EXHIBIT 10.1
TALTON HOLDINGS, INC.
$115,000,000
11% SENIOR NOTES DUE 2007, SERIES A
PURCHASE AGREEMENT
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June 24, 1997
CIBC WOOD GUNDY SECURITIES CORP.
425 Lexington Avenue
Third Floor
New York, New York 10017
Ladies and Gentlemen:
Talton Holdings, Inc., a Delaware corporation (the "Company"), and
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AmeriTel Pay Phones, Inc., a Missouri corporation ("AmeriTel"), Talton
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Telecommunications Corporation, an Alabama corporation ("Talton
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Telecommunications"), Talton Telecommunications of Carolina, Inc., an Alabama
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corporation ("Talton of Carolina"), and Talton STC, Inc., a Delaware corporation
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("Talton STC", and collectively with AmeriTel, Talton Telecommunications and
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Talton of Carolina, the "Subsidiary Guarantors"), jointly and severally agree
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with you as follows:
1. The Notes. The Company proposes to issue and sell to CIBC Wood
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Gundy Securities Corp. (the "Initial Purchaser"), an aggregate of $115,000,000
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principal amount of its 11% Senior Notes due 2007, Series A (the "Series A
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Notes"). The Series A Notes are to be issued pursuant to an indenture (the
"Indenture") to be dated as of June 27, 1997 by and among the Company, the
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Subsidiary Guarantors and U.S. Trust Company of Texas, N.A. (the "Trustee").
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Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Indenture.
The Company's obligations under the Series A Notes and the Series B
Notes (as defined below) (the Series A Notes and the Series B Notes being
collectively referred to as the "Notes") will be fully and unconditionally
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guaranteed, jointly and severally, on a general unsecured basis initially by the
Subsidiary Guarantors pursuant to and to the extent set forth in the Indenture
(the "Subsidiary Guarantees").
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The Notes will be offered and sold to you pursuant to an exemption
from the registration requirements under the Securities Act of 1933, as amended
(the "Securities Act"). The Company has prepared a preliminary offering
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memorandum, subject to completion, dated June 4, 1997 (the "Preliminary Offering
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Memorandum"), and a final offering memorandum, dated June 24, 1997 (the
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"Offering Memorandum"), relating to the Company, the Subsidiary Guarantors, the
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Notes and the Subsidiary Guarantees.
Upon original issuance thereof by the Company, and until such time as
the same is no longer required under the applicable requirements of the
Securities Act, the Notes (and all securities issued in exchange therefor or in
substitution thereof) shall bear the following legend:
"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. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a)
INSIDE THE UNITED STATES 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 501(A)(1), (2), (3) OR (7) OF THE
SECURITIES ACT), THAT PRIOR TO SUCH TRANSFER, FURNISHED THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE
FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER
IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SENIOR NOTES LESS
THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, 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 OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT
OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE."
You have advised the Company that you will make offers (the "Exempt
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Resales") of the Notes purchased by you hereunder on the terms set forth in the
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Offering Memorandum, as amended or supplemented, solely by you to (i) persons
who you reasonably believe to be "qualified institutional buyers," as defined in
Rule 144A under the Securities Act ("QIBs"), and (ii) to a limited number of
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institutional "accredited investors" referred to in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act (each, an "Institutional Accredited Investor", and
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together with the QIBs, the "Eligible Purchasers.") You will offer the Notes to
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Eligible Purchasers initially at a price equal to 100% of the principal amount
thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will
have the registration rights set forth in the registration rights agreement
relating thereto (the "Registration Rights Agreement"),
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to be dated the Closing Date (as defined below), in substantially the form of
Exhibit A hereto, for so long
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as such Series A Notes constitute "Transfer Restricted Securities" (as defined
in the Registration Rights Agreement). Pursuant to, and subject to all the terms
and conditions of, the Registration Rights Agreement, the Company and the
Subsidiary Guarantors will agree to file with the Securities and Exchange
Commission (the "Commission"), under the circumstances set forth therein, (i) a
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registration statement under the Securities Act (the "Exchange Offer
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Registration Statement") relating to the 11% Senior Notes due 2007, Series B
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(the "Series B Notes") of the Company to be offered in exchange for the Series A
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Notes (the "Exchange Offer"), and, as and to the extent required by the
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Registration Rights Agreement, (ii) a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement") relating
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to the resale by certain holders of the Series A Notes, and to use their best
efforts to cause such Registration Statements to be declared effective.
The Company is a party to (i) that certain asset purchase agreement
dated as of May 9, 1997 (as amended on June 21, 1997, the "STC Acquisition
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Agreement") with Security Telecom Corporation, a Texas corporation ("STC"), and
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(ii) that certain Stock Purchase Agreement dated as of June 21, 1997, with
O.B.A., Inc. (the "LETI Acquisition Agreement", and collectively with the STC
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Acquisition Agreement, the "Acquisition Agreements"). This Purchase Agreement
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(this "Agreement"), the Notes, the Subsidiary Guarantees, the Indenture, the
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Registration Rights Agreement, and the Acquisition Agreements, are hereinafter
sometimes referred to collectively as the "Operative Documents."
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2. Agreements to Sell and Purchase. On the basis of the
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representations and 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, $115,000,000 aggregate principal amount of Series A Notes at the
purchase price equal to 96.65% of the principal amount thereof (the "Purchase
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Price").
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3. Delivery and Payment. Delivery to the Initial Purchaser of and
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payment for the Notes shall be made at 10:00 A.M., New York City time, on June
27, 1997, at the offices of CIBC Wood Gundy Securities Corp., 425 Lexington
Avenue, New York, New York 10017, or such other time or place as the Initial
Purchaser and the Company shall designate (the "Closing Date"). The actual time
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of such delivery and purchase of the Notes on the Closing Date is referred to
herein as the "Closing."
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One or more of the Series A Notes in definitive form, registered in
the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), or
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such other names as the Initial Purchaser may request upon at least one business
day's notice to the Company, having an aggregate principal amount designated by
the Initial Purchaser (each, a "Global Note"), and one or more certificated
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Series A Notes in definitive form, registered in such names and denominations as
the Initial Purchaser may so request (each, a "Definitive Note"), shall be
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delivered by the Company to the Initial Purchaser (or as the Initial Purchaser
directs), against payment by the Initial Purchaser of the Purchase Price by wire
transfer of immediately available funds to the order of the Company. The Global
Note(s) and the Definitive Note(s), if any, shall be made available to the
Initial Purchaser for inspection no later than 9:30 a.m. on the business day
immediately preceding the Closing Date.
4. Agreements of the Company and the Subsidiary Guarantors. The
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Company and the Subsidiary Guarantors agree, jointly and severally, 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, (i) of the
issuance by any state securities commission of any stop order known to the
Company or any of the Subsidiary Guarantors suspending the qualification or
exemption of the Notes (including the Subsidiary Guarantees thereof) for
offering
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or sale in any jurisdiction, or the initiation of any proceeding known to
the Company or any of the Subsidiary Guarantors for such purpose by the
Commission or any state securities commission or other regulatory
authority, and (ii) of the happening of any event known to the Company or
any of the Subsidiary Guarantors that 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 (as amended or
supplemented from time to time) in order to make any statements of a
material fact therein, in light of the circumstances under which they were
made, not misleading. The Company and each of the Subsidiary Guarantors
shall use its respective reasonable best efforts to prevent the issuance of
any stop order or order suspending the qualification or exemption of the
Notes and the Subsidiary Guarantees under any state securities 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 the Notes or the Subsidiary Guarantees under any state
securities or Blue Sky laws, the Company and each of the Subsidiary
Guarantors shall use its reasonable best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time.
(b) For the period after the date hereof and prior to the
completion of all Exempt Resales, to furnish to the Initial Purchaser,
without charge, as many copies of the Offering Memorandum and any
amendments or supplements thereto, as the Initial Purchaser may reasonably
request. The Company and each of the Subsidiary Guarantors consents to the
use of the Offering Memorandum, as amended or supplemented, by the Initial
Purchaser in connection with Exempt Resales until the effectiveness of the
Exchange Offer Registration Statement or the Shelf Registration Statement,
as applicable.
(c) Not to amend or supplement the Preliminary Offering
Memorandum or the Offering Memorandum prior to the Closing Date, unless the
Initial Purchaser shall previously have been advised thereof and shall not
have reasonably objected thereto promptly after notice thereof. The
Company and the Subsidiary Guarantors will promptly prepare, upon the
Initial Purchaser's request, any amendment or supplement to the Offering
Memorandum that may be reasonably necessary or advisable in connection with
Exempt Resales.
(d) If, after the date hereof and prior to consummation of any
Exempt Resales, any event shall occur as a result of which, in the
reasonable judgment of the Company or in the reasonable opinion of the
Initial Purchaser's counsel, it becomes necessary to amend or supplement
the Offering Memorandum in order to make the statements of material fact
therein, in light of the circumstances existing when the Offering
Memorandum is delivered to a prospective purchaser, not misleading, or if
it is necessary to amend or supplement the Offering Memorandum to comply
with applicable law, promptly to prepare an appropriate amendment or
supplement to the Offering Memorandum so that the statements of material
fact therein, as so amended or supplemented, will not, in light of the
circumstances existing when the Offering Memorandum is so delivered, be
misleading, and will comply with applicable law, and to furnish to the
Initial Purchaser, without charge, such number of copies thereof as the
Initial Purchaser may reasonably request.
(e) To cooperate with the Initial Purchaser and the Initial
Purchaser's counsel in connection with the registration or qualification of
the Notes and the Subsidiary Guarantees for offer and sale by the Initial
Purchaser in the Exempt Resales under the state securities or Blue Sky laws
of such jurisdictions as the Initial Purchaser may request and to continue
such qualification in effect so long as required to complete such offer and
sale of the Notes in the Exempt Resales; provided, however, that neither
the Company nor any Subsidiary Guarantor shall be obligated to qualify as a
foreign corporation in any jurisdiction in which they are not so qualified
or to take any
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action that would subject it to service of process in suits or taxation,
other than as to matters of and transactions relating to Exempt Resales, in
any jurisdiction in which it is not now so subject.
(f) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the
Securities Act) that would be integrated with the sale of the Notes in a
manner that would require the registration under the Securities Act of the
sale to the Initial Purchaser or to Eligible Purchasers of the Notes.
(g) Not to sell, offer for sale or solicit offers to buy any
Notes or debt securities of the Company that are substantially similar to
the Notes (other than the Series B Notes issuable in the Exchange Offer)
for a period of 180 days following the Closing Date.
(h) For so long as any of the Notes remain outstanding and
during any period in which neither the Company nor any Subsidiary Guarantor
is 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
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Purchaser or beneficial owner or holder of Notes in connection with any
sale thereof and any prospective purchaser of such Notes, the information
required by Rule 144A(d)(4) under the Securities Act.
(i) Prior to or concurrently with the Closing, to enter into the
Registration Rights Agreement in substantially the form attached hereto as
Exhibit A in order to permit registration of the Series B Notes to be
offered in exchange for the Series A Notes as contemplated thereby.
(j) To comply with all of the agreements set forth in the
Registration Rights Agreement, and all agreements set forth in the letter
of representations from the Company, the Subsidiary Guarantors and the
Trustee to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer.
(k) To use their reasonable best efforts to effect the inclusion
of the Notes in the PORTAL market upon issuance.
(l) During a period of three years following the date of this
Agreement, to deliver to the Initial Purchaser promptly upon their becoming
available, copies of all current, regular and periodic reports and other
publicly available information filed by the Company or any Subsidiary
Guarantor with the Commission or any securities exchange or with any
governmental authority succeeding to any of the Commission's functions and
other such publicly available information concerning the Company and the
Subsidiary Guarantors as the Initial Purchaser shall reasonably request.
(m) To use the proceeds from the sale of the Notes in the manner
described in the Offering Memorandum under the caption "Use of Proceeds."
(n) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of the
Notes.
(o) To use their reasonable best efforts to obtain all requisite
Authorizations (as defined below) and make all requisite declarations and
filings with the FCC and all applicable State Regulatory Agencies (as
defined below).
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(p) To use their reasonable best efforts to do and perform all
things required or necessary to be done and performed under this Agreement
by the Company and the Subsidiary Guarantors prior to or after the Closing
Date and to satisfy all conditions precedent on their part to the delivery
of the Notes.
5. Agreement Concerning Expenses. The Company and the Subsidiary
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Guarantors, jointly and severally, agree with the Initial Purchaser that,
whether or not the transactions contemplated by this Agreement are consummated
or this Agreement is terminated, the Company and the Subsidiary Guarantors shall
pay all costs, expenses, fees and taxes incident to and in connection with this
Agreement and the transactions contemplated hereby and by the other Operative
Documents as follows:
(i) the preparation, printing and distribution of the Preliminary
Offering Memorandum and the Offering Memorandum (including, without
limitation, financial statements and exhibits) and all amendments and
supplements thereto;
(ii) the preparation (including, without limitation, word
processing and duplication costs) and delivery of this Agreement, the
Registration Rights Agreement, the Notes, the Subsidiary Guarantees, the
Indenture, the Exchange Offer Registration Statement and any Shelf
Registration Statement and all preliminary and final Blue Sky memoranda and
all other agreements, memoranda, correspondence and other documents
prepared and delivered in connection herewith and with the Exempt Resales;
(iii) the qualification of the Notes for offer and sale under the
securities or Blue Sky laws of the several states (including, without
limitation, the reasonable fees and disbursements of counsel to the Initial
Purchaser) relating to such registration or qualification;
(iv) furnishing such copies of the Preliminary Offering Memorandum
and the Offering Memorandum, and all amendments and supplements thereto, as
may be reasonably requested for use in connection with Exempt Resales;
(v) the fees, disbursements and expenses of accountants and
counsel to the Company and the Subsidiary Guarantors;
(vi) the fees, disbursements and expenses of counsel to the Initial
Purchaser;
(vii) all expenses and listing fees in connection with the
application for quotation of the Notes in the PORTAL market;
(viii) the issuance and delivery by the Company of the Notes and by
the Subsidiary Guarantors of the Subsidiary Guarantees;
(ix) the preparation of certificates for the Notes (including,
without limitation, printing and engraving of the Notes);
(x) all fees and expenses (including fees and expenses of counsel)
of the Company in connection with approval of the Notes by DTC for "book-
entry" transfer;
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(xi) all "road show" and other marketing expenses related to the
preparation of slides, videotapes and printed marketing materials, and
travel, hotel, food and entertainment expenses of affiliates of the Company
and the Subsidiary Guarantors; and
(xii) the performance by the Company and the Subsidiary Guarantors
of their other respective obligations under this Agreement and the
Registration Rights Agreement, the Notes, the Subsidiary Guarantees, the
Indenture, the Exchange Offer Registration Statement and any Shelf
Registration Statement not specifically set forth in this Section 5.
6. Representations and Warranties of the Company and the Subsidiary
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Guarantors. The Company and each of the Subsidiary Guarantors, jointly and
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severally, represent and warrant to the Initial Purchaser that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum do 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 to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that the
representations and warranties contained in this paragraph (a) shall not
apply to statements in or omissions from the Preliminary Offering
Memorandum and 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. To the knowledge
of the Company and each of the Subsidiary Guarantors, no stop order
preventing the use of the Preliminary Offering Memorandum or 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 Securities Act, has been issued and no
proceedings for that purpose have been commenced or are pending or
contemplated.
(b) The Company and each of the Subsidiary Guarantors has been
duly incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, has the 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 is duly qualified and is in good
standing as a foreign corporation authorized to do business in each
jurisdiction where the operation, ownership or leasing of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not (i) have a material adverse effect on
the properties, business, results of operations, condition (financial or
otherwise), affairs or prospects of the Company, and the Subsidiary
Guarantors, taken as a whole, (ii) have material adverse effect on the
ability of the Company or any of the Subsidiary Guarantors to perform its
obligations under this Agreement and the other Operative Documents, or
(iii) in any manner draw into question the validity of this Agreement or
any of the other Operative Documents (any of the events set forth in (i),
(ii) or (iii), a "Material Adverse Effect").
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(c) The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement and
the other Operative Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby, including, without
limitation, the corporate power and authority to issue, sell and deliver
the Notes as provided herein and therein. Each of the Subsidiary
Guarantors has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement, its Subsidiary
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Guarantee and the other Operative Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby.
(d) (i) All of the issued and outstanding shares of capital
stock of the Company and each of the Subsidiary Guarantors have been duly
and validly authorized and issued and are fully paid and nonassessable;
(ii) the capital stock of the Company is owned as described in the Offering
Memorandum and the Company owns all of the issued and outstanding capital
stock of each of the Subsidiary Guarantors; (iii) all such shares of
capital stock described in the foregoing subsection (ii) are fully paid and
nonassessable, and are owned free and clear of any security interest,
mortgage, pledge, claim, lien or encumbrance (each, a "Lien"), except for
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such Liens arising under the Senior Credit Facility and inchoate statutory
liens for amounts not yet due and payable, and all such capital stock was
not issued in violation of any preemptive or similar rights; (iv) except
for the ownership interests described in the subsection (ii) of this
paragraph, the Company, and the Subsidiary Guarantors have no other direct
or indirect subsidiaries; and (v) except as described in the Offering
Memorandum there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or Liens
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership interest in, the Company
or any of the Subsidiary Guarantors.
(e) This Agreement has been duly and validly authorized,
executed and delivered by the Company and each of the Subsidiary
Guarantors, and (assuming the due execution and delivery hereof by you)
constitutes a valid and legally binding agreement of the Company and each
of the Subsidiary Guarantors, enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer
moratorium and other similar laws relating to or affecting creditors'
rights generally, by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law) and
the discretion of the court before which any proceeding therefor may be
brought and, as to rights of indemnification or contribution, by principles
of public policy or federal or state securities laws relating thereto.
(f) The Indenture has been duly and validly authorized by the
Company and each of the Subsidiary Guarantors and, when duly executed and
delivered in accordance with its terms, will be the valid and legally
binding agreement of the Company and each of the Subsidiary Guarantors,
enforceable against each of them in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer moratorium and other
similar laws relating to or affecting creditors' rights generally, by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and the discretion of the
court before which any proceeding therefor may be brought, and, as to
rights of indemnification or contribution, by principles of public policy
or federal or state securities laws relating thereto.
(g) The Series A Notes have been duly and validly authorized for
issuance and sale to the Initial Purchaser by the Company pursuant to this
Agreement and, when issued and authenticated in accordance with the terms
of the Indenture and delivered against payment therefor in accordance with
the terms hereof, will be the legally 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 as such enforceability
may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer moratorium and other similar laws relating to or
affecting creditors' rights generally, by general equitable principles
(regardless of whether such
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enforceability is considered in a proceeding in equity or at law) and the
discretion of the court before which any proceeding therefor may be brought
and, as to rights of indemnification or contribution, by principles of
public policy or federal or state securities laws relating thereto.
(h) The Series B Notes have been duly and validly authorized for
issuance by the Company, and when issued and authenticated in accordance
with the terms of the Indenture, the Registration Rights Agreement and the
Exchange Offer, will be the legally 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 as such enforceability
may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer moratorium and other similar laws relating to or
affecting creditors' rights generally, by general equitable principles
(regardless of whether such
(i) The Subsidiary Guarantees (issued in connection with the
issuance of the Series A Notes and to be issued in connection with the
issuance of the Series B Notes) have been duly and validly authorized for
issuance by each of the Subsidiary Guarantors pursuant to this Agreement
and, when issued in accordance with the terms of the Indenture, will be the
legally valid and binding obligation of each of the Subsidiary Guarantors,
enforceable against each of the Subsidiary Guarantors in accordance with
their terms and entitled to the benefits of the Indenture, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer moratorium and other similar laws
relating to or affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and the discretion of the court before
which any proceeding therefor may be brought and, as to rights of
indemnification or contribution, by principles of public policy or federal
or state securities laws relating thereto.
(j) The Registration Rights Agreement has been duly authorized
by the Company and each of the Subsidiary Guarantors and, when duly
executed and delivered by the Company and the Subsidiary Guarantors
(assuming the due execution and delivery thereof by you) will be the
legally valid and binding obligation of the Company and the Subsidiary
Guarantors, enforceable against each of them in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer moratorium and other
similar laws relating to or affecting creditors' rights generally, by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and the discretion of the
court before which any proceeding therefor may be brought and, as to rights
of indemnification or contribution, by principles of public policy or
federal or state securities laws relating thereto.
(k) The Acquisition Agreements have been duly authorized,
executed and delivered by the Company and remain in full force and effect
and have not been modified or amended in any material respect since their
respective dates (except for such modifications or amendments copies of
which have previously been provided to the Initial Purchaser and its
counsel).
(l) This Agreement and the other Operative Documents, when
executed and delivered by the Company and the Subsidiary Guarantors, as
applicable, will conform in all material respects to the respective
descriptions thereof in the Offering Memorandum.
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(m) (i) Neither the Company nor any of the Subsidiary Guarantors
(x) is in violation of its respective certificate of incorporation or
bylaws or in default in the performance of any bond, debenture, note or any
other evidence of indebtedness or any indenture, mortgage, deed of trust or
other contract, lease or other instrument to which any of them is a party
or by which any of them is bound, or to which any of their respective
properties or assets is subject, or (y) is in violation of any law,
statute, rule, regulation, judgment or court decree applicable to the
Company or any of the Subsidiary Guarantors or their respective assets or
properties, and (ii) there exists no condition that, with notice, the
passage of time or otherwise, would constitute any such default under any
such document or instrument, except any such default, violation or
condition that could not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(n) The execution, delivery and performance by the Company and
each of the Subsidiary Guarantors of this Agreement and the other Operative
Documents to which each is a party and the consummation of the transactions
contemplated hereby and thereby and the issuance and sale of the Series A
Notes, and the issuance of the Series B Notes in the Exchange Offer, will
not violate, conflict with or result in a breach or violation of the terms
or provisions of, or constitute a default under (or an event that with
notice or the lapse of time, or both, would constitute a default under), or
require a consent under, or result in the imposition or creation of (or the
obligation to create or impose) a Lien or an acceleration of indebtedness
pursuant to, (i) the certificate of incorporation or bylaws of the Company
or any of the Subsidiary Guarantors, (ii) any bond, note, debenture or
other evidence of indebtedness or any indenture, mortgage, deed of trust or
other agreement or instrument presently in effect to which the Company or
any of the Subsidiary Guarantors is a party or by which any of them is
bound, or to which any properties of the Company or any of the Subsidiary
Guarantors is or may be subject, (iii) any statute, rule or regulation
presently in effect applicable to the Company or any of the Subsidiary
Guarantors or any of their assets or properties, (including, without
limitation, the Telecommunications Act of 1996 (the "Telecommunications
------------------
Act"), the rules and regulations of the Federal Communications Commission
(the "FCC") and the rules and regulations of any state or other regulatory
---
agency or body with jurisdiction over telecommunications matters in the
jurisdictions in which the Company, the Subsidiary Guarantors or STC
operate or provide telecommunications services (a "State Regulatory
----------------
Agency")) or (iv) any judgment, order or decree presently in effect of any
court or governmental agency or authority having jurisdiction over the
Company or any of the Subsidiary Guarantors or any of their properties,
except for Liens under the Senior Credit Facility as described in the
Offering Memorandum and any such violations, conflicts, breaches or
defaults which, individually or in the aggregate, (i) could not reasonably
be expected to result in a Material Adverse Effect or (ii) do not and will
not result in the termination or revocation of any of the material permits,
licenses, approvals, orders, certificates, franchises or authorizations of
state, federal or other governmental or regulatory authorities, including
those relating to the Telecommunications Act, the rules and regulations of
the FCC or the rules and regulations of any State Regulatory Agency, owned
or held by the Company or any of the Subsidiary Guarantors, or result in
any other material impairment of the rights of the holder of such permits
licenses, approvals, orders, certificates, franchises or authorizations.
(o) Assuming the accuracy of the Initial Purchaser's
representations and warranties set forth in Section 7 hereof, and the due
performance by the Initial Purchaser of the covenants and agreements to be
performed by it set forth in Section 7 hereof, no consent, waiver,
approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, any court or governmental
agency, body or administrative agency (including, without limitation, the
FCC and any State Regulatory Agency) or other person is required for the
execution, delivery and
10
performance of the Operative Documents by the Company and each of the
Subsidiary Guarantors, as applicable, the issuance and sale of the Notes
(including the Subsidiary Guarantees thereof) and the consummation of the
transactions contemplated hereby and thereby, except (i) as described in
the Offering Memorandum or (ii) such as have been obtained and made (or, in
the case of the Registration Rights Agreement, will be obtained and made)
under the Securities 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 National Association of
Security Dealers ("NASD"), or (iii) where the failure to obtain such
----
consents, waivers, approvals, authorizations, orders, filings,
registrations, qualifications, licenses or permits could not reasonably be
expected to have a Material Adverse Effect. No consents, waivers, approvals
or authorizations from any other person are required for the execution,
delivery and performance by the Company or the Subsidiary Guarantors of
this Agreement and the other Operative Documents, as applicable, and the
consummation of the transactions contemplated hereby and thereby, other
than such consents, waivers, approvals or authorizations as have been
obtained (or, in the case of the Registration Rights Agreement, which the
Company will seek to obtain pursuant to the terms thereof) except where the
failure to obtain such consents, waivers, approvals or authorizations could
not reasonably be expected to have a Material Adverse Effect.
(p) Except as described in the Offering Memorandum, 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 or any of the Subsidiary
Guarantors is or may be a party, or affecting the Company or any of the
Subsidiary Guarantors or any of their respective businesses or properties,
(ii) no statute, rule, regulation or order that has been enacted, adopted
or issued by any governmental agency or that has been proposed by any
governmental body, (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 or any of the Subsidiary Guarantors is
subject, that would, in the case of (i), (ii) and (iii), reasonably be
expected, either individually or in the aggregate, (x) to have a Material
Adverse Effect, (y) to restrain, enjoin or prohibit the issuance and sale
of the Series A Notes or (z) to question the validity of any of the
Operative Documents.
(q) The Company and each of the Subsidiary Guarantors has good
and valid title to all property and assets described in the Offering
Memorandum as being owned by it, free and clear of all Liens, claims,
encumbrances and restrictions, except (i) inchoate statutory Liens for
amounts not yet due and payable, (ii) as described in the Offering
Memorandum or (iii) as could not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect. All leases to which the
Company or any of the Subsidiary Guarantors is a party are valid and
binding, no default has occurred or is continuing thereunder and the
Company and each such Subsidiary Guarantor enjoys peaceful and undisturbed
possession under all such leases to which any of them is a party as lessee,
except to the extent that such failure to be binding, default or failure to
enjoy peaceful and undisturbed possession could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(r) Except as described in the Offering Memorandum, neither the
Company nor any of the Subsidiary Guarantors has violated any
environmental, safety or similar law or regulation applicable to its
business or property relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any permits, licenses or other
------------------
approvals required of them under applicable
11
Environmental Laws or is violating any term condition of any such permit,
license or approval, which could in such circumstance reasonably be
expected to have a Material Adverse Effect.
(s) Except as described in the Offering Memorandum, there is (i)
no unfair labor practice complaint pending against the Company or any of
the Subsidiary Guarantors nor, to the best knowledge of the Company and the
Subsidiary Guarantors, threatened against any of them, before the National
Labor Relations Board, any state or local labor relations board or any
foreign labor relations board, and no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against the Company or any of the Subsidiary Guarantors, or to the best
knowledge of the Company and the Subsidiary Guarantors, threatened against
any of them, (ii) no strike, labor dispute, slowdown or stoppage against
the Company or any of the Subsidiary Guarantors or, to the best knowledge
of the Company and the Subsidiary Guarantors, threatened against the
Company or any of the Subsidiary Guarantors, and (iii) to the best
knowledge of the Company and the Subsidiary Guarantors, no union
representation question existing with respect to the employees of the
Company or any of the Subsidiary Guarantors and, to the best knowledge of
the Company and the Subsidiary Guarantors, no union organizing activities
are taking place, except (with respect to any matter specified in clause
(i), (ii) or (iii) above, individually or in the aggregate) such as would
not have a Material Adverse Effect. Neither the Company nor any of the
Subsidiary Guarantors has violated any Federal, state, local or foreign law
relating to discrimination in the hiring, promotion or pay of employees nor
any applicable wage or hour laws, nor any provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA") or the rules and
-----
regulations promulgated thereunder, nor has the Company or any of the
Subsidiary Guarantors engaged in any unfair labor practice, which in each
case could reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect.
(t) Except as would not, individually or in the aggregate, have
a Material Adverse Effect, (i) each of the Company and the Subsidiary
Guarantors has all certificates, consents, exemptions, orders, permits,
licenses, authorizations, or other approvals (each, an "Authorization") of
-------------
and from, and has made all declarations and filings with, all Federal,
state, local and other governmental authorities (including, without
limitation, the FCC and all State Regulatory Agencies), all self-regulatory
organizations and all courts and other tribunals, necessary or required to
engage in its business currently conducted by it in the manner described in
the Offering Memorandum, (ii) all such Authorizations are valid and in full
force and effect and (iii) the Company and the Subsidiary Guarantors are in
compliance with the terms and conditions of all such Authorizations and
with the rules and regulations of the regulatory authorities and governing
bodies having jurisdiction with respect thereto.
(u) The Company and each of the Subsidiary Guarantors owns or
possesses or has the right to use the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
(collectively, the "Intellectual Property") presently employed by them in
---------------------
connection with, and material individually or in the aggregate to the
operation of the businesses now operated by them, and neither the Company
nor any of the Subsidiary Guarantors has received any notice of
infringement of or conflict with asserted rights of others with respect to
the foregoing which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could reasonably be expected to
result in a Material Adverse Effect. To the knowledge of the Company and
each of the Subsidiary Guarantors, the use of such Intellectual Property in
connection with the business and operations of the Company and the
12
Subsidiary Guarantors does not infringe on the rights of any person, except
as could not reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect.
(v) All tax returns required to be filed by the Company or any
of the Subsidiary Guarantors in all jurisdictions have been timely and duly
filed, other than those filings being contested in good faith, except where
the failure to so file any such returns could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; all
such tax returns were correct and complete, in all material respects, when
so filed; there are no tax returns of the Company or any of the Subsidiary
Guarantors that are currently being audited by state, local or federal
taxing authorities or agencies (and with respect to which the Company, or
any of the Subsidiary Guarantors has received notice), where the findings
of such audit, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect; all taxes, including withholding
taxes, penalties and interest, assessments, fees and other charges due or
claimed to be due from such entities have been paid, other than those being
contested in good faith and for which adequate reserves have been provided
in accordance with generally accepted accounting principles or those
currently payable without penalty or interest; and neither the Company nor
any of the Subsidiary Guarantors knows of any material proposed additional
tax assessments against the Company or any of the Subsidiary Guarantors.
(w) Neither the Company nor any of the Subsidiary Guarantors is,
or intends to conduct its business in a manner that would cause it to
become, an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(x) Except pursuant to the Registration Rights Agreement, there
are no holders of securities of the Company or the Subsidiary Guarantors
who, by reason of the execution by the Company or any of the Subsidiary
Guarantors of this Agreement or any other Operative Document to which it is
a party or the consummation of the transactions contemplated hereby and
thereby, have the right to request or demand the Company or any Subsidiary
Guarantor register under the Securities Act or analogous foreign laws and
regulations securities held by them.
(y) The Company and each of the Subsidiary Guarantors maintain
insurance (including self-insurance) covering its respective properties,
operations, personnel and businesses. Such insurance insures against such
losses and risks as in the Company's reasonable determination are adequate
for the conduct of the business of the Company and the Subsidiary
Guarantors and the value of their property. Neither the Company nor any of
the Subsidiary Guarantors has received notice from any insurer or agent of
such insurer that material 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 and will be outstanding
and duly in force on the Closing Date.
(z) When the Notes are delivered pursuant to this Agreement,
none of the Notes will be of the same class (within the meaning of Rule
144A under the Securities Act ("Rule 144A")) as securities of the Company
---------
or any of the Subsidiary Guarantors 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.
(aa) Deloitte & Touche LLP are independent public accountants
with respect to the Company and Talton STC as required by the Securities
Act. Arthur Andersen LLP are
13
independent public accountants with respect to AmeriTel as required by the
Securities Act. Borland, Benefield, Crawford & Webster, P.C. are
independent public accountants with respect to Talton Telecommunications
and its subsidiaries as required by the Securities Act. Davis, Clark and
Company, P.C. are independent public accountants with respect to STC as
required by the Securities Act. The historical financial statements,
together with related notes thereto, set forth in the Offering Memorandum
fairly present, in all material respects, the financial position and
condition of the applicable entities at the respective dates indicated and
the results of their operations and their cash flows for the respective
periods indicated (subject, in the case of unaudited financial statements,
to year-end adjustments), in accordance with generally accepted accounting
principles ("GAAP"), consistently applied throughout such periods (except
----
that the financial statements of the Company reflect the application of the
purchase method of accounting). The pro forma financial statements,
together with the related notes thereto, set forth in the Offering
Memorandum have been prepared on a basis consistent with such historical
statements, except for the pro forma adjustments specified therein, and
give effect, based on assumptions made on a reasonable basis, to certain
historical transactions described therein and to the transactions
contemplated by this Agreement and the other Operative Documents in
accordance with the applicable requirements of Regulation S-X and the
Securities Act. The other historical and pro forma financial and
statistical information and data included in the Offering Memorandum are,
in all material respects, fairly presented and prepared on a basis
consistent with such financial statements and the books and records of the
applicable entities.
(bb) The Company, each of the Subsidiary Guarantors and STC
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (1) transactions are executed in accordance with
management's general or specific authorizations; (2) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (3) access
to assets is permitted only in accordance with management's general or
specific authorization; and (4) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect thereto.
(cc) No registration under the Securities Act of any of the
Series A Notes is required for the sale of the Series A Notes to the
Initial Purchaser as contemplated by this Agreement or for the Exempt
Resales assuming (i) that the Initial Purchaser's representations and
warranties in Section 7 are true and that the Initial Purchaser duly
performs the covenants and agreements to be performed by it set forth in
Section 7 hereof, (ii) that the representations of the Institutional
Accredited Investors set forth in the letters of representation of such
Institutional Accredited Investors in the form set forth as Annex A to the
Offering Memorandum are true, and (iii) that each of the Eligible
Purchasers is a QIB or an Institutional Accredited Investor. No form of
general solicitation or general advertising was used by the Company, the
Subsidiary Guarantors or any of their representatives in connection with
the offer and sale of the Notes or 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 (it being
understood that the Company and the Subsidiary Guarantors are making no
representation in this sentence with respect to any actions taken by the
Initial Purchaser in connection with the Offering). No securities of the
same class as and of the Notes have been issued and sold by the Company or
any of the Subsidiary Guarantors within the six-month period immediately
prior to the date hereof.
14
(dd) The Offering Memorandum, as of its date, contains, and the
Offering Memorandum as amended or supplemented by any amendment or
supplement thereto, as of its date, will contain all the information
specified in, and conforms, and as amended or supplemented, will conform,
in all material respects, to the requirements of Rule 144A(d)(4) under the
Securities Act.
(ee) The execution and delivery of this Agreement and the other
Operative Documents and the sale of the Notes to be purchased by the
Eligible Purchasers will not involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue
Code of 1986. The representation made by the Company and the Subsidiary
Guarantors 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 Eligible Purchasers as set forth in the Offering
Memorandum under the section entitled "Notice to Investors."
(ff) Prior to the Exchange Offer or the effectiveness of the
Shelf Registration Statement, the Indenture is not required to be qualified
under the Trust Indenture Act.
(gg) 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, neither the Company nor any of the
Subsidiary Guarantors has incurred any liabilities or obligations, direct
or contingent, that are material to the Company and the Subsidiary
Guarantors taken as a whole, nor entered into any material transaction not
in the ordinary course of business, and there has not been, individually or
in the aggregate, any material adverse change in the properties, business,
results of operations, condition (financial or otherwise), affairs or
prospects of the Company and the Subsidiary Guarantors taken as a whole (a
"Material Adverse Change") or any development which could reasonably be
-----------------------
expected to result in a Material Adverse Change.
(hh) The present fair saleable value of the assets of the Company
and the Subsidiary Guarantors, taken as a whole, exceeds the sum of the
stated liabilities (including the maximum amount of liability that may
reasonably be expected to result from contingent liabilities) of the
Company and the Subsidiary Guarantors, and the assets of the Company and
the Subsidiary Guarantors, taken as a whole, do not constitute unreasonably
small capital to carry on their business as conducted or as proposed to be
conducted. The Company does not intend to, or believe that it will, incur
debts beyond its ability to pay such debts as they mature. The Company does
not intend to permit the Subsidiary Guarantors to incur debts beyond their
respective ability to pay such debts as they mature. Upon the issuance of
the Series A Notes and the application of the net proceeds therefrom, the
present fair saleable value of the assets of the Company and the Subsidiary
Guarantors, taken as a whole, will exceed the sum of their stated
liabilities (including the maximum amount of liability that may reasonably
be expected to result from contingent liabilities), and the assets of the
Company and the Subsidiary Guarantors, taken as a whole, will not
constitute unreasonably small capital to carry on their business as now
conducted or as proposed to be conducted, including the capital needs of
the Company and the Subsidiary Guarantors, taking into account the
projected capital requirements and capital availability of the Company and
each of the Subsidiary Guarantors.
(ii) Neither the Company nor any of the Subsidiary Guarantors (i)
has taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or that constitutes, the stabilization
or manipulation of the price of any security of the Company or any of the
Subsidiary Guarantors to facilitate the sale or resale of the Notes (or the
Subsidiary Guarantees) or (ii) since the date of the Preliminary Offering
Memorandum (A) sold, bid for, purchased, or paid
15
any person other than the Initial Purchaser pursuant to the terms of this
Agreement any compensation for soliciting purchases of, the Notes or (B)
paid or agreed to pay to any person other than the Initial Purchaser any
compensation for soliciting another to purchase any other securities of the
Company or any of the Subsidiary Guarantors.
(jj) No Subsidiary Guarantor is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distributions on such Subsidiary Guarantor's capital stock, from repaying
to the Company any loans or advances to such Subsidiary Guarantor or from
transferring any of such Subsidiary Guarantor's property or assets to the
Company or to any other Subsidiary Guarantor, except pursuant to the
provisions of the Senior Credit Facility or the Existing Credit Facility.
(kk) There are no contracts, agreements or understandings between
the Company or the Subsidiary Guarantors, on the one hand, and any person
other than the Initial Purchaser, on the other hand, that would give rise
to a valid claim against the Company or any Subsidiary Guarantor for a
brokerage commission, finder's fee or like payment in connection with the
issuance, purchase and sale of the Notes.
(ll) Each certificate signed by any authorized officer of the
Company or any of the Subsidiary Guarantors and delivered to the Initial
Purchaser or its representatives in connection with the Offering shall be
deemed to be a representation and warranty by the Company or such
Subsidiary Guarantor to the Initial Purchaser as to the matters covered
thereby.
The Company and the Subsidiary Guarantors acknowledge that the Initial
Purchaser and, for purposes of the opinions to be delivered to the Initial
Purchaser pursuant to Section 9 hereof, counsel to the Company and the
Subsidiary Guarantors and counsel to the Initial Purchaser will rely, as to
matters of fact, upon the accuracy and truth of the foregoing representations
and hereby consent to such reliance.
7. Initial Purchaser's Representations and Warranties. The Initial
--------------------------------------------------
Purchaser represents and warrants to the Company and the Subsidiary Guarantors
that:
(a) It 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 Notes.
(b) It (i) is not acquiring the Series A Notes with a view to
any distribution thereof or with any present intention of offering or
selling any of the Series A Notes in a transaction that would violate the
Securities Act or the securities laws of any State of the United States or
any other applicable jurisdiction and (ii) will be reoffering and reselling
the Series A Notes only to QIBs in reliance on the exemption from the
registration requirements of the Securities Act provided by Rule 144A and
to a limited number of Institutional Accredited Investors that execute and
deliver a letter containing certain representations and agreements in the
form attached as Annex A to the Offering Memorandum in a private resale
exempt from the registration requirements of the Securities Act.
(c) In connection with the Exempt Resales, it will solicit
offers to buy the Series A Notes only from, and will offer to sell the
Series A Notes only to and will sell Series A Notes only to Eligible
Purchasers. The Initial Purchaser further agrees that it will offer to sell
the Series A Notes only to, and will solicit offers to buy the Series A
Notes only from, persons who in purchasing such Series A Notes will be
deemed to have represented and agreed (1) if such Eligible Purchasers
16
are QIBs, that they are purchasing the Series A Notes for their own account
or an account with respect to which they exercise sole investment
discretion and that they or such accounts are QIBs, (2) that such Series A
Notes will not have been registered under the Securities Act and may be
resold, pledged or otherwise transferred, only (A) (I) inside the United
States to a person who the seller reasonably believes is a QIB within the
meaning of Rule 144A in a transaction meeting the requirements of Rule
144A, or in accordance with Rule 144 under the Securities Act, or pursuant
to another exemption from the registration requirements of the Securities
Act (and based upon an opinion of counsel if the Company so requests), (II)
to the Company or (III) outside the United States to a foreign person in a
transaction meeting the requirements of Rule 904 under the Securities Act
and (B) in each case, in accordance with any applicable securities laws of
any State of the United States or any other applicable jurisdiction, (3)
that the holder will, and each subsequent holder is required to, notify any
purchaser from it of the security evidenced thereby of the resale
restrictions set forth in (2) above.
(d) 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 Series A Notes,
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.
(e) The Initial Purchaser also understands that the Company and
the Subsidiary Guarantors and, for purposes of the opinions to be delivered
to the Company and the Subsidiary Guarantors pursuant to Section 9 hereof,
counsel to the Company and the Subsidiary Guarantors and counsel to the
Initial Purchaser will rely, as to matters of fact, upon the accuracy and
truth of the foregoing representations and the Initial Purchaser hereby
consents to such reliance.
8. Indemnification.
---------------
(a) The Company and the Subsidiary Guarantors (for purposes of
this Section 8 collectively referred to as the "Talton Entities") jointly
---------------
and severally agree to indemnify and hold harmless the Initial Purchaser
and each person, if any, who controls (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) the Initial Purchaser
(a "controlling person") and the respective officers, directors, partners,
------------------
employees, representatives and agents of the Initial Purchaser or any
controlling person (each of the foregoing may hereinafter be referred to as
an "Indemnified Person") to the fullest extent lawful, from and against any
------------------
and all losses, claims, damages, liabilities, judgments, actions and
expenses directly or indirectly caused by, related to, based upon, arising
out of or in connection with: (1) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum (or any amendment or supplement
thereto) or (2) any omission or alleged omission to state in the
Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto) a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading or (3) the failure by the Company or any of the
Subsidiary Guarantors to obtain any required Authorizations from, or make
any required declarations or filings with, the FCC or any State Regulatory
Agency; and will reimburse, as incurred, each Indemnified Person for any
legal or other expenses reasonably incurred by such Indemnified Person in
connection with investigating, preparing, pursuing or defending against any
claim or action, or any investigation or proceeding, commenced or
threatened, or appearing as a third-party witness in connection with any
such loss, claim, damage, liability, judgment, action or expense; provided,
however, that none
17
of the Talton Entities will be liable in any such case to an Indemnified
Person to the extent that such losses, claims, damages, liabilities,
judgments, actions or expenses are caused by an untrue statement or alleged
untrue statement or omission or alleged omission that is made in the
Preliminary Offering Memorandum or the Offering Memorandum or any amendment
or supplement thereto in reliance upon and in conformity with information
relating to the Initial Purchaser furnished in writing to the Company or
the Subsidiary Guarantors by or on behalf of the Initial Purchaser
expressly for use therein; and provided, further, indemnity with respect to
the Preliminary Offering Memorandum and the Offering Memorandum shall not
inure to the benefit of any Indemnified Person from whom the person
asserting any such loss, claim, damage, liability, judgment, action or
expense purchased the Series A Notes which are the subject thereof if such
person did not receive a copy of the Offering Memorandum (or the Offering
Memorandum as amended or supplemented) excluding documents incorporated
therein by reference at or prior to the confirmation of the sale of such
Series A Notes to such person in any case where such delivery is required
by the Securities Act and the untrue statement or omission of a material
fact contained in the Preliminary Offering Memorandum was corrected in the
Offering Memorandum (or the Offering Memorandum as amended or
supplemented), unless such failure to deliver such Offering Memorandum (as
amended or supplemented) was a result of noncompliance by the Talton
Entities with Section 4(d) of this Agreement. The indemnity, contribution
and reimbursement obligations of the Talton Entities set forth in this
Section 8 shall be in addition to any liability or obligation the Talton
Entities may otherwise have to any Indemnified Person.
(b) The Initial Purchaser agrees to indemnify and hold harmless
the Company and the Subsidiary Guarantors and their respective directors
and officers, and any person controlling (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) the Company and
the Subsidiary Guarantors and the respective officers, directors,
employees, representatives and agents of each such person, to the same
extent as the foregoing indemnity set forth in clauses (1) and (2) of the
preceding paragraph from the Talton Entities to each of the Indemnified
Persons, but only with respect to losses, claims, damages, liabilities,
judgments, actions and expenses based on information relating to the
Initial Purchaser furnished in writing to the Company or the Subsidiary
Guarantors by or on behalf of the Initial Purchaser expressly for use in
the Preliminary Offering Memorandum and the Offering Memorandum or any
amendment or supplement thereto. The indemnity, contribution and
reimbursement obligations of the Initial Purchaser set forth in this
Section 8 shall be in addition to any liability or obligation the Initial
Purchaser may otherwise have to the Company or the Subsidiary Guarantors.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action or proceeding
(including any governmental or regulatory investigation or proceeding),
such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party of the commencement thereof; provided, that the omission
so to notify the indemnifying party will not relieve it from any liability
that it may have to any indemnified party except to the extent that such
omission materially prejudices the rights or defenses of the indemnifying
party. In case any such action is brought against any indemnified party,
and such indemnified party notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party; provided,
however, that if the named parties in any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that there
may be one or more legal defenses
18
available to it and/or other indemnified parties that are different from or
additional to those available to any such indemnifying party, then the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of such indemnified party or parties and such indemnified
party or parties shall have the right to select separate counsel to defend
such action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by such indemnified party of
counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or
other expenses, other than reasonable and documented out-of-pocket costs of
investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall
have employed separate counsel in accordance with the proviso to the
immediately preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for
the expenses of more than one separate counsel (in addition to local
counsel) in any one action or separate but substantially similar actions in
the same jurisdiction arising out of the same general allegations or
circumstances, designated by the Initial Purchaser in the case of paragraph
(a) of this Section 8 or the Company in the case of paragraph (b) of this
Section 8, representing the indemnified parties under such paragraph (a) or
paragraph (b), as the case may be, who are parties to such action or
actions); (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying parties; or (iii) the indemnifying party shall have failed to
assume the defense or retain counsel reasonably satisfactory to the
indemnified party. After such notice from the indemnifying parties to such
indemnified party (so long as the indemnified party shall have informed the
indemnifying parties of such action in accordance with this Section 8 on a
timely basis prior to the indemnified party seeking indemnification
hereunder), the indemnifying parties will not be liable under this Section
8 for the costs and expenses of any settlement of such action effected by
such indemnified party without the consent of the indemnifying party,
unless such indemnified party waived its rights under this Section 8, in
which case the indemnified party may effect such a settlement without such
consent. No indemnifying party shall, without the prior written consent of
each indemnified party, settle or compromise or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened
action, claim, litigation or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not any indemnified
party is a party thereto), unless such settlement, compromise, consent or
termination includes an unconditional release of each indemnified party
from all liability arising out of such action, claim, litigation or
proceeding. If any indemnifying party reimburses an indemnified party
hereunder for any expenses incurred in connection with an action or
proceeding for which indemnification is sought, the indemnified party
hereby agrees to refund such reimbursement of expenses to the extent that
it is determined by a court of competent jurisdiction that the indemnified
party is not entitled to indemnification pursuant to this Section 8 for
such expenses.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or expenses referred to herein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and expenses (i) in
such proportion as is appropriate to reflect the relative benefits received
by the indemnifying party on the one hand and the indemnified party on the
other hand from the offering of the Notes or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
indemnifying parties and the indemnified party, as well as any other
relevant equitable considerations. The relative benefits
19
received by the Talton Entities, on the one hand, and the Initial
Purchaser, on the other hand, shall be deemed to be in the same proportion
as the total proceeds from the offering of the Notes (net of commissions
and discounts but before deducting expenses) received by the Talton
Entities bears to the total commissions and discounts received by the
Initial Purchaser. The relative fault of the Talton Entities, on the one
hand, and the Initial Purchaser, on the other hand, 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 related to information supplied by the Talton Entities or the
Initial Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission and other equitable considerations appropriate in the
circumstances. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities, judgments, actions or
expenses referred to in this paragraph shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim.
The Talton Entities and the Initial Purchaser agree that it would
not be equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Initial Purchaser and its
related Indemnified Persons were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 8, the Initial
Purchaser (and the related Indemnified Persons) shall not be required to
contribute, in the aggregate, any amount in excess of the amount by which
the total discounts and commissions applicable to the Series A Notes
purchased by the Initial Purchaser under this Agreement exceeds the
aggregate amount of any damages which the Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(e) The Company and each Subsidiary Guarantor hereby designates
CT Corporation System, 1633 Broadway, New York, New York 10019 as its
authorized agent upon whom process may be served in any action, suit or
proceeding that may be instituted in any state or federal court in the
State of New York by the Initial Purchaser or any person asserting a claim
for indemnification or contribution under or pursuant to this Section 8,
and the Company and the Subsidiary Guarantors will accept the jurisdiction
of such court in such action, and waive, to the fullest extent permitted by
applicable law, any defense based upon lack of personal jurisdiction or
venue. A copy of any such process shall be sent or given to the Company
and the Subsidiary Guarantors at the address for notices specified in
Section 11 hereof.
(f) The parties hereto agree that the statements contained in
the Preliminary Offering Memorandum and the Offering Memorandum in the
fourth paragraph on page (ii) and the third, fourth, ninth and twelfth
paragraphs of the section entitled "Plan of Distribution" constitute the
only information heretofore furnished to the Company or the Subsidiary
Guarantors in writing by or behalf of the Initial Purchaser expressly for
use in the Preliminary Offering Memorandum or the Offering Memorandum or
any amendment or supplement thereto.
9. Conditions of Initial Purchaser's Obligations. The obligations
---------------------------------------------
of the Initial Purchaser under this Agreement are subject to the satisfaction of
each of the following conditions:
20
(a) All of the representations and warranties of the Company and
the Subsidiary Guarantors contained in this Agreement shall be true and
correct on the Closing Date with the same force and effect as if made on
and as of the Closing Date. The Company and each of the Subsidiary
Guarantors shall have performed or complied with all of its obligations and
agreements herein contained and required to be performed or complied with
by it on or prior to the Closing Date.
(b) No stop order suspending the qualification or exemption from
qualification of any of the Notes or the Subsidiary Guarantees 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 statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the
issuance of any of the Series A Notes or the Subsidiary Guarantees or the
sale of any Notes and the Subsidiary Guarantees; and no injunction,
restraining order or order of any nature by a Federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance of the Notes or the Subsidiary Guarantees. No
action, suit or proceeding shall be pending against or affecting or, to the
knowledge of the Company or any of the Subsidiary Guarantors, threatened
against, the Company or any of the Subsidiary Guarantors, before any court
or arbitrator or any governmental body, agency or official that, if
adversely determined, would prohibit, interfere with or adversely affect
the issuance of the Series A Notes or the Subsidiary Guarantees or the sale
of any of the Notes or the Subsidiary Guarantees or would have a Material
Adverse Effect; and 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 Securities Act shall have been issued.
(d) Since the dates as of which information is given in the
Offering Memorandum, (i) there shall not have been any Material Adverse
Change, (ii) since the date of the latest balance sheet included in the
Offering Memorandum, or as otherwise described in the Offering Memorandum,
there shall not have been any material change in the capital stock,
material increase in long-term debt or short-term debt of the Company, or
any of the Subsidiary Guarantors from that set forth in the Offering
Memorandum and (iii) the Company and the Subsidiary Guarantors shall have
incurred no liability or obligation, direct or contingent, that is material
individually or in the aggregate, to the Company and the Subsidiary
Guarantors, taken as a whole, and is required to be disclosed on a balance
sheet in accordance with GAAP and is not disclosed on the latest balance
sheet included in the Offering Memorandum (other than liabilities and
obligations arising in the ordinary course of business since the date of
the latest balance sheet included in the Offering Memorandum, none of which
arose as a result of any breach of contract, breach of warranty, tort,
infringement or violation of law).
(e) You shall have received (i) certificates of the Company and
each of the Subsidiary Guarantors, dated the Closing Date, executed on
behalf of the Company and the Subsidiary Guarantors, by the Chairman, the
Chief Executive Officer, the President or any Vice President and a
principal financial or accounting officer of the Company and each of the
Subsidiary Guarantors, confirming, as of the Closing Date, the matters set
forth in paragraphs (a), (b), (c) and (d) of this Section 9, and (ii) the
Secretary of the Company and each of the Subsidiary Guarantors certifying
as true, accurate and complete, the bylaws, resolutions with respect to the
transactions
21
contemplated herein and incumbency of certain officers and, in
each case, as to such other matters as you may reasonably request.
(f) The Offering Memorandum shall have been printed and
copies distributed to you not later than 10:00 a.m., New York City time, on
the second business day following the date of this Agreement or at such
later date and time as to which you may agree.
(g) You shall have received a copy of the certificate of
incorporation of the Company and each of the Subsidiary Guarantors,
certified as of a recent date by the Secretary of the State (or other
appropriate official) of their respective jurisdiction of incorporation.
(h) You shall have received appropriate certificates of
qualification to do business and of good standing issued on a recent date
by the Secretary of State (or other appropriate official) of each
jurisdiction in which of the Company or any Subsidiary Guarantor, as the
case may be, is qualified to do business.
(i) On the Closing Date, you shall have received an opinion
(satisfactory to you and your counsel), dated the Closing Date, of Hughes &
Luce, L.L.P., special counsel for the Company and the Subsidiary Guarantors
("Hughes & Luce"), to the effect that:
-------------
(1) The Company and each of the Subsidiary Guarantors has
been duly incorporated and is a validly existing corporation in good
standing under the laws of its jurisdiction of incorporation, has the
requisite corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Offering Memorandum, and is duly qualified as a foreign corporation
and in good standing in each jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have a Material Adverse Effect.
(2) (i) All of the issued and outstanding shares of
capital stock of the Company and the Subsidiary Guarantors have been
duly and validly authorized and issued and are fully paid and non-
assessable; (ii) all of the issued and outstanding shares of capital
stock of each Subsidiary Guarantor is, as of the Closing Date, owned
of record by the Company; (iii) to the knowledge of such counsel, all
such shares of capital stock of the Company and the Subsidiary
Guarantors described in the foregoing subsections (i) and (ii) are
owned free and clear of any Lien, except for Liens described in the
Offering Memorandum and inchoate statutory liens for amounts not yet
due and payable, and were not issued in violation of any preemptive or
similar statutory rights; (iv) to the knowledge of such counsel, the
Company and the Subsidiary Guarantors have no other direct or indirect
subsidiaries; (v) to the knowledge of such counsel, except as set
forth in the Offering Memorandum, there are no outstanding
subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or Liens related to or entitling any
person to purchase or otherwise to acquire any shares of the capital
stock of, or other ownership interest in, the Company or the
Subsidiary Guarantors; and (vi) the Company had at the Closing Date,
the authorized and outstanding capitalization as set forth in the
Offering Memorandum.
(3) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and the other Operative
22
Documents, including the corporate power and authority to issue, sell
and deliver the Notes as contemplated by this Agreement. Each
Subsidiary Guarantor has the requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement
and the other Operative Documents to which it is a party.
(4) Each of this Agreement, the Notes, the Indenture, the
Registration Rights Agreement and the Acquisition Agreements has been
duly authorized, executed and delivered by the Company.
(5) Each of this Agreement, the Subsidiary Guarantees,
the Indenture and the Registration Rights Agreement has been duly
authorized, executed and delivered by each Subsidiary Guarantor.
(6) When issued and authenticated in accordance with the
terms of the Indenture and delivered to and paid for by you in
accordance with the terms of this Agreement, the Series A Notes will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture.
(7) When issued and authenticated in accordance with the
terms of the Indenture, the Registration Rights Agreement and the
Exchange Offer, the Series B Notes will constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the
Indenture.
(8) When issued in accordance with the terms of the
Indenture, the Subsidiary Guarantees of the Series A Notes executed by
the Subsidiary Guarantors will constitute valid and legally binding
obligations of the Subsidiary Guarantors, enforceable against the
Subsidiary Guarantors in accordance with their terms and entitled to
the benefits of the Indenture.
(9) When issued in accordance with the terms of the
Indenture, the Registration Rights Agreement and the Exchange Offer,
the Subsidiary Guarantees of the Series B Notes executed by the
Subsidiary Guarantors will constitute valid and legally binding
obligations of the Subsidiary Guarantors, enforceable against the
Subsidiary Guarantors in accordance with their terms and entitled to
the benefits of the Indenture.
(10) The Indenture, assuming due authorization, execution
and delivery thereof by the Trustee, constitutes a valid and legally
binding obligation of the Company and each of the Subsidiary
Guarantors, enforceable against the Company and the Subsidiary
Guarantors in accordance with its terms.
(11) The Registration Rights Agreement constitutes a valid
and legally binding agreement of the Company and each of the
Subsidiary Guarantors, enforceable against each of them in accordance
with its terms.
(12) The Notes, the Subsidiary Guarantees, the Indenture
and, the Registration Rights Agreement conform in all material
respects to the descriptions thereof contained in the Offering
Memorandum.
23
(13) When the Notes are issued and delivered pursuant to
the Agreement, the Notes will not be of the same class (within the
meaning of Rule 144A) as securities of the Company or the Subsidiary
Guarantors that are listed on any national securities exchange
registered under Section 6 of the Exchange Act or that are quoted in a
United States automated inter-dealer quotation system.
(14) No registration under the Securities Act of the Notes
is required for the sale of the Notes to you as contemplated hereby or
for the Exempt Resales, and prior to the consummation of the Exchange
Offer or the effectiveness of the Shelf Registration Statement, the
Indenture is not required to be qualified under the Trust Indenture
Act, assuming (i) that Eligible Purchasers acquire the Notes in the
Exempt Resales; (ii) the accuracy of the Initial Purchaser's
representations and those of the Company and the Subsidiary Guarantors
regarding the absence of general solicitation in connection with the
Exempt Resales contained herein; (iii) the accuracy of the
representations made by each Institutional Accredited Investor who
purchases Notes pursuant to an Exempt Resale as set forth in the
letters of representation executed by such Institutional Accredited
Investor in the form of Annex A to the Offering Memorandum; and (iv)
the performance by each such Institutional Accredited Investor of its
obligations under such letters of representation.
(15) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, and each amendment or supplement
thereto, as of its date (except for the financial statements and the
notes thereto and schedules and other financial data included therein,
as to which no opinion need be expressed), complied in all material
respects with the requirements of Rule 144A.
(16) Neither the Company nor any of the Subsidiary
Guarantors is an "investment company" or a company "controlled by" an
investment company within the meaning of the Investment Company Act of
1940, as amended.
(17) To such counsel's knowledge, there are no legal,
regulatory or governmental proceedings pending or threatened to which
the Company or any of the Subsidiary Guarantors is a party or to which
any property of the Company or any Subsidiary Guarantor is subject
which, if determined adversely, could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(18) The execution, delivery and performance by the Company
and each of the Subsidiary Guarantors of this Agreement and the other
Operative Documents to which it is a party, and the issuance and sale
of the Notes and the Subsidiary Guarantees, will not 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 on any properties of the Company or the
Subsidiary Guarantors (except as contemplated by the Senior Credit
Facility), or an acceleration of indebtedness pursuant to, (i) the
certificate of incorporation or bylaws of the Company or the
Subsidiary Guarantors, (ii) any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or instrument known to such
counsel to which the Company or any of the Subsidiary Guarantors is a
party or by which any of them or their property is bound, (iii) any
statute, rule or regulation applicable to the Company or any of the
Subsidiary Guarantors, or (iv) any judgment, order or decree known
24
to such counsel of any United States federal or state court or
governmental agency or authority having jurisdiction over the Company
or any of the Subsidiary Guarantors.
(19) To such counsel's knowledge, no consent, approval,
authorization or order of, or filing, registration, qualification,
license or permit of or with, any Unites States federal or state court
or governmental agency, body or administrative agency (including,
without limitation, any State Regulatory Agency) is required for the
execution, delivery and performance of this Agreement and the other
Operative Documents, except such as may be required under state
securities or Blue Sky laws and regulations (as to which such counsel
may express no opinion), the Securities Act and the Trust Indenture
Act or such as may be required by the NASD.
(20) To the knowledge of such counsel, the Company and each
Subsidiary Guarantor have obtained all material consents, approvals,
orders, certificates, licenses, permits, franchises and other
authorizations of and from, and have made all material declarations
and filings with, all governmental and regulatory authorities, all
self-regulatory organizations, and all courts and other tribunals
necessary to own, lease, license, use and operate their respective
properties and assets and to conduct their respective businesses in
the manner described in the Offering Memorandum; the execution and
delivery by the Company and each of the Subsidiary Guarantors of, and
the performance by the Company and each of the Subsidiary Guarantors
of their respective obligations under, this Agreement, the Indenture,
the Notes, the Subsidiary Guarantees, the Registration Rights
Agreement and the Acquisition Agreements (to the extent a party
thereto) and the consummation by the Company and each of the
Subsidiary Guarantors of the transactions contemplated hereby and
thereby will not violate any such approval, certification, license or
permit.
(21) To the knowledge of such counsel, other than pursuant
to the Registration Rights Agreement, there are no holders of
securities of the Company or the Subsidiary Guarantors who, by reason
of the execution by the Company or the Subsidiary Guarantors of this
Agreement or any other Operative Document to which it is a party, or
the consummation of the transactions contemplated hereby and thereby,
have the right to request or demand that the Company or the Subsidiary
Guarantors register under the Securities Act any securities held by
them.
In addition, Hughes & Luce shall additionally state that they have
participated in conferences with officers and representatives of the Company and
the Subsidiary Guarantors, representatives of the independent certified public
accountants for the Company and the Subsidiary Guarantors, and representatives
of the Initial Purchaser at which the contents of the Offering Memorandum and
related matters were discussed, and have participated in the preparation of the
Offering Memorandum and any amendment thereof or supplement thereto, and
although such counsel is not passing upon and does not assume any responsibility
for, and have not verified, the accuracy, completeness or fairness of the
statements contained in the Offering Memorandum and any amendment thereof or
supplement thereto, on the basis of the foregoing and without independent check
or verification, such counsel advises you that no facts came to such counsel's
attention that have lead such counsel to believe that the Offering Memorandum
(as amended or supplemented, if applicable), as of its date and as of the
Closing Date, contained an untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that Hughes
25
& Luce need express no belief or opinion with respect to the financial
statements and schedules and other financial and statistical data included
therein).
In rendering such opinion, Hughes & Luce may rely, with regard to
matters concerning the application of laws of jurisdictions other than the State
of Texas and the federal laws of the United States and the Delaware General
Corporation Law, on the opinions of (i) Brydon, Swearengen & England, (ii)
Rosenblum, Goldenhersh, Silverstein & Zafft, P.C., (iii) Berkowitz, Lefkovits,
Isom & Kushner, (iv) Shustak, Jalil, Sanders & Heller, or such other local
counsel reasonably acceptable to the Initial Purchaser as Hughes & Luce deems
necessary. Hughes & Luce will be permitted to except from its opinions with
respect to enforceability: (A) the effect of bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer moratorium and other similar
laws now or hereafter in effect relating to or affecting the rights and remedies
of creditors; (B) the effect of general equitable principles, whether such
enforceability is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought; (C)
the unenforceability under certain circumstances under law or court decisions of
provisions providing for the indemnification of or contribution to a party with
respect to a liability where such indemnification or contribution is contrary to
public policy; (D) the unenforceability of any provision requiring the payment
of attorney's fees, except to the extent that a court determines such fees to be
reasonable; and (E) compliance with laws relating to permissible rates of
interest.
(j) On the Closing Date, you shall have received an opinion
(satisfactory to you and your counsel), dated the Closing Date, of Stutzman
& Bromberg, counsel for the Company and the Subsidiary Guarantors
("Stutzman & Bromberg"), to the effect that:
-------------------
(1) Talton STC has been duly incorporated and is a
validly existing corporation in good standing under the laws of its
jurisdiction of incorporation, and has the requisite corporate power
and authority to own, lease and operate its properties and to conduct
its business as described in the Offering Memorandum. To the best of
such counsel's knowledge, the Company and each of the Subsidiary
Guarantors is duly qualified as a foreign corporation and in good
standing in each jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, other than
where the failure to be so qualified or in good standing would not
have a Material Adverse Effect.
(2) (i) All of the issued and outstanding shares of
capital stock of the Company and each of the Subsidiary Guarantors
have been duly and validly authorized and issued and are fully paid
and non-assessable (ii) the issued and outstanding shares of capital
stock of the Company is owned of record as described on a scheduled
attached to such opinion; (iii) all of the issued and outstanding
shares of capital stock of each of AmeriTel, Talton Telecommunications
and Talton of Carolina is owned of record by the Company and all of
the issued and outstanding shares of capital stock of Talton of
Carolina is owned of record by Talton Telecommunications; (iv) to the
best knowledge of such counsel, all such shares of capital stock of
the Company and the Subsidiary Guarantors described in the foregoing
subsections (i), (ii) and (iii) are owned free and clear of any Lien,
except for Liens arising under that certain credit facility dated as
of December 27, 1996 among the Company, AmeriTel, Talton
Telecommunications, Talton of Carolina and Canadian Imperial Bank of
Commerce, as agent for lenders (the "Existing Credit Facility"), and
------------------------
inchoate statutory liens for amounts not yet due and payable, and were
not issued in violation of any preemptive or similar statutory rights;
(v) except as described in clause (iii) above, to the best knowledge
of such counsel, the Company and the Subsidiary Guarantors have no
other direct or indirect subsidiaries; and (vi) to the best knowledge
of such counsel, except as set forth on a
26
schedule attached to such opinion, there are no outstanding
subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or Liens related to or entitling any
person to purchase or otherwise to acquire any shares of the capital
stock of, or other ownership interest in, the Company or the
Subsidiary Guarantors.
(3) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Acquisition Agreements. The Acquisition Agreements have been duly
authorized, executed and delivered by the Company.
(4) To the best of such counsel's knowledge, there are no
legal, regulatory or governmental proceedings pending or threatened to
which the Company or any of the Subsidiary Guarantors is a party or to
which any property of the Company or any Subsidiary Guarantor is
subject which, if determined adversely, could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(5) The execution, delivery and performance by the Company
and each of the Subsidiary Guarantors of this Agreement and the other
Operative Documents to which it is a party, and the issuance and sale
of the Notes and the Subsidiary Guarantees, will not 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 on any properties of the Company or the
Subsidiary Guarantors except as contemplated by the Existing Credit
Facility, or an acceleration of indebtedness pursuant to, (i) the
respective certificate or articles of incorporation or bylaws of the
Company or the Subsidiary Guarantors, (ii) any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument
known to such counsel to which the Company or any of the Subsidiary
Guarantors is a party or by which any of them or their property is
bound, (iii) any statute, rule or regulation applicable to the Company
or any of the Subsidiary Guarantors, or (iv) any judgment, order or
decree known to such counsel of any United States federal or state
court or governmental agency or authority having jurisdiction over the
Company or any of the Subsidiary Guarantors. To such counsel's
knowledge, no consent, approval, authorization or order of, or filing,
registration, qualification, license or permit of or with, any Unites
States federal or state court or governmental agency, body or
administrative agency is required for the execution, delivery and
performance of this Agreement and the other Operative Documents,
except such as may be required under state securities or Blue Sky laws
and regulations (as to which such counsel may express no opinion), the
Securities Act and the Trust Indenture Act or such as may be required
by the NASD.
(6) To the best knowledge of such counsel, other than
pursuant to the Registration Rights Agreement, there are no holders of
securities of the Company or the Subsidiary Guarantors who, by reason
of the execution by the Company or the Subsidiary Guarantors of this
Agreement or any other Operative Document to which it is a party, or
the consummation of the transactions contemplated hereby and thereby,
have the right to request or demand that the Company or the Subsidiary
Guarantors register under the Securities Act any securities held by
them.
(7) To the best knowledge of such counsel, the Company
and each Subsidiary Guarantor have obtained all material consents,
approvals, orders, certificates,
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licenses, permits, franchises and other authorizations of and from,
and have made all material declarations and filings with, all
governmental and regulatory authorities, all self-regulatory
organizations, and all courts and other tribunals necessary to own,
lease, license, use and operate their respective properties and assets
and to conduct their respective businesses in the manner described in
the Offering Memorandum; the execution and delivery by the Company and
each of the Subsidiary Guarantors of, and the performance by the
Company and each of the Subsidiary Guarantors of their respective
obligations under, this Agreement, the Indenture, the Notes, the
Subsidiary Guarantees, the Registration Rights Agreement and the
Acquisition Agreements (to the extent a party thereto) and the
consummation by the Company and each of the Subsidiary Guarantors of
the transactions contemplated hereby and thereby will not violate any
such approval, certification, license or permit.
In addition, Stutzman & Bromberg shall additionally state that such
counsel has participated in conferences with officers and representatives of the
Company and the Subsidiary Guarantors, representatives of the independent
certified public accountants for the Company and the Subsidiary Guarantors, and
representatives of the Initial Purchaser at which the contents of the Offering
Memorandum and related matters were discussed, and participated in the
preparation of the Offering Memorandum and any amendment thereof or supplement
thereto, and although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum and any amendment thereof or supplement
thereto and has not independently verified the accuracy, completeness or
fairness of such statements, such counsel advises you that, on the basis of the
foregoing, no facts came to such counsel's attention that caused such counsel to
believe that the Offering Memorandum (as amended or supplemented, if
applicable), as of the date thereof and on the Closing Date, contained an untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief or opinion with respect to the
financial statements and schedules and other financial and statistical data
included therein).
(k) On the Closing Date, you shall have received an opinion
(satisfactory to you and your counsel), dated the Closing Date, of
Dickstein, Shapiro, Morin & Oshinsky L.L.P., special regulatory counsel for
the Company and the Subsidiary Guarantors ("Regulatory Counsel for the
--------------------------
Company"), to the effect that:
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(1) The statements in the Offering Memorandum under the
headings "Risk Factors--Regulatory Factors" and "Business--
Regulation," insofar as such statements constitute a summary of
statutes, regulations, rules, legal matters, documents or proceedings
referred to therein, fairly present the information set forth therein
with respect to such statutes, regulations, rules, legal matters,
documents or proceedings;
(2) The Company and each Subsidiary Guarantor have
obtained all consents, approvals, orders, certificates, licenses,
permits, franchises and other authorizations of and from, and have
made all declarations and filings with the FCC necessary to own,
lease, license, use and operate their respective properties and assets
and to conduct their respective businesses in the manner described in
the Offering Memorandum; and the approvals, certificates, licenses and
permits listed on a schedule attached to such opinion constitute all
such approvals, certificates, licenses and permits required by the
FCC; and
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(3) The execution and delivery by the Company and each of
the Subsidiary Guarantors of, and the performance by the Company and
each of the Subsidiary Guarantors of their respective obligations
under, this Agreement, the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement and the Acquisition
Agreements (to the extent a party thereto) and the consummation by the
Company and each of the Subsidiary Guarantors of the transactions
contemplated hereby and thereby (i) will not violate any such
approval, certification, license or permit referred to in the
preceding paragraph (2), or (ii) require any consent or approval by
the FCC.
(l) On the Closing Date, you shall have received an opinion
(satisfactory to you and your counsel), dated the Closing Date, of Brydon
Swearangen & England, special state regulatory counsel for the Company and
the Subsidiary Guarantors ("State Regulatory Counsel for the Company"),
----------------------------------------
to the effect that:
(1) The Company and each Subsidiary Guarantor have
obtained all consents, approvals, orders, certificates, licenses,
permits, franchises and other authorizations of and from, and have
made all declarations and filings with all State Regulatory Agencies
necessary to own, lease, license, use and operate their respective
properties and assets and to conduct their respective businesses in
the manner described in the Offering Memorandum; and
(2) The execution and delivery by the Company and each of
the Subsidiary Guarantors of, and the performance by the Company and
each of the Subsidiary Guarantors of their respective obligations
under, this Agreement, the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement and the Acquisition
Agreements (to the extent a party thereto) and the consummation by the
Company and each of the Subsidiary Guarantors of the transactions
contemplated hereby and thereby (i) will not violate any such
approval, certification, license or permit referred to in the
preceding paragraph (1), or (ii) require any consent or approval by
such State Regulatory Agencies.
(m) Counsel for the Company shall have delivered to you
copies of all opinions issued by them in connection with the Acquisition
Agreements and the transactions contemplated thereby, along with executed
letters addressed to you entitling you to rely upon such opinions as if
originally addressed to you.
(n) The Initial Purchaser shall have received an opinion, dated
the Closing Date, of Latham & Watkins, counsel for the Initial Purchaser
("Counsel for the Initial Purchaser"), in form and substance reasonably
---------------------------------
satisfactory to the Initial Purchaser.
(o) The Initial Purchaser shall have received letters on and as
of the date hereof as well as on and as of the Closing Date in form and
substance satisfactory to the Initial Purchaser, from each of Deloitte &
Touche, LLP, Arthur Andersen LLP, Benefield, Crawford & Webster, P.C., and
Davis, Clark and Company, P.C., independent public accountants, with
respect to the financial statements and certain financial information
contained in the Offering Memorandum.
(p) The Subsidiary Guarantors shall have entered into this
Agreement and you shall have received executed counterparts thereof.
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(q) The Company and the Subsidiary Guarantors shall have entered
into the Registration Rights Agreement and you shall have received executed
counterparts thereof.
(r) The Company, the Subsidiary Guarantors and the Trustee shall
have entered into the Indenture and you shall have received executed
counterparts thereof.
(s) The Acquisition Agreements shall be in full force and effect
and you shall have received counterparts, conformed as executed, thereof,
and all conditions precedent to the consummation of the acquisitions
thereunder shall have been satisfied or waived.
(t) Counsel for the Initial Purchaser shall have been furnished
with such documents and opinions, 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 9 and in order to
evidence the accuracy, completeness or satisfaction in all material
respects of any of the representations, warranties or conditions herein
contained.
(u) Prior to the Closing Date, the Company and the Subsidiary
Guarantors shall have furnished to you such further information,
certificates and documents as you may reasonably request.
All opinions, certificates, letters and other documents required to be
delivered by the Company and the Subsidiary Guarantors will be in compliance
with the provisions hereof only if they are reasonably satisfactory in form and
substance to the Initial Purchaser. The Company and the Subsidiary Guarantors
will furnish the Initial Purchaser with such conformed copies of such opinions,
certificates, letters and other documents as the Initial Purchaser shall
reasonably request.
10. Effective Date of Agreement and Termination. This Agreement
-------------------------------------------
shall become effective upon the execution hereof.
This Agreement may be terminated at any time prior to the Closing by
you by notice to the Company if any of the following has occurred on or after
the date hereof: (i) subsequent to the date information is provided in the
Offering Memorandum, any Material Adverse Change which, in your judgment
materially impairs the investment quality of the Notes, (ii) any outbreak or
escalation of hostilities or other national or international calamity or crisis
or material adverse change in the financial markets of the United States or
elsewhere, or any other substantial national or international calamity or
emergency if the effect of such outbreak, escalation, calamity, crisis or
emergency would, in your judgment, make it impracticable or inadvisable to
market the Notes or to enforce contracts for the sale of the Notes, (iii) any
suspension or limitation of trading generally in securities on the New York
Stock Exchange or in the over-the-counter markets or any setting of minimum
prices for trading on such exchange or markets, (iv) any declaration of a
general banking moratorium by either federal or New York authorities, (v) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs that in your judgment has a material
adverse effect on the financial markets in the United States, and would, in your
judgment, make it impracticable or inadvisable to market the Notes or to enforce
contracts for the sale of the Notes, or (vi) the enactment, publication, decree,
or other promulgation of any federal or state statute, regulation, rule or order
of any court or other governmental authority which, in your judgment, would have
a Material Adverse Effect.
The indemnities and contribution provisions and the other agreements,
representations and warranties of the Company and the Subsidiary Guarantors,
their respective officers and directors and of the
30
Initial Purchaser set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Notes, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of the Initial Purchaser or by or on
behalf of the Company, the Subsidiary Guarantors, the officers or directors of
the Company or the Subsidiary Guarantors, or any controlling person of the
Company or the Subsidiary Guarantors, (ii) acceptance of the Notes and payment
therefor hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Initial Purchaser
pursuant to clause (i) of the second paragraph of this Section 10 or because of
the failure or refusal on the part of the Company or any of the Subsidiary
Guarantors to comply with the terms or to fulfill any of the conditions of this
Agreement, the Company and the Subsidiary Guarantors agree to reimburse you for
all out-of-pocket expenses (including the fees and disbursements of counsel)
incurred by you. Notwithstanding any termination of this Agreement, the Company
and each of the Subsidiary Guarantors shall be liable for all expenses which it
has agreed to pay pursuant to Section 5 hereof.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Subsidiary
Guarantors, the Initial Purchaser, any Indemnified Person referred to herein and
their respective successors and assigns, all as and to the extent provided in
this Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The terms "successors and assigns" shall not include
a purchaser of any of the Notes from the Initial Purchaser merely because of
such purchase.
11. Notices. Notices given pursuant to any provision of this
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Agreement shall be addressed as follows: (a) if to the Company or any of the
Subsidiary Guarantors, to it at 611 S.W. Third Street, Lee's Summit, Missouri
64063, with a copy in each case to Hughes & Luce, L.L.P., 1717 Main Street,
Suite 2800, Dallas, Texas 75201, Attention: Glen Hettinger; and (b) if to the
Initial Purchaser, to CIBC Wood Gundy Securities Corp. 425 Lexington Avenue,
Third Floor, New York, New York 10017, Attention: Syndicate Department, and, in
each case, with a copy to Latham & Watkins, 633 West Fifth Street, Suite 4000,
Los Angeles, California 90071, Attention: Mary Ellen Kanoff, Esq., or in any
case to such other address as the person to be notified may have requested in
writing.
12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
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This Agreement may be signed in multiple counterparts which together
shall constitute one and the same instrument. Please confirm that the foregoing
correctly sets forth the agreement among the Company and you.
Talton Holdings, Inc.
By:__________________________________
Name:
Title:
AmeriTel Pay Phones, Inc.
By:__________________________________
Name:
Title:
Talton Telecommunications Corporation
By:__________________________________
Name:
Title:
Talton Telecommunications of Carolina,
INC.
By:__________________________________
Name:
Title:
Talton STC, Inc.
By:__________________________________
Name:
Title:
CIBC Wood Gundy Securities Corp.
By:____________________________
Name:
Title:
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