-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, SlrvZ4/NdaLLE2s4avtnOJ3tbd+VVN0ZNwwMa2QpclILLLxf+5IZpeDqd7yXs03e R5rQYjTIOqc10lNcKqUXcQ== 0000912057-94-000197.txt : 19940208 0000912057-94-000197.hdr.sgml : 19940208 ACCESSION NUMBER: 0000912057-94-000197 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19940207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROCHESTER TELEPHONE CORP CENTRAL INDEX KEY: 0000084567 STANDARD INDUSTRIAL CLASSIFICATION: 4813 IRS NUMBER: 160613330 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 33 SEC FILE NUMBER: 033-51601 FILM NUMBER: 94504727 BUSINESS ADDRESS: STREET 1: ROCHESTER TEL CENTER STREET 2: 180 S CLINTON AVE CITY: ROCHESTER STATE: NY ZIP: 14646-0995 BUSINESS PHONE: 7167771000 S-3/A 1 S-3/A 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) NEW YORK 16-0613330 (STATE OR OTHER (I.R.S. EMPLOYER JURISDICTION OF IDENTIFICATION INCORPORATION OR NUMBER) ORGANIZATION)
------------------------ 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: 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
------------------------ 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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. 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.
PROCEEDS TO PRICE TO UNDERWRITING PROCEEDS TO SELLING PUBLIC DISCOUNT COMPANY (1)(2) STOCKHOLDER Per Share........................ $ $ $ $ Total............................ $ $ $ $ - ----------------------------------------------------------------------------------------------------------- (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".
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. 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 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 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 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 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 - ------------------------ (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.
5 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.
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 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
AT DECEMBER 31, ---------------------------------------------------------- 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) 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 - ------------------------------ (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.
6 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 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.
QUARTERLY PRICE RANGE DIVIDENDS -------------------- DECLARED HIGH LOW PER SHARE --------- --------- ---------- 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
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 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.
ACTUAL AS ADJUSTED ------------- ------------- (IN THOUSANDS) 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 $ ------------- ------------- ------------- -------------
9 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 The financial results for the three years include the impact of five nonrecurring items:
1993 1992 1991 --------- --------- --------- (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) 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 --------- --------- --------- --------- --------- ---------
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 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 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 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 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:
PERCENT OF ACCESS TELEPHONE PROPERTIES AT LINES AT DECEMBER 31, 1993 ACCESS LINES DECEMBER 31, 1993 PERCENT DIGITAL - ------------------------------------------------------------ ------------- ------------------- --------------- 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% ------------- ------- ------ ------------- ------- ------ - ------------------------ (1) These companies also have properties in one or more other states (Florida, Iowa and Ohio).
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 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 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 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 The Company owned the following cellular properties as of December 31, 1993:
1993 CURRENT PENDING PENDING ESTIMATED OWNERSHIP ADJUSTED OWNERSHIP ADJUSTED MARKET POPULATION INTEREST POPULATION INTEREST POPULATION - ------------------------------------------------ ----------- --------------- ----------- --------------- ----------- 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 - ------------------------------ * Company managed systems. ** Additional Company managed systems pending completion of the Supersystem in 1994.
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 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 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 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:
NUMBER OF UNDERWRITERS SHARES - ----------------------------------------------------------------------------------------------------- ----------- Salomon Brothers Inc................................................................................. Lehman Brothers Inc.................................................................................. Smith Barney Shearson Inc. .......................................................................... ----------- Total............................................................................................ 5,000,000 ----------- -----------
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 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 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
PAGE ----- 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
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 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: 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 --------- ---------
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 ITEM 16. EXHIBITS 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).
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 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.
SIGNATURE TITLE DATE - ------------------------------------------------------ ----------------------------------- -------------------- * ------------------------------------------- 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
II-3 * ------------------------------------------- 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
II-4 INDEX TO EXHIBITS
EXHIBITS PAGE - ----------- --------- 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).
EX-1 2 EXHIBIT 1.1 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. 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 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 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 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 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 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 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 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 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 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 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 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 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 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 (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 (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 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 (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 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 (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 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 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 (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 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 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 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 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 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 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 (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 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 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 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 EX-1 3 EXHIBIT 1.2 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 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. 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 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 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 By: Name: Title: For themselves and the other several Underwriters named in Schedule I to the Agreement. Rochester Telephone Corporation By: Name: Title: EX-1 4 EXHIBIT 1.3 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 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: (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 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 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 several Underwriters named in Schedule I to the Agreement. Rochester Telephone Corporation By: ---------------------------- Name: Title: EX-23 5 EXHIBIT 23.1 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 -----END PRIVACY-ENHANCED MESSAGE-----