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EXHIBIT 4.14
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OPTEL, INC.
$200,000,000
11-1/2% Senior Notes Due 2008
PURCHASE AGREEMENT
Dated: June 29, 1998
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OPTEL, INC.
$200,000,000
11-1/2% Senior Notes Due 2008
PURCHASE AGREEMENT
New York, New York
June 29, 1998
SALOMON BROTHERS INC
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
OpTel, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to Salomon Brothers Inc, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and CIBC
▇▇▇▇▇▇▇▇▇▇▇ Corp. (collectively, the "Initial Purchasers") $200,000,000
principal amount of its 11-1/2% Senior Notes Due 2008 (the "Notes"). The Notes
are to be issued under an indenture (the "Indenture") to be dated as of July 7,
1998 between the Company and U.S. Trust Company of Texas, N.A., as trustee (the
"Trustee"). The holders of Notes, including the Initial Purchasers, will be
entitled to the benefits of a Registration Agreement (the "Registration
Agreement") to be dated as of July 7, 1998 between the Company and the Initial
Purchasers.
Approximately $22.0 million of the net proceeds from the sale
of the Notes (the "Initial Escrow Amount"), representing funds that, together
with the proceeds from the investment thereof, will be sufficient to pay the
first two interest payments on the Notes, are to be placed in a collateral
account and pledged to the Trustee, for the benefit of the holders of the Notes
and the Trustee (in its capacity as such under the Indenture) and the holders
of the Existing Notes (as defined) and the Existing Notes Trustee (as defined)
(in its capacity as such under the Existing Notes Indenture (as defined))
pursuant to the Escrow Agreement, to be dated as of July 7, 1998 (the "Escrow
Agreement") among the Company, U.S. Trust Company of Texas, N.A., as Escrow
Agent (the "Escrow Agent"), and the Trustee.
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The sale of the Notes to the Initial Purchasers will be made
without registration of the Notes under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon exemptions from the registration
requirements of the Securities Act. The Initial Purchasers have advised the
Company that the Initial Purchasers will offer and sell the Notes purchased by
them hereunder in accordance with Section 4 of this agreement (this "Agreement"
or the "Purchase Agreement") as soon as they deem advisable.
In connection with the sale of the Notes, the Company has
prepared a preliminary offering memorandum, dated June 12, 1998 (including any
and all exhibits thereto, the "Preliminary Memorandum") and a final offering
memorandum, dated June 29, 1998 (including any and all exhibits thereto, the
"Final Memorandum"). Each of the Preliminary Memorandum and the Final
Memorandum sets forth certain information concerning the Company and the Notes.
The Company hereby confirms that it has authorized the use of the Preliminary
Memorandum and the Final Memorandum, and any amendment or supplement thereto,
in connection with the offer and sale of the Notes by the Initial Purchasers.
Unless stated to the contrary, all references herein to the Final Memorandum
are to the Final Memorandum at the Execution Time (as defined below) and are
not meant to include any amendment or supplement subsequent to the Execution
Time.
1. Representations and Warranties. The Company
represents and warrants to each Initial Purchaser as set forth below in this
Section 1.
(a) The Preliminary Memorandum, at the date thereof, did
not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The Final Memorandum, at the date hereof, does not, and at the Closing
Date (as defined below) (as it may have been amended and supplemented
at the Closing Date) will not (and any amendment or supplement
thereto, at the date thereof and at the Closing Date, will not),
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representation or
warranty as to the information contained in or omitted from the
Preliminary Memorandum or the Final Memorandum, or any amendment or
supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Initial Purchasers specifically for inclusion therein.
(b) Neither the Company nor any of its Affiliates (as
defined in Rule 501(b) of Regulation D under the Securities Act
("Regulation D")), nor (assuming that the representations and
warranties of the Initial Purchasers contained in Section 4 are true,
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correct and complete) any person acting on its or their behalf has,
directly or indirectly, made offers or sales of any security, or
solicited offers to buy any security, under circumstances that would
require the registration of the Notes under the Securities Act.
(c) Neither the Company, nor any of its Affiliates, nor
(assuming that the representations and warranties of the Initial
Purchasers contained in Section 4 are true, correct and complete) any
person acting on its or their behalf has engaged in any form of
general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of the Notes in the
United States.
(d) Assuming that the representations and warranties of
the Initial Purchasers contained in Section 4 are true, correct and
complete, and assuming that the representations and warranties deemed
to be made by non-U.S. persons and "qualified institutional buyers"
(as defined in Rule 144A(a)(1) under the Securities Act) purchasing
Notes are true and correct as of the Closing Date, and assuming
compliance by such persons with their agreements deemed made by the
Final Memorandum, it is not necessary in connection with the offer,
sale and delivery of the Notes to the Initial Purchasers in the manner
contemplated by, or in connection with the initial resale of such
Notes by the Initial Purchasers in accordance with, this Agreement to
register the Notes under the Securities Act or to qualify any
indenture in respect of the Notes under the Trust Indenture Act of
1939 (the "TIA").
(e) Each of the Company, each subsidiary of the Company
(a "Subsidiary") and Transmission Holdings, Inc., a Delaware
corporation (the "LHC"), has been duly incorporated or organized, and
each is validly existing as a corporation or limited partnership, as
the case may be, under the laws of its jurisdiction of incorporation
or organization, with all requisite power and authority to own or
lease its properties and to conduct its business as described in the
Final Memorandum. Each of the Company, the Subsidiaries and the LHC
(x) has all necessary authorizations, approvals, orders, licenses and
permits of and from regulatory or governmental officials, bodies and
tribunals, to own or lease its properties and to conduct its
businesses as now conducted as described in the Final Memorandum and
(y) is duly qualified to do business as a foreign corporation and is
in good standing in all other jurisdictions where the ownership or
leasing of its properties or the conduct of its businesses requires
such qualification, except, in the case of clauses (x) and (y), where
the failure to have such authorizations, approvals, orders, licenses
and permits or to be so qualified could not reasonably be expected to
have a material adverse effect on the business, condition (financial
or otherwise), assets, results of operations or prospects of the
Company and the Subsidiaries taken as a whole (a "Material Adverse
Effect").
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(f) The Notes and the Exchange Securities (as defined in
the Registration Agreement) have been duly authorized by the Company,
and the Company has all requisite corporate power and authority to
execute, issue and deliver the Notes and the Exchange Securities and
to incur and perform its obligations provided for therein. The Notes,
when executed, authenticated and issued in accordance with the terms
of the Indenture (assuming the due authorization, execution and
delivery of the Indenture by the Trustee) and when delivered against
payment of the purchase price therefor as provided in this Agreement,
will constitute the valid and binding obligations of the Company,
entitled to the benefits of the Indenture, enforceable against the
Company in accordance with the terms thereof; and the Exchange
Securities, when executed, authenticated, issued and delivered by the
Company in exchange for the Notes in accordance with the terms of the
Registration Agreement, will constitute valid and binding obligations
of the Company, entitled to the benefits of the Indenture, enforceable
against the Company in accordance with the terms thereof; subject, in
the case of each of the foregoing, to (a) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and
(b) general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) (clauses (a) and (b) being
referred to herein as the "Enforceability Limitations").
(g) This Agreement has been, and, as of the Closing Date,
the Registration Agreement, the Escrow Agreement and the Indenture
will have been, duly authorized, executed and delivered by the
Company, and upon such execution by the Company (assuming the due
authorization, execution and delivery by parties thereto other than
the Company) this Agreement constitutes, and, as of the Closing Date,
the Registration Agreement, the Escrow Agreement and the Indenture
will constitute, the valid and binding obligations of the Company,
enforceable against the Company in accordance with the terms hereof or
thereof, subject only to the Enforceability Limitations.
(h) Upon the satisfaction and discharge of and
termination of all commitments under the senior secured credit
facility dated as of December 19, 1997, by and among the Company, its
principal operating subsidiaries, the Agents named therein and the
lenders party thereto from time to time (the "Senior Credit
Facility"), and upon the release of all collateral securing the Senior
Credit Facility, no Lien (as defined in the Indenture) will exist upon
the Collateral (as defined in the Escrow Agreement) and no right or
option to acquire the same will exist in favor of any other person or
entity, except for (A) the pledge and security interest in favor of
the Trustee for the benefit of the holders of the Notes and the
Trustee (in its capacity as such under the Indenture), and (B) the
pledge and security interest in favor of the trustee (the "Existing
Senior Notes Trustee") for the
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benefit of the holders of the 13% Senior Notes Due 2005 of the Company
(the "Existing Senior Notes") and the Existing Senior Notes Trustee
(in its capacity under the indenture relating to the Existing Senior
Notes (the "Existing Senior Notes Indenture")), in each case to be
created or provided for in the Escrow Agreement, which pledges and
security interests shall constitute first priority perfected pledges
and security interests in and to all of the Collateral.
(i) No consent, authorization, approval, license or order
of, or filing, registration or qualification with, any court or
governmental or regulatory agency or body, domestic or foreign, is
required for the performance by the Company of its obligations under
this Agreement, the Registration Agreement, the Escrow Agreement and
the Indenture, or for the consummation of the transactions
contemplated hereby or thereby except such as may be required (A) in
connection with the registration under the Securities Act of the Notes
or the Exchange Securities pursuant to the Registration Agreement
(including any filing with the NASD), (B) for the qualification of the
Indenture under the TIA or (C) by state securities or "blue sky" laws
in connection with the offer and sale of the Notes or the registration
thereof or of the Exchange Securities pursuant to the Registration
Agreement.
(j) The issuance, sale and delivery of the Notes and the
Exchange Securities, the execution, delivery and performance by the
Company of this Agreement, the Registration Agreement, the Escrow
Agreement and the Indenture, the consummation by the Company of the
transactions contemplated hereby, thereby, and as described in the
Final Memorandum and the compliance by the Company with the terms of
the foregoing do not, and, at the Closing Date, will not conflict with
or constitute or result in a breach or violation by the Company or the
Subsidiaries of (A) upon the satisfaction and discharge of and
termination of all commitments under the Senior Credit Facility and
upon the release of all collateral securing the Senior Credit
Facility, any of the terms or provisions of, or constitute a default
(or an event which, with notice or lapse of time or both, would
constitute a default) by any of the Company or the Subsidiaries or
give rise to any right to accelerate the maturity or require the
prepayment of any indebtedness under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or the Subsidiaries under any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, authorization, permit, certificate or
other agreement or document to which any of the Company or the
Subsidiaries is a party or by which any of them may be bound, or to
which any of them or any of their respective assets or businesses is
subject (and the Company has no knowledge of any conflict, breach or
violation of such terms or provisions or of any such default, in any
such case, which has occurred or will so result),
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(B) the articles or by-laws (each, an "Organizational Document") of
each of the Company and the Subsidiaries or (C) any law, statute, rule
or regulation, or any judgment, decree or order, in any such case, of
any domestic or foreign court or governmental or regulatory agency or
other body having jurisdiction over the Company or any of the
Subsidiaries or any of their respective properties or assets.
(k) The Notes, the Exchange Securities, the Registration
Agreement, the Escrow Agreement and the Indenture will each conform in
all material respects to the descriptions thereof in the Final
Memorandum.
(l) The audited consolidated financial statements (and
the related notes) and schedules of the Company and the Subsidiaries
included in the Final Memorandum present fairly the consolidated
financial position, results of operations and cash flows of the
Company and the Subsidiaries, at the dates and for the periods to
which they relate, and have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis,
and the unaudited historical consolidated financial statements (and
the related notes) of the Company and the Subsidiaries included in the
Final Memorandum present fairly the consolidated financial position,
results of operations and cash flows of the Company and the
Subsidiaries, at the dates and for the periods to which they relate,
and have been prepared in accordance with GAAP, subject, in the case
of interim financial statements, to year-end adjustments as may be
required by GAAP. To the knowledge of the Company, Deloitte & Touche
LLP, which has examined certain of such financial statements and
schedules as set forth in its report included in the Final Memorandum,
is an independent public accounting firm with respect to the Company
and the Subsidiaries as required by the Securities Act and the
Exchange Act and the rules and regulations of the Securities Exchange
Commission ("SEC") thereunder (the "Act Regulations") and Rule 101 of
the American Institute of Certified Public Accountants (the "AICPA").
(m) Since the respective dates as of which information is
given in the Final Memorandum, except as otherwise specifically stated
therein, there has been no (A) significant change in or material
adverse change in the condition (financial or otherwise), assets,
results of operations or prospects of the Company or of the Company
and the Subsidiaries considered as one enterprise or of the LHC,
whether or not arising in the ordinary course of business, (B)
transaction entered into by any of the Company or the Subsidiaries,
other than in the ordinary course of business, that is material to the
Company and the Subsidiaries taken as a whole or (C) dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock.
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(n) At the Closing Date, the Company will have the
authorized and issued and outstanding capitalization set forth in the
Final Memorandum under the caption "Capitalization"; the outstanding
capital stock of the Company and each Subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable and was
not issued in violation of any preemptive or similar rights (whether
provided contractually or pursuant to Organizational Documents); and
except as set forth on Schedule II, all of the outstanding shares of
the Subsidiaries are owned beneficially and of record by the Company
or by another Subsidiary, in each case, free and clear of all liens,
encumbrances, equities or claims of any kind whatsoever or
restrictions on transferability or voting.
(o) None of the Company or any of the Subsidiaries or the
LHC is (A) in violation of its Organizational Documents, (B) in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan agreement, note, lease, license,
authorization, permit, certificate or other agreement or document to
which the Company or any Subsidiary or the LHC is a party or by which
it or any of them may be bound, or to which any of the assets or
businesses of the Company or any Subsidiary or the LHC is subject, or
(C) in violation of any applicable law, rule or regulation, or any
judgment, order or decree of any domestic or foreign court with
jurisdiction over the Company or any Subsidiary or the LHC, or other
governmental or regulatory authority with jurisdiction over the
Company or any Subsidiary or the LHC which, in the case of (B) or (C),
could have a Material Adverse Effect.
(p) Except as described or reflected in the Final
Memorandum and for matters not required to be described in the Final
Memorandum were the Final Memorandum a registration statement on Form
S-1 filed under the Securities Act and the Act Regulations, there is
not pending or, to the knowledge of the Company, threatened, any
action, suit, proceeding, inquiry or investigation to which the
Company or any Subsidiary or the LHC is a party, or to which the
rights of entry or assets of the Company or any of the Subsidiaries or
the LHC is subject, before, or brought by, any court or governmental
or regulatory agency or body with jurisdiction over the Company or any
Subsidiary or the LHC.
(q) Each of the Company and the Subsidiaries and the LHC
owns or possesses, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, trademarks, inventions, service
marks, trade names, copyrights and know-how (including trade secrets
and other proprietary or confidential information, systems or
procedures, whether patented or unpatented) (collectively,
"intellectual property") necessary to conduct the business now or, to
its belief, proposed to be operated by it as described in
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the Final Memorandum, except as described in the Final Memorandum and
except where the failure to own, possess or have the ability to
acquire any such intellectual property could not, individually or in
the aggregate, be reasonably expected to have a Material Adverse
Effect; and, except as disclosed in the Final Memorandum, neither the
Company nor any of the Subsidiaries has received any notice of
infringement of or conflict with (or knows of any such infringement of
or conflict with) asserted rights of others with respect to any of
such intellectual property which, if such assertion of infringement or
conflict were sustained, would result in any Material Adverse Effect.
(r) Each of the Company, the Subsidiaries and the LHC has
obtained all consents, approvals, orders, certificates, licenses,
permits, franchises and other authorizations (collectively, the
"Licenses") of and from, and has made all declarations and filings
with, all governmental or regulatory authorities, including, without
limitation, the Federal Communications Commission (the "FCC"), and all
courts and other tribunals necessary to own, lease, license and use
its assets and to conduct its businesses in the manner described in
the Final Memorandum except where the failure to obtain such Licenses
and make such declarations and filings would not have a Material
Adverse Effect. Neither the Company nor any of the Subsidiaries nor
the LHC, has received any notice of proceedings relating to the
revocation or modification of, or denial of any application for, any
License which, if the subject of an unfavorable decision, ruling or
finding, would, singly or in the aggregate, have a Material Adverse
Effect; the Company and each of the Subsidiaries and the LHC, have
fulfilled and performed all of their obligations with respect to all
Licenses possessed by any of them, except where the failure to so
fulfill and perform would not, singly or in the aggregate, have a
Material Adverse Effect; and no event has occurred which allows, or
after notice or lapse of time, or both, would allow, revocation or
termination thereof or result in any other material impairment of the
rights of the holder of any such License, except where such revocation
or termination would not, singly or in the aggregate, have a Material
Adverse Effect; and the Licenses referred to above, including, to the
actual knowledge of the Company, those held by the LHC, contain no
restrictions on the Company or any of the Subsidiaries or the LHC that
are not described in the Final Memorandum, except where such
restrictions would not, singly or in the aggregate, have a Material
Adverse Effect.
(s) There are no legal, governmental or regulatory
proceedings affecting the business of the Company or any Subsidiary or
the LHC, including, without limitation, before the FCC, actions,
suits, inquiries or investigations which, if applicable, would be
required to be described in the Final Memorandum were the Final
Memorandum a registration statement on Form S-1 filed under the
Securities Act and the Act Regulations that are not described, nor any
laws, rules, regulations, contracts or other documents
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which, under such circumstances, would be required to be described in
the Final Memorandum by the Securities Act or by the Act Regulations
that have not been so described.
(t) Each of the Company and the Subsidiaries and the LHC
has filed all necessary income, franchise and other tax returns, and
has paid any taxes assessed by the due date for payment thereof,
except where such taxes are being contested in good faith or where the
failure to file and pay such taxes would not have a Material Adverse
Effect.
(u) Except as described in the Final Memorandum, none of
the Company nor any of the Subsidiaries has incurred any liability for
any prohibited transaction or funding deficiency or any complete or
partial withdrawal liability with respect to any pension, profit
sharing or other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which the
Company or the Subsidiaries makes or ever has made a contribution and
in which any employee of the Company or any such Subsidiary is or has
ever been a participant, which, individually or in the aggregate,
could reasonably be expected to have or result in a Material Adverse
Effect. With respect to such plans, each of the Company and the
Subsidiaries is in compliance in all respects with all applicable
provisions of ERISA, except where the failure to so comply could not,
individually or in the aggregate, reasonably be expected to have or a
result in a Material Adverse Effect.
(v) Except as disclosed in the Final Memorandum, there
are, and upon the satisfaction and discharge of and termination of all
commitments under the Senior Credit Facility and upon the release of
all collateral securing the Senior Credit Facility there will be, no
mortgages, charges or security arrangements nor any consensual
encumbrances or other arrangements which restrict the ability of any
Subsidiary (i) to pay dividends or make any other distributions on
such Subsidiary's shares or to pay any indebtedness owed to the
Company or any other Subsidiary, (ii) to make any loans or advances
to, or investments in, the Company or any other Subsidiary or (iii) to
transfer any of its property or assets to the Company or any other
Subsidiary.
(w) Except as disclosed in the Final Memorandum, to the
knowledge of the Company, there are no defaults under any Right of
Entry (as defined in the Final Memorandum) by any party thereunder or
notices of termination or non-renewal with respect thereto, except for
such defaults or notices as, individually or in the aggregate, cannot
reasonably be expected to have a Material Adverse Effect.
(x) The market-related data and estimates included in the
Final Memorandum are based on or derived from independent sources which
the Company believes to be reliable and accurate.
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(y) The Notes satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(z) Neither the Company, nor any of its Affiliates, nor
any person acting on its or their behalf has engaged in any directed
selling efforts with respect to the Notes, and each of them has
complied with the offering restrictions requirement of Regulation S
("Regulation S") under the Securities Act. Terms used in this
paragraph have the meanings given to them by Regulation S.
(aa) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), without taking account of any exemption
arising out of the number of holders of the Company's securities.
(bb) The Company has not paid or agreed to pay to any
person any compensation for soliciting another to purchase the Notes
or Exchange Securities of the Company (except as contemplated by this
Agreement).
(cc) The information provided by the Company pursuant to
Section 5(h) hereof will not, at the date thereof, contain any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Any certificate signed by any two or more officers of the
Company and delivered to an Initial Purchaser or to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
("Counsel for the Initial Purchasers") pursuant to the terms of this Agreement
shall be deemed a representation and warranty by such Company to each Initial
Purchaser as to the matters covered thereby.
2. Purchase and Sale. Subject to the terms and
conditions and in reliance upon the representations and warranties herein set
forth, the Company agrees to sell to each Initial Purchaser, and each Initial
Purchaser agrees, severally and not jointly, to purchase from the Company, at a
purchase price of 97.25% of the principal amount of the Notes, the aggregate
principal amount of Notes set forth opposite such Initial Purchaser's name in
Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for
the Notes shall be made at 10:00 AM, New York City time, on July 7, 1998, or
such later date as the Initial Purchasers shall designate, which date and time
may be postponed by agreement between the Initial Purchasers and the Company or
as provided in Section 9 hereof (such date and time of
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delivery and payment for the Notes being herein called the "Closing Date").
Delivery of the Notes shall be made to the Initial Purchasers for the
respective accounts of the Initial Purchasers against payment by the Initial
Purchasers of the purchase price thereof to or upon the order of the Company by
federal funds check or checks or wire transfer payable in same day funds or
such other manner of payment as may be agreed by the Company and the Initial
Purchasers. Delivery of the Notes shall be made at such location as the
Initial Purchasers shall reasonably designate at least one business day in
advance of the Closing Date and payment for the Notes shall be made at the
office of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Counsel for the Initial Purchasers, Eighty
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Certificates for the Notes shall be
registered in such names and in such denominations as the Initial Purchasers
may request not less than three full business days in advance of the Closing
Date.
The Company agrees to have the Notes available for inspection,
checking and packaging by the Initial Purchasers in New York, New York, not
later than 1:00 PM on the business day prior to the Closing Date.
4. Offering of Notes. Each Initial Purchaser, severally
and not jointly, represents and warrants to and agrees with the Company that:
(a) It has not offered or sold, and will not offer or
sell, any Notes except (i) to those it reasonably believes to be
qualified institutional buyers (as defined in Rule 144A under the
Securities Act) and that, in connection with each such sale, it has
taken or will take reasonable steps to ensure that the purchaser of
such Notes is aware that such sale is being made in reliance on Rule
144A, or (ii) in accordance with the restrictions set forth in Exhibit
B hereto.
(b) Neither it nor any person acting on its behalf has
made or will make offers or sales of the Notes in the United States by
means of any form of general solicitation or general advertising
(within the meaning of Regulation D) in the United States.
(c) Such Initial Purchaser is a QIB, with such knowledge
and experience in financial and business matters as are necessary in
order to evaluate the merits and risks of an investment in the Notes.
(d) Each of the Initial Purchasers understands that the
Company and, for purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Section 6 hereof, counsel to the
Company and Counsel for the Initial Purchasers will rely upon the
accuracy and truth of the foregoing representations and hereby
consents to such reliance.
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5. Agreements. The Company agrees with each Initial
Purchaser that:
(a) The Company will furnish to each Initial Purchaser
and to Counsel for the Initial Purchasers, without charge, during the
period referred to in paragraph (c) below, as many copies of the Final
Memorandum and any amendments and supplements thereto as it may
reasonably request. The Company will pay the expenses of printing or
other production of the Preliminary Memorandum, the Final Memorandum
and any amendments or supplements thereto.
(b) The Company will not amend or supplement the
Preliminary Memorandum or the Final Memorandum without the prior
written consent of the Initial Purchasers.
(c) If at any time prior to the completion of the sale of
the Notes by the Initial Purchasers (as determined by the Initial
Purchasers), any event occurs as a result of which the Final
Memorandum, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it
should be necessary to amend or supplement the Final Memorandum to
comply with applicable law, the Company will promptly notify the
Initial Purchasers of the same and, subject to the requirements of
paragraph (b) of this Section 5, will prepare and provide to the
Initial Purchasers pursuant to paragraph (a) of this Section 5 an
amendment or supplement which will correct such statement or omission
or effect such compliance.
(d) The Company will arrange for the qualification of the
Notes for sale by the Initial Purchasers under the laws of such
jurisdictions as the Initial Purchasers may designate and will
maintain such qualifications in effect so long as required for the
sale of the Notes. The Company will promptly advise the Initial
Purchasers of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
(e) The Company will not, and will not permit any of its
Affiliates to, resell any Notes that have been acquired by any of
them.
(f) Neither the Company, nor any of its Affiliates, nor
any person acting on its or their behalf will, directly or
indirectly, make offers or sales of any security, or solicit offers to
buy any security, under circumstances that would require the
registration of the Notes under the Securities Act.
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(g) Neither the Company, nor any of its Affiliates, nor
any person acting on its or their behalf will engage in any form of
general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of the Notes or the
Exchange Securities in the United States.
(h) So long as any of the Notes are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities
Act, the Company will, unless it becomes subject to and complies with
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), provide to each holder of such restricted
securities and to each prospective purchaser (as designated by such
holder) of such restricted securities, upon the request of such holder
or prospective purchaser, any information required to be provided by
Rule 144A(d)(4) under the Securities Act. This covenant is intended
to be for the benefit of the holders, and the prospective purchasers
designated by such holders, from time to time of such restricted
securities.
(i) Neither the Company, nor any of its Affiliates, nor
any person acting on its or their behalf will engage in any directed
selling efforts with respect to the Notes, and each of them will
comply with the offering restrictions requirement of Regulation S.
Terms used in this paragraph have the meanings given to them by
Regulation S.
(j) The Company will not, until 90 days following the
Closing Date, without the prior written consent of the Initial
Purchasers, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of, any debt
securities (excluding commercial loans, purchase money security
interests or other customary commercial financial arrangements
obtained in the ordinary course of business and excluding securities
issued to the seller of any business to the Company or any of its
Subsidiaries as consideration for such sale) issued or guaranteed by
the Company (other than the Notes), other than in connection with the
Exchange Offer (as defined in the Final Memorandum).
(k) In connection with any disposition of Notes pursuant
to a transaction made in compliance with paragraph 6 of Exhibit A, the
Company will reissue certificates evidencing such Notes without the
legend referred to in paragraph 5 of Exhibit A (provided, in the case
of a transaction made in compliance with paragraph 6(f) of Exhibit A,
that the legal opinion referred to therein so permits).
(l) Pursuant to the Escrow Agreement, the Company will
deposit the Initial Escrow Amount into a collateral account,
representing funds that, together with the proceeds from the
investment thereof, will be sufficient to pay the first two interest
payments on the Notes, and will take all actions necessary to pledge,
assign and set over to the Trustee, for the benefit of the holders of
the Notes and the Trustee (in its capacity
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as such under the Indenture), and irrevocably grant to (A) the Trustee
for the benefit of the holders of the Notes and the Trustee (in its
capacity as such under the Indenture), and (B) the Existing Senior
Notes Trustee for the benefit of the holders of the Existing Senior
Notes and the Existing Senior Notes Trustee (in its capacity as such
under the Existing Senior Notes Indenture) a first priority perfected
security interest in, all of its respective right, title and interest
in such collateral account, all funds held therein and all other
Collateral held by the Escrow Agent or on their behalf, in order to
secure the obligations and indebtedness of the Company under the
Indenture, the Escrow Agreement and the Notes.
6. Conditions to the Obligations of the Initial
Purchasers. The obligations of the Initial Purchasers to purchase the Notes
shall be subject to the accuracy of the representations and warranties on the
part of the Company contained herein at the date and time that this Agreement
is executed and delivered by the parties hereto (the "Execution Time") and the
Closing Date, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional
conditions:
(a) The Company shall have furnished to the Initial
Purchasers the opinion of Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇ LLP, counsel
for the Company, dated the Closing Date, in form and substance
reasonably acceptable to the Initial Purchasers to the effect that:
(i) The Company has been duly incorporated and is
validly existing under the laws of the State of Delaware, with
corporate power and authority to own, lease and operate its
assets and properties and conduct its business as described in
the Final Memorandum and to enter into and perform its
obligations under this Agreement, the Indenture, the
Registration Agreement and the Escrow Agreement;
(ii) The Company has all requisite corporate power
and authority to issue the Notes;
(iii) The authorized, and to the knowledge of such
counsel based solely upon a review of either the Company's
stock ledger and corporate records or a certificate of the
transfer agent, the issued and outstanding capital stock of
the Company is as set forth in the Final Memorandum under the
caption "Capitalization";
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(iv) Each of this Agreement, the Registration
Agreement, the Escrow Agreement, the Notes, the Exchange
Securities and the Indenture has been duly authorized by the
Company;
(v) No consent, approval, authorization, license,
qualification or order of or filing or registration with, any
court or governmental or regulatory agency or body of the
United States or the State of New York or under the General
Corporation Law of the State of Delaware is required for the
execution and delivery by the Company of this Agreement, the
Registration Agreement, the Escrow Agreement or the Indenture
or for the issue and sale of the Notes or the Exchange
Securities or the consummation by the Company of any of the
transactions contemplated herein or therein, except such as
may be required (A) in connection with the registration under
the Securities Act of the Notes or the Exchange Securities,
pursuant to the Registration Agreement, (B) the qualification
of the Indenture under the TIA in connection with the
registration of the Notes or the Exchange Securities pursuant
to the Registration Agreement, (C) under the "blue sky" laws
of any jurisdiction in connection with the purchase and
distribution of the Notes by the Initial Purchasers (as to
which such counsel need express no opinion), (D) under the
Rules and Regulations of the FCC ("FCC Rules") or under any
rules or regulations of any State regulatory commissions
("State Rules") responsible for the regulation of
cable/telecommunications services (as to which counsel need
express no opinion) and (E) such as have been obtained or
made, as the case may be;
(vi) The issuance, sale and delivery of the Notes
and the Exchange Securities, the execution, delivery and
performance by the Company of this Agreement, the Registration
Agreement, the Escrow Agreement and the Indenture (in each
case assuming due authorization and execution by each party
other than the Company) and the consummation by the Company of
the transactions contemplated hereby and thereby and the
compliance by the Company with the terms of the foregoing do
not, and, at the Closing Date, will not, conflict with or
constitute or result in a breach or violation by the Company
or any of the Subsidiaries of (A) any provision of the
Certificate of Incorporation or By-laws of the Company, (B)
upon the satisfaction and discharge of and termination of all
commitments under the Senior Credit Facility and upon the
release of all collateral securing the Senior Credit Facility,
any of the terms or provisions of, or constitute a default (or
an event which, with notice or lapse of time or both, would
constitute a default) by the Company, or give rise to any
right to accelerate the maturity or require the prepayment of
any indebtedness under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or
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assets of the Company or any Subsidiary under any material
agreements or instruments (excluding any licenses or
authorizations granted under the FCC Rules or State Rules, as
to which such counsel need express no opinion) known to such
counsel or (C) any law, statute, rule, or regulation (except
for the FCC Rules and State Rules, as to which such counsel
need express no opinion) of the United States or the State of
New York or under the General Corporation Law of the State of
Delaware or any order, decree or judgment known to such
counsel to be applicable to the Company or any Subsidiary, of
any court or governmental or regulatory agency or body or
arbitrator in the United States or the States of New York or
Delaware;
(vii) The statements in the Final Memorandum under
the headings "Offering Memorandum Summary -- The Offering,"
"Description of the Notes," and "Exchange Offer; Registration
Rights," insofar as such statements purport to summarize
certain provisions of the Notes, the Exchange Securities, the
Registration Agreement, the Escrow Agreement and the Indenture
provide a fair summary of such provisions of such agreements
and instruments;
(viii) Each of the Indenture, the Registration
Agreement and the Escrow Agreement (assuming due authorization
and execution by each party thereto other than the Company)
constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except (a) with respect to the Indenture and the Registration
Agreement, the Enforceability Limitations, and (b) with
respect to the Registration Agreement and the Escrow
Agreement, that such counsel expresses no opinion regarding
the validity or enforceability of the indemnification and
contribution provisions contained in Sections 7 and 5,
respectively, thereof;
(ix) Each of the Notes, when executed and
authenticated in accordance with the provisions of the
Indenture and delivered and paid for in accordance with the
terms of this Agreement, and the Exchange Securities when
executed, authenticated and delivered in exchange for the
Notes in accordance with the terms of the Indenture and the
Registration Agreement, will be entitled to the benefits of
the Indenture and will be valid and binding obligations of the
Company, enforceable in accordance with its terms except as
the enforceability thereof may be limited by the
Enforceability Limitations;
(x) The Escrow Agreement has been duly authorized,
executed and delivered by the Company;
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(xi) The Escrow Agreement creates a valid security
interest in favor of the Trustee in all right, title and
interest of the Company in and to the Escrow Account and the
Collateral (such counsel need not express an opinion as to the
perfection or priority of the security interest in the
Collateral created by the Escrow Agreement);
(xii) Assuming that the factual representations and
warranties of the Company contained in Section 1(b) and 1(c)
and that the representations and warranties of the Initial
Purchasers contained in Section 4 of this Agreement are true,
correct and complete, and assuming compliance by the Initial
Purchasers with their covenants in Section 4 hereof, and
assuming that the representations and warranties deemed made
by "qualified institutional buyers" and non-U.S. persons
purchasing Notes from the Initial Purchasers are true and
correct as of the Closing Date, it is not necessary in
connection with the offer, sale and delivery of the Notes to
the Initial Purchasers under, or in connection with the
initial resale of the Notes by the Initial Purchasers in
accordance with, this Agreement for the Company to register
the Notes under the Securities Act or to qualify the Indenture
under the TIA;
(xiii) Neither the Company nor any of the
Subsidiaries is an "investment company" or a company
"controlled by" or required to register as an investment
company as such terms are defined in the Investment Company
Act of 1940, as amended, and the rules and regulations
thereunder;
(xiv) When the Notes are issued and delivered
pursuant to this Agreement, such Notes will not be of the same
class (within the meaning of Rule 144A) as securities of the
Company which are listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a
U.S. automated inter-dealer quotation system; and
(xv) The statements in the Final Memorandum under
the caption "Certain Federal Income Tax Considerations"
provide a fair summary of the material tax consequences of
owning Notes.
In addition, such counsel shall state that they have
participated in conferences with officers and other representatives of the
Company, representatives of the independent certified public accountants of the
Company and the Initial Purchasers and their representatives at which the
contents of the Final Memorandum and related matters were discussed and,
although such counsel has not undertaken to investigate or verify
independently, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained
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in the Final Memorandum (except as indicated above), on the basis of the
foregoing, they have no reason to believe that at the Execution Time and the
Closing Date the Final Memorandum contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
laws of the State of New York, the general corporate laws of the State of
Delaware or the laws of the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good standing
whom they believe to be reliable and who are satisfactory to Counsel for the
Initial Purchasers, including Goldberg, Godles, Weiner & ▇▇▇▇▇▇ and (B) as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials.
All references in this Section 6(a) to the Final Memorandum
shall be deemed to include any amendment or supplement thereto at the Closing
Date.
(b) The Company shall have furnished to the Initial
Purchasers the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Vice President, Legal Affairs
and General Counsel of the Company, dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers, to the effect
that:
(i) The Company has been duly incorporated and
each of the Company and the Subsidiaries and the LHC are
validly existing as a corporation or limited partnership in
good standing under the laws of the jurisdiction in which it
is organized, with full power and authority to own its
properties and conduct its business as described in the Final
Memorandum, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns
or leases material properties or conducts material business,
except where the failure to so qualify would not have a
Material Adverse Effect;
(ii) All the outstanding shares of capital stock
of the Company and the LHC and each Subsidiary have been duly
and validly authorized and issued and are fully paid and
nonassessable, and, upon satisfaction and discharge of and
termination of all commitments under the Senior Credit
Facility and the release of all collateral securing the Senior
Credit Facility, all outstanding shares of capital stock of
the Subsidiaries are owned by the Company either directly or
through other Subsidiaries free and clear of any security
interests, liens or encumbrances;
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(iii) The issuance, sale and delivery of the Notes
and the Exchange Securities, the execution, delivery and
performance by the Company of this Agreement, the Registration
Agreement, the Escrow Agreement and the Indenture (in each
case assuming due authorization and execution by each party
other than the Company) and the consummation by the Company of
the transactions contemplated hereby and thereby and the
compliance by the Company with the terms of the foregoing do
not, and, at the Closing Date, will not, conflict with or
constitute or result in a breach or violation by the Company
or any of the Subsidiaries of (A) any provision of the
Certificate of Incorporation or By-laws of the Company or any
of the Subsidiaries, (B) upon satisfaction and discharge of
and termination of all commitments under the Senior Credit
Facility and the release of all collateral securing the Senior
Credit Facility, any of the terms or provisions of, or
constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) by the Company or
any of the Subsidiaries, or give rise to any right to
accelerate the maturity or require the prepayment of any
indebtedness under, or result in the creation of imposition of
any lien, charge or encumbrance upon any property or assets of
the Company or any of the Subsidiaries under any material
agreements or instruments known to such counsel or (C) any
order, decree or judgment known to such counsel to be
applicable to the Company or any Subsidiary, of any court or
governmental or regulatory agency or body or arbitrator in the
United States or the States of New York or Delaware;
(iv) The statements in the Final Memorandum under
the headings "Risk Factors -- Risks Associated with Rights of
Entry", "-- Use of the Name OpTel" and "Business -- Legal
Proceedings" fairly summarize the legal matters therein
described;
(v) To the knowledge of such counsel (no search
of court or administrative records having been made), no
material legal or governmental or regulatory proceedings
(including proceedings by or before the FCC) are pending to
which the Company or any of the Subsidiaries or the LHC is a
party or to which the business of the Company or any of the
Subsidiaries or the LHC are subject that are not described or
reflected therein as required, and no such proceedings have
been threatened against the Company or any of the Subsidiaries
or the LHC or with respect to any of their assets; and there
is no material contract, agreement or other document not
described or referred to in the Final Memorandum;
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(vi) To such counsel's knowledge, (i) no
application, action, complaint, investigation or proceeding is
pending or directly threatened that is likely to result in the
denial of any pending application for the renewal,
modification or assignment of any of the licenses, special
temporary authorizations, conditional licenses, construction
permits and other authorizations issued by the FCC in favor of
the Company and the Subsidiaries and the LHC (collectively,
"FCC Authorizations") for the conduct of their business as
described in the Final Memorandum, and (ii) except for
proceedings of general applicability, there are no proceedings
or actions pending that could result in the revocation,
materially adverse modification or suspension of any of the
FCC Authorizations, the issuance of a cease and desist order,
or the imposition of any administrative or judicial sanction,
including but not limited to a monetary forfeiture, except in
each case as disclosed in the Final Memorandum or such as,
individually or in the aggregate, would not have a Material
Adverse Effect; and
(vii) To such counsel's knowledge, each FCC report,
registration, certification and notice required to be filed at
the FCC and relating to any of the FCC Authorizations or the
Company and the Subsidiaries, including but not limited to
annual Equal Employment Opportunity Reports, has been timely
filed, except as disclosed in the Final Memorandum or for such
reports the non-filing or failure to timely file of which
individually or in the aggregate would not have a Material
Adverse Effect.
In addition, such counsel shall state that he has no reason to
believe that at the Execution Time and the Closing Date the Final Memorandum
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters
involving the application of laws of any jurisdiction other than the laws of
the State of New York or the laws of the United States, to the extent he deems
proper and specified in such opinion, upon the opinion of other counsel of good
standing whom he believes to be reliable and who are satisfactory to Counsel
for the Initial Purchasers.
(c) The Company shall have furnished to the Initial
Purchasers the opinion of Goldberg, Godles, Weiner & ▇▇▇▇▇▇, FCC
counsel for the Company, dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, to the effect that:
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(i) To such counsel's knowledge, the Company and
the Subsidiaries and the LHC are in compliance in all material
respects with each of the FCC Authorizations for the conduct
of their business as described in the Final Memorandum and all
such FCC Authorizations represent all FCC Authorizations
necessary for the conduct of the business of the Company and
the Subsidiaries as presently conducted and described in the
Final Memorandum;
(ii) To such counsel's knowledge, (i) except as
set forth on a schedule to such opinion letter, no
application, action or proceeding is pending for the renewal,
modification or assignment of any of the FCC Authorizations,
(ii) no application, action, complaint, investigation or
proceeding is pending or directly threatened that is likely to
result in the denial of any such application and (iii) except
for proceedings of general applicability, there are no
proceedings or actions pending that are likely to result in
the revocation, materially adverse modification or suspension
of any of the FCC Authorizations, the issuance of a cease and
desist order, or the imposition of any administrative or
judicial sanction, including but not limited to a monetary
forfeiture; and all renewal applications required to be filed
by the FCC's Rules have been filed;
(iii) To such counsel's knowledge, each FCC report,
registration, certification and notice required to be filed at
the FCC and relating to any of the FCC Authorizations or the
Company and the Subsidiaries, including but not limited to
annual Equal Employment Opportunity Reports, has been timely
filed, except for such reports the non-filing of which
individually or in the aggregate would not have a Material
Adverse Effect;
(iv) The execution, delivery and performance by
the Company of its obligations under this Agreement, the
Registration Agreement, the Escrow Agreement, the Indenture,
the Notes, the Exchange Securities and the transactions
contemplated therein, did not or will not result in a
violation of the Communications Act, the Cable Acts and the
Telecommunications Act or any order, rule or regulation of the
FCC;
(v) No consent, approval, authorization, order or
registration of or with the FCC is required under the
Communications Act, the Cable Acts, the Telecommunications Act
or the rules and regulations of the FCC for the execution and
delivery by the Company of, and the performance by the Company
of its obligations under, this Agreement, the Registration
Agreement, the Escrow Agreement, the Indenture, the Notes or
the Exchange Securities;
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(vi) Other than matters described in the Final
Memorandum and except as to any other matters relating to the
multichannel television and telecommunications industries in
general, such counsel does not know of any proceedings
threatened or pending before the FCC against or involving the
properties, businesses or franchises of the Company which
could reasonably be expected to have a Material Adverse
Effect; and
(vii) The statements in the Final Memorandum under
the captions "Risk Factors -- Regulation" and "-- Risks
Associated with Rights of Entry" and "Business -- Regulation"
insofar as such statements summarize applicable provisions of
the Communications Act, the Cable Acts and the
Telecommunications Act and the published orders, rules and
regulations of the FCC promulgated thereunder are accurate
summaries in all material respects of the provisions purported
to be summarized under such captions in the Final Memorandum;
and the statutes and regulations summarized in such captions
are statutes and regulations enforced or promulgated by the
FCC that are material to the Company's business as described
in the Final Memorandum.
In rendering such opinion, such counsel may state that it
expresses no opinion with respect to any matters other than those arising under
the Communications Act, the Telecommunications Act and the Cable Acts and the
published rules and regulations promulgated thereunder by the FCC, and may rely
as to all matters of fact relevant to such opinion on certificates and written
statements of officers and employees of the Company; provided, however, that
all such certificates and statements shall be satisfactory to the Initial
Purchasers in all material respects and attached to such counsel's opinion. In
addition, counsel may note that item (v) above is qualified by the requirement
to file certain corporate and loan instruments with the FCC within 30 days of
the Closing Date.
(d) The Initial Purchasers shall have received from
Counsel for the Initial Purchasers such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Notes, the
Final Memorandum and other related matters as the Initial Purchasers
may reasonably require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(e) The Company shall have furnished to the Initial
Purchasers a certificate of the Company, signed by the Chairman of the
Board or the President and the principal financial or accounting
officer of the Company, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the Final
Memorandum, any amendment or supplement to the Final Memorandum and
this Agreement and that:
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(i) the representations and warranties of the
Company in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date, and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied hereunder at or prior to the
Closing Date; and
(ii) since the date of the most recent financial
statements included in the Final Memorandum, there has been no
material adverse change in the condition (financial or other),
assets, results of operations, business or prospects of the
Company and the Subsidiaries, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated by the Final Memorandum (exclusive of
any amendment or supplement thereto).
(f) At the Execution Time and at the Closing Date,
Deloitte & Touche LLP shall have furnished to the Initial Purchasers a
letter or letters, dated respectively as of the Execution Time and as
of the Closing Date, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent accountants within
the meaning of the Securities Act and the Exchange Act and the
applicable rules and regulations of the SEC thereunder and Rule 101 of
the Code of Professional Conduct of the AICPA and stating in effect
that:
(i) in their opinion the audited financial
statements included in the Final Memorandum and reported on by
them comply in form in all material respects with the
applicable accounting requirements of the Exchange Act and the
related published rules and regulations thereunder;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and the Subsidiaries; their limited review in accordance with
the standards established by the AICPA of the unaudited
interim financial information as indicated in their report
included in the Final Memorandum; carrying out certain
specified procedures (but not an examination in accordance
with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and the audit and
compensation committees of the Company and the Subsidiaries;
and inquiries of certain officials of the Company who have
responsibility for financial and accountings matters of the
Company and the Subsidiaries as to transactions and events
subsequent to August 31, 1997, nothing came to their attention
which caused them to believe that:
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(1) any unaudited financial statements
included in the Final Memorandum do not comply in
form in all material respects with applicable
accounting requirements and with the published rules
and regulations of the Securities and Exchange
Commission with respect to financial statements
included or incorporated in quarterly reports on Form
10-Q under the Exchange Act; and said unaudited
financial statements are not, in all material
respects, in conformity with generally accepted
accounting principles applied on a basis
substantially consistent with that of the audited
financial statements included in the Final
Memorandum; or
(2) with respect to the period
subsequent to February 28, 1998, there were any
changes, at a specified date not more than five
business days prior to the date of the letter, in the
total long-term debt of the Company and the
Subsidiaries or capital stock of the Company or
decreases in the stockholders' equity of the Company
as compared with the amounts shown on the February
28, 1998 consolidated balance sheet included in the
Final Memorandum, or for the period from March 1,
1998 to such specified date there were any decreases,
as compared with the period from comparable period of
fiscal 1997, in net revenues or increases in loss
before income taxes or in total net loss of the
Company and the Subsidiaries, except in all instances
for changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an
explanation by the Company as to the significance
thereof unless said explanation is not deemed
necessary by the Initial Purchasers; or
(3) the information included under the
headings "Selected Historical Consolidated Financial
and Operating Data" is not in conformity with the
disclosure requirements of Regulation S-K; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and the Subsidiaries) set forth in the Final
Memorandum, including the information set forth under the
captions "Summary Consolidated Financial and Operating Data",
"Capitalization" and "Selected Historical Consolidated
Financial and Operating Data" in the Final Memorandum, agrees
with the accounting records of the Company and the
Subsidiaries, excluding any questions of legal interpretation;
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(iv) in addition, they shall provide such
additional statements with respect to any unaudited financial
statements included in the Final Memorandum of persons other
than the Company as shall reasonably be requested by the
Initial Purchasers.
All references in Section 6(f) to the Final Memorandum shall
be deemed to include any amendment or supplement thereto at the date of the
letter.
(g) Subsequent to the Execution Time, or if earlier, the
dates as of which information is given in the Final Memorandum, there
shall not have been (i) any change or decrease specified in the letter
or letters referred to in paragraph (d) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company and the
Subsidiaries or the LHC the effect of which, in any case referred to
in clause (i) or (ii) above, is, in the judgment of the Initial
Purchasers, so material and adverse as to make it impractical or
inadvisable to market the Notes as contemplated by the Final
Memorandum.
(h) Each of the Indenture, the Escrow Agreement and the
Registration Agreement shall have been executed and delivered by each
of the parties thereto.
(i) The Company shall have taken any and all actions
reasonably required to establish the Escrow Account with the Escrow
Agent and to prepare to file appropriate financing statements in each
of the offices where such filing is necessary or, in the opinion of
the Initial Purchasers, desirable to perfect the lien in favor of the
Trustee and the Existing Senior Notes Trustee created by the Escrow
Agreement.
(j) The Senior Credit Facility shall have been fully
satisfied and discharged and all commitments thereunder terminated
pursuant to the terms thereof, and all collateral securing the Senior
Credit Facility shall have been released, in each case evidenced by a
"payoff" letter satisfactory in form and substance to the Initial
Purchasers.
(k) Prior to the Closing Date, the Company shall have
furnished to the Initial Purchasers such further information,
certificates and documents as the Initial Purchasers may reasonably
request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Initial Purchasers and Counsel for
the Initial Purchasers, this Agreement and all obligations of the Initial
Purchasers hereunder may be cancelled at, or at any time prior to, the Closing
Date by the Initial Purchasers. Notice of such cancellation shall be given to
the Company in writing or by telephone or telegraph confirmed in writing.
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The documents required to be delivered by this Section 6 will
be delivered at the office of Counsel for the Initial Purchasers, at Eighty
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, a reasonable time prior to the Closing
Date.
7. Reimbursement of Expenses. If the sale of the Notes
provided for herein is not consummated because any condition to the obligations
of the Initial Purchasers set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Initial Purchasers in payment for the Notes on the
Closing Date, the Company will reimburse the Initial Purchasers severally upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Notes.
8. Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless each Initial Purchaser, the directors,
officers, employees and agents of each Initial Purchaser and each person who
controls any Initial Purchaser within the meaning of either the Securities Act
or the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained
in the Preliminary Memorandum, the Final Memorandum or any information provided
by the Company to any holder or prospective purchaser of Notes pursuant to
Section 5(h), or in any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and agrees to reimburse each such indemnified party, as incurred,
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in the Preliminary Memorandum or the Final Memorandum, or
in any amendment thereof or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Initial Purchasers specifically for inclusion therein; and provided
further, that the Company will not be liable in any such case to
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the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in the Preliminary Memorandum which is corrected or
contained, as the case may be, in the Final Memorandum and the Initial
Purchaser fails to deliver the Final Memorandum. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) Each Initial Purchaser severally agrees to indemnify
and hold harmless the Company, its directors, its officers, and each person who
controls the Company within the meaning of either the Securities Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Initial Purchaser, but only with reference to written information relating
to such Initial Purchaser furnished to the Company by or on behalf of such
Initial Purchaser specifically for inclusion in the Preliminary Memorandum or
the Final Memorandum (or in any amendment or supplement thereto). This
indemnity agreement will be in addition to any liability which any Initial
Purchaser may otherwise have. The Company acknowledges that the statements set
forth in the last paragraph of the cover page and in the fifth, eighth, tenth,
eleventh and last paragraphs under the heading "Plan of Distribution" in the
Preliminary Memorandum and the Final Memorandum constitute the only information
furnished in writing by or on behalf of the Initial Purchasers for inclusion in
the Preliminary Memorandum or the Final Memorandum (or in any amendment or
supplement thereto).
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, 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 in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it did not otherwise learn of such action
and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ one
additional and separate counsel (and one additional and separate local
counsel), and the indemnifying party shall bear the reasonable fees, costs and
expenses of such separate counsel (and local counsel) if (i) the use of counsel
chosen by the indemnifying party to represent the
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indemnified party would present such counsel with a conflict of interest, (ii)
the actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available to
it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, (iii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the institution
of such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Company and the Initial Purchasers
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company
and one or more of the Initial Purchasers may be subject in such proportion as
is appropriate to reflect the relative benefits received by the Company and by
the Initial Purchasers from the offering of the Notes; provided, however, that
in no case shall any Initial Purchaser (except as may be provided in any
agreement among the Initial Purchasers relating to the offering of the Notes)
be responsible for any amount in excess of the purchase discount or commission
applicable to the Notes purchased by such Initial Purchaser hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for
any reason, the Company and the Initial Purchasers shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and of the Initial Purchasers in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to the total net proceeds from the offering
(before deducting expenses), and benefits received by the Initial Purchasers
shall be deemed to be equal to the total purchase discounts and commissions
received by the Initial Purchasers from the Company in connection with the
purchase of the Notes hereunder. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the Company or the Initial Purchasers. The Company and
the Initial Purchasers agree that it would not be just and equitable if
contributions were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable
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considerations referred to above. Notwithstanding the provisions of this
paragraph (d), 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. For purposes of this Section 8, each person who controls an
Initial Purchaser within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of an Initial
Purchaser shall have the same rights to contribution as such Initial Purchaser,
and each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act and each officer and director of the Company
shall have the same rights to contribution as the Company, subject in each case
to the applicable terms and conditions of this paragraph (d).
9. Default by an Initial Purchaser. If any one or more
Initial Purchasers shall fail to purchase and pay for any of the Notes agreed
to be purchased by such Initial Purchaser hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Initial Purchasers shall be
obligated severally to take up and pay for (in the respective proportions which
the aggregate principal amount of Notes set forth opposite their names in
Schedule I hereto bears to the aggregate principal amount of Notes set forth
opposite the names of all the remaining Initial Purchasers) the Notes which the
defaulting Initial Purchaser or Initial Purchasers agreed but failed to
purchase; provided, however, that in the event that the aggregate principal
amount of Notes which the defaulting Initial Purchaser or Initial Purchasers
agreed but failed to purchase shall exceed 10% of the aggregate principal
amount of Notes set forth in Schedule I hereto, the remaining Initial
Purchasers shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Notes, and if such non-defaulting Initial
Purchasers do not purchase all the Notes, this Agreement will terminate without
liability to any non-defaulting Initial Purchaser or the Company. In the event
of a default by any Initial Purchaser as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the Initial Purchasers shall determine in order that the required changes in
the Final Memorandum or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Initial
Purchaser of its liability, if any, to the Company or any non-defaulting
Initial Purchaser for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, by notice
given to the Company prior to delivery of and payment for the Notes, if prior
to such time (i) trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war or other
29
31
calamity or crisis the effect of which on financial markets is such as to make
it, in the judgment of the Initial Purchasers, impracticable or inadvisable to
proceed with the offering or delivery of the Notes as contemplated by the Final
Memorandum.
11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Initial Purchasers set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the Initial
Purchasers or the Company or any of the officers, directors or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Notes. The provisions of Sections 7 and 8 hereof shall survive
the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the Initial Purchasers,
will be mailed, delivered or telegraphed and confirmed to them, care of Salomon
Brothers Inc, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention:
General Counsel; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Vice President, Legal Affairs and
General Counsel.
13. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
the officers and directors and controlling persons referred to in Section 8
hereof, and, except as expressly set forth in Section 5(h) hereof, no other
person will have any right or obligation hereunder.
14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW THEREOF.
15. Business Day. For purposes of this Agreement,
"business day" means each Tuesday, Wednesday, Thursday and Friday that is not a
day on which banking institutions in The City of New York, New York are
authorized or obligated by law, executive order or regulation to close.
16. Counterparts. This Agreement may be executed in one
or more counterparts, each of which will be deemed to be an original, but all
such counterparts will together constitute one and the same instrument.
[Signature Pages Follow]
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If the foregoing in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this Purchase Agreement and your acceptance shall represent a binding
agreement between the Company and the Initial Purchasers.
Very truly yours,
OPTEL, INC.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
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The foregoing Purchase Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
By: Salomon Brothers, Inc
By:
------------------------------
Name:
Title:
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SCHEDULE I
Principal Amount
Initial Purchasers of Notes
------------------ ----------------
Salomon Brothers . . . . . . . . . . . . . . . $140,000,000
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. . . . . . . . . . . . . . 50,000,000
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. . . . . . . . . . . . . 10,000,000
Total . . . . . . . . $200,000,000
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EXHIBIT A
Non-Distribution Letter for U.S. Purchasers
[Date]
Salomon Brothers Inc
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
OpTel, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Purchase of Notes (the "Notes")
of OpTel, Inc. (the "Company")
Ladies and Gentlemen:
In connection with our purchase of the Notes we confirm that:
1. We understand that the Notes are not being and will
not be registered under the Securities Act of 1933, as amended (the "Securities
Act"), and are being sold to us in a transaction that is exempt from the
registration requirements of the Securities Act.
2. We acknowledge that (a) neither the Company, nor the
Initial Purchasers (as defined in the Offering Memorandum dated June 29, 1998
relating to the Notes (the "Final Memorandum")) nor any person acting on behalf
of the Company of the Initial Purchasers has made any representation to us with
respect to the Company or the offer or sale of any Notes and (b) any
information we desire concerning the Company and the Notes or any other matter
relevant to our decision to purchase the Notes (including a copy of the Final
Memorandum) is or has been made available to us.
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36
3. We have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an
investment in the Notes, and we are (or any account for which we are purchasing
under paragraph 4 below is) an institutional "accredited investor" (within the
meaning of Rule 501(a)(1), (2), (3) or (7) or Regulation D under the Securities
Act) able to bear the economic risk of investment in the Notes.
4. We are acquiring the Notes for our own account (or
for accounts as to which we exercise sole investment discretion and have
authority to make, and do make, the statements contained in this letter) and
not with a view to any distribution of the Notes, subject, nevertheless, to the
understanding that the disposition of our property will at all times be and
remain within our control.
5. We understand that (a) the Notes will be in
registered form only and that any certificates delivered to us in respect of
the Notes will bear a legend substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT
THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X)
PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A
PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE ISSUER AT ANYTIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE
ISSUER, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICTED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), AND, IF
SUCH TRANSFER IS BEING EFFECTED BY CERTAIN TRANSFERORS SPECIFIED IN
THE INDENTURE PRIOR TO THE EXPIRATION OF THE "40 DAY RESTRICTED
PERIOD" (WITHIN THE MEANING OF RULE 903(c)(3) OF REGULATIONS S UNDER
THE
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SECURITIES ACT), A CERTIFICATE WHICH MAY BE OBTAINED FORM THE ISSUER OR
THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE ISSUER AND THE
TRUSTEE, (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a)(1), (2) OR (7) UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A
CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE
TRANSFEREE TO THE ISSUER AND THE TRUSTEE (PROVIDED THAT CERTAIN
HOLDERS SPECIFIED IN THE INDENTURE MAY NOT TRANSFER THIS SECURITY
PURSUANT TO THIS CLAUSE (4) PRIOR TO THE EXPIRATION OF THE "40 DAY
RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE 903(c)(3) OF REGULATION
S UNDER THE SECURITIES ACT)), (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. AN INSTITUTIONAL "ACCREDITED INVESTOR" HOLDING THIS
SECURITY AGREES IT WILL FURNISH TO THE ISSUER AND THE TRUSTEE SUCH
CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO
CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE
FOREGOING RESTRICTIONS. THE HOLDER THEREOF, BY PURCHASING THIS
SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE ISSUER THAT IT
IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
OR (2) AN INSTITUTION THAT IS AN ACCREDITED INVESTOR AND THAT IT IS
HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION
OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2) OF
RULE 902) UNDER REGULATION S UNDER THE SECURITIES ACT.
and (b) the Company has agreed to reissue such certificates without the
foregoing legend only in the event of a disposition of the Notes in accordance
with the provisions of paragraph 6 below (provided, in the case of a
disposition of the Notes in accordance with paragraph 6(f) below, that the
legal opinion referred to in such paragraph so permits), or at our request at
such time as we would be permitted to dispose of them in accordance with
paragraph 6(a) below.
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6. We agree that in the event that at some future time
we wish to dispose of any of the Notes, we will not do so unless such
disposition is made in accordance with any applicable securities laws of any
state of the United States and:
(a) the Notes are sold in compliance with Rule 144(k)
under the Securities Act; or
(b) the Notes are sold in compliance with Rule 144A under
the Securities Act; or
(c) the Notes are sold in compliance with Rule 904 of
Regulation S under the Securities Act; or
(d) the Notes are sold pursuant to an effective
registration statement under the Securities Act; or
(e) the Notes are sold to the Company or an affiliate (as
defined in Rule 501(b) of Regulation D) of the Company; or
(f) the Notes are disposed of in any other transaction
that does not require registration under the Securities Act, and we
theretofore have furnished to the Company or its designee an opinion
of counsel experienced in securities law matters to such effect or
such other documentation as the Company or its designee may reasonably
request.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
By:
-----------------------------
(Authorized Officer)
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EXHIBIT B
Selling Restrictions for Offers and
Sales Outside the United States
(1)(a) The Notes have not been and will not be registered
under the Securities Act and may not be offered or sole within the United
States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act. Each
Initial Purchaser represents and agrees that, except as otherwise permitted by
Section 4(a)(i) or (ii) of the Agreement to which this is an exhibit, it has
offered and sold the Notes, and will offer and sell the Notes, (i) as part of
their distribution at any time and (ii) otherwise until 40 days after the later
of the commencement of the offering and the Closing Date, only in accordance
with Rule 903 of Regulation S under the Securities Act. Accordingly, each
Initial Purchaser represents and agrees that neither it, nor any of its
affiliates nor any person acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Notes, and that it
and they have complied and will comply with the offering restrictions
requirement of Regulation S. Each Initial Purchaser agrees that, at or prior
to the confirmation of sale of Notes (other than a sale of Notes pursuant to
Section 4(a)(i) or (ii) of the Agreement to which this is an exhibit), it shall
have sent to each distributor, dealer or person receiving a selling concession,
fee or other renumeration that purchasers Notes from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered or sole within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at anytime
or (ii) otherwise until 40 days after the later of the commencement of
the offering and [ ], 1998, except in either case
in accordance with Regulation S or Rule 144 under the Securities Act.
Terms used above have the meanings given to them by Regulation S."
(b) Each Initial Purchaser also represents and agrees
that it has not entered and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Notes, except with
its affiliates or with the prior written consent of the Company.
(c) Terms used in this section have the meanings given to
them by Regulation S.
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(2) Each Initial Purchaser represents and agrees that (i)
it has not offered or sold, and will not offer or sell, in the United Kingdom,
by means of any document, any Notes other than to persons whose ordinary
business it is to buy or sell shares or debentures, whether as principal or as
agent (except in circumstances which do not constitute an offer to the public
within the meaning of the Companies ▇▇▇ ▇▇▇▇ of Great Britain), (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act of 1986 of the United Kingdom with respect to anything done by it
in relation to the Notes in, from or otherwise involving the United Kingdom,
and (iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of the
Notes to a person who is of a kind described in Article 9(3) of the Financial
Services ▇▇▇ ▇▇▇▇ (Investment Advertisements) (Exemptions) Order 1988 or is a
person to whom the document may otherwise lawfully be issued or passed on.
(3) The Notes are not being and may not be sold directly
or indirectly in Canada or to residents of Canada except by way of a private
placement in compliance with applicable securities laws.
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Annex 1
[SALOMON BROTHERS INC LETTERHEAD]
[ ], 1998
Deloitte & Touche LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is hereby made to the Purchase Agreement (the
"Purchase Agreement") dated June 29, 1998 among the undersigned and the other
parties named in Schedule I hereto (the "Initial Purchasers"), and OpTel, Inc.
(the "Company") pursuant to which the Company will sell to the Initial
Purchasers, and the Initial Purchases will purchase from the Company,
$200,000,000 principal amount of the Company's [ ]% Senior Notes Due 2008
(the "Securities").
Pursuant to Section 6(f) of the Purchase Agreement, you are
required to deliver certain letters, in form and substance satisfactory to us,
setting forth the matters described in such Section (the "Auditor's Letters").
In connection with your delivery of the Auditor's Letters, we confirm to you
that:
(i) we are knowledgeable with respect to the due
diligence review process that would be performed if this placement of
Securities were being registered pursuant to the Securities Act of
1933, as amended (the "Act"); and
(ii) we will be reviewing certain information relating to
the Company that will be included or incorporated by reference in the
Final Memorandum (as defined in the Purchase Agreement) and this
review process, applied to the information relating to the Company,
will be substantially consistent with the due diligence review process
that we would perform if this placement of Securities were being
registered pursuant to the Act.
In accordance with the foregoing, we hereby request that you
deliver to us the Auditor's Letters.
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This letter is being furnished to you solely for the purpose
of obtaining the Auditor's Letters and may not be relied upon or used by you
for any other purpose, or given or shown to any other person, without our prior
written consent.
Very truly yours,
SALOMON BROTHERS INC
By:
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Name:
Title:
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