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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
October 28, 1998 (October 23, 1998)
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Pennsylvania 0-11053 23-2093008
(State of incorporation (Commission File Number) (I.R.S. Employer
or organization) Identification No.)
100 CTE Drive
Dallas, PA 18612-9774
(Address, including zip code of Registrant's principal executive offices)
Registrant's telephone number, including area code: (717) 674-2700
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Item 5: Other Events
The Registrant issued a press release on October 26, 1998. The text of
such release was as follows:
"Contact: David G. Weselcouch
(717) 674-2805
CTE SUCCESSFULLY CONCLUDES RIGHTS OFFERING
Company Raises Approximately $77 Million in Accordance with its
Recapitalization Plan
DALLAS, PA - October 23, 1998 - Commonwealth Telephone Enterprises, Inc.
(the "Company") (NASDAQ: CTCO, CTCOB) announced that its rights offering of
3.69 million shares of its Common Stock expired at 5:00 p.m. EST today and that
shareholders fully subscribed for all shares of Common Stock offered.
Shareholders of record at the close of business on September 25, 1998, received
one transferable subscription right for every five shares of Common Stock or
Class B Common Stock held. Rights holders were permitted to purchase one share
of Common Stock for each right held at a subscription price of $21.25 per
share.
Each right also carried the right to "oversubscribe" at the subscription
price for shares of Common Stock that were not purchased pursuant to the
initial exercise of rights. There were many more shares requested pursuant to
the oversubscription privilege than there were shares available. The available
shares will be allocated to the holders exercising the oversubscription
privilege pro rata based on the number of shares requested. Although final
allocations are not expected to be completed for several days, it is
anticipated that each holder exercising the oversubscription privilege will
receive approximately 10% of the shares requested.
The Company expects to use the net proceeds from the rights offering,
which are approximately $77 million, to repay outstanding indebtedness. The
rights offering was the last step for the Company in the recapitalization plan
that resulted in the Company spinning off its former subsidiaries RCN
Corporation (NASDAQ:RCNC) and Cable Michigan, Inc. (NASDAQ:CABL).
Level 3 Telecom Holdings, Inc. ("LTTH"), which owned approximately 48% of
the outstanding Common Stock and approximately 49% of the outstanding Class B
Common Stock prior to the rights offering, exercised the 1,776,065 rights it
received in respect of the shares it held.
About CTE
Headquartered in Dallas, PA, Commonwealth Telephone Enterprises, Inc., is
a diversified telecommunications company providing advanced solutions to
deliver communications, information and entertainment services to business and
residential users in select United States markets.
CTE is organized into two principal operating segments: Commonwealth
Telephone Company ("CT"), the nation's 11th largest independent incumbent local
exchange carrier ("ILEC") which has been operating in various rural
Pennsylvania markets since 1897, and CTSI, Inc. ("CTSI"), a competitive local
exchange carrier ("CLEC") which formally commenced operations in 1997.
Additionally, CTE operates three support businesses that provide expertise to
its two principal operating segments. These businesses consist of Commonwealth
Communications, a telecommunications engineering and consulting business, epix
Internet Services (www.epix.net) and Commonwealth Long Distance Company.
A web site featuring current information regarding CTE can be reached at
www.ct.enterprises.com."
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
10.01 Registration Rights Agreement dated October 23, 1998, among the
Registrant, Walter Scott, Jr., James Q. Crowe and David C.
McCourt.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned hereunto duly authorized.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
By: /s/ Bruce C. Godfrey
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Name: Bruce C. Godfrey
Title: Executive Vice President and
Chief Financial Officer
Date: October 28, 1998
EXHIBIT 10.01
REGISTRATION RIGHTS AGREEMENT
AGREEMENT dated as of October 23, 1998 among Commonwealth Telephone
Enterprises, Inc., a Pennsylvania corporation (the "Company"), Walter Scott,
Jr., James Q. Crowe and David C. McCourt (collectively, the "Shareholders").
WHEREAS, the Company has distributed to the holders of record of its
issued and outstanding shares of Common Stock, par value $1.00 per share
("Common Stock"), and to holders of record its outstanding shares of Class B
Common Stock, par value $1.00 per share, at no charge to such holders,
transferable subscription rights to subscribe for and purchase an aggregate of
3,678,612 shares of Common Stock for a price of $21.25 per share (such
transaction being herein referred to as the "Rights Offering").
WHEREAS, this Agreement is being entered into pursuant to Section 6 of
the Rights Exercise Agreement dated as of September 25, 1998 (the "Rights
Exercise Agreement") among the Company, Level 3 Telecom Holdings, Inc., a
Delaware corporation, and the Shareholders.
WHEREAS, it is intended by the Company and the Shareholders that this
Agreement shall become effective immediately upon the issuance of the Common
Stock of the Company to be issued pursuant to the Rights Offering.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Commission" means the Securities and Exchange Commission.
"Demand Registration" means a Demand Registration as defined in
Section 2.01.
"Fair Market Value" means, with respect to Registrable Securities, the
average closing price of the shares of Common Stock for the 30 trading days
prior to the day on which a request for registration pursuant to a Demand
Registration is made.
"Participating Shareholders" means the Shareholders electing to sell
Registrable Securities pursuant to a Demand Registration or a Piggyback
Registration.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Piggyback Registration" means a Piggyback Registration as defined in
Section 2.02.
"Registrable Securities" means the shares of Common Stock issued to
the Shareholders pursuant to the Rights Exercise Agreement and any shares of
Common Stock or other securities distributed as a dividend with respect to, or
issued in exchange for or in replacement of such shares.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
ARTICLE 2
REGISTRATION RIGHTS
SECTION 2.01. Demand Registration. (a) The Shareholders may make up to
two written requests for registration under the Securities Act of all or any
part of the Registrable Securities held by such Shareholders (a "Demand
Registration"); provided that (i) a majority of the Shareholders (the "Required
Holders") must make each such request, (ii) each Demand Registration must be in
respect of Registrable Securities with a Fair Market Value in excess of
$1,000,000 and (iii) the Shareholders shall not request a Demand Registration
within 180 days of the effective date of a prior Demand Registration. Such
request will specify the aggregate number of shares of Registrable Securities
proposed to be sold by the Required Holders and will also specify the intended
method of disposition thereof. Each Shareholder that is not a Required Holder
in relation to a Demand Registration shall have the right to be a Participating
Shareholder in relation to such Demand Registration. A registration will not
count as a Demand Registration until it has become effective. Should a Demand
Registration not become effective due to the failure of the Participating
Shareholders to perform their obligations under this Agreement or the inability
of the Participating Shareholders to reach agreement with the underwriters for
the proposed sale (the "Underwriters") on price or other customary terms for
such transaction, or in the event the Participating Shareholders withdraw or do
not pursue the request for the Demand Registration (in each of the foregoing
cases, provided that at such time the Company is in compliance in all material
respects with its obligations under this Agreement), then such Demand
Registration shall be deemed to have been effected (provided that if the Demand
Registration does not become effective because of (i) a material adverse change
in the condition (financial or otherwise), business, assets or results of
operations of the Company and its subsidiaries taken as a whole or (ii) a
material adverse change in the financial markets that occurs, in either case,
subsequent to the date of the written request made by the Participating
Shareholders, then the Demand Registration shall not be deemed to have been
effected). The Required Holders may on any occasion withdraw a request for a
Demand Registration at any time prior to the time the Demand Registration
becomes effective and such request will not be considered a request for a
Demand Registration provided that the Participating Shareholders pay all
expenses incurred by the Company in connection with such withdrawn request.
(b) If the Required Holders so elect, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the
form of an underwritten offering. The Participating Shareholders shall have the
right jointly to select the managing Underwriters and any additional investment
bankers and managers to be used in connection with such offering, subject to
the Company's approval, which approval shall not be unreasonably withheld.
(c) The Company will have the right to preempt any Demand
Registration with a primary registration by delivering written notice (within
five business days after the Company has received from the Participating
Shareholders a request for such Demand Registration) of such intention to the
Participating Shareholders indicating that the Company has identified a
specific business need and use for the proceeds of the sale of such securities
and the Company shall use all commercially reasonable efforts to effect a
primary registration within 60 days of such notice. In the ensuing primary
registration, the Shareholders will have such piggyback registration rights as
are set forth in Section 2.02 hereof. Upon the Company's preemption of a
requested Demand Registration, such requested registration will not count as a
Demand Registration.
SECTION 2.02. Piggyback Registration. If the Company proposes to
file a registration statement under the Securities Act with respect to an
offering (a "Proposed Offering") of common equity securities for the Company's
own account or for the account of other shareholders of the Company (other than
a registration statement on Form S-4 or S-8 or pursuant to Rule 415 (or any
substitute form or rule, respectively, that may be adopted by the Commission)),
the Company shall give written notice of such proposed filing to each
Shareholder as soon as reasonably practicable (but in no event less than ten
business days before the anticipated filing date), and such notice shall offer
each Shareholder the opportunity to register such number of shares of
Registrable Securities held by such Shareholder as such Shareholder may request
on the same terms and conditions as the Company's Common Stock (a "Piggyback
Registration"). Each Shareholder will have five business days after receipt of
any such notice to notify the Company as to whether it wishes to participate in
a Piggyback Registration and, if so, the number of Registrable Securities
proposed to be included in such offering; provided that should any Shareholder
fail to provide timely notice to the Company, such Shareholder will forfeit any
rights to participate in the Piggyback Registration with respect to such
proposed offering. If the Company shall determine in its sole discretion not to
register or to delay the Proposed Offering, the Company may, at its election,
provide written notice of such determination to the Shareholders who have
provided timely notice of their intention to participate in the Piggyback
Registration and (i) in the case of a determination not to effect the Proposed
Offering, shall thereupon be relieved of the obligation to register such
Shareholders' Registrable Securities in connection therewith, and (ii) in the
case of a determination to delay a Proposed Offering, shall thereupon be
permitted to delay registering such Shareholders' Registrable Securities for
the same period as the delay in respect of Common Stock being registered for
the Company's account; provided that such delay will not prevent the
Shareholders from exercising their right to request a Demand Registration
subject to the provisions of Section 2.01. The Company shall be entitled to
select the Underwriters in connection with any Piggyback Registration.
SECTION 2.03. Reduction of Offering. Notwithstanding anything
contained herein, if the managing Underwriter of an offering described in
Section 2.01 or Section 2.02 states in writing that the size of the offering
that the Shareholders, the Company and any other Persons intend to make is such
that the success of the offering would be materially and adversely affected,
then the amount of Registrable Securities to be offered for the account of the
Shareholders and other selling persons exercising similar piggy-back
registration rights shall be reduced pro rata to the extent necessary to reduce
the total amount of securities to be included in such offering to the amount
recommended by such managing Underwriter and, as between the Shareholders and
other selling persons exercising similar piggy-back registration rights, the
number will be reduced pro rata based on the number of Registrable Securities
each Shareholder requests to have registered; provided that in the case of a
Demand Registration, the amount of Registrable Securities to be offered for the
account of the Shareholder making the Demand shall be reduced pro rata as to
those Shareholders making a Demand Registration only after the amount of
securities to be offered for the account of the Company and any other Persons
has been reduced to zero. If, in the case of a Demand Registration, the amount
of Registrable Securities to be offered for the account of the Shareholders
making the demand has been reduced by 50% or more pursuant to this Section
2.03, then the Demand Registration shall be deemed not to have been effected.
ARTICLE 3
REGISTRATION PROCEDURES
SECTION 3.01. Filings; Information. Whenever the Shareholders request
that any Registrable Securities be registered pursuant to Section 2.01 hereof,
the Company will use all commercially reasonable efforts to effect the
registration of such Registrable Securities as promptly as is reasonably
practicable, and in connection with any such request:
(a) The Company will expeditiously prepare and file with the
Commission a registration statement on any form for which the Company
then qualifies and which counsel for the Company shall deem
appropriate and available for the sale of the Registrable Securities
to be registered thereunder in accordance with the intended method of
distribution thereof, and use all commercially reasonable efforts to
cause such filed registration statement to become and remain effective
for such period, not to exceed 90 days, as may be reasonably necessary
to effect the sale of such securities; provided that if the Company
shall furnish to the Participating Shareholders a certificate signed
by the Company's Chairman or President stating that in the good faith
judgment of the Company's Board of Directors it would be seriously
detrimental to the Company or its shareholders for such a registration
statement to be filed or become effective as expeditiously as
possible, the Company may postpone the filing or effectiveness of a
registration statement for a period of not more than 120 days
(provided that the Company may not defer such filing pursuant to this
clause more than once in any 12 month period); and provided further
that if (i) the effective date of any registration statement filed
pursuant to a Demand Registration would otherwise be at least 45
calendar days, but fewer than 90 calendar days, after the end of the
Company's fiscal year, and (ii) the Securities Act requires the
Company to include audited financials as of the end of such fiscal
year, the Company may delay the effectiveness of such registration
statement for such period as is reasonably necessary to include
therein its audited financial statements for such fiscal year.
(b) The Company will, if requested, prior to filing such registration
statement or any amendment or supplement thereto, furnish to the
Participating Shareholders and each applicable managing Underwriter,
if any, copies thereof, and thereafter furnish to the Participating
Shareholders and each such Underwriter, if any, such number of copies
of such registration statement, amendment and supplement thereto (in
each case including all exhibits thereto and documents incorporated by
reference therein) and the prospectus included in such registration
statement (including each preliminary prospectus) as the Participating
Shareholders or each such Underwriter may reasonably request in order
to facilitate the sale of the Registrable Securities.
(c) After the filing of the registration statement, the Company will
promptly notify the Participating Shareholders of any stop order
issued or, to the Company's knowledge, threatened to be issued by the
Commission and take all commercially reasonable actions required to
prevent the entry of such stop order or to remove it if entered.
(d) The Company will use all commercially reasonable efforts to
qualify the Registrable Securities for offer and sale under such other
securities or blue sky laws of such jurisdictions in the United States
as the Participating Shareholders reasonably request; provided that
the Company will not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required
to qualify but for this paragraph 3.01(d), (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction.
(e) The Company will as promptly as is practicable notify the
Participating Shareholders, at any time when a prospectus relating to
the sale of the Registrable Securities is required by law to be
delivered in connection with sales by an Underwriter or dealer, of the
occurrence of any event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading and promptly make available to the
Participating Shareholders and to the Underwriters any such supplement
or amendment. Upon receipt of any notice from the Company of the
occurrence of any event of the kind described in the preceding
sentence, the Participating Shareholders will forthwith discontinue
the offer and sale of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until
receipt by the Participating Shareholders and the Underwriters of the
copies of such supplemented or amended prospectus and, if so directed
by the Company, the Participating Shareholders will deliver to the
Company all copies, other than permanent file copies then in the
Participating Shareholders' possession, of the most recent prospectus
covering such Registrable Securities at the time of receipt of such
notice. In the event the Company shall give such notice, the Company
shall extend the period during which such registration statement shall
be maintained effective as provided in Section 3.01(a) hereof by the
number of days during the period from and including the date of the
giving of such notice to the date when the Company shall make
available to the Participating Shareholders such supplemented or
amended prospectus.
(f) The Company will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions
as are required in order to expedite or facilitate the sale of such
Registrable Securities.
(g) At the request of any Underwriter in connection with an
underwritten offering, the Company will furnish (i) an opinion of
counsel, addressed to the Underwriters, covering such customary
matters as the managing Underwriter may reasonably request and (ii) a
comfort letter or comfort letters from the Company's independent
public accountants covering such customary matters as the managing
Underwriter may reasonably request.
(h) The Company will make generally available to its security
holders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after
the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission
thereunder.
(i) The Company will use all commercially reasonable efforts to cause
all such Registrable Securities to be listed on each securities
exchange or quoted on each inter-dealer quotation system on which the
Common Stock is then listed or quoted.
The Company may require the Participating Shareholders promptly to
furnish in writing to the Company such information regarding the Participating
Shareholders, the plan of distribution of the Registrable Securities and other
information as the Company may from time to time reasonably request or as may
be legally required in connection with such registration.
SECTION 3.02. Registration Expenses. In connection with any Demand
Registration or Piggyback Registration, the Company shall pay the following
expenses incurred in connection with such registration: (i) registration and
filing fees with the Commission and National Association of Securities Dealers,
Inc., (ii) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities), (iii) printing expenses,
(iv) fees and expenses incurred in connection with the listing or quotation of
the Registrable Securities, (v) fees and expenses of counsel to the Company and
the fees and expenses of independent certified public accountants for the
Company (including fees and expenses associated with any special audits or the
delivery of comfort letters), (vi) the reasonable fees and expenses of any
additional experts retained by the Company in connection with such registration
and (vii) the reasonable fees and expenses of one counsel for all the
Participating Shareholders not in excess of $25,000. The Shareholders shall pay
any underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities and any out-of-pocket expenses of the Shareholders
(other than the fees and expenses of counsel described in clause (vii) of this
Section 3.02).
ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.01. Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Shareholder from and against any and all
losses, claims, damages and liabilities (including reasonable attorneys' fees)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Registrable Securities (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
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 or contained in or based upon any information furnished in writing to
the Company by a Shareholder or any Underwriter expressly for use therein. The
Company also agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors and each person who controls such
Underwriters on substantially the same basis as that of the indemnification of
Shareholder provided in this section 4.01.
SECTION 4.02. Indemnification by Shareholder. Each Shareholder agrees
to indemnify and hold harmless the Company, its officers and directors, 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 the Shareholders, but
only with reference to information furnished in writing by or on behalf of such
Shareholder expressly for use in any registration statement or prospectus
relating to the Registrable Securities, or any amendment or supplement thereto,
or any preliminary prospectus or the failure to deliver a copy of such
registration statement or prospectus or any amendments or supplements thereto
due to the fault of such Shareholder. Each Shareholder also agrees to indemnify
and hold harmless any Underwriters of the Registrable Securities, their
officers and directors and each person who controls such Underwriters on
substantially the same basis as that of the indemnification of the Company
provided in this section 4.02. The extent of each Shareholder's liability under
this Section 4.02 shall be limited to the amount such Shareholder receives in
the relevant offering of Registrable Securities.
SECTION 4.03. Conduct of Indemnification Proceedings. 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 4.01 or Section 4.02, 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 the request
of the Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such 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 Indemnified Party and the Indemnifying 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 connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all such Indemnified Parties, and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Indemnified Parties, such firm shall be designated in writing by the
Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, which
consent will not be unreasonably withheld, but if settled with such consent, or
if there be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment.
SECTION 4.04. Contribution. If the indemnification provided for in
this Article 4 is unavailable to an Indemnified Party in respect of any losses,
claims, damages or liabilities in respect of which indemnity is to be provided
hereunder, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall to the fullest extent permitted by law contribute to
the amount paid or payable by such Indemnified Party as a result of such
losses, claims, damages or liabilities in such proportion as is appropriate to
reflect the relative fault of the Company and the Shareholders 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 fault of the Company and the Shareholders 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 such party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Shareholders agree that it would not be just and
equitable if contribution pursuant to this section 4.04 were determined by pro
rata allocation (even if the Shareholders 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 the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or 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 Article 4, no Shareholder shall be
required to contribute any amount in excess of the amount by which the net
proceeds of the offering (before deducting expenses) received by such
Shareholder exceeds the amount of any damages which such Shareholder 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.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Participation in Underwritten Registrations. No Person
may participate in any underwritten registered offering contemplated hereunder
unless such Person (a) agrees to sell its securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements, (b) completes and executes all customary and normal
questionnaires, powers of attorney, custody arrangements, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and this Agreement and (c) furnishes in
writing to the Company such information regarding such Person, the plan of
distribution of the Registrable Securities and other information as the Company
may from time to time request or as may be legally required in connection with
such registration.
SECTION 5.02. Rule 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange
Act and that it will take such further action as the Shareholders may
reasonably request to the extent required from time to time to enable the
Shareholders to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission. Upon the
request of the Shareholders, the Company will deliver to the Shareholders a
written statement as to whether it has complied with such reporting
requirements. A Shareholder shall not be entitled to a Demand Registration or a
Piggyback Registration if the Company provides to the Shareholder an opinion of
recognized counsel to the effect that based on the proposed plan of
distribution, registration of such transaction under the Securities Act is not
required.
SECTION 5.03. Holdback Agreements. Each Shareholder agrees, if
requested by the Company and an underwriter of equity securities of the
Company, not to offer, sell, contract to sell or otherwise dispose of any
Registrable Securities, or any securities convertible into or exchangeable or
exercisable for such securities during the 90-day period beginning on the
effective date of the registration statement of the Company filed under the
Securities Act with respect to the offering of such equity securities (other
than the Registrable Securities to be sold pursuant to such registration
statement); provided that all executive officers and directors of the Company
enter into similar arrangements.
SECTION 5.04. Notices. All notices, requests and other
communications to either party hereunder shall be in writing (including
telecopy or similar writing) and shall be given,
if to the Company, to
Commonwealth Telephone Enterprises, Inc.
105 Carnegie Center
Princeton, NJ 08540-6215
Attention: General Counsel
Telecopy: (609) 734-3830
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: William L. Taylor, Esq.
Telecopy: (212) 450-4800
if to Walter Scott, Jr., to:
Walter Scott, Jr.
c/o Level 3 Communications Inc.
3555 Farnam Street
Omaha, NE 68131
Telecopy: (303) 926-3400
if to James Q. Crowe, to:
James Q. Crowe
c/o Level 3 Communications Inc.
3555 Farnam Street
Omaha, NE 68131
Telecopy: (303) 926-3400
if to David C. McCourt, to:
David C. McCourt
c/o Commonwealth Telephone Enterprises, Inc.
105 Carnegie Center
Princeton, NJ 08540-6215
Telecopy: (609) 734-3830
or such other address or telecopier number as such party may hereafter specify
for the purpose by notice to the other party hereto. Each such notice, request
or other communication shall be effective when delivered at the address
specified in this Section 5.
SECTION 5.05. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by each Shareholder and the Company, or in the case of a waiver, by
the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 5.06. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns; provided that
no party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement (except for any assignment, delegation or
transfer by a deceased person to its executor or heirs or by an incompetent
person to its legal guardian or by a Shareholder to any person or entity to
whom such Shareholder transfers any Registrable Securities in a private
placement transaction) without the written consent of the other parties hereto.
Neither this Agreement nor any provision hereof is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
SECTION 5.07. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other parties hereto.
SECTION 5.08. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior agreements, understandings and negotiations, both
written and oral, between the parties hereto with respect thereto.
SECTION 5.09. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, without
regard to the conflicts of law rules of such state.
SECTION 5.10. Jurisdiction. Except as otherwise expressly provided in
this Agreement, the parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or
in connection with, this Agreement or the transactions contemplated hereby
shall be brought in the United States District Court for the Southern District
of New York or any New York State court sitting in the Borough of Manhattan,
and each of the parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 5.04 shall
be deemed effective service of process on such party.
SECTION 5.11. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 5.12. Headings. The headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning of
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
or caused this Agreement to be duly executed by their respective authorized
officers, as of the day and year first above written.
COMMONWEALTH TELEPHONE
ENTERPRISES, INC.
By: /s/ Bruce C. Godfrey
----------------------------------------
Name: Bruce C. Godfrey
Title: Executive Vice President
and Chief Financial Officer
WALTER SCOTT, JR.
/s/ Walter Scott, Jr.
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JAMES Q. CROWE
/s/ James Q. Crowe
---------------------------------------------
DAVID C. MCCOURT
/s/ David C. McCourt
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