-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Li0CQuBniOLMSvHDU3TD9qjufWn1sKFSOu2FWYSR7FSXQQCaL0BYjZkJ2GeLKXW9 ocATvdfFdHAC1vls5bk0mA== 0000950103-02-001108.txt : 20021112 0000950103-02-001108.hdr.sgml : 20021111 20021112085147 ACCESSION NUMBER: 0000950103-02-001108 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20021112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMONWEALTH TELEPHONE ENTERPRISES INC /NEW/ CENTRAL INDEX KEY: 0000310433 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 232093008 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-101127 FILM NUMBER: 02815256 BUSINESS ADDRESS: STREET 1: 100 CTE DRIVE STREET 2: PO BOX 800 CITY: DALLAS STATE: PA ZIP: 18612-9799 BUSINESS PHONE: 7176742700 FORMER COMPANY: FORMER CONFORMED NAME: COMMONWEALTH TELEPHONE ENTERPRISES INC DATE OF NAME CHANGE: 19860501 FORMER COMPANY: FORMER CONFORMED NAME: C TEC CORP DATE OF NAME CHANGE: 19920703 S-3 1 nov1102_s3.txt As filed with the Securities and Exchange Commission on November 12, 2002 Registration No. 333- =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------------- COMMONWEALTH TELEPHONE ENTERPRISES, INC. (Exact name of Registrant as specified in its charter) Pennsylvania 23-2093008 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 100 CTE Drive Dallas, Pennsylvania 18612-9774 (570) 631-2700 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) ----------------------- Michael J. Mahoney President and Chief Executive Officer 100 CTE Drive Dallas, Pennsylvania 18612-9774 (570) 631-2700 (Name, address, including zip code, and telephone number, including area code, of agent for service) ----------------------- Copy to: Luciana Fato Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 (212) 450-4596 ----------------------- Approximate date of commencement of proposed sale to the public: From time to time 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. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] _________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ----------------------- CALCULATION OF REGISTRATION FEE =================================================================================================================================== Proposed Maximum Title of Each Class Amount to be Offering Price Per Proposed Maximum Amount of of Securities to be Registered (1) Registered (2) Share (3) Aggregate Offering Price Registration Fee (4) - ----------------------------------------------------------------------------------------------------------------------------------- Common Stock, par value $1.00 per share..... 4,741,326 $37.32 $176,946,287 $16,279.06 ===================================================================================================================================
(1) This Registration Statement covers shares of Common Stock of Commonwealth Telephone Enterprises, Inc. that may be offered and sold from time to time by Selling Stockholder named herein. (2) Includes an undetermined number of additional shares of Common Stock as may from time to time be issued by reason of stock splits, stock dividends and other similar transactions, which shares are registered hereunder pursuant to Rule 416(b). (3) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act of 1933, as amended, based on the average of the high and low trading prices of $37.62 and $37.01 of the Common Stock on November 5, 2002. (4) Calculated pursuant to Section 6(b) of the Securities Act of 1933, as amended, as follows: $92 per $1 million of proposed maximum aggregate offering price. 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 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. =============================================================================== The information in this prospectus is not complete and may be changed. The selling stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED November 12, 2002 PROSPECTUS 4,741,326 Shares of Common Stock We are registering 4,741,326 shares of our common stock for offer and sale from time to time by the selling stockholder named in this prospectus. We will not receive any of the proceeds from the sale of the shares by the selling stockholder. The selling stockholder will bear all sales commissions and similar expenses. Our common stock is traded on the Nasdaq National Market under the symbol "CTCO". On November 11, 2002, the closing sales price of one share of common stock was $38.02. See "Risk Factors" in the documents we file with the Securities and Exchange Commission that we incorporated by reference in this prospectus to read about factors you should consider before investing in the shares. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus or any accompanying prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is __________, 2002 TABLE OF CONTENTS Page ---- The Company.................................................................1 Where You Can Find More Information.........................................1 Special Note on Forward-Looking Statements..................................2 Selling Stockholder.........................................................3 Use of Proceeds.............................................................3 Plan of Distribution........................................................4 Legal Matters...............................................................5 Experts.....................................................................5 --------------------------------- You should rely only on the information contained in or incorporated by reference in this prospectus. We have not authorized anyone to provide you with information different from that contained or incorporated by reference in this prospectus. The selling stockholder is offering to sell shares of common stock and seeking offers to buy shares of common stock, only in jurisdictions where offers and sales are permitted. The information contained in or incorporated by reference in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of common stock. In this prospectus, unless the context otherwise requires, o "we," "us" and "our" refer to Commonwealth Telephone Enterprises, Inc. and its subsidiaries. o "our RLEC" and "CT" refer to Commonwealth Telephone Company, a rural local exchange carrier and a subsidiary of Commonwealth Telephone Enterprises, Inc. o "our CLEC" and "CTSI" refer to CTSI, LLC, a competitive local exchange carrier and a subsidiary of Commonwealth Telephone Company. THE COMPANY We are a telecommunications company providing telephony and related services in Pennsylvania markets as a rural local exchange carrier, or RLEC. We also operate as a competitive local exchange carrier, or CLEC, in three regional Pennsylvania markets that border our RLEC's markets, which we refer to as our "edge-out" markets. We also own and operate other telecommunications-related support businesses which all operate in the deregulated segments of the telecommunications industry and support the operations of our two primary operations. Our principal executive offices are located at 100 CTE Drive, Dallas, Pennsylvania 18612-9774, and our telephone number is 570-631-2700. We maintain a website at www.ct-enterprises.com where general information about us is available. We are not incorporating the contents of the website into this prospectus. WHERE YOU CAN FIND MORE INFORMATION As required by the Securities Act of 1933, as amended, we filed a registration statement relating to the securities offered by this prospectus with the Securities and Exchange Commission (the "SEC"). This prospectus is a part of that registration statement, which includes additional information. We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's public reference room, 450 Fifth Street, Washington, D.C. 20549. You can also request copies of the documents, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. These SEC filings are also available to the public from the SEC's web site at http://www.sec.gov. The SEC allows us to incorporate by reference the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus. Information that we file later with the SEC will automatically update information in this prospectus. In all cases, you should rely on the later information over different information included in this prospectus or the prospectus supplement. We incorporate by reference the documents listed below and any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended: o Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on March 15, 2002; o Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed with the SEC on May 14, 2002; o Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed with the SEC on August 14, 2002; o Current Report on Form 8-K dated October 28, 2002, filed with the SEC on October 28, 2002; and o The description of capital stock contained in the prospectus filed with the SEC on March 28, 2002 pursuant to Rule 424(b)(1) under the Securities Act. All documents we file pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and before the later of the completion of the offering of the securities described in this prospectus and the date the selling stockholder stops offering securities pursuant to this prospectus shall be incorporated by reference in this prospectus from the date of filing of such documents. 1 You may request a copy of these filings, at no cost, by writing or telephoning us at the following address: Commonwealth Telephone Enterprises, Inc. 100 CTE Drive Dallas, Pennsylvania 18612-9774 Attn: Investor Relations (570) 631-2700 SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS This prospectus contains or incorporates by reference certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and we intend that such forward-looking statements be subject to these safe harbors. These statements are generally accompanied by words such as "intend," "anticipate," "believe," "estimate," "expect" or similar statements. Our forward-looking statements involve risks and uncertainties that could significantly affect expected results in the future differently than expressed in any forward- looking statements we have made. These risks and uncertainties include, but are not limited to: o uncertainties relating to our ability to further penetrate our markets and the related cost of that effort; o economic conditions, acquisitions and divestitures; o government and regulatory policies; o the pricing and availability of equipment, material and inventories; o technological developments; and o changes in the competitive environment in which we operate. Additional factors that could cause or contribute to such differences are set forth herein and in "Risk Factors" and elsewhere in the documents incorporated into this prospectus by reference. Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, we cannot provide any assurance that the results contemplated in such forward-looking statements will be realized. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future events, plans or expectations that we contemplate will be achieved. Furthermore, past performance in operations and share price is not necessarily predictive of future performance. 2 SELLING STOCKHOLDER The following table sets forth certain information with respect to the ownership of common stock held by the selling stockholder and the number of shares of such stock it is offering under this prospectus. The information has been supplied by the selling stockholder. The selling stockholder may sell all, some or none of its shares in this offering. See "Plan of Distribution." Number of Shares Number of Shares Owned Prior Type of Number of to be Owned After Selling Stockholder to Offering Shares Owned Shares Offered Offering - ------------------- ---------------- ------------ -------------- ----------------- Eldorado Equity Holdings, Inc. (1) 4,741,326 (2) Common Stock 4,741,326 (2) -- (3)
- --------- (1) Eldorado Equity Holdings, Inc. is a subsidiary of Level 3 Delaware Holdings, Inc., which is a subsidiary of Level 3 Telecom Holdings, Inc. Level 3 Communications, Inc. indirectly holds all of the capital stock of Level 3 Telecom Holdings, Inc. On February 7, 2002, Level 3 Delaware Holdings, Inc. transferred all of the shares of common stock it beneficially owned to Eldorado Equity Holdings, Inc. The address of Level 3 Communications, Inc. and Level 3 Telecom Holdings, Inc. is 1025 Eldorado Blvd., Broomfield, CO 80021. The address of Level 3 Delaware Holdings, Inc. and Eldorado Equity Holdings, Inc. is 1105 North Market Street, Suite 1300, Wilmington, Delaware 19801. Eldorado Equity Holdings, Inc. also owns 1,017,061 shares of our class B common stock which are subject to a Registration Rights Agreement dated as of February 7, 2002 between us and Level 3 Communications, Inc. None of these shares of class B common stock are being offered under this prospectus. (2) Includes an undetermined number of additional shares as may from time to time be issued by reason of stock splits, stock dividends and other similar transactions. (3) Assumes the selling stockholder sells all of its shares of Common Stock. USE OF PROCEEDS We will not receive any proceeds from the sale of the common stock by the selling stockholder. 3 PLAN OF DISTRIBUTION We are registering 4,741,326 shares of our common stock on behalf of the selling stockholder. The selling stockholder may sell the shares from time to time in one or more transactions on the Nasdaq National Market or otherwise, at market prices prevailing at the time of sale, at a fixed offering price which may be changed, at varying prices determined at the time of sale or at negotiated prices. The shares may be sold by one or more means, including but not limited to the following: o in a block trade in which the broker or dealer so engaged will attempt to sell the shares of common stock as agent but may position and resell a portion of the block as principal to facilitate the transaction; o through purchases by a broker or dealer as principal and resale by that broker or dealer for its account; o in an over-the-counter distribution; o in ordinary brokerage transactions in which the broker solicits purchasers; o in connection with short sales or the writing of call options or other derivative contracts, in hedging transactions and in settlement of other transactions in standardized or over-the-counter options; o in privately negotiated transactions; o through a combination of any such methods of sale; and o through any other method permitted under applicable law and not otherwise prohibited by this prospectus. The prospectus supplement will set forth the terms of the offering of the shares including but not limited to the following: o the name or names of any underwriters, dealers or agents and the amounts of shares underwritten or purchased by each of them; and o the public offering price of the shares and the proceeds to us and any discounts, commissions or concessions allowed or reallowed or paid to dealers. Any public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. The selling stockholder will bear all underwriting fees, commissions and similar expenses related to the sale of the shares and certain other expenses that are incurred in connection with two underwritten offerings. We will bear a portion of the other expenses that are incurred in connection with two underwritten offerings and all of the expenses incurred in connection with the pre-effective filings of the registration statement, of which this prospectus forms a part. If underwriters are used in the sale of any shares, the shares will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The shares may be either offered to the public through underwriting syndicates represented by managing underwriters, or directly by underwriters. Generally, the underwriters' obligations to purchase the shares will be subject to certain conditions precedent. 4 The selling stockholder may sell the shares through agents from time to time. The prospectus supplement will name any agent involved in the offer or sale of the shares and any commissions the selling stockholder pays to them. Generally, any agent will be acting on a best efforts basis for the period of its appointment. In the event an NASD member participates in a public offering of the shares: (a) the actual price and selling terms will be disclosed in post-effective amendments or prospectus supplements; (b) maximum compensation to be received by any NASD member in such a distribution will be disclosed and submitted for NASD approval; and (c) prior to the commencement of the distribution, underwriting documents proposed for use will be submitted for NASD review. The maximum commission or discount to be received by any NASD member or independent broker- dealer will not be greater than 8% for the sale of any shares registered hereby. Agents and underwriters may be entitled to indemnification by the selling stockholder and/or us against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which the agents or underwriters may be required to make in respect thereof. Agents and underwriters may be customers of, engage in transactions with, or perform services for the selling stockholder and/or us in the ordinary course of business. Any underwriters, broker-dealers or agents participating in the distribution of the shares covered by this prospectus may be deemed to be "underwriters" within the meaning of the Securities Act, and any commissions received by any of those underwriters, broker-dealers or agents may be deemed to be underwriting commissions under the Securities Act. LEGAL MATTERS The validity of the common stock will be passed on for us by Kenneth E. Lee, Vice President, General Counsel and Secretary of our company. EXPERTS The consolidated financial statements of Commonwealth Telephone Enterprises, Inc. incorporated in this prospectus by reference to the Annual Report on Form 10-K of Commonwealth Telephone Enterprises, Inc. for the year ended December 31, 2001, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 5 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution The following are the estimated expenses to be incurred and paid by the Registrant in connection with the offering described in this Registration Statement (other than underwriting fees, commissions and similar expenses). The selling stockholder will bear certain other expenses that are incurred in connection with two underwritten offerings. We will bear a portion of the other expenses that are incurred in connection with two underwritten offerings and all of the expenses incurred in connection with the pre-effective filings of this Registration Statement. All amounts are estimates except the SEC registration fee. Amount to be Paid -------------- SEC registration fee................................ $ 16,279 NASD filing fee .................................... 18,200 Legal fees and expenses............................. 75,000 Accounting fees and expenses........................ 100,000 Transfer agent fees................................. 2,500 Miscellaneous....................................... 8,021 Total............................................ $ 220,000 ============== Item 15. Indemnification of Directors and Officers Section 1713 of Subchapter B of the Pennsylvania Business Corporation Law of 1988, as amended (the "BCL"), provides that, if the bylaws of a business corporation so provide, no director shall be personally liable for monetary damages for any action or failure to act unless the director has breached or failed to perform his or her duties under Subchapter B of Chapter 17 of the BCL and the breach or failure to perform constitutes self-dealing, wilful misconduct or recklessness, provided that such provision does not apply to the responsibility or liability of a director with respect to any criminal statute or for the payment of taxes. The Company's Bylaws ("Bylaws") contain provisions which limit the liability of directors as described in Section 1713. Subchapter D (Sections 1741 through 1750) of Chapter 17 of the BCL contains provisions for mandatory and discretionary indemnification of a corporation's directors, officers, employees and agents (collectively, "Representatives") and related matters. Under Section 1741, subject to certain limitations, a corporation has the power to indemnify directors, officers and other Representatives under certain prescribed circumstances against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative, to which any of them is a party or threatened to be made a party by reason of his being a Representative of the corporation or serving at the request of the corporation or serving at the request of the corporation as a Representative of another corporation, partnership, joint venture, trust or other enterprise, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. Section 1742 provides for indemnification with respect to derivative actions similar to that provided by Section 1741. However, indemnification is not provided under Section 1742 in respect of any claim, issue or matter as to which a Representative has been adjudged to be liable to the corporation unless and only to the extent that the II-1 proper court determines upon application that, despite the adjudication of liability but in view of all the circumstances of the case, a Representative is fairly and reasonably entitled to indemnity for the expenses that the court deems proper. Section 1743 provides that indemnification against expenses is mandatory to the extent that a Representative has been successful on the merits or otherwise in defense of any such action or proceeding referred to in Section 1741 or 1742. Section 1744 provides that unless ordered by a court, any indemnification under Section 1741 or 1742 shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of a Representative is proper because the Representative met the applicable standard of conduct, and such determination will be made by the board of directors by a majority vote of a quorum of directors not parties to the action or proceeding; if a quorum is not obtainable or if obtainable and a majority of disinterested directors so directs; by independent legal counsel; or by the stockholders. Section 1745 provides that expenses incurred by a Representative in defending any action or proceeding referred to in Subchapter D of Chapter 17 of the BCL may be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of the Representative to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation. Except as otherwise provided in the Company's Bylaws, advancement of expenses shall be authorized by the board of directors. Section 1746 provides generally that except in any case where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted wilful misconduct or recklessness, the indemnification and advancement of expenses provided by Subchapter D of Chapter 17 of the BCL shall not be deemed exclusive of any other rights to which a Representative seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding that office and that the corporation may create a fund or otherwise secure or insure its indemnification obligation, whether arising by law or otherwise. Section 1747 grants a corporation the power to purchase and maintain insurance on behalf of any Representative against any liability incurred by him in his capacity as a Representative, whether or not the corporation would have the power to indemnify him against that liability under Subchapter D of Chapter 17 of the BCL. Sections 1748 and 1749 apply the indemnification and advancement of expense provisions contained in Subchapter D of Chapter 17 of the BCL to successor corporations resulting from consolidation, merger or division and to service as a representative of a corporation with respect to an employee benefit plan. Section 1750 provides that the indemnification and advancement of expenses provided by, or granted pursuant to, Subchapter D of Chapter 17 of the BCL shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a Representative and shall inure to the benefit of the heirs and personal representatives of such Representatives. The Company's Bylaws provide that each person who was or is made a party or is threatened to be made a party to or is involved in any action, suits or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "Proceeding"), by reason of the fact that he is or was a director or officer of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another entity, including service with respect to employee benefit plans, shall be indemnified and held harmless by the Company, to the extent such person is not otherwise entitled to indemnification (including indemnification under any insurance policy maintained by the person, the Company or any other entity), to the fullest extent authorized by Pennsylvania law, against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith. Such II-2 indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his heirs, executors and administrators. The Company shall indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the board of directors of the Company. Indemnification thereunder shall apply whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent. The right to indemnification conferred by the Bylaws shall be a contract right and shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition. If Pennsylvania law so requires, the payment of such expenses incurred by a director or officer in his capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service with respect to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Company of an undertaking, by or on behalf of such person, to repay all amounts so advanced if it shall ultimately be determined that such person is not entitled to be indemnified. The Company may, by action of its board of directors, enter into contracts with its directors, officers, employees and/or agents to provide such indemnification for such actions as it may deem appropriate not inconsistent with the provisions of applicable Pennsylvania law. The Company's Bylaws authorize the Company to purchase and maintain insurance to protect itself and/or any director, officer, employee or agent of the Company or another entity against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss pursuant to applicable Pennsylvania law now or hereafter in effect. The Company has purchased such insurance. Item 16. Exhibits and Financial Statement Schedules (a) The following exhibits are filed as part of this Registration Statement: Exhibit No. Document ----------- -------- 5.1 Opinion of Kenneth E. Lee, Vice President, General Counsel and Secretary (includes consent). 10.1 Shelf Registration Agreement dated as of November 12, 2002 among Registrant, Level 3 Communications, Inc. and Eldorado Equity Holdings, Inc. 23.1 Consent of PricewaterhouseCoopers LLP. 23.2 Consent of Kenneth E. Lee, Vice President, General Counsel and Secretary (included in Exhibit 5.1). 24.1 Powers of Attorney (included on the signature page of the Registration Statement). Item 17. Undertakings The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made of securities registered hereby, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of II-3 securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (i) and (ii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post- effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 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 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered herein, 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: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance under 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 of 1933 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 of 1933, 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. Insofar as indemnification for liabilities arising under the Securities Act of 1933 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 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (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 by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of their 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 of 1933 and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the 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 Borough of Dallas, Commonwealth of Pennsylvania, on November 12, 2002. COMMONWEALTH TELEPHONE ENTERPRISES, INC. By: /s/ Michael J. Mahoney ------------------------------------- Michael J. Mahoney President, Chief Executive Officer and Director POWERS OF ATTORNEY Each person whose signature appears below hereby constitutes and appoints Michael J. Mahoney and Donald P. Cawley, and each acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any or all amendments or supplements to this Registration Statement, whether pre-effective or post-effective, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing necessary or appropriate to be done with respect to this Registration Statement or any amendments or supplements hereto in the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date - --------- ----- ---- /s/Michael J. Mahoney President, Chief Executive Officer November 12, 2002 - --------------------------------------- and Director Michael J. Mahoney (principal executive officer) /s/Donald P. Cawley Senior Vice President and Chief November 12, 2002 - ----------------------------------------Accounting Officer Donald P. Cawley (principal financial officer and principal accounting officer) /s/David C. McCourt Chairman of the Board of Directors November 12, 2002 - ---------------------------------------- David C. McCourt /s/Michael A. Adams Director November 12, 2002 - --------------------------------------- Michael A. Adams II-5
Signature Title Date - --------- ----- ---- /s/James Q. Crowe Director November 12, 2002 - ---------------------------------------- James Q. Crowe Director November 12, 2002 - ---------------------------------------- Stuart E. Graham /s/Frank M. Henry Director November 12, 2002 - ---------------------------------------- Frank M. Henry /s/Richard R. Jaros Director November 12, 2002 - ---------------------------------------- Richard R. Jaros /s/Daniel E. Knowles Director November 12, 2002 - ---------------------------------------- Daniel E. Knowles /s/David C. Mitchell Director November 12, 2002 - ---------------------------------------- David C. Mitchell /s/Eugene Roth Director November 12, 2002 - ---------------------------------------- Eugene Roth /s/Walter Scott, Jr. Director November 12, 2002 - ---------------------------------------- Walter Scott, Jr. /s/Timothy J. Stoklosa Director November 12, 2002 - ---------------------------------------- Timothy J. Stoklosa /s/John J. Whyte Director November 12, 2002 - ---------------------------------------- John J. Whyte
II-6 EXHIBIT INDEX Exhibit No. Document - ----------- -------- 5.1 Opinion of Kenneth E. Lee, Vice President, General Counsel and Secretary (includes consent). 10.1 Shelf Registration Agreement dated as of November 12, 2002 among Registrant, Level 3 Communications, Inc. and Eldorado Equity Holdings, Inc. 23.1 Consent of PricewaterhouseCoopers LLP. 23.2 Consent of Kenneth E. Lee, Vice President, General Counsel and Secretary (included in Exhibit 5.1). 24.1 Powers of Attorney (included on the signature page of the Registration Statement). II-7 EX-5.1 3 nov1102_ex0501.txt Exhibit 5.1 [CTE Logo] OPINION OF REGISTRANT'S COUNSEL November 12, 2002 Commonwealth Telephone Enterprises, Inc. 100 CTE Drive Dallas, PA 18612 Ladies and Gentlemen: Commonwealth Telephone Enterprises, Inc., a Pennsylvania corporation (the "Company") is filing with the Securities and Exchange Commission a Registration Statement on Form S-3 (the "Registration Statement") for the purpose of registering under the Securities Act of 1933, as amended (the "Securities Act"), the sale, pursuant to Rule 415 under the Securities Act, by a third party of 4,741,326 shares of its common stock, par value $1 per share (the "Securities"), as described in the Registration Statement. I have examined such documents and such matters of fact and law that I have deemed necessary for the purpose of rendering the opinion expressed herein. Based on the foregoing, I am of the opinion that, when the Securities have been delivered against payment therefor in accordance with the terms of the Underwriting Agreement referred to in the prospectus which is a part of the Registration Statement, the Securities will be validly issued, fully paid and non-assessable. I hereby consent to the filing of this opinion as an Exhibit to the Registration Statement referred to above, and further consent to the reference to my name under the caption "Legal Matters" in the prospectus which is a part of the Registration Statement, without admitting that I am an expert within the meaning of the Securities Act. Very truly yours, /S/Kenneth E. Lee --------------------------------- Kenneth E. Lee Vice President, General Counsel and Secretary II-8 EX-10.1 4 nov1102_ex1001.txt Exhibit 10.1 SHELF REGISTRATION AGREEMENT AGREEMENT dated as of November 12, 2002 among Commonwealth Telephone Enterprises, Inc., a Pennsylvania corporation (the "Company"), Level 3 Communications, Inc., a Delaware corporation ("Level 3") and Eldorado Equity Holdings, Inc., a Delaware corporation ("Eldorado"). WHEREAS, Level 3 is the indirect beneficial owner of 4,741,326 issued and outstanding shares of the Company's Common Stock, par value $1.00 per share (together with any shares distributed as a dividend with respect to, or issued in exchange for or in replacement of such stock, the "Common Stock"), and 1,017,061 issued and outstanding shares of the Company's Class B Common Stock, par value $1.00 per share (together with any shares distributed as a dividend with respect to, or issued in exchange for or in replacement of such stock, the "Class B Common Stock"; and together with the Common Stock, the "Capital Stock"). WHEREAS, Eldorado is an indirect, wholly-owned subsidiary of Level 3 and the holder of record of the Capital Stock. WHEREAS, the Company and Level 3 have entered into a Registration Rights Agreement dated as of February 7, 2002 (the "Registration Rights Agreement"). WHEREAS, the parties hereto desire to enter into this Agreement to govern the filing and use of a shelf registration statement (the "Registration Statement") with the U.S. Securities and Exchange Commission (the "Commission") to allow for the offer and sale from time to time of the Common Stock by Eldorado. WHEREAS, the parties hereto desire to supersede the Registration Rights Agreement with this Agreement insofar as the Registration Rights Agreement relates to offers and sales of Common Stock. WHEREAS, the parties hereto intend for the Registration Rights Agreement to remain operative as it relates to offers and sales of Class B Common Stock. WHEREAS, the Company and Level 3 desire to amend and restate the allocation of registration expenses and certain other terms that are set forth in the Registration Rights Agreement as set forth herein. NOW, THEREFORE, the parties hereto agree as follows: II-9 ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions. The following terms, as used herein, have the following meanings: "Adverse Disclosure" means public disclosure of material non-public information, which disclosure in the good faith judgment of the Chief Executive Officer of the Company: (i) would be required to be made in the Registration Statement or any supplement thereto filed by the Company with the Commission so that the Registration Statement would not be materially misleading; (ii) would not be required to be made at such time but for the filing of such supplement to the Registration Statement; and (iii) is such that it would be seriously detrimental to the Company or its shareholders if it were publicly disclosed. "Agent" means a securities broker who arranges for the purchase of shares and who does not purchase such shares as principal. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the Borough of Manhattan or the City of New York are authorized or obligated by law or executive order to close. "Company Expenses" means: (i) registration and filing fees with the Commission and the NASD, Inc., (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with applicable blue sky qualifications), (iii) printing expenses, (iv) fees and expenses incurred in connection with the listing or quotation of shares, (v) fees and expenses of counsel to the Company and fees and expenses of independent certified public accountants for the Company (including fees and expenses associated with any special audits or the delivery of comfort letters), (vi) reasonable fees and expenses of any additional experts retained by the Company in connection with any offer of shares, and (vii) reasonable fees and expenses of one counsel for both Level 3 and Eldorado not to exceed $25,000. "Demand Registration" means a Demand Registration as such term is defined in Section 2.1 of the Registration Rights Agreement. "Person" means an individual, corporation, limited liability company, partnership, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Subsidiary" means each corporation, partnership, joint venture or other legal entity of which a holder of Common Stock beneficially owns, directly or indirectly, more than 50% of the outstanding stock or other equity interests. II-10 "Underwriter" means a securities dealer who purchases shares as principal and not as part of such dealer's market-making activities. ARTICLE 2 STATUS OF REGISTRATION RIGHTS AGREEMENT SECTION 2.01. Status of Registration Rights Agreement. (a) The parties hereto hereby agree that upon the effectiveness of this Agreement, the Registration Rights Agreement shall no longer be effective insofar as the Registration Rights Agreement relates to offers and sales of Common Stock. (b) The Registration Rights Agreement shall remain operative and in full force and effect at all times insofar as it relates to offers and sales of Class B Common Stock. (c) Notwithstanding Section 2.01(a) hereof and for the avoidance of doubt, the indemnification and contribution provisions contained in Article 4 of the Registration Rights Agreement, insofar as such provisions relate to sales of Capital Stock made thereunder, shall remain operative in their entirety and in full force and effect at all times and regardless of the effectiveness of this Agreement. (d) Upon the effectiveness of this Agreement, Section 3.2(a) of the Registration Rights Agreement shall be amended and restated as set forth in Section 4.02 hereof. (e) Nothing contained herein shall limit the number of Demand Registrations that may be exercised under the Registration Rights Agreement. ARTICLE 3 SHELF REGISTRATION SECTION 3.01. Shelf Registration. (a) The Company is currently eligible to use Form S-3 and will use all commercially reasonable efforts to maintain such eligibility during the Effective Period (as defined in Section 3.01(c)), and, in the event such eligibility is not maintained, the Company shall convert the Registration Statement to a registration statement on Form S-1. (b) Subject to Section 3.01(c) below, the Company will use all commercially reasonable efforts to expeditiously prepare and file, within 5 Business Days of the date of this Agreement, the Registration Statement with the Commission on Form S-3 to register the Common Stock for offer and sale by Eldorado or its permitted assigns on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"). II-11 (c) The Company will use all commercially reasonable efforts to expeditiously cause the Registration Statement to become effective and to remain so until the date on which Level 3 and its affiliates no longer beneficially own any shares of Common Stock (the "Effective Period"); provided that if the Company shall furnish to Level 3 a certificate signed by the Company's Chairman or President stating that, in the good faith judgment of the Company's Board of Directors, it would be seriously detrimental to the Company or its shareholders for the Registration Statement to be filed or become effective as expeditiously as possible, the Company may postpone, upon giving prompt (but in any event within 5 Business Days of such determination) written notice of such action to Level 3, the filing or effectiveness of the Registration Statement for a period of not more than 120 days (provided that the Company may not defer such filing or effectiveness pursuant to this clause more than once); and provided further that if (i) the effective date of the Registration Statement would otherwise be at least 45 days, but fewer than 90 days, after December 31, 2002, and (ii) the Securities Act requires the Company to include audited financials as of December 31, 2002, the Company may delay the effectiveness of the Registration Statement for such period as is reasonably necessary to include therein its audited financial statements as of and for the year ended December 31, 2002, although the Company will use all commercially reasonable efforts to minimize the length of such delay. The Company shall promptly (but in any event within 5 Business Days) notify Level 3 of the termination of any such suspension period. (d) The Company will, if requested, prior to filing the Registration Statement or any amendment or supplement thereto, furnish to Level 3 and each managing Underwriter or Agent, if any, copies thereof, and thereafter furnish to Level 3 and each such Underwriter or Agent, if any, such number of copies of the Registration Statement, amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein) and the prospectus included in the Registration Statement (including each preliminary prospectus supplement and prospectus supplement) as Level 3 or each such Underwriter or Agent may reasonably request in order to facilitate the offer and sale of the Common Stock. (e) The Company will promptly notify Level 3 of any stop order issued in connection with the Registration Statement or, to the Company's knowledge, threatened to be issued by the Commission, and will take all commercially reasonable actions required to prevent the entry of such stop order or to remove it if entered. (f) Notwithstanding any provision contained herein to the contrary, the Company will pay all pre-effective expenses that do not relate to a specific Shelf Takedown (as defined in Section 4.01(a)) incurred in connection with the Registration Statement. (g) To the extent a post-effective amendment to the Registration Statement is required by Rule 416 under the Securities Act, the Company shall at its expense file such an amendment (or take such other action to fulfill such requirement as is then permitted by the Staff of the Commission) within 2 Business Days of the effective date of the event requiring such action. II-12 ARTICLE 4 SHELF TAKEDOWNS SECTION 4.01. Shelf Takedowns. (a) So long as the Registration Statement is effective, Eldorado may offer and sell some or all of the Common Stock through Underwriters or Agents ("Underwritten Takedowns") or directly to investors ("Direct Takedowns", and together with Underwritten Takedowns, "Shelf Takedowns"), as more fully described in the Registration Statement. Level 3 shall have the right to select the managing Underwriters or Agents and any additional investment bankers, managers, dealers, brokers or agents to be used in connection with any Underwritten Takedown, subject to the Company's approval, which approval shall not be unreasonably withheld, conditioned or delayed. (b) Level 3 shall provide verbal notice to the Company immediately prior to a proposed Direct Takedown and shall provide written notice to the Company 5 Business Days prior to a proposed Underwritten Takedown. Such written notice shall state that Level 3, to the best knowledge of one of its authorized officers, is not, and will not be at the time of the sale, in possession of any material, non-public information regarding the Company and shall specify the number of shares of Common Stock to be offered and the intended method of disposition of such shares. (c) At the request of any Underwriter or Agent (as the case may be) in connection with any Underwritten Takedown, Level 3 and Eldorado will complete and execute all customary and normal questionnaires, powers of attorney, custody arrangements, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting or placement agreements and this Agreement. (d) The Company will use all commercially reasonable efforts to qualify the shares to be offered in a Shelf Takedown under such securities or blue sky laws of such jurisdictions in the United States as Level 3 shall reasonably request; provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction. (e) At the request of any Underwriter or Agent (as the case may be) in connection with any Underwritten Takedown, the Company will enter into customary agreements (including an underwriting or placement agreement in customary form) and take such other actions as are required in order to expedite or facilitate such Underwritten Takedown, including furnishing (i) an opinion of counsel addressed to the Underwriters or Agents (as the case may be) covering such customary matters as the managing Underwriter or Agent (as the case may be) may reasonably request and (ii) a comfort letter or comfort letters from the Company's independent public accountants covering such customary matters as the managing Underwriter or Agent (as the case may be) may reasonably request. In connection with any Direct Takedown, the Company will enter into customary agreements and take such other actions as are reasonably required in order to expedite or facilitate the Direct Takedown. II-13 (f) An Underwritten Takedown will not count as an Underwritten Takedown for the purposes of Section 4.02 hereof unless the distribution contemplated thereby is actually consummated. Should the distribution contemplated by an Underwritten Takedown not be consummated due to the failure of Level 3 or Eldorado to perform its obligations under this Agreement or the inability of Level 3 or Eldorado to reach agreement with the Underwriters or Agents (as the case may be) for the proposed sale on the price or other customary terms for such transaction, or in the event that Level 3 or Eldorado withdraws or does not pursue the Underwritten Takedown (in each of the foregoing cases, provided that at such time the Company is in compliance in all material respects with its obligations under this Agreement), then such Underwritten Takedown shall not be deemed to have been effected for the purposes of Section 4.02 hereof but Level 3 shall pay those expenses incurred by the Company in connection therewith as set forth in Section 4.02 hereof. (g) (i) The Company will have the right to preempt, subject to Sections 4.01(g)(ii) and (iii) hereof, any Underwritten Takedown with a primary registration (a "Proposed Offering") by delivering written notice (the "Proposed Offering Notice") of such intention to Level 3 (within 5 Business Days after the Company has received from Level 3 a request for such a takedown) indicating that the Company has identified a specific business need and use for the proceeds of the sale of such securities, the required time frame for such need directly interferes with the proposed Underwritten Takedown and the Company shall use all commercially reasonable efforts to consummate the sale of such securities pursuant to such primary registration within 90 days of such notice. Upon the Company's preemption of an Underwritten Takedown, such takedown shall not count as an Underwritten Takedown for the purposes of Section 4.02. The Company shall not be entitled to exercise this right of preemption more than one time in any 180-day period. (ii) In the case of a Proposed Offering (other than an offering made on Form S-4 or S-8 or pursuant to Rule 415 (or any substitute form or rule, respectively, that may be adopted by the Commission)), the Company shall offer Level 3 the opportunity in the Proposed Offering Notice to conduct a concurrent offering of such number of shares (subject to 4.01(g)(iii) hereof) of Common Stock held by Eldorado as Level 3 may request (a "Concurrent Offering") on the same terms and conditions as the Proposed Offering. Level 3 will have 5 Business Days after receipt of the Proposed Offering Notice to notify the Company as to whether it wishes to conduct a Concurrent Offering and, if so, the number of shares of Common Stock proposed to be included in such offering; provided that should Level 3 fail to provide timely notice to the Company, Level 3 and Eldorado will forfeit any rights to conduct a Concurrent Offering with respect to such Proposed Offering. The Company shall be entitled to select the Underwriters in connection with any Proposed Offering and any Concurrent Offering. (iii) Notwithstanding anything contained herein, if the managing underwriter of a Proposed Offering advises the Company and Level 3 that marketing factors require a limitation of the number of shares to be underwritten, then the number of securities to be offered in the Proposed Offering for the account of selling persons exercising piggy-back registration rights (other than Eldorado) shall be reduced to the extent necessary to reduce the total size of the Proposed Offering and the Concurrent Offering to the number of securities recommended (the "Recommended Amount") by the managing underwriter; provided however that, to the extent that the total number of shares to be offered in the Proposed Offering and the Concurrent Offering after such reduction continues to exceed the Recommended Amount, the number of shares to be offered by Eldorado in the Proposed Offering and the Concurrent Offering shall then be reduced until the Recommended Amount is met. For the avoidance of doubt, nothing contained in this Section 4.01(g)(iii) shall reduce the number of securities to be offered by the Company in the Proposed Offering. II-14 (iv) If the Company shall determine in its sole discretion not to conduct such Proposed Offering, the Company shall provide written notice of such determination within 1 Business Day of such determination to Level 3. Upon receipt of such notice, Level 3 and Eldorado shall have the right to exercise a Shelf Takedown. (h) Notwithstanding the preemption provision contained in the immediately preceding paragraph, if a Shelf Takedown would require the Company to make an Adverse Disclosure, the Company shall have the right to prevent, for the shortest period of time determined in good faith by the Chief Executive Officer of the Company to be necessary for such purpose (the "Suspension Period"), any Shelf Takedown by delivering written notice of such intention (the "Suspension Notice") to Level 3 within 2 Business Days after the Company has received from Level 3 a request for such a takedown. The Company shall deliver a written notice to Level 3 stating that the Chief Executive Officer of the Company has determined in good faith that the Suspension Period has expired (the "Suspension Expiration Notice") within 1 Business Day of such determination. Notwithstanding the foregoing, (i) the Company shall not be permitted to exercise such suspension right more than 1 time in any 12-month period or for a period that exceeds 90 days per exercise of such right and (ii) Level 3 shall have the right to exercise a Shelf Takedown upon the earlier of (x) the 90th day following the date on which Level 3 receives the Suspension Notice and (y) the date on which such Adverse Disclosure is made or Level 3 receives the Suspension Expiration Notice. (i) Notwithstanding any other provision in this Article 4, Level 3 shall not request an Underwritten Takedown within 90 days of the completion of a prior Underwritten Takedown. (j) The Company will as promptly as is practicable notify Level 3, at any time when a prospectus relating to the sale of shares of Common Stock is required by law to be delivered in connection with sales by an Underwriter or Agent (as the case may be), of the occurrence of any event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such shares, such prospectus (as amended or supplemented) will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and promptly make available to Level 3 and any Underwriters or Agents (as the case may be) any such amendment or supplement. Upon receipt of any notice from the Company of the occurrence of any event of the kind described in the preceding sentence, Level 3 will forthwith discontinue, or cause to be discontinued, the offer and sale of shares pursuant to the Registration Statement until receipt by Level 3 and the Underwriters or Agents (as the case may be) of the copies of such supplemented or amended prospectus and, if so directed by the Company, Level 3 will deliver, or cause to be delivered, to the Company all copies, other than permanent file copies then in the possession of Level 3 or any of its affiliates, of the most recent prospectus covering such shares at the time of receipt of such notice. (k) The Company may require Level 3 to promptly furnish in writing to the Company such information regarding Level 3 and its affiliates, the plan of distribution of the shares of Common Stock and other information as the Company may from time to time reasonably request or as may be legally required in connection with a Shelf Takedown. (l) The Company shall make generally available to its security holders, as soon as reasonably practicable, an earning statement covering a period of 12 months, beginning within three months after II-15 the effective date of the Registration Statement, which earning statement shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. (m) The Company shall use all commercially reasonable efforts to cause the Common Stock to be listed on each securities exchange or quoted on each inter-dealer quotation system on which the Common Stock is then listed or quoted. (n) Level 3 and Eldorado agree, if requested by the Company and an underwriter of equity securities of the Company, not to offer, sell, contract to sell or otherwise dispose of shares of Common Stock, or any securities convertible into or exchangeable or exercisable for such securities, during the 90-day period beginning on the effective date of the registration statement filed in connection therewith, provided that all executive officers and directors of the Company enter into similar arrangements. SECTION 4.02. Registration and Shelf Takedown Expenses. (a) Subject to Section 3.01(f) hereof, Level 3 shall bear 50% of the Company Expenses incurred in connection with each of an aggregate of any three (including the Demand Registration that was consummated on or about April 2, 2002) Underwritten Takedowns or Demand Registrations (up to $500,000 per Underwritten Takedown or Demand Registration, as the case may be) and the Company shall bear the balance of the Company Expenses in such cases. Level 3 shall bear 100% of the Company Expenses incurred in connection with any other Underwritten Takedowns or Demand Registrations. Level 3 shall also bear 100% of the Company Expenses incurred in connection with any Direct Takedown, except for (i) ordinary expenses that the Company would have otherwise incurred in satisfying its ongoing reporting requirements under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and (ii) any expenses that the Company may incur in connection with the issuance of a legal opinion to the transfer agent for the shares of Common Stock. The Company shall bear all of the Company Expenses incurred in connection with a Proposed Offering and a Concurrent Offering, whether or not such offerings are consummated. Level 3 shall pay any underwriting fees, discounts or commissions attributable to the sale of any Capital Stock and any out-of-pocket expenses of Level 3 and its affiliates (other than the fees and expenses of counsel described in clause (vii) of the definition of "Company Expenses" set forth in Article I hereof). In the event that a distribution contemplated by an Underwritten Takedown or a Demand Registration is not consummated for any reason other than the failure by the Company to perform its obligations under this Agreement or the Registration Rights Agreement, all reasonable Company Expenses incurred in connection with such takedown or registration shall be borne by Level 3; provided that should the distribution contemplated by an Underwritten Takedown or Demand Registration not be consummated due to Level 3 or any of its affiliates withdrawing such Underwritten Takedown or a Demand Registration as a result of either (x) a material adverse change in the condition (financial or otherwise), business, assets or results of operations of the Company and its subsidiaries taken as a whole or (y) a material adverse change in the United States financial markets, in either case occurring subsequent to the date of the written request made by Level 3 hereunder, Level 3 and the Company shall each bear 50% of the Company Expenses incurred with such withdrawn Underwritten Takedown or Demand Registration. (b) Notwithstanding any provision in this Agreement to the contrary, each party to this Agreement shall bear its own expenses (including attorneys' fees and expenses and the fees and expenses of any financial adviser) incurred by that party in connection with the negotiation, review, preparation and execution of this Agreement, and Level 3 shall have no responsibility for the payment of any other expenses incurred by the Company related to the transactions contemplated herein other than as set forth in Section 4.02(a) hereof. II-16 ARTICLE 5 INDEMNIFICATION AND CONTRIBUTION SECTION 5.01. Indemnification by the Company. The Company agrees to indemnify and hold harmless Level 3 and Eldorado from and against any and all losses, claims, damages and liabilities (including reasonable attorneys' fees) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or prospectus (as amended or supplemented) or any preliminary prospectus supplement, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by or contained in or based upon any information furnished in writing to the Company by Level 3 or any Underwriter or Agent (as the case may be) expressly for use therein. The Company also agrees to indemnify any Underwriters or Agents (as the case may be) of Common Stock, their officers and directors, and each person who controls such Underwriters or Agents (as the case may be), on substantially the same basis as that of the indemnification of Level 3 and Eldorado provided in this Section 5.01. SECTION 5.02. Indemnification by Level 3. Level 3 agrees to indemnify and hold harmless the Company, its officers and directors, and each Person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to Level 3 and Eldorado, but only with reference to information furnished in writing by or on behalf of Level 3 and Eldorado expressly for use in the Registration Statement, prospectus or prospectus supplement relating to the Common Stock, or any amendment or supplement thereto, or any preliminary prospectus supplement or the failure to deliver a copy of such Registration Statement or prospectus or any amendments or supplements thereto due to the fault of Level 3 or Eldorado. Level 3 and Eldorado also agree to indemnify and hold harmless any Underwriters or Agents (as the case may be) of Common Stock, their officers and directors and each person who controls such Underwriters or Agents (as the case may be), their officers and directors and each person who controls such Underwriters or Agents (as the case may be) on substantially the same basis as that of the indemnification of the Company provided in this Section 5.02. The extent of Level 3 and Eldorado's liability under this Section 5.02 shall be limited to the amount Eldorado receives in the relevant offering of Common Stock. SECTION 5.03. Conduct of Indemnification Proceedings. In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to Section 5.01 or Section 5.02, such Person (the "Indemnified Party") shall promptly notify the Person against whom such indemnity may be sought (the "Indemnifying Party") in writing and the Indemnifying Party, upon the request of the Indemnified Party, shall retain counsel reasonably satisfactory to such Indemnified Party to represent such Indemnified Party and any others the Indemnifying Party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnified Party and the Indemnifying Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties, II-17 and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by the Indemnified Parties. The Indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, which consent will not be unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. SECTION 5.04. Contribution. If the indemnification provided for in this Article 5 is unavailable to an Indemnified Party in respect of any losses, claims, damages or liabilities in respect of which indemnity is to be provided hereunder, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall to the fullest extent permitted by law contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the Company (on the one hand) and Level 3 and Eldorado (on the other hand) in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company (on the one hand) and Level 3 and Eldorado (on the other hand) shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, Level 3 and Eldorado agree that it would not be just and equitable if contribution pursuant to this Section 5.04 were determined by pro rata allocation (even if Level 3 and Eldorado were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Article 5, neither Level 3 nor Eldorado shall be required to contribute any amount in excess of the amount by which the net proceeds of the offerings (before deducting expenses) received by Eldorado exceeds the amount of any damages which Level 3 and Eldorado have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. ARTICLE 6 MISCELLANEOUS SECTION 6.01. Notices. Except as otherwise provided herein, all notices, requests and other communications to any party hereunder shall be in writing (including telecopy or similar writing) and shall be given, II-18 If to the Company, to: Commonwealth Telephone Enterprises, Inc. 100 CTE Drive Dallas, PA 18612 Attention: General Counsel With a copy to: Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 Attention: Lucy Fato Telecopy: (212) 450-3596 If to Level 3 or Eldorado, to: Level 3 Communications, Inc. 1025 Eldorado Blvd. Broomfield, CO 80021 Attention: General Counsel Telecopy: (720) 888-5619 With a copy to: Willkie Farr & Gallagher 787 Seventh Avenue New York, NY 10019 Attention: David Boston Telecopy: (212) 728-8111 or such other address or telecopier number as such party may hereafter specify for the purpose by notice to the other parties hereto. Each such notice, request or other communication shall be effective when delivered at the address specified in this Section 6; provided that any copy provided to counsel to a party hereto shall not constitute delivery of such notice, request or other communication to such party for purposes of this Agreement. SECTION 6.02. Amendments; No Waivers. (a) Any provision of this Agreement may be amended or waived if and only if such amendment or waiver is in writing and signed, in the case of an amendment, by Level 3 and the Company, or in the case of a waiver, by the party or parties against whom the waiver is to be effective. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a wavier thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 6.03. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns; provided that, except as set forth in Section 6.03(b) hereof, no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement, directly or indirectly, whether by operation of law or otherwise, without the written consent of the other parties hereto, and any II-19 attempted assignment contrary to the terms hereof shall be null and void. Neither this Agreement nor any provision hereof is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder. (b) Notwithstanding the provisions of Section 6.03(a) hereof, Eldorado or any other holder who holds shares pursuant to this subsection may transfer and assign its rights and obligations under this Agreement without the prior written consent of the Company under the following circumstances: (i) the transfer by a deceased person to his or her executors or heirs or by an incompetent person to his or her legal guardian; (ii) the transfer by such a holder of a minimum of 1,500,000 shares of Common Stock (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like) to any Person in a bona fide private placement transaction; and (iii) the transfer by such a holder to any Subsidiary of such a holder, provided that such entity continues as a Subsidiary to such transferring or assigning holder to and including the time such Subsidiary exercises any of its rights hereunder. (c) Prior to any transfer or assignment of rights under Section 6.03(b) hereof, the transferring or assigning holder shall provide the Company with notice of the transferee's or assignee's name and address and of the shares of Common Stock with respect to which such rights are being transferred or assigned. The transferee or assignee of rights under Section 6.03(b) hereof shall assume the obligations of the transferring or assigning holder under this Agreement in a written instrument delivered to the Company, whereupon the transferring and assigning holder shall be released from all liability under this Agreement other than, and solely with regard to, the provisions of Section 4.02 of this Agreement. SECTION 6.04. Counterparts: Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto. SECTION 6.05. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral, between the parties hereto with respect thereto. SECTION 6.06. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without regard to the conflicts of law rules of such state. SECTION 6.07. Jurisdiction. Except as otherwise expressly provided in the Agreement, the parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York or any New York State court sitting in the Borough of Manhattan, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an II-20 inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 6.01 shall be deemed effective service of process on such party. SECTION 6.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATE HEREBY. SECTION 6.09. Headings. The headings contained in the Agreement are for reference purposes only and shall not in any way affect the meaning of interpretation of this Agreement. II-21 IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or caused this Agreement to be duly executed by their respective authorized officers, as of the day and year first above written. COMMONWEALTH TELEPHONE ENTERPRISES, INC. By: /s/ Michael J. Mahoney ------------------------------------------- Name: Michael J. Mahoney Title: President and Chief Executive Officer LEVEL 3 COMMUNICATIONS, INC. By: /s/ Neil J. Eckstein ------------------------------------------- Name: Neil J. Eckstein Title: Vice President ELDORADO EQUITY HOLDINGS, INC. By: /s/ Neil J. Eckstein ------------------------------------------- Name: Neil J. Eckstein Title: Vice President II-22 EX-23.1 5 nov1102_ex2301.txt Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated February 11, 2002 relating to the financial statements and financial statement schedules, which appears in Commonwealth Telephone Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001. We also consent to the reference to us under the heading "Experts" in such Registration Statement. /S/ PricewaterhouseCoopers LLP Philadelphia, Pennsylvania November 11, 2002 II-23 -----END PRIVACY-ENHANCED MESSAGE-----