EXHIBIT 10.4
EXECUTION COPY
4,260,000 Shares
Commonwealth Telephone Enterprises, Inc.
Common Stock, par value $1.00 per share
UNDERWRITING AGREEMENT
March 26, 0000
Xxx Xxxx, Xxx Xxxx
March 26, 2002
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
As Representative 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 representative (the "Representative"), an aggregate of
4,260,000 shares (the "Firm Shares") of the common stock, par value $1.00 per
share, of Commonwealth Telephone Enterprises, Inc., a Pennsylvania corporation
(the "Company").
The Selling Stockholder also proposes to sell to the several Underwriters
not more than an additional 638,000 shares of the common stock, par value $1.00
per share of the Company (the "Additional Shares"), if and to the extent that
you, as Representative, shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such Additional Shares granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares". 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, including a prospectus, relating to the
Shares (Commission file no. 333-82366). The registration statement as amended at
the time it became effective, including the information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
430A under the Securities Act of 1933, as amended (the "Securities Act"), is
hereinafter referred to as the "Registration Statement"; the prospectus in the
form first used to confirm sales of Shares is hereinafter referred to as the
"Prospectus". If the Company has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462 Registration Statement. Any reference herein to the Registration Statement,
any preliminary prospectus 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.
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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 when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder, (ii)
the Registration Statement 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
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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.
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(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 have been both (i) set forth or
incorporated by reference in the Prospectus and (ii) waived or
satisfied.
(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
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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
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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) The Registration Statement, when it 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 $34.02 per share (the "Purchase Price")
the number of Firm 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.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Stockholder
agrees to sell to the Underwriters the Additional Shares, and the Underwriters
shall have a one-time right to purchase, severally and not jointly, up to
638,000 Additional Shares at the Purchase Price. If you, on behalf of the
Underwriters, elect to exercise such one-time option, you shall so notify the
Selling Stockholder in writing at least three business days in advance of the
Option Closing Date and not later than 30 days after the date of this Agreement,
which notice shall be irrevocable and shall specify the number of Additional
Shares to be purchased by the Underwriters and the date on which such shares are
to be purchased. Such date may be the same as the Closing Date (as defined
below) but not earlier than the Closing Date or three business days after the
date such notice is given nor later than ten business days after the date such
notice is given. Additional Shares may be purchased as provided in Section 5
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. If any Additional Shares are to be
purchased, each Underwriter agrees, severally
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and not jointly, to purchase from the Selling Stockholder, the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
you may determine) that bears the same proportion to the total number of
Additional Shares to be purchased as the number of Firm Shares set forth in
Schedule II hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.
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, (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 interests in other companies if the recipients of such shares
of Common Stock agree in writing to be bound by the restrictions contained in
this paragraph in the same manner as then applied to the Company.
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 180 days after the date of the Prospectus,
(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 to be sold hereunder, (ii)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the offering of the Shares,
(iii) any transfer of shares of Common Stock to the Company, (iv) 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 (v) 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
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Shares as soon after the Registration Statement and this Agreement have 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
$36.00 a share (the "Public Offering Price") and to certain dealers selected by
you at a price that represents a concession not in excess of $1.29 a share under
the Public Offering Price.
5. Payment and Delivery. Payment for the Firm Shares shall be made to the
Selling Stockholder in Federal or other funds immediately available in New York
City against delivery of such Firm Shares for the respective accounts of the
several Underwriters at 10:00 a.m., New York City time, on April 2, 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".
Payment for any Additional Shares shall be made to the Selling Stockholder
in Federal or other funds immediately available in New York City against
delivery of the Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 3 or at such other time on the same or on such other
date, in any event not later than May 9, 2002, as shall be designated in writing
by you. The time and date of such payment are hereinafter referred to as the
"Option Closing Date".
The certificates evidencing the Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or the Option Closing Date, as the case may
be, 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
Registration Statement shall have been declared effective by the Commission not
later than 5:30 p.m. (New York City Time) on the date hereof.
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
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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, as then amended, was
declared effective on March 26, 2002;
(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 under the
captions "Transactions with Related Parties" and "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
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(vi) nothing has come to such counsel's attention that
causes it to believe that (i) the Registration Statement or the
Prospectus (except for the financial statements and financial
schedules and other financial and statistical data included
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 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) as of its date or as of the Closing
Date 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, is validly existing or subsisting as a corporation in
good standing under the laws of the jurisdiction of its incorporation
and has the corporate 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 are fully paid and non-assessable.
(e) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx X. Xxx, Vice President, Corporate Secretary and
11
General Counsel 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;
12
(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) all filings with,
or authorization, approval, consent, license, order, registration,
qualification or decree of the Federal Communications 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 under the captions "Summary", "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
13
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 under
the captions "Summary", "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
14
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 X. Xxx
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.
15
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing
Date of such customary documents as you may reasonably request with respect
to the good standing of the Company, the due authorization and issuance of
the Additional Shares and other matters related to the issuance of the
Additional Shares.
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
16
Statement, any preliminary prospectus, the Prospectus and amendments and
supplements to any of the foregoing, including all printing costs
associated therewith, 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
17
noncompliance by the Company with Section 7(a) hereof.
(b) The Selling Stockholder agrees to indemnify and hold harmless and
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 "Principal and
Selling Stockholders", the first, second, third and fourth sentences under
the heading "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 portion of the third sentence that states that Xxxxx 0
Xxxxxxx Xxxxxxxx, Inc. is the holding company through which Level 3
Communications, Inc. owns its equity stake in the Company and the fifth
sentence, both under the heading "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
18
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 Representative. 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
19
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.
20
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 or the Option Closing Date, as the case may be, 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 Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate
21
number of Firm 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 Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling Stockholder for the purchase of such Firm 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. If, on the Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase Additional Shares or (ii) purchase not less
than the number of Additional Shares that such non-defaulting Underwriters would
have been obligated to purchase in the absence of such default. 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.
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. (212) 761-
22
0260), 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 Willkie, Xxxx & Xxxxxxxxx, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000 (fax no. (000) 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.
23
Very truly yours,
Commonwealth Telephone Enterprises, Inc.
By: /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: Senior V.P. and Chief
Accounting Officer
Level 3 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
24
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/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Director
25
SCHEDULE I
Number of
Firm Shares
Underwriter To Be Purchased
Xxxxxx Xxxxxxx & Co. Incorporated 1,950,043
Xxxxxxx, Sachs & Co. 975,020
First Union Securities, Inc. 324,979
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated 324,979
XX Xxxxx Securities Corporation 324,979
X.X. Xxxxxxx & Sons, Inc. 60,000
ABN AMRO Rothschild LLC 60,000
CIBC World Markets Corp. 60,000
Xxxxxx X. Xxxxx & Co., L.P. 60,000
Xxxxxxx Bros., L.P. 60,000
Xxxxxxx Xxxxx & Associates, Inc. 60,000
---------
Total 4,260,000
=========
26
27
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 relating to the Public Offering (the
"Preliminary Prospectus") and ending 90 days after the date of the final
prospectus relating to the Public Offering (the "Prospectus"), (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.
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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) transfer 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 and ending 90 days after the date of the Prospectus, 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 May 31, 2002.
Very truly yours,
By:____________________
Name:
Title:
29
