EXECUTION COPY
▇▇▇▇▇▇▇ COMMUNICATIONS, INC.
$150,000,000 7.625% Senior Notes due 2008
$150,000,000 8.250% Senior Subordinated
Notes due 2008
PURCHASE AGREEMENT
New York, New York
January 30, 1998
To: SALOMON BROTHERS INC
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
In care of:
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
▇▇▇▇▇▇▇ Communications, Inc., a Delaware corpora tion (the
"Company"), proposes to issue and sell to you (the "Purchasers") $150,000,000
principal amount of its 7.625% Senior Notes due 2008 (the "Senior Securities")
and $150,000,000 principal amount of its 8.250% Senior Subordinated Notes due
2008 (the "Senior Subordinated Securities" and, together with the Senior
Securities, the "Securities"), to be issued under separate Indentures (the
"Indentures") to be dated as of February 5, 1998, between the Company and The
Bank of New York, as trustee (the "Trustee").
The sale of the Securities to you will be made without
registration of the Securities under the Securities Act of 1933, as amended (the
"Act"), in reliance upon the exemption from the registration requirements of the
Act provided by Section 4(2) thereof. You have advised the
[NYCORP3:548835.3:4575D:02/02/98--1:30p]
2
Company that you will make an offering of the Securities purchased by you
hereunder in accordance with Section 4 hereof on the terms set forth in the
Final Memorandum (as defined below), as soon as you deem advisable after this
Agreement has been executed and delivered.
In connection with the sale of the Securities, the Company has
prepared a final offering memorandum, dated as of January 30, 1998 and delivered
thereafter (the "Final Memorandum"). 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 Final Memorandum in connection
with the offering and resale by the Purchasers of the Securities. Any references
herein to the Final Memorandum shall be deemed to include all exhibits thereto
and all documents incorporated by reference therein which were filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or before
the Execution Time (as defined below); and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Final Memorandum shall
be deemed to refer to and include the filing of any document under the Exchange
Act after the Execution Time which is incorporated by reference therein.
The holders of the Securities will be entitled to the benefits
of the Registration Agreement dated the date hereof, between the Company and the
Purchasers (the "Registration Agreement").
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, the Purchasers as set forth below in this Section
1.
(a) The Final Memorandum as of its date did not, and the Final
Memorandum (as the same may have been amended or supplemented) as of
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
representations or warranties as to the information contained in or
omitted from the Final Memorandum in reliance upon and in conformity
with information furnished in writing to the Company by the Purchasers
specifically for
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inclusion in the Final Memorandum (and any amendment or supplement
thereof or thereto). All documents incorporated by reference in the
Final Memorandum which were filed under the Exchange Act on or before
the Execution Time complied, and all such documents which are filed
under the Exchange Act after the Execution Time and on or before the
Closing Date will comply, in all material respects with the applicable
requirements of the Exchange Act and the rules thereunder.
(b) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange
Act in connection with the offering of the Securities.
(c) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Act ("Regulation D")) of the Company
has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Act) which is or will be integrated with
the sale of the Securities in a manner that would require the
registration of the Securities under the Act or (ii) engaged in any
form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with the offering of the Securities.
(d) It is not necessary in connection with the offer, sale and
delivery of the Securities in the manner contemplated by this Agreement
and the Final Memorandum to register the Securities under the Act or to
qualify the Indentures under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
(e) None of the Company, its affiliates or any person acting
on behalf of the Company or its affili ates has engaged in any directed
selling efforts (as that term is defined in Regulation S under the Act
("Regulation S")) with respect to the Securities, and the Company and
its affiliates and any person acting on its or their behalf have
complied with the offering restrictions requirement of Regulation S.
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(f) The Company is subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act.
(g) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Act. The Company has been advised by the National
Association of Securi ties Dealers, Inc. PORTAL Market that the
Securities have or will be designated PORTAL eligible securities in
accordance with the rules and regulations of the National Association
of Securities Dealers, Inc.
(h) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Final Memorandum; and the
Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, other than where the failure to so qualify could not,
individually or in the aggregate, have a material adverse effect on the
financial condition or business, properties, net worth or results of
operations of the Company and its subsidiaries taken as a whole.
(i) Each Significant Subsidiary (as defined in Rule 1-02(a) of
Regulation S-X promulgated under the Act) of the Company has been duly
incorporated or formed and is an existing corporation or partnership in
good standing under the laws of the jurisdiction of its incorporation
or organization, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Final
Memorandum; and each Significant Subsidiary of the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business required such qualification, other than
when the failure to qualify could not, individually or in the
aggregate, have a material adverse effect on the financial condition or
business, properties, net worth or results of operations of the Company
and its Significant Subsidiaries taken as a whole; all of the
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issued and outstanding capital stock of each Significant Subsidiary of
the Company has been duly authorized and validly issued and is fully
paid and nonassessable; and the capital stock or partnership interest
of each Significant Subsidiary owned by the Company, directly or
through Significant Subsidiaries, is owned free from liens,
encumbrances and defects, except for such proxies, liens, encumbrances
and options disclosed in the Final Memorandum.
(j) The Indentures have been duly authorized; the Securities
have been duly authorized; and when the Securities are delivered and
paid for pursuant to this Agreement on the Closing Date, the Indentures
will be duly executed, authenticated, issued and delivered and will
conform to the description thereof contained in the Final Memorandum
and the Indentures and the Securities will constitute valid and legally
binding obligations of the Company, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(k) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required
for the consummation of the transactions contemplated by this Agreement
or the Registration Agreement in connection with the issuance and sale
of the Securities by the Company, except such as have been obtained and
made under the Act and such as may be required under state securities
laws.
(l) The execution, delivery and performance of the Indentures,
this Agreement and the Registration Agreement, and the issuance and
sale of the Securities and compliance with the terms and provisions
thereof and hereof will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any
statute, any rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the
Company or any subsidiary of the Company or any of their properties, or
any agreement or instrument to which the Company or any such subsidiary
is a party or
6
by which the Company or any such subsidiary is bound or to which any of
the properties of the Company or any such subsidiary is subject, or the
charter or by-laws (or, if applicable, the partnership agreement) of
the Company or any such subsidiary, and the Company has full power and
authority to authorize, issue and sell the securities as contemplated
by this Agreement.
(m) This Agreement and the Registration Agreement have been
duly authorized, executed and delivered by the Company.
(n) Except as disclosed in the Final Memorandum, the Company
and its subsidiaries have good and marketable title to all material
real properties and all other properties and assets owned by them, in
each case free from liens, encumbrances and defects that could
materially affect the value thereof or materially interfere with the
use made or presently contemplated to be made thereof by them; and
except as disclosed in the Final Memorandum, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that are material or could
materially interfere with the use made or presently contemplated to be
made thereof by them.
(o) The Company and its Significant Subsidiaries possess
adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by them other than those the absence of which could not
reasonably be expected to, individually or in the aggregate, have a
material adverse effect on the financial condition or business,
properties, net worth or results of operations of the Company and its
Significant Subsidiaries taken as a whole and have not received any
notice of proceedings relating to the revocation or modification of any
such certificate, authority or permit that, if determined adversely to
the Company or any of its Significant Subsidiaries, could reasonably be
expected to individually or in the aggregate have a material adverse
effect on the financial condition or business, properties, net worth or
results of operations of the Company and its subsidiaries taken as a
whole.
7
(p) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
could reasonably be expected to, individually or in the aggregate, have
a material adverse effect on the financial condition or business,
properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole.
(q) The Company and its Significant Subsidiaries own, possess
or can acquire on reasonable terms, adequate trademarks, trade names
and other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property necessary to
conduct the business now operated by them, other than those the absence
of which could not, individually or in the aggregate, have a material
adverse effect on the financial condition or business, properties, net
worth or results of operations of the Company and its Significant
Subsidiaries taken as a whole, or presently employed by them, and have
not received any notice of infringement of or conflict with asserted
rights of others with respect to any trademarks, trade names or other
rights to inventions, know-how, patents, copyrights, confidential
information or other intellectual property that, if determined
adversely to the Company or any of its subsidiaries, could individually
or in the aggregate have a material adverse effect on the financial
condition or business, properties, net worth or results of operations
of the Company and its Significant Subsidiaries taken as a whole.
(r) Except as disclosed in the Final Memorandum, there are no
pending actions, suits or proceedings against or affecting the Company,
any of its subsidiaries, any of their respective properties or any of
the Company's directors or executive officers that, if determined
adversely to the Company or any of it subsidiaries, could reasonably be
expected to individually or in the aggregate have a material adverse
effect on the financial condition or business, properties, net worth or
results of operations of the Company and its subsidiaries taken as a
whole, or would materially and adversely affect the ability of the
Company to perform its obligations under the
8
Indentures, this Agreement or the Registration Agreement, or which are
otherwise material in the context of the sale of the Securities; and,
to the Company's knowledge, no such actions, suits or proceedings are
threatened.
(s) The financial statements included in the Final Memorandum
present fairly the financial position of the Company and its
consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent
basis, except as otherwise stated therein; and the schedules included
in the Final Memorandum present fairly in all material respects the
information required to be stated therein.
(t) Except as disclosed in the Final Memorandum, since the
date of the latest audited financial statements included in the Final
Memorandum there has been no material adverse change, nor any
development or event which could reasonably be expected to result in a
material adverse change, in the financial condition or business,
properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in the Final
Memorandum, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(u) Except to the extent set forth in the Final Memorandum,
the Company has not received any notice of, nor does it have any actual
knowledge of, any failure by it or any of its Significant Subsidiaries
to be in substantial compliance with all existing statutes and
regulations applicable to it or such subsidiaries, which failure could
materially and adversely affect the financial condition or business,
properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole.
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 the Purchasers, and the Purchasers agree, severally
and not
9
jointly, to purchase from the Company, (a) at a purchase price of 99.000% of the
principal amount thereof, plus accrued interest, if any, from February 5, 1998,
to the Closing Date, the principal amount of Senior Securities set forth
opposite each Purchaser's name in Schedule I hereto and (b) at a purchase price
of 98.892% of the principal amount thereof, plus accrued interest, if any, from
February 5, 1998, to the Closing Date, the principal amount of Senior
Subordinated Securities set forth opposite each Purchaser's name in Scedule I
hereto.
3. Delivery and Payment. Delivery of and payment for the
Securities shall be made at 10:00 AM, New York City time, on February 5, 1998,
or such later date (not later than February 12, 1998) as the Purchasers
designate, which date and time may be postponed by agreement between the
Purchasers and the Company or as provided in Section 9 hereof (such date and
time of delivery and payment for the Securities being herein called the "Closing
Date"). Deliv ery of the Securities shall be made to the Purchasers against
payment by the Purchasers of the purchase price thereof to or upon the order of
the Company by wire transfer in same day funds to an account designated by the
Company no less than two business days prior to the Closing Date. Delivery of
the Securities shall be made at such location as the Purchasers shall reasonably
designate at least one business day in advance of the Closing Date and payment
for the Securities shall be made at the office of Cravath, Swaine & ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇. Certificates for the Securities shall be
registered in such names and in such denominations as the Purchasers may request
not less than three full business days in advance of the Closing Date.
The Company agrees to have the Securities avail able for
inspection, checking and packaging by the 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 Purchaser severally and not
jointly (i) acknowledges that the Securities have not been registered under the
Act and may not be offered or sold except pursuant to, the registration
requirements of the Act or pursuant to an effective registration statement under
the Securities Act and (ii) represents and warrants to and agrees with the
Company that:
10
(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 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 under the
Act or (ii) in accordance with the restrictions set forth in Exhibit A
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, except
pursuant to a registered public offering, whether an exchange offer or
shelf registration, as provided in the Registration Agreement.
5. Agreements. The Company agrees with the Purchasers that:
(a) The Company will furnish to the Purchasers, without
charge, during the period mentioned in para graph (c) below, as many
copies of the Final Memorandum and any supplements and amendments
thereof or thereto as the Purchasers 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, other than by filing documents under the Exchange Act which
are incorporated by reference therein, without prior consent of the
Purchasers. Prior to the completion of the sale of the Securities by
the Purchasers, the Company will not file any document under the
Exchange Act which is incorporated by reference in the Final Memorandum
unless the Company has furnished you a copy for your review prior to
filing and will not file any such document to which you reasonably and
timely object.
(c) The Company will promptly advise the Purchasers when,
prior to the completion of the sale of the Securities by the
Purchasers, any document filed
11
under the Exchange Act which is incorporated by reference in the Final
Memorandum shall have been filed with the Securities and Exchange
Commission (the "Commission").
(d) If at any time prior to the completion of the sale of the
Securities by the 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 shall
be necessary to amend or supplement the Final Memorandum (including any
document incorporated by reference therein which was filed under the
Exchange Act) to comply with the Exchange Act or the rules thereunder
or other applicable law, the Company promptly will notify the
Purchasers of the same and, subject to paragraph (b) of this Section 5,
will prepare and provide to the Pur chasers pursuant to paragraph (a)
of this Section 5 an amendment or supplement which will correct such
state ment or omission or effect such compliance and, in the case of
such an amendment or supplement which is to be filed under the Exchange
Act and which is incorporated by reference in the Final Memorandum,
will file such amendment or supplement with the Commission.
(e) The Company will arrange for the qualifica tion of the
Securities for sale under the laws of such jurisdictions as the
Purchasers may designate, will maintain such qualifications in effect
so long as required for the sale of the Securities and will arrange for
the determination of the legality of the Securities. The Company
promptly will advise the Purchasers of the receipt by it 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.
(f) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D) of the Company will solicit any offer to buy or
offer or sell the Securities by means of any form of general
solicitation
12
or general advertising (within the meaning of Regulation D).
(g) None of the Company, its affiliates nor any person acting
on behalf of the Company or its affiliates will engage in any directed
selling efforts with respect to the Securities within the meaning of
Regulation S, and the Company, its affiliates and each such person
acting on its or their behalf will comply with the offering
restrictions requirement of Regulation S.
(h) So long as any of the Securities are "restricted
securities" within the meaning of Rule 144(a)(3) under the Act, the
Company shall, during any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act, make available, upon request,
to any holder of such Securities in connection with any sale thereof
and any prospective purchaser of Securities from such holder the
information ("Rule 144A Information") specified in Rule 144A(d)(4)
under the Act.
(i) The Company will not, and will not permit any of its
affiliates (as defined in Rule 501(b) of Regulation D) to, resell any
Securities which constitute "restricted securities" under Rule 144
under the Act that have been reacquired by any of them.
(j) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D) will sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in
the Act) the offering of which security will be integrated with the
sale of the Securities in a manner which would require the registration
of the Securities under the Act.
(k) The Company shall use its best efforts in cooperation with
the Purchasers to permit the Securities to be eligible for clearance
and settlement through The Depository Trust Company.
(l) The Company will not, for a period of 90 days following
the Execution Time without prior written consent of Salomon Brothers
Inc, offer, sell or contract to sell, or otherwise dispose of, directly
or
13
indirectly, or announce the offering of, any debt securities issued or
guaranteed by the Company (other than the Securities).
(m) The Company will apply the net proceeds from the sale of
the Securities sold by it substantially in accordance with its
statements under the caption "Use of Proceeds" in the Final Memorandum.
6. Conditions to the Obligations of the Purchasers. The
obligations of the Purchasers to purchase the Securities shall be subject to the
accuracy of the representations and warranties on the part of the Company
contained herein as of 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 Purchasers the
opinion of ▇▇▇▇, Ewing, ▇▇▇▇▇▇ & ▇▇▇▇, counsel for the Company, dated
the Closing Date, to the effect that:
(i) each of the Company, Suburban Cable TV Co. Inc.,
LenComm, Inc., ▇▇▇▇▇▇▇ West, Inc., ▇▇▇▇▇▇▇ Atlantic, Inc.,
▇▇▇▇▇▇▇ Newcastle County, Inc. and CAH, Inc. (individually a
"Cable Television Subsidiary" and collectively the "Cable
Television Subsidiaries"), has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the jurisdiction in which it is chartered or
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;
(ii) all the outstanding shares of capital stock of
each Cable Television Subsidiary have
14
been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the
Final Memorandum, all outstanding shares of capital stock of
the Cable Television Subsidiaries are owned by the Company
either directly or through wholly owned subsidiaries free and
clear of any perfected security interest and, to the knowledge
of such counsel, after due inquiry, any other security
interests, claims, liens or encumbrances;
(iii) the Company's authorized equity capitalization
is as set forth in the Final Memorandum; and the Securities
conform to the description thereof contained in the Final
Memorandum;
(iv) the Indentures have been duly authorized,
executed and delivered, and constitute legal, valid and
binding instruments enforceable against the Company in
accordance with their respective terms (subject, as to
enforcement of remedies, to applicable bankruptcy,
reorganization, arrangement, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time
in effect and subject, as to enforceability, to general
principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at
law); and the Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions
of the Indentures and delivered to and paid for by the
Purchasers pursuant to this Agreement, will constitute legal,
valid and binding obligations of the Company entitled to the
benefits of the Indentures;
(v) such counsel has no reason to believe that as of
the Execution Time the Final Memorandum contained any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
state ments therein not misleading or that the Final
Memorandum includes any untrue statement of a material fact or
omits to state a material fact
15
necessary to make the statements therein, in the
light of the circumstances under which they were
made, not misleading;
(vi) this Agreement and the Registration Agreement
have been duly authorized, executed and delivered by the
Company;
(vii) no consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transac tions contemplated herein or in
the Registration Agreement, except such as may be required
under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the
Purchasers, such as are required under the Act, the Exchange
Act and such blue sky laws in connection with the transactions
contemplated by the Registration Agreement and such other
approvals (specified in such opinion) as have been obtained;
(viii) neither the issue and sale of the Securities,
the execution and delivery of the Indentures, this Agreement
or the Registration Agreement the consummation of any other of
the transactions herein or therein contemplated nor the
fulfillment of the terms hereof or thereof will conflict with,
result in a breach or violation of, or constitute a default
under any law or the charter or by-laws of the Company or the
terms of any indenture or other agreement or instrument known
to such counsel and to which the Company or any of its
subsidiaries is a party or bound or any judgment, order or
decree known to such counsel to be applicable to the Company
or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Company or any of its subsidiaries; and
(ix) it is not necessary in connection with the
offer, sale and delivery of the Securities in the manner
contemplated by this Agreement to register the Securities
under the Act or to
16
qualify the Indentures under the Trust Indenture
Act.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of Pennsylvania or 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 Purchasers and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. Refer ences to the Final
Memorandum in this paragraph (a) include any amendments or supplements
thereof or thereto at the Closing Date.
(b) The Company shall have furnished to the Purchasers the
opinion of ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇, L.L.P., special counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Company and its subsidiaries have been
granted and presently hold the Federal Communications
Commission (the "FCC") authorizations necessary for the
Company and its subsidiaries to conduct their respective
businesses as presently conducted or proposed to be conducted
other than those that could not reasonably be expected to,
individually or in the aggregate, have a material adverse
effect on the Company and its subsidiaries taken as a whole;
to the knowledge of such counsel such FCC authorizations are
in full force and effect; and to the knowledge of such
counsel, except as set forth in a schedule to such opinion, no
proceedings to revoke such FCC authorizations are pending or
threatened;
(ii) to the knowledge of such counsel after due
inquiry, such counsel is of the opinion that the Company and
its subsidiaries are not, nor with the passage of time or the
giving of notice or both would be, in violation of any
judgment, injunction, order or decree of the FCC relating
specifically to the Company or its subsidiaries or
17
to any properties of the Company or its subsidiaries other
than those that could not reasonably be expected to,
individually or in the aggregate, have a material adverse
effect on the Company and its subsidiaries taken as a whole;
(iii) the execution and delivery of this Agreement,
the Registration Agreement and the Securities by the Company,
and the performance by the Company of its obligations under
this Agreement, the Registration Agreement and the Securities,
do not violate the Communications Act of 1934, as amended, or
any rules or the regulation thereunder binding on the Company
or its subsidiaries or any order, writ, judgement, injunction,
decree or award of the FCC binding on the Company or its
subsidiaries of which such counsel has knowledge after due
inquiry:
(iv) there is no proceeding or investigation pending
before the FCC, or, to the knowledge of such counsel, any
investigation pending or threatened by the FCC against the
Company or its subsidiaries which, if adversely determined,
could have a material adverse effect on the Company and its
subsidiaries taken as a whole;
(v) the execution, delivery and performance of this
Agreement or the Registration Agreement does not constitute
the transfer or assignment, directly or indirectly, or any
license existing as of the Closing Date issued by the FCC in
connection with the operations of the Company or its
subsidiaries or the transfer of control of the Company or its
subsidiaries within the meaning of Section 310(d) of the
Communications Act of 1934, as amended; and
(vi) the statements in the Final Memorandum under the
heading "Legislation and Regulation" fairly summarize the
matters therein described.
(c) The Purchasers shall have received an opinion, dated the
Closing Date, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq., Vice President--General
Counsel of the Company, to the effect that, (i) to the best knowledge
18
of such counsel after due inquiry, no franchising authority has claimed
in writing that the Company or any subsidiary is in default under any
franchise that, if revoked, would have a material adverse effect,
individually or in the aggregate, on the Company and its subsidiaries
taken as a whole and (ii) to the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding before any court
or governmental agency, authority or body or any arbitrator involving
the Company, any of its subsidiaries or any of the Company's directors
or executive officers of a character that would be required to be
disclosed in a registration statement filed under the Act which is not
adequately disclosed in the Final Memorandum, and there is no
franchise, contract or other document of a character required to be
described in a registration statement filed under the Act, or required
to be filed as an exhibit to such a registration statement, which is
not described in the Final Memorandum; and the statements in the
Company's Form 10-K for the fiscal year ended December 31, 1996, under
the heading "Legal Proceedings" fairly summarize the matters therein
described.
(d) The Purchasers shall have received from Cravath, Swaine &
▇▇▇▇▇, counsel for the Purchasers, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Securities,
the Indentures, the Final Memorandum (together with any amendment or
supplement thereof or thereto) and other related matters as the
Purchasers may reasonably re quire, 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 Purchasers a
certificate of the Company, signed by the Chairman of the Board or the
President and the vice president, finance of the Company, dated the
Closing Date, to the effect that the signers of such certificate have
carefully examined the Final
19
Memorandum, any amendment or supplement to the Final Memorandum and
this Agreement and the Registration 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 at or prior to the Closing
Date; and
(ii) since the date of the most recent ▇▇▇▇▇ cial
statements included in the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto), there has been no
material adverse change in the condition (financial or other),
earnings, business or properties of the Company and its
subsidiaries, whether or not arising from transactions in the
ordinary course of business, except as set forth in or
contemplated in the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto).
(f) At the Execution Time and at the Closing Date, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP shall have furnished to the 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 Purchasers,
confirming that they are independent accountants within the meaning of
the Exchange Act and the applicable published rules and regulations
thereunder and that they have performed a review of the unaudited
interim financial information of the Company for the nine-month period
ended September 30, 1997, in accordance with Statement of Accounting
Standards No. 71 and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules and pro forma financial
statements included or incorporated in the Final Memorandum
and reported on by them comply in form in all material
respects with the applicable accounting requirements of the
20
Exchange Act and the related published rules and
regulations;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and its subsidiaries; 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 and directors of the Company
and its subsidiaries; and inquiries of certain officials of
the Company who have responsibility for financial and account-
ing matters of the Company and its subsidiaries as to
transactions and events subsequent to December 31, 1996,
nothing came to their attention which caused them to believe
that:
(1) any unaudited financial statements
included or incorporated 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 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 conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited
financial statements included or incorporated in the
Final Memorandum; or
(2) with respect to the period subsequent to
September 30, 1997, there were any changes, at a
specified date not more than five business days prior
to the date of the letter, in the Notes Payable or
decreases in the Stockholders' Equity (Deficit) or
Total Assets of the Company as compared with the
amounts shown on the September 30, 1997, consolidated
balance sheet included or incorporated in the Final
Memorandum, or for the period from October 1, 1997,
to such
21
specified date there were any decreases, as compared
with the corresponding period in the preceding year,
in Net Income (Loss), Income (Loss) Before Income
Taxes, Operating Income or Revenues, 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 Purchasers; 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 its subsidiaries) set forth or incorporated in the
Final Memorandum agrees with the accounting records of the
Company and its subsidiaries, excluding any questions of legal
interpretation.
References to the Final Memorandum in this para graph (f)
include any amendment or supplement thereof or thereto at the date of
the letter.
The Purchasers shall have also received from ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇ LLP a letter stating that the Company's system of internal
accounting controls taken as a whole is sufficient to meet the broad
objectives of internal accounting control insofar as those objectives
pertain to the prevention or detection of errors or irregularities in
amounts that would be material in relation to the financial statements
of the Company and its subsidiaries.
(g) At the Execution Time and at the Closing Date, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP shall have furnished to the 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 Purchasers, con
firming that they are independent accountants within the meaning of the
Act and the applicable published
22
rules and regulations thereunder and that they have performed a review
of the unaudited interim financial information of Garden State
Cablevision L.P. for the nine-month period ended and as of September
30, 1997, in accordance with Statement on Accounting Standards No. 71
and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included in the Final
Memorandum and reported on by them comply in form in all
material respects with the applicable accounting requirements
of the Act and the Exchange Act and the related published
rules and regulations;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by Garden State
Cablevision L.P.; 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
partners of Garden State Cablevision L.P.; and inquiries of
certain officials of Garden State Cablevision L.P. who have
responsibility for financial and accounting matters of Garden
State Cablevision L.P. as to transactions and events
subsequent to December 31, 1996, nothing came to their
attention which caused them to believe that:
(1) any unaudited financial statements of
Garden State Cablevision L.P. included or
incorporated in the Final Memorandum do not comply in
form in all material respects with applicable
accounting requirements of the Act and with the
published rules and regulations of the 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 conformity with gener ally
accepted accounting principles applied on a basis
substantially consistent with that
23
of the audited financial statements included
in the Final Memorandum; or
(2) with respect to the period subsequent to
September 30, 1997, 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 or
increases in the Partners' Deficit of Garden State
Cablevision L.P. as compared with the amounts shown
on the September 30, 1997, consolidated balance sheet
included or incorporated in the Final Memorandum, or
for the period from October 1, 1997, to such
specified date there were any decreases, as compared
with the corresponding period in the preceding year
in Net Loss, Operating Income or Service Income,
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 Garden State
Cablevision L.P. as to the significance thereof
unless said explanation is not deemed necessary by
the Purchasers.
References to the Final Memorandum in this paragraph (g)
include any amendment or supplement thereof or thereto at the date of
the letter.
(h) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Final Memorandum (exclusive of
any amendment or supplement thereof or thereto), there shall not have
been (i) any change or decrease specified in the letter or letters
referred to in paragraphs (f) or (g) 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 its
subsidiaries the effect of which, in any case referred to in clause (i)
or (ii) above, is, in the judgment of the Purchasers, so material and
adverse as to make it impractical or inadvisable to market the
Securities as contemplated by the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto).
24
(i) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of the Company's debt securities
by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act) or any notice given
of any intended or potential decrease in any such rating or of a
possible change in any such rating that does not indicate the direction
of the possible change.
(j) Prior to the Closing Date, the Company shall have
furnished to the Purchasers such further informa tion, certificates and
documents as the Purchasers may reasonably request.
(k) On or prior to the Closing Date, the Company shall have
furnished to the Purchasers a Consent or Waiver under the Bank Credit
Facility (as defined in the Final Memorandum) in order to permit the
Company to enter into the transactions contemplated by this Agreement.
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 Purchasers and counsel for the
Purchasers, this Agreement and all obligations of the Purchasers hereunder may
be canceled at, or at any time prior to, the Closing Date by the Purchasers.
Notice of such cancelation 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 shall
be delivered at the office of Cravath, Swaine & ▇▇▇▇▇, counsel for the
Purchasers, at Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, on the
Closing Date.
7. Reimbursement of Purchasers' Expenses. If the sale of the
Securities provided for herein is not con summated because any condition to the
obligations of the 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
25
the Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by the Purchasers, the Company will reimburse
the Purchasers upon demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been incurred by it in
connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Purchaser, the directors, officers, employees
and agents of each Purchaser and each person who controls any Purchaser within
the meaning of either the 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 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 Final Memorandum or any Rule 144A 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
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 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 the
Purchasers specifically for inclusion therein. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each Purchaser severally agrees to indemnify and hold
harmless the Company, its directors, its officers, and each person who controls
the Company within the meaning
26
of either the Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Company to each Purchaser, but only with reference to written
information relating to such Purchaser furnished to the Company by or on behalf
of such Purchaser specifically for inclusion in the Final Memorandum, or in any
amendment thereof or supplement thereto. This indemnity agreement will be in
addition to any liability which any Purchaser may otherwise have. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page and under the heading "Plan of Distribution" in the Final Memorandum
constitute the only information furnished in writing by or on behalf of the
several Purchasers for inclusion in the Final Memorandum, and you, as the
Purchasers, confirm that such statements are correct.
(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 writ ing 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 indemni fying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indem nified party or parties except as set forth below);
provided, however, that such counsel shall be 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 separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such
27
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.
The indemnifying parties will not be liable under this
Agreement for any amount paid by the indemnified parties to settle any claims or
actions if the settlement is entered into without their consent, which may not
be withheld unless such settlement is unreasonable in light of such claims or
actions against, and defenses available to the indemnified parties. If the
indemnifying parties do withhold their consent to a proposed settlement, and the
claim or action against the indemnified parties is not settled as proposed, the
indemnifying parties will then indemnify the indemnified parties in accordance
with the previous paragraph, or if such indemnity is unavailable for any reason,
contribute in accordance with clause (d) below.
(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 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)
28
(collectively "Losses") to which the Company and one or more of the Purchasers
may be subject in such proportion as is appropriate to reflect the relative
benefits received by the Company and by the Purchasers from the offering of the
Securities; provided, however, that in no case shall the Purchasers (except as
may be provided in any agreement among Purchasers relating to the offering of
the Securities) be responsible for any amount in excess of the purchase discount
or commission applicable to the Securities purchased by the Purchasers
hereunder. If the allocation provided by the immediately preceding sentence is
unavail able for any reason, the Company and the 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 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 Purchasers shall be deemed to be equal
to the total purchase discounts and commissions, in each case as set forth on
the cover page of the Final Memorandum. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the Company or the Purchasers. The Company and the
Purchasers agree that it would not be just and equitable if contribution 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 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 a Purchaser within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of a Purchaser shall have the
same rights to contribution as such Purchaser, and each person who controls the
Company within the meaning of either the 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).
29
9. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Purchasers, by notice given to the
Company prior to delivery of and payment for the Securities, 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 Purchasers,
impracticable or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Final Memorandum (exclusive of any amendment
or supplement thereof or thereto).
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the 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 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 Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancelation of this
Agreement.
11. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Purchasers, will be mailed,
delivered or telegraphed and confirmed to it, at Seven World Trade Center, New
York, New York, 10048; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
12. 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 no other person will have any right or obligation hereunder.
30
13. Applicable Law. This Agreement will be gov erned by and
construed in accordance with the laws of the State of New York (without regard
to principles of conflicts of law).
31
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company and the several Purchasers.
Very truly yours,
▇▇▇▇▇▇▇ COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the date first
above written.
SALOMON BROTHERS INC
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
By: SALOMON BROTHERS INC
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Name:
Title:
32
SCHEDULE I
Principal Amount
of Senior
Securities
Initial Purchaser to be Purchased
----------------- ---------------
Salomon Brothers Inc......................................... $75,000,000
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC........................ 75,000,000
-----------
Total............................................... $150,000,000
============
Principal Amount
of Senior
Subordinated
Securities
Initial Purchaser to be Purchased
----------------- ---------------
Salomon Brothers Inc......................................... $75,000,000
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC........................ 75,000,000
-----------
Total............................................... $150,000,000
1
EXHIBIT A
Selling Restrictions for Offers and
Sales outside the United States
(1)(a) The Securities have not been and will not be registered
under the 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 or pursuant to an exemption from the registration requirements of the Act.
Each Purchaser represents and agrees that, except as otherwise permitted by
Section 4(a)(i) of the Agreement to which this is an Exhibit, it has offered and
sold the Securities, and will offer and sell the Securities, (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. Accordingly, each 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 Securities, and that it and they have complied and will comply with the
offering restrictions requirement of Regulation S. Each Purchaser agrees that,
at or prior to the confirmation of sale of Securities (other than a sale of
Securities pursuant to Section 4(a)(i) 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 Securities 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 "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, except in
either case in accordance with Regulation S, Rule 144A under
the Act or another available exemption from registration under
the Act. Terms used above have the meanings given to them by
Regulation S."
2
(b) Each 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 Securities, except with its affiliates
or with the prior written consent of the Company.
(c) Terms used in this Exhibit but not defined in the
Agreement to which this Exhibit is attached have the meanings given to them by
Regulation S.
(2) Each 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 Securities 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 Act 1985 of Great Britain), (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 of the
United Kingdom with respect to anything done by it in relation to the Securities
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 Securities to a person who is
of a kind described in Article 9(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1988 or is a person to whom the
document may otherwise lawfully be issued or passed on.
