Exhibit 10.4
EXECUTION COPY
4,741,326 Shares
Commonwealth Telephone Enterprises, Inc.
Common Stock, par value $1.00 per share
UNDERWRITING AGREEMENT
December 12, 0000
Xxx Xxxx, Xxx Xxxx
December 12, 2002
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
As Representatives of the several Underwriters
named in Schedule I hereto,
Dear Ladies and Gentlemen:
Eldorado Equity Holdings, Inc. (the "Selling Stockholder") proposes to sell
to the several underwriters named in Schedule I hereto (the "Underwriters"), for
whom you are acting as representatives (the "Representatives"), an aggregate of
4,741,326 shares (the "Shares") of the common stock, par value $1.00 per share,
of Commonwealth Telephone Enterprises, Inc., a Pennsylvania corporation (the
"Company"). The shares of common stock, par value $1.00 per share, of the
Company, together with all other classes of common stock of the Company, are
hereinafter referred to as the "Common Stock".
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Commission file no.
333-101127), including a prospectus, relating to the registration of certain
shares of Common Stock (the "Shelf Securities"), including the Shares, to be
sold from time to time by the Selling Stockholder. The registration statement as
amended to the date of this Agreement, including the information (if any) deemed
to be part of the registration statement that has been filed under the
Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Registration Statement"; the prospectus included therein
relating to the Shelf Securities as of the date of this Agreement is hereinafter
referred to as the "Basic Prospectus." The Basic Prospectus, as supplemented by
the prospectus supplement dated December 12, 2002 (the "Prospectus Supplement"),
relating to the Shares, in the form first used to confirm sales of the Shares is
hereinafter referred to as the "Prospectus". Any reference herein to the
Registration Statement, the Basic Prospectus, any preliminary form of prospectus
previously filed with the Commission pursuant to Rule 424 of the Securities Act
or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on or before the effective date of the Registration Statement or the
issue date of such preliminary prospectus or the Prospectus, as the case may be;
and any reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include the filing of any document
under the Exchange Act after the effective date of the Registration Statement or
the issue date of any preliminary prospectus or the Prospectus, as the case may
be, deemed to be incorporated therein by reference.
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the knowledge
of the Company, threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or
will comply, in each case, as of the date when so filed in all material
respects with the Exchange Act and the applicable rules and regulations of
the Commission thereunder, (ii) each part of the Registration Statement
when such part became effective and any amendments thereto, as of their
respective effective dates, did not contain or, as the case may be, will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (iii) the Registration Statement and any
of the amendments thereto, as of their respective effective dates, and the
Prospectus, as of its issue date and, as amended or supplemented, if
applicable, complied or will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iv) the Prospectus, as of its issue date and, as amended or
supplemented, if applicable, does not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or
omissions in the Registration Statement or the Prospectus or any amendment
or supplement thereto based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein or relating to the Selling Stockholder furnished
to the Company in writing by the Selling Stockholder expressly for use
therein.
(c) The Company has been duly incorporated, is validly subsisting as a
corporation under the laws of the Commonwealth of Pennsylvania, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not reasonably be expected to have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company that would be a "significant
subsidiary" of the Company within the meaning of Rule 1-02 under Regulation
S-X promulgated by the Commission (each a "Material Subsidiary") has been
duly incorporated or otherwise organized, is validly existing as a
corporation, limited liability company, or partnership, as the case may be,
in good standing under the laws of the jurisdiction of its incorporation or
organization, has the corporate, limited liability company, or partnership,
as the case may be, power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be so
qualified or be in good standing would not reasonably be expected to have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; all of the outstanding shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are fully
paid and non-assessable and, except as otherwise set forth or incorporated
by reference in the Prospectus, are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and delivered by
the Company, and the Company has the corporate power to enter into this
Agreement and perform its obligations hereunder.
(f) The authorized equity capitalization of the Company conforms in
all material respects as to legal matters to the description thereof
contained in the Prospectus.
(g) All outstanding shares of Common Stock (including the Shares) have
been duly authorized and are validly issued, fully paid and non-assessable.
(h) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement (i) will not
violate any provision of the amended and restated articles of incorporation
(as amended) or the amended and restated by-laws (as amended) of the
Company and (ii) will not violate any provision of law applicable to the
Company or any of its subsidiaries, any agreement or other instrument
binding upon the Company or any of its subsidiaries or any judgment, order
or decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary, except in each case set forth in this
clause (ii) for violations that would not reasonably be expected to have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, or the Company's ability to perform its obligations hereunder; and
no filing, consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the execution,
delivery or performance of this Agreement by the Company, except such as
may be required by (A) the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares or (B) the
Federal Communications Commission, the Pennsylvania Public Utility
Commission or any other governmental body or agency with regulatory control
over the Company's industry.
(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus.
(j) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or its Material
Subsidiaries is a party or to which any of the properties of the Company or
its Material Subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or the Prospectus that are
not described as required. There are no contracts or other documents
required to be filed as exhibits to the Registration Statement that are not
filed as required.
(k) Any preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(l) The Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus will not be, required to register as an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(m) The Company and its Material Subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the appropriate
Federal, state or foreign regulatory authorities necessary to conduct their
respective businesses material to the Company and its
subsidiaries, taken as a whole, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, would reasonably be expected to have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business.
(n) To the knowledge of the Company, the Company and its Material
Subsidiaries (i) are in compliance with any and all applicable Federal,
state and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except, in the case of all matters set forth in
clauses (i), (ii) and (iii), as set forth in the Prospectus and except
where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not
reasonably be expected to, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(o) There are no costs or liabilities known to the Company associated
with Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities
to third parties) which would reasonably be expected to, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(p) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to register any securities pursuant to the Registration Statement,
except such rights as (x) have been both (i) set forth or incorporated by
reference in the Prospectus and (ii) waived or satisfied or (y) are not
applicable.
(q) Except as disclosed in the Prospectus, the Company and its
Material Subsidiaries have good and marketable title to all real properties
and all other properties and assets owned by them, in each case free from
liens, encumbrances and defects, except for such liens, encumbrances and
defects as would not (i) reasonably be expected to have a material adverse
effect on the Company and its subsidiaries taken as a whole or (ii)
materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectus, the Company and its subsidiaries
hold any leased real or personal property under valid and enforceable
leases with no exceptions that would (x) materially interfere with the use
made or to be made thereof by them or (y) reasonably be expected to have a
material adverse effect on the Company and its subsidiaries taken as a
whole.
(r) No material labor dispute with the employees of the Company or its
Material Subsidiaries exists or, to the knowledge of the Company, is
imminent that would reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(s) The Company and its Material Subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively, "intellectual
property rights") necessary to conduct the business now operated by them,
or presently employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others with respect to
any intellectual property rights that, if determined adversely to the
Company or its Material Subsidiaries, would individually or in the
aggregate reasonably be expected to have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
2. Representations and Warranties of the Selling Stockholder. The Selling
Stockholder represents and warrants to and agrees with each of the Underwriters
that:
(a) This Agreement has been duly authorized, executed and delivered by
or on behalf of the Selling Stockholder.
(b) The execution and delivery by the Selling Stockholder of, and the
performance by the Selling Stockholder of its obligations under this
Agreement will not violate (i) any provision of the certificate of
incorporation or by-laws (or equivalent constituent documents) of the
Selling Stockholder, or (ii) except in each case for violations that would
not materially and adversely affect the consummation by the Selling
Stockholder of the transactions contemplated by this Agreement, any
provision of law applicable to the Selling Stockholder, any agreement or
other instrument binding upon the Selling Stockholder or any property of
the Selling Stockholder or to which the Selling Stockholder is a party or
any judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Selling Stockholder; and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the execution, delivery or performance of this
Agreement by the Selling Stockholder, except for (x) the registration of
the Shares under the Securities Act, (y) the filing of any necessary
amendment to any report on Schedule 13D or 13G relating to the Company
filed by the Selling Stockholder and (z) such as may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Shares or the Federal Communications Commission, the
Pennsylvania Public Utility Commission or any other governmental body or
agency with regulatory control over the Company's industry.
(c) The Selling Stockholder has, and on the Closing Date will have,
the corporate power to enter into this Agreement, to sell, transfer and
deliver the Shares and perform its obligations under this Agreement.
(d) The Selling Stockholder is the record owner of the Shares and is
not aware of any "adverse claims" (within the meaning of Section 8-105 of
the Uniform Commercial Code as adopted by the State of New York (the
"UCC")) that may be asserted against the Selling Stockholder with respect
to the Shares.
(e) Each part of the Registration Statement, when such part became
effective, did not contain and, as amended or supplemented, if applicable,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and the Prospectus does not contain and,
as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this paragraph apply only to statements or
omissions in the Registration Statement or Prospectus based upon
information relating to the Selling Stockholder
furnished to the Company in writing by the Selling Stockholder expressly
for use therein.
(f) The Selling Stockholder has not taken, and will not take, directly
or indirectly, any action designed to, or which might reasonably be
expected to, cause or result in any stabilization or manipulation of the
price of any security of the Company to facilitate the sale of the Shares
pursuant to the distribution contemplated by this Agreement and, other than
as permitted by the Securities Act, the Selling Stockholder has not
distributed and will not distribute any prospectus or other offering
material in connection with the offering and sale of the Shares.
3. Agreements to Sell and Purchase. Upon the basis of the representations
and warranties herein contained, but subject to the conditions hereinafter
stated, the Selling Stockholder hereby agrees to sell to the several
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Selling Stockholder at $33.60 per share (the "Purchase Price")
the number of Shares (subject to such adjustments to eliminate fractional shares
as you may determine) set forth in Schedule I hereto opposite the name of such
Underwriter.
The Company hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 90 days after the date of the Prospectus Supplement, (a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Common Stock or (b) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of Common Stock, whether any such transaction
described in clause (a) or (b) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (i) the issuance by the Company of shares of Common Stock
upon the exercise of an option or the conversion of a security outstanding on
the date hereof or with respect to awards under its equity incentive plan
outstanding on the date hereof, (ii) the issuance by the Company of shares of
Common Stock or the grant of options or awards to purchase shares of Common
Stock pursuant to employee benefit plans of the Company in effect as of the date
hereof or (iii) the issuance by the Company of shares of Common Stock (and the
filing of a registration statement with respect thereto) in connection with the
acquisition by the Company of assets or equity of other companies provided that
the recipients of such shares of Common Stock either agree in writing to be
bound by the restrictions contained in this paragraph in the same manner as then
applied to the Company or the consummation of the acquisition by the Company
will occur 90 days after the date of the Prospectus Supplement.
The Selling Stockholder hereby agrees that, without the prior written
consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it
will not, during the period ending 90 days after the date of the Prospectus
Supplement, (a) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for shares of Common Stock or (b) enter into
any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of Common Stock, whether any such
transaction described in clause (a) or (b) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (i) the Shares sold to the Underwriters hereunder,
(ii) shares of the Common Stock of
the Company other than shares of the Company's class B common stock after the
completion of the offering of the Shares, (iii) transactions relating to shares
of class B common stock or other securities acquired in open market transactions
after the completion of the offering of the Shares, (iv) any transfer of shares
of class B common stock to the Company after the completion of the offering of
the Shares, (v) any transfer of shares of Common Stock to any affiliate of the
Selling Stockholder (other than the Company), provided that such affiliate
agrees in writing to be bound by the restrictions contained in this paragraph in
the same manner as then applied to the Selling Stockholder or (vi) the sale of
shares of Common Stock by the Selling Stockholder to one or more investors in a
private placement (but not subsequent transfers by such investors to third
parties), provided that such investors agree in writing to be bound by the
restrictions contained in this paragraph in the same manner as then applied to
the Selling Stockholder.
4. Terms of Public Offering. The Selling Stockholder is advised by you that
the Underwriters propose to make a public offering of the Shares as soon after
this Agreement has become effective as in your judgment is advisable. The
Selling Stockholder is further advised by you that the Shares are to be offered
to the public initially at $35.00 a share (the "Public Offering Price") and to
certain dealers selected by you at a price that represents a concession not in
excess of $0.91 a share under the Public Offering Price.
5. Payment and Delivery. Payment for the Shares shall be made to the
Selling Stockholder in Federal or other funds immediately available in New York
City against delivery of such Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on December 18, 2002, or at such
other time on the same or such other date, not more than five business days
later, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "Closing Date".
The certificates evidencing the Shares shall be delivered to you on the
Closing Date for the respective accounts of the several Underwriters, with any
transfer taxes payable in connection with the transfer of the Shares to the
Underwriters duly paid, against payment of the Purchase Price therefor.
6. Conditions to the Obligations of the Underwriters and the Selling
Stockholder. The obligation of the Selling Stockholder to sell the Shares to the
Underwriters and the several obligations of the Underwriters to purchase and pay
for the Shares on the Closing Date are subject to the condition that the
Prospectus, as amended or supplemented, in relation to the Shares, shall have
been filed with the Commission pursuant to Rule 424(b) within the applicable
time period prescribed for such filing by the rules and regulations under the
Securities Act; as of the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall be in effect or shall be
pending or, to the knowledge of the Company, threatened by the Commission.
The several obligations of the Underwriters are subject to the following
additional conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and
its subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement) that, in your judgment, is material and adverse and that
makes it, in your judgment, impracticable to market the Shares on the terms
and in the manner contemplated in the Prospectus.
(b) (i) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company to the effect that the representations and warranties of the
Company contained in this Agreement are true and correct as if made on the
Closing Date and that the Company has complied with all of the agreements
and satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date and (ii) the Underwriters
shall have received on the Closing Date a certificate, dated the Closing
Date and signed by an executive officer of the Selling Stockholder to the
effect that the representations and warranties of the Selling Stockholder
contained in this Agreement are true and correct as if made on the Closing
Date and that the Selling Stockholder has complied with all of the
agreements and satisfied all of the conditions on its part to be performed
or satisfied hereunder on or before the Closing Date.
The officers signing and delivering such certificates may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Xxxxx Xxxx & Xxxxxxxx, outside counsel for the Company, dated
the Closing Date, to the effect that:
(i) such counsel has been advised by a member of the Commission
that the Registration Statement was declared effective under the
Securities Act on November 22, 2002; the Prospectus Supplement was
filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations of the Commission within the period specified thereby;
and, no stop order suspending the effectiveness of the Registration
Statement has been issued and, to their knowledge, no proceeding for
that purpose is pending or contemplated under the Securities Act.
(ii) the execution and delivery by the Company of, and the
performance of its obligations under, this Agreement will not
contravene any provision of U.S. Federal or New York State law that in
such counsel's experience is normally applicable to general business
corporations in relation to transactions of the type contemplated by
this Agreement, or the amended and restated articles of incorporation
(as amended) or the amended and restated by-laws (as amended) of the
Company, and no filing, consent, approval, authorization or order of,
or qualification with, any governmental body or agency under U.S.
Federal or New York State law that in such counsel's experience is
normally applicable to general business corporations in relation to
transactions of the type contemplated by this Agreement is required
for the performance by the Company of its obligations under this
Agreement, except such as may be required by (A) the securities or
Blue Sky laws of the various states in connection with the offer and
sale of the Shares or (B) the Federal Communications Commission, the
Pennsylvania Public Utility Commission or any other governmental body
or agency with regulatory control over the Company's industry;
(iii) the statements (A) in the Prospectus Supplement under the
caption "Underwriters" and (B) in the Registration Statement in Item
15, in each case insofar as such statements constitute summaries of
the legal matters or documents referred to therein, fairly summarize
in all material respects the matters referred to therein;
(iv) after due inquiry, such counsel does not know of any legal
or governmental proceedings pending or threatened to which the Company
or its Material Subsidiaries is a party or to which any of the
properties of the Company or its Material Subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required;
(v) the Company is not, and after giving effect to the
transactions contemplated by this Agreement will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended; and
(vi) nothing has come to such counsel's attention that causes it
to believe that (i) the Registration Statement or Prospectus (except
for financial statements and financial schedules and other financial
and statistical data included or incorporated by reference therein, as
to which such counsel shall express no belief) do not comply as to
form in all material respects with the requirements of the Securities
Act and the applicable rules and regulations of the Commission
thereunder, (ii) the Registration Statement or the prospectus included
therein (except for the financial statements and financial schedules
and other financial and statistical data included or incorporated
therein, as to which such counsel shall express no belief) at the time
the Registration Statement became effective contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or (iii) the Prospectus (except as stated
above) as of the date of the Prospectus Supplement or as of the date
hereof contained or contains an untrue statement of a material fact or
omitted or omits 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.
Such counsel may state that it expresses no opinion or belief with respect
to matters governed by or related to federal, state, local or foreign
communications law or the rules, regulations or policies of the Federal
Communications Commission or the Pennsylvania Public Utility Commission
thereunder.
(d) The Underwriters shall have received on the Closing Date an
opinion of Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP, special Pennsylvania
counsel for the Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, and is validly
subsisting as a corporation under the laws of the Commonwealth of
Pennsylvania and has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus;
(ii) each Material Subsidiary of the Company has been duly
incorporated or formed, as applicable, and is validly subsisting as a
corporation or limited liability company, as applicable, under the
laws of the Commonwealth of Pennsylvania and has the corporate or
limited liability company, as applicable, power and authority to own
its property and to conduct its business as described in the
Prospectus;
(iii) the authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof
contained in the Prospectus;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company and the Company has the corporate power to
enter into this Agreement and perform its obligations hereunder;
(v) the issued shares of Common Stock (including the Shares) are
fully paid and non-assessable; and
(vi) all of the issued shares of capital stock of each Material
Subsidiary of the Company, other than CTSI, LLC, are fully paid and
non-assessable.
(e) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxxx Xxxxxxxx, Vice President, General Counsel and Secretary of the Company,
dated the Closing Date, to the effect that:
(i) all outstanding shares of Common Stock (including the Shares)
have been duly authorized and are validly issued, fully paid and
non-assessable;
(ii) the Company is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(iii) all of the issued shares of capital stock of each Material
Subsidiary of the Company have been duly authorized and are validly
issued, fully paid and non-assessable and are owned directly by the
Company, free and clear of all liens, encumbrances, equities or
claims;
(iv) each material subsidiary of the Company is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole;
(v) the execution and delivery by the Company of, and the
performance of its obligations under, this Agreement (i) will not
violate any provision of the amended and restated articles of
incorporation (as amended) or the amended and restated by-laws (as
amended) of the Company and (ii) to such counsel's knowledge, will not
violate any provision of law applicable to the Company or any of its
subsidiaries, any agreement or other instrument binding upon the
Company or any of its subsidiaries, or any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, except in each case set forth in this
clause (ii) for violations that would not reasonably be expected to
have a material adverse effect on the Company and its subsidiaries,
taken as a whole, or the Company's ability to perform its obligations
hereunder; and no filing, consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required
for the execution, delivery or performance of this Agreement by the
Company, except such as may be required by (A) the securities or Blue
Sky laws of the various states in connection with the offer and sale
of the Shares or (B) the Federal Communications Commission, the
Pennsylvania Public Utility Commission or any other governmental body
or agency with regulatory control over the Company's industry;
(vi) to such counsel's knowledge, (a) there are no legal or
governmental proceedings pending or threatened to which the Company or
its Material Subsidiaries is a party or to which any of the properties
of the Company or its Material Subsidiaries is subject that are
required to be described in the Registration Statement or the
Prospectus and are not so described, (b) there are no statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus that are not
described as required and (c) there are no contracts or other
documents required to be filed as exhibits to the Registration
Statement that are not filed as required;
(vii) to such counsel's knowledge, the Company and its Material
Subsidiaries (A) are in compliance with any and all applicable
Environmental Laws, (B) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (C) are in compliance with all
terms and conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, reasonably be expected to have
a material adverse effect on the Company and its subsidiaries, taken
as a whole; and
(viii) each document filed pursuant to the Exchange Act and
incorporated by reference in the Registration Statement and the
Prospectus (other than the financial statements and notes thereto, the
financial statement schedules and the other financial and statistical
data included or incorporated by reference therein, as to which such
counsel expresses no opinion), as of its filing date, complied as to
form in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder.
(f) The Underwriters shall have received from Xxxxxxx Berlin Sheriff
Xxxxxxxx, LLP, special Federal regulatory counsel to the Company, such letter
with respect to Federal regulatory matters, dated the Closing Date and addressed
to the Underwriters, to the effect that (i) no consent, waiver, approval,
authorization, license, qualification or order of or registration with the
Federal Communications Commission is required for the due authorization,
execution or delivery by the Company and the Selling Stockholder of this
Agreement or the performance by the Company and the Selling Stockholder of the
transactions contemplated under the Prospectus and this Agreement and (ii) the
statements in the Prospectus and the documents incorporated by reference therein
under the captions "Summary", "Risk Factors", "Supplemental Risk Factors,"
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" and "Business", in each case insofar as such statements constitute
summaries of the Federal regulatory matters, documents or proceedings referred
to therein, fairly present the information called for with respect to such
regulatory matters, documents and proceedings and fairly summarize the
regulatory matters referred to therein.
(g) The Underwriters shall have received from Xxxxxxxxx, Xxxxx & XxXxxx
LLP, special Pennsylvania regulatory counsel to the Company, such letter with
respect to Pennsylvania regulatory matters, dated the Closing Date and addressed
to the Underwriters, to the effect that, based upon the transaction described in
the Registration Statement, (i) all filings with, or authorization, approval,
consent, license, order, registration, qualification or decree of the
Pennsylvania Public Utility Commission necessary or required for the due
authorization, execution or delivery by the Company and the Selling Stockholder
of this Agreement or the performance by the Company and the Selling Stockholder
of the transactions contemplated under the Prospectus and this Agreement have
been made and/or obtained and (ii) the statements in the Prospectus and the
documents incorporated by reference therein under the captions "Summary", "Risk
Factors", "Supplemental Risk Factors", "Management's Discussion and Analysis of
Results of Operations and Financial Condition" and "Business", in each case
insofar as such statements constitute summaries of the Pennsylvania regulatory
matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such regulatory matters, documents and
proceedings and fairly summarize the regulatory matters referred to therein.
(h) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxxx Xxxx & Xxxxxxxxx, outside counsel for the Selling Stockholder, dated the
Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder and Level 3
Communications, Inc.;
(ii) the execution and delivery by the Selling Stockholder of,
and the performance by the Selling Stockholder of its obligations
under this Agreement will not violate (i) any provision of the
certificate of incorporation or by-laws (or equivalent constituent
documents) of the Selling Stockholder, or (ii) to such counsel's
knowledge, except in each case for violations that would not
materially and adversely affect the consummation by the Selling
Stockholder of the transactions contemplated by this Agreement, any
provision of New York, Delaware corporate or United States Federal law
(other than the Communications Act of 1934, as amended, comparable
state statutes governing telecommunications, the rules, regulations
and decisions of the Federal Communications Commission and the rules
and regulations of comparable state regulatory agencies, as to which
such counsel need express no opinion) applicable to the Selling
Stockholder, any agreement or other instrument binding upon the
Selling Stockholder or any property of the Selling Stockholder or to
which the Selling Stockholder is a party or any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over the Selling Stockholder; and, to such counsel's knowledge, no
filing, consent, approval, authorization or order of, or qualification
with, any New York, Delaware (insofar as Delaware corporate law is
concerned) or United States Federal governmental body or agency is
required for the execution, delivery or performance of this Agreement
by the Selling Stockholder, except for (A) the registration of the
Shares under the Securities Act, (B) the filing of any necessary
amendment to any report on Schedule 13D or 13G relating to the Company
filed by the Selling Stockholder, (C) such as may be required by the
securities or Blue Sky laws of the various states in connection with
the offer and sale of the Shares and (D) such as may be required by
the Federal Communications Commission, the Pennsylvania Public Utility
Commission or any other governmental
body or agency with regulatory control over the Company's industry, in
each case as to which such counsel need express no opinion;
(iii) based solely on a review of the applicable stock
certificates, the Selling Stockholder is the record owner of the
Shares and has the corporate right, power and authority to enter into
this Agreement and to sell, transfer and deliver the Shares; and
(iv) assuming that each of the Underwriters acquires its interest
in the Shares sold by the Selling Stockholder without notice of any
adverse claim (within the meaning of Section 8-105 of the UCC), each
Underwriter, once it has purchased such Shares delivered to DTC by
making payment therefor, as provided herein, and has had such Shares
credited to the securities account or accounts of such Underwriter
maintained with DTC, will have acquired a security entitlement (within
the meaning of Section 8-102(a)(17) of the UCC) to such Shares
purchased by such Underwriter and such Underwriter will take such
shares free and clear of any adverse claim with respect to such
Shares.
(i) The Underwriters shall have received on the Closing Date an opinion of
Cravath, Swaine & Xxxxx, counsel for the Underwriters, dated the Closing Date,
covering the matters referred to in Section 6(d)(iii), Section 6(c)(iii) (but
only as to the statements in the Prospectus under the caption "Underwriters")
and Section 6(c)(vi) above.
The opinions of Xxxxx Xxxx & Xxxxxxxx described in Section 6(c), Wolf,
Block, Xxxxxx and Xxxxx-Xxxxx LLP described in Section 6(d), Xxxxxxx Xxxxxxxx
described in Section 6(e), Xxxxxxx Berlin Sheriff Xxxxxxxx, LLP described in
Section 6(f), Xxxxxxxxx, Xxxxx & XxXxxx LLP described in Section 6(g) and
Xxxxxxx Xxxx & Xxxxxxxxx described in Section 6(h) shall be rendered to the
Underwriters at the request of the Company or the Selling Stockholder, as the
case may be, and shall so state therein.
(j) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance reasonably satisfactory to the Underwriters
from PricewaterhouseCoopers LLP, independent public accountants, with respect to
the Company, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement and the Prospectus;
provided that the letters delivered on the Closing Date shall use a "cut-off
date" not earlier than the date hereof.
(k) The "lock-up" agreements, each substantially in the form of Exhibit A
hereto, between you and the executive officers and directors of the Company
relating to sales and certain other dispositions of shares of Common Stock or
certain other securities, delivered to you on or before the date hereof, shall
be in full force and effect on the Closing Date.
(l) The Company shall have furnished to the Underwriters such further
customary information, certificates and documents as the Underwriters may
reasonably request.
7. Covenants of the Company. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
(a) To furnish to each of you without charge, one signed copy of the
Registration Statement (including exhibits thereto and documents incorporated by
reference) and to each other Underwriter a conformed copy of the Registration
Statement (without exhibits thereto or documents incorporated by reference) and,
during the period mentioned in paragraph (c) below, as many copies of the
Prospectus, any documents incorporated by reference, and any supplements and
amendments thereto as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement (other than any document required to be filed pursuant to the
Exchange Act) and not to file any such proposed amendment or supplement (other
than any document required to be filed pursuant to the Exchange Act) to which
you reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus required
to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public offering of
the Shares as in the opinion of counsel for the Underwriters the Prospectus is
required by law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the Underwriters
it is necessary to amend or supplement the Prospectus to comply with applicable
law, forthwith to prepare, file with the Commission and furnish, at its own
expense, to the Underwriters and to the dealers (whose names and addresses you
will furnish to the Company) to which Shares may have been sold by you on behalf
of the Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the Prospectus,
as amended or supplemented, will comply with law.
(d) To make generally available to the Company's security holders and to
you as soon as practicable an earning statement covering the twelve-month period
ending March 31, 2003 that satisfies the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder.
8. Expenses. Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, the Company agrees to pay or
cause to be paid all expenses incident to the performance of their obligations
under this Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Shares under the Securities Act and all other
fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing (including all printing costs
associated therewith except for such printing costs incurred during the period
beginning at 12:01 a.m. on December 7, 2002 and ending at 8:00 a.m. on December
9, 2002 for which the Underwriters shall pay or cause to be paid any additional
overtime expense incurred in connection therewith; provided that the
Underwriters shall pay only for the
difference between the regular rate charged by the financial printer and the
weekend overtime rate charged by the financial printer), and the mailing and
delivering of copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) the cost of printing certificates representing the
Shares, (iii) the costs and charges of any transfer agent, registrar or
depositary, (iv) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Shares, including, without limitation, travel and lodging
expenses of the representative and officers of the Company and the cost of any
aircraft chartered by the Company in connection with the road show and (v) all
other costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this Section.
Notwithstanding the foregoing, it is understood that the Selling Stockholder
will pay or cause to be paid (in the form of the difference between the Purchase
Price and the Public Offering Price) the underwriting discount with respect to
the Shares, all costs and expenses related to the transfer and delivery of the
Shares to the Underwriters, including any transfer or other taxes payable on the
transfer of the Shares to the Underwriters and all fees and disbursements of
their legal counsel in connection with the sale of the Shares pursuant to this
Agreement. It is understood, however, that except as provided in this Section,
Section 9 entitled "Indemnity and Contribution", and the last paragraph of
Section 11 below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes payable
on resale of any of the Shares by them and any advertising expenses connected
with any offers they may make.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Company and the Selling Stockholder may otherwise have for
the allocation of such expenses among themselves.
9. Indemnity and Contribution. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to (i) any Underwriter furnished to the Company in
writing by or on behalf of any Underwriter through you expressly for use therein
or (ii) the Selling Stockholder furnished in writing by or on behalf of the
Selling Stockholder expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if it shall be established that a copy of the
Prospectus was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus
would have cured the defect giving rise to such losses, claims, damages or
liabilities, unless such failure is the result of
noncompliance by the Company with Section 7(a) hereof.
(b) The Selling Stockholder agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls or any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by 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, but only
with reference to information relating to the Selling Stockholder furnished in
writing by or on behalf of the Selling Stockholder expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto and such indemnification being limited to the
amount of net proceeds received from the sale of the Shares by the Underwriters;
it being understood and agreed that the only such information furnished by the
Selling Stockholder consists of the information pertaining to the Selling
Stockholder included in the Prospectus under the heading "Selling Stockholder",
the first, second, third and fourth sentences in the Prospectus Supplement under
the heading "Supplemental Risk Factors--Risks related to Level 3 Communications,
Inc.'s significant influence over us--Level 3 holds a significant portion of the
voting power in our equity securities and may have interests that differ from
yours" and the second sentence under the heading "Supplemental Risk
Factors--Risks related to Level 3 Communications, Inc.'s significant influence
over us--We have existing relationships with RCN Corporation, an affiliate of
Xxxxx 0, that may lead to conflicts of interest"; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if it shall be established that a copy of the
Prospectus was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus
would have cured the defect giving rise to such losses, claims, damages or
liabilities, unless such failure is the result of noncompliance by the Company
with Section 7(a) hereof.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Selling Stockholder, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or the Selling Stockholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by 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,
but only with reference to information relating to such Underwriter furnished to
the Company in
writing by or on behalf of such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 9(a), 9(b) or 9(c), such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing of the commencement thereof; but the failure so
to notify the indemnifying party (i) will not relieve such indemnifying party
from liability under paragraph (a), (b) or (c) above unless and to the extent it
did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
will not, in any event, relieve the indemnifying party from any obligations to
any indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, (ii) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section and
(iii) the fees and expenses of more than one separate firm (in addition to any
local counsel) for the Selling Stockholder and all persons, if any, who control
the Selling Stockholder within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing jointly by the
Representatives. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Stockholder and such control persons of the Selling Stockholder,
such firm shall be designated in writing by the Selling Stockholder. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party (such consent not to be unreasonably
withheld), effect any settlement of any pending or threatened 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 proceeding.
(e) To the extent the indemnification provided for in Section 9(a), 9(b) or
9(c) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(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 9(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and/or the Selling Stockholder, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the Shares
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Shares (before deducting expenses) received by the
Selling Stockholder and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Shares. The relative fault of the Company, the Selling Stockholder and the
Underwriters 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, the Selling Stockholder or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(f) The Company, the Selling Stockholder and the Underwriters agree that it
would not be just or equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 9(e). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and the Selling Stockholder shall not be required to
contribute an amount that, together with any other payments made pursuant to
this Section 9, exceeds the net proceeds received by the Selling Stockholder
from the sale of the Shares pursuant to this Agreement. No person guilty of
fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 9 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section 9
and the representations, warranties and other statements of the Company and the
Selling Stockholder contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Selling Stockholder or any person controlling
the Selling Stockholder, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
(h) The indemnity and contribution provisions contained in this Section 9
do not modify or supersede any agreement between the Company and the Selling
Stockholder relating to such matters.
10. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company and the Selling Stockholder, if after the execution
and delivery of this Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on, or by, as the case
may be, either the New York Stock Exchange or the Nasdaq National Market, (ii)
trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a material disruption in
securities settlement, payment or clearance services in the United States shall
have occurred, (iv) any moratorium on commercial banking activities shall have
been declared by Federal or New York State authorities or (v) there shall have
occurred any outbreak or escalation of hostilities, or any change in financial
markets or any calamity or crisis that, in your judgment, is material and
adverse and which, singly or together with any other event specified in this
clause (v), makes it, in your judgment, impracticable or inadvisable to proceed
with the offer, sale or delivery of the Shares on the terms and in the manner
contemplated in the Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date any one or more of the Underwriters shall fail or
refuse to purchase Shares that it has or they have agreed to purchase hereunder
on such date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the aggregate number of the Shares to be purchased on such
date, the other Underwriters shall be obligated severally in the proportions
that the number of Shares set forth opposite their respective names in Schedule
I bears to the aggregate number of Shares set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 11 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Shares and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares to be purchased, and arrangements
satisfactory to you, the Company and the Selling Stockholder for the purchase of
such Shares are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter,
the Company or the Selling Stockholder. In any such case either you, the Company
or the Selling Stockholder 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 Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Selling Stockholder to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Selling Stockholder shall be unable to perform its
obligations under this Agreement, the Selling Stockholder will reimburse the
Company and the Underwriters or such persons as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
such persons in connection with this Agreement or the offering contemplated
hereunder.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Company and the Selling Stockholder may otherwise have for
the allocation of such expenses among themselves.
12. Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
13. Notices. All communications under this Agreement will be in writing and
effective only on receipt, and, if sent to the Underwriters, will be mailed,
delivered or telefaxed to Xxxxxx Xxxxxxx & Co. Incorporated, 0000 Xxxxxxxx, Xxx
Xxxx, XX 00000 (fax no. (000) 000-0000), attention General Counsel, or if sent
to the Company, will be mailed, delivered or telefaxed to Commonwealth Telephone
Enterprises, Inc., 000 XXX Xxxxx, Xxxxxx, XX 00000 (fax no. (000-000-0000),
attention Xxxxxxx X. Xxxxxxx, with a copy to Xxxxx Xxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 (fax no. (000) 000-0000), attention Xxxx
Xxxx, Esq., or if sent to the Selling Stockholder, will be mailed, delivered or
telefaxed to Xxxxx 0 Xxxxxxxxxxxxxx, Xxx., 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxxx,
XX 00000 (fax no. 000-000-0000), attention General Counsel, with a copy to
Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 (fax no. (212)
000-0000), attention Xxxxx Xxxxxx, Esq.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
15. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
Commonwealth Telephone Enterprises, Inc.
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Sr. VP and CAO
Xxxxx 0 Communications, Inc.
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Vice President
Eldorado Equity Holdings, Inc.
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Vice President
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Acting severally on behalf
of itself and the
several Underwriters named
in Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Executive Director
SCHEDULE I
Number of Shares
To Be Purchased
Underwriter
Xxxxxx Xxxxxxx & Co. Incorporated.................................. 2,702,558
Xxxxxxx, Sachs & Co................................................ 1,126,065
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated............................... 225,213
Xxxxxxx Xxxxx & Associates, Inc.................................... 225,213
XX Xxxxx Securities Corporation.................................... 225,213
CIBC World Markets Corp............................................ 59,266
X.X. Xxxxxxx & Sons, Inc........................................... 59,266
Xxxxxx X. Xxxxx & Co., L.P......................................... 59,266
Xxxxxxx Bros., L.P................................................. 59,266
------
Total............................ 4,741,326
=========
EXHIBIT A
[FORM OF LOCK-UP LETTER]
, 2002
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Ladies and Gentlemen:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx
Xxxxxxx") acting severally on behalf of itself and the several underwriters (the
"Underwriters") propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") with Commonwealth Telephone Enterprises, Inc., a
Pennsylvania corporation (the "Company"), Xxxxx 0 Communications, Inc. and
Eldorado Equity Holdings, Inc. (the "Selling Stockholder") providing for the
public offering (the "Public Offering") by the Underwriters of shares (the
"Shares") of the common stock, par value $1.00 per share of the Company
(together with the Class B common stock, par value $1.00 per share of the
Company, the "Common Stock"), on behalf of the Selling Stockholder.
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date of the preliminary prospectus supplement relating to the Public Offering
(the "Preliminary Prospectus Supplement") and ending 90 days after the date of
the final prospectus supplement relating to the Public Offering (the "Prospectus
Supplement"), (a) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or (b) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clauses (a) or (b) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (a) transactions relating to shares of Common Stock
or other securities acquired in open market transactions after the completion of
the Public Offering and (b) transfers of shares of Common Stock or any security
convertible into Common Stock as a bona fide gift or gifts; provided that in the
case of any transfer or distribution pursuant to clause (b), (i) each donee
shall execute and deliver to Xxxxxx Xxxxxxx a duplicate form of this Lock-Up
Letter and (ii) no filing by any party (donor, donee) under Section 16(a) of the
Securities Exchange Act of 1934, as amended, shall be required or shall be made
voluntarily in connection with such transfer or distribution (other than a
filing on a Form 5 made after the expiration of the 90-day period referred to
above). In addition, the undersigned agrees that, without the prior written
consent of Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the
period commencing on the date of the Preliminary Prospectus Supplement and
ending 90 days after the date of the Prospectus Supplement, make any demand for
or exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Notwithstanding anything to the contrary contained herein, this Lock-Up
Agreement shall be null and void if (i) the Underwriting Agreement is terminated
pursuant to Section 10 of said Underwriting Agreement or (ii) the Public
Offering has not occurred by January 31, 2003.
Very truly yours,
By:___________________
Name:
Title:
