EXHIBIT 9
CONFORMED COPY
RIGHTS EXERCISE AGREEMENT
THIS RIGHTS EXERCISE AGREEMENT (this "Agreement") is made and entered
into as of September 25, 1998, by and among Commonwealth Telephone Enterprises,
Inc., a Pennsylvania corporation (the "Company"), Xxxxxx Xxxxx, Xx. ("Xx.
Xxxxx"), Xxxxx X. Xxxxx ("Xx. Xxxxx"), Xxxxx X. XxXxxxx ("Xx. XxXxxxx") and
Level 3 Telecom Holdings, Inc., a Delaware corporation ("LTTH").
RECITALS:
A. The Company anticipates distributing and issuing to the holders of
record of its issued and outstanding shares of Common Stock, par value $1.00
per share ("Common Stock"), and to holders of record its outstanding shares of
Class B Common Stock, par value $1.00 per share ("Class B Stock", and together
with the Common Stock, the "Company Stock"), at no charge to such holders,
transferable subscription rights (the "Rights") to subscribe for and purchase
an aggregate of 3,678,612 shares of Common Stock for a price of $21.25 per
share (the "Subscription Price") (such transaction being herein referred to as
the "Rights Offering").
B. The Company is conducting the Rights Offering in order to raise
approximately $77 million of net proceeds which will be used to repay debt.
C. LTTH will receive 1,776,065 Rights (the "LTTH Rights") in respect
of the shares of Company Stock currently owned by it.
D. Xx. Xxxxx will receive 137 Rights (the "Xxxxx Rights") in respect
of shares of Company Stock currently owned by him.
E. Xx. Xxxxx will receive 137 Rights (the "Xxxxx Rights") in respect
of shares of Company Stock currently owned by him.
F. Xx. XxXxxxx will receive 7,339 Rights (the "XxXxxxx Rights") in
respect of shares of Company Stock currently owned by him.
G. The Company has requested LTTH, and Messrs. Xxxxx, Xxxxx and
XxXxxxx to exercise their Rights and to exercise the Oversubscription Privilege
(as defined below) on the terms and subject to the conditions set forth below.
In consideration of the mutual promises contained herein, the parties
agree as follows:
1. Rights Offering; Registration of the Common Stock
The Company represents and warrants to each of the other parties
to this Agreement as follows:
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (registration no. 333-59747)
(as amended to the date of this agreement, the "Registration Statement"),
including a related prospectus, relating to the registration of, among other
securities, the Rights. The prospectus included therein, is hereinafter
referred to as the "Base Prospectus." The Base Prospectus, as supplemented by
the prospectus supplement dated September 25, 1998 (the "Prospectus
Supplement") relating to the Rights, is hereinafter referred to as the
"Prospectus". The Registration Statement has been declared effective by the
Commission. All expenses relating to the Registration Statement and the
Prospectus have been borne by the Company. The shares of Common Stock to be
issued and sold pursuant to the Rights Offering (the "Underlying Shares") have
been registered pursuant to the Registration Statement and have been duly
authorized and when issued upon valid exercise of the Rights will be validly
issued, fully paid and non-assessable. A copy of the Prospectus has been
furnished to LTTH and Messrs Xxxxx, Xxxxx and XxXxxxx. Each part of the
Registration Statement, when such part became effective, did not contain and
each such part, as amended or supplemented, if applicable, will not, on or
prior to the expiration of the Rights Offering, 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, the Registration
Statement and the Prospectus comply and, as amended or supplemented, if
applicable, will, on and prior to the expiration of the Rights Offering, comply
in all material respects with the Securities Act of 1933, as amended (the
"Act"), and the applicable rules and regulations of the Commission thereunder
and the Prospectus does not contain and, as amended or supplemented, if
applicable, will not, on or prior to the Rights Offering, 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. The Company will timely file with the Commission the
Prospectus Supplement pursuant to Rule 424(b) under the Act. Capitalized terms
used herein without definition shall have the meanings ascribed to them in the
Prospectus.
2. Exercise of Rights
(a) Subject to the terms and conditions herein set forth, LTTH
hereby agrees to properly exercise the Basic Subscription Privilege in respect
of all of the LTTH Rights on or before the Expiration Date.
(b) Subject to the terms and conditions set forth herein, Xx.
Xxxxx agrees (i) to properly exercise the Basic Subscription Privilege in
respect of all of the Xxxxx Rights on or before the Expiration Date and (ii) to
properly exercise the Oversubscription Privilege for 947,468 additional
Underlying Shares on or before the Expiration Date. If Xx. Xxxxx purchases or
otherwise acquires additional Rights (A) such Rights will be treated as Xxxxx
Rights for purposes of clause (i) of the preceding sentence and (B) the number
of Underlying Shares in respect of which Xx. Xxxxx will exercise the
Oversubscription Privilege pursuant to clause (ii) of the preceding sentence
will be reduced by an amount equal to such number of additional Rights.
(c) Subject to the terms and conditions set forth herein, Xx.
Xxxxx agrees (i) to properly exercise the Basic Subscription Privilege in
respect of all of the Xxxxx Rights on or before the Expiration Date and (ii) to
properly exercise the Oversubscription Privilege for 473,733 additional
Underlying Shares on or before the Expiration Date. If Xx. Xxxxx purchases or
otherwise acquires additional Rights (A) such Rights will be treated as Xxxxx
Rights for purposes of clause (i) of the preceding sentence and (B) the number
of Underlying Shares in respect of which Xx. Xxxxx will exercise the
Oversubscription Privilege pursuant to clause (ii) of the preceding sentence
will be reduced by an amount equal to such number of additional Rights.
(d) Subject to the terms and conditions set forth herein, Xx.
XxXxxxx agrees (i) to properly exercise the Basic Subscription Privilege in
respect of all of the XxXxxxx Rights on or before the Expiration Date and (ii)
to properly exercise the Oversubscription Privilege for 473,733 additional
Underlying Shares on or before the Expiration Date. If Xx. XxXxxxx purchases or
otherwise acquires additional Rights (A) such Rights will be treated as XxXxxxx
Rights for purposes of clause (i) of the preceding sentence and (B) the number
of Underlying Shares in respect of which Xx. XxXxxxx will exercise the
Oversubscription Privilege pursuant to clause (ii) of the preceding sentence
will be reduced by an amount equal to such number of additional Rights.
(e) The Underlying Shares for which Messrs Xxxxx, Xxxxx and
XxXxxxx have agreed to exercise the Oversubscription Privilege under Sections
2(b), 2(c) and 2(d) are referred to herein as the "Oversubscription Shares".
The Company agrees that Messrs Xxxxx, Xxxxx and XxXxxxx will be entitled to
reallocate among themselves the Oversubscription Shares in such manner as they
may agree so long as (i) the total number of Underlying Shares for which they
exercise the Oversubscription Privilege is equal to the number of
Oversubscription Shares and (ii) no such reallocation results in any additional
filing or approval requirements that could adversely affect or delay the Rights
Offering.
3. Payment for Underlying Shares
The Company hereby agrees to permit each of Messrs Xxxxx, Xxxxx
and XxXxxxx to enter into escrow arrangements for the payment for all
Underlying Shares subscribed for by him pursuant to the Oversubscription
Privilege in excess of 5,000 after the Expiration Date and after all prorations
and adjustments contemplated by the Rights Offering have been effected. Such
escrow arrangements shall be reasonably satisfactory to the Company.
4. Exercise Conditions
The several obligations of LTTH and Messrs Xxxxx, Xxxxx and
XxXxxxx to take the actions set forth under Section 2 shall in each case be
subject to the satisfaction of the following conditions on the Expiration Date:
(a) No stop order suspending the effectiveness of the
Registration Statement or any amendment or supplement thereto shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission;
(b) (i) There shall not be pending any action or proceeding
instituted by any governmental authority before any court or governmental,
administrative or regulatory authority challenging or seeking to make illegal,
materially delay or make materially more costly the Rights Offering or the
transactions contemplated hereby; (ii) since the date of this Agreement, there
shall not have occurred any change, condition, event or development that has
had a material adverse affect on the business, operations, properties,
condition (financial or otherwise), assets or liabilities of the Company and
its subsidiaries taken as a whole; and (iii) since the date of this Agreement,
there shall not have occurred any material adverse change in the financial
markets in the United States; and
(c) The representations and warranties of the Company set forth
in Section 1 shall be true and correct as of the Expiration Date.
(d) Each of the other shareholders who are party to this
Agreement shall have exercised the Rights which such shareholders are required
to exercise pursuant to Section 2.
In addition, (i) the obligation of Xx. Xxxxx to take the actions set forth in
Section 2(b) is subject to the expiration or early termination of the waiting
period under the Xxxx-ScottRodino Antitrust Improvements Act of 0000 (xxx "XXX
Xxx") to the extent applicable to the transactions by Xx. Xxxxx hereunder and
(ii) the several obligations of Messrs Xxxxx, Xxxxx and XxXxxxx to take the
actions set forth in Sections 2(b), 2(c) and 2(d), respectively, are subject to
the delivery to such individuals by the Company of the registration rights
agreement referred to in Section 6 duly executed by the Company.
5. HSR Filings
Promptly after the execution of this Agreement, the Company and
Xx. Xxxxx will make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act. The Company will pay all filing fees in connection
with such filings.
6. Registration Rights
On the Expiration Date, the Company and Messrs Xxxxx, Xxxxx and
XxXxxxx shall enter into a customary registration rights agreement in respect
of the shares of the Common Stock purchased by Messrs Xxxxx, Xxxxx and XxXxxxx
pursuant to the Rights Offering. Such agreement will provide at the Company's
expense Messrs Xxxxx, Xxxxx and XxXxxxx two demand registration (to be
exercised by them jointly) and unlimited "piggyback" registration rights. Such
agreement will contain other customary terms and conditions and will be
mutually satisfactory to the parties thereto.
7. Indemnity
The Company agrees to indemnify and hold harmless each other
party to this Agreement and their affiliates from and against any loss, damage,
liability, claim or expense (including reasonable attorney's fees) arising from
any third party claim (including any derivative claim brought in the name or on
behalf of the Company) arising out of or relating to this Agreement, except to
the extent such claim is for a breach by any such party of its obligations
under this Agreement. Any party seeking indemnification under this Section 7
(the "Indemnified Party") agrees to give prompt notice to the Company of the
assertion of any claim, or the commencement of any suit, action or proceeding
in respect of which indemnity may be sought under such Section; provided,
however, that the failure to so notify the Company shall not relieve the
Company from liability under this Section except to the extent the Company is
prejudiced thereby. The Company may participate in and control the defense of
any such suit, action or proceeding at its own expense so long as the Company
shall acknowledge its obligation to indemnify the Indemnified Party. The
Company shall not be liable under this Section 7 for any settlement effected
without its consent (which consent shall not be unreasonably withheld) of any
claim, litigation or proceeding in respect of which indemnity may be sought
hereunder.
8. Termination
Any of the parties hereto may terminate this Agreement if the
transactions contemplated hereby are not consummated by December 1, 1998.
9. Choice of Law
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York governing contracts made and to be
performed in such State without regard to any principles of conflict of laws.
10. Execution in Counterparts
This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such respective counterparts shall together constitute but one and the
same instrument.
11. Entire Agreement
Except for the Subscription Certificates which LTTH, Xx. Xxxxx,
Xx. Xxxxx and Xx. XxXxxxx shall execute and deliver to the Subscription Agent
pursuant to this Agreement, this Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof. Any amendment
hereto must be in writing, signed by each party.
COMMONWEALTH TELEPHONE
ENTERPRISES, INC.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
XXXXXX XXXXX, XX.
/s/ Xxxxxx Xxxxx, Xx.
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Xxxxxx Xxxxx, Xx.
XXXXX X. XXXXX
/s/ Xxxxx X. Xxxxx
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Xxxxx. X. Xxxxx
XXXXX X. XXXXXXX
/s/ Xxxxx X. XxXxxxx
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Xxxxx X. XxXxxxx
LEVEL 3 TELECOM HOLDINGS, INC.
By: /s/ Level 3 Telecom Holdings, Inc.
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Name:
Title:
