ADELPHIA COMMUNICATIONS CORPORATION
$150,000,000 10 1/2% Senior Notes due 2004
$95,000,000 13% Series A Cumulative Exchangeable Preferred Stock
PURCHASE AGREEMENT
July 1, 1997
Xxxxx Xxxxxx Inc.
Bear, Xxxxxxx & Co. Inc.
NationsBanc Capital Markets, Inc.
TD Securities (USA) Inc.
c/o Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Adelphia Communications Corporation, a Delaware corporation
(the "Company"), proposes, upon the terms and conditions set forth herein, to
issue and sell to you, as the initial purchasers (the "Initial Purchasers"), (a)
$150,000,000 in aggregate principal amount of its 10 1/2% Senior Notes due 2004
(the "Senior Notes") and (b) an aggregate of 950,000 shares (the "Shares") of
13% Series A Cumulative Exchangeable Preferred Stock, par value $.01 per share
(Liquidation Preference $100.00 per share) (the "Exchangeable Preferred Stock").
The Senior Notes will (i) have the terms and provisions which are summarized in
the Offering Memorandum (as defined herein), (ii) be in the forms specified by
the Initial Purchasers pursuant to Section 3 hereof, and (iii) be issued
pursuant to the provisions of an Indenture, to be dated as of July 7, 1997 (the
"Indenture"), between the Company and Bank of Montreal Trust Company, as trustee
(the "Trustee"). The Shares will (i) have the terms and provisions which are
summarized in the Offering Memorandum (as defined herein), (ii) be in the forms
specified by the Initial Purchasers pursuant to Section 3 hereof, (iii) be
issued pursuant to the Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions thereof of 13% Series A Cumulative
Exchangeable Preferred Stock and 13% Series B Cumulative Exchangeable Preferred
Stock of Adelphia Communications Corporation (the "Certificate of Designations")
and (iv) be exchangeable as set forth in the Certificate of Designations for the
Company's 13% Senior Subordinated Exchange Debentures due 2009 (the "Exchange
Debentures" and collectively with the Senior Notes and the Exchangeable
Preferred Stock, the "Initial Securities").
The Company also proposes to issue and sell, pursuant to a
separate purchase agreement, 550,000 shares (the "Highland Shares") of the
Exchangeable Preferred Stock to Highland Holdings. Unless the context otherwise
requires, references herein to the Exchangeable Prefered Stock include the
Highland Shares.
The Company wishes to confirm as follows its agreement with
you the Initial Purchasers in connection with the purchase and resale of the
Senior Notes and the Shares.
Preliminary Offering Memorandum and Offering Memorandum. The Senior
Notes and the Shares will be offered and sold to the Initial Purchasers without
registration under the Securities Act of 1933, as amended (the "Act"), in
reliance on an exemption pursuant to Section 4(2) under the Act. The Company has
prepared a preliminary offering memorandum, dated June 23, 1997, which includes
the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
1997 and the Company's Form 10-K/A dated July 29, 1996 (the "Preliminary
Offering Memorandum"), and an offering memorandum, dated July 1, 1997, which
includes the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1997 and the Company's Form 10-K/A dated July 29, 1996 (the "Offering
Memorandum"), setting forth information regarding the Company, the Initial
Securities and the New Securities (as defined herein). Any references herein to
the Preliminary Offering Memorandum and the Offering Memorandum shall be deemed
to include all amendments and supplements thereto, if any. The Company hereby
confirms that it has authorized the use of the Preliminary Offering Memorandum
and the Offering Memorandum in connection with the offering and resale of the
Senior Notes and the Shares by the Initial Purchasers.
The Company understands that the Initial Purchasers propose to
make offers (the "Exempt Resales") of the Senior Notes and the Shares purchased
by the Initial Purchasers hereunder only on the terms set forth in the Offering
Memorandum, and Section 2 hereof, as soon as the Initial Purchasers deem
advisable after this Agreement has been executed and delivered, solely to
persons whom the Initial Purchasers reasonably believe to be "qualified
institutional buyers" as defined in Rule 144A under the Act ("QIBs") (such
persons also being referred to herein as the "Eligible Purchasers").
It is understood and acknowledged that upon original issuance
thereof, and until such time as the same is no longer required under the
applicable requirements of the Act, the Initial Securities (and all securities
issued in exchange therefor, in substitution thereof) shall bear the following
legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (4) TO AN
INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM
THE REGISTRATION
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REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND OTHER JURISDICTIONS."
It is also understood and acknowledged that holders (including
subsequent transferees) of the Initial Securities will have the registration
rights set forth (i) with respect to the Senior Notes, in the registration
rights agreement (the "Notes Registration Rights Agreement"), to be dated the
Closing Date, in substantially the form of Exhibit A hereto, for so long as such
Senior Notes constitute "Transfer Restricted Securities" (as defined in the
Notes Registration Rights Agreement), and (ii) with respect to the Exchangeable
Preferred Stock and the Exchange Debentures, in the registration rights
agreement (the "Exchangeable Preferred Stock Registration Rights Agreement" and
collectively with the Notes Registration Rights Agreement, the "Registration
Rights Agreements"), to be dated the Closing Date, in substantially the form of
Exhibit B hereto, for so long as such Exchangeable Preferred Stock or Exchange
Debentures constitute "Transfer Restricted Securities" (as defined in the
Exchangeable Preferred Stock Registration Rights Agreement). Pursuant to such
Registration Rights Agreements, the Company will agree to file with the
Securities and Exchange Commission (the "Commission") under the circumstances
set forth therein, (i) a registration statement under the Act relating to (a)
the Company's 10 1/2% Senior Notes due 2004 (the "New Notes") to be offered in
exchange for the Senior Notes, (b) the Company's 13% Series B Cumulative
Exchangeable Preferred Stock to be offered in exchange for the Exchangeable
Preferred Stock (the "New Exchangeable Preferred Stock") and (c) the Company's
13% Senior Subordinated Exchange Debentures due 2009 to be offered in exchange
for the Exchange Debentures (the "New Exchange Debentures") (the "Registered
Exchange Offer") and (ii) under certain circumstances, a shelf registration
statement pursuant to Rule 415 under the Act relating to the resale by certain
holders of the Initial Securities, and to use its best efforts to cause such
registration statement to be declared effective. As used herein, (i) the New
Notes, the New Exchangeable Preferred Stock and the New Exchange Debentures are
hereinafter referred to collectively as the "New Securities," (ii) the Senior
Notes and the New Notes are hereinafter referred to collectively as the "Notes,"
(iii) the Exchangeable Preferred Stock, the Highland Shares and the New
Exchangeable Preferred Stock are hereinafter referred to collectively as the
"Preferred Stock," (iv) the Exchange Debentures and the New Exchange Debentures
are hereinafter referred to collectively as the "Debentures" and (v) the Initial
Securities and the New Securities are hereinafter referred to collectively as
the "Securities." This Agreement, the Indenture, the indenture governing the
Exchange Debentures (the "Exchange Indenture"), the Registration Rights
Agreements, the Certificate of Designations and the Securities are hereinafter
referred to collectively as the "Operative Documents."
Agreements to Sell, Purchase and Resell. The Company
hereby agrees, on the basis of the representations, warranties and agreements of
the Initial Purchasers contained herein and subject to all the terms and
conditions set forth herein, to issue and sell to the Initial Purchasers and,
upon the basis of the representations, warranties and agreements of the Company
herein contained and subject to all the terms and conditions set forth herein,
each Initial Purchaser agrees severally and not jointly to purchase from the
Company, (i) with respect to the Senior Notes, at a purchase price of 99.2666%
of the principal amount thereof and (ii) with respect to the Shares at a
purchase price per share of $98.8421, the principal amount of Senior Notes and
the number of Shares set forth opposite the name of such Initial Purchaser in
Schedule I hereto. The Company shall not be obligated to deliver any (i) of the
Senior Notes to be delivered hereunder except upon payment for all of the Senior
Notes to be purchased as provided herein or (ii) Shares to be delivered
hereunder except upon payment for all of the Shares to be purchased as provided
herein.
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Each of the Initial Purchasers hereby represents and
warrants to the Company that it will offer the Senior Notes and the Shares for
sale upon the terms and conditions set forth in this Agreement and in the
Offering Memorandum. Each of the Initial Purchasers hereby represents and
warrants to, and agrees with, the Company that such Initial Purchaser (i) is
either a QIB or other institutional "accredited investor," as defined in Rule
501(a)(1), (2), (3) or (7) under the Act (each, an "Accredited Institution"), in
either case with such knowledge and experience in financial and business matters
as are necessary in order to evaluate the merits and risks of an investment in
the Senior Notes and the Shares; (ii) is purchasing the Senior Notes and Shares
pursuant to a private sale exempt from registration under the Act; (iii) in
connection with the Exempt Resales, will solicit offers to buy the Senior Notes
and the Shares only from, and will offer to sell the Senior Notes and the Shares
only to, the Eligible Purchasers in accordance with this Agreement and on the
terms contemplated by the Offering Memorandum; and (iv) will not offer or sell
the Senior Notes or the Shares nor has it offered or sold the Senior Notes or
the Shares by, or otherwise engaged in, any form of general solicitation or
general advertising (within the meaning of Regulation D; including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising) in connection with the offering of
the Senior Notes and the Shares. The Initial Purchasers have advised the Company
that the Initial Purchasers will initially offer (i) the Senior Notes to
Eligible Purchasers at a price of 100% of the principal amount thereof, plus
accrued interest, if any, from the date of issuance of the Senior Notes and (ii)
the Shares to Eligible Purchasers at a price of $100 per Share. Such prices may
be changed by the Initial Purchasers at any time thereafter without notice.
Each of the Initial Purchasers understands that the Company
and, for purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Sections 7(d) and 7(h) hereof, counsel to the Company and counsel to
the Initial Purchasers, will rely upon the accuracy and truth of the foregoing
representations, warranties and agreements and the Initial Purchasers hereby
consent to such reliance.
Delivery of the Senior Notes and the Shares and
Payment Therefor. Delivery to the Initial Purchasers of and payment for the
Senior Notes and the Shares shall be made at the office of Xxxxxx & Xxxxxxx, 000
Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 at 9:00 A.M., New York City
time, on July 7, 1997 (the "Closing Date"). The place of closing for the Senior
Notes and the Shares and the Closing Date may be varied by agreement between the
Initial Purchasers and the Company.
The Senior Notes and the Shares will be delivered to
the Initial Purchasers against payment of the purchase price therefor in
immediately available funds. The Senior Notes and the Shares will be evidenced
by one or more global securities in definitive form (the "Global Securities"),
and will be registered in the name of Cede & Co. as nominee of The Depository
Trust Company ("DTC"). The Senior Notes and the Shares to be delivered to the
Initial Purchasers shall be made available to the Initial Purchasers in New York
City for inspection and packaging not later than 9:30 A.M., New York City time,
on the business day next preceding the Closing Date.
Agreements of the Company. The Company agrees with
the Initial Purchasers as follows:
The Company will furnish to the Initial Purchasers,
without charge, such number of copies of the Offering Memorandum as the Initial
Purchasers may reasonably request.
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The Company will not make any amendment or supplement
to the Preliminary Offering Memorandum or to the Offering Memorandum of which
the Initial Purchasers shall not previously have been advised or to which the
Initial Purchasers shall reasonably object after being so advised, including by
way of filing any document with the Commission that would be incorporated
therein by reference.
Prior to the execution and delivery of this
Agreement, the Company shall have delivered or will deliver to the Initial
Purchasers, without charge, in such quantities as the Initial Purchasers shall
have requested or may hereafter reasonably request, copies of the Preliminary
Offering Memorandum. The Company consents to the use, in accordance with the
securities or Blue Sky laws of the jurisdictions in which the Senior Notes or
the Shares are offered by the Initial Purchasers and by dealers, prior to the
date of the Offering Memorandum, of each Preliminary Offering Memorandum so
furnished by the Company. The Company consents to the use of the Offering
Memorandum in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Senior Notes or the Shares are offered by the Initial
Purchasers and by all dealers to whom Senior Notes or Shares, may be sold, in
connection with the offering and sale of the Senior Notes and the Shares.
If, at any time prior to completion of the
distribution of the Senior Notes and the Shares by the Initial Purchasers to
Eligible Purchasers, any event shall occur that in the judgment of the Company,
or in the opinion of counsel for the Initial Purchasers, should be set forth in
the Offering Memorandum in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it is
necessary to supplement or amend the Offering Memorandum in order to comply with
any law, the Company will forthwith prepare an appropriate supplement or
amendment thereto, and will expeditiously furnish to the Initial Purchasers and
dealers a reasonable number of copies thereof.
The Company will cooperate with the Initial
Purchasers and with their counsel in connection with the qualification of the
Senior Notes and the Shares for offering and sale by the Initial Purchasers and
by dealers under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect such
qualifications; provided, that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Senior Notes or the
Shares, in any jurisdiction where it is not now so subject.
So long as any of the Securities are outstanding, the
Company will furnish to the Initial Purchasers (i) as soon as available, a copy
of each report of the Company mailed to stockholders generally or filed with any
stock exchange or regulatory body and (ii) from time to time such other
information concerning the Company as the Initial Purchasers may reasonably
request.
If this Agreement shall terminate or shall be
terminated after execution and delivery pursuant to any provisions hereof
(otherwise than by notice given by the Initial Purchasers terminating this
Agreement pursuant to Section 10 hereof) or if this Agreement shall be
terminated by the Initial Purchasers because of any failure or refusal on the
part of the Company to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse the Initial Purchasers for all
out-of-pocket expenses (including reasonable fees and expenses of their counsel)
reasonably incurred by them in connection herewith, but without any further
obligation on the part of the Company for loss of profits or otherwise.
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The Company will apply the net proceeds from the sale
of the Senior Notes and the Shares to be sold by it hereunder and from the sale
of the Highland Shares and the Company's Series C Cumulative Convertible
Preferred Stock (the "Convertible Preferred Stock") substantially in accordance
with the description set forth in the Offering Memorandum under the caption "Use
of Proceeds."
Except as stated in this Agreement and in the
Preliminary Offering Memorandum and Offering Memorandum, the Company has not
taken, nor will it take, directly or indirectly, any action designed to or that
might reasonably be expected to cause or result in stabilization or manipulation
of the price of the Securities to facilitate the sale or resale of the
Securities. Except as permitted by the Act, the Company will not distribute any
offering material in connection with the Exempt Resales.
The Company will use its best efforts to permit the
Securities to be designated Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in the PORTAL Market and to permit the Securities to be
eligible for clearance and settlement through DTC.
From and after the Closing Date, so long as any of
the Securities are outstanding and are "restricted securities" within the
meaning of the Rule 144(a)(3) under the Act or, if earlier, until two years
after the Closing Date, and during any period in which the Company is not
subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Company will furnish to holders of the
Securities and prospective purchasers of the Securities designated by such
holders, upon request of such holders or such prospective purchasers, the
information (the "Additional Company Information") required to be delivered
pursuant to Rule 144A(d)(4) under the Act to permit compliance with Rule 144A in
connection with resales of the Securities.
The Company has complied and will comply with all
provisions of Florida Statutes Section 517.075 relating to issuers doing
business with Cuba.
The Company agrees not to sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Act) that would be integrated with the sale of the Senior Notes
and the Shares in a manner that would require the registration under the Act of
the sale to the Initial Purchasers or the Eligible Purchasers of the Senior
Notes and the Shares.
The Company agrees to comply with all the terms and
conditions of the Registration Rights Agreements and all agreements set forth in
the representation letters of the Company to DTC relating to the approval of the
Securities by DTC for "book entry" transfer.
The Company agrees to cause the Registered Exchange
Offer to be made in the appropriate form, as contemplated by the Registration
Rights Agreements, to permit registration of the New Securities to be offered in
exchange for the Initial Securities, and to comply with all applicable federal
and state securities laws in connection with the Registered Exchange Offer.
The Company agrees that prior to any registration of
the Senior Notes pursuant to the Notes Registration Rights Agreement, or at such
earlier time as may be required, the Indenture shall be qualified under the
Trust Indenture Act of 1939 (the "1939 Act") and any necessary supplemental
indentures will be entered into in connection therewith.
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The Company agrees that prior to (i) any registration
of the Exchange Debentures pursuant to the Exchangeable Preferred Stock
Registration Rights Agreement or otherwise, or at such earlier time as may be
required, the Exchange Indenture shall be qualified under the 1939 Act and any
necessary supplemental indentures will be entered into in connection therewith.
The Company will not voluntarily claim, and will
resist actively all attempts to claim, the benefit of any usury laws against
holders of the Notes or the Debentures.
The Company agrees that on or prior to the Closing
Date, it shall cause the Certificate of Designations to be filed with the
appropriate authorities.
The Company agrees to consummate the sale of the
Highland Shares and the shares of the Convertible Preferred Stock prior to or
simultaneously with the consummation of the sale of the Senior Notes and the
Shares hereunder.
The Company will do and perform all things required
or necessary to be done and performed under this Agreement by it prior to the
Closing Date, and to satisfy all conditions precedent to the Initial Purchasers'
obligations hereunder to purchase the Senior Notes and the Shares.
(v) The Company has furnished to you a "lock-up" letter with
respect to the Highland Shares, in form and substance satisfactory to you,
signed by Highland Holdings.
Representations and Warranties of the Company. The
Company represents and warrants to the Initial Purchasers that:
The Preliminary Offering Memorandum and the Offering
Memorandum have been prepared in connection with the offering of the
Senior Notes and the Shares. The Preliminary Offering Memorandum or the
Offering Memorandum, as the case may be, and any amendments or
supplements thereto did not and will not, as of their respective dates,
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by the
Initial Purchasers concerning the Initial Purchasers expressly for use
therein (the "Initial Purchasers Information"). Each of the Preliminary
Offering Memorandum and the Offering Memorandum, as of its date,
contains all the information specified in, and meeting the requirements
of, Rule 144A(d)(4) under the Act.
The Company has not sustained since March 31, 1997
any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Offering Memorandum; and, since the respective dates as of which
information is given in the Offering Memorandum, there has not been any
reduction in the consolidated stockholders' equity or change in the
capital stock, as applicable (other than reductions in the ordinary
course of business consistent with prior periods), material increase in
the total amount of short-term debt (excluding trade payables) and
long-term debt of the Company or any of its material subsidiaries (the
"Subsidiaries") or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, partners' equity,
shareholders' equity or results
7
of operations of the Company and its Subsidiaries,
otherwise than as set forth or contemplated in the Offering Memorandum;
Each of the Company and its Subsidiaries has good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as
are described in the Offering Memorandum or such as do not affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
Subsidiaries; and any real property and buildings held under lease by
the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its Subsidiaries;
except in any case that would not have a material adverse effect on the
business, general affairs, management, financial position, partners
equity or shareholders' equity (other than reductions in the ordinary
course of business consistent with prior periods), results of
operations or prospects of the Company and its Subsidiaries, taken as a
whole (a "Material Adverse Effect");
(i) Each of the Subsidiaries that are partnerships
has been duly formed and is validly existing as a partnership in good
standing under the laws of its state of formation, with full power and
authority (partnership and other) to own its properties and conduct its
business as described in the Offering Memorandum, and has been duly
qualified as a foreign partnership 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, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction except where the failure to so qualify would not have a
Material Adverse Effect; and (ii) each of the Company and the
Subsidiaries that are corporations has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
its state of incorporation, with full power and authority (corporate
and other) to own its properties and conduct its business as described
in the Offering Memorandum, and has been 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, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction
except where the failure to so qualify would not have a Material
Adverse Effect;
Each of the Company and its Subsidiaries has the
ownership or authorized capitalizations, as the case may be, as set
forth in the Offering Memorandum, and all of the partnership interests
of the Subsidiaries that are partnerships and all of the issued shares
of capital stock of its Subsidiaries that are corporations have been
duly and validly authorized and issued and with respect to shares of
capital stock are fully paid and non-assessable; and all of the
partnership interests of the Subsidiaries disclosed in the Offering
Memorandum as being owned directly or indirectly by the Company and all
of the issued shares of capital stock of the Subsidiaries that are
corporations have been duly and validly authorized and issued are fully
paid and non-assessable and are owned directly or indirectly by the
Company free and clear of all liens, encumbrances, equities or claims
(other than liens to secure indebtedness under credit facilities
disclosed in the Offering Memorandum); and ownership of the various
interests and shares of the Company and its Subsidiaries is as
described in the Offering Memorandum;
The Notes have been duly authorized and, when issued
and delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will
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constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture under which they are
to be issued; the Indenture has been duly authorized by the Company
and, when executed and delivered by the Company and the Trustee, the
Indenture will constitute a valid and legally binding instrument,
enforceable in accordance with its terms against the Company, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Notes and the
Indenture will conform to the descriptions thereof in the Offering
Memorandum and will be in substantially the form previously delivered
to the Initial Purchasers in connection with this transaction.
The shares of Exchangeable Preferred Stock have been
duly and validly authorized and, when issued and delivered pursuant to
this Agreement and the purchase agreement with respect to the Highland
Shares, will have been duly and validly issued, will be fully paid and
non-assessable, in the case of the Highland Shares, will have been
issued in compliance with all applicable federal and state securities
laws, and the Exchangeable Preferred Stock will be entitled to the
rights, privileges and preferences set forth in the Certificate of
Designations; the stockholders of the Company have no preemptive rights
with respect to the issuance of the Exchangeable Preferred Stock; the
Certificate of Designations has been duly authorized by the Company and
will be duly executed by the Company and filed as required; and the
Preferred Stock and the Certificate of Designations will conform to the
descriptions thereof in the Offering Memorandum and will be
substantially in the form previously delivered to the Initial
Purchasers in connection with this transaction.
The Debentures have been duly authorized and, when
issued and delivered in exchange for the Preferred Stock in accordance
with the terms of the Certificate of Designations, will have been duly
executed, authenticated, issued and delivered, and will constitute the
valid and legally binding obligations of the Company entitled to the
benefits provided by the Exchange Indenture under which they are to be
issued; the Exchange Indenture has been duly authorized by the Company
and, when executed and delivered by the Company and the Trustee
thereunder, the Exchange Indenture will constitute a valid and legally
binding instrument, enforceable against the Company in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Debentures and the Exchange Indenture will conform to the descriptions
thereof in the Offering Memorandum and will be in substantially the
form previously delivered to the Initial Purchasers in connection with
this transaction.
The shares of Convertible Preferred Stock have been
duly and validly authorized and, when issued and delivered pursuant to
the purchase agreement in respect thereof, will have been duly and
validly issued, will be fully paid and non-assessable, will have been
issued in compliance with all applicable federal and state securities
laws and will be entitled to the rights, privileges and preferences set
forth in the Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions thereof of Series C
Cumulative Convertible Preferred Stock of Adelphia Communications
Corporation (the "Convertible Preferred Stock Certificate of
Designations"); the stockholders of the Company have no preemptive
rights with respect to the issuance of the Convertible Preferred Stock;
the Convertible Preferred Stock Certificate of Designations has been
duly authorized by the Company and will be duly executed by the Company
and filed as required; and the Convertible Preferred Stock and the
Convertible Preferred Stock Certificate of Designations will conform to
the descriptions thereof in the Offering Memorandum and will be
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substantially in the form previously delivered to the Initial
Purchasers in connection with this transaction.
The capital stock of the Company conforms to the
description thereof contained in the Offering Memorandum; all of the
issued shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and
were not issued in violation of any preemptive rights; except as
disclosed in the Offering Memorandum, there are no outstanding (i)
securities or obligations of the Company or any of its Subsidiaries
convertible into or exchangeable for any capital stock of the Company,
(ii) warrants, rights or options to subscribe for or purchase any such
capital stock or any such convertible or exchangeable securities or
obligations or (iii) obligations of the Company to issue any shares of
capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
None of the transactions contemplated by this
Agreement (including, without limitation, the use of the proceeds from
the sale of the Senior Notes and Exchangeable Preferred Stock) will
violate or result in a violation of Section 7 of the Exchange Act, or
any regulation promulgated thereunder, including, without limitation,
Regulations G, T, U, and X of the Board of Governors of the Federal
Reserve System;
Prior to the date hereof, none of the Company or any
of its affiliates (other than the Initial Purchasers or any person
acting on their behalf as to which the Company makes no representation)
has taken, directly or indirectly, any action which is designed to or
which has constituted or which might have been expected to cause or
result in stabilization or manipulation of the price of any security of
the Company in connection with the offering of the Securities;
Each of the Registration Rights Agreements has been
duly authorized by the Company and, when executed and delivered by the
Company, the Initial Purchasers, and, in the case of the Exchangeable
Preferred Stock Registration Rights Agreement, Highland Holdings will
constitute a valid and legally binding instrument, enforceable against
the Company in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; and each of the Registration Rights Agreements will
conform to the description thereof in the Offering Memorandum and will
be in substantially the forms previously delivered to the Initial
Purchasers;
Neither (i) the issue and sale of the Notes and
Preferred Stock and the compliance by the Company with all of the
applicable provisions of the Notes and Preferred Stock, the Indenture,
the Exchange Indenture, the Certificate of Designations, the
Registration Rights Agreements, this Agreement and the documents
executed in connection with the sale of the Highland Shares and the
consummation of the transactions herein and therein contemplated nor
(ii) the issue and sale of the Convertible Preferred Stock and the
compliance by the Company with all of the applicable provisions of the
Convertible Preferred Stock and the documents executed in connection
with the sale thereof, will conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any material indenture, mortgage, deed of trust, sale/leaseback
agreement, loan agreement or other similar financing agreement or
instrument or other agreement or instrument (including, without
limitation, any license or franchise granted to the Company or one of
its Subsidiaries by a local franchising governmental body) to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound or has rights under or to which any
of the property or assets of the Company or any of
10
its Subsidiaries is subject, nor will such action result in any
violation of the provisions of the certificate of incorporation or
bylaws of the Company or its Subsidiaries that are corporations or the
certificates of limited partnership or the partnership agreements of
its Subsidiaries that are partnerships, or any statute or any order,
rule or regulation of any court or regulatory or governmental agency or
body having jurisdiction over the Company or any of its Subsidiaries or
any of their properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
regulatory or governmental agency or body is required for the issue and
sale of the Securities and the Convertible Preferred Stock or the
consummation by the Company of the transactions contemplated by this
Agreement, the Indenture, the Exchange Indenture, the Certificate of
Designations, the Registration Rights Agreements or the documents
executed in connection with the sale of the Highland Shares or the
Convertible Preferred Stock, other than (i) such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Senior Notes and the Shares by the Initial
Purchasers, (ii) the filing of registration statements by the Company
with the Commission pursuant to the Act pursuant to the Registration
Rights Agreements and in respect of the Convertible Preferred Stock and
(iii) such other consents, approvals, authorizations, registrations or
qualifications as may be required under the Act, state or foreign
securities or Blue Sky laws in connection with the exchange, offer or
resale registration contemplated in the Offering Memorandum and
described in the Registration Rights Agreements in connection with the
purchase and resale of the Senior Notes and Exchangeable Preferred
Stock and (iv) in respect of the Convertible Preferred Stock, and (iv)
as may be required by (x) the HartScott Xxxxxx Antitrust Improvements
Act of 1976 ("Xxxx-Xxxxx Xxxxxx Act"), (y) federal or state securities
laws and regulations or (z) the laws, orders, regulations or
requirements regarding, or governmental authorizations to own or
operate, cable television systems or competitive local exchange carrier
networks and related facilities under, federal, state or local law, and
similar laws or regulations, in each case in connection with the
conversion of the Convertible Preferred Stock into Class A Common
Stock;
None of the Company or its Subsidiaries is in
violation of its certificate of incorporation or bylaws, as the case
may be, or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, sale/leaseback agreement, loan
agreement or other similar financing agreement or instrument or other
agreement or instrument (including, without limitation, any license or
franchise granted to the Company or a subsidiary by a local franchising
governmental body) to which the Company or a subsidiary is a party or
by which it or any of its properties may be bound, except for such
defaults as would not have individually or in the aggregate a Material
Adverse Effect;
The statements set forth in the Offering Memorandum
under the captions "Affiliates Purchase of Convertible Preferred
Stock," "Description of the Notes;" "Description of the Exchangeble
Preferred Stock and Exchange Debentures," "Terms Applicable to All
Securities" and "Description of Convertible Preferred Stock," insofar
as they purport to constitute a summary of the terms of such
securities, and under the captions "Business," and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" insofar as they purport to describe the provisions of the
laws and documents referred to therein, are accurate, complete and fair
in all material respects;
When the Senior Notes and the Shares are issued and
delivered pursuant to this Agreement, the Senior Notes and the Shares
will not be of the same class (within the meaning of Rule 144A under
the Act) as securities of the Company which are listed on a national
securities
11
exchange registered under Section 6 of the Exchange Act or quoted in a
U.S. automated inter-dealer quotation system;
None of the Company or its Subsidiaries is or, after
giving effect to the offering and sale of the Senior Notes and
Exchangeable Preferred Stock, will be an "investment company", or an
entity "controlled" by an "investment company", as such terms are
defined in the United States Investment Company Act of 1940, as amended
(the "Investment Company Act");
None of the Company or any person acting on its
behalf (other than the Initial Purchasers, as to which the Company
makes no representation or warranty) has offered or sold the Senior
Notes or the Exchangeable Preferred Stock by means of any general
solicitation or general advertising within the meaning of Rule 502(c)
under the Act;
Except for the offering and sale of $350,000,000
aggregate principal amount of the Company's 97/8% Senior Notes due
2007, within the preceding six months, none of the Company or any other
person acting on behalf of the Company (other than the Initial
Purchasers, as to which the Company makes no representation or
warranty) has offered or sold to any person any Notes or Preferred
Stock, or any securities of the same or a similar class as the Notes or
the Preferred Stock, other than Senior Notes and Shares offered or sold
to the Initial Purchasers hereunder and Highland Shares to be sold to
Highland Holdings. The Company will take reasonable precautions
designed to insure that any offer or sale, direct or indirect, in the
United States or to any U.S. person (as defined in Rule 902 under the
Act) of any Notes or Preferred Stock or any substantially similar
security issued by the Company, within six months subsequent to the
date on which the distribution of the Notes or Preferred Stock has been
completed (as notified by the Initial Purchasers), is made under
restrictions and other circumstances reasonably designed not to affect
the status of the offer and sale of the Notes or Preferred Stock in the
United States and to U.S. persons contemplated by this Agreement as
transactions exempt from the registration provisions of the Act;
None of the Company or any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes;
Other than as set forth in the Offering Memorandum
(including those matters referred to therein relating to general
rulemakings and similar matters relating generally to the cable
television industry), there are no legal or governmental proceedings
pending to which the Company or any of its Subsidiaries is a party or
of which any property of the Company or any of its Subsidiaries is the
subject which, if determined adversely to the Company or any of its
Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or by others; and except with respect to general rulemakings and
similar matters relating generally to the cable television industry,
during the time the Systems (as defined below) have been owned by the
Company or a subsidiary (i) there has been no adverse judgment, order,
or decree issued by the United States Federal Communications Commission
(the "FCC") relating to any of the Systems that has not been disclosed
in the Offering Memorandum that would be required to be disclosed in a
public offering registered under the Act; (ii) there are no actions,
suits, proceedings, inquiries or investigations by the FCC pending or
threatened in writing against or affecting the Company, any of its
Subsidiaries or any System; and (iii) to the Company's
12
knowledge, after due inquiry, there is no reasonable basis for any such
action, suit, proceeding or investigation;
Deloitte & Touche LLP, who have reported on the
financial statements of the Company, are independent public accountants
as required by the Act and the rules and regulations of the Commission
thereunder;
This Agreement has been duly authorized, executed and
delivered by the Company;
Except for matters covered by paragraph (bb) below or
with respect to matters that would not individually or in the aggregate
have a Material Adverse Effect, (i) the Company and its Subsidiaries
have made all filings, recordings and registrations with, and possess
all validations or exemptions, approvals, orders, authorizations,
consents, licenses, certificates and permits from, the FCC, applicable
public utilities and other federal, state and local regulatory or
governmental bodies and authorities or any subdivision thereof,
including, without limitation, cable television franchises, pole
attachment agreements, and cable antenna relay service, broadcast
auxiliary, earth station, business radio, microwave or special safety
radio service licenses issued by the FCC (collectively, the
"Authorizations") necessary or appropriate to own, operate and
construct the cable communication systems owned by them (the "Systems")
or otherwise for the operation of their businesses and are not in
violation thereof; (ii) all such Authorizations are in full force and
effect, and no event has occurred that permits, or after notice or
lapse of time could permit, the revocation, termination or modification
of any Authorization which is necessary or appropriate to own, operate
and construct the Systems or otherwise for the operation of any such
business; (iii) none of the Company or any of its Subsidiaries is in
violation of any duty or obligation required by the United States
Communications Act of 1934, as amended (the "Communications Act"), or
any FCC rule or regulation applicable to the operation of any portion
of any of the Systems; (iv) none of the Company or any of its
Subsidiaries is in violation of any duty or obligation required by
state or local laws, or local rules or regulations applicable to the
operation of any portion of any of the Systems; (v) there is not
pending or, to the best knowledge of the Company or any of its
Subsidiaries, threatened, any action by the FCC or state or local
regulatory authority to modify, revoke, cancel, suspend or refuse to
renew any Authorization; (vi) other than as described in the Offering
Memorandum, there is not now issued or outstanding or, to the best
knowledge of the Company or any of its Subsidiaries, threatened, any
notice of any hearing, material violation or material complaint against
the Company or any of its Subsidiaries with respect to the operation of
any portion of the Systems and none of the Company or its Subsidiaries
has any knowledge that any person intends to contest renewal of any
material Authorization;
(i) (A) The Company and its Subsidiaries have entered
into, or have rights under, all required programming agreements
(including, without limitation, all non-broadcast affiliation
agreements under which the Company and its Subsidiaries are accorded
retransmission rights relating to programming that the Systems provide
to their customers) that are material to the conduct of their business
as described in the Offering Memorandum; and (B) all such material
agreements are in full force and effect and none of the Company, any of
its Subsidiaries or any of its affiliates has received any written
notice of revocation or material modifications of such material
agreements; and (ii)(A) either the Company or its Subsidiaries has
entered into agreements with the television stations that have notified
the Company or its Subsidiaries that such station's respective consent
is required to carry such stations on the Systems or has ceased
carrying such stations; (B) all such agreements grant the Company or
one of its Subsidiaries retransmission
13
consent in exchange for various non-cash consideration; and (C) all
such agreements are in full force and effect and are not subject to
revocation (except in the case of material breach by the Company or its
Subsidiaries) or material modifications, and no event has occurred that
permits, or after notice or lapse of time could permit, the revocation,
termination or material modification of any such agreement, except
where the failure of such agreements to be in full force and effect or
such revocation would not, in either case, individually or in the
aggregate have a Material Adverse Effect;
(aa) Except for matters that would not individually or in the
aggregate have a Material Adverse Effect, (i) all registration
statements and all other documents (including but not limited to annual
reports) required by the FCC in connection with the operation of the
Systems have been filed with the FCC; (ii) all frequencies within the
restricted aeronautical and navigational bands (i.e., 108-136 MHz and
225-400 MHz) which are currently being used in connection with the
operation of the Systems have been authorized for such use by the FCC;
(iii) each of the Systems subject to Equal Employment Opportunity
Commission ("EEO") compliance certification by the FCC has been
certified by the FCC for annual EEO compliance during the time such
Systems have been owned by the Company or its Subsidiaries; and (iv)
all towers associated with the Systems are in compliance with the rules
and regulations of the United States Federal Aviation Administration;
(bb) Except for matters that would not individually or in the
aggregate have a Material Adverse Effect, none of the Company or any of
its Subsidiaries is in breach or violation of, or in default under, any
of the terms, conditions or provisions of the Communications Act or the
rules, regulations or policies of the FCC thereunder;
(cc) (i) Except for matters that would not individually or in
the aggregate have a Material Adverse Effect, all statements of
accounts and any other filings that are required under Section 111 of
the United States Copyright Act of 1976, as amended, in connection with
the retransmission of any broadcast television and radio signals on the
Systems have been timely filed with the United States Copyright Office
and indicated royalty payments have been made for each System for each
accounting period during which such Systems have been owned by the
Company or its Subsidiaries; (ii) none of the Company, any of its
Subsidiaries or any System has received any inquiry or request from the
United States Copyright Office or from any other party challenging or
questioning any such statements of account or royalty payments; and
(iii) no claim of copyright infringement has been made or threatened in
writing against the Company, any of its Subsidiaries or any System;
(dd) Neither the execution and delivery of this Agreement, the
Indenture, the Certificate of Designations or the Registration Rights
Agreements, nor the consummation of the transactions contemplated
hereby and thereby or by the Offering Memorandum under "Use of
Proceeds," nor compliance with the terms, conditions and provisions
thereof by the Company, will conflict with the Communications Act or
the rules, regulations or policies of the FCC thereunder, or will cause
any suspension, revocation, impairment, forfeiture, nonrenewal or
termination of any material license, permit, franchise, certificate,
consent, authorization, designation, declaration, filing, registration
or qualification;
(ee) Neither the execution and delivery of this Agreement, the
Indenture, the Certificate of Designations, or the Registration Rights
Agreements, nor the execution, delivery, offer, issuance and sale of
the Senior Notes or the Exchangeable Preferred Stock, nor compliance
with
14
the terms, conditions and provisions thereof by the Company, requires
any license, permit, franchise, certificate, consent, authorization,
designation, declaration, filing, registration or qualification by or
with the FCC.
Indemnification and Contribution. The Company agrees
to indemnify and hold harmless each Initial Purchaser and each person, if any,
who controls any Initial Purchaser within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the Preliminary Offering Memorandum or Offering
Memorandum, 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, liabilities or expenses arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
Initial Purchasers information furnished in writing to the Company by or on
behalf of the Initial Purchasers expressly for use in connection therewith;
provided, however, that the indemnification contained in this paragraph (a) with
respect to the Preliminary Offering Memorandum shall not inure to the benefit of
any Initial Purchaser (or to the benefit of any person controlling such Initial
Purchaser) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Senior Notes or the Shares by such Initial
Purchaser to any person if the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in the Preliminary
Offering Memorandum was corrected in the Offering Memorandum and such Initial
Purchaser sold Senior Notes or Shares to that person without sending or giving
at or prior to the written confirmation of such sale, a copy of the Offering
Memorandum (as then amended or supplemented) if the Company has previously
furnished sufficient copies thereof to the Initial Purchasers on a timely basis
to permit such sending or giving. The foregoing indemnity agreement shall be in
addition to any liability which the Company may otherwise have.
If any action, suit or proceeding shall be brought
against the Initial Purchasers or any person controlling the Initial Purchasers
in respect of which indemnity may be sought against the Company, the Initial
Purchasers or such controlling person shall promptly notify the parties against
whom indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. The Initial Purchasers or any
such controlling person shall have the right to employ separate counsel in any
such action, suit or proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Initial
Purchasers or such controlling person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying parties
have failed to assume the defense and employ counsel, or (iii) the named parties
to any such action, suit or proceeding (including any impleaded parties) include
both the Initial Purchasers or such controlling person and the indemnifying
parties and the Initial Purchasers or such controlling person shall have been
advised in writing by its counsel that representation of such indemnified party
and any indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential differing
interests between them (in which case the indemnifying party shall not have the
right to assume the defense of such action, suit or proceeding on behalf of the
Initial Purchasers or such controlling person). It is understood, however, that
the indemnifying parties shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
the Initial Purchasers and controlling persons not having actual or potential
differing interests with the Initial
15
Purchasers or among themselves, which firm shall be designated in writing by
Xxxxx Xxxxxx Inc., and that all such fees and expenses shall be reimbursed as
they are incurred. The indemnifying parties shall not be liable for any
settlement of any such action, suit or proceeding effected without their written
consent, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the
indemnifying parties agree to indemnify and hold harmless the Initial
Purchasers, to the extent provided in paragraph (a), and any such controlling
person from and against any loss, claim, damage, liability or expense by reason
of such settlement or judgment.
Each Initial Purchaser, severally and not jointly,
agrees to indemnify and hold harmless the Company and its directors and
officers, and any person who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act to the same extent as the
indemnity from the Company to the Initial Purchasers set forth in paragraph (a)
hereof, but only with respect to the Initial Purchasers Information furnished in
writing by or on behalf of the Initial Purchasers expressly for use in the
Preliminary Offering Memorandum or Offering Memorandum. If any action, suit or
proceeding shall be brought against the Company, any of its directors or
officers, or any such controlling person based on the Preliminary Offering
Memorandum or Offering Memorandum, and in respect of which indemnity may be
sought against the Initial Purchasers pursuant to this paragraph (c), the
Initial Purchasers shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof, the Initial Purchasers shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the Initial Purchasers' expense), and
the Company, its directors and officers, and any such controlling person shall
have the rights and duties given to the Initial Purchasers by paragraph (b)
above. The foregoing indemnity agreement shall be in addition to any liability
which the Initial Purchasers may otherwise have.
If the indemnification provided for in this Section 6
is unavailable (except if inapplicable according to its terms) to an indemnified
party under paragraphs (a) or (c) hereof in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then an indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchasers on the other hand from the offering of the
Senior Notes and the Shares, 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 Company on the one hand and the Initial
Purchasers on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Initial Purchasers on the other shall be
deemed to be in the same proportion as the total net proceeds from the offerings
(before deducting expenses) received by the Company bear to the total discounts
and commissions received by the Initial Purchasers. The relative fault of the
Company on the one hand and the Initial Purchasers on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or by the Initial Purchasers on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section 6 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d)
16
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 6, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price of the Senior Notes and the Shares purchased by it and
distributed to the purchasers pursuant to Exempt Resales exceeds the amount of
any damages which such Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 6 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred but
only to the extent that such losses, claims, damages, liabilities or expenses
are required to be paid by an indemnified party. The indemnity and contribution
agreements contained in this Section 6 and the representations and warranties of
the Company set forth in this Agreement shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of the
Initial Purchasers or any person controlling any Initial Purchaser, the Company,
its directors or officers or any person controlling the Company, (ii) acceptance
of any Senior Notes and Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to an Initial Purchaser or any person
controlling an Initial Purchaser, or to the Company, its directors or officers
or any person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
6.
No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
Conditions of the Initial Purchasers' Obligation. The
obligation of the Initial Purchasers to purchase the Senior Notes and the Shares
hereunder is subject to the following conditions:
At the time of execution of this Agreement and on the
Closing Date, no order or decree preventing the use of the Offering Memorandum,
or any order asserting that the sale of the Convertible Preferred Stock or the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending or, to the knowledge of
the Company, be contemplated. No stop order suspending the sale of the Senior
Notes or the Shares in any jurisdiction designated by the Initial Purchasers
shall have been issued and no proceedings for that purpose shall have been
commenced or shall be pending or, to the knowledge of the Company, shall be
contemplated.
Subsequent to the date as of which information is
given in the Offering Memorandum, except as otherwise stated in the Offering
Memorandum, there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting the condition (financial or
other), business, properties, net worth, or results of operations of the Company
or its Subsidiaries not contemplated by the Offering Memorandum, which in the
opinion of the Initial Purchasers, would
17
materially adversely affect the market for the Senior Notes or the Shares, or
(ii) any event or development relating to or involving the Company, any of its
Subsidiaries or any officer or director of the Company or any of its
Subsidiaries which makes any statement made in the Offering Memorandum untrue or
which, in the opinion of the Company and its counsel or the Initial Purchasers
and their counsel, requires the making of any addition to or change in the
Offering Memorandum in order to state a material fact required by any law to be
stated therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Offering Memorandum to reflect such
event or development would, in the opinion of the Initial Purchasers, materially
adversely affect the market for the Securities.
The Offering Memorandum shall have been printed and
copies thereof distributed to the Initial Purchasers in such quantities as shall
have been previously specified by the Initial Purchasers not later than 9:00
A.M., New York City time, on July 2, 1997, or at such later date and time as the
Initial Purchasers may approve in writing.
The Initial Purchasers shall have received on the
Closing Date an opinion of Xxxxxxxx Xxxxxxxxx Professional Corporation, counsel
for the Company, dated the Closing Date and addressed to the Initial Purchasers,
to the effect that:
The Company has been duly incorporated and
is validly existing as a
corporation in good standing under the laws of the state of its
formation with full corporate power and authority to own its properties
and conduct its business as described in the Offering Memorandum;
This Agreement has been duly authorized,
executed and delivered by the Company;
The Registration Rights Agreements have been
duly authorized, executed and delivered by the Company;
The Notes have been duly authorized and,
when issued and delivered pursuant to this Agreement, will have been
duly executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture and enforceable against the Company
in accordance with their terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles and further except that (a) rights to
contribution or indemnification may be limited by the laws, rules or
regulations of any governmental authority or agency thereof or by
public policy, and (b) waivers as to usury, stay or extension laws may
be unenforceable; and the Notes and the Indenture conform in all
material respects to the descriptions thereof in the Offering
Memorandum;
The Indenture has been duly authorized,
executed and delivered by the Company and will constitute a valid and
legally binding instrument enforceable in accordance with its terms
against the Company, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles and further except that (a) rights to contribution or
indemnification may be limited by the laws, rules or regulations of any
governmental authority or agency thereof or by public policy, and (b)
waivers as to usury, stay or extension laws may be unenforceable;
18
The shares of Exchangeable Preferred Stock
have been duly authorized and, when issued and delivered pursuant to
this Agreement and the purchase agreement with respect to the Highland
Shares, will have been duly and validly issued, will be fully paid and
non-assessable, and will be entitled to the rights, privileges and
preferences set forth in the Certificate of Designations which,
together with the Preferred Stock, conform in all material respects to
the descriptions thereof in the Offering Memorandum; the stockholders
of the Company have no preemptive rights with respect to the issuance
of the Exchangeable Preferred Stock; and the Certificate of
Designations has been duly authorized and executed by the Company and
filed with the appropriate authorities;
The shares of Convertible Preferred Stock
have been duly authorized and, when issued and delivered pursuant to
the purchase agreement in respect thereof, will have been duly and
validly issued, will be fully paid and non-assessable, and will be
entitled to the rights, privileges and preferences set forth in the
Convertible Preferred Stock Certificate of Designations which, together
with the Convertible Preferred Stock, conform in all material respects
to the descriptions thereof in the Offering Memorandum; the
stockholders of the Company have no preemptive rights with respect to
the issuance of the Convertible Preferred Stock; the Convertible
Preferred Stock Certificate of Designations has been duly authorized
and executed by the Company and filed with the appropriate authorities.
The Debentures have been duly authorized
and, when issued and delivered pursuant to the Certificate of
Designations, will have been duly executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the Exchange Indenture
and enforceable against the Company in accordance with their terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles and
further except that (a) rights to contribution or indemnification may
be limited by the laws, rules or regulations of any governmental
authority or agency thereof or by public policy, and (b) waivers as to
usury, stay or extension laws may be unenforceable; and the Debentures
and the Exchange Indenture conform in all material respects to the
descriptions thereof in the Offering Memorandum;
The Exchange Indenture has been duly
authorized, and when executed and delivered by the Company will
constitute a valid and legally binding instrument enforceable in
accordance with its terms against the Company, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles and further except that (a)
rights to contribution or indemnification may be limited by the laws,
rules or regulations of any governmental authority or agency thereof or
by public policy, and (b) waivers as to usury, stay or extension laws
may be unenforceable;
The Registration Rights Agreements have been
duly authorized by the Company and, when executed and delivered by the
parties thereto, will constitute valid and legally binding instruments,
enforceable in accordance with their terms against the Company,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to or
affecting creditors' rights, to general equity principles and further
except that (a) rights to contribution or indemnification may be
limited by the laws, rules or regulations of any governmental authority
or agency thereof or by public policy and (b) waivers as to usury,
19
stay or extension laws may be unenforceable; and the Registration
Rights Agreements conform in all material respects to the descriptions
thereof in the Offering Memorandum;
The issue and sale of the Convertible
Preferred Stock, the Notes and the Preferred Stock and the compliance
by the Company with all of the provisions of the Convertible Preferred
Stock and the documents executed in connection with the sale thereof,
the Notes and the Preferred Stock, the Certificate of Designations, the
Indenture, the Registration Rights Agreements, this Agreement and the
documents executed in connection with the sale of the Highland Shares
and the consummation of the transactions herein and therein
contemplated will not contravene the provisions of the certificate of
incorporation and bylaws of the Company, or to the best of our
knowledge, any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company, except as may be
required by (x) the Xxxx-Xxxxx Xxxxxx Act, (y) federal or state
securities laws and regulations and (z) the laws, orders, regulations
or requirements regarding, or governmental authorizations to own or
operate, cable television systems or competitive local exchange carrier
networks and related facilities under federal, state or local law, and
similar laws or regulations, in each case in connection with the
conversion of the Convertible Preferred Stock into Class A Common
Stock;
The statements set forth in the Offering
Memorandum under the captions "Risk Factors -- Certain Tax
Considerations," "Affiliates Purchase of Convertible Preferred Stock;"
"Description of the Notes;" "Description of the Exchangeable Preferred
Stock and Exchange Debentures;" "Terms Applicable to Securities" and
"Description of Convertible Preferred Stock," insofar as they purport
to constitute a summary of the terms of such securities, the statements
set forth in the Offering Memorandum under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--Financing Activities,"
insofar as they purport to describe the debt instruments referred to
therein and the statements set forth in the Offering Memorandum under
the caption "Certain Federal Income Tax Considerations", insofar as
they purport to describe the provisions of the laws referred to
therein, are, when taken together with the other information included
in the Offering Memorandum, accurate in all material respects;
No registration of the Securities under the
Act, and no qualification of an indenture under the 1939 Act with
respect thereto, is required for the offer, sale and initial resale of
the Senior Notes and the Shares by the Initial Purchasers in the manner
contemplated by this Agreement; no registration of the Highland Shares
or the Convertible Preferred Stock under the Act is required for the
offer and sale of the Highland Shares or the Convertible Preferred
Stock as described in the Offering Memorandum; and
The Company is not an "investment company"
or an entity "controlled by an investment company," as such terms are
defined in the Investment Company Act.
In addition, such counsel shall also state that such
counsel has participated in conferences with officers and representatives of the
Company, representatives of the independent public accountants for the Company
and the Initial Purchasers at which the contents of the Offering Memorandum and
related matters were discussed and, although such counsel is not passing upon
and does not assume any responsibility for and has not verified the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum,
and has not made any independent check or verification thereof, on the basis of
the foregoing (relying as to materiality to the extent such counsel deemed
appropriate upon facts provided by officers and other representatives of the
Company), no facts have come to the attention
20
of such counsel that lead such counsel to believe that the Offering Memorandum,
as of its date or as of the Closing Date, contained or contains any untrue
statement of material fact or omitted or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need express no belief or opinion with respect to the financial
statements and other financial and statistical data included therein).
The opinion of such counsel may be limited to the laws of the
State of New York, the General Corporation Law of the State of Delaware and the
federal laws of the United States.
The Initial Purchasers shall have received on the
Closing Date an opinion of Xxxxxxx X. Xxxxxx, Esq., General Counsel of the
Company, dated the Closing Date and addressed to the Initial Purchasers to the
effect that:
Except as set forth in the Offering
Memorandum, each of the Company and its Subsidiaries has all of the
licenses, permits, franchises and authorizations, if any, required by
the relevant governmental authorities of each of New York, Virginia,
Pennsylvania, Ohio, New Jersey, Massachusetts, New Hampshire, Vermont,
Michigan and Connecticut and/or its political subdivisions for the
provision of cable television service (as such counsel understands
service to be provided which may be based on a certificate of an
officer of the Company, provided that such counsel shall state that
they believe that both the Initial Purchasers and he are justified in
relying on such certificate), where the failure to obtain or hold such
license, permit, franchise or authorization would have a Material
Adverse Effect;
To the best of such counsel's knowledge
after due inquiry, each of the Company and its Subsidiaries has made
all filings, reports, applications and submissions required by the laws
and ordinances relating to cable services of each of New York,
Virginia, Pennsylvania, Ohio, New Jersey, Massachusetts, New Hampshire,
Vermont, Michigan and Connecticut, and the ordinances of the state's
political subdivisions relating thereto, and the rules and regulations
promulgated therewith;
Each of the Company and its Subsidiaries has
the consents, approvals, authorizations, licenses, certificates,
permits, or orders of any governmental authorities of the each of New
York, Virginia, Pennsylvania, Ohio, New Jersey, Massachusetts, New
Hampshire, Vermont, Michigan and Connecticut, and its political
subdivisions, if any, required for the consummations of the
transactions contemplated in the Purchase Agreement where the failure
to obtain the consents, approvals, authorizations, licenses,
certificates, permits or orders would have a Material Adverse Effect;
There are no actions, suits or proceedings
pending or, to the best of such counsel's knowledge, threatened by or
before any court or governmental body each of New York, Virginia,
Pennsylvania, Ohio, New Jersey, Massachusetts, New Hampshire, Vermont,
Michigan and Connecticut, against or affecting any of the Company or
its Subsidiaries, or the business of the Company and its Subsidiaries;
The statements in the Offering Memorandum
under the headings "Risk Factors - Regulation in the Telecommunications
Industry" and "Risk Factors - Competition," insofar as they relate to
the Company and its Subsidiaries operations each of New York, Virginia,
Pennsylvania, Ohio, New Jersey, Massachusetts, New Hampshire, Vermont,
Michigan and
21
Connecticut, and purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair in all
material respects; and
Neither (a) the offering the Highland Shares
and of the Convertible Preferred Stock contemplated by the Offering
Memorandum nor (b) the execution and delivery of the Purchase Agreement
and the offering of the Senior Notes and the Shares contemplated
thereby will conflict with or result in a violation of any order or
regulation of each of New York, Virginia, Pennsylvania, Ohio, New
Jersey, Massachusetts, New Hampshire, Vermont, Michigan and
Connecticut, or its political subdivisions applicable to the Company
and its Subsidiaries, the conflict with or the violation of which would
have a Material Adverse Effect.
The Initial Purchasers shall have received
on the Closing Date an opinion of Xxxxx X. Xxxxxx, Deputy General
Counsel to the Company, dated the Closing Date and addressed to the
Initial Purchasers, to the effect that:
None of the Company or its Subsidiaries is
in violation of its certificate of incorporation, by-laws, certificate
of limited partnership or partnership agreement, as applicable, or in
default in the performance or observance of any material obligation,
covenant or condition contained in any partnership agreement,
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of
its properties may be bound;
Each of the Company and its Subsidiaries has
been duly qualified as a foreign corporation or partnership, as the
case may be, 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, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction,
except where the failure to so qualify would not have a Material
Adverse Effect (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company, provided
that such counsel shall state that he believes that both the Initial
Purchasers and he are justified in relying upon such opinions and
certificates);
Each Subsidiary of the Company is owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims (other than liens to secure
indebtedness under credit facilities disclosed in the Offering
Memorandum) (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company or its
Subsidiaries, provided that such counsel shall state that he believes
that both the Initial Purchasers and he are justified in relying upon
such opinions and certificates);
To the best of such counsel's knowledge and
other than as set forth in the Offering Memorandum, there are no legal
or governmental proceedings pending to which the Company or any of its
Subsidiaries is a party or of which any property of the Company or any
of its Subsidiaries is the subject which, if determined adversely to
the Company or any of its Subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, stockholder's equity, partners'
equity, or results of operations of the Company and its Subsidiaries;
and, to the best of such counsel's knowledge, no
22
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
The issue and sale of the Notes, the
Preferred Stock and the Convertible Preferred Stock and the compliance
by the Company with all of the provisions of the Notes, the Preferred
Stock, the Convertible Preferred Stock and the documents executed in
connection with the sale thereof, the Indenture, the Certificate of
Designations, the Registration Rights Agreements, this Agreement and
the documents executed in connection with the sale of the Highland
Shares and the consummation of the transactions herein and therein
contemplated will not, to the best of my knowledge after due inquiry,
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under any material indenture,
mortgage, deed of trust, sale/leaseback transaction, loan agreement or
other similar financing agreement, or instrument or other agreement or
instrument (including, without limitation, any license or franchise
granted to the Company or a Subsidiary by a local franchising
governmental body) to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound or to
which any of the property or assets of the Company or any of its
Subsidiaries is subject, nor will such actions result in any violation
of the provisions of the certificate of incorporation, by-laws, the
certificate of limited partnership or the partnership agreements of the
Company and its Subsidiaries, as appropriate, or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its Subsidiaries or any
of their properties, except as may be required by (x) the Xxxx-Xxxxx
Xxxxxx Act, (y) federal or state securities laws and regulations and
(z) the laws, orders, regulations or requirements regarding, or
governmental authorizations to own or operate, cable television systems
or competitive local exchange carrier networks and related facilities
under, federal, state or local law, and similar laws or regulations, in
each case in connection with the conversion of the Convertible
Preferred Stock into Class A Common Stock; and
No consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Securities and
the Convertible Preferred Stock or the consummation by the Company of
the transactions contemplated by this Agreement, the Indenture, the
Certificate of Designations and the Registration Rights Agreements, or
the documents executed in connection with the sale of the Highland
Shares or the Convertible Preferred Stock, except such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and resale of the Senior Notes and the Shares by the Initial
Purchasers, and as may be required by (x) the Xxxx-Xxxxx Xxxxxx Act,
(y) federal or state securities laws and regulations and (z) the laws,
orders, regulations or requirements regarding, or governmental
authorizations to own or operate, cable television systems or
competitive local exchange carrier networks and related facilities
under, federal, state or local law, and similar laws or regulations, in
each case in connection with the conversion of the Convertible
Preferred Stock into Class A Common Stock.
In addition, such counsel shall also state that such
counsel has participated in conferences with officers and representatives of the
Company, representatives of the independent public accountants for the Company
and the Initial Purchasers at which the contents of the Offering Memorandum and
related matters were discussed and, although such counsel is not passing upon
and does not assume any responsibility for and has not verified the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum,
and has not made any independent check or verification thereof, on the basis of
the foregoing (relying as to materiality to the extent such counsel deemed
appropriate upon
23
facts provided by officers and other representatives of the Company), no facts
have come to the attention of such counsel that lead such counsel to believe
that the Offering Memorandum, as of its date or as of the Closing Date,
contained or contains any untrue statement of material fact or omitted or omits
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no belief or opinion with respect to
the financial statements and other financial and statistical data included
therein).
The Initial Purchasers shall have received on the
Closing Date an opinion of Xxxxxxxxxx & Xxxxx, P.C., special regulatory counsel
for the Company and its Subsidiaries, dated the Closing Date, and addressed to
the Initial Purchasers to the effect that:
The communities listed in Section A of
Attachment 1 to the opinion have been registered with the FCC in
connection with the operation of the Systems. The filing of a
registration statement constitutes initial FCC authorization for the
commencement of cable television operations in the community
registered.
The Subsidiaries hold certain FCC licenses,
as that term is defined below ("FCC Licenses"). All FCC Licenses and
receive-only earth station registrations held by the Subsidiaries in
connection with the operation of the Cable Systems are listed on
Attachment 1 to the Opinion. To the best of our knowledge, all such FCC
Licenses have been validly issued or assigned to the present licensee
and are currently in full force and effect. We have no knowledge of any
event which would allow, or after notice or lapse of time which would
allow, revocation or termination of any FCC License held by the
Subsidiaries or would result in any other material impairment of the
rights of the holder of such license. To the best of our knowledge, no
other FCC Licenses are required in connection with the operation of the
Cable Systems by the Subsidiaries in the manner we have advised they
are presently being operated. For the purposes of this opinion, an FCC
License is defined as an authorization, or renewal thereof, issued by
the FCC authorizing the transmission of radio energy through the
airways.
Other than proceedings affecting the cable
television industry generally, there is no action, suit or proceeding
pending before or, to the best of our knowledge, threatened by the FCC
which is reasonably likely to have a materially adverse impact upon the
cable television operations of the Company and its Subsidiaries taken
as a whole.
To the best of our knowledge after due
inquiry, the Company and the Subsidiaries have filed all current and
routine filings, reports, applications and submissions required under
the Communications Act, as amended, and under the rules and regulations
of the FCC.
The Subsidiaries hold all authorizations
and/or have filed all notifications required by the FCC in connection
with their operation on all frequencies in the 108-137 MHz and 225-400
MHz bands which we have been advised are currently being utilized on
the Cable Systems. The geographic and technical parameters with respect
to the authorized use of these frequencies are listed on Attachment 1
hereto.
The employment units covered by the Cable
Systems and operated by the Subsidiaries have been certified, where
required, by the FCC for compliance with equal employment opportunity
("EEO") requirements in each of calendar years 1992 through 1996 in
which such Cable Systems have been owned and operated by the Company or
the Subsidiaries.
24
Employment certification records for the years prior to 1992 have been
purged from the FCC's database and are therefore outside the scope of
this opinion.
Statements of Account required by Section
111 of the Copyright Act of 1976, as amended have been filed, together
with royalty payments accompanying said Statements of Account, with the
U.S. Copyright Office for the Cable Systems covering each of the
accounting periods beginning with January 1 through June 30, 1994
accounting period and ending with the July 1 through December 31, 1996
accounting period during which such Cable Systems have been operated by
the Subsidiaries. We have not received the information or calculations
contained in these Statements, and express no opinion with respect to
the accuracy thereof. To the best of our knowledge, there are no
currently outstanding inquiries received from the U.S. Copyright Office
or any other party which question the copyright filings or payments
made by the Company or the Subsidiaries with respect to the Cable
Systems. It is possible that there may be matters pending before the
U.S. Copyright Office relating to the Cable Systems, the Company or the
Subsidiaries of which we do not have knowledge because such matters
have not yet been incorporated into the available public files of the
U.S. Copyright Office. However, we are not aware of the pending or
threatened claim, action or demand for copyright infringement or for
non-payment of royalties with respect to the Statements of Account or
related royalty payments filed by the Company and the Subsidiaries for
the Cable Systems.
The Company has obtained all consents,
approvals and authorizations of the FCC, if any, required for the
consummation of the transactions of the transactions contemplated in
the Purchase Agreement where the failure to obtain the consents,
approval, authorizations, licenses, certificates, permits or orders
would reasonably be expected to have a materially adverse impact on the
Company or the Subsidiaries.
Neither the execution and delivery of the
Purchase Agreement nor the offering of the Senior Notes and the Shares
contemplated thereby nor the offering of the Highland Shares and the
Convertible Preferred Stock as contemplated by the Offering Memorandum
will conflict with or result in a violation of any order or regulation
of the FCC applicable to the Company and the Subsidiaries, the conflict
with or the violation of which would reasonably be expected to have a
materially adverse impact on the Company or the Subsidiaries. However,
we call your attention to the following.
Under the Act as now in effect, the sale or
other disposition of certain pledged collateral and the exercise of
certain other rights and remedies conferred upon you by any agreement
or by applicable law might constitute an assignment of an FCC licensee,
or transfer of control of an FCC license, requiring for its
consummation the prior consent of the FCC granted upon an appropriate
application thereof.
Under the Act as now in effect, and as now
interpreted by the FCC, no valid security interest may be granted in an
FCC license. To the extent that the Purchase Agreement and/or related
financing documents purport to grant to you a security interest in any
FCC licenses, such security interest may not be legally enforceable.
In the course of our representation of the
Company and its Subsidiaries, no matters have come to our attention,
other than matters affecting the cable television industry generally,
which would reasonable be expected to have a materially adverse impact
upon the cable television operations of the Company and the
Subsidiaries taken as a whole.
25
In our opinion, the Statements in the
Offering Memorandum under the headings "Risk Factors - Regulation in
the Telecommunications Industry" and "Risk Factors Competition,"
insofar as the purport to describe the provisions of the law referred
to therein, are accurate, complete and fair in all material respects.
The Initial Purchasers shall have received on the
Closing Date an opinion, of Xxxxxx & Xxxxxxx, counsel for the Initial
Purchasers, dated the Closing Date, and addressed to the Initial Purchasers,
with respect to such matters as the Initial Purchasers may reasonably request,
and such counsel shall have received such certificates, documents and
information as they may reasonably request to enable them to pass upon such
matters.
The Initial Purchasers shall have received letters
addressed to the Initial Purchasers, and dated the date hereof and the Closing
Date from Deloitte & Touche LLP, independent certified public accountants,
substantially in the forms heretofore approved by the Initial Purchasers and
their counsel.
There shall not have been any decrease in
stockholders' equity of the Company nor any material increase in the short-term
or long-term debt of the Company (other than in the ordinary course of business)
from that set forth or specifically contemplated in the Offering Memorandum;
(ii) the Company and its Subsidiaries shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), that are material to the Company and its Subsidiaries, taken as a
whole, other than those reflected in the Offering Memorandum; and (iii) all the
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on and as of the date hereof and on
and as of the Closing Date as if made on and as of the Closing Date, and the
Initial Purchasers shall have received a certificate, dated the Closing Date and
signed by the Chief Executive Officer and the Chief Financial Officer of the
Company (or such other officers as are acceptable to the Initial Purchaser), to
the effect set forth in this Section 7(j) and in Section 7(k) hereof.
The Company shall not have failed at or prior to the
Closing Date to have performed or complied in all material respects with any of
its agreements herein contained and required to be performed or complied with by
it hereunder at or prior to the Closing Date.
There shall not have been any announcement by any
"nationally recognized statistical rating organization," as defined for purposes
of Rule 436(g) under the Act, that (i) it is downgrading its rating assigned to
any class of securities of the Company or any of its Subsidiaries, or (ii) it is
reviewing its ratings assigned to any class of securities of the Company or any
of its Subsidiaries with a view to possible downgrading, or with negative
implications, or direction not determined.
The Initial Securities shall have been approved for
trading in the PORTAL Market.
The Company shall have obtained, in writing, all
consents and waivers required under the terms of any of its material agreements
necessary to ensure that the transactions contemplated by this Agreement and the
other Operative Documents and the sale of the Highland Shares and the
Convertible Preferred Stock as contemplated by the Offering Memorandum will not
conflict with or constitute a breach of, or a default under any of such
agreements. The Company shall have furnished photocopies of such waivers and
consents, if any, to the Initial Purchasers.
The Certificate if Designations shall have been filed
with the appropriate authorities.
26
The sale of the Highland Shares and the Convertible
Preferred Stock shall have been consummated prior to or simultaneously with the
consummation of the sale of the Senior Notes and the Shares hereunder.
The Company shall have furnished or caused to be
furnished to you the "lock-up" letter contemplated by Section 4(v) hereof.
The Company shall have furnished or caused to be
furnished to the Initial Purchasers such further certificates and documents as
the Initial Purchasers or their counsel shall have requested.
All such opinions, certificates, letters, consents, waivers
amendments and other documents will be in compliance with the provisions hereof
only if they are reasonably satisfactory in form and substance to the Initial
Purchasers and counsel for the Initial Purchasers. Any certificate or document
signed by any officer of the Company and delivered to the Initial Purchasers, or
to counsel for the Initial Purchasers, shall be deemed a representation and
warranty by the Company to the Initial Purchasers as to the statements made
therein.
Expenses. The Company agrees to pay the following
costs, expenses and fees and all other costs and expenses incident to the
performance by it of any of its obligations hereunder: (i) the preparation and
reproduction of the Preliminary Offering Memorandum and the Offering Memorandum
(including, without limitation, financial statements thereto), and each
amendment or supplement to any of them, this Agreement, the Indenture and the
Exchange Indenture; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the Offering Memorandum, the Preliminary Offering Memorandum, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Senior Notes and the Shares;
(iii) the preparation, printing, authentication, issuance and delivery of
certificates for the Senior Notes and the Exchangeable Preferred Stock,
including any stamp taxes in connection with the original issuance and sale of
the Notes and the Preferred Stock; (iv) the printing (or reproduction) and
delivery of this Agreement, the preliminary and supplemental Blue Sky Memoranda
and all other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Senior Notes and the Exchangeable Preferred
Stock; (v) the application for quotation of the Initial Securities on the PORTAL
Market; (vi) the qualification of the Senior Notes and the Shares for offer and
sale under the securities or Blue Sky laws of the several states as provided in
Section 4(e) hereof (including the reasonable fees, expenses and disbursements
of counsel for the Initial Purchasers relating to the preparation, printing or
reproduction, and delivery of the preliminary and supplemental Blue Sky
Memoranda and such qualification); (vii) the performance by the Company of its
obligations under the Registration Rights Agreements; (viii) fees and expenses
of the Trustee and its counsel; (ix) the transportation and other expenses, if
any, incurred by or on behalf of the Company representatives in connection with
presentations to prospective purchasers of the Senior Notes and the Shares; and
(x) the fees and expenses of the Company's accountants and the fees and expenses
of counsel (including local and special counsel, if any) for the Company. The
Company hereby agrees that they will pay in full on the Closing Date the fees
and expenses referred to in clause (vi) of this Section 8 by delivering to
counsel for the Initial Purchasers on such date a check payable to such counsel
in the requisite amount.
Effective Date of Agreement. This Agreement shall
become effective upon the execution and delivery hereof by all the parties
hereto.
27
Termination of Agreement. This Agreement shall be
subject to termination in the absolute discretion of the Initial Purchasers,
without liability on the part of the Initial Purchasers to the Company, by
notice to the Company, if prior to the Closing Date, (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities in New York shall have been
declared, or (iii) there shall have occurred any outbreak or escalation of
hostilities involving the United States or other domestic, foreign or
international calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Initial Purchasers, impracticable or
inadvisable to commence or continue the offering of the Securities on the terms
set forth on the cover page of the Offering Memorandum or to enforce contracts
for the resale of the Senior Notes and Shares by the Initial Purchasers. Notice
of such termination may be given to the Company by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
If on the Closing Date any one or more of the Initial
Purchasers shall fail or refuse to purchase the Senior Notes and the Shares
which it or they have agreed to purchase hereunder on such date and the amount
of Senior Notes or Shares which such defaulting Initial Purchaser or Initial
Purchasers, as the case may be, agreed but failed or refused to purchase is not
more than one-tenth of the total amount of securities of such series to be
purchased on such date by all Initial Purchasers, each non-defaulting Initial
Purchaser shall be obligated severally, in the proportion which the aggregate
principal amount or number of shares of such securities set forth opposite its
name in Schedule I bears to the total amount of such securities which all the
non-defaulting Initial Purchasers, as the case may be, have agreed to purchase,
or in such other proportion as you may specify, to purchase the securities which
such defaulting Initial Purchaser or Initial Purchasers, as the case may be,
agreed but failed or refused to purchase on such date; provided that in no event
shall the aggregate principal amount or number of shares of such securities
which any Initial Purchaser has agreed to purchase pursuant to Section 2 hereof
be increased pursuant to this Section 10 by an amount in excess of one-ninth of
such aggregate amount of such securities without the written consent of such
Initial Purchaser. If on the Closing Date any Initial Purchaser or Initial
Purchasers shall fail or refuse to purchase such Senior Notes or Shares and the
aggregate amount of securities with respect to which such default occurs is more
than one-tenth of the total amount of securities of such series to be purchased
by all Initial Purchasers and arrangements satisfactory to you and the Company
for the purchase of such securities are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Initial Purchaser and the Company. In any such case which does
not result in termination of this Agreement, either the Initial Purchasers or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Offering Memorandum or any other documents or arrangements xxx be effected. Any
action taken under this paragraph shall not relieve any defaulting Initial
Purchaser from liability in respect of any default of any such Initial Purchaser
under this Agreement.
Information Furnished by the Initial Purchasers.
The statements set forth in the last paragraph of the front cover page of the
Preliminary Offering Memorandum and the Offering Memorandum and the second to
last paragraph on page 2 of the Preliminary Offering Memorandum and the Offering
Memorandum, constitute the only Initial Purchasers Information furnished by or
on behalf of the Initial Purchasers as such information is referred to in
Sections 5(a) and 6 hereof.
Miscellaneous. Except as otherwise provided in
Sections 4, 9 and 10 hereof, notice given pursuant to any provision of this
Agreement shall be in writing and shall be delivered (i) if to the Company, at
the office of the Company at Main at Water Street, Coudersport, PA 16915,
Attention: Chief Financial Officer with a copy to Xxxxxxxx Xxxxxxxxx
Professional Corporation, 1 Oxford Center, 301 Grant
28
Street, 20th Floor, Pittsburgh, PA 15219, Attention: Xxxx X. Xxxxxxxxxxxx, Xx.,
or (ii) if to the Initial Purchasers, addressed to Xxxxx Xxxxxx Inc., 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Manager, Investment Banking
Division, with a copy to Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxx X. Xxxxxxx.
This Agreement has been and is made solely for the benefit of
the Initial Purchasers, the Company and their respective directors, officers and
the controlling persons referred to in Section 6 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Initial Purchasers of any of the Senior Notes
or the Shares in his status as such purchaser.
Applicable Law; Counterparts This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York and without regard to the
conflicts of law principles thereof.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
[signature page follows]
29
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the Initial Purchasers.
Very truly yours,
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title:Executive Vice President
Confirmed as of the date first above mentioned.
XXXXX XXXXXX INC.
BEAR, XXXXXXX & CO. INC.
NATIONSBANC CAPITAL MARKETS, INC.
TD SECURITIES (USA) INC.
By XXXXX XXXXXX INC.
By: /s/ M.E. Xxxxxxxx
Name:
Title:
SCHEDULE I
Number of Shares
Principal Amount of Exchangeable
of Senior Notes Preferred Stock
Initial Purchasers to be Purchased to be Purchased
Xxxxx Xxxxxx Inc. ................................... $105,000,000 665,000
Bear, Xxxxxxx & Co. Inc. ............................ 22,500,000 142,500
NationsBanc Capital Markets, Inc. ................... 11,250,000 71,250
TD Securities (USA) Inc.............................. $11,250,000 71,250
----------- ------
Total....................................... $150,000,000 950,000
31
Exhibit A
Form of Notes Registration Rights Agreement
32
Exhibit B
Form of Exchangeable Preferred Stock Registration Rights Agreement
33
