EXHIBIT 1.1
3,500,000 Shares
Commonwealth Telephone Enterprises, Inc.
Common Stock, par value $1.00 per share
UNDERWRITING AGREEMENT
[ ], 2002
New York, New York
[ ], 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 3,500,000 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 525,000 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 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
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reference in the Prospectus, are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and
delivered by the Company, and the Company has the corporate power to
enter into this Agreement and perform its obligations hereunder.
(f) The authorized equity capitalization of the Company
conforms in all material respects as to legal matters to the
description thereof contained in the Prospectus.
(g) All outstanding shares of Common Stock (including the
Shares) have been duly authorized and are validly issued, fully paid
and non-assessable.
(h) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement (i)
will not violate any provision of the amended and restated articles of
incorporation (as amended) or the amended and restated by-laws (as
amended) of the Company and (ii) will not violate any provision of law
applicable to the Company or any of its subsidiaries, any agreement or
other instrument binding upon the Company or any of its subsidiaries or
any judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, except in each
case set forth in this clause (ii) for violations that would not
reasonably be expected to have a material adverse effect on the Company
and its subsidiaries, taken as a whole, or the Company's ability to
perform its obligations hereunder; and no filing, consent, approval,
authorization or order of, or qualification with, any governmental body
or agency is required for the execution, delivery or performance of
this Agreement by the Company, except such as may be required by (A)
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares or (B) the Federal Communications
Commission, the Pennsylvania Public Utility Commission or any other
governmental body or agency with regulatory control over the Company's
industry.
(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus.
(j) There are no legal or governmental proceedings pending or,
to the knowledge of the Company, threatened to which the Company or its
Material Subsidiaries is a party or to which any of the properties of
the Company or its Material Subsidiaries is subject that are required
to be described in the Registration Statement or the Prospectus and are
not so described or any statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus that are not described as required. There
are no contracts or other documents required to be filed as exhibits to
the Registration Statement that are not filed as required.
(k) Any preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(l) The Company is not, and after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus will not be, required to
register as an
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"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 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.
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(r) No material labor dispute with the employees of the
Company or its Material Subsidiaries exists or, to the knowledge of the
Company, is imminent that would reasonably be expected to have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(s) The Company and its Material Subsidiaries own, possess or
can acquire on reasonable terms, adequate trademarks, trade names and
other rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively,
"intellectual property rights") necessary to conduct the business now
operated by them, or presently employed by them, and have not received
any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if
determined adversely to the Company or its Material Subsidiaries, would
individually or in the aggregate reasonably be expected to have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
2. Representations and Warranties of the Selling Stockholder. The
Selling Stockholder represents and warrants to and agrees with each of the
Underwriters that:
(a) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder.
(b) The execution and delivery by the Selling Stockholder of,
and the performance by the Selling Stockholder of its obligations under
this Agreement will not violate (i) any provision of the certificate of
incorporation or by-laws (or equivalent constituent documents) of the
Selling Stockholder, or (ii) except in each case for violations that
would not materially and adversely affect the consummation by the
Selling Stockholder of the transactions contemplated by this Agreement,
any provision of law applicable to the Selling Stockholder, any
agreement or other instrument binding upon the Selling Stockholder or
any property of the Selling Stockholder or to which the Selling
Stockholder is a party or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Selling
Stockholder; and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
execution, delivery or performance of this Agreement by the Selling
Stockholder, except for (x) the registration of the Shares under the
Securities Act, (y) the filing of any necessary amendment to any report
on Schedule 13D or 13G relating to the Company filed by the Selling
Stockholder and (z) such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of
the Shares or the Federal Communications Commission, the Pennsylvania
Public Utility Commission or any other governmental body or agency with
regulatory control over the Company's industry.
(c) The Selling Stockholder has, and on the Closing Date will
have, the corporate power to enter into this Agreement, to sell,
transfer and deliver the Shares and perform its obligations under this
Agreement.
(d) The Selling Stockholder is the record owner of the Shares
and is not aware of any "adverse claims" (within the meaning of Section
8-105 of the Uniform Commercial Code as adopted by the State of New
York (the "UCC")) that may be asserted against the Selling Stockholder
with respect to the Shares.
(e) 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
6
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 $[ ] 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
525,000 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 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
7
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 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 $[ ] a share (the
"Public Offering Price") and to certain dealers selected by you at a price that
represents a concession not in excess of $0.[ ] 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 [ ], 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 [ ], 2002, as shall be
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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 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 [the date hereof];
(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
9
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
(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
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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
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
11
extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(v) the execution and delivery by the Company of, and
the performance of its obligations under, this Agreement (i)
will not violate any provision of the amended and restated
articles of incorporation (as amended) or the amended and
restated by-laws (as amended) of the Company and (ii) to such
counsel's knowledge, will not violate any provision of law
applicable to the Company or any of its subsidiaries, any
agreement or other instrument binding upon the Company or any
of its subsidiaries, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Company or any subsidiary, except in each case set forth
in this clause (ii) for violations that would not reasonably
be expected to have a material adverse effect on the Company
and its subsidiaries, taken as a whole, or the Company's
ability to perform its obligations hereunder; and no filing,
consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the
execution, delivery or performance of this Agreement by the
Company, except such as may be required by (A) the securities
or Blue Sky laws of the various states in connection with the
offer and sale of the Shares or (B) the Federal Communications
Commission, the Pennsylvania Public Utility Commission or any
other governmental body or agency with regulatory control over
the Company's industry;
(vi) to such counsel's knowledge, (a) there are no
legal or governmental proceedings pending or threatened to
which the Company or its Material Subsidiaries is a party or
to which any of the properties of the Company or its Material
Subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not so
described, (b) there are no statutes, regulations, contracts
or other documents that are required to be described in the
Registration Statement or the Prospectus that are not
described as required and (c) there are no contracts or other
documents required to be filed as exhibits to the Registration
Statement that are not filed as required;
(vii) to such counsel's knowledge, the Company and
its Material Subsidiaries (A) are in compliance with any and
all applicable Environmental Laws, (B) have received all
permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective
businesses and (C) are in compliance with all terms and
conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such
permits, licenses or approvals would not, singly or in the
aggregate, reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
and
(viii) each document filed pursuant to the Exchange
Act and incorporated by reference in the Registration
Statement and the Prospectus (other than the financial
statements and notes thereto, the financial statement
schedules and the other financial and statistical data
included or incorporated by reference therein, as to which
such counsel expresses no opinion), as of its filing date,
complied as to form in all material respects with the
12
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
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;
(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
13
regulations of comparable state regulatory agencies, as to
which such counsel need express no opinion) applicable to the
Selling Stockholder, any agreement or other instrument binding
upon the Selling Stockholder or any property of the Selling
Stockholder or to which the Selling Stockholder is a party or
any judgment, order or decree of any governmental body, agency
or court having jurisdiction over the Selling Stockholder;
and, to such counsel's knowledge, no filing, consent,
approval, authorization or order of, or qualification with,
any New York, Delaware (insofar as Delaware corporate law is
concerned) or United States Federal governmental body or
agency is required for the execution, delivery or performance
of this Agreement by the Selling Stockholder, except for (A)
the registration of the Shares under the Securities Act, (B)
the filing of any necessary amendment to any report on
Schedule 13D or 13G relating to the Company filed by the
Selling Stockholder, (C) such as may be required by the
securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares and (D) such
as may be required by the Federal Communications Commission,
the Pennsylvania Public Utility Commission or any other
governmental body or agency with regulatory control over the
Company's industry, in each case as to which such counsel need
express no opinion;
(iii) based solely on a review of the applicable
stock certificates, the Selling Stockholder is the record
owner of the Shares and has the corporate right, power and
authority to enter into this Agreement and to sell, transfer
and deliver the Shares; and
(iv) assuming that each of the Underwriters acquires
its interest in the Shares sold by the Selling Stockholder
without notice of any adverse claim (within the meaning of
Section 8-105 of the UCC), each Underwriter, once it has
purchased such Shares delivered to DTC by making payment
therefor, as provided herein, and has had such Shares credited
to the securities account or accounts of such Underwriter
maintained with DTC, will have acquired a security entitlement
(within the meaning of Section 8-102(a)(17) of the UCC) to
such Shares purchased by such Underwriter and such Underwriter
will take such shares free and clear of any adverse claim with
respect to such Shares.
(i) The Underwriters shall have received on the Closing Date
an opinion of Cravath, Swaine & Xxxxx, counsel for the Underwriters,
dated the Closing Date, covering the matters referred to in Section
6(d)(iii), Section 6(c)(iii) (but only as to the statements in the
Prospectus under the caption "Underwriters") and Section 6(c)(vi)
above.
The opinions of Xxxxx Xxxx & Xxxxxxxx described in Section
6(c), Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP described in Section
6(d), Xxxxxxx 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
14
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.
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
15
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering
the twelve-month period ending March 31, 2003 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
8. Expenses. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the
Company agrees to pay or cause to be paid all expenses incident to the
performance of their obligations under this Agreement, including: (i)
the fees, disbursements and expenses of the Company's counsel and the
Company's accountants in connection with the registration and delivery
of the Shares under the Securities Act and all other fees or expenses
in connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments
and supplements to any of the foregoing, including all printing costs
associated therewith, 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
16
statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon
information relating to (i) any Underwriter furnished to the Company in
writing by or on behalf of any Underwriter through you expressly for
use therein or (ii) the Selling Stockholder furnished in writing by or
on behalf of the Selling Stockholder expressly for use therein;
provided, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased Shares, or any person controlling such
Underwriter, if it shall be established that a copy of the Prospectus
was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to
the written confirmation of the sale of the Shares to such person, and
if the Prospectus would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the
result of noncompliance by the Company with Section 7(a) hereof.
(b) The Selling Stockholder agrees to indemnify and hold harmless
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 and third 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)
17
caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with
reference to information relating to such Underwriter furnished to the
Company in writing by or on behalf of such Underwriter through you
expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to Section 9(a), 9(b) or 9(c),
such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve such indemnifying party from
liability under paragraph (a), (b) or (c) above unless and to the
extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other
than the indemnification obligation provided in paragraph (a), (b) or
(c) above. The indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all Underwriters and all persons, if any, who control any
Underwriter within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, (ii) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the
Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the
meaning of either such Section and (iii) the fees and expenses of more
than one separate firm (in addition to any local counsel) for the
Selling Stockholder and all persons, if any, who control the Selling
Stockholder within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for the Underwriters and such control
persons of any Underwriters, such firm shall be designated in writing
jointly by the 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
18
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party (such consent not to be
unreasonably withheld), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder
by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in Section
9(a), 9(b) or 9(c) is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph,
in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received
by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause 9(e)(i) above is
not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 9(e)(i)
above but also the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the other
hand in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by
the Company and/or the Selling Stockholder, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the
Shares shall be deemed to be in the same respective proportions as the
net proceeds from the offering of the Shares (before deducting
expenses) received by the Selling Stockholder and the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover of the Prospectus,
bear to the aggregate Public Offering Price of the Shares. The relative
fault of the Company, the Selling Stockholder and the Underwriters
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Stockholder or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this
Section 9 are several in proportion to the respective number of Shares
they have purchased hereunder, and not joint.
(f) The Company, the Selling Stockholder and the Underwriters
agree that it would not be just or equitable if contribution pursuant
to this Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in Section 9(e). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, no Underwriter shall
be required to contribute any amount in excess of the amount by which
the total price at which the Shares underwritten by it and distributed
19
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 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
20
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)
761-0260), 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
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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.
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Very truly yours,
Commonwealth Telephone Enterprises, Inc.
By:____________________________
Name:
Title:
Xxxxx 0 Communications, Inc.
By:____________________________
Name:
Title:
Eldorado Equity Holdings, Inc.
By:____________________________
Name:
Title:
23
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:___________________________
Name:
Title:
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SCHEDULE I
Number of
Firm Shares
Underwriter To Be Purchased
Xxxxxx Xxxxxxx & Co. Incorporated................. ________
Total.................................... [ ]
========
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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. The foregoing sentence shall not apply to (a) transactions
relating to shares of Common Stock or other securities acquired in open
market transactions after the completion of the Public Offering and (b)
transfers of shares of Common Stock or any security convertible into
Common Stock as a bona fide gift or gifts; provided that in the case of
any transfer or distribution pursuant to clause (b), (i) each donee
shall execute and deliver to Xxxxxx Xxxxxxx a duplicate form of this
Lock-Up Letter and (ii) no filing by any party (donor, donee) under
Section 16(a) of the Securities Exchange Act of 1934, as amended, shall
be required or shall be made voluntarily in connection with such
transfer or distribution (other than a filing on a Form 5 made after
the expiration of the 90-day period referred to above). In addition,
the undersigned agrees that, without the prior written consent of
Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the
period commencing on the date of the Preliminary Prospectus 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.
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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:
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