Exhibit 1.1
EXECUTION COPY
UNDERWRITING AGREEMENT
June 13, 2001
Citizens Communications Company
0 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Dear Sirs and Mesdames:
We (the "REPRESENTATIVES" or the "UNDERWRITERS") understand that
Citizens Communications Company, a Delaware corporation (the "COMPANY"),
proposes to issue and sell 6 3/4% Equity Units described IN Schedule I hereto
(the "EQUITY UNITS").
Subject to the terms and conditions set forth or incorporated by
reference herein, the Company hereby agrees to sell to the several Underwriters
listed in Schedule II hereto, and the Underwriters agree, severally and not
jointly, to purchase from the Company the numbers of Equity Units set forth
opposite their names in Schedule II hereto on the terms set forth in the
Prospectus dated May 9, 2001 and the Prospectus Supplement dated June 13, 2001,
and in Schedule I hereto.
The Underwriters will pay for the Equity Units upon delivery thereof at
the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx at 10:00 a.m. (New York City time) on
June 19, 2001, or at such other time, not later than 5:00 p.m. (New York City
time) on June 26, 2001, as shall be designated by the Representatives. The time
and date of such payment and delivery are hereinafter referred to as the Closing
Date.
All provisions contained in the document entitled Citizens
Communications Company -- Underwriting Agreement Standard Provisions (Equity
Securities) dated June 13, 2001, a copy of which is attached hereto, are herein
incorporated by reference in their entirety and shall be deemed to be a part of
this Agreement to the same extent as if such provisions had been set forth in
full herein, except that if any term defined in such document is otherwise
defined herein, the definition set forth herein shall control.
Please confirm your agreement by having an authorized officer sign a
copy of this Agreement in the space set forth below.
Very truly yours,
XXXXXX XXXXXXX & CO. INCORPORATED
Acting severally on behalf of themselves and
the several Underwriters named herein
By: XXXXXX XXXXXXX & CO. INCORPORATED
By: /s/ XXXXX XXXXXXX
---------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
X.X. XXXXXX SECURITIES INC.
Acting severally on behalf of themselves and
the several Underwriters named herein
By: X.X. XXXXXX SECURITIES INC.
By: /s/ XXXXX X. XXXXX
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Director
Accepted:
CITIZENS COMMUNICATIONS COMPANY
By: /s/ XXXXXX X. XXXXXX
---------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President, Finance and Treasurer
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SCHEDULE I
Title of Securities: 6 3/4% Equity Units
Registration Statement: Registration Statement No. 333-58044
Number of Underwritten Securities: 16,000,000 Equity Units
Number of Option Securities: 2,400,000 Equity Units
Price to Public: $25 per Equity Unit
Purchase Price by Underwriters: $25 per Equity Unit
Commission Payable to Underwriters: $0.7500 per Equity Unit
Interest Rate on Senior Note: 6 3/4% per annum
Specified funds for payment of purchase price: Federal (same day) funds
Reference Price: $12.10
Threshold Appreciation Price: $14.52
Closing Price of Citizens Communications
Company Stock on June 13, 2001: $12.10
Payment Dates: February 17, May 17, August 17 and November 17 of each
year, beginning August 17, 2001
Warrant Settlement Date: August 17, 2004
Maturity of Senior Note: August 17, 2006
Stock Exchange Listing: New York Stock Exchange
Closing Date: June 19, 2001
Name and address of Representatives Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
SCHEDULE II
NUMBER OF EQUITY UNITS
UNDERWRITER TO BE PURCHASED
Xxxxxx Xxxxxxx & Co. Incorporated........................... 3,175,600
X.X. Xxxxxx Securities Inc.................................. 3,175,600
Banc of America Securities LLC.............................. 3,175,600
Xxxxxxx Xxxxx Xxxxxx Inc.................................... 3,175,600
Xxxxxx Brothers Inc......................................... 844,800
The Buckingham Research Group 169,600
Incorporated
Xxxx Xxxxxxxx Incorporated.................................. 211,200
First Union Securities, Inc................................. 846,400
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated........................ 169,600
Mizuho International plc.................................... 211,200
Xxxxxxxxx Xxxxxxxx, Inc..................................... 422,400
TD Securities (USA) Inc..................................... 422,400
-----------
Total.............................................. 16,000,000
===========
CITIZENS COMMUNICATIONS COMPANY
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
(EQUITY UNITS)
June 13, 2001
From time to time, Citizens Communications Company, a Delaware
corporation (the "COMPANY"), may enter into one or more underwriting agreements
that provide for the sale of designated securities to the several underwriters
named therein. The standard provisions set forth herein may be incorporated by
reference in any such underwriting agreement (an "UNDERWRITING AGREEMENT"). The
Underwriting Agreement, including the provisions incorporated therein by
reference, is herein sometimes referred to as this Agreement. Terms defined in
the Underwriting Agreement are used herein as therein defined.
The designated securities will consist of Equity Units (the
"UNDERWRITTEN SECURITIES"). Each Equity Unit will consist of (a) a warrant, also
referred to herein as a stock purchase contract (a "Warrant" or "PURCHASE
CONTRACT") under which the holder of the Equity Unit will purchase from the
Company on a date specified in the Underwriting Agreement, for an amount in cash
equal to the stated amount per Security of $25 (the "STATED AMOUNT"), a number
of shares of common stock, par value $.25 per share, of the Company (the "COMMON
STOCK"), as set forth in such Warrant, and (b) a Senior Note (a "SENIOR NOTE").
For every 40 Equity Xxxxx, 00 Treasury Equity Units ("TREASURY EQUITY UNITS")
may be created by substituting U.S. treasury securities for the Senior Notes.
Additionally, the Company may issue and sell to the several Underwriters, for
the sole purpose of covering over-allotments in connection with the sale of the
Underwritten Securities, at the option of the Underwriters, up to the amount of
additional Equity Units (the "OPTION SECURITIES") specified in the Underwriting
Agreement. The Underwritten Securities and any Option Securities are herein
referred to as the "SECURITIES". In accordance with the terms of a Warrant
Agreement (the "WARRANT AGREEMENT" also referred to as the "PURCHASE CONTRACT
AGREEMENT"), to be entered into between the Company and The Chase Manhattan
Bank, as Warrant Agent (the "WARRANT AGENT"), the holders of the Equity Units
will pledge the Senior Notes to The Bank of New York, as Collateral Agent (the
"COLLATERAL AGENT"), pursuant to a Pledge Agreement (the "PLEDGE AGREEMENT") to
be entered into between the Company and the Collateral Agent, to secure the
holders' obligations to purchase Common Stock under the Warrants. The Warrants,
the Warrant Agreement and the Pledge Agreement are herein collectively referred
to as the "EQUITY UNIT AGREEMENTS". The Senior Notes will be issued pursuant to
an Indenture (the "INDENTURE"), between the Company and The Chase Manhattan
Bank, as trustee (the "INDENTURE TRUSTEE").
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to
Common Stock,
common stock warrants, debt securities and debt warrants, units thereof, and
certain other securities and has filed with, or transmitted for filing to, or
shall promptly hereafter file with or transmit for filing to, the Commission a
prospectus supplement (the "PROSPECTUS SUPPLEMENT") specifically relating to the
Equity Units pursuant to Rule 424 under the Securities Act of 1933, as amended
(the "SECURITIES ACT"). The term "REGISTRATION STATEMENT" means the registration
statement, including the exhibits thereto, as amended to the date of this
Agreement. The term "BASIC PROSPECTUS" means the prospectus included in the
Registration Statement. The term "PROSPECTUS" means the Basic Prospectus
together with the Prospectus Supplement. The term "PRELIMINARY PROSPECTUS" means
a preliminary prospectus supplement specifically relating to the Equity Units,
together with the Basic Prospectus. As used herein, the terms "Basic
Prospectus", "Prospectus" and "preliminary prospectus" shall include in each
case the documents, if any, incorporated by reference therein. The terms
"SUPPLEMENT", "AMENDMENT" and "AMEND" as used herein shall include all documents
deemed to be incorporated by reference in the Prospectus that are filed
subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT").
1. REPRESENTATIONS AND WARRANTIES. 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
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 when filed or will comply when so filed in all material
respects with the Exchange Act and the applicable rules and regulations
of the Commission thereunder and none of such documents (other than the
Financial Statements contained in the Current Reports on Form 8-K filed
on May 7, 2001, February 13, 2001 and November 14, 2000 (exclusive of
the pro forma financial information contained therein) (the "Excluded
Information") as to which the Company makes no representation)
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements in such documents, in
light of the circumstances under which they were made, not misleading,
(ii) the Registration Statement, when it became effective, did not
contain, and the Registration Statement, 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, (iii) the
Registration Statement (as of its effective date) and the Prospectus
(as of the date of the then most recent supplement thereto) complied,
and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and did not and, as amended or
supplemented, if applicable, will not contain at the time of such
amendment, any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and (iv) 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
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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 (A) to statements or omissions in the Registration Statement
or the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein or (B) to that part of the
Registration Statement that constitutes the Statement of Eligibility
(Form T-1) under the Trust Indenture Act of 1939, as amended (the
"TRUST INDENTURE ACT"), of the Indenture Trustee.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, 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 have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company set forth on Schedule 1
attached hereto (each, a "SIGNIFICANT SUBSIDIARY") has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, 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 have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
all of the issued shares of capital stock of each Significant
Subsidiary, other than Electric Lightwave, Inc. ("XXX"), of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly, free and clear of all liens,
encumbrances, equities or claims; all of the shares of capital stock of
XXX that are issued to the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly, free and clear of all liens, encumbrances, equities or
claims.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting creditors' rights
generally, general principles of equity and an implied covenant of good
faith and fair dealing.
(f) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Company and is a valid and legally binding agreement of the
Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting creditors' rights
generally, general principles of equity and an implied covenant of good
faith and fair dealing.
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(g) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture, the Equity Units, the Treasury Equity Units, the Senior
Notes, the Warrants, the Warrant Agreement, the Remarketing Agreement
and the Pledge Agreement, as applicable, (collectively, the
"TRANSACTION DOCUMENTS") will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
of its subsidiaries pursuant to any indenture, mortgage, deed of trust,
loan agreement or other material agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, except
where such violation, default, lien, charge, or encumbrance would not
have a material adverse effect on the consolidated financial position,
results of operations or business of the Company and its subsidiaries,
taken as a whole (a "MATERIAL ADVERSE EFFECT"); (ii) contravene any
provision of applicable law or the certificate of incorporation or
by-laws of the Company or any agreement or other instrument binding
upon the Company or any of its subsidiaries that is material to the
Company and its subsidiaries, taken as a whole, or (iii) result in the
violation of any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any of its
subsidiaries, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under any of the
Transaction Documents, except 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 Equity Units and except where any such violation or failure
to obtain a consent or other approval would not cause a Material
Adverse Effect or prevent the consummation of the transaction
contemplated hereby.
(h) Each Transaction Document conforms in all material
respects to the description thereof contained in the Prospectus.
(i) Since the date as of which information is given in the
Registration Statement and the Prospectus (exclusive of amendments or
supplements after the date hereof) and as of the date of the
Underwriting Agreement, except as otherwise stated therein, (i) there
has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, management or
operations of the Company and its subsidiaries, taken as a whole,
whether or not arising in the ordinary course of business, (ii) none of
the Company or any of its subsidiaries has incurred any material
liability or obligation, direct or contingent, other than in the
ordinary course of business, (iii) none of the Company or any of its
subsidiaries has entered into any material transaction other than in
the ordinary course of business and (iv) there has not been any change
in the capital stock or long-term debt of the Company or any of its
subsidiaries, or any dividend or distribution of any kind declared,
paid or made by the Company or any of its subsidiaries on any class of
its capital stock, or any redemption in respect thereof, except that
capital stock may have changed due to the exercise of stock options in
the ordinary course of business.
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(j) There are (i) no legal or governmental proceedings pending
or, to the knowledge of the Company, threatened to which the Company or
any of its subsidiaries is a party or to which any of the properties of
the Company or any of its subsidiaries is subject that are required to
be described in the Registration Statement or the Prospectus and are
not so described and which, if determined adversely to the Company or
any of its subsidiaries, would have a Material Adverse Effect or (ii)
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed or incorporated by reference as exhibits to
the Registration Statement that are not described, filed or
incorporated as required.
(k) Each 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
and did not and, as supplemented will not contain at the time of such
supplement, any untrue statement of a material fact or omit to state a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(l) The Company is not and, after giving effect to the
offering and sale of the Equity Units and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" or a company controlled by an investment company
as such term is defined in the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission thereunder.
(m) The Company is not a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended (the
"PUBLIC UTILITY HOLDING COMPANY ACT"), and the rules and regulations of
the Commission thereunder.
(n) The Company and its subsidiaries (i) are, to the Company's
best knowledge, in compliance with any and all applicable foreign,
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, to the Company's best knowledge,
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 have a Material Adverse Effect.
(o) There are no costs or liabilities 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 have a Material Adverse
Effect.
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(p) KPMG LLP are independent certified public accountants with
respect to the Company and its subsidiaries and, to the best of the
Company's knowledge, Xxxxxx Xxxxxxxx LLP are independent certified
public accountants with respect to GTE Minnesota Inc., Frontier
Incumbent Local Exchange Carrier Businesses and Qwest Communications
International Inc. and PricewaterhouseCoopers LLP are independent
certified public accountants with respect to Frontier Incumbent Local
Exchange Carrier Businesses each (i) as required by the Securities Act
and the rules and regulations of the Commission thereunder and (ii)
within the meaning of Rule 101 of the Code of Professional Conduct of
the American Institute of Certified Public Accountants and its
interpretations and rulings thereunder. The historical and pro forma
financial statements (including the related notes) contained or
incorporated by reference in the Prospectus comply as to form in all
material respects with the applicable requirements under the Securities
Act and the Exchange Act (except that certain supporting schedules are
omitted); such financial statements (other than the Excluded
Information as to which the Company makes no representation) have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby and fairly
present in all material respects the financial position of the entities
purported to be covered thereby at the respective dates indicated and
the results of their operations and their cash flows for the respective
periods indicated; and the financial information contained or
incorporated by reference in the Prospectus (other than the Excluded
Information as to which the Company makes no representation) is derived
from the accounting records of the Company and its subsidiaries and
fairly present in all material respects the information purported to be
shown thereby. The other historical and pro forma financial and
statistical information and data included in the Prospectus (other than
the Excluded Information as to which the Company makes no
representation) are, in all material respects, fairly presented.
(q) The Company and each of its subsidiaries possess all
material licenses, certificates, authorizations and permits issued by,
and have made all declarations and filings with, the appropriate
federal, state or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of their respective properties
or the conduct of their respective businesses as described in the
Prospectus, except where the failure to possess or make the same would
not, singularly or in the aggregate, have a Material Adverse Effect,
and neither the Company nor any of its subsidiaries has received
notification of any revocation or modification of any such license,
certificate, authorization or permit or has any reason to believe that
any such license, certificate, authorization or permit will not be
renewed in the ordinary course in each case where such revocation,
modification or failure of renewal would have a Material Adverse
Effect.
(r) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
(s) The shares of Common Stock outstanding prior to the
issuance of the Equity Units have been duly authorized and are validly
issued, fully paid and non-assessable, and are not subject to any
preemptive or similar rights.
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(t) The shares of Common Stock to be issued and sold by the
Company pursuant to the settlement of the Warrants have been duly and
validly authorized and reserved for issuance; such shares of Common
Stock, when issued and delivered in accordance with the provisions of
the Equity Unit Agreements, will be validly issued, fully paid and
non-assessable; and the issuance of such shares of Common Stock will
not be subject to any preemptive or similar rights.
(u) The shares of Common Stock outstanding prior to the
issuance of the Equity Units are, and upon issuance the shares of
Common Stock to be issued and sold by the Company pursuant to the
settlement of the Warrants will be, listed on the New York Stock
Exchange.
(v) The Equity Units and the Equity Unit Agreements have been
duly authorized and, at the Closing Date or, in the case of Option
Securities and Warrants constituting part of the Option Securities, the
Option Closing Date (as defined herein), will have been duly executed
and delivered by the Company, and, as of the Closing Date or the Option
Closing Date, as the case may be, assuming due authorization, execution
and delivery by parties thereto other than the Company, the Equity Unit
Agreements will constitute valid and binding agreements of the Company,
enforceable in accordance with their terms, except to the extent
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization or moratorium laws or by other laws now or hereafter in
effect relating to or affecting the enforcement of creditors' rights
and by general equitable principles (regardless of whether considered
in a proceeding in equity or at law), an implied covenant of good faith
and fair dealing and consideration of public policy, and Federal or
state securities law limitations on indemnification and contribution
(the "ENFORCEABILITY EXCEPTIONS"); PROVIDED, HOWEVER, that upon the
occurrence of a Termination Event (as defined in the Warrant Agreement)
due to a bankruptcy filing by or against the Company,(a) Section
365(e)(1) of the United States Bankruptcy Code (11 U.S.C. Sections
1101-1330, as amended) should not substantively limit the provisions of
Section 5.07 of the Warrant Agreement that require termination of
Warrants and the rights and obligations of the holders thereof to
purchase shares of Common Stock, and (b) Section 541 of the Bankruptcy
Code should not substantively limit the provisions of Section 3.15 of
the Warrant Agreement or Section 5.4 of the Pledge Agreement that
provide for the release of the Collateral Agent's security interest in
(1) Treasury Securities (as defined in the Warrant Agreement), (2) the
Applicable Ownership Interests (as defined in the Warrant Agreement) of
the Treasury Portfolio, or (3) the Senior Notes;
(w) The Remarketing Agreement (the "INITIAL REMARKETING
AGREEMENT") between Xxxxxx Xxxxxxx & Co. Incorporated and the Company
and the Supplemental Remarketing Agreement between Xxxxxx Xxxxxxx & Co.
Incorporated, the Chase Manhattan Bank and the Company (the
"SUPPLEMENTAL REMARKETING AGREEMENT" and, together with the Remarketing
Agreement, the "REMARKETING AGREEMENT") has been duly authorized by the
Company and when executed and delivered by the Company will constitute
a valid and binding agreement of the Company, enforceable in accordance
with its terms, except to the extent limited by the Enforceability
Exceptions; and the Remarketing Agreement conforms in all material
respects to the description thereof in the Prospectus;
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(x) The Senior Notes have been duly authorized, and, when
issued and delivered pursuant to the Indenture, will have been duly
executed, authenticated, issued and delivered and will constitute valid
and binding obligations of the Company, enforceable against the Company
in accordance with their terms, except to the extent limited by the
Enforceability Exceptions; and entitled to the benefits provided by the
Indenture.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell
to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Equity Units (the "UNDERWRITTEN SECURITIES")
set forth in the Underwriting Agreement opposite its name at $25 per Equity Unit
(the "PURCHASE PRICE").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Option Securities, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, any or all of the Option
Securities at the Purchase Price. If the Representatives, on behalf of the
Underwriters, elects to exercise such option, it shall so notify the Company in
writing not later than 30 days after the date of this Agreement, which notice
shall specify the number of Option Securities to be purchased by the
Underwriters and the date on which such Option Securities are to be purchased.
Such date may be the same as the Closing Date (as defined below) but not earlier
than the Closing Date nor later than ten business days after the date of such
notice. Option Securities may be purchased as provided in Section 3 hereof
solely for the purpose of covering over-allotments made in connection with the
offering of the Underwritten Securities. If any Option Securities are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase the
number of Option Securities (subject to such adjustments to eliminate fractional
units as you may determine) that bears the same proportion to the total number
of Optional Securities to be purchased as the number of Underwritten Securities
set forth in the Underwriting Agreement opposite the name of such Underwriter
bears to the total number of Underwritten Securities.
The Company hereby agrees that, without the prior written consent of
the Representatives, on behalf of the Underwriters, the Company will not, during
the period ending 90 days after the date of the final prospectus supplement
included in the Prospectus, (i) register, 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 Equity Units, Warrants or
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Equity Units, Warrants or Common Stock, or (ii) 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 Equity Units, Warrants or Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Equity Units, Warrants or Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Equity Units or Warrants (or the securities underlying either thereof) to be
issued in the transactions contemplated hereby, (B) the issuance by the Company
of shares of Common Stock pursuant to, or the grant of options under the
Company's existing stock option, employee benefit or dividend reinvestment plans
(as
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described in the Prospectus), (C) the issuance by the Company of shares of
Common Stock in certain private sales (as described in the Prospectus), (D) the
issuance by the Company of 17,500,000 of Common stock concurrent with the
offering of the Equity Units (as described in the Prospectus).
3. TERMS OF PUBLIC OFFERING. The Company is advised by the
Representatives that the Underwriters propose to make a public offering of their
respective portions of the Equity Units as soon after this Agreement has become
effective as in the Representatives' judgment is advisable. The Company is
further advised by the Representatives that the Equity Units are to be offered
to the public initially at $25 per Equity Unit (the "PUBLIC OFFERING PRICE") and
to certain dealers selected by you at the Public Offering Price.
As compensation to the Underwriters for their commitments hereunder,
the Company hereby agrees to pay at the Closing Date to the Representatives for
the accounts of the several Underwriters a commission in the amount per Security
set forth in the Underwriting Agreement (the "UNDERWRITING COMMISSION").
4. PAYMENT AND DELIVERY. Payment for the Underwritten Securities shall
be made to the Company in Federal or other funds immediately available in New
York City against delivery to the Representatives of the certificates for such
Underwritten Securities for the respective accounts of the several Underwriters,
or delivery to a securities intermediary designated by you of such certificates
and crediting to your securities account at such securities intermediary for the
account of the several Underwriters of security entitlements in respect of the
Underwritten Securities, against, in either case, crediting to the securities
account of the Collateral Agent of security entitlements in respect of the
Senior Notes constituting a part of the Underwritten Securities as set forth in
the Pledge Agreement, and payment to the Representatives of the Underwriting
Commission with respect to the Underwritten Securities by wire transfer in
immediately available funds to an account specified by you to the Company shall
be made at the time and date set forth in the Underwriting Agreement. The time
and date of such payment are hereinafter referred to as the "CLOSING DATE".
Payment for the Option Securities shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
to the Representatives of the certificates for such Option Securities for the
respective accounts of the several Underwriters, or delivery to a securities
intermediary designated by the Representatives of such certificates and
crediting to the Representatives' securities account at such securities
intermediary for the accounts of the several Underwriters of security
entitlements in respect of such Option Securities, against, in either case,
crediting to the securities account of the Collateral Agent of security
entitlements in respect of the Senior Notes constituting a part of such Option
Securities as set forth in the Pledge Agreement, and payment to the
Representatives of the Underwriting Commission with respect to such Option
Securities in the manner set forth above shall be made at 10:00 a.m., New York
City time, on the date specified in the notice described in Section 2 or at such
other time on the same or on such other date, in any event not later than 10
business days after the expiration of the Underwriters' option to purchase
Option Securities as shall be designated in writing by you. The time and date of
such payment are hereinafter referred to as the "OPTION CLOSING DATE".
13
The certificates, if any, for the Equity Units purchased by the
Underwriters shall be registered in such names and in such denominations as the
Representatives shall request in writing not later than one full business day
prior to the Closing Date or the Option Closing Date, as the case may be. The
certificate, if any, evidencing the Underwritten Securities or Option Securities
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 Underwritten
Securities or Option Securities to the Underwriters duly paid, against payment
of the Purchase Price and the Underwriting Commission with respect to such
Equity Units.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The several obligations
of the Underwriters are subject to the following conditions:
(a) Subsequent to the execution and delivery of the
Underwriting Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change in the
condition, financial or otherwise, or in the earnings,
business affairs, management 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 the
judgment of the Representatives, is material and adverse and
that makes it, in the judgment of the Representatives,
impracticable to market the Equity Units on the terms and in
the manner contemplated in the Prospectus.
(b) 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 set forth in Section 5(a)(i) above and to
the effect that as of the Closing Date, the representations and
warranties of the Company contained in this Agreement are true and
correct as of the Closing Date in all material respects and that the
Company has complied with all of the agreements and satisfied in all
material respects all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate 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 Winston & Xxxxxx, outside counsel for the Company, dated
the Closing Date, substantially to the effect that:
14
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, 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, singularly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
(ii) the Company has an authorized capitalization as set forth
in the Prospectus;
(iii) each Significant Subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, 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 its jurisdiction of
incorporation 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;
(iv) the Company has full right, power and authority to
execute and deliver each of the Transaction Documents and to perform
its obligations thereunder, and all corporate action required to be
taken for the due and proper authorization, execution and delivery of
each of the Transaction Documents and the consummation of the
transactions contemplated thereby by the Company have been duly and
validly taken;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Company and is a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms;
(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture, the Equity Units, the Notes and the Equity Unit
Agreements will not contravene any provision of Applicable Law or the
certificate of incorporation or by-laws of the Company or, to the best
of such counsel's knowledge, any agreement or other instrument binding
upon the Company or any of its subsidiaries that is set forth as an
Exhibit to the Company's then current Annual Report on Form 10-K and
any subsequently filed Current Reports on Form 8-K or Quarterly Reports
on Form 10-Q or, to the best of such counsel's knowledge, any judgment,
order or decree of any Governmental Authority having jurisdiction over
the Company or any subsidiary, and no consent, approval, authorization
or
15
order of, or qualification with, any Governmental Authority is required
for the performance by the Company of its obligations under this
Agreement, the Indenture, the Equity Units or the Equity Unit
Agreements, except 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 Equity Units and except where any such contravention (other than
with respect to the certificate of incorporation or by-laws of the
Company) or failure to obtain such consent or other approval would not
cause a Material Adverse Effect;
(viii) the descriptions in the Prospectus of statutes, legal
and governmental proceedings and contracts and other documents are
accurate in all material respects; the statements (A) in the Prospectus
under the captions "Certain Provisions of the Purchase Contracts, the
Purchase Contract Agreement and the Pledge Agreement", "Certain ERISA
Considerations", "Description of the Senior Notes", "Description of
Debt Securities", "Description of Capital Stock", "Description of
Warrants," "Description of the Equity Units", "Description of the
Purchase Contracts", "Plan of Distribution", and Underwriters (B) in
the Registration Statement under Item 15, (C) in "Item 3 - Legal
Proceedings" of the Company's most recent annual report on Form 10-K
incorporated by reference in the Prospectus and (D) in "Item 1 - Legal
Proceedings" of Part II of the Company's quarterly reports on Form
10-Q, if any, filed since such annual report, in each case insofar as
such statements constitute summaries of the legal matters, documents,
conclusions or proceedings referred to therein in each case in all
material respects, fairly present the information called for with
respect to such legal matters, documents, conclusions and proceedings
and fairly summarize the matters referred to therein; and after due
inquiry, such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the
Company or any of its 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 or incorporated by reference
as exhibits to the Registration Statement that are not described, filed
or incorporated as required;
(ix) the Company is not and, after giving effect to the
offering and sale of the Equity Units and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended and the rules and regulations of the Commission
thereunder, without taking into account of any exemption under the
Investment Company Act arising out of the number of holders of the
Company's securities;
(x) the Company is not a "holding company" within the meaning
of the Public Utility Holding Company Act and the rules and regulations
of the Commission thereunder; and
16
(xi) such counsel (A) is of the opinion that each document, if
any, filed pursuant to the Exchange Act and incorporated by reference
in the Prospectus (except for financial statements and schedules and
other financial and statistical data included or incorporated by
reference therein as to which such counsel need not express any
opinion) complied when so filed as to form in all material respects
with the Exchange Act and the applicable rules and regulations of the
Commission thereunder, (B) has no reason to believe that (except for
financial statements and schedules and other financial and statistical
data as to which such counsel need not express any belief and except
for that part of the Registration Statement that constitutes the Form
T-1 heretofore referred to) the Registration Statement, when it became
effective, contained any 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, (C) is of the opinion that
the Registration Statement, as of its effective date, and Prospectus,
as of the date of the then most recent supplement thereto, (except for
financial statements and schedules and other financial and statistical
data included or incorporated by reference therein as to which such
counsel need not express any opinion) comply as to form in all material
respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (D) has no reason to
believe that (except for financial statements and schedules and other
financial and statistical data as to which such counsel need not
express any belief) the Prospectus, as of the date such opinion is
delivered and as supplemented or amended to such date, contains any
untrue statement of a material fact 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.
(xii) The Equity Units and the Equity Unit Agreements have
been duly authorized, executed and delivered by the Company and,
assuming (A) due execution and delivery of the Warrants and the Warrant
Agreement by the Warrant Agent, (B) due execution, delivery and
authentication of the Equity Units by the Trustee and upon payment and
delivery thereof in accordance with the Underwriting Agreement, and (C)
that the Equity Units and the Equity Unit Agreements are the valid and
legally binding obligations of the Warrant Agent, constitute valid and
legally binding obligations of the Company, enforceable against the
Company in accordance with their respective terms and entitled to the
benefits of the Warrant Agreement, except as limited by the
Enforceability Exceptions; PROVIDED, HOWEVER, that upon the occurrence
of a Termination Event (as defined in the Warrant Agreement) due to a
bankruptcy filing by or against the Company,(a) Section 365(e)(1) of
the United States Bankruptcy Code (11 U.S.C. Sections 1101-1330, as
amended) should not substantively limit the provisions of Section 5.07
of the Warrant Agreement that require termination of Warrants and the
rights and obligations of the holders thereof to purchase shares of
Common Stock, and (b) Section 541 of the Bankruptcy Code should not
substantively limit the provisions of Section 3.15 of the Warrant
Agreement or Section 5.4 of the Pledge Agreement that provide for the
release of the Collateral Agent's security interest in (1) Treasury
Securities (as defined in the Warrant Agreement), (2) the
17
Applicable Ownership Interests (as defined in the Warrant Agreement) of
the Treasury Portfolio, or (3) the Senior Notes;
(xiii) The shares of Common Stock to be issued and sold by the
Company pursuant to the settlement of the Warrants have been duly and
validly authorized and reserved for issuance, and such shares of Common
Stock, when issued and delivered in accordance with the provisions of
the Equity Unit Agreements, will be validly issued, fully paid and
non-assessable, and the issuance of such shares of Common Stock will
not be subject to any preemptive or similar rights under Federal or New
York law or the Company's certificate of incorporation or by-laws;
(xiv) The Senior Notes have been duly authorized, and, when
issued and delivered pursuant to the Indenture, will have been duly
executed, authenticated, issued and delivered and will constitute valid
and binding obligations of the Company, enforceable against the Company
in accordance with their terms; and entitled to the benefits provided
by the Indenture.
(xv) Subject to the qualifications and limitations stated
therein, the statements set forth in the Prospectus under the caption
"Material United States Federal Income Tax Consequences" insofar as
they purport to constitute summaries of matters of United States
federal income tax laws and regulations or legal conclusions with
respect thereto, constitute accurate summaries of the matters described
therein in all material respects;
(xvi) The Remarketing Agreement has been duly authorized,
executed and delivered by the Company;
(xvii) The Pledge Agreement creates in favor of the Collateral
Agent for the benefit of the Company a security interest under the New
York UCC in the investment property identified on Schedule 1 hereto
(the "PLEDGED SECURITIES"). The Collateral Agent will have a perfected
security interest in the Pledged Securities for the benefit of the
Company under the New York UCC upon delivery to the Collateral Agent
for the benefit of the Company in the State of New York of the
certificate representing the Pledged Securities in registered form,
endorsed to the Collateral Agent or in blank by an effective
endorsement or accompanied by undated bond powers with respect thereto
duly endorsed to the Collateral Agent or in blank by an effective
endorsement. Assuming the Collateral Agent and the Company do not have
notice of any adverse claim to the Pledged Securities, the Collateral
Agent will acquire the security interest in the Pledged Securities for
the benefit of the Company free of any adverse claim; and
(xviii) The security interest of the Collateral Agent in
security entitlements with respect to the Pledged Senior Notes (as
defined under the Pledge Agreement) that are from time to time credited
to the Collateral Account (as described in Section 4 of the Pledge
Agreement) will be perfected, and the Collateral Agent will have
"control" (within the meaning of Article 8-106 of the New York UCC)
thereof, once the Securities Intermediary has indicated by book
18
entry that such financial assets have been credited to the Collateral
Account, provided that, the Securities Intermediary has agreed that it
will comply with "entitlement orders" originated by the Collateral
Agent without further consent by the "entitlement holder" (as each is
defined in Article 8-102(a)(7) and (8) of the New York UCC). Under
Section 4.3 of the Pledge Agreement, the Securities Intermediary has
agreed that it will comply with entitlement orders originated by the
Collateral Agent, as the secured party, with respect to the Collateral
Account without further consent by the Warrant Agent, which is the
entitlement holder with respect to such security entitlements. Under
Section 8-510 of the New York UCC, assuming that neither the Collateral
Agent nor the Company has any notice of any adverse claim to such
security entitlements, insofar as Articles 8 and 9 of the New York UCC
are applicable thereto, no action based on an adverse claim to such
security entitlements, whether framed in conversion, replevin,
constructive trust, equitable lien or other theory, may be asserted
against the Collateral Agent or the Company. In giving the opinion
contained in this paragraph (xviii) such counsel may rely upon the
representations of the Securities Intermediary contained in, and assume
compliance by the Securities Intermediary with its undertakings set
forth in the Pledge Agreement.
For purposes of the foregoing opinion, Winston & Xxxxxx may
state that (a) "Applicable Law" means only the laws of the United
States, the State of New York and the General Corporation Law of the
State of Delaware which, in such counsel's experience, are normally
applicable to transactions of the type contemplated by this
Underwriting Agreement, but without such counsel having made any
special investigation as to the applicability of any specific law, rule
or regulation except as specified, and (b) "Governmental Authority"
means any New York or federal executive, legislative, judicial
administrative or regulatory body.
The foregoing opinions may be subject to the following
assumptions, qualifications and limitations:
(A) The opinions referred to in paragraphs 5(c)(vi)
and 5(c)(xiv) above are qualified to the extent that
enforceability may be limited by or subject to: (i) the effect
of bankruptcy, insolvency, reorganization, fraudulent
conveyance, arrangement, moratorium or other similar
proceedings, laws or court decisions now or hereafter in
effect relating to creditors' rights generally; (ii) the
availability of the remedies of specific performance or
injunctive relief; (iii) the effect of general principles of
equity (whether or not such enforceability is considered in a
proceeding in equity or at law) including, without limitation,
an implied covenant of good faith, fair dealing and
conscionability, and (iv) the possibility that rights as to
indemnification and contribution may be limited by applicable
law.
(B) Such counsel need not express any opinion as to
the severability of any provision of the Transaction
Documents.
(C) The opinions referred to in paragraphs 5(c)(vi),
5(c)(xii), 5(c)(xiv), 5(c)(xvii) and 5(c)(xviii) above are
subject to (A) the equitable powers of the
19
applicable Bankruptcy Court, including those set forth in
Section 105(a) of the Bankruptcy Code, (B) any procedural
delays (including delays resulting from the automatic stay
under Section 362 of the Bankruptcy Code and efforts seeking
to lift the automatic stay) which could affect the timing of
the exercise of such rights and remedies, and (C) the further
limitation that such counsel expresses no opinion as to
whether the Company may have any continuing property interest
in the Collateral (as defined in the Pledge Agreement) if, at
the time of a Termination Event due to a bankruptcy filing by
or against the Company, the holders of Warrants have
obligations other than the Obligations secured by, or the
Company has rights of offset or recoupment or counterclaims
against, the Collateral.
With respect to Section 5(c)(xi) above, Winston & Xxxxxx may
state that their opinion and beliefs are based upon their participation
in the preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and documents incorporated therein by
reference and review and discussion of the contents thereof, but are
without independent check or verification, except as specified.
(d) The Company shall have furnished an opinion of L. Xxxxxxx
Xxxxxx, Vice President and General Counsel of the Company, with respect
to FERC and all applicable state utility regulators' orders and/or
authorizations necessary to enable the Company to issue the Equity
Units, addressed to the Underwriters and dated the Closing Date, in
form and substance reasonably satisfactory to the Underwriters.
The opinions described in Sections 5(c) and 5(d) above shall
be rendered to the Underwriters at the request of the Company and shall
so state therein.
(e) The Underwriters shall have received on the Closing Date
an opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, special counsel for the
Underwriters, dated the Closing Date, covering the matters referred to
in Sections 5(c)(v), 5(c)(vi) and 5(c)(viii) (but only as to the
statements in the Prospectus under "Description of Debt Securities",
"Description of Warrants", "Description of Equity Units", "Description
of the Purchase Contracts", "Description of the Senior Notes", "Certain
Provisions of the Purchase Contracts, the Purchase Contract Agreement
and the Pledge Agreement", "Underwriters" and "Plan of Distribution")
and clauses 5(c)(xi)(B), 5(c)(xi)(C) and 5(c)(xi)(D) above.
With respect to clauses 5(c)(xi)(B), 5(c)(xi)(C) and
5(c)(xi)(D) above, Xxxxxxx Xxxxxxx & Xxxxxxxx may state that their
opinion and beliefs are based upon their participation in the
preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto (but not including documents
incorporated therein by reference) and review and discussion of the
contents thereof (including documents incorporated therein by
reference), but are without independent check or verification, except
as specified.
(f) A written opinion of counsel shall have been furnished to
the Underwriters by counsel to The Chase Manhattan Bank, as Warrant
Agent, addressed to the Underwriters and dated such Closing Date, in
form and substance satisfactory to the Underwriters, to the effect
that:
20
(i) The Warrant Agent is duly incorporated as a New
York banking corporation with all necessary power and
authority to execute, deliver and perform its obligations
under the Warrant Agreement and the Pledge Agreement;
(ii) The execution, delivery and performance by the
Warrant Agent of the Warrant Agreement and the Pledge
Agreement, and the authentication and delivery of the Equity
Units and the Treasury Equity Units have been duly authorized
by all necessary corporate action on the part of the Warrant
Agent, and the Warrant Agreement and the Pledge Agreement have
been duly executed and delivered by the Warrant Agent, and
constitute the valid and binding agreements of the Warrant
Agent, enforceable against the Warrant Agent in accordance
with their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing;
(iii) The execution, delivery and performance of the
Warrant Agreement and the Pledge Agreement by the Warrant
Agent does not conflict with or constitute a breach of the
charter or by-laws of the Warrant Agent; and
(iv) No consent, approval or authorization of, or
registration with or notice to, any state or federal
governmental authority or agency is required for the
execution, delivery or performance by the Warrant Agent of the
Warrant Agreement and the Pledge Agreement.
(g) A written opinion of Xxxxx & Xxxxxx LLP, counsel to The
Bank of New York, as Collateral Agent, Securities Intermediary and
Custodial Agent, shall have been furnished to the Underwriters by such
counsel and addressed to the Underwriters and dated such Closing Date,
in form and substance satisfactory to the Underwriters, to the effect
that:
(i) The Collateral Agent and Securities Intermediary
are duly incorporated as New York banking corporations with
all necessary corporate power and authority to execute,
deliver and perform their obligations under the Pledge
Agreement;
(ii) The execution, delivery and performance by the
Collateral Agent and Securities Intermediary of the Pledge
Agreement have been duly authorized by all necessary corporate
action on the part of the Collateral Agent and Securities
Intermediary. The Pledge Agreement has been duly executed and
delivered by the Collateral Agent and the Securities
Intermediary, and constitutes the valid and binding agreement
of the Collateral Agent and Securities Intermediary,
enforceable against the Collateral Agent and Securities
Intermediary in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable
principles (whether
21
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing;
(iii) The execution, delivery and performance of the
Pledge Agreement by the Collateral Agent and Securities
Intermediary does not conflict with or constitute a breach of
the charter or by-laws of the Collateral Agent and the
Securities Intermediary; and
(iv) No consent, approval or authorization of, or
registration with or notice to, any New York state or federal
governmental authority or agency is required for the execution
or delivery or as a condition precedent to the performance by
the Collateral Agent and the Securities Intermediary of the
Pledge Agreement.
(h) The Underwriters shall have received on the date of this
Agreement (other than from Xxxxxx Xxxxxxxx LLP with respect to GTE
Minnesota Inc.), dated the date of this Agreement, and on the Closing
Date, dated the Closing Date, letters, in form and substance
satisfactory to the Underwriters, from the Company's independent public
accountants listed in Section 1(p) of this Agreement and each of the
other accountants listed in Section 1(p) of this Agreement (except for
PricewaterhouseCoopers LLP), 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 Prospectus.
(i) The "lock-up" agreements, each substantially in the form
of Exhibit A hereto, between the Representatives and each of the
directors and certain executive officers of the Company relating to
sales and certain other dispositions of shares of Common Stock or
certain other securities, delivered to the Representatives on or before
the date hereof, shall be in full force and effect on the Closing Date.
(j) The Equity Units shall have been approved for listing,
subject only to official notice of issuance, on the New York Stock
Exchange.
The several obligations of the Underwriters to purchase Option
Securities hereunder are subject to the delivery to the Representatives on the
Option Closing Date of such documents as the Representatives may reasonably
request, including those set forth above, with respect to the good standing of
the Company, the due authorization and issuance of the Option Securities and
other matters related to the issuance of the Option Securities.
6. 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 advise the Underwriters promptly and, if requested,
confirm such advice in writing, of the happening of any event which
makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires the making of any
additions to or changes in the Registration Statement or the Prospectus
(as amended or supplemented from time to time) in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; to advise the
22
Underwriters promptly of any order preventing or suspending the use of
the Prospectus, of any suspension of the qualification of the Equity
Units for offering or sale in any jurisdiction and of the initiation or
threatening of any proceeding for any such purpose; and to use its best
efforts to prevent the issuance of any such order preventing or
suspending the use of the Registration Statement or the Prospectus or
suspending any such qualification and, if any such suspension is
issued, to obtain the lifting thereof at the earliest possible time;
(b) To furnish the Representatives, without charge, one
conformed copy of the Registration Statement (including exhibits
thereto) and for delivery to each other Underwriter a conformed copy of
the Registration Statement (without exhibits thereto) and to furnish
the Representatives in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 6(c) below,
as many copies of the Prospectus, any documents incorporated by
reference therein and any supplements and amendments thereto or to the
Registration Statement as the Representatives may reasonably request.
(c) Before amending or supplementing the Registration
Statement or the Prospectus with respect to the Equity Units, to
furnish to the Representatives a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement
to which the Representatives reasonably object.
(d) If, during such period after the first date of the public
offering of the Equity Units 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 the Representatives will furnish
to the Company) to which Offered Securities may have been sold by the
Representatives 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.
(e) To endeavor to qualify the Equity Units for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request.
(f) To make generally available to the Company's security
holders and to the Representatives as soon as practicable an earning
statement covering a twelve-month period beginning on the first day of
the first full fiscal quarter after the date of this Agreement, which
earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission
thereunder. If such fiscal quarter is the last fiscal quarter of the
Company's fiscal year, such earning statement shall
23
be made available not later than 90 days after the close of the period
covered thereby and in all other cases shall be made available not
later than 45 days after the close of the period covered thereby.
(g) To assist the Underwriters in arranging for the Equity
Units to be eligible for clearance and settlement through The
Depository Trust Company ("DTC").
(h) To apply the net proceeds from the sale of the Equity
Units as set forth in the Prospectus under the heading "Use of
Proceeds".
(i) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
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
Equity Units under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments
and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof
to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and
delivery of the Equity Units to the Underwriters, including any
transfer or other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky or legal investment memorandum in connection
with the offer and sale of the Equity Units under state law and all
expenses in connection with the qualification of the Equity Units for
offer and sale under state law as provided in Section 6(d) hereof,
including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and
in connection with the Blue Sky or legal investment memorandum, (iv)
the fees and disbursements of the Company's counsel and accountants and
of the Trustee and its counsel, (v) all filing fees and the reasonable
fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the
Equity Units by the National Association of Securities Dealers, Inc.,
(vi) any fees charged by the rating agencies for any rating of the
Equity Units, (vii) 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 Equity Units, including, without
limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of
the Company, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show, and (viii) 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. It is understood, however, that except as provided in
this Section, Section 7 entitled "Indemnity and Contribution" and the
last paragraph of Section 9 below, the Underwriters will pay all of
their costs and expenses, including fees and disbursements of their
counsel, and any advertising expenses connected with any offers they
may make.
24
(j) To use its best efforts to effect the listing of the
Equity Units and the shares of Common Stock issuable upon settlement of
the Warrants on The New York Stock Exchange.
7. 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 any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless 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 Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Underwriter, but only
with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through the Representatives
expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to either Section 7(a) or 7(b),
such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in
writing and 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 the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Representatives, in the case of parties
indemnified pursuant to
25
Section 7(a) above, and by the Company, in the case of parties
indemnified pursuant to Section 7(b) above. 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. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section
7(a) or 7(b) 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 Company on
the one hand and the Underwriters on the other hand from the offering
of the Equity Units or (ii) if the allocation provided by clause
7(d)(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 7(d)(i) above but also the relative fault of the Company on the
one hand and of the Underwriters 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 on the
one hand and the Underwriters on the other hand in connection with the
offering of the Offered Securities shall be deemed to be in the same
respective proportions as the net proceeds from the offering of such
Equity Units (before deducting expenses) received by the Company 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 Supplement, bear to the aggregate Public Offering Price
of the Equity Units. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by 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 7 are several in proportion to the respective
principal amounts of Equity Units they have purchased hereunder, and
not joint.
(e) The Company and the Underwriters agree that it would not
be just or equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
26
allocation that does not take account of the equitable considerations
referred to in Section 7(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which
the total price at which the Equity Units 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. 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
7 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.
(f) The indemnity and contribution provisions contained in
this Section 7 and the representations, warranties and other statements
of the Company 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 or the Company,
its officers or directors or any person controlling the Company and
(iii) acceptance of and payment for any of the Equity Units.
8. TERMINATION. This Agreement shall be subject to termination by
notice given by the Representatives to the Company, if (a) after the execution
and delivery of the Underwriting 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, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in the judgment of the Representatives,
is material and adverse and (b) in the case of any of the events specified in
clauses 8(a)(i) through 8(a)(iv), such event, singly or together with any other
such event, makes it, in the judgment of the Representatives, impracticable to
market the Equity Units on the terms and in the manner contemplated in the
Prospectus.
9. DEFAULTING UNDERWRITERS. If, on the Closing Date or the Option
Closing Date, any one or more of the Underwriters shall fail or refuse to
purchase Underwriters' Securities that it has or they have agreed to purchase
hereunder on such date, and the aggregate amount of Underwriters' Equity Units
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is not more than one-tenth of the aggregate amount of the
Underwriters' Securities to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the amount of Underwriters'
Equity Units set forth opposite their respective names in the Underwriting
Agreement bears to the aggregate amount of Underwriters' Equity Units set forth
opposite the names of all such non-defaulting Underwriters, or in such other
27
proportions as the Representatives may specify, to purchase the Underwriters'
Equity Units which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on such date; provided that in no event shall the amount
of Underwriters' Securities that any Underwriter has agreed to purchase pursuant
to this Agreement be increased pursuant to this Section 10 by an amount in
excess of one-ninth of such amount of Underwriters' Equity Units without the
written consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Underwriters' Equity Units and the
aggregate amount of Underwriters' Securities with respect to which such default
occurs is more than one-tenth of the aggregate amount of Underwriters' Equity
Units to be purchased on such date, and arrangements satisfactory to the
Representatives and the Company for the purchase of such Underwriters'
Securities are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either the Representatives or the Company shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the 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 Option Securities and the aggregate number of Option
Securities with respect to which such default occurs is more than one-tenth of
the aggregate number of Option Securities to be purchased, the non-defaulting
Underwriters shall have the option to (i) terminate their obligation hereunder
to purchase Option Securities or (ii) purchase not less than the number of
Option Securities 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.
10. 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.
11. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
12. 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.
28
SCHEDULE I
LIST OF SIGNIFICANT SUBSIDIARIES
Electric Lightwave, Inc.
Citizens Telecommunications Company of California, Inc.
Citizens Telecommunications Company
Citizens Utilities Rural Company, Inc.
Citizens Telecommunications Company of New York, Inc.
Citizens Telecommunications Company of Tennessee L.L.C.
Citizens Telecommunications Company of West Virginia, Inc.
Citizens Telecommunications Company of the White Mountains, Inc.
Citizens Directory Services Company, Inc.
Citizens Utilities Capital L.P.
29
EXHIBIT A
[FORM OF LOCK-UP LETTER]
[Date]
Xxxxxx Xxxxxxx & Co. Incorporated
X.X. Xxxxxx Securities Inc.
Banc of America Securities LLC
Xxxxxxx Xxxxx Xxxxxx Inc
Xxxxxx Brothers Inc.
The Buckingham Research Group Incorporated
Xxxx Xxxxxxxx Incorporated
First Union Securities, Inc.
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
Mizuho International plc
Xxxxxxxxx Xxxxxxxx, Inc.
TD Securities (USA) Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") and X.X. Xxxxxx Securities Inc. ("JPMORGAN") proposes to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with
Citizens Communications Company, a Delaware corporation (the "COMPANY"),
providing for the public offering (the "PUBLIC OFFERING") by the several
Underwriters, including Xxxxxx Xxxxxxx and JPMorgan (the "UNDERWRITERS"), of
Equity Units that will include a stock purchase contract under which the holder
of the Equity Unit will purchase from the Company shares of the Common Stock,
par value $.25 per share of the Company (the "COMMON STOCK").
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 and JPMorgan on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 90 days after the date of the
final prospectus relating to the Public Offering (the "PROSPECTUS"), (1) 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 (2) 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
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (a) the sale of any Equity Units to the Underwriters pursuant to the
Underwriting Agreement or (b) transactions relating to shares of Common Stock or
other
securities acquired in open market transactions after the completion of
the Public Offering. In addition, the undersigned agrees that, without the prior
written consent of Xxxxxx Xxxxxxx and JPMorgan on behalf of the Underwriters, it
will not, during the period commencing on the date hereof 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.
Very truly yours
---------------------------
(Name)
---------------------------
(Address)
2
