<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T- 3
APPLICATION FOR QUALIFICATION OF INDENTURE
UNDER THE TRUST INDENTURE ACT OF 1939
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
(Name of Applicant)
110 East 59th Street
New York, New York 10022
(Address of Principal Executive Offices)
SECURITIES TO BE ISSUED UNDER THE
INDENTURE TO BE QUALIFIED
TITLE OF CLASS AMOUNT
15% Subordinated Notes To be determined as
Due 2008 described in the Indenture
Approximate date of proposed public offering: As soon as practicable
after the date of this Application for Qualification.
Name and address of agent for service: Copies to be sent to:
Richard J. Lubasch, Esq. Thomas H. Kennedy, Esq.
Senior Vice President, General Counsel Skadden, Arps, Slate,
Cellular Communications of Puerto Rico, Inc. Meagher & Flom, LLP
110 East 59th Street 919 Third Avenue
New York, New York 10022 New York, New York 10022
(212) 355-3466 (212) 735-2526
<PAGE> 2
1. GENERAL INFORMATION
(a) The applicant is a corporation.
(b) The applicant is organized under the laws of the State of
Delaware.
2. SECURITIES ACT EXEMPTION APPLICABLE
15% Subordinated Notes due 2008 (the "Notes") to be issued by
Cellular Communications of Puerto Rico, Inc. (the "Company" or "CCPR") under the
Indenture to be qualified hereby will be offered to holders of the Company's
Common Stock, par value $.01 per share ("Common Stock"), pursuant to the terms
of the Exchange Offer ("Exchange Offer"), for up to 3,500,000 shares of CCPR
Common Stock at the exchange ratio of $15.00 principal amount of the Notes for
each share of Common Stock. The terms of the Exchange Offer are contained in the
Offering Circular dated October 15, 1998, and in related documents attached
hereto as Exhibit T3E.
As the Notes are proposed to be offered for exchange by CCPR
with its existing stockholders exclusively and solely for outstanding securities
of CCPR, the transaction is exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to the provisions of Section
3(a)(9) thereof. No sales of securities of the same class as the Notes have been
or are to be made by CCPR by or through an underwriter at or about the same time
as the Exchange Offer for which the exemption is claimed. No consideration has
been, or is to be given, directly or indirectly, to any person in connection
with the transaction, except for the customary payments to be made in respect of
preparation, printing, and mailing of the Offering Circular and related
documents and the engagement of D.F. King & Co., Inc. as Information Agent and
Continental Stock Transfer & Trust, Inc. as Exchange Agent for CCPR. No holder
of the outstanding Common Stock has made or will be requested to make any cash
payment to the Company in connection with the Exchange Offer.
AFFILIATIONS
3. AFFILIATES
The following is a list of the subsidiaries of CCPR as of the
date of this Application. CCPR owns, directly or indirectly, 100% of the capital
stock of each of its subsidiaries, except where indicated with an amount of
ownership in parenthesis:
2
<PAGE> 3
Cellular Communications of Puerto Rico, Inc.
CCPR, Inc.
CCPR of Virgin Islands, Inc.
CCPR Paging, Inc.
Merrimack Telecommunications Corp.
SJCT, Inc.
USVI Cellular Telephone Communications
USVI Paging, Inc.
San Juan Cellular Telephone Company (92.378%)
CCPR Services, Inc.
CCPR Telecommunications, Inc.
3
<PAGE> 4
MANAGEMENT AND CONTROL
4. DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the names and offices held by all
directors and executive officers of the Company. The mailing address for all of
the persons listed is:
Cellular Communications of
Puerto Rico, Inc.
100 East 59th Street
26th Floor
New York, NY 10022
George S. Blumenthal Chairman, Treasurer and Director
Sidney R. Knafel Director
J. Barclay Knapp President, Chief Executive Officer
and Director
Del Mintz Director
Alan J. Patricof Director
Warren Potash Director
Richard J. Lubasch Senior Vice President, General Counsel
and Secretary
Stanton N. Williams Vice President and Chief Financial Officer
Stephen M. Shapiro Senior Vice President and General Manager
Jose Juan Davila Vice President-Finance
Gregg Gorelick Vice President-Controller
5. PRINCIPAL OWNERS OF VOTING SECURITIES
The following table lists, as of August 14, 1998, and giving
effect to the Exchange Offer, the name and complete mailing address, title and
number of shares of voting securities owned, and the percentage of voting
securities owned, for all persons owning more than 10% of CCPR's voting
securities.
4
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE PERCENTAGE OF
OF COMMON STOCK OF TOTAL TOTAL COMMON STOCK
BENEFICIALLY OWNED COMMON STOCK AFTER EXCHANGE OFFER
-------------------- ------------------- ---------------------
<S> <C> <C> <C>
Snyder Capital Management, L.P. (1)....... 1,687,662 12.43% 17.39%
Snyder Capital Management, Inc.
350 California Street, Suite 1460
San Francisco, CA 94104
Ronald Baron (2).......................... 1,506,200 11.09% 15.52%
Baron Capital Group, Inc.
AMCO, Inc.
Baron Capital Management Inc.
Baron Asset Fund
767 Fifth Avenue
New York, NY 10153
Wallace R. Weitz & Company (3)............ 829,300 6.11% 8.54%
1125 South 103rd Street
Suite 600
Omaha, NE 68124-6008
The Equitable Companies Incorporated (4).. 710,249 5.23% 7.31%
1290 Avenue of the Americas
New York, NY 10104
Lazard Freres & Co., LLC (5).............. 681,883 5.02% 7.02%
30 Rockefeller Plaza
New York, NY 10020
</TABLE>
(1) Based solely upon a Schedule 13-G, filed by Snyder Capital Management,
L.P. and by Snyder Capital Management, Inc. with the Securities and
Exchange Commission (the "SEC") on May 12, 1998.
(2) Based solely upon a Schedule 13-G (Amendment No. 2), filed by Baron
Capital, Inc. with the SEC on February 19, 1998.
(3) Based solely upon a Schedule 13-G , filed by Wallace R. Weitz & Company
with the SEC on February 11, 1998.
(4) Based solely upon a Schedule 13-G , filed by The Equitable Companies
Incorporated with the SEC on February 13, 1998.
(5) Based solely upon a Schedule 13-G (Amendment No. 1), filed by Lazard
Freres & Co., LLC with the SEC on April 6, 1998.
UNDERWRITERS
6. UNDERWRITERS
(a) No person has acted as underwriter for CCPR's securities
issued in the last three years.
(b) Not applicable.
5
<PAGE> 6
CAPITAL SECURITIES
7. CAPITALIZATION
(a) The debt securities and capital stock of CCPR on a
consolidated basis as of October 12, 1998 were as follows:
<TABLE>
<CAPTION>
AMOUNT AUTHORIZED AMOUNT OUTSTANDING
------------------------ ---------------------------
Debt Securities (amount in thousands):
None
<S> <C> <C>
Capital Stock (in number of shares)
Preferred Stock, $.01 par value................. 2,500,000 0
Common Stock, $.01 par value.................... 30,000,000 13,203,713
(exclusive of 383,000
shares held in treasury)
</TABLE>
(b) The holders of the Common Stock have one vote per share,
except that with respect to the election of directors of the Company they are
entitled to cumulate their votes provided certain conditions are satisfied.
Holders of Common Stock have no preemptive, subscription or conversion rights,
and the Common Stock is not subject to any liability for further assessments.
There currently are no shares of CCPR Preferred Stock outstanding. Subject to
applicable regulations, the holders of Preferred Stock would have voting rights
as determined by the Board of Directors when, as and if shares of Preferred
Stock are issued by CCPR. The Company has entered into a Rights Agreement,
dated as of January 24, 1992, between the Company and Continental Stock Transfer
and Trust Company. Set forth in the Offering Circular is a description of
material provisions of the Company's Certificate of Incorporation, By-laws and
Rights Agreement.
INDENTURE SECURITIES
8. ANALYSIS OF INDENTURE PROVISIONS
See "Description of the Notes" in the Offering Circular (as
defined below), which information is specifically incorporated herein by
reference, and which is filed herewith as Exhibit T3E.1.
6
<PAGE> 7
9. OTHER OBLIGORS
None.
Contents of Application for Qualification. This application
for qualification comprises:
(a) Pages numbered 1 to 8 consecutively.
(b) The statement of eligibility and qualification on Form T-1
of The Chase Manhattan Bank, as Trustee under the Indenture to be qualified.
(c) The following Exhibits in addition to those filed as part
of the statement of eligibility and qualification of such Trustee:
8
<PAGE> 8
EXHIBIT T3A - AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE
COMPANY.
EXHIBIT T3B - AMENDED AND RESTATED BYLAWS OF THE COMPANY.
EXHIBIT T3C - FORM OF INDENTURE BETWEEN THE COMPANY AND THE CHASE
MANHATTAN BANK, AS TRUSTEE.
EXHIBIT T3D - NOT APPLICABLE
EXHIBIT T3E - (1) THE COMPANY'S OFFERING CIRCULAR, DATED OCTOBER 15, 1998
(THE "OFFERING CIRCULAR");
(2) LETTER OF TRANSMITTAL ACCOMPANYING THE OFFERING
CIRCULAR;
(3) FORM OF LETTER FROM THE COMPANY TO BROKERS, DEALERS AND
NOMINEES;
(4) FORM OF LETTER FROM BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND NOMINEES TO CLIENTS; AND
(5) LETTER TO HOLDERS OF SHARES OF COMMON STOCK, DATED
OCTOBER 15, 1998.
EXHIBIT T3F - CROSS-REFERENCE SHEET (INCLUDED AS PART OF EXHIBIT T3C).
EXHIBIT 99.1 - FORM T-1 OF THE CHASE MANHATTAN BANK, AS TRUSTEE UNDER THE
INDENTURE TO BE QUALIFIED.
9
<PAGE> 9
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
applicant, Cellular Communications of Puerto Rico, Inc., a corporation
organized and existing under the laws of State of Delaware, has duly caused this
application to be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the City of
New York, New York on the 15th day of October, 1998.
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By: /s/ Richard J. Lubasch
------------------------------
Richard J. Lubasch
10
<PAGE> 1
Exhibit 99.T3A
Page 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
OWNERSHIP, WHICH MERGES:
"CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.", A DELAWARE CORPORATION,
WITH AND INTO "CORECOMM INCORPORATED" UNDER THE NAME OF "CELLULAR
COMMUNICATIONS OF PUERTO RICO, INC.", A CORPORATION ORGANIZED AND EXISTING
UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE
THE FIRST DAY OF SEPTEMBER, A.D. 1998, AT 4:01 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS.
/s/ Edward J. Freel
SEAL -----------------------------------
Edward J. Freel, Secretary of State
2705605 8100M AUTHENTICATION: 9282361
981342096 DATE: 09-01-98
<PAGE> 2
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
INTO
CORECOMM INCORPORATED
- -----------------------------------------------------------------------------
Pursuant to Sections 103 and 253 of the
General Corporation Law of the State of Delaware
- -----------------------------------------------------------------------------
CoreComm Incorporated, a Delaware corporation (the "Corporation"), does
hereby certify:
FIRST: The Corporation is incorporated pursuant to the General
Corporation Law of the State of Delaware.
SECOND: The Corporation owns 100% of the outstanding shares of each class
of the capital stock of Cellular Communications of Puerto Rico, Inc., a
Delaware corporation (the "Subsidiary").
THIRD: The Board of Directors of the Corporation, by resolutions duly
adopted at a meeting held on July 21, 1998 (true and correct copies of which
are attached hereto as Exhibit A), has authorized the merger of the Subsidiary
with and into the Corporation (the "Merger"). Such resolutions have not been
modified or rescinded and are in full force and effect on the date hereof.
FOURTH: The Corporation shall be the surviving corporation of the Merger
(the "Surviving Corporation").
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:01 PM 09/01/1998
981342096 - 2939201
<PAGE> 3
FIFTH: At the effective time of the Merger the name of the Surviving
Corporation shall be changed to Cellular Communications of Puerto Rico, Inc.
IN WITNESS WHEREOF, CoreComm Incorporated caused this Certificate of
Ownership and Merger to be executed in its corporate name this 1st day of
September, 1998.
CORECOMM INCORPORATED
By: /s/ Richard J. Lubasch
----------------------
Name: Richard J. Lubasch
Title: Secretary
2
<PAGE> 4
EXTRACT FROM
RESOLUTIONS ADOPTED ON
JULY 21, 1998
BY THE BOARD OF DIRECTORS OF
CORECOMM INCORPORATED
(THE "CORPORATION")
RESOLVED, that the proper officers of the Corporation be, and each of them
hereby is, authorized and directed to cause the formation of Cellular
Communications of Puerto Rico, Inc. (the "Subsidiary"), as a wholly owned
subsidiary of the Corporation under and pursuant to the laws of the State of
Delaware; that the Subsidiary shall be merged with and into the Corporation
(the "Merger") and the Corporation shall be the surviving corporation (the
"Surviving Corporation") of the Merger; that in connection with the Merger the
Surviving Corporation shall change its name to Cellular Communications of
Puerto Rico, Inc.; that, from and after the effective time of the Merger, the
certificate of incorporation of the Corporation shall be the certificate of
incorporation of the Surviving Corporation, the bylaws of the Corporation shall
be the bylaws of the Surviving Corporation, the officers and directors of the
Corporation shall be the officers and directors of the Surviving Corporation,
the outstanding common stock and other securities of the Corporation shall
remain outstanding as the common stock and other securities of the Surviving
Corporation and the outstanding common stock of the Subsidiary shall be
cancelled; that the proper officers of the Corporation be, and each of them
hereby is, authorized and directed, in the name and on behalf of the
Corporation, to prepare and execute a Certificate of Ownership and Merger and
to cause such Certificate of Ownership and Merger to be filed with the
Secretary of state of the State of Delaware pursuant to Sections 103 and 253 of
the General Corporation Law of the State of Delaware; and that the Merger shall
be effective at the time stated in such Certificate of Ownership and Merger;
and further
RESOLVED, that, upon the effectiveness of the Merger, the proper officers
of the Corporation be, and each of them individually hereby is, authorized,
empowered and directed to prepare or cause to be prepared forms of (i) a
certificate to evidence shares of common stock of the Corporation, par value
$0.01 per share ("Common Stock"), and (ii) a certificate to evidence the Series
A Junior participating Preferred Stock stated value $1.00 per share ("Junior
Preferred Stock") in each case reflecting the changes in corporate name
resulting from the Merger that such forms of Common Stock certificate and Series
A Preferred Stock certificate (together, the "Certificates") shall be adopted,
to the same extent as if presented to and adopted by the Board of Directors at
this meeting, provided that a copy thereof be affixed to these minutes by the
Secretary or Assistant Secretary; that the proper officers of the Corporation
be, and each of them individually hereby is, authorized, empowered and directed
to execute the Certificates; that any or all of such signatures on the
Certificates may be facsimile signatures; and that in case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon the Certificates shall have ceased to be such officer, transfer agent or
registrar before the issuance thereof, it may be issued by the Corporation with
the same effect as if such person were such officer, transfer agent or registrar
at the date of issue; and further
<PAGE> 5
RESOLVED, that, upon the effectiveness of the Merger, the proper
officers of the Corporation be, and each of them individually hereby is,
authorized, empowered and directed to prepare or cause to be prepared a
corporate seal, reflecting the change in corporate name resulting from the
Merger, that such corporate seal shall be adopted, to the same extent as if
presented to and adopted by the Board of Directors at minutes by the Secretary
or Assistant Secretary; and further
RESOLVED, that the proper officers of the Corporation be, and each of
them hereby is, authorized and directed to prepare, execute, deliver and file
or cause to be prepared, executed, delivered and filed any and all documents
and to take any and all actions with federal, state, local and foreign
authorities and with Nasdaq, as they or any of them may deem necessary or
appropriate to effect the corporate name change and Merger contemplated by the
foregoing resolutions and to carry out fully the purpose and intent of such
resolutions; and further
RESOLVED, that all actions heretofore taken by any officer or director
of the Corporation and Cellular Communications of Puerto Rico, Inc. in
connection with the matters contemplated by the foregoing resolutions be, and
they hereby are, approved, adopted, ratified, confirmed and accepted in all
respects.
<PAGE> 6
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FIELD 08:33 AM 11/10/1997
971382575 - 2705605
CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED OFFICE
AND OF REGISTERED AGENT
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
CoreComm Incorporated.
2. The registered office of the Corporation within the State of Delaware
is hereby changed to 9 East Loockerman Street, City of Dover 19901, County of
Kent.
3. The registered agent of the Corporation within the State of Delaware
is hereby changed to National Registered Agents, Inc., the business office of
which is identical with the registered office of the corporation as hereby
changed.
4. The Corporation has authorized the changes hereinbefore set forth by
resolution of its Board of Directors.
Signed on November 3, 1997.
/s/ Richard J. Lubasch
-------------------------------------
Richard J. Lubasch
Senior Vice President - General
Counsel and Secretary
<PAGE> 7
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
----------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"CORECOMM INCORPORATED", FILED IN THIS OFFICE ON THE THIRTY-FIRST DAY OF
JANUARY, A.D. 1997, AT 8:35 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
[SEAL OF SECRETARY'S OFFICE - ----------------------------------
STATE OF DELAWARE] Edward J. Freel, Secretary of State
2705605 8100 AUTHENTICATION: 8310649
971033190 DATE: 01-31-97
<PAGE> 8
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 08:35 AM 01/31/1997
971033190 - 2705605
CERTIFICATE OF RESTATED
CERTIFICATE OF INCORPORATION
January 31, 1997
<PAGE> 9
RESTATED CERTIFICATE OF INCORPORATION
OF
CORECOMM INCORPORATED
The undersigned, Richard J. Lubasch and Sandra Barnett, certify that they
are the Senior Vice President-General Counsel and Assistant Secretary,
respectively, of CoreComm Incorporated, a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), and do hereby
certify as follows:
(1) The name of the Corporation is CoreComm Incorporated.
(2) The name under which the Corporation was originally incorporated was
"CoreCom Inc.," and the original Certificate of Incorporation was filed with
the Secretary of State of the State of Delaware on January 16, 1997.
(3) This Restated Certificate of Incorporation was duly adopted by
stockholder written consent in accordance with Sections 228, 242 and 245 of the
General Corporation Law of the State of Delaware.
(4) The text of the Certificate of Incorporation as amended hereby is
restated to read in its entirety as follows:
FIRST: The name of the Corporation is CORECOMM INCORPORATED (hereinafter
the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1013 Centre Road, in the City of Wilmington, County of New
Castle. The name of its registered agent at that address is The Prentice-Hall
Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"GCL").
<PAGE> 10
FOURTH: The total number of shares of stock which the Corporation shall
have the authority to issue is 32,500,000, consisting of 30,000,000 shares of
common stock, par value $0.01 per share (the "Common Stock"), and 2,500,000
shares of preferred stock, par value $0.01 per share (the "Preferred Stock").
Shares of the Preferred Stock of the Corporation may be issued from time
to time in one or more classes or series, each of which class or series shall
have such distinctive designation or title as shall be fixed by the Board of
Directors of the Corporation (the "Board of Directors") prior to the issuance
of any shares thereof. Each such class or series of Preferred Stock shall have
such voting powers, full or limited, or no voting powers, and such preferences
and relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated in such
resolution or resolutions providing for the issue of such class or series of
Preferred Stock as may be adopted from time to time by the Board of Directors
prior to the issuance of any shares thereof pursuant to the authority hereby
expressly vested in it, all in accordance with the laws of the State of
Delaware.
FIFTH: The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. The number of directors of the
Corporation shall be as from time to time fixed by, or in the manner provided
in, the By-laws of the Corporation. The directors shall be divided into three
classes, designated Class I, Class II and Class III. Each class shall consist,
as nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. The term of the initial Class I
directors shall terminate on the date of the 1997 annual meeting of
stockholders; the term of the initial Class II directors shall terminate on the
date of the 1998 annual meeting of stockholders and the term of the initial
Class III directors shall terminate on the date of the 1999 annual meeting of
stockholders. At each annual meeting of stockholders beginning in 1997,
successors to the class of directors whose term expires at that annual meeting
shall be elected for a three-year term. If the number of directors is changed,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as
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<PAGE> 11
possible, and any additional directors of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case will a decrease
in the number of directors shorten the term of any incumbent director. A
director shall hold office until the annual meeting for the year in which his
term expires and until his successor shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office. Any vacancy on the Board of Directors, howsoever resulting,
may be filled by a majority of the directors then in office, even if less than a
quorum, or by a sole remaining director. Any director elected to fill a vacancy
shall hold office for a term that shall coincide with the term of the class to
which such director shall have been elected.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation or the resolution or resolutions
adopted by the Board of Directors pursuant to Article FOURTH applicable thereto,
and such directors so elected shall not be divided into classes pursuant to this
Article FIFTH unless expressly provided by such terms.
SIXTH: Subject to the rights, if any, of the holders of shares of Preferred
Stock then outstanding, any or all of the directors of the Corporation may be
removed from office at any time, but only for cause and only by the affirmative
vote of the holders of a majority of the outstanding shares of the Corporation
then entitled to vote generally in the election of directors, considered for
purposes of this Article SIXTH as one class.
SEVENTH: Any action required or permitted to be taken at any annual or
special meeting of stockholders may be taken only upon the vote of the
stockholders at an annual or special meeting duly noticed and called, as
provided in the By-laws of the Corporation, and may not
3
<PAGE> 12
be taken by a written consent of the stockholders pursuant to the GCL.
EIGHTH: Special meetings of the stockholders of the Corporation for
any purpose or purposes may be called at any time by the Board of Directors,
the Chairman of the Board of Directors or the President. Special meetings of
the stockholders of the Corporation may not be called by any other person or
persons.
NINTH:
A. In addition to any affirmative vote required by law or this
Certificate of Incorporation or the By-laws of the Corporation, and except as
otherwise expressly provided in Section B of this Article NINTH, a Business
Combination (as hereinafter defined) with, or proposed by or on behalf of, any
Interested Stockholder (as hereinafter defined) or any Affiliate or Associate
(as hereinafter defined) of any Interested Stockholder or any person who
thereafter would be an Affiliate or Associate of such Interested Stockholder
shall require the affirmative vote of not less than sixty-six and two-thirds
percent (66-2/3%) of the votes entitled to be cast by the holders of all the
then outstanding shares of Voting Stock (as hereinafter defined), voting
together as a single class, excluding Voting Stock beneficially owned by any
Interested Stockholder or any Affiliate or Associate of such Interested
Stockholder. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage or separate class
vote may be specified, by law or in any agreement with any national securities
exchange or otherwise.
B. The provisions of Section A of this Article NINTH shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote, if any, as is required by
law or any other provision of this Certificate of Incorporation or the By-laws
of the Corporation, if all of the conditions specified in either of the
following Paragraph 1 or 2 are met:
1. The Business Combination shall have been approved by a
majority of the Continuing Directors (as hereinafter defined).
4
<PAGE> 13
2. All of the following conditions shall have been met:
a. the aggregate amount of the cash and Fair Market Value (as
hereinafter defined) as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share by
holders of Common Stock in such Business Combination shall be at least equal to
the highest amount determined under clauses (i) and (ii) below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Stockholder for any share of Common Stock in
connection with the acquisition by the Interested Stockholder
of beneficial ownership of shares of Common Stock acquired by it
(x) within the two-year period immediately prior to the first
public announcement of the proposed Business Combination (the
"Announcement Date") or (y) in the transaction in which it
became an Interested Stockholder, whichever is higher, in either
case as adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to the Common
Stock; and
(ii) the Fair Market Value per share of Common Stock
on the Announcement Date or on the date on which the Interested
Stockholder became an Interested Stockholder (the "Determination
Date"), whichever is higher, as adjusted for any subsequent stock
split, stock dividend, subdivision or reclassification with
respect to the Common Stock.
(b) The aggregate amount of the cash and the Fair Market Value as of
the date of the consummation of the Business Combination, of consideration
other than cash to be received per share by holders of shares of any class or
series of outstanding Capital Stock (as hereinafter defined), other than Common
Stock, shall be at least equal to the highest amount determined under
clauses (i), (ii) and (iii) below;
5
<PAGE> 14
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid
by or on behalf of the Interested Stockholder for any share of such class
or series of Capital Stock in connection with the acquisition by the
Interested Stockholder of beneficial ownership of shares of such class or
series of Capital Stock (x) within the two-year period immediately prior
to the Announcement Date or (y) in the transaction in which it became
an Interested Stockholder, whichever is higher, in either case as adjusted
for any subsequent stock split, stock dividend, subdivision or
reclassification with respect to such class or series of Capital Stock;
(ii) the Fair Market Value per share of such class or series of
Capital Stock on the Announcement Date or on the Determination Date,
whichever is higher, as adjusted for any subsequent stock split, stock
dividend, subdivision or reclassification with respect to such class or
series of Capital Stock; and
(iii) (if applicable) the highest preferential amount per share to
which the holders of shares of such class or series of Capital Stock would
be entitled in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation regardless
of whether the Business Combination to be consummated constitutes such
an event.
The provisions of this Paragraph 2 shall be required to be met with respect to
every class or series of outstanding Capital Stock, whether or not the
Interested Stockholder has previously acquired beneficial ownership of any
shares of a particular class or series of Capital Stock.
c. The consideration to be received by holders of a particular class or
series of outstanding Capital Stock shall be in cash or in the same form as
previously has been paid by or on behalf of the Interested Stockholder in
connection with its direct or indirect
6
<PAGE> 15
acquisition of beneficial ownership of shares of such class or series of Capital
Stock. If the consideration so paid for shares of any class or series of Capital
Stock varied as to form, the form of consideration for such class or series of
Capital Stock shall be either cash or the form used to acquire beneficial
ownership of the largest number of shares of such class or series of Capital
Stock previously acquired by the Interested Stockholder.
d. After the Determination Date and prior to the consummation of such
Business Combination: (i) except as approved by a majority of the Continuing
Directors, there shall have been no failure to declare and pay at the regular
date therefor any full quarterly dividends (whether or not cumulative) payable
in accordance with the terms of any outstanding Capital Stock; (ii) there shall
have been no reduction in the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any stock split, stock dividend or subdivision
of the Common Stock), except as approved by a majority of the Continuing
Directors; (iii) there shall have been an increase in the annual rate of
dividends paid on the Common Stock as necessary to reflect any reclassification
(including any reverse stock split), recapitalization, reorganization or any
similar transaction that has the effect of reducing the number of outstanding
shares of Common Stock, unless the failure so to increase such annual rate is
approved by a majority of the Continuing Directors; and (iv) such Interested
Stockholder shall not have become the beneficial owner of any additional shares
of Capital Stock except as part of the transaction that results in such
Interested Stockholder becoming an Interested Stockholder and except in a
transaction that, after giving effect thereto, would not result in any increase
in the Interested Stockholder's percentage beneficial ownership of any class or
series of Capital Stock.
e. A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder (the "Act") (or
any subsequent provisions replacing such Act, rules or regulations) shall be
mailed to all stockholders of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or
7
<PAGE> 16
not such proxy or information statement is required to be mailed pursuant to
such Act or subsequent provisions). The proxy or information statement shall
contain on the first page thereof, in a prominent place, any statement as to the
advisability (or inadvisability) of the Business Combination that the Continuing
Directors, or any of them, may choose to make and, if deemed advisable by a
majority of the Continuing Directors, an opinion of an investment banking firm
selected by a majority of the Continuing Directors as to the fairness (or
unfairness) of the terms of the Business Combination from a financial point of
view to the holders of the outstanding shares of Capital Stock other than the
Interested Stockholder and its Affiliates or Associates, such investment banking
firm to be paid a reasonable fee for its services by the Corporation.
f. Such Interested Stockholder shall not have made any major change
in the Corporation's business or equity capital structure without the approval
of a majority of the Continuing Directors.
C. The following definitions shall apply with respect to this Article
NINTH:
1. The term "Business Combination" shall mean:
a. any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with (i) any Interested Stockholder or (ii) any other
company (whether or not itself an Interested Stockholder) which is or after such
merger or consolidation would be an Affiliate or Associate of an Interested
Stockholder; or
b. any sale, lease, exchange, mortgage, pledge, transfer or other
disposition or security arrangement, investment, loan, advance, guarantee,
agreement to purchase, agreement to pay, extension of credit, joint venture
participation or other arrangement (in one transaction or a series of
transactions) with or for the benefit of any Interested Stockholder or any
Affiliate or Associate of any Interested Stockholder involving any assets,
securities or commitments of the Corporation, any Subsidiary or any Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder (except
for
8
<PAGE> 17
any arrangement, whether as employee, consultant or otherwise, other than as a
director, pursuant to which any Interested Stockholder or any Affiliate or
Associate thereof shall, directly or indirectly, have any control over or
responsibility for the management of any aspect of the business or affairs of
the Corporation, with respect to which arrangements the value tests set forth
below shall not apply), together with all other such arrangements (including
all contemplated future events), has an aggregate Fair Market Value and/or
involves aggregate commitments of $5,000,000 or more or constitutes more than 5
percent of the book value of the total assets (in the case of transactions
involving assets or commitments other than capital stock) or 5 percent of the
stockholders' equity (in the case of transactions in capital stock) of the
entity in question (the "Substantial Part"), as reflected in the most recent
fiscal year-end consolidated balance sheet of such entity existing at the time
the stockholders of the Corporation would be required to approve or authorize
the Business Combination involving the assets, securities and/or commitments
constituting any Substantial Part; or
c. the adoption or any plan or proposal for the liquidation or
dissolution of the Corporation or for any amendment to the Corporation's
By-laws; or
d. any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or consolidation
of the Corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving an Interested Stockholder)
that has the effect, directly or indirectly, of increasing the proportionate
share of any class or Series of Capital Stock, or any securities convertible
into Capital Stock or into equity securities of any Subsidiary, that is
beneficially owned by any Interested Stockholder or any Affiliate or Associate
of any Interested Stockholder; or
e. any agreement, contract or other arrangement providing for any
one or more of the actions specified in the foregoing clauses (a) to (d).
2. The term "Capital Stock" shall mean all capital stock of the
Corporation authorized to be issued from time to time under Article FOURTH of
this
9
<PAGE> 18
Certificate of Incorporation, and the term "Voting Stock" shall mean all
Capital Stock which by its terms may be voted on all matters submitted to
stockholders of the Corporation generally.
3. The term "person" shall mean any individual, firm, company or other
entity and shall include any group comprised of any person and any other person
with whom such person or any Affiliate or Associate of such person has any
agreement, arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of Capital Stock.
4. The term "Interested Stockholder" shall mean any person (other than the
Corporation or any Subsidiary and other than any profit-sharing, employee stock
ownership or other employee benefit plan of the Corporation or any Subsidiary
or any trustee of or fiduciary with respect to any such plan when acting in
such capacity who (a) is or has announced or publicly disclosed a plan or
intention to become the beneficial owner of Voting Stock representing ten
percent (10%) or more of the vote entitled to be cast by the holders of all
then outstanding shares of Voting Stock; or (b) is an Affiliate or Associate of
the Corporation and at any time within the two-year period immediately prior to
the date in question was the beneficial owner of Voting Stock representing ten
percent (10%) or more of the votes entitled to be cast by the holders of all
then outstanding shares of Voting Stock.
5. A person shall be a "beneficial owner" of any Voting Stock: (a) which
such person or any of its Affiliates or Associates beneficially owns, directly
or indirectly; (b) which such person or any of its Affiliates or Associates
has, directly or indirectly, (i) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii) the right
to vote pursuant to any agreement, arrangement or understanding; or (c) which
is beneficially owned, directly or indirectly, by any other person with which
such person or any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares
10
<PAGE> 19
of Capital Stock. For the purposes of determining whether a person is an
Interested Stockholder pursuant to Paragraph 4 of this Section C, the number of
shares of Capital Stock deemed to be outstanding shall include shares deemed
beneficially owned by such person through application of this Paragraph 5 of
Section C, but shall not include any other shares of Capital Stock that may be
issuable pursuant to an agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
6. The term "Affiliate" or "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Act, as in effect on November 8, 1990 (the term
"registrant" in said Rule 12b-2 meaning in this case the Corporation).
7. "Subsidiary" means any company of which a majority of any class of
equity security is beneficially owned by the Corporation; provided, however,
that for the purposes of the definition of Interested Stockholder set forth in
Paragraph 4 of this Section C, the term "Subsidiary" shall mean only a company
of which a majority of each class of equity security is beneficially owned by
the Corporation.
8. The term "Continuing Director" means any member of the Board of
Directors of the Corporation, while such person is a member of the Board of
Directors, who is not an Affiliate or Associate or representative of the
Interested Stockholder and was a member of the Board of Directors prior to the
time that the Interested Stockholder became an Interested Stockholder, and any
successor of a Continuing Director while such successor is a member of the
Board of Directors, who is not an Affiliate or Associate or representative of
the Interested Stockholder and is recommended or elected to succeed the
Continuing Director by a majority of Continuing Directors.
9. The term "Fair Market Value" means: (a) in the case of cash, the
amount of such cash; (b) in the case of stock, the highest closing sale price
during the 30-day period immediately preceding the date in question of a share
of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks,
or, if such stock
11
<PAGE> 20
is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United States securities
exchange registered under the Act on which such stock is listed or, if such
stock is not listed on any such exchange, the highest closing bid quotation with
respect to a share of such stock during the 30-day period preceding the date in
question on the National Association of Securities Dealers, Inc. Automated
Quotations System, in the pink sheets of the National Quotation Bureau or any
similar system then in use, or if no such quotations are available, the fair
market value on the date in question of a share of such stock as determined by a
majority of the Continuing Directors in good faith; and (c) in the case of
property other than cash or stock, the fair market value of such property on the
date in question as determined in good faith by a majority of the Continuing
Directors.
10. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as used in
Paragraphs 2.a. and 2.b. of Section B of this Article NINTH shall include the
shares of Common Stock and/or the shares of any other class or series of Capital
Stock retained by the holders of such shares.
D. A majority of the Continuing Directors shall have the power and duty to
determine for the purpose of this Article NINTH, on the basis of information
known to them after reasonable inquiry, all questions arising under this Article
NINTH, including, without limitation, (a) whether a person is an Interested
Stockholder, (b) the number of shares of Capital Stock or other securities
beneficially owned by any person, (c) whether a person is an Affiliate or
Associate of another, (d) whether a Proposed Action (as hereinafter defined) is
with, or proposed by, or on behalf of an Interested Stockholder or an Affiliate
or Associate of an Interested Stockholder, (e) whether the assets that are the
subject of any Business Combination have, or the consideration to be received
for the issuance or transfer of securities by the Corporation or any Subsidiary
in any Business Combination has, an aggregate Fair Market Value of $5,000,000 or
more and (f) whether the assets or securities that are the subject of any
Business Combination constitute a Substantial Part. Any such determination made
in good
12
<PAGE> 21
faith shall be binding and conclusive on all parties. The good faith
determination of a majority of the Continuing Directors on such matters shall
be conclusive and binding for all purposes of this Article NINTH.
E. Nothing contained in this Article NINTH shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
F. The fact that any Business Combination complies with the provisions of
Section 5 of this Article NINTH shall not be construed to impose any fiduciary
duty, obligation or responsibility on the Board of Directors, or any member
thereof, to approve such Business Combination or recommend its adoption or
approval to the stockholders of the Corporation, nor shall such compliance
limit, prohibit or otherwise restrict in any manner the Board of Directors, or
any member thereof, with respect to evaluations of or actions and responses
taken with respect to such Business Combination.
G. For the purposes of this Article NINTH, a Business Combination or any
proposal to amend, repeal or adopt any provision of this Certificate of
Incorporation inconsistent with this Article NINTH (collectively, "Proposed
Action") is presumed to have been proposed by, or on behalf of, an Interested
Stockholder or a person who thereafter would become such if (1) after the
Interested Stockholder became such, the Proposed Action is proposed following
the election of any director of the Corporation who with respect to such
Interested Stockholder, would not qualify to serve as a Continuing Director or
(2) such Interested Stockholder, Affiliate, Associate or person votes for or
consents to the adoption of any such Proposed Action, unless as to such
Interested Stockholder, Affiliate, Associate or person a majority of the
Continuing Directors makes a good faith determination that such Proposed Action
is not proposed by or on behalf of such Interested Stockholder, Affiliate,
Associate or person, based on information known to them after reasonable
inquiry.
H. Notwithstanding any other provisions of this Certificate of
Incorporation or the By-laws of the Corporation (and notwithstanding the fact
that a lesser percentage or separate class vote may be specified by law, this
Certificate of Incorporation or the By-laws of
13
<PAGE> 22
the Corporation), any proposal to amend, repeal or adopt any provision of this
Certificate of Incorporation inconsistent with this Article NINTH which is
proposed by or on behalf of an Interested Stockholder or an Affiliate or
Associate of an Interested Stockholder shall require the affirmative vote of
the holders of not less than sixty-six and two-thirds percent (66-2/3%) of the
votes entitled to be cast by the holders of all the then outstanding shares of
Voting Stock, voting together as a single class, excluding Voting Stock
beneficially owned by such Interested Stockholder; provided, however, that this
Section H shall not apply to, and such sixty-six and two-thirds percent
(66-2/3%) vote shall not be required for, any amendment, repeal or adoption
unanimously recommended by the Board of Directors if all of such directors are
persons who would be eligible to serve as Continuing Directors within the
meaning of Section C, Paragraph 8 of this Article NINTH.
TENTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of
fiduciary duty by such a director as a director. Notwithstanding the foregoing
sentence, a director shall be liable to the extent provided by applicable law
(i) for any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) pursuant to Section
174 of the GCL or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article TENTH
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.
ELEVENTH: In furtherance and not in limitation of the powers conferred by
statue, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend or rescind the By-laws of the Corporation. In addition, the By-laws of
the Corporation may be adopted, repealed, altered, amended, or rescinded by the
affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the
outstanding stock of the Corporation entitled to vote thereon.
14
<PAGE> 23
TWELFTH: Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the Voting Stock, voting together
as a single class, shall be required to amend, repeal or adopt any provision
inconsistent with Articles FIFTH, SEVENTH, EIGHTH, NINTH, TENTH and ELEVENTH of
this Certificate of Incorporation.
THIRTEENTH: The Corporation reserves the right to repeal, alter,
amend, or rescind any provision contained in this Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this
reservation.
IN WITNESS WHEREOF, CoreComm Incorporated has caused its corporate
seal to be hereunto affixed and this Restated Certificate of Incorporation to
be signed by Richard J. Lubasch, its Senior Vice President-General Counsel and
attested by Sandra Barnett, its Assistant Secretary, this 31st day of January,
1997.
CORECOMM INCORPORATED
By: /s/ Richard J. Lubasch
--------------------------------
Richard J. Lubasch
Senior Vice President-
General Counsel
[SEAL]
ATTEST:
/s/ Sandra Barnett
- -------------------------
Sandra Barnett
Assistant Secretary
15
<PAGE> 1
Exhibit 99.T3B
BY-LAWS
Adopted January 21, 1997
<PAGE> 2
BY-LAWS
OF
CORECOMM INCORPORATED
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. Annual meetings of stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect by a plurality vote a Board of Directors,
and transact such other business as may properly be brought before the meeting
in accordance with these By-laws. Written notice of the annual meeting stating
the place, date and hour of the meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten nor more than sixty days
before the date of the meeting.
<PAGE> 3
Section 3. Special Meetings. Special meetings of stockholders, for
any purpose or purposes, may be called by the Board of Directors, the Chairman
of the Board of Directors or the President. Special meetings of the
stockholders may not be called by any other person or persons. Written notice
of a special meeting stating the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called shall be given not less
than ten nor more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting, and only such business as is
stated in such notice shall be acted upon thereat.
Section 4. Advance Notification of Business to be Transacted at
Stockholder Meetings. To be properly brought before the annual or any special
stockholders' meeting, business must be either (a) specified in the notice of
meeting (or any supplement or amendment thereto) given by or at the direction
of the Board of Directors, (b) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (c) otherwise properly
brought before the meeting by a stockholder. In addition to any other
applicable requirements, for business to be properly brought before an annual
or any special stockholders' meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 75 days nor more than 90 days prior to the meeting; provided,
however, that in the event that less than 90 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close of
business on the fifteenth day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made, whichever
first occurs. Such stockholder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the meeting (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the class, series and
number of shares of capital stock of the Corporation which are beneficially
2
<PAGE> 4
owned by the stockholder and (iv) any material interest of the stockholder in
such business.
Notwithstanding anything in these By-laws to the contrary, no business
shall be conducted at the annual or any special meeting except in accordance
with the procedures set forth in this Article II, Section 4, provided, however,
that nothing in this Section 5 shall be deemed to preclude discussion by any
stockholder of any business properly brought before the meeting. The officer of
the Corporation presiding at the meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Article II, Section 4, and if
he should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
Section 5. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder entitled to vote at
the meeting.
Section 6. Voting. Unless otherwise required by law, the Certificate of
Incorporation or these By-laws, any question brought before any meeting of
stockholders shall be decided by the vote of the holders of a majority of the
stock represented and entitled to vote thereat. Unless otherwise provided in the
Certificate of Incorporation, each stockholder represented at a meeting of
stockholders shall be entitled to cast one vote for
3
<PAGE> 5
each share of the capital stock entitled to vote thereat held by such
stockholder. The Board of Directors, in its discretion, or the officer of the
Corporation presiding at a meeting of stockholders, in his discretion, may
require that any votes cast at such meeting shall be cast by written ballot.
Section 7. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
Section 8. Stock Ledger. The stock ledger of the Corporation shall
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 7 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. Subject to the rights,
if any, of holders of preferred stock of the Corporation, the Board of
Directors shall consist of not less than three nor more than fifteen members,
the exact number of which shall be fixed from time to time by the Board of
Directors. Except as provided in Section 3 of this Article III, directors shall
be elected by a plurality of the votes cast at Annual
4
<PAGE> 6
Meetings of Stockholders, and each director so elected shall hold office as
provided by Article FIFTH of the Certificate of Incorporation. Any director may
resign at any time upon written notice to the Corporation. Directors need not
be stockholders.
Section 2. Nomination of Directors. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Corporation at the Annual Meeting may be made at such meeting by or at the
direction of the Board of Directors, by any committee or persons appointed by
the Board of Directors or by any stockholder of the Corporation entitled to vote
for the election of directors at the meeting who complies with the notice
procedures set forth in this Article III, Section 2. Such nominations, other
than those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 75 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 90 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the fifteenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever first occurs. Such stockholder's
notice to the Secretary shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (i)
he name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class, series and
number of shares of capital stock of the Corporation which are beneficially
owned by the person and (iv) any other information relating to the person that
is required to be disclosed in solicitations for proxies for election of
directors pursuant to the Rules and Regulations of the Securities and Exchange
Commission under Section 14 of the Securities Exchange Act of 1934, as amended;
and (b) as to the stockholder giving the notice (i) the name and record address
of the stockholder and (ii) the class, series and number of shares of capital
stock of the Cor-
<PAGE> 7
poration which are beneficially owned by the stockholder. Such notice shall be
accompanied by the executed consent of each nominee to serve as a director if
so elected. The Corporation may require any proposed nominee to furnish such
other information as may reasonably be required by the Corporation to determine
the eligibility of such proposed nominee to serve as a director of the
Corporation. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth
herein. The officer of the Corporation presiding at an Annual Meeting shall, if
the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting, and the defective nomination
shall be disregarded.
Section 3. Vacancies. Any vacancy on the Board of Directors, howsoever
resulting, may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director. Any director elected to
fill a vacancy shall hold office for a term that shall coincide with the term
of the class to which such director shall have been elected.
Section 4. Duties and Powers. The business of the Corporation shall be
managed by or under the direction of the Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as
are not by statute or by the Certificate of Incorporation or by these By-laws
directed or required to be exercised or done by the stockholders.
Section 5. Meetings. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman of the Board of Directors, the President or by a majority of the
Board of Directors. Notice thereof stating the place, date and hour of the
meeting shall be given to each director either by mail not less than
forty-eight (48) hours before the date of the meeting, or personally or by
telephone, telegram, telex or similar means of communication on twenty-four
(24) hours'
6
<PAGE> 8
notice, or on such shorter notice as the person or persons calling such meeting
may deem necessary or appropriate in the circumstances.
Section 6. Quorum; Action of the Board of Directors. Except as may be
otherwise specifically provided by law, the Certificate of Incorporation or
these By-laws, at all meetings of the Board of Directors, a majority of the
entire Board of Directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 7. Action by Written Consent. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 8. Meetings by Means of Conference Telephone. Members of the Board
of Directors of the Corporation, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 8 shall
constitute presence in person at such meeting.
Section 9. Committees. The Board of Directors may, by resolution passed
by a majority of the entire Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the
7
<PAGE> 9
absence of a designation by the Board of Directors of an alternate member to
replace the absent or disqualified member, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any absent or disqualified
member. Any committee, to the extent allowed by law and provided in the
resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation. Unless the Board of Directors or such
committee shall otherwise provide, regular and special meetings and other
actions of any shall be governed by the provisions of this Article III
applicable to meetings and actions of the Board of Directors. Each committee
shall keep regular minutes and report to the Board of Directors when required.
Section 10. Fees and Compensation. Directors and members of committees
may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by the Board of
Directors. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 11. Interested Directors. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction, or solely because his or their
votes are counted for such purpose if (a) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of
Directors or committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or (b) the material
facts as to his or their relationship or inter-
8
<PAGE> 10
est and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (c) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board of Directors, a committee thereof
or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a President, one or more Vice Presidents, a
Secretary and a Treasurer. The Board of Directors, in its discretion, may also
choose a Chairman of the Board of Directors (who must be a director) and
Assistant Secretaries, Assistant Treasurers and other officers. Such officers as
the Board of Directors may choose shall perform such duties and have such powers
as from time to time may be assigned to them by the Board of Directors. The
Board of Directors may delegate to any other officer of the Corporation the
power to choose such other officer and to prescribe their respective duties and
powers. Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these By-laws. The
officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such officers
be directors of the Corporation.
Section 2. Election. The Board of Directors at its first meeting held after
each Annual Meeting of Stockholders shall elect the officers of the Corporation,
who shall be subject to the control of the Board of Directors and shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors, and
all officers of the Corporation shall hold office until their successors are
chosen and qualified,
9
<PAGE> 11
or until their earlier resignation or removal. Any officer elected by the Board
of Directors may be removed at any time by the Board of Directors with or
without cause. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President and any
such officer may, in the name of and on behalf of the Corporation, take all
such action as any such officer may deem advisable to vote in person or by
proxy at any meeting of security holders of any corporation in which the
Corporation may own securities and at any such meeting shall possess and may
exercise any and all rights and power incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have
exercised and possessed if present. The Board of Directors may, by resolution,
from time to time confer like powers upon any other person or persons.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (a) by the Chairman of the Board of Directors, the President or a
Vice President and (b) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number
of shares owned by him in the Corporation.
Section 2. Signatures. Where a certificate is countersigned by (a)
a transfer agent other than the Corporation or its employee or (b) a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall
10
<PAGE> 12
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond
in such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable
in the manner prescribed by law and in these By-laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by his attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate shall be issued.
Section 5. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty days nor less
than ten days before the date of such meeting, nor more than sixty days prior
to any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meet-
11
<PAGE> 13
ing; provided, however, that the Board of Directors may fix a new record date
for the adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-laws, to be given to any director or
stockholder, such notice may be given by mail, addressed to such director or
stockholder, at his address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at
the time when the same shall be deposited in the United States mail. Written
notice may also be given personally or by telegram, telex, cable or facsimile
transmission.
Section 2. Waivers of Notice. Whenever any notice is required by law, the
Certificate of Incorporation or these By-laws, to be given to any director or
stockholder, a waiver thereof in writing, signed, by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or
12
<PAGE> 14
special meeting pursuant to law. Dividends may be paid in cash, in property or
in shares of capital stock. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in its absolute discretion,
deems proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for any proper purpose, and the Board of Directors may modify or abolish any
such reserve.
Section 2. Disbursements. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify to the full extent authorized or permitted
by law (as now or hereafter in effect) any person made, or threatened to be
made, a defendant or witness to any action, suit or proceeding (whether civil or
criminal or otherwise) by reason of the fact that he, his testator or intestate,
is or was a director or officer of the Corporation or by reason of the fact that
such director or officer, at the request of the Corporation, is or was serving
any other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, in any capacity.
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ARTICLE IX
AMENDMENTS
These By-laws may be altered, amended or repealed, in whole or in part, or
new By-laws may be adopted by either the affirmative vote of the holders of
sixty-six and two-thirds percent (66-2/3%) of the outstanding capital stock of
the Corporation entitled to vote thereon or by the Board of Directors.
14
<PAGE> 1
Exhibit 99.T3C
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
As Issuer
And
THE CHASE MANHATTAN BANK,
As Trustee
INDENTURE
Dated as of October 15, 1998
15% Subordinated Notes due November 15, 2008
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA SECTION INDENTURE SECTION
<S> <C>
310 (a)(1)................................................................................... 7.10
(a)(2)................................................................................... 7.10
(a)(3)................................................................................... N.A.
(a)(4)................................................................................... N.A.
(a)(5)................................................................................... 7.10
(b)...................................................................................... 7.08; 7.10;
11.02
(c)...................................................................................... N.A.
311 (a)...................................................................................... 7.11
(b)...................................................................................... 7.11
(c)...................................................................................... N.A.
312 (a)...................................................................................... 2.05
(b)...................................................................................... 11.03
(c)...................................................................................... 11.03
313 (a)...................................................................................... 7.06
(b)...................................................................................... 7.06
(c)...................................................................................... 11.02; 7.06
(d)...................................................................................... 7.06
314 (a)...................................................................................... 4.05; 7.06
(b)...................................................................................... N.A.
(c)(1)................................................................................... 11.04
(c)(2)................................................................................... 11.04
(c)(3)................................................................................... N.A.
(d)...................................................................................... N.A.
(e)...................................................................................... 11.05
(f)...................................................................................... N.A.
315 (a)...................................................................................... 7.01(b)
(b)...................................................................................... 7.05; 11.02
(c)...................................................................................... 7.01(a)
(d)...................................................................................... 7.01(c)
(e)...................................................................................... 6.11
316 (a) (last sentence)...................................................................... 11.06
(a)(1)(A)................................................................................ 6.05
(a)(1)(B)................................................................................ 6.04
(a)(2)................................................................................... N.A.
(b)...................................................................................... 6.07
317 (a)(1)................................................................................... 6.08
(a)(2)................................................................................... 6.09
(b)...................................................................................... 2.04
318 (a)...................................................................................... 11.01
</TABLE>
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
Section 1.01 Definitions.....................................................................................1
Section 1.02 Incorporation by Reference of Trust Indenture Act...............................................5
Section 1.03 Rules of Construction...........................................................................5
ARTICLE II
THE SECURITIES
Section 2.01 Form and Dating.................................................................................6
Section 2.02 Execution and Authentication; Denominations.....................................................6
Section 2.03 Registrar and Paying Agent......................................................................7
Section 2.04 Paying Agent to Hold Money in Trust.............................................................7
Section 2.05 Securityholder Lists............................................................................8
Section 2.06 Transfer and Exchange...........................................................................8
Section 2.07 Replacement Securities..........................................................................8
Section 2.08 Outstanding Securities..........................................................................9
Section 2.09 Temporary Securities............................................................................9
Section 2.10 Cancellation....................................................................................9
Section 2.11 Defaulted Interest..............................................................................9
ARTICLE III
REDEMPTION
Section 3.01 Notices to Trustee.............................................................................10
Section 3.02 Selection of Securities to be Redeemed or Purchased............................................10
Section 3.03 Notice of Redemption...........................................................................10
Section 3.04 Effect of Notice of Redemption.................................................................11
Section 3.05 Deposit of Redemption Price....................................................................11
Section 3.06 Securities Redeemed in Part....................................................................12
Section 3.07 Optional Redemption Provisions.................................................................12
ARTICLE IV
COVENANTS
Section 4.01 Payment of Securities..........................................................................12
Section 4.02 Maintenance of Office or Agency................................................................13
Section 4.03 Corporate Existence............................................................................13
</TABLE>
i
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<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 4.04 Compliance Certificate.........................................................................13
Section 4.05 Reports........................................................................................13
ARTICLE V
SUCCESSOR CORPORATION
Section 5.01 When Company May Merge, Etc....................................................................14
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01 Events of Default..............................................................................15
Section 6.02 Acceleration...................................................................................16
Section 6.03 Other Remedies.................................................................................17
Section 6.04 Waiver of Past Defaults........................................................................17
Section 6.05 Control by Majority............................................................................18
Section 6.06 Limitation on Suits............................................................................18
Section 6.07 Rights of Holders to Receive Payment...........................................................18
Section 6.08 Collection Suit by Trustee.....................................................................19
Section 6.09 Trustee May File Proofs of Claim...............................................................19
Section 6.10 Priorities.....................................................................................19
Section 6.11 Undertaking for Costs..........................................................................19
ARTICLE VII
TRUSTEE
Section 7.01 Duties of Trustee..............................................................................20
Section 7.02 Rights of Trustee..............................................................................21
Section 7.03 Individual Rights of Trustee...................................................................21
Section 7.04 Trustee's Disclaimer...........................................................................21
Section 7.05 Notice of Defaults.............................................................................21
Section 7.06 Reports by Trustee to Holders..................................................................22
Section 7.07 Compensation and Indemnity.....................................................................22
Section 7.08 Replacement of Trustee.........................................................................22
Section 7.09 Successor Trustee by Merger, Etc...............................................................23
Section 7.10 Eligibility; Disqualification..................................................................23
Section 7.11 Preferential Collection of Claims Against Company..............................................23
Section 7.12 Authenticating Agent...........................................................................24
</TABLE>
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ARTICLE VIII
<TABLE>
<CAPTION>
PAGE
SATISFACTION AND DISCHARGE OF INDENTURE
<S> <C>
Section 8.01 Satisfaction, Discharge of the Indenture and Defeasance of the Securities......................25
Section 8.02 Termination of the Company's Obligations upon Cancellation of the Securities...................26
Section 8.03 Survival of Certain Obligations................................................................27
Section 8.04 Acknowledgment of Discharge by Trustee.........................................................27
Section 8.05 Application of Trust Assets....................................................................27
Section 8.06 Repayment to the Company.......................................................................27
Section 8.07 Reinstatement..................................................................................28
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01 Without Consent of Holders.....................................................................28
Section 9.02 With Consent of Holders........................................................................28
Section 9.03 Compliance with Trust Indenture Act............................................................29
Section 9.04 Revocation and Effect of Consents..............................................................30
Section 9.05 Notation on or Exchange of Securities..........................................................30
Section 9.06 Trustee to Sign Amendments, Etc................................................................30
ARTICLE X
SUBORDINATION OF SECURITIES
Section 10.01 Agreement to Subordinate.......................................................................30
Section 10.02 Default on Senior Indebtedness.................................................................31
Section 10.03 Liquidation; Dissolution; Bankruptcy...........................................................31
Section 10.04 Subrogation....................................................................................32
Section 10.05 Trustee to Effectuate Subordination............................................................33
Section 10.06 Notice by the Company..........................................................................33
Section 10.07 Rights of the Trustee; Holders of Senior Indebtedness..........................................34
Section 10.08 Subordination May Not Be Impaired..............................................................35
ARTICLE XI
MISCELLANEOUS
Section 11.01 Trust Indenture Act Controls...................................................................35
Section 11.02 Notices........................................................................................36
Section 11.03 Communication by Holders with Other Holders....................................................37
Section 11.04 Certificate and Opinion as to Conditions Precedent.............................................37
</TABLE>
iii
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<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 11.05 Statements Required in Certificate or Opinion..................................................37
Section 11.06 When Treasury Securities Disregarded...........................................................37
Section 11.07 Rules by Trustee, Paying Agent, Registrar......................................................38
Section 11.08 Legal Holidays.................................................................................38
Section 11.09 Governing Law..................................................................................38
Section 11.10 No Adverse Interpretation of Other Agreement...................................................38
Section 11.11 No Recourse Against Others.....................................................................38
Section 11.12 Successors.....................................................................................39
Section 11.13 Duplicate Originals............................................................................39
Section 11.14 Severability...................................................................................39
Section 11.15 Table of Contents, Headings, Etc...............................................................39
</TABLE>
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INDENTURE dated as of October 15, 1998, between Cellular
Communications of Puerto Rico, Inc., a Delaware corporation ("Company"), and The
Chase Manhattan Bank, a New York corporation, as Trustee ("Trustee").
The Company has duly authorized the creation of its 15%
Subordinated Notes due November 15, 2008 (the "Securities") and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture. Each party agrees as follows for the benefit of the other party and
for the equal and proportionate benefit of the Holders of the Securities:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
"Affiliate" means, with respect to any specified Person, (i)
any other Person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, such specified Person or (ii) any
officer, director, or controlling stockholder of such other Person. For purposes
of this definition, the term "control" means (a) the power to direct the
management and policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract
or otherwise, or (b) without limiting the foregoing, the beneficial ownership of
10% or more of the voting power of the voting common equity of such Person (on a
fully diluted basis) or of warrants or other rights to acquire such equity
(whether or not presently exercisable).
"Authenticating Agent" shall have the meaning provided in
Section 7.12.
"Bankruptcy Law" shall have the meaning provided in Section
6.01.
"Board of Directors" means the Board of Directors of the
Company or any authorized committee of such Board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Company" means the party named as such in the first paragraph
to this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and thereafter means the successor obligor under
this Indenture and on the Securities.
<PAGE> 8
"Consolidated Net Income" shall have the meaning provided in
Section 4.03.
"Custodian" shall have the meaning provided in Section 6.01.
"Default" means any event which is, or after notice or passage
of time would be, an Event of Default.
"Event of Default" shall have the meaning provided in Section
6.01.
"Exchange Offer" means the Company's offer, dated October 15,
1998, to exchange Securities for Common Stock, as such offer may be
supplemented or amended.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"Indebtedness" of any person means (a) any indebtedness of
such person, contingent or otherwise, in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such person or
only to a portion thereof), or evidenced by the bonds, notes, debentures or
similar instruments or letters of credit, or representing the balance deferred
and unpaid of the purchase price of any property, including any such
indebtedness incurred in connection with the acquisition by such person or any
of its subsidiaries of any other business or entity, if and to the extent such
indebtedness would appear as a liability upon a balance sheet of such person
prepared in accordance with generally accepted accounting principles, including
for such purpose obligations under capitalized leases, and (b) any guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business) discount with recourse, agreement (contingent or otherwise) to
purchase, repurchase or otherwise acquire or to supply or advance funds with
respect to, or to become liable with respect to (directly or indirectly) any
indebtedness, obligation, liability or dividend of any person, but shall not
include indebtedness or amounts owed (except to banks, or other financing
institutions) for compensation to employees, for goods or materials purchased,
or services utilized, in the ordinary course of business of such person. For
purposes hereof, a "capitalized lease" shall be deemed to mean a lease of real
or personal property which, in accordance with generally accepted accounting
principles, is required to be capitalized.
"Indenture" means this Indenture as amended, restated or
supplemented from time to time.
"Initial Aggregate Principal Amount" means an aggregate
principal amount of Securities determined in accordance with the following
formula:
C x T where C = the aggregate principal amount of Securities
exchanged by the Company for each share of Common Stock
accepted by the Company in the Exchange Offer; and T = the
number of shares of Common Stock accepted for exchange by the
Company pursuant to the Exchange Offer.
"Legal Holiday" shall have the meaning provided in Section
10.08.
"Maximum Aggregate Principal Amount" means the Initial
Aggregate Principal Amount plus the Secondary Aggregate Principal Amount.
"Net book value" shall have the meaning provided in Section
4.03.
"Net Income" shall have the meaning provided in Section 4.03.
2
<PAGE> 9
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Operating Officer, any Vice President, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Secretary
or the Controller of the Company.
"Officers' Certificate" means a certificate signed by two
Officers one of whom must be the principal executive officer, the principal
financial officer, the treasurer or the principal accounting officer of the
Company. See Sections 10.04 and 10.05.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee. See Sections.10.04 and
10.05.
"Paying Agent" shall have the meaning provided in Section
2.03.
"person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization
or government or other agency or political subdivision thereof or other entity.
"Predecessor Securities" of any particular Security means
every previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 2.07 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"principal" of a debt security, including the Securities,
means the principal of the Security plus, when appropriate, the premium, if any,
on the security.
"Redemption Date" when used with respect to any Security to be
redeemed means the date fixed for such redemption by or pursuant to this
Indenture and the Securities.
"Redemption Price" when used with respect to any Security to
be redeemed means the price at which it is to be redeemed pursuant to this
Indenture and the Securities.
"Registrar" shall have the meaning provided in Section 2.03.
"SEC" means the Securities and Exchange Commission.
"Secondary Securities" shall have the meaning specified in
each Security.
"Secondary Aggregate Principal Amount" means the aggregate
principal amount of Securities determined in accordance with the following
formula:
I X 1.35, where I = Initial Aggregate Principal Amount
"Securities" means any of the Company's 15% Notes due November
15, 2008, in the form of Exhibit A hereto, including any Secondary Securities,
if any as amended or supplemented from time to time, that are authenticated and
issued under this Indenture.
3
<PAGE> 10
"Senior Indebtedness" means, with respect to any person, (i)
the principal, premium, if any, and interest in respect of (A) indebtedness of
such person for money borrowed, and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such person, (ii) all
capital lease obligations of such person, (iii) all obligations of such person
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such person and all obligations of such person under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of such person for the
reimbursement on any letter of credit, banker's acceptance, Security purchase
facility or similar credit transaction, (v) all obligations of the type referred
to in clauses (i) through (iv) above of other persons for the payment of which
such obligor is responsible or liable as obligor, guarantor or otherwise and
(vi) all obligations of the type referred to in clauses (i) through (v) above
of other persons secured by any lien on any property or asset of such obligor
(whether or not such obligation is assumed by such obligor), except for (1) any
such indebtedness that is by its terms subordinated to or ranks pari passu with
the Securities; (2) any indebtedness of the Company that, when incurred, was
without recourse to the Company; or (3) any trade payables. Such Senior
Indebtedness shall continue to be Senior Indebtedness and be entitled to the
benefits of the subordination provisions of Article X of this Indenture
irrespective of any amendment, modification or waiver of any term of such Senior
Indebtedness.
"Significant Subsidiary" means any Subsidiary which (i) for
the most recent fiscal year of the Company, accounted for either (x) more than
5% of Consolidated Net Income, or (y) more than 10% of the Company's
consolidated revenues or (ii) as at the end of such fiscal year, was the owner
of more than 5% of the Company's consolidated net assets, all as shown on the
Company's consolidated financial statements for such fiscal year.
"subsidiary" means, with respect to any person, (i) any
corporation of which at least a majority in interest of the outstanding stock
having by the terms thereof voting power under ordinary circumstances to elect a
majority of the directors of such corporation, irrespective of whether or not at
the time stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency, is at the
time, directly or indirectly, owned or controlled by such person, or by one or
more other corporations a majority in interest of such stock of which is
similarly owned or controlled, or by such person and one or more other
corporations a majority in interest of such stock of which is similarly owned or
controlled and (ii) any other person (other than a corporation) in which such
person or any subsidiary directly or indirectly, has a least a 50% ownership in
interest or over which it exercises control.
"Subsidiary" means any subsidiary of the Company.
"TIA" means the Trust Indenture Act of 1939 as in effect on
the date of this Indenture (except as provided in Section ).
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"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to the applicable provisions of this
Indenture and thereafter means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"U.S. Government Obligations" shall have the meaning provided
in Section 8.01.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts and, except for purposes of Article Eight
hereof, includes a check of the Company or a bank check payable in U.S. Legal
Tender.
Section 1.02 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder or Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them.
Section 1.03 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
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(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with U.S. generally accepted
accounting principles;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in
the plural include the singular.
ARTICLE II
THE SECURITIES
Section 2.01 Form and Dating.
The Securities and the Trustee's certificate of authentication
relating thereto shall be substantially in the forms set forth in Exhibit A to
this Indenture, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture. The Securities
may have notations, legends or endorsements required by law, stock exchange rule
or usage. The Company shall approve the forms of the Securities and any
notation, legend or endorsement on them. Each Security shall be dated the date
of its authentication.
The terms and provisions in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture and, to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Security conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.
Section 2.02 Execution and Authentication; Denominations.
One Officer shall sign the Securities for the Company by
manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until the Trustee manually signs
the certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
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Upon a written order of the Company signed by two Officers of
the Company, the Trustee shall authenticate Securities from time to time and at
any time for original issue in the aggregate principal amount of up to the
Maximum Aggregate Principal Amount. The aggregate principal amount of Securities
issued and outstanding at any time may not exceed such amount except as provided
in Section 2.07.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $15.00 and any integral multiples
thereof, provided, that, Secondary Securities may be issued in integral
denominations of less than $15.00 (but not less than $1.00).
The Company and the Trustee by their execution and
authentication, respectively, of the Securities, expressly agree to the terms
and conditions stated therein and to be bound thereby.
Section 2.03 Registrar and Paying Agent.
The Company shall maintain in the Borough of Manhattan, City
of New York, State of New York an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Securities may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent. The term Registrar includes any co-registrar. The Company may change any
Paying Agent without prior notice to any Holder. The Company or any of its
Affiliates may act as Paying Agent or Registrar.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture.
The agreement shall implement the provisions of this Indenture that relate to
such agent. The Company shall notify the Trustee of the name and address of any
such agent. If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
The Company initially appoints the Trustee as Registrar and
Paying Agent.
Section 2.04 Paying Agent to Hold Money in Trust.
Subject to the provisions of Section 8.06 hereof, each Paying
Agent shall hold in trust for the benefit of Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal of or interest on
the Securities, and shall notify the Trustee of any default by the Company in
making any such payment. If the Company or any of its Affiliates acts as Paying
Agent, it shall, on or before each due date of principal of or interest on the
Securities, segregate the money and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee. Upon doing so the Paying Agent shall have no further liability for
the money.
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Section 2.05 Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee on or before each semi-annual interest payment date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee may reasonably require of the names and
addresses of Securityholders.
Section 2.06 Transfer and Exchange.
Where a Security is presented to the Registrar or a
co-registrar with a request to register transfer, the Registrar shall register
the transfer as requested if the requirements of Section 8-401(l) of the Uniform
Commercial Code are met. Where Securities are presented to the Registrar or a
co-registrar with a request to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met. To permit transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Securities at the
Registrar's request. No service charge shall be made for any registration of
transfer or exchange (except as otherwise expressly permitted herein), but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any such
transfer tax or similar governmental charge payable upon exchanges pursuant to
Sections 2.09, 3.06 or 9.05 hereof).
The Company shall not be required (i) to issue, register the
transfer of or exchange any Security for a period beginning at the opening of
business 15 days before the day of any selection of Securities to be redeemed
under Section 3.02 hereof and ending at the close of business on the day of
selection, or (ii) to register the transfer, or exchange, of any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
Section 2.07 Replacement Securities.
If the Holder of a Security claims that the Security has been
lost, destroyed or wrongfully taken, the Company shall issue and the Trustee
shall authenticate a replacement Security if the requirements of Section 8-405
of the Uniform Commercial Code as in effect at the date of this Indenture are
met. An indemnity bond must be sufficient in the judgment of the Company and the
Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar or
any coregistrar from any loss which any of them may suffer if a Security is
replaced. The Company and the Trustee may charge for its expenses in replacing a
Security. Every replacement Security is an additional obligation of the
Company.
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Section 2.08 Outstanding Securities.
Securities outstanding at any time are all Securities
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, and those described in this Section as not outstanding.
Subject to the provisions of Section 10.06 hereof, a Security does not cease to
be outstanding because the Company or an Affiliate holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds on a Redemption Date or maturity
date money sufficient to pay Securities payable on that date, then on and after
the date such Securities shall cease to be outstanding and interest on them
ceases to accrue.
Section 2.09 Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall upon a written order of the Company
signed by two Officers of the Company, authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Securities in exchange for temporary
Securities.
Section 2.10 Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or payment.
The Trustee and no one else shall cancel all Securities surrendered for
transfer, exchange, payment or cancellation. The Trustee shall dispose of
canceled Securities as the Company directs. Subject to Section 2.07, the Company
may not issue new Securities to replace Securities it has paid or delivered to
the Trustee for cancellation.
Section 2.11 Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix the
record date and payment date provided that no such record date shall be less
than 10 days before the related payment date for such defaulted interest. At
least 15 days before the record date, the Company shall mail to each
Securityholder a notice that states the record date, the payment date, and the
amount of defaulted interest to be paid. The Company may pay defaulted interest
in any other lawful manner.
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ARTICLE III
REDEMPTION
Section 3.01 Notices to Trustee.
If the Company elects to redeem Securities pursuant to
paragraph 5 of the Securities, it shall notify the Trustee of the Redemption
Date and the principal amount of Securities to be redeemed at least 50 days
(unless a shorter notice shall be satisfactory to the Trustee) before the
Redemption Date.
Section 3.02 Selection of Securities to be Redeemed or Purchased.
If less than all Securities are to be redeemed, selection of
securities for redemption or acceptance shall be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Securities are listed or, if the Securities are not so
listed, on a pro rata basis, by lot or by such other method as the Trustee deems
fair and appropriate, provided that no securities with a principal amount of
$15.00 or less shall be redeemed or purchased in part. Securities and portions
thereof selected by the Trustee shall be in amounts of $15.00 or whole multiples
of $15.00. If any Securities are to be redeemed or purchased in part only, the
notice of redemption that relates to such Securities shall state the portion of
the principal amount thereof to be redeemed or purchased. A new Securities in
principal amount equal to the unredeemed or unaccepted portion thereof shall be
issued in the name of the Holder thereof upon cancellation of the original
Securities. On and after the redemption date, interest shall cease to accrue on
Securities or portions thereof called for redemption.
Section 3.03 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall cause to be mailed a notice of redemption by first class
mail to each Holder of Securities to be redeemed.
The notice shall identify the Securities or portions thereof
to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) in the event that any Security is to be redeemed
in part only, the portion of the principal amount thereof to be
redeemed and that, on and after the
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Redemp tion Date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion thereof
will be issued upon cancellation of the original Security;
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price; and
(6) that interest on Securities called for redemption
ceases to accrue on and after the Redemption Date.
At the Company's request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's
expense.
Section 3.04 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the Redemption
Price. Upon surrender to the Paying Agent, such Securities shall be paid at the
Redemption Price, plus accrued interest to the Redemption Date provided that if
the Redemption Date is after a regular interest payment record date and on or
prior to the Interest Payment Date, the accrued interest shall be payable to the
Holder of the redeemed Securities registered on the relevant record date, and
provided, further, that if a Redemption Date is a Legal Holiday, payment shall
be made on the next succeeding Business Day and no interest shall accrue for the
period from such Redemption Date to such succeeding Business Day.
Section 3.05 Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit
with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price
of and accrued interest on all Securities to be redeemed on that date other than
any Securities or portions thereof called for redemption on that date which have
been surrendered pursuant to the second sentence of paragraph 6 of the
Securities on or prior to the date of such deposit. On and after any Redemption
Date, if money sufficient to pay the redemption price of and accrued interest on
Securities called for redemption shall have been made available in accordance
with the preceding paragraph, the Securities called for redemption will cease
to accrue interest and the only right of the Holders of such Securities will be
to receive payment of the redemption price of and, subject to the first proviso
in Section 3.04, accrued and unpaid interest on such Securities to the
Redemption Date. If any Security called for redemption shall not be so paid,
interest will be paid, from the Redemption Date until such redemption payment
is made, on the unpaid principal of the Security and any interest not paid
on such unpaid principal, in each case, at the rate and in the manner
provided in the Securities.
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Section 3.06 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate for the Holder a new Security equal in principal
amount to the unredeemed portion of the Security surrendered.
Section 3.07 Optional Redemption Provisions.
The Company shall not have the right to redeem any Securities prior to
November 15, 1999. On or after November 15, 1999, the Company will have the
right to redeem all or any part of the Securities in cash at 102% of aggregate
principal amount, in each case plus accrued and unpaid interest, if any, to the
applicable redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on an Interest Payment Date that is
on prior to the redemption date).
ARTICLE IV
COVENANTS
Section 4.01 Payment of Securities.
The Company shall pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities and this
Indenture. An installment of principal of or interest on the Securities shall be
considered paid on the date it is due if the Trustee or Paying Agent holds on
that date U.S. Legal Tender designated for and sufficient to pay the
installment; provided that interest which, under the Securities, may be paid
with Secondary Securities shall be considered paid on the date due if the Paying
Agent, if other than the Company or any Affiliate thereof, holds on the due date
duly authenticated Secondary Securities (along with the amount of cash, in
immediately available funds, necessary to satisfy the requirement that Secondary
Securities that would be in incremental amounts of less than $1.00 shall be
payable in cash) sufficient to pay all interest then due. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months and,
for periods not involving a full calendar month, the actual number of days
elapsed (but not to exceed 30 days).
The Company shall pay interest on overdue principal at the
rate borne by the Securities; it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
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Section 4.02 Maintenance of Office or Agency.
The Company will maintain in the County of New York, The City
of New York, an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 10.02.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the County of New York, The City of New York for such purpose.
Section 4.03 Corporate Existence.
Subject to Article 5, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each Significant
Subsidiary in accordance with the respective organizational documents of each
Significant Subsidiary and the rights (charter and statutory), licenses and
franchises of the Company and each Significant Subsidiary; provided, however,
that the Company shall not be required to preserve, with respect to itself, any
material right, license or franchise, and with respect to its Significant
Subsidiaries, any such existence, material right, license or franchise if the
Board of Directors, or the board of directors or managing partners of the
Significant Subsidiary concerned, shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and the
Subsidiaries taken as a whole.
Section 4.04 Compliance Certificate.
The Company shall deliver to the Trustee within 90 days after
the end of each fiscal year of the Company an Officers' Certificate stating
whether or not the signers know of any default by the Company in performing its
covenants in Sections 4.02 and 4.03. If they do know of such a default, the
certificate shall describe the default.
Section 4.05 Reports.
The Company shall file with the Trustee within 15 days after
it files them with the SEC copies of the quarterly and annual reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and
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regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Company also shall comply with the other
provisions of TIA Section 314(a).
So long as any of the Securities remain outstanding, the
Company shall cause annual and quarterly reports, containing such financial
statements and other information concerning the business and affairs of the
Company as would be required to be included in annual and quarterly reports
required to be filed with the SEC, pursuant to Section 13 or 15(d) of the
Exchange Act, by an issuer of a security registered with the SEC pursuant to
Section 12 of the Exchange Act, to be mailed to the Holders at their addresses
appearing in the register of Securities maintained by the Registrar.
ARTICLE V
SUCCESSOR CORPORATION
Section 5.01 When Company May Merge, Etc.
The Company shall not consolidate with or merge into any other
corporation or transfer its properties and assets substantially as an entirety
to any person, unless:
(1) either the Company shall be the continuing
corporation, or the corporation (if other than the Company) formed by
such consolidation or into which the Company is merged or to which the
properties and assets of the Company substantially as an entirety are
transferred shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of the Company under the Securities
and this Indenture;
(2) immediately after giving effect to such
transaction, no Event of Default, and no event which, after notice or
lapse of time or both would become an Event of Default, shall have
happened and be continuing; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture
comply with this Article Five and that all conditions precedent herein
provided for relating to such transaction have been complied with.
The successor corporation formed by such consolidation or into
which the Company is merged or to which such transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same
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effect as if such successor corporation had been named as the Company herein,
and thereafter the predecessor corporation shall be relieved of all obligations
and covenants under the Indenture and the Securities, and in the event of such
conveyance or transfer any such predecessor cor poration may be dissolved and
liquidated.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01 Events of Default.
An "Event of Default" with respect to any Securities occurs
if:
(1) the Company defaults in the payment of interest
on any Security when the same becomes due and payable and the default
continues for a period of 30 days; or
(2) the Company defaults in the payment of principal
or premium, if any, of any Security when the same becomes due and
payable at maturity, upon redemp tion or otherwise; or
(3) the Company fails to comply with any of its other
agreements in the Securities or this Indenture, and the default
continues for a period of 45 days after the Company receives written
notice thereof specifying the default from the Trustee or the holders
of at least 25% in aggregate principal amount of outstanding
securities. The notice must specify the default, demand that it be
remedied and state that the notice is a "Notice of Default."
(4) an event or events of default, as defined in any
one or more mortgages, indentures or instruments under which there may
be issued, or by which there may be secured or evidenced, any
Indebtedness of the Company, whether such Indebted ness now exists or
shall hereafter be created, shall happen and shall entitle the holders
of such Indebtedness to declare an aggregate principal amount of at
least $25,000,000 of such Indebtedness due and payable prior to the
date on which it would otherwise have become due and payable and such
event of default shall not have been cured in accordance with the
provisions of such instrument, or such Indebtedness shall not have been
discharged, within a period of 30 days after there shall have been
given, by registered or certified mail, to the Company by the trustee
or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the outstanding Securities a written notice
specifying such event or events of default and requiring the Company to
cause such event of default to be cured, or such Indebtedness to be
discharged and stating that such notice is a "Notice of Default"
hereunder; provided, however, that the Company
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is not in good faith contesting in appropriate proceedings the
occurrence of such an event of default; or
(5) the Company or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for
relief against it in an involuntary case;
(C) consents to the appointment of a
Custodian of it or for all or substantially all of its
property;
(D) makes a general assignment for the
benefit of its creditors; or
(6) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(A) is for relief against the Company or
any Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or
any Significant Subsidiary or for all or substantially all of
its property; or
(C) orders the liquidation of the Company or
any Significant Subsidiary, and the order or decree remains
unstayed and in effect for 90 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
Section 6.02 Acceleration.
If an Event of Default occurs and is continuing, the Trustee
by notice to the Company, or the Holders of at least 25% in principal amount of
the outstanding Securities by notice to the Company and the Trustee, may declare
the principal amount of all the Securities to gether with accrued interest
thereon, but in no event more than the maximum amount of principal and interest
thereon allowed by law, to be due and payable immediately. Upon any such
declaration such principal and interest shall be payable immediately.
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At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinaf ter in this Article Seven provided, the
Holders of a majority in principal amount of the outstand ing Securities, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) the principal of any Securities that
have become due otherwise than by such declaration of
acceleration (together with interest, if any, pursuant to
Section 3.04);
(B) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents,
attorneys and counsel; and
(2) all existing Events of Default have been cured or
waived and if the rescission would not conflict with any judgment or
decree.
Section 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, premium, if any, or interest on the Securities or to
enforce the performance of any provisions of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 6.04 Waiver of Past Defaults.
Subject to Section 9.02 the Holders of a majority in principal
amount of outstand ing Securities by notice to the Trustee may waive an existing
Default and its consequences. When a Default is waived, it is cured and stops
continuing. No waiver shall extend to any subsequent or other Default or Event
of Default or impair any right consequent thereto.
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Section 6.05 Control by Majority.
The Holders of a majority in principal amount of the
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. However, subject to Section 7.01, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture, that is
unduly prejudicial to the rights of another Securityholder, or that would
involve the Trustee, in personal liability.
Section 6.06 Limitation on Suits.
A Securityholder may not pursue any remedy with respect to
this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written
notice of a continuing Event of Default;
(2) the Holders of at least 25% in principal amount
of the outstanding Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of indemnity;
and
(5) during such 60-day period the Holders of a
majority in principal amount of the then outstanding securities do not
give the Trustee a direction inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
Section 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal or interest on
the Security, on or after the respective due dates expressed in the Security or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of the
Holder.
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Section 6.08 Collection Suit by Trustee.
If an Event of Default in payment of interest or principal
specified in Section 6.01(l) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount of principal, premium, if any, and interest
remaining unpaid.
Section 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Securityholders allowed in any judicial proceedings relative to
the Company, its creditors or its property.
Section 6.10 Priorities.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Securityholders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Securities for principal, premium, if any, and
interest, respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders.
Section 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07, or a suit by Holders of more than 10% in
principal amount of the outstanding Securities.
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ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
Section 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise its rights and powers and use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties that
are specifically set forth in this Indenture and no others.
(ii) In the absence of bad faith on its part, the
Trustee conclu sively may rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions, which by any provision of this Indenture are specifically
required to be furnished to the Trustee, to determine whether or not
they conform to the requirements of this Indenture and confirm the
correctness of all mathematical computations.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of
paragraph (b) of this Section.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
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(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company.
Section 7.02 Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the certificate or opinion.
(c) The Trustee may act through its attorneys or agents (which
shall not include its employees) and shall not be responsible for the misconduct
or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
Section 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not Trustee. Any
Paying Agent, Registrar or co-registrar may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
Section 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, and it shall not be responsible
for any statement in the Securities other than its certificate of
authentication.
Section 7.05 Notice of Defaults.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Securityholder notice of the Default
within 90 days after it occurs. Except in the case of a default in payment on
any Security, the Trustee may withhold the notice if and so
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long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
Section 7.06 Reports by Trustee to Holders.
Within 60 days after each [May 15] beginning with the [May 15]
following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such May 15 that complies with TIA
Section 313(a). The Trustee also shall comply with TIA Section 313(b) and (c).
A copy of each report at the time of its mailing to
Securityholder shall be filed with the SEC and any stock exchange on which the
Securities are listed.
Section 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its services. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred by it.
Such expenses may include the reasonable compensation and expenses of the
Trustee's agents and counsel. The Company shall indemnify the Trustee against
any loss or liability incurred by it. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. The Company shall defend
the claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent. The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal,
premium, if any, and interest on particular Securities.
Section 7.08 Replacement of Trustee.
The Trustee may resign by so notifying the Company. The
Holders of a majority in principal amount of the Securities may remove the
Trustee by so notifying the removed Trustee and may appoint a successor Trustee
with the Company's consent. The Company may remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10
unless the Trustee's duty to resign is stayed by Section 3.0(b) of the
Trust Indenture Act;
(ii) the Trustee is adjudged a bankrupt or an
insolvent;
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(iii) a receiver or other public officer takes charge
of the Trustee or its property; or
(iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Immediately
after that, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Securityholder.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the Securities may
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
Section 7.09 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into,
or transfers all or substantially all of its corporate trust assets to,
another corporation, the resulting, surviving or transferee corporation
without any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA-Section 310(a)(1), (2) and (5). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b).
Section 7.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
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Section 7.12 Authenticating Agent.
If the Company so requests, there shall be an Authenticating
Agent appointed by the Trustee with power to act on its behalf and subject to
its direction in the authentication and delivery of Securities in connection
with the exchange, transfer or redemption thereof as fully to all intents and
purposes as though the Authenticating Agent had been expressly authorized by the
relevant Sections hereof to authenticate and deliver Securities, and Securities
so authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as though authenticated by the Trustee
hereunder, and for all purposes of this Indenture, the authentication and
delivery of Securities by the Authenticating Agent pursuant to this Section
shall be deemed to be the authentication and delivery of such Securities "by the
Trustee." Notwithstanding anything to the contrary contained in Section 2.02, or
in any other Section hereof, all authentication in connection with exchange,
transfer or redemption thereof shall be effected either by the Trustee or an
Authenticating Agent.
Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authentication Agent shall be a party, or any corporation succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the parties hereto or the Authenticating Agent or
such successor corporation.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company. The Trustee may
at any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time any Authenticating Agent shall cease to be eligible under this Section,
the Trustee shall promptly appoint a successor Authenticating Agent, shall give
written notice of such appointment to the Company.
Any Authenticating Agent by the acceptance of its appointment
shall be deemed to have agreed with the Trustee that: it will perform and carry
out the duties of an Authenticating Agent as herein set forth, including,
without limitation, the duties to authenticate and deliver Securities when
presented to it in connection with exchanges, registrations of transfer or
redemptions thereof; it will furnish from time to time, as requested by the
Trustee, appropriate records of all transactions carried out by it as
Authenticating Agent and will furnish the Trustee such other information and
reports as the Trustee may reasonably require; and it will indemnify the Trustee
against any loss, liability or expense incurred by the Trustee and will defend
any claim asserted against the Trustee by reason of any act or failure to act of
the Authenticating Agent but it shall have no liability for any action taken by
it at the specific written direction of the Trustee.
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The Company agrees to pay to the Authenticating Agent from
time to time reasonable compensation for its services.
The provisions of Section 7.02, 7.03 and 7.04 shall bind and
inure to the benefit of any Authenticating Agent to the same extent that they
bind and inure to the benefit of the Trustee.
ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 8.01 Satisfaction, Discharge of the Indenture and Defeasance of the
Securities.
The Company shall be deemed to have paid and discharged the
entire Indebtedness on the Securities and the provisions of this Indenture
(subject to Section 8.03), if:
(1) The Company irrevocably deposits in trust with
the Trustee, pursuant to an irrevocable trust and security agreement in
form and substance reasonably satisfactory to the Trustee, U.S. Legal
Tender or direct non-callable obligations of, or non-callable
obligations guaranteed by, the United States of America for the payment
of which obligation or guarantee the full faith and credit of the
United States of America is pledged ("U.S. Government Obligations")
maturing as to principal and interest in such amounts and at such times
as are sufficient, without consideration of the reinvestment of such
interest and after payment of all Federal, state and local taxes or
other charges or assessments in respect thereof payable by the Trustee,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof (in form and
substance reasonably satisfactory to the Trustee) delivered to the
Trustee, to pay the principal of, premium, if any, and interest on the
outstanding Securities on the dates on which any such payments are due
and payable in accordance with the terms of the Indenture and of the
Securities;
(2) Such deposits shall not cause the Trustee to have
a conflicting interest as defined in and for purposes of the TIA;
(3) No Default or Event of Default shall have
occurred or be continuing on the date of such deposit or shall occur
on or before the 91st day after the date of such deposit;
(4) Such deposit will not result in a breach or
violation of, or constitute a default under, this Indenture or any
other instrument to which the Company is a party or by which it or its
property is bound;
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(5) The deposit shall not result in the Company, the
Trustee or the trust becoming or being deemed to be an "investment
company" under the Investment Company Act of 1940;
(6) The Holders shall have a perfected security
interest under applicable law in the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.01(l) above; and
(7) The Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent specified herein relating to the defeasance
contemplated by this Section 8.01 have been complied with.
In the event all or any portion of the Securities are to be
redeemed through such irrevocable trust, the Company must make arrangements
satisfactory to the Trustee, at the time of such deposit, for the giving of the
notice of such redemption or redemptions by the Trustee in the name and at the
expense of the Company.
Section 8.02 Termination of the Company's Obligations upon Cancellation of the
Securities.
In addition to its rights under Section 8.01, the Company may
terminate all of its obligations under this Indenture (subject to Section 8.03)
when:
(1) all Securities theretofore authenticated and
delivered (other than Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section
2.07) have been delivered to the Trustee for cancellation;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent specified herein relating to the satisfaction and
discharge of this indenture have been complied with.
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Section 8.03 Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this
indenture and of the Securities referred to in Section 8.01 or 8.02, the
respective obligations of the Company and the Trustee under Sections 2.02, 2.03,
2.04, 2.05, 2.06, 2.07, 4.01, 4.02, 6.07, 7.07, 7.08, 8.05, 8.06 and 8.07 shall
survive until the Securities are no longer outstanding, and thereafter the
obligations of the Company and the Trustee under Section 7.07, 8.05, 8.06 and
8.07 shall survive. Nothing contained in this Article VIII shall abrogate any of
the obligations or duties of the Trustee under this Indenture.
Section 8.04 Acknowledgment of Discharge by Trustee.
After (i) the conditions of Section 8.01 or 8.02 have been
satisfied, (ii) the Company has paid or caused to be paid all other sums payable
hereunder by the Company and (iii) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon request shall acknowledge in writing the discharge of the Company's
obligations under this Indenture except for those surviving obligations
specified in Section 8.03.
Section 8.05 Application of Trust Assets.
The Trustee shall hold any U.S. Legal Tender or U.S.
Government Obligations deposited with it in the irrevocable trust established
pursuant to Section 8.01. The Trustee shall apply the deposited U.S. Legal
Tender or U.S. Government Obligations, together with earnings thereon, through
the Paying Agent (other than the Company or any Affiliate thereof), in
accordance with this Indenture and the terms of the irrevocable trust agreement,
to the payment of principal of and interest on the Securities. The U.S. Legal
Tender or U.S. Government Obligations so held in trust and deposited with the
Trustee in compliance with Section 8.01 shall not be part of the trust estate
under this Indenture, but shall constitute a separate trust fund for the benefit
of all Holders entitled thereto.
Section 8.06 Repayment to the Company.
Upon termination of the trust established pursuant to Section
8.01, the Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess U.S. Legal Tender or U.S. Government Obligations held by
them.
The Trustee and the Paying Agent shall pay to the Company upon
request, and, if applicable, in accordance with the irrevocable trust
established pursuant to Section 8.01 or 8.02, any U.S. Legal Tender or U.S.
Government Obligations held by them for the payment of principal of, premium, if
any, or interest on the Securities that remain unclaimed for two years after the
date on which such payment shall have become due. After payment to the Company,
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Holders entitled to such payment must look to the Company for such payment as
general creditors unless an applicable abandoned property law designates another
person.
Section 8.07 Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S.
Legal Tender or U.S. Government Obligations in accordance with Section 8.01 or
8.02 by reason of any legal proceeding or by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this Indenture and
the Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01 and 8.02 until such time as the Trustee or Paying Agent
is permitted to apply all such U.S. Legal Tender or U.S. Government Obligations
in accordance with Section 8.01 or 8.02; provided, however, that if the Company
has made any payment of principal of, premium, if any, or interest on any
Securities because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the U.S. Legal Tender or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01 Without Consent of Holders.
The Company and the Trustee may amend or supplement this
Indenture or the Securities without notice to or consent of any Securityholder:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to comply with Article 5;
(iii) to provide for uncertified Securities in
addition to or in place of certified Securities; or
(iv) to make any change that does not adversely
affect the rights of any Securityholder.
Section 9.02 With Consent of Holders.
The Company may amend or supplement this Indenture or the
Securities without notice to any Securityholder but with the written consent of
the Holders of at least a majority in principal amount of the outstanding
Securities. The Holders of a majority in principal amount of
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the outstanding Securities may waive compliance by the Company with any
provision of this Indenture or the Securities without notice to any
Securityholder. However, without the consent of each Securityholder affected, an
amendment, supplement or waiver, including a waiver pursuant to Section 7.04,
may not:
(1) reduce the amount of Securities whose Holders
must consent to any amendment, supplement or waiver;
(2) reduce the rate of or extend the time for payment
of interest on any Security;
(3) reduce the principal of or extend the fixed
maturity of any Security or alter the redemption provisions with
respect thereto;
(4) waive a default in the payment of the principal
of, premium, if any, interest on or redemption payment with respect to
any Security (except in rescission of acceleration of the Securities by
the Holders of at least a majority in aggregate principal amount of the
Securities and a waiver of the payment default that resulted from such
acceleration);
(5) make any Security payable in money other than
that stated in the Security;
(6) make any change in Section 6.04 or 6.07; or
(7) make any change in the foregoing amendment and
waiver provisions of this Article 9.
To secure a consent of the Holders under this Section 9.02, it
shall not be necessary for the Holders to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to Holders a notice briefly describing
the amendment or waiver.
Section 9.03 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
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Section 9.04 Revocation and Effect of Consents.
A consent to an amendment, supplement or waiver by a Holder of
a Security shall bind the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of a Security. The Trustee must receive the notice of revocation
before the date the amendment, supplement or waiver becomes effective.
After an amendment, supplement or waiver becomes effective, it
shall bind the Holder of every such Security unless it makes a change described
in clause (1), (2), (3), (4), (5), (6) or (7) of Section 9.02. In that case the
amendment, supplement or waiver shall bind each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.
Section 9.05 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects the changed
terms.
Section 9.06 Trustee to Sign Amendments, Etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article if the amendment, supplement or waiver does
not adversely affect the rights of the Trustee. If it does, the Trustee may but
need not sign it. The Company may not sign an amendment or supplement until the
Board of Directors approves it. The Trustee, subject to Sections 7.01 and 7.02,
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that any amendment, supplement or waiver is
authorized by this Indenture and complies with the provisions of this Article 9.
ARTICLE X
SUBORDINATION OF SECURITIES
Section 10.01 Agreement to Subordinate.
The Securities issued hereunder will be subordinate and junior
in right of payment to all Senior Indebtedness of the Company. No payment of
principal (including prepayments),
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premium, if any, or interest on the Securities (except for payment in shares of
capital stock of the Company or subordinated debt securities of the Company
(including Secondary Securities) that require no payment of principal or prior
to the stated maturity of the Securities and that are subordinated and junior in
right of payment to Senior Indebtedness at least to the same extent as the
Securities) may be made at any time when (i) any Senior Indebtedness is not paid
when due, (ii) any applicable grace period with respect to such default has
ended and such default has not been cured or waived or ceased to exist, or (iii)
the maturity of any Senior Indebtedness has been accelerated because of a
default).
No provision of this Article X shall prevent the occurrence of
any Default or Event of Default hereunder.
Section 10.02 Default on Senior Indebtedness.
In the event that, any payment shall be received by the
Trustee when such payment is prohibited by Section 10.01, such payment shall be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing,
within 90 days of such payment of the amounts then due and owing on such Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of such Senior Indebtedness.
Section 10.03 Liquidation; Dissolution; Bankruptcy.
Upon any distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, all Senior Indebtedness must be paid in
full before the holders of the Securities are entitled to receive or retain any
payment in respect thereof; and upon any such dissolution or winding-up or
liquidation or reorganization or assignment, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Securityholders or the Trustee would be
entitled to receive from the Company, except for the provisions of this Article
X, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
or by the Securityholders or by the Trustee under the Indenture if received by
them or it, directly to the holders of Senior Indebtedness of the Company (pro
rata to such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all such Senior Indebtedness in full, in money or money's
worth, after giving
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effect to any concurrent payment or distribution to or for the holders of such
Senior Indebtedness, before any payment or distribution is made to the
Securityholders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Trustee before all Senior Indebtedness is paid in full, or provision is made
for such payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of and shall be paid over or
delivered to the holders of such Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebted ness may have been issued,
as their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all such Senior Indebtedness in full in money in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of such Senior Indebtedness.
For purposes of this Article X, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article X with respect
to the Securities to the payment of Senior Indebtedness that may at the time be
out standing, provided that (i) such Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the sale,
conveyance, transfer or lease of its property as an entirety, or substantially
as an entirety, to another Person upon the terms and conditions provided for in
Article V of this Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 10.03 if such
other Person shall, as a part of such consolidation, merger, sale, conveyance,
transfer or lease, comply with the conditions stated in Article V of this
Indenture.
Section 10.04 Subrogation.
Subject to the payment in full of all Senior Indebtedness, the
rights of the Securityholders shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company, as the case may be, applicable to such
Senior Indebtedness until the principal of (and premium, if any) and interest on
the Securities shall be paid in full; and, for the purposes of such subrogation,
no payments or distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Securityholders or the Trustee would
be entitled except for the provisions of this Article X, and no payment over
pursuant to the provisions of this Article X to or for the benefit of the
holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as
between
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<PAGE> 39
the Company, its creditors other than holders of Senior Indebtedness of the
Company, and the holders of the Securities, be deemed to be a payment by the
Company to or on account of such Senior Indebtedness. It is understood that the
provisions of this Article X are and are intended solely for the purposes of
defining the relative rights of the holders of the Securities, on the one hand,
and the holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article X or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the holders of the
Securities and creditors of the Company, as the case may be, other than the
holders of Senior Indebtedness of the Company, as the case may be, nor shall
anything herein or therein prevent the Trustee or the holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under the Indenture, subject to the rights, if any, under this Article X of the
holders of such Senior Indebtedness in respect of cash, property or securities
of the Company, as the case may be, received upon the exercise of any such
remedy.
Section 10.05 Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance
thereof authorizes and directs the Trustee on such Securityholder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article X and appoints the Trustee such
Securityholder's attorney-in-fact for any and all such purposes.
Section 10.06 Notice by the Company.
The Company shall give prompt written notice to the Trustee of
any fact known to the Company that would prohibit the making of any payment of
monies to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article X. Notwithstanding the provisions of this Article X
or any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment of monies to or by the Trustee in respect of the Securities pursuant to
the provisions of this Article X, unless and until the Trustee shall have
received written notice thereof, in accordance with the provisions set forth in
Section 11.02, from the Company or a holder or holders of Senior Indebtedness
or from any trustee therefor; and before the receipt of any such written notice,
the Trustee, subject to the provisions of Article VII of this Indenture, shall
be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section 10.06 at least two Business Days prior to the date (i) upon which
by the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of (or premium, if any) or
interest on any Security), or (ii)
33
<PAGE> 40
moneys are deposited in trust pursuant to Article VIII, then anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purposes for which
they were received, and shall not be affected by any notice to the contrary that
may be received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Article VII of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior
Indebtedness of the Company (or a trustee or representative on behalf of such
holder), as the case may be, to establish that such notice has been given by a
holder of such Senior Indebtedness or a trustee or representative on behalf of
any such holder or holders. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of such Senior Indebtedness to participate in any payment or
distribution pursuant to this Article X, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of such Senior Indebtedness held by such Person, the extent to which such Person
is entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article X, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Upon any payment or distribution of assets of the Company
referred to in this Article X, the Trustee and the Securityholders shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the Trustee or to the
Securityholders, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article X.
Section 10.07 Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article X in respect of any Senior Indebtedness
at any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article X, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and,
subject to the provisions of Article VII of this Indenture, the Trustee shall
not be liable to any holder of Senior
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<PAGE> 41
Indebtedness if it shall pay over or deliver to Securityholders, the Company or
any other Person money or assets to which any holder of Senior Indebtedness
shall be entitled by virtue of this Article X or otherwise.
Nothing in this Article X shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07.
Section 10.08 Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof that any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Securityholders,
without incurring responsibility to the Securityholders and without impairing or
releasing the subordination provided in this Article X or the obligations
hereunder of the holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under which
such Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required to be included in this
Indenture by the TIA or the TIA as amended after the date hereof, the required
provision shall control.
35
<PAGE> 42
Section 11.02 Notices.
Any notice or communication shall be sufficiently given if in
writing and delivered in person or mailed by registered or certified mail,
postage prepaid, return receipt requested or delivered by telecopier or
overnight air courier guaranteeing next day delivery to the other's address set
forth below:
If to the Company:
Cellular Communications of Puerto Rico, Inc.
110 East 59th Street
New York, New York 10022
Attention: Secretary
Telecopier No: (212) 906-8497
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
Attention: Thomas H. Kennedy, Esq
Telecopier No: (212) 735-2000
if to the Trustee:
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed by first-class mail, postage prepaid, to such Holder at such Holder's
address as it appears on the register maintained by the Registrar and shall be
sufficiently given to such Holder if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
36
<PAGE> 43
Section 11.03 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA Section 312(c).
Section 11.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee at the request of the Trustee:
(i) an Officers' Certificate stating that, in the
opinion of the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been complied
with; and
(ii) an Opinion of Counsel stating that, in the opinion
of such counsel, all such conditions precedent have been complied with.
Section 11.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that the person making such
certificate or opinion has read such covenant or condition;
(ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of such
person, such person has made such examination or investigation as is
necessary to enable such person to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether or not in the opinion
of such person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an opinion of
counsel may rely on an Officer's Certificate.
Section 11.06 When Treasury Securities Disregarded.
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<PAGE> 44
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or by an Affiliate shall be disregarded, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which the
Trustee knows are so owned shall be so disregarded.
Section 11.07 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or a
meeting of Securityholders. The Paying Agent or Registrar each may make
reasonable rules for its functions.
Section 11.08 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday, a legal holiday or
a day on which banking institutions in New York, New York are not required to be
open. If a payment date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period. If any other operative date
for purposes of this Indenture shall occur on a Legal Holiday then for all
purposes the next succeeding day that is not a Legal Holiday shall be such
operative date.
Section 11.09 Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to principles of conflict of laws.
Section 11.10 No Adverse Interpretation of Other Agreement.
This Indenture many not be used to interpret another
indenture, loan or debt agreement of the Company or a Subsidiary. Any such
indenture, loan or debt agreement many no be used to interpret this Indenture.
Section 11.11 No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Securities.
38
<PAGE> 45
Section 11.12 Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
Section 11.13 Duplicate Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 11.14 Severability.
If any provision of this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.15 Table of Contents, Headings, Etc.
The Table of Contents and headings of the Articles of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
39
<PAGE> 46
IN WITNESS WHEREOF, the Company and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized and their respective corporate seals, duly attested, to be hereunto
duly affixed, all as of the day and year first above written.
Dated: October 15, 1998
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By: ________________________________
Richard J. Lubasch
Senior Vice President-General Counsel
Dated: THE CHASE MANHATTAN BANK,
as Trustee
By: ________________________________
40
<PAGE> 47
EXHIBIT A
FORM OF SECURITY
15% SUBORDINATED NOTE DUE 2008
CUSIP NO.
No. $____________
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC., a Delaware
corporation, for value received
promises to pay to
or registered assigns the principal sum of __________ Dollars on ____________.
Interest Payment Dates: May 15 and November 15
Record Date: May 1 and November 1
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by a duly authorized officer.
<PAGE> 48
This is one of the 15% Subordinated Notes due 2008 described in the
within-mentioned Indenture.
Authenticated: Dated:
Trustee's Certificate of Authentication
Dated: _______, 1998
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
THE CHASE MANHATTAN BANK,
as Trustee
By: ________________________________
Name:
By: ____________________________ Title:
A-2
<PAGE> 49
(Back of Security)
1. Interest.
Cellular Communications of Puerto Rico, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
the rate per annum shown above. The Company will pay interest semi-annually on
May 15 and November 15 of each year ("Interest Payment Date"), commencing May
15, 1999. For interest payments due beginning on May 15, 2000, the Company may,
at its option, make interest payments through the issuance of additional
Securities ("Secondary Securities") in an aggregate principal amount equal to
the amount of the interest that would be payable. The Company may, at its
option, pay cash in lieu of issuing any Secondary Security to the extent the
principal amount of such Secondary Security is not an integral multiple of
$1.00. Interest on the Securities will accrue from the most recent date to which
interest has been paid, unless the date hereof is a date to which interest has
been paid, in which case from the date of the Security, or, if no interest has
been paid, from November 15, 1998. Notwithstanding the foregoing, when there is
no existing default in the payment of interest on the s, if the date hereof is
after a Record Date, as that term is defined below, and before the next
succeeding Interest Payment Date, this Security shall bear interest from such
Interest Payment Date; provided, however, that if the Company shall default in
the payment of interest due on such Interest Payment Date, then this Security
shall bear interest from the next preceding Interest Payment Date to which
interest has been paid, or, if no interest has been paid on the s, from November
15, 1988. Interest will be computed on the basis of a 360-day year of twelve
30-day months. If the Company elects to make an interest payment on an Interest
Payment Date through the issuance of Secondary Securities as provided above, it
must provide the Trustee and the Holders with irrevocable notice of such
election at least ten (10) and not more than thirty (30) Business Days prior to
the immediately preceding Interest Payment Date. Notwithstanding the foregoing,
Secondary Securities may be used to make the interest payments due May 15, 1999
or November 15, 1999.
2. Method of Payment.
The Company will pay interest on the s (except defaulted
interest) to the persons who are registered holders of s at the close of
business on the first day of the month in which the Interest Payment Date occurs
("Record Date"). Holders must surrender s to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts (other than payment of interest through the issuance of Secondary
Securities). However, the Company may pay principal and any interest by its
check payable in such money (other than payment of interest through the issuance
of Secondary Securities). It may mail an interest check to a holder's registered
address.
A-3
<PAGE> 50
3. Paying Agent and Registrar.
Initially, the Trustee, will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-registrar
without notice. The Company or any of its Affiliates may act as Paying Agent,
Registrar or co-registrar.
4. Indenture.
The Company issued the s under an Indenture dated as of
October 15, 1998 ("Indenture") between the Company and the Trustee. The terms of
the s include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939 as in effect on the date of the
Indenture. The s are subject to all such terms and Securityholders are referred
to the Indenture and such Act for a statement of them. Terms used herein which
are defined in the Indenture shall have the respective meanings assigned to them
in the Indenture.
5. Optional Redemption.
The s may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time on or after November 15, 1999,
at a Redemption Price equal to 102% of the principal amount thereof, together
with accrued interest to the Redemption Date; provided, however, that if the
Redemption Date is subsequent to a Record Date with respect to any Interest
Payment Date specified above on or prior to such Interest Payment Date, then
such accrued interest will be paid to the person in whose name this Security is
Registered at the close of business on such Record Date.
6. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the Redemption Date to each holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$15.00 may be redeemed in part in integral multiples of $15.00. On or after the
Redemption Date interest ceases to accrue on Securities or portions of them
called for redemption.
7. Denominations, Transfer, Exchange.
The Securities are in registered form without coupons in
denominations of $15.00 and integral multiples thereof. A holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not transfer or exchange any Securities selected
for redemption. Also, it need not transfer or exchange any Securities for a
period of 15 days before a selection of Securities to be redeemed.
A-4
<PAGE> 51
8. Persons Deemed Owners.
The registered holder of a Security may be treated as the
owner of it for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, holders entitled to the money must look
to the Company for payment unless an abandoned property law designates another
person.
10. Discharge Prior to Redemption or Maturity.
If the Company at any time deposits with the Trustee U.S.
Legal Tender or U.S. Government Obligations sufficient to pay the principal of
and interest on the Securities to redemption or maturity and complies with the
other provisions of the Indenture relating thereto, the Company will be
discharged from certain provisions of the Indenture and the Securities
(including the financial covenants, but excluding its obligation to pay the
principal of or interest on the Securities).
11. Amendment, Supplement, Waiver.
Subject to certain exceptions requiring the consent of the
holders of each of the affected Securities, the Indenture or the Securities may
be amended or supplemented with the consent of the holders of at least a
majority in principal amount of the Securities then outstanding, and any past
default or compliance with any provision may be waived with the consent of the
holders of a majority in principal amount of the Securities then outstanding.
Without the consent of any Securityholder, the Company may amend or supplement
the Indenture or the Securities to cure any ambiguity, defect or inconsistency
or to provide for uncertificated Securities in addition to or in place of
certificated s or to make any change that does not materially adversely affect
the rights of any Securityholder.
12. Restrictive Covenants.
The Securities are general unsecured obligations of the
Company limited to the aggregate principal amount as defined in the Indenture.
The Indenture does not limit unsecured debt other than the aggregate principal
amount of indebtedness to be issued pursuant to the Indenture.
13. Successor Corporation.
A-5
<PAGE> 52
When a successor corporation assumes all the obligations of
its predecessor under the Securities and the Indenture, the predecessor
corporation will be released from these obligations.
14. Defaults and Remedies.
An Event of Default is: default for 30 days in payment of
interest on any of the Securities; default in payment of principal of any of the
Securities due and payable at maturity or upon redemption or otherwise; failure
by the Company for 45 days after notice to it to comply with any of its other
agreements in the Indenture or in the Securities; or the happening of an Event
of Default under other Indebtedness of the Company entitling the holders thereof
to declare at least $25,000,000 aggregate principal amount thereof due and
payable, unless cured or waived or discharged within 30 days after notice to the
Company by the Trustee or the holders of at least 25% in aggregate principal
amount of the Securities then outstanding or unless the Company by appropriate
proceedings is in good faith contesting such happening; and certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing, the
Trustee or the holders of at least 25% in principal amount of the Securities
then outstanding may declare all the Securities to be due and payable
immediately in accordance with Section 6.02 of the Indenture. Securityholders
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
holders of a majority in principal amount of the Securities then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing default (except a default
in payment of principal or interest) if it determines that withholding notice is
in their interests.
15. Trustee Dealings with Company.
The Chase Manhattan Bank, the Trustee under the Indenture, in
its individual or any other capacity, may make loans to, accept deposits from,
and perform services for the Company or its affiliates, and may otherwise deal
with the Company or its affiliates, as if it were not Trustee.
16. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each holder of Securities by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
17. Authentication.
A-6
<PAGE> 53
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
A-7
<PAGE> 54
18. Abbreviations.
Customary abbreviations may be used in the name of a holder of
Securities of an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
[19. Original Issue Discount.
For purposes of Section 1232 of the Internal Revenue Code of
1986, as amended, dealing with "original issue discount," the "date of original
issue" of this Security is ____________, the "issue price," expressed as a
percentage of the principal amount hereof, is ____% and the effective yield to
maturity is ____%.]
The Company will furnish to any holder of Securities upon
written request and without charge a copy of the Indenture. Requests may be made
to: Cellular Communications of Puerto Rico, Inc., 110 East 59th Street, New
York, New York, 10022, Attention: Chief Financial Officer.
A-8
<PAGE> 1
Exhibit 99.T3E.1
OFFERING CIRCULAR
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
OFFER TO EXCHANGE 15%
SUBORDINATED NOTES DUE 2008 FOR UP TO
3,500,000 SHARES OF ITS COMMON STOCK
Cellular Communications of Puerto Rico, Inc. ("CCPR" or the "Company")
hereby offers (the "Exchange Offer"), upon the terms and subject to the
conditions set forth in this Offering Circular (the "Offering Circular"), and in
the accompanying Letter of Transmittal (the "Letter of Transmittal"), to
exchange $15.00 principal amount of a new issue of 15% Subordinated Notes due
2008 (the "Notes") in exchange for each share of its Common Stock, par value
$.01 share (the "Common Stock" or "Shares"), up to 3,500,000 shares (although
the Company may determine to accept a greater or lesser number of Shares in
accordance with the provisions for modifying the terms of the Exchange Offer and
in compliance with applicable law, including Rule 13e-4(f)(1)(ii) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")). As of October
12, 1998, there were approximately 13,204,000 shares exclusive of 383,000
treasury shares of Common Stock outstanding. The Exchange Offer is being made
for up to 3,500,000 shares of Common Stock. If more then 3,500,000 shares of
Common Stock are properly tendered prior to the Expiration Date, the Company may
accept for exchange 3,500,00 shares from shareholders who properly tender the
shares on a pro-rata basis. If the Company modifies the number of shares of
Common Stock that it will accept, in accordance with applicable provisions of
the Exchange Offer and law, and more than that number designated by the Company
are tendered, the Company may accept for exchange such designated number of
shares on a pro-rata basis. The Notes issued pursuant to the Exchange Offer will
be delivered as soon as practicable following the Expiration Date. The terms and
conditions of the Exchange Offer will not be applicable to any shares of Common
Stock that are not accepted pursuant to the Exchange Offer, or which are
delivered for exchange after the Expiration Date. The Exchange Offer is not
conditioned on any minimum number of shares being tendered.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER 12,
1998 UNLESS EXTENDED (SUCH DATE AS EXTENDED FROM TIME TO TIME, THE "EXPIRATION
DATE"). SHARES OF COMMON STOCK TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
AFTER THE EXPIRATION DATE, SHARES OF COMMON STOCK TENDERED IN THE EXCHANGE OFFER
MAY NOT BE WITHDRAWN UNLESS THE EXCHANGE OFFER IS TERMINATED OR EXPIRES WITHOUT
CONSUMMATION THEREOF.
The purpose of the Company's offer to issue Notes in exchange for Shares is
to give Shareholders who prefer not to continue in an equity position as holders
of common stock in the Company an opportunity to obtain an alternative return on
their investment in the Company through the exchange of their Shares for Notes
and to reduce the equity capitalization of the Company.
The Company intends to enter into an indenture (the "Indenture") with The
Chase Manhattan Bank as trustee governing the issuance of the Notes. Notes will
be issued in the amount of $15.00 of principal amount for each share of Common
Stock tendered and accepted and will be issued in denominations of $15.00 and
multiples thereof. Interest on the Notes will accrue from November 15, 1998, and
be payable on May 15 and November 15. After the second semi-annual interest
payment, or November 15, 1999, interest may, at the option of CCPR, be paid in
whole or in part, in cash or through the issuance of additional Notes. The Notes
are redeemable at the Company's option at any time after November 15, 1999 at
102% of principal amount plus accrued interest to the redemption date. The Notes
are subordinated to all Senior Indebtedness (as defined) of the Company. See
"Description of the Notes" and "Risk Factors -- Subordination."
<PAGE> 2
Notwithstanding any other provision of the Exchange Offer, the Company's
obligation to accept for exchange, and to exchange, shares of Common Stock
properly tendered and not withdrawn pursuant to the Exchange Offer is
conditioned upon certain conditions (including, among others, those set forth
under "The Exchange Offer -- Conditions to the Exchange Offer.") If the
conditions of the Exchange Offer are satisfied or waived and the shares of
Common Stock are accepted by the Company for exchange, the Notes will be
exchanged on or promptly after the date on which the shares of Common Stock are
accepted for exchange (the "Exchange Offer Acceptance Date"). Under no
circumstances will any interest be payable because of any delay in the
transmission of Notes or funds to holders of shares of Common Stock. Subject to
applicable securities laws and the terms set forth in this Offering Circular,
the Company reserves the right (i) to waive any and all conditions to the
Exchange Offer, (ii) to extend the Exchange Offer or (iii) otherwise to amend
the Exchange Offer in any respect.
An application Form T-3 will be filed with the Securities and Exchange
Commission (the "SEC") on or about the date of this Offering Circular for
qualification under the Trust Indenture Act of 1939 of the Indenture under which
the Notes will be issued. Until such application becomes effective, the Company
will not issue any Notes in exchange for shares or accept shares properly
tendered.
The terms of the Exchange Offer equate to $15 principal amount of Notes for
each share of Common Stock received in the Exchange Offer. The Common Stock is
traded in the Nasdaq National Market System under the symbol "CLRP". On October
14, 1998, the last reported sales price of the Common Stock on the Nasdaq
National Market was $9.00 per share.
See "Risk Factors" on page 13 for a discussion of certain factors that
should be carefully considered in connection with the exchange offered hereby.
IMPORTANT
Any beneficial holder of shares of Common Stock desiring to tender all or
any portion of his shares should either (i) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and mail or deliver it, together with the certificates
representing tendered shares of Common Stock and any other required documents,
to Continental Stock Transfer & Trust Company (the "Exchange Agent") or tender
such shares of Common Stock pursuant to the procedure for book-entry transfer
set forth in "The Exchange Offer -- Procedures for Tendering" or (2) request his
broker, dealer, commercial bank, trust company or nominee to effect the
transaction for him. BENEFICIAL HOLDERS WHOSE SHARES OF COMMON STOCK ARE
REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR
OTHER NOMINEE MUST CONTACT SUCH PERSON IF THEY DESIRE TO TENDER THEIR SHARES OF
COMMON STOCK. Holders who wish to tender shares of Common Stock and whose
certificates representing such shares of Common Stock are not immediately
available or who cannot comply with the procedures for book entry transfer on a
timely basis may tender such shares of Common Stock by following the procedures
for guaranteed delivery set forth in "The Exchange Offer -- Procedures for
Tendering."
------------------------
The date of this Offering Circular is October 15, 1998.
The Exchange Offer will expire at 5:00 p.m., New York City time, on
November 12, 1998 (such time and date, the "Expiration Date"), unless the
Company, in its sole discretion, extends the period during which the Exchange
Offer is open, in which event the term "Expiration Date" means the latest time
and date at which the Exchange Offer, as so extended by the Company, shall
expire. See "The Exchange Offer -- Expiration; Extension; Termination;
Amendment." Shares of Common Stock may be tendered and will be accepted in
exchange for Notes in denominations of $15.00 principal amount and integral
multiples thereof.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER ANY HOLDER OF SHARES OF COMMON STOCK SHOULD TENDER SHARES
OF COMMON STOCK PURSUANT TO THE EXCHANGE OFFER. NO PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY
2
<PAGE> 3
REPRESENTATIONS, OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN
THIS OFFERING CIRCULAR OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH
RECOMMENDATIONS, INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS OFFERING CIRCULAR
NOR ANY DISTRIBUTION OF SECURITIES HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
This Offering Circular does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the securities covered
by this Offering Circular, nor does it constitute an offer to sell or a
solicitation of an offer to buy any such securities by any person in any
jurisdiction in which such offer or solicitation would be unlawful.
The Exchange Offer is being made by the Company in reliance on the
exemption from the registration requirements of the Securities Act afforded by
Section 3(a)(9) thereof. The Company therefore will not pay any commission or
other remuneration to any broker, dealer, salesman or other person for
soliciting tenders of Shares of Common Stock. Officers, directors and regular
employees of the Company may solicit tenders of Shares of Common Stock but they
will not receive additional compensation therefor.
IN DECIDING WHETHER TO ACCEPT THE EXCHANGE OFFER, HOLDERS OF SHARES OF
COMMON STOCK MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF
THE EXCHANGE OFFER, INCLUDING THE MERITS AND RISKS INVOLVED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT PASSED UPON THE FAIRNESS OF SUCH TRANSACTION NOR CONFIRMED
THE ACCURACY OR DETERMINED THE ADEQUACY OF THE INFORMATION CONTAINED IN THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
3
<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Offering Circular:
1. CCPR's Annual Report on Form 10-K for the year ended December 31,
1997, dated March 30, 1998;
2. CCPR's Current Reports on Form 8-K, dated March 23, 1998, June 10,
1998, September 1, 1998, and October 13, 1998.
3. CCPR's Quarterly Reports on Form 10-Q for the quarter ended June
30, 1998, dated August 13, 1998 and the quarter ended March 31, 1998, dated
May 11, 1998.
The Company also incorporates herein by reference all documents and reports
subsequently filed by the Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Offering Circular
and prior to termination of this offering. Such documents and reports shall be
deemed to be incorporated by reference in this Offering Circular and to be a
part hereof from the date of filing of such documents or reports. 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
Offering Circular 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 statement so
modified or superseded, except as so modified or superseded, shall not be deemed
to constitute a part of this Offering Circular.
The Company will provide without charge to each person whom a copy of this
Offering Circular has been delivered, on the written or oral request of such
person, a copy of any or all of the documents incorporated herein by reference,
other than exhibits to such documents unless they are specifically incorporated
by reference into such documents. Requests for such copies should be directed
to: Secretary, Cellular Communications of Puerto Rico, Inc., 110 East 59th
Street, New York, New York 10022, telephone (212) 355-3466.
4
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION....................................... 6
OFFERING SUMMARY............................................ 7
SUMMARIZED FINANCIAL INFORMATION............................ 10
CAPITALIZATION.............................................. 12
RISK FACTORS................................................ 13
THE EXCHANGE OFFER.......................................... 22
THE COMPANY................................................. 31
DESCRIPTION OF THE NOTES.................................... 33
DESCRIPTION OF CAPITAL STOCK................................ 37
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS.............. 44
INTEREST IN SHARES OF COMMON STOCK.......................... 46
CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE SHARES OF COMMON STOCK................ 47
</TABLE>
5
<PAGE> 6
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Schedule 13E-4, which shall encompass any amendments thereto,
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with
respect to the Exchange Offer. This Offering Circular does not contain all the
information set forth in the Schedule 13E-4 and the exhibits thereto, to which
reference is hereby made for further information about the Company and the
Exchange Offer.
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy and information
statements, and other information with the Commission. The Schedule 13E-4 and
all reports, proxy and information statements, and other information filed by
the Company with the Commission may be inspected at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at 7 World
Trade Center, New York, New York 10048, and Suite 1400, Citicorp Center, 700
West Madison Street, Chicago, Illinois 60661-2511. Copies of such material may
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Additionally, the
Commission maintains an electronic Web Site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission, the address of such Web Site being
(http://www.sec.gov).
The Company will provide without charge to each person to whom a copy of
this Offering Circular has been delivered, on the written and oral request of
such person, a copy of the Schedule 13E-4. Requests for such copies should be
directed to: Secretary, Cellular Communications of Puerto Rico, Inc., 110 East
59th Street, New York, New York 10022, telephone (212) 355-3466.
6
<PAGE> 7
OFFERING SUMMARY
The following is a summary of certain information included in this Offering
Circular or in documents incorporated by reference herein. It is not intended to
be complete and is qualified in its entirety by the more detailed information
found elsewhere in this Offering Circular or in such documents, which should be
read with care. As used herein, unless the context otherwise requires, the
"Company" refers to Cellular Communications of Puerto Rico, Inc. and its
consolidated shareholders. As used herein, the term "Offering Circular" shall
mean this Offering Circular and all Appendixes and Exhibits hereto, as the same
may be amended, supplemented, restated or otherwise modified from time to time.
The term "Exchange Offer" shall mean the offering contemplated hereby.
References to the Company's fiscal year shall refer to the calendar year in
which the Company's fiscal year ends (e.g., fiscal year 1997).
THE COMPANY
The Company, through wholly and majority owned entities, owns, operates and
markets cellular and paging systems in the Commonwealth of Puerto Rico and the
U.S. Virgin Islands and conducts other cellular, paging and communications
related operations described below. From time to time the Company reviews
opportunities in other telecommunications related industries both inside and
outside of Puerto Rico and the U.S. Virgin Islands.
The Company has retained an investment banking firm to act as financial
advisor to CCPR in reviewing strategic alternatives to enhance shareholder value
including the exploration of partnering opportunities in the region through a
business combination, an appropriate acquisition, the sale of the Company, or
similar transactions. As of the date of this Offering Circular, the Company is
not presently engaged in substantive discussions with other parties regarding
such a potential transaction. However, there can be no assurance that such
substantive discussions or such a transaction might not be pursued or
consummated after the date hereof, or that such a development would not be seen
by the Company as a basis for terminating the Exchange Offer. See "RISK
FACTORS -- Exchange Offer Subject to Certain Contingencies," "-- Review of
Strategic Alternatives".
Investors are encouraged to read the Company's annual report on Form 10-K,
dated December 31, 1997, for a detailed description of the Company's business.
The Company's executive offices are located at 110 East 59th Street, New
York, New York 10022 and its telephone number is (212) 355-3466.
Effect of Hurricane Georges
Management does not believe the Company will experience substantial long
term damage from the recent hurricane (Hurricane Georges) which struck Puerto
Rico and the U.S. Virgin Islands in September 1998. The Company's insurance is
expected to cover nearly all of the expenses associated with restoring its
service, and approximately 90% of the cost of repairing and replacing damaged
equipment and facilities. In addition, the Company has business interruption
insurance so that it is not expected to incur an uninsured material loss from
the Company's cell sites that were out of service. The Company has not, however,
completed discussions with its insurance carriers and their adjusters.
RECENT DEVELOPMENTS
Prior to September 2, 1998 (the "Distribution Date") Cellular
Communications of Puerto Rico, Inc. ("CCPR" or the "Company") was known as
CoreComm Incorporated. On the September 2, 1998 the Company effected a
distribution (the "Distribution") whereby shareholders of CCPR received on a
one-for-one basis shares of CoreComm Limited ("Newco"), a Bermuda corporation,
which until the Distribution Date had been a wholly owned subsidiary of CCPR.
Newco was formed by CCPR in March 1998 in order to succeed to the business and
assets that were operated by OCOM Corporation, which had been acquired by CCPR
in June 1998, and to pursue telecommunications opportunities outside Puerto Rico
and the U.S. Virgin Islands in an entrepreneurial corporate environment. See
"Business -- Recent Developments -- Newco Distribution".
7
<PAGE> 8
THE EXCHANGE OFFER
The Offering................. The Company is making an exchange offer to each
shareholder of the Company under which such
shareholders will receive $15.00 principal amount
of the Notes for each share of Common Stock
tendered (the "Exchange Offer Consideration").
The notes will be issued in denominations of
$15.00 and multiples thereof. Although the
Company has no current intention to do so, if it
should modify the Exchange Offer Consideration,
the modified consideration would be applicable
with regard to all shares of Common Stock
accepted in the Exchange Offer, including those
tendered before the announcement of the
modification. If the Exchange Offer consideration
is modified, or the number of shares to be
accepted is increased or decreased (except for an
increase of less than 264,080 shares) the
Exchange Offer will remain open at least ten
business days from the date the Company gives
notice by public announcement or otherwise, of
such. See "The Exchange Offer -- Terms of the
Exchange Offer."
Purpose of Offering.......... The purpose of the Company's offer to issue Notes
in exchange for Shares is to give Shareholders
who prefer not to continue in an equity position
as holders of common stock in the Company an
opportunity to obtain an alternative return on
their investment in the Company through the
exchange of their Shares for Notes and to reduce
the equity capitalization of the Company.
Expiration Date.............. 5:00 p.m., New York City time, on, November 12,
1998, unless extended or terminated by the
Company. See "The Exchange Offer -- Expiration;
Extensions; Termination; Amendment."
Withdrawal of Tenders........ Tenders of shares of Common Stock may be
withdrawn at any time prior to the expiration of
the Exchange Offer. Thereafter, such tenders are
irrevocable, except that they may be withdrawn
after the expiration of 40 business days from the
commencement of the Exchange Offer, unless
accepted for exchange prior to that date. See
"The Exchange Offer -- Withdrawal Rights."
Acceptance of Common Stock
and Delivery of Notes........ The Company will accept for exchange any and all
shares of Common Stock that are properly tendered
prior to the Expiration Date subject to the
conditions set forth in the section entitled "The
Exchange Offer -- Acceptance of Shares; Delivery
of Notes." The Notes to be issued pursuant to the
Exchange Offer will be delivered promptly
following the Expiration Date. The Exchange Agent
(as defined herein) will act as agent for
tendering holders for the purpose of issuing
Notes to such holders. See "The Exchange
Offer -- Acceptance of Shares; Delivery of
Notes."
Conditions to the Tender
Offer........................ The obligation of the Company to consummate the
Exchange Offer is subject to certain conditions
and the Company reserves the right to amend the
Exchange Offer at any time for any reason. See
"The Exchange Offer -- Conditions to the Exchange
Offer."
Procedures for Tendering
Shares....................... Each holder of shares of Common Stock wishing to
accept the Exchange Offer must complete and sign
the Letter of Transmittal, in
8
<PAGE> 9
accordance with the instructions contained herein
and therein, and forward or hand deliver such
Letter of Transmittal, together with any
signature guarantees and any other documents
required by the Letter of Transmittal, including
certificates representing the tendered shares of
Common Stock or confirmations of, or an Agent's
Message (as defined) with respect to, book entry
transfers of such shares of Common Stock, to the
Exchange Agent at its address set forth on the
back cover page of this Offering Circular. Any
beneficial owner of shares of Common Stock whose
securities are registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee is urged to contact the registered
holder(s) of such securities promptly to instruct
the registered holder(s) whether to tender such
beneficial owner's securities. Beneficial Holders
whose certificates representing their shares of
Common Stock are not immediately available or who
cannot deliver their certificates or any other
required documents to the Exchange Agent prior to
the Expiration Date may tender their shares of
Common Stock pursuant to the guaranteed delivery
procedure set forth herein. See "The Exchange
Offer -- Procedures for Tendering -- Guaranteed
Delivery."
Certain Federal Income Tax
Considerations............. For a discussion of certain federal income tax
consequences of the Exchange Offer to holders of
shares of Common Stock, see "Certain Federal
Income Tax Considerations."
The Notes and the Common
Stock...................... As of October 12, 1998, there were approximately
13,204,000 shares (exclusive of 383,000 treasury
shares) of Common Stock issued and outstanding.
Assuming that holders of 3,500,000 outstanding
shares of Common Stock accept the Exchange Offer,
there would be 3,500,000 fewer shares of Common
Stock outstanding upon consummation of the
Exchange Offer, or such other number of shares
ultimately determined by the Company to be
accepted if it modifies the terms of the Exchange
Offer in accordance with the provisions for
modifying the Exchange Offer and in compliance
with applicable law, including Rule
13e-4(f)(1)(ii) of the Exchange Act. See
"Description of the Notes" and "Description of
Capital Stock."
Trading...................... The Common Stock is traded on the Nasdaq National
Market under the symbol "CLRP." For further
information, see "Description of Capital
Stock -- Market Price of Common Stock." At
present the Company does not intend to apply for
listing of the Notes for trading on any exchange
or automated quotation system. See "Risk
Factors -- Possible Lack of Trading Market for
Notes."
Exchange Agent............... Continental Stock Transfer & Trust Company. See
"The Exchange Offer -- Exchange Agent."
Information Agent............ D.F. King & Co., Inc. See "The Exchange
Offer -- Information Agent."
Risk Factors................. See "Risk Factors" beginning on page 13 for
discussion of certain factors that should be
carefully considered in connection with deciding
whether to tender shares of Common Stock in the
Exchange Offer.
9
<PAGE> 10
SUMMARIZED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
The following historical information has been derived from the financial
statements of the Company incorporated by reference herein. The pro forma
financial data gives effect to the spin-off of CoreComm Limited and related
financing as more fully described in the Pro Forma Financial Statements
incorporated herein by reference. The pro forma as adjusted data gives further
effect to the Exchange Offer.
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31, 1997
---------------------------------- PRO FORMA AS ADJUSTED
1996 1997 1997 FOR THE ISSUANCE OF
HISTORICAL HISTORICAL PROFORMA 3,500,000 SHARES
---------- ---------- -------- ---------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues................................... $133,818 $148,494 $148,494 $148,494
Costs and Expenses......................... 115,817 130,969 131,403 131,403
Operating Income........................... 18,001 17,525 17,091 17,091
Interest Expense........................... 8,181 19,400 31,088 38,963
Other Expense (Income) net................. 4,706 139 139 139
Extraordinary Item......................... -- (3,326) (3,326) (3,326)
-------- -------- -------- --------
Net Income (Loss).......................... $ 5,114 $ (5,340) $(17,462) $(25,337)
======== ======== ======== ========
Net Income (Loss) per Share Basic.......... $ 0.39 $ (0.40) $ (1.31) $ (2.65)
======== ======== ======== ========
Weighted Average Shares.................... 13,196 13,075 13,075 9,575
======== ======== ======== ========
Net Income (Loss) per Share Assuming
Dilution................................. $ 0.36 $ (0.40) $ (1.31) $ (2.65)
======== ======== ======== ========
Weighted Average Shares.................... 14,027 13,075 13,075 9,575
======== ======== ======== ========
Ratio of Earnings to Fixed Charges......... 2.0 1.0 -- --
BALANCE SHEET DATA
Working Capital............................ $ 11,078 $ 72,562 $ 49,022 $ 49,022
Total Assets............................... 300,722 397,276 373,736 373,736
Long-Term Debt............................. 115,000 209,456 364,456 416,956
Stockholders Equity (Deficiency)........... 162,608 156,861 (21,679) (74,179)
Book Value Per Share....................... 12.32 11.90 (1.64) (7.66)
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
SIX MONTHS
SIX MONTHS ENDED JUNE 30 ENDED JUNE 30
---------------------------------- PRO FORMA AS ADJUSTED
1997 1998 1998 FOR THE ISSUANCE OF
HISTORICAL HISTORICAL PROFORMA 3,500,000 SHARES
---------- ---------- -------- ---------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues................................... $ 75,709 $ 83,280 $ 82,019 $ 82,019
Costs and Expenses......................... 65,357 70,859 68,434 68,434
Operating Income........................... 10,352 12,421 13,585 13,585
Interest Expense........................... 9,061 10,760 16,604 20,541
Other Expense (Income) net................. (640) (344) (344) (344)
Extraordinary Item......................... (3,842) -- -- --
-------- -------- -------- --------
Net income................................. $ (1,911) $ 2,005 $ (2,675) $ (6,612)
======== ======== ======== ========
Net Income Per Share Basic................. $ (0.14) $ 0.15 $ (0.20) $ (0.68)
======== ======== ======== ========
Weighted Average Shares.................... 13,072 13,183 13,183 9,683
======== ======== ======== ========
Net income per share assuming dilution..... $ (0.14) $ 0.14 $ (0.20) $ (0.68)
======== ======== ======== ========
Weighted Average Shares.................... 13,297 13,955 13,183 9,683
======== ======== ======== ========
Ratio of Earnings to Fixed Charges(1)...... 1.3 1.2 1.2 1.2
BALANCE SHEET DATA
Working Capital............................ $ 40,599 $ 34,674 $ 34,674
Total Assets............................... 413,237 377,758 377,758
Long-Term Debt............................. 218,210 364,310 416,810
Stockholders Equity (deficit).............. 158,896 (19,644) (72,144)
Book Value per Share....................... 12.05 (1.49) (4.32)
</TABLE>
- ---------------
(1) Fixed charges consist of interest expense, including capitalized interest,
amortization of fees related to debt financing and rent expense deemed to be
interest. The fixed charges coverage deficiency amounted to $21,166,000,
$11,977,000 and $19,852,000 for the year ended December 31, 1997 historical,
proforma and proforma as adjusted, respectively.
(2) Pursuant to the Company's Stock Option Plan and the related option
agreements, an equitable adjustment was made to reduce the exercise price of
each such option to reflect the change in the book value of the Company's
common stock resulting from the Distribution. The Company had a measurement
date as defined in APB Opinion No. 25, "Accounting for Stock Issued to
Employees" due to this change in the exercise price. Accordingly, the
Company recorded compensation expense of approximately $21.8 million and
deferred compensation of approximately $26.3 million. The deferred
compensation will be amortized to compensation expense over the remaining
vesting period of the options (approximately $7.4 million on January 1,
1999, 2000 and 2001, and approximately $4.1 million on January 1, 2002).
11
<PAGE> 12
CAPITALIZATION
The following table sets forth (i) the historical capitalization of the
Company (ii) the pro forma capitalization of the Company after giving effect to
the spin off of CoreComm Limited and the related financing (see
"Business -- Recent Developments -- The Newco Distribution.") and (iii) as
adjusted to give further effect to the Exchange Offer.
<TABLE>
<CAPTION>
JUNE 30, 1998
(DOLLARS IN THOUSANDS)
-------------------------------------------
PRO FORMA AS
ADJUSTED
ASSUMING 3,500,000
HISTORICAL PROFORMA SHARES EXCHANGED
---------- --------- ------------------
<S> <C> <C> <C>
Cash and cash equivalents, including $24.7 million at
the Company......................................... $ 43,624 $ 36,523 $ 36,523
======== ========= ========
Bank Loans............................................ $ -- $ 155,000 $155,000
10% Senior Subordinated Notes......................... 200,000 200,000 200,000
Other................................................. 18,210 9,310 9,310
15% Subordinated Notes................................ -- -- 52,500
-------- --------- --------
LONG TERM DEBT.............................. 218,210 364,310 416,810
Series Preferred Stock -- $.01 par value;
authorized 2,500,000 shares; issued and outstanding
none
Common Stock -- $.01 par value; authorized 30,000,000
shares; issued 13,567,000 shares (1)................ 136 136 136
Additional Paid in Capital............................ 226,520 226,520 226,520
Deficit............................................... (58,698) (237,238) (237,238)
Treasury Stock, at cost 383,000 shares (historical and
proforma; 3,883,000 shares proforma as adjusted).... (9,062) (9,062) (61,562)
-------- --------- --------
STOCKHOLDERS EQUITY (DEFICIENCY)............ 158,896 (19,644) (72,144)
-------- --------- --------
TOTAL CAPITALIZATION........................ $377,106 $ 344,666 $344,666
======== ========= ========
</TABLE>
- ------------------------
(1) Does not include an aggregate of approximately 4.3 million shares of Common
Stock issuable upon exercise of options.
12
<PAGE> 13
RISK FACTORS
Investment in the Notes is subject to certain risks and other factors,
including but not limited to those set forth below. In considering the Exchange
Offer, an investor should carefully consider the following risk factors, as well
as the risk factors appearing in the Company's filings with the Commission and
incorporated herein by reference and all other information appearing in this
Offering Circular, as well as his or her particular financial circumstances,
investment objectives and tax situation.
INCREASED LEVERAGE AND DEBT SERVICE OBLIGATIONS
Following the Exchange Offer, the Company will be more leveraged and will
have incurred substantial additional debt service in addition to operating
expenses and planned capital expenditures. At June 30, 1998, as adjusted to give
effect to the issuance of the maximum $52.5 million principal amount of the
Notes, the total long-term debt of the Company would have been approximately
$416.8 million. In addition, assuming the issuance of the maximum $52.5 million
principal amount of the Notes pursuant to the Exchange Offer, the Company would
incur additional debt service of approximately $7.9 million annually.
The Company's level of indebtedness may have several important effects on
its future operations, including, without limitation, (i) a substantial portion
of the Company's cash flow operations must be dedicated to the payment of
interest and principal on its indebtedness, reducing the funds available for
operations and for capital expenditures, including acquisitions, (ii)
restrictions in future agreements may limit the Company's ability to borrow
additional funds or to dispose of assets, and may affect the Company's
flexibility in planning for, and reacting to, changes in its business, (iii) the
Company's leveraged position will increase its vulnerability to adverse changes
in general economic, industry and competitive conditions, (iv) the Company's
ability to obtain additional financing for working capital, capital
expenditures, acquisitions, general corporate and other purposes may be limited,
and (v) the Company's leveraged position may place the Company at a relative
competitive disadvantage as compared with certain of its competitors. The
Company's ability to meet its debt service obligations and to reduce its total
indebtedness will be dependent upon the Company's future performance, which will
be subject to general economic, industry and competitive conditions and to
financial business and other factors affecting the operations of the Company,
many of which are beyond its control, or its ability to raise additional equity.
There can be no assurance that the Company's business will be able to generate
sufficient cash flow from operations in the future to service its debt; it may
be required, among other things, to seek additional financing in the debt or
equity markets, to refinance or restructure all or a portion of the its
indebtedness, including the Notes, to sell selected assets, or to reduce or
delay planned capital expenditures and growth or business strategies. There can
be no assurance that any such measures would be sufficient to enable the Company
to service its debt, or that any of these measures could be effected on
satisfactory terms, if at all.
If the Company fails to pay any required payment of interest or principal
with respect to the Notes on a timely basis, such failure will constitute a
default under the terms of the Indenture. An event of default under the
Indenture also may trigger an event of default under certain other existing
obligations of the Company. As a result, the incurrence of additional debt
resulting from the Exchange Offer will increase the risk of possible default by
the Company with respect to its current and future obligations.
Management does not anticipate that CCPR and its subsidiaries will generate
sufficient cash flow from operations to repay at maturity the entire principal
amount of the outstanding indebtedness of CCPR and its subsidiaries.
Accordingly, CCPR will be required to consider a number of measures, including
(i) refinancing all or a portion of such indebtedness, (ii) seeking
modifications of the terms of such indebtedness, (iii) seeking additional debt
financing, which would be subject to obtaining necessary lender consents, (iv)
seeking additional equity financing or (v) a combination of the foregoing. The
particular measures CCPR may undertake and the ability of CCPR to accomplish
those measures will depend on the financial condition of CCPR and its
subsidiaries at the time, as well as a number of factors beyond the control of
CCPR and its subsidiaries, including prevailing economic and market conditions
and financial, business and other factors. No assurance can be given that any of
the foregoing measures can be accomplished, or can be accomplished in sufficient
time to make timely payments with respect to CCPR's indebtedness. In addition,
there can be no
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assurance that any such measures can be accomplished on terms which are
favorable to CCPR and its subsidiaries.
HOLDING COMPANY STRUCTURE; DEPENDENCE ON CASH FLOWS FROM SUBSIDIARIES; EXISTING
SUBSIDIARY INDEBTEDNESS
The Notes will be unsecured obligations of the Company and will be
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined) of the Company. The Notes will also be structurally subordinated to
all indebtedness and other liabilities of the Company's subsidiaries.
Substantially all of the Company's operating income is generated by its
subsidiaries, and the Company from time to time will not hold assets other than
the stock of its subsidiaries. As a result, other than for cash and cash
equivalents held by the Company (which as at September 30, 1998, was $24.4
million), the Company will need to rely on dividends and other payments received
from its subsidiaries to provide substantially all of the funds necessary to
meet its debt service obligations, including the payment of principal of and
interest on the Notes.
However, in connection with the Newco Distribution, CCPR Services, Inc.
("Services"), an indirect wholly owned subsidiary of CCPR, entered into a credit
agreement dated August 11, 1998 with The Chase Manhattan Bank and other lenders,
for senior secured credit facilities (the "Credit Facility") in an aggregate
amount of up to $170 million, of which $155 million has been drawn. $150 million
of the $155 million was transferred to CCPR, and CCPR subsequently transferred
that amount to CoreComm Limited as a capital contribution prior to the Newco
Distribution. See "Business -- Recent Developments -- the Newco Distribution."
Additionally, Services currently has outstanding $200 million principal amount
of 10% Senior Subordinated Notes due 2007, which is guaranteed by CCPR, Inc., a
wholly owned subsidiary of the Company. The indenture and agreements governing
the existing indebtedness of Services permits Services and CCPR, Inc. to incur
substantial additional indebtedness.
The Credit Facility contains restrictive covenants that, among other
things, restrict CCPR, Inc., Services and other of the Company's subsidiaries
from paying dividends or other distributions (whether in cash, securities or
other property) with respect to any shares of any class of capital stock of
CCPR, Inc. or any of its subsidiaries. These restrictions affect the ability
CCPR, Inc. to make payments to CCPR. CCPR, Inc. is a directly, wholly owned
subsidiary of the Company, which holds all of the capital stock of the Company's
operating subsidiaries or their parent companies, which own all of the Company's
assets. Moreover, substantial assets of the Company's subsidiaries were pledged
to secure the Credit Agreement. In the event of a default under the Credit
Agreement, the lenders thereunder would be entitled to a claim on the assets
securing the Credit Facility. Similarly, under the indenture relating to
Service's 10% Senior Subordinated Notes due 2007 (the "Services Indenture"),
there are substantial limitations regarding payment of dividends and the
disposition of several of the Company's subsidiaries' assets which, among other
things, could render proceeds from a sale of such assets effectively unavailable
to the Company to pay amounts due under the Notes.
In addition, it should also be noted that each of CCPR's subsidiaries that
is a Delaware corporation may pay dividends, under the Delaware General
Corporation Law (the "DGCL"), only out of its surplus, or, in the event that it
has no surplus, out of its net profits for the fiscal year in which the dividend
is declared or for the immediately preceding fiscal year. Moreover, Puerto Rico
may impose a tax upon the payment of any such dividends. Other statutory
obligations also affect the ability of directors of CCPR's subsidiaries to
declare dividends and the ability of CCPR's subsidiaries to make payments to
CCPR on account of intercompany loans. Additionally, certain agreements of the
Company may now or in the future limit the ability of its subsidiaries in
certain situations to pay dividends to the Company or to repay intercompany
debt. The Notes are not guaranteed by any of the subsidiaries of the Company,
and therefore, should the Company fail to satisfy any payment obligation under
the Notes, the holders would not have a direct claim therefor against the
subsidiaries. Any indebtedness incurred directly by the subsidiaries of the
Company, including guarantees, will be senior in right of a payment to the
common stock of such subsidiaries. This means that in the event of any
liquidation or bankruptcy of a subsidiary, all debt of such subsidiary would be
entitled to be paid before any amounts would be available to the Company by
virtue of ownership of the common stock.
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The ability of CCPR and its subsidiaries to make scheduled payments under
present and future indebtedness will depend upon, among other things, CCPR's
ability to access the earnings of its subsidiaries (which may be subject to
significant contractual and legal limitations), the future operating performance
of CCPR and its subsidiaries and CCPR's ability to refinance its indebtedness
when necessary. Each of these factors is to a large extent subject to economic,
financial, competitive, regulatory and other factors that are beyond CCPR's and
its subsidiaries' control. The Indenture will not limit the ability of the
Company and its subsidiaries to incur additional indebtedness, including Senior
Indebtedness. Moreover, certain Senior Indebtedness of the Company is now and
may in the future be guaranteed by, and secured by the assets of, the Company's
subsidiaries. In the event of a default under any such Senior Indebtedness, the
lenders thereunder would be entitled to a claim on the assets securing such
indebtedness. Accordingly, because of any or all of the above, the Company may
not have sufficient monies available from its subsidiaries or from other means,
or assets remaining after payment of prior claims from time to time, to pay
amounts due on the Notes.
SUBORDINATION
The Notes will be unsecured obligations of the Company and will be
subordinated in right of payment to all existing and future "Senior
Indebtedness" which includes all indebtedness of the Company, whether existing
on or created or incurred after the date of issuance of the Notes, that is not
made subordinate to or pari passu with the Notes by the instrument creating the
indebtedness, excluding trade payables. The Notes will rank senior only to other
indebtedness of the Company that expressly provides that it is subordinated in
right of payment to the Notes, if any. In the event of bankruptcy, liquidation,
insolvency, reorganization or similar proceeding relating to the Company, the
assets of the Company will be available to pay obligations on the Notes only
after all Senior Indebtedness has been paid in full, and there may be
insufficient assets remaining to pay amounts due on any or all of the Notes
outstanding. In addition, in an insolvency, bankruptcy or liquidation scenario,
there is always the risk that senior creditors would seek to recover any monies
paid on the Notes. There are no restrictions in the Indenture on the ability of
the Company to increase its indebtedness. Moreover, under the Indenture,
payments due under the Notes may not be made at any time when: (i) Senior
Indebtedness is not paid when due; any applicable grace period with respect to
such default has ended and such default has not been cured; (ii) or the maturity
of any Senior Indebtedness has been accelerated because of a default. As of June
30, 1998, including the $155 million outstanding under the Credit Facility, and
without including any indebtedness under the Notes, the Company had
approximately $364 million of indebtedness outstanding, all of which would be
Senior Indebtedness. Additional Senior Indebtedness may be incurred by the
Company and its subsidiaries from time to time, subject only to certain
restrictions imposed by other agreements of the Company. See "Description of the
Notes -- Subordination" and "Certain Covenants."
FRAUDULENT CONVEYANCE CONSIDERATIONS
Under applicable provisions of the Bankruptcy Code or comparable provisions
of fraudulent transfer law, if CCPR, at the time it incurred its indebtedness in
connection with the Exchange Offer, (i) incurred such indebtedness with the
intent to hinder, delay or defraud a present or future creditor or (ii)(a)
received or receives less than reasonably equivalent fair value or fair
consideration and (b)(1) was or is insolvent or rendered insolvent by reason of
such incurrence or (2) was or is engaged in a business or transaction for which
the assets remaining with it constituted unreasonably small capital or (3)
intended or intends to incur, or believed or believes that it would incur, debts
beyond its ability to pay such debts as they mature or (4) was a defendant in an
action for money damages docketed against it (if, in either case, after final
judgment the judgement is unsatisfied), the Notes could be voided, or claims in
respect of the Notes could be subordinated to all other debts of the Company. In
addition, the payment of principal by the Company pursuant to the Notes could be
voided and be required to be returned to any such present or future creditor, or
to a fund for the benefit of the creditors of the Company or to any judgment
creditor referred to in clause (4) above.
The measures of insolvency for purposes of the foregoing considerations
will vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, the Company would be considered insolvent if the
sum of its debts, including contingent liabilities, were greater than the fair
saleable
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<PAGE> 16
value of all of its assets at a fair valuation or if the present fair saleable
value of its assets were less than the amount that would be required to pay its
probable liability on its existing debts, including contingent liabilities, as
they become absolute and mature. There can be no assurance, however, as to what
standard a court would apply in making such determination.
DETERMINATION OF TERMS OF NOTES; LACK OF RESTRICTIVE COVENANTS IN INDENTURE
The Company has determined the terms of the Notes without formally
retaining any independent financial advisor or investment banking firm.
Accordingly, there can be no assurance that the terms of the Notes are fair from
a financial point of view to tendering stockholders. In this regard, there can
be no assurance that if the Company were to issue subordinated debt in the
capital markets, the interest rate on such debt would not be higher than 15% per
annum, or that the financial and other covenants would not be more restrictive.
For example, companies that issue unsecured, non-investment grade subordinated
debt similar to the Notes typically are subject to more restrictions than those
imposed by the Indenture with respect to the Notes, including restrictions on
incurring additional indebtedness above a specified amount or in violation of a
specified formula, paying dividends or making certain other distributions,
payments and investments, creating liens, and engaging in transactions with
affiliates or in unrelated businesses, among others. In addition, the terms of
such securities typically include a change of control provision, which typically
provides a right to debt holders to force a company to redeem their debt in the
event of a change of control of that company's voting securities whereas the
Indenture under which the Notes will be issued contains no such provision. This
means that the Notes would remain outstanding even in the event the Company were
subject to a change in control of its voting securities. As a result of the lack
of restrictive covenants, stockholders who tender their Shares in exchange for
Notes would not receive the same level of protection that typically would be
afforded to holders of unsecured, non-investment grade subordinated debt issued
by other similarly situated companies. Moreover, because the Notes contain terms
that may be less attractive than other similar types of securities issued in the
market, there can be no assurance the Company will not record the Notes at a
discount from their principal amount. In addition, the relative lack of standard
restrictive covenants may adversely affect the liquidity of the Notes.
EXCHANGE OFFER SUBJECT TO CERTAIN CONTINGENCIES
The Exchange Offer is subject to certain contingencies that are not within
the control of the Company. First, the Company will accept no more than
3,500,000 Shares in the Exchange Offer unless the Company modifies the number of
Shares it will accept in accordance with the provisions for modifying the
Exchange Offer, and in accordance with applicable law, including Rule
13e-4(f)(1)(ii) of the Exchange Act, in which case the Company will accept no
more than such designated number of Shares, whether that number is less than or
greater than 3,500,000. If more than 3,500,000 Shares are validly tendered, the
Company will allocate Notes among the tendering stockholders on a pro-rata basis
based on the number of Shares tendered. Similarly, if the Company increases or
decreases the number of Shares it will accept, and more than such designated
number of Shares are tendered, the Company will accept Shares and allocate
Notes, among the tendering Stockholders on a pro-rata basis based on the number
of Shares tendered. In addition, the Exchange Offer requires qualification of
the Indenture under the Trust Indenture Act of 1939 and may require certain
approvals or consents from government regulatory agencies, self regulatory
organizations, and other third parties. There can be no assurance that all
required conditions, consents, or regulatory approvals will be obtained or
achieved in a timely manner. Moreover, the Exchange Offer may be modified or
withdrawn in certain circumstances subject to the discretion of the Company's
Board of Directors. See "The Exchange Offer -- Conditions to and Amendment of
the Exchange Offer".
REVIEW OF STRATEGIC ALTERNATIVES
The Company has retained an investment banking firm to act as financial
adviser to CCPR in reviewing strategic alternatives to enhance shareholder
value, including the exploration of partnering opportunities in the region
through a business combination, an appropriate acquisition, the sale of the
Company, or similar transactions. As of the date of this Offering Circular, the
Company is not presently engaged in any substantive
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discussions with other parties regarding such a potential transaction. However,
there can be no assurance that such substantive discussions or such a
transaction might not be pursued or consummated after the date hereof, or that
such a development would not be seen by the Company as a basis for terminating
the Exchange Offer.
LOSS OF RIGHTS ASSOCIATED WITH COMMON STOCK
To the extent stockholders exchange their Shares for Notes, they will be
relinquishing certain rights available to holders of Common Stock in exchange
for acquiring rights as holders of debt. Stockholders whose Shares are validly
tendered and accepted for exchange will lose the right to share in any capital
appreciation of the Company's Common Stock, will not be entitled to vote upon
any matters submitted to the Company's stockholders, and will no longer be
entitled to dividends paid, if any, on the Company's Common Stock, although to
date the Company has never paid a cash dividend and has no present intention to
do so. In addition, because there is an established trading market for the
Shares and no established trading market for the Notes, the liquidity of a
tendering stockholder's investment in the Company will likely be reduced.
MARKET ISSUES
If successful, the Exchange Offer will reduce the Company's stockholders'
equity and increase its indebtedness, thereby increasing the Company's debt to
equity ratio and its debt service obligations. There can be no assurance that
the market will not regard these results unfavorably and that the price of the
Company's Common Stock will not be adversely affected. To the extent the market
does not regard the Exchange Offer as favorable, the market price of the Notes
also could be adversely affected. In addition, although the Company believes the
Exchange Offer complies with all applicable listing and maintenance requirements
imposed by the Nasdaq National Market, there can be no assurance that issues
regarding the Common Stock's listing status will not arise.
LACK OF PUBLIC MARKET FOR THE NOTES; VOLATILITY; RESTRICTIONS ON RESALE
There is no existing market for the Notes, and there can be no assurance
regarding the future development of a market for the Notes or the ability of the
holders of the Notes, or the price at which such holders may be able, to sell
their Notes. If such a market were to develop, the Notes could trade at prices
that may be higher or lower than the $15.00 principal amount per share of Common
Stock being offered. Prevailing market prices from time to time will depend on
many factors, including then existing interest rates, operating results and cash
flow of the Company and the market for similar securities. Moreover, even if a
trading market for the Notes does develop, there can be no assurance as to the
liquidity of that market. The Company does not intend to apply for listing or
quotation of the Notes on any securities exchange or stock market.
In addition, the liquidity of, and trading markets for, the Notes may be
adversely affected by declines in the market for high-yield securities
generally, such as the recent decline in that market. Such a decline may
adversely affect liquidity and trading markets independent of the financial
performance of, and prospects for, the Company.
INCREASED PERCENTAGE OF SHARES HELD BY MANAGEMENT
As of October 15, 1998, the Company's officers and directors beneficially
owned approximately 7.07% of the outstanding Shares of the Company's Common
Stock. Assuming the maximum number of Shares is exchanged in the Exchange Offer,
and that no executive officers or directors tender shares, the Company's
officers and directors will beneficially own approximately 9.63% of the
Company's outstanding Shares of Common Stock. However, the Company's directors
and officers may participate in the Exchange Offer on the same terms as any
other stockholders.
RISK OF PREPAYMENT
The Notes are subject to redemption at the option of the Company in whole,
at a rate of 102% of principal, at any time after November 15, 1999 or in part
from time to time without penalty upon notice to the holders of the Notes. As a
result, the holders of the Notes will be subject to a risk of prepayment at a
time
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when interest rates may be generally declining. In such case, holders of Notes
that are redeemed who tendered their Shares to acquire an interest-bearing
security will no longer have the right to receive interest and may only be able
to reinvest the redemption proceeds in securities with a lower rate of interest,
depending upon prevailing conditions.
COMPETITION
The sale of cellular and paging services in each of the Company's markets
is becoming increasingly competitive. In Puerto Rico and the USVI, where the
Company previously had one cellular competitor in each market, the Company in
the near future may face many wireless competitors due to the introduction of
broadband personal communications services ("PCS") on frequencies recently
auctioned by the FCC and specialized mobile radio ("SMR") services on existing
SMR frequencies. At least one competitor is offering PCS services with
comparable voice quality, system reliability, system coverage, product
offerings, marketing techniques and pricing in several of the Company's markets.
Additional services may also in the future be competitive with the Company's
cellular service as they develop. The Telecommunications Act of 1996 removed
certain restrictions on the ability of the Company's competitors to offer as a
single package a variety of services, such as wireless voice and data, paging,
long-distance, local landline and cable services, some of which the Company does
not currently provide. Increased competition could result in pricing pressure,
which could contribute to lower revenues per customer, and higher customer
acquisition costs resulting in lower profit margins. Continuing technological
advances in the communications industry make it impossible to predict the extent
of future competition for the Company. See "Business -- Competition."
The Company's significant competitor is the Puerto Rico Telephone Company
(the "PRTC"), which is the other cellular licensee and the landline telephone
service provider in Puerto Rico. The PRTC is owned by the government of Puerto
Rico. The PRTC is significantly larger and better capitalized than the Company
and is being acquired by GTE, which is even larger than PRTC and substantially
larger than the Company. The Company believes the PRTC currently provides
service to approximately 35% of the subscribers to cellular service in Puerto
Rico.
POTENTIAL NEED FOR ADDITIONAL CAPITAL
The acquisition, development, ownership and operation of wireless
communications networks require substantial capital investment. The Company
believes that, after giving effect to the Exchange Offer, it will have adequate
internal resources to meet its capital requirements. If required, sources of
additional capital could include debt and equity financing by CCPR or
subsidiaries of CCPR. While the Company has been successful in obtaining
financing for investment and capital contribution requirements to date, there
can be no assurance they will be able to do so in the future. If such financing
is unavailable, the Company may not be able to develop further its existing
projects, and the number of projects in which the Company participates may be
limited. See "-- Increased Leverage and Debt Service Obligation."
HISTORY OF LOSSES; NEGATIVE NET WORTH
Although the Company generated net earnings for the six month period ending
June 30, 1998, the Company has never generated earnings on an annual basis other
than in 1996. Although the Company generated approximately $2.0 million in net
income for the six month period ended June 30, 1998, giving effect to interest
requirements on the Credit Facility and the Notes, the Company believes that it
may not generate substantial net income for fiscal year 1998. The Company has
incurred aggregate net losses of approximately $58.7 million from March 8, 1989,
(i.e., date operations commenced) through June 30, 1998. There can be no
assurances that the Company will achieve profitability in the near future. This
may be significant to investors in that such lack of profitability could, among
other things, adversely affect the Company's ability to finance its operations
and meet its debt service obligations.
Assuming that all 3,500,000 Shares being sought are tendered by
stockholders and accepted by the Company, this will immediately change the
Company's capitalization to one that is more highly leveraged. In this regard,
the following discussion compares the pro forma book effect of the Exchange
Offer on long-term
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debt, stockholder's equity and income/loss from continuing operations with
recent historical financial information of the Company. On a pro forma book
basis at June 30, 1998, giving effect to the Exchange Offer, the Company would
have had approximately $416.8 million of long-term debt and a deficit of
approximately $72.1 million of stockholders' equity, as compared to the
approximately $364.3 million of long-term debt and a deficit of approximately
$19.6 million of stockholders' equity that was shown on the Company's balance
sheet on such date (after giving effect to the Newco distribution). In addition,
if the Exchange Offer had occurred as of January 1, 1997, the Company would have
reported, on a pro forma basis, a loss from continuing operations of
approximately $22 million for the year ended December 31, 1997 and a loss from
continuing operations of approximately $6.6 million for the six months ended
June 30, 1998 as compared to losses from continuing operations of $2.0 million
for the year ended December 31, 1997 and income of $2.0 million for the six
months ended June 30, 1998 that were reported for each period. See "SUMMARIZED
FINANCIAL INFORMATION" and "CAPITALIZATION."
REGULATION
The Company is subject to significant government regulation at the Federal
level by the FCC and, to some extent, the Federal Aviation Administration (the
"FAA"). In Puerto Rico, the Company is subject to regulation by the Puerto Rico
Planning Board (the "Planning Board"), the Administration of Regulations and
Permits ("ARPE") and the newly-created Telecommunications Regulations Board (the
"Board").
The Company's wireless licenses are granted for specific periods of time.
The most significant cellular and paging licenses are granted for a period of
ten years. The Company believes that each of its expiring licenses will be
renewed based upon its prior experience with expired licenses and upon FCC rules
establishing a presumption in favor of licensees that have substantially
complied with their regulatory obligations during the initial license period.
However, there can be no assurance that any license will be renewed.
Wireless communications operations are subject to governmental regulation,
which may change from time to time. There can be no assurance that material and
adverse changes in the regulation of the Company's existing operating systems
will not occur in the future and will not have an adverse effect on the
Company's business. For a general description of the regulatory environment
facing the Company, investors are encouraged to read the Company's 1997 10-K.
LACK OF GEOGRAPHIC DIVERSIFICATION
The Company's business at present principally is confined to the operation
of a cellular telephone system and paging operations in Puerto Rico and the U.S.
Virgin Islands. As such, it is highly dependent on trends in the use of cellular
telephone and paging services and is subject to economic, social, political and
governmental conditions in Puerto Rico and the U.S. Virgin Islands. Moreover,
Puerto Rico and the U.S. Virgin Islands are located in the Carribean Sea, and
are prone to severe weather -- particularly hurricanes -- that can seriously
impact the types of services offered by the Company. Recently, Hurricane Georges
inflicted great damage on Puerto Rico and the U.S. Virgin Islands. Although the
damage done to the Company's facilities was minimal, there can be no assurance
that a future storm might not be more devastating. See "The Company -- Recent
Developments -- Hurricane Georges."
TECHNOLOGY
The operations of the Company and its ventures depend in part upon the
successful deployment of continuously evolving wireless communications
technologies. There can be no assurance that such technologies will be developed
according to anticipated schedules, that they will perform according to
expectations or that they will achieve commercial acceptance. The Company may be
required to make more capital expenditures than is currently expected if a
technology's performance falls short of expectations or if commercial acceptance
is not achieved. Thus, there can be no assurance that technological developments
will not have a material adverse effect on the Company.
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VALUE OF FCC LICENSES
A substantial portion of the Company's assets consist of intangible assets
in the form of investments in cellular licenses, the value of which will depend
upon the success of the operations of such entities and the growth and future
direction of the cellular industry generally. Values of licenses also have been
affected by fluctuations in the level of supply and demand for such licenses. In
addition, the infrequency with which licenses are traded or sold may increase
the difficulty of establishing values for the Company's license interests. Any
transfer of control of an entity holding a domestic license is subject to prior
FCC (and possibly state or Commonwealth of Puerto Rico regulatory) approval and
the future value of such interests will depend significantly upon future
regulatory actions affecting the Company or its market and the success of the
Company's businesses. While the Company believes that there is currently a
market for such assets, such market may not exist in the future or the values
obtainable may be significantly lower than at present. As a consequence, there
can be no assurance that the proceeds from the liquidation or sale of the
Company's assets would be sufficient to pay the Company's obligations and a
significant reduction in the value of the licenses could require a charge to the
Company's results of operations. Finally, under FCC rules, a license is subject
to renewal. There may be competition for licenses upon the expiration of their
initial ten-year terms. The Company's San Juan/Caguas license expires in 1998
and its other licenses expire in 1998 through 2002. There can be no assurance
that any such licenses will be renewed.
RELIANCE ON USE OF THIRD-PARTY SERVICE MARK
The Company currently uses the registered service mark CELLULARONE(R) to
market the services of its non-wireline systems. The Company's use of this
service mark is governed by five-year contracts between the Company and Cellular
One Group, the owner of the service mark. Such contracts expire on various dates
and each is renewable at the option of the Company for three additional
five-year terms, subject to the attainment of certain customer satisfaction
ratings. Under these agreements, the Company has agreed to meet a consistent set
of operating and service quality standards for its cellular service areas. If
these agreements were not renewed upon expiration or if the Company were to fail
to meet the applicable operating or service quality standards, and therefore was
no longer permitted to use the CELLULARONE(R) service mark, the Company's
ability both to attract new subscribers and retain existing subscribers could be
materially impaired. In addition, if for some reason beyond the Company's
control, the name CELLULARONE(R) were to suffer diminished marketing appeal, the
Company's ability both to attract new subscribers and retain existing
subscribers could be materially impaired. McCaw/AT&T Wireless, which had been
the single largest user of the CELLULARONE(R) brand name, has significantly
reduced its use of the brand name as a primary service mark. There can be no
assurance that such reduction in use by McCaw/AT&T Wireless will not have an
adverse effect on the marketing appeal of the brand name.
RADIO FREQUENCY EMISSIONS CONCERNS
Media reports have suggested that certain radio frequency ("RF") emissions
from portable cellular telephones might be linked to cancer. The Company has
collected and reviewed relevant scientific information and, based on such
information, is not aware of any credible evidence linking the usage of portable
cellular telephones with cancer. The FCC recently updated the guidelines and
methods it uses for evaluating RF emissions in radio equipment, including
cellular telephones. While the new rules impose more restrictive standards on RF
emissions from low-power devices such as portable cellular telephones, the
Company believes that all cellular telephones currently marketed and in use
comply with those standards. Additional concerns have been expressed about the
safety of emissions from cellular facilities which transmit calls to customers'
telephone handsets. The Company's facilities are licensed by the FCC and comply
with the prior exposure levels set by the FCC, and the Company believes that
they comply with the new levels. The Telecommunications Act of 1996 provides
that state and local governments may not regulate the placement, construction or
modification of personal wireless service facilities on the basis of the
environmental effects of RF emissions as long as such facilities comply with the
FCC's regulations concerning such emissions. However, local authorities still
have jurisdiction over zoning and permitting of such facilities.
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FRAUD
The cellular industry continues to be subject to fraudulent activity.
Cloning, which is one form of such fraud, results from the use of scanners and
other electronic devices to illegally obtain telephone numbers and electronic
serial numbers during cellular transmission. These stolen telephone and serial
number combinations can be programmed into a cellular phone and used to obtain
fraudulent access to cellular networks. Roaming fraud occurs when a phone
programmed with a number stolen from the Company's customer is used to place
fraudulent calls from another carrier's market, resulting in a roaming fee
charged to the Company that cannot be collected from the customer. The Company
is working to reduce the negative impacts of fraud through investment in new
technologies and the deployment of other measures. In its own markets, the
Company has had significant success in detecting and reducing fraudulent usage
of numbers stolen from the Company's customers. However, the Company continues
to experience average levels of roaming fraud. The cost of cellular fraud could
have a significant impact on the Company's operating results for the foreseeable
future.
DEPENDENCE UPON KEY PERSONNEL OF CCPR
CCPR's businesses are managed by a small number of key executive officers,
the loss of one or more of whom could have a material adverse effect on CCPR.
CCPR believes that its future success will depend in large part on its continued
ability to attract and retain highly skilled and qualified personnel. CCPR has
not entered into written employment contracts or non-compete agreements with,
nor has it obtained life insurance policies covering, such key executive
officers. Certain senior managers of CCPR also serve as members of senior
management of other companies in the telecommunications business.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK
This Offering Circular, including the information incorporated by
reference, contains forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are based largely on the Company's expectations
and are subject to a number of risks and uncertainties, certain of which are
beyond the Company's control. Actual results could differ materially from these
forward-looking statements as a result of the factors described in "Risk
Factors." In light of these risks and uncertainties, there can be no assurance
that the forward-looking information contained in this Offering Circular will in
fact transpire. Actual results may differ materially from those contemplated in
such projections and forward-looking statements. Important assumptions and
factors that could cause actual results to differ materially from those
contemplated or projected, forecast, estimated or budgeted in or expressed or
implied by such projections and forward-looking statements include: (i) those
specified in the "RISK FACTORS" section; (ii) industry trends; (iii) the ability
of CCPR to continue to obtain and maintain any required government licenses or
approvals and finance construction and development, in a timely manner, at
reasonable costs and on satisfactory terms and conditions; (iv) assumptions
about customer acceptance, churn rates, overall market penetration and
competition from providers of alternative services, and availability, terms and
deployment of capital; and (v) general economic and business conditions in the
United States, Puerto Rico and the U.S. Virgin Islands. Other factors and
assumptions not identified above were also involved in the derivation of these
forward-looking statements, and the failure of such other assumptions to be
realized, as well as other factors, may also cause actual results to differ
materially from those projected. CCPR does not assume any obligation to update
such forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting such forward-looking
statements.
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THE EXCHANGE OFFER
GENERAL
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Offering Circular and in the accompanying Letter of Transmittal,
to exchange up to 3,500,000 shares of Common Stock ("Shares"), each for $15.00
principal amount of 15% Subordinated Notes due 2008 (the "Notes"). The Company
expressly reserves the right to alter or modify any of the terms of this
Exchange Offer, including increasing or decreasing the number of Shares it will
accept in accordance with the provisions for modifying the Exchange Offer and in
compliance with applicable law, including Rule 13e-4(f)(1)(ii) of the Exchange
Act. The Company proposes to consummate the Exchange Offer promptly after
October 15, 1998.
The purpose of the Exchange Offer is to give shareholders who prefer not to
continue in an equity position as holders of Common Stock the opportunity to
obtain an alternative return on their investment in the Company though the
exchange of their shares of Common Stock for Notes, and to reduce the equity
capitalization of the Company.
TERMS OF THE EXCHANGE OFFER
Shares may be tendered and will be accepted for exchange only for Notes in
denominations of $15.00 principal amount and integral multiples thereof.
Interest on the Notes will accrue from November 15, 1998, and be payable May 15
and November 15. After the second semi-annual interest payment on November 15,
1999, interest may, at the option of CCPR, be paid in whole or in part, in cash
or through the issuance of additional Notes. The Notes are redeemable at the
Company's option at any time at 102% of principal amount plus accrued interest
to the redemption date. See "Description of the Notes -- Principal, Maturity and
Interest".
Although the Company has no present intention to do so, if it should modify
the Exchange Offer Consideration offered for the Shares in the Exchange Offer,
that modified consideration would be provided with regard to all Shares accepted
in the Exchange Offer. If the Company modifies the Exchange Offer Consideration,
the Exchange Offer will remain open at least 10 business days from the date the
Company first publishes, sends or gives notice, by public announcement or
otherwise, of such modification to the holders of Shares.
Tendering holders of Shares will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Shares pursuant to
the Exchange Offer. The Company will pay all charges and expenses, other than
certain applicable taxes, in connection with the Exchange Offer.
CONDITIONS TO THE EXCHANGE OFFER
The Company may accept up to 3,500,000 Shares validly tendered
(representing approximately 26% of the outstanding Shares of the Company's
Common Stock as of October 12, 1998), or such greater or lesser amount as the
Company shall determine in accordance with the provisions for modifying the
terms of the Exchange Offer and in compliance with applicable law, including
Rule 13e-4(f)(1)(ii) of the Exchange Act. If more than 3,500,000 Shares are
tendered, the Company will accept no more than 3,500,000 Shares of Common Stock,
to be allocated among the tendering stockholders on a pro rata basis as
described under " -- Proration if Shares Tendered Exceed Maximum." If the
Company modifies the number of Shares that it will accept, and more than that
number designated by the Company are tendered, the Company may accept for
exchange such designated number of Shares on a pro-rata basis.
An application will be filed with the Commission for qualification of the
Indenture under which the Notes will be issued under the Trust Indenture Act of
1939 (the "Trust Indenture Act"). The Exchange Offer is conditioned upon the
Indenture being qualified under the Trust Indenture Act.
Notwithstanding any other provision of the Exchange Offer, the Company will
not be required to accept for exchange or subject to any applicable rules or
regulations of the Commission, any Shares tendered for
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<PAGE> 23
exchange and may postpone the exchange of any Shares tendered and to be
exchanged by it, and may terminate or amend the Exchange Offer as provided
herein if any of the following conditions exist:
(1) there shall have been instituted or threatened or be pending any
action or proceeding before or by any court or governmental, regulatory or
administrative agency or instrumentality, or by any other person, (a) that
challenges the making of the Exchange Offer, or might, directly or
indirectly, prohibit, prevent, restrict, or delay consummation of the
Exchange Offer or otherwise adversely affect, in any material manner the
Exchange Offer or which requires the Company to file a registration
statement pursuant to the Securities Act of 1933, as amended (the "1933
Act") in respect of the Notes being offered as consideration in the
Exchange Offer, or (b) that is, or is reasonably likely to be, in the sole
judgment of the Company, materially adverse to the business, operations,
properties, condition (financial or otherwise), assets, liabilities or
prospects of the Company;
(2) there shall have occurred any material adverse development, in the
sole judgment of the Company, with respect to any action or proceeding
concerning the Company.
(3) an order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been proposed, enacted, entered,
issued, promulgated, enforced or deemed applicable by any court or
governmental, regulatory or administrative agency or instrumentality that,
in the sole judgment of the Company, would or might prohibit, prevent,
restrict or delay consummation of the Exchange Offer or that is, or is
reasonably likely to be, materially adverse to the business, operations,
properties, condition (financial or otherwise), assets, liabilities or
prospects of the Company;
(4) there shall have occurred or be likely to occur any event
affecting the business or financial affairs of the Company or which, in the
sole judgment of the Company, would or might prohibit, prevent, restrict or
delay consummation of the Exchange Offer, or that will, or is reasonably
likely to, materially impair the contemplated benefits to the Company of
the Exchange Offer, or otherwise result in the consummation of the Exchange
Offer not being or not at the time likely to be in the best interests of
the Company;
(5) the Trustee shall have objected in any respect to, or taken any
action that could, in the sole judgment of the Company, adversely affect
the consummation of the Exchange Offer, or shall have taken any action that
challenges the validity or effectiveness of the procedures used by the
Company in the making of the Exchange Offer or the offering of any of the
Notes;
(6) the Company shall not have received from any federal, state or
local governmental, regulatory or administrative agency or instrumentality,
any approval, authorization or consent that, in the sole judgment of the
Company, is necessary to effect the Exchange Offer; and
(7) there shall have occurred (a) any general suspension of, or
limitation on prices for, trading in securities in the United States
securities or financial markets, (b) any significant adverse change in the
price of the Common Stock in the United States securities or financial
markets, (c) a material impairment in the trading market for debt or equity
securities, (d) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (e) any limitation
(whether or not mandatory) by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, on,
or other event that, in the reasonable judgment of the Company, might
affect, the extension of credit by banks or other lending institutions, (f)
a commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States,
(g) any imposition of a general suspension of trading or limitation of
prices on the New York Stock Exchange or the Nasdaq, or (h) in the case of
any of the foregoing existing on the date hereof, a material acceleration
or worsening thereof.
All of the foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company at any time regardless of the circumstances
giving rise to such conditions and may be waived by the Company, in whole or in
part, at any time and from time to time, in the sole discretion of the Company.
The failure by the Company at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
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If any of the conditions set forth in this section shall not be satisfied,
the Company may, subject to applicable law, (i) terminate the Exchange Offer and
return all Shares tendered pursuant to the Exchange Offer to tendering holders;
(ii) extend the Exchange Offer and retain all tendered Shares until the
Expiration Date for the extended Exchange Offer; (iii) amend the terms of the
Exchange Offer or modify the consideration to be provided by the Company
pursuant to the Exchange Offer; or (iv) waive the unsatisfied conditions with
respect to the Exchange Offer and accept all Shares tendered pursuant to the
Exchange Offer.
PRORATION IF SHARES TENDERED EXCEED MAXIMUM
If stockholders tendering Shares validly tender more than 3,500,000 shares,
the Company will accept for exchange no more than 3,500,000 Shares (or such
greater or lesser number of Shares that the Company shall determine to accept in
accordance with the provisions for modifying the terms of the Exchange Offer and
in compliance with applicable law, including Rule 13e-4(f)(1)(ii) of the
Exchange Act). In such event, Shares will be accepted and Notes will be
allocated to tendering stockholders on a pro rata basis based on the number of
Shares tendered by each tendering stockholder. The Company will accept from each
tendering stockholder that number Shares equal to 3,500,000 (or such greater or
lesser number of Shares that the Company shall determine to accept) multiplied
by a fraction, the numerator of which is the total number of Shares validly
tendered by such tendering stockholder and the denominator of which is the total
number of the Shares validly tendered by all tendering stockholders. The number
of Shares will be rounded up or down as nearly as practicable to result in the
tender of whole Shares rather than fractional Shares. Any Shares not accepted by
the Company as a result of the allocation described above will be returned
promptly to the tendering stockholder.
EXPIRATION; EXTENSION; TERMINATION; AMENDMENT
The Exchange Offer is scheduled to expire at 5:00 PM, New York City time,
on November 12, 1998. The Company expressly reserves the right, in its sole
discretion, at any time or from time to time, to extend the period of time
during which the Exchange Offer is open by giving oral or written notice of such
extension to the Exchange Agent and making a public announcement thereof as
described in the second succeeding paragraph. There can be no assurance that the
Company will exercise its right to extend the Exchange Offer. During any
extension of the Exchange Offer, all Shares previously tendered pursuant thereto
and not exchanged or withdrawn will remain subject to the Exchange Offer and may
be accepted for exchange by the Company at the expiration of the Exchange Offer
subject to the right of a tendering holder to withdraw his Shares. See "The
Exchange Offer -- Withdrawal of Tenders." Under no circumstances will interest
on the Exchange Offer Consideration be paid by the Company by reason of any such
extension.
The Company also expressly reserves the right, subject to applicable law,
(i) to delay acceptance for exchange of any Shares or, regardless of whether
such Shares were theretofore accepted for exchange, to delay the exchange of any
shares pursuant to the Exchange Offer or to terminate the Exchange Offer and not
accept for exchange any Shares, if any of the conditions to the Exchange Offer
specified herein fail to be satisfied, by giving oral or written notice of such
delay or termination to the Exchange Agent; (ii) to waive any condition to the
Exchange Offer and accept all the shares tendered; and (iii) at any time, or
from time to time, to amend the terms of Exchange Offer in any respect,
including but not limited to altering the Exchange Offer Consideration or
increasing or decreasing the number of Shares the Company will accept. The
reservation by the Company of the right to delay exchange or acceptance for
exchange of Convertible Notes is subject to the provisions of Rule 13e-4(f)(5)
under the Exchange Act, which requires that the Company pay the consideration
offered or return the Shares deposited by or on behalf of holders thereof
promptly after the termination or withdrawal of the Exchange Offer.
Any extension, delay, termination or amendment of the Exchange Offer will
be followed as promptly as practicable by a public announcement thereof. Without
limiting the manner in which the Company may choose to make a public
announcement of any extension, delay, termination or amendment of the Exchange
Offer, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by issuing a release to the
Dow Jones News Service, except in the case of an announcement of an extension of
the Exchange Offer, in which case the Company shall have no obligation to
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publish, advertise or otherwise communicate such announcement other than by
issuing a notice of such extension by press release or other public
announcement, which notice shall be issued no later than 9:00 A.M., New York
City time, on the next business day after the previously scheduled Expiration
Date.
If the Company makes a material change in the terms of the Exchange Offer
or the information concerning the Exchange Offer, or if the Company waives any
condition of the Exchange Offer that results in a material change to the
circumstances of the Exchange Offer, the Company will disseminate additional
Exchange Offer materials in a manner reasonably calculated to inform holders of
Shares of such change, and will provide holders of Shares adequate time to
consider such materials and their participation in the Exchange Offer. The
minimum period during which the Exchange Offer must remain open following a
material change in the terms of the Exchange Offer or the information concerning
the Exchange Offer, other than a change in the Exchange Offer Consideration or
the percentage of the Shares sought in the Exchange Offer, will depend upon the
facts and circumstances, including the relative materiality, of the changed
terms or information.
If the Company increases or decreases the Exchange Offer Consideration or
the amount of Shares sought in the Exchange Offer, the Exchange Offer will
remain open at least ten business days from the date that the Company first
publishes, sends or gives notice, by public announcement or otherwise, of such
increase or decrease. The Company has no current intention to increase or
decrease the Exchange Offer Consideration currently offered or the amount of
Shares sought to be purchased.
DIVIDENDS AND DISTRIBUTION
If, on or after October 15, 1998, the Company should split, combine or
otherwise change the Common Stock or its capitalization, then, without prejudice
to the Company's rights under "the Exchange Offer -- Conditions of the Exchange
Offer," the Company, in its discretion, may make such adjustments in the
Exchange Offer Consideration and other terms of the Exchange Offer as it deems
appropriate to reflect such split, combination or other change.
Although the Company does not intend to pay a stock dividend in the near
future, if, on or after October 15, 1998, should the Company declare any cash or
stock dividend, stock split or other distribution on, or issue any rights with
respect to the Common Stock, payable or distributable to shareholders of record
on a date occurring on or after October 15, 1998, and prior to the transfer to
the name of the Company or its nominee or transferee on the Company's stock
transfer records of the Shares tendered pursuant to the Exchange Offer, then,
without prejudice to the Company's rights under "The Exchange
Offer -- Conditions of Exchange Offer," (i) the principal amount of Notes to be
exchanged per share of Common Stock pursuant to the Exchange Offer shall be
reduced by the amount of any such cash dividend or distribution; or (ii) the
whole of any noncash dividend or distribution (including additional shares or
rights as aforesaid) received by a tendering shareholder shall be required to be
promptly remitted and transferred by the tendering shareholder to the Exchange
Agent for the account of the Company, accompanied by appropriate documentation
of transfer. Pending such remittance or appropriate documentation, the Company
shall be, subject to applicable law, entitled to all rights and privileges as
owners of such noncash dividend, distribution or right and may deduct from the
principal amount Notes to be exchanged per share of Common Stock the amount or
value thereof, as determined by the Company in its discretion.
PROCEDURES FOR TENDERING
Tenders of Securities. For a Registered Holder validly to tender Shares
pursuant to the Exchange Offer, a properly completed and validly executed Letter
of Transmittal (or a facsimile thereof), together with any signature guarantees
or, in the case of a Book-Entry Transfer (as defined below), an Agent's Message
(as defined below), and any other documents required by the instructions to the
Letter of Transmittal, must be received by the Exchange Agent prior to the
Expiration Date at one of its addresses set forth on the back cover page of this
Offering Circular. In addition, the Exchange Agent must receive either
certificates for tendered Shares at any of such addresses or such Shares must be
transferred pursuant to the procedures for book-entry
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transfer described below and a confirmation of, or an Agent's Message with
respect to, such book-entry transfer must be received by the Exchange Agent
prior to the Expiration Date. A Registered Holder who desires to tender Shares
and who cannot comply with the procedures set forth herein for tender on a
timely basis or whose Shares are not immediately available must comply with the
procedures for guaranteed delivery set forth below. Letters of Transmittal,
certificates representing Shares and confirmations of, or an Agent's Message
with respect to, book-entry transfer should be sent only to the Exchange Agent,
and not to the Company or the Trustee.
The term "Agent's Message" means a message transmitted by a Book-Entry
Facility to, and received by, the Exchange Agent and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility, tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Company may enforce such agreement against the participant.
Delivery of Letters of Transmittal. If the certificates for Shares are
registered in the name of a person other than a signer of the Letter of
Transmittal relating thereto, then, in order to tender such Shares pursuant to
the Exchange Offer, the certificates evidencing such Shares must be endorsed or
accompanied by appropriate stock powers signed exactly as the name or names of
the registered owner or owners appear on the certificates, with the signatures
on the certificates or stock powers guaranteed as provided below.
ANY BENEFICIAL OWNER WHOSE SHARES ARE REGISTERED IN THE NAME OF A BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE AND WHO WISHES TO TENDER
SHARES IN THE EXCHANGE OFFER SHOULD CONTACT SUCH REGISTERED HOLDER TO TENDER THE
SHARES ON SUCH BENEFICIAL OWNER'S BEHALF. IF ANY BENEFICIAL OWNER WISHES TO
TENDER SHARES HIMSELF, THAT BENEFICIAL OWNER MUST, PRIOR TO COMPLETING AND
EXECUTING THE LETTER OF TRANSMITTAL AND, WHERE APPLICABLE, DELIVERING HIS
SHARES, EITHER MAKE APPROPRIATE ARRANGEMENTS TO REGISTER OWNERSHIP OF THE SHARES
IN SUCH BENEFICIAL OWNER'S NAME OR FOLLOW THE PROCEDURES DESCRIBED IN THE
IMMEDIATELY PRECEDING PARAGRAPH. THE TRANSFER OF RECORD OWNERSHIP MAY TAKE A
CONSIDERABLE AMOUNT OF TIME.
The method of delivery of Shares, Letters of Transmittal and all other
required documents to the Exchange Agent is at the election and risk of the
holder tendering the Shares. If delivery is to be made by mail, it is suggested
that the holder use properly insured, registered mail with return receipt
requested, and that the mailing be made sufficiently in advance of the
Expiration Date to permit delivery to the Exchange Agent prior to that date and
time.
Book-Entry Transfer. Promptly after the commencement of the Exchange
Offer, the Exchange Agent and the Company will seek to establish a new account
or utilize an existing account with respect to the Shares at The Depository
Trust Company (a "Book-Entry Transfer Facility"). Any financial institution that
is a participant in the Book-Entry Transfer Facility system and whose name
appears on a security position listing as the owner of Shares may make
book-entry delivery of such Shares by causing the Book-Entry Transfer Facility
to transfer such Shares into the Exchange Agent's account in accordance with the
Book-Entry Transfer Facility's procedures for such transfer. However, although
delivery of Shares may be effected through book-entry transfer at a Book-Entry
Transfer Facility, the applicable Letter of Transmittal (or a facsimile or
electronic copy thereof or an electronic agreement to comply with the terms
thereof), properly completed and validity executed, with any required signature
guarantees, an Agent's Message and any other required documents, must, in any
case, be received by the Exchange Agent at one of its addresses set forth on the
back cover page of this Offering Circular on or prior to the Expiration Date, or
the tendering holder must comply with the guaranteed delivery procedures
described below. The Company may elect to waive receipt of a written Letter of
Transmittal if delivery is properly effected through the Book-Entry Transfer
Facility.
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IN ORDER TO BE ASSURED OF PARTICIPATING IN THE EXCHANGE OFFER, ANY
BENEFICIAL OWNER WHOSE SHARES ARE REGISTERED IN THE NAME OF A BROKER, DEALER,
COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE OR WHO WISHES TO TENDER SHARES
SHOULD CONTACT SUCH REGISTERED HOLDER PROMPTLY (LEAVING SUCH REGISTERED HOLDER
WITH SUFFICIENT TIME TO TENDER THE SHARES ON THE BENEFICIAL HOLDERS BEHALF) AND
INSTRUCT SUCH REGISTERED HOLDER TO TENDER THE SHARES ON SUCH BENEFICIAL OWNER'S
BEHALF.
Signature Guarantees. Signatures on the Letter of Transmittal must be
guaranteed by a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., or by a
commercial bank or trust company having an office or correspondent in the United
States or by any other "eligible guarantor institution" as defined in Rule
17Ad-15 under the Exchange Act (each of the foregoing being an "Eligible
Institution") unless (a) the Letter of Transmittal is signed by the registered
holder of the Shares tendered therewith (or by a participant in one of the
Book-Entry Transfer Facilities whose name appears on a security position listing
as the owner of such Shares) and neither the "Special Payment Instructions" box
nor the "Special Delivery Instructions" box of the Letter of Transmittal is
completed, or (b) such Shares are tendered for the account of an Eligible
Institution.
Guaranteed Delivery. If a holder desires to tender Shares pursuant to the
Exchange Offer and (a) certificates representing such Shares are not immediately
available, (b) time will not permit such holder's Letter of Transmittal,
certificates evidencing such Shares or other required documents to reach the
Exchange Agent prior to the Expiration Date or (c) such holder cannot complete
the procedures for book-entry transfer prior to the Expiration Date, a tender
may be effected if all the following are complied with:
(a) such tender is made by or through an Eligible Institution;
(b) on or prior to the Expiration Date, the Exchange Agent has
received from such Eligible Institution, at one of the addresses of the
Exchange Agent set forth on the back cover page of this Offering Circular,
a properly completed and validly executed Notice of Guaranteed Delivery (by
telegram, telex, facsimile transmission, mail or hand delivery) in
substantially the form accompanying this Offering Circular, setting forth
the name and address of the registered holder and the principal amount or
number of Shares being tendered and stating that the tender is being made
thereby and guaranteeing that, within three New York Stock Exchange trading
days after the date of the Notice of Guaranteed Delivery, the Letter of
Transmittal validly executed (or a facsimile thereof), together with
certificates evidencing the Shares (or confirmation of, or an Agent's
Message with respect to, book-entry transfer of such Shares into the
Exchange Agent's account with a Book-Entry Transfer Facility), and any
other documents required by the Letter of Transmittal and the instructions
thereto, will be deposited by such Eligible Institution with the Exchange
Agent; and
(c) such Letter of Transmittal (or a facsimile thereof), properly
completed and validly executed, together with certificates evidencing all
physically delivered Shares in proper form for transfer (or confirmation
of, or an Agent's Message with respect to, book-entry transfer of such
Shares into the Exchange Agent's account with a Book-Entry Transfer
Facility) and any other required documents are received by the Exchange
Agent within three New York Stock Exchange trading days after the date of
such Notice of Guaranteed Delivery.
Tender Constitutes an Agreement. The tender of Shares pursuant to the
Exchange Offer pursuant to any of the procedures described above, including
tendering through a book-entry delivery, will constitute a binding agreement
between the tendering holder and the Company upon the terms and conditions of
the Exchange Offer, and a representation that (i) such holder owns the Shares
being tendered and is entitled to tender such Shares as contemplated by the
Exchange Offer all within the meaning of Rule 14e-4 under the Exchange Act, and
(ii) the tender of such Shares complies with Rule 14e-4.
Further, by executing or transmitting a Letter of Transmittal (as set forth
above, including book-entry transfer, and subject to and effective upon
acceptance for exchange for the Shares tendered therewith or
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<PAGE> 28
effectively agreeing to the terms of the Letter of Transmittal pursuant to a
book-entry delivery), a tendering holder irrevocable sells, assigns and
transfers to or upon the order of the Company or its assignee all right, title
and interest in and to all such Shares tendered thereby, waives any and all
rights with respect to the Shares, and each such holder irrevocably selects and
appoints the Exchange Agent the true and lawful agent and attorney-in-fact of
such holder (with full knowledge that the Exchange Agent also acts as agent of
the Company and as the Trustee under the Indenture) with respect to such Shares,
with full power of substitution and resubstitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) to (a) deliver
certificates representing such Shares, or transfer ownership of such Shares on
the account books maintained by a Book-Entry Transfer Facility, together, in
each case, with all accompanying evidences of transfer and authenticity, to or
upon the order of the Company, (b) present such Shares for transfer on the
relevant security register and (c) receive all benefits or otherwise exercise
all rights of beneficial ownership of such Shares (except that the Depositary
will have no rights to or control over funds from the Company).
Other Matters. Notwithstanding any other provision of the Exchange Offer,
delivery of the Notes for Shares tendered and accepted pursuant to the Exchange
Offer will occur only after timely receipt by the Exchange Agent of such Shares
(or confirmation of, or an Agent's Message with respect to, book-entry transfer
of such Shares into the Exchange Agent's account with a Book-Entry Transfer
Facility), together with properly completed and validly executed Letters of
Transmittal (or a facsimile or electronic copy thereof or an electronic
agreement to comply with the terms thereof) and any other required documents.
All questions as to the form of all documents, the validity (including time
of receipt) and acceptance of tenders of the Shares will be determined by the
Company, in its sole discretion, the determination of which shall be final and
binding. Alternative, conditional or contingent tenders of Shares will not be
considered valid. The Company reserves the absolute right to reject any or all
tenders of Shares that are not in proper form or the acceptance of which, in the
Company's opinion, would be unlawful. The Company also reserves the right to
waive any defects, irregularities or conditions of tender as to particular
Shares. If the Company waives its right to reject a defective tender of Shares,
the holder will be entitled to the Exchange Offer Consideration. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) will be final and binding. Any defect
or irregularity in connection with tenders of Shares must be cured within such
time as the Company determines, unless waived by the Company. Tenders of Shares
shall not be deemed to have been made until all defects and irregularities have
been waived by the Company or cured. None of the Company, the Exchange Agent,
the Trustee or any other person will be under any duty to give notice of any
defects or irregularities in tenders of Shares, or will incur any liability to
holder for failure to give any such notice.
WITHDRAWAL OF TENDERS
Tenders of Shares may be withdrawn at any time until the Expiration Date as
such date may be extended. Thereafter, such tenders are irrevocable, except that
they may be withdrawn after the expiration of 40 business days from the
commencement of the Exchange Offer unless accepted for exchange prior to that
date.
Holders who wish to exercise their right of withdrawal with respect to a
Exchange Offer must give written notice of withdrawal, delivered by mail or hand
delivery or facsimile transmission, to the Exchange Agent at its address set
forth on the back cover page of this Offering Circular prior to the Expiration
Date or at such other time as otherwise provided for herein. In order to be
effective, a notice of withdrawal must specify the name of the person who
deposited the Shares to be withdrawn (the "Depositor"), the name in which the
Shares are registered, if different from that of the Depositor, and the number
of the Shares to be withdrawn prior to the physical release of the certificates
to be withdrawn. If tendered Shares to be withdrawn have been delivered or
identified through confirmation of book-entry transfer to the Exchange Agent,
the notice of withdrawal also must specify the name and number of the account at
the Book-Entry Transfer Facility to be credited with withdrawn Shares. The
notice of withdrawal must be signed by the registered holder of such Shares in
the same manner as the applicable Letter of Transmittal (including any required
signature guarantees), or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial ownership
of such Shares. Withdrawals of tenders of shares may not be
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rescinded, and any shares withdrawn will be deemed not validly tendered
thereafter for purposes of the Exchange Offer. However, properly withdrawn
shares may be tendered again at any time prior to the Expiration Date by
following the procedures for tendering not previously tendered shares described
elsewhere herein.
All questions as to the form, validity and eligibility (including time of
receipt) of any withdrawal of tendered Shares will be determined by the Company,
in its sole discretion, which determination shall be final and binding. None of
the Company, the Exchange Agent, the Trustee or any other person will be under
any duty to give notification of any defect or irregularity in any withdrawal of
tendered Shares, or will incur any liability for failure to give any such
notification.
If the Company is delayed in its acceptance for conversion and payment for
any Shares or is unable to accept for conversion or convert any Shares pursuant
to the Exchange Offer for any reason, then, without prejudice to the Company's
rights hereunder, tendered Shares may be retained by the Exchange Agent on
behalf of the Company and may not be withdrawn (subject to Rule 13e-14(f)(5)
under the Exchange Act, which requires that the issuer making the tender offer
pay the consideration offered, or return the tendered securities, promptly after
the termination or withdrawal of a tender offer), except as otherwise permitted
hereby.
ACCEPTANCE OF SHARES; DELIVERY OF NOTES
The acceptance of the Shares validly tendered for exchange and not
withdrawn will be made as promptly as practicable after the Expiration Date.
Acceptance will not take place until the Indenture pursuant to which the Notes
are to be issued is qualified under the Trust Indenture Act of 1939. An
application on Form T-3 has been filed with the Securities and Exchange
Commission seeking such qualifications. For purposes of the Exchange Offer, the
Company will be deemed to have accepted for exchange validly tendered Shares if,
as and when the Company gives oral or written notice thereof to the Exchange
Agent. Such notice of acceptance shall constitute a binding contract between the
Company and the tendering holder pursuant to which the Company will be obligated
to provide the Exchange Offer Consideration therefor. Subject to the terms and
conditions of the Exchange Offer, delivery of Notes in respect of Shares
accepted and exchanged pursuant to the Exchange Offer will be made by the
Exchange Agent as soon as practicable after receipt of such notice. The Exchange
Agent will act as agent for the tendering holders of Shares for the purposes of
receiving Shares and transmitting the Notes (through Book-Entry Transfer or
otherwise). Stockholders who are entitled to receive Notes will receive Notes
through Book Entry Transfer by crediting the stockholder's DTC (as defined)
account, unless stockholders choose to receive Notes in registered form in
accordance with the instructions in the Letter of Transmittal. Stockholders who
receive Notes through Book Entry Transfer will not be the registered holder of
the Notes. Notes received in this manner will be registered in the name of Cede
& Co., the nominee of DTC, but will be beneficially owned by the stockholder
entitled to such Notes. Tendered Shares not accepted for conversion by the
Company, if any, will be returned without expense to the tendering holder of
such Shares (or, in the case of Shares tendered by book-entry transfer into the
Exchange Agent's account at a Book-Entry Transfer Facility, such Shares will be
credited to an account maintained at a Book-Entry Transfer Facility) as promptly
as practicable following the Expiration Date.
EXCHANGE AGENT
Continental Stock Transfer & Trust Company has been appointed Exchange
Agent for the Exchange Offer. All deliveries and correspondence sent to the
Exchange Agent should be directed to its address set forth on the back cover
page of this Offering Circular. The Company has agreed to pay the Exchange Agent
customary fees for its services and to reimburse the Exchange Agent for its
reasonable out-of-pocket expenses in connection therewith. The Company also has
agreed to indemnify the Exchange Agent for certain liabilities, including
liabilities under the federal securities laws.
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INFORMATION AGENT
D.F. King & Co., Inc. has been appointed Information Agent for the Exchange
Offer. All questions in connection with the Exchange Offer and the Letter of
Transmittal, as well as requests for information or additional copies of the
Offering Circular or Letter of Transmittal should be directed to the address of
the Information Agent set forth on the back cover page of this Offering
Circular.
MISCELLANEOUS
The Company has not retained any dealer manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting tenders of Shares. However, directors, officers
and employees of the Company (who will not be separately compensated for such
services) may solicit exchanges by use of the mails, personally or by telephone,
facsimile or similar means of electronic transmission. The Company also will pay
brokerage houses and other custodians, nominees and fiduciaries their reasonable
out-of-pocket expenses incurred in forwarding copies of this Offering Circular
and related documents to the beneficial owners of the Shares and in handling or
forwarding tenders of Shares by their customers.
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THE COMPANY
The Company, through wholly and majority owned entities, owns, operates and
markets cellular, paging and other communications systems in the Commonwealth of
Puerto Rico and the U.S. Virgin Islands and conducts other cellular and paging
related operations described below. From time to time the Company reviews
opportunities in other telecommunications related industries both inside and
outside of Puerto Rico and the U.S. Virgin Islands.
Investors are encouraged to read the Company's annual report on Form 10-K,
dated December 31, 1997, for a detailed description of the Company's business.
Review of Strategic Alternatives
The Company has retained an investment banking firm to act as financial
advisor to CCPR in reviewing strategic alternatives to enhance shareholder value
including the exploration of partnering opportunities in the region through a
business combination, an appropriate acquisition, the sale of the Company, or
similar transactions. As of the date of this Offering Circular, the Company is
not presently engaged in substantive discussions with other parties regarding
such a potential transaction. However, there can be no assurance that such
substantive discussions, or such a transaction might not be pursued or
consummated after the date hereof, or that such a development would not be seen
by the Company as a basis for terminating the Exchange Offer.
The Company's executive offices are located at 110 East 59th Street, New
York, New York 10022 and its telephone number is (212) 355-3466.
RECENT DEVELOPMENTS
The Newco Distribution. Prior to September 2, 1998 (the "Distribution
Date") Cellular Communications of Puerto Rico, Inc. ("CCPR" or the "Company")
was known as CoreComm Incorporated. On the Distribution Date CCPR effected a
distribution (the "Newco Distribution") whereby shareholders of CCPR received on
a one-for-one basis shares of CoreComm Limited ("Newco"), a Bermuda corporation,
which until the Distribution Date had been a wholly owned subsidiary of CCPR.
Newco was formed by CCPR in March, 1998 in order to succeed to the business and
assets that were operated by OCOM Corporation, which had been acquired by CCPR
in June, 1998, and to pursue telecommunications opportunities outside Puerto
Rico and the U.S. Virgin Islands in an entrepreneurial corporate environment.
Transactions Related to the Newco Distribution. CCPR contributed all of
its non-Puerto Rico and U.S. Virgin Islands businesses to Newco, as described in
the following sections. Additionally, prior to the Distribution, CCPR
contributed to Newco $150 million in cash, which was obtained through a credit
agreement entered into by CCPR Services, Inc. (Delaware) ("Services"), an
indirect wholly owned subsidiary of CCPR, with The Chase Manhattan Bank and
other lenders on August 11, 1998. On August 11 and 12, 1998 Services drew down
under the credit agreement an aggregate of $155 million of which $150 million
was transferred to CCPR. See "-- CCPR Funding of Newco."
The following sections detail the transactions that resulted in CCPR's
owning the businesses contributed to Newco (the "Newco Businesses") and the
transactions between CCPR and Newco that resulted in Newco owning the Newco
Businesses.
In planning the Newco Distribution, CCPR undertook to acquire the operating
assets of OCOM Corporation ("OCOM") and various complementary lines of business
in the communications industry that were contributed to Newco. CCPR's
subsidiaries that carried on CCPR's principal lines of business and the Newco
Businesses, including the transactions through which such businesses were
acquired, are as follows:
- CCPR, Inc. (Delaware), through wholly owned subsidiaries, carries on
telecommunications businesses in Puerto Rico and the U.S. Virgin Islands,
including cellular telephone service, cellular long distance service and
paging service (collectively the "Puerto Rico and U.S. Virgin Islands
Telecommunications Businesses"). This is CCPR's sole line of business
since the Newco Distribution.
- On June 1, 1998 CoreComm Newco, Inc. (Delaware) ("CNI"), a wholly owned
direct subsidiary of CCPR, purchased substantially all of the assets and
related liabilities of OCOM Corporation, a subsidiary of NTL Incorporated
(Delaware), for a cash purchase price of $1,312,069. CNI's businesses
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include Competitive Local Exchange Corner ("CLEC") service, cellular long
distance, landline long distance and cellular resale service, primarily
in the State of Ohio.
- CoreComm Telco, Inc. (Delaware) owns 28 subsidiaries (Delaware) (the
"Telco Group"), each of which has applied or will apply in a single state
for certification to offer CLEC service (the "28 CLEC Subsidiaries").
Thus far, certification has been granted in Ohio and New York.
- All of the capital stock of Digicom, Inc. (Ohio) ("Digicom") was acquired
by CCPR through an agreement dated as of February 11, 1998, for a cash
purchase price of $2 million. Digicom is in the business of centralized
telecommunications services.
- CCPR purchased all of the operating assets of JeffRand Corp. ("Wireless
Outlet") pursuant to an agreement dated as of February 12, 1998, for a
cash purchase price of $400,000. Wireless Outlet consists of a paging
business and a prepaid cellular business. CoreComm subsequently
transferred these assets to Prepaid Communications Corp. (Delaware), an
indirect wholly owned subsidiary of CCPR, that is now an indirect wholly
owned subsidiary of Newco.
- CCPR formed Newco on March 18, 1998, in order to effect the Newco
Distribution. Newco's original name was Cortelyou Communications Ltd.,
which subsequently was changed to CoreComm Limited. Newco formerly was a
wholly owned direct subsidiary of CoreComm.
- Cortelyou Communications Corp. (Delaware) ("Cortelyou") owns 15 LMDS
licenses that were obtained through an FCC auction. The licenses were
granted on June 8, 1998. CCPR made the final payment to the FCC on June
22, 1998, for a total of $25.2 million paid for the LMDS licenses.
Contribution of the Newco Businesses. On August 18, 1998 CoreComm
contributed to Newco all of the above business except for the Puerto Rico and
U.S. Virgin Islands Telecommunications Businesses (the "Contributions"). The
Contributions consisted of the capital stock of the Telco Group, Digicom,
Wireless Outlet, CNI and Cortelyou. The Contributions and Newco Distribution
resulted in CoreComm Limited having a holding company structure.
- CCPR retained and continues to carry on all of the Puerto Rico and U.S.
Virgin Islands Telecommunications Businesses.
Manner of Effecting the Newco Distribution. The general terms and
conditions relating to the Newco Distribution are set forth in a Distribution
Agreement, dated as of August 18, 1998 (the "Distribution Agreement"), between
CCPR and Newco. The Newco Distribution was made on the basis of one share of
Newco Common Stock for each share of CCPR Common Stock held on the Record Date.
The actual total number of shares of Newco Common Stock distributed was
13,198,000.
No holder of CCPR Common Stock was required to pay any cash or other
consideration for the shares of Newco Common Stock received in the Newco
Distribution or to surrender or exchange shares of CCPR Common Stock in order to
receive shares of Newco Common Stock.
Description of CCPR Funding of Newco. Prior to the Newco Distribution,
CCPR contributed to Newco $150 million in cash. CCPR funded the capital
contribution with the proceeds of a bank loan to Services. Services entered into
a credit agreement dated August 11, 1998, with The Chase Manhattan Bank and the
other lenders party thereto, for senior secured credit facilities in an
aggregate amount of up to $170 million. On August 11 and 12, 1998, Services drew
down under the credit agreement an aggregate of $155 million of which $150
million was transferred to CCPR. See "RISK FACTORS -- Holding Company Structure;
Dependence On Cash Flow From Subsidiaries".
Effect of Hurricane Georges
Management does not believe the Company will experience substantial long
term damage from the recent hurricane (Hurricane Georges) which struck Puerto
Rico and the U.S. Virgin Islands in September 1998. The Company's insurance is
expected to cover nearly all of the expenses associated with restoring its
service, and approximately 90% of the cost of repairing and replacing damaged
equipment and facilities. In addition, the Company has business interruption
insurance so that it is not expected to incur an uninsured material loss from
the Company's cell sites that were out of service. The Company has not, however,
completed discussions with its insurance carriers and their adjusters.
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DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to an Indenture (the "Indenture"),
between the Company and The Chase Manhattan Bank, as trustee (the "Trustee"). A
copy of the form of Indenture has been filed as an exhibit to the Schedule 13E-4
of which this Offering Circular is a part. The following summary of certain
provisions of the Notes, and the Indenture does not purport to be complete and
is qualified in its entirety by reference to the provisions of the Notes, and
the Indenture, including the definitions therein of certain terms used below.
The definitions of certain terms used in the following summary are set forth
below under "-- Certain Definitions."
The Notes are unsecured obligations of the Company, subordinated in right
of payment to all existing and future Senior Indebtedness of the Company as
described under "-- Subordination of Notes." The Indenture does not contain any
financial covenants or restrictions on the payment of dividends, the incurrence
of Senior Indebtedness or issuance or repurchase of securities of the Company.
The Indenture contains no covenants or other provisions to afford protection to
holders of the Notes in the event of a highly leveraged transaction or a change
in control of the Company.
The operations of the Company are conducted through its subsidiaries,
partnerships and joint ventures and, therefore, the Company is dependent upon
the cash flow of its subsidiaries, partnerships and joint ventures to meet its
obligations, including its obligations under the Notes. As a result, the Notes
are effectively subordinated to all existing and future indebtedness and other
liabilities and commitments of such Subsidiaries.
PRINCIPAL, MATURITY AND INTEREST
The Notes will be limited by the Indenture to that principal amount
sufficient for consummation of the Exchange Offer, as it may be amended or
supplemented, and such amount necessary to pay interest in the form of
additional notes, as provided for in the indenture. The Notes bear interest from
November 15, 1998, at the rate per annum set forth on the cover page of this
Offering Circular and will mature on November 15, 2008.
Interest on the Notes is payable semiannually on May 15 and November 15 of
each year (each an "Interest Payment Date"), commencing on May 15, 1999, to
holders of record at the close of business on May 1 or November 1 (each a
"Regular Record Date") immediately preceding such Interest Payment Date.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. After the second semiannual interest payment, on November 15,
1999, interest may, at the option of CCPR, be paid in whole or in part, in cash
or through the issuance of additional Notes.
Interest on the Notes accrues from the most recent date to which interest
has been paid or, if no interest has been paid, from November 15, 1998.
The Notes are payable as to principal and interest at the office or agency
of the Company maintained for such purposes within the City and State of New
York or, at the option of the Company, payment of interest may be made by check
mailed to the holders of the Notes at their respective addresses set forth in
the register of holders of Notes, provided that a holder of Notes with an
aggregate principal amount in excess of $5,000,000 will be paid by wire transfer
in immediately available funds at the election of such holder if such holder
provides the Company with wire transfer instructions in writing. Until otherwise
designated by the Company, the Company's office or agency in New York will be
the office of the Trustee maintained for such purpose. The Notes will be issued
in registered form or through Book Entry Transfer, without coupons, and in
denominations of $15.00 and integral multiples thereof. See "The EXCHANGE
OFFER -- Acceptance of Shares, Delivery of Notes"
OPTIONAL REDEMPTION
The Company shall not have the right to redeem any Securities prior to
November 15, 1999. On or after November 15, 1999, the Company will have the
right to redeem all or any part of the Securities in cash at
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102% of aggregate principal amount, in each case plus accrued and unpaid
interest, if any, to the applicable redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on an
Interest Payment Date that is prior to the redemption date).
Selection of Securities for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the notes are listed or, if the Securities are not so listed,
on a pro rata basis, by lot or by such other method as the Trustee deems fair
and appropriate, provided that no securities with a principal amount of $15.00
or less shall be redeemed or purchased in part. Notice of redemption will be
mailed by first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Securities to be redeemed. Securities and
portions thereof selected by the Trustee shall be in amounts of $15.00 or whole
multiples of $15.00. On and after the redemption date, interest shall cease to
accrue on Securities or portions thereof called for redemption.
CERTAIN COVENANTS
Successor Corporation. The Company shall not consolidate with or merge
into any other corporation or transfer its properties and assets substantially
as an entirety to any person, unless: (i) either the Company shall be the
continuing corporation, or the corporation (if other than the Company) formed by
such consolidation or into which the Company is merged or to which the
properties and assets of the Company substantially as an entirety are
transferred shall expressly assume, by an indenture supplemental to the
Indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Securities and the
Indenture; (ii) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both would become
an Event of Default, shall have happened and be continuing; and (iii) the
Company has delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture comply with the Indenture.
The successor corporation formed by such consolidation or into which the
Company is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Indenture with the same effect as if such successor corporation had been
named as the Company therein, and thereafter the predecessor corporation shall
be relieved of all obligations and covenants under the Indenture and the
Securities, and in the event of such conveyance or transfer any such predecessor
corporation may be dissolved and liquidated.
EVENTS OF DEFAULT AND NOTICE THEREOF
The term "Event of Default," when used in the indenture, means any one of
the following: failure of the Company to pay interest for thirty days on any of
the Notes when due; defaults in the payment of principal or premium, if any, of
the Notes when due at maturity or upon redemption or otherwise; failure to
perform any other covenant contained in the indenture for forty-five days after
notice; the default under any instrument governing other Indebtedness of the
Company which shall happen and entitle the holder thereof to declare an
aggregate principal amount of at least $25,000,000 of such Indebtedness to
become due prior to its stated maturity, or such Indebtedness that shall not
have been discharged within a period of thirty days after there shall have been
given to the Company a written notice specifying such events of default; and
certain events of bankruptcy, insolvency or reorganization.
The Indenture provides that the Trustee will give, within ninety days after
the occurrence of a default, the Noteholders notice of all uncured defaults
known to it, provided that, except in the case of default in the payment of
principal of or interest on any of the Notes, the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interest of the Noteholders.
In case any Event of Default occurs and is continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding, by notice in writing to the Company (and to the Trustee if given by
the Noteholders) may declare the principal of all accrued interest on all the
Notes to be due and payable immediately. Such declaration may be rescinded by
holders of a majority in principal amount
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of the Notes, if all existing Events of Default have been cured or waived and if
the recission would not conflict with any judgement or decree.
Defaults (except, unless theretofore cured, a default in payment of
principal or interest on the Notes, failure to make any redemption payment or a
default with respect to a provision which cannot be modified under the terms of
the Indenture without the consent of each Noteholder affected) may be waived by
the holders of a majority in principal amount of the Notes, upon the conditions
provided in the Indenture.
The Indenture will include a covenant that the Company will file annually
with the Trustee a statement regarding compliance by the Company with the terms
thereof and specifying any defaults of which the signers may have knowledge.
MODIFICATION OF THE INDENTURE
Under the Indenture, the rights and obligations of the Company and the
rights of Noteholders may be modified by the Company and the Trustee only with
the consent of the holders of not less than a majority in principal amount of
the Notes then outstanding; but no reduction in the principal of or extension of
the maturity of any Notes, or reduction in the interest rate or extension of the
time of payment of interest, or any other modification in the terms of payment
of the principal of or premium, if any, or interest on the Notes, or reducing
the percentage required for modification, will be effective against any
Noteholder without their consent.
SATISFACTION AND DISCHARGE OF INDENTURE
The Company may satisfy and discharge its obligation under the Indenture by
delivering to the Trustee for cancellation all outstanding Notes, theretofore
authenticated, and paying or causing to be paid all other sums payable
thereunder by the Company; and may discharge substantially all of its
obligations (including the negative covenants described herein, but excluding
its obligations to pay the principal of and interest on the Notes) by depositing
with the Trustee or Paying Agent(s), other than the Company or any Subsidiary of
the Company, United States Legal Tender or United States Government Obligations,
sufficient to pay all remaining principal of and interest on the Notes to be
discharged as and when due and complying with the certain other conditions
relating to discharge. "U.S. Government Obligations" are direct, noncallable
obligations of, or noncallable obligations guaranteed by, the United States of
America for the payment of which guarantee or obligation the full faith and
credit of the United States is pledged.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict or resign.
The holders of a majority in principal amount of all outstanding Notes will
have the right to direct the time, method and place of conducting any proceeding
for exercise of any remedy available to the Trustee, provided that such
direction would not conflict with any rule of law or with the Indenture, would
not be unduly prejudicial to the rights of another Noteholder, and would not
involve the Trustee in personal liability. The Indenture will provide that in
case an Event of Default shall occur and be known to the Trustee (and not be
cured) the Trustee will be required to use the degree of care of a prudent man
in the conduct of his own affairs in the exercise of its powers. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the Noteholders,
unless they shall have offered to the Trustee security and indemnity
satisfactory to it.
REPORTS TO NOTEHOLDERS
The Company will furnish each Noteholder annual and quarterly reports
containing specified financial statements and certain other information
concerning the business and affairs of the Company.
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SUBORDINATION OF NOTES
The Notes are subordinate in right of payment to all existing and future
Senior Indebtedness. The Indenture does not restrict the amount of Senior
Indebtedness of the Company or any Subsidiary of the Company. On June 30, 1998,
the Company and its subsidiaries had approximately $388.7 million of Senior
Indebtedness outstanding.
The payment of the principal of, interest on or any other amounts due on
the Notes are subordinated in right of payment to the prior payment in full of
all Senior Indebtedness of the Company. No payments due on the Notes may be made
if (i) any Senior Indebtedness has not been paid when due; (ii) any applicable
grace period with respect to such default has ended and such default has not
been cured; or (iii) the maturity of any Senior Indebtedness has been
accelerated because of a default.
Upon any distribution of its assets in connection with any dissolution,
winding-up, liquidation or reorganization of the Company or acceleration of the
principal amount due on the Notes because of an Event of Default, all Senior
Indebtedness must be paid in full before the holders of the Notes are entitled
to any payments whatsoever.
As a result of these subordination provisions, in the event of the
Company's insolvency, holders of the Notes may recover ratably less than general
creditors of the Company.
The Notes are obligations exclusively of the Company. Since the operations
of the Company are conducted through Subsidiaries, the cash flow and the
consequent ability to service debt, including the Notes, of the Company, are
dependent upon the earnings of its Subsidiaries and the distribution of those
earnings to, or upon loans or other payments of funds by those Subsidiaries to,
the Company. The payment of dividends and the making of loans and advances to
the Company by its Subsidiaries may be subject to statutory or contractual
restrictions, are dependent upon the earnings of those Subsidiaries and are
subject to various business considerations. See "RISK FACTORS -- Holding Company
Structure; Dependence on Cash Flows from Subsidiaries; Existing Subsidiary
Indebtedness."
Any right of the Company to receive assets of any of its Subsidiaries upon
their liquidation or reorganization (and the consequent right of the holders of
the Notes to participate in those assets) will be effectively subordinated to
the claims of that Subsidiary's creditors (excluding trade creditors), except to
the extent that the Company is itself recognized as a creditor of such
Subsidiary, in which case the claims of the Company would still be subordinate
to any security interests in the assets of such Subsidiary and any indebtedness
of such Subsidiary senior to that held by the Company.
In the event that, notwithstanding the foregoing, the Trustee or any holder
of Notes receives any payment or distribution of assets of the Company of any
kind in contravention of any of the terms of the Indenture, whether in cash,
property or securities, including, without limitation by way of set-off or
otherwise, in respect of the Notes before all Senior Indebtedness is paid in
full, then such payment or distribution will be held by the recipient in trust
for the benefit of holders of Senior Indebtedness, and will be immediately paid
over or delivered to the holders of Senior Indebtedness or their representative
or representatives to the extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of Senior
Indebtedness.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar (initially, the Trustee) and the Trustee may require a holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a holder to pay any taxes and fees required by law
or permitted by the Indenture.
ADDITIONAL INFORMATION
Anyone who receives this Offering Circular may obtain a copy of the
Indenture without charge by writing to the Company, 110 East 59th Street, New
York, New York 10022, Attention: Richard J. Lubasch, Esq., Senior Vice
President, General Counsel.
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DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock. On October 12, 1998, there were approximately 13,204,000 shares
(exclusive of 383,000 treasury shares) of Common Stock outstanding. The
following description is qualified in all respects by reference to the
Certificate of Incorporation (the "Certificate") and the By-laws, copies of
which will be available upon request.
COMMON STOCK
All shares of Common Stock participate equally in dividends payable to
holders of Common stock when and as declared by the Board of Directors and in
net assets available for distribution to holders of Common Stock on liquidation
or dissolution, have one vote per share on all matters submitted to a vote of
the Company stockholders and do not have cumulative rights in the decision of
directors. All issued and outstanding shares of Common Stock are fully paid and
nonassessable, and the holders thereof do not have pre-emptive rights.
PREFERRED STOCK
The Board of Directors is authorized to provide for the issuance of shares
of Preferred Stock in one or more series, and to fix for each such series such
voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as are stated in a
Certificate of Designation adopted by the Board of Directors providing for the
issue of such series and as are permitted by the Delaware General Corporation
Law (the "DGCL").
TRANSFER AGENT
Continental Stock Transfer & Trust Company is the transfer agent and
registrar for the Company's Common Stock.
CERTAIN SPECIAL PROVISIONS
Certain Provisions contained in the Certificate, the By-laws and the Rights
Agreement, dated as of January 24, 1992, between the Company and Continental
Stock Transfer & Trust Company (the "Rights Agreement"), could make the
acquisition of control of the Company by means of a tender offer, open market
purchases, a proxy contest or otherwise more difficult. Set forth below is a
description of such provisions in the Certificate, the By-laws and the Rights
Agreement. Such description is intended as a summary only and is qualified in
its entirety by reference to the Certificate, By-laws and the Rights Agreement,
copies of which will be available upon request.
CLASSIFIED BOARD OF DIRECTORS
The Certificate and the By-laws provide that the Board of Directors is
divided into three classes of directors, with the classes as nearly equal in
number as possible. At each annual meeting of stockholders, one class of
directors is elected, each year for a three-year term.
The Company believes that the classified board provision of the By-laws is
advantageous to the Company and its stockholders because, by providing that
directors serve three-year terms rather than one-year terms, it enhances the
likelihood of continuity and stability in the composition of the Board of
Directors and in the policies formulated by the Board of Directors. The Company
believes that this, in turn, permits the board to represent more effectively the
interests of all stockholders.
With a classified Board of Directors, it generally takes a majority
stockholder two annual meetings of stockholders to elect a majority of the Board
of Directors. As a result, a classified board may discourage proxy contests for
the election of directors or purchases of a substantial block of stock because
its provisions could
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operate to prevent obtaining control of the board in a relatively short period
of time. The classification provisions could also have the effect of
discouraging a third party from making a tender offer or otherwise attempting to
obtain control of the Company, even though such an attempt might be beneficial
to the Company and its stockholders. In addition, because under the Certificate
directors may be removed only for cause, a classified board would delay
stockholders who do not agree with the policies of the Board of Directors from
replacing a majority of the Board of Directors for two years, unless they can
demonstrate the directors should be removed for cause and obtain the requisite
vote.
NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES
The Certificate and the By-laws provide that the number of directors is
fixed from time to time exclusively by the Board of Directors, but shall consist
of not more than fifteen nor less than three directors. In addition, the
Certificate and the By-laws provide that, subject to any rights of holders of
any shares of Preferred Stock, if any, a majority of the Board of Directors then
in office may fill any vacancies on the Board of Directors. Accordingly, the
Board of Directors could temporarily Prevent any stockholder from obtaining
majority representation on the board by enlarging the size of the board and
filling the new directorships with its own nominees.
Under the DGCL and the Certificate, a director serving on a classified
board may be removed by the stockholders only for cause. Moreover, the
Certificate provides that directors may be removed only by the affirmative vote
of holders of a least a majority of the voting power of all the then outstanding
shares of stock entitled to vote generally in the election of directors (the
"Voting Stock"), voting together as a single class.
NO STOCKHOLDER ACTION BY WRITTEN CONSENT SPECIAL MEETINGS
The Certificate provides that stockholder action can be taken only at an
annual or special meeting of stockholders and prohibits stockholder action by
written consent in lieu of a meeting. The Certificate and the By-laws provide
that, subject to the rights of holders of any series of Preferred Stock, special
meetings of stockholders can be called only by the Board of Directors, the
Chairman of the Board of Directors or the President. Stockholders are not
permitted to call a special meeting or to require that the Board of Directors
call a special meeting of stockholders. Moreover, the business permitted to be
conducted at any special meeting of stockholders is limited to the purpose or
purposes specified in the written notice of such meeting.
The provisions of the Certificate prohibiting stockholder action by written
consent may have the effect of delaying consideration of a stockholder proposal
until the next annual meeting unless a special meeting is called by the Board of
Directors, the Chairman of the Board of Directors or the President. These
provisions would also prevent the holders of a majority of the voting power of
the Voting Stock from using the written consent procedure to take stockholder
action and from taking action by consent without giving all the stockholders of
the Company entitled to vote on a proposed action the opportunity to participate
in determining such proposed action. Moreover, a stockholder could not force
stockholder consideration of a proposal over the opposition of the Board of
Directors, the Chairman of the Board of Directors or the President by calling a
special meeting of stockholders prior to the time the Board of Directors, the
Chairman of the Board of Directors or the President believes such consideration
to be appropriate.
ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER PROPOSALS
The By-laws establish an advance notice procedure with regard to the
nomination, other than by or at the direction of the Board of Directors, of
candidates for election as directors (the "Nomination Procedure") and with
regard to business to be brought before an annual or special meeting of
stockholders, of the Company (the "Business Procedure").
The Nomination Procedure provides that, subject to the rights of holders of
any series of Preferred Stock, if any, only persons who are nominated by or at
the direction of the Board of Directors or by a stockholder who has given timely
written notice to the Secretary prior to the meeting at which directors are to
be elected, will be eligible for election as directors of the Company. The
Business Procedure provides that at an annual or special meeting only such
business may be conducted as has been specified in the notice of meeting,
brought
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<PAGE> 39
before the meeting by or at the direction of the Board of Directors or by a
stockholder who has given timely written notice to the Secretary of such
stockholder's intention to bring such business before the meeting. Under the
Nomination Procedure or the Business Procedure, to be timely, notice must be
received by the Company not less than 75 days nor more than 90 days prior to the
annual or special meeting of stockholders, provided, however, that in the event
that less than 90 days' notice or prior public disclosure of the meeting date is
given or made to stockholders, notice by the stockholder to be timely must be
received not later than the fifteenth day following the day on which such notice
of the date of the meeting was mailed or such public disclosure was made,
whichever first occurs.
Under the Nomination Procedure, a stockholder's notice to the Company
proposing to nominate a person for election as a director must contain certain
information (i) about each proposed nominee, including, without limitation, (a)
the name, age, business address and residence address of the nominee, (b) the
principal occupation or employment of the nominee, (c) the class, series and
number of shares of capital stock of the Company which are beneficially owned by
the nominee, and (d) any other information relating to the nominee that is
required to be disclosed in solicitations of proxies for election of directors
pursuant to the Rules and Regulations of the Commission under the Exchange Act
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as director if elected) and (ii) about the
stockholder proposing to nominate such person, including, without limitation,
the name and record address of the stockholder and the class, series and number
of shares of capital stock of the Company which are beneficially owned by the
stockholder. The Company may require any proposed nominee to furnish such other
information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee to serve as a director of the Company.
Under the Business Procedure, a stockholder's notice relating to the conduct of
business other than the nomination of directors at an annual meeting must
contain certain information about such business and about the proposing
stockholder including, without limitation, a brief description of the business
desired to be brought before the meeting, the name and record address of the
proposing stockholder, the class, series and number of shares of capital stock
of the Company owned by the proposing stockholder and a description of any
material interest of the stockholder in such business. If the officer presiding
at a meeting determines that a person was not nominated in accordance with the
Nomination Procedure, such person will not be eligible for election as a
director and such nomination shall be disregarded. If such presiding officer
determines that business was not properly brought before such meeting in
accordance with the Business Procedure, such business will not be transacted at
such meeting.
By requiring advance notice of nominations by stockholders, the Nomination
Procedure affords the Board of Directors a meaningful opportunity to consider
the qualifications of the Proposed nominees and, to the extent deemed necessary
or desirable by the Board of Directors, to inform stockholders about such
qualification. By requiring advance notice of proposed business, the Business
Procedure provides a more orderly procedure for conducting annual meetings of
stockholders and, to the extent deemed necessary or desirable by the Board of
Directors, provides the Board of Directors with a meaningful opportunity to
inform stockholders, prior to such meetings, of any business proposed to be
conducted at such meetings, together with any recommendation of the Board of
Directors' position as to action to be taken with respect to such business, so
as to enable stockholders better to determine whether they desire to attend such
a meeting or grant a proxy to the Board of Directors as to the disposition of
any such business. Although the Certificate and the By-laws do not give the
Board of Directors any power to approve or disapprove stockholder nominations
for the election of directors or proposals for action, they may have the effect
of precluding a contest for the election of directors or the consideration of
stockholder proposals if the proper procedures are not followed, and of
discouraging or deterring a third party from conducting a solicitation of
procedures to elect its own slate of directors or to approve its proposal
without regard to whether consideration of such nominees or proposals might be
harmful or beneficial to the Company and its stockholders.
PREFERRED STOCK
The Certificate authorizes the Board of Directors to issue one or more
series of Preferred Stock and to determine, with respect to any series of
Preferred Stock, the powers, designations, preferences, optional or other
rights, if any, and the qualifications, limitations or restrictions thereof.
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<PAGE> 40
The Company believes that the ability of the Board of Directors to issue
one or more series of Preferred Stock provides increased flexibility in
structuring possible future financings and acquisitions and in meeting other
corporate needs which might arise. The authorized shares of Preferred Stock, as
well as shares of the Common Stock, are available for issuance without further
action by the Company's stockholders, unless such action is required by
applicable law or the rules of any stock exchange on which the Company's
securities may be listed or applicable rules of any self-regulatory
organization. If the approval of the Company's stockholders is not required for
the issuance of shares of Preferred Stock or the Company Common Stock, the Board
of Directors does not intend to seek stockholder approval. The Board of
Directors will make any determination to issue such shares based on its judgment
as to the best interests of the Company and its stockholders. The Board of
Directors, in so acting, could issue Preferred Stock having terms that could
discourage an acquisition attempt or other transaction that some or a majority
of the stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then current
market price of such stock.
AMENDMENT OF CERTAIN CHARTER AND BY-LAW PROVISIONS
Under the DGCL, the stockholders have the right to adopt, amend or repeal
the By-laws of a corporation. In addition, if the certificate of incorporation
so provides, the By-laws may be amended by the board of directors. The By-laws
provide that they may be amended by the Board of Directors or stockholders,
provided that if the amendment is to be adopted by the stockholders, the
affirmative vote of the holders of at least 66 2/3% of the Voting Stock, voting
together as a single class, is required. Similarly, provisions set forth in the
Certificate relating to the election and term of directors, the prohibition of
stockholder action without a meeting, calling a stockholders' meeting, the
elimination of personal liability of directors and the amendment of the By-laws
may be amended only by the affirmative vote of the holders of at least 66 2/3%
of the Voting Stock, voting together as a single class.
ANTI-TAKEOVER STATUTE
Section 203 of the DGCL prohibits certain transactions between a Delaware
corporation and an "interested stockholder," which is defined therein as a
person who, together with any affiliates and/or associates of such person,
beneficially owns, directly or indirectly, 15% or more of the outstanding voting
shares of a Delaware corporation. This provision prohibits certain business
combinations (defined broadly to include mergers, consolidations, sales or other
dispositions of assets having an aggregate value in excess of 10% of the
consolidated assets of the corporation, and certain transactions that would
increase the interested stockholder's proportionate share ownership in the
corporation) between an interested stockholder and a corporation for a period of
three years after the date the interested stockholder acquired its stock unless
(i) the business combination is approved by the corporation's Board of Directors
prior to the date the interested stockholder acquired shares, (ii) the
interested stockholder acquired at least 85% of the voting stock of the
corporation in the transaction in which it becomes an interested stockholder or
(iii) the business combination is approved by a majority of the Board of
Directors and by the affirmative vote of 66 2/3% of the votes entitled to be
cast by disinterested stockholders at an annual or special meeting. The Restated
Certificate and By-laws do not exclude the Company from the restrictions imposed
under Section 203 of the DGCL.
STOCKHOLDER RIGHTS PLAN
The following description of the Rights Agreement is qualified in its
entirety by reference to the Rights Agreement, copies of which are available
upon request.
The Rights Agreement provides that one Right will be issued with each share
of the Common Stock issued (whether originally issued or from the Company's
treasury) on or after the date of the Distribution and prior to the Rights
Distribution Date (as hereinafter defined). The Rights are not exercisable until
the Rights Distribution Date and will expire at the close of business on the
date which is ten years from the date of the Stock Distribution unless
previously redeemed by the Company as described below. When exercisable, each
Right entitles the owner to purchase from the Company one one-hundredth of a
share of Series A Junior Participating Preferred Stock at a purchase price as
provided in the Rights Agreement.
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Except as described below, the Rights will be evidenced by all the Common
Stock certificates and will be transferred with the Common Stock certificates,
and no separate Rights certificates will be distributed. The Rights will
separate from the Common Stock and a "Rights Distribution Date" will occur upon
the earlier of (i) 10 days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has acquired,
or obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of the Common Stock (the "Stock Acquisition Date") or (ii) 10
business days (or such later date as is determined by the Company's Board of
Directors) following the commencement of a tender offer or exchange offer that
would result in a person or group becoming an Acquiring Person, except that any
person or group of affiliated or associated persons who acquire or obtain the
right to acquire beneficial ownership of 15% or more of the outstanding shares
of Common Stock solely as a result of the Exchange Offer described in this
Offering Circular will not be deemed acquiring persons, and any person who, as
of October 15, 1998 had publically disclosed beneficial ownership of the Common
Stock pursuant to Regulation 13D-G under the Exchange Act shall be permitted to
acquire up to the number of additional Shares which, prior to the Exchange
Offer, would have resulted in such person being the beneficial owner of 14.9%.
After the Rights Distribution Date, Rights certificates will be mailed to
holders of record of the Common Stock as of the Rights Distribution Date and,
thereafter the separate Rights certificates alone will represent the Rights.
The Series A Junior Participating Preferred Stock issuable upon exercise of
the Rights will be entitled to a minimum preferential quarterly dividend payment
of $0.01 per share and will be entitled to an aggregate dividend of 100 times
the dividend, if any, declared per share of Common Stock. In the event of
liquidation, the holders of the Series A Junior Participating Preferred Stock
will be entitled to a minimum preferential liquidation payment of $1 per share
and will be entitled to an aggregate payment of 100 times the payment made per
share of the Common Stock. Each share of Series A Junior Participating Preferred
Stock will have 100 votes and will vote together with the Common Stock. In the
event of any merger, consolidation or other transaction in which shares of the
Common Stock are changed or exchanged, each share of Series A Junior
Participating Preferred Stock will be entitled to receive 100 times the amount
received per share of the Common Stock. These rights are protected by customary
antidilution provisions. Because of the nature of the Series A Junior
Participating Preferred Stock's dividend, liquidation and voting rights, the
value of one one-hundredth of a share of Series A Junior Participating Preferred
Stock purchasable upon exercise of each Right should approximate the value of
one share of the Common Stock.
In the event that a person becomes an Acquiring Person, each holder of a
Right will thereafter have the right to receive, upon the exercise thereof at
the then current exercise price, the Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the exercise price of the Right. Notwithstanding any of the foregoing,
following the occurrence of any such event, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were beneficially owned
by any Acquiring Person (or certain related parties) will be null and void.
However, Rights are not exercisable following the occurrence of the event set
forth above until such time as the Rights are no longer redeemable by the
Company as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or the Common Stock is
changed or exchanged (other than a merger which follows a Qualifying Offer and
satisfies certain other requirements) or (ii) 50% or more of the Company's
assets or earning power is sold or transferred, each holder of a Right (except
Rights which previously have been voided as set forth above) shall thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price, Common Stock of the acquiring company having a value equal to
two times the exercise price of the Right.
At any time prior to the earlier of (i) until 10 days following the Stock
Acquisition Date, or (ii) the Final Expiration Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right. Immediately upon
the action of the Board of Directors ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of the Rights will be to
receive the $.01 redemption price.
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Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for the CoreComm Common Stock (or other consideration) or for Common
Stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors prior to the Rights Distribution Date. After the Rights
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board of Directors in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person) or to shorten or lengthen any time period under the Rights
Agreement, provided that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not redeemable.
The Rights have certain anti-takeover effects as they will cause
substantial dilution to a person or group that acquires a substantial interest
in the Company without the prior approval of the Board of Directors. Among the
effects is that the Rights could discourage a takeover attempt that might
otherwise allow the holders of Common Stock to sell such Common Stock at a
premium to the then current market price or which might otherwise be beneficial
to stockholders.
LIMITATION OF LIABILITY OF DIRECTORS
The Certificate provides that to the fullest extent provided by law a
director will not be personally liable for monetary damages to the Company or
its stockholders for, or with respect to, any acts or omissions in the
performance of his or her duties, except for liability, (i) for any breach of
the director's duty of loyalty to such corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemption as provided in Section 174 of the DGCL or (iv)
for any transaction from which the director derived an improper personal
benefit.
This provision is intended to afford directors additional protection and
limit their potential liability from suits alleging a breach of the duty of care
by a director. As a result of the inclusion of such a provision, stockholders
may be unable to recover monetary damages against directors for actions taken by
them that constitute negligence or gross negligence or that are otherwise in
violation of their fiduciary duty of care, although it may be possible to obtain
injunctive or other equitable relief with respect to such actions. If equitable
remedies are found not to be available to stockholders in any particular
situation, stockholders may not have an effective remedy against a director in
connection with such conduct.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The By-laws provide that directors and officers of the Company shall be
indemnified against liabilities arising from their service as directors and
officers to the full extent permitted by law. Section 145 of the DGCL empowers a
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145 also empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with
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the defense or settlement of such action or suit if he acted under similar
standards, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation unless, and only to the extent that, the Court of Chancery or
the court in which such action was brought shall determine that despite the
adjudication of liability such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent that a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation is empowered to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
There has not been in the past and there is not presently pending any
litigation or proceeding involving a director, officer, employee or agent of the
Company which could give rise to an indemnification obligation on the part of
the Company. In addition, except as described herein, the Board of Directors is
not aware of any threatened litigation or proceeding which may result in a claim
for indemnification.
MARKET PRICE OF COMMON STOCK
The Common Stock is listed on the Nasdaq National Market under the symbol
"CLRP." The following table sets forth the high and low sales price for the
Common Stock during the periods indicated as reported by the Nasdaq National
Market.
<TABLE>
<CAPTION>
FISCAL PERIODS HIGH LOW
- -------------- ------ ------
<S> <C> <C>
1996
First Quarter.............................................. $17.34* $15.75
Second Quarter............................................. 19.78 15.83
Third Quarter.............................................. 19.86 15.06
Fourth Quarter............................................. 15.98 11.72
1997
First Quarter.............................................. 13.09 8.83
Second Quarter............................................. 11.27 8.52
Third Quarter.............................................. 10.20 8.52
Fourth Quarter............................................. 10.05 6.09
1998
First Quarter.............................................. 10.27 6.39
Second Quarter............................................. 16.28 10.27
Third Quarter.............................................. 20.84 10.44
Fourth Quarter (through October 14)........................ 11.13 8.13
</TABLE>
The closing price per share of Common Stock on October 14, 1998 was $9.00.
*The historical price per share of Common Stock has been adjusted to give effect
to the Newco Distribution. See "Business -- The Newco Distribution."
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain U.S. federal income tax
consequences to a U.S. person (as defined below) associated with the exchange of
the Common Stock for the Notes pursuant to the Exchange Offer and the ownership
and disposition of the Notes. This discussion is based on provisions of the
Internal Revenue Code (the "Code"), Treasury regulations promulgated thereunder,
and administrative and judicial interpretations thereof, all as in effect on the
date hereof and all of which are subject to change, possibly with retroactive
effect. This discussion does not address the tax consequences to subsequent
purchasers of the Notes and is limited to investors who hold the Common Stock
and Notes as capital assets. Furthermore, this discussion does not address U.S.
federal alternative minimum tax consequences and does not address all aspects of
U.S. federal income taxation that may be applicable to investors in light of
their particular circumstances, or to investors subject to special treatment
under U.S. federal income tax law (including, without limitation, certain
financial institutions, insurance companies, tax-exempt entities, dealers in
securities or persons who have acquired Common Stock or Notes as part of a
straddle, hedge, conversion transaction or other integrated investment).
As used herein, the term "U.S. person" means a holder of Common Stock or
Notes that is, for U.S. federal income tax purposes, (i) a citizen or resident
of the U.S., (ii) a corporation or partnership created or organized in or under
the laws of the U.S. or of any political subdivision thereof, (iii) an estate
the income of which is subject to U.S. federal income taxation regardless of its
source or (iv) a trust if a U.S. court is able to exercise primary supervision
over the administration of such trust and one or more U.S. persons have the
authority to control all substantial decisions of such trust.
EACH HOLDER SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH HOLDER OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF
COMMON STOCK AND NOTES, INCLUDING THE APPLICABILITY OF ANY FEDERAL ESTATE OR
GIFT TAX LAWS OR ANY STATE, LOCAL OR FOREIGN TAX LAWS, ANY CHANGES IN APPLICABLE
TAX LAWS AND ANY PENDING OR PROPOSED LEGISLATION OR REGULATIONS.
EXCHANGE OF COMMON STOCK FOR NOTES
The exchange of Common Stock for Notes will be a taxable transaction for
federal income tax purposes, generally treated as a "sale or exchange." Under
Section 302(b) of the Code, the exchange of Common Stock generally will be
treated as a "sale or exchange" if the receipt of Notes: (a) results in a
"complete termination" of the holder's interest in the Company, (b) is
"substantially disproportionate" with respect to the holder, or (c) is "not
essentially equivalent to a dividend" with respect to the holder. With respect
to this last test, the Internal Revenue Service has indicated in a published
ruling that, in the case of a minority holder of a publicly held corporation who
exercised no control over corporate affairs, a reduction in the holder's
proportionate interest in the corporation from .0001118% to .0001081% was "not
essentially equivalent" to a dividend. In determining whether any of these tests
has been met, Common Stock actually owned, as well as Common Stock considered to
be owned by the holder by reason of certain constructive ownership rules set
forth in Section 318 of the Code, generally must be taken into account. If any
of these three tests for "sale or exchange" treatment is met, a holder will
recognize gain or loss equal to the difference between the "issue price" of the
Notes (defined below) and the tax basis of the Common Stock exchanged. If such
Common Stock is held as a capital asset, the gain or loss will be a capital gain
or loss and will be long-term if such Common Stock has been held for more than
one year.
If none of the tests set forth in Section 302(b) of the Code is met,
amounts received by a holder who exchanges Common Stock will be taxable to the
holder as a "dividend" to the extent of such holder's allocable share of the
Company's current or accumulated earnings and profits, and the excess of such
amounts received over the portion that is taxable as a dividend would constitute
a non-taxable return of capital (to the extent of the holder's tax basis in the
Common Stock exchanged) and any amounts in excess of the holder's tax basis
would constitute taxable gain. Any remaining tax basis in the Common Stock
exchanged would be transferred to any remaining stockholdings of the holder in
the Company.
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<PAGE> 45
The "issue price" of the Notes is expected to be the fair market value of
the Common Stock exchanged therefor. However, it is possible that the Notes will
be traded (for example, on a quotation medium) within the meaning of the
applicable Treasury regulations at some time during the 60-day period ending 30
days after the Notes' issue date. If the Notes are so tradeable, their "issue
price" should be the fair market value of the Notes on the issue date.
THE NOTES
Original Issue Discount ("OID")
Since the terms of the Notes permit the Company to issue additional Notes
in lieu of paying cash interest (which generally is the case after November 15,
1999) the Notes will be deemed to have been issued with OID for U.S. federal
income tax purposes. Consequently, holders will be required to include OID in
ordinary income over the period that they hold the Notes in advance of the
receipt of cash attributable thereto under a constant yield method. If the
issuance of additional Notes would not reduce the yield to maturity on the Notes
(which generally should be the case if the issue price of the Notes is at least
equal to their stated principal amount) and the Company does not elect to issue
additional Notes, the amount of OID includible in ordinary income over the term
of the Notes will be equal to the excess of (i) the sum of the stated principal
amount of the Notes plus all cash payments of stated interest over (ii) the
issue price of the Notes. The amount of OID includible in a holder's income
during a calendar year should generally equal the sum of the product of the
yield to maturity of the Notes times their adjusted issue price (as defined
below) for each accrual period.
If the issuance of additional Notes would not reduce the yield to maturity
on the Notes, and the Company elects to issue additional Notes, the issuance of
additional Notes would not be treated as a payment of interest and the Notes
would be deemed to be "reissued" on each date that additional Notes are issued
solely for purposes of computing the amount of OID includible in income during
the then remaining term of the Notes. Under these rules, the Notes would be
deemed to be reissued at their then adjusted issue price (i.e., their original
issue price plus accrued OID less previous payments of interest in cash) and any
additional Notes would be treated as part of the original Notes to which such
additional Notes relate. The amount of OID includible in a holder's income over
the remaining term of a Note, determined under the constant yield method
referred to above, would be equal to (i) the stated principal amount due at
maturity (including the stated principal amount of any additional Notes treated
as part of such Note) plus all remaining cash payments of stated interest over
(ii) the adjusted issue price of the Notes.
If the issuance of additional Notes would reduce the yield to maturity on
the Notes (which generally should be the case if the issue price of the Notes is
less than their stated principal amount) and the Company elects to issue
additional Notes in lieu of paying cash interest, the amount of OID includible
in income in respect of a Note should generally be equal to (i) the stated
principal amount due at maturity (including the stated principal amount of the
additional Notes, assuming the Company issued Notes in lieu of paying cash
interest on all interest payment dates after November 15, 1999) plus all
remaining cash payments of stated interest on such Note over (ii) the issue
price of the Note.
Bond Premium
If the issue price of a Note exceeds its stated principal amount, the Note
may be treated as having been issued with amortizable bond premium, in which
case a holder may be entitled to amortize the bond premium over the life of the
Note.
Sale, Exchange or Redemption of Notes
A holder generally will recognize taxable gain or loss upon the sale,
exchange or redemption of Notes equal to the difference between the amount of
cash or the fair market value of property received (except to the extent that
such cash or property is attributable to accrued, but previously untaxed,
interest) and the holder's adjusted tax basis in the Notes. A holder which
receives Notes in exchange for Common Stock generally should have an adjusted
tax basis in the Notes equal to the "issue price" of the Notes, increased by any
accrued OID thereon included in the holder's income prior to such sale, exchange
or redemption, and
45
<PAGE> 46
generally reduced by (i) any cash payments of interest and (ii) the amount of
any previously amortized bond premium, as discussed above. Such gain or loss
will be long-term capital gain or loss if the holder's holding period for the
Notes exceeds one year immediately prior to such sale, exchange or redemption.
Application of AHYDO Rules
The applicable high yield discount obligation ("AHYDO") rules may affect
the Company's ability to deduct interest payments made on the Notes. Under those
rules, the Company would not be entitled to deduct a portion of the OID accruing
on the Notes and would be allowed to deduct the remainder of the OID only when
paid. The AHYDO rules apply to debt instruments that have a term of more than
five years, have a yield to maturity that equals or exceeds five percentage
points over the "applicable federal rate" (the "AFR") and that have "significant
OID." In such event, the Company will not be entitled to deduct OID that accrues
with respect to such Notes until the amounts attributable to the OID are paid.
In addition, if any Notes are AHYDOs and such Note's yield to maturity exceeds
the relevant AFR plus six percentage points (the "Excess Yield"), the Company's
deduction for the "disqualified portion" of the OID for any accrual period will
equal the product of (i) the Excess Yield divided by the yield to maturity on
the Notes, and (ii) the OID for the accrual period. If the Excess Yield
provisions of the AHYDO rules applied to a Note, a corporate holder may be
treated as receiving dividend income (to the extent of the Company's current and
accumulated earnings and profits) solely for purposes of the dividends received
deduction, with respect to that portion of the OID for which the Company is
denied a deduction. If the disqualified portion exceeds the Company's current
and accumulated earnings and profits, the excess will continue to be taxed as
OID.
Backup Withholding
A holder of Common Stock or Notes may be subject to backup withholding at
the rate of 31% with respect to amounts paid on or with respect to the Common
Stock or Notes, unless the holder (i) is a corporation or comes within certain
other exempt categories and, when required, demonstrates this fact or (ii)
provides a correct taxpayer identification number, certifies as to no loss of
exemption from backup withholding and otherwise complies with the applicable
requirements of the backup withholding rules. Holders exchanging Common Stock
should consult their tax advisors as to their qualification for exemption from
backup withholding and the procedure for obtaining such an exemption. Any amount
paid as backup withholding will be creditable against the holder's federal
income tax liability.
Holders of Shares of Common Stock Who Do Not Participate in the Exchange Offer
Holders of Shares who elect not to participate in the Exchange Offer and
who consequently do not exchange their Shares for Notes will not recognize gain
or loss as a consequence of the Exchange Offer.
THE FOREGOING IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL INCOME TAX
ASPECTS OF THE EXCHANGE OFFER AND IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING
AND ADVICE BASED UPON THE INDIVIDUAL CIRCUMSTANCES OF EACH HOLDER OF SHARES OF
COMMON STOCK. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
CONSEQUENCES TO THEM OF THE EXCHANGE.
INTEREST IN SHARES OF COMMON STOCK
Based upon the Company's records and upon information provided to the
Company by its directors, executive officers and affiliates, except as provided
below, neither the Company nor any of its subsidiaries or affiliates nor any of
the directors or executive officers of the Company, nor any associates of any of
the foregoing, including the directors or executive officers of its
subsidiaries, has effected any transactions in the Shares during the forty
business day period prior to the date hereof. Any Shares owned directly or
indirectly by officers/directors at the time of the Exchange Offer are eligible
for exchange if properly tendered pursuant to the Exchange Offer on the same
basis as all other Shares.
46
<PAGE> 47
CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE SHARES OF COMMON STOCK
None of the Company nor any of its affiliates, directors or executive
officers, or any of the executive officers or directors of its subsidiaries, is
a party to any contract, arrangement, understanding or relationship with any
other person relating, directly or indirectly, to the Exchange Offer with
respect to any securities of the Company (including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loans or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies, consents or authorizations).
47
<PAGE> 48
Facsimile copies of the Letter of Transmittal will be accepted. Letters of
Transmittal, certificates for the Shares and any other required documents should
be sent by each Stockholder or his broker, dealer, commercial bank, trust
company or other nominee to the Exchange Agent at one of the addresses set forth
below:
THE EXCHANGE AGENT:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
2 Broadway
New York, New York 10004
(212) 509-4000 (ext. 535)
(212) 509-5150 (fax)
THE INFORMATION AGENT:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers call Collect: (212) 269-5550
All others call Toll Free: (888) 414-5566
Any questions or requests for assistance or additional copies of this
Offering Circular, the Letter of Transmittal and/or the Notice of Guaranteed
Delivery may be directed to the Exchange Agent or the Information Agent at their
respective telephone numbers and addresses set forth above. You may also contact
your broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the Exchange Offer.
<PAGE> 1
Exhibit 99.T3E.2
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
NOVEMBER 12, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE OR,
UNLESS THERETOFORE ACCEPTED FOR EXCHANGE, AFTER 5:00 P.M., NEW YORK CITY TIME,
ON THE 40TH BUSINESS DAY AFTER OCTOBER 15, 1998.
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE
THE EXCHANGE AGENT FOR THE OFFER IS:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
BY MAIL: BY HAND:
2 BROADWAY 2 BROADWAY
NEW YORK, NEW YORK 10004 19TH FLOOR
(212) 509-4000 NEW YORK, NEW YORK 10004
(212) 509-4000
</TABLE>
The undersigned acknowledges that he or she has received and reviewed the
Offering Circular dated October 15, 1998 (the "Offering Circular") of Cellular
Communications of Puerto Rico, Inc. (the "Company" or "CCPR"), and this Letter
of Transmittal (the "Letter"), which together constitute the Company's offer
(the "Exchange Offer" or the "Offer") to exchange $15.00 principal amount of a
new issue of 15% Subordinated Notes Due 2008 (the "Notes") in exchange for each
share of its Common Stock, par value $.01 per share (the "Common Stock" or
"Shares"), up to 3,500,000 Shares (or such greater or lesser amount that the
Company may determine to accept in accordance with the provisions for modifying
the Exchange Offer set forth in the Offering Circular.)
The Company will accept for exchange up to an aggregate of 3,500,000 shares
of Common Stock which are properly tendered in the Exchange Offer prior to 5:00
P.M., New York City time, on November 12, 1998, unless extended (the "Expiration
Date"). If more than 3,500,000 shares of Common Stock (or such greater or lesser
number of Shares as the Company may determine to exchange pursuant to the Offer
and in compliance with applicable law, including Rule 13e-4(f)(1)(ii) of the
Securities Exchange Act of 1934, as amended) are validly tendered and not
properly withdrawn prior to the Expiration Date, Notes will be allocated to
tendering stockholders on a pro rata basis based on the number of Shares equal
to 3,500,000 (or such greater or lesser number of Shares as the Company may
determine to exchange) multiplied by a fraction, the numerator of which is the
total number of shares validly tendered by such tendering stockholders and the
denominator of which is the total number of the Shares validly tendered by all
tendering stockholders. The number of Shares will be rounded up or down as
nearly as practicable to result in the tender of whole Shares rather than
fractional Shares. Any Shares not accepted by the Company as a result of the
allocation described above will be returned promptly to the tendering
stockholder. The Company reserves the right to accept all or any portion of the
number of shares of Common Stock in excess of 3,500,000 tendered pursuant to the
Exchange Offer.
Notes will be issued in denominations of $15.00 and multiples thereof.
The Company reserves the right to extend the Exchange Offer at its
discretion, in which event the term "Expiration Date" shall mean 5:00 P.M., New
York City time, on the date on which the Exchange Offer as so extended shall
expire. The Company shall notify the Exchange Agent of any extension by oral or
written notice and shall make a public announcement thereof prior to 9:00 A.M.,
New York City time, on the next business day after the previously scheduled
Expiration Date.
If the Company increases or decreases the Exchange Offer Consideration or
the amount of Shares sought in the Exchange Offer (except for in an increase in
the number of Shares to be accepted of less than 264,080), the Offer will remain
open at least ten business days from the date that the Company first publishes,
sends or gives notice, by public announcement or otherwise, of such increase or
decrease. The Company has no current intention to increase or decrease the
Exchange Offer Consideration currently offered or the amount of Shares sought to
be purchased.
The undersigned has checked the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE> 2
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the number of shares of Common Stock
indicated below. Subject to and effective upon the acceptance for exchange of
the Common Stock tendered hereby, the undersigned hereby sells, assigns and
transfers to or upon the order of the Company all right, title and interest in
and to such shares of Common Stock as are being tendered hereby. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent the true and
lawful agent and attorney-in-fact of the undersigned (with full knowledge that
said Exchange Agent also acts as agent of the Company) with respect to such
Common Stock with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) to: (a) deliver such
Common Stock or transfer ownership of such Common Stock on the account books
maintained by The Depository Trust Company ("DTC") and deliver, in any such
case, all accompanying evidences of transfer and authenticity to or upon the
order of the Company upon receipt by the Exchange Agent, as the undersigned's
agent, of the Notes to which the undersigned is entitled upon the acceptance by
the Company of such Common Stock under the Exchange Offer, and (b) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Common Stock, all in accordance with the terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the shares of
Common Stock tendered hereby and that the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim when the same are accepted
by the Company. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Exchange Agent or the Company to be necessary
or desirable to complete the sale, assignment and transfer of the Common Stock
tendered hereby. All authority conferred or agreed to be conferred in this
Letter and every obligation of the undersigned hereunder shall be binding upon
the successors, assigns, heirs, executors, administrators, trustees in
bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned. This
tender may be withdrawn only in accordance with the procedures set forth in the
Instructions contained in this Letter.
Unless otherwise indicated herein under "Special Issuance and Delivery
Instructions" below, please deliver Notes (and, if applicable, substitute
certificates for any Common Stock not exchanged) through book entry transfer by
causing DTC to transfer such Notes into the DTC account of the undersigned in
accordance with DTC's procedures for such transfer. If indicated under "Special
Issuance and Delivery Instructions" below, please send Notes in registered form
(and, if applicable, substitute certificates for any Common Stock not exchanged)
to the undersigned at the address set forth in Special Issuance and Delivery
Instructions. The undersigned understands that stockholders who tender Common
Stock by book-entry transfer ("Book-Entry Stockholders") may request that any
Common Stock not exchanged be returned by crediting such account maintained at
the DTC as such Book-Entry Stockholder may designate by making an appropriate
entry under "Special Issuance and Delivery Instructions." The undersigned
recognizes that the Company has no obligation pursuant to the "Special Issuance
and Delivery Instructions" to transfer any Common Stock from the name of the
registered holder thereof if the Company does not accept for exchange any of the
shares of such Common Stock.
2
<PAGE> 3
THE UNDERSIGNED, BY COMPLETING THE BOX BELOW AND SIGNING THIS LETTER, WILL
BE DEEMED TO HAVE TENDERED THE COMMON STOCK AS SET FORTH IN THE BOX BELOW.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS)
(SEE INSTRUCTIONS 1 AND 3)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
Dated:
- ---------------------------------
Area Code and Tel. No.:
- --------------------------------------------------------------------------------
Must be signed by registered holder(s) as the name(s) appear(s) on
certificate(s) for Common Stock or on a security position listing or by
person(s) authorized to become registered holder(s) by endorsements and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, officer or other person acting in a fiduciary or
representative capacity, please set forth full title. See Instruction 3.
Name(s):------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity:
------------------------------------------------------------------------
Address:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
DTC Account Number:-------------------------------------------------------------
IMPORTANT: STOCKHOLDERS WHO HOLD THEIR SHARES IN REGISTERED FORM AND NOT IN
A BROKERAGE ACCOUNT NORMALLY WILL NOT HAVE A DTC ACCOUNT NUMBER. STOCKHOLDERS
WHO DO NOT HAVE A DTC ACCOUNT NUMBER MAY REQUEST THAT NOTES BE ISSUED AND SENT
IN REGISTERED FORM BY FILLING OUT THE INFORMATION UNDER "SPECIAL ISSUANCE AND
DELIVERY INSTRUCTIONS" BELOW.
SIGNATURE GUARANTEE
Signature(s) Guaranteed by an Eligible Institution:
- ----------------------------------------------------------------
(If required by Instruction 3) (Authorized Signature)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Name of Firm)
Dated:
- ---------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE
CERTIFICATES FOR COMMON STOCK OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL
OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW
3
<PAGE> 4
This Letter may be used either if certificates for Common Stock are to be
forwarded herewith or if tenders are to be made by book-entry transfer to the
account maintained by the Exchange Agent at DTC. Delivery of documents to DTC
does not constitute delivery to the Exchange Agent.
Your bank or broker can assist you in completing this form. The
Instructions included with this Letter must be followed. Questions and requests
for assistance or for additional copies of the Offering Circular and this Letter
may be directed to the Exchange Agent or the Company.
List below the Common Stock to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and share amounts should
be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF COMMON STOCK
NUMBER OF
NAME(S) AND ADDRESS(ES) SHARES NUMBER OF
OF REGISTERED HOLDER(S) CERTIFICATE REPRESENTED BY SHARES
(PLEASE FILL IN, IF BLANK) NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
TOTAL
* Need not be completed by Book-Entry stockholders (see below).
** Unless otherwise indicated in this column, a holder will be deemed to have tendered the entire number of
shares represented by the Common Stock indicated in the third column.
SEE INSTRUCTION 2.
</TABLE>
[ ] CHECK HERE IF TENDERED SHARES OF COMMON STOCK ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED SHARES OF COMMON STOCK ARE BEING DELIVERED BY BOOK-
ENTRY TRANSFER TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
DTC Account Number:
Transaction Code Number:
[ ] CHECK HERE IF TENDERED SHARES OF COMMON STOCK ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING (SEE
INSTRUCTION 1):
Name of Registered Owner(s):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which guaranteed delivery:
DTC Account Number (if delivered by book-entry transfer):
4
<PAGE> 5
------------------------------------------------------------
SPECIAL ISSUANCE AND
DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for shares of Common Stock not
exchanged and/or Notes are to be registered in the name of and sent to
someone other than the person whose signature appears on the face of this
Letter; if shares of Common Stock tendered by book-entry transfer which
are not exchanged are to be returned by credit to an account maintained at
DTC or if Notes are to be issued in registered form instead of through
Book Entry Transfer.
Issue and mail:
(check appropriate box(es)):
[ ] Notes to:
[ ] Common Stock to:
Name(s)
-------------------------------------------------
(PLEASE PRINT)
------------------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
Credit unexchanged Common Stock tendered by book-entry transfer to
the DTC account set forth below.
------------------------------------------------------------
(DTC ACCOUNT NUMBER)
------------------------------------------------------------
EMPLOYER IDENTIFICATION OR
SOCIAL SECURITY NO.
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for shares of Common Stock not
exchanged and/or Notes registered in the name of the person whose
signature appears on the face of this Letter are to be sent to someone
other than such person or to such person at an address other than that
shown in the box entitled "Description of Common Stock" on the face of
this Letter.
Mail or deliver:
(check appropriate box(es)):
[ ] Notes to:
[ ] Common Stock to:
Name(s)
-------------------------------------------------
(PLEASE PRINT)
------------------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
EMPLOYER IDENTIFICATION OR
SOCIAL SECURITY NO.
------------------------------------------------------------
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 5)
5
<PAGE> 6
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE PART I -- Please provide your TIN in the box at -------------------------------
FORM W-9 right and certify by signing and dating below. Social Security Number
DEPARTMENT OF THE OR
TREASURY
INTERNAL REVENUE SERVICE
-------------------------------
PAYER'S REQUEST FOR TAXPAYER Employer Identification Number
IDENTIFICATION NUMBER ("TIN") (If awaiting TIN write "Applied For")
----------------------------------------------------------------------------------------
PART II -- For payees NOT subject to backup withholding, see the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as
instructed therein.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued
to me), and
(2) I am not subject to backup withholding because either (a) I am exempt from backup withholding, or (b) I have not been
notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of failure to
report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are subject
to backup withholding because of underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you
are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed
Guidelines.)
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATES
REQUIRED TO AVOID BACKUP WITHHOLDING.
- -------------------------------------------------------------------------------------------------------------------------
Signature _____________________________________________________________________________________________
Date ________________
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND IN BACKUP WITHHOLDING OF 31%
OF ANY CASH PAYMENTS MADE TO YOU. PLEASE REVIEW THE ENCLOSED GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN
PART I OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (A) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(B) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
--------------------------------------------------------------------------
--------------------------------------------------
Signatures Date
- --------------------------------------------------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND CERTIFICATES.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or if tenders are to be made pursuant to the procedures for
book-entry transfer set forth in the Offering Circular under "The Exchange
Offer." Certificates for Common Stock, or any book-entry transfer into the
Exchange Agent's account at the DTC of Common Stock tendered electronically, as
well as a properly completed and duly executed copy of this Letter or a
facsimile thereof, an Agent's Message and any other documents required by this
Letter, must be received by the Exchange Agent at its address set forth below or
(in the case of tenders by book-entry transfer) confirmed to the Exchange Agent
on or prior to the Expiration Date. The method of delivery of this Letter, the
Common Stock and any other required documents is at the election and risk of the
stockholder, but, except as otherwise provided below, the delivery will be
deemed made only when actually received or confirmed by the Exchange Agent. If
certificates for Common Stock are sent by mail, it is suggested that the mailing
be made sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent on or before the Expiration Date.
Stockholders whose shares of Common Stock are not immediately available or
who cannot deliver their shares of Common Stock and all other required documents
to the Exchange Agent or who cannot complete the procedures for book-entry
transfer on or prior to the Expiration Date may tender their shares of Common
Stock pursuant to the guaranteed delivery procedure set forth in the Offering
Circular. Pursuant to such procedure: (i) such tender must be made by or through
a firm that is a member of a registered national securities exchange or a member
of the National Association of Securities Dealers, Inc. or by a commercial bank
or trust company having an office in the United States (an "Eligible
Institution"); (ii) prior to the Expiration Date the Exchange Agent must have
received from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by telegram, telex, facsimile transmission, mail
or hand delivery) setting forth the name and address of the holder of the Common
Stock and the number of shares of Common Stock tendered, stating that the tender
is being made thereby and guaranteeing that, within three Nasdaq National Market
("Nasdaq") trading days after the Expiration Date, this Letter together with the
Common Stock and any other documents required by this Letter will be deposited
by the Eligible Institution with the Exchange Agent; and (iii) the certificates
for all tendered Common Stock, or a confirmation of a book-entry transfer of
such Common Stock into the Exchange Agent's account at a DTC as described above,
and this Letter as well as all other documents required by this Letter, must be
received by the Exchange Agent within three Nasdaq trading days after the
Expiration Date, all as provided in the Offering Circular under "The Exchange
Offer -- Guaranteed Delivery."
See "The Exchange Offer" section of the Offering Circular.
2. PARTIAL TENDERS AND WITHDRAWALS.
If less than the number of shares of any Common Stock evidenced by a
submitted certificate is to be tendered, the tendering stockholder should fill
in the number of shares to be tendered in the box entitled "Number of Shares
Tendered." A reissued certificate representing such Common Stock for the number
of shares not tendered will be sent to such stockholder, unless otherwise
provided in the appropriate box on this Letter, as soon as practicable after the
Expiration Date. The entire number of shares of all Common Stock delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
Any holder of shares of Common Stock who has tendered such Common Stock may
withdraw the tender by delivering written notice of withdrawal to the Exchange
Agent prior to 5:00 P.M., New York City time, on November 12, 1998, or, unless
such tenders have previously been accepted for exchange, after 5:00 P.M., New
York City time, on December 14, 1998. To be effective, a notice of withdrawal
must indicate the certificate number or numbers of the shares of Common Stock to
which it relates (or, if the tender was by book-entry delivery, information
sufficient to enable the Exchange Agent to identify the Common Stock so
tendered) and the number of shares represented by such Common Stock and (a) be
signed by the holder in the same manner as the original signature in this Letter
or (b) be accompanied by evidence satisfactory to the Company that the holder
revoking such tender has succeeded to beneficial ownership of such Common Stock.
Withdrawals of tenders of shares may not be rescinded, and any shares withdrawn
will be deemed
7
<PAGE> 8
not validly tendered thereafter for purposes of the Exchange Offer. However,
properly withdrawn shares may be tendered again at any time prior to the
Expiration Date by following the procedures for tendering not previously
tendered shares.
3. SIGNATURES ON THIS LETTER, STOCK POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Common Stock
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any of the shares of Common Stock tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter.
If any tendered shares of Common Stock are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder or holders of the
Common Stock listed and tendered hereby, no endorsements of certificates or
separate stock powers are required. If, however, Notes are to be issued, or
certificates for any untendered principal amount of Common Stock are to be
reissued, to a person other than the registered holder, then endorsements of any
certificates transmitted hereby or separated stock powers are required.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) listed, such certificate(s) must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holder or holders appear on the certificate(s).
ANY BENEFICIAL OWNER WHOSE SHARES ARE REGISTERED IN THE NAME OF A BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE AND WHO WISHES TO TENDER
SHARES IN THE EXCHANGE OFFER SHOULD CONTACT SUCH REGISTERED HOLDER TO TENDER THE
SHARES ON SUCH BENEFICIAL OWNER'S BEHALF. IF ANY BENEFICIAL OWNER WISHES TO
TENDER SHARES HIMSELF, THAT BENEFICIAL OWNER MUST, PRIOR TO COMPLETING AND
EXECUTING THE LETTER OF TRANSMITTAL AND, WHERE APPLICABLE, DELIVERING HIS
SHARES, EITHER MAKE APPROPRIATE ARRANGEMENTS TO REGISTER OWNERSHIP OF THE SHARES
IN SUCH BENEFICIAL OWNER'S NAME OR FOLLOW THE PROCEDURES DESCRIBED IN THE
IMMEDIATELY PRECEDING PARAGRAPH, THE TRANSFER OF RECORD OWNERSHIP MAY TAKE A
CONSIDERABLE AMOUNT OF TIME.
If this Letter or any certificates or stock powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR COMMON STOCK OR SIGNATURES ON STOCK POWERS
REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE SHARES OF COMMON STOCK ARE TENDERED: (I) BY A
REGISTERED HOLDER OF SUCH COMMON STOCK (WHICH TERM, FOR PURPOSES OF THIS LETTER,
SHALL INCLUDE ANY PARTICIPANT IN DTC WHOSE NAME APPEARS ON A SECURITY POSITION
LISTING AS THE OWNER OF COMMON STOCK) WHO HAS NOT COMPLETED THE BOX ENTITLED
"SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS" OR "SPECIAL DELIVERY INSTRUCTIONS"
ON THIS LETTER; OR (II) FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering stockholders should indicate in the applicable box the name and
address to which Notes and/or substitute certificates evidencing Common Stock
for the number of shares not exchanged are to be issued or sent, if different
from the name and address of the person signing this Letter. In the case of
issuance in a different name, the employer identification or social security
number of the person named must also be indicated. If no such instructions are
given, such Common Stock not exchanged will be returned by crediting the account
at DTC as designated below the box entitled "Description of Common Stock." In
addition, stockholders who wish to have their Notes delivered in registered
form,
8
<PAGE> 9
instead of through book entry transfer, should so indicate in the appropriate
box, entitled "Special Issuance and Delivery Instructions."
5. TAX IDENTIFICATION NUMBER; SUBSTITUTE FORM W-9.
Federal income tax law requires that a stockholder whose tendered shares of
Common Stock are accepted for exchange must provide the Exchange Agent with a
correct Taxpayer Identification Number ("TIN"), generally the holder's social
security or federal employer identification number, and with certain other
information, on the Substitute Form W-9, which is provided under "Important Tax
Information" below, and to certify under penalties of perjury, that such number
is correct and that the holder (or other payee) is not subject to backup
withholding. See "Important Tax Information" below. If a holder is subject to
backup withholding, he or she must cross out item (2) of the Certification Box
on the Substitute Form W-9 before signing such Form. Failure to furnish the
correct TIN on the Substitute Form W-9 may subject the holder (or other payee)
to a $50 penalty imposed by the Internal Revenue Service and payments of cash to
the holder (or other payee) may be subject to backup withholding of 31%. If the
holder has not been issued a TIN and Notes and has applied for a number or
intends to apply for a number in the near future, he or she should write
"Applied For" in the space provided for on the TIN in Part I, sign and date the
Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I and the Exchange
Agent is not provided with a TIN by the time of payment, the Exchange Agent will
withhold 31% of all payments thereafter until a TIN is provided to the Exchange
Agent.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
and sale of Common Stock to it or its order pursuant to the Exchange Offer. If,
however, Notes and/or substitute certificates for shares of Common Stock not
exchanged are to be delivered to, or are to be registered or issued in the name
of, any person other than the registered holder of the Common Stock tendered
hereby, or if tendered shares of Common Stock are registered in the name of any
person other than the person signing this Letter, or if a transfer tax is
imposed for any reason other than the transfer and sale of Common Stock to the
Company or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering stockholder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering
stockholder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any
conditions enumerated in the Offering Circular, other than that the Indenture
pertaining to the Notes be qualified under the Trust Indenture Act of 1939,
which the Company may not waive.
8. NO CONDITIONAL OFFERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering stockholders, by execution of this Letter (or a
facsimile thereof), shall waive any right to receive notice of the acceptance of
their Common Stock for exchange.
The Company, Exchange Agent or any other person is not obligated to give
notice of defects or irregularities in any tender, nor shall any of them incur
any liability for failure to give any such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES FOR SHARES OF COMMON
STOCK.
Any stockholder whose shares of Common Stock have been mutilated, lost,
stolen or destroyed should contact the Exchange Agent at the address indicated
herein for further instructions.
9
<PAGE> 10
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering and completing this
Letter, as well as requests for assistance or additional copies of the Offering
Circular and this Letter, may be directed to the Exchange Agent at D.F. King &
Co., Inc., 77 Water Street, New York, New York 10005.
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder surrendering certificates must,
unless an exemption applies, provide the Exchange Agent (as payer) with his
correct TIN on Substitute Form W-9 included in this Letter of Transmittal. If
the stockholder is an individual, his TIN is his social security number. If the
correct TIN is not provided, the stockholder may be subject to a $50 penalty
imposed by the Internal Revenue Service and payments of cash to the stockholder
(or other payee) may be subject to backup withholding of 31%.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding. In
order for an exempt foreign stockholder to avoid backup withholding, that person
should complete, sign and submit a Form W-8, Certificate of Foreign Status,
signed under penalties of perjury, attesting to his exempt status. A Form W-8
can be obtained from the Exchange Agent. Exempt stockholders, other than foreign
stockholders, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 and sign, date and return the Substitute Form W-9 to the
Exchange Agent. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payment made to payee. Backup withholding is not an additional tax.
Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If backup withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder,
the stockholder is required to notify the Exchange Agent of his correct TIN (or
the TIN of any other payee) by completing the Substitute Form W-9 included in
this Letter of Transmittal certifying (1) that the TIN provided on the
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN), and
that (2) the stockholder is not subject to backup withholding because (1) the
stockholder has not been notified by the Internal Revenue Service that the
stockholder is subject to backup withholding as a result of a failure to report
all interest and dividends or (ii) the Internal Revenue Service has notified the
stockholder that the stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The stockholder is required to give the Exchange Agent the TIN, generally
the social security number or employer identification number, of the record
owner of the certificates. If the certificates are in more than one name or are
not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W -9 for
additional guidance on which number to report. If the stockholder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future, he or she should write "Applied For" in the space provided for
the TIN in Part 1, sign and date the Substitute Form W-9 and sign and date the
Certificate of Awaiting Taxpayer Identification Number, which appears in a
separate box below the Substitute Form W-9. If "Applied For" is written in Part
1 and the Exchange Agent is not provided with a TIN by the time of payment, the
Exchange Agent will withhold 31% of all payments until a TIN is provided to the
Exchange Agent.
10
<PAGE> 11
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate, or pension The legal entity
trust (Do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 12
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or, an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRON AGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 20% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
Exhibit 99.T3E.3
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
OFFER TO EXCHANGE 15% SUBORDINATED NOTES DUE 2008
FOR UP TO 3,500,000 SHARES OF ITS
COMMON STOCK, PAR VALUE $.01 PER SHARE
To Securities Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Cellular Communications of Puerto Rico, Inc. (the "Company") is offering
(the "Exchange Offer"), upon the terms and subject to the conditions set forth
in the enclosed Offering Circular dated October 15, 1998 (the "Offering
Circular") and the enclosed Letter of Transmittal (the "Letter of Transmittal"),
to exchange $15.00 principal amount of a new issue of 15% Subordinated Notes due
2008 for each share of its Common Stock, par value $.01 per share (the "Common
Stock" or "Shares"), up to 3,500,000 shares (although the Company may determine
to accept a greater or lesser number of Shares in accordance with the provisions
for modifying the terms of the Exchange Offer set forth in the Offering Circular
and in compliance with applicable law, including Rule 13e-4(f)(1)(ii) of the
Securities Exchange Act of 1934, as amended). Consummation of the Exchange Offer
is subject to a number of conditions described in the Offering Circular.
We are asking you to contact your clients for whom you hold Common Stock
registered in your name or in the name of your nominee or who hold Common Stock
registered in their own names.
The Company will not pay any fees or commissions to any broker or dealer or
other person for soliciting tenders of Common Stock pursuant to the Exchange
Offer. You will be reimbursed for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients. The
Company will pay all transfer taxes, if any, applicable to the transfer and
exchange of Common Stock to it or its order, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Enclosed is a copy of the following documents:
1. The Offering Circular.
2. The Letter of Transmittal for your use and for the information of
your clients.
3. A form of letter which may be sent to your clients for whose
account you hold Common Stock registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer.
4. The Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
5. A return envelope addressed to Continental Stock Transfer & Trust
Co., the Exchange Agent.
6. A Notice of Guaranteed Delivery.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON NOVEMBER 12, 1998, UNLESS EXTENDED (THE "EXPIRATION
DATE"). COMMON STOCK MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE
AND, UNLESS THERETOFORE ACCEPTED FOR EXCHANGE, AFTER 5:00 P.M., NEW YORK CITY
TIME, ON THE 40TH BUSINESS DAY AFTER OCTOBER 15, 1998.
To participate in the Exchange Offer, certificates for Common Stock or
confirmation of any book-entry transfer into the Exchange Agent's account at The
Depository Trust Company, and a duly executed and properly completed Letter of
Transmittal or facsimile thereof, together with any other required documents,
must be delivered to the Exchange Agent as indicated in the Letter of
Transmittal and the Offering Circular.
If holders of Common Stock wish to tender, but it is impracticable for them
to forward their Common Stock prior to the expiration of the Exchange Offer, a
tender may be effected by following the guaranteed delivery procedures described
in the Offering Circular under "The Exchange Offer -- Guaranteed Delivery
Procedures."
<PAGE> 2
Additional copies of the enclosed material may be obtained from, and any
other inquiries you may have with respect to the Exchange Offer should be
directed to the Information Agent, D.F. King & Co., Inc. for the Exchange Offer.
Very truly yours,
Cellular Communications of Puerto
Rico, Inc.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE DESIGNATION OF YOU
OR ANY PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU
OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH
RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
OFFERING CIRCULAR OR THE ACCOMPANYING LETTER OF TRANSMITTAL.
<PAGE> 1
Exhibit 99.T3E.4
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
OFFER TO EXCHANGE 15% SUBORDINATED NOTES DUE 2008
FOR UP TO 3,500,000 SHARES OF ITS
OUTSTANDING COMMON STOCK, PAR VALUE $.01 PER SHARE
To Our Clients:
Enclosed for your consideration are an Offering Circular dated October 15,
1998 (the "Offering Circular") and a Letter of Transmittal (the "Letter of
Transmittal") relating to the offer (the "Exchange Offer") by Cellular
Communications of Puerto Rico, Inc. (the "Company") to exchange $15.00 principal
amount of its 15% Subordinated Notes due November 15, 2008 for each share of its
Common Stock, par value $.01 per share (the "Common Stock"). Consummation of the
Exchange Offer is subject to a number or conditions described in the Offering
Circular.
This material is being forwarded to you as the beneficial owner of Common
Stock carried by us in your account but not registered in your name. A tender of
such Common Stock may only be made by us as the holder of record and pursuant to
your instructions.
Accordingly, we request instructions as to whether you wish us to tender
any or all such Common Stock held by us for your account pursuant to the terms
and conditions set forth in the enclosed Offering Circular and Letter of
Transmittal. However, we urge you to read the Offering Circular carefully before
instructing us to tender your Common Stock.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to tender Common Stock on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 P.M.,
New York City time, on November 12, 1998, unless extended or terminated by the
Company (the "Expiration Date"). Common Stock may be withdrawn at any time prior
to 5:00 P.M., New York City time, on the Expiration Date, and, unless
theretofore accepted for exchange, after 5:00 P.M., New York City time, on the
40th business day after October 15, 1998.
If you wish to have us tender any or all of your Common Stock please so
instruct us by completing, executing, detaching and returning to us the attached
instruction form. The accompanying Letter of Transmittal is furnished to you for
your information only and may not be used by you to tender Common Stock.
<PAGE> 2
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer to acquire the
Common Stock of Cellular Communications of Puerto Rico, Inc.
---------------
This will instruct you to tender the number of shares of Common Stock
indicated below held by you for the account of the undersigned, pursuant to the
terms and conditions set forth in the Offering Circular and the related Letter
of Transmittal.
Box 1 [ ] Please TENDER ______ shares of Common Stock held by you for my
account.
Box 2 [ ] Please DO NOT tender outstanding Common Stock held by you for
my account.
DATE:
--------------------------------------
--------------------------------------
Signature(s)
--------------------------------------
--------------------------------------
Please print name(s) here
Unless a specific contrary instruction is given in the spaces provided, your
signature(s) hereon shall constitute an instruction to us to tender all your
Common Stock pursuant to the terms and conditions set forth in the Offering
Circular and the Letter of Transmittal.
<PAGE> 1
Exhibit 99.T3E.5
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
October 15, 1998
To the Holders of
Shares of Common Stock, Par Value $.01
of Cellular Communications of Puerto Rico, Inc.
Cellular Communications of Puerto Rico, Inc. ("CCPR" or the "Company") is
offering (the "Exchange Offer"), upon the terms and subject to the conditions
set forth in the enclosed Offering Circular (the "Offering Circular"), and in
the accompanying Letter of Transmittal (the "Letter of Transmittal"), to
exchange $15.00 principal amount of a new issue of 15% Subordinated Notes due
2008 (the "Notes") in exchange for each share of its Common Stock, par value
$.01 share (the "Common Stock"), up to 3,500,000 shares (although the Company
may determine to accept a greater or lesser number of shares in accordance with
the provisions for modifying the terms of the Exchange Offer and in compliance
with applicable law, including Rule 13e-4(f)(1)(ii) of the Securities Exchange
Act of 1934, as amended).
As of October 12, 1998, there were approximately 13,204,000 shares
(exclusive of 383,000 treasury shares) of Common Stock outstanding. The Exchange
Offer is being made for 3,500,000 shares of Common Stock. If more than 3,500,000
shares of Common Stock are properly tendered prior to the Expiration Date, the
Company may accept for exchange 3,500,000 shares from shareholders who properly
tender the shares on a pro-rata basis. If the Company modifies the number of
shares of Common Stock that it will accept, and more than that number designated
by the Company are tendered, the Company may accept for exchange such designated
number of shares on a pro-rata basis.
Please read carefully the Offering Circular and the other enclosed
materials relating to the Exchange Offer. If you require assistance, you should
consult your financial, tax or other professional advisors. Holders who wish to
participate in the Exchange Offer are asked to respond promptly by completing
and returning the enclosed Letter of Transmittal, and all other required
documentation, to Continental Stock Transfer & Trust Company, the Exchange Agent
for the Exchange Offer.
QUESTIONS REGARDING THE TERMS OF THE EXCHANGE OFFER MAY BE DIRECTED TO THE
INFORMATION AGENT: D.F. KING & CO., INC., 77 WATER STREET, NEW YORK, NEW YORK
10005, (212) 269-5550 or (888) 414-5566.
Very truly yours,
CELLULAR COMMUNICATIONS OF PUERTO
RICO, INC.
<PAGE> 1
Exhibit 99.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
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Cellular Communications of Puerto Rico, Inc.
(Exact name of obligor as specified in its charter)
DELAWARE 13-3120943
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
110 EAST 59TH STREET
NEW YORK, NY 10022
(Address of principal executive offices) (Zip Code)
15% SUBORDINATED NOTES DUE 2008
(Title of the indenture securities)
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, Suite 2310, 5 Empire State
Plaza, Albany, New York 12223. Board of Governors of the Federal
Reserve System 20th and C Street NW, Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y. 10045.
Federal Deposit Insurance Corporation, 550 Seventeenth Street NW
Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
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Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 15TH day of SEPTEMBER, 1998.
THE CHASE MANHATTAN BANK
By /S/ ANDREW M. DECK
----------------------------
/S/ ANDREW M. DECK
VICE PRESIDENT
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<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1998, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ................................. $ 12,546
Interest-bearing balances .......................................................... 6,610
Securities:
Held to maturity securities ........................................................... 2,014
Available for sale securities ......................................................... 46,342
Federal funds sold and securities purchased under agreements to resell ................ 27,489
Loans and lease financing receivables:
Loans and leases, net of unearned income .............................$129,281
Less: Allowance for loan and lease losses ............................ 2,796
Less: Allocated transfer risk reserve ................................ 0
Loans and leases, net of unearned income, allowance, and reserve ................... 126,485
Trading Assets ........................................................................ 58,015
Premises and fixed assets (including capitalized leases) .............................. 3,001
Other real estate owned ............................................................... 260
Investments in unconsolidated subsidiaries and associated companies ................... 255
Customers' liability to this bank on acceptances outstanding .......................... 1,245
Intangible assets ..................................................................... 1,492
Other assets .......................................................................... 16,408
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TOTAL ASSETS .......................................................................... $302,162
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</TABLE>
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<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits
In domestic offices ............................................................ $ 99,347
Noninterest-bearing ............................................................ $ 41,566
Interest-bearing ............................................................... 57,781
In foreign offices, Edge and Agreement, subsidiaries and IBF's ................. 80,602
Noninterest-bearing ............................................................ $ 4,109
Interest-bearing ............................................................... 76,493
Federal funds purchased and securities sold under agree-
ments to repurchase ............................................................... 37,760
Demand notes issued to the U.S. Treasury .......................................... 1,000
Trading liabilities ............................................................... 42,941
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less .................................. 4,162
With a remaining maturity of more than one year through three years ............ 213
With a remaining maturity of more than three years ............................. 106
Bank's liability on acceptances executed and outstanding .......................... 1,245
Subordinated notes and debentures ................................................. 5,408
Other liabilities ................................................................. 11,796
TOTAL LIABILITIES ................................................................. 284,580
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EQUITY CAPITAL
Perpetual preferred stock and related surplus ..................................... 0
Common stock ...................................................................... 1,211
Surplus (exclude all surplus related to preferred stock) ......................... 10,441
Undivided profits and capital reserves ............................................ 5,916
Net unrealized holding gains (losses)
on available-for-sale securities .................................................. (2)
Cumulative foreign currency translation adjustments ............................... 16
TOTAL EQUITY CAPITAL .............................................................. 17,582
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TOTAL LIABILITIES AND EQUITY CAPITAL .............................................. $302,162
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE )DIRECTORS
WILLIAM B. HARRISON, JR.)
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