. The Company proposes to, upon the terms and
subject to the conditions set forth herein, issue and sell to the Initial
Purchaser $200,000,000 in aggregate liquidation preference of Securities.
Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Securities
Act of 1933, as amended (the "Act"), the Preferred Stock, (and all securities
issued in exchange therefor or in substitution thereof) shall bear the following
legend:
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"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION HEREOF, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS ACQUIRING
THE SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF
REGULATION S. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR
THE BENEFIT OF THE COMPANY THAT (Y) SUCH SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT), IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE (A)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE OR
(e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY, (3) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (Z)
IT WILL NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY, PRIOR TO
CLOSING OF ANY SALE, OF THE RESALE RESTRICTIONS SET FORTH IN (Y)
ABOVE."
2. Offering. The Preferred Stock will be offered and sold to the
Initial Purchaser pursuant to an exemption from the registration requirements
under the Act. The Company has prepared a final Offering Memorandum, dated
October 1, 1997 (the "Offering Memorandum"), relating to the Securities.
The Initial Purchaser has advised the Company that they will make
offers (the "Exempt Resales") of the Preferred Stock on the terms set forth in
the Offering Memorandum, as amended or supplemented, solely to (i) persons whom
the Initial Purchaser reasonably believes to be "qualified institutional
buyers," as defined in Rule 144A under the Act ("QIBs") and (ii) to non-U.S.
persons outside the United States in
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reliance upon Regulation S under the Securities Act. The persons specified in
clauses (i) and (ii) above are referred to herein as the "Eligible Purchasers."
The Initial Purchaser will offer the Preferred Stock to such Eligible Purchasers
initially at the price set forth herein. Such price may be changed at any time
without notice.
Holders (including subsequent transferees) of the Preferred Stock will
have the registration rights set forth in the registration rights agreement
relating thereto (the "Registration Rights Agreement") to be dated the Closing
Date, in substantially the form of Exhibit A hereto for so long as such
Preferred Stock constitutes "Transfer Restricted Securities" (as defined in such
agreement). Pursuant to the Registration Rights Agreement, the Company will
agree to file with the Securities and Exchange Commission (the "Commission"),
under the circumstances set forth therein, (i) a registration statement under
the Act (the "Exchange Offer Registration Statement") relating to the Company's
127/8% Series B Preferred Stock due 2007 (the "New Preferred Stock") to be
offered in exchange for the Preferred Stock (the "Exchange Offer") or, if the
Preferred Stock has been exchanged for the Exchange Debentures, the Company's
127/8% Senior Subordinated Debentures due 2007 (the "New Exchange Debentures")
to be offered in exchange for the Exchange Debentures (in either case such offer
to exchange being referred to as the "Exchange Offer") and, if necessary, (ii) a
shelf registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement") relating to the resale by certain holders of the
Preferred Stock or Exchange Debentures, as the case may be, and to use its best
efforts to cause such registration statements to be declared effective and
consummate the Exchange Offer.
This Agreement, Certificate of Designation, the indenture pursuant to
which the Exchange Debentures will be issued (the "Indenture"), the Securities,
the Debentures and the Registration Rights Agreement are hereinafter sometimes
referred to collectively as the "Operative Documents."
3. Purchase, Sale and Delivery. (a) On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to its terms and conditions, the Company agrees to issue and sell to the
Initial Purchaser, and the Initial Purchaser agrees to purchase from the Company
200,000 shares of Preferred Stock. The purchase price to be paid by the Initial
Purchaser for the Preferred Stock shall be $975.00 per share (the "Purchase
Price").
(b) Delivery of the Preferred Stock shall be made, against payment of
the purchase price therefor, at the offices of Latham & Watkins at 885 Third
Avenue, New York, New York or such other location as may be mutually acceptable.
Such delivery and payment shall be made at 10:00 a.m., New York time, on October
9, 1997 (the "Closing") or at such other time as shall be agreed upon by the
Initial Purchaser and the Company. The time and date of such delivery and
payment are herein called the "Closing Date."
(c) The Preferred Stock shall initially be issued in the form of one or
more Global Securities (the "Global Securities"), registered in the name of Cede
& Co., as nominee of the Depository Trust Company ("DTC"), having a liquidation
preference corresponding to the aggregate liquidation preference of the
Preferred Stock. The Global Securities shall be delivered by the Company to the
Initial Purchaser (or as the Initial Purchaser directs) in each case with any
transfer taxes payable upon initial issuance thereof duly paid by the Company
against payment of the Purchase Price by wire transfer of same-day funds to the
order of the Company. The Global Securities shall be made available to the
Initial Purchaser for inspection not later than 9:30 a.m., New York City time,
on the business day immediately preceding the Closing Date.
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4. Agreements of the Company. The Company covenants and agrees
with the Initial Purchaser as follows:
(a) To advise the Initial Purchaser promptly and, if requested
by the Initial Purchaser, confirm such advice in writing of, (i) the
issuance by any state securities commission of any stop order
suspending the qualification or exemption from qualification of any of
the Preferred Stock for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purpose by any state securities
commission or other regulatory authority; and (ii) the happening of any
event that, in the reasonable opinion of either counsel to the Company
or counsel to the Initial Purchaser, makes any statement of a material
fact made in the Offering Memorandum untrue or that requires the making
of any additions to or changes in the Offering Memorandum in order to
make the statements therein, in the light of the circumstances under
which they are made, not misleading. The Company shall use its best
efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption of any shares of Preferred Stock under
any state securi ties or Blue Sky laws and, if at any time any state
securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption of any shares of
Preferred Stock under any state securities or Blue Sky laws, the
Company shall use its best efforts to obtain the withdrawal or lifting
of such order at the earliest possible time.
(b) To furnish the Initial Purchaser and those persons
identified by the Initial Purchaser to the Company, without charge, as
many copies of the Offering Memorandum, and any amendments or
supplements thereto, as the Initial Purchaser may reasonably request.
The Company consents to the use of the Offering Memorandum and any
amendments and supplements thereto required pursuant hereto, by the
Initial Purchaser in connection with Exempt Resales.
(c) Not to amend or supplement the Offering Memorandum prior
to the Closing Date unless the Initial Purchaser shall previously have
been advised thereof and shall not have objected thereto within a
reasonable time after being furnished a copy thereof. The Company shall
promptly prepare, upon the Initial Purchaser's request, any amendment
or supplement to the Offering Memorandum that may be necessary or
reasonably requested by the Initial Purchaser in connection with Exempt
Resales.
(d) If, after the date hereof and prior to consummation of any
Exempt Resale, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of either counsel
to the Company or counsel to the Initial Purchaser, it becomes
necessary or advisable to amend or supplement the Offering Memorandum
in order to make the statements therein, in the light of the
circumstances when such Offering Memorandum is delivered to an Eligible
Purchaser which is a prospective purchaser, not misleading, or if it is
necessary or advisable to amend or supplement the Offering Memorandum
to comply with applicable law, (i) notify the Initial Purchaser and
(ii) forthwith to prepare an appropriate amendment or supplement to
such Offering Memorandum so that the statements therein as so amended
or supplemented will not, in the light of the circumstances when it is
so delivered, be misleading, or so that such Offering Memorandum will
comply with applicable law.
(e) To cooperate with the Initial Purchaser and counsel to the
Initial Purchaser in connection with the qualification or registration
of the Preferred Stock under the securities or Blue
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Sky laws of such jurisdictions as the Initial Purchaser may reasonably
request and to continue such qualification in effect so long as
required for the Exempt Resales; provided that the Company shall not be
required to take any action that would subject it to service of process
in suits or taxation, other than as to matters and transactions
relating to the Offering Memorandum or Exempt Resales, in any
jurisdiction where it is not now so subject.
(f) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is
terminated, to pay all costs, expenses, fees and taxes incident to the
performance of the obligations of the Company hereunder, including in
connection with: (i) the preparation, printing, filing and distribution
of the Offering Memorandum (including, without limitation, financial
statements) and all amendments and supplements thereto required
pursuant hereto, (ii) the preparation (including, without limitation,
duplication costs) and delivery of all Blue Sky memoranda prepared and
delivered in connection herewith and with the Exempt Resales, (iii) the
issuance, transfer and delivery by the Company of the Preferred Stock
and, if issued, the Debentures to the Initial Purchaser, (iv) the
qualification or registration of the Securities for offer and sale
under the securities or Blue Sky laws of the several states (including,
without limitation, the cost of printing and mailing a final Blue Sky
Memorandum and the reasonable fees and disbursements of counsel to the
Initial Purchaser relating to such qualification or registration), (v)
furnishing such copies of the Offering Memorandum, and all amendments
and supplements thereto, as may be requested for use in connection with
Exempt Resales, (vi) the preparation of certificates for the Securities
(including, without limitation, printing and engraving thereof), (vii)
the fees, disbursements and expenses of the Company's counsel and
accountants, (viii) all expenses and listing fees in connection with
the application for quotation of the Preferred Stock in the National
Association of Securities Dealers, Inc. ("NASD") Automated Quotation
System PORTAL ("PORTAL"), (ix) all fees and expenses (including fees
and expenses of counsel to the Company) of the Company in connection
with the approval of the Preferred Stock, New Preferred Stock and, if
issued the Debentures by DTC for "book-entry" transfer, (x) the rating
of the Securities by rating agencies, (xi) the reasonable fees and
expenses of the Transfer Agent and its counsel in connection with the
Certificate of Designation, (xii) performance by the Company of its
other obligations under this Agreement and the other Operative
Documents and (xiii) "roadshow" travel and other expenses incurred in
connection with the marketing and sale of the Securities.
(g) To use the proceeds from the sale of the Preferred Stock
in the manner described in the Offering Memorandum under the caption
"Use of Proceeds."
(h) If the Debentures are issued, not to voluntarily claim,
and to resist actively any attempts to claim, the benefit of any usury
laws against the holders of any Debentures.
(i) To do and perform all things required to be done and
performed under this Agreement by it prior to or after the Closing Date
and to satisfy all conditions precedent on its part to the delivery of
the Preferred Stock.
(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Preferred Stock in a
manner that would require the registration under the Act of the sale to
the Initial Purchaser
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or the Eligible Purchasers of the Preferred Stock or to take any other
action that would result in the Exempt Resales not being exempt from
registration under the Act.
(k) For so long as any of the Securities remain outstanding
and during any period in which the Company is not subject to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to make available to any Eligible Purchaser or
beneficial owner of Securities in connection with any sale thereof and
any prospective purchaser of such Preferred Stock from such Eligible
Purchasers or beneficial owner, the information required by Rule
144A(d)(4) under the Act.
(l) To cause the Exchange Offer to be made in the appropriate
form to permit registered New Preferred Stock or New Exchange
Debentures to be offered in exchange for the Preferred Stock or
Exchange Debentures, as the case may be, and to comply with all
applicable federal and state securities laws in connection with the
Exchange Offer.
(m) To comply with all of its agreements set forth in the
Registration Rights Agreement and all agreements set forth in the
representation letters of the Company to DTC relating to the approval
of the Securities by DTC for "book-entry" transfer.
(n) To use its best efforts to effect the inclusion of the
Preferred Stock in PORTAL and to obtain approval of the Securities by
DTC for "book-entry" transfer.
(o) During a period of five years following the Closing Date,
to deliver without charge to the Initial Purchaser, as they may
reasonably request, promptly upon their becoming available, copies of
(i) all reports or other publicly available information that the
Company shall mail or otherwise make available to its securityholders
and (ii) all reports, financial statements and proxy or information
statements filed by the Company with the Commission or any national
securities exchange and such other publicly available information
concerning the Company or its subsidiaries, including without
limitation, press releases.
(p) Prior to the Closing Date, to furnish to the Initial
Purchaser, as soon as they have been prepared in the ordinary course by
the Company, copies of any unaudited interim financial statements for
any period subsequent to the periods covered by the financial
statements appearing in the Offering Memorandum.
(q) Neither the Company nor any of its Subsidiaries nor any of
the Joint Ventures (as defined) will take, directly or indirectly, any
action designed to, or that might reasonably be expected to, cause or
result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Preferred Stock.
Except as permitted by the Act, the Company will not distribute any
preliminary offering memorandum, offering memorandum or other offering
material in connection with the offering and sale of the Preferred
Stock.
(r) To comply with the agreements in the Certificate of
Designation, Indenture, the Registration Rights Agreement and each
other Operative Document.
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5. Representations and Warranties. (a) The Company
represents and warrants to the Initial Purchaser that:
(i) The Offering Memorandum (and each supplement and amendment
thereto) have been prepared in connection with the Exempt Resales. The
Offering Memorandum does not, and any supplement or amendment to them
will not, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties
contained in this paragraph shall not apply to statements in or
omissions from the Offering Memorandum (or any supplement or amendment
thereto) made in reliance upon and in conformity with information
relating to the Initial Purchaser furnished to the Company in writing
by or on behalf of the Initial Purchaser expressly for use therein. No
stop order preventing the use of the Offering Memorandum, or any
amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(ii) When the Preferred Stock are issued and delivered
pursuant to this Agreement, no Senior Note will be of the same class
(within the meaning of Rule 144A under the Act) as securities of the
Company that are listed on a national securities exchange registered
under Section 6 of the Exchange Act or that are quoted in a United
States automated inter-dealer quotation system.
(iii) Each of the Company and its Subsidiaries (as defined)
(A) has been duly organized, is validly existing as a corporation in
good standing under the laws of its respective jurisdiction of
incorporation, (B) has all requisite corporate power and authority to
carry on its business as it is currently being conducted and as
described in the Offering Memorandum and to own, lease and operate its
properties and (C) is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires
such qualification except, with respect to this clause (C), where the
failure of the Company and its Subsidiaries to be so qualified or in
good standing does not and could not reasonably be expected to (x)
individually or in the aggregate, result in a material adverse effect
on the assets, liabilities, business, results of operations, condition
(financial or otherwise), cash flows, affairs or prospects of the
Company and the Subsidiaries, taken as a whole, (y) interfere with or
adversely affect the issuance or marketability of the Preferred Stock
or (z) in any manner draw into question the validity of this Agreement
or any other Operative Document or the ability to conduct its business
in the manner set forth in the Offering Memorandum (any of the events
set forth in clauses (x), (y) or (z), a "Material Adverse Effect"). The
Company has no direct or indirect subsidiaries as of the Closing Date
other than those set forth on Schedule I hereto (referred to herein
collectively as "Subsidiaries" and individually as a "Subsidiary").
(iv) Each of the Joint Ventures (as defined) (A) has been duly
formed as a partnership or corporation, as applicable, under the laws
of its respective jurisdiction of formation, (B) has all requisite
partnership or corporate power and authority, as applicable, to carry
on its business as it is currently being conducted and as described in
the Offering Memorandum and to own, lease and operate its properties
and (C) is duly qualified and in good standing as a foreign partnership
authorized to do business in each jurisdiction in which the nature of
its business or its ownership
7
or leasing of property requires such qualification except, with respect
to this clause (C), where the failure to be so qualified or in good
standing does not and could not reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor its Subsidiaries has
any ownership interest in any Joint Venture other than those set forth
on Schedule II hereto (referred to herein collectively as "Joint
Ventures" and individually a "Joint Venture").
(v) All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and nonassessable and were not issued in violation of any preemptive or
similar rights. At June 30, 1997, on a combined basis, after giving
effect to the issuance and sale of the Preferred Stock pursuant hereto,
the Company had an authorized and outstanding consolidated
capitalization as set forth in the Offering Memorandum under the
caption "Capitalization."
(vi) All of the outstanding capital stock of each Subsidiary
is owned by the Company, free and clear of any security interest,
claim, lien, limitations on voting rights or other charge or
encumbrance, other than security interests, claims, liens, limitation
on voting rights or other charges or encumbrances arising from the
pledge of the capital stock of certain Subsidiaries as security for the
Company's 12 1/4 Senior Secured Notes due 2004. Except as disclosed in
the Offering Memorandum, there are not currently, and will not be as a
result of the Offering, any outstanding subscriptions, rights,
warrants, calls, commitments of sale or options to acquire, or
instruments convertible into or exchangeable for, any capital stock or
other equity interest of the Company or any Subsidiary.
(vii) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and the Operative Documents and to consummate the
transactions contemplated hereby and thereby, including, without
limitation, the corporate power and authority to issue, sell and
deliver the Securities as provided herein and therein.
(viii) This Agreement has been duly and validly authorized,
executed and delivered by Company and is the legal, valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except insofar as indemnification and contribution
provisions may be limited by applicable law or public policy or
equitable principles and subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of
equity.
(ix) The shares of Preferred Stock have been duly and validly
authorized for issuance and sale to the Initial Purchaser by the
Company pursuant to this Agreement and, when issued, delivered and paid
for in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable and entitled to the rights,
privileges and preferences set forth in the Certificate of Designation,
and the issuance of such shares of Preferred Stock will not be subject
to any preemptive or similar rights. The Preferred Stock will conform
in all material respects with the description thereof in the Offering
Memorandum.
(x) The shares of New Preferred Stock have been duly and
validly authorized by the Company and, when issued and delivered in
accordance with the terms of the Certificate of Designation and the
Exchange Offer, will be validly issued, fully paid and non-assessable
and
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entitled to the rights, privileges and preferences set forth in the
Certificate of Designation, and the issuance of such shares of New
Preferred Stock will not be subject to any preemptive or similar
rights. The New Preferred Stock will conform in all material respects
to the description thereof in the Offering Memorandum.
(xi) The Exchange Debentures have been duly and validly
authorized by the Company and, if and when issued by the Company will
conform in all material respects to the description thereof in the
Offering Memorandum. When the Exchange Debentures are issued and
delivered in accordance with the Indenture, the Exchange Debentures
will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to
general principles of equity. The Exchange Debentures will conform in
all material respects to the description thereof in the Offering
Memorandum.
(xii) The New Exchange Debentures have been duly and validly
authorized by the Company and, if and when issued and delivered by the
Company in accordance with the terms of the Indenture and the Exchange
Offer, will constitute legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms
and entitled to the benefits of the Indenture, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to
general principles of equity. The New Exchange Debentures will conform
in all material respects to the description thereof in the Offering
Memorandum.
(xiii) The Certificate of Designation has been duly authorized
by all necessary corporate and any necessary stockholder action and, on
the Closing Date will have been duly executed by the Company and filed
with the Secretary of State of the State of Delaware and will conform
in all material respects to the description thereof in the Offering
Memorandum.
(xiv) The Indenture has been duly and validly authorized by
the Company and, when duly executed and delivered by the Company, will
be the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to
general principles of equity.
(xv) The Registration Rights Agreement has been duly and
validly authorized by the Company and, when duly executed and delivered
by the Company, will be the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity. The description
of the Registration Rights Agreement in the Offering Memorandum is
accurate in all material respects.
(xvi) None of the Company, the Subsidiaries or the Joint
Ventures is and, after giving effect to the Offering will be (A) in
violation of its charter and bylaws or partnership agreement, as
applicable, (B) in default in the performance of any bond, debenture,
note, indenture, mortgage,
9
deed of trust or other agreement or instrument to which it is a party
or by which it is bound or to which any of its properties is subject,
or (C) in violation of any local, state or Federal law, statute,
ordinance, rule, regulation, requirement, judgment or court decree
(including, without limitation, the Communications Act of 1934, as
amended by the Telecommunications Act of 1996 (the "Telecommunications
Act"), and the rules and regulations of the Federal Communications
Commission (the "FCC") and environmental laws, statutes, ordinances,
rules, regulations, judgments or court decrees) applicable to the
Company, any Subsidiary, any Joint Venture or any of their respective
assets or properties (whether owned or leased) other than, in the case
of clauses (B) and (C), any default or violation that could not
reasonably be expected to have a Material Adverse Effect. There exists
no condition that, with notice, the passage of time or otherwise, would
constitute a default under any such document or instrument that could
reasonably be expected to have a Material Adverse Effect.
(xvii) None of (A) the execution, delivery or performance by
the Company and the Subsidiaries, as the case may be, of this Agreement
and the other Operative Documents, (B) the issuance and sale of the
Preferred Stock, (C) the issuance of the New Preferred Stock in
exchange for the Preferred Stock, and (D) consummation by the Company,
the Subsidiaries and the Joint Ventures of the transactions described
in the Offering Memorandum violate, conflict with or constitute a
breach of any of the terms or provisions of, or a default under (or an
event that with notice or the lapse of time, or both, would constitute
a default), or require consent under, or result in the imposition of a
lien or encumbrance on any properties of the Company, any Subsidiary or
any Joint Venture, or an acceleration of any indebtedness of the
Company, any Subsidiary or any Joint Venture pursuant to, (i) the
charter or bylaws of the Company or any Subsidiary or the partnership
agreement governing any Joint Venture, (ii) any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company, any Subsidiary or any Joint Venture is a party or by
which any of them or their property is or may be bound, (iii) any
local, state or Federal law, statute, ordinance, rule, regulation or
requirement (including, without limitation, the Telecommunications Act
and the rules and regulations of the FCC and environmental laws,
statutes, ordinances, rules or regulations) applicable to the Company,
any Subsidiary, any Joint Venture or any of their respective assets or
properties or (iv) any judgment, order or decree of any court or
governmental agency or authority having jurisdiction over the Company,
the Subsidiaries, the Joint Ventures or any of their assets or
properties, except in the case of clauses (ii), (iii) and (iv) for such
violations conflicts, breaches, defaults, consents, impositions of
liens or accelerations that would not singly, or in the aggregate, have
a Material Adverse Effect. Other than as described in the Offering
Memorandum, no consent, approval, authorization or order of, or filing,
registration, qualification, license or permit of or with, (A) any
court or governmental agency, body or administrative agency (including,
without limitation, the FCC) or (B) any other person is required for
(1) the execution, delivery and performance by the Company of this
Agreement and the other Operative Documents or (2) the issuance and
sale of the Securities and the transactions contemplated hereby and
thereby, except (x) such as have been obtained and made (or, in the
case of the Registration Rights Agreement, will be obtained and made)
under the Act, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and state securities or Blue Sky laws and regulations
or such as may be required by the NASD or (y) where the failure to
obtain any such consent, approval, authorization or order of, or filing
registration, qualification, license or permit would not reasonably be
expected to result in a Material Adverse Effect.
10
(xviii) There is (i) no action, suit or proceeding before or
by any court, arbitrator or governmental agency, body or official,
domestic or foreign, now pending or threatened or contemplated to which
the Company, any of the Subsidiaries or any of the Joint Ventures is or
may be a party or to which the business or property of the Company, any
Subsidiary or any Joint Venture is subject, (ii) no local, state or
Federal law, statute, ordinance, rule, regulation, requirement,
judgment or court decree (including, without limitation, the
Telecommunications Act and the rules and regulations of the FCC) or
order that has been enacted, adopted or issued by any governmental
agency or, to the best of the Company's knowledge, that has been
proposed by any governmental body or (iii) no injunction, restraining
order or order of any nature by a federal or state court or foreign
court of competent jurisdiction to which the Company, any Subsidiary or
any Joint Venture is or could reasonably be expected to be subject or
to which the business, assets, or property of the Company, any
Subsidiary or any Joint Venture are could reasonably be expected to be
subject, that, in the case of clauses (i), (ii) and (iii) above, (y) is
required to be disclosed in the Offering Memorandum and that is not so
disclosed, or (z) could reasonably be expected to individually or in
the aggregate, result in a Material Adverse Effect.
(xix) No action has been taken and no local, state or Federal
law, statute, ordinance, rule, regulation, requirement, judgment or
court decree has been enacted, adopted or issued by any governmental
agency that prevents the issuance of the Preferred Stock or prevents or
suspends the use of the Offering Memorandum; no injunction, restraining
order or order of any nature by a federal or state court of competent
jurisdiction has been issued that prevents the issuance of the
Preferred Stock or prevents or suspends the sale of the Preferred Stock
in any jurisdiction referred to in Section 4(e) hereof; and every
request of any securities authority or agency of any jurisdiction for
additional information has been complied with in all material respects.
(xx) There is (i) no unfair labor practice complaint pending
against the Company, any Subsidiary or any Joint Venture or threatened,
before the National Labor Relations Board, any state or local labor
relations board or any foreign labor relations board, and no
significant grievance or significant arbitration proceeding arising out
of or under any collective bargaining agreement is so pending against
the Company, any Subsidiary or any Joint Venture threatened, (ii) no
significant strike, labor dispute, slowdown or stoppage pending against
the Company, any Subsidiary or any Joint Venture threatened against the
Company, any Subsidiary or the Joint Venture and (iii) no union
representation question existing with respect to the employees of the
Company, any Subsidiary or any Joint Venture that, in the case of
clauses (i), (ii) or (iii), could reasonably be expected to result in a
Material Adverse Effect. To the best of the Company's knowledge, no
collective bargaining organizing activities are taking place with
respect to the Company, the Subsidiaries or the Joint Ventures. None of
the Company, any Subsidiary or any Joint Venture has violated (A) any
federal, state or local law or foreign law relating to discrimination
in hiring, promotion or pay of employees, (B) any applicable wage or
hour laws or (C) any provision of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the rules and
regulations thereunder, which in the case of clause (A), (B) or (C)
above could reasonably be expected to result in a Material Adverse
Effect.
(xxi) None of the Company, any Subsidiary or any Joint Venture
has violated any environmental, safety or similar law or regulation
applicable to it or its business or property relating to the protection
of human health and safety, the environment or hazardous or toxic
11
substances or wastes, pollutants or contaminants ("Environmental
Laws"), lacks any permit, license or other approval required of it
under applicable Environmental Laws is violating any term or condition
of such permit, license or approval which could reasonably be expected
to, either individually or in the aggregate, have a Material Adverse
Effect.
(xxii) Each of the Company, the Subsidiaries and the Joint
Ventures has (i) good and marketable title to all of the properties and
assets described in the Offering Memorandum as owned by it, free and
clear of all liens, charges, encumbrances and restrictions, except such
as are described in the Offering Memorandum or as would not have a
Material Adverse Effect, (ii) peaceful and undisturbed possession under
all leases to which any of them is a party as lessee, (iii) all
licenses, certificates, permits, authorizations, approvals, franchises
and other rights from, and has made all declarations and filings with,
all federal, state and local authorities (including, without
limitation, the FCC), all self-regulatory authorities and all courts
and other tribunals (each an "Authorization") necessary to engage in
the business as presently conducted by any of them in the manner
described in the Offering Memorandum, except as described in the
Offering Memorandum or where failure to hold such Authorizations would
not, individually or in the aggregate, have a Material Adverse Effect
and (iv) no reason to believe that any governmental body or agency is
considering limiting, suspending or revoking any such Authorization.
Except where the failure to be in full force and effect would not have
a Material Adverse Effect, all such Authorizations are valid and in
full force and effect and each of the Company, the Subsidiaries and the
Joint Ventures is in compliance with the terms and conditions of all
such Authorizations and with the rules and regulations of the
regulatory authorities having jurisdiction with respect thereto. All
leases to which the Company, the Subsidiaries and the Joint Ventures is
a party are valid and binding and no default by the Company, any
Subsidiary or any Joint Venture has occurred and is continuing
thereunder and no defaults by the landlord are existing under any such
lease that could reasonably be expected to result in a Material Adverse
Effect.
(xxiii) Each of the Company, the Subsidiaries and the Joint
Ventures owns, possesses or has the right to employ all patents, patent
rights, licenses (including all FCC, state, local or other
jurisdictional regulatory licenses), inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, software, systems or
procedures), trademarks, service marks and trade names, inventions,
computer programs, technical data and information (collectively, the
"Intellectual Property") presently employed by the Company, its
Subsidiaries or the Joint Ventures in connection with the businesses
now operated by it or which are proposed to be operated by the Company,
its Subsidiaries or the Joint Ventures free and clear of and without
violating any right, claimed right, charge, encumbrance, pledge,
security interest, restriction or lien of any kind of any other person
and none of the Company, any Subsidiary or any Joint Venture has
received any notice of infringement of or conflict with asserted rights
of others with respect to any of the foregoing except as could not
reasonably be expected to have a Material Adverse Effect. The use of
the Intellectual Property in connection with the business and
operations of the Company, the Subsidiaries and the Joint Ventures does
not infringe on the rights of any person, except would not have a
Material Adverse Effect.
(xxiv) None of the Company, any Subsidiary, any Joint Venture
or any of their respective officers, directors, partners, employees,
agents or affiliates or any other person acting on behalf of the
Company, any Subsidiary or any Joint Venture, as the case may be, has,
directly or
12
indirectly, given or agreed to give any money, gift or similar benefit
(other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer
or supplier, official or employee of any governmental agency (domestic
or foreign), instrumentality of any government (domestic or foreign) or
any political party or candidate for office (domestic or foreign) or
other person who was, is or may be in a position to help or hinder the
business of the Company, any Subsidiary or any Joint Venture (or assist
the Company, any Subsidiary or any Joint Venture in connection with any
actual or proposed transaction) which (i) might subject the Company,
any Subsidiary, or any other individual or entity to any damage or
penalty in any civil, criminal or governmental litigation or proceeding
(domestic or foreign), (ii) if not given in the past, could reasonably
be expected to have had a Material Adverse Effect on the assets,
business or operations of the Company, any Subsidiary or any Joint
Venture or (iii) if not continued in the future, could reasonably be
expected to have a Material Adverse Effect.
(xxv) All tax returns required to be filed by the Company,
each of the Subsidiaries and each of the Joint Ventures in all
jurisdictions have been so filed. All taxes, including withholding
taxes, penalties and interest, assessments, fees and other charges due
or claimed to be due from such entities or that are due and payable
have been paid, other than those being contested in good faith and for
which adequate reserves have been provided or those currently payable
without penalty or interest. There are no proposed additional tax
assessments against the Company, any Subsidiary, any Joint Venture or
the assets or property of the Company, any Subsidiary or any Joint
Venture.
(xxvi) None of the Company, the Subsidiaries or the Joint
Ventures is (i) an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "Investment Company Act"), or (ii) a "holding
company" or a "subsidiary company" or an "affiliate" of a holding
company within the meaning of the Public Utility Holding Company Act of
1935, as amended (the "PUC Act").
(xxvii) There are no holders of securities of the Company, the
Subsidiaries or the Joint Ventures who, by reason of the execution by
the Company of this Agreement or any other Operative Document to which
it is a party or the consummation by the Company of the transactions
contemplated hereby and thereby, have the right to request or demand
that the Company, any of the Subsidiaries or any of the Joint Ventures
register any of its securities under the Act.
(xxviii) Each of the Company, the Subsidiaries and the Joint
Ventures maintains a system of internal accounting controls sufficient
to provide reasonable assurance that: (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto.
13
(xxix) Each of the Company, the Subsidiaries and the Joint
Ventures maintains insurance covering its properties, operations,
personnel and businesses. Such insurance insures against such losses
and risks as are adequate in accordance with customary industry
practice to protect the Company, the Subsidiaries, the Joint Ventures
and their respective businesses. None of the Company, any Subsidiary or
any Joint Venture has received notice from any insurer or agent of such
insurer that substantial capital improvements or other expenditures
will have to be made in order to continue such insurance. All such
insurance is outstanding and duly in force on the date hereof.
(xxx) None of the Company, any Subsidiary or any Joint Venture
has (i) taken, directly or indirectly, any action designed to, or that
might reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Preferred Stock (ii) since the date of the
Offering Memorandum (A) sold, bid for, purchased or paid any person any
compensation for soliciting purchases of the Preferred Stock or (B)
paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(xxxi) No registration under the Act of the Preferred Stock is
required for the sale of the Preferred Stock to the Initial Purchaser
as contemplated hereby or for the Exempt Resales assuming (i) that the
purchasers who buy the Preferred Stock in the Exempt Resales are
Eligible Purchasers and (ii) the accuracy of the Initial Purchaser's
representations regarding the absence of general solicitation in
connection with the sale of Preferred Stock to the Initial Purchaser
and the Exempt Resales contained herein. No form of general
solicitation or general advertising was used by the Company or any of
its representatives (other than the Initial Purchaser, as to which the
Company makes no representation or warranty) in connection with the
offer and sale of the Preferred Stock in connection with Exempt
Resales, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Preferred Stock
have been issued and sold by the Company within the six-month period
immediately prior to the date hereof.
(xxxii) Set forth on Exhibit B hereto is a list of each
employee pension or benefit plan with respect to which the Company or
any corporation considered an affiliate of the Company within the
meaning of Section 407(d)(7) of ERISA (an "ERISA Affiliate") is a party
in interest or disqualified person. The execution and delivery of this
Agreement, the other Operative Documents and the sale of the Preferred
Stock to be purchased by the QIBs will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975
of the Internal Revenue Code of 1986, as amended. The representation
made by the Company in the preceding sentence is made in reliance upon
and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the QIBs as set
forth in the Offering Memorandum under the caption "Notice to
Investors."
(xxxiii) The Offering Memorandum, as of its date, and each
amendment or supplement thereto, as of its date, contains the
information specified in, and meets the requirements of, Rule
144A(d)(4) under the Act.
14
(xxxiv) Subsequent to the respective dates as of which
information is given in the Offering Memorandum and up to the Closing
Date, except as set forth in the Offering Memorandum, (i) none of the
Company, any Subsidiary or any Joint Venture has incurred any
liabilities or obligations, direct or contingent, which are material,
individually or in the aggregate, to the Company, the Subsidiaries and
the Joint Ventures taken as a whole, nor entered into any transaction
not in the ordinary course of business, (ii) there has not been, singly
or in the aggregate, any change or development which could reasonably
be expected to result in a Material Adverse Effect, (iii) there has
been no dividend or distribution of any kind declared, paid or made by
the Company or its Subsidiaries on any class of capital stock and (iv)
there has been no distribution of profits or return of capital
contribution by any Joint Venture.
(xxxv) None of (A) the execution, delivery and performance of
this Agreement or any of the Operative Documents, (B) the issuance and
sale of the Securities, (C) the application of the proceeds from the
issuance and sale of the Securities or (D) the consummation of the
transactions contemplated in connection with any of the foregoing as
set forth in the Offering Memorandum, will violate Regulations G, T, U
or X promulgated by the Board of Governors of the Federal Reserve
System or analogous foreign laws and regulations.
(xxxvi) The accountants who have certified or will certify the
financial statements included or to be included as part of the Offering
Memorandum are independent accountants. The historical financial
statements of the Company and each of the Subsidiaries comply as to
form in all material respects with the requirements applicable to
registration statements on Form S-4 under the Act and present fairly in
all material respects the financial position and results of operations
of the Company and each of its Subsidiaries, at the respective dates
and for the respective periods indicated. Such financial statements
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
presented. The other financial information and data included in the
Offering Memorandum, historical and pro forma, are accurately presented
in all material respects and prepared on a basis consistent with the
financial statements, historical and pro forma, included in the
Offering Memorandum and the books and records of the Company, each of
its Subsidiaries and each of its Joint Ventures, as applicable. The
statistical information and data included in the Offering Memorandum
are accurately presented in all material respects.
(xxxvii) The Company does not intend to, nor does it believe
that it will, incur debts beyond its ability to pay such debts as they
mature. The present fair saleable value of the assets of the Company on
a consolidated basis exceeds the amount that will be required to be
paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of the Company on a consolidated
basis as they become absolute and matured. The assets of the Company on
a consolidated basis do not constitute unreasonably small capital to
carry out the business of the Company, the Subsidiaries and the Joint
Ventures, taken as a whole, as conducted or as proposed to be
conducted. Upon the issuance of the Preferred Stock, the present fair
saleable value of the assets of the Company on a consolidated basis
will exceed the amount that will be required to be paid on or in
respect of the existing debts and other liabilities (including
contingent liabilities) of the Company on a consolidated basis as they
become absolute and matured. Upon the issuance of the Preferred Stock,
the assets of the Company on a consolidated basis will not constitute
unreasonably small capital to carry out its businesses as now
conducted, including the capital needs
15
of the Company on a consolidated basis, taking into account the
projected capital requirements and capital availability.
(xxxviii) Except pursuant to this Agreement, there are no
contracts, agreements or understandings between the Company, any of its
Subsidiaries or any of its Joint Ventures and any other person that
would give rise to a valid claim against the Company or any of the
Initial Purchaser for a brokerage commission, finder's fee or like
payment in connection with the issuance, purchase and sale of the
Preferred Stock.
(xxxix) Each of the Company, the Subsidiaries and the Joint
Ventures has complied with all provisions of Section 517.075, Florida
Statutes, relating to doing business with the Government of Cuba or
with any affiliate located in Cuba.
(xl) Except as disclosed in the Offering Memorandum, there are
no business relationships or related party transactions required to be
disclosed therein pursuant to Item 404 of Regulation S-K of the
Commission (assuming for purposes of this paragraph 5(xl) only that
Regulation S-K is applicable to the Offering Memorandum).
(xli) None of the Company, the Subsidiaries, the Joint
Ventures nor any of their respective affiliates or any person acting on
their behalf has engaged or will engage in any directed selling efforts
within the meaning of Regulation S with respect to the Preferred Stock,
and each of the Company, the Subsidiaries, the Joint Ventures and their
respective affiliates and all persons acting on its or their behalf
have complied with and will comply with the offering restrictions of
Regulation S in connection with the offering of the Preferred Stock
outside the United States.
(xlii) The Preferred Stock offered an sold in reliance on
Regulation S have been and will be offered and sold only in offshore
transactions and such securities have been and will be represented upon
issuance by a global security that may not be exchanged for definitive
securities until the expiration of the restricted period (as defined in
Regulation S) and only upon certification of beneficial ownership of
the securities by a non-U.S. person or a U.S. person who purchased such
securities in a transaction that was exempt from the registration
requirements of the Act, which U.S. person will acquire an interest in
a Transfer Restricted Security (as defined in the Registration Rights
Agreement).
(xliii) The sale of the Preferred Stock pursuant to Regulation
S is not part of a plan or scheme to evade the registration provisions
of the Act.
(xliv) Each of the Company and Hyperion Telecommunications of
New York, Inc. have been released from all of their obligations under
the partnership agreement governing the NewChannels Hyperion
Telecommunications of New York joint venture pursuant to agreements
that dissolved such joint venture on September 12, 1997.
Each certificate signed by any officer of the Company and
delivered to the Initial Purchaser or counsel for the Initial Purchaser pursuant
to this Agreement shall be deemed to be a representation and warranty by the
Company to the Initial Purchaser as to the matters covered thereby.
16
The Company acknowledges that the Initial Purchaser and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to
Section 8 hereof, counsel to the Company and counsel to the Initial Purchaser,
will rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.
(b) The Initial Purchaser warrants and covenants to the Company and
agrees that:
(i) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order
to evaluate the merits and risks of an investment in the Preferred
Stock.
(ii) Such Initial Purchaser (A) is not acquiring the Preferred
Stock with a view to any distribution thereof that would violate the
Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling
the Preferred Stock only to QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and to
non-U.S. persons outside the United States in offshore transactions in
reliance upon Regulation S under the Act.
(iii) No form of general solicitation or general advertising
has been or will be used by the Initial Purchaser or any of its
representatives in connection with the offer and sale of any of the
Preferred Stock, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or
general advertising.
(iv) In connection with the Exempt Resales, such Initial
Purchaser will solicit offers to buy the Preferred Stock only from, and
will offer to sell the Preferred Stock only to, Eligible Purchasers.
Such Initial Purchaser further agrees (A) that, with respect to QIBs,
it will offer to sell the Preferred Stock only to, and will solicit
offers to buy the Preferred Stock only from QIBs who in purchasing such
Preferred Stock will be deemed to have represented and agreed that they
are purchasing the Preferred Stock for their own accounts or accounts
with respect to which they exercise sole investment discretion and that
they or such accounts are QIBs and (B) that such QIBs acknowledge and
agree that such Preferred Stock will not have been registered under the
Act and may be resold, pledged or otherwise transferred only (x)(I) to
a person who the seller reasonably believes is a QIB in a transaction
meeting the requirements of Rule 144A or (II) in a transaction meeting
the requirements of Rule 144 or (III) outside the United States in a
transaction meeting the requirements of Rule 903 or 904 of Regulation S
under the Securities Act, (IV) to an institutional "accredited
investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation
D under the Securities Act that prior to such transfer, furnishes to
the Trustee a signed letter containing certain representations and
agreements relating to the transfer of the Preferred Stock or (V) in
accordance with another exemption from the registration requirements of
the Act (and based upon an opinion of counsel if the Company so
requests), (y) to the Company or (z) pursuant to an effective
registration statement under the Act and, in each case, in accordance
with any applicable securities laws of any state of the United States
or any other applicable jurisdiction and (C) that the holder will, and
each subsequent holder is required to, notify any purchaser of the
security evidenced thereby of the resale restrictions set forth in (B)
above.
17
(v) Such Initial Purchaser agrees that it has offered the
Preferred Stock and will offer and sell the Preferred Stock (i) as part
of its distribution at any time and (ii) otherwise until one year after
the later of the commencement of the offering of the Preferred Stock
and the Closing Date, only in accordance with Rule 903 of Regulation S
or another exemption from the registration requirements of the Act.
Accordingly, neither such Initial Purchaser, its affiliates nor any
persons acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Rule 901(b) of
Regulation S with respect to the Preferred Stock, and such Initial
Purchaser, its affiliates and all persons acting on its or their behalf
have complied and will comply with the offering restrictions
requirements of Regulation S.
(vi) Such Initial Purchaser agrees that the Preferred Stock
offered and sold in reliance on Regulation S have been and will be
offered and sold only in offshore transactions and that such securities
have been and will be represented upon issuance by a global security
that may not be exchanged for definitive securities until the
expiration of the restricted period (as defined in Regulation S) and
only upon certification of beneficial ownership of the securities by a
non-U.S. person or a U.S. person who purchased such securities in a
transaction that was exempt from the registration requirements of the
Act, which U.S. person will acquire an interest in a Registrable
Security (as defined in the Registration Rights Agreement).
(vii) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Preferred Stock, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Preferred Stock from it during the
restricted period (as defined in Regulation S) a confirmation or notice
to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time or (ii) otherwise until one year after the later of the
commencement of the Offering and the Closing Date, except in either
case in accordance with Regulation S (or Rule 144A or in transactions
that are exempt from the registration requirements of the Securities
Act) under the Securities Act. Terms used above have the meanings
assigned to them in Regulation S."
Such Initial Purchaser further agrees that it has not entered and will
not enter into any contractual arrangement with respect to the
distribution or delivery of the Preferred Stock, except with its
affiliates or with the prior consent of the Company.
(viii) Such Initial Purchaser further represents and agrees
that (1) it has not offered or sold and will not offer or sell any
Preferred Stock to persons in the United Kingdom prior to the expiry of
the period of six months from the issue date of the Preferred Stock,
except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent)
for the purposes of their business or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995, (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Preferred Stock in, from or
otherwise involving the United Kingdom and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any
document
18
received by it in connection with the issuance of the Securities to a
person who is of a kind described in Article 11(3) of the Financial
Services Act of 1986 (Investment Advertisements) (Exemptions) Order
1996 or is a person to whom the document may otherwise lawfully be
issued or passed on.
(ix) Such Initial Purchaser agrees that it will not offer,
sell or deliver any of the Preferred Stock in any jurisdiction outside
the United States except under circumstances that will result in
compliance with the applicable laws thereof, and that it will take at
its own expense whatever action is required to permit its purchase and
resale of the Preferred Stock in such jurisdictions. Such Initial
Purchaser understands that no action has been taken to permit a public
offering in any jurisdiction outside the United States where action
would be required for such purpose.
(x) Such Initial Purchaser agrees not to cause any
advertisement of the Preferred Stock to be published in any newspaper
or periodical or posted in any public place and not to issue any
circular relating to the Preferred Stock, except such advertisements as
include the statements required by Regulation S.
(xi) The sale of the Preferred Stock in offshore transactions
pursuant to Regulation S is not part of a plan or scheme to evade the
registration provisions of the Act.
The Initial Purchaser understands that the Company and, for purposes of the
opinions to be delivered to the Initial Purchaser pursuant to Section 8 hereof,
counsel to the Company and counsel to the Initial Purchaser will rely upon the
accuracy and truth of the foregoing representations and hereby expressly
consents to such reliance.
6. Indemnification.
(a) The Company and its Subsidiaries, jointly and severally,
agree to indemnify and hold harmless (i) each Initial Purchaser, (ii)
each person, if any, who controls the Initial Purchaser within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Initial Purchaser or any controlling
person to the fullest extent lawful, from and against any and all
losses, liabilities, claims, damages and expenses whatsoever (including
but not limited to attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Offering
Memorandum, or in any supplement thereto or amendment thereof, 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 the light of the circumstances under
which they were made, not misleading; provided that the Company will
not be liable in any such case to the extent, but only to the extent,
that any such loss, liability, claim, damage or expense arises out of
or is based upon any such untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to
19
the Company by or on behalf of the Initial Purchaser expressly for use
therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have, including, under this Agreement.
(b) The Initial Purchaser agrees to indemnify and hold
harmless the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any losses, liabilities, claims, damages and
expenses whatsoever (including but not limited to attorneys' fees and
any and all expenses whatsoever incurred in investigating, preparing or
defending against any investigation or litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation), joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or
expenses (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in the Offering Memorandum, or in any amendment thereof 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 the light of
the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Initial
Purchaser expressly for use therein; provided that in no case shall the
Initial Purchaser be liable or responsible for any amount in excess of
the discounts and commissions received by the Initial Purchaser in
connection with the Offering. This indemnity will be in addition to any
liability which the Initial Purchaser may otherwise have, including
under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
each party against whom indemnification is to be sought in writing of
the commencement thereof (but the failure so to notify an indemnifying
party shall not relieve it from any liability which it may have under
this Section 6 except to the extent that it has been actually
prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is
brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party
or parties shall have the right to employ its or their own counsel in
any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action,
(ii) the indemnifying parties shall not have employed counsel to take
charge of the defense of such action within a reasonable time after
notice of commencement of the action, or (iii) such indemnified party
or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not
20
have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and
expenses of counsel shall be borne by the indemnifying parties. The
indemnifying party under subsection (a) or (b) above, shall only be
liable for the legal expenses of one counsel (in addition to any local
counsel) for all indemnified parties in each jurisdiction in which any
claim or action is brought; provided that the indemnifying party shall
be liable for separate counsel for any indemnified party in a
jurisdiction, if counsel to the indemnified parties shall have
reasonably concluded that there may be defenses available to such
indemnified party that are difference from or additional to those
available to one or more of the other indemnified parties and that
separate counsel for such indemnified party is prudent under the
circumstances. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written
consent; provided that such consent was not unreasonably withheld.
7. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 6 is for any reason held to
be unavailable from the Company or is insufficient to hold harmless a party
indemnified thereunder, the Company and the Initial Purchaser shall contribute
to the aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company, any contribution received by the Company from persons,
other than the Initial Purchaser, who may also be liable for contribution,
including persons who control the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act) to which the Company and the
Initial Purchaser may be subject, in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Initial Purchaser
from the offering of the Preferred Stock or, if such allocation is not permitted
by applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 6, in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Company and the Initial Purchaser in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Initial Purchaser shall be deemed to be in the same proportion as (x) the total
proceeds from the offering of Preferred Stock (net of discounts but before
deducting expenses) received by the Company and (y) the discounts received by
the Initial Purchaser. The relative fault of the Company and of the Initial
Purchaser 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 Company
or the Initial Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 7, (i) in no case shall the Initial Purchaser be required to
contribute any amount in excess of the amount by which the discount applicable
to the Preferred Stock purchased by the Initial Purchaser pursuant to this
Agreement exceeds the amount of any damages which the Initial Purchaser has
otherwise been required to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of
21
this Section 7, (A) each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and (B) the respective officers, directors, partners, employees, representatives
and agents of the Initial Purchaser or any controlling person shall have the
same rights to contribution as such Initial Purchaser, and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 7. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 7, notify such party or parties from whom contribution may be
sought, but the failure to so notify such party or parties shall not relieve the
party or parties from whom contribution may be sought from any obligation it or
they may have under this Section 7 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent; provided that such written consent was not unreasonably
withheld.
8. Conditions of Initial Purchaser's Obligations. The obligation
of the Initial Purchaser to purchase and pay for the Preferred Stock, as
provided herein, shall be subject to the satisfaction of the following
conditions:
(a) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the date
hereof and on the Closing Date with the same force and effect as if
made on and as of the date hereof and the Closing Date, respectively.
The Company shall have performed or complied with all of the agreements
herein contained and required to be performed or complied with by it at
or prior to the Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchaser not later than 5:00 p.m., New York
City time, on the second day following the date of this Agreement or at
such later date and time as to which the Initial Purchaser may agree,
and no stop order suspending the qualification or exemption from
qualification of the Preferred Stock in any jurisdiction referred to in
Section 4(e) shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
(c) No action shall have been taken and no local, state or
Federal law, statute, ordinance, rule, regulation, requirement,
judgment or court decree shall have been enacted, adopted or issued by
any governmental agency which would, as of the Closing Date, prevent
the issuance of the Preferred Stock; no action, suit or proceeding
shall have been commenced and be pending against or affecting or, to
the best knowledge of the Company, threatened against, the Company, the
Subsidiaries or the Joint Ventures before any court or arbitrator or
any governmental body, agency or official (including, but not limited
to the FCC or any state regulatory authority or body) that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect; and no stop order shall have been issued
preventing the use of the Offering Memorandum, or any amendment or
supplement thereto, or which could reasonably be expected to have a
Material Adverse Effect.
(d) Since the dates as of which information is given in the
Offering Memorandum or as otherwise disclosed therein, (i) there shall
not have been any material adverse change, or any development that is
reasonably likely to result in a material adverse change, in the
capital stock or
22
the long-term debt, or material increase in the short-term debt, of the
Company, the Subsidiaries or the Joint Ventures from that set forth in
the Offering Memorandum, (ii) no dividend or distribution of any kind
shall have been declared, paid or made by the Company or any Subsidiary
on any class of its capital stock, (iii) neither the Company nor any
Subsidiary nor any Joint Venture shall have incurred any liabilities or
obligations, direct or contingent, that are material, individually or
in the aggregate, to the Company, the Subsidiaries and the Joint
Ventures taken as a whole, and that are required to be disclosed on a
balance sheet or notes thereto in accordance with generally accepted
accounting principles and are not disclosed on the latest balance sheet
or notes thereto included in the Offering Memorandum. Since the date
hereof and since the dates as of which information is given in the
Offering Memorandum, there shall not have occurred any Material Adverse
Change.
(e) The Initial Purchaser shall have received a certificate,
dated the Closing Date, signed on behalf of the Company by (i) the
President or a Vice Chairman and (ii) a Vice President, Vice Chairman,
Secretary or Assistant Secretary, in form and substance reasonably
satisfactory to the Initial Purchaser, confirming, as of the Closing
Date, the matters set forth in paragraphs (a), (b), (c) and (d) of this
Section 8, certain incumbency matters and that, as of the Closing Date,
the obligations of the Company to be performed hereunder on or prior
thereto have been duly performed.
(f) The Initial Purchaser shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchaser and counsel to the Initial
Purchaser, of Buchanan Ingersoll, counsel for the Company, to the
effect set forth in Exhibit C hereto.
(g) The Initial Purchaser shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchaser and counsel to the Initial
Purchaser, of Swidler & Berlin, special regulatory counsel to the
Company, to the effect set forth in Exhibit D hereto.
(h) The Initial Purchaser shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchaser and counsel to the Initial
Purchaser, of Downs Rachlin & Martin, special state regulatory counsel
for the Company in the State of Vermont, to the effect set forth in
Exhibit D hereto.
(i) The Initial Purchaser shall have received an opinion,
dated the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchaser, of Latham & Watkins, counsel to the Initial
Purchaser, covering such matters as are customarily covered in such
opinions.
(j) At the Closing Date the Initial Purchaser shall have
received from Deloitte & Touche, independent public accountants for the
Company dated as of the Closing Date, a customary comfort letter
addressed to the Initial Purchaser and in form and substance
satisfactory to the Initial Purchaser and counsel to the Initial
Purchaser with respect to the financial statements and certain
financial information of the Company, the Subsidiaries and the Joint
Ventures contained in the Offering Memorandum.
23
(k) Latham & Watkins shall have been furnished with such
documents, in addition to those set forth above, as they may reasonably
require for the purpose of enabling them to review or pass upon the
matters referred to in this Section 8 and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any
of the representations, warranties or conditions herein contained.
(l) Prior to the Closing Date, the Company, the Subsidiaries
and the Joint Ventures shall have furnished to the Initial Purchaser
such further information, certificates and documents as the Initial
Purchaser may reasonably request.
(m) The Company shall have entered into the Registration
Rights Agreement and the Initial Purchaser shall have received
counterparts, conformed as executed, thereof.
(n) The Company shall have authorized, executed and filed the
Certificate of Designation in accordance with Delaware law and the
Initial Purchaser shall have received an original, duly executed by the
Company.
All opinions, certificates, letters and other documents required by
this Section 8 to be delivered by the Company will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance
to the Initial Purchaser. The Company will furnish the Initial Purchaser with
such conformed copies of such opinions, certificates, letters and other
documents as it shall reasonably request.
9. Initial Purchaser's Information. For the purposes of Sections 4(a)
and 6(b) herein and otherwise, the Company and the Initial Purchaser severally
acknowledge that the statements with respect to the offering of the Preferred
Stock set forth in the last paragraph of the cover page and the third sentence
of the fourth paragraph, the fifth paragraph, the sixth paragraph and the eighth
paragraph under the caption "Plan of Distribution" in such Offering Memorandum
constitute the only information furnished in writing by or on behalf of the
Initial Purchaser expressly for use in the Offering Memorandum.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Initial Purchaser and the Company
contained in this Agreement, including, without limitation, the representations
and warranties and agreements contained in Sections 4(f) and 11(d), the
indemnity agreements contained in Section 6 and the contribution agreements
contained in Section 7, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Initial Purchaser
any controlling person thereof or by or on behalf of the Company or any
controlling person thereof, and shall survive delivery of and payment for the
Preferred Stock to and by the Initial Purchaser. The representations contained
in Section 5 and the agreements contained in Sections 4(f), 6, 7 and 11(d) shall
survive the termination of this Agreement, including any termination pursuant to
Section 11.
11. Effective Date of Agreement; Termination
(a) This Agreement shall become effective upon execution and
delivery of a counterpart hereof by each of the parties hereto.
24
(b) The Initial Purchaser shall have the right to terminate
this Agreement at any time prior to the Closing Date by notice to the
Company from the Initial Purchaser, without liability (other than with
respect to Sections 6 and 7) on the Initial Purchaser's part to the
Company if, on or prior to such date, (i) the Company shall have
failed, refused or been unable to perform in any material respect any
agreement on its part to be performed hereunder, (ii) any other
condition to the obligations of the Initial Purchaser hereunder as
provided in Section 8 is not fulfilled when and as required in any
material respect, (iii) in the reasonable judgment of the Initial
Purchaser any material adverse change shall have occurred since the
respective dates as of which information is given in the Offering
Memorandum in the condition (financial or otherwise), business,
properties, assets, liabilities, prospects, net worth, results of
operations or cash flows of the Company and the Subsidiaries taken as a
whole, other than as set forth in the Offering Memorandum, or (iv)(A)
any domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Initial Purchaser will in the
immediate future materially disrupt, the market for the Company's
securities or for securities in general; or (B) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market shall have been suspended or materially
limited, or minimum or maximum prices for trading shall have been
established, or maximum ranges for prices for securities shall have
been required, on such exchange, or by such exchange or other
regulatory body or governmental authority having jurisdiction; or (C) a
banking moratorium shall have been declared by Federal or state
authorities, or a moratorium in foreign exchange trading by major
international banks or persons shall have been declared; or (D) there
is an outbreak or escalation of armed hostilities involving the United
States on or after the date hereof, or there has been a declaration by
the United States of a national emergency or war, the effect of which
shall, in the Initial Purchaser's judgment, make it inadvisable or
impracticable to proceed with the offering or delivery of the Preferred
Stock on the terms and in the manner contemplated in the Offering
Memorandum; or (E) there has been a material adverse change in general
economic, political or financial conditions in the United States, or
the effect of international conditions on the financial markets in the
United States shall be such that, it is, in the Initial Purchaser's
judgment, inadvisable or impracticable to proceed with the delivery of
the Preferred Stock as contemplated hereby.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone, telex, telephonic facsimile, or telegraph,
confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to any of clauses (iii)
or (iv) of Section 11(b), in which case each party will be responsible
for its own expenses), or if the sale of the Preferred Stock provided
for herein is not consummated because any condition to the obligations
of the Initial Purchaser set forth herein is not satisfied or because
of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by the Initial Purchaser, reimburse the
Initial Purchaser for all out-of-pocket expenses (including the
reasonable fees and expenses of Initial Purchaser's counsel), incurred
by the Initial Purchaser in connection herewith.
12. Notice. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to the
Initial Purchaser shall be mailed, delivered, or telexed, telegraphed or
telecopied and confirmed in writing to Bear, Stearns & Co. Inc., 245 Park
Avenue, New
25
York, New York 10167, Attention: Corporate Finance Department, telecopy number:
(212) 272-3092; and if sent to the Company, shall be mailed, delivered or
telexed, telegraphed or telecopied and confirmed in writing to Hyperion
Telecommunications, Inc., Main at Water Street, Coudersport, Pennsylvania 16915,
Attention: Daniel Milliard, telecopy number: (814) 274-8631, with a copy to
Buchanan Ingersoll, One Oxford Centre, 301 Grant street, 20th Floor, Pittsburgh,
Pennsylvania 15219-1410, Attention: Carl E. Rothenberger, Jr.; provided that any
notice pursuant to Section 7 shall be mailed, delivered or telexed, telegraphed
or telecopied and confirmed in writing.
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Initial Purchaser and the Company and the controlling
persons and agents referred to in Sections 6 and 7, and their respective
successors and assigns, and no other person shall have or be construed to have
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. The term "successors
and assigns" shall not include a purchaser, in its capacity as such, of
Preferred Stock from the Initial Purchaser.
14. Construction. This Agreement shall be construed in accordance
with the internal laws of the State of New York. TIME IS OF THE ESSENCE IN THIS
AGREEMENT.
15. Captions. The captions included in this Agreement are
included solely for convenience of reference and are not to be considered a part
of this Agreement.
16. Counterparts. This Agreement may be executed in various
counterparts which together shall constitute one and the same instrument.
[Signature page follows]
26
If the foregoing correctly sets forth the understanding among
the Initial Purchaser, the Company, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement between us.
Very truly yours,
HYPERION TELECOMMUNICATIONS, INC.
By: /S/ James P. Rigas
Name: James P. Rigas
Title: Vice Chairman and Chief Executive Officer
Accepted and agreed to as of the date first above written:
BEAR, STEARNS & CO. INC.
By: /s/ John Andrew Bugas
Name: John Andrew Bugas
Title: Senior Manging Director
SCHEDULE I
Subsidiaries
Hyperion Enhanced Networks of Virginia, Inc.
Hyperion Telecommunications of Florida, Inc.
Hyperion Telecommunications of Kansas, Inc.
Hyperion Telecommunications of Kentucky, Inc.
Hyperion Telecommunications of Massachusetts, Inc.
Hyperion Telecommunications of Michigan, Inc.
Hyperion Telecommunications of New Jersey, Inc.
Hyperion Telecommunications of New York, Inc.
Hyperion Telecommunications of North Carolina, Inc.
Hyperion Telecommunications of Ohio, Inc.
Hyperion Telecommunications of Pennsylvania, Inc.
Hyperion Telecommunications of South Carolina, Inc.
Hyperion Telecommunications of Tennessee, Inc.
Hyperion Telecommunications of Vermont, Inc.
Hyperion Telecommunications of Virginia, Inc.
Hyperion Telecommunications of Arkansas, Inc.
Hyperion Telecommunications of Louisiana, Inc.
Hyperion Telecommunications of Mississippi, Inc.
Hyperion Telecommunications of Syracuse, Inc.
Hyperion Telecommunications of Buffalo, Inc.
Hyperion Telecommunications of Albany, Inc.
Hyperion Telecommunications of Louisville, Inc.
Hyperion Telecommunications of Lexington, Inc.
Hyperion Telecommunications of Harrisburg, Inc.
Hyperion Telecommunications of Scranton
Hyperion Telecommunications of Coudersport, Inc.
SCHEDULE II
Joint Ventures
MediaOne of Virginia
AVR of Tennessee, L.P., d/b/a Hyperion of Tennessee, L.P.
MediaOne Fiber Technologies, Inc.
Hyperion Telecommunications of Harrisburg
Louisville Lightwave
Multimedia Hyperion Telecommunications
New Jersey Fiber Technologies
NHT Partnership
PECO Hyperion Telecommunications
Susquehanna Hyperion Telecommunications
Entergy Hyperion Telecommunications of Arkansas, L.L.C.
Entergy Hyperion Telecommunications of Louisiana, L.L.C.
Entergy Hyperion Telecommunications of Mississippi, L.L.C.
EXHIBIT A
Form of Registration Rights Agreement
EXHIBIT B
List of Employee Pension and Benefit Plans
of Hyperion Telecommunications, Inc.
and its Subsidiaries
Adelphia Communications Corporation Employee Benefit Plan
Adelphia Communications Corporation 401(k) Savings and Protection Profit Sharing
Plan
EXHIBIT C
Form of Opinion of Buchanan Ingersoll
1. Each of the Company and the Subsidiaries is duly organized
and validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation, and has all requisite corporate
power and authority to carry on its business as it is being conducted
and as described in the Offering Memorandum and to own, lease and
operate its properties, and is duly qualified and in good standing as a
foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified would not, singly or in the aggregate, have a material
adverse effect on the business, financial condition or results of
operations of the Company and the Subsidiaries, taken as a whole.
2. Each of the Joint Ventures is duly formed and valid
existing as a partnership in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate power
and authority to carry on its business as it is being conducted and as
described in the Offering Memorandum and to own, lease and operate its
properties, and is duly qualified and in good standing as a partnership
authorized to do business in each jurisdiction in which the nature of
its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not,
singly or in the aggregate, have a material adverse effect on the
business, financial condition or results of operations of the Company
and the Subsidiaries, taken as a whole.
3. All of the outstanding shares of capital stock of the
Company have been duly authorized, validly issued, and are fully paid
and nonassessable and were not issued in violation of any preemptive or
similar rights. All of the outstanding shares of capital stock of the
Company is set forth in the Offering Memorandum under the caption
"Capitalization."
4. All of the partnership interests owned the Company
and each Subsidiary have been duly authorized and validly issued.
5. All of the outstanding capital stock of each Subsidiary is
owned by the Company, free and clear of any security interest, claim,
lien, limitation on voting rights or encumbrance. There are not, to our
knowledge, other than as set forth in the Offering Memorandum,
currently, and will not be following the Offering, any outstanding
subscriptions, rights, warrants, calls, commitments of sale or options
to acquire, or instruments convertible into or exchangeable for, any
capital stock or other equity interest of the Company or any
Subsidiary.
6. When the shares of Preferred Stock are issued and delivered
pursuant to this Agreement, no such shares will be of the same class
(within the meaning of Rule 144A under the Act) as securities of the
Company that are listed on a national securities exchange registered
under Section 6 of the Exchange Act or that are quoted in a United
States automated inter-dealer quotation system.
7. The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and each of the Operative Documents, as
applicable, and to consummate the transactions contemplated thereby,
including, without limitation, the corporate power and authority to
issue, sell and deliver the Securities as provided herein and therein.
8. This Agreement has been duly and validly authorized,
executed and delivered by the Company.
9. Each of the Operative Documents has been duly and validly
authorized, executed and delivered by the Company and is the valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that (a) such enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium (whether general or specific) or similar
laws now or hereafter in effect relating to or affecting creditors'
rights and remedies generally, (b) such enforceability may be limited
by the effects of general principals of equity and by the discretion of
the court before which any proceeding therefor may be brought (whether
such proceeding is at law or in equity or in a bankruptcy proceeding),
(c) rights to contribution or indemnification may be limited by the
laws, rules or regulations of any governmental authority or agency
thereof or by public policy, and (d) waivers as to usury, stay or
extension laws may be unenforceable.
10. The shares of Preferred Stock have been duly and validly
authorized for issuance and sale to the Initial Purchaser by the
Company pursuant to this Agreement and, when issued, delivered and paid
for in accordance with the terms of the Certificate of Designation and
delivered against payment therefor in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable and
entitled to the rights, privileges and preferences set forth in the
Certificate of Designation, and the issuance of such shares of
Preferred Stock will not be subject to any preemptive or similar
rights.
11. The shares of Series B Preferred Stock have been duly and
validly authorized for issuance by the Company and, when issued and
delivered in accordance with the terms of the Exchange Offer and the
Certificate of Designation, will be validly issued, fully paid and
non-assessable and entitled to the rights, privileges and preferences
set forth in the Certificate of Designation, and the issuance of such
shares of Series B Preferred Stock will not be subject to any
preemptive or similar rights.
12. The Exchange Debentures have been duly and validly
authorized for issuance and, if and when issued and delivered by the
Company in accordance with the terms of the Indenture and the
Certificate of Designation, the Exchange Debentures will be the valid
and binding obligations of the Company, enforceable against the Company
in accordance with their terms and entitled to the benefits of the
Indenture, except that (a) such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium (whether general or specific) or similar laws now or
hereafter in effect relating to or affecting creditors' rights and
remedies generally, (b) such enforceability may be limited by the
effects of general principals of equity and by the discretion of the
court before which any proceeding therefor may be brought (whether such
proceeding is at law or in equity or in a bankruptcy proceeding), (c)
rights to contribution or indemnification may be limited by the laws,
rules or regulations of any governmental authority or agency thereof or
by public policy, and (d) waivers as to usury, stay or extension laws
may be unenforceable.
13. The New Exchange Debentures have been duly and validly
authorized for issuance and, if and when issued and delivered by the
Company in accordance with the terms of the Indenture and the
Certificate of Designation, the Exchange Debentures will be the valid
and binding obligations of the Company, enforceable against the Company
in accordance with their terms and entitled to the benefits of the
Indenture, except that (a) such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium (whether general or specific) or similar laws now or
hereafter in effect relating to or affecting creditors' rights and
remedies generally, (b) such enforceability may be limited by the
effects of general principals of equity and by the discretion of the
court before which any proceeding therefor may be brought (whether such
proceeding is at law or in equity or in a bankruptcy proceeding), (c)
rights to contribution or indemnification may be limited by the laws,
rules or regulations of any governmental authority or agency thereof or
by public policy, and (d) waivers as to usury, stay or extension laws
may be unenforceable.
14. The Offering Memorandum contains a fair summary of
each of the Securities, the Debentures and each of the Operative
Documents.
15. No registration under the Act of the Preferred Stock is
required for the sale of the Preferred Stock to the Initial Purchaser
as contemplated by this Agreement or for the Exempt Resales assuming
(i) that the Initial Purchaser is a Qualified Institutional Buyer, as
defined in Rule 144A under the Act ("QIBs") or that the Preferred Stock
are purchased in an offshore transaction within the meaning of
Regulation S, (ii) that the purchasers who buy the Preferred Stock in
the Exempt Resales are QIBs, (iii) the accuracy of the Initial
Purchaser's representations regarding the absence of general
solicitation in connection with the sale of the Preferred Stock to the
Initial Purchaser and the Exempt Resales contained in this Agreement
and (iv) the accuracy of the Company's representations in Sections
5(a)(ii), (xxi), (xxix) and (xxxiii) (other than with respect to the
first sentence) of this Agreement.
16. The Offering Memorandum, as of its date (except for the
financial statements, including the notes thereto, and supporting
schedules and other financial, statistical and accounting data included
therein or omitted therefrom, as to which no opinion need be
expressed), and each amendment or supplement thereto, as of its date,
contains all the information specified in, and meets the requirements
of, Rule 144A(d)(4) under the Act.
17. Prior to the Registered Exchange Offer or the
effectiveness of the Shelf Registration Statement, the Indenture is not
required to be qualified under the Trust Indenture Act.
18. None of (A) the execution, delivery or performance by the
Company of this Agreement and the other Operative Documents, (B) the
issuance and sale of the Preferred Stock or (C) consummation by the
Company and the Subsidiaries of the transactions described in the
Offering Memorandum violates, conflicts with or constitutes a breach of
any of the terms or provisions of, or a default under (or an event that
with notice or the lapse of time, or both, would constitute a default),
or require consent under, or result in the imposition of a lien or
encumbrance on any properties of the Company or any Subsidiary, or an
acceleration of any indebtedness of the Company or any Subsidiary
pursuant to, (i) the charter or bylaws of the Company or any
Subsidiary, (ii) any bond, debenture, note, indenture, mortgage, deed
of trust or other agreement or instrument to which the Company or any
Subsidiary is a party or by which it or its property is or may be bound
identified to such counsel as material (assuming all of such agreements
are
governed by Pennsylvania law), (iii) any local, state or Federal law,
statute, ordinance, requirement, administrative statute, rule or
regulation applicable to the Company or any Subsidiary or its assets or
properties (except with respect to the matters set forth in the opinion
of Swidler & Berlin, as to which no opinion need be expressed) or (iv)
any judgment, order or decree of any court or governmental agency or
authority having jurisdiction over the Company or any Subsidiary or its
assets or properties known to such counsel, except in the case of
clauses (ii), (iii) and (iv) for such violations, conflicts, breaches,
defaults, consents, impositions of liens or accelerations that (x)
would not, singly or in the aggregate, have a Material Adverse Effect
or (y) are disclosed in the Offering Memorandum. Assuming compliance
with applicable state securities and Blue Sky laws, as to which such
counsel need express no opinion, and except for the filing of a
registration statement under the Act and qualification of the Indenture
under the Trust Indenture Act of 1939, as amended, in connection with
the Registration Rights Agreement, no consent, approval, authorization
or order of, or filing, registration, qualification, license or permit
of or with, any court or governmental agency, body or administrative
agency is required for (1) the execution, delivery and performance by
the Company of this Agreement and the other Operative Documents, as
applicable, (2) the issuance and sale of the Preferred Stock or (3)
consummation by the Company, the Subsidiaries and the Joint Ventures of
the transactions described in the Offering Memorandum, except such as
have been obtained and made or have been disclosed in the Offering
Memorandum, and except where the failure to obtain such consents or
waivers would not, singly or in the aggregate, have a Material Adverse
Effect. To the best of such counsel's knowledge, no consents or waivers
from any other person are required for the execution, delivery and
performance by the Company, the Subsidiaries and the Joint Ventures of
this Agreement and the other Operative Documents or the issuance and
sale of the Preferred Stock, as applicable, other than such consents
and waivers as have been obtained.
19. None of the Company, its Subsidiaries or the Joint
Ventures is (i) an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended, or (ii) a "holding company" or a "subsidiary
company" or an "affiliate" of a holding company within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
20. Except as set forth in this Agreement or the Registration
Rights Agreement, there are no holders of securities of the Company
who, by reason of the execution by the Company of this Agreement or any
other Operative Document to which it is a party or the consummation by
the Company of the transactions contemplated thereby, have the right to
request or demand that the Company register under the Act securities
held by them.
21. None of (A) the execution, delivery and performance of
this Agreement or any of the Operative Documents, (B) the issuance and
sale of the Securities the application of the proceeds from the
issuance and sale of the Preferred Stock or (C) the consummation of the
transactions contemplated in connection with any of the foregoing as
set forth in the Offering Memorandum, will violate Regulations G, T, U
or X promulgated by the Board of Governors of the Federal Reserve
System.
22. To the knowledge of such counsel, there is (i) no action,
suit, investigation or proceeding before or by any court, arbitrator or
governmental agency, body or official, domestic or foreign, now
pending, or threatened or contemplated to which any of the Company or
any Subsidiary is or may be a party or to which the business or
property of any of the Company or any Subsidiary is or may be subject,
(ii) no statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency, or (iii) no injunction,
restraining order or order of any nature by a federal or state court of
competent jurisdiction to which any of the Company or any Subsidiary is
or may be subject has been issued that, in the case of clauses (i),
(ii) and (iii) above, (x) is required to be disclosed in the Offering
Memorandum and that is not so disclosed and, (y) could reasonably be
expected to have, either individually or in the aggregate, a Material
Adverse Effect, it being understood that for purposes of this opinion,
such counsel need express no opinion with respect to (i) actions, suits
investigation or proceedings before the FCC or any similar state
regulatory commission or body, (ii) statutes, rules, regulations or
orders by any FCC or any similar state regulatory commission or (iii)
injunctions, restraining orders or other orders by the FCC or any
similar state regulatory commission or body.
We have participated in conferences with officers and other
representatives of the Company, representatives of the independent
certified public accountants of the Company and the Initial Purchasers
and its representatives at which the contents of the Offering
Memorandum and related matters were discussed and, although we have not
undertaken to investigate or verify independently, and do not assume
any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Offering Memorandum (except as indicated
above), on the basis of the foregoing, no facts have come to our
attention which led us to believe that the Offering Memorandum, as of
its date or the Closing Date, contained an untrue statement of a
material fact or omitted to state any fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading (except as
to financial statements and related notes, the financial statement
schedules and other financial and statistical data included therein).
Exhibit D
Form of Opinion of Regulatory Counsel
1. Each of the Company, the Subsidiaries and the Joint Ventures has all
of the licenses, permits and authorizations, if any, required by the
FCC and the State Regulatory Agencies for the provision of
telecommunications services except where the failure to obtain or hold
such license, permit or authority would not have a Material Adverse
Effect on the Company, the Subsidiaries and the Joint Ventures, taken
as a whole.
2. Neither the Company, any Subsidiaries nor any Joint Ventures is
subject to any pending complaint or investigation before the FCC or, to
the best knowledge of counsel, to any threatened complaint or
investigation before the FCC, or, any pending or threatened complaint
or investigation before any State Regulatory Agencies based on any
alleged violation by the Company, the Subsidiaries or the Joint
Ventures in connection with their provision of or failure to provide
telecommunications services.
3. The statements in the Offering Memorandum under the heading of "Risk
Factors Regulation" and "Business - Government Regulation" fairly and
accurately summarize the matters therein described.
4. The Company, the Subsidiaries and the Joint Ventures have the
consents, approvals, authorizations, licenses, certificates, permits,
or orders of the FCC or any State Regulatory Agency if any, for the
consummation of the transactions contemplated in the Purchase Agreement
except where the failure to obtain the consents, approvals,
authorizations, licenses, certificates, permits or orders would not
have a Material Adverse Effect on the Company, the Subsidiaries and the
Joint Ventures, taken as a whole.
5. Neither the execution and delivery of the Purchase Agreement and the
Operative Documents nor the sale of the Preferred Stock will conflict
with or result in a violation of any order or regulation of the FCC or
any State Regulatory Agency applicable to the Company, its Subsidiaries
or the Joint Ventures except where the conflict with or the violation
of which would not have a material adverse impact on the Company, the
Subsidiaries and the Joint Ventures, taken as a whole.