Exhibit 1.1
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OPTEL, INC.
225,000 Units
consisting of
$225,000,000
13% Senior Notes Due 2005
and
225,000 Shares of Class C Common Stock
PURCHASE AGREEMENT
Dated: February 7, 1997
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OPTEL, INC.
225,000 Units
consisting of
$225,000,000
13% Senior Notes Due 2005
and
225,000 Shares of Class C Common Stock
PURCHASE AGREEMENT
New York, New York
February 7, 1997
SALOMON BROTHERS INC
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
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 and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (collectively, the "Initial Purchasers")
225,000 Units (the "Units") consisting of $225,000,000 principal amount of its
13% Senior Notes Due 2005 (the "Notes") and 225,000 shares of Class C Common
Stock, par value $.01 per share (the "Shares" and, together with the Notes and
the Units, the "Securities"). The Notes are to be issued under an indenture (the
"Indenture") dated as of February 14, 1997 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") dated as of February 14,
1997 between the Company and the Initial Purchasers. The holders of Shares,
including the Initial Purchasers, will be entitled to the benefits of a Common
Stock Registration Rights Agreement (the "Common Stock Registration Rights
Agreement") dated as of February 14, 1997 between the Company, VPC Corporation,
Le Groupe Videotron Ltee, the Initial Purchasers and U.S. Trust Company of
Texas, N.A.
Approximately $80,000,000 of the net proceeds from the sale of the
Units (the "Initial Escrow Amount"), representing funds that, together with the
proceeds from the investment thereof, will be sufficient to pay the first six
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) pursuant to the Escrow
Agreement, dated as of February 14, 1997 (the "Escrow Agreement") among the
Company, U.S. Trust Company of Texas, N.A., as Escrow Agent (the "Escrow
Agent"), and the Trustee.
The sale of the Units to the Initial Purchasers will be made without
registration of the Units under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions from the registration
requirements of the Securities Act. You have advised the Company that the
Initial Purchasers will offer and sell the Units purchased by them hereunder in
accordance with Section 4 hereof as soon as you deem advisable.
In connection with the sale of the Units, the Company has prepared a
preliminary offering memorandum, dated January 16, 1997 (including any and all
exhibits thereto, the "Preliminary Memorandum") and a final offering memorandum,
dated February 7, 1997 (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 Securities. 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 Units 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) 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 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
Securities under the Securities Act.
(c) Neither the Company, nor any of its Affiliates, nor 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 Securities 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 contained in the
Accredited Investor Letters (the "Accredited Investor Letters")
(substantially in the form of Exhibit A hereto) completed by Accredited
Investors or 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 Units are true and correct as of the Closing Date, and
assuming compliance by such persons with their agreements made in the
Accredited Investor Letters or deemed made by the Final Memorandum, it is
not necessary in connection with the offer, sale and delivery of the Units
to the Initial Purchasers in the manner contemplated by, or in connection
with the initial resale of such Units by the Initial Purchasers in
accordance with, this Agreement to register the Units under the Securities
Act or to qualify any indenture in respect of the Units under the Trust
Indenture Act of 1939 (the "TIA").
(e) The Company and each subsidiary of the Company (a "Subsidiary")
and Transmission Holdings, Inc., a Delaware corporation (the "LHC"), has
been duly incorporated and each is validly existing as a corporation under
the laws of its jurisdiction of incorporation, 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 and 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").
(f) The Units, 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 Units, 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 Securities pursuant to
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) At the Closing Date, the Shares will have been duly authorized
by the Company and the Company will have all requisite corporate power and
authority to issue and deliver the Shares and to incur and perform its
obligations provided for therein. When issued, the Shares
will be duly authorized, validly issued, fully paid and non-assessable and
will not be subject to any preemptive or similar rights. The number of
Shares to be sold will, at the Closing Date, represent, 5% of the shares
of Common Stock of the Company on a fully diluted basis (assuming
conversion of the Convertible Notes (as defined in the Final Memorandum)
on April 30, 1999 as though no initial public offering had occurred).
(h) This Agreement has been, and, as of the Closing Date, the
Registration Agreement, the Escrow Agreement, the Common Stock
Registration Rights 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,
the Common Stock Registration Rights 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.
(i) At the time of deposit with the Escrow Agent of the Initial
Escrow Amount (as such term is defined in the Escrow Agreement) no Lien
(as such term is defined in the Indenture) exists upon such Collateral (as
such term is defined in the Escrow Agreement) and no right or option to
acquire the same exists in favor of any other person or entity, except for
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) to be created or provided for in the Escrow Agreement,
which pledge and security interest shall constitute a first priority
perfected pledge and security interest in and to all of the Collateral.
(j) 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, the Common Stock
Registration Rights 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 Act of the
Notes or the Exchange Securities pursuant to the Registration Agreement
(including any filing with the NASD), (B) in connection with the
registration under the Act of the Shares pursuant to the Common Stock
Registration Rights Agreement (including any filing with the NASD), (C)
the qualification of the Indenture under
the TIA pursuant to the Registration Agreement or (D) by state securities
or "blue sky" laws in connection with the offer and sale of the Securities
or the registration thereof or of the Exchange Securities pursuant to the
Registration Agreement.
(k) The issuance, sale and delivery of the Securities and the
Exchange Securities, the execution, delivery and performance by the
Company of this Agreement, the Registration Agreement, the Escrow
Agreement, the Common Stock Registration Rights Agreement and the
Indenture, the consummation by the Company of the transactions
contemplated hereby, thereby, and as described in the Offering 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) 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, any
material Rights of Entry (as defined in the Final Memorandum) 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), (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.
(l) The Securities, the Exchange Securities, the Registration
Agreement, the Escrow Agreement, the Common Stock Registration Rights
Agreement and the Indenture will each conform in all material respects to
the descriptions thereof in the Final Memorandum.
(m) 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. 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
rules and regulations of the Securities Exchange Commission ("SEC")
thereunder (the "Act Regulations").
(n) Since the respective dates as of which information is given in
the Final Memorandum, except as otherwise specifically stated therein,
there has been no 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.
(o) 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 have been duly authorized and validly issued,
are fully paid and nonassessable and were 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.
(p) Neither the Company nor any of the Subsidiaries nor 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.
(q) Except as described or reflected in the Final Memorandum and for
matters not required to be described in the Final Memorandum, 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.
(r) 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 the Final Memorandum, except as described in the Final
Memorandum and 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.
(s) Each of the Company and the Subsidiaries 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.
(t) 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 Act and the Act Regulations that are not
described, nor any laws, rules, regulations, contracts or other documents
which, under such circumstances, would be required to be described in the
Final Memorandum by the Act or by the Act Regulations that have not been
so described.
(u) 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.
(v) Except as disclosed in the Final Memorandum, there are 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) To the knowledge of the Company, there are no defaults under any
Rights 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.
(y) The Securities 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 Securities, 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.
(ab) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase the Securities or Exchange
Securities of the Company (except as contemplated by this Agreement).
(ac) 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.
In regards to the foregoing representations and warranties of the
Company, it is understood that (i) all necessary applications, authorizations
and organizational
procedures are being conducted with regard to the LHC and will be completed
prior to the Closing Date and (ii) an amendment to the Company's Certificate of
Incorporation creating the Class C Common Stock of the Company and making
certain other changes thereto will be authorized and filed prior to the Closing
Date, and, accordingly, all such representations and warranties pertaining to
the LHC, the Class C Common Stock and the Company's capitalization will only be
given as of the Closing Date.
Any certificate signed by any two or more members of the Board of
Directors or 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
$980.67 per Unit, the number of Units set forth opposite such Initial
Purchaser's name in Schedule I hereto.
3. Delivery and Payment. Delivery of the Units, Notes and Shares and
payment for the Units shall be made at 10:00 AM, New York City time, on February
14, 1997, or such later date (not later than February 17, 1997) 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 delivery and payment for the Units, Notes and
Shares being herein called the "Closing Date"). Delivery of the Units, Notes and
Shares 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 Units, Notes and Shares 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 Units shall be made at the office of ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ("Counsel for the Initial Purchasers"), Eighty ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Certificates for the Units, Notes and Shares 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 Units, Notes and Shares 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 Securities. 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
Securities 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 Securities is aware
that such sale is being made in reliance on Rule 144A, or (ii) to other
institutional "accredited investors" (as defined in Rule 501(a)(1),(2),
(3) or (7) of Regulation D) who provide to it and to the Company a letter
in the form of Exhibit A hereto or (iii) 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 Securities 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 Securities.
(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 to the
Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
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 all
documents relating to the offering.
(b) The Company will not amend or supplement 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
Securities 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 Representatives 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 Securities
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 Securities. 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 Securities 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 Securities 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 Securities under
the Securities Act.
(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 Securities or the Exchange
Securities in the United States.
(h) So long as any of the Securities 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 Securities, 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
and 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 Securities), other than in connection with
the Exchange Offer (as defined in the Final Memorandum).
(k) In connection with any disposition of Securities pursuant to a
transaction made in compliance with paragraph 6 of Exhibit A, the Company
will reissue certificates evidencing such Securities 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 six 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 as
such under the Indenture), and irrevocably grant to the Trustee for the
benefit of the holders of the Notes and the Trustee (in its capacity as
such under the 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 (as such term is defined in the Escrow Agreement)
held by the Escrow Agent or on its 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 Units 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 Securities;
(iii) The authorized, and to the knowledge of such counsel based
solely upon a review of the Company's stock ledger and corporate
records, the issued and outstanding capital stock of the Company is
as set forth in the Final Memorandum under the caption
"Capitalization";
(iv) Each of this Agreement, the Registration Agreement, the
Escrow Agreement, the Common Stock Registration Rights Agreement,
the Securities, 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 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, the
Common Stock Registration Rights Agreement or the Indenture or for
the issue and sale of the Securities 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, and the registration under the Securities Act of the
Shares, pursuant to the Common Stock Registration Rights Agreement,
(B) the qualification of the Indenture under the TIA in connection
with the registration of the Securities or the Exchange Securities
pursuant to the Registration Agreement, and the registration under
the Securities Act of the Shares, pursuant to the Common Stock
Registration Rights Agreement, (C) under the "blue sky" laws of any
jurisdiction in connection with the purchase and distribution of the
Units 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 Securities and the
Exchange Securities, the execution, delivery and performance by the
Company of this Agreement, the Registration Agreement, the Escrow
Agreement, the Common Stock Registration Rights 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) 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
assets of the Company or any Subsidiary under any material
agreements or instruments known to such counsel or (C) any law,
statute, rule, or regulation (except for the FCC Rules and State
Rules to which 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 Offering Memorandum under the
headings "Summary - The Offering," "Description of the Units,"
"Description of the Notes," "Description of Common Stock
Registration and Other Rights" and "Exchange Offer; Registration
Rights," insofar as such statements purport to summarize certain
provisions of the Securities, the Exchange Securities, the
Registration Agreement, the Escrow Agreement, the Common Stock
Registration Rights Agreement and the Indenture provide a fair
summary of such provisions of such agreements and instruments;
(viii) Each of the Indenture, the Registration Agreement, the
Escrow Agreement and the Common Stock Registration Rights 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, the Common Stock
Registration Rights Agreement and the Registration Agreement, the
Enforceability Limitations, and (b) with respect to the Registration
Agreement, the Common Stock Registration Rights Agreement and the
Escrow Agreement, that such counsel expresses no opinion regarding
the validity and enforceability of the indemnification and
contribution provisions contained in Sections 7, 5 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 Securities in accordance with the terms of 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; the Shares when executed, authenticated and delivered,
will be entitled to the benefits of the Common Stock Registration
Rights Agreement 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 issuance of the Shares has been duly and validly
authorized, and the Shares, when paid for and delivered in
accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable, and no holder of any securities of the
Company has preemptive or similar rights applicable to the Shares;
(xi) The Escrow Agreement has been duly authorized, executed
and delivered by the Company;
(xii) 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);
(xiii) Assuming 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 contained in the Accredited
Investor Letters completed by Accredited Investors and deemed made
by "qualified institutional buyers" and non-U.S. persons purchasing
Units 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 Units to the Initial Purchasers under, or in
connection with the initial resale of the Units by the Initial
Purchasers in accordance with, this Agreement for the Company to
register the Units under the Securities Act or to qualify the
Indenture under the TIA;
(xiv) 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;
(xv) When the Securities are issued and delivered pursuant to
this Agreement, such Securities 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
(xvi) 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 Securities.
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 we have not undertaken to investigate or verify
independently, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the 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 required to be stated therein, in the
light of the circumstances under which they were made, not misleading or
that the Final Memorandum includes an untrue statement of 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) Each of the Company and the Subsidiaries and the LHC has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction in which it is
organized, with full corporate 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,
except as otherwise set forth in Schedule II to the Purchase
Agreement, 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;
(iii) The issuance, sale and delivery of the Securities and the
Exchange Securities, the execution, delivery and performance by the
Company of this Agreement, the Registration Agreement, the Escrow
Agreement, the Common Stock Registration Rights 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) 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," and "-- Use
of the Name OpTel" fairly summarizes 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;
(vi) To 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; and
(vii) To 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 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 required to be stated therein, in the light of the
circumstances under which they were made, not misleading or that the Final
Memorandum includes an untrue statement of 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
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.
(c) The Company shall have furnished to the Initial Purchasers the
opinion of Goldberg, Godles, Weiner & ▇▇▇▇▇▇, FCC counsel for the Issuers,
dated the Closing Date, in form and substance reasonably satisfactory to
the Initial Purchasers, to the effect that:
(i) To 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 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 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 Common Stock Registration Rights
Agreement, the Indenture, the Securities, 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
the performance by the Company of its obligations under this
Agreement, the Registration Agreement, the Escrow Agreement, the
Common Stock Registration Rights Agreement, the Indenture, the
Securities or the Exchange Securities;
(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, 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 Securities, 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:
(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 thereunder
and Rule 101 of the Code of Professional Conduct of the American Institute
of Certified Public Accountants (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, 1996, nothing came to their
attention which caused them to believe that:
(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 November
30, 1996, there were any changes, at a specified date not more
than five business days prior to the date of the letter, in
the 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 November 30, 1996 consolidated balance sheet included in
the Final Memorandum, or for the period from December 1, 1996
to such specified date there were any decreases, as compared
with the period from comparable period of fiscal 1996, 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 Consolidated Financial and Other 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 Consolidated Financial and
Other Operating Data" in the Final Memorandum, agrees with the
accounting
records of the Company and the Subsidiaries,
excluding any questions of legal interpretation;
(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 Units as contemplated by the
Final Memorandum.
(h) Each of the Indenture, the Escrow Agreement, the Registration
Agreement and the Common Stock Registration Rights 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 created
by the Escrow Agreement.
(j) Prior to the Closing Date, the maturity of the Convertible Notes
(as defined in the Final Memorandum) shall have been extended to the
earlier of August 15, 2005 or 6 months after the indefeasible payment in
full of the Notes and the Convertible Notes shall be subordinated in right
of payment to the Securities as will be set forth in Exhibit F-1 to the
Indenture.
(k) Prior to the Closing Date, the Company shall have authorized and
filed an amendment to its Certificate of Incorporation that creates the
Class C Common Stock to be issued as part of the Units and reflects the
other changes to the Company's Certificate of Incorporation contemplated
to be made by the Final Memorandum.
(l) Prior to the Closing Date, the Company shall have received all
necessary authorizations, made all necessary filings and shall have
established the LHC in form and function as described in the Final
Memorandum.
(m) Prior to the Closing Date, the Company shall have furnished to
the Initial Purchasers such further information, certificates and
documents as the Representatives 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.
The documents required to be delivered by this Section 6 will be
delivered at the office of Counsel for the Initial Purchasers, at Eighty ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Units 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 Units 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 Units.
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 Securities 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 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 sixth paragraph 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 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 Purchases 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 Units; 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 Units) be responsible for
any amount in excess of the purchase discount or commission applicable to the
Units 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 Units 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
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 Units 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 number of Units set
forth opposite their names in Schedule I hereto bears to the number of Units set
forth opposite the names of all the remaining Initial Purchasers) the Units
which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase; provided, however, that in the event that the number of Units which
the defaulting Initial Purchaser or Initial Purchasers agreed but failed to
purchase shall exceed 10% of the Units 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 Units, and if such
non-defaulting Initial Purchasers do not purchase all the Units, 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 Units, 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 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
Units 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 Units. 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 ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇; 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.
15. Business Day. For purposes of this Agreement, "business day"
means each Monday, 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.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this Agreement and your acceptance shall represent a binding agreement between
the Company and the Initial Purchasers.
Very truly yours,
OPTEL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: VP and General Counsel
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and CEO
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
Salomon Brothers Inc
Merrill, Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
By: Salomon Brothers Inc
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
SCHEDULE I
Number of Units
Initial Purchasers to be Purchased
------------------ ---------------
Salomon Brothers Inc ................. 112,500
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ............. 112,500
---------
Total ................. 225,000
SCHEDULE II
The following is a list of all subsidiaries that are not wholly
owned by OpTel, Inc.:
1. ▇▇▇▇▇▇ Pacific Cable Partners VI, L.P.:
100% of the general partnership interest is owned by
OpTel, Inc., but none of the limited partnership
interest is owned by OpTel, Inc.
2. ▇▇▇▇▇▇ Pacific Cable Partners VII, L.P.:
100% of the general partnership interest is owned by
OpTel, Inc., but none of the limited partnership
interest is owned by OpTel, Inc.
EXHIBIT A
Non-Distribution Letter for U.S. Purchasers
__________, 199_
Salomon Brothers Inc
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
OpTel, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Purchase of Units (the "Units"),
of OpTel, Inc. (the "Company")
Ladies and Gentlemen:
In connection with our purchase of the Units we confirm that:
1. We understand that the Units 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 February 7, 1997
relating to the Units (the "Final Memorandum")) nor any person acting on behalf
of the Company or the Initial Purchasers has made any representation to us with
respect to the Company or the offer or sale of any Units and (b) any information
we desire concerning the Company and the Units or any other matter relevant to
our decision to purchase the Units (including a copy of the Final Memorandum) is
or has been made available to us.
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 Units, 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) of Regulation D under the Securities Act)
able to bear the economic risk of investment in the Units.
A-1
4. We are acquiring the Units 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 Units, 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 Units will be in registered form only
and that any certificates delivered to us in respect of the Units will bear a
legend substantially to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S UNDER
THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE
WHICH IS THREE YEARS (OR SUCH SHORTER PERIOD AS MAY BE PRESCRIBED BY RULE
144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER)
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR
OF THIS SECURITY) OR THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE
OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS
SECURITY OR (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE
LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
A-2
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
PURSUANT TO RULE 904 OF REGULATION S, (E) TO AN ACCREDITED INVESTOR THAT
IS ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY 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 Units in accordance
with the provisions of paragraph 6 below (provided, in the case of a disposition
of the Units 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.
6. We agree that in the event that at some future time we wish to
dispose of any of the Units, 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 Units are sold in compliance with Rule 144(k) under the
Securities Act; or
(b) the Units are sold in compliance with Rule 144A under the
Securities Act; or
(c) the Units are sold in compliance with Rule 904 of Regulation S
under the Securities Act; or
(d) the Units are sold pursuant to an effective registration
statement under the Securities Act; or
(e) the Units are sold to the Company or an affiliate (as defined in
Rule 501(b) of Regulation D) of the Company; or
A-3
(f) the Units 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)
A-4
EXHIBIT B
Selling Restrictions for Offers and
Sales outside the United States
(1)(a) The Units have not been and will not be registered under the
Securities Act and may not be offered or sold 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 Units, and will offer
and sell the Units, (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 Units, and that it and they have compiled 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 Units (other than a sale of
Units 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 remuneration that purchases Units 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 sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the
offering and February 14, 1997, except in either case in accordance with
Regulation S or Rule 144A 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 Units, except with its
affiliates or with the prior written consent of the Company.
B-1
(c) Terms used in this section have the meanings given to them by
Regulation S.
(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 Units 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 ▇▇▇ ▇▇▇▇ of the
United Kingdom with respect to anything done by it in relation to the Units 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 Units 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.
B-2
Annex 1
[SALOMON BROTHERS INC LETTERHEAD]
February 7, 1997
Deloitte & Touche LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is hereby made to the Purchase Agreement (the "Purchase
Agreement") dated February 7, 1997 among the undersigned and the other parties
named in Schedule I thereto (the "Initial Purchasers"), and OpTel, Inc. (the
"Company") pursuant to which the Company will sell to the Initial Purchasers,
and the Initial Purchasers will purchase from the Company, 225,000 Units
consisting of $225,000,000 principal amount of the Company's 13% Senior Notes
Due 2005 and 225,000 Shares of Class C Common Stock (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.
ANNEX 1-1
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:
ANNEX 1-2