<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 7, 1994.
REGISTRATION NO. 33-51601
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ROCHESTER TELEPHONE CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 16-0613330
(STATE OR OTHER (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION
INCORPORATION OR NUMBER)
ORGANIZATION)
</TABLE>
------------------------
ROCHESTER TEL CENTER
180 SOUTH CLINTON AVENUE
ROCHESTER, NEW YORK 14646-0700
(716) 777-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------------
JOSEPHINE S. TRUBEK, ESQ.
CORPORATE SECRETARY
ROCHESTER TELEPHONE CORPORATION
ROCHESTER TEL CENTER
180 SOUTH CLINTON AVENUE
ROCHESTER, NEW YORK 14646-0700
(716) 777-6713
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
VINCENT PAGANO, JR., ESQ. PETER H. DARROW, ESQ.
SIMPSON THACHER & BARTLETT CLEARY, GOTTLIEB, STEEN & HAMILTON
425 LEXINGTON AVENUE ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10017-3909 NEW YORK, NEW YORK 10006
(212) 455-2000 (212) 225-2000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE. PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF
1933, THE PROSPECTUS INCLUDED IN THIS REGISTRATION STATEMENT IS A COMBINED
PROSPECTUS AND ALSO RELATES TO REGISTRATION STATEMENT NO. 33-40824 PREVIOUSLY
FILED BY THE COMPANY AND DECLARED EFFECTIVE ON JUNE 27, 1991. THIS REGISTRATION
STATEMENT CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT
NO. 33-40824 AND SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(C) OF THE
SECURITIES ACT OF 1933.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION
FEBRUARY 7, 1994
PROSPECTUS
5,000,000 SHARES
ROCHESTER TELEPHONE CORPORATION
COMMON STOCK
($1.00 PAR VALUE)
Of the 5,000,000 shares (the "Shares") of Common Stock of Rochester Telephone
Corporation (the "Company"), $1.00 par value per share (the "Common Stock"),
offered hereby (the "Offering"), 2,885,000 Shares are being sold by the Selling
Stockholder and 2,115,000 Shares are being issued and sold by the Company. None
of the proceeds of the sale of Shares by the Selling Stockholder will be
received by the Company. See "Selling Stockholder".
The Common Stock is listed on the New York Stock Exchange under the trading
symbol "RTC". On January 19, 1994, the last reported sale price of the Common
Stock as reported on the New York Stock Exchange was $42.375 per share. See
"Price Range of Common Stock and Dividend Policy".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT COMPANY (1)(2) STOCKHOLDER
<S> <C> <C> <C> <C>
Per Share........................ $ $ $ $
Total............................ $ $ $ $
- -----------------------------------------------------------------------------------------------------------
<FN>
(1) Before deducting expenses payable by the Company estimated at $381,000.
(2) The Company has granted the Underwriters a 30-day option to purchase up to
750,000 additional shares of Common Stock at the Price to Public, less the
Underwriting Discount, solely to cover over-allotments, if any. If such
option is exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting".
</TABLE>
The Shares are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the right of the Underwriters to reject any order in whole or
in part and to withdraw, cancel or modify the offer without notice. It is
expected that delivery of the Shares will be made at the office of Salomon
Brothers Inc, Seven World Trade Center, New York, New York, or through the
facilities of The Depository Trust Company, on or about February __, 1994.
SALOMON BROTHERS INC
LEHMAN BROTHERS
SMITH BARNEY SHEARSON INC.
The date of this Prospectus is February , 1994.
<PAGE>
Two maps showing the location of the telephone properties,
cellular interests and long distance network of the Company.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-
THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy or information statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement of which this Prospectus forms a part, as well as reports, proxy
statements and other information filed by the Company, may be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the Commission's regional offices at Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, New York, New York 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Reports and other information
concerning the Company can also be inspected at the office of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect to the Common Stock being offered pursuant to this
Prospectus. This Prospectus does not contain all information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. The Registration Statement may be
inspected and copied at the public reference facilities maintained by the
Commission at the addresses set forth in the preceding paragraph. Statements
contained herein concerning the provisions of any documents are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed with the Commission, are
hereby incorporated by reference:
1. Annual Report on Form 10-K of the Company for the fiscal year ended
December 31, 1992 and Amendment No. 1 thereto on Form 10-K/A;
2. Quarterly Reports on Form 10-Q of the Company for the fiscal
quarters ended March 31, 1993 (as amended), June 30, 1993 and September 30,
1993; and
3. Current Reports on Form 8-K, filed by the Company with the
Commission on February 3, 1993, March 19, 1993, July 9, 1993 and January 20,
1994.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the completion of the Offering being made hereby, shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statements as modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any or all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus (other than certain exhibits to
such documents). Requests for such documents may be made by writing Kristen H.
Jenks, Corporate Manager-Investor Relations, Rochester Telephone Corporation,
Rochester Tel Center, 180 South Clinton Avenue, Rochester, New York 14646.
3
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS. TERMS NOT DEFINED IN THIS SUMMARY ARE DEFINED ELSEWHERE HEREIN.
UNLESS OTHERWISE INDICATED, INFORMATION IN THIS PROSPECTUS RELATING TO SHARE
DATA ASSUMES NO EXERCISE OF THE OVER-ALLOTMENT OPTION GRANTED TO THE
UNDERWRITERS.
THE COMPANY
Rochester Telephone Corporation (the "Company") is a major U.S. diversified
telecommunications company and the largest independent telephone company in New
York State. The Company's principal lines of business are regulated local
telephone operations ("Telephone Operations") and long distance, wireless and
other telecommunication services ("Telecommunication Services"). In addition to
the local exchange carrier in Rochester (the "Rochester Operating Company"),
Telephone Operations consists of 36 other local exchange companies, which
together with the Rochester Operating Company serve, as of December 31, 1993,
approximately 931,650 access lines in 14 states.
In 1988, the Company accelerated its strategy to diversify telephone
operations outside of New York State. Since that time, the Company has acquired
29 local telephone companies. Through effective marketing and operating
efficiencies, regional telephone operations have become a significant
contributor to profitability. The Company made the strategic decision in 1984 to
enter the long distance business, which it was free to enter because the Company
is not a Regional Bell Operating Company ("RBOC") and is not subject to the same
restrictions imposed upon an RBOC. In 1985, the Company entered the wireless
communications business. The Company now provides long distance voice, video and
data communications services in New York State, New England and the Mid-Atlantic
and Midwest regions, wireless communications serving a population of
approximately 4.3 million in five states, and designs, installs and maintains
integrated business communications systems, primarily in New York State.
The Company had total assets of approximately $1.5 billion at December 31,
1993. The Company's revenues grew from approximately $515 million for the year
ended December 31, 1988 to approximately $906 million for the year ended
December 31, 1993.
COMPETITIVE STRATEGY
The Company's strategy is to be the leading provider of integrated
telecommunication products and services to its customers, combining significant
capabilities in local telephone, long distance and wireless communications. As a
local service provider, the Company has a direct link to its customer base and
therefore an opportunity to market a broad array of telecommunication products
to its customers. The Company has upgraded its networks and information systems,
expanded its long distance business and increased its presence and investment in
the wireless communications business. The Company intends to pursue continued
growth through expansion of its existing business, development of value-added
products and selected acquisitions.
TELEPHONE OPERATIONS. Since the beginning of 1988, the Company has invested
over $560 million in upgrading its Telephone Operations business and over $480
million for the acquisition of independent telephone companies. Over this
period, the Company substantially digitized its switching networks. As a result,
the Company has developed an over 99 percent digital network in Rochester,
making it one of the largest digital cities in the United States. In its other
operating regions, the Company has on average over 91 percent digital
capability. In addition, the Company has been able to achieve substantial cost
reductions through elimination of duplicative services and procedures and
consolidation of administrative functions, reducing the number of employees per
ten thousand access lines by over 20 percent since 1988 to 37 as of December 31,
1993.
The Company is pursuing alternatives to provide broadband services to its
customers. To date, the Company has installed over 10,000 miles of fiber optic
cable in the Rochester area to provide its
4
<PAGE>
business customers with enhanced capacity and product capability. With respect
to residential customers, the Company is conducting marketing trials and testing
new technologies as exemplified by a true video on demand service utilizing a
hybrid fiber-optic/coaxial cable network, expected to be marketed to selected
customers in its Rochester service area during the second quarter of 1994.
TELECOMMUNICATION SERVICES. Telecommunication Services is comprised
primarily of RCI Long Distance, a regional interexchange carrier, and the
Company's affiliated long distance businesses ("RCI"), and the Company's
wireless communications operations ("Cellular Operations"). Since 1984, the
Company has expanded its long distance coverage area and product offerings, both
internally and through acquisitions. Today, RCI provides services through its
owned and leased digital transmission system, primarily to small-and
medium-sized businesses and residential customers in New York, New England and
the Mid-Atlantic and Midwest regions. RCI's business is expected to grow through
integration of long distance service with local exchange customers, additional
product offerings and geographic expansion.
Cellular Operations provides cellular and paging services in western New
York and, upon implementation of a proposed 50/50 joint venture (the
"Supersystem") with NYNEX Mobile Communications Company ("NYNEX") in early 1994,
will manage cellular systems in New York State serving a population of
approximately 4.3 million. The Supersystem will allow the Company to provide a
broad range of products to an enlarged service area through existing facilities
with a minimal incremental investment. The Company has additional nonmanaged
cellular interests in New York State and four other states serving a population
of approximately 2.1 million, and is a founding member of MobiLink, the
nationwide cellular consortium.
The Company is regulated by the New York State Public Service Commission
(the "NYSPSC"). In February 1993, the Company filed a petition for
reorganization with the NYSPSC to establish two new companies: a competitive
retail full-service telecommunications company, and a regulated wholesale
network company which would provide access to the Rochester network to all
telecommunications providers (the "Open Market Plan"). A holding company would
be the parent corporation of the two new companies. The Company considers this
unique operating structure to be a natural outgrowth of its current operations,
but cannot predict whether or when it will be approved by the NYSPSC and, if so,
in what form.
THE OFFERING
<TABLE>
<S> <C>
Common Stock being offered by the Company............ 2,115,000 shares
Common Stock being offered by C FON Corporation
(the "Selling Stockholder")........................ 2,885,000 shares
Shares of Common Stock to be outstanding after
the Offering....................................... 36,083,119 shares (1)
Use of proceeds to the Company....................... For general corporate purposes,
principally for the expansion of the
Company's businesses. See "Use of
Proceeds".
New York Stock Exchange Symbol....................... RTC
<FN>
- ------------------------
(1) Excludes 171,360 shares issuable pursuant to director and executive stock
option plans (of which options to purchase 14,806 shares are presently
exercisable) and up to shares (assuming a market price of $ per share)
which may be issued as final payment for an acquisition.
</TABLE>
5
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA
Set forth below are selected consolidated financial data of the Company for
each of the five years for the period ended December 31, 1993, derived from
financial statements of the Company which were audited by Price Waterhouse,
independent auditors. The selected financial data for each of the five years for
the period ended December 31, 1993 should be read in conjunction with the more
detailed financial information incorporated in this Prospectus by reference.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
FINANCIAL DATA:
TELEPHONE OPERATIONS:
Total Revenues.................................. $593,871 $567,272 $497,597 $417,520 $386,146
Operating Income................................ 164,271 152,032 131,741 109,703 104,240
Depreciation.................................... 99,995 100,692 86,467 72,588 60,538
Construction Expenditures....................... 86,479 114,906 98,927 93,816 94,920
TELECOMMUNICATION SERVICES:
Network Systems and Services Sales.............. 288,783 217,144 208,236 189,078 195,814
Wireless Communications Sales................... 29,586 21,113 17,038 13,048 12,039
Eliminations.................................... (5,790) (1,480) (9,312) (6,652) (3,654)
---------- ---------- ---------- ---------- ----------
Total Sales-Telecommunication Services........ 312,579 236,777 215,962 195,474 204,199
Operating Income-Network Systems and Services... 27,344 18,918 13,153 7,551 9,276
Operating Income-Wireless Communications........ 3,256 4,110 3,412 2,000 1,885
Eliminations.................................... 74 74 62 75 76
---------- ---------- ---------- ---------- ----------
Operating Income-Telecommunication Services... 30,674 23,102 16,627 9,626 11,237
Depreciation.................................... 14,816 13,335 12,081 8,584 8,239
Construction Expenditures....................... 15,677 8,941 9,657 15,403 17,078
CONSOLIDATED:
Net Revenues and Sales.......................... 906,450 804,049 713,559 612,994 590,345
Operating Income................................ 194,945 175,134 148,368 119,329 115,478
Income from Continuing Operations............... 82,720 70,503 75,289 51,935 57,386
Consolidated Net Income......................... 82,720 69,431 79,046 51,935 83,944
Earnings per Common Share Primary:
Earnings before Extraordinary Items............. $ 2.42 $ 2.08 $ 2.31 $ 1.71 $ 1.94
Earnings per Common Share-Primary............... 2.42 2.05 2.43 1.71 2.86
Dividends Declared per Common Share............. 1.59 1.55 1.51 1.47 1.43
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets.................................... $1,510,201 $1,513,897 $1,496,737 $1,198,858 $1,122,147
Long-term Debt.................................. 492,555 525,597 591,232 363,020 354,302
Share Owners' Equity............................ 675,099 621,594 604,431 487,491 455,391
OPERATING DATA:
Access Lines - Business......................... 262,138 238,643 226,668 181,877 167,584
Access Lines - Residential...................... 669,512 657,758 641,236 506,812 477,411
---------- ---------- ---------- ---------- ----------
Access Lines - Total.......................... 931,650 896,401 867,904 688,689 644,995
Average Daily Carrier Access Minutes of Use (in
thousands)..................................... 9,615 8,907 7,515 5,848 5,269
Telephone Employees............................. 3,444 3,885 3,915 3,251 3,020
Telephone Employees per 10,000 Access Lines..... 37 43 45 47 47
Net Cellular POPs (1)........................... 1,650,518 1,459,229 1,422,477 2,113,904 1,716,736
Long Distance Billable Minutes (in
thousands)(2).................................. 1,756,401 1,152,358 848,744 774,296 688,322
<FN>
- ------------------------------
(1) "Net Cellular POPs" means the population of a licensed cellular market based
on population estimates for such market, multiplied by the Company's
percentage ownership interest in the cellular licensee operating in such
market as of the date specified.
(2) Includes Long Distance North after 1991.
</TABLE>
6
<PAGE>
USE OF PROCEEDS
At an assumed public offering price of $42.375 per share, the net proceeds
to the Company from the sale of the Shares in the Offering are estimated to be
approximately $86.7 million ($117.5 million if the Underwriters' over-allotment
option is exercised in full). The Company will use the net proceeds of the
Offering for general corporate purposes, principally for the expansion of the
Company's businesses through internal growth, acquisitions, or a combination
thereof. The proceeds of the Offering may also be used to reduce indebtedness.
The Offering of the Shares by the Company has been approved by the NYSPSC,
subject to certain conditions, including the condition that the Company must
apply for NYSPSC approval before using any of the proceeds of the Offering for a
particular purpose. The Company cannot predict whether and on what terms the
approval for any particular use of proceeds will be obtained.
None of the proceeds of the sale of Shares by the Selling Stockholder will
be received by the Company.
7
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is listed and traded on the New York Stock Exchange (the
"NYSE") under the symbol "RTC". The number of holders of record of Common Stock
at December 31, 1993 was 20,759. In November 1993, the Board of Directors of the
Company announced an increase in the quarterly dividend to be paid on the Common
Stock to $.405 per share, which was paid on February 1, 1994 to holders of
record on January 14, 1994. The future payment of dividends is subject to the
discretion of the Board of Directors and dependent upon the Company's results of
operations, financial condition, cash requirements and other relevant factors.
The following table sets forth the high and low sale prices for the Common
Stock for the calendar quarters indicated as reported by the NYSE and the
dividends declared per share on the Common Stock during each such period.
<TABLE>
<CAPTION>
QUARTERLY
PRICE RANGE DIVIDENDS
-------------------- DECLARED
HIGH LOW PER SHARE
--------- --------- ----------
<S> <C> <C> <C>
1994:
First Quarter (through January 19, 1994)......................................... $ 44.88 $ 40.50 $ --
1993:
Fourth Quarter................................................................... 50.25 43.38 .405
Third Quarter.................................................................... 48.75 41.00 .395
Second Quarter................................................................... 43.50 36.50 .395
First Quarter.................................................................... 38.88 34.63 .395
1992:
Fourth Quarter................................................................... 35.75 30.63 .395
Third Quarter.................................................................... 32.88 30.25 .385
Second Quarter................................................................... 33.75 29.13 .385
First Quarter.................................................................... 34.00 30.13 .385
1991:
Fourth Quarter................................................................... 34.00 29.75 .385
Third Quarter.................................................................... 31.38 28.25 .375
Second Quarter................................................................... 31.50 29.00 .375
First Quarter.................................................................... 30.38 26.00 .375
</TABLE>
The last reported sale price of the Common Stock on the NYSE as of a recent
date is set forth on the cover page of this Prospectus.
On November 15, 1993, the Board of Directors of the Company approved a
2-for-1 split of the Company's Common Stock effective upon approval by
regulatory agencies, including the NYSPSC. The record and distribution dates for
the split, which will be effected in the form of a 100 percent stock dividend,
will be established after such regulatory approvals have been obtained, which
will not occur until after the completion of the Offering.
8
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1993 and as adjusted to give effect to the issuance and sale of
2,115,000 shares of Common Stock offered by the Company hereby and the
application of the net proceeds therefrom.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Long-Term Debt...................................................................... $ 492,555 $
Share Owners' Equity:
Common stock...................................................................... 34,025
Capital in excess of par value.................................................... 201,591
Retained earnings................................................................. 418,889
------------- -------------
654,505
Less-Treasury stock, at cost........................................................ 2,191
------------- -------------
Common Share Owners' Equity......................................................... 652,314
Preferred stock..................................................................... 22,785
------------- -------------
Total Share Owners' Equity...................................................... 675,099
------------- -------------
Total capitalization.......................................................... $ 1,167,654 $
------------- -------------
------------- -------------
</TABLE>
9
<PAGE>
FINANCIAL OVERVIEW
CONSOLIDATED OPERATIONS
Historically, the Company's Telephone Operations have provided a majority of
the Company's overall revenues and income. Telephone Operations provided 66
percent of total revenues and 84 percent of operating income for the year ended
December 31, 1993. Telephone Operations revenues are derived from local service
and toll access fees, directory advertising, billing services and other services
such as sales of telephone equipment and voice mail. An increasing percentage of
the Company's revenues and income is being generated by its Telecommunication
Services businesses. Telecommunication Services revenues include long distance
revenues based on billable minutes of long distance usage, and wireless access
and usage charges. Operating income for these deregulated businesses has grown
to 16 percent of the Company's total operating income in 1993, compared with 8
percent five years ago.
The Company's Telephone Operations expenses are primarily related to the
development and maintenance of its local exchange networks. Additional Telephone
Operations expenses include costs associated with customer service and billing.
The Company's principal Telecommunication Services expenses are related to the
leasing of transmission facilities and the payment of local access charges for
its long distance business, charges for interconnection of cellular and paging
operations with wireless telephone companies, costs of cellular telephones and
paging units sold and other wireless network-related expenses.
Revenues and expenses derived from the Company's majority-owned cellular
operations are currently, and will continue to be, reflected in the Company's
consolidated financial statements. The Company's minority interests are
accounted for using the equity method, as will be the proposed 50/50 cellular
joint venture with NYNEX. The Company will recognize its proportional share of
the net income (loss) of the cellular operations following commencement of the
proposed joint venture with NYNEX in the line item entitled "Equity in net
income (loss) of unconsolidated partnerships and corporations".
Consolidated revenues and sales were $906 million in 1993, a $102 million,
or 12.7 percent, increase over 1992. This followed a 12.7 percent, or $90.5
million, increase in 1992 over 1991. Of the $102 million increase in 1993, $15
million related to additional revenues associated with 1993 purchase
acquisitions. Of the $90.5 million increase in 1992, $56.7 million was related
to additional revenues associated with 1991 purchase acquisitions (see Note 2 to
the consolidated financial statements incorporated herein by reference to the
Company's Current Report on Form 8-K dated January 20, 1994 for further details
about the purchase acquisitions). Excluding the impact of these acquisitions,
revenues and sales rose 10.9 percent in 1993 and 5.2 percent in 1992.
Consolidated costs and expenses were $711.5 million, $628.9 million and
$565.2 million in 1993, 1992 and 1991, respectively, reflecting 13.1 percent and
11.3 percent increases in 1993 and 1992, respectively. Purchase acquisitions
accounted for $16.9 million of the increase in 1993 and $43.7 million in 1992.
Consolidated costs and expenses, excluding the impact of purchase acquisitions,
increased 10.4 percent in 1993 and 3.9 percent in 1992. As a result of the
Company's continuing focus on cost controls and operating synergies,
consolidated operating margins improved steadily over the past three years, from
20.8 percent in 1991, to 21.8 percent in 1992 and 21.9 percent in 1993 (after
excluding the impact of the software write-off described in "Telephone
Operations", below).
The Company has elected to adopt Financial Accounting Standards Board
Statement No. 106, "Employers' Accounting for Post-retirement Benefits Other
Than Pensions" ("FAS 106"), using the delayed recognition of the transition
obligation method and will amortize this cost over a period of 20 years. The
adoption of this new standard resulted in approximately $11.9 million in
additional operating expenses in the year ended December 31, 1993. However, a
substantial portion of the increase was offset by a change in accounting for
pensions required for rate making purposes at the Rochester Operating Company.
The impact of both accounting changes resulted in additional operating expenses,
net of income taxes, of $3.8 million for the year.
10
<PAGE>
The financial results for the three years include the impact of five
nonrecurring items:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS OF DOLLARS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Income, as stated.............................................................. $ 82,720 $ 69,431 $ 79,046
Adjustments, net of taxes
1. Tax law change.............................................................. 400 -- --
2. Software write-off.......................................................... 2,145 -- --
3. Gain on sale of assets...................................................... (3,293) -- --
4. Early retirement of debt.................................................... -- 1,072 --
5. Cellular gain............................................................... -- -- (19,500)
--------- --------- ---------
Income, after adjustment....................................................... $ 81,972 $ 70,503 $ 59,546
--------- --------- ---------
--------- --------- ---------
Earnings per share, as stated.................................................. $ 2.42 $ 2.05 $ 2.43
Adjustments, net of taxes
1. Tax law change.............................................................. .01 -- --
2. Software write-off.......................................................... .06 -- --
3. Gain on sale of assets...................................................... (.10) -- --
4. Early retirement of debt.................................................... -- .03 --
5. Cellular gain............................................................... -- -- (.61)
--------- --------- ---------
Earnings per share, after adjustments.......................................... $ 2.39 $ 2.08 $ 1.82
--------- --------- ---------
--------- --------- ---------
</TABLE>
TELEPHONE OPERATIONS
Telephone Operations revenues increased 4.7 percent in 1993 and 14.0 percent
in 1992. Excluding purchase acquisitions, revenue increased 4.2 percent in 1992.
Revenue growth was partly driven by increases in access lines of 3.9 percent in
1993 and 3.3 percent in 1992. Growth in long distance usage also contributed
substantially to revenue growth, with minutes of use increasing by 7.7 percent
in 1993 and 18.8 percent in 1992. In general, long distance access rates per
minute of use declined slightly to address the telephone operating companies'
need to be competitive in this market sector and are expected to decline further
in 1994.
Local service revenue increased due to rate increases received in 1993 and
1992 at a selected number of non-New York State telephone companies, offset in
part by reduced rates at the Rochester Operating Company in 1993. Increased
market penetration of enhanced services such as custom calling features and
advanced number identification products like Caller ID also contributed to
revenue growth in 1993 and 1992.
Costs and expenses for Telephone Operations rose $14.4 million in 1993 and
$49.4 million in 1992. In 1992, $35.4 million of the increase was related to
incremental costs and expenses associated with the telephone companies acquired
in 1991. Adjusting for these acquisition-related expenses, total costs and
expenses increased 3.8 percent in 1992. The primary reasons for expense
increases in 1993 were: the $3.3 million write-off of deferred software expenses
at the Rochester Operating Company; an increase in wages and benefits due to the
addition of employees in key functional areas; increase in severance and other
expenses associated with streamlining operations to arrive at a reduced cost
structure; and increase in right-to-use fees associated with network software
upgrades. In 1992, expenses increased due to higher depreciation expenses and
amortization of costs associated with the March 1991 ice storm in Rochester, New
York.
Operating margins for Telephone Operations were 27.7 percent in 1993, 26.8
percent in 1992 and 26.5 percent in 1991. Excluding the write-off of the
deferred software expense, the operating margin in
11
<PAGE>
1993 was 28.2 percent. The composite depreciation rate for Telephone Operations
was 6.2 percent in 1993, compared with 6.4 percent in 1992 and 6.3 percent in
1991. The Company continues to pursue alignment of depreciation rates with the
economic lives of depreciable property.
TELECOMMUNICATION SERVICES
Telecommunication Services sales increased $75.8 million, or 32 percent, in
1993 and $20.8 million, or 9.6 percent, in 1992. Excluding the impact of
purchase acquisitions, sales rose 25.7 percent, or $60.9 million, and 7.6
percent, or $15.1 million, in 1993 and 1992, respectively. The increases in both
years resulted primarily from the growth in Network Systems and Services, where
sales in the long distance business were $262.5 million in 1993 and $187.3
million in 1992 due to increased usage and market penetration, price increases
and new products. Sales from wireless services increased $8.5 million in 1993
and $4.1 million in 1992 and continue to improve as a result of the Company's
acquisition of the Utica-Rome partnership in 1993, price increases and a growing
customer base.
Costs and expenses in 1993 for Telecommunication Services amounted to $281.9
million, increasing $68.2 million, or 31.9 percent, over 1992. Adjusting for the
impact of the 1993 acquisitions, expenses increased by $51.3 million, or 24.0
percent, primarily due to the increased volume of long distance traffic carried
by the Company and the associated costs to originate and terminate the traffic
on local telephone company facilities.
The increase in expenses in 1992 over 1991 was $14.3 million, or 7.2
percent. Normalizing for the impact of the 1991 acquisitions, costs and expenses
rose 4.5 percent, driven primarily by access costs. These results, which compare
favorably to the increases in sales, produced operating margins for the
three-year period of 9.8 percent, 9.8 percent and 7.7 percent in 1993, 1992 and
1991, respectively. This positive trend was achieved through operating
synergies, new product offerings and a growing customer base.
INTEREST EXPENSE
Interest expense decreased $3.5 million, or 7 percent, in 1993 as a result
of lower debt levels relative to 1992. During 1993, the Company recalled $115.4
million of debt. In 1992, interest expense increased $5.5 million, or 12.2
percent, primarily due to the issuance of new debt in 1991 which was used to
finance acquisitions.
GAIN ON SALE OF ASSETS
In 1993, the Company recognized gains on sales of S&A Telephone Company and
a portion of the Company's minority investment in a Canadian long distance
company. In 1991, the gain represents the ordinary gain on sale of cellular
interests as part of the purchase of the Vista Telephone Company of Minnesota
properties from Centel Corporation ("Centel").
OTHER INCOME (EXPENSE), NET
In 1993, net other expense increased $6.9 million, or 47.9 percent, over
1992. This increase is primarily the result of additional administrative expense
associated with the reorganization petition filed with the NYSPSC, refinancing
expenses and acquisition expenses.
In 1992, the net change was an increase in expense of $3.8 million over
1991, primarily due to lower equity earnings in cellular partnerships and
increased goodwill amortization relating to purchase acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
One of the most important items in evaluating management's success is its
use of the Company's capital resources. While increasing net income is an
important component of the process, management believes that the primary source
of value over the long term is cash generation over and above investment
requirements. The Company's liquidity is a function of its internal generation
of funds and access to securities markets, as well as its construction program
and debt service requirements.
The Company's primary source of funds is its net cash provided by operating
activities, which increased $12.2 million in 1993 and $52.9 million in 1992. The
increase in both years is attributable to increases in net income, after
excluding the 1991 cellular gains and depreciation and amortization; and
12
<PAGE>
in 1992, an increase of $26.5 million in accounts payable which is directly
related to the timing of purchases associated with the Company's construction
program. In addition to funds from operations, the Company accesses the
securities markets to fund the expansion of its business. The Company recently
filed a debt shelf registration for up to $100 million of debt securities, none
of which has been utilized at this time. The Company has funded acquisitions
primarily with newly issued stock.
The Company uses funds for its construction expenditures, acquisitions and
debt service requirements. Net cash used in investing activities decreased $12.4
million in 1993 and $148.8 million in 1992. The decline in 1993 was caused by a
reduction in construction expenditures offset in part by an increase in purchase
acquisitions. The decline in 1992 was due primarily to a $164.6 million decrease
in purchase acquisitions, offset in part by an increase of $15.3 million in
construction expenditures. The funding requirements associated with the
telephone acquisitions and network modernization programs have stabilized. Total
gross expenditures for property, plant and equipment in 1994 are anticipated to
be $58.3 million for Telephone Operations and $15.4 million for
Telecommunication Services.
The net cash used in financing activities increased $87.3 million in 1993
and $199.1 million in 1992. The changes in both years are attributable to
repayment/retirement of long term debt and the issuance of $239 million of long
term debt in 1991 associated with the Company's acquisition program. At December
31, 1993, aggregate debt maturities were $3.96 million in 1994, $3.66 million in
1995 and $3.75 million in 1996. (See Note 7 to the consolidated financial
statements incorporated herein by reference to the Company's Current Report on
Form 8-K dated January 20, 1994.)
The Company believes that internally generated funds will be sufficient to
fund its planned construction expenditures and to service its debt requirements.
Unless used to refinance outstanding debt, funds raised through the securities
markets, including the proceeds of the Offering, will be used principally for
expansion of the Company's business.
13
<PAGE>
BUSINESS OVERVIEW
GENERAL
The Company is a major U.S. diversified telecommunications company and the
largest independent telephone company in New York State. The Company was
incorporated in 1920 under the laws of New York State to take over and unify the
properties of a predecessor company and properties of New York Telephone Company
located in the same general territory. The Company's principal lines of business
are Telephone Operations and Telecommunication Services. In addition to the
Rochester Operating Company, Telephone Operations consists of 36 other local
exchange companies, which together with the Rochester Operating Company serve,
as of December 31, 1993, approximately 931,650 access lines in 14 states.
In 1988, the Company accelerated its strategy to diversify telephone
operations outside of New York State. Since that time, the Company has acquired
29 local telephone companies. Through effective marketing and operating
efficiencies, regional telephone operations have become a significant
contributor to profitability. The Company made the strategic decision in 1984 to
enter the long distance business, which it was free to enter because the Company
is not an RBOC and is not subject to the same restrictions imposed upon an RBOC.
In 1985, the Company entered the wireless communications business. The Company
now provides long distance voice, video and data communications services in New
York State, New England and the Mid-Atlantic and Midwest regions, wireless
communications serving a population of approximately 4.3 million in five states,
and designs, installs and maintains integrated business communications systems,
primarily in New York State.
The Company seeks to maximize the integration of its local exchange, long
distance, wireless and other services within targeted geographic locations. As a
local service provider, the Company has a direct link to its customer base and
therefore a unique opportunity to market a broad array of telecommunications
products to its customers. The Company intends to pursue continued growth
through expansion of its existing businesses, development of value-added
products and selected acquisitions.
On November 3, 1993, the Company announced that it had initiated a corporate
restructuring to become more competitive, address the needs of specific market
segments and operate more cost-effectively. The restructuring will be achieved
in part through the coordination and consolidation of redundant systems, a
reduction in the number of customer service centers, and the streamlining of
management. In order to better serve its customers, the Company also
consolidated marketing functions in its Rochester market. In addition, the
Company reduced its work force by 7 percent during 1993, and continues to
evaluate further reductions in work force levels.
On December 20, 1993, the Company announced a series of transactions
designed to optimize its resources for future growth and profitability. In New
York State, the Company and NYNEX have agreed to contribute additional cellular
properties to the Supersystem which the Company will manage, including interests
in the Binghamton and Elmira markets. In Alabama, the Company increased its
ownership interest in the South Alabama Cellular Partnership from 50.6 percent
to 69.6 percent. In addition, the Company has reached a definitive agreement to
sell the Minot Telephone Company of North Dakota, representing approximately
26,000 access lines. All of the transactions are subject to various regulatory
approvals.
On February 1, 1994, the Company entered into a non-binding letter of intent
for the purchase of a partnership ("Minnesota Cellular") which owns the business
and assets of a cellular Rural Statistical Area ("RSA") in Minnesota serving a
population of approximately 225,000. The transaction is anticipated to involve
the issuance of the Company's Common Stock and is contingent upon the
negotiation, execution and delivery of definitive documentation, approval of the
Company's Board of Directors, regulatory approvals and other conditions, and is
not expected to be completed until the second half of 1994.
The principal executive offices of the Company are located at 180 South
Clinton Avenue, Rochester, New York 14646-0700. The telephone number is (716)
777-1000.
14
<PAGE>
TELEPHONE OPERATIONS
GENERAL
Through the Company's Telephone Operations business, the Rochester Operating
Company and 36 wholly-owned local exchange companies serve, as of December 31,
1993, approximately 931,650 access lines in 14 states. The local exchange
carriers provide local service, toll access and resale, the sale, installation
and maintenance of premises equipment, and directory services. Since the
beginning of 1988, the Company has invested over $560 million in upgrading its
Telephone Operations business and over $480 million for the acquisition of
independent telephone companies. Over this period, the Company substantially
digitized its switching networks. As a result, the Company has developed an over
99 percent digital network in Rochester, making it one of the largest digital
cities in the United States. In its other operating regions, the Company has on
average over 91 percent digital capability. In addition, the Company has been
able to achieve substantial cost reductions through elimination of duplicative
services and procedures and consolidation of administrative functions, reducing
the number of employees per ten thousand access lines by over 20 percent since
1988 to 37 as of December 31, 1993.
The table below sets forth certain information with respect to access lines
as of December 31, 1993:
<TABLE>
<CAPTION>
PERCENT OF ACCESS
TELEPHONE PROPERTIES AT LINES AT
DECEMBER 31, 1993 ACCESS LINES DECEMBER 31, 1993 PERCENT DIGITAL
- ------------------------------------------------------------ ------------- ------------------- ---------------
<S> <C> <C> <C>
Rochester, NY............................................... 506,522 54.4% 99%
Other NY Companies.......................................... 82,942 8.9% 100%
------------- ------- ------
TOTAL NEW YORK............................................ 589,464 63.3% 100%
Alabama (1)................................................. 26,809 2.9% 100%
Georgia..................................................... 20,693 2.2% 100%
Illinois (1)................................................ 18,187 2.0% 96%
Indiana..................................................... 4,506 0.5% 100%
Iowa........................................................ 50,582 5.4% 54%
Michigan (1)................................................ 25,635 2.8% 89%
Minnesota................................................... 96,680 10.4% 89%
Mississippi................................................. 5,064 0.5% 100%
North Dakota................................................ 26,292 2.8% 100%
Pennsylvania................................................ 33,197 3.6% 100%
Wisconsin................................................... 34,541 3.7% 100%
------------- ------- ------
TOTAL OTHER STATES...................................... 342,186 36.7% 91%
CONSOLIDATED ACCESS LINES............................... 931,650 100.0% 96%
------------- ------- ------
------------- ------- ------
<FN>
- ------------------------
(1) These companies also have properties in one or more other states (Florida,
Iowa and Ohio).
</TABLE>
The Company operates 71 central office and remote switching centers in
Rochester, and a total of 275 central office and remote switching centers in its
other telephone territories. Of the 931,650 access lines in service on December
31, 1993, 669,512 were residence lines and 262,138 were business lines. Long
distance network service to and from points outside the telephone companies'
operating territories is provided by interconnection with the lines of
interexchange carriers. As part of the Company's ongoing strategy to provide a
greater selection of value-added products, it introduced advanced services such
as caller ID, distinctive ringing, directory-assisted call completion and voice
mail during 1992 and 1993.
15
<PAGE>
The Company is pursuing alternatives to provide broadband services to its
customers. To date, the Company has installed over 10,000 miles of fiber optic
cable in the Rochester area to provide its business customers with enhanced
capacity and product capability. With respect to residential customers, the
Company is conducting marketing trials and testing new technologies as
exemplified by a true video on demand service utilizing a hybrid
fiber-optic/coaxial cable network, expected to be marketed to selected customers
in its Rochester service area during the second quarter of 1994.
Pursuant to its integration strategy, the Company has developed a new
program known as "Visions Long Distance", whereby its local exchange companies
resell RCI's long distance services under the local companies' names. The
Company believes that customers prefer the convenience of obtaining their long
distance service through their local company and receiving a unified bill. The
Company introduced Visions Long Distance at nine local exchange companies in
1993 and intends to roll out the program to additional subsidiaries in 1994. The
results of Visions Long Distance operations are included as part of the
Telecommunication Services segment.
The Company can be considered the only provider of basic local exchange
service in the various geographic areas in which it has telephone properties,
including its largest holding in Rochester. Competition in local exchange and
toll services is being facilitated by changing technology and regulation; as
such, there are currently entities which have the ability to provide dial tone
and basic service in limited areas, including Rochester. To benefit from these
technological advances and broaden the scope and quality of its own competitive
offerings, the Company has increased its digital, fiber and switching capacity
throughout its networks and is pursuing regulatory alternatives such as the Open
Market Plan.
OPEN MARKET PLAN
On February 3, 1993, the Company filed the Open Market Plan with the NYSPSC,
which would open the Rochester local exchange market to competition. The Company
was the first telephone company in the nation to propose such a plan for full
open local competition. The Open Market Plan would enable customers to choose
their local telephone company and have a broad selection of products, services
and prices. It would also give the Company flexibility to broaden the scope and
quality of its own competitive offerings.
Under the Open Market Plan, the Company's local exchange operations would be
divided into two companies -- a wholesale provider of basic network services
("R-Net") and a retail provider of telecommunications service ("R-Com"). R-Net
and R-Com would be subsidiaries of the Company, which would become a holding
company and would continue to hold the remaining assets of the Company,
primarily investments in subsidiaries. The holding company structure would
provide financial flexibility for the Company to continue the acquisition and
diversification efforts necessary for its long-term growth.
R-Net would be a fully regulated company and would sell basic network
services such as access to the network, transport between offices and switching
to R-Com and all other local telecommunications companies. These retail
companies would then package the services for resale to local customers. The
proposed wholesale rates unbundle network services into functional elements for
purchase by the retailers. As proposed, R-Net would offer discounts based on
usage per line and term commitment and a short-term cap on residential flat rate
service.
R-Com would be a full service provider of a broad array of integrated
telecommunications services, including local, long distance, cellular and,
potentially, video and other value-added offerings. R-Com would also be able to
package the network elements purchased from R-Net and other network providers
into services such as flat rate service, measured rate service, Centrex and
ISDN. The Company intends that R-Com would eventually offer its products and
services outside of its existing markets.
The Open Market Plan must be approved by NYSPSC, which approval is not
expected until the second half of 1994. If the Open Market Plan is approved,
retail providers of local telephone services may be selected by consumers
through a ballot process. The Company will aggressively pursue approval of the
Open Market Plan but cannot predict whether or when it will be approved by the
NYSPSC, and, if so, in what form.
16
<PAGE>
TELECOMMUNICATION SERVICES
GENERAL
Telecommunication Services is comprised of network systems and services,
which includes long distance services and a customer premises equipment
business, and Cellular Operations, which provides wireless communications. The
Telecommunication Services contribution to the Company's total revenues has
increased, accounting for 34 percent of total revenues for the year ended
December 31, 1993. The Company seeks to expand through increasing its existing
commercial and residential customer base, developing new products, and
acquisitions.
LONG DISTANCE
The Company provides long distance services through RCI. RCI routes long
distance traffic over its 100 percent digital state-of-the-art network. The
Company owns and operates seven switching sites, located in Rochester, New York
City, Washington, D.C., Philadelphia, Cleveland, Burlington, Vermont and
Manchester, New Hampshire, and is currently installing a switch in Chicago.
RCI's switched services include basic long distance or measured toll service,
accessible via "1+ dialing", 800 services, a variety of long distance products
targeted at specific consumer and business segments, and value-added services
such as travel cards, prepaid cards and information services. In addition, RCI
provides flexible billing services such as multi-location billing, customized
accounting codes and electronic billing features.
RCI serves primarily small-to medium-sized businesses and residential
customers in New York, New England and the Mid-Atlantic and Midwest regions.The
majority of RCI's revenues are derived from small-to medium-sized business
customers, whose calling volume consists primarily of calls made during regular
business hours.
Within the past year RCI has implemented marketing and service development
efforts intended to expand its share of the residential long distance market.
RCI now offers residential customers low, simplified rates, direct dialing for
nationwide and international calls, 24-hour customer service, and unified
billing from the local exchange carrier. As part of its residential strategy,
RCI has significantly increased residential usage through its "Visions Long
Distance" program (as described in "Telephone Operations-General") whereby RCI's
long distance services are marketed through Company-owned as well as
nonaffiliated local exchange service providers. Through the Visions Long
Distance program, the Company has achieved penetration in excess of 50 percent
in initial markets as a result of customer preference for unified billing and
local exchange company customer service. Because residential long distance
traffic peaks in the evenings, on weekends and on holidays, when commercial
traffic tends to be lowest, expanding residential business increases revenues
with virtually no need to increase existing switching and transmission
facilities.
RCI focuses its marketing efforts in five key regions: Rochester, New York
State, New England and the Mid-Atlantic and Midwest regions. In these regions,
RCI markets its products through its affiliated local exchange carriers, a
direct sales force, direct marketing campaigns and agents. RCI has introduced a
number of programs designed to attract new long distance customers. The "Budget
Call" feature enables any telephone user to dial an access code and complete a
call through RCI's long distance network, with the cost of the call to be billed
on the customer's local telephone company statement. The rates for such calls
are typically 10 percent lower than the rates charged by the major long distance
carriers. Budget Call will be available in six to ten states in 1994.
RCI completed two acquisitions in 1993. In June 1993, the Company completed
the purchase of Budget Call Long Distance Inc. ("Budget Call"), a long distance
reseller in Pennsylvania, and began to utilize the Budget Call program,
described above, throughout its long distance markets. On September 30, 1993,
the Company completed the purchase of Mid Atlantic Telecom, Inc. ("Mid
Atlantic"), a
17
<PAGE>
facilities-based interexchange carrier headquartered in Washington D.C. with
operations in New England and the Mid-Atlantic region. Mid Atlantic has more
than tripled its revenue in the past five years, to $21 million for the twelve
months ended September 30, 1992. Both purchases served to implement RCI's
strategy to expand its markets and to broaden product offerings in existing
territories.
The long distance industry is dominated on a volume basis by the nation's
three largest long distance providers, AT&T, MCI and Sprint, which generate an
aggregate of approximately 86 percent of the nation's long distance revenue of
approximately $59 billion. In each of its markets RCI competes with AT&T, MCI
and Sprint, as well as other national and regional long distance companies, for
intercity communications transmission services such as 1+, dedicated access, 800
service and private line service. The primary bases for competition in the long
distance business are pricing, product offering and service, including billing
and customer information.
WIRELESS COMMUNICATIONS
Since 1985, the Company has been providing cellular and paging service in
the Rochester Metropolitan Statistical Area ("MSA"), which has a population of
approximately one million, in a partnership with ALLTEL Corporation in which
Cellular Operations has an 85 percent interest. Cellular Operations currently
operates and maintains 25 cell sites in the Rochester MSA. In addition, in April
1993 Cellular Operations acquired a 70 percent interest in a cellular system
serving the Utica-Rome MSA, and also has investments in wireless properties
elsewhere in New York and in Alabama, Georgia, Illinois and Iowa. Cellular
Operations is also a member of the MobiLink marketing alliance, a nationwide
consortium of wireless operators. The objective of Cellular Operations is to
invest in cellular properties adjacent to existing Company-owned properties or
when a controlling interest can be obtained.
Cellular Operations has been profitable since its first full year of service
in the Rochester market, its largest market, despite intense price competition
during the buildout of its network. As prices per minute have approximately
doubled from their lowest level in 1989, Cellular Operations was able to
increase margins by maintaining its efficient cost structure.
On March 12, 1993, the Company and NYNEX signed a definitive agreement to
launch the Supersystem in upstate New York, which is scheduled to begin
operations in early 1994. The Company will serve as the initial operating
partner of the 50/50 joint venture. The Company will contribute its cellular
properties in Rochester and Utica-Rome and its Rochester area paging operations,
and NYNEX will contribute its cellular properties in Buffalo, Syracuse,
Utica-Rome and New York State RSA No. 1. The parties propose to amend the
definitive agreement to include the Binghamton and Elmira MSAs. By combining
marketing and service efforts and integrating networks, Cellular Operations and
NYNEX will be able to provide seamless cellular service to a population of more
than 4.5 million in upstate New York. The Supersystem has been approved by the
NYSPSC and is subject to approval of the Federal Communications Commission (the
"FCC"), and the receipt of waivers by NYNEX from the U.S. District Court for the
District of Columbia.
Cellular systems compete principally on the basis of network quality,
customer service, price and coverage area. The Company's chief competition in
each market is from the other cellular licensee in such market. The Company
believes that its technological expertise, emphasis on customer service and
development of new products and services make it a strong competitor.
Several recent FCC initiatives indicate that the Company is likely to face
greater wireless competition in the future. The FCC has licensed specialized
mobile radio ("SMR") system operators to construct digital mobile communications
systems on existing SMR frequencies in many metropolitan areas throughout the
United States. Also, in September 1993, the FCC announced its decision to
allocate radio frequency spectrum for personal communications services ("PCS").
Pursuant to the FCC's decision, seven new licenses will be granted: two 30 MHz
blocks, one 20 MHz block and four 10 MHz blocks. (By comparison, the two
cellular carriers in each market currently have 25 MHz of spectrum each.) The
Company has committed resources to evaluating the expansion of wireless
communications to include PCS offerings.
18
<PAGE>
The Company owned the following cellular properties as of December 31, 1993:
<TABLE>
<CAPTION>
1993 CURRENT PENDING PENDING
ESTIMATED OWNERSHIP ADJUSTED OWNERSHIP ADJUSTED
MARKET POPULATION INTEREST POPULATION INTEREST POPULATION
- ------------------------------------------------ ----------- --------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
NEW YORK
Rochester*.................................... 1,012,000 85.0% 860,200 42.5% 430,100
Orange-Poughkeepsie........................... 600,000 15.0% 90,000 15.0% 90,000
Binghamton**.................................. 305,000 24.0% 73,200 32.5% 99,125
Utica-Rome*................................... 313,000 70.0% 219,100 50.0% 156,500
RSA #2**...................................... 231,000 12.5% 28,875 12.5% 28,875
RSA #3*....................................... 477,000 22.5% 107,325 22.5% 107,325
Buffalo**..................................... 1,180,000 0.0% 0 50.0% 590,000
Syracuse**.................................... 665,000 0.0% 0 27.5% 182,875
Elmira**...................................... 96,000 0.0% 0 50.0% 48,000
RSA #1**...................................... 264,000 0.0% 0 20.0% 52,800
ALABAMA
RSA #4........................................ 134,000 69.6% 93,264 69.6% 93,264
RSA #6........................................ 118,000 69.6% 82,128 69.6% 82,128
GEORGIA
RSA #3........................................ 202,000 25.0% 50,500 25.0% 50,500
ILLINOIS
RSA #2........................................ 250,000 6.7% 16,750 6.7% 16,750
RSA #3........................................ 199,000 6.4% 12,736 6.4% 12,736
IOWA
Des Moines.................................... 411,000 4.0% 16,440 4.0% 16,440
TOTAL........................................... 6,457,000 1,650,518 2,057,418
RTC Total....................................... 4,252,000 1,650,518 2,057,418
Total Managed Including Supersystem............. 4,312,000 1,288,700 1,695,600
<FN>
- ------------------------------
* Company managed systems.
** Additional Company managed systems pending completion of the Supersystem in
1994.
</TABLE>
OTHER
Rotelcom Network Systems ("Rotelcom"), which was established in 1978,
markets and services a wide range of telecommunications and data equipment for
mid-to large-size business customers, and competes directly with other
interconnect vendors that offer for sale telephone systems to businesses and
other enterprises. Rotelcom's product line includes: private branch exchanges
("PBXs") from Siemens/ROLM and Northern Telecom; data communications equipment
from leading manufacturers including Dowty and Newbridge; and videoconferencing
equipment from PictureTel. The majority of Rotelcom's customers are in New York
State. Rotelcom is also a partner in Anixter-Rotelcom, a joint venture
telecommunications supply venture with Anixter Bros., Inc.
REGULATION
The Company's telephone operating companies are subject to the jurisdiction
of the various state regulatory authorities in each of the respective states in
which they operate, with respect to intrastate rates, facilities, services,
reports and issuance of securities and other matters.
The Rochester Operating Company's local exchange operations in Rochester
over the last few years have generally functioned under incentive regulation;
that is, rate payers share in earnings above a certain percentage, in the form
of rebates. While such plans generally lock in rates at specified levels
(subject to annual adjustment), there is some relief if the NYSPSC changes its
rules or if other mandatory changes affect earnings. Under a September 1993
proposal currently being considered by the NYSPSC the Rochester Operating
Company would defer 50 percent of its earnings beginning January 1, 1994 to the
extent such earnings are above the allowed rate of return on equity of 10.9
percent, subject to a number of adjustments. The disposition of any earnings in
excess of the threshold will be determined in the Open Market Plan proceeding.
If the Company earns less than the allowed rate of return in 1994, it would be
permitted to recover certain cost increases up to the level of the allowed
return.
19
<PAGE>
The other New York local exchange companies and the Company's telephone
companies outside of New York State predominantly operate under rate-of-return
regulation, although some jurisdictions have moved or may move to incentive
regulation.
The Company and the NYSPSC entered into a financing agreement, or
Stipulation, in 1986 to allow the Company flexibility to pursue acquisitions and
to fulfill financing requirements of existing subsidiaries. The Stipulation was
amended in 1988 to accommodate additional acquisitions and again in 1991 in
conjunction with the acquisition of telephone properties from Centel. Portions
of the 1991 amendment to the agreement expired on June 17, 1993. On April 27,
1993, the Company petitioned the NYSPSC to extend the June 17 expiration date to
December 31, 1993. On August 4, 1993 the NYSPSC granted the extension. Starting
in 1994, the Company will look to the Open Market Plan and, in its absence,
case-by-case applications to the NYSPSC to provide the needed financing and
acquisition flexibility.
The NYSPSC issued an order on July 6, 1993 which imposed a royalty on the
Company in the amount of 2 percent of the total capitalization of the Company's
unregulated operations, on the theory that the Company's ratepayers should
benefit from competitive advantages accrued by the non-regulated operations' use
of the name and reputation of the Company and in order to make up for possible
inaccuracies in the reimbursement of regulated operations by unregulated
affiliates. Based upon an initial interpretation of the order, the Company
estimates that its effect is in the range of $2.0 million per year. The Company
disputes the justification for the royalty proposal which would be treated as an
offset to the Rochester Operating Company's regulated revenue requirement from
regulated intrastate telephone operations. The Company intends to vigorously
defend against the royalty imposition and has filed an appeal with the New York
State Supreme Court. The Company cannot predict the outcome of the appeal.
Effective May 25, 1984, the FCC approved an access charge plan which changed
the way local telephone operating companies are compensated for their interstate
toll investment and related expenses. Access charges are collected from access
line customers through monthly end-user subscriber line charges and from all
long distance carriers through usage based rates. Effective July 1, 1991, the
Company elected to become subject to price cap regulation by the FCC with
respect to its interstate access revenue. This allowed the Company increased
pricing flexibility among interstate services while tying overall price level
changes to inflation and productivity constraints.
For additional information on regulation matters, see "Business --
Regulation" in the Company's Annual Report on Form 10-K, as amended, for the
year ended December 31, 1992, incorporated by reference herein.
SELLING STOCKHOLDER
Of the shares of Common Stock being offered hereby, 2,885,000 shares are
being sold by C FON Corporation (the "Selling Stockholder"), a direct wholly
owned subsidiary of Centel which is, in turn, a direct wholly owned subsidiary
of Sprint Corporation. Prior to the Offering, the Selling Stockholder is the
owner of record of 2,885,000 shares, or 8.5 percent, of the Company's Common
Stock, all of which is being sold in the Offering. The Selling Stockholder
received the Shares being sold by it from Centel, which received such Shares in
1991 in exchange for certain telephone properties in Minnesota and Iowa.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, $1.00 par value, and 850,000 shares of cumulative preferred
stock, $100 par value (the "Cumulative Preferred Stock") issuable in series.
Common Stock of the same class as the Common Stock being offered hereby is
registered pursuant to Section 12(b) of the Exchange Act.
The following summary description of capital stock is not intended to be
complete and is qualified by reference to the provisions of the Company's
Restated Certificate of Incorporation, as amended, (the "Certificate of
Incorporation") and By-laws and by New York law.
20
<PAGE>
As of December 31, 1993 there were 33,968,119 shares of Common Stock and
200,000 shares of Cumulative Preferred Stock, constituting three series (the
5.00% Series, 5.65% Series and 4.60% Series), outstanding. Dividends may be
declared and paid on the Common Stock out of legally available surplus. However,
no dividends may be paid on the Common Stock until accrued and unpaid dividends
on the Company's outstanding series of Cumulative Preferred Stock have been paid
or declared and funds set aside for their payment. On any liquidation of the
Company, the holders of the Cumulative Preferred Stock are entitled to $100 per
share plus accumulated dividends. After satisfaction of outstanding liabilities
and of the preferential liquidation rights of the Cumulative Preferred Stock,
the holders of the Common Stock are entitled to share ratably in the
distribution of all remaining assets.
The holders of the Company's Common Stock have exclusive voting rights of
one vote for each share held, subject to the voting rights of the outstanding
Cumulative Preferred Stock described below. The holders of the Company's Common
Stock are not entitled to cumulative voting in the election of directors. When
four or more quarterly dividends on the Cumulative Preferred Stock are in
arrears, and until such arrearage at full dividend rates have been paid or
declared and set apart for payment, the holders of the Cumulative Preferred
Stock as a class have the right to elect a majority of the Board of Directors.
In such event, the holders of the Company's Common Stock have the right to elect
only the remaining directors. In addition, the affirmative vote of various
proportions of the Cumulative Preferred Stock is required to (1) increase the
authorized amount of the Cumulative Preferred Stock; (2) create shares having
preferential rights equal or superior to the Cumulative Preferred Stock; (3)
issue any shares of Cumulative Preferred Stock or any shares having preferential
rights equal or superior to the Cumulative Preferred Stock without compliance
with certain requirements as to earnings; and (4) create, alter or abolish any
voting rights or preferential rights or redemption provisions affecting the
Cumulative Preferred Stock adversely.
Holders of Common Stock have no pre-emptive rights, subscription rights,
conversion rights or redemption rights. All shares of Common Stock presently
outstanding are fully paid and non-assessable.
The Company's Common Stock is listed on the NYSE under the Symbol "RTC". The
transfer agent and registrar for the Common Stock is First Chicago Trust Company
of New York.
21
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
among the Underwriters named below (the "Underwriters"), the Company and the
Selling Stockholder (the "Underwriting Agreement"), the Company and the Selling
Stockholder have agreed to sell to each of the Underwriters, and each of the
Underwriters, for whom Salomon Brothers Inc ("Salomon"), Lehman Brothers Inc.
and Smith Barney Shearson Inc. are acting as representatives (the
"Representatives"), has severally agreed to purchase from the Company and the
Selling Stockholder, the respective number of shares of Common Stock set forth
opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- ----------------------------------------------------------------------------------------------------- -----------
<S> <C>
Salomon Brothers Inc.................................................................................
Lehman Brothers Inc..................................................................................
Smith Barney Shearson Inc. ..........................................................................
-----------
Total............................................................................................ 5,000,000
-----------
-----------
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all of the
above-listed shares of Common Stock offered hereby if any such shares are
purchased. In the event of a default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, purchase commitments of the
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated. The Company and the Selling Stockholder have been advised by the
Representatives that the several Underwriters propose initially to offer such
shares to the public at the public offering price set forth on the cover page of
this Prospectus, and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share. After the initial
offering, the public offering price and such concessions may be changed.
The Company has agreed not to offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering of, any other
shares of Common Stock, or securities convertible into or exchangeable for
shares of Common Stock, except the shares of Common Stock offered in the
Offering for a period of 90 days following the commencement of the Offering
without the prior written consent of Salomon; PROVIDED, HOWEVER, that the
Company may issue stock options and may issue and sell Common Stock pursuant to
any director or employee stock option plan, stock ownership plan, or dividend
reinvestment plan of the Company in effect at the time of, or as proposed to be
in effect following, commencement of the Offering, the Company may issue Common
Stock issuable upon the conversion of securities or the exercise of warrants
outstanding at the time of commencement of the Offering, the Company may
announce the issuance of or issue Common Stock as payment for the acquisitions
of Mid Atlantic and Minnesota Cellular, and the Company may issue Common Stock
pursuant to the 2-for-1 stock split approved by the Company's Board of Directors
on November 15,
22
<PAGE>
1993; and PROVIDED FURTHER, that the Company, with the consent of Salomon, may
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any other shares of Common Stock or any
securities convertible into, or exchangeable for, shares of Common Stock in
connection with a merger, acquisition or other similar transaction by the
Company, in which instance the consent of Salomon shall not be unreasonably
withheld.
The Selling Stockholder has agreed not to offer, sell or contract to sell,
or otherwise dispose of, directly or indirectly, or announce the offering of,
any other shares of Common Stock, or securities convertible into or exchangeable
for shares of Common Stock, except the shares of Common Stock offered in the
Offering for a period of 120 days following the commencement of the Offering
without the prior written consent of the Representatives.
The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to 750,000
shares of Common Stock from the Company at the same price per share as the
initial 5,000,000 shares of Common Stock to be purchased by the several
Underwriters. The Underwriters may exercise such option only to cover
over-allotments in the sale of the shares they have agreed to purchase. To the
extent that the Underwriters exercise such option, each of the Underwriters will
have a firm commitment, subject to certain conditions, to purchase the same
proportion of the option shares as the number of shares of Common Stock to be
purchased and offered by such Underwriter in the above table bears to the total
number of shares of Common Stock initially offered by the Underwriters.
The Underwriting Agreement provides that the Company and the Selling
Stockholder will indemnify the Underwriters against certain liabilities and
expenses, including liabilities under the Securities Act, or contribute to
payments that the Underwriters may be required to make in respect thereof.
LEGAL MATTERS
The validity of the shares of Common Stock will be passed upon for the
Company by Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York. Certain legal matters relating to the shares
of Common Stock offered hereby will be passed upon for the Underwriters by
Cleary, Gottlieb, Steen & Hamilton, New York, New York.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1993, 1992 and 1991 and for each of the three years in the period ended December
31, 1993 incorporated by reference to the Company's Current Report on Form 8-K
dated January 20, 1994 in this Prospectus have been so incorporated in reliance
upon the report of Price Waterhouse, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
23
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR THE UNDERWRITERS. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 3
Incorporation of Certain Information by
Reference..................................... 3
Prospectus Summary............................. 4
Use of Proceeds................................ 7
Price Range of Common Stock and Dividend
Policy........................................ 8
Capitalization................................. 9
Financial Overview............................. 10
Business Overview.............................. 14
Selling Stockholder............................ 20
Description of Capital Stock................... 20
Underwriting................................... 22
Legal Matters.................................. 23
Experts........................................ 23
</TABLE>
5,000,000 SHARES
ROCHESTER TELEPHONE
CORPORATION
COMMON STOCK
($1.00 PAR VALUE)
[LOGO]
SALOMON BROTHERS INC
LEHMAN BROTHERS
SMITH BARNEY SHEARSON INC.
PROSPECTUS
DATED FEBRUARY , 1994
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate (except for the Registration fee) of the fees
and expenses payable by the Company in connection with the Offering:
<TABLE>
<S> <C>
Registration fee................................................... $ 46,557
Blue sky fees and expenses......................................... 12,000
Printing and engraving expenses.................................... 60,000
Legal fees and expenses............................................ 130,000
NYSE listing fees.................................................. 35,800
Accounting fees and expenses....................................... 20,000
Transfer Agent and Registrar's fees and expenses................... 1,500
Miscellaneous...................................................... 75,143
---------
Total............................................................ 381,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Business Corporation Law of the State of New York ("BCL") provides that
if a derivative action is brought against a director or officer, the Company may
indemnify him or her against amounts paid in settlement and reasonable expenses,
including attorneys' fees incurred by him or her in connection with the defense
or settlement of such action, if such director or officer acted in good faith
for a purpose which he or she reasonably believed to be in the best interests of
the Company, except that no indemnification shall be made without court approval
in respect of a threatened action, or a pending action settled or otherwise
disposed of, or in respect of any matter as to which such director or officer
has been found liable to the Company. In a nonderivative action or threatened
action, the BCL provides that the Company may indemnify a director or officer
against judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees incurred by him or her in defending such action if
such director or officer acted in good faith for a purpose which he or she
reasonably believed to be in the best interests of the Company.
Under the BCL, a director or officer who is successful, either in a
derivative or nonderivative action, is entitled to indemnification as outlined
above. Under any other circumstances, such director or officer may be
indemnified only if certain conditions specified in the BCL are met. The
indemnification provisions of the BCL are not exclusive of any other rights to
which a director or officer seeking indemnification may be entitled pursuant to
the provisions of the certificate of incorporation or the bylaws of a
corporation or, when authorized by such certificate of incorporation or bylaws,
pursuant to a shareholders' resolution, a directors' resolution or an agreement
providing for such indemnification.
The above is a general summary of certain provisions of the BCL and is
subject, in all cases, to the specific and detailed provisions of Sections
721-725 of the BCL.
Article II, Section 12, of the Company's Bylaws contains provisions
authorizing indemnification by the Company of directors and officers against
certain liabilities and expenses which they may incur as directors and officers
of the Company or of certain other entities.
Section 726 of the BCL also contains provisions authorizing the Company to
obtain insurance on behalf of any such director and officer against liabilities,
whether or not the Company would have the power to indemnify against such
liabilities. The Company maintains Executive Liability and Defense coverage
under which the directors and officers of the Company are insured, subject to
the limits of the policy, against certain losses, as defined in the policy,
arising from claims made against such directors and officers by reason of any
wrongful acts as defined in the policy, in their respective capacities as
directors or officers.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<C> <C> <S>
1.1 -- Form of Underwriting Agreement (filed herewith).
1.2 -- Form of Sprint Corporation Letter (filed herewith).
1.3 -- Form of Centel Corporation Letter (filed herewith).
3.1 -- Restated Certificate of Incorporation with all Amendments (incorporated by
reference to Exhibit 3 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1980).
3.2 -- Certificate of Amendment to Certificate of Incorporation (incorporated by
reference to Exhibit 3-2 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1984).
3.3 -- Certificate of Change to Certificate of Incorporation (incorporated by reference
to Exhibit 3-4 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1988).
3.4 -- Certificate of Amendment to Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3-5 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1990).
3.5 -- By-laws (incorporated by reference to Exhibit 3-3 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992).
5.1 -- Opinion of Simpson Thacher & Bartlett regarding the legality of the shares of
Common Stock being registered (filed previously).
23.1 -- Consent of Price Waterhouse (filed herewith).
23.2 -- Consent of Simpson Thacher & Bartlett (filed previously).
24.1 -- Power of Attorney (filed previously).
</TABLE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liability (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted against
the registrant by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
The registrant hereby undertakes:
1. For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497
(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
2. For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
it has reasonable grounds to believe that it meets all requirements for filing
on Form S-3 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Rochester,
State of New York, on February 4, 1994.
ROCHESTER TELEPHONE CORPORATION
By /s/ LOUIS L. MASSARO
------------------------------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ----------------------------------- --------------------
<C> <S> <C>
*
------------------------------------------- Chairman, President and Chief February 4, 1994
Ronald L. Bittner Executive Officer
Corporate Vice President-
/s/ LOUIS L. MASSARO Finance and Treasurer
------------------------------------------- (Principal Financial and February 4, 1994
Louis L. Massaro Accounting Officer)
*
------------------------------------------- Director February 4, 1994
Patricia C. Barron
*
------------------------------------------- Director February 4, 1994
John R. Block
*
------------------------------------------- Director February 4, 1994
Harlan D. Calkins
*
------------------------------------------- Director February 4, 1994
Brenda E. Edgerton
*
------------------------------------------- Director February 4, 1994
Jairo A. Estrada
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S> <C>
*
------------------------------------------- Director February 4, 1994
Daniel E. Gill
*
------------------------------------------- Director February 4, 1994
Alan C. Hasselwander
*
------------------------------------------- Director February 4, 1994
Wolcott J. Humphrey, Jr.
*
------------------------------------------- Director February 4, 1994
Douglas H. McCorkindale
*
------------------------------------------- Director February 4, 1994
Richard P. Miller, Jr.
*
------------------------------------------- Director February 4, 1994
G. Dennis O'Brien
*
------------------------------------------- Director February 4, 1994
Leo J. Thomas, Ph.D.
*
------------------------------------------- Director February 4, 1994
Michael T. Tomaino
* By: /s/ LOUIS L. MASSARO
------------------------------------------- February 4, 1994
Attorney-in-fact
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS PAGE
- ----------- ---------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement (filed herewith).
1.2 -- Form of Sprint Corporation Letter (filed herewith).
1.3 -- Form of Centel Corporation Letter (filed herewith).
3.1 -- Restated Certificate of Incorporation with all Amendments (incorporated by reference to
Exhibit 3 to the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1980).
3.2 -- Certificate of Amendment to Certificate of Incorporation (incorporated by reference to
Exhibit 3-2 to the Company's Annual Report on Form 10-K for the year ended December 31,
1984).
3.3 -- Certificate of Change to Certificate of Incorporation (incorporated by reference to
Exhibit 3-4 to the Company's Annual Report on Form 10-K for the year ended December 31,
1988).
3.4 -- Certificate of Amendment to Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3-5 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1990).
3.5 -- By-laws (incorporated by reference to Exhibit 3-3 to the Company's Annual Report on Form
10-K for the year ended December 31, 1992).
5.1 -- Opinion of Simpson Thacher & Bartlett regarding the legality of the shares of Common Stock
being registered (filed previously).
23.1 -- Consent of Price Waterhouse (filed herewith).
23.2 -- Consent of Simpson Thacher & Bartlett (filed previously).
24.1 -- Power of Attorney (filed previously).
</TABLE>
<PAGE>
DRAFT 2/2/94
Rochester Telephone Corporation
5,000,000 Shares*
Common Stock
($1.00 par value)
Underwriting Agreement
New York, New York
February ____, 1994
Salomon Brothers Inc
Lehman Brothers Inc.
Smith Barney Shearson Inc.
As Representatives of the several Underwriters,
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Rochester Telephone Corporation, a New York corporation (the
"Company"), proposes to sell to the underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, 2,115,000 shares of Common Stock, $1.00 par value, of the
Company ("Common Stock"), which shares shall include 56,413 shares of treasury
stock of the Company, and C FON Corporation, a Delaware corporation with its
sole place of business in Wilmington, Delaware (the "Selling Stockholder"),
proposes to sell to the Underwriters 2,885,000 shares of Common Stock (said
shares to be issued and sold by the Company and shares to be sold by the Selling
Stockholder collectively being hereinafter called the "Underwritten
Securities"). The Company also proposes to grant to the Underwriters an option
to purchase up to 750,000 additional shares of Common Stock (the "Option
Securities"; the Option Securities, together with the Underwritten Securities,
being hereinafter called the "Securities").
1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to, and
- ----------------
* Plus an option to purchase from Rochester Telephone Corporation
up to 750,000 additional shares to cover over-allotments.
<PAGE>
agrees with, each Underwriter as set forth below in this Section 1. Certain
terms used in this Section 1 are defined in paragraph (iii) hereof.
(i) The Company meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"), and has filed with
the Securities and Exchange Commission (the "Commission") two
registration statements (file numbers 33-40824 and 33-51601) on Form
S-3, including a related preliminary prospectus, for the registration
under the Act of the offering and sale of the Securities. The Company
may have filed one or more amendments thereto, including the related
preliminary prospectus, each of which has previously been furnished to
you. The Company will next file with the Commission either: (A) prior
to effectiveness of the registration statement file number 33-51601, a
further amendment thereto (including the form of final prospectus) or
(B) a final prospectus in accordance with Rules 430A and 424(b)(1) or
(4). In the case of clause (B), the Company shall include in such
registration statements, as amended at the Effective Date, all
information (other than Rule 430A Information) required by the Act and
the rules thereunder to be included in the Prospectus with respect to
the Securities and the offering thereof. As filed, such amendment and
form of final prospectus, or such final prospectus, shall contain all
Rule 430A Information, together with all other such required
information, with respect to the Securities and the offering thereof
and, except to the extent the Representatives shall agree in writing to
a modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
(ii) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b), on the Closing Date and on any settlement date pursuant to
Section 3 hereof, the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the
Act and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the respective rules thereunder; on the Effective Date, the
Registration Statement did not or will not
2
<PAGE>
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and on the Effective Date,
the Prospectus, if not filed pursuant to Rule 424(b), did not or will
not, and on the date of any filing pursuant to Rule 424(b), on the
Closing Date and on any settlement date pursuant to Section 3 hereof,
the Prospectus (together with any supplement thereto) will not, include
any untrue statement of a material fact or omit 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; PROVIDED,
HOWEVER, that the Company makes no representations or warranties as to
the information contained in or omitted from the Registration Statement
or the Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the Representatives, or by or on
behalf of the Selling Stockholder, Centel Corporation ("Centel") or
Sprint Corporation ("Sprint"), in each case specifically for inclusion
in the Registration Statement or the Prospectus (or any supplement
thereto).
(iii) The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term the "Effective Date" shall mean
each date that the registration statement file number 33-51601 and any
post-effective amendment or amendments thereto became or become
effective. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in
paragraph (i) above and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A
Information. "Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statements referred
to in paragraph (i) above, including incorporated documents, exhibits
and financial statements, as amended at the Execution Time (or, if
registration statement file number 33-51601 is not effective at the
Execution Time, in the form in which it shall become effective) and, in
the event any post-effective amendment thereto becomes effective prior
3
<PAGE>
to the Closing Date (as hereinafter defined), shall also mean such
registration statements as so amended. Such term shall include any Rule
430A Information deemed to be included therein at the Effective Date as
provided by Rule 430A. "Rule 424", "Rule 430A" and "Regulation S-K"
refer to such rules or regulation under the Act. "Rule 430A
Information" means information with respect to the Securities and the
offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A. Any reference herein
to the Registration Statement, a 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 Exchange Act.
(b) The Selling Stockholder represents and warrants to, and agrees
with, each Underwriter that:
(i) The Selling Stockholder is the lawful owner of the Securities
to be sold by the Selling Stockholder hereunder and upon sale and
delivery of, and payment for, such Securities, as provided herein, the
Selling Stockholder will convey good and marketable title to such
Securities, free and clear of all liens, encumbrances, equities and
claims whatsoever.
(ii) The Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in this
Section 1 are not true and correct, is familiar with the Registration
Statement and has no knowledge of any material fact, condition or
information not disclosed in the Prospectus or any supplement thereto
which has adversely affected or may adversely affect the business of the
Company or any of its subsidiaries; and the sale of Securities by the
Selling Stockholder pursuant hereto is not prompted by any information
concerning the Company or any of its subsidiaries which is not set forth
in the Prospectus or any supplement thereto.
(iii) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or which has constituted
or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities and has not effected any sales of shares of Common Stock
which, if effected by the issuer, would be required to be disclosed in
response to
4
<PAGE>
Item 701 of Regulation S-K.
(iv) No consent, approval, authorization or order of any court or
governmental agency or body is required with respect to the Selling
Stockholder for the consummation by the Selling Stockholder of the
transactions contemplated herein, except such as may have been obtained
under the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters and such other approvals as have been
obtained.
(v) Neither the sale of the Securities being sold by such Selling
Stockholder nor the consummation of any other of the transactions herein
contemplated by such Selling Stockholder or the fulfillment of the terms
hereof by such Selling Stockholder will conflict with, result in a
breach or violation of, or constitute a default under any law or the
charter or by-laws of the Selling Stockholder, or the terms of any
indenture or other agreement or instrument to which the Selling
Stockholder or any of its subsidiaries is a party or bound, or any
judgment, order or decree applicable to the Selling Stockholder, or any
of its subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Selling Stockholder or any of its subsidiaries. In respect of any
statements in or omissions from the Registration Statement or the
Prospectus or any supplement thereto made in reliance upon and in
conformity with information furnished in writing to the Company by the
Selling Stockholder specifically for use in connection with the
preparation thereof, the Selling Stockholder hereby makes the same
representations and warranties to each Underwriter as the Company makes
to such Underwriter under paragraph (a)(ii) of this Section.
2. PURCHASE AND SALE. (a) Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company and the Selling Stockholder agree, severally and not jointly, to sell to
each Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Company and the Selling Stockholder, at a purchase price of
$[ ] per share, the amount of the Underwritten Securities set forth opposite
such Underwriter's name in Schedule I hereto. The number of Underwritten
Securities to be purchased by each Underwriter from each of the Company and the
Selling Stockholder shall
5
<PAGE>
be as nearly as practicable in the same proportion to the total amount of
Underwritten Securities to be purchased by such Underwriter as the total number
of Underwritten Securities to be sold by each of the Company and the Selling
Stockholder bears to the total number of Underwritten Securities to be sold
pursuant hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
750,000 shares of the Option Securities at the same purchase price per share as
the Underwriters shall have agreed to pay for the Underwritten Securities. Said
option may be exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriters. Said option may be exercised in
whole or in part at any time (but not more than once) on or before the 30th day
after the date of the Prospectus upon written or telegraphic notice by the
Representatives to the Company setting forth the number of shares of the Option
Securities as to which the several Underwriters are exercising the option and
the settlement date. Delivery of certificates for the shares of Option
Securities by the Company, and payment therefor to the Company, shall be made as
provided in Section 3 hereof. The number of shares of Option Securities to be
purchased by each Underwriter shall be the same percentage of the total number
of shares of Option Securities to be purchased by the several Underwriters as
such Underwriter is purchasing of the Underwritten Securities, subject to such
adjustments as the Representatives in their absolute discretion shall make to
eliminate any fractional shares.
3. DELIVERY AND PAYMENT. Delivery of and payment for the
Underwritten Securities (and the Option Securities (if the option provided for
in Section 2(b) hereof shall have been exercised on or before the third
business day prior to the Closing Date)) shall be made at 10:00 AM, New York
City time, on February ____, 1994, or such later date (not later than
February ____, 1994) as the Representatives shall designate, which date and time
may be postponed by agreement among the Representatives, the Company and the
Selling Stockholder or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being herein called the "Closing Date").
Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the respective aggregate purchase
prices of the Securities being sold by the Company and the Selling
6
<PAGE>
Stockholder to or upon the order of the Company and the Selling Stockholder by
certified or official bank check or checks drawn on or by a New York Clearing
House bank or by intrabank wire or wires at a New York Clearing House bank, in
each case payable in next-day funds. Delivery of the Underwritten
Securities and the Option Securities shall be made at such location as the
Representatives shall reasonably designate at least one business day in advance
of the Closing Date and payment for the Securities shall be made at the office
of Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New
York, 10006. Certificates for the Securities shall be registered in such names
and in such denominations as the Representatives may request not less than three
full business days in advance of the Closing Date.
The Company and the Selling Stockholder agree to have the
Securities available for inspection, checking and packaging by the
Representatives in New York, New York, not later than 1:00 PM on the business
day prior to the Closing Date.
The Selling Stockholder will pay all applicable state transfer
taxes, if any, involved in the transfer to the several Underwriters of the
Securities to be purchased by them from the Selling Stockholder and the
respective Underwriters will pay any additional stock transfer taxes involved in
further transfers.
If the option provided for in Section 2(b) hereof is exercised
after the third business day prior to the Closing Date, the Company will deliver
(at the expense of the Company) to the Representatives, at the office of Cleary,
Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York, on the date
specified by the Representatives (which shall be within three business days
after exercise of said option), certificates for the Option Securities in such
names and denominations as the Representatives shall have requested against
payment of the purchase price thereof to or upon the order of the Company by
certified or official bank check or checks drawn on or by a New York Clearing
House bank or by intrabank wire or wires at a New York Clearing House bank, in
each case payable in next-day funds. If settlement for the Option Securities
occurs after the
7
<PAGE>
Closing Date, the Company will deliver to the Representatives on the settlement
date for the Option Securities, and the obligation of the Underwriters to
purchase the Option Securities shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of such date the
opinions, certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. AGREEMENTS. (a) The Company agrees with the several
Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement to the Prospectus unless the
Company has furnished you a copy for your review prior to filing and
will not file any such proposed amendment or supplement to which you
reasonably object. Subject to the foregoing sentence, if the
Registration Statement has become or becomes effective pursuant to Rule
430A, or filing of the Prospectus is otherwise required under
Rule 424(b), the Company will cause the Prospectus, properly completed,
and any supplement thereto to be filed with the Commission pursuant to
the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Representatives
of such timely filing. The Company will promptly advise the
Representatives (A) when the Registration Statement, if not effective at
the Execution Time, and any amendment thereto, shall have become
effective, (B) when the Prospectus, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to
Rule 424(b), (C) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement shall have been
filed or become effective, (D) of any request by the Commission for any
amendment of the Registration Statement or supplement to the Prospectus
or for any additional information, (E) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any
8
<PAGE>
proceeding for that purpose and (F) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result
of which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the Exchange Act or the respective
rules thereunder, the Company promptly will prepare and file with the
Commission, subject to the second sentence of subparagraph (a)(i) of
this Section 5, an amendment or supplement which will correct such
statement or omission or an amendment or supplement which will effect
such compliance.
(iii) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under
the Act.
(iv) The Company will furnish to the Representatives and counsel
for the Underwriters, without charge, copies of the Registration
Statement (including exhibits thereto) certified as true, complete and
correct by two senior officers (including a senior financial officer) of
the Company and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or a dealer may be required by the Act, as
many copies of each Preliminary Prospectus and the Prospectus and any
supplement thereto as the Representatives may reasonably request. The
Company will pay the expenses of printing or other production of all
documents relating to the offering.
(v) The Company, in cooperation with counsel for the Underwriters,
will arrange for the qualification of
9
<PAGE>
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities;
PROVIDED, HOWEVER, that the Company shall not be required to qualify to
do business in any jurisdiction in which it is not now so qualified or
to take any action that would subject it to general or unlimited service
of process in any jurisdiction where it is not now so subject.
(vi) The Company will not, for a period of 90 days following the
Execution Time, without the prior written consent of Salomon Brothers
Inc, offer, sell or contract to sell, or otherwise dispose of, directly
or indirectly, or announce the offering of, any other shares of Common
Stock or any securities convertible into, or exchangeable for, shares of
Common Stock; provided, however, that the Company (A) may issue stock
options and sell Common Stock pursuant to any employee or director stock
option plan, stock ownership plan or dividend reinvestment plan of the
Company in effect at the Execution Time or as proposed to be restated
or amended at the Annual Meeting of Shareowners in April 1994,
(B) may issue Common Stock issuable upon the conversion of securities or
the exercise of warrants outstanding at the Execution Time, (C) may
issue Common Stock in connection with the earn-out final payment for the
Company's acquisition of Mid Atlantic Telecom, Inc. and may announce,
and/or issue Common Stock pursuant to, the proposed acquisition of
Minnesota Southern Cellular Telephone Company as described in the
Prospectus, and (D) may issue Common Stock pursuant to the 2-for-1
stock split approved by the Company's Board of Directors on November 15,
1993; and PROVIDED FURTHER, that the Company, with the consent of
Salomon Brothers Inc, may offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering of, any
other shares of Common Stock or any securities convertible into, or
exchangeable for, shares of Common Stock in connection with a merger,
acquisition or other similar transaction by the Company, in which
instance the consent of Salomon Brothers Inc shall not be unreasonably
withheld.
(b) The Selling Stockholder agrees with the several Underwriters
that it will not during the period of 120 days following the Execution Time,
without the prior written consent of the Representatives, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or announce
the offering of, any other shares of Common Stock beneficially owned by the
Selling Stockholder, or any securities convertible into, or exchangeable for,
shares of Common Stock.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholder contained herein as of the Execution Time, the Closing Date and any
10
<PAGE>
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Stockholder made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholder of their respective obligations hereunder, to the accuracy of the
representations and warranties on the part of Centel and Sprint contained in
the representation and warranty letters attached hereto as Exhibit A (the
"Centel Letter") and Exhibit B (the "Sprint Letter"), respectively, as of the
Execution Time, the Closing Date and any settlement date pursuant to Section 3
hereof, to the accuracy of the statements of Centel and Sprint made in any
certificates pursuant to the provisions of the Centel Letter and the Sprint
Letter, respectively, to the performance by Centel and Sprint of their
respective obligations under the Centel Letter and the Sprint Letter,
respectively, and to the following additional conditions:
(a) If the Registration Statement has not become effective prior
to the Execution Time, unless the Representatives agree in writing to a
later time, the Registration Statement will become effective not later
than (i) 6:00 PM New York City time, on the date of determination of the
public offering price, if such determination occurred at or prior to
3:00 PM New York City time on such date or (ii) 12:00 Noon on the
business day following the day on which the public offering price was
determined, if such determination occurred after 3:00 PM New York City
time on such date; if filing of the Prospectus, or any supplement
thereto, is required pursuant to the applicable paragraph of
Rule 424(b), the Prospectus, and any such supplement, will be filed in
the manner and within the time period required by Rule 424(b); and no
stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.
(b) The Company shall have furnished to the Representatives the
opinion of John T. Pattison, Managing Attorney of the Company, dated the
Closing Date, to the effect that:
(i) Each of the Company and its subsidiaries listed on
Schedule II hereto (individually a "Subsidiary" and collectively
the "Subsidiaries") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or
11
<PAGE>
organized, and each of the joint ventures denominated as
Rochester Telephone Mobile Communications, Anixter-Rotelcom and
the Utica-Rome Cellular Partnership has been duly organized and
is validly existing, in each case with full power and authority to
own, lease and operate its properties and conduct its business as
described in the Prospectus, and the Company and each of the
Subsidiaries is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases material properties or conducts material business, except
where the failure to be so qualified and in good standing would not
have a material adverse effect on the business, financial condition
or results of operations of the Company and its subsidiaries taken
as a whole;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and are owned by the Company either
directly or through wholly-owned subsidiaries free and clear of any
perfected security interest and, to the knowledge of such counsel,
after due inquiry, any other security interests, claims, liens or
encumbrances other than security interests, claims, liens or
encumbrances which would not, taken in the aggregate, have a
material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries taken as
a whole;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms
to the description thereof contained in the Prospectus; the
outstanding shares of Common Stock (including the Securities being
sold hereunder by the Selling Stockholder) have been duly and
validly authorized and issued and are fully paid and nonassessable;
the Securities being sold hereunder by the Company have been duly
and validly authorized, and, when issued and delivered to and paid
for by the Underwriters pursuant to this Agreement, will be fully
paid and nonassessable; the Securities being sold hereunder by the
Company and the Selling Stockholder are duly authorized for
listing, subject to official notice of issuance, on the New
12
<PAGE>
York Stock Exchange; the certificates for the Securities are in
valid and sufficient form; and the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or
other similar rights to subscribe for the Securities;
(iv) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court
or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries, joint ventures or
partnerships of a character required to be disclosed in the
Registration Statement which is not disclosed in the Prospectus as
required, and there is no franchise, contract or other document of
a character required to be described in the Registration Statement
or the Prospectus, or to be filed as an exhibit, which is not
described or filed as required; and the statements in the
Prospectus under the heading "Regulation" fairly summarize the
matters therein described;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) no consent, approval, authorization or order of any New
York or Federal or, to the best of such counsel's knowledge, other
court or governmental agency or body is required for the
consummation of the transactions contemplated herein, except such
as have been obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters and
such other approvals (specified in such opinion) as have been
obtained;
(vii) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated
nor the fulfillment of the terms hereof will conflict with, result
in a breach or violation of, or constitute a default under any law
or the charter or by-laws of the Company or the terms of any
indenture or other material agreement or instrument known to such
counsel and to which the Company or any of its subsidiaries, joint
ventures or partnerships is a party or bound, or any judgment,
order or decree known to the actual knowledge of such counsel to be
13
<PAGE>
applicable to the Company or any of its subsidiaries, joint
ventures or partnerships of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Company or any of its subsidiaries, joint
ventures or partnerships; and
(viii) other than the Selling Shareholder, no holders of
securities of the Company have rights to the registration of such
securities under the Registration Statement.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company, your
representatives and your counsel at which the contents of the
Registration Statement and Prospectus and related matters were
discussed and, although such counsel is not passing upon and
does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and Prospectus (except as explicitly set
forth in clause (iv) of this Section 6(b)), on the basis of the
foregoing, no information came to such counsel's attention that
caused such counsel to believe that the Registration Statement
(as amended at the Closing Date, if applicable), at the time
such Registration Statement or any post-effective amendment
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 (other than information omitted therefrom in reliance
on Rule 430A under the Act), or that the Prospectus (as amended
or supplemented), as of its date and the Closing Date, contained
an untrue statement of a material fact or omitted 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 because the primary
purpose of such counsel's professional engagement was not to
establish or confirm factual matters or financial, accounting or
statistical matters and because of the wholly or partially non-
legal character of many of the statements contained in the
Registration Statement and the Prospectus, such counsel is not
passing upon and does not assume
14
<PAGE>
any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus and
such counsel makes no representation that such counsel has independently
verified the accuracy, completeness or fairness of such statements.
Without limiting the foregoing, such counsel may further state that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements and schedules and other financial and statistical data
included in the Registration Statement, and such counsel has not
examined the accounting, financial or statistical records from which
such financial statements, schedules and data are derived. Such counsel
may note that while certain portions of the Registration Statement
(including financial statements and schedules) have been included
therein on the authority of "experts" within the meaning of the Act,
such counsel is not an expert with respect to any portion of the
Registration Statement, including without limitation such financial
statements or schedules or the other financial or statistical data
included therein.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of New York or the United States, to the extent such counsel deems
proper and specifies in such opinion, upon the opinion of other counsel
of good standing whom such counsel believes to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company, the Selling Stockholder, Centel,
Sprint and public officials. References to the Prospectus in this
paragraph (b) include any supplements thereto at the Closing Date.
(c) The Company shall have furnished to the Representatives the
opinion of Simpson Thacher & Bartlett, counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of New
York, with full power and authority to own, lease and operate its
properties;
15
<PAGE>
(ii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms
to the description thereof contained in the Prospectus; the
outstanding shares of Common Stock (including the Securities being
sold hereunder by the Selling Stockholder) have been duly and
validly authorized and issued and are fully paid and nonassessable;
the Securities being sold hereunder by the Company have been duly
and validly authorized, and, when issued and delivered to and paid
for by the Underwriters pursuant to this Agreement, will be fully
paid and nonassessable; the Securities being sold hereunder by the
Company and the Selling Stockholder are duly authorized for
listing, subject to official notice of issuance, on the New York
Stock Exchange; the certificates for the Securities are in valid
and sufficient form; and the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive rights
with respect to the Securities;
(iii) the Registration Statement has become effective under
the Act; any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); to the best
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued, no
proceedings for that purpose have been instituted or threatened and
the Registration Statement, at the time it or any post-effective
amendment thereto was declared effective, and the Prospectus, as of
its date, complied as to form in all material respects with the
applicable requirements of the Act and the rules and regulations
thereunder and the documents incorporated by reference therein (as
any such documents may have been amended), at the time such
documents were filed, complied in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder (in each case, other than the financial statements and
other financial and statistical information contained therein as to
which such counsel need express no opinion);
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
16
<PAGE>
(v) no consent, approval, authorization or order of any New
York or federal court or governmental agency or body is required
for the consummation of the transactions contemplated herein,
except such as have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the
Underwriters and the approval of the New York State Public Service
Commission and such other approvals (specified in such opinion) as
have been obtained; and
(vi) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated
nor the fulfillment of the terms hereof will conflict with, result
in a breach or violation of, or constitute a default under any New
York or Federal law or the charter or by-laws of the Company or
the terms of any indenture or other agreement or instrument as set
forth on Schedule I to that opinion to which the Company or any of
its subsidiaries, joint ventures or partnerships is a party or
bound.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of
the Company, representatives of the independent public accountants for
the Company, your representatives and your counsel at which the contents
of the Registration Statement and Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not
assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement and Prospectus,
on the basis of the foregoing, no information came to such counsel's
attention that caused such counsel to believe that the Registration
Statement (as amended at the Closing Date, if applicable), at the time
such Registration Statement or any post-effective amendment 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 (other than information
omitted therefrom in reliance on Rule 430A under the Act), or that the
Prospectus (as amended or supplemented), as of its date and the Closing
Date, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein,
in
17
<PAGE>
the light of the circumstances under which they were made, not
misleading. Such counsel may state that because the primary purpose of
their professional engagement was not to establish or confirm factual
matters or financial, accounting or statistical matters and because of
the wholly or partially non-legal character of many of the statements
contained in the Registration Statement and the Prospectus, they are not
passing upon and do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus and they make no representation that they
have independently verified the accuracy, completeness or fairness of
such statements. Without limiting the foregoing, such counsel may
further state that they assume no responsibility for, and they have not
independently verified, the accuracy, completeness or fairness of the
financial statements and schedules and other financial and statistical
data included in the Registration Statement, and they have not examined
the accounting, financial or statistical records from which such
financial statements, schedules and data are derived. Such counsel may
note that while certain portions of the Registration Statement
(including financial statements and schedules) have been included
therein on the authority of "experts" within the meaning of the Act,
they are not such experts with respect to any portion of the
Registration Statement, including without limitation such financial
statements or schedules or the other financial or statistical data
included herein.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of New York or the United States, to the extent such counsel deems
proper and specifies in such opinion, upon the opinion of other counsel
of good standing whom such counsel believes to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company, the Selling Stockholder, Centel,
Sprint and public officials. References to the Prospectus in this
paragraph (c) include any supplements thereto at the Closing Date.
(d) The Selling Stockholder shall have furnished to the
Representatives the opinion of Tucci & Semes, counsel for the Selling
Stockholder, dated the Closing Date, to the effect that:
18
<PAGE>
(i) this Agreement has been duly authorized, executed and
delivered by the Selling Stockholder and the Selling Stockholder
has full legal right and authority to sell, transfer and deliver in
the manner provided in this Agreement the Securities being sold by
the Selling Stockholder hereunder;
(ii) the delivery by the Selling Stockholder to the several
Underwriters of certificates for the Securities being sold
hereunder by the Selling Stockholder against payment therefor as
provided herein, will pass good and marketable title to such
Securities to the several Underwriters, free and clear of all
liens, encumbrances, equities and claims whatsoever;
(iii) no consent, approval, authorization or order of any
Delaware, Federal or, to the best of such counsel's knowledge,
other court or governmental agency or body is required with respect
to the Selling Stockholder for the consummation by the Selling
Stockholder of the transactions contemplated herein, except such as
may have been obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters and
such other approvals (specified in such opinion) as have been
obtained; and
(iv) neither the sale of the Securities being sold by the
Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by the Selling Stockholder or the
fulfillment of the terms hereof by the Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or the charter or By-laws of the Selling
Stockholder, or the material terms of any indenture or other
agreement or instrument of which such counsel has actual knowledge
and to which the Selling Stockholder or any of its subsidiaries is
a party or bound, or any judgment, order or decree known to such
counsel to be applicable to the Selling Stockholder or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the
Selling Stockholder or any of its subsidiaries.
19
<PAGE>
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of Delaware or the United States, to the extent they deem proper
and specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters, and (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the
Company, the Selling Stockholder, Centel, Sprint and public officials.
(e) The Representatives shall have received from Cleary, Gottlieb,
Steen & Hamilton, counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, with respect to the issuance and sale
of the Securities, the Registration Statement, the Prospectus (together
with any supplement thereto) and other related matters as the
Representatives may reasonably require, and the Company, the Selling
Stockholder, Centel and Sprint shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(f) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplement to the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as
of the Closing Date with the same effect as if made on the Closing
Date and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to such officers' knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus
20
<PAGE>
(exclusive of any supplement thereto), there has been no material
adverse change in the condition (financial or other), earnings,
business or properties of the Company and its subsidiaries, whether
or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(g) The Selling Stockholder shall have furnished to the
Representatives a certificate, signed by the President or a Vice
President of the Selling Stockholder, dated the Closing Date, to the
effect that the signer of such certificate has carefully examined the
Registration Statement, the Prospectus, any supplement to the Prospectus
and this Agreement and that the representations and warranties of the
Selling Stockholder in this Agreement are true and correct in all
material respects on and as of the Closing Date to the same effect as if
made on the Closing Date.
(h) Centel shall have furnished the Centel Letter in the form
attached as Exhibit A to this Agreement and the certificate and legal
opinion referred to therein, and Sprint shall have furnished the Sprint
Letter in the form attached as Exhibit B to this Agreement and the
certificate and legal opinion referred to therein.
(i) At the Execution Time and at the Closing Date, Price
Waterhouse shall have furnished to the Representatives a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the Representatives,
confirming that they are independent certified public accountants
within the meaning of the Act and the applicable published rules and
regulations thereunder and stating in effect that:
(i) in their opinion the audited consolidated financial
statements and financial statement schedules included or
incorporated in the Registration Statement and the Prospectus and
reported on by them comply as to form in all material respects
with the applicable accounting requirements of the Act or the
Exchange Act, as applicable, and the related published rules and
regulations thereunder;
(ii) they have (a) read the Company's unaudited financial
statements as of September 30, 1993 made available by the Company
and incorporated by reference in the Registration Statement and the
21
<PAGE>
Prospectus and agreed the amounts contained therein with the
Company's accounting records as of September 30, 1993 and 1992,
and for the three-month and nine-month periods then ended; (b)
read the Company's unaudited financial statements as of
December 31, 1993 as set forth in the Current Report on Form 8-K
dated January 20, 1994 made available by the Company and
incorporated by reference in the Registration Statement and the
Prospectus and agreed the amounts contained therein with the
Company's accounting records as of December 31, 1993 and 1992,
and for the three-month periods then ended; (c) read the minutes
of the meetings of the stockholders, directors, management and
compensation and audit committees of the Company; (d) made
inquires of certain officials of the Company who have
responsibility for financial and accounting matters of the Company
and its subsidiaries as to transactions and events subsequent to
December 31, 1992; and (e) such officials of the Company have
stated to them that:
(1) the unaudited financial statements of the Company
incorporated or included in the Registration Statement and
the Prospectus are in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited consolidated financial
statements, except for the adoption of SFAS 106, Employers'
Accounting for Postretirement Benefits Other than Pensions,
and comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations of the Commission; and
(2) with respect to the period subsequent to December
31, 1993, there were no changes, at a specified date not more
than five business days prior to the date of the letter, in
the capital stock or current liabilities of the Company,
increase in the long-term debt of the Company and its
subsidiaries or any decreases in consolidated net current
assets or shareowners' equity as compared with the amounts
shown on the December 31, 1993 consolidated balance sheet
included or incorporated in the Registration Statement and
the Prospectus, or for the period from January 1, 1994 to
such specified date there were any decreases, as compared
with the corresponding period in the preceding year, in
consolidated net revenues or in total or per-share amounts
of income before
22
<PAGE>
extraordinary items or of net income of the Company and its
subsidiaries, except in all instances for changes or
decreases set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is not
deemed necessary by the Representatives; and
(iii) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth and incorporated in the Registration Statement and the
Prospectus, agrees with the accounting records of the Company and
its subsidiaries, excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (i) include any
supplement thereto at the date of the letter.
(j) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any
supplement thereto), there shall not have been (i) any change, increase
or decrease specified in the letter or letters referred to in paragraph
(i) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the business or properties of the
Company and its subsidiaries taken as a whole the effect of which, in
any case referred to in clause (i) or (ii) above, is, in the judgment
of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of
the Securities as contemplated by the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any
supplement thereto).
(k) On or prior to the Execution Time, the New York Stock Exchange
shall have approved the Underwriters' participation in the distribution
of the Securities to be sold by the Selling Stockholder.
23
<PAGE>
(l) Subsequent to the Execution Time, there shall not have been
any decrease in the rating of any of the Company's debt securities by a
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice given of any
intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the
possible change.
(m) Prior to the Closing Date, the Company, the Selling
Stockholder, Centel and Sprint shall have furnished to the
Representatives such further information, certificates and documents as
the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancelation shall be given to the Company and the Selling Stockholder in
writing or by telephone or telegraph confirmed in writing.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. (a) If the sale of
the Securities provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Sections 6 (a), (b), (c), (f),
(i), (j), (l), or (m) hereof which is required to be satisfied is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Selling Stockholder, Centel or Sprint,
the Company will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities. If the sale of the Securities provided for herein
is not consummated because any condition to the obligations of the Underwriters
set forth in Sections 6 (d), (g), (h) or (m) hereof which is required to be
satisfied is not satisfied, because of any termination pursuant to Section 10
hereof (except if trading in the Company's Common Stock shall have been
suspended by the
24
<PAGE>
Commission or the New York Stock Exchange), or because of any refusal, inability
or failure on the part of the Selling Stockholder, Centel or Sprint to perform
any agreement herein or comply with any provision hereof other than by reason of
a default by any of the Underwriters or the Company, the Selling Stockholder
will reimburse the Underwriters upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities.
(b) If this Agreement is terminated in accordance with Section 10
herein (except if trading in the Company's Common Stock shall have been
suspended by the Commission or the New York Stock Exchange), the Company's and
the Selling Stockholder's obligations pursuant to (a) above shall be joint and
several. As between the Company and the Selling Stockholder, the Company will
be responsible for 42.3% of the amount paid to the Underwriters and the Selling
Stockholder will be liable for 57.7% of the amount paid to the Underwriters.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter, each person who controls any Underwriter, each
of the Selling Stockholder, Centel and Sprint, the directors, officers,
employees and agents of the Selling Stockholder, Centel and Sprint and each
person who controls the Selling Stockholder, Centel and Sprint within the
meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement for the registration of the
Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the
Company
25
<PAGE>
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the Representatives, or by or
on behalf of the Selling Stockholder, Centel and Sprint, specifically for
inclusion therein. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) The Selling Stockholder agrees to indemnify and hold harmless
each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter within the meaning of
either the Act or the Exchange Act to the same extent as the foregoing indemnity
from the Company to each Underwriter, the Selling Stockholder, Centel and
Sprint, but only with reference to written information furnished to the Company
by or on behalf of the Selling Stockholder specifically for use in the
preparation of the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which the Selling
Stockholder may otherwise have.
(c) Each Underwriter severally agrees to indemnify and hold
harmless the Company, the Selling Stockholder, Centel and Sprint, each of their
respective directors, each of the Company's officers who signs the Registration
Statement, each of the officers, employees and agents of the Selling
Stockholder, Centel and Sprint and each person who controls each of the Company,
the Selling Stockholder, Centel and Sprint within the meaning of either the Act
or the Exchange Act, to the same extent as the foregoing indemnity from the
Company to each Underwriter, the Selling Stockholder, Centel and Sprint, but
only with reference to written information relating to the Underwriters
furnished to the Company by or on behalf of the Underwriters through the
Representatives specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Company and the Selling
Stockholder acknowledge that the statements set forth in the last paragraph of
the cover page and under the heading "Underwriting" in any Preliminary
Prospectus and the Prospectus constitute the only information furnished in
26
<PAGE>
writing by or on behalf of the several Underwriters for inclusion in any
Preliminary Prospectus or the Prospectus, and you, as the Representatives,
confirm that such statements are correct.
(d) The Selling Stockholder agrees to indemnify the Company, each
of its directors, each of its officers who signs the Registration Statement and
each person who controls the Company within the meaning of either the Act or the
Exchange Act as contemplated by and to the extent set forth in Section 5(b) of
the Securities Agreement by and between Centel and the Company attached as
Exhibit C hereto (the "Securities Agreement").
(e) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a), (b), (c) or (d) 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), (c) or (d) above.
The indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); PROVIDED, HOWEVER, that such counsel shall be satisfactory to
the indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have
27
<PAGE>
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(f) In the event that the indemnity provided in paragraph (a),
(b), (c) or (d) of this Section 8 is unavailable or insufficient to hold
harmless an indemnified party for any reason, the Company, the Selling
Stockholder and the Underwriters agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively
"Losses") to which the Company, the Selling Stockholder and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company, by the Selling Stockholder and by the
Underwriters from the offering of the Securities; PROVIDED, HOWEVER, that (1) in
no case shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Securities purchased by such Underwriter hereunder and (2) the Securities
Agreement shall control the contribution to Losses by the Company, if any, to be
made by the Selling Stockholder and shall also control the Company's
contribution to the Selling Stockholder's, Centel's or Sprint's Losses, if any,
including Losses resulting from indemnification of the Underwriters by the
Selling Stockholder, Centel or Sprint. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company, the
Selling Stockholder and the Underwriters shall contribute in such proportion as
is
28
<PAGE>
appropriate to reflect not only such relative benefits but also the relative
fault of the Company, of the Selling Stockholder and of the Underwriters in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations; PROVIDED, HOWEVER, that the
Securities Agreement shall control the contribution to Losses by the Company, if
any, to be made by the Selling Stockholder and shall also control the Company's
contribution to the Selling Stockholder's, Centel's or Sprint's Losses, if any,
including Losses resulting from indemnification of the Underwriters by the
Selling Stockholder, Centel or Sprint. Benefits received by the Company and by
the Selling Stockholder shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by each of them, and
benefits received by the Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the cover
page of the Prospectus. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by the Company, the Selling Stockholder or the Underwriters. The Company, the
Selling Stockholder and the Underwriters agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (f), no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person who controls an Underwriter within the meaning of either the Act or
the Exchange Act and each director, officer, employee and agent of an
Underwriter shall have the same rights to contribution as such Underwriter, each
person who controls any of the Selling Stockholder, Centel or Sprint within the
meaning of either the Act or the Exchange Act and each director, officer,
employee and agent of any of the Selling Stockholder, Centel or Sprint shall
have the same rights to contribution as the Selling Stockholder, Centel or
Sprint, respectively, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to the applicable terms and conditions of this paragraph (f).
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters
shall fail to purchase and pay for any of the
29
<PAGE>
Securities agreed to be purchased by such Underwriter or Underwriters hereunder
and such failure to purchase shall constitute a default in the performance of
its or their obligations under this Agreement, the remaining Underwriters shall
be obligated severally to take up and pay for (in the respective proportions
which the amount of Securities set forth opposite their names in Schedule I
hereto bears to the aggregate amount of Securities set forth opposite the names
of all the remaining Underwriters) the Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase; PROVIDED, HOWEVER,
that in the event that the aggregate amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Securities set forth in Schedule I hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Securities, and if such nondefaulting
Underwriters do not purchase all the Securities, this Agreement will terminate
without liability to any nondefaulting Underwriter, the Selling Stockholder,
Centel, Sprint or the Company. In the event of a default by any Underwriter as
set forth in this Section 9, the Closing Date shall be postponed for such
period, not exceeding seven days, as the Representatives shall determine in
order that the required changes in the Registration Statement and the Prospectus
or in any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any defaulting Underwriter of its liability, if
any, to the Company, the Selling Stockholder, Centel, Sprint and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. TERMINATION. This Agreement shall be subject to termination
in the absolute discretion of the Representatives, by notice given to the
Company and the Selling Stockholder prior to delivery of and payment for the
Securities, if prior to such time (i) trading in the Company's Common Stock
shall have been suspended by the Commission or the New York Stock Exchange or
trading in securities generally on the New York Stock Exchange shall have been
suspended or limited or minimum prices shall have been established on such
Exchange, (ii) a banking moratorium shall have been declared either by Federal
or New York State authorities or (iii) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Prospectus
30
<PAGE>
(exclusive of any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of the Selling Stockholder and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter,
the Selling Stockholder or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to them, care of Salomon Brothers Inc, at
Seven World Trade Center, New York, New York, 10048; or, if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to it at Rochester
Telephone Corporation, Rochester Tel Center, 180 South Clinton Avenue,
Rochester, New York, 14646-0700, attention of the legal department; or if sent
to the Selling Stockholder, will be mailed, delivered or telegraphed and
confirmed to it at 2500 West 4th Street, Suite 16A, Wilmington, Delaware,
19805, attention of the President, with a copy to Michael Semes, Esq., Tucci
& Semes, Three Mill Road, Suite 206, Wilmington, Delaware, 19806; or if sent
to Sprint or Centel, will be mailed, delivered or telegraphed and confirmed
to it or them at Sprint Corporation, 2330 Shawnee Mission Parkway Westwood,
Kansas, 66205, attention of the legal department.
13. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Section 8 hereof,
and no other person will have any right or obligation hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
15. BUSINESS DAY. For purposes of this Agreement, "business day"
means any day on which the New York Stock Exchange is open for trading.
16. COUNTERPARTS. This Agreement may be signed in
31
<PAGE>
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.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Selling Stockholder and the several Underwriters.
Very truly yours,
Rochester Telephone Corporation
By:
---------------------
Name:
Title:
C FON Corporation
By:
---------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
Lehman Brothers Inc.
Smith Barney Shearson Inc.
By: Salomon Brothers Inc
By:
----------------------------
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
32
<PAGE>
Schedule I
Number of Shares
of Underwritten
Securities
Underwriters to be Purchased
------------ ----------------
Salomon Brothers Inc .............
Lehman Brothers Inc. .............
Smith Barney Shearson Inc. .......
---------------
Total ......................
5,000,000
---------------
33
<PAGE>
Schedule II
Subsidiaries
------------
C, C & S Telco, Inc.
Enterprise Telephone Company
Highland Telephone Company
Monroeville Telephone Company, Inc.
RCI Long Distance, Inc.
RCI Long Distance New England,Inc.
Rochester Tel Cellular Holding Corporation
Rochester Telephone Mobile Communications, Inc.
Rochester Tel Subsidiary Telco, Inc.
Rochester Tel Telecommunications Corporation
Rochester Tel Telecommunications Holding Corporation
Rotelcom Inc.
Southland Telephone Company
The Statesboro Telephone Company
Sylvan Lake Telephone Company, Inc.
Urban Telephone Corporation
Vista Telephone Company of Minnesota
34
<PAGE>
February __, 1994
Salomon Brothers Inc
Lehman Brothers Inc.
Smith Barney Shearson Inc.
As Representatives of the several Underwriters,
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Rochester Telephone Corporation
180 South Clinton Avenue
Rochester, New York 14646-0700
Ladies and Gentlemen:
C FON Corporation, a Delaware corporation with its sole place of
business in Wilmington, Delaware ("C FON"), proposes to sell to the
Underwriters, for whom you (the "Representatives") are acting as
representatives, 2,885,000 shares of the common stock, par value $1.00 per
share (the "Common Stock") of Rochester Telephone Corporation, a New York
corporation (the "Company"). C FON is a wholly owned subsidiary of Centel
Corporation, a Kansas corporation ("Centel"), and Centel is a wholly owned
subsidiary of Sprint Corporation, a Kansas corporation ("Sprint"). This
letter (the "Sprint Letter") is being provided to the Representatives by
Sprint pursuant to Section 6(h) of the Underwriting Agreement, dated February
__, 1994, among the Representatives, the Company and C FON (the "Agreement").
Capitalized terms not defined herein have the meanings given to them in the
Agreement.
1. REPRESENTATIONS AND WARRANTIES. Sprint represents and warrants
to, and agrees with, each Underwriter that:
(i) C FON is the lawful owner of the Securities to be sold by C
FON under the Agreement and upon sale and delivery of, and payment for,
such Securities, as provided therein, C FON will convey good and
marketable title to such Securities, free and clear of all liens,
encumbrances, equities and claims whatsoever.
(ii) Sprint has no reason to believe that the representations and
warranties of the Company contained in Section 1 of the Agreement are
<PAGE>
not true and correct, is familiar with the Registration Statement and has
no knowledge of any material fact, condition or information not disclosed
in the Prospectus or any supplement thereto which has adversely affected
or may adversely affect the business of the Company or any of its
subsidiaries; and the sale of Securities by C FON pursuant to the
Agreement is not prompted by any information concerning the Company or
any of its subsidiaries which is not set forth in the Prospectus or any
supplement thereto.
(iii) Sprint has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange Act
or otherwise, in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities and has not effected any sales of shares of Common Stock
which, if effected by the issuer, would be required to be disclosed
inresponse to Item 701 of Regulation S-K.
(iv) No consent, approval, authorization or order of any court or
governmental agency or body is required with respect to Sprint for the
consummation by C FON of the transactions contemplated in the Agreement,
except such as may have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the Underwriters and
such other approvals as have been obtained.
(v) Neither the sale of the Securities being sold by C FON nor
the consummation of any other of the transactions contemplated herein by
Sprint or in the Agreement by C FON or the fulfillment of the terms hereof
by Sprint or the terms of the Agreement by C FON will conflict with,
result in a breach or violation of, or constitute a default under any law
or the charter or by-laws of Sprint, or the terms of any indenture or
other agreement or instrument to which Sprint or any of its subsidiaries
is a party or bound, or any judgment, order or decree applicable to Sprint
or any of its subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over Sprint
or any of its subsidiaries. In respect of any statements in or omissions
from the Registration Statement or the Prospectus or any supplement
thereto made in reliance upon and in conformity with information furnished
in writing to the Company by Sprint specifically for use in connection
with the preparation thereof, Sprint hereby makes the same representations
and warranties to each Underwriter as the Company makes to such
Underwriter under paragraph (a)(ii) of Section 1 of the Agreement.
2. AGREEMENTS. Sprint agrees with the several Underwriters
that it will not during the period of 120 days following the Execution Time,
without the prior written consent of the Representatives, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or announce
the offering of, any other shares of Common Stock beneficially owned by
Sprint, or any securities convertible into, or exchangeable for, shares of
Common Stock. This restriction shall not apply to the officers and directors
of Sprint.
<PAGE>
3. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Securities from C FON shall be
subject to the terms and conditions set forth in Section 6 of the Agreement,
including, but not exclusive to, the following:
(a) Sprint shall have furnished to the Representatives the
opinion of Don A. Jensen, Vice President and Secretary of Sprint,
dated the Closing Date, to the effect that:
(i) no consent, approval, authorization or order of any
Kansas, Federal or, to the best of such counsel's knowledge, other
court or governmental agency or body is required with respect to
Sprint for the consummation by C FON of the transactions
contemplated in the Agreement, except such as may have been
obtained under the Act and such as may be required under the blue
sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other
approvals (specified in such opinion) as have been obtained; and
(ii) neither the sale of the Securities being sold by C FON
nor the consummation of any other of the transactions contemplated
in the Agreement by C FON or the fulfillment of the terms of the
Agreement by C FON will conflict with, result in a breach or
violation of, or constitute a default under any law or the charter
or By-laws of Sprint or the terms of any indenture or other
material agreement or instrument known to such counsel and to
which Sprint or any of its subsidiaries is a party or bound, or
any judgment, order or decree known to such counsel to be
applicable to Sprint or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over Sprint or any of its
subsidiaries.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of Kansas or the United States, to the extent such counsel deems
proper and specified in such opinion, upon the opinion of other counsel
of good standing whom such counsel believes to be reliable and who are
satisfactory to counsel for the Underwriters, and (B) as to matters of
fact, to the extent such counsel deems proper, on certificates or
letters of responsible officers of the Company, C FON, Centel, Sprint
and public officials.
(b) Sprint shall have furnished to the Representatives a
certificate, signed by a Vice President of Sprint, dated the Closing
Date, to the effect that the signer of such certificate has carefully
examined the Registration Statement, the Prospectus, any supplement to
the Prospectus, the Agreement and this Sprint Letter and that the
representations and warranties of Sprint in this Sprint Letter are true
and correct in all material respects on and as of the Closing Date to
the same effect as if made on the Closing Date.
(c) Prior to the Closing Date, Sprint shall have furnished to the
Representatives
<PAGE>
such further information, certificates and documents as the Representatives
may reasonably request.
4. INDEMNIFICATION AND CONTRIBUTION. (a) Sprint agrees that
Sprint, Centel and C FON will jointly and severally indemnify and hold
harmless each Underwriter, the directors, officers, employees and agents of
each Underwriter and each person who controls any Underwriter within the
meaning of either the Act or the Exchange Act to the same extent as the
indemnity from the Company to each Underwriter, C FON, Centel and Sprint set
forth in Section 8(a) of the Agreement, but only with reference to written
information furnished to the Company by or on behalf of Centel, Sprint or C
FON specifically for use in the preparation of the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to any
liability which Sprint may otherwise have.
(b) Sprint acknowledges that the statements set forth in the last
paragraph of the cover page and under the heading "Underwriting" in any
Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in any Preliminary Prospectus or the Prospectus.
(c) Sprint agrees to indemnify the Company, each of its
directors, each of its officers who signs the Registration Statement and each
person who controls the Company within the meaning of either the Act or the
Exchange Act as contemplated by and to the extent set forth in Section 5(b) of
the Securities Agreement.
(d) The provisions of Section 8(e) of the Agreement will be
applicable to the indemnification provided by Sprint herein as if the
indemnification provided herein were provided in Section 8 of the Agreement.
Sprint agrees that C FON, Sprint and Centel will be jointly and severally
liable for the liabilities, if any, of C FON that shall arise under the
provisions of Section 8(f) of the Agreement.
5. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. (a) If the sale
of the Securities provided for in the Agreement is not consummated because any
condition to the obligations of the Underwriters set forth in Sections 6 (d),
(g), (h) or (m) of the Agreement which is required to be satisfied is not
satisfied, because of any termination pursuant to Section 10 of the Agreement
(except if trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange) or because of any refusal,
inability or failure on the part of C FON, Centel or Sprint to perform any
agreement therein or comply with any provision thereof other than by reason of
a default by any of the Underwriters or the Company, Sprint agrees that C FON,
Sprint and Centel, jointly and severally, will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
(b) If the Agreement is terminated in accordance with Section 10 therein
(except if trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange), Sprint agrees that the
Company, C FON, Sprint and Centel will be jointly and severally liable to the
several Underwriters regarding the obligations
<PAGE>
pursuant to (a) above. As among the Company, C FON, Sprint and Centel, the
Company will be responsible for 42.3% of the amount paid to the Underwriters
and C FON, Sprint and Centel will be jointly and severally liable for 57.7% of
the amount paid to the Underwriters.
6. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of
Sprint set forth in or made pursuant to this Sprint Letter will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter, Centel, C FON, Sprint or the Company or any of the officers,
directors or controlling persons referred to in Section 8 of the Agreement,
and will survive delivery of and payment for the Securities. The provisions
of Sections 8 of the Agreement and Sections 4 and 5 of this Sprint Letter shall
survive the termination or cancellation of the Agreement.
7. NOTICES. All communications hereunder will be governed by
the provisions of Section 12 of the Agreement.
8. SUCCESSORS. This Sprint Letter will inure to the benefit of
the Underwriters, their respective successors and their officers and directors
and controlling persons referred to in Section 8 of the Agreement, and will
bind Sprint, its successors and its officers and directors and controlling
persons referred to in Section 8 of the Agreement, and no other person will
have any right or obligation hereunder.
9. APPLICABLE LAW. This Sprint Letter will be governed by and
construed in accordance with the laws of the State of New York.
Very truly yours,
Sprint Corporation
By:
Name:
Title:
The foregoing Letter is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
Lehman Brothers Inc.
Smith Barney Shearson Inc.
By: Salomon Brothers Inc
<PAGE>
By:
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the Agreement.
Rochester Telephone Corporation
By:
Name:
Title:
<PAGE>
February __, 1994
Salomon Brothers Inc
Lehman Brothers Inc.
Smith Barney Shearson Inc.
As Representatives of the several Underwriters,
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Rochester Telephone Corporation
180 South Clinton Avenue
Rochester, New York 14646-0700
Ladies and Gentlemen:
C FON Corporation, a Delaware corporation with its sole place of
business in Wilmington, Delaware ("C FON"), proposes to sell to the
Underwriters, for whom you (the "Representatives") are acting as
representatives, 2,885,000 shares of the common stock, par value $1.00 per share
(the "Common Stock") of Rochester Telephone Corporation, a New York corporation
(the "Company"). C FON is a wholly owned subsidiary of Centel Corporation, a
Kansas corporation ("Centel"), and Centel is a wholly owned subsidiary of Sprint
Corporation, a Kansas corporation ("Sprint"). This letter (the "Centel Letter")
is being provided to the Representatives by Centel pursuant to Section 6(h) of
the Underwriting Agreement, dated February __, 1994, among the Representatives,
the Company and C FON (the "Agreement"). Capitalized terms not defined herein
have the meanings given to them in the Agreement.
1. REPRESENTATIONS AND WARRANTIES. Centel represents and warrants to,
and agrees with, each Underwriter that:
(i) C FON is the lawful owner of the Securities to be sold by C FON
under the Agreement and upon sale and delivery of, and payment for, such
Securities, as provided therein, C FON will convey good and marketable
title to such Securities, free and clear of all liens, encumbrances,
equities and claims whatsoever.
(ii) Centel has no reason to believe that the representations and
warranties of the Company contained in Section 1 of the Agreement are not
true and correct, is familiar with the Registration Statement and has no
knowledge of any material fact, condition or information not disclosed in
the Prospectus or any supplement thereto which has
<PAGE>
adversely affected or may adversely affect the business of the Company or
any of its subsidiaries; and the sale of Securities by C FON pursuant to
the Agreement is not prompted by any information concerning the Company or
any of its subsidiaries which is not set forth in the Prospectus or any
supplement thereto.
(iii) Centel has not taken and will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities and has not effected any
sales of shares of Common Stock which, if effected by the issuer, would be
required to be disclosed in response to Item 701 of Regulation S-K.
(iv) No consent, approval, authorization or order of any court or
governmental agency or body is required with respect to Centel for the
consummation by C FON of the transactions contemplated in the Agreement,
except such as may have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters and such
other approvals as have been obtained.
(v) Neither the sale of the Securities being sold by C FON nor the
consummation of any other of the transactions contemplated herein by Centel
or in the Agreement by C FON or the fulfillment of the terms hereof by
Centel or the terms of the Agreement by C FON will conflict with, result in
a breach or violation of, or constitute a default under any law or the
charter or by-laws of Centel, or the terms of any indenture or other
agreement or instrument to which Centel or any of its subsidiaries is a
party or bound, or any judgment, order or decree applicable to Centel or
any of its subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over Centel or
any of its subsidiaries. In respect of any statements in or omissions from
the Registration Statement or the Prospectus or any supplement thereto made
in reliance upon and in conformity with information furnished in writing to
the Company by Centel specifically for use in connection with the
preparation thereof, Centel hereby makes the same representations and
warranties to each Underwriter as the Company makes to such Underwriter
under paragraph (a)(ii) of Section 1 of the Agreement.
2. AGREEMENTS. Centel agrees with the several Underwriters that it
will not during the period of 120 days following the Execution Time, without the
prior written consent of the Representatives, offer, sell or contract to sell,
or otherwise dispose of, directly or indirectly, or announce the offering of,
any other shares of Common Stock beneficially owned by Centel, or any securities
convertible into, or exchangeable for, shares of Common Stock. This restriction
shall not apply to the officers and directors of Centel.
3. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Securities from C FON shall be
subject to the terms and conditions set forth in Section 6 of the Agreement,
including, but not exclusive to, the following:
<PAGE>
(a) Centel shall have furnished to the Representatives the opinion of
Don A. Jensen, Vice President and Secretary of Sprint, dated the Closing
Date, to the effect that:
(i) no consent, approval, authorization or order of any Kansas,
Federal or, to the best of such counsel's knowledge, other court or
governmental agency or body is required with respect to Centel for the
consummation by C FON of the transactions contemplated in the
Agreement, except such as may have been obtained under the Act and
such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters and such other approvals (specified in such opinion) as
have been obtained; and
(ii) neither the sale of the Securities being sold by C FON nor
the consummation of any other of the transactions contemplated in the
Agreement by C FON or the fulfillment of the terms of the Agreement
by C FON will conflict with, result in a breach or violation of, or
constitute a default under any law or the charter or By-laws of Centel
or the terms of any indenture or other material agreement or
instrument known to such counsel and to which Centel or any of its
subsidiaries is a party or bound, or any judgment, order or decree
known to such counsel to be applicable to Centel or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over Centel or any
of its subsidiaries.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of Kansas or the United States, to the extent such counsel deems proper and
specified in such opinion, upon the opinion of other counsel of good
standing whom such counsel believes to be reliable and who are satisfactory
to counsel for the Underwriters, and (B) as to matters of fact, to the
extent such counsel deems proper, on certificates or letters of responsible
officers of the Company, C FON, Centel, Sprint and public officials.
(b) Centel shall have furnished to the Representatives a certificate,
signed by a Vice President of Centel, dated the Closing Date, to the effect
that the signer of such certificate has carefully examined the Registration
Statement, the Prospectus, any supplement to the Prospectus, the Agreement
and this Centel Letter and that the representations and warranties of
Centel in this Centel Letter are true and correct in all material respects
on and as of the Closing Date to the same effect as if made on the Closing
Date.
(c) Prior to the Closing Date, Centel shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
4. INDEMNIFICATION AND CONTRIBUTION. (a) Centel agrees that Centel
and C FON will jointly and severally indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within
<PAGE>
the meaning of either the Act or the Exchange Act to the same extent as the
indemnity from the Company to each Underwriter, C FON, Centel and Sprint set
forth in Section 8(a) of the Agreement, but only with reference to written
information furnished to the Company by or on behalf of Centel, Sprint or C FON
specifically for use in the preparation of the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which Centel may otherwise have.
(b) Centel acknowledges that the statements set forth in the last
paragraph of the cover page and under the heading "Underwriting" in any
Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in any Preliminary Prospectus or the Prospectus.
(c) Centel agrees to indemnify the Company, each of its directors,
each of its officers who signs the Registration Statement and each person who
controls the Company within the meaning of either the Act or the Exchange Act as
contemplated by and to the extent set forth in Section 5(b) of the Securities
Agreement.
(d) The provisions of Section 8(e) of the Agreement will be
applicable to the indemnification provided by Centel herein as if the
indemnification provided herein were provided in Section 8 of the Agreement.
Centel agrees that C FON and Centel will be jointly and severally liable for the
liabilities, if any, of C FON that shall arise under the provisions of Section
8(f) of the Agreement.
5. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. (a) If the sale of the
Securities provided for in the Agreement is not consummated because any
condition to the obligations of the Underwriters set forth in Sections 6 (d),
(g), (h) or (m) of the Agreement which is required to be satisfied is not
satisfied, because of any termination pursuant to Section 10 of the Agreement
(except if trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange) or because of any refusal,
inability or failure on the part of C FON, Centel or Sprint to perform any
agreement therein or comply with any provision thereof other than by reason of a
default by any of the Underwriters or the Company, Centel agrees that C FON and
Centel, jointly and severally, will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Securities.
(b) If the Agreement is terminated in accordance with Section 10 therein
(except if trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange), Centel agrees that the Company,
C FON and Centel will be jointly and severally liable to the several
Underwriters regarding the obligations pursuant to (a) above. As among the
Company, C FON and Centel, the Company will be responsible for 42.3% of the
amount paid to the Underwriters and C FON and Centel will be jointly and
severally liable for 57.7% of the amount paid to the Underwriters.
6. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of
Centel set forth in or made
<PAGE>
pursuant to this Centel Letter will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter,
Centel, C FON, Sprint or the Company or any of the officers, directors or
controlling persons referred to in Section 8 of the Agreement, and will
survive delivery of and payment for the Securities. The provisions of
Sections 8 of the Agreement and Sections 4 and 5 of this Centel Letter shall
survive the termination or cancellation of the Agreement.
7. NOTICES. All communications hereunder will be governed by the
provisions of Section 12 of the Agreement.
8. SUCCESSORS. This Centel Letter will inure to the benefit of the
Underwriters, their respective successors and their officers and directors and
controlling persons referred to in Section 8 of the Agreement, and will bind
Centel, its successors and its officers and directors and controlling persons
referred to in Section 8 of the Agreement, and no other person will have any
right or obligation hereunder.
9. APPLICABLE LAW. This Centel Letter will be governed by and
construed in accordance with the laws of the State of New York.
Very truly yours,
Centel Corporation
By:
---------------------
Name:
Title:
The foregoing Letter is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
Lehman Brothers Inc.
Smith Barney Shearson Inc.
By: Salomon Brothers Inc
By:
----------------------------
Name:
Title:
For themselves and the other
<PAGE>
several Underwriters named in
Schedule I to the Agreement.
Rochester Telephone Corporation
By:
----------------------------
Name:
Title:
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 2 to the Registration Statement on Form
S-3 of Rochester Telephone Corporation of our report, dated January 18, 1993,
which appears on page 29 of the 1992 Annual Report to Share Owners of Rochester
Telephone Corporation, which is incorporated by reference in Rochester Telephone
Corporation's Annual Report on Form 10-K for the year ended December 31, 1992.
We also consent to the incorporation by reference of our report on the Financial
Statement Schedules, which appears on page 24 of such Annual Report on Form
10-K. We also consent to the incorporation by reference of our report dated
January 17, 1994 which appears on page 9 of the Current Report on Form 8-K dated
January 20, 1994. We also consent to the reference to us under the heading
"Experts" in such Prospectus. We also consent to the reference to us under the
heading "Summary Financial and Operating Data" in such Prospectus. However, it
should be noted that Price Waterhouse has not prepared or certified such
"Summary Financial and Operating Data."
s/Price Waterhouse
PRICE WATERHOUSE
February 4, 1994
Rochester, New York
