1
EXHIBIT 1.1
UNDERWRITING AGREEMENT
PhoneTel Technologies, Inc.
$110,000,000
% Senior Notes due 2006
December , 1996
X.X. XXXXXX SECURITIES INC.
CIBC WOOD GUNDY SECURITIES CORP.
ING BARINGS (U.S.) SECURITIES, INC.
SOUTHCOAST CAPITAL CORPORATION
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
PhoneTel Technologies, Inc., an Ohio corporation (the "Company"),
proposes to issue and sell to the underwriters listed on Schedule I hereto
(collectively, the "Underwriters") $110,000,000 aggregate principal amount of
its % Senior Notes due 2006 (the "Notes"). The Notes will be issued
pursuant to the provisions of an Indenture to be dated as of December , 1996
(the "Indenture") among the Company, the Guarantors (as hereinafter defined) and
Marine Midland Bank, as Trustee (the "Trustee"). The Notes will be
unconditionally guaranteed, jointly and severally, on a senior unsecured basis
initially by the subsidiaries of the Company listed on Schedule II hereto (each
a "Guarantor" and collectively the "Guarantors"). Such guarantees are
hereinafter referred to as the "Guarantees," and the Notes and the Guarantees
are hereinafter referred to as the "Securities." The Company and the Guarantors
are collectively referred to herein as the "Registrants."
The Registrants have prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form SB-2 (File No. 333-15211), including a prospectus, relating to
the Securities. The registration statement as amended at the time when it shall
become effective, including any registration statements filed pursuant to Rule
462(b) under the Securities Act to increase the size of the
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offering, and including in each case information (if any) deemed to be part of
the registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act, is hereinafter referred to as the "Registration
Statement," and the prospectus in the form first used to confirm sales of
Securities is hereinafter referred to as the "Prospectus."
The Company is a party to (i) that certain Agreement and Plan of
Merger, dated as of November 21, 1996, with Cherokee Communications, Inc.
("Cherokee"), PhoneTel CCI, Inc. and all of the shareholders of Cherokee (the
"Cherokee Agreement") [and (ii) that certain Asset Purchase Agreement dated as
of December __, 1996, with Texas Coinphone (the "Texas Coinphone Agreement" and,
together with the Cherokee Agreement, the "Acquisition Agreements")]. The
acquisitions of Cherokee and Texas Coinphone are referred to herein,
collectively, as the "Pending Acquisitions."
In connection with the offering of the Securities and the consummation
of the Acquisition Agreements, the Company is (i) offering 6,750,000 shares of
its Common Stock, $.01 par value (the "Common Stock") (the "Concurrent Public
Offering"), (ii) repaying approximately $7.8 million in indebtedness relating to
certain capital leases, (iii) repaying approximately $3.3 million in
indebtedness relating to certain notes payable owed to the sellers of Payphones
of America, Inc. and (iv) repaying approximately $43.0 million aggregate
principal amount outstanding under its existing senior secured bank credit
agreement (the "Credit Agreement").
The Company hereby agrees with each Underwriter as follows:
1. The Company hereby agrees to issue and sell the Securities to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective principal amount of Securities set forth
opposite such Underwriter's name in Schedule I hereto at a price equal to %
of the principal amount of the Notes. The yield to the public of the Securities
is not lower than the yield recommended by CIBC Wood Gundy Securities Corp.
("CIBC"), acting as a "qualified independent underwriter" within the meaning of
Rule 2720 of the Conduct Rules of the National Association of Securities
Dealers, Inc. (the "NASD").
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2. The Company understands that the Underwriters intend (i) to make a
public offering of the Securities as soon as they deem advisable after the
Registration Statement and this Agreement have become effective and the
Indenture has been qualified under the Trust Indenture Act of 1939, as amended,
and the rules and regulations of the Commission thereunder (collectively, the
"Trust Indenture Act") and (ii) initially to offer the Securities upon the terms
set forth in the Prospectus.
The Company hereby confirms its engagement of CIBC and CIBC hereby
confirms its agreement with the Company to render services as, a "qualified
independent underwriter" within the meaning of Rule 2720 of the Conduct Rules of
the NASD with respect to the offering and sale of the Securities. CIBC, in its
capacity as qualified independent underwriter, and not otherwise, is referred to
herein as the "QIU." As compensation for the services of acting as the QIU
hereunder, the Company agrees to pay $10,000 to CIBC on the Closing Date.
3. Payment for the Securities shall be made to the Company or to its
order by check or wire transfer payable in same day funds, in accordance with
written instructions to be provided by the Company at least one full Business
Day prior to the Closing Date, at the office of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 A.M., New York City time, on December __,
1996, or at such other time on the same or such other date, not later than the
fifth Business Day thereafter, as the Underwriters and the Company may agree
upon in writing. The time and date of such payment for the Securities are
referred to herein as the "Closing Date." As used herein, the term "Business
Day" means any day other than a day on which banks are permitted or required to
be closed in New York City.
Payment for the Securities to be purchased on the Closing Date shall
be made against delivery to the account of X.X. Xxxxxx Securities Inc., at The
Depository Trust Company, on behalf of the Underwriters, of one or more global
certificates for the Securities to be purchased on such date registered in such
names and in such denominations as the Underwriters shall request in writing not
later than two Business Days prior to the Closing Date, with any transfer taxes
payable in connection with the transfer to the Underwriters of the Securities
duly paid by the Company. The certificates for the Securities will be made
available for inspection by the
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Underwriters in New York, New York not later than 1:00 P.M., New York City time,
on the Business Day prior to the Closing Date.
4. The Company represents as to itself and the Guarantors, and each
Guarantor represents and warrants as to itself, to each of the Underwriters
that:
(a) no order preventing or suspending the use of any preliminary
prospectus filed as part of the Registration Statement has been issued by
the Commission, and each preliminary prospectus filed as part of the
Registration Statement, as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act, complied
when so filed in all material respects with the Securities Act, and did not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, provided, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information relating to any Underwriter furnished to any
Registrant in writing by such Underwriter expressly for use therein;
(b) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of any Registrant, threatened by the
Commission; and the Registration Statement and the Prospectus (as amended
or supplemented if the Registrants shall have furnished any amendments or
supplements thereto) comply, and will comply as of the Closing Date, in all
material respects with the Securities Act and the Trust Indenture Act and
do not, and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the date of the
Prospectus and any amendment or supplement thereto, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and the Prospectus, as amended or supplemented at the Closing
Date, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not
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misleading; except that the foregoing representations and warranties shall
not apply to statements or omissions in the Registration Statement,
furnished to any Registrant in writing by such Underwriter expressly for
use therein or to the Statement of Eligibility on Form T-1 of the Trustee
under the Trust Indenture Act filed as an exhibit to the Registration
Statement;
(c) none of the Company or any Guarantor has (i) taken, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale or resale of the Notes or (ii) since the
filing of the Registration Statement (A) sold, bid for, purchased or paid
anyone any compensation for soliciting purchases of the Notes or (B) paid
or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company, except as contemplated by
this Agreement or the Underwriting Agreement dated December , 1996 (the
"Concurrent Underwriting Agreement") between the Company and Southcoast
Capital Corporation ("Southcoast") with respect to the Concurrent Public
Offering;
(d) the financial statements, and the related notes thereto, included
in the Registration Statement and the Prospectus present fairly the
consolidated financial position of (i) the Company and its subsidiaries,
(ii) each of the Acquired Companies (as defined below) for whom financial
statements are included and (iii) to the knowledge of the Company after due
inquiry, Cherokee, and the results of their respective operations and the
changes in their respective consolidated cash flows as of the dates and for
the periods indicated, and said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved; the "Acquired Companies"
are (1) Paramount Communications Systems, Inc. ("Paramount"), (2)
International Pay Phones, Inc. (South Carolina) ("IPP-SC"), (3)
International Payphones, Inc. (Tennessee) ("IPP-TN"), (4) Payphones of
America, Inc. ("POA") and (5) Amtel Communications, Inc. and Combined
Companies (Debtor-in-Possession) ("Amtel"). The summary and selected
financial and related statistical data included in the Registration
Statement and the Prospectus present fairly the information shown therein
and have been
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prepared and compiled on a basis consistent with the audited financial
statements included therein; Price Waterhouse LLP, whose reports on the
audited financial statements of the Company and its subsidiaries as of
December 31, 1994 and 1995 and for the three years ended December 31, 1995
and the audited financial statements of Paramount as of December 31, 1995
and for the year then ended are included in the Registration Statement and
the Prospectus, are independent accountants with respect to the Company and
its subsidiaries and Paramount, as required by the Securities Act; KPMG
Peat Marwick LLP, whose report on the audited financial statements of
Paramount as of December 31, 1994 and for the year then ended is included
in the Registration Statement and Prospectus, are independent accountants
with respect to Paramount, as required by the Securities Act; Xxxxxx
Xxxxxxxx Xxxxx, CPA, PA, whose report on the audited financial statements
of IPP-SC as of December 31, 1994 and 1995 and for the two years ended
December 31, 1995, is included in the Registration Statement and
Prospectus, are independent accountants with respect to IPP-SC, as required
by the Securities Act; Xxxxxx X. Xxxxxx, CPA, whose report on the audited
financial statements of IPP-TN as of December 31, 1994 and 1995 and for the
two years ended December 31, 1995, is included in the Registration
Statement and Prospectus, is an independent accountant with respect to
IPP-TN, as required by the Securities Act; Xxxxxx, Xxx & Xxxxxxxx LLP,
whose report on the audited financial statements of POA as of December 31,
1994 and 1995 and for the two years ended December 31, 1995, is included in
the Registration Statement and Prospectus, are independent accountants with
respect to POA, as required by the Securities Act; Xxxxxx & Xxxxxxxx, CPAs,
whose report on the audited financial statements of Amtel as of December
31, 1994 and 1995 and for the two years ended December 31, 1995, is
included in the Registration Statement and Prospectus, are independent
accountants with respect to Amtel, as required by the Securities Act; to
the knowledge of the Company after due inquiry, Deloitte & Touche LLP,
whose report on the audited financial statements of Cherokee as of
September 30, 1994 and 1995 and for the three years ended September 30,
1995, is included in the Registration Statement and Prospectus, are
independent accountants with respect to Cherokee, as required by the
Securities Act;
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(e) the pro forma financial statements (including the footnotes
thereto) and the other pro forma financial information included in the
Prospectus and Registration Statement (i) comply as to form in all material
respects with the applicable requirements of Item 310 of Regulation S-B
under the Securities Act; (ii) have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and include adjustments which give effect to events that are (A)
directly attributable to the transactions referred to therein, (B) expected
to have a continuing impact on the Company, and (C) factually supportable;
and (iii) have been computed on the bases described therein; the
assumptions used in the preparation of the pro forma financial statements
and other pro forma financial information included in the Prospectus and
Registration Statement are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein;
(f) each of the Company and the Guarantors makes and keeps accurate
books and records reflecting its assets and maintains internal accounting
controls which provide reasonable assurance that (i) transactions are
executed in accordance with management's authorization, (ii) transactions
are recorded as necessary to permit preparation of the Company's
consolidated financial statements in accordance with generally accepted
accounting principles and to maintain accountability for the assets of the
Company, (iii) access to the assets of the Company and each of the
Guarantors is permitted only in accordance with management's authorization,
and (iv) the recorded accountability for assets of the Company and each of
the Guarantors is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences;
(g) the Company has no subsidiaries other than those subsidiaries
listed on Schedule II hereto and all of the subsidiaries are Guarantors; no
Guarantor is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distributions on such
Guarantor's capital stock, from repaying to the Company any loans or
advances to such Guarantor or except as provided under the Credit Agreement
and related loan documents, from transferring any of such Guarantor's
property or assets to the Company or to any other Guarantor.
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(h) the Company has the authorized, issued and outstanding
capitalization set forth in the Registration Statement and Prospectus under
the column entitled "Actual" under the heading "Capitalization"; all of the
outstanding shares of capital stock of the Company and each Guarantor have
been duly authorized and validly issued and are fully paid and
nonassessable; except as described in the Prospectus, there are no
outstanding rights (including, without limitation, preemptive rights),
warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest in
the Company or in any Guarantor, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of any
capital stock of the Company or any such Guarantor, any such convertible or
exchangeable securities or any such rights, warrants or options; the
Company beneficially owns, directly or indirectly, free and clear of any
mortgage, pledge, security interest, lien, claim or other encumbrance, all
of the outstanding capital stock of each Guarantor, except for such
pledges, security interests, liens, claims or other encumbrances created
pursuant to the Credit Agreement and related loan documents;
(i) all offers and sales of securities of the Company prior to the
date hereof were at all relevant times duly registered under the Securities
Act or exempt from the registration requirements of the Securities Act, and
were duly registered or the subject of an available exemption from the
registration requirements of the applicable state securities or blue sky
laws;
(j) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been (A) any
change in the Company's issued capital stock, warrants or options except
pursuant to (i) the terms of the instruments governing the same, (ii) the
exercise of such options or warrants, and (iii) the arrangements relating
to the Concurrent Public Offering, or (B) any material adverse change, or
any development reasonably likely to become a material adverse change, in
or affecting the business, prospects, financial position, management,
stockholder's equity or results of operations of the Company and the
Guarantors, taken as a whole (a "Material Adverse Change");
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(k) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as disclosed therein,
(i) there have been no transactions entered into by the Company or by any
of the Guarantors, other than in the ordinary course of business, which are
material to the Company and the Guarantors, taken as a whole; and (ii)
there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock;
(l) each of the Company and the Guarantors has been duly incorporated
under the laws of its jurisdiction of incorporation; each of the Company
and the Guarantors is a validly existing corporation in good standing under
the laws of its jurisdiction of incorporation, with full corporate power
and authority to own, lease and operate its properties and conduct its
business as described in the Registration Statement and the Prospectus and
is duly qualified as a foreign corporation for the transaction of business
and is in good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as to require
such qualification, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a material
adverse effect on the business, prospects, financial position, management,
stockholders' equity or results of operations of the Company and the
Guarantors, taken as a whole (a "Material Adverse Effect");
(m) this Agreement has been duly authorized, executed and delivered by
each of the Registrants;
(n) the execution and delivery of the Indenture has been duly and
validly authorized by the Company and each of the Guarantors and the
Indenture has been qualified under the Trust Indenture Act and, when
executed and delivered by the Company and each of the Guarantors (assuming
due authorization, execution and delivery thereof by the Trustee), the
Indenture will constitute a legal, valid and binding agreement of the
Company and each of the Guarantors enforceable against the Company and each
of the Guarantors in accordance with its terms except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court
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before which any proceeding therefor may be brought (regardless of whether
such enforceability is considered in a proceeding at law or in equity); and
the Securities and the Indenture will conform in all material respects to
the descriptions thereof in the Prospectus;
(o) the Notes have been duly authorized by the Company and the
Guarantees have been duly authorized by each of the Guarantors and, when
executed and authenticated in accordance with the terms of the Indenture
and delivered to and paid for by the Underwriters, the Notes will
constitute legal, valid and binding obligations of the Company and the
Guarantees will constitute legal, valid and binding obligations of each
Guarantor, in each case enforceable in accordance with their terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought (regardless of whether such
enforceability is considered in a proceeding at law or in equity);
(p) the execution and delivery of the New Credit Agreement has been
duly and validly authorized by the Company and each of the Guarantors a
party thereto and, when executed and delivered by the Company and each of
the Guarantors a party thereto (assuming due authorization, execution and
delivery by the other parties thereto), the New Credit Agreement will
constitute a legal, valid and binding agreement of the Company and each of
the Guarantors a party thereto enforceable against the Company and each of
such Guarantors in accordance with its terms except that the enforcement
thereof may be subject to (i) bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought (regardless of whether such
enforceability is considered in a proceeding at law or in equity);
(q) to the best of the Company's knowledge after due inquiry, Cherokee
has duly authorized, executed and delivered the Cherokee Agreement and such
agreement is a legal, valid and binding agreement of Cherokee; to the best
of
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the Company's knowledge after due inquiry, [Texas Coinphone has duly
executed and delivered the Texas Coinphone Agreement and such agreement is
a legal, valid and binding agreement of Texas Coinphone];
(r) the execution and delivery by the Company and each of the
Guarantors of, and the performance by the Company and each of the
Guarantors of all of the provisions of and their respective obligations
under, this Agreement, the Indenture and the Securities (including the
Guarantees) and by the Company of the Acquisition Agreements and the
consummation by the Company and each of the Guarantors of the transactions
contemplated herein and therein, and the issuance and sale by the Company
of the Common Stock in the Concurrent Public Offering (i) have been duly
authorized by all necessary corporate action on the part of the Company and
each of the Guarantors (to the extent a party thereto), (ii) do not and
will not result in any violation of the Articles of Incorporation (or other
applicable charter document) or any shareholder's agreement or the By-laws
of the Company, any Guarantor, Cherokee [or Texas Coinphone] (to the extent
a party thereto), (iii) except as would not have a Material Adverse Effect,
do not and will not conflict with, or result in a breach or violation of
any of the terms or provisions of, or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default)
under, or give rise to any right to accelerate the maturity or require the
prepayment of any indebtedness or the purchase of any capital stock under,
or result in the creation or imposition of any lien, charge or encumbrance
upon any properties or assets of the Company, any Guarantor, or, to the
best of the Company's knowledge after due inquiry, Cherokee [or Texas
Coinphone] under, (A) any contract, indenture, mortgage, deed of trust,
loan agreement, note, lease, partnership agreement or other agreement or
instrument to which any such person is a party or by which any of them may
be bound or to which any of their respective properties or assets may be
subject, (B) (assuming, in the case of the offer and sale of the
Securities, compliance with the Securities Act and all applicable state
securities or "Blue Sky" laws) any law or statute, or governmental rule or
regulation applicable to any such person or any of their respective
properties or assets (including, without limitation, the Communications Act
of 1934, as amended (the "Communications Act"), the Telecommunications Act
of 1996 (the "Telecommunications Act") and
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the rules and regulations of the Federal Communications Commission (the
"FCC") under each of the foregoing and the rules and regulations of any
state or other regulatory agency or body with jurisdiction over
telecommunications matters in the jurisdictions in which the Company and
the Guarantors, or, to the best of the Company's knowledge after due
inquiry, Cherokee [or Texas Coinphone] operate or provide
telecommunications services (a "State Regulatory Agency")) or (C) any
judgment, order or decree of any government, governmental instrumentality,
agency, body or court, domestic or foreign, having jurisdiction over any
such person or any of their respective properties or assets and (iv) except
as would not have a Material Adverse Effect, do not and will not result in
the termination or revocation of any of the permits, licenses, approvals,
orders, certificates, franchises or authorizations of state, federal or
other governmental or regulatory authorities, including those relating to
the Communications Act, the Telecommunications Act, the rules and
regulations of the FCC or the rules and regulations of any State Regulatory
Agency, owned or held by the Company, any of the Guarantors, or, to the
best of the Company's knowledge after due inquiry, Cherokee or Texas
Coinphone;
(s) the Company, the Guarantors, and, to the best of the Company's
knowledge after due inquiry, Cherokee [and Texas Coinphone] have good and
marketable title in fee simple to all items of real property and good title
to all assets owned by them that is material to the business of the Company
and the Guarantors, taken as a whole, as currently conducted or as proposed
to be conducted upon consummation of the Pending Acquisitions, in each case
free and clear of all liens, encumbrances and defects, except such as are
described in the Prospectus or such as do not materially affect the value
of such property or asset and do not interfere with the use made or
proposed to be made of such property or asset by the Company and the
Guarantors; and any real property, buildings or personal property held
under lease by the Company, the Guarantors, and, to the best of the
Company's knowledge after due inquiry, Cherokee and [Texas Coinphone] that
are material to the business of the Company and the Guarantors, taken as a
whole, as currently conducted or as proposed to be conducted upon
consummation of the Pending Acquisitions, are held by them under valid,
existing and enforceable leases with such exceptions as are not material
and do not
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interfere materially with the use made or proposed to be made of such
property by the Company and the Guarantors;
(t) no authorization, approval, consent, order, registration,
qualification or license of, or filing with, any government, governmental
instrumentality, agency (including, without limitation, the FCC and any
State Regulatory Agency), body or court, domestic or foreign, or third
party is required for the valid authorization, issuance, sale and delivery
of the Securities (including the Guarantees), and the Common Stock in the
Concurrent Public Offering, or the performance by the Company or any
Guarantor of all of its respective obligations under this Agreement, the
Indenture, the Securities (including the Guarantees) and the Acquisition
Agreements, or the consummation by the Company and each of the Guarantors
of the transactions contemplated by this Agreement, the Acquisition
Agreements and the Indenture (other than (i) in the case of the offering of
the Securities and the Concurrent Public Offering, as has been obtained
under the Securities Act or the Trust Indenture Act or as may be required
under the securities or Blue Sky laws of the various states of the United
States of America and other jurisdictions where qualification or
registration of the Securities or the Common Stock may be required or by
the rules and regulations of the National Association of Securities
Dealers, Inc. [and (ii) in the case of the Acquisition Agreements, as has
been disclosed in Schedule 3.5(a) to the Cherokee Agreement [and Schedule
____ to the Texas Coinphone Agreement]]);
(u) neither the Company nor any of the Guarantors is (i) in violation
of its Articles of Incorporation (or other applicable charter document) or
By-laws, (ii) in violation of any statute, judgment, decree, order, rule or
regulation applicable to any of them or any of their respective properties
or assets (including, without limitation, the Communications Act, the
Telecommunications Act, the rules and regulations of the FCC under each of
the foregoing and the rules and regulations of any State Regulatory
Agency), except for any such violation which would not, individually or in
the aggregate, have a Material Adverse Effect, or (iii) in breach or
violation of any of the terms or provisions of, or with the giving of
notice or lapse of time, or both, would be in default under, any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease,
partnership agreement, or
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other agreement or instrument to which the Company or any Guarantor is a
party or by which any of them may be bound or to which any of their
properties or assets may be subject, except for such violations or defaults
that would not, individually or in the aggregate, have a Material Adverse
Effect;
(v) there are no legal or governmental proceedings pending to which
the Company, any of the Guarantors, or, to the best of the Company's
knowledge after due inquiry, Cherokee [or Texas Coinphone] is or may be a
party or to which any property of the Company, any of the Guarantors,
Cherokee [or Texas Coinphone] is or may be the subject of which, if
determined adversely to the Company or any of the Guarantors, would
individually or in the aggregate have a Material Adverse Effect and, to the
best knowledge of each Registrant, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(w) there are no legal or governmental proceedings or contracts or
documents of a character required to be described or referred to in the
Registration Statement or the Prospectus, or to be filed as exhibits to the
Registration Statement, that are not described, referred to or filed as
required and the descriptions of any legal or governmental proceedings or
contracts or documents fairly summarize, in all material respects, such
legal or regulatory proceedings, contracts or documents;
(x) each of the Company, the Guarantors, and, to the best of the
Company's knowledge after due inquiry, Cherokee [and Texas Coinphone] owns,
possesses or has obtained all licenses, permits, certificates, consents,
orders, approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and other
governmental authorities (including, without limitation, the FCC and the
State Regulatory Agencies), all self-regulatory organizations and all
courts and other tribunals, domestic or foreign, necessary to own or lease,
as the case may be, and to operate the properties and to carry on the
business of the Company and the Guarantors as conducted and as proposed to
be conducted upon consummation of the Pending Acquisitions and each of them
is in full force and effect, except in each case as otherwise disclosed in
the Registration Statement or where the failure to obtain licenses,
permits, certificates, consents,
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orders, approvals and other authorizations, or to make all declarations and
filings, would not, individually or in the aggregate, have a Material
Adverse Effect, and none of the Company, the Guarantors, and, to the best
of the Company's knowledge after due inquiry, Cherokee or Texas Coinphone
has received any notice relating to revocation or modification of any such
license, permit, certificate, consent, order, approval or other
authorization, except where such revocation or modification would not,
individually or in the aggregate, have a Material Adverse Effect;
(y) no person has the right to require the Company to register any
securities for offering and sale under the Securities Act by reason of the
filing of the Registration Statement with the Commission or the issue and
sale of the Securities, or, except as disclosed in the Registration
Statement and Prospectus, by reason of the filing of the registration
statement relating to the Concurrent Public Offering;
(z) there are no employment or labor disputes or negotiations with
employees of the Company or any of the Guarantors which could have,
individually or in the aggregate, a Material Adverse Effect;
(aa) the Company and the Guarantors are in compliance with, and not
subject to any liability under, all applicable federal, state, local and
foreign laws, regulations, rules, codes, ordinances, directives, and orders
relating to pollution or to protection of public or employee health or
safety or to the environment, including, without limitation, those that
relate to any Hazardous Material (as hereinafter defined) ("Environmental
Laws"), except, in each case, where noncompliance or liability,
individually or in the aggregate, would not have a Material Adverse Effect.
The term "Hazardous Material" means any pollutant, contaminant or waste, or
any hazardous, dangerous, or toxic chemical, material, waste, substance or
constituent subject to regulation under any Environmental Law;
(ab) the fair salable value of the assets of each Registrant exceeds
the amount that will be required to be paid on or in respect of its
existing debts and other liabilities (including contingent liabilities) as
they mature; the assets of each of the Registrants do not constitute
unreasonably small capital to carry out its business as conducted or as
proposed to be conducted; each
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Registrant does not intend to, and does not believe that it will, incur
debts beyond its ability to pay such debts as they mature; upon the
issuance of the Securities, the fair salable value of the assets of each of
the Registrants will exceed the amount that will be required to be paid on
or in respect of its existing debts and other liabilities (including
contingent liabilities) as they mature; and upon the issuance of the
Securities, the assets of each of the Registrants will not constitute
unreasonably small capital to carry out its business as now conducted or as
proposed to be conducted;
(ac) each of the Company and the Guarantors owns or legally possesses
the patents, patent licenses, trademarks, service marks, trade names,
copyrights and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) (collectively, the "Intellectual Property") employed by it in
connection with the business conducted by it as of the date hereof, except
to the extent that the failure to own or legally possess, any such
Intellectual Property would not have, individually or in the aggregate, a
Material Adverse Effect, and to the best knowledge of the Company after due
inquiry, neither the Company nor any Guarantor has received any notice of
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property;
(ad) none of the Company or the Guarantors has any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other
plan which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or any Guarantor ever has
made a contribution and in which any employee of the Company or any
Guarantor has ever been a participant. None of the Company or the
Guarantors participates in or makes contributions to any pension profit
sharing or other plan which is subject to ERISA;
(ae) Each of the Company and the Guarantors has filed all necessary
federal, state, local and foreign income and franchise tax returns, and has
paid all taxes shown as due thereon, except where the failure to file such
returns or pay such taxes would not have a Material Adverse Effect; there
is no tax deficiency that has been asserted against
17
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the Company or any Guarantor that would have a Material Adverse Effect;
(af) the Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" or a
company "controlled" by an "investment company" as such terms are defined
in the Investment Company Act of 1940;
(ag) the Company has not done, and is not presently doing, business
with the government of Cuba or with any person or any affiliate located in
Cuba; and
(ah) the Trustee, on behalf of the holders of the Notes, on the
Closing Date and after the deposit with the Trustee of such amounts as are
required by the Indenture (the "Trust Funds"), will have a valid first
priority perfected security interest in the Trust Funds.
5. The Registrants, jointly and severally, covenant and agree with
each Underwriter as follows:
(a) to use their respective best efforts to cause the Registration
Statement to become effective (if the Registration Statement shall not have
been declared effective prior to the execution hereof) at the earliest
possible time and, if required, to file the Prospectus with the Commission
in the manner and within the time periods specified by Rule 424(b) and Rule
430A under the Securities Act;
(b) to deliver, at the expense of the Registrants, (i) five conformed
copies of the Registration Statement (as originally filed) and each
amendment thereto, including exhibits, to the Underwriters, and (ii) during
the period mentioned in Section 5(e), to each of the Underwriters as many
copies of the Prospectus (including all amendments and supplements thereto)
as the Underwriters may reasonably request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, to furnish to the Underwriters
and their counsel a copy of the proposed amendment or supplement for review
within a reasonable time prior to the proposed
18
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filing thereof and not to file any such proposed amendment or supplement to
which the Underwriters or their counsel reasonably object;
(d) to advise the Underwriters promptly, and to confirm such advice in
writing, (i) when the Registration Statement shall become effective, (ii)
when any amendment to the Registration Statement shall have become
effective, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for any additional information, (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or the initiation or, to the best of the Company's knowledge, threat of any
proceeding for that purpose and (v) of the receipt by any Registrant of any
notification with respect to any suspension of the qualification of the
Securities (including any Guarantee) for offer and sale in any jurisdiction
or the initiation or, to the best of the Company's knowledge, threat of any
proceeding for such purpose; and to use their respective best efforts to
prevent the issuance of any such stop order or notification and, if issued,
to obtain promptly the withdrawal thereof;
(e) if, during such period of time after the first date of the public
offering of the Securities as in the opinion of counsel for the
Underwriters a prospectus relating to the Securities is required by law to
be delivered in connection with sales by an Underwriter or any dealer, any
event shall occur which is known to any of the Registrants or information
shall become known to any of the Registrants as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances at the time the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with law,
forthwith to, at the sole expense of the Registrants, prepare and, subject
to Section 5(c) above, file with the Commission, and furnish to the
Underwriters and to the dealers (whose names and addresses the Underwriters
will furnish to the Registrants) to which Securities may have been sold by
the Underwriters and to any other dealers upon request such amendments or
supplements to the Prospectus as may be necessary so that the statements in
the Prospectus as so amended or supplemented will not, in the light of the
circumstances at the time the Prospectus is delivered to a
19
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purchaser, be misleading or so that the Prospectus will comply with law;
(f) (i) to endeavor to qualify the Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Underwriters
shall reasonably request and to continue such qualification in effect so
long as reasonably required for distribution of the Securities and (ii) to
pay all fees and expenses (including fees and disbursements of counsel for
the Underwriters) incurred in connection with such qualification and in
connection with the determination of the eligibility of the Securities for
investment under the laws of such jurisdictions as the Underwriters may
designate; provided that no Registrant shall be required to file a general
consent to service of process or to qualify as a foreign corporation in any
jurisdiction;
(g) to make generally available to the Registrants' security holders
and to the Underwriters as soon as practicable an earnings statement (which
need not be audited) covering a period of at least twelve months beginning
with the first fiscal quarter of the Registrants occurring after the
effective date of the Registration Statement which shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 of the
Commission promulgated thereunder;
(h) so long as the Securities are outstanding, to furnish to the
Underwriters copies of all reports or other communications (financial or
other) required to be furnished to holders of the Securities, and copies of
any reports and financial statements required to be furnished to or filed
with the Commission or any national securities exchange;
(i) to pay all costs and expenses incident to the performance of its
obligations hereunder, whether or not the transactions contemplated herein
are consummated or this Agreement is terminated pursuant to Section 8
hereof, including without limiting the generality of the foregoing, all
costs and expenses (i) incident to the preparation, issuance, execution,
authentication and delivery of the Securities (including any expenses of
the Trustee and the Trustee's counsel), (ii) incident to the preparation,
printing and filing under the Securities Act of the Registration Statement,
the Prospectus and any preliminary
20
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prospectus (including in each case all exhibits, amendments and supplements
thereto), (iii) incurred in connection with the registration or
qualification and determination of eligibility for investment of the
Securities under the laws of such jurisdictions as the Underwriters may
designate (including fees and disbursements of Xxxxxx Xxxxxx & Xxxxxxx,
counsel for the Underwriters, in connection with such registration or
qualification), (iv) relating to any filing with, and determination of the
fairness of the underwriting terms and arrangements by, the NASD in
connection with the offering of the Securities (including the fees and
expenses of CIBC, as QIU), (v) in connection with the printing (including
word processing and duplication costs) and delivery of this Agreement, the
Indenture, all other agreements relating to underwriting arrangements, Blue
Sky Memoranda, any legal investment surveys and the furnishing to the
Underwriters and dealers of copies of the Registration Statement and the
Prospectus, including mailing and shipping, as herein provided, and (vi)
payable to rating agencies in connection with the rating of the Securities;
(j) none of the Company or the Subsidiaries will (i) take, directly or
indirectly, prior to the termination of the underwriting syndicate
contemplated by this Agreement, any action designed to cause or to result
in, or that might reasonably be expected to constitute, the stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities (other than stabilization of
the Common Stock by the underwriters in the Concurrent Public Offering as
described in the prospectus related thereto), (ii) sell, bid for, purchase
or pay anyone any compensation for soliciting purchases of the Securities
or (iii) pay or agree to pay to any person any compensation for soliciting
another to purchase any other securities of the Company except as
contemplated by this Agreement or the Concurrent Underwriting Agreement;
(k) to use the net proceeds of the offering of Securities as set forth
in the Registration Statement and the Prospectus under the caption "Use of
Proceeds"; and
(l) to comply with the special offer provisions of the Indenture in
the event the Cherokee acquisition shall not have been consummated in
accordance with the terms of
21
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the Cherokee Agreement on or prior to
, 1997.
6. The several obligations of the Underwriters hereunder to purchase
the Securities are subject to the performance by the Registrants of their
obligations hereunder and to the following additional conditions:
(a) if the Registration Statement has not been declared effective
prior to the execution and delivery hereof, the Registration Statement
shall have become effective (or if a post-effective amendment is required
to be filed under the Securities Act, such post-effective amendment shall
have become effective) not later than 5:00 P.M., New York City time, on the
date hereof; and no stop order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceedings for such
purpose shall be pending before or, to the knowledge of the Company,
threatened by the Commission; and any requests for additional information
shall have been complied with to the reasonable satisfaction of the
Underwriters;
(b) each of the representations and warranties of the Registrants
contained herein shall be true and correct on and as of the Closing Date as
if made on and as of the Closing Date, and the Registrants shall have
complied in all material respects with all agreements and all conditions on
their part to be performed or satisfied hereunder at or prior to the
Closing Date;
(c) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading,
nor shall any notice have been given of (i) any intended or potential
downgrading or (ii) any review or possible change that does not indicate an
improvement in the rating accorded any securities of or guaranteed by any
of the Registrants by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2) under
the Securities Act;
(d) since the respective dates as of which information is given in the
Prospectus, there shall not have been any Material Adverse Change,
otherwise than as set forth in the Prospectus, the effect of which in the
sole judgment of the Underwriters makes it impracticable or
22
-22-
inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated in the Prospectus;
(e) on the Closing Date, the Underwriters shall have received a
certificate or certificates on behalf of each Registrant, addressed to the
Underwriters and dated the Closing Date, (A) of two executive officers of
each such Registrant satisfactory to the Underwriters to the effect set
forth in subsections (a) through (c) of this Section 6 and to the further
effect that since the respective dates as of which information is given in
the Prospectus there has not occurred any Material Adverse Change,
otherwise than as set forth in the Prospectus and (B) of Xxxx Xxxx, Senior
Vice President - Acquisitions and Regulatory Matters, to the effect that he
is knowledgeable with respect to regulatory compliance matters affecting
the operations of the Company and the Guarantors and that the approvals,
certificates, licenses and permits obtained by the Company and listed on a
schedule attached to such certificate constitute all such approvals,
certificates, licenses and permits required by the FCC or State Regulatory
Agencies, except such as the failure to obtain would not, individually or
in the aggregate, have a Material Adverse Effect;
(f) the Underwriters shall have received on the Closing Date a signed
opinion of Xxxxx X. Xxxxxx, Esq., General Counsel of the Company, in form
and substance satisfactory to Xxxxxx Xxxxxx & Xxxxxxx, counsel to the
Underwriters, dated the Closing Date and addressed to the Underwriters, to
the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation with full power and authority (corporate
and other) to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the
Prospectus;
(ii) the Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing in each
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification other than where the
failure to be so qualified or in good standing would not have a
Material Adverse Effect;
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(iii) the authorized, issued and outstanding capital stock of the
Company is as set forth in the Registration Statement and the
Prospectus;
(iv) all the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable;
(v) all of the outstanding shares of capital stock of each
Guarantor are owned beneficially by the Company and, to such counsel's
knowledge after due inquiry, all of such shares are owned free and
clear of all liens, security interests, pledges, charges,
encumbrances, shareholders' agreements, voting trusts, defects,
equities or claims of any nature whatsoever, except for such liens,
security interests, pledges, charges, encumbrances or claims created
pursuant to the Credit Agreement and related loan documents. Other
than the subsidiaries listed on Schedule II hereto, the Company does
not own, directly or indirectly, any capital stock or other equity
securities of any other corporation or any ownership interest in any
partnership, joint venture or other association;
(vi) Neither the Company nor any of the Guarantors is (A) in
violation of its charter or by-laws or (B) in breach or violation of
any of the terms or provisions of, or with the giving of notice or
lapse of time, or both, would be in default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any of the
Guarantors is a party or by which it or any of them or any of their
respective properties is bound, or any applicable law or statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company, the Guarantors or any of
their respective properties, except for violations and defaults which
individually or in the aggregate would not have a Material Adverse
Effect;
(vii) the Indenture has been duly and validly authorized,
executed and delivered by the Company;
(viii) the Notes have been duly authorized by the Company;
24
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(ix) the execution and delivery by the Company and each of the
Guarantors of, and the performance by the Company and each of the
Guarantors of their respective obligations under this Agreement, the
Indenture, the Securities (including the Guarantees) and the
Acquisition Agreements (to the extent a party thereto) and the
consummation by the Company and each of the Guarantors of the
transactions herein and therein contemplated, and the issuance and
sale by the Company of the Common Stock in the Concurrent Public
Offering, (i) have been duly authorized by all necessary corporate
action on the part of the Company and each of the Guarantors (to the
extent applicable), (ii) do not and will not result in any violation
of the Articles of Incorporation or the By-laws of the Company or any
Guarantor and (iii) except as would not have a Material Adverse
Effect, do not and will not conflict with, or result in a breach or
violation of any of the terms or provisions of, or constitute a
default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or give rise to any right to
accelerate the maturity or require the prepayment of any indebtedness
or the purchase of any capital stock under, or result in the creation
or imposition of any lien, charge or encumbrance upon any properties
or assets of the Company or any Guarantor under, (A) any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease,
partnership agreement or other agreement or instrument known to such
counsel to which the Company or any such Guarantor is a party or by
which any of them may be bound or to which any of their respective
properties or assets may be subject, (B) any applicable law or statute
or governmental rule or regulation (other than the securities or Blue
Sky laws of the various states of the United States of America) or (C)
any judgment, order or decree known to such counsel of any government,
governmental instrumentality, agency, body or court, domestic or
foreign, having jurisdiction over the Company or any such Guarantor or
any of their respective properties or assets; and
(x) any real or personal property held under lease by the Company
or any of the Guarantors that are material (individually or in the
aggregate) to the Company or any Guarantor, are held by the Company
25
-25-
or such Guarantor, as the case may be, under valid, subsisting and
enforceable leases with such exceptions as would not have a Material
Adverse Effect;
(xi) to such counsel's knowledge after due inquiry, the Company
has obtained all consents, approvals, orders, certificates, licenses,
permits, franchises and other authorizations of and from, and have
made all declarations and filings with, all governmental and
regulatory authorities (including, without limitation, any State
Regulatory Agencies in the State of Ohio), all self-regulatory
organizations, and all courts and other tribunals necessary to own,
lease, license, use and operate its properties and assets and to
conduct its businesses in the manner described in the Registration
Statement and Prospectus, except, in each case, as otherwise disclosed
in the Prospectus or where the failure to obtain consents, approvals,
orders, certificates, licenses, permits, franchises and other
authorizations or to make declarations and filings would not,
individually or in the aggregate, have a Material Adverse Effect; the
execution and delivery by the Company and each of the Guarantors of,
and the performance by the Company and each of the Guarantors of their
respective obligations under this Agreement, the Indenture, the
Securities (including the Guarantees) and the Acquisition Agreements
(to the extent a party thereto) and the consummation by the Company
and each of the Guarantors of the transactions herein and therein
contemplated, and the issuance and sale by the Company of the Common
Stock in the Concurrent Public Offering, will not violate any such
approval, certification, license or permit, except in all cases, as
should not have a Material Adverse Effect; and
(xii) no authorization, approval, consent, order, registration,
qualification or license of, or filing with, any government,
governmental instrumentality, agency, body or court is required under
the laws of the State of Ohio in connection with the authorization,
issuance and sale and delivery of the Securities (including the
Guarantees), the Common Stock in the Concurrent Public Offering or the
performance by the Company and each of the Guarantors of all of their
obligations under this Agreement, the
26
-26-
Indenture, the Securities (including the Guarantees), the Acquisition
Agreements or the consummation by the Company and each of the
Guarantors of the transactions contemplated by this Agreement, except
such as have been obtained.
(g) the Underwriters shall have received on the Closing Date a signed
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the
Company, in form and substance satisfactory to Xxxxxx Xxxxxx & Xxxxxxx,
counsel to the Underwriters, dated the Closing Date and addressed to the
Underwriters, to the effect that:
(i) assuming due authorization, execution and delivery of the
Indenture by the Company, the Guarantors and the Trustee, the
Indenture is a valid and binding agreement of the Company and each of
the Guarantors, enforceable against the Company and each of the
Guarantors in accordance with its terms, except that the enforcement
thereof may be subject to (1) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (2)
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought (regardless of whether
enforceability is considered in a proceeding in equity or at law);
(ii) assuming due authorization of the Notes by the Company and
of the Guarantees by the Guarantors, when the Notes and the Guarantees
are executed and authenticated in accordance with the respective terms
of the Indenture and delivered to and paid for by the Underwriters,
the Notes will constitute valid and binding obligations of the Company
and the Guarantees will constitute legal, valid and binding
obligations of the Guarantors, in each case enforceable in accordance
with their respective terms, except that the enforcement thereof may
be subject to (1) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (2) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether enforceability is
considered in a proceeding in equity or at law);
27
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(iii) the Securities and the Indenture conform as to legal
matters in all material respects to the descriptions thereof in the
Prospectus; the statements in the Registration Statement and
Prospectus under the headings "Prospectus Summary -- Recent
Developments -- Recent Regulatory Developments," "Risk Factors --
Government Regulation," the third and fifth paragraphs of "Business --
Industry Overview," "Business -- Government Regulations," and
"Business -- Legal Proceedings," insofar as such statements constitute
a summary of statutes, regulations, rules, legal matters, documents or
proceedings referred to therein, fairly present the information
required to be set forth therein with respect to such statutes,
regulations, rules, legal matters, documents or proceedings;
(iv) to such counsel's knowledge (which knowledge may be based
solely on such counsel's discussions with officers of the Company, the
Guarantors, Cherokee and Texas Coinphone responsible for the matters
discussed below and such counsel's review of documents furnished to
them by the Company without any search of the public docket records of
any court, governmental agency or body or administrative agency),
there are no legal, regulatory or governmental proceedings pending or
threatened to which the Company, any of the Guarantors, Cherokee or
Texas Coinphone is or may be a party or to which any property of the
Company or the Guarantors, Cherokee or Texas Coinphone is or may be
the subject which, if determined adversely, could individually or in
the aggregate be reasonably expected to have a Material Adverse
Effect; and such counsel does not know of any contracts or other
documents of a character required to be filed as an exhibit to the
Registration Statement or required to be described or referred to in
the Registration Statement or the Prospectus which are not filed,
referred to or described as required;
(v) [to such counsel's knowledge after due inquiry, the Company,
each Subsidiary, Cherokee and Texas Coinphone have obtained all
consents, approvals, orders, certificates, licenses, permits,
franchises and other authorizations of and from, and have made all
declarations and filings with the FCC necessary to own, lease,
license, use and operate their
28
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respective properties and assets and to conduct their respective
businesses in the manner described in the Registration Statement and
Prospectus, except where the failure to obtain consents, approvals,
orders, certificates, licenses, permits, franchises and other
authorizations or to make declarations and filings would not,
individually or in the aggregate, have a Material Adverse Effect; the
execution and delivery by the Company and each of the Guarantors of,
and the performance by the Company and each of the Guarantors of their
respective obligations under this Agreement, the Indenture, the
Securities (including the Guarantees) and the Acquisition Agreements
(to the extent a party thereto) and the consummation by the Company
and each of the Guarantors of the transactions herein and therein
contemplated, and the issuance and sale by the Company of the Common
Stock in the Concurrent Public Offering, will not violate any such
approval, certification, license or permit, except in all cases, as
would not have a Material Adverse Effect];
(vi) no authorization, approval, consent, order, registration,
qualification or license of, or filing with, any government,
governmental instrumentality, agency, body or court is required under
the laws of the State of New York or the laws of the United States of
America in connection with the authorization, issuance and sale and
delivery of the Securities (including the Guarantees), the Common
Stock in the Concurrent Public Offering or the performance by the
Company and each of the Guarantors of all of their obligations under
this Agreement, the Indenture, the Securities (including the
Guarantees), the Acquisition Agreements or the consummation by the
Company and each of the Guarantors of the transactions contemplated by
this Agreement, except such as have been obtained. Such counsel need
not express any opinion in this paragraph (vi), however, as to (x) the
securities laws of any jurisdiction, the rules and regulations of the
National Association of Securities Dealers, Inc. or the Trust
Indenture Act, (y) laws other than those that, in such counsel's
experience, are normally applicable to transactions of the type
provided for by this Agreement, the Indenture, the Securities and the
New Credit Agreement [and (z) laws relating to the telecommunications
industry, including, without limitation, the
29
-29-
Communications Act, the Telecommunications Act and the rules and
regulations of the FCC];
(vii) the Registration Statement has been declared effective
under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto has been issued; the Indenture has been qualified
under the Trust Indenture Act; any required filing of the Prospectus
and any supplements thereto pursuant to Rule 424(b) has been made in a
manner and within the time period required by Rule 424(b);
(viii) the Registration Statement as of its effective date and
the Prospectus and any amendments and supplements thereto as of their
respective dates (except for the financial statements and other
financial and statistical data included therein or omitted therefrom
as to which such counsel need not express an opinion) appeared or
appear on their face to be appropriately responsive in all material
respects with the requirements of the Securities Act and the Trust
Indenture Act, except that such counsel is not required to assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus
or the exhibits to the Registration Statement, including the Form T-1,
in each case (other than to the extent specified in Section
6(g)(iii)); the Registrants satisfy all of the requirements to file a
Registration Statement on Form SB-2;
(ix) the Trustee, on behalf of the holders of the Notes, on the
Closing Date and upon receipt by the Trustee of a check or checks
representing the the Trust Funds, will have a valid first priority
security interest in the Trust Funds; and
(x) the Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" or
a company "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940.
30
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At the time the foregoing opinion is delivered, Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP shall additionally state that it has participated in
conferences with officers and other representatives of the Company and the
Guarantors, representatives of the independent auditors for each of the
Company, the Acquired Companies, Cherokee and Texas Coinphone and
representatives of the Underwriters, at which conferences the contents of
the Registration Statement and the Prospectus and related matters were
discussed, and, although such counsel has not independently verified and is
not passing upon and assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the Prospectus and
Registration Statement (except to the extent specified in Section
6(g)(iii)), no facts have come to such counsel's attention which lead such
counsel to believe that the Registration Statement as of its effective date
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as of its date
and as of the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading (it
being understood that such firm need not express an opinion with respect to
the financial statements and the other financial and statistical data
included in or omitted from the Registration Statement and the Prospectus
or the exhibits to the Registration Statement, including the Form T-1).
(h) the Underwriters shall have received on the Closing Date signed
opinions, in form and substance satisfactory to Xxxxxx Xxxxxx & Xxxxxxx,
counsel to the Underwriters, dated the Closing Date and addressed to the
Underwriters, from local counsel in each of (1) Florida, Missouri and
Texas, to the effect set forth in subsections (f)(i), (f)(ii), (f)(iv),
(f)(vii), (f)(viii), (f)(xi) and (f)(xii) of this Section 6, (2)
California, to the effect set forth in subsections (f)(xi) and (f)(xii) of
this Section 6 and (3) Indiana, to the effect set forth in subsections
(f)(i), (f)(ii), (f)(iv), (f)(vii) and (f)(viii) of this Section 6, in each
case with respect to the Guarantor incorporated in such state and the
operations of the Company in such state.
31
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(i) on the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment, if any,
to the Registration Statement and also on the Closing Date, each of the
independent accountants specified in Section 4(d) shall have furnished to
the Underwriters letters, dated the respective dates of delivery thereof,
in form and substance satisfactory to the Underwriters, containing
statements and information of the type customarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Prospectus;
(j) the Underwriters shall have received on and as of the Closing Date
an opinion dated the Closing Date of Xxxxxx Xxxxxx & Xxxxxxx, counsel to
the Underwriters, addressed to the Underwriters and in form and substance
satisfactory to the Underwriters with respect to the validity of the
Securities, the Indenture, the Registration Statement, the Prospectus and
other related matters as the Underwriters may reasonably request, and such
counsel shall have received from the Company such papers and information as
they may reasonably request to enable them to pass upon such matters;
(k) on or prior to the Closing Date the Company shall have furnished
to the Underwriters such further certificates and documents as the
Underwriters or their counsel, Xxxxxx Xxxxxx & Xxxxxxx, shall reasonably
request;
(l) on or prior to the Closing Date, the Company shall have
consummated the Concurrent Public Offering and shall have received gross
proceeds therefrom of not less than $25 million;
(m) the Trust Funds shall have been deposited with the Trustee in
accordance with the terms of the Indenture on the Closing Date.
7. The Registrants, jointly and severally, agree to indemnify and hold
harmless each Underwriter, its officers and directors, and each person, if any,
who controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, the
legal fees and other expenses incurred
32
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in connection with any suit, action or proceeding or any claim asserted) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities arise out of or
are based upon any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Underwriter furnished to any Registrant in writing by such Underwriter
expressly for use therein; provided, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting such losses, claims, damages or
liabilities purchased Notes, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished such underwriter any such
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Notes to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities.
The Registrants, jointly and severally, also agree to indemnify and
hold harmless the QIU, its officers and directors, and each person, if any, who
controls the QIU within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, from and against all losses, claims, damages
and liabilities (including, without limitation, the legal fees and other
expenses incurred in connection with any suit, action or proceedings or any
claim asserted) incurred as a result of the QIU performing the duties of its
engagement pursuant to Section 2.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless each of the Registrants, each of their directors, each of their
officers who signed the Registration Statement and each person who controls any
of the Registrants within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Registrants to each Underwriter, but only with reference to information
relating to such
33
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Underwriter furnished to any Registrant in writing by such Underwriter expressly
for use in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any preliminary prospectus. For purposes of this Section
7 and Section 4(a) and 4(b) hereof, the only written information furnished by
the Underwriters to any Registrant expressly for use in the Registration
Statement and the Prospectus is the information in (A) the last paragraph on the
cover page of the Prospectus, (B) the paragraph regarding stabilization on the
inside front cover page of the Prospectus and (C) in the section titled
"Underwriting" in the Prospectus, the paragraph preceding the table and the
first and third paragraphs following the table.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to the preceding
paragraphs, such person (the "Indemnified Person") shall promptly notify the
person against whom such indemnity may be sought (the "Indemnifying Person") in
writing, and the Indemnifying Person, upon request of the Indemnified Person,
shall retain counsel satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Person after receipt of written notices from the Indemnified Party
requesting indemnification and the retention of counsel has failed within a
reasonable time to retain counsel satisfactory to the Indemnified Person or
(iii) the named parties in any such proceeding (including any impleaded parties)
include both the Indemnifying Person and the Indemnified Person and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is understood that the
Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are
incurred; provided, however, that if indemnity may be sought pursuant to the
second paragraph of this Section 7 in respect of such proceeding, then, in
34
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addition to such separate firm for the Underwriters and such control persons of
the Underwriters, the indemnifying party shall be liable for the fees and
expenses of not more than one separate firm (in addition to any local counsel)
for the QIU and all persons, if any, who control the QIU within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act. Any
such separate firm for the Underwriters and such control persons of Underwriters
shall be designated in writing by X.X. Xxxxxx Securities Inc., any such separate
firm for the QIU and such control persons of the QIU shall be designated in
writing by CIBC and any such separate firm for any of the Registrants, each
director of the Registrants, each officer of the Registrants who signed the
Registration Statement and such control persons of the Registrants shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. No Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional written release, in form and
substance satisfactory to the Indemnified Person, of such Indemnified Person
from all liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in this Section 7 is for any
reason unavailable to, or insufficient to hold harmless, an Indemnified Person
in respect of any losses, claims, damages or liabilities referred to therein,
then each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Registrants on the one hand and the Underwriters and
the QIU on the other hand from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Registrants
on the one hand and the Underwriters and the QIU on the other in connection with
the statements or omissions that resulted in such
35
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losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Registrants on the one
hand and the Underwriters and the QIU on the other shall be deemed to be in the
same respective proportions as the net proceeds from the offering (before
deducting expenses) received by the Company and the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus (or, in the case of the QIU, the fee
received by the QIU for performing the duties of its engagement pursuant to
Section 2), bear to the aggregate public offering price of the Securities. The
relative fault of the Registrants on the one hand and the Underwriters and the
QIU on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Registrants, by the Underwriters or by the QIU and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Registrants and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters and the QIU were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay or has paid by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 7 are several in proportion
to the respective principal
36
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amounts of Securities set forth opposite their names in Schedule I hereto, and
not joint.
The indemnity and contribution agreements contained in this Section 7
are in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Registrants as set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or the QIU or any person controlling any Underwriter or the
QIU or by or on behalf of any Registrant, officer or director of any Registrant
or any other person controlling any Registrant and (iii) acceptance of and
payment for any of the Securities.
8. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Underwriters, by notice given to
the Company, if after the execution and delivery of this Agreement and prior to
the Closing Date (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange, the National Association of Securities Dealers, Inc. or
the Chicago Board Options Exchange, (ii) trading of any securities of or
guaranteed by any of the Registrants shall have been suspended on any exchange
or in any over-the-counter market, (iii) a general moratorium on commercial
banking activities in New York shall have been declared by either Federal or New
York State authorities, or (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
crisis that, in the judgment of the Underwriters, is material and adverse and
which, in the judgment of the Underwriters, makes it impracticable to market the
Securities on the terms and in the manner contemplated in the Prospectus.
9. If this Agreement shall be terminated by the Underwriters because
of any failure or refusal on the part of any of the Registrants to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Registrant shall be unable to perform its obligations under this
Agreement or any condition to the Underwriters' obligations cannot be fulfilled,
the Registrants agree jointly and severally to reimburse the Underwriters and
the QIU for all
37
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out-of-pocket expenses (including the reasonable fees and expenses of their
counsel) reasonably incurred by the Underwriters and the QIU in connection with
this Agreement or the offering contemplated hereunder.
10. Any action by the Underwriters hereunder may be taken by the
Underwriters jointly or by X.X. Xxxxxx Securities Inc. alone on behalf of the
Underwriters, and any such action taken by X.X. Xxxxxx Securities Inc. alone
shall be binding upon the Underwriters. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or telecopied. Notices to the Underwriters shall be given to the
Underwriters, c/o X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (facsimile number (000) 000-0000); Attention: Syndicate Department.
Notices to any Registrant shall be given to the Company at 0000 Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxx, Xxxx 00000-0000 (facsimile number (000) 000-0000;
Attention: General Counsel, with a copy to Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxx,
Esq.
11. This Agreement shall inure to the benefit of and be binding upon
the Underwriters and the Registrants and any controlling person referred to
herein and their respective successors, heirs and legal representatives. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the
Registrants and their respective successors, heirs and legal representatives and
the controlling persons and officers and directors referred to in Section 7 and
their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
No purchaser of Securities from any Underwriter shall be deemed to be a
successor merely by reason of such purchase.
12. The Company and the Underwriters agree that it is the intent of
the parties to this Agreement that the Underwriters be entitled to rely on the
representations and warranties of Cherokee as set forth in the Cherokee
Agreement, on the same terms and conditions as may the Company.
13. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument.
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14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS
OF LAWS PROVISIONS THEREOF.
39
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
PHONETEL TECHNOLOGIES, INC.
By:
-------------------------------------
Name:
Title:
NORTHERN FLORIDA TELEPHONE CORPORATION
PARAMOUNT COMMUNICATIONS SYSTEMS, INC.
PAYPHONES OF AMERICA, INC.
PUBLIC TELEPHONE CORPORATION
WORLD COMMUNICATIONS, INC.
For each of the above:
By:
-------------------------------------
Name:
Title:
Accepted: December , 1996
X.X. XXXXXX SECURITIES INC.
CIBC WOOD GUNDY SECURITIES, CORP.
ING BARINGS (U.S.) SECURITIES, INC.
SOUTHCOAST CAPITAL CORPORATION
By: X.X. XXXXXX SECURITIES INC.
By:
-------------------------------------
Name:
Title:
40
SCHEDULE I
Principal Amount
of Securities
Underwriter to be Purchased
----------- ---------------
X.X. Xxxxxx Securities Inc. ................ $
------------
CIBC Wood Gundy Securities Corp............. $
------------
ING Barings (U.S.) Securities, Inc. ........ $
------------
SouthCoast Capital Corporation ............. $
------------
------------
Total ........................ $110,000,000
============
41
SCHEDULE II
Subsidiaries of the Company
Jurisdiction of
Name Incorporation
---- -------------
Northern Florida Telephone
Corporation ..................................... Florida
Paramount Communications Systems, Inc. ............ Florida
Payphones of America, Inc. ........................ Ohio
Public Telephone Corporation ...................... Indiana
World Communications, Inc. ........................ Missouri
PhoneTel CCI, Inc. ................................ Texas
