As filed with the Securities and Exchange Commission on July 10, 1995
Registration No. 33-59203
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Century Telephone Enterprises, Inc.
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
<C> <C> <C>
Louisiana 4813 72-0651161
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of incorporation Classification Code Number) Identification Number)
or organization)
</TABLE>
100 Century Park Drive
Monroe, Louisiana 71203
(318) 388-9500
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
<TABLE>
<CAPTION>
<C> <C> <C>
HARVEY P. PERRY, ESQ.
Copy to: Senior Vice President, General Counsel Copy to:
KENNETH J. NAJDER, ESQ. and Secretary JAMES T. THOMAS, IV, ESQ.
Jones, Walker, Waechter, Century Telephone Enterprises, Inc. Brunini, Grantham, Grower
Poitevent, Carrere & Denegre, L.L.P. 100 Century Park Drive & Hewes, PLLC
201 St. Charles Avenue, 51st Floor Monroe, Louisiana 71203 1400 Trustmark Building
New Orleans, Louisiana 70170-5100 (318) 388-9500 248 East Capitol Street
(504) 582-8000 Jackson, Mississippi 39201
(601) 948-3101
</TABLE>
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
Upon the effective date of the merger described in this
Registration Statement.
If any of the securities being registered on this form
are being offered in connection with the formation of a holding
company and there is compliance with General Instruction G, please
check the following box. [ ]
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933 or until this Registration Statement shall become effective on
such date as the Commission, acting pursuant to Section 8(a), may
determine.
CENTURY TELEPHONE ENTERPRISES, INC.
Cross Reference Sheet
Between
Items of Form S-4 and Location in Information Statement and Prospectus
<TABLE>
<CAPTION>
Item in Form S-4 Location in Prospectus
<S> <C>
1 Forepart of the Registration State-
ment and Outside Front Cover Page of
Prospectus .............................. Facing Page; Cross Reference Sheet;
Outside Front Cover Page
2 Inside Front and Outside Back Cover
Pages of Prospectus ..................... Available Information; Incorporation
of Certain Documents by Reference;
Table of Contents
3 Risk Factors, Ratio of Earnings
to Fixed Charges and Other Information .. Summary; Risk Factors
4 Terms of the Transaction ................ Summary; Risk Factors; The Merger
Proposal; Comparative Rights of
Century and Mississippi-6 Share-
holders
5 Pro Forma Financial Information ......... *
6 Material Contracts with the Company
Being Acquired .......................... The Merger Proposal
7 Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters ............... *
8 Interests of Named Experts and Counsel .. Legal Matters; Experts
9 Disclosure of Commission Position
on Indemnification for Securities Act
Liabilities ............................. *
10 Information with Respect to S-3
Registrants ............................. Available Information; Incorporation
of Certain Documents by Reference;
Summary; Risk Factors; Information
About Century; Comparative Rights of
Century and Mississippi-6 Share-
holders
11 Incorporation of Certain Informa-
tion by Reference ....................... Incorporation of Certain Documents
by Reference
12 Information with Respect to S-2 or
S-3 Registrants ......................... *
13 Incorporation of Certain Informa-
tion by Reference ....................... *
14 Information with Respect to Registrants
Other Than S-2 or S-3 Registrants ....... *
15 Information with Respect to S-3
Companies ............................... *
16 Information with Respect to S-2 or S-3
Companies ............................... *
17 Information with Respect to Companies
Other Than S-3 or S-2 Companies ......... Summary; Information About
Mississippi-6; Mississippi-6
Management's Discussion and Analysis
of Financial Condition and Results
of Operations; Comparative Rights of
Century and Mississippi-6
Shareholders; Index to Financial
Statements
18 Information if Proxies, Consents or
Authorizations are to be Solicited ...... *
19 Information if Proxies, Consents or
Authorizations are not to be Solicited
in an Exchange Offer .................... Outside Front Cover Page; Summary;
The Special Meeting; The Merger
Proposal; Information About
Mississippi-6
_____________________________
*Not applicable.
</TABLE>
<PAGE>
MISSISSIPPI-6 CELLULAR CORPORATION
1410 LIVINGSTON LANE
JACKSON, MISSISSIPPI 39213-8003
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
Notice is hereby given that a special meeting of
shareholders (the "Special Meeting") of Mississippi-6 Cellular
Corporation ("Mississippi-6") will be held on August 8, 1995
at 9:30 a.m. local time at 1410 Livingston Lane, Jackson,
Mississippi, for the following purposes:
1. To consider and vote upon a proposal (the "Merger
Proposal") to approve the Agreement and Plan of Merger
dated as of April 18, 1995, as amended (the "Merger
Agreement"), between, among others, Mississippi-6 and
Century Telephone Enterprises, Inc. ("Century") (and
the accompanying escrow agreement referred to below),
pursuant to which, among other things, (i) a
subsidiary of Century will be merged into Mississippi-
6 (the "Merger") in a tax-free reorganization, (ii)
each outstanding share of common stock of Mississippi-
6 (the "Mississippi-6 Stock"), other than those held
by shareholders who perfect dissenters' rights under
Mississippi law, will be converted into 583.1740
shares of common stock of Century ("Century Stock")
and (iii) each non-dissenting Mississippi-6
shareholder will agree to assume responsibility for
certain post-closing liabilities, to hold his shares
of Century Stock to safeguard the tax-free treatment
of the Merger, to appoint David A. Bailey as his sole
representative for certain purposes specified in the
Merger Agreement and the escrow agreement to be
entered into thereunder, and to relinquish certain
rights under the current shareholders' agreement among
the Mississippi-6 shareholders, in each case on the
terms and conditions specified in the attached
Information Statement and Prospectus.
2. To transact such other business as may properly come
before the Special Meeting or any adjournment thereof.
Only Mississippi-6 shareholders of record as of the close
of business on June 13, 1995 are entitled to notice of and to
vote at the Special Meeting.
Subject to certain exceptions and limitations described in
the attached Information Statement and Prospectus, certain
shareholders of Mississippi-6 who own approximately 62% of the
outstanding shares of Mississippi-6 Stock have agreed to vote
all of their shares in favor of the Merger Proposal (which
votes in and of themselves will be sufficient to approve the
Merger Proposal).
Mississippi-6's shareholders who object to the Merger
Proposal have the right to dissent and have the "fair value"
of their stock paid to them in cash. To perfect such rights,
a Mississippi-6 shareholder must (i) prior to the Special
Meeting deliver to Mississippi-6 a written notice stating an
intent to demand payment for his shares if the Merger is
effectuated, (ii) refrain from voting in favor of the Merger
Proposal, and (iii) otherwise follow all of the procedures set
forth in the Mississippi Business Corporation Act as more
fully described in the attached Information Statement and
Prospectus.
The Board of Directors encourages your participation at
the Special Meeting.
By Order of the Board of Directors
James T. Thomas, IV, Secretary
Jackson, Mississippi
July 11, 1995
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
PROSPECTUS
_______________
MISSISSIPPI-6 CELLULAR CORPORATION
INFORMATION STATEMENT
FOR A SPECIAL MEETING OF SHAREHOLDERS OF
MISSISSIPPI-6 CELLULAR CORPORATION
TO BE HELD ON AUGUST 8, 1995
Mississippi-6 Cellular Corporation ("Mississippi-6") is
furnishing this Information Statement and Prospectus to its
shareholders in connection with its Special Meeting of
Shareholders to be held on August 8, 1995 (the "Special
Meeting"). At this meeting, the shareholders of Mississippi-6
will consider and vote upon a proposal to approve an Agreement
and Plan of Merger dated as of April 18, 1995, as amended,
between, among others, Mississippi-6 and Century Telephone
Enterprises, Inc. ("Century") (and an accompanying escrow
agreement to be entered into thereunder), pursuant to which,
among other things, (i) a subsidiary of Century will be merged
into Mississippi-6 (the "Merger"), (ii) each outstanding share
of common stock of Mississippi-6, other than those held by
shareholders who perfect dissenters' rights under Mississippi
law, will be converted into 583.1740 shares of common stock of
Century ("Century Stock") and (iii) each non-dissenting
Mississippi-6 shareholder will agree to assume certain
responsibilities, acknowledge certain appointments, abide by
certain covenants and relinquish certain rights. For further
information, see "The Merger Proposal."
Century has filed a registration statement on Form S-4
(the "Registration Statement") pursuant to the Securities Act
of 1933, as amended, to register the shares of Century Stock
issuable to the Mississippi-6 shareholders in connection with
the Merger. This document constitutes an Information
Statement of Mississippi-6 in connection with the Special
Meeting and a Prospectus of Century with respect to the
Century Stock to be issued upon consummation of the Merger.
The information contained herein with respect to Century and
its subsidiaries has been supplied by Century and the
information with respect to Mississippi-6 has been supplied by
Mississippi-6.
Subject to certain exceptions, each outstanding share of
Century Stock entitles the holder to one vote unless it has
been beneficially owned by the same person or entity
continuously since May 30, 1987, in which case it generally
entitles the holder to ten votes per share until transfer.
Accordingly, each share of Century Stock offered hereby will
entitle the holder to one vote. Additionally, a preferred
stock purchase right is attached to and trades with each share
of Century Stock, including those issuable hereunder. Century
Stock is traded on the New York Stock Exchange under the
symbol CTL. Unless the context otherwise requires, all
references to Century will include Century and its
subsidiaries.
This Information Statement and Prospectus is first being
mailed to Mississippi-6 shareholders on or about July 11,
1995.
For a discussion of certain factors that the
Mississippi-6 shareholders should consider in evaluating
Century and the transactions described herein, see "Risk
Factors" on page 1 of this Information Statement and
Prospectus.
____________________
NEITHER CENTURY NOR MISSISSIPPI-6 IS ASKING YOU FOR A
PROXY AND YOU
ARE REQUESTED NOT TO SEND ONE TO CENTURY OR
MISSISSIPPI-6.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS INFORMATION STATEMENT AND PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
_____________________
The date of this Information Statement and Prospectus is
July 11, 1995.
<PAGE>
AVAILABLE INFORMATION
Century is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, files reports, proxy
statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by Century with the
Commission pursuant to the informational requirements of the
Exchange Act may be inspected and copied at the public
reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission at the following
locations: 7 World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60621-2511. 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. Century Stock is listed on the New York Stock Exchange
and its reports, proxy statements and other information may
also be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
In addition to the information contained in this
Information Statement and Prospectus, further information
regarding Century and the Century Stock offered hereby is
contained in the Registration Statement and the exhibits
thereto, which may be inspected and copied at the Commission's
principal office in Washington, D.C. at the address and in the
manner indicated above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Information Statement and Prospectus incorporates
by reference documents that are not presented herein or
delivered herewith. These documents are available upon
request from Harvey P. Perry, Century Telephone Enterprises,
Inc., 100 Century Park Drive, Monroe, Louisiana 71203,
telephone: (318) 388-9500. In order to insure timely delivery
of these documents, any request should be received by August
1, 1995.
The following documents, which Century has filed with
the Commission pursuant to the Exchange Act, are incorporated
herein by reference:
(a)Century's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994.
(b)Century's Quarterly Report on Form 10-Q for the period
ended March 31, 1995.
(c)The description of Century Stock set forth in Century's
registration statement filed under the Exchange Act (File No.
1-7784), as modified by Century's Current Report on Form 8-K
dated June 12, 1991.
All reports filed by Century with the Commission
pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act
subsequent to the date of this Information Statement and
Prospectus and prior to the Special Meeting shall be deemed to
be incorporated by reference herein and to be made a part
hereof from their respective dates of filing. Information
appearing herein or in any document incorporated herein by
reference is not necessarily complete and is qualified in its
entirety by the information and financial statements appearing
in the documents incorporated herein by reference and should
be read together therewith. Any statements contained in a
document incorporated or deemed to be incorporated by
reference shall be deemed to be modified or superseded to the
extent that a statement contained herein or in any other
document subsequently filed or incorporated by reference
herein modifies or supersedes such statement. Any statement
so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this
Information Statement and Prospectus.
_____________________
No person is authorized to give any information or to
make any representation not contained in this Information
Statement and Prospectus, and if given or made, such
information or representation should not be relied upon as
having been authorized. This Information Statement and
Prospectus does not constitute an offer to sell, or a
solicitation of an offer to purchase, the securities offered
hereby, in any jurisdiction in which, or to any person to
whom, it is unlawful to make such offer or solicitation of an
offer. Neither the delivery of this Information Statement and
Prospectus nor any distribution of the Century Stock offered
hereby shall, under any circumstances, create any implication
that there has been no change in the affairs of Century or
Mississippi-6 since the date hereof.
<PAGE>
TABLE OF CONTENTS
Description Page
COVER PAGE................................................ i
AVAILABLE INFORMATION..................................... ii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........... ii
SUMMARY................................................... v
RISK FACTORS.............................................. 1
Considerations Relating to the Merger................ 1
Considerations Relating to Century Stock............. 1
THE SPECIAL MEETING....................................... 2
Purpose of Special Meeting........................... 2
Record Date and Quorum............................... 3
Vote Required........................................ 3
THE MERGER PROPOSAL ...................................... 3
General Description of the Merger.................... 4
Effective Time of Merger............................. 4
Background of the Merger............................. 4
Reasons for the Merger and Recommendation............ 7
Conversion of Mississippi-6 Stock.................... 7
Post-Closing Liabilities; Escrow Agreement........... 8
Shareholders' Representative......................... 11
Agreement of Shareholders to Hold Century Stock...... 12
Termination of Shareholders' Agreement............... 13
Certain Federal Income Tax Consequences.............. 13
Procedures For Receiving Merger Consideration........ 14
Other Terms of the Merger Agreement.................. 15
Termination and Amendment of Certain Agreements...... 18
Accounting Treatment................................. 18
Operations After the Merger.......................... 18
Resales of Century Stock............................. 18
Dissenting Shareholders' Rights...................... 19
INFORMATION ABOUT MISSISSIPPI-6........................... 20
Description of the Business.......................... 20
Security Ownership of Certain Beneficial Owners and
Management....................................... 23
Dividends on and Market Prices of Mississippi-6
Stock............................................ 24
MISSISSIPPI-6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS........ 24
Background........................................... 24
Year Ended December 31, 1994 Compared to Year Ended
December 31, 1993.................................... 24
Three Months Ended March 31, 1995 Compared to Three
Months Ended March 31, 1994.......................... 26
Other Matters........................................ 27
INFORMATION ABOUT CENTURY................................. 27
General.............................................. 27
Price Range of Stock................................. 28
Selected Consolidated Operating and Financial Data... 28
COMPARATIVE RIGHTS OF CENTURY AND MISSISSIPPI-6
SHAREHOLDERS......................................... 30
Voting Rights of Common Stock........................ 30
Preferred Stock...................................... 31
Preferred Stock Purchase Rights...................... 31
Dividends, Redemptions and Stock Repurchases......... 32
Approval of Extraordinary Transactions............... 33
Liability of Directors and Officers.................. 33
Dissenters' Rights................................... 34
Inspection Rights.................................... 34
Transfer Restrictions................................ 35
Laws and Organizational Document Provisions with
Possible Antitakeover Effects.................... 35
Bylaws............................................... 38
Vacancies............................................ 39
LEGAL MATTERS............................................. 39
EXPERTS................................................... 39
INDEX TO MISSISSIPPI-6 FINANCIAL STATEMENTS............... F-1
APPENDIX A - Agreement and Plan of Merger, As Amended..... A-1
APPENDIX B - List of Mississippi-6 Shareholders as of the
Record Date............................................... B-1
APPENDIX C - Form of Escrow Agreement..................... C-1
APPENDIX D - Article 13 of the Mississippi Business
Corporation Act - Dissenters' Rights...................... D-1
<PAGE>
SUMMARY
The following summary is qualified in its entirety by
reference to the Merger Agreement and the accompanying Escrow
Agreement described below, each of which appear as appendices
to this Information Statement and Prospectus (the "Information
Statement"), and by the more detailed information and
financial statements appearing elsewhere herein and in the
documents incorporated herein by reference.
The Special Meeting
General. A Special Meeting of Mississippi-6's
shareholders will be held on August 8, 1995 at the time and
place specified in the accompanying Notice (the "Special
Meeting"). Only holders of record of common stock of
Mississippi-6 ("Mississippi-6 Stock") at the close of business
on June 13, 1995 (the "Record Date") are entitled to notice of
and to vote at the Special Meeting.
Purpose of Special Meeting. The purpose of the Special
Meeting is to consider and vote upon a proposal (the "Merger
Proposal") to approve an Agreement and Plan of Merger dated as
of April 18, 1995, as amended (the "Merger Agreement"), by and
among Century, Mississippi 6 Acquisition Corporation, a
wholly-owned subsidiary of Century ("Sub"), Mississippi-6, and
certain shareholders of Mississippi-6 who own of record
approximately 62% of the outstanding Mississippi-6 Stock (the
"Principal Shareholders"), along with an accompanying escrow
agreement to be entered into thereunder (the "Escrow
Agreement"). The Merger Agreement provides, among other
things, that (i) Sub will merge into Mississippi-6 (the
"Merger") in a tax-free reorganization, (ii) each outstanding
share of Mississippi-6 Stock (other than those held by
shareholders who perfect dissenters' rights under Mississippi
law) will be converted into 583.1740 shares of Century Stock
and (iii) each non-dissenting Mississippi-6 shareholder will
agree to assume responsibility for certain post-closing
liabilities, to hold his shares of Century Stock to safeguard
the tax-free treatment of the Merger, to appoint David A.
Bailey (the "Shareholders' Representative") as his sole
representative for certain purposes specified in the Merger
Agreement and Escrow Agreement, and to relinquish certain
rights under the current shareholders' agreement among the
Mississippi-6 shareholders, in each case on the terms and
conditions specified herein. See "The Special Meeting -
Purpose of Special Meeting" and "The Merger Proposal."
Vote Required. Approval of the Merger Proposal requires
the affirmative vote of the holders of a majority of the total
voting power of the Mississippi-6 Stock. Pursuant to the
Merger Agreement, the Principal Shareholders, who as of the
Record Date owned of record shares of Mississippi-6 Stock
entitling them to cast approximately 62% of Mississippi-6's
total voting power (which votes are in and of themselves
sufficient to approve the Merger Proposal without the vote of
any other Mississippi-6 shareholder), have agreed to vote all
their shares of Mississippi-6 Stock in favor of the Merger
Proposal, unless (i) between April 18, 1995 and the date of
the Special Meeting there has been a material adverse change
in Century, which is defined in the Merger Agreement to
exclude, among other things, decreases in the trading price of
Century Stock that do not relate to events or conditions
affecting Century, or (ii) the Merger Agreement has been
terminated in accordance with its terms. Based on concerns
described elsewhere herein, William M. Mounger, II, the
President and a director of Mississippi-6, voted against
ratification of a preliminary agreement with Century at a
March 28, 1995 meeting of the Board of Directors of
Mississippi-6, and has advised that he intends to vote against
the Merger Proposal at the Special Meeting but does not intend
to exercise dissenters' rights under Mississippi law. See
"The Merger Proposal - Background of the Merger." For
additional information (including information on the number of
shares beneficially owned by the directors, executive officers
and certain principal shareholders of Mississippi-6), see "The
Special Meeting - Vote Required."
The Merger Proposal
Effective Time of Merger. The Merger will become
effective when the parties file with the Secretary of State of
Mississippi a certificate of merger (such date and time of
filing being hereinafter referred to as the "Effective Date"
and the "Effective Time"). The parties intend to schedule a
closing (the "Closing") to consummate the Merger immediately
after the Special Meeting and to file the certificate of
merger on the same date. See "The Merger Proposal - Effective
Time of Merger."
Background of the Merger. The Merger Agreement and the
transactions contemplated thereunder were approved on April
14, 1995 by the Board of Directors of Mississippi-6 following
the solicitation of acquisition offers from Century and other
prospective buyers by Mississippi-6's management. In
connection with voting against ratification of a preliminary
agreement with Century at a March 28, 1995 meeting of the
Board of Directors of Mississippi-6, William M. Mounger, II
reiterated the concerns that he had previously expressed in
his March 13 letter to each shareholder. This letter set
forth the following concerns and assertions:
. that management had entered into the
preliminary agreement without the free
and open discussion of a Board meeting
. that the Merger is not in the best
interests of the shareholders
. that the consideration offered by
Century is inadequate
. that Mississippi-6 could have obtained
substantially more favorable offers if
management had conducted a more
thorough sales process
For a more complete discussion of the background of the Merger
Proposal (including further information regarding the
opposition to the Merger Proposal of Mr. Mounger), see "The
Merger Proposal - Background of the Merger."
Recommendation of the Board of Directors. For the
reasons specified under "The Merger Proposal - Reasons for the
Merger and Recommendation," the Board of Directors of
Mississippi-6 recommends that the shareholders of Mississippi-
6 vote in favor of the Merger Proposal.
Conversion of Mississippi-6 Stock. At the Effective
Time, each outstanding share of Mississippi-6 Stock (other
than shares held by shareholders who perfect dissenters'
rights under Mississippi law) will be converted into 583.1740
shares of Century Stock (the "Conversion Ratio"). In lieu of
receiving fractional shares of Century Stock, holders of
Mississippi-6 Stock will receive a cash payment (without
interest), calculated as described elsewhere herein. The
shares of Century Stock issuable in connection with the Merger
and the cash payable in lieu of fractional shares is sometimes
referred to herein as the "Merger Consideration."
Under the Merger Agreement, each non-dissenting
shareholder of Mississippi-6 as of the Effective Time
(collectively, the "Shareholders") will be required to pay his
pro rata share of any liabilities that may be asserted after
the Effective Time in connection with (i) any indemnity claims
made by Century or certain of its affiliates ("Century
Indemnitees") pursuant to the Merger Agreement, (ii) any post-
closing adjustment to the Conversion Ratio that reduces the
Merger Consideration, (iii) costs associated with tax audits
relating to taxable periods ending on or before the Effective
Date, (iv) the incurrence of certain expenses by the Escrow
Agent (as defined below) and (v) the incurrence of certain
expenses by the Shareholders' Representative (collectively,
"Post-Closing Liabilities"). At the Closing, 29,159 shares of
Century Stock, which represents 5% of the aggregate number of
shares of Century Stock issuable in connection with the
Merger, will be placed in escrow pursuant to the terms of the
Escrow Agreement described below. For further information,
see "The Merger Proposal - Post-Closing Liabilities; Escrow
Agreement."
Post-Closing Liabilities; Escrow Agreement. Subject to
certain limitations, deductibles, conditions and procedures
described herein, the Merger Agreement provides that the
Shareholders will, on a pro rata basis, severally indemnify
the Century Indemnitees for losses resulting from any (i)
breaches of certain representations, warranties and covenants
of Mississippi-6 and the Principal Shareholders, (ii) breaches
of the covenants to be made by the Shareholders by virtue of
their execution of the Letter of Authorization mailed in
conjunction with this Information Statement ("Letter of
Authorization") and (iii) claims made by former shareholders
relating to any act or omission of Mississippi-6 prior to the
Effective Date. In addition, Century will be obligated to
indemnify the Shareholders and their heirs from and against
losses that may be asserted after the Effective Time in
connection with breaches of certain representations,
warranties or covenants of Century.
If it is determined that the Shareholders are obligated
to indemnify any Century Indemnitee for losses, each
Shareholder will be severally liable for such loss in
accordance with his respective pro rata ownership interest of
Mississippi-6 Stock immediately prior to the Effective Time.
In the event the shares held in escrow are insufficient to
compensate for the loss, the Century Indemnitees will be free
to pursue any or all of the Shareholders directly for their
respective pro rata share of the remainder.
After the Closing, the Merger Consideration will be
adjusted to reflect the parties' final calculation of the
Conversion Ratio. If the Conversion Ratio disclosed in this
Information Statement (which is based on current estimates of
Mississippi-6's Net Indebtedness described elsewhere herein)
exceeds the final calculation of the Conversion Ratio, then
all Shareholders will be required to refund the difference to
Century, and if the Conversion Ratio disclosed herein is less
than the final calculation of the Conversion Ratio, then
Century will be required to deliver to the Escrow Agent shares
of Century Stock ("Excess Shares") equal in value to the
shortfall. Amounts payable by the Shareholders will be
discharged by returning escrow shares to Century in the manner
described elsewhere herein. In the unlikely event that the
escrow shares are insufficient to reimburse Century fully,
Century will be free to pursue all or any of the Shareholders
directly for their respective pro rata share of the shortfall.
As described above, at the Closing Century will deliver
29,159 shares of Century Stock to Regions Bank of Louisiana,
Monroe, Louisiana (the "Escrow Agent"), which will hold these
shares and any subsequently delivered Excess Shares
(collectively, the "Escrow Shares") in accordance with the
Escrow Agreement to be entered into at the Closing. By virtue
of the approval of the Merger Proposal at the Special Meeting,
each Shareholder will be deemed to have agreed to all of the
terms and conditions of the Escrow Agreement (which agreement
will be confirmed by each such Shareholder by execution of the
Letter of Authorization).
Prior to the expiration of the Escrow Agreement, Escrow
Shares may be used to discharge the Shareholders' obligations
for any Post-Closing Liabilities other than those owed to the
Shareholders' Representative. Subject to certain exceptions,
the Shareholders' Post-Closing Liability will be discharged by
transferring to Century Escrow Shares having a market value as
nearly equal as possible to such liability.
In the absence of unresolved claims under the Merger
Agreement, the Escrow Agent will release one-half of the
Escrow Shares then remaining in escrow to the Shareholders'
Representative on the 12-month anniversary of the Effective
Date and one-half of the remaining shares six months later.
Unless extended in connection with an unresolved claim, the
Escrow Agreement will terminate on the 24-month anniversary of
the Effective Date, at which time all remaining shares of
Century Stock not subject to an unresolved claim will be
released to the Shareholders' Representative. The
Shareholders' Representative will be responsible for
distributing all Escrow Shares released to him to the
Shareholders on a pro rata basis. No assurance can be given
that any Escrow Shares will remain on the 12-, 18- or 24-month
anniversary dates. Subject to certain limited exceptions, the
contingent right of each Shareholder to receive such
distributions shall be nontransferable.
In the event the Shareholders become obligated to any
claimant for any Post-Closing Liability in an amount that
exceeds the value of the remaining Escrow Shares or any Post-
Closing Liability as to which Escrow Shares are unavailable,
the claimant may proceed against any or all of the
Shareholders to collect the remaining amount owed. Although
no Shareholder will be obligated to pay more than his pro rata
share of any such liability, there are no limitations on the
amount that a Shareholder may be obligated to pay in
connection with Post-Closing Liabilities. Accordingly, it is
possible that a Shareholder's Post-Closing Liabilities could
exceed the value of the Merger Consideration received by him.
Moreover, the release of Escrow Shares to the Shareholders on
the 12-, 18- and 24-month anniversaries of the Effective Date
will not eliminate or reduce the Shareholders' obligations to
pay Post-Closing Liabilities that may arise at a later date.
Each claimant will be free to pursue any or all of the
Shareholders in its sole discretion, and the refusal or
inability of a Shareholder to discharge his Post-Closing
Liability will not excuse any other Shareholder from his Post-
Closing Liability.
Dissenting shareholders who perfect their dissenters'
rights under Mississippi law will not be responsible for any
Post-Closing Liabilities. All other shareholders of
Mississippi-6 as of the Effective Time will be responsible for
such liabilities upon adoption of the Merger Proposal, even if
they fail to vote, abstain, or vote against the Merger
Proposal.
For additional information, see "The Merger Proposal -
Post-Closing Liabilities; Escrow Agreement."
Shareholders' Representative. By virtue of the approval
of the Merger Proposal at the Special Meeting, each
Shareholder will be deemed to have appointed David A. Bailey
to serve as his sole Shareholders' Representative with respect
to the matters set forth in the Merger Agreement and the
Escrow Agreement, including pursuing, defending, collecting
and settling adjustments to the Merger Consideration and
indemnification claims. For more information on David A.
Bailey and his rights and duties under the Merger Agreement
and the Escrow Agreement, see "The Merger Proposal -
Shareholders' Representative."
Agreement of Shareholders to Hold Century Stock. In
order to safeguard the tax-free treatment of the Merger, the
Merger Agreement obligates the Shareholders to hold as a group
sufficient amounts of Century Stock for a sufficient duration
to satisfy certain "continuity of interest" requirements
described further below. Prior to the Closing, Mississippi-6
intends to solicit the Mississippi-6 shareholders to execute
an agreement obligating each of them to hold at least one-half
of the shares of Century Stock issued to them in connection
with the Merger for at least two years after the Effective
Date. See "The Merger Proposal - Agreement of Shareholders to
Hold Century Stock."
Termination of Shareholders' Agreement. Mississippi-6
and Century have agreed to take certain actions designed to
terminate substantially all of the provisions of the
shareholders' agreement dated January 1, 1995 among the
Mississippi-6 shareholders. See "The Merger Proposal -
Termination of Shareholders' Agreement."
Certain Federal Income Tax Consequences. The Merger
will have the following principal federal income tax
consequences, which represent the views of Mississippi-6:
(i) The Merger has been structured to constitute a
tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"),
and, as a result, no gain or loss will be recognized by the
shareholders of Mississippi-6 who receive Century Stock in
exchange for their shares of Mississippi-6 Stock;
(ii) The payment of cash to Mississippi-6 shareholders
in lieu of fractional shares of Century Stock will be accorded
sale or exchange treatment under Section 302 of the Code; and
(iii) Any Mississippi-6 shareholder who exercises his
rights under Mississippi law to dissent to the Merger will be
treated as if his shares were redeemed.
Neither Century nor Mississippi-6 has sought or received
an opinion of tax counsel or other tax expert regarding the
tax consequences of the Merger. It is recommended that each
shareholder consult his own tax advisor concerning the
applicable federal, state and local income tax consequences of
the Merger. For further discussion regarding the foregoing,
see "The Merger Proposal - Certain Federal Income Tax
Consequences."
Procedures for Receiving Merger Consideration. In
connection with the mailing of this Information Statement,
each Mississippi-6 shareholder has been furnished with a
Letter of Authorization for use in authorizing the surrender
of their certificates representing Mississippi-6 Stock.
Immediately following the Effective Time, it is anticipated
that Society Shareholder Services, Inc., Dallas, Texas (the
"Exchange Agent"), will deliver to each Mississippi-6
shareholder, upon such shareholder's delivery to the Exchange
Agent of a duly completed Letter of Authorization, the Merger
Consideration payable to such shareholder under the terms and
conditions of the Merger Agreement. The execution of the
Letter of Authorization by each Shareholder will constitute
such Shareholder's acknowledgement that he will be bound by
certain of the terms and conditions of the Merger Agreement
and Escrow Agreement, each of which are described elsewhere
herein. Each Mississippi-6 shareholder is encouraged to
promptly complete and return the enclosed Letter of
Authorization in order that the Merger Consideration may be
distributed as soon as practicable after the Effective Time.
See "The Merger Proposal - Procedures for Receiving Merger
Consideration."
Other Terms of the Merger Agreement. In addition to the
receipt of shareholder approval and several other customary
closing conditions, Century's obligation to consummate the
Merger is subject to, among other things, (i) the aggregate
Mississippi-6 Stock held by dissenting Mississippi-6
shareholders being no more than 10% of all such stock
immediately prior to the Effective Time, (ii) the absence of a
material adverse change with respect to Mississippi-6, and
(iii) the termination of a services agreement between
Mississippi-6 and a company affiliated with it, the execution
and delivery of a transitional services agreement between
Mississippi-6 and such affiliated company, and the amendment
of a billing contract to which Mississippi-6 is a party. No
assurance can be given that the conditions to either party's
obligation to consummate the Merger can or will be satisfied
or waived. See "The Merger Proposal - Other Terms of the
Merger Agreement -- Regulatory Approvals and Other Closing
Conditions."
Mississippi-6 and the Principal Shareholders have
agreed, unless the Board of Directors of Mississippi-6 makes a
Fiduciary Determination (as defined below), to refrain from
soliciting or encouraging any acquisition proposal relating to
Mississippi-6 or engaging in discussions or negotiations with,
or furnishing any information to, any person that is
considering making an acquisition proposal. Mississippi-6 has
agreed to pay Century a termination fee of 5% of the value of
the Merger Consideration if, following the receipt of an
unsolicited bona fide acquisition proposal, the Merger
Agreement is terminated by Mississippi-6 as a result of a
Fiduciary Determination by the Board of Directors of
Mississippi-6. Prior to such termination, Century will be
permitted to match such acquisition proposal for a period of
five business days. The termination fee could have the effect
of discouraging a third party from pursuing an acquisition
proposal involving Mississippi-6. See "The Merger Proposal -
Other Terms of the Merger Agreement -- Non-Solicitation;
Termination Fee."
The Merger Agreement may be amended at any time before
or after its approval by Mississippi-6's shareholders, subject
to applicable law. Subject to certain exceptions, any party
may waive compliance with, among other things, any of the
conditions to its obligation to consummate the Merger. The
Merger Agreement may be terminated at any time prior to the
Effective Time by (i) the mutual consent of the parties, (ii)
Century or Mississippi-6 upon the occurrence or non-occurrence
of certain specified events, including a material breach by a
party of any representations, warranties or covenants that is
not or cannot be cured within 15 days after written notice of
such breach, or (iii) Mississippi-6 if the Board of Directors
of Mississippi-6 makes a Fiduciary Determination upon receipt
of an unsolicited bona fide acquisition proposal. See "The
Merger Proposal - Other Terms of the Merger Agreement --
Amendment, Waiver and Termination."
Dissenting Shareholders' Rights. By refraining from
voting in favor of the Merger Proposal and complying with
various other pre- and post-closing procedures that are
required by Article 13 of the Mississippi Business Corporation
Act and described under "The Merger Proposal - Dissenting
Shareholders' Rights," shareholders of Mississippi-6 will have
the right to dissent to the Merger, in which event, if the
Merger is consummated, they will be entitled to receive, in
lieu of the Merger Consideration payable under the Merger
Agreement, a cash payment equal to the "fair value" of their
respective shares of Mississippi-6 Stock, which will be
determined by Mississippi-6 and such shareholder after the
Effective Date or, in the absence of agreement by such
parties, will be determined by judicial appraisal. The
exercise of these rights could result in a judicial
determination that the fair value of a dissenting
shareholder's shares is higher or lower than the value of the
Merger Consideration payable to non-dissenting shareholders in
connection with the Merger. Shareholders who oppose the
Merger are urged to read "The Merger Proposal - Dissenting
Shareholders' Rights" in its entirety.
Interests of Certain Persons
Prior to and after the Closing, Mississippi-6 will make
certain payments to an affiliated company that provides
cellular management services to Mississippi-6 and other
cellular companies. See "The Merger Proposal - Termination
and Amendment of Certain Agreements."
Century and Mississippi-6
Century. Century is a regional diversified
telecommunications company that is primarily engaged in
providing local telephone and cellular mobile telephone
services largely in the central north-south corridor of the
United States. During 1994, telephone operations provided 72%
of Century's consolidated revenues, with mobile communications
operations providing the balance. Century's principal
executive offices are located at 100 Century Park Drive,
Monroe, Louisiana, 71203, and its telephone number is (318)
388-9500. See "Information About Century."
Mississippi-6. Mississippi-6 owns and operates a non-
wireline cellular telephone system servicing an eight-county
rural area in central Mississippi northeast of Jackson,
Mississippi, which has been designated by the FCC as the
"Mississippi-6-Montgomery" Rural Service Area (the "RSA").
The day-to-day operations of the system are managed by an
affiliate of Mississippi-6. Mississippi-6's principal
executive offices are located at 1410 Livingston Lane,
Jackson, Mississippi, 39213-8003 and its telephone number is
(601) 362-2200. See "Information About Mississippi-6."
Market Prices
On April 17, 1995 (the trading day preceding the
execution of the Merger Agreement) and on July 10, 1995 (the
trading day preceding the date of this Information Statement),
the closing per share sales price of Century Stock, as
reported on the New York Stock Exchange Composite Tape, was
$29-7/8 and $________, respectively. No assurance can be
given as to the market price of Century Stock on the Effective
Date. Because the market price of Century Stock may increase
or decrease, you are urged to obtain current market
quotations. See "Information About Century - Price Range of
Stock." The Mississippi-6 Stock is not traded in any
established public market.
Comparative Per Share Data
Set forth below with respect to the Century Stock and
Mississippi-6 Stock is certain unaudited per fully diluted
common share data presented on a historical, pro forma
consolidated and pro forma equivalent basis. The information
set forth below should be read in conjunction with Century's
financial statements incorporated herein by reference and
Mississippi-6's financial statements included elsewhere
herein.
<TABLE>
<CAPTION>
As of or for As of or for
Year Ended Three Months Ended
December 31, 1994 March 31, 1995
_________________ __________________
<S> <C> <C>
Century Stock<FN1>
Book value
Historical $12.09 $13.49
Pro forma consolidated<FN1> $12.09 $13.49
Cash dividends
Historical $.32 $.0825
Pro forma consolidated<FN1> $.32 $.0825
Net income
Historical $1.80 $.47
Pro forma consolidated<FN1> $1.80 $.47
Mississippi-6 Stock
Book value
Historical $145.98 $56.02
Pro forma equivalent<FN2> $6,697.19 $7,472.71
Cash dividends
Historical -0- -0-
Pro forma equivalent<FN2> $177.26 $45.70
Net income (loss)
Historical $(120.23) $(89.96)
Pro forma equivalent<FN2> $997.10 $260.35
</TABLE>
__________________
<FN1> Because pro forma financial information is not required
to be presented herein in accordance with the rules and
regulations of the Commission, Century's historical
amounts have also been reflected as pro forma
consolidated amounts.
<FN2> Calculated by multiplying the Century historical amounts
by the Conversion Ratio of 583.1740. This Conversion
Ratio is subject to adjustment after the Effective Date.
See "The Merger Proposal - Post-Closing Liabilities;
Escrow Agreement -- Post-Closing Adjustment of Merger
Consideration."
Risk Factors
For a discussion of certain investment considerations
associated with the Merger Proposal, see "Risk Factors."
______________________
All share and per share data relating to the Century
Stock contained in this Information Statement has been
adjusted for a stock split effected as a 50% stock dividend
distributed in December 1992. When used herein with respect
to any particular entity, the term "pop" means the population
of a licensed cellular telephone market multiplied by such
entity's proportionate equity interest in the licensed
operator thereof. Unless otherwise defined in the following
pages, capitalized terms used herein will have the meanings
ascribed in pages i to xi hereof. Certain key terms have been
defined in multiple locations.
<PAGE>
RISK FACTORS
Shareholders of Mississippi-6 should consider the following
investment considerations in determining whether to vote in favor of the
Merger Proposal and to acquire the Century Stock offered by this
Information Statement.
Considerations Relating to the Merger
Agreement by Principal Shareholders to Vote for the Merger
Proposal. The Principal Shareholders own of record approximately 62% of
the outstanding Mississippi-6 Stock, which enables them to control
Mississippi-6. Subject to certain exceptions and limitations described
herein, the Principal Shareholders have agreed to vote all of their
shares in favor of the Merger Proposal, which votes in and of themselves
will be sufficient to approve the Merger Proposal. See "The Special
Meeting - Vote Required." For a discussion of the rights of
Mississippi-6 shareholders to dissent to the Merger Proposal, see "The
Merger Proposal - Dissenting Shareholders' Rights."
Post-Closing Liabilities; Escrow Agreement. Under the Merger
Agreement, each Shareholder will be required to pay his pro rata share
of any liabilities that may be asserted after the Effective Time in
connection with (i) any indemnity claims made by Century or its
affiliates pursuant to the Merger Agreement, (ii) any post-closing
adjustment to the Conversion Ratio that reduces the Merger
Consideration, (iii) costs associated with tax audits relating to
taxable periods ending on or before the Effective Date, (iv) the
incurrence of certain expenses by the Escrow Agent and (v) the
incurrence of certain expenses by the Shareholders' Representative
(collectively, "Post-Closing Liabilities"). At the Closing, 29,159
shares of Century Stock, which represents 5% of the aggregate number of
shares of Century Stock issuable in connection with the Merger, will be
placed in escrow pursuant to the terms of the Escrow Agreement. In the
event the Shareholders become obligated to any claimant for any Post-
Closing Liability in an amount that exceeds the value of the remaining
Escrow Shares, the claimant may proceed against any or all Shareholders
to collect their respective pro rata share of the shortfall. See "The
Merger Proposal - Post-Closing Liabilities; Escrow Agreement."
Restrictions on Transferability. In order to safeguard the tax-
free treatment of the Merger, the Merger Agreement obligates the
Shareholders as a group to hold sufficient amounts of Century Stock for
a sufficient duration to satisfy certain "continuity of interest"
requirements. Prior to Closing, Mississippi-6 intends to solicit the
Mississippi-6 shareholders to execute an agreement obligating each of
them to hold at least one-half of the shares of Century Stock issued to
them in connection with the Merger for at least two years after the
Closing Date. See "The Merger Proposal - Agreement of Shareholders to
Hold Century Stock." For a discussion of certain additional
restrictions on resales of Century Stock by affiliates of Mississippi-6
under the federal securities laws, see "The Merger Proposal - Resales of
Century Stock."
Opposition of Mississippi-6's President to the Merger Proposal.
William M. Mounger, II, the President and a director of Mississippi-6,
voted against ratification of a preliminary agreement with Century at a
March 28, 1995 meeting of the Board of Directors of Mississippi-6, and
has advised that he intends to vote against the Merger Proposal at the
Special Meeting but does not intend to exercise dissenters' rights under
Mississippi law. For further information on Mr. Mounger's views, see
"The Merger Proposal - Background of the Merger."
Considerations Relating to Century Stock
Events Affecting the Telecommunications Industry. The
telecommunications industry is currently undergoing various regulatory,
competitive and technological changes that make it impossible to
determine the form or degree of future regulation and competition
affecting Century's telephone and mobile communications operations. The
Federal Communications Commission ("FCC") and a number of state
regulatory commissions have begun to reduce the regulatory oversight of
local exchange telephone companies ("LECs"). Coincident with this
movement toward reduced regulation is the introduction and encouragement
of local exchange competition by the FCC, various state regulatory
commissions and others. These changes have accelerated the growth of
certain companies providing competitive access and other services that
compete with LECs' services and led to the announcement by certain
interexchange carriers and cable television companies of their desire to
enter the local telephone business, particularly in larger markets.
Wireless telephone services are also expected to increasingly compete
with LECs. The FCC has recently allocated additional frequency spectrum
for mobile communications technologies that will or may be competitive
with cellular, including Personal Communications Services (for which the
FCC began to auction operating licenses in late 1994) and mobile
satellite services. The FCC has also authorized certain specialized
mobile radio service licensees to configure their systems so as to
operate in a manner similar to cellular systems. Some of these
licensees have announced their intention to create a nationwide mobile
communications system to compete with cellular systems. In addition, in
connection with the well-publicized convergence of telecommunications,
cable, video, computer and entertainment businesses, several large
companies have announced plans to offer products that would
significantly enhance current communications and data transmission
services and, in some instances, introduce new two-way video,
entertainment, data, consumer and other multimedia services.
In 1994 the United States House of Representatives passed two
telecommunications bills that proposed to substantially alter the
regulatory framework of the telecommunications industry by, among other
things, promoting local exchange competition and removing certain
barriers of entry to several lines of telecommunications businesses. A
companion bill failed to pass in the United States Senate. In mid-June
1995, the United States Senate passed a communications bill that, among
other things, promotes telecommunications competition and deregulation
to a greater degree than the bills that passed the House in 1994.
Developing Cellular Industry; Value Associated With Cellular
Operations. The cellular industry has a relatively limited operating
history, and there continues to be uncertainty regarding its future.
Among other factors, there is uncertainty regarding (i) the continued
growth in the number of customers, (ii) the usage and pricing of
cellular services, particularly as market penetration and competition
increase, (iii) the number of customers who will terminate service each
month, and (iv) the impact of changes in technology, regulation and
competition (see "-- Events Affecting the Telecommunications Industry").
The market value of cellular interests is frequently expressed on
the basis of the number of pops owned by a cellular provider. The
population of a particular cellular market, however, does not
necessarily bear a direct relationship to the number of subscribers or
the revenues that may be realized from the operation of the related
cellular system. The future market value of Century's cellular
interests will depend on, among other things, the success of its
cellular operations.
Other Considerations. For further information on regulatory,
competitive and technological changes affecting Century's cellular and
telephone operations, see the documents filed by Century pursuant to the
Exchange Act that are incorporated by reference herein. See
"Incorporation of Certain Documents by Reference" and "Available
Information."
THE SPECIAL MEETING
This Information Statement has been furnished in connection with
the special meeting of Mississippi-6's shareholders to be held at the
time and place specified in the accompanying Notice of Special Meeting
of Shareholders, and at any adjournments thereof (the "Special
Meeting"). Only holders of record of Mississippi-6 Stock at the close
of business on the Record Date are entitled to notice of and to vote at
the Special Meeting.
Purpose of Special Meeting
The purpose of the Special Meeting is to consider and vote upon a
proposal (the "Merger Proposal") to approve the Agreement and Plan of
Merger dated as of April 18, 1995, as amended (the "Merger Agreement"),
by and among Century, Sub, Mississippi-6, and David A. Bailey, Dwight S.
Bailey, JoAnn Bailey, Lori A. Bailey, James T. Thomas, IV, Sanford C.
Thomas and Wirt A. Yerger, III, who in the aggregate own of record
approximately 62% of the outstanding Mississippi-6 Stock (the "Principal
Shareholders"), along with the accompanying Escrow Agreement. The
Merger Agreement provides, among other things, that (i) Sub will merge
with and into Mississippi-6 (the "Merger") in a transaction structured
as a tax-free reorganization, (ii) each outstanding share of
Mississippi-6 Stock (other than those held by shareholders who perfect
dissenters' rights under Mississippi law) will be converted into
583.1740 shares of Century Stock and (iii) each non-dissenting
Mississippi-6 shareholder will agree to assume responsibility for
certain post-closing liabilities, to hold his shares of Century Stock to
safeguard the tax-free treatment of the Merger, to appoint David A.
Bailey (the "Shareholders' Representative") as his sole representative
for certain purposes specified in the Merger Agreement and Escrow
Agreement, and to relinquish certain rights under the current
shareholders' agreement among the Mississippi-6 shareholders, in each
case on the terms and conditions specified herein. See "The Special
Meeting - Purpose of Special Meeting" and "The Merger Proposal."
Record Date and Quorum
Mississippi-6's Board of Directors has set the Record Date as the
date to determine those record holders of Mississippi-6 Stock entitled
to notice of and to vote at the Special Meeting. On that date there was
outstanding 1,000 shares of Mississippi-6 Stock, each of which is
entitled to one vote with respect to each matter to be voted upon at the
Special Meeting.
Mississippi-6's Bylaws provide that the holders of a majority of
the issued and outstanding Mississippi-6 Stock must attend the Special
Meeting in person or be duly represented by proxy in order for a quorum
to be properly constituted at such meeting.
Vote Required
Approval of the Merger Proposal requires the affirmative vote of
the holders of a majority of the total voting power of the Mississippi-6
Stock. Abstaining with respect to the Merger Proposal will have the
same effect as a negative vote. Pursuant to the Merger Agreement, the
Principal Shareholders, who as of the Record Date owned of record shares
of Mississippi-6 Stock entitling them to cast approximately 62% of
Mississippi-6's total voting power (which votes are in and of themselves
sufficient to approve the Merger Proposal without the vote of any other
Mississippi-6 shareholder), have agreed to vote all their shares of
Mississippi-6 Stock in favor of the Merger Proposal, unless (i) between
April 18, 1995 and the date of the Special Meeting there has been a
material adverse change in Century, which is defined in the Merger
Agreement to exclude, among other things, decreases in the trading price
of Century Stock that do not relate to events or conditions affecting
Century, or (ii) the Merger Agreement has been terminated in accordance
with its terms. After taking into account shares registered in the
names of immediate family members of certain of the Principal
Shareholders, as of the Record Date the Principal Shareholders
beneficially owned (determined in accordance with the federal securities
laws) approximately 66.7% of the Mississippi-6 Stock. See "Information
About Mississippi-6 - Security Ownership of Certain Beneficial Owners
and Management."
Directors and executive officers of Mississippi-6 beneficially own
approximately 62% of the Mississippi-6 Stock. Each of these individuals
has advised Mississippi-6 that he intends to vote in favor of the Merger
Proposal, other than William M. Mounger, II, the President and a
director of Mississippi-6. Based on concerns described elsewhere
herein, Mr. Mounger voted against ratification of a preliminary
agreement with Century at a March 28, 1995 meeting of the Board of
Directors of Mississippi-6, and has advised that he intends to vote
against the Merger Proposal at the Special Meeting but does not intend
to exercise dissenters' rights under Mississippi law. See "The Merger
Proposal - Background of the Merger." For information concerning the
amount of Mississippi-6 Stock beneficially owned by Mississippi-6's
directors, executive officers and certain shareholders, see "Information
About Mississippi-6 - Security Ownership of Certain Beneficial Owners
and Management."
Neither the laws of Louisiana, the jurisdiction in which Century
is incorporated, nor the rules of the New York Stock Exchange require
that the Merger Agreement or the issuance of Century Stock thereunder be
approved by the Century shareholders.
Neither Century nor Mississippi-6 is asking any Mississippi-6
shareholder for a proxy and all such shareholders are requested to
refrain from sending one to Century or Mississippi-6.
THE MERGER PROPOSAL
Consummation of the Merger will be effected in accordance with the
terms and conditions set forth in the Merger Agreement. The following
brief description of the Merger Agreement and the Merger does not
purport to be complete and is qualified in its entirety by reference to
the Merger Agreement, a copy of which is attached hereto as Appendix A
and is incorporated herein by reference.
For a description of the rights of shareholders to dissent to the
Merger Proposal under Mississippi law, see "- Dissenting Shareholders'
Rights." Hereinafter, shareholders of Mississippi-6 who perfect their
dissenters' rights under Mississippi law are occasionally referred to as
"dissenting shareholders" and all other shareholders are occasionally
referred to as "non-dissenting shareholders."
General Description of the Merger
The Merger Agreement provides that at the Effective Time (i) Sub
will merge into Mississippi-6, with Mississippi-6 becoming the surviving
corporation and a wholly-owned subsidiary of Century, and (ii) each
outstanding share of Mississippi-6 Stock held by non-dissenting
shareholders will be converted into 583.1740 shares of Century Stock
(the "Conversion Ratio"). Under the Merger Agreement, each non-
dissenting shareholder will be required to pay his pro rata share of
certain liabilities that may be asserted after the Effective Time,
including any indemnity claims by Century and its affiliates and any
post-closing adjustments of the Conversion Ratio that reduce the Merger
Consideration. See "- Conversion of Mississippi-6 Stock."
Based upon the number of shares of Century Stock and Mississippi-6
Stock outstanding as of the Record Date, approximately 58.9 million
shares of Century Stock will be outstanding immediately following the
Effective Time, of which approximately 583,000 shares (.99%) will be
held by or on behalf of the former holders of Mississippi-6 Stock.
Effective Time of Merger
Notwithstanding anything to the contrary in the Merger Agreement,
the Merger will become effective at the time the parties file with the
Secretary of State of Mississippi a certificate of merger (such date and
time being hereinafter referred to as the "Effective Date" and
"Effective Time"). The Merger Agreement contemplates that the parties
will schedule a closing (the "Closing") to consummate the Merger which
shall be no later than the tenth business day following the date upon
which the last to occur of the conditions to the parties' obligations is
fulfilled or duly waived. The parties intend to hold the Closing and
file the certificate of merger immediately after the Special Meeting
(the "Closing Date"). See "- Other Terms of the Merger Agreement --
Regulatory Approvals and Other Closing Conditions."
Background of the Merger
Formation of Mississippi-6. Mississippi-6 was organized as a
privately-held corporation in November 1990 to purchase for $2.2 million
the FCC non-wireline license that entitles the holder to construct and
operate a cellular telephone system serving the RSA. Mississippi-6 was
organized by the principals of Mercury Communications Company
("Mercury"), a privately-held corporation formed in August 1990 to
manage cellular systems. During late 1990 and early 1991, the
principals of Mercury contributed approximately 10% of Mississippi-6's
initial capitalization of $2.4 million, and obtained the balance from
business associates and friends. The purpose of the group's investment
was to participate in the cellular growth potential of the RSA. At the
time of investment, the investor group understood that Mercury would
manage Mississippi-6's cellular system and that financing constraints
would limit Mississippi-6's ability to engage in any business other than
developing the RSA. For additional information regarding Mississippi-6
and Mercury, see "Information About Mississippi-6."
Events Leading Up to Decision to Sell. Since the organization of
Mississippi-6 in late 1990, management has been principally engaged in
providing for the financing, construction and operation of Mississippi-
6's cellular telephone system. Although Mississippi-6's management has
from time to time reviewed the company's potential for growth and
expansion, pursuit of these alternatives has been limited by financing
and capital constraints. Beginning in 1991, Mississippi-6's lenders
have required the pledge of substantially all of Mississippi-6's assets
and all of the Mississippi-6 Stock. These financing arrangements have
hindered other financing opportunities and significantly limited the
liquidity of the Mississippi-6 Stock. Moreover, Mississippi-6's
principal shareholders have from time to time expressed an interest in
maximizing the value of their investment through a sale or business
combination, and have periodically instructed management to monitor the
conditions under which shareholder value could be maximized.
During 1994, several of the principal shareholders of Mississippi-
6 concluded that management should actively explore the possibility of a
sale or business combination. On September 30, 1994 the Board of
Directors authorized Wirt A. Yerger, III, Vice President of
Mississippi-6, and William M. Mounger, II, President and a director of
Mississippi-6, to attempt to sell Mississippi-6 prior to November 17,
1994 for at least $150 per pop, which was understood to be a "gross"
purchase price target that did not reflect any reductions that might be
requested by a potential purchaser to compensate it for assuming
Mississippi-6's indebtedness. These decisions by the principal
shareholders and the Board were motivated principally by a desire to
enhance the diversification and liquidity of the shareholders'
investment. Accordingly, management focused in particular on pursuing
business combinations in which the Mississippi-6 shareholders could
receive publicly-traded shares of a larger telecommunications company,
preferably in a tax-free reorganization.
Solicitation of Potential Purchasers. Beginning in early October
1994, Mr. Yerger began contacting telecommunications companies believed
to have a possible interest in acquiring Mississippi-6. Over the next
couple of months Mr. Yerger contacted seven potential buyers, four of
which (including Century) expressed an interest in a possible
transaction. Upon executing non-disclosure agreements, three of these
interested parties (including Century) were provided access to further
information regarding Mississippi-6 in the form of a confidential
brochure prepared by Mercury at the direction of Mr. Yerger.
Over the next several weeks, Mr. Yerger engaged in a dialog with
the three interested parties. During these conversations Mr. Yerger
advised each party that, while any offer would be welcomed, the Board
had established $150 per pop as the "gross" purchase price at which the
Board would be prepared to approve a transaction and recommend it to
Mississippi-6's shareholders. In certain of these conversations, Mr.
Yerger acknowledged that the Board would be similarly prepared to accept
a "net" offer of $125 per pop, calculated after giving effect to all
reductions or offsets for Mississippi-6's indebtedness requested by the
potential purchaser. Although each interested party was encouraged to
communicate the price at which it would be interested in acquiring
Mississippi-6, none of the interested parties submitted an offer prior
to expiration of the November 17, 1994 deadline established by the Board
at its September 30, 1994 meeting. With the acknowledgement of two of
Mississippi-6's directors and the knowledge of the third director (but
without formal action by the Board at this time), Mr. Yerger continued
the sales process after November 17, principally with Century, which
showed the greatest interest in a transaction and which owns an adjacent
cellular market. As indicated below under "-- Negotiations With
Century," Century submitted an oral offer to acquire Mississippi-6 in
late December 1994.
In connection with refinancing its debt in early 1995,
Mississippi-6 was requested to provide the lender with an appraisal
indicating the fair market value of Mississippi-6's cellular telephone
system. In response, Mississippi-6 engaged Columbia Capital
Corporation, an investment banking firm headquartered in Alexandria,
Virginia ("Columbia"), based upon Columbia's nationally-recognized
experience in advising, valuing and selling cellular companies. In its
letter to the lender dated February 17, 1995, Columbia stated that "it
is reasonable to conclude that the current market value for
Mississippi-6 is at least $15,000,000 ($81.78 per pop) and probably
substantially higher." The letter states that it is not intended to
serve as a formal appraisal but reflects Columbia's opinion regarding
market valuation based on its experience in representing buyers and
sellers of cellular interests. In connection with this loan
refinancing, Mississippi-6 consulted Columbia regarding its ongoing
sales process but did not request nor receive any valuation opinions or
studies from Columbia other than the February 17, 1995 letter.
Mississippi-6 has agreed to pay Columbia $2,000 for its services in
connection with the loan refinancing and $2,000 for the additional
consulting.
Neither Mr. Yerger nor any other officer of Mississippi-6 receives
any compensation in their capacities as officers and none received any
compensation for their additional duties in connection with selling
Mississippi-6. Management's analysis of Mississippi-6's value was
conducted principally by Mr. Yerger, based largely on his review of
recent sales prices for various U.S. cellular properties. In connection
with this review, Mr. Yerger relied upon (i) publicly-available data on
recent cellular sales prices set forth in newsletters published by Paul
Kagan Associates, Inc., a media research firm with nationally-recognized
expertise in broadcast, media and telecommunications businesses, (ii)
his discussions with cellular market owners, cellular brokers and other
knowledgeable sources and (iii) his personal business experience as an
officer of several cellular companies. Mr. Yerger also reviewed certain
pro forma financial information and discounted cash flow analysis
prepared by Mississippi-6 or Mercury, as well as publicly-available
reports on Century prepared by certain brokerage companies. For further
information regarding Mississippi-6's management, see "Information About
Mississippi-6 - Security Ownership of Certain Beneficial Owners and
Management."
Negotiations With Century. Although Mississippi-6 encouraged
continued contact with each potential purchaser other than Century,
after November 1994 these conversations were sporadic and limited in
nature. Consequently, beginning in late 1994 Mississippi-6 began to
engage in exclusive negotiations with Century. On December 7, 1994, Mr.
Yerger and David A. Bailey, Vice President and a director of
Mississippi-6, met with Century's management to discuss the possibility
of a tax-free reorganization. On December 8, 1994 the Board of
Directors received a report on the sales process and authorized
management to continue their negotiations. In late December 1994,
Century orally offered to acquire Mississippi- 6 at a price
significantly below management's net target price of $125 per pop. In
early 1995, management continued to negotiate with Century in an effort
to increase the offer price and encouraged Century to submit an enhanced
offer in writing. In response, in late February 1995 Century submitted
a written offer to acquire Mississippi-6 in exchange for $19 million of
stock, subject to a positive adjustment for Mississippi-6's construction
costs and a negative adjustment for Mississippi-6's net indebtedness.
Both these proposed adjustments were similar to the adjustments
subsequently agreed to by the parties and described under "- Post-
Closing Liabilities; Escrow Agreement -- Post-Closing Adjustment of
Merger Consideration." Due principally to the concerns of William M.
Mounger, II regarding the adequacy of this offer, management briefly
discussed other alternatives, including the possibility of retaining
Columbia to auction Mississippi-6 individually or as a package with
other minority-owned cellular interests controlled by Mississippi-6's
principals and other unrelated cellular markets.
In late February 1995, Mr. Mounger left the country on a 12-day
trip to Europe to pursue certain personal business interests. During
this time, the remaining officers determined that it was in Mississippi-
6's best interests to continue to pursue negotiations with Century and
attempt to enhance Century's offer price. In reaching this
determination, management considered the costs that would be associated
with retaining Columbia to auction Mississippi-6, as well as the other
factors described under "- Reasons for the Merger and Recommendation."
Following additional negotiations, management advised Century that it
would likely retain Columbia to auction Mississippi-6 if Century did not
raise its offer prior to the close of business on March 3, 1995.
Following additional negotiations, Century raised its offer
approximately $750,000 and agreed to reimburse Mississippi-6 for
additional construction costs, and on March 3, 1995 Century,
Mississippi-6 and the Principal Shareholders entered into a letter of
intent (the "Letter of Intent") under which they agreed to negotiate a
definitive merger agreement. After March 3, 1995, management of
Mississippi-6 attempted to negotiate additional increases in the
purchase price, but these efforts were unsuccessful.
Management of Mississippi-6 believes that the Merger Consideration
payable in connection with the Merger implies a "gross" per pop value of
$112.97 (determined by dividing the sum of Century's $19.75 million
price plus its reimbursement of approximately $924,000 of construction
costs by the RSA's population of 183,000) and a "net" per pop value of
$91.40 (determined in like manner after subtracting Mississippi-6's Net
Indebtedness from the gross price). See "- Post-Closing Liabilities;
Escrow Agreement -- Post-Closing Adjustment of Merger Consideration."
Authorization of Merger Agreement. On March 28, 1995 the Board of
Directors met to discuss the most recent draft of the Merger Agreement.
At such meeting the Board received reports on the results of the sales
process, the terms of the Letter of Intent and the issues still being
negotiated with Century. Following discussion of each of these matters,
by a vote of 2 to 1 (with William M. Mounger, II opposed), the Board
ratified the Letter of Intent and authorized management to proceed
towards completing its negotiation of the Merger Agreement. Following
the completion of negotiations in early April 1995, on April 14 the
Board voted unanimously to authorize the execution of the Merger
Agreement. The Merger Agreement was signed as of April 18 in
substantially the same form presented to the Board at its April 14
meeting.
From time to time throughout the entire sales process, management
solicited and received input from shareholders who are neither directors
nor officers of Mississippi-6. Management believes that these
communications assisted them in their efforts to negotiate a business
combination that is in the best interests of Mississippi-6 and its
shareholders. In addition, between each respective Board meeting, the
directors and officers of Mississippi-6 conversed from time to time to
provide updates and confer on the sales process.
Opposition of Mississippi-6's President. Since late 1994, William
M. Mounger, II has expressed concerns regarding the sales process. Mr.
Mounger has been principally concerned with the amounts offered by
Century, which he believes are inadequate. Mr. Mounger has also
expressed concern regarding the process employed in selling Mississippi-
6. In particular, Mr. Mounger was troubled by management's failure to
consult with him or convene a Board meeting prior to the execution of
the Letter of Intent and with the comprehensiveness of management's
discussions with other potential buyers. Upon returning from his
extended trip abroad, Mr. Mounger furnished each shareholder with a
letter dated March 13, 1995 detailing his concerns. The full text of
Mr. Mounger's March 13 letter is reproduced below:
* * * * * * * *
When I was traveling abroad last week, I
learned that the MS-6 Board had entered into a
Letter of Intent to merge MS-6 with Century
Telephone Enterprises. It is very disturbing
that certain individuals would enter into a
Letter of Intent to sell the market without the
free and open discussion of a Board meeting.
As a Board member, President, and
shareholder, I must state that this merger is
not in the best interest of the Shareholders.
As a Board, we had earlier voted not to accept
any offers less than $150 per pop. Although I
would agree that $150/pop is on the high side, I
do believe that we could have obtained an offer
of $135/pop. Therefore, I strongly believe we
have left $30/pop or $5,400,000 on the table.
By correctly working the market and bringing
other players into the bidding, we could have
obtained offers in this range. A lack of
patience has cost value to shareholders.
Since it appears a majority of the
shareholders are in favor of the present deal, I
will support the wishes of the majority.
However, we should not acquiesce on any
negotiating points as we negotiate the final
documents. I also trust that no one will commit
the corporation in such a manner ever again.
* * * * * * * *
At the March 28, 1995 meeting of the Board of Directors of
Mississippi-6, Mr. Mounger reiterated the concerns expressed in his
March 13 letter and voted against ratification of the Letter of Intent.
Mr. Mounger has advised Mississippi-6 that he intends to cast a vote
against the Merger Proposal at the Special Meeting but does not intend
to exercise dissenters' rights under Mississippi law. Mr. Mounger has
further advised that his execution of the Merger Agreement (and his vote
as a director on April 14, 1995 to authorize such action) constituted
his acknowledgement that execution of the Merger Agreement was
appropriate in light of the majority views of management, but in no way
signifies his support of the Merger Proposal.
Other Matters. As of June 1, 1995, a subsidiary of Century
entered into a definitive agreement to sell its Austin, San Antonio and
San Marcos, Texas paging assets to Wirt A. Yerger, III or one of his
affiliates. Century initially attempted to sell these assets in early
1995 to a large telecommunications company (the "Other Company") that
holds certain "first-refusal" purchase rights, but the parties were
unable to agree upon price. Thereafter, Century determined that it
would most likely be necessary to incur the expense of retaining a
broker to identify interested purchasers for these assets, unless it
could sell them directly to Mr. Yerger, who had informed Century of his
desire to expand his paging holdings in December 1994. As a result, in
mid-March 1995 (after the Letter of Intent was executed but prior to the
execution of the Merger Agreement), Century advised Mr. Yerger that it
was willing to discuss a sales transaction for a limited period, and on
March 31, 1995 Century furnished Mr. Yerger with evaluation materials
regarding its Texas paging assets. Although some preliminary
discussions regarding the purchase price ensued in mid-April 1995, most
of the substantive negotiations were conducted in late April after the
Merger Agreement was executed. On April 28, 1995 Century agreed in
principal to sell these properties to Mr. Yerger, subject to the first-
refusal rights of the Other Company. Under both the preliminary and
definitive sales agreements, Mr. Yerger agreed to purchase these assets
for the sum of (i) $225 per paging customer whose bill is not more than
60 days delinquent (with lesser amounts being payable for delinquent
customers) and (ii) Century's costs for pager inventory in good working
condition. As of May 31, 1995, Century had approximately 8,500 paging
customers in these markets, approximately 95% of which are not
delinquent. On June 21, 1995 the Other Company exercised its first-
refusal rights to purchase these assets. Accordingly, Mr. Yerger will
be unable to purchase these assets unless the sales transaction with the
Other Company is not completed.
Although Century and Mr. Yerger commenced discussions regarding
the sale of these paging assets prior to the execution of the Merger
Agreement on April 18, 1995, Mississippi-6 is unaware of these
discussions having any impact on the negotiation or approval of the
Merger Agreement. First, the purchase price that Mr. Yerger agreed to
pay for the Texas paging assets was derived from arms' length
negotiations and is believed by Mississippi-6 and Century to be within
the range of prices that could reasonably be expected to be offered by
other bidders. Second, most of the substantive negotiations occurred
after the Merger Agreement was signed on April 18, 1995, and at no time
during any of these negotiations did the price offered by Mr. Yerger for
the paging assets differ materially from the price ultimately agreed to.
Third, the pricing structure and other key terms set forth in the Merger
Agreement were established in early March 1995 in the Letter of Intent,
and the subsequent negotiation of the Merger Agreement was limited
principally to legal and non-monetary issues. Fourth, throughout the
entire period of his negotiations with Century, Mr. Yerger was aware
that his proposed acquisition of the Texas paging assets was subject to
the potential first-refusal purchase rights of the Other Company, which
had previously expressed a clear interest in acquiring these assets.
The Board of Directors of Mississippi-6 was not informed of Mr.
Yerger's preliminary or definitive agreements with Century until early
June 1995. At a telephonic Board meeting held on June 29, 1995 (with
Sanford C. Thomas absent), the Board unanimously determined that
Mississippi-6 would not have pursued a purchase of Century's Texas
paging assets had Mr. Yerger offered such transaction to Mississippi-6
when he first became aware of it in March 1995, principally due to the
recognition that Century would have no interest in selling its
discontinued operations to a company it proposed to acquire, but also in
light of Mississippi-6's limited corporate objectives and its financing
constraints. See "-- Formation of Mississippi-6" and "-- Events Leading
Up to Decision to Sell." The Board further determined that it had no
objection to Mr. Yerger pursuing this opportunity in his individual
capacity in the event the Other Company does not complete its proposed
purchase. Finally, the Board determined that the disclosures of Mr.
Yerger's discussions with Century would have no impact on the Board's
recommendation of the Merger Proposal. See "- Reasons for the Merger
and Recommendation."
Reasons for the Merger and Recommendation
The Board of Directors has determined that the Merger is in the
best interests of Mississippi-6 and its shareholders, and has approved
the Merger Proposal and the transactions contemplated thereby. The
Board principally considered the following factors in support of the
conclusions reached: (i) the limited diversification and liquidity
offered by the Mississippi-6 Stock, (ii) the desire of a substantial
majority of the shareholders to dispose of their shares at the highest
price available, (iii) attractive valuations of cellular properties in
the current equity and corporate control markets, coupled with
uncertainty regarding future valuations, (iv) valuations of recent
comparable cellular acquisitions compared with the value of Century's
offer to acquire Mississippi-6, (v) the value of Century's offer in
relation to the relatively small initial investment made by the
shareholders in late 1990 and early 1991 and to the value of
Mississippi-6 as determined by Columbia Capital Corporation in
connection with Mississippi-6's loan refinancing in early 1995, (vi)
competitive, technological and regulatory changes in the
telecommunications industry requiring substantial future investment and
incurrence of additional debt, (vii) Mississippi-6's limited options,
due principally to financing and capital constraints, for expanding its
operations or maximizing shareholder value in any manner other than
through a sale or business combination, (viii) the unlikelihood of
receiving an offer better than Century's in light of the results of
management's discussions with other potential purchasers, coupled with
the provisions of the Merger Agreement that permit Mississippi-6 to
terminate the Merger Agreement under certain circumstances in connection
with its receipt of a higher, unsolicited acquisition offer, (ix)
information with respect to the financial condition, earnings,
dividends, business, operations, assets, management and prospects of
Century and Mississippi-6 (including the prospects of Mississippi-6 if
it continued as an independent entity) and the historical price
performance of Century Stock and (x) the opportunity afforded to the
Mississippi-6 shareholders under the Merger Agreement to exchange their
shares on a tax-free basis for an ownership interest in Century, which
will provide such shareholders with a continuing interest in a
telecommunications company that has greater financial, technical and
marketing resources. At no time between the Board authorization of the
sales process in September 1994 and the date hereof has Mississippi-6
retained any financial advisers to assist it in connection with the sale
of Mississippi-6 (other than the limited engagement of Columbia Capital
Corporation). For additional information (including the opposition to
the Merger Proposal by Mississippi-6's President), see "- Background of
the Merger."
The Board of Directors of Mississippi-6 recommends that you vote
in favor of the Merger Proposal.
Conversion of Mississippi-6 Stock
At the Effective Time, each outstanding share of Mississippi-6
Stock held by non-dissenting shareholders will be converted into
583.1740 shares of Century Stock. No fractional shares of Century Stock
will be issued in connection with the Merger. In lieu thereof, each
shareholder of Mississippi-6 otherwise entitled to a fractional share
will receive an amount of cash (without interest) equal to such fraction
multiplied by $28.68 (which represents the average closing price of
Century Stock for the twenty-day trading period that ended three days
prior to the date of this Information Statement, and which is
hereinafter referred to as the "Average Century Stock Price"). The
shares of Century Stock issuable in connection with the Merger and the
cash payable in lieu of fractional shares is sometimes referred to
herein as the "Merger Consideration."
Under the Merger Agreement, each non-dissenting shareholder of
Mississippi-6 as of the Effective Time (collectively, the
"Shareholders") will be required to pay his pro rata share of any
liabilities that may be asserted after the Effective Time in connection
with (i) any indemnity claims made by Century or its affiliates pursuant
to the Merger Agreement, (ii) any post-closing adjustment to the
Conversion Ratio that reduces the Merger Consideration, (iii) costs
associated with tax audits relating to taxable periods ending on or
before the Effective Date, (iv) the incurrence of certain expenses or
liabilities by the Escrow Agent and (v) subject to certain exceptions,
the incurrence of expenses or liabilities by the Shareholders'
Representative in connection with any suits against the Shareholders'
Representative in his capacity as such (collectively, "Post-Closing
Liabilities"). At the Closing, 29,159 shares of Century Stock, which
represents 5% of the aggregate number of shares of Century Stock
issuable in connection with the Merger, will be placed in escrow
pursuant to the terms of the Escrow Agreement. For further information,
see "- Post-Closing Liabilities; Escrow Agreement."
Post-Closing Liabilities; Escrow Agreement
As discussed further below, the Shareholders may be required to
pay certain Post-Closing Liabilities in accordance with their pro rata
record ownership interest ("Pro Rata Share") of Mississippi-6 Stock
immediately prior to the Effective Time. Appendix B hereto sets forth
the pro rata record ownership interest of each Mississippi-6 shareholder
as of the Record Date. Assuming that none of these shareholders
transfer their rights or interests with respect to their shares prior to
the Effective Time or perfect dissenters' rights in connection with the
Merger, the record ownership interests listed on Appendix B will
constitute each such shareholder's Pro Rata Share. For certain
information regarding the effects of transfers of the right to receive
the Merger Consideration, see "- Procedures For Receiving Merger
Consideration."
Indemnification. After the Closing Date, the Shareholders,
Century, and certain of their affiliates will have the following
indemnification rights and obligations.
Indemnification by Shareholders. The Merger Agreement obligates
the Shareholders to severally indemnify Century and its directors,
officers, agents, affiliates, successors and permitted assigns
(collectively, "Century Indemnitees") against claims, losses (including
in certain circumstances any diminution in value of Mississippi-6 or its
assets), liabilities, costs and expenses (collectively, "Losses")
incurred by the Century Indemnitees, directly or indirectly, relating to
or arising out of (i) any inaccuracy in any representation or warranty
made by Mississippi-6 or the Principal Shareholders in the Merger
Agreement or in documents to be delivered thereunder at the Closing
("Closing Documents"), (ii) any breach by Mississippi-6 or the Principal
Shareholders of any agreement or obligation under the Merger Agreement
or any Closing Documents, (iii) any breach by any Shareholder of the
covenants to be made by the Shareholders by virtue of their execution of
the Letter of Authorization mailed in conjunction with this Information
Statement or (iv) any claim made by former shareholders relating to any
act or omission of Mississippi-6 prior to the Closing or to the
distribution of the Merger Consideration, including the negotiation,
execution, delivery, announcement or performance of the Merger
Agreement. For additional information regarding these representations,
warranties and covenants, see "- Other Terms of the Merger Agreement"
and "- Procedures for Receiving Merger Consideration."
If it is determined that the Shareholders are obligated to
indemnify any Century Indemnitees for Losses, each Shareholder will be
severally liable for such Loss in accordance with his respective Pro
Rata Share. All such Losses will be discharged by releasing to the
Century Indemnitees Escrow Shares, which will be valued based upon the
average closing sales price of Century Stock for the 20 trading days
preceding the release of shares ("Current Century Stock Price"). In the
event the Escrow Shares are insufficient to compensate for the Loss, the
Century Indemnitees will be free to pursue any or all of the
Shareholders directly for their respective Pro Rata Share of the
remainder. See "-- Escrow Agreement."
Indemnification by Century. Century will be obligated to
indemnify the Shareholders and their successors, heirs and personal
representatives (the "Shareholder Indemnitees") from and against all
Losses incurred, directly or indirectly, relating to or arising out of
(i) any inaccuracy of any representation or warranty made by Century in
the Merger Agreement or any Closing Documents or (ii) any breach of any
covenant or other obligation of Century in the Merger Agreement or any
Closing Documents.
Limitations and Procedures. The indemnification obligations of
the Shareholders and Century are subject to certain limitations,
conditions and procedures set forth in the Merger Agreement. Under the
Merger Agreement neither the Shareholders nor Century has any
indemnification liability unless written notice of an indemnity claim is
given prior to the third anniversary of the Closing Date. However, (i)
the Century Indemnitees may continue to make claims after such date for
inaccuracies of certain representations or warranties relating to
Mississippi-6's capitalization, litigation, labor relations, product
liabilities claims, taxes, compliance with certain laws and payments to
brokers and (ii) the Shareholder Indemnitees may continue to make claims
after such date for inaccuracies of certain representations and
warranties relating to Century's capitalization and compliance with
certain securities laws.
The Merger Agreement further provides that generally neither the
Shareholder Indemnitees nor the Century Indemnitees are entitled to
indemnification except to the extent the aggregate amount of all
indemnifiable Losses payable to them exceeds $10,000. In addition, no
Shareholder will have any indemnification liability for any inaccuracy
of a representation or warranty in the Merger Agreement or any breach of
any covenant, agreement or obligation of the Principal Shareholders
under the Merger Agreement other than the Principal Shareholder who made
or agreed to the specific representation, warranty, covenant, agreement
or obligation. In the absence of common law fraud, the indemnification
rights afforded to the Century Indemnitees and the Shareholder
Indemnitees constitute their sole respective remedies for any Losses
relating to the Merger Agreement other than those arising in connection
with adjusting the Merger Consideration after the Closing (which are
described below under "-- Post-Closing Adjustment of Merger
Consideration").
The Merger Agreement sets forth certain procedures and conditions
with respect to making and defending claims for indemnification and
generally allows the indemnifying party to control the defense of and,
subject to certain conditions contained in the Merger Agreement, settle
or compromise claims for which it may be responsible. The Merger
Agreement provides that all claims made by or against the Shareholders
will be pursued, administered, collected and defended by the
Shareholders' Representative. See "- Shareholders' Representative."
Post-Closing Adjustment of Merger Consideration. The Conversion
Ratio was calculated immediately prior to the date of this Information
Statement pursuant to a formula specified in the Merger Agreement.
Under this formula, the Conversion Ratio was determined by dividing (i)
$19.75 million plus approximately $924,000 of construction costs, less
approximately $3,948,000, which constitutes the good faith estimate of
Mississippi-6's management as to the difference between Mississippi-6's
indebtedness as of the Effective Time minus its current assets as of
such time ("Net Indebtedness") by (ii) $28.68, which represents the
Average Century Stock Price, and thereafter dividing the resulting
quotient by 1,000, which represents the number of outstanding shares of
Mississippi-6 Stock. For a discussion of certain payments and other
transactions related to the Merger that have increased Net Indebtedness,
see "-- Escrow Agreement --- Fees and Expenses of Escrow Agent," and "-
Termination and Amendment of Certain Agreements." Within 60 days after
the Closing, Century will (i) determine the actual amount of Net
Indebtedness as of the Effective Time, (ii) recalculate the Conversion
Ratio based upon the actual amount of Net Indebtedness and (iii) advise
the Shareholders' Representative of its findings. If the Shareholders'
Representative does not agree with Century's findings, then Century and
the Shareholders' Representative will negotiate in good faith to resolve
such dispute and agree upon the amount of the final Merger Consideration
and submit any unresolved disputes to an independent accounting firm,
whose resolution will be final and binding on Mississippi-6, Century and
their respective shareholders. Except for Net Indebtedness, no
component of the formula used to calculate the Conversion Ratio will be
adjusted after the Closing.
If the Conversion Ratio disclosed in this Information Statement
exceeds the final calculation of the Conversion Ratio, then all
Shareholders will be required to refund the difference to Century, and
if the Conversion Ratio disclosed herein is less than the final
calculation of the Conversion Ratio, then Century will be required to
deliver to the Escrow Agent such number of shares of Century Stock
("Excess Shares") equal in value to the shortfall based upon the Average
Century Stock Price. Any such Excess Shares will be held and disbursed
under the Escrow Agreement in the same manner as all other shares
deposited at Closing. Amounts payable by the Shareholders will be
discharged by returning to Century Escrow Shares, which will be valued
based upon the Current Century Stock Price. In the unlikely event that
the Escrow Shares are insufficient to reimburse Century fully, Century
will be free to pursue all or any of the Shareholders directly for their
respective Pro Rata Share of the shortfall. See "-- Escrow Agreement."
Obligations with Respect to Taxes. The shareholders of
Mississippi-6 will be obligated to pay all legal and other costs for tax
audits or examinations with respect to taxable periods ending on or
before the Effective Date.
Escrow Agreement. As described above, at the Closing Century will
deliver 29,159 shares of Century Stock to the Escrow Agent, which will
hold these shares and any subsequently delivered Excess Shares
(collectively, the "Escrow Shares") in accordance with the Escrow
Agreement to be executed at the Closing. The following summary of the
Escrow Agreement does not purport to be complete and is qualified in its
entirety by reference to the Escrow Agreement, a form of which is
attached hereto as Appendix C and is incorporated herein by reference.
By virtue of the approval of the Merger Proposal at the Special Meeting,
each Shareholder will be deemed to have agreed to all of the terms and
conditions of the Escrow Agreement (which agreement will be confirmed by
each such Shareholder by execution of the Letter of Authorization). See
"- Procedures for Receiving Merger Consideration." For information
regarding the agreement of the Principal Shareholders to vote in favor
of the Merger Proposal, see "The Special Meeting - Vote Required."
Management of Escrow Account. The Escrow Shares will be disbursed
solely in accordance with the Escrow Agreement. Upon payment of any
cash dividends with respect to the Century Stock held in escrow, the
Escrow Agent will promptly disburse such dividends to the Shareholders'
Representative, who will be obligated to distribute such payments
(without interest) to the Shareholders in accordance with their Pro Rata
Share. All voting rights attributable to the Escrow Shares will be
exercised by the Escrow Agent solely in accordance with the voting
instructions of the Shareholders' Representative, who will be obligated
to consult with the Shareholders prior to submitting instructions. If
the Escrow Agent does not timely receive voting instructions from the
Shareholders' Representative, the Escrow Shares will not be voted. In
the event of any recapitalization, reclassification, merger, business
combination or other transaction in which holders of Century Stock
become entitled to cash, securities or other property with respect to or
in exchange for Century Stock, the Escrow Agent will hold such cash,
securities or other property for the benefit of the claimants under the
Escrow Agreement and will pay, at the end of each calendar quarter and
upon termination of the Escrow Agreement, any interest or dividends that
accrue with respect thereto to the Shareholders' Representative, who
will be obligated to distribute such amounts to the Shareholders in the
same manner as Century dividends. Subject to certain exceptions, the
Escrow Agent will have no power to dispose of the Escrow Shares.
Payment of Escrow Shares to Century or the Century Indemnitees.
Prior to the expiration of the Escrow Agreement, Escrow Shares may be
returned to Century or the Century Indemnitees for any of the following
purposes:
. to discharge the Shareholders' indemnification obligations
to Century Indemnitees for any Losses, as described more
fully above under "-- Indemnification"
. to reduce the Merger Consideration upon final resolution of
the Conversion Ratio, as described more fully above under "-
- Post-Closing Adjustment of Merger Consideration"
. to discharge the Shareholders' tax-related liabilities
referred to under "-- Obligations With Respect to Taxes."
In each of the cases listed above, the Shareholders' Post-Closing
Liability will be discharged by transferring Escrow Shares having an
aggregate value as nearly equal as possible to such liability; for these
purposes, each Escrow Share will be deemed to have a value equal to the
Current Century Stock Price. If the value of the Escrow Shares is
insufficient to discharge the Shareholders' Post-Closing Liabilities,
the Shareholders will remain responsible for the balance. See "--
Unlimited Liability." For a description of the circumstances under
which Escrow Shares may be used to discharge amounts owed by the
Shareholders to the Escrow Agent, see "--- Fees and Expenses of Escrow
Agent."
Release of Escrow Shares to Shareholders. In the absence of
unresolved claims under the Merger Agreement, the Escrow Agent will
release to the Shareholders' Representative one-half of the Escrow
Shares then remaining in escrow on the 12-month anniversary of the
Closing Date and one-half of the remaining shares six months later.
Unless extended in connection with an unresolved claim, the Escrow
Agreement will terminate on the 24-month anniversary of the Closing
Date, at which time all remaining shares of Century Stock not subject to
an unresolved claim will be released to the Shareholders'
Representative. No assurance can be given that any Escrow Shares will
remain on the 12-, 18- or 24-month anniversary dates. Upon any such
release of shares, the Shareholders' Representative will instruct the
Exchange Agent to allocate the released shares among the Shareholders in
a manner such that (i) the Shareholders receive a number of shares as
nearly equal as possible to their respective Pro Rata Share of the total
number of shares released and (ii) no fractional shares are issued. Any
cash or other property held in escrow will be distributed in like
manner. See "--- Management of Escrow Account."
All distributions made for the benefit of the Shareholders under
the Escrow Agreement will be made to the Shareholders' Representative,
who will be obligated to forward such distributions to the names and
addresses provided in the Letters of Authorization delivered to the
Exchange Agent (unless the Shareholders' Representative subsequently
receives notice of a different address in accordance with the procedures
described in the Letter of Authorization). Except as otherwise noted in
the Letter of Authorization, the contingent right of each Shareholder to
receive such distributions (and to consult with the Shareholders'
Representative with respect to the exercise of voting rights) shall be
nontransferable and nonassignable (except for transfers upon such
Shareholder's death or otherwise by operation of law) and shall not be
represented by any certificate or other written instrument. See "-
Procedures for Receiving Merger Consideration."
Fees and Expenses of Escrow Agent. All fees and expenses of the
Escrow Agent will be borne equally by Century and the Shareholders. The
Escrow Agent's basic fee of $3,000 for two years' service will be paid
prior to Closing in equal parts by Century and Mississippi-6. Although
the parties believe that this payment will fully compensate the Escrow
Agent for its services, the Escrow Agreement further obligates the
Shareholders to reimburse the Escrow Agent for expenses incurred by it
in the performance of its duties (including reasonable counsel fees) and
to indemnify the Escrow Agent for any taxes, expenses, liabilities or
other charges incurred by it in connection with its duties under the
Escrow Agreement, except as a result of its own gross negligence or
willful misconduct. If the Escrow Agent submits any claims after the
Closing Date for these extraordinary charges, the Shareholders'
Representative will attempt to collect the Shareholders' 50% portion
thereof by soliciting cash payments directly from the Shareholders. In
the event the Escrow Agent does not fully recoup these extraordinary
charges timely from the Shareholders' Representative, the Escrow Agent
will have the right to sell an appropriate amount of Escrow Shares and
retain proceeds equal to the unpaid amount.
Exculpation of Shareholders' Representative. The Shareholders
will also be obligated after the Closing Date to exculpate and reimburse
the Shareholders' Representative in certain circumstances. See "-
Shareholders' Representative." Unlike all other Post-Closing
Liabilities, the Escrow Shares will not be available to satisfy these
liabilities. Instead, the Shareholders' Representative will be required
to pursue the Shareholders directly for these amounts.
Unlimited Liability. In the event the Shareholders become
obligated to any claimant for any Post-Closing Liability in an amount
that exceeds the value of the remaining Escrow Shares or for any Post-
Closing Liability as to which Escrow Shares are not available, the
claimant may proceed against any or all of the Shareholders to collect
the remaining amount owed. Although no Shareholder will be obligated to
pay more than his Pro Rata Share of any such liability, there are no
limitations on the amount that a Shareholder may be obligated to pay in
connection with Post-Closing Liabilities. Accordingly, it is possible
that a Shareholder's Post-Closing Liabilities could exceed the value of
the Merger Consideration received by him. Moreover, the release of
Escrow Shares to the Shareholders on the 12-, 18- and 24-month
anniversaries of the Closing Date will not eliminate or reduce the
Shareholders' obligations to pay Post-Closing Liabilities that may arise
at a later date. Each claimant will be free to pursue any or all of the
Shareholders in its sole discretion, and the refusal or inability of any
Shareholder to discharge his Post-Closing Liability will not excuse any
other Shareholder from his Post-Closing Liability.
Dissenting shareholders who perfect their dissenters' rights under
Mississippi law will not be responsible for any Post-Closing
Liabilities. All other shareholders of Mississippi-6 as of the
Effective Time will be responsible for such liabilities upon adoption of
the Merger Proposal, even if they fail to vote, abstain, or vote against
the Merger Proposal.
Shareholders' Representative
Designation. By virtue of the approval of the Merger Proposal at
the Special Meeting, each Shareholder will be deemed to have appointed
David A. Bailey to serve as his sole Shareholders' Representative with
respect to the matters set forth in the Merger Agreement and the Escrow
Agreement. Upon such approval, each Shareholder will, effective as of
the Effective Time, be deemed to have (i) irrevocably appointed the
Shareholders' Representative as his agent, proxy and attorney-in-fact
for all purposes of the Merger Agreement and the Escrow Agreement and
(ii) agreed that such agency and proxy are coupled with an interest, and
are therefore irrevocable without the consent of the Shareholders'
Representative and shall survive the death, incapacity, bankruptcy, or
divorce of any Shareholder, which appointment and agreement will be
confirmed upon such Shareholder's execution of the Letter of
Authorization. See "-Procedures for Receiving Merger Consideration."
For information regarding the agreement of the Principal Shareholders to
vote in favor of the Merger Proposal (and thereby to ensure the
appointment of David A. Bailey as the Shareholders' Representative), see
"The Special Meeting - Vote Required."
Authority. The Shareholders' Representative will have the power
and authority to act on each Shareholder's behalf to do, among other
things, the following (in each case in accordance with the Merger
Agreement and the Escrow Agreement): (i) to take all actions which the
Shareholders' Representative considers necessary or desirable in
connection with the defense, pursuit or settlement of any adjustments to
the Merger Consideration and any claims for indemnification made by or
against Century; (ii) to engage and employ agents and representatives
and to incur other expenses as he deems necessary or advisable; (iii) to
provide for expenses incurred in connection with the administration of
the foregoing (including expenses incurred by the Shareholders'
Representative) to be paid by directing the Shareholders to pay such
amounts; (iv) to disburse all indemnification payments received from
Century; (v) to disburse any shares or other property remaining in the
Escrow Account upon expiration of the Escrow Agreement; (vi) to amend
and grant consents and waivers after the Closing under the Merger
Agreement and Escrow Agreement; (vii) to manage tax audits relating to
Mississippi-6 for taxable periods ending on or before the Effective Date
and represent the Shareholders' interests in connection therewith and
(viii) to take all other actions and exercise all other rights which the
Shareholders' Representative (in his sole discretion) considers
necessary or appropriate in connection with the Merger Agreement and the
Escrow Agreement. All decisions and acts by the Shareholders'
Representative will be binding upon all of the Shareholders, and, except
to the extent otherwise provided under "-- Exculpation," no such
Shareholder will have the right to object, dissent, protest or otherwise
contest such decisions or acts.
Resignation. Under the Merger Agreement, if the Shareholders'
Representative resigns or is unable to serve for any reason, Wirt A.
Yerger, III shall serve as the Shareholders' Representative under the
Merger Agreement and the Escrow Agreement.
Exculpation. The Merger Agreement provides that neither the
Shareholders' Representative nor any of his agents will be liable to any
Shareholder relating to the performance of his duties under the Merger
Agreement or the Escrow Agreement for any errors in judgment,
negligence, oversight, breach of duty or otherwise, and that the
Shareholders' Representative will be indemnified and held harmless by
the Shareholders in accordance with their respective Pro Rata Shares
against all expenses (including attorneys' fees), judgments, fines and
other amounts incurred in connection with any suit or claim to which the
Shareholders' Representative is made a party by reason of the fact that
he was acting as the Shareholders' Representative pursuant to the Merger
Agreement or the Escrow Agreement, in each case except to the extent it
is finally determined in a court having jurisdiction that the actions
taken or not taken by the Shareholders' Representative constituted fraud
or were taken or not taken in bad faith.
Certain Information Regarding Shareholder's Representative. For
certain information regarding David A. Bailey, see "Information About
Mississippi-6 - Security Ownership of Certain Beneficial Owners and
Management."
Agreement of Shareholders to Hold Century Stock
In order to safeguard the tax-free treatment of the Merger, the
Principal Shareholders have represented to Century in the Merger
Agreement that they do not have a present intention to sell the Century
Stock to be received by them in connection with the Merger in a manner
that jeopardizes such tax-free treatment. As described further under "-
Certain Federal Income Tax Consequences," the continuing qualification
of the Merger as a tax-free reorganization is contingent upon the
Mississippi-6 shareholders retaining a sufficient continuing interest in
Mississippi-6 through their ownership of Century Stock. In an effort to
insure the continuing interest of the former shareholders in the
surviving corporation, the Merger Agreement obligates the Shareholders
to hold as a group sufficient amounts of Century Stock for a sufficient
duration to satisfy the "continuity of interest" requirements described
under "- Certain Federal Income Tax Consequences." This agreement among
the Shareholders will be confirmed by virtue of the Shareholders'
execution of the Letter of Authorization. See "- Procedures for
Receiving Merger Consideration."
To ensure that this agreement of the shareholders to hold their
shares is administered fairly and equitably among all Shareholders,
Mississippi-6 intends to solicit each Mississippi-6 shareholder prior to
Closing to execute an agreement obligating each such shareholder to hold
at least one-half of the shares of Century Stock issued to him in
connection with the Merger for at least two years after the Closing
Date. In addition, it is anticipated that one-half of the Century Stock
issued to the Shareholders will be represented by certificates that
contain a restrictive legend summarizing the terms of this proposed
agreement.
If for any reason it is determined that the Merger does not
constitute a tax-free reorganization, neither Century nor Sub will incur
any adverse effects. Neither Century nor Sub will take any steps
whatsoever to ensure the tax-free treatment of the Merger, and neither
will have any responsibility or liability in the event that actions
taken after the Closing jeopardize or eliminate such tax-free treatment.
Termination of Shareholders' Agreement
Each Mississippi-6 shareholder is a party to the First Amended and
Restated Shareholders Agreement dated as of January 1, 1995 (the
"Shareholders' Agreement") which, among other things, places certain
restrictions on the transfer of Mississippi-6 Stock to non-family
members and limits the ability of shareholders to sue officers and
directors of Mississippi-6 for breaches of their fiduciary duty of care.
See "Comparative Rights of Century and Mississippi-6 Shareholders -
Transfer Restrictions." The Merger Agreement contemplates that the
Shareholders' Agreement will be terminated. To effect this,
Mississippi-6 intends to solicit each Mississippi-6 shareholder prior to
the Closing to execute a termination agreement providing that all
provisions of the Shareholders' Agreement shall lapse, other than those
limiting the ability of shareholders to sue officers and directors.
Upon executing the Letter of Authorization, each Shareholder will
acknowledge that he has no further rights under the Shareholders'
Agreement (other than as an officer or director). See "- Procedures For
Receiving Merger Consideration."
Certain Federal Income Tax Consequences
Principal Consequences of the Merger. The Merger is intended to
be a "tax-free reorganization" for federal income tax purposes under
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of
1986, as amended (the "Code"). The following will be the principal
federal income tax consequences of the Merger assuming it is treated as
a "tax-free reorganization":
(i) No gain or loss will be recognized by Mississippi-6, Sub or
Century as a result of the Merger.
(ii) No gain or loss will be recognized by Mississippi-6's
shareholders as a result of the Merger, except as described in
paragraphs (iv) and (vii) below.
(iii) The Merger will not result in any change in the basis of
Mississippi-6's assets.
(iv) The payment of cash to a holder of Mississippi-6 Stock in
lieu of fractional shares of Century Stock will be accorded sale or
exchange treatment under Section 302 of the Code. Such Shareholder's
realized gain will be recognized to the extent of the cash payment
received by him.
(v) The basis for tax purposes of the shares of Century Stock
received by a holder of Mississippi-6 Stock pursuant to the Merger will
be the same as the basis for such shareholder's Mississippi-6 Stock
surrendered in exchange therefor increased by the amount of any gain
recognized by such shareholder in connection with the receipt of a cash
payment in lieu of a fractional share and reduced by the amount of any
cash received by such shareholder in connection therewith.
(vi) A Mississippi-6 shareholder's holding period with respect to
the shares of Century Stock received by such shareholder as a result of
the Merger will include the period for which he held the shares of
Mississippi-6 Stock which were converted into such shares of Century
Stock, provided such shares of Mississippi-6 Stock were held as a
capital asset on the Effective Date.
(vii) Under current rulings of the Internal Revenue Service (the
"IRS"), any Mississippi-6 shareholder who exercises his rights under
Mississippi law to dissent from the Merger will be treated as if his
Mississippi-6 Stock was redeemed by Mississippi-6, although it is
possible that a dissenter will be treated as if he received a whole
share of Century Stock which was then redeemed by Century. Such
dissenter should recognize gain or loss based on the difference between
his tax basis in his Mississippi-6 shares and the amount of cash he
receives for the shares. Normally such gain or loss should be capital
gain or loss. However, if a redemption fails to qualify for exchange
treatment under Section 302(b) of the Code (considering the attribution
rules of Section 318 thereof) because the shareholder's interest is not
sufficiently reduced, a risk exists that some or all of the cash
received by a dissenting shareholder will be treated as a taxable
dividend to such shareholder.
Continuity of Interest Requirements. For IRS ruling purposes, in
order for the Merger to constitute a tax-free reorganization, the amount
of Century Stock received by all Mississippi-6 shareholders in
connection with the Merger must be at least 50% of the aggregate value
of the consideration paid to all dissenting and non-dissenting
shareholders in connection with the Merger. Century Stock received in
the Merger will not count toward the 50% threshold if the recipient
disposes of such stock and such recipient had an intention to dispose of
the stock on the Effective Date. The disposition of stock within two
years of the Effective Date may evidence that the shareholder had an
intent to dispose of the stock on the Effective Date. Dispositions
within two years of the Effective Date of over 50% of the Century Stock
issued in connection with the Merger could result in the IRS taking the
position that the Merger was a taxable transaction and that the
Shareholders owe taxes in connection therewith. In an effort to
safeguard the tax-free treatment of the Merger, the Merger Agreement
obligates the Shareholders as a group to hold sufficient amounts of
their Century Stock for a sufficient duration to satisfy the continuity
of interest requirements of the Code and the regulations promulgated
thereunder. See "- Agreement of Shareholders to Hold Century Stock."
Consequences of Escrow Agreement. All cash dividends received by
the Shareholders with respect to the Escrow Shares will be taxable to
the Shareholders as if they held the Escrow Shares in their own names.
Any other dividends and interest will be taxable to the Shareholders as
if they held the other shares and investments in their own name, even
though such dividends and interest will not be distributed to such
Shareholders except at the end of each calendar quarter and upon
termination of the Escrow Agreement. The Shareholders will recognize
gain or loss on the return of Escrow Shares to Century, and they will
increase the basis of their remaining Century shares by an amount equal
to the fair market value of the shares returned. The Shareholders will
recognize no gain or loss on the receipt of Escrow Shares from the
Escrow Agent. If the Escrow Agent sells Escrow Shares to collect
reimbursable expenses, each Shareholder will recognize his Pro Rata
Share of any gain or loss. The fees and expenses paid to the Escrow
Agent are likely not deductible expenses for tax purposes.
The tax discussion set forth above sets forth the views of
Mississippi-6, is included for general information only, and is based
upon present law. The tax consequences of the Merger will depend in
large part on the facts and circumstances applicable to each shareholder
and upon an evaluation of facts and events that will occur in the
future, and as a result, the particular tax consequences to a
shareholder cannot be predicted with certainty. Neither Century nor
Mississippi-6 has sought or received an opinion of tax counsel or other
tax expert regarding the tax consequences of the Merger. Therefore,
each shareholder is urged to consult his own tax advisor regarding the
tax consequences of the Merger. With regard to tax consequences under
the laws of states or local governments or of any other jurisdiction, no
information or opinion is provided herein, and shareholders are urged to
consult, and should rely upon, their own tax advisors.
Procedures For Receiving Merger Consideration
In connection with the mailing of this Information Statement, each
Mississippi-6 shareholder has been furnished with a Letter of
Authorization for use in authorizing the surrender to the Exchange Agent
of their certificates representing Mississippi-6 Stock. Mississippi-6
believes that all such certificates are currently held by its lender,
Trustmark National Bank. Mississippi-6 and Century intend to take such
steps as may be necessary to cause the lender to release all of these
certificates to the Exchange Agent in connection with the Closing.
Immediately following the Effective Time, the Exchange Agent will
deliver to each former Mississippi-6 shareholder the appropriate amount
of Merger Consideration (less such shareholder's Pro Rata Share of the
29,159 shares of Century Stock placed in escrow as described under "-
Post-Closing Liabilities; Escrow Agreement -- Escrow Agreement") upon
its receipt from such shareholder of a Letter of Authorization duly
completed in accordance with its instructions. At all times after
consummation of the Merger but prior to such exchange, certificates
previously representing Mississippi-6 Stock will be deemed to represent
such number of shares of Century Stock into which they will have been
converted at the Effective Time and the right to receive a cash payment
in lieu of a fractional share (or, with respect to dissenting
shareholders, the right to receive the fair value of their shares).
Until a Shareholder furnishes the Exchange Agent with a duly completed
Letter of Authorization, (i) no certificates representing Century Stock
will be issued to such Shareholder and (ii) dividends or other
distributions payable with respect to the shares of Century Stock issued
to such Shareholder in connection with the Merger will not be paid.
As explained further in the enclosed Letter of Authorization, the
execution of the Letter of Authorization by each Shareholder will
constitute such Shareholder's acknowledgement that, by virtue of the
approval of the Merger Proposal at the Special Meeting, (i) such
Shareholder will be responsible for any Post-Closing Liabilities on the
terms and conditions specified in the Merger Agreement and the Escrow
Agreement, (ii) such Shareholder will be bound by the provision in the
Merger Agreement that obligates the Shareholders as a group to hold
sufficient amounts of Century Stock for sufficient duration to safeguard
the tax-free treatment of the Merger, (iii) such Shareholder will have
been deemed to have irrevocably appointed David A. Bailey as of the
Effective Time as such Shareholder's agent, proxy and attorney-in-fact
for all purposes specified in the Merger Agreement and the Escrow
Agreement, and (iv) such Shareholder will have no further rights under
the Shareholders' Agreement (except as an officer or director of
Mississippi-6). See "- Post-Closing Liabilities; Escrow Agreement," "-
Agreement of Shareholders to Hold Century Stock," "- Shareholders'
Representative" and "- Termination of Shareholders' Agreement." The
Merger Agreement obligates the Shareholders to indemnify the Century
Indemnitees for Losses arising out of any breach by any Shareholder of
the covenants to be made by virtue of the Shareholders' execution of the
Letter of Authorization. See "- Post-Closing Liabilities; Escrow
Agreement -- Indemnification."
The Letter of Authorization permits Shareholders to transfer the
right to receive the Merger Consideration to transferees of their
choice. No such transfer, however, will relieve the Shareholder of his
obligation to discharge his Pro Rata Share of any Post-Closing
Liabilities.
Although no assurance can be given that the Merger will be
consummated, in order to ensure the earliest possible receipt of the
Merger Consideration, Mississippi-6 shareholders are encouraged at their
earliest convenience to complete the enclosed Letter of Authorization
and to send it in accordance with its instructions in the enclosed
stamped envelope addressed to the Exchange Agent.
Other Terms of the Merger Agreement
Regulatory Approvals and Other Closing Conditions. On June 28,
1995, the FCC's order dated May 11, 1995 approving the transactions
contemplated by the Merger Agreement became final and nonappealable.
All other regulatory approvals required by law to consummate the
transactions contemplated by the Merger Agreement have been obtained.
In addition to receipt of the regulatory approval described above,
the obligations of Century and Mississippi-6 to consummate the Merger
are subject to, among other things, (i) the approval of the Merger
Proposal by a majority of the total voting power of Mississippi-6 at the
Special Meeting, (ii) the absence of any stop order with respect to the
Registration Statement of which this Information Statement forms a part,
(iii) the Century Stock having been approved for listing on the New York
Stock Exchange, (iv) the material accuracy of the other party's
representations and warranties, (v) the material performance by the
other party of its obligations under the Merger Agreement, (vi) the
absence of any injunctions or other court orders preventing consummation
of the Merger, (vii) the absence of any litigation with a reasonable
likelihood of success seeking to enjoin the Merger or related
transactions, (viii) the execution and delivery of the Escrow Agreement,
(ix) the satisfaction of all conditions required for treating the Merger
as a tax-free reorganization and (x) the receipt of any required third-
party consents, legal opinions and other closing certificates and
documents, and the satisfaction of certain other customary closing
conditions.
The obligation of Century to consummate the Merger is further
conditioned upon, among other things, (i) the absence of a material
adverse change with respect to Mississippi-6, (ii) the aggregate
Mississippi-6 Stock held by dissenting shareholders being no more than
10% of all such stock immediately prior to the Effective Time, (iii) the
Net Indebtedness of Mississippi-6 as of the Closing not exceeding by
more than $100,000 the amount estimated by Mississippi-6's management
prior to the date of this Information Statement, (iv) Century's receipt
of a resignation letter and release executed by each director and
officer of Mississippi-6 and (v) the termination of a services agreement
between Mississippi-6 and Mercury, the execution and delivery of a
transitional services agreement with Mercury and the amendment of a
billing contract to which Mississippi-6 is a party, all of which are
described further under "- Termination and Amendment of Certain
Agreements."
The obligation of Mississippi-6 to consummate the Merger is
further subject to the condition of there having been no material
adverse change with respect to Century between April 18, 1995 and the
Closing Date. For a description of the manner in which "material
adverse change" is defined in the Merger Agreement, see "The Special
Meeting - Vote Required."
No assurance can be given that the conditions to consummating the
Merger can or will be satisfied or waived in a timely manner or at all.
Expenses. Regardless of whether the Merger is consummated, the
Merger Agreement provides that all fees and expenses incurred in
connection with the Merger Agreement and related transactions shall be
paid by the party incurring them. For a description of the
Shareholders' obligation to pay certain expenses of the Escrow Agent and
Shareholders' Representative, see "- Post-Closing Liabilities; Escrow
Agreement." See also "- Termination and Amendment of Certain
Agreements."
Representations and Warranties. *The Merger Agreement contains
various mutual representations and warranties of Mississippi-6 and
Century relating to, among other things, (i) organization and other
corporate matters, (ii) capitalization and capital stock, financial
statements and financial information, (iii) due authorization,
execution, and enforceability of the Merger Agreement and related
agreements, (iv) required third party and governmental consents and the
absence of material conflicts or violations under charter or bylaw
provisions, agreements or other instruments or applicable laws, (v) the
compliance with securities laws, (vi) the accuracy of information
supplied by Century and Mississippi-6 for use in this Information
Statement and the Registration Statement, (vii) the absence of
undisclosed brokers or finders fees and (viii) certain other customary
representations and warranties.
The Merger Agreement also contains various representations and
warranties of Mississippi-6 relating to, among other things, (i) the
absence since December 31, 1994 of certain material events, changes or
effects relating to Mississippi-6, (ii) retirement and other employee
benefit plans and employee-related matters, including severance and
other benefits and labor matters, (iii) pending and threatened
litigation and claims, including product liability claims, (iv) title to
and sufficiency and condition of its assets, (v) material contracts and
defaults, (vi) intellectual property, real estate and insurance matters,
(vii) compliance with tax, environmental, securities and other laws,
(viii) investments and outstanding indebtedness, (ix) absence of
undisclosed liabilities, (x) interests in customers and suppliers, and
(xi) compliance with and validity of licenses and permits (including FCC
licenses) and other FCC matters. By application of these
representations and warranties, shareholders of Mississippi-6 (which has
been taxed as a Subchapter S corporation since January 1, 1991) will
remain liable for the payment of taxes due for taxable periods ending on
or before the Effective Date. The Merger Agreement contains other
representations and warranties of Century relating to, among other
things, the accuracy of information contained in Century's Exchange Act
filings and the Registration Statement.
The Principal Shareholders also make certain representations and
warranties to Century as to themselves relating to, among other things,
authority to enter into the Merger Agreement, due execution and
enforceability of the Merger Agreement, the absence of material
conflicts or violations with agreements and other instruments, absence
of required consents, absence of material litigation and absence of
undisclosed interests in Mississippi-6.
Subject to the limitations on the parties' respective
indemnification obligations under the Merger Agreement, all
representations and warranties will survive after the Effective Time for
the periods specified therein. See "- Post-Closing Liabilities; Escrow
Agreement -- Indemnification."
Non-Solicitation; Termination Fee. Pursuant to the Merger
Agreement, Mississippi-6 and the Principal Shareholders have agreed
that, unless the Board of Directors makes a Fiduciary Determination (as
defined below), they will not (and will instruct their affiliates,
directors, officers, employees and representatives not to), among other
things, (i) solicit or encourage any acquisition proposal to acquire all
or a substantial portion of the assets or equity of Mississippi-6 or
(ii) engage in discussions or negotiations with, or furnish any
information to, any person that is considering making an acquisition
proposal.
If, following the receipt of an unsolicited bona fide acquisition
proposal, the Merger Agreement is terminated by Mississippi-6 upon a
good faith determination by the Board of Directors of Mississippi-6,
after considering the written advice of outside counsel regarding its
fiduciary duties, that acceptance of such proposal is in the best
interests of Mississippi-6's shareholders and is required pursuant to
the Board's fiduciary duties under Mississippi law (a "Fiduciary
Determination"), then Mississippi-6 has agreed to pay Century a fee, as
liquidated damages, equal to 5% of the Merger Consideration, calculated
as of the date the Merger Agreement is terminated. Prior to such
termination, Century will be permitted to match such acquisition
proposal for a period of five business days.
The termination fee could have the effect of discouraging a third
party from pursuing an acquisition proposal involving Mississippi-6
because the cost of such acquisition would be increased by the amount of
the termination fee.
Amendment, Waiver and Termination. The Merger Agreement may be
amended at any time before or after its approval by Mississippi-6's
shareholders, provided that no amendment may be made after shareholder
approval that decreases the Merger Consideration or changes the form
thereof or adversely affects the rights of Mississippi-6's shareholders
without the further approval of the affected shareholders.
Upon consummating the Merger, each party is deemed to have
acknowledged that all conditions to its obligation to consummate the
Merger have been fulfilled or duly waived and, in the absence of common
law fraud, to have waived any right to subsequently assert that any such
conditions were not fulfilled or duly waived. Except for such deemed
waivers or as otherwise provided in the Merger Agreement, all waivers
must be in writing.
The Merger Agreement may be terminated at any time prior to the
Effective Time by the mutual consent of Century and Mississippi-6 or
unilaterally by either Century or Mississippi-6 upon the occurrence or
nonoccurrence of certain specified events, including (i) failure to
consummate the Merger upon the tenth day after satisfaction or waiver of
the closing conditions, (ii) a material breach by a party of any
representations, warranties or covenants that are not or cannot be cured
within 15 days after written notice of such breach and (iii) the
commencement by or against a party of any proceeding relating to
insolvency. In addition, the Merger Agreement may be unilaterally
terminated by Mississippi-6 if the Board of Directors of Mississippi-6,
upon receipt of an unsolicited bona fide acquisition proposal, makes a
Fiduciary Determination upon receipt of an unsolicited bona fide
acquisition proposal. Upon termination of the Merger Agreement, neither
party shall have any liability to the others, except for (i) actual
damages incurred as a result of material breaches of representations,
warranties or covenants, (ii) common law fraud or (iii) in connection
with acceptance of an acquisition proposal described above, a
termination fee as discussed under "-- Non-Solicitation; Termination
Fee."
Conduct of Business Pending the Merger. The Merger Agreement
provides that until the Effective Time, Mississippi-6 will conduct its
business in the ordinary course of business consistent with past
practice and will use its reasonable best efforts to maintain and
protect its respective properties and business organization and the
services of its officers, and maintain the relationships with its
respective customers and suppliers. The Merger Agreement also provides
that Mississippi-6 will, among other things, (i) continue to market and
advertise its services and products in accordance with past practices,
(ii) use its reasonable best efforts to expeditiously and diligently
resolve all proceedings, threatened proceedings and other claims as soon
as reasonably practicable, provided that it consults with Century prior
to settling any such matter, (iii) construct all cell sites currently
under construction in accordance with sound business practices and (iv)
otherwise make all capital improvements in accordance with its capital
expenditure budget.
The Merger Agreement also contains various customary covenants and
agreements by Century and Mississippi-6, including covenants to
cooperate and use reasonable best efforts to obtain all necessary third-
party and governmental approvals, to satisfy all conditions to Closing
and to consummate the Merger at the earliest practical date.
Termination and Amendment of Certain Agreements
Prior to the Effective Time, the management and construction
services agreement between Mississippi-6 and Mercury will be terminated,
and in connection therewith Mississippi-6 will pay to Mercury a
termination fee of $72,000. Century's obligation to consummate the
Merger is conditioned upon Century and Mercury agreeing to a short-term
agreement under which Mercury will provide on a transitional basis after
the Closing certain of the management services currently being provided
to Mississippi-6. See "- Other Terms of the Merger Agreement --
Regulatory Approvals and Other Closing Conditions." Negotiations of
this transitional agreement have not yet begun and may not commence
until shortly before the Closing. However, it is anticipated that
Mercury will provide a substantially reduced level of services for no
more than one or two months after the Closing Date. For a discussion of
the management agreement currently in effect and the affiliations of
Mercury and Mississippi-6, see "Information About Mississippi-6 -
Description of the Business -- Construction and Management of Cellular
System" and the Notes to Mississippi-6's financial statements appearing
elsewhere herein.
At Century's request, Mississippi-6 agreed in the Merger Agreement
to use its best efforts prior to Closing to amend its billing services
agreement with an unaffiliated party to delete, to the fullest extent
possible, liability of Mississippi-6 for termination fees upon early
termination of the agreement. Under the agreement's original formula,
the termination fee would have been approximately $371,400, assuming an
August 1995 termination. Under the Merger Agreement, Century's
obligation to consummate the Merger is conditioned upon amending this
agreement prior to the Closing to delete any reference to termination
fees or to otherwise effect amendments acceptable to Century. In late
June 1995, the unaffiliated party agreed to reduce this fee, and Century
agreed to waive this closing condition in exchange for Mississippi-6's
agreement to assume liability for one-half of the reduced termination
fee. This liability has been reflected in Mississippi-6's calculation
of Net Indebtedness. See "- Post-Closing Liabilities; Escrow Agreement
-- Post-Closing Adjustment of Merger Consideration."
Accounting Treatment
Century will account for the Merger as a purchase under generally
accepted accounting principles.
Operations After the Merger
After the Closing, Mississippi-6 will be a wholly-owned subsidiary
of Century. The articles of incorporation of Mississippi-6 and the
bylaws of Sub in effect immediately prior to the Effective Time will be
the articles of incorporation and bylaws of Mississippi-6 as the
surviving corporation in the Merger. The officers and directors of Sub
(each of whom are officers or directors of Century) immediately prior to
the Effective Time will serve as the officers and directors of
Mississippi-6 after the Effective Time.
Resales of Century Stock
The Century Stock to be issued to shareholders of Mississippi-6 in
connection with the Merger will be freely transferable under the
Securities Act of 1933, as amended (the "Securities Act"), except for
shares issued to the persons who are "affiliates" of Mississippi-6 on
the Record Date (the "Mississippi-6 Affiliates") for purposes of Rule
145 ("Rule 145") promulgated under the Securities Act. Such persons may
not sell their shares of Century Stock acquired in connection with the
Merger except pursuant to an effective registration statement under the
Securities Act covering such shares, in compliance with Rule 145 or
pursuant to another applicable exemption from the registration
requirements of the Securities Act. As a condition to consummating the
Merger, each Mississippi-6 Affiliate is required to deliver to Century a
written agreement that such person will not sell, pledge, transfer or
otherwise dispose of any shares of Century Stock received in the Merger
in violation of the Securities Act.
Under Rule 145, the sale of Century Stock by a Mississippi-6
Affiliate will be subject to certain restrictions, including the
requirement that (i) Century has filed all reports required to be filed
by Section 13 of the Exchange Act during the preceding twelve months and
(ii) such Century Stock is sold in a "broker's transaction," which is
defined under the Securities Act generally as an unsolicited sale
through a broker who receives a normal commission. Assuming Century has
timely filed all such reports, after the second anniversary of the
Closing Date each Mississippi-6 Affiliate who is not an affiliate of
Century will be able to sell Century Stock without any restriction.
After the third anniversary of the Closing Date, Mississippi-6
Affiliates who are not affiliates of Century will be subject to no
restrictions under Rule 145.
Dissenting Shareholders' Rights
General. Any record shareholder of Mississippi-6 who objects to
the Merger and who follows the procedures proscribed by Article 13 of
the Mississippi Business Corporation Act (the "MBCA") will be entitled
to receive, in lieu of the Merger Consideration, cash equal to the "fair
value" of his shares of Mississippi-6 Stock. "Fair value" is defined in
the MBCA as the value of the shares immediately before the Merger,
excluding any appreciation or depreciation in anticipation thereof
unless exclusion would be inequitable. The procedures set forth in
Article 13 must be strictly complied with. Failure to follow any such
procedures may result in a termination or waiver of dissenters' rights
under Article 13. In the event a shareholder of Mississippi-6 seeking
dissenters' rights forfeits or waives such rights under Article 13, such
shareholder shall immediately thereafter be deemed to have converted his
shares into the right to receive the Merger Consideration as described
herein and such shareholder, in order to receive such consideration,
should submit to the Exchange Agent a Letter of Authorization and any
certificates previously representing shares of Mississippi-6 Stock held
by such shareholder. See "- Procedures for Receiving Merger
Consideration."
Set forth below is a summary of the procedures relating to the
exercise of dissenting shareholders' rights as provided in the MBCA.
The summary does not purport to be complete and is qualified in its
entirety by reference to Sections 79-4-13.01 through 79-4-13.31 of the
MBCA, which have been attached hereto as Appendix D.
Procedures to Perfect Rights. In order to be eligible to exercise
the right to dissent, a Mississippi-6 shareholder must:
(i) give notice in writing to Mississippi-6 prior to the vote on
the Merger that he intends to demand payment for his shares
if the Merger is effectuated; neither a vote against the
Merger Proposal nor a proxy directing such vote shall
satisfy this notice requirement; and
(ii) refrain from voting in favor of the Merger Proposal; a
shareholder need not vote against the Merger Proposal or
take any other affirmative action to satisfy this
requirement.
Mississippi-6 believes that each record shareholder of
Mississippi-6 beneficially holds all of the voting and investment power
associated with their shares. To the extent any shares of Mississippi-6
Stock are beneficially owned by someone other than the record
shareholder, the holders are urged to review the procedures set forth in
Section 79-4-13.03 of the MBCA.
Determination of "Fair Value" by Parties. If the Merger Proposal
is approved at the Special Meeting, Mississippi-6 will be required,
within ten days after the Effective Date, to deliver a written notice
(the "Dissenters Notice") to all shareholders who satisfied the
requirements described above. This notice must, among other things, (i)
state where the shareholder must send his demand for payment ("Payment
Demand") and state where and when the certificates formerly representing
the shareholder's Mississippi-6 Stock must be deposited, (ii) supply a
form for demanding payment that includes the date of the first
announcement to the news media or to shareholders of the terms of the
proposed Merger and which requires that the shareholder certify whether
he acquired beneficial ownership of his shares before that date and
(iii) set a date by which Mississippi-6 must receive the Payment Demand,
which date may not be fewer than 30 nor more than 60 days after the date
the Dissenters' Notice is delivered.
Each dissenting shareholder who receives a Dissenters' Notice will
be required to demand payment and deposit his certificates in accordance
with the terms of the Dissenters' Notice. A shareholder who fails to
timely demand payment or deposit his certificates in the manner required
under the Dissenters' Notice will forfeit his dissenters' rights under
the MBCA, and, in accordance with the Merger Agreement, will be entitled
to the Merger Consideration payable to non-dissenting shareholders under
the Merger Agreement.
Subject to the exceptions described below, upon receipt of a
Payment Demand, Mississippi-6 will be required to pay each dissenting
shareholder who has duly demanded payment and tendered his certificates
the amount Mississippi-6 estimates to be the fair value of his shares,
plus accrued interest from the Effective Date at the average rate then
paid by Mississippi-6 on its principal bank debt. This payment must be
accompanied by, among other things, (i) various specified financial
statements of Mississippi-6 and (ii) an explanation of how the interest
was calculated. Mississippi-6 may elect to withhold payment from a
dissenting shareholder who was not the beneficial owner of the shares on
the date set forth in the Dissenters' Notice as the date of the first
announcement of the terms of the proposed Merger. In such case,
Mississippi-6 shall estimate the fair value of the shares, plus accrued
interest, and shall pay this amount to each dissenter who agrees to
accept it in full satisfaction of his demand.
Thereafter, a dissenter may notify Mississippi-6 in writing of his
estimate of the fair value of his shares and amount of interest due, and
demand payment of his estimate (less any payments previously made) or
reject Mississippi-6's offer and demand payment of the fair value of his
shares and interest due, if, among other circumstances, (i) the
dissenter believes that the amount paid or offered by Mississippi-6 is
less than the fair value of his shares or that the interest due is
incorrectly calculated or (ii) Mississippi-6 fails to timely pay the
dissenter as required under the MBCA. A dissenter waives his right to
demand payment unless he notifies Mississippi-6 of his demand in writing
within 30 days after Mississippi-6 made or offered payment for his
shares.
Judicial Appraisal. Under the MBCA, if a dissenting shareholder's
demand for payment remains unsettled, Mississippi-6 must commence a
proceeding in the Chancery Court for Hinds County, Mississippi (the
"Court") within 60 days after receiving the Payment Demand and petition
the court to determine the fair value of the shares and accrued
interest. If Mississippi-6 does not commence this proceeding within
this 60-day period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
Mississippi-6 will be required to make all dissenters whose
demands remained unsettled parties to the proceeding. The Court will be
authorized to appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The
appraiser shall have the powers described in the order appointing them.
The Court, in the appraisal proceeding, will be required to
determine all costs of the proceeding, including the reasonable
compensation and expense of appraisers appointed by the Court. The
Court will assess these costs against Mississippi-6, except that the
Court may assess costs against all or some of the dissenters, in amounts
the Court finds equitable, to the extent the Court finds the dissenters
acted arbitrarily or in bad faith in demanding payment. The Court may
also assess the fees and expenses of counsel and experts for the
respective parties, in amounts the Court finds equitable, either (i)
against Mississippi-6 and in favor of any and all dissenters if the
Court finds that Mississippi-6 did not substantially comply with certain
specified procedural requirements, or (ii) against either Mississippi-6
or a dissenter if the Court finds that the party against whom the fees
and expenses are assessed acted arbitrarily or in bad faith.
The exercise of these rights may result in a judicial
determination that the fair value of a dissenting shareholder's shares
of Mississippi-6 Stock is higher or lower than the value of the Merger
Consideration payable to the non-dissenting shareholders pursuant to the
Merger Agreement.
Other Considerations. The MBCA provides that, in the absence of
fraud or illegality, the right to dissent is the only remedy provided to
a shareholder objecting to the Merger Proposal. Century's obligation to
consummate the Merger is subject to the condition that the number of
shares of Mississippi-6 Stock held by dissenting shareholders will not
exceed 10% of all of the issued and outstanding Mississippi-6 Stock.
See "- Other Terms of the Merger Agreement -- Regulatory Approvals and
Other Closing Conditions." For discussion of certain tax consequences
associated with the exercise of dissenters' rights, see "- Certain
Federal Income Tax Consequences."
INFORMATION ABOUT MISSISSIPPI-6
Description of the Business
General. Mississippi-6 was organized as a privately-held
corporation in late 1990 to acquire the FCC non-wireline license to
construct and operate a cellular telephone system serving the RSA.
Since acquiring this license in early 1991, Mississippi-6 has been
primarily engaged in providing for the financing, construction and
operation of a cellular telephone system servicing this licensed market,
which has a population of approximately 183,000. As of May 31, 1995,
Mississippi-6 had 3,520 subscribers to its cellular service. For
additional information regarding Mississippi-6's organization, see "The
Merger Proposal - Background of the Merger."
The cellular industry has been in existence for just over ten
years in the United States. Cellular mobile telephone technology was
developed in response to certain limitations of conventional mobile
telephone systems. Compared to such conventional systems, cellular
mobile telephone service is capable of high-quality, high-capacity
communications to and from vehicle-mounted, transportable and hand-held
radio telephones. Although the industry is relative new, it has grown
significantly during this period. According to the Cellular
Telecommunications Industry Association, in February 1995 there were
estimated to be over 25 million cellular customers across the United
States. Cellular service is now available in substantially all areas of
the United States.
Description of RSA. The RSA consists of eight counties located in
central Mississippi northeast of Jackson, Mississippi. Columbus,
Mississippi, which has a metropolitan-wide population of approximately
27,000, is the largest city located in the RSA. Starkville,
Mississippi, which is located within 15 miles of Columbus, has a
population of approximately 18,000. The Columbus-Starkville area
includes Mississippi State University, the Mississippi University for
Women, the Columbus Air Force Base and several local manufacturing
companies. The RSA also includes a 15-mile section of Interstate
Highway 55, a 94-mile section of U.S. Highway 82, and a 60-mile section
of State Highway 25.
Construction and Management of Cellular System. Since its
inception, Mississippi-6 has been managed by Mercury Communications
Company ("Mercury"), a privately-held corporation formed in 1990 to
provide managerial services to cellular companies. Currently Mercury
manages seven RSA cellular systems in six states. Mercury's
shareholders, directors and officers beneficially own approximately
67.9% of the Mississippi-6 Stock. In addition, two of Mississippi-6's
three directors are also shareholders and directors of Mercury, and
William M. Mounger, II acts as the President of both companies.
In 1994, Mississippi-6 terminated its original services agreement
with Mercury and entered into a new three-year management and
construction services agreement with Mercury (the "Service Agreement").
Subject to Mississippi-6's oversight and certain budgetary constraints,
Mercury has agreed under the Service Agreement to (i) manage and
supervise the expansion of Mississippi-6's cellular system, including
developing and implementing plans to construct such other cell sites as
may be necessary to meet customer demands and provide service in the
entire licensed territory in the manner required by the FCC, and (ii)
subject to certain restrictions, manage and supervise the day-to-day
operations of the system, including providing administrative,
operational and marketing services. In exchange for its services,
Mercury is entitled to receive a $5,000 management fee per month,
reimbursement of its direct costs (including the compensation of 14
employees of Mercury who perform services solely for Mississippi-6) and
certain specified indirect costs and (iii) a bonus equal to 5% of an
amount equal to Mississippi-6's net income plus depreciation and
amortization. Either party may terminate the Service Agreement upon,
among other things, 90 days' written notice. For additional information
on the Service Agreement, see the notes to the financial statements of
Mississippi-6 appearing elsewhere herein. As indicated under "The
Merger Proposal - Termination and Amendment of Certain Agreements," the
Service Agreement will be terminated in connection with the Closing.
Construction of Mississippi-6's first cellular radio cell site was
completed in late October 1991. Pending completion of construction,
Mississippi-6 offered cellular service by means of a re-sale agreement
with the wireline provider of cellular service in the RSA. In December
1991 the Company began converting existing customers to services
provided through its own system. Currently, Mississippi-6 has eight
fully-constructed cell sites, each of which utilize analog cellular
voice transmission facilities. The following chart indicates the number
of Mississippi-6's subscribers as of the dates indicated:
Date No. of Subscribers
December 31, 1992 1,706
December 31, 1993 2,539
December 31, 1994 3,372
May 31, 1995 3,520
As indicated below under "-- Regulation," five years after initial
cellular operating licenses are granted, areas unserved by the holder of
the license may be applied for by any qualified party. To avoid the
possibility of forfeiting the right to serve a 36-square mile area in
the southwest corner of the RSA, Mississippi-6 entered into a co-
licensing agreement with the cellular operator of the adjacent market on
April 21, 1995.
Services, Customers and System Usage. Mississippi-6 sells a full
range of vehicle-mounted, transportable, and hand-held portable cellular
telephones. Mississippi-6's customers are able to choose from a variety
of packaged pricing plans which are designed to fit different calling
patterns. Mississippi-6 typically charges its customers separately for
custom-calling features, air time in excess of the packaged amount, and
toll calls. Custom-calling features provided by Mississippi-6 include
call-forwarding, call-waiting, three-way calling, no-answer transfer and
voice mail.
Cellular customers come from a wide range of occupations. They
typically include a large proportion of individuals who work outside of
their office. It is anticipated that average revenue per customer will
continue to decline as additional non-commercial customers who generate
fewer local minutes of use are added as subscribers and as competitive
pressures intensify and place downward pressure on rates.
Marketing. Mississippi-6 markets its services under the
"CellularOne" tradename. Mississippi-6 has engaged five independent
sales agents who are compensated on a commission basis, and who report
to a general manager of Mercury whose efforts are dedicated solely to
Mississippi-6's market.
Regulation. During the 1980's and early 1990's, the FCC awarded
two licenses to provide cellular service in each market. Licenses for
rural service areas (such as the RSA) were granted several years after
the initial licenses were granted for metropolitan service areas. Each
licensee is required to provide service to a designated portion of the
area or population in its licensed area as a condition to maintaining
that license. Initially, one license was reserved for companies
offering local telephone service in the market (the wireline carrier)
and one licensee was available for firms unaffiliated with the local
telephone company (the non-wireline carrier).
Initial operating licenses are granted for ten-year periods and
are renewable upon application to the FCC for periods of ten years.
Licenses may be revoked and license renewal applications denied for
cause. There may be competition for licenses upon the expiration of the
initial ten-year terms and there is no assurance that any license will
be renewed, although the FCC has issued a decision that grants a renewal
expectancy during the license renewal period to incumbent licensees that
substantially comply with the terms and conditions of their cellular
authorizations and the FCC's regulations. Five years after initial
operating licenses are granted, unserved areas within markets previously
granted to licensees may be applied for by any qualified party. The FCC
has rules that govern the procedures for filing and granting such
applications and has established requirements for constructing and
operating systems in such areas. See "-- Construction and Management of
Cellular System."
The completion of acquisitions involving the transfer of control
of a cellular system requires prior FCC approval and, in certain cases,
receipt of other federal and state regulatory approvals. Acquisitions
of minority interests generally do not require FCC approval. Whenever
FCC approval is required, any interested party may file a petition to
dismiss or deny the application for approval of the proposed transfer.
Mississippi-6 is also subject to certain state and local
regulation in some instances. Although the FCC has pre-empted the
states from exercising jurisdiction in the areas of licensing, technical
standards and market structure, the State of Mississippi requires
cellular operators to be certified. In addition, Mississippi regulates
certain aspects of cellular operators' businesses, including the terms
and conditions of service and the technical arrangements and charges for
interconnection with the landline network.
Competition. Competition between cellular providers in each
market is conducted principally on the basis of services and
enhancements offered, the technical quality and coverage of the system,
quality and responsiveness of customer service, and price. Competition
may be intense. Mississippi-6 competes in its licensed market against
Cellular Holdings, Inc., which has assets and resources significantly
greater than Mississippi-6's.
Continued and rapid technological advances in the communications
field, coupled with legislative and regulatory uncertainty, make it
impossible to predict the extent of future competition to cellular
systems or determine which existing or emerging technologies pose the
most viable alternatives to Mississippi-6's cellular operations. These
technologies include (i) personal communications services, as to which
the FCC is currently auctioning additional radio frequency spectrum for
future use, (ii) specialized mobile radio service ("SMR") and enhanced
SMR, (iii) mobile satellite systems and (iv) several other one-way and
two-way paging, beeping, data and other communications services. For
further information on the competitive environment for cellular
companies, reference is made to the reports of Century incorporated
herein by reference. See "Incorporation of Certain Documents by
Reference."
Litigation. Mississippi-6 is a defendant in a lawsuit by a former
Mercury employee seeking $150,000 and punitive damages in connection
with an alleged retaliatory termination and alleged violations of wage
and hour laws. For further information, see Note 10 to Mississippi-6's
financial statements included elsewhere herein.
Other. The Company has no employees on its payroll. See "--
Construction and Management of Cellular System" and "-- Marketing."
Mississippi-6 leases all of its cell sites and office space except for
its Starkville cell site, which it owns.
For further information regarding Mississippi-6, see "Mississippi-
6 Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Mississippi-6's financial statements and the
notes thereto included elsewhere herein.
Security Ownership of Certain Beneficial Owners and Management
As of the Record Date, there were outstanding 1,000 shares of
Mississippi-6 Stock, the only class of capital stock of Mississippi-6.
The following table shows the number of shares of Mississippi-6 Stock
owned of record and beneficially as of the Record Date by (i) each
person known by Mississippi-6 to own beneficially 5% or more of the
outstanding Mississippi-6 Stock, (ii) each of Mississippi-6's directors
and executive officers and (iii) all directors and executive officers of
Mississippi-6 as a group. Beneficial ownership has been determined in
accordance with Rule 13d-3 promulgated under the Exchange Act. Unless
otherwise indicated, (i) each person has been engaged in the principal
occupation listed below for at least five years and (ii) all information
is presented as of Record Date and all shares indicated as beneficially
owned are held with sole voting and investment power.
<TABLE>
<CAPTION>
Current
Management No. of Shares
Name and Address of Principal Position with Beneficially Percent
Beneficial Owner<FN1> Occupation Mississippi-6 Owned of Class
<S> <C> <C> <C> <C>
David A. Bailey Chief executive officer Director and 374.14<FN2> 37.41%
and principal stockholder Vice President
of several cable
television companies
Wirt A. Yerger, III Private investor since Vice President 116.60 11.66%
January 1, 1995; chief
executive officer or
principal of several
cellular and
communications companies;
Vice President of Ross &
Yerger, an independent
insurance agency, between
1982 and January 1, 1995
William M. Mounger, II President of Mercury Director and 104.83 10.48%
Communications Company President
since 1990
Bruce G. Allbright, III Principal of Bruce --- 58.53 5.85%
Allbright Agency, Inc.
(cotton merchants) since
1983; private investor in
several telecommunications
and agricultural
partnerships
James T. Thomas, IV Partner, Brunini, Secretary 57.33 5.73%
Grantham, Grower & Hewes,
PLLC (a law firm)
Sanford C. Thomas <FN3> Investment adviser and Director 24.75 2.48%
consultant, Crown Partners
All directors and --- --- 620.32 62.03%
executive officers
as a group (4
persons)
____________________
</TABLE>
<FN1>With the exception of Mr. Allbright, whose
mailing address is 4325 North Golden State Boulevard, Suite
105, Fresno, California 93722, the mailing address of the
directors and officers of Mississippi-6 is c/o Mississippi-6
Cellular Corporation, 1410 Livingston Lane, Jackson,
Mississippi 39213-8003.
<FN2>Includes 47.07 shares owned of record by Mr.
Bailey's wife and 47.07 shares owned of record by his 20-
year-old son.
<FN3>James T. Thomas, IV and Sandford C. Thomas are
brothers.
__________________
Dividends on and Market Prices of Mississippi-6 Stock
No established trading market exists with respect to
shares of Mississippi-6 Stock. As of the Record Date, there
were 24 holders of record of Mississippi-6 Stock. Since its
inception in late 1990, Mississippi-6 has not declared or
paid dividends with respect to the Mississippi-6 Stock.
MISSISSIPPI-6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis of Mississippi-6's
financial condition and results of operations should be read
in conjunction with the financial statements of
Mississippi-6 included elsewhere herein.
Background
Mississippi-6 was formed in late 1990 to acquire the
non-wireline cellular operating license issued by the FCC
and to construct and operate a cellular system serving the
RSA. Since acquiring this license in 1991, Mississippi-6
has been engaged in the construction, development and
operation of a cellular telephone system to serve this
licensed market, which has a population of approximately
183,000.
Year Ended December 31, 1994 Compared to Year Ended December
31, 1993
Results of Operations
<TABLE>
<CAPTION>
Year ended December 31,
_______________________
1994 1993
_________ __________
<S> <C> <C>
Operating revenues
Service revenues $2,582,676 $ 2,010,485
Equipment sales 222,709 260,998
_________ _________
2,805,385 2,271,483
_________ _________
Operating expenses
System operations 786,341 656,334
Cost of equipment sold 298,487 311,065
General and administrative 640,849 617,995
Marketing and selling 250,804 188,352
Management fees 118,190 72,000
Depreciation and amortization 480,140 428,956
Other, net 13,142 10,000
_________ _________
2,587,953 2,284,702
_________ _________
Operating income (loss) 217,432 (13,219)
Interest expense (332,908) (287,889)
Other income (expense), net (4,749) (9,277)
_________ __________
Net loss $ (120,225) $ (310,385)
========= ==========
</TABLE>
Operating income increased in 1994 by $230,000 to $217,000
from an operating loss of $13,000 in 1993. Operating revenues increased
$534,000, which more than offset an increase in operating expenses of
$303,000.
Service revenues, which increased $572,000 in 1994 compared
to 1993, are derived from charges to customers for cellular services,
including monthly access, cellular air time, roamer charges to other
carriers' customers, and other related services. Approximately $400,000
of the increase was attributable to a 38% increase in the average number
of customers and $170,000 was due to increased roaming revenues. The
average units in service during 1994 and 1993 were approximately 2,900
and 2,100, respectively. The average monthly service revenue per
customer declined to $74 in 1994 from $80 in 1993. It has been an
industry-wide trend that early subscribers have normally been the
heaviest users and that a higher percent of new subscribers tend to be
lower usage customers. The average monthly service revenue per customer
may further decline (i) as market penetration increases and additional
lower usage customers are activated and (ii) as competitive pressures
intensify and place downward pressure on rates. During the second
quarter of 1995, Mississippi-6 added a new rate plan and reduced usage
charges on certain other rate plans, the overall effect of which is not
expected to materially adversely affect the results of operations of
Mississippi-6.
System operations expenses increased $130,000 to $786,000 in
1994 and marketing and selling expenses increased to $251,000 from
$188,000. These are primarily variable costs, such as salaries and
commissions, which vary with the numbers of customers and/or customer
usage of the system.
General and administrative expenses increased to $641,000
during 1994 from $618,000 in 1993 primarily due to costs incurred as a
result of the increased number of customers.
Management fees were $118,000 in 1994 and $72,000 in 1993.
Mississippi-6 attained certain performance levels in 1993 that for the
first time obligated Mississippi-6 to pay management bonuses to Mercury;
such bonuses for 1993 in the amount of $36,000 were not determined or
recorded until 1994. Also in 1994 Mississippi-6 entered into a new
management and construction service agreement with Mercury. See
"Information About Mississippi-6 - Description of the Business --
Construction and Management of Cellular System."
Depreciation and amortization includes $110,000 of
amortization of licensing costs in 1994 and 1993. The $51,000 increase
in depreciation expense in 1994 was primarily due to higher levels of
property, plant and equipment.
Interest expense payable under Mississippi-6's variable-rate
long-term debt increased in 1994 due principally to an increase in the
prime rate.
Liquidity and Capital Resources. During 1993,
Mississippi-6's primary source of funds was proceeds from the issuance
of debt. However, in 1994 funds were provided by operating activities.
Net cash provided by operating activities during 1994 was $536,000; net
cash used by operating activities during 1993 was $63,000. Mississippi-
6's accompanying statements of cash flows identifies major differences
between net loss and cash provided or used by operating activities for
1994 and 1993. For additional information relating to the operating
activities of Mississippi-6, see "- Results of Operations."
Net cash used in investing activities during 1994 and 1993
was $595,000 and $353,000, respectively, all of which represented
additions to property, plant and equipment. During 1994 two cell sites
and an extender were constructed.
Net cash used in financing activities during 1994 was
$169,000; net cash provided by financing activities during 1993 was
$653,000. During 1993 Mississippi-6 borrowed $664,000. Repayment of
borrowings during 1994 and 1993 were $169,000 and $11,000, respectively.
Subsequent Event. During the first quarter of 1995,
Mississippi-6 discharged its then-existing debt to Novatel Finance, Inc.
("Novatel") in the amount of $3,300,000 and refinanced such debt with a
line of credit from Trustmark National Bank ("Trustmark") in Jackson,
Mississippi. Maximum borrowings available under the facility are
$5,000,000. Mississippi-6 intends to utilize borrowings available under
this new facility to, among other things, complete payment of certain
1994 construction costs, construct a new cell site during 1995, and open
and/or renovate certain sales offices.
Three Months Ended March 31, 1995 Compared to Three Months
Ended March 31, 1994
Results of Operations
Three months ended
March 31,
__________________________
1995 1994
_________ ________
Operating revenues
Service revenues $ 704,099 595,997
Equipment sales 33,711 50,195
_________ _________
737,810 646,192
_________ _________
Operating revenues
System operations 200,749 133,284
Cost of equipment sold 65,111 61,239
General and administrative 202,887 152,343
Marketing and selling 62,672 46,007
Management fees 15,000 54,000
Depreciation and amortization 144,510 120,180
_________ _________
690,929 567,053
_________ _________
Operating income 46,881 79,139
Interest expense (105,683) (72,599)
Other income (expense), net (31,157) 430
_________ _________
Net income (loss) $ (89,959) 6,970
========= =========
Operating income for the three months ended March 31, 1995 was
$47,000 compared to operating income of $79,000 for the quarter ended
March 31, 1994. Operating revenues, which increased $92,000, were more
than offset by an increase in operating expenses of $146,000.
Service revenues increased $108,000 in 1995 compared to the first
quarter of 1994 due to an increase in the average number of customers.
The average units in service during the first quarter of 1995 and 1994
was approximately 3,400 and 2,600, respectively. The average monthly
service revenue per customer decreased to $69 in the first quarter of
1995 from $76 during the first quarter of 1994, continuing the trend
discussed under "- Year Ended December 31, 1994 Compared to Year Ended
December 31, 1993 -- Results of Operations." As stated in that section,
during the second quarter of 1995 Mississippi-6 added a new rate plan
and reduced usage charges on certain other rate plans, the overall
effect of which is not expected to materially adversely affect the
results of operations of Mississippi-6. Mississippi-6 anticipates that
the new rate plan and the reduction in usage charges may result in an
increase in the number of subscribers.
Operating expenses, exclusive of management fees and depreciation
and amortization, increased primarily due to costs incurred as a result
of serving the increased number of customers. Mississippi-6 anticipates
that in the latter part of 1995 operating costs will stabilize and the
increase in operating costs per subscriber will decrease from the levels
incurred during the first quarter of 1995.
Management fees were less during the first quarter of 1995
compared to the first quarter of 1994 primarily because Mississippi-6
entered into a new management agreement with Mercury in 1994 and because
of 1993 management bonuses recorded in 1994 (see "- Year Ended December
31, 1994 Compared to Year Ended December 31, 1993 -- Results of
Operations").
Depreciation and amortization includes $27,500 of amortization of
licensing costs in 1995 and 1994. The increase in depreciation and
amortization was primarily due to higher levels of property, plant and
equipment.
Interest expense increased $33,000 primarily due to $15,000 of
fees paid in connection with the new financing and the effect of an
increase in the prime rate. The average interest rate payable under
Mississippi-6's variable-rate long term debt was 9.8% in 1995 and 8% in
1994.
Other income and expense for the three months ended March 31, 1995
included the writeoff of $29,000 of unamortized deferred debt costs
related to the Novatel debt, which was refinanced during the first
quarter of 1995.
Liquidity and Capital Resources. During the first three months of
1994, net cash provided by operating activities was $92,000. During the
first three months of 1995, net cash used in operating activities was
$181,000. Mississippi-6's accompanying statements of cash flows
identifies major differences between net income or loss and cash
provided or used by operating activities for each of these three-month
periods. For additional information related to the operating activities
of Mississippi-6, see "-- Results of Operations."
Net cash used in investing activities during the first three
months of 1995 and 1994 was $305,000 and $70,000, respectively, all of
which represented additions to property, plant and equipment. The
increase was principally because a new cell site was constructed and two
cell sites were expanded during the first three months of 1995.
Net cash provided by financing activities during the first three
months of 1995 was $173,000, which primarily represented the excess of
the amounts borrowed under Mississippi-6's new line of credit from
Trustmark over the refinancing of the Novatel debt and the repayment of
notes payable to shareholders. For additional information, see "- Year
Ended December 31, 1994 Compared to Year Ended December 31, 1993 --
Subsequent Event."
Other Matters
The telecommunications industry is currently undergoing various
regulatory, competitive and technological changes that make it
impossible to determine the form or degree of future regulation and
competition affecting Mississippi-6's cellular operations. The FCC has
recently allocated additional frequency spectrum for mobile
communications technologies that will or may be competitive with
cellular, including Personal Communications Services (for which the FCC
began to auction operating licenses in late 1994) and mobile satellite
services. The FCC has also authorized certain specialized mobile radio
service licensees to configure their systems so as to operate in a
manner similar to cellular systems. Some of these licensees have
announced their intention to create a nationwide mobile communications
system to compete with cellular systems. In addition, certain
competition which is expected to compete primarily with wireline
services may also result in competition with cellular service.
INFORMATION ABOUT CENTURY
General
Century is a regional diversified telecommunications company that
is primarily engaged in providing local telephone and cellular mobile
telephone services largely in the central, north-south corridor of the
United States. At December 31, 1994, the Company's telephone
subsidiaries served approximately 455,000 telephone access lines,
primarily in rural, suburban and small urban communities in 14 states,
with its largest customer bases located in Wisconsin, Louisiana,
Michigan and Ohio. Through its cellular operations, the Company
controls approximately 7.1 million pops in 28 MSAs (Metropolitan
Statistical Areas) and 31 RSAs (Rural Service Areas), primarily
concentrated in Michigan, Louisiana, Texas, Arkansas and Mississippi.
Century is the majority owner and operator in 19 of these MSAs and 12 of
these RSAs. At December 31, 1994, Century's majority-owned cellular
systems had more than 211,000 cellular subscribers. During 1994,
telephone operations provided 72% of Century's consolidated revenues,
with mobile communications operations providing the balance.
According to published sources and data derived therefrom, Century
is the 16th largest local exchange telephone company in the United
States based on the number of access lines served and is the 17th
largest cellular telephone company in the United States based on
Century's owned pops.
Century's general strategy has been to provide diversified
telecommunications services and to achieve growth principally through
the acquisition of attractive telecommunications companies. Century is
continually evaluating the possibility of acquiring additional telephone
access lines and cellular interests, either in exchange for cash or
securities of Century, or both. Although Century's primary focus will
be on acquiring telephone and cellular interests that are proximate to
Century's properties, other communications interests may also be
acquired.
For further information, see "Incorporation of Certain Documents
by Reference."
Price Range of Stock
Century Stock is listed on the New York Stock Exchange and is
traded under the symbol CTL. The following table sets forth the high
and low per share sales prices of Century Stock as reported on the New
York Stock Exchange composite tape for each of the quarters indicated:
High Low
1993:
First quarter $33-3/8 $ 26
Second quarter 33-1/8 28
Third quarter 31-5/8 27-1/8
Fourth quarter 30-3/8 23-1/4
1994:
First quarter 27-7/8 21-7/8
Second quarter 27-5/8 22-5/8
Third quarter 30-1/2 25
Fourth quarter 32-1/4 27-1/2
1995:
First quarter 33-1/8 29
Second quarter (through July 10, 1995)......31-3/4 27-1/4
On April 17, 1995, the trading day preceding the execution of the
Merger Agreement, and on July 10, 1995, the trading day preceding the
date of this Information Statement, the closing per share sales price of
Century Stock as reported on the New York Stock Exchange composite tape
was $29-7/8 and $__-__, respectively. As of the Record Date, there were
approximately 6,990 shareholders of record of Century Stock.
No assurance can be given as to the market price of Century Stock
before, at or after the Effective Date. Because the market price of
Century Stock issuable in connection with the Merger may increase or
decrease, you are urged to obtain current market quotations.
Selected Consolidated Operating and Financial Data
The following table presents certain selected consolidated
operating and financial data for Century as of and for each of the years
ended in the five-year period ended December 31, 1994, and as of or for
the three-month periods ended March 31, 1994 and 1995. The data, except
for the selected operating data, for each of the years in the five-year
period ended December 31, 1994 are derived from Century's consolidated
financial statements, which have been audited by KPMG Peat Marwick LLP,
independent certified public accountants. The consolidated financial
statements as of December 31, 1993 and 1994 and for each of the years in
the three-year period ended December 31, 1994, and the independent
auditors' report thereon, are incorporated by reference herein. The
unaudited financial information as of March 31, 1995 and for the three-
month periods ended March 31, 1994 and 1995 has not been audited by
independent public accountants; however, in the opinion of management,
all adjustments (which include only normal recurring adjustments)
necessary to present fairly the results of operations for the three-
month periods have been included therein. The results of operations for
the first three months of 1995 are not necessarily indicative of the
results of operations which might be expected for the entire year.
<TABLE>
<CAPTION>
December 31, March 31,
_______________________________________________ _________
1990 1991 1992 1993 1994 1995
____ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C>
Selected Operating Data:
Telephone access lines 304,915 314,819 397,300 434,691 454,963 465,029
Cellular units in service -
majority owned markets 35,815 51,083 73,084 116,484 211,710 223,404
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
________________________________________________ __________________
1990 1991 1992 1993 1994 1994 1995
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Income Statement Data:
Revenues:
Telephone $ 215,771 $ 235,796 $ 297,510 $ 348,485 $ 389,438 $ 91,770 $ 100,276
Mobile Communications 34,594 46,731 62,092 84,712 150,802 29,210 42,149
_________ _________ _________ _________ _________ _________ _________
Total revenues 250,365 282,527 359,602 433,197 540,240 120,980 142,425
========= ========= ========= ========= ========= ========= =========
Operating income (loss):
Telephone $ 70,654 $ 80,039 $ 103,672 $ 114,902 $ 137,992 $ 30,890 $ 34,345
Mobile Communications (9,553) (4,952) 5,956 9,906 31,443 4,996 13,211
_________ _________ _________ _________ _________ _________ _________
Total operating income 61,101 75,087 109,628 124,808 169,435 35,886 47,556
Gain on sales of assets 4,094 --- 3,985 1,661 15,877 --- 5,909
Income (loss) from
unconsolidated cellular
entities (68) 697 1,692 6,626 15,698 2,564 4,724
Interest expense (24,132) (22,504) (27,166) (30,149) (42,577) (8,502) (11,396)
Minority interest 289 344 (436) (516) (3,377) (698) (1,946)
Other income and expense 7,210 3,865 4,869 3,826 6,482 889 848
_________ _________ _________ _________ _________ _________ _________
Income before income taxes
and cumulative effect of
changes in accounting
principles 48,494 57,489 92,572 106,256 161,538 30,139 45,695
Income taxes (17,396) (20,070) (32,599) (37,252) (61,300) (10,938) (18,695)
_________ _________ _________ _________ _________ _________ _________
Income before cummulative
effect of changes in
accounting principles 31,098 37,419 59,973 69,004 100,238 19,201 27,000
Cumulative effect of
changes in accounting
principles --- --- (15,668) --- --- --- ---
_________ _________ _________ _________ _________ _________ _________
Net income $ 31,098 $ 37,419 $ 44,305 $ 69,004 $ 100,238 $ 19,201 $ 27,000
========= ========= ========= ========= ========= ========= =========
Primary earnings per share:
Primary earnings per
share before cumulative
effect of changes in
accounting principles $ .66 $ .79 $ 1.23 $ 1.35 $ 1.88 $ .36 $ .48
Cumulative effect of
changes in accounting
principles --- --- (.32) --- --- --- ---
_________ _________ _________ _________ _________ _________ _________
Primary earnings per
share $ .66 $ .79 $ .91 $ 1.35 $ 1.88 $ .36 $ .48
========= ========= ========= ========= ========= ========= =========
Fully diluted earnings
per share:
Fully diluted earnings
per share before
cumulative effect of
changes in accounting
principles $ .66 $ .79 $ 1.22 $ 1.32 $ 1.80 $ .35 $ .47
Cumulative effect of
changes in accounting
principles --- --- (.31) --- --- --- ---
_________ _________ _________ _________ _________ _________ _________
Fully diluted earnings
per share $ .66 $ .79 $ .91 $ 1.32 $ 1.80 $ .35 $ .47
========= ========= ========= ========= ========= ========= =========
Dividends per common
share $ .280 $ .287 $ .293 $ .310 $ .320 $ .0800 $ .0825
========= ========= ========= ========= ========= ========= =========
Average primary shares
outstanding 46,809 47,305 48,500 51,206 53,419 52,817 56,184
========= ========= ========= ========= ========= ========= =========
Average fully diluted
shares outstanding 46,944 47,432 48,653 55,892 58,135 57,478 58,660
========= ========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
December 31, March 31,
________________________________________________________ ___________
1990 1991 1992 1993 1994 1995
____ ____ ____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Selected Balance Sheet Data:
Net property, plant and equipment $ 490,957 $ 534,998 $ 675,878 $ 827,776 $ 947,131 $ 984,897
Excess cost of net assets
acquired, net 110,013 114,258 217,688 297,158 441,436 447,293
Total assets 706,411 764,539 1,040,487 1,319,390 1,643,253 1,692,151
Long-Term debt 230,715 205,453 346,944 364,433 518,603 427,022
Stockholders' equity 280,915 319,977 385,449 513,768 650,236 789,048
</TABLE>
For additional information, see Management's Discussion and
Analysis of Financial Condition and Results of Operations included in
Century's filings under the Exchange Act incorporated herein by
reference.
COMPARATIVE RIGHTS OF CENTURY AND MISSISSIPPI-6 SHAREHOLDERS
If the Merger is consummated, all shareholders of Mississippi-6,
other than dissenting shareholders, will become shareholders of Century.
The rights of Century's shareholders are governed by and subject to the
provisions of the Louisiana Business Corporation Law (the "LBCL"), the
Articles of Incorporation of Century (the "Century Articles") and the
Bylaws of Century (the "Century Bylaws"), rather than the provisions of
the MBCA, the Articles of Incorporation of Mississippi-6 (the
"Mississippi-6 Articles"), the Bylaws of Mississippi-6 (the
"Mississippi-6 Bylaws") and the First Amended and Restated Shareholders
Agreement among Mississippi-6 and the shareholders thereof dated as of
January 1, 1995 (the "Shareholders' Agreement") that currently govern
the rights of Mississippi-6's shareholders. The following is a brief
summary of certain differences between the rights of shareholders of
Century and the rights of shareholders of Mississippi-6 and is qualified
in its entirety by reference to the relevant provisions of (i) the LBCL,
(ii) the MBCA, (iii) the Century Articles, (iv) the Century Bylaws, (v)
the Mississippi-6 Articles, (vi) the Mississippi-6 Bylaws, (vi) the
Shareholders' Agreement and (viii) Century's Registration Statement
filed under the Exchange Act, as modified by its Current Report on Form
8-K dated June 12, 1991, which has been incorporated herein by
reference. See "Incorporation of Certain Documents by Reference."
Voting Rights of Common Stock
Under the Century Articles, each share of Century Stock that has
been beneficially owned by the same person or entity continuously since
May 30, 1987 generally entitles the holder thereof to ten votes on all
matters duly submitted to a vote of shareholders. Otherwise, each share
entitles the holder thereof to one vote per share. Accordingly, each
share issued in connection with the Merger will entitle the holder to
one vote, and, subject to the possibility of Century issuing ten-vote
shares in connection with business combinations accounted for as
poolings of interest, each other share of Century Stock issued by
Century in the future will entitle the holder to one vote. Holders of
Century Stock do not have cumulative voting rights. As a result, the
holders of more than 50% of the voting power may elect all of the
directors if they so desire. As of March 13, 1995, the trustee for two
of Century's employee benefit plans was the record holder of Century
Stock having approximately 38% of the total voting power of all classes
of Century's capital stock. The trustee votes these shares in
accordance with the instructions of Century's employees. For a
discussion of the possible antitakeover effects of these provisions, see
the discussion below under the heading "- Laws and Organizational
Document Provisions with Possible Antitakeover Effects."
The holders of Mississippi-6 Stock are entitled to one vote per
share on all matters duly submitted to a shareholder vote. However, in
connection with the election and removal of directors, holders of
Mississippi-6 Stock have cumulative voting rights.
Preferred Stock
Under the Century Articles, the Board of Directors of Century is
authorized, without shareholder action, to issue preferred stock
("Century Preferred Stock") from time to time and to establish the
designations, preferences and relative, optional or other special rights
and qualifications, limitations and restrictions thereof, as well as to
establish and fix variations in the relative rights as between holders
of any one ore more series thereof. The authority of the Board of
Directors includes, but is not limited to, the determination or
establishment of the following with respect to each series of Century
Preferred Stock that may be issued: (i) the designation of such series,
(ii) the number of shares initially constituting such series, (iii) the
dividend rate and conditions and the dividend and other preferences, if
any, in respect of Century Preferred Stock or among the series of
Century Preferred Stock, (iv) whether, and upon what terms, the Century
Preferred Stock would be convertible into or exchangeable for other
securities of Century, (v) whether, and to what extent, holders of
Century Preferred Stock will have voting rights, and (vi) the
restrictions, if any, that are to apply on the issue or reissue of any
additional shares of Century Preferred Stock.
As of December 31, 1994, 90,707 shares of certain series of
Century Preferred Stock were outstanding. At such time, such shares
were convertible into a total of approximately 193,000 shares of Century
Stock, and 4,260 of such shares were immediately redeemable at the
option of the Board of Directors. Each holder of the currently
outstanding Century Preferred Stock is entitled to receive cumulative
dividends prior to the distribution or declaration of dividends in
respect of the Century Stock and is entitled to vote as a class with the
Century Stock. Shares of Century Preferred Stock that have been
beneficially owned by the same person or entity continuously since May
30, 1987 entitle the holder to cast ten votes per share in the same
manner as the Century Stock. Upon the dissolution, liquidation or
winding up of Century, the holders of the currently outstanding Century
Preferred Stock are entitled to receive, pro rata with all other such
holders, a per share amount equal to $25.00 plus any unpaid accumulated
dividends thereon prior to any payments on the Century Stock.
For a discussion of the possible antitakeover effects of the
existence of undesignated Century Preferred Stock, see the discussion
below under "-Laws and Organizational Document Provisions with Possible
Antitakeover Effects."
The Mississippi-6 Articles do not authorize the issuance of
preferred stock, and no shares of Mississippi-6 preferred stock are
outstanding.
Preferred Stock Purchase Rights
In November 1986, the Board of Directors of Century declared a
distribution of one preferred stock purchase right (a "Right") for each
outstanding share of Century Stock, payable to shareholders of record at
the close of business on November 28, 1986, and authorized the issuance
of one Right with respect to each share of Century Stock (including the
shares to be issued in connection with the Merger) issued between such
date and the Distribution Date (as defined below). Each Right currently
entitles the registered holder to purchase from Century eight twenty-
sevenths of one one-hundredth of a share of a new series of preferred
stock, designated as Series AA Junior Participating Preferred Stock,
$25.00 par value (the "Series AA Preferred Stock"), at a price of $85
per one one-hundredth of a share (the "Purchase Price"). The Rights are
represented by the Century Stock certificates and are not exercisable or
transferable apart from the Century Stock certificates until the close
of business on the tenth day following the earlier to occur of (i) a
public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person"), other than Century, any subsidiary of
Century or any employee benefit plan or employee stock plan of Century
or of any subsidiary of Century (an "Exempt Person"), has acquired, or
obtained the right to acquire, beneficial ownership of securities of
Century representing 15% or more of the outstanding Century Stock or
such date as a majority of the Board of Directors shall become aware of
such acquisition of the Century Stock (the "Stock Acquisition Date") or
(ii) the commencement of, or public announcement of an intention to
make, a tender or exchange offer (other than a tender or exchange offer
by an Exempt Person) the consummation of which would result in the
ownership of 30% or more of the outstanding Century Stock (the earlier
of such dates being called the "Distribution Date"). As soon as
practicable following the Distribution Date, separate certificates
evidencing the Rights will be mailed to holders of record of Century
Stock as of the close of business on the Distribution Date and such
separate certificates alone will evidence the Rights from and after the
Distribution Date and could begin trading separately from the Century
Stock.
The Rights will expire at the close of business on November 27,
1996 unless earlier redeemed by Century as described below. Until a
Right is exercised, the holder, as such, will have no rights as a
shareholder of Century, including, without limitation, the right to vote
or to receive dividends.
If (i) any Acquiring Person acquires or obtains the right to
acquire beneficial ownership of 15% or more of the outstanding shares of
Century Stock (other than pursuant to an all-cash tender offer for all
of the outstanding Century Stock that increases such Acquiring Person's
beneficial ownership to 80% or more of the outstanding shares of Century
Stock and as to which Century has received an opinion from its
investment bankers that the per share price offered is not inadequate),
or (ii) during such time as there is an Acquiring Person there shall
occur any reclassification of securities (including any reverse stock
split), recapitalization of Century, or any merger or consolidation of
Century with any of its subsidiaries or any other transaction or
transactions involving Century or any of its subsidiaries (whether or
not involving the Acquiring Person) that have the effect of increasing
by more than 1% the proportionate share of the outstanding shares of any
class of equity securities of Century or any of its subsidiaries
directly or indirectly owned or controlled by the Acquiring Person, then
proper provision will be made so that each holder of record of a Right,
other than Rights beneficially owned by an Acquiring Person (which will
become void), will thereafter be entitled to receive, upon payment of
the Purchase Price, that number of shares of Century Stock having a
market value at the time of the transaction equal to two times the
Purchase Price. The holder of any Rights that are or were at any time,
on or after the earlier of the Stock Acquisition Date or the
Distribution Date, beneficially owned by an Acquiring Person which is or
was involved in or which caused or facilitated, directly or indirectly,
the event or transaction or transactions described in this paragraph
shall not be entitled to the benefit of the adjustment described in this
paragraph.
At any time until ten days following the Stock Acquisition Date
(subject to extension by the Board of Directors), Century may redeem the
Rights in whole, but not in part, at a price of $.05 per Right. Under
certain circumstances, the decision to redeem shall require the
concurrence of a majority of the Continuing Directors (which is
generally defined as those members of the Board of Directors of Century
who are members of the Board immediately prior to the Stock Acquisition
Date). Immediately upon the action of the Board of Directors of Century
authorizing redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of rights will be to
receive the redemption price without any interest thereon.
The number of shares of Series AA Preferred Stock or other
securities issuable upon exercise of the Rights and the Purchase Price
are subject to certain adjustments from time to time upon certain
occurrences. For a discussion of the possible antitakeover effects of
the Rights, see the discussion below under "- Laws and Organizational
Document Provisions with Possible Antitakeover Effects."
Mississippi-6 does not have any preferred stock purchase rights or
similar rights outstanding.
Dividends, Redemptions and Stock Repurchases
Under the LBCL, dividends may be declared by the Board of
Directors and paid out of surplus, provided that in no event shall
dividends be paid when the corporation is insolvent or would thereby be
made insolvent. The LBCL provides that if no surplus is available,
dividends may, subject to certain exceptions, be paid out of any net
profits for the then current fiscal year or the preceding fiscal year,
or both. The LBCL further provides that shareholders must be notified
of any dividend paid out of capital surplus. The MBCA generally
provides that no distribution, including dividend distributions, may be
made if, after giving effect thereto, the corporation would not be able
to pay its debts as they become due in the usual course of business, or
the corporation's total assets would be less than the sum of its total
liabilities.
Under the LBCL, a corporation may redeem or repurchase its shares
out of surplus or, in certain circumstances, stated capital, provided in
either event that it is solvent and will not be rendered insolvent
thereby, and provided further that the net assets are not reduced to a
level below the aggregate liquidation preferences of any shares that
will remain outstanding after the redemption. Under the MBCA and the
Mississippi-6 Bylaws, Mississippi-6 may redeem or repurchase its
outstanding shares if, after giving effect thereto, Mississippi-6 is
able to satisfy the solvency tests described in the immediately
preceding paragraph relating to the payment of dividends.
The Century Articles, in accordance with the LBCL, provides that
cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares that are not claimed by the shareholders entitled
thereto within one year after the dividend or redemption price became
payable or the shares became issuable revert in full ownership to
Century, and Century's obligation to pay such dividend or redemption
price or issue such shares, as appropriate, will thereupon cease,
subject to the power of the Board of Directors to authorize such payment
or issuance following the reversion. The Mississippi-6 Articles do not
contain a comparable provision.
Approval of Extraordinary Transactions
To authorize any (i) merger or share exchange, (ii) sale, lease or
exchange of all or substantially all of a corporation's assets other
than in the course of ordinary business, (iii) voluntary dissolution or
(iv) amendments to the articles of incorporation with respect to which
dissenters' rights would be created, the MBCA requires, subject to
certain limited exceptions, the approval of a majority of all votes
entitled to be cast, unless the corporation's organizational documents
otherwise provide. The Shareholders' Agreement provides that a sale of
all or substantially all of the property of Mississippi-6 must be
approved by shareholders owning at least 60% of the Mississippi-6 Stock.
To authorize substantially similar transactions, the LBCL requires,
subject to certain limited exceptions, the affirmative vote of the
holders of two-thirds (or such larger or smaller proportion, not less
than a majority, as the articles of incorporation may provide) of the
voting power present or represented at the shareholder meeting at which
the transaction is considered and voted upon. The Century Articles
provide that certain provisions thereof (primarily those relating to
approving certain business combinations, holding shareholder meetings,
removing directors, considering tender offers and amending bylaws) may
be amended only upon, among other things, the affirmative vote of 80% of
the votes entitled to be cast by all shareholders and two-thirds of the
votes entitled to be cast by all shareholders other than Related Persons
(which is defined therein). For a discussion of certain supermajority
votes required to approve certain business combinations or to amend the
Century Bylaws, see the discussion below under "- Laws and
Organizational Documents with Possible Antitakeover Effects -- Louisiana
Fair Price Statute" and "- Bylaws."
The MBCA and LBCL provide that the holders of outstanding shares
of a class of stock shall be entitled to vote as a class in connection
with any proposed amendment to the corporation's articles of
incorporation, whether or not such holders are entitled to vote thereon
by the articles of incorporation, if such amendment would have certain
specified adverse effects on the holders of such class of stock.
Liability of Directors and Officers
Under both the MBCA and LBCL, shareholders are entitled to bring
suit, generally in an action on behalf of the corporation, to recover
damages caused by breaches of the duty of care and the duty of loyalty
owed to a corporation and its shareholders by directors and, to a
certain extent, officers. The MBCA and the LBCL permit corporations to
(i) include provisions in their articles of incorporation that limit
personal liability of directors and officers for monetary damages
resulting from breaches of the duty of care, subject to certain
exceptions that are substantially the same for each state, and
(ii) indemnify officers and directors in certain circumstances for their
expenses and liabilities incurred in connection with defending pending
or threatened suits, as more fully described below.
Pursuant to the authority granted by the MBCA, the Shareholders'
Agreement exempts all officers and directors of Mississippi-6 from
personal liability to Mississippi-6 or its shareholders for monetary
damages during the term of the Shareholders' Agreement for any action
taken, or the failure to take any action, except for: (i) a financial
benefit received to which a director or officer is not entitled; (ii) an
intentional infliction of harm on Mississippi-6 or its shareholders;
(iii) an unlawful distribution as defined in the MBCA; and (iv) an
intentional violation of criminal law. In addition, under the
Shareholders' Agreement Mississippi-6 and its shareholders have agreed
not to sue the officers or directors of Mississippi-6 for any actions
taken while performing their duties as officers and directors subject to
the exceptions described in the preceding sentence.
The Century Articles include a provision that eliminates the
personal liability of a director or officer to Century and its
shareholders for monetary damages resulting from breaches of the duty of
care to the full extent permitted by Louisiana law and further provides
that any amendment or repeal of this provision will not affect the
elimination of liability accorded to any director or officer for acts or
omissions occurring prior to such amendment or repeal.
Under both the MBCA and LBCL, corporations are permitted, and in
some circumstances required, to indemnify, among others, current and
prior officers, directors, employees or agents of the corporation for
expenses and liabilities incurred by such parties in connection with
defending pending or threatened suits instituted against them in their
corporate capacities, provided certain specified standards of conduct
are determined to have been met. These corporate statutes further
permit corporations to purchase insurance for indemnifiable parties
against liability asserted against or incurred by such parties in their
corporate capacities. Both a Mississippi and a Louisiana corporation
may provide indemnification rights more expansive than those permitted
by statute (subject only to the limitation that no payments be made in
respect of gross negligence or willful misconduct).
The Century Bylaws and the Mississippi-6 Bylaws provide for
mandatory indemnification for current and former directors and officers
of Century to the full extent permitted by Louisiana law and Mississippi
law, respectively. The Mississippi-6 Bylaws provide that Mississippi-6
shall in certain circumstances not indemnify nor advance expenses to any
officer or director to the extent any insurance policy would provide
coverage for such payments. The Mississippi-6 Bylaws also provide that
any indemnification or advancement of expenses to an officer or director
by Mississippi-6 in connection with a proceeding by or in the right of
the corporation must be reported to the shareholders of Mississippi-6 in
writing before the notice of the next shareholders' meeting.
Dissenters' Rights
Under the LBCL, a shareholder has the right to dissent from most
types of mergers or consolidations, or from the sale, lease, exchange or
other disposition of all or substantially all of the corporation's
assets, if such transaction is approved by less than 80% of the
corporation's total voting power. The right to dissent is not available
with respect to sales pursuant to court orders of or sales for cash on
terms requiring distribution of all or substantially all of the net
proceeds to the shareholders in accordance with their respective
interests within one year after the date of the sale. Moreover, no
dissenters' rights are available with respect to (i) shareholders
holding shares of any class of stock that are listed on a national
securities exchange, subject to certain exceptions, or (ii) shareholders
of a surviving corporation whose approval is not required in connection
with the transaction. The MBCA provides dissenters' rights to
shareholders in any of the following corporate actions: (i) a merger if
shareholder approval is required or if the corporation is a subsidiary
that merges with its parent; (ii) a plan of share exchange if the
corporation is being acquired and if the shareholder is entitled to vote
on the plan; (iii) a sale or exchange of all or substantially all of the
property of the corporation that is not in the usual and regular course
of business, but not including a court ordered sale or sale pursuant to
a plan where the shareholders will receive the proceeds within one year
after the date of sale; (iv) an amendment to the Mississippi-6 Articles
that materially and adversely affects rights in respect of a dissenter's
shares; and (v) any corporate action taken pursuant to a shareholder
vote to the extent dissenters' rights have been provided in the articles
of incorporation, bylaws or a Board resolution. For a more complete
description of dissenters' rights under the MBCA, see "The Merger
Proposal - Dissenting Shareholders' Rights" and the relevant sections of
the MBCA attached as Appendix D.
In order to exercise dissenters' rights under the LBCL, a
dissenting shareholder must follow certain procedures similar to the
procedures that a dissenting shareholder under the MBCA must follow as
discussed above under "The Merger Proposal - Dissenting Shareholders'
Rights."
Inspection Rights
Under the LBCL, any shareholder, except a business competitor, who
has been the holder of record of at least 5% of the outstanding shares
of any class of the corporation's stock for a minimum of six months has
the right to examine the records and accounts of the corporation for any
proper and reasonable purpose. Two or more shareholders who have each
held shares for six months may aggregate their stock holdings to attain
the required 5% threshold. Business competitors, however, must have
owned at least 25% of all outstanding shares for a minimum of six months
to obtain such inspection rights. As shareholders of a public company
subject to the Exchange Act, Century's shareholders are entitled to
receive periodic reports concerning Century's operations and
performance.
The Mississippi-6 Bylaws provide shareholders of Mississippi-6
with the same inspection rights as provided for in the MBCA. Under the
MBCA, any shareholder of Mississippi-6 shall have the right to inspect
and copy any of the records of the corporation that are required to be
kept at the corporation's principal office. In addition, the MBCA
provides that any shareholder shall have the right to inspect and copy
for any proper purpose all other relevant books and accounts that are
directly connected to the purpose of requesting the inspection.
Moreover, under the MBCA Mississippi-6 is obligated to furnish to
shareholders its financial statements within 120 days after the close of
each fiscal year.
Transfer Restrictions
Generally the LBCL and MBCA both permit corporations to place
reasonable restrictions upon the transfer of capital stock. No such
restrictions have been imposed generally on the Century Stock. For a
discussion of certain restrictions on the transferability of the Century
Stock to be issued to the Shareholders in connection with the Merger,
see "Risk Factors - Considerations Relating to the Merger --
Restrictions on Transferability." The Shareholders' Agreement governing
the Mississippi-6 Stock restricts the transfer of shares except (i) to a
shareholder's spouse, lineal descendant, sibling or family trust or (ii)
by bequest or through intestate succession to the shareholder's family.
All other transfers of Mississippi-6 Stock must receive the consent of
the Board of Directors and shareholders owning 70% of the Mississippi-6
Stock and are further subject to "first refusal" purchase rights of
Mississippi-6 and, thereafter, the shareholders. If such consents are
granted and Mississippi-6 and the other shareholders do not exercise
their purchase rights with respect to the shares being offered for
transfer, the selling shareholder will be permitted, but not obligated,
to sell the shares subject to the prospective transfer. The
Shareholders' Agreement has similar provisions for transfers of
Mississippi-6 Stock upon the death, insolvency and incompetency of a
shareholder.
In addition, the Shareholders' Agreement provides that any
purchaser who purchases a majority of the Mississippi-6 Stock shall be
required to offer to purchase all of each shareholder's stock at the
average purchase price paid for all other Mississippi-6 Stock acquired
by the purchaser within one year of the transaction by which a majority
of the stock was acquired. The Shareholders' Agreement provides, to the
extent feasible, that the construction and operation of the Mississippi-
6 cellular telephone system shall be financed through borrowed funds.
If a shareholder refuses to guarantee or loan his proportionate share of
such funds, the Board of Directors may issue additional shares of
Mississippi-6 Stock to which shareholders other than the noncontributing
shareholders will have a right of first refusal. For a discussion of
other terms of the Shareholders' Agreement see "- Approval of
Extraordinary Transactions" and "- Liability of Directors and Officers."
Laws and Organizational Document Provisions with Possible Antitakeover
Effects
Both the LBCL and MBCA permit corporations to include in their
articles of incorporation any provisions not inconsistent with law that
regulates the internal affairs of the corporation, including provisions
that are intended to encourage any person desiring to acquire a
controlling interest in the corporation to do so pursuant to a
transaction negotiated with the corporation's board of directors rather
than through a hostile takeover attempt. These provisions are intended
to assure that any acquisition of control of the corporation will be
subject to review by the board to take into account the interests of all
of the corporation's shareholders. However, some shareholders may find
these provisions to be disadvantageous to the extent that they could
limit or preclude meaningful shareholder participation in certain
transactions such as mergers or tender offers and render more difficult
or discourage certain takeovers in which shareholders might receive for
some or all of their shares a price that is higher than the prevailing
market price at the time the takeover attempt is commenced. These
provisions might further render more difficult or discourage proxy
contests, the assumption of control by a person of a large block of the
corporation's voting stock or any other attempt to influence or replace
the corporation's incumbent management.
Unlike the Mississippi-6 Articles, the Century Articles contain
provisions that are designed to ensure meaningful participation of the
Board of Directors in connection with proposed takeovers. Moreover,
Louisiana has adopted statutes that regulate takeover attempts. Set
forth below is a discussion of the provisions of the Century Articles,
Century Bylaws and the LBCL that may reasonably be expected to affect
the incidence and outcome of takeover attempts.
Louisiana Fair Price Statute. Louisiana has adopted a statute
(the "Louisiana Fair Price Statute") that is intended to deter the use
of "two-tier" tender offers in which an "Interested Shareholder" obtains
a controlling interest in the shares of a Louisiana corporation having
100 or more beneficial shareholders at a price in excess of the market
value of the corporation's voting stock and subsequently seeks in the
"second tier" to compel a "Business Combination" in which the
consideration paid to the remaining shareholders is greatly reduced.
Under the statute, an Interested Shareholder is defined to include any
person (other than the corporation, its subsidiaries or its employee
benefit plans) who is the beneficial owner of shares of capital stock
representing 10% or more of the total voting power of a corporation.
The term Business Combination is broadly defined to include most
corporate actions that an Interested Shareholder might contemplate after
acquiring a controlling interest in a corporation in order to increase
his or her share ownership or reduce his or her acquisition debt. These
"second tier" transactions include any merger or consolidation of the
corporation involving an Interested Shareholder, any disposition of
assets of the corporation to an Interested Shareholder, any issuance to
an Interested Shareholder of securities of the corporation meeting
certain threshold amounts and any reclassification of securities of the
corporation having the effect of increasing the voting power or
proportionate share ownership of an Interested Shareholder. Under the
Louisiana Fair Price Statute, a Business Combination must be recommended
by the board of directors and approved by the affirmative vote of the
holders of 80% of the corporation's total voting power and two-thirds of
the total voting power excluding the shares held by the Interested
Shareholder (in addition to any other votes required under law or the
corporation's articles of incorporation), unless the transaction is
approved by the board of directors prior to the time the Interested
Shareholder first obtained such status or the Business Combination
satisfies certain minimum price, form of consideration and procedural
requirements. Although the statute protects shareholders by encouraging
an Interested Shareholder to negotiate with the board of directors or to
satisfy the minimum price, form of consideration and procedural
requirements imposed thereunder, it does not prevent an acquisition of a
controlling interest of a corporation by an Interested Shareholder who
does not contemplate initiating a "second tier" transaction. The
Century Articles contain an article that provides for substantially
similar protections.
Although Mississippi has a similar statute, it does not apply to a
corporation with fewer than 500 beneficial shareholders unless such
corporation, in its articles of incorporation, opts into the statutory
provisions. Mississippi-6 has not made such an election.
Louisiana Control Share Statute. The Louisiana Control Share
Statute adopted in 1987 provides that, subject to certain exceptions,
any shares of certain publicly-traded Louisiana corporations acquired by
a person or group (an "Acquiror"), other than an employee benefit plan
or related trust of the corporation, in an acquisition that causes such
Acquiror to have the power to vote or direct the voting of shares in the
election of directors in excess of 20%, 33-1/3% or 50% thresholds shall
have only such voting power as shall be accorded by the affirmative vote
of, among others, the holders of a majority of the votes of each voting
group entitled to vote separately on the proposal, excluding all
"interested shares" (as defined below), at a meeting that, subject to
certain exceptions, is required to be called for that purpose upon the
Acquiror's request. "Interested shares" is defined by the statute to
sterilize the vote of the corporation's management and the Acquiror, and
includes all shares as to which the Acquiror, any officer of the
corporation and any director of the corporation who is also an employee
of the corporation may exercise or direct the exercise of voting power.
If either the Acquiror fails to comply with certain specified notice
requirements or the shareholders vote against according voting rights to
the shares obtained by the Acquiror, the corporation has the right to
redeem the shares held by the Acquiror for their fair value. The
Company has adopted a bylaw, effective May 23, 1995, which provides that
this statute will not apply to control share acquisitions of its capital
stock.
Mississippi has a similar Control Share Act. However, because
Mississippi-6 is not an issuing public corporation nor a domestic
corporation with 100 or more shareholders of record, the statute is not
applicable to Mississippi-6.
Evaluation of Tender Offers. The LBCL and MBCA expressly permit
and the Century Articles expressly require the Board of Directors, when
considering a tender offer, exchange offer, or Business Combination
(defined therein substantially similarly to the definition of such term
set forth above under "-- Louisiana Fair Price Statute"), to consider,
among other factors, the social and economic effects of the proposal on
the corporation, its subsidiaries, and their respective employees,
customers, creditors and communities. One effect of this provision may
be to discourage, in advance, an acquisition proposal to the extent it
strengthens the position of Century's Board of Directors in dealing with
any potential offeror who seeks to enter into a negotiated transaction
with Century prior to or during a takeover attempt. Another effect of
such provision may be to dissuade shareholders who might potentially be
displeased with the Board's response to an acquisition proposal from
engaging Century in costly and time-consuming litigation.
Unissued Stock. As discussed above under "- Preferred Stock," the
Board of Directors of Century is authorized, without action of its
shareholders, to issue Century Preferred Stock. One of the effects of
the existence of undesignated preferred stock (and authorized but
unissued common stock) may be to enable the Board of Directors to make
more difficult or to discourage an attempt to obtain control of Century
by means of a merger, tender offer, proxy contest or otherwise, and
thereby to protect the continuity of Century's management. If, in the
due exercise of its fiduciary obligations, the Board of Directors were
to determine that a takeover proposal was not in Century's best
interest, such shares could be issued by the Board of Directors without
shareholder approval in one or more transactions that might prevent or
make more difficult or costly the completion of the takeover transaction
by diluting the voting or other rights of the proposed acquiror or
insurgent shareholder group, by creating a substantial voting block in
institutional or other hands that might undertake to support the
position of the incumbent Board of Directors, by effecting an
acquisition that might complicate or preclude the takeover, or
otherwise. In this regard, the Century Articles grant the Board of
Directors broad power to establish the rights and preferences of the
authorized and unissued Century Preferred Stock, one or more series of
which could be issued entitling holders (i) to vote separately as a
class on any proposed merger or consolidation; (ii) to elect directors
having terms of office or voting rights greater than those of other
directors; (iii) to convert Century Preferred Stock into a greater
number of shares of Century Stock or other securities; (iv) to demand
redemption at a specified price under prescribed circumstances related
to a change of control; or (v) to exercise other rights designed to
impede or discourage a takeover. The issuance of shares of Century
Preferred Stock pursuant to the Board of Directors' authority described
above may adversely affect the rights of the holders of Century Stock.
The Mississippi-6 Articles have no comparable provision.
Time-Phase Voting. As discussed above, each outstanding share of
Century Stock entitles the holder to one vote unless it has been
beneficially owned by the same person or entity continuously since May
30, 1987, in which case it generally entitles the holder to ten votes
until transfer. The existence of multi-vote stock may render more
difficult a change of control of Century or the removal of incumbent
management. To the extent that voting power will be concentrated in
shareholders entitled to ten votes per share, it may be difficult or
impossible to consummate a merger, tender offer, proxy contest or
similar transaction opposed by such shareholders. Because this
provision also has the effect of increasing the voting power of the
shares held by Century's management, employees and benefit plans, a
takeover attempt or an effort to remove incumbent directors or
management that is opposed by management or the employees of Century
could be less likely to succeed. For more information on the voting
rights associated with the Century Stock and the voting power controlled
by the trustee for two of Century's employee benefit plans, see "-
Voting Rights of Common Stock."
Preferred Stock Purchase Rights. As discussed above under the
heading "- Preferred Stock Purchase Rights," Century has issued Rights
entitling the registered holder to purchase certain securities of
Century. The Rights will cause substantial dilution to a person or
group that attempts to acquire Century without conditioning the offer on
the redemption of the Rights. The Rights should not interfere with any
merger or other business combination approved by the Board of Directors
of Century since the Board of Directors may, at its option, at any time
until ten days following the Stock Acquisition Date, redeem all but not
less than all the then outstanding Rights for a redemption price of $.05
per Right.
Classified Board of Directors. Both the MBCA and the LBCL permit
a Board of Directors to be divided into classes of directors, with each
class to be as nearly equal in size as possible, serving staggered
multi-year terms. Unlike the Mississippi-6 Articles, the Century
Articles provide for three classes of directors serving staggered three-
year terms. Classification of the Board of Directors of Century tends
to make more difficult the change of a majority of its composition and
to assure the continuity and stability of Century's management and
policies, since a majority of the directors at any given time will have
served on the Board of Directors for at least one year. Absent the
removal of directors, a minimum of two annual meetings of shareholders
is necessary to effect a change in control of the Board of Directors.
The classified Board provision applies to every election of directors,
regardless of whether Century is or has been the subject of an
unsolicited takeover attempt. The shareholders may, therefore, find it
more difficult to change the composition of the Board of Directors for
any reason, including performance, and the classified Board structure
will thereby tend to perpetuate existing management of Century. In
addition, because the provision will make it more difficult to change
control of the Board of Directors, it may discourage tender offers or
other transactions that shareholders may believe would be in their best
interests.
Removal of Directors. The MBCA provides that each director shall
hold office for the term for which he is elected and until his successor
is elected and qualified, unless removed from office with or without
cause by the shareholders at any special shareholders meeting called for
that purpose, unless the articles of incorporation provide that a
director may be removed only for cause. The Mississippi-6 Articles do
not contain such a provision.
Under the LBCL, subject to certain exceptions, the shareholders by
vote of a majority of the total voting power may at any time remove from
office any director. The Century Articles, however, provide that
directors of Century may be removed from office only for cause and only
by vote of the holders of at least 50% of the total voting power and, at
any time that there is a Related Person (defined therein substantially
similarly to the definition of Interested Shareholder set forth above
under "-- Louisiana Fair Price Statue"), by the holders of a majority of
the votes entitled to be cast by all shareholders other than the Related
Person, voting as a separate group. This provision precludes a third
party from gaining control of Century's Board of Directors by removing
incumbent directors without cause and filling the vacancies created
thereby with his or her own nominees. However, such provision also
tends to reduce, and in some instances eliminate, the power of
shareholders, even those with a majority interest in Century, to remove
incumbent directors.
Restrictions on Taking Shareholder Action. The MBCA provides that
a special meeting of shareholders may be called by the Board of
Directors, by such person or persons as so authorized by the articles of
incorporation or the bylaws and, unless the articles of incorporation
provide otherwise, the holders of at least ten percent of all votes
entitled to be cast on any issue proposed to be considered at a proposed
special meeting after delivering a signed and dated demand for the
special meeting to the secretary of the corporation. The Mississippi-6
Bylaws provide that a special meeting of shareholders may be called by
the Chief Executive Officer or the Secretary in his absence and the
Board of Directors, and must be called by the Board or officers of
Mississippi-6 at the written request of shareholders holding 10% of all
votes entitled to be cast on any issue proposed to be considered at such
special meeting. Under the Century Articles, holders of a majority of
the total voting power are entitled to call a special meeting of
shareholders. This higher threshold substantially reduces the ability
of shareholders interested in effecting corporate action from calling a
special meeting between annual meetings.
Under the MBCA, shareholders may effect corporate action without a
meeting if a consent describing the action is signed by all the
shareholders entitled to vote on the action. Under the Century
Articles, shareholder action may be taken only at a duly called annual
or special meeting of shareholders.
The Century Bylaws require shareholders who wish to nominate
directors or submit other matters for consideration at shareholders'
meetings to provide timely advance written notice to Century. This
bylaw may have the effect of precluding contests for the election of
directors and other shareholder initiatives if the specified bylaw
procedures are not followed, and may discourage or deter a third party
from conducting a solicitation of proxies. The Mississippi-6 Articles
and Bylaws have no comparable provisions.
Bylaws
Under the Century Articles, the Century Bylaws may be amended and
new bylaws may be adopted by the shareholders, upon the affirmative vote
of the holders of 80% of the total voting power and two-thirds of the
votes entitled to be cast by all shareholders other than Related Persons
(as defined above), or by the Board of Directors, upon, among other
things, the affirmative vote of a majority of all directors, other than
those affiliated with any Interested Shareholder, who served prior to
the time such Interested Shareholder obtained such status.
Under the Mississippi-6 Bylaws, the power to adopt, amend or
repeal the Mississippi-6 Bylaws is vested in the Board of Directors and
shareholders of Mississippi-6. Any such action requires the affirmative
vote of a majority of the directors present at a Board meeting or
shareholders present at a shareholders meeting, respectively.
Vacancies
Under the LBCL, any vacancy on the board of directors (including
those resulting from an increase in the authorized number of directors)
may be filled by the remaining directors, subject to the right of the
shareholders to fill such vacancy. Under the Century Articles, changes
in the number of directors may not be made without, among other things,
the affirmative vote of 80% of the directors. Louisiana law expressly
provides that a board of directors may declare vacant the office of a
director if he or she is interdicted or adjudicated an incompetent, is
adjudicated a bankrupt or becomes incapacitated by illness or other
infirmity and cannot perform his or her duties for a period of six
months or longer.
Pursuant to the Mississippi-6 Bylaws, any vacancy on the Board of
Directors of Mississippi-6 may be filled by a majority of the
shareholders entitled to vote, the Board of Directors, or, if the
directors remaining in office constitute fewer than a quorum of the
Board, such remaining directors may fill the vacancy by the affirmative
vote of a majority of all such directors remaining in office.
LEGAL MATTERS
Certain legal matters in connection with this offering have been
passed upon for Century by Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P., New Orleans, Louisiana.
EXPERTS
The consolidated financial statements and related schedule of
Century as of December 31, 1993 and 1994, and for each of the years in
the three-year period ended December 31, 1994 incorporated by reference
herein have been incorporated by reference herein in reliance upon the
report, also incorporated by reference herein, of KPMG Peat Marwick LLP,
independent certified public accountants, and upon the authority of said
firm as experts in accounting and auditing. The report of KPMG Peat
Marwick LLP refers to changes in the methods of accounting for income
taxes and postretirement benefits other than pensions in 1992.
The balance sheets of Mississippi-6 as of December 31, 1994 and
1993, and the related statements of operations, changes in stockholders'
equity and cash flows for each of the years then ended, included
elsewhere herein, have been so included in reliance on the report of
Breazeale, Saunders & O'Neil, Ltd., independent certified public
accountants, also included elsewhere herein, given on the authority of
such firm as experts in accounting and auditing.
_____________________
INDEX TO MISSISSIPPI-6 FINANCIAL STATEMENTS
Page
Independent Auditors' Report........................................... F-2
Financial Statements:
Balance Sheets as of December 31, 1994 and 1993 and as of
March 31, 1995 (unaudited)..................................... F-3
Statements of Operations for the Years Ended
December 31, 1994 and 1993 and the Three Months Ended
March 31, 1995 and 1994 (unaudited)............................ F-4
Statements of Changes in Stockholders' Equity
for the Years Ended December 31, 1994 and 1993 and the
Three Months Ended March 31, 1995 (unaudited).................. F-5
Statements of Cash Flows for the Years Ended
December 31, 1994 and 1993 and the Three Months Ended
March 31, 1995 and 1994 (unaudited)............................ F-6
Notes to Financial Statements - December 31, 1994 and 1993....... F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Mississippi-6 Cellular Corporation:
We have audited the accompanying balance sheets of
Mississippi-6 Cellular Corporation as of December 31,
1994 and 1993, and the related statements of operations,
changes in stockholders' equity, and cash flows for the
years then ended. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates
made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the financial
position of Mississippi-6 Cellular Corporation as of
December 31, 1994 and 1993, and the results of its operations
and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.
BREAZEALE, SAUNDERS & O'NEIL, LTD.
March 3, 1995, except for the second paragraph in note 11,
as to which the date is April 18, 1995.
<PAGE>
MISSISSIPPI-6 CELLULAR CORPORATION
Balance Sheets
<TABLE>
<CAPTION>
December 31, March 31,
1994 1993 1995
__________ ________ __________
(unaudited)
<S> <C> <C> <C>
ASSETS
Current assets
Cash $ 334,067 562,646 20,654
Accounts receivable from customers,
less allowance for doubtful accounts
of $60,681 in 1994, $75,701 in 1993,
and $60,681 (unaudited) at March 31,
1995 241,916 189,792 344,986
Accounts receivable from related party --- 2,543 ---
Inventories 61,641 36,158 111,013
Prepaid expenses 26,233 34,880 37,476
Deposit with management company 33,000 --- 33,000
__________ ________ _________
Total current assets 696,857 826,019 547,129
Plant and equipment, net (at cost) 1,658,847 1,433,922 1,846,780
Licensing costs, net of accumulated
amortization of $424,031 in 1994 and
$314,031 in 1993, and $451,532
(unaudited) at March 31, 1995 1,775,969 1,885,969 1,748,468
Deferred charges, net of accumulated
amortization of $32,845 in 1994,
$22,927 in 1993, and $7691 (unaudited)
at March 31, 1995 32,832 42,751 1,676
Other assets 18,534 41,693 12,606
_________ _________ _________
$4,183,039 4,230,354 4,156,659
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 339,084 146,505 360,000
Notes payable to related parties 250,500 250,500 ---
Accounts payable to trade creditors 245,464 95,713 205,004
Account payable to related party 63,371 --- 61,733
Customer deposits 31,516 13,365 31,516
Accrued interest to related parties 58,754 37,363 ---
Commissions payable 26,843 21,494 1,084
Other accrued expenses 30,152 46,148 47,515
_________ _________ _________
Total current liabilities 1,045,684 611,088 706,852
Long-term debt, less current maturities 2,991,379 3,353,065 3,393,790
_________ _________ _________
Total liabilities 4,037,063 3,964,153 4,100,642
_________ _________ _________
Stockholders' equity
Common stock, $1 par value, 100,000
shares authorized and 1,000 shares
issued and outstanding 1,000 1,000 1,000
Additional paid-in capital 2,399,000 2,399,000 2,399,000
Accumulated deficit (2,254,024) (2,133,799) (2,343,983)
_________ _________ _________
Total stockholders' equity 145,976 266,201 56,017
_________ _________ _________
$4,183,039 4,230,354 4,156,659
========= ========= =========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MISSISSIPPI-6 CELLULAR CORPORATION
Statements of Operations
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
_______________________ ___________________________
1994 1993 1995 1994
__________ _________ __________ __________
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Service operations
Revenues $2,582,676 2,010,485 704,099 595,997
_________ _________ __________ __________
Costs and expenses
System operations 786,341 656,334 200,749 133,284
General and administrative 640,849 617,995 202,887 152,343
Marketing and selling 250,804 188,352 62,672 46,007
Management fees 118,190 72,000 15,000 54,000
Depreciation 370,140 318,956 117,010 92,680
Amortization of license 110,000 110,000 27,500 27,500
_________ _________ __________ __________
Total costs and expenses 2,276,324 1,963,637 625,818 505,814
_________ _________ __________ __________
Service operating income 306,352 46,848 78,281 90,183
_________ _________ __________ __________
Equipment sales
Revenues 222,709 260,998 33,711 50,195
_________ _________ __________ __________
Costs and expenses
Cost of equipment sold 298,487 311,065 65,111 61,239
Inventory writedown 13,142 10,000 --- ---
_________ _________ __________ __________
Total costs and expenses 311,629 321,065 65,111 61,239
_________ _________ __________ __________
Loss on equipment sales (88,920) (60,067) (31,400) (11,044)
_________ _________ __________ __________
Operating income (loss) 217,432 (13,219) 46,881 79,139
Other income (expense), net (4,749) (9,277) (31,157) 430
_________ _________ __________ __________
Income (loss) before interest expense 212,683 (22,496) 15,724 79,569
_________ _________ __________ __________
Interest expense
Interest expense - related parties 21,391 16,283 2,708 4,373
Interest expense - other 311,517 271,606 102,975 68,226
_________ _________ __________ __________
Total interest expense 332,908 287,889 105,683 72,599
_________ _________ __________ __________
Net income (loss) $ (120,225) (310,385) (89,959) 6,970
========= ========= ========== ==========
Net income (loss) per share of common stock $ (120.23) (310.39) (89.96) 6.97
========= ========= ========== ==========
Weighted average shares of common
stock outstanding 1,000 1,000 1,000 1,000
========= ========= ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MISSISSIPPI-6 CELLULAR CORPORATION
Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Total
Additional Accum- Stock-
Common Paid-in ulated holders'
Stock Capital Deficit Equity
_______ _________ _________ _______
<S> <C> <C> <C> <C>
Balance at December 31, 1992 $ 1,000 2,399,000 (1,823,414) 576,586
Net loss --- --- (310,385) (310,385)
_______ _________ _________ _______
Balance at December 31, 1993 $ 1,000 2,399,000 (2,133,799) 266,201
Net loss --- --- (120,225) (120,225)
_______ _________ _________ _______
Balance at March 31, 1994 $ 1,000 2,399,000 (2,254,024) 145,976
Net loss (unaudited) --- --- (89,959) (89,959)
_______ _________ _________ _______
Balance at March 31, 1995
(unaudited) $ 1,000 2,399,000 (2,343,983) 56,017
======= ========= ========= =======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MISSISSIPPI-6 CELLULAR CORPORATION
Statements of Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
1994 1993 1995 1994
__________ ________ ________ ________
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income loss $ (120,225) (310,385) (89,959) 6,970
__________ ________ ________ ________
Add (deduct) adjustments to
reconcile net income loss to net cash
provided (used) by operating activities:
Depreciation 370,140 318,956 117,010 92,680
Amortization 119,919 119,917 29,980 26,931
Debt extinguishment expenses --- --- 28,677 ---
Net effect of changes in assets and
liabilities:
Accounts receivable (52,124) 28,998 (103,070) (9,295)
Accounts receivable from related party 2,543 (2,543) --- 2,543
Inventory (25,483) 3,966 (49,372) (10,411)
Prepaid expenses 8,647 (507) (11,243) 3,503
Deposit with management company (33,000) --- --- (33,000)
Other assets 23,159 21,611 5,928 5,402
Accounts payable 149,751 (153,743) (40,460) (6,374)
Accounts payable to a related party 63,371 (41,924) (1,638) 30,382
Customer deposits 18,151 5,515 --- 7,100
Accrued interest to related parties 21,391 23,372 (58,754) 4,373
Commissions payable 5,349 (35,506) (25,759) (17,118)
Other accrued expenses (15,996) (41,012) 17,363 (11,758)
_________ _________ ________ ________
Total adjustments 655,818 247,100 (91,338) 84,958
_________ _________ ________ ________
Total cash provided (used) by operating
activities 535,593 (63,285) (181,297) 91,928
_________ _________ ________ ________
Cash flows from investing activities
Additions to plant and equipment (595,065) (353,070) (304,943) (70,463)
_________ _________ ________ ________
Cash flows from financing activities
Proceeds from borrowings --- 663,674 3,753,790 ---
Repayment of borrowings (169,107) (11,050) (3,580,963) (23,356)
_________ _________ _________ ________
Total cash provided (used) by financing
activities (169,107) 652,624 172,827 (23,356)
_________ _________ _________ ________
Net increase (decrease) in cash (228,579) 236,269 (313,413) (1,891)
Cash - beginning of year 562,646 326,377 334,067 562,646
_________ _________ _________ ________
Cash - end of period $ 334,067 562,646 20,654 560,755
========= ========= ========= ========
Supplemental disclosure of cash flow information
Cash paid for interest $ 335,341 265,710 133,748 68,226
========= ========= ========= ========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MISSISSIPPI-6 CELLULAR CORPORATION
Notes to Financial Statements
December 31, 1994 and 1993
(1) Summary of Significant Accounting Policies
A summary of significant accounting policies for
Mississippi-6 Cellular Corporation (the "Company")
follows:
(a) Organization and Operations
The Company is a Mississippi corporation which is
principally engaged in the ownership and operation
of a rural cellular telephone system in northeast
Mississippi.
The Company was incorporated November 29, 1990.
In April, 1991, the Company began selling cellular
services to customers by means of a re-sale
agreement with the wire-line competitor in the
Mississippi-6 Rural Service Area ("RSA") market.
Construction of the Company's first cellular radio
cell site was completed in late October, 1991. In
December, 1991, the Company began converting
existing customers to its system.
(b) Plant and Equipment
Equipment is recorded at cost. Depreciation has
been provided using the straight-line method over
the estimated useful lives of the assets.
(c) Inventory
Inventories are stated at the lower of cost or
market with cost determined on a specific
identification basis.
(d) Licensing Costs
Pursuant to approval from the Federal
Communications Commission ("FCC"), the Company
purchased the authorization granted by the FCC
("Permit") to construct the non-wireline cellular
telecommunications system in the Mississippi-6 RSA
from Montgomery Cellular Partnership for a
purchase price of $2,200,000. The cost of
obtaining the Permit has been capitalized as
Licensing Costs and is being amortized over a
twenty (20) year period. Amortization expense for
licensing costs amounted to $110,000 annually for
the years ended December 31, 1994 and 1993.
(e) Deferred Charges
Deferred charges represent capitalized legal fees
relating to the organization of the Company and
obtaining a financing agreement with NovAtel
Finance, Inc. Organizational costs are being
amortized over a five year period. Financing
costs are being amortized over the life (seven
years) of the loan. Amortization of deferred
charges amounted to $9,919 and $9,917 for the
years ended December 31, 1994 and 1993,
respectively.
(f) Revenues
Revenues from operations consist of charges to
customers for monthly service access, cellular
airtime usage, toll charges, roamer charges and
vertical services. Revenues are recognized as
services are rendered. Equipment sales are
recognized upon delivery to the customer and
reflect charges to customers for cellular
telephone equipment purchased.
(g) Cash and Cash Equivalents
For purposes of the statements of cash flows, the
Company considers cash in operating bank accounts
and cash on hand as cash equivalents.
(h) Reclassifications
Certain reclassifications have been made to the
1993 financial statements to conform to the 1994
presentation.
(2) Plant and Equipment
A summary of plant and equipment follows:
<TABLE>
<CAPTION>
December 31, March 31,
_____________________ ___________
1994 1993 1995
_________ _________ ___________
(unaudited)
<S> <C> <C> <C>
Cellular plant and equipment $ 2,391,808 1,918,367 2,584,028
Leasehold improvements 31,404 29,339 43,582
Land 41,350 --- 41,350
Office equipment 20,449 16,110 23,778
Furniture and fixtures 30,219 30,219 54,139
Vehicles 23,176 --- 23,176
Construction-in-progress 52,857 2,164 126,153
_________ _________ _________
Total plant and equipment 2,591,263 1,996,199 2,896,206
Less accumulated depreciation (932,416) (562,277) (1,049,426)
_________ _________ _________
Plant and equipment, net $ 1,658,847 1,433,922 1,846,780
========= ========= =========
</TABLE>
Depreciation expense for the years ended December 31,
1994 and 1993 was $370,140 and $318,956, respectively.
(3) Accounts Receivable from Related Party
The amount receivable from related party in 1993, of
$2,543 is due from Mercury Communications Company.
(4) Accounts Payable to a Related Party
The amount payable to a related party in 1994 of
$63,371 is payable to Mercury Communications Company.
(5) Notes Payable to Related Parties
Short-term notes payable totalling $250,500 in 1994
and 1993, are due to the stockholders on demand.
Until such time as these amounts are repaid, they will
accrue interest at a rate equal to Chase Manhattan
Bank prime. Interest accrued amounted to $58,754 and
$37,363 as of December 31, 1994 and 1993,
respectively.
(6) Income Taxes
The Company has elected, with the consent of its
stockholders, to be taxed as an "S" Corporation under
Internal Revenue Code Section 1362. Accordingly, no
income taxes have been reported in the accompanying
financial statements. Income from the Corporation is
reported in the stockholders' individual Federal and
State income tax returns. The net difference between
the tax bases and the reported amounts of the
Company's assets and liabilities was approximately
$100,000 as of December 31, 1994.
(7) Long-Term Debt
A summary of long-term debt follows:
<TABLE>
<CAPTION>
1994 1993
______ ______
<S> <C> <C>
Notes payable to NovAtel Finance, Inc.
under a loan agreement bearing interest
at a rate equal to Chase Mahattan Bank
prime plus 2% per annum (10.5% and 8% at
December 31, 1994 and 1993, respectively) $3,330,463 3,499,570
Less current maturities (339,084) (146,505)
_________ _________
Long-term debt, less current maturities $2,991,379 3,353,065
========= =========
</TABLE>
On August 17, 1991, the Company entered into a
Loan and Security Agreement ("NovAtel Loan Agreement")
with NovAtel Finance, Inc. The loan has been
structured as a line of credit to be drawn upon by the
Company as needed. Availability of borrowing additional
funds under this line of credit expired in 1993.
Amounts borrowed under the NovAtel Loan Agreement are
secured by all of the assets of the Company and a
pledge by the stockholders of their shares of stock.
Interest under the NovAtel Loan Agreement is payable
monthly on the outstanding indebtedness. Principal is
to be repaid over five years commencing with the twenty-
fifth (25th) month from the date of each note (draw),
and for the next fifty-nine (59) months thereafter. A
schedule of principal repayments by year follows:
Year of Payment Payment Amount
_______________ ______________
Year 1 0
Year 2 0
Year 3 1/15th
Year 4 2/15th
Year 5 3/15th
Year 6 4/15th
Year 7 5/15th
The terms of the NovAtel Loan Agreement also include,
among others, restrictions on incurring additional
indebtedness and on paying dividends.
A summary of maturities of long-term debt at December
31, 1994, follows:
Year Ending December 31, Amount
________________________ _________
1995 $ 339,084
1996 595,727
1997 829,769
1998 997,515
1999 474,067
Thereafter 94,301
_________
$ 3,330,463
=========
(8) Related Parties
The Company is managed by Mercury Communications
Company ("Mercury") pursuant to an RSA Management and
Construction Services Agreement (the "Agreement")
entered into by the Company and Mercury. Certain of
the directors and shareholders of the Company are also
directors and shareholders of Mercury.
The Agreement provides for the management and
supervision of the construction, and on-going
operations of the Company's cellular system.
Mercury's compensation for these services consists of
a management fee of $5,000 per month. In the event of
the termination of the Agreement, Mercury is entitled
to receive additional compensation in the form of a
transfer fee of $72,000. The Agreement also provides
for Mercury to receive management bonuses if certain
performance levels are met. Management bonuses earned
by Mercury for the years ended December 31, 1994 and
1993, were $58,190 and $0, respectively. The
Agreement provides for a term of three (3) years
beginning January 1, 1994, but termination may occur
upon ninety (90) days written notice.
The Company is billed for all expenses specifically
identified to the Company which are incurred by
Mercury. In addition, Mercury bills the Company for
an allocation of common expenses. Such allocations
are based upon the number of markets being managed by
Mercury at the time the expenses are incurred.
Management believes the method used to allocate common
expenses is reasonable. Expenses billed to the
Company by Mercury, including management fees, are as
follows:
<TABLE>
<CAPTION>
Description 1994 1993
_______________________________________________ _________ _______
<S> <C> <C>
Salaries of personnel located in the RSA market $ 307,896 253,346
Salaries of centralized services personnel 77,527 65,898
Payroll taxes 29,847 29,949
Fixed asset usage fee --- 4,000
Management fees 118,190 72,000
Other rebilled expenses and Mercury allocations 87,284 48,263
_________ ________
$ 620,744 473,456
========= ========
</TABLE>
The Company entered into a Services and Switch
Agreement (the "Switch Agreement") with Mercury for
the use of switch equipment beginning in November
1991. The Company was required to prepay the lease
and paid $57,140 in December 1991 and an additional
$50,911 in September 1992 under an amendment to the
Switch Agreement. The amounts paid are non-
refundable, with certain exceptions. Lease
amortization expense was $21,610 for the years ended
December 31, 1994 and 1993. The prepaid portion
of the lease is included on the accompanying balance
sheet as part of current prepaid expense and non-
current other assets.
(9) Lease Commitments
The Company leases certain office and cell site
locations under operating leases.
Future minimum rental payments required under
operating leases as of December 31, 1994 are as
follows:
Year Ending December 31, Amount
________________________ _________
1995 $ 42,867
1996 37,762
1997 18,200
1998 14,602
1999 11,366
_________
$ 124,797
=========
In addition, the Company is obligated to provide 6
cellular telephones and 1,000 minutes of use per month
under an operating lease which expires on December 31,
1995. Rent expense totalled $35,278 and $35,119 for
the years ended December 31, 1994 and 1993,
respectively.
(10) Contingency
The Company is a defendant in a lawsuit by a former
employee alleging retaliatory termination and
violation of wage and hour laws. The plaintiff is
seeking actual damages of $150,000 and punitive
damages in an amount to be set by the jury.
Management intends to vigorously defends this lawsuit
and believes that a favorable outcome will be
achieved. No provision for this contingency has been
made in the financial statements.
(11) Subsequent Events
On February 14, 1995, the Company entered into a
$5,000,000 Loan and Security Agreement with Trustmark
National Bank ("Trustmark Loan"). The proceeds of the
Trustmark Loan were used to pay off the NovAtel Loan
and to fund capital improvements. The Trustmark Loan
is an installment loan payable over seven years with a
variable interest rate of Trustmark National Bank's
Prime Plus 1/2%. The Trustmark Loan is secured by
substantially all of the assets of the Company and a
pledge by the stockholders of their shares of stock.
A summary of maturities of the Trustmark Loan follows:
Year Ending December 31, Amount
________________________ ________
1995 $ 300,000
1996 360,000
1997 560,000
1998 870,000
1999 924,000
On April 18, 1995, the Company entered into an
Agreement and Plan of Merger with Century Telephone
Enterprises, Inc. ("Century"), among other, pursuant
to which a wholly-owned subsidiary of Century will be
merged into the Company, with the Company becoming
the surviving corporation and a wholly-owned
subsidiary of Century. This transaction is expected
to be consummated during the third quarter of 1995.
<PAGE>
AGREEMENT AND PLAN OF MERGER
By and Among
Century Telephone Enterprises, Inc.,
Mississippi 6 Acquisition Corp.,
Mississippi-6 Cellular Corporation
and
the Principal Shareholders of Mississippi-6
April 18, 1995
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"),
dated this 18th day of April, 1995, is by and among Century
Telephone Enterprises, Inc., a Louisiana corporation
("Century"), Mississippi 6 Acquisition Corporation, a
Mississippi corporation and a wholly-owned subsidiary of
Century ("Sub"), and Mississippi-6 Cellular Corporation, a
Mississippi corporation ("Corporation") and the undersigned
principal stockholders of the Corporation.
WITNESSETH:
WHEREAS, Corporation owns the operating license issued
by FCC (as defined below) to provide cellular radio telephone
service on the A block frequency to the Mississippi Rural
Service Area #6;
WHEREAS, the respective Boards of Directors of Century,
Sub and Corporation have determined that it is desirable and
in the best interests of their respective stockholders for
Century to acquire all of the capital stock of Corporation by
merging Sub with and into Corporation (the "Merger") on the
terms and subject to the conditions set forth in this
Agreement;
WHEREAS, David A. Bailey, Dwight S. Bailey, Jo Ann
Bailey, Lori A. Bailey, James T. Thomas, IV, Sanford C. Thomas
and Wirt A. Yerger, III (collectively, the "Principal
Stockholders"), who as of the date hereof collectively
beneficially own shares of capital stock of Corporation
entitling them to cast a majority of the Corporation's total
voting power, deem it desirable and in the best interests of
Corporation's stockholders to consummate the Merger on the
terms and subject to the conditions set forth in this
Agreement and to join herein for limited purposes as set forth
herein; and
WHEREAS, this Merger is intended to be a reorganization
under Section 368 of the Code (as defined below),
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements
herein contained, and intending to be legally bound hereby,
Century, Sub, Corporation and the Principal Stockholders
hereby agree as follows:
ARTICLE 1. DEFINITIONS
1.1 Defined Terms. For all purposes of this
Agreement, except as otherwise expressly provided herein,
terms defined above in the preamble and recitals shall have
the meanings set forth therein and the following terms shall
have the meanings set forth below:
"Acquired Shares" shall have the meaning specified
in Section 6.2.
"Acquisition Proposal" means any offer or proposal
relating to, or any indication of interest in, a merger,
consolidation, share exchange or other business
combination involving Corporation or the acquisition of
all or a substantial equity interest in, or all or a
substantial portion of the assets of the Corporation.
"Affiliate" means (unless otherwise provided
herein), with respect to any Person, any other Person
that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such Person.
"Aggregate Merger Consideration" means
$19,750,000, (i) plus amounts listed, and not to exceed
the amount indicated on, Schedule 1.1 hereto, and (ii)
minus an amount equal to Net Indebtedness, if any, as of
the Effective Time.
"Applicable Law" means any statute, law, rule,
regulation or ordinance or any judgment, order, writ,
injunction, or decree of any Governmental Entity to
which a specified Person or property is subject.
"Articles of Merger" means the articles of merger
to be filed on the Closing Date by the Surviving
Corporation with the Mississippi Secretary of State in
accordance with Section 79-4-11.05 of the MBCA.
"Average Century Stock Price" means the
arithmetical average of the per share closing prices of
the Century Common Stock as reported in the NYSE
Composite Transactions section of The Wall Street
Journal for each of the twenty trading days immediately
preceding the third trading day prior to the Fix Date.
"Balance Sheet" means the balance sheet of
Corporation as of December 31, 1994 included among the
Corporation Financial Statements.
"Budgets" shall have the meaning specified in
Section 3.7(b).
"Calculation Certificate" shall have the meaning
specified in Section 2.8(a).
"Ceiling Price" means $33.00, unless and until
adjusted under Section 2.10.
"Cellular Service" means the provision of domestic
public cellular radio telecommunications service
pursuant to authority granted by the FCC under the
Communications Act and the regulations promulgated
thereunder.
"Century Common Stock" means shares of common
stock, $1.00 par value per share, of Century, including
any associated shareholder rights issued under the
Amended and
Restated Rights Agreement dated as of November 17, 1986
by and between Century and the Rights Agent named
therein, as amended.
"Century Exchange Act Reports" means all Exchange
Act Reports filed with the SEC by Century.
"Century Stock Price" means the Average Century
Stock Price, provided however, that (i) if the Average
Century Stock Price is less than the Floor Price, then
the Century Stock Price will be deemed to equal the
Floor Price, and (ii) if the Average Century Stock Price
is greater than the Ceiling Price, then the Century
Stock Price will be deemed to equal the Ceiling Price.
"Closing" means the closing of the
transactions contemplated by this Agreement, to be
scheduled and held in accordance with Section 2.2.
"Closing Certificate" means, with respect to any
party hereto, any closing certificate delivered by such
party pursuant to Section 7.2(d) or 7.3(d) hereof.
"Closing Date" means the date on which the Closing
occurs, as determined in accordance with Section 2.2.
"Closing Instruments" means, with respect to any
party hereto, all of the agreements, certificates
(including Closing Certificates), resignations,
acknowledgements, releases, documents and other
instruments to be delivered by such party at or prior to
the Closing pursuant to Section 2.2 or Article 7.
"Code" means the Internal Revenue Code of 1986, as
amended and in effect on the Closing Date.
"Communications Act" means the Communications Act
of 1934, as amended.
"Contracts" means, with respect to any specified
Person, any contracts, agreements, leases, commitments
or other understandings or arrangements, oral or
written, to which such Person or its properties are
legally bound, or under which such Person is legally
obligated, whether on an absolute or contingent basis.
"Corporation" means Mississippi-6 Cellular
Corporation.
"Corporation Financial Statements" means any
balance sheet, statement of operation, statement of
changes in stockholders' equity or statement of cash
flows contained in any Corporation Financial Statement,
whether audited or unaudited.
"Corporation Stock" means shares of common stock,
$1.00 par value per share, of Corporation.
"Current Assets" means the current assets of
Corporation within the meaning of GAAP.
"Diluting Event" means (i) a dividend or other
distribution upon or in redemption of Century Common
Stock payable in the form of shares of capital stock of
Century or any of its subsidiaries or in the form of any
other property (other than cash dividends paid in the
ordinary course and at times and in amounts consistent
with past practice), (ii) a combination of outstanding
shares of Century Common Stock into a smaller number of
shares of Century Common Stock, or (iii) any
reorganization, split, exchange or reclassification of
Century Common Stock, or any consolidation or merger of
Century with another corporation, or the sale of all or
substantially all of its assets to another corporation,
or any other transaction effected in a manner such that
holders of outstanding Century Common Stock shall be
entitled to receive (either directly, or upon subsequent
liquidation) stock, securities or other property with
respect to or in exchange for Century Common Stock.
"Disclosure Statement" means any registration
statement, prospectus, offering circular, notification
form (including Form D), placement memorandum or similar
written report or communication filed with the SEC or
delivered to offerees under the Securities Act or any
regulation promulgated thereunder (including Regulation
A, Regulation D and Regulation S-B) in connection with
any offering or sale of securities within the meaning of
the Securities Act.
"Dissenting Shares" mean, as of any specified
date, any shares of Corporation Stock held of record by
Persons who have objected to the Merger and complied
with all provisions of Article 13 of the MBCA necessary
to perfect and maintain their appraisal rights
thereunder.
"DOJ" means the U.S. Department of Justice.
"Effective Time" shall have the meaning specified
in Section 2.3.
"Employee Benefit Plans" mean each oral or written
plan or agreement that Corporation or any Affiliate
maintains, administers, participates in, contributes to,
or has any absolute or contingent liability with respect
to, that is (i) an "employee welfare benefit plan," as
defined in Section 3(1) of ERISA ("Employee Welfare
Benefit Plans"), (ii) an "employee pension benefit
plan," as defined in Section 3(2) of ERISA, but
excluding any "multiemployer plans" ("Employee Pension
Benefit Plans"), (iii) a "multiemployer plan," as
defined in Section 4001(a)(3) and 3(37) of ERISA
("Multiemployer Plans"), (iv) a voluntary employees'
beneficiary association and related trusts ("VEBA's") or
(v) a retirement or deferred compensation plan,
incentive compensation plan, profit sharing plan, stock
purchase plan, stock option plan, stock appreciation
plan, restricted stock, unemployment compensation plan,
change in control plan, vacation pay, sick pay, death
benefit, severance pay, bonus or benefit arrangement,
medical, dental, disability, insurance or
hospitalization program or any other fringe benefit
arrangement for any director, officer, employee,
consultant or agent, whether active or retired, and
whether pursuant to contract, plan or any other legally
binding arrangement, custom or understanding, that does
not constitute an Employee Welfare Benefit Plan,
Employee Pension Benefit Plan, Multiemployer Plan or
VEBA.
"Encumbrances" means liens, charges, pledges,
options, mortgages, deeds of trust, security interests,
claims, transfer or other restrictions, easements, title
defects, and other encumbrances of every type and
description, whether choate or inchoate and whether
imposed by law, contract or otherwise (other than
restrictions on the right to transfer any security that
arises under any federal or state securities law).
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"Escrow Account" means the escrow account to be
established pursuant to the Escrow Agreement for the
purposes described therein and herein (including
securing the indemnity obligations to Century).
"Escrow Agent" means the Trust Department of
Regions Bank of Louisiana, Monroe, Louisiana.
"Escrow Agreement" means the Escrow Agreement to
be entered into at Closing pursuant to Section 7.1(f).
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Exchange Act Report" means any report, schedule,
form, statement or other document filed with the SEC
under the Exchange Act or the regulations promulgated
thereunder.
"FCC" means the Federal Communications Commission.
"FCC Licenses" mean, (i) each FCC cellular
frequency Block "A" operating license held by the
Corporation and (ii) each other Permit that has been
issued by the FCC to the Corporation.
"Fiduciary Determination" means any good faith
determination by the Board of Directors of Corporation,
after considering the written advice of outside counsel
regarding the fiduciary duties of directors under
Mississippi law, that the acceptance of any unsolicited,
bona fide Acquisition Proposal submitted to it is in the
best interests of Corporation's stockholders and is
required pursuant to its fiduciary duties under
Mississippi law.
"Fix Date" means a date which is the 3rd day prior
to the date the Information Statement is mailed to the
Stockholders.
"Floor Price" means $27, unless and until adjusted
under Section 2.10.
"FTC" means the Federal Trade Commission.
"GAAP" means generally accepted accounting
principles applied on a basis consistent with prior
accounting periods (except for normal, recurring year-
end audit adjustments made in conformity with GAAP).
"Governmental Entity" means any court or tribunal
in any jurisdiction (domestic or foreign) or any public,
governmental, legislative or regulatory body, agency,
department, commission, board, bureau, or other
authority or instrumentality (domestic or foreign),
including the FCC and MPSC.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"HSR Notification" means the notification and
report forms required to be filed pursuant to the HSR
Act.
"Indebtedness" means all obligations of
Corporation (whether for principal, interest, premium,
fees or otherwise and whether classified as current or
long-term) arising under (i) any agreement or contract,
(ii) any other indebtedness for borrowed money or for
the deferred purchase price of property or services
(including all notes payable and all obligations
evidenced by bonds, debentures, notes or other similar
instruments, accrued expenses), (iii) obligations with
respect to any installment sale or conditional sale
agreement or title retention agreement, (iv) unpaid
reimbursement obligations arising in connection with any
guaranties or sureties, including any performance, bid
or other similar bonds, (v) unpaid reimbursement
obligations arising under any letters of credit, (vi)
any lease obligation that would be required to be
capitalized in accordance with GAAP, (vii) any
obligations arising under advances or deposits of funds,
(viii) all accounts payable, and (ix) any and all other
liabilities.
"Information Statement" means the information
statement and prospectus that will form a part of the
Registration Statement and which will constitute an
information statement of Corporation with respect to the
Stockholders Meeting and a prospectus of Century with
respect to the issuance of Century Common Stock in
connection with the Merger, along with all related
materials and all amendments and supplements thereto, if
any.
"Intellectual Property" shall have the meaning
specified in Section 3.28.
"IRS" means the U.S. Internal Revenue Service.
"Letter of Transmittal" shall have the meaning
specified in Section 2.9.
"Material Adverse Effect" or "Material Adverse
Change" means, when used in reference to Corporation or
Century, a material adverse effect on, or a material
adverse change in, as the case may be, the operations,
cash flows, assets, business, property or condition
(financial or otherwise) of such entity, provided,
however, that (i) no effect or change with respect to
any such entity relating to changes in accounting
practices mandated by statements or interpretations
adopted by the Financial Accounting Standards Board or
any similar organization shall be deemed to constitute a
Material Adverse Effect or a Material Adverse Change,
(ii) no effect or change with respect to any such entity
relating to national, regional, state or local economic
conditions (other than the inclusion of Columbus Air
Force Base on a list of military installation scheduled
for "scale-back" or closure), to general
telecommunication industry developments or conditions
(including developments or conditions relating to
cellular and other forms of wireless communications), to
increased competition arising out of events or
conditions that are not subject to the control of such
entity or group, to changes in the Communications Act or
other statutes, laws, rules or regulations applicable to
such entity or group, or to other general economic or
other conditions, facts or circumstances that are not
subject to the control of such entity, shall be deemed
to constitute, create or cause a Material Adverse Effect
or a Material Adverse Change, (iii) the phrases
"Material Adverse Effect on Century", "Material Adverse
Change in Century", "Material Adverse Effect with
respect to Century" or "Material Adverse Change with
respect to Century" or any similar expression mean a
Material Adverse Effect on, or a Material Adverse Change
in, as the case may be, Century and its subsidiaries
taken as a whole and (iv) no decrease in the trading
price of the Century Common Stock (regardless of the
size of the decrease and including those resulting from
market breaks or other precipitous and broad-based
decreases in the trading prices of issuers listed on the
principal U.S. stock exchanges) shall, in and of itself,
constitute a Material Adverse Effect or a Material
Adverse Change with respect to Century unless such
decrease relates to, results from or arises out of
events or conditions (other than those described in (ii)
above) affecting the operations, cash flows, assets,
business, property or condition (financial or otherwise)
of Century and its subsidiaries taken as a whole.
"MBCA" means the Mississippi Business Corporation
Act.
"Merger Consideration" shall have the meaning
specified in Section 2.9.
"Mississippi Secretary of State" means the
Secretary of State of the State of Mississippi.
"MPSC" means the Mississippi Public Service
Commission.
"Net Indebtedness" means an amount determined by
subtracting Current Assets from total Indebtedness.
"NYSE" means The New York Stock Exchange, Inc.
"Options" mean, with respect to the Corporation
any options, warrants, rights, subscriptions, puts,
calls, conversion rights, rights of exchange, plans or
any other agreements or commitments of any character,
whether absolute or contingent, providing for the
purchase, redemption, issuance or sale of any shares of
capital stock or equity interests of the Corporation, or
any securities or other instruments convertible into or
exchangeable for shares of such capital stock or equity
interests or any other security.
"Organizational Documents" means the Corporation's
certificate of incorporation or articles of
incorporation (including any certificate of designations
deemed to be a part thereof under Applicable Law) and
its bylaws, along with any stockholder agreements or
other similar instruments governing its internal
affairs.
"Permits" mean permits, licenses, franchises,
certificates, consents, approvals, and other
authorizations issued or granted by Governmental
Entities, including all FCC Licenses, all State Licenses
and all such other authorizations issued or granted by
the FCC or MPSC.
"Permitted Encumbrance" means (i) liens for Taxes
not yet due and payable or the validity of which is
being contested in good faith by appropriate Proceedings
disclosed hereunder and for which adequate reserves have
been set aside, (ii) statutory liens (including
materialmen's, mechanic's, repairmen's, landlord's, and
other similar liens) arising in connection with the
ordinary course of business securing payments not yet
due and payable or, if due and payable, the validity of
which is being contested in good faith by appropriate
Proceedings disclosed hereunder and for which adequate
reserves have been set aside, (iii) such imperfections
of title or other Encumbrances that individually or
collectively do not have a Material Adverse Effect with
respect to the Corporation, and (iv) liens to Trustmark
National Bank for loans made to the Corporation.
"Person" means any individual, corporation,
partnership, limited liability company, joint venture,
association, joint-stock company, trust, enterprise,
unincorporated organization, Governmental Entity, or
other entity.
"POPs" means the population of the RSA.
"Proceedings" means all proceedings, actions and
suits that have been instituted by or before any
arbitrator or Governmental Entity.
"Reasonable best efforts" means the taking of all
steps that are reasonable for the causation or
prevention of an event or condition that would
reasonably have been taken in similar circumstances by a
prudent business person for the advancement or
protection of his own economic interest, in light of the
consequences of the failure to cause or to prevent the
occurrence of such event or condition.
"Registration Statement" means the registration
statement of Century on Form S-4 that will be prepared
and filed pursuant to the Securities Act in accordance
with the terms and conditions specified in Section 6.2
and which will include the Information Statement, along
with all amendments and supplements thereto, if any.
"Required Consents" means the consents specified
on Schedule 3.15 that are required to be received from
Persons in order to consummate the transactions
contemplated hereunder.
"RSA" means the Mississippi Rural Service Area #6
(Market No. 498) licensed by the FCC.
"SEC" means the U.S. Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933,
as amended.
"Shareholders Agreement" means the First Amended
and Restated Shareholders Agreement dated as of January
1, 1995 between the Corporation and the Stockholders.
"State Licenses" mean each certificate of
convenience and necessity or similar Permit that has
been issued to Corporation by the MPSC or any public
utility commission of any state.
"Stock Certificate" means any certificate that
immediately prior to the Effective Time represented
issued and outstanding shares of Corporation Stock.
"Stockholders" mean each record holder of
Corporation Stock outstanding immediately prior to the
Effective Time (other than holders of Dissenting Shares
and other than shares that are held in the treasury of
Corporation).
"Stockholders Meeting" means the annual or special
meeting of Corporation stockholders (including all
adjournments thereof) to be called, convened and held in
accordance with the terms and conditions of Section 6.2
in order to, among other things, consider and vote upon
the adoption of this Agreement.
"Stockholders' Representative" means David A.
Bailey, acting in his capacity as the representative of
the Corporation Stockholders for the purposes set forth
herein and in the Escrow Agreement.
"Subsidiary" means each and any corporation of
which a majority of the total voting power of its
outstanding voting securities, or any other partnership,
limited liability company, joint venture, or other
entity of which a majority of the partnership interests
or other similar equity interests thereof, is owned,
directly or indirectly, by Corporation.
"Surviving Corporation" means Corporation at and
after the Effective Time.
"Tax Returns" means all returns, declarations,
reports, statements or other documents required to be
filed in respect of Taxes.
"Taxes" means all federal, state, local, foreign
and other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding,
payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits,
customs, duties or other taxes, fees, assessments or
charges of any kind whatever, together with any interest
and any penalties, additions to tax or additional
amounts with respect thereto.
"Threatened Proceedings" mean all investigations
and inquiries by Governmental Entities and all threats
made by any Person to institute Proceedings.
"To the best knowledge" (or similar references to
knowledge) means, with respect to any corporation, the
actual knowledge of the executive officers of such
corporation following a reasonable investigation by such
executive officers into the truth and accuracy of the
statement qualified by such reference, provided,
however, that nothing herein shall obligate such
executive officers to contact any third parties in
connection with such investigation or to contact any
employee of such corporation or its subsidiaries other
than the officer, manager or employee who has primary
responsibility for the subject matter of the statement
so qualified and any other employee or employees
suggested by such officer, manager or employee.
"Unfair Labor Practice" means any unfair labor
practice, unlawful employment practice or unlawful
discrimination.
1.2 Singular and Plural. Defined terms in this
Agreement shall also mean in the singular number the plural,
and in the plural number the singular.
1.3 Capitalized Terms. In addition to such terms as
are defined in the preamble and recitals to this Agreement and
in Section 1.1, any other capitalized term appearing herein
shall have the meaning ascribed to it in the Article or
Section in which it is defined.
1.4 Dbu Calculations. Any reference herein to the 32
Dbu contour of a cell site or cellular system shall mean the
32 Dbu contour calculated under the formula prescribed by the
FCC in FCC Part 22.911.
1.5 Parties. Any reference herein to the parties to
this Agreement shall be deemed to include Principal
Stockholders, in each case to the extent specified in the
preamble hereto.
ARTICLE 2. THE MERGER
2.1 Merger. At the Effective Time, in accordance with
the terms and conditions of this Agreement and the MBCA, Sub
shall be merged with and into Corporation, the separate
existence of Sub shall cease, and Corporation shall be the
Surviving Corporation and shall succeed to and assume all the
rights and obligations of Sub in accordance with the MBCA.
2.2 Closing. (a) The closing of the Merger will take
place at the offices of Century , 100 Century Park Drive,
Monroe, Louisiana, at 10 a.m. on a date to be mutually agreed
upon between the parties, which shall be no later than the
tenth business day following the date upon which the last to
occur of the conditions to the obligations of the parties set
forth in Article 7 is fulfilled or duly waived, or, if no date
has been agreed to, on any date specified by one party to the
others upon five days' written notice following satisfaction
of the conditions to the obligations of the parties set forth
in Article 7, provided, however, that in no event will any
party be obligated to consummate the Merger unless all other
closing conditions set forth in Article 7 that are applicable
to such party shall have been fulfilled or duly waived as
provided in Article 7 on or prior to the Closing Date.
(b) Subject to the satisfaction or waiver of
each of the conditions set forth in Article 7, at the Closing
(i) the Closing Instruments, opinions and other documents
required by Article 7 shall be delivered, (ii) the appropriate
officers of the Surviving Corporation shall execute and
acknowledge the Articles of Merger and (iii) the parties shall
take such other action as is required to consummate the
transactions described in this Agreement and the Articles of
Merger.
2.3 Effective Time of the Merger. As soon as
practicable on or after the Closing Date, the parties shall
file a duly executed copy of the Articles of Merger
substantially in the form of Exhibit A hereto and shall make
all other filings or recordings required under the MBCA. The
Merger shall become effective at 12.01 a.m. Mississippi time
on the date the Articles of Merger are duly filed with the
Mississippi Secretary of State (the "Effective Time").
2.4 Effects of the Merger. The Merger shall have the
effects set forth in Section 79-4-11.06 of the MBCA.
2.5 Articles of Incorporation and By-laws. (a)
Except as otherwise provided in the Articles of Merger, the
Articles of Incorporation of Corporation, as amended and in
effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation after
the Effective Time unless and until amended in accordance with
its terms and as provided by Applicable Law.
(b) The By-laws of Sub, as amended and in effect
immediately prior to the Effective Time, shall be the By-laws
of the Surviving Corporation after the Effective Time unless
and until amended in accordance with the terms of the
Organizational Documents of the Surviving Corporation and as
provided by Applicable Law.
2.6 Directors and Officers. The directors and
officers of Sub immediately prior to the Effective Time shall
serve as the directors and officers of the Surviving
Corporation after the Effective Time, each to hold office in
accordance with the Organizational Documents of the Surviving
Corporation until their respective successors are duly elected
and qualified. Immediately after the Effective Time, Century
shall take, or cause the Surviving Corporation to take, any
actions necessary to effectuate this Section 2.6.
2.7 Conversion of Shares. (a) As of the Effective
Time, by virtue of the Merger and without any further action
on the part of Century, Sub, Corporation, the Surviving
Corporation or any holder of any of the following securities:
(i) all shares of Corporation Stock that
are held in the treasury of Corporation shall be cancelled;
(ii) all shares of Corporation Stock issued
and outstanding immediately prior to the Effective Time (other
than shares of Corporation Stock to be cancelled pursuant to
paragraph (a)(i) or Dissenting Shares) shall be converted into
such number of shares of Century Common Stock determined by
dividing the Aggregate Merger Consideration by the Century
Stock Price (the "Aggregate Stock Consideration"); and
(iii) each issued and outstanding share of
common stock, $.01 par value per share, of Sub shall be
converted into one share of common stock,$1.00 par value per
share, of the Surviving Corporation.
(b) Subject to the adjustments, holdbacks and
other terms and conditions set forth in Sections 2.8 and
2.9, upon conversion of the shares of Corporation Stock into
the Aggregate Merger Consideration in the manner described in
paragraph (a)(ii) above, each Corporation Stockholder shall
have the right to receive (i) a certificate representing such
whole number of shares of Century Common Stock as is derived
by multiplying the number of shares of Century Common Stock
comprising the Aggregate Stock Consideration by such Person's
pro rata or percentage ownership interest in the Corporation
and (ii) in lieu of the issuance of a fractional share of
Century Common Stock hereunder, a cash payment (without
interest) equal to the fair market value of such fraction of a
share of Century Common Stock to which such holder would
otherwise be entitled but for this provision. For purposes of
calculating this fractional share payment, the fair market
value of any such fraction of a share of Century Common Stock
shall equal the Century Stock Price multiplied by such
fraction.
2.8 Pre- and Post-Closing Calculations and Price
Adjustments. (a) At least two business days prior to the Fix
Date, Corporation shall deliver to Century a certificate (the
"Calculation Certificate") setting forth (i) the amount (and
underlying calculation thereof) estimated to be owed by
Corporation as of the Effective Time for Net Indebtedness,
(ii) a true and complete list of the number of shares of
Century Common Stock that each Stockholder will be entitled to
receive at the Effective Time pursuant to this Agreement
(after giving effect to the terms and conditions of Section
2.7(b)) and (iii) 5% of the Aggregate Stock Consideration to
be delivered to the Escrow Agent under Section 2.9(b)(i) (the
"Holdback Amount"). Corporation shall estimate the Aggregate
Merger Consideration as of the Effective Time in the
Calculation Certificate.
(b) On the Closing Date Corporation will re-
certify (after making any necessary updates or corrections)
all of the information set forth in the Calculation
Certificate (including any schedules thereto), provided
however that the Calculation Certificate shall determine the
Aggregate Merger Consideration to be delivered by Century at
the Closing
(c) After the Closing the parties shall take the
following actions to adjust the Aggregate Merger Consideration
payable hereunder. Within 60 days after the Closing Date,
Century shall prepare and deliver Stockholders' Representative
a written statement specifying whether Century agrees with the
amounts of Net Indebtedness used in connection with
calculating the Aggregate Merger Consideration at Closing,
and, if not, a statement of the amounts that Century believes
should have been so used (the "Supplemental Statement"). Upon
its receipt of the Supplemental Statement, the Stockholders'
Representative shall have 30 days to notify Century in writing
of any objections that it may have to such statements. If no
written objection is raised by the Stockholders'
Representative within such 30-day period, the Supplemental
Statement shall conclusively be deemed to have been agreed
upon by the parties and shall be final, binding and conclusive
with respect to all parties hereto and their respective
stockholders, and shall not be subject to judicial review.
If, on the other hand, the Stockholders' Representative gives
timely notice of its objections to the Supplemental
Statement, the Stockholders' Representative and Century shall
attempt to resolve any disputed matters by negotiating in good
faith and attempting to agree in writing as to the actual
amount of Net Indebtedness and the amount of any payments
owed by any party under paragraph (e). If Century and the
Stockholders' Representative are unable to agree within 15
days from the date of delivery of the Stockholders'
Representative's written objection, then Century and the
Stockholders' Representative shall submit any disputed matters
to a nationally recognized accounting firm mutually acceptable
to both Century and the Stockholders' Representative. If
Century and the Stockholders' Representative are unable to
agree on a nationally recognized accounting firm within 10
days following the expiration of such 15-day period, then each
party shall select a nationally recognized accounting firm
(which shall not be any certified public accounting firm
retained within the past two years by Century or Corporation
to audit its financial statements), and the two firms selected
shall together select a third nationally recognized accounting
firm to resolve the dispute. If the two accounting firms
selected by the parties are unable to agree within 30 days on
a third accounting firm to resolve the dispute, then either
Century or the Stockholders' Representative may commence court
proceedings to name a nationally recognized accounting firm to
resolve the dispute. The accounting firm selected hereunder
to resolve the dispute shall make a final determination of the
actual amount of the disputed matters, which will be provided
in writing to each party, and its resolution shall be final,
conclusive and binding on all parties to this Agreement and
their respective stockholders, and shall not be subject to
judicial review.
(d) After the date on which Century furnishes the
Stockholders' Representative with the Supplemental Statement,
Century shall afford the Stockholders' Representative and his
agents, employees and representatives with full access at all
reasonable times to (i) all accounting books and records of
Corporation relating to all relevant accounting periods prior
to the Closing Date, (ii) all work papers of Century,
Corporation and their accountants and accounting personnel
relating to their preparation of the Supplemental Statements
and (iii) Century's and Corporation's accountants and
accounting personnel and other personnel who participated in
the preparation of the Supplemental Statement and their
notes and work papers, in each case until the resolution of
all matters relating to the determination of the actual amount
of Aggregate Merger Consideration as of the Effective Time and
the amount of any payments arising under paragraph (e).
(e) Within five business days of any final, binding
and conclusive determination of the actual amount of Net
Indebtedness as of the Effective Time (whether through non-
objection, agreement, or otherwise), Century and the
Stockholders' Representative shall recalculate the Aggregate
Merger Consideration based upon the amounts so determined. If
the amount of Aggregate Merger Consideration as so determined
is less than the amount determined at Closing, the
Stockholders' Representative shall promptly (i) inform Escrow
Agent to pay to Century such difference from the Escrow
Account and in the event all of such Escrow Account is so
utilized, then to (ii) promptly instruct each Stockholder to
pay to Century their portion of the balance of such difference
(without interest) that such stockholder is obligated to pay
based upon the procedures specified in Section 11.6 and the
Stockholder's Representative shall use its reasonable best
efforts to assist Century in timely collecting all such
payments. If, on the other hand, the amount of Aggregate
Merger Consideration as so determined is more than the amount
determined at Closing, then Century shall promptly pay the
amount of such excess (without interest) by delivery of
Century Stock to the Escrow in an amount equal to the excess.
2.9 Delivery of Merger Consideration; Exchange of
Stock Certificates. (a) Prior to the date upon which the
Information Statement is mailed to the Stockholders, Century
shall (i) appoint Society Shareholder Services, Inc., Dallas,
Texas, which serves as the transfer agent with respect to the
Century Common Stock, or any other exchange agent reasonably
satisfactory to Corporation, to act as the exchange agent
hereunder (the "Exchange Agent") and (ii) prepare a letter of
transmittal, in form and substance reasonably satisfactory to
Corporation ("Letter of Transmittal"), to be used by the
Stockholders to exchange their Stock Certificates for the
consideration specified in this Article 2. Century shall
cause the Exchange Agent to pay such consideration to each
Stockholder in accordance with the terms and conditions
specified herein and in the Letter of Transmittal.
(b) On the Closing Date Century shall (i) pay to
the Escrow Agent stock in the amount of the Holdback Amount
specified in the Calculation Certificate, and (ii) pay, or
cause the Exchange Agent to commence to mail to each
Stockholder who has duly tendered his Stock Certificates in
accordance herewith and with the Letter of Transmittal all
consideration specified in the Calculation Certificate (as re-
certified at Closing).
(c) From and after the Effective Time each
Stockholder shall be entitled, upon the surrender of his Stock
Certificate or Certificates to the Exchange Agent, accompanied
by a properly completed and executed Letter of Transmittal, to
receive in exchange therefor on the terms and subject to the
conditions set forth herein and in the Letter of Transmittal
(i) a check payable in the sum of the amounts specified in
Section 2.7(b), without interest for each fractional share and
(ii) a certificate or certificates representing that whole
number of shares of Century Common Stock into which the shares
of Corporation Stock represented by the Stock Certificate so
surrendered shall have been converted pursuant to Section
2.7(b).
(d) The Letter of Transmittal shall set forth
customary terms and conditions upon which the exchanges
described in paragraph (c) above will be made. Without
limiting the generality of the foregoing, the Letter of
Transmittal will provide that (i) if any check or certificate
for shares of Century Common Stock is to be issued in the name
of any Person other than that in which a surrendered Stock
Certificate is then registered, such surrender shall be
accompanied by payment of any applicable transfer Taxes and
such documents reasonably deemed necessary or appropriate by
Century, (ii) if a former holder of Corporation Stock claims
that a Stock Certificate has been lost, stolen or destroyed,
the Exchange Agent shall deliver to such holder the Merger
Consideration only upon receipt of appropriate evidence of
ownership of such Corporation Stock, and appropriate
indemnification (and, if requested by Century, a bond), in
each case reasonably satisfactory to Century, and (iii) the
execution and delivery of the Letter of Transmittal by any
Stockholder will constitute such stockholders' written
appointment of the Stockholders' Representative as his agent
and attorney-in-fact for all purposes specified herein and in
the Escrow Agreement. A Letter of Transmittal shall be mailed
to each record stockholder of Corporation in connection with
the mailing of the Information Statement.
(e) From and after the Effective Time and until
surrendered and exchanged as provided in this Section, each
Stock Certificate (excluding Stock Certificates previously
representing shares of Corporation Stock held in the treasury
of Corporation and excluding Stock Certificates representing
Dissenting Shares) shall be deemed for all purposes, except as
hereinafter provided, to evidence that whole number of shares
of Century Common Stock (subject to any Holdback Deductions)
and the right to receive that amount of cash into which the
fractional shares of Corporation Stock represented by the
Stock Certificate so surrendered have been converted under
this Article 2 and a right to receive a pro-rata amount of any
remaining portion of the Holdback Deductions in accordance
with the Escrow Agreement. Unless and until any such Stock
Certificate shall be so surrendered, the holder of such Stock
Certificate shall not have any right to receive any dividends
paid or other distributions made to the holders of record of
Century Common Stock after the Effective Time. Subject to
Applicable Law, upon surrender of any such Stock Certificate,
the surrendering holder of record thereof shall receive all
dividends and other distributions, with respect to the total
number of shares of Century Common Stock into which his
Corporation Stock was converted, that have been paid or made
with respect to shares of Century Common Stock outstanding as
of a record date after the Effective Time, but without
interest thereon.
(f) If any former Stockholder fails to duly
deliver a Letter of Transmittal within 9 months of the
Effective Time, all cash payments, dividends, distributions
and stock certificates otherwise payable to such former
Stockholder by the Exchange Agent or the Escrow Agent shall
be returned to Century, after which each such former
Stockholder shall look, subject to applicable escheat or other
Applicable Laws, to Century as general creditors only for
payment thereof.
(g) The Merger Consideration to be issued and
paid upon surrender of Stock Certificates in accordance with
the terms of this Section shall be deemed to have been issued
in full satisfaction of all rights pertaining to the shares of
Corporation Stock theretofore represented thereby, and there
shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of
Corporation Stock that were outstanding immediately prior to
the Effective Time.
2.10 Non-Dilution. If, at any time after the date
hereof and prior to the Effective Time, Century effects a
Diluting Event, then as a condition of such Diluting Event,
lawful, appropriate, equitable and adequate adjustments (as
mutually determined by Corporation and Century prior to the
Effective Time, subject to any rights of the Stockholders to
indemnification under Article 10 for any inaccuracy of the
representations and warranties of Century in Section 5.9)
shall be made to the Century Stock Price, Average Century
Stock Price, Ceiling Price and Floor Price, or to the terms of
Section 2.7, as appropriate, whereby the Stockholders shall
thereafter be entitled to receive (under the same terms
otherwise applicable to their receipt of the Century Common
Stock), in lieu of or in addition to, as the case may be, the
consideration specified in Section 2.7, such shares of stock,
securities or other property as may be issued or payable with
respect to or in exchange for that number of shares of Century
Common Stock to which such Stockholders were so entitled under
Section 2.7, and in any such case appropriate, equitable and
adequate adjustments shall also be made to such resulting
consideration in like manner in connection with any subsequent
Diluting Events. It is the intention of the parties that the
foregoing shall have the effect of entitling the Stockholders
to receive upon the Effective Time such stock, securities and
other property (other than cash dividends paid in the ordinary
course and at times and in amounts consistent with past
practice) as the Corporation Stockholders would have received
had they held the Century Common Stock (or any replacement or
additional stock, securities or property, as applicable) on
the record date of such Diluting Event.
2.11 Dissenting Shares. Notwithstanding anything to
the contrary herein, Dissenting Shares shall not be converted
as of the Effective Time into a right to receive the Merger
Consideration, but, instead, shall entitle the holder of such
shares to such rights as may be available under Article 13 of
the MBCA, provided, however, that if after the Effective Time
such holder fails to perfect or withdraws or otherwise loses
his right to appraisal, the shares of Corporation Stock owned
by such holder immediately prior to the Effective Time shall
be treated as if they had been converted as of the Effective
Time into the right to receive the Merger Consideration,
without interest. Prior to the Effective Time, Corporation
shall give Century prompt notice of any demands received by
Corporation for appraisal of shares of Corporation Stock, and
Century shall have the right to participate in all
negotiations and proceedings with respect to such demands.
Prior to the Effective Time, Corporation shall not, except
with the prior written consent of Century, make any payment
with respect to, or settle, any such demands. After the
Effective Time, Century shall pay, or cause the Surviving
Corporation to pay, any amounts that may become payable to the
holders of Dissenting Shares under Section 79-4-13.25 of the
MBCA.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF CORPORATION
Corporation hereby makes the following representations
and warranties to Century and Sub as of the date hereof:
3.1 Organization of Corporation. Corporation is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Mississippi. The
Corporation owns no subsidiaries. The Corporation has full
corporate power and authority to carry on the business in
which it is engaged and to own, lease and operate its
properties. The Corporation is not required to be duly
qualified or authorized to do business in any jurisdiction
as a foreign corporation because neither the character or
location of its properties, or the nature of its activities
makes such qualification necessary.
3.2 Authorization and Enforceability. (a)
Corporation has full corporate power and authority to execute
and deliver this Agreement and each Closing Instrument to be
executed and delivered by it and, subject to the adoption of
this Agreement by the Stockholders in accordance with the
MBCA and Corporation's Organizational Documents, to consummate
the transactions contemplated hereby and under such Closing
Instruments. The execution, delivery and performance by
Corporation of this Agreement and each Closing Instrument to
be executed and delivered by it has been duly and unanimously
authorized by Corporation's Board of Directors, and no other
corporate proceedings (other than the adoption of this
Agreement by the Stockholders in accordance with the MBCA and
Corporation's Organizational Documents) are necessary to
authorize Corporation's execution, delivery or performance of
this Agreement or such Closing Instruments.
(b) This Agreement has been duly executed and
delivered by Corporation and constitutes, and each Closing
Instrument, when executed and delivered by Corporation, will
be duly executed and delivered by Corporation and will
constitute, a valid and legally binding obligation of
Corporation, enforceable against Corporation in accordance
with its respective terms, except that such enforceability may
be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting
creditors' rights generally and (ii) equitable principles that
may limit the availability of certain equitable remedies (such
as specific performance) in certain instances.
3.3 Capital Stock. (a) The authorized capital stock
of Corporation consists exclusively of 100,000 shares of
Corporation Common Stock, $1.00 par value, of which 1,000 are
issued and outstanding and none are held in Corporation's
treasury. All shares of Corporation Stock are held by the
record owners in the amounts specified on Schedule 3.3.
(b) All issued and outstanding shares of
Corporation Stock have been duly authorized and validly
issued, are fully paid and nonassessable and are free and
clear of any preemptive or similar rights except for rights
created by the Shareholders Agreement which shall be cancelled
immediately prior to closing. Corporation has no outstanding,
or is subject to any, Options. There are no equity equivalents
in, interests in the ownership or earnings of, or other
similar rights binding upon Corporation.
3.4 Personal Properties. Except as set forth on
Schedule 3.4 hereto, the Corporation has good, valid and
marketable title to, or a valid leasehold interest in, all of
its properties and assets (real and personal, tangible and
intangible), including all properties and assets reflected in
the Balance Sheet (or which would be reflected thereon if not
fully depreciated or amortized), in each case subject to no
Encumbrances of any kind whatsoever, except for Permitted
Encumbrances. The Corporation validly owns or leases all
properties and assets necessary for the continued conduct of
its business in the ordinary course.
3.5 Organizational Documents, Books and Records, and
Related Matters. (a) Corporation has delivered to Century
true, correct and complete copies of (i) each Organizational
Document governing Corporation, together with all amendments
thereto, as certified by the Secretary of State of Mississippi
or by the corporate secretary, as appropriate, and (ii)
minutes of all meetings of the Boards of Directors and
Stockholders of Corporation. All books and records of
Corporation and all files, data and other materials relating
to its businesses, have been prepared and maintained in
accordance with sound business practices.
(b) The affirmative vote of the holders of a majority
of the outstanding total voting power of the holders of the
Corporation Stock is the only vote of the holders of any class
or series of Corporation Stock that is required under
Corporation's Organizational Documents or the MBCA to approve
this Agreement and the transactions described herein.
3.6 Investments and Interests. Except as listed on
Schedule 3.6, the Corporation does not own or have the right
or obligation to acquire, directly or indirectly, any capital
stock or other equity or proprietary interest in any Person.
3.7 Financial Statements. (a) The Corporation
Financial Statements for the fiscal year ended December 31,
1994 attached hereto as Exhibit B (i) reflect only actual bona
fide transactions, (ii) have been prepared from the books and
records of Corporation in accordance with GAAP, and (iii)
fairly present in all material respects Corporation's
financial position as of the respective dates thereof in
accordance with GAAP and its results of operations and cash
flows for the periods then ended in accordance with GAAP. All
unaudited interim financial statements included among the
Corporation Financial Statements reflect all adjustments
(which include only normal recurring adjustments made in
conformity with GAAP) that are necessary for a fair statement
of the results of operation of Corporation for the periods
presented therein.
(b) Attached hereto as Exhibit C is a true and
complete copy of the capital expenditure budget (the "Budget")
for fiscal year 1995 for the RSA all of which been prepared in
good faith by Corporation.
3.8 Absence of Material Changes. Since December 31,
1994 and except as set forth on Schedule 3.8 hereto, the
Corporation has not:
(a) amended any of its Organizational Documents;
(b) undergone any change in its financial
condition, assets, properties, liabilities, business or
operations, other than changes in the ordinary course of
business, none of which individually or in the aggregate
has resulted in a Material Adverse Effect with respect
to the Corporation;
(c) suffered any damage, destruction or loss
(whether or not covered by insurance), or condemnation
or other taking that has resulted in a Material Adverse
Effect with respect to Corporation;
(d) Subjected any of its other properties or
assets to any Encumbrance other than Permitted
Encumbrances;
(e) guaranteed any Indebtedness or obligations
of any other Person; created, incurred or assumed any
Indebtedness (or increased prior Indebtedness) or
otherwise become liable for the obligations of any other
Person); prepaid, amended or altered the payment
obligations with respect to any Indebtedness or made any
loans, advances or capital contributions to, or
investments in, any other Person.
(f) sold, transferred, assigned or otherwise
disposed of any direct or indirect equity interest in
the RSA, the Corporation or any Intellectual Property;
leased any office space; or acquired, sold, assigned,
leased, transferred or otherwise disposed of, directly
or indirectly, any other assets;
(g) received written notice of any Proceeding,
Threatened Proceeding, dispute, claim, event or
condition of any character (including but not limited to
regulatory and administrative notices) that could
reasonably be expected to have a Material Adverse Effect
with respect to the Corporation.
(h) made any change in its accounting methods,
principles or practices, except for any change required
by reason of a concurrent change in GAAP and notice of
which is given in writing to Century;
(i) received written notice that any group,
organization or union has attempted or intends to
organize any of its employees or that any group of
employees has attempted or intends to institute any
labor slowdown, picketing, stoppage or similar
disturbance;
(j) issued any shares of capital stock, Options
or other securities; declared, set aside, or paid any
dividend or other distribution (whether in cash, stock
or property or any combination thereof), repurchased,
redeemed or otherwise acquired any Corporation Stock or
any other securities; or adopted a plan of liquidation,
dissolution, restructuring, recapitalization or other
reorganization;
(k) entered into, adopted or (except as may be
required by law) amended or terminated any Employee
Benefit Plan or other arrangement for the benefit or
welfare of any current or former director, officer or
employee; paid to any current or former director,
officer or employee any amount not required by any
Employee Benefit Plan; or granted or paid any bonus,
severance payment, termination payment or change in
control payment;
(l) cancelled or materially reduced the coverage
under any insurance or indemnity Contract;
(m) entered into any networking contracts or
otherwise become obligated under any Contract outside
the ordinary course of business consistent with past
practice or amended, modified or terminated any Contract
listed on any Schedule hereto, other than as
contemplated hereunder;
(n) waived, released, granted or transferred any
rights of value or settled any Proceeding or Threatened
Proceeding involving claims in excess of $20,000, except
for any waivers, releases, grants, transfers or
settlements that have no effect on Corporation's
financial position other than reducing Current Assets or
increasing Current Liabilities or that have been
approved in writing by any executive officer of Century;
(o) amended any Tax Return, made any tax
election or settled or compromised any Tax liability;
(p) failed to staff its operations at levels
comparable with past practice;
(q) materially delayed payment of any of its
accounts payable or other liability beyond the date when
such liability would have been paid in the ordinary
course of business consistent with past practice;
(r) received written notice of any actual or
threatened termination, cancellation or limitation of,
or any modification in, its business relationship with
any customer or group of customers whose payments to
Corporation individually or in the aggregate are
material to its operations, or with any vendor, agent,
representative, or consultant, or group thereof, whose
sales of services to such entity individually or in the
aggregate are material to its operations;
(s) otherwise failed to operate its business in
the ordinary course consistent with prior practices so
as to preserve its business organization and to preserve
the good will of its customers, suppliers and others
with whom it has business relations; or
(t) authorized, agreed or became committed to do
or to take any of the actions referred to in this
Section 3.8.
3.9 Indebtedness. Schedule 3.9 hereof sets forth all
Indebtedness of Corporation to any Person (including its
Affiliates) as of the date hereof (except to the extent a
different date is otherwise set forth thereon with respect to
any specific Indebtedness). Except as disclosed on Schedule
3.9, all Indebtedness is prepayable at any time at the option
of Corporation, without premium or penalty. The Corporation
has not taken any action or omitted to take any action, and no
event has occurred, that constitutes (with or without the
giving of notice or the passage of time or both) a material
default under, or gives rise (with or without the giving of
notice or the passage of time or both) to any right of
termination, cancellation, or acceleration under, any Contract
creating, or note or other instrument evidencing, any
Indebtedness.
3.10 Litigation and Claims. (a) Schedule 3.10 sets
forth a list of each Proceeding in which the Corporation is a
party. Except as specifically disclosed on Schedule 3.10,
there are no judgments, orders, injunctions, decrees or awards
binding upon the Corporation, or its assets, and there are no
Proceedings or, to the best knowledge of Corporation,
Threatened Proceedings asserted against Corporation, or its
assets, in each case that could reasonably be expected to have
a Material Adverse Effect with respect to any Corporation.
Schedule 3.10 sets forth each reserve established by
Corporation with respect to its liability or potential
liability arising under any Proceeding or Threatened
Proceeding listed thereon.
(b) There are no Proceedings or, to the best
knowledge of Corporation, Threatened Proceedings asserted
against Corporation, or its assets, that, individually or in
the aggregate, could reasonably be expected to (i) impair in
any material respect the ability of Corporation to perform its
obligations under this Agreement or (ii) prevent the
consummation of any of the transactions described in this
Agreement, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator that could
reasonably be expected to have any such effect.
3.11 Real Estate and Leases. Schedule 3.11 hereto sets
forth a complete list of all real properties and structures
thereon owned in whole or in part by Corporation, or leased by
Corporation, and includes the name of the record title holder
thereof. The Corporation owns or validly leases all of the
real property reflected on the Balance Sheets (or which would
be reflected thereon if not fully depreciated or amortized)
and all real properties used in the conduct of its business.
Title to all real property owned by the Corporation is, in
each case, good and marketable and free and clear of any
Encumbrances, except for Permitted Encumbrances or any
Encumbrance arising under indentures, security interests,
mortgages or deeds of trust listed on Schedule 3.11. All such
real property has access to adequate water, electric, gas,
sewerage and/or any other utility services which are necessary
for the conduct of the business of Corporation, and, with
respect to each, the Corporation has adequate rights of
ingress and egress for operation of business in the ordinary
course. There are no Proceedings or, to the best knowledge of
Corporation, Threatened Proceedings relating to condemnation,
eminent domain or similar matters that would preclude or
impair the use of any such property by Corporation for the
purposes for which it is currently used.
3.12 Condition of Personal Properties and Real Estate.
All buildings, equipment and other assets (including all
switches, cell sites, cell enhancers, radios, towers,
generators and microwave systems) owned or leased by
Corporation (i) are in good operating condition and do not
require any maintenance or repairs, except for ordinary,
routine maintenance and repairs that arise in the ordinary
course of business and that in the aggregate are not material
in nature or cost, (ii) are suitable for the purposes for
which they are currently being used and are sufficient for the
continued conduct of business after the Closing in
substantially the same manner as conducted prior thereto and
(iii) conform in all material respects with all Applicable
Laws (including all zoning laws) and Permits.
3.13 Insurance. Schedule 3.13 hereto sets forth a
complete list and brief description of all policies and
binders of insurance insuring Corporation and its properties
and businesses. All such policies and binders of insurance
are in full force and the premiums thereon have been duly and
timely paid. The Corporation is not in material default with
respect to any provision contained in any such policy or
binder, nor has there been any failure to give notice or to
present any claim relating to Corporation or under any such
policy or binder in a timely fashion or in the manner or
detail required by the policy or binder, except for failures
that would not reasonably be expected to result in a Material
Adverse Effect with respect to the Corporation. No notice of
cancellation or nonrenewal with respect to any such policy or
binder has been received by Corporation. Corporation has
delivered to Century correct and complete copies of (i)
certificates of insurance pertaining to and a policy digest of
all such policies and binders, (ii) the most recent inspection
reports, if any, received from the insurance underwriters as
to the condition of the insured properties and (iii) all such
policies and binders.
3.14 Contracts. (a) Except as set forth in Schedule
3.14, the Corporation is not a party to, nor is bound by,
obligated under or subject to the terms of, any:
(i) Contract for the lease or sublease of
any real or personal property from or to any Person (including
any Affiliate of Corporation);
(ii) Contract with any Person (including
any Affiliate of Corporation) wherein it provides or receives
services relating to customer billing, data processing or
accounting, or which relates to the switching or reselling of
Cellular Services or the sharing of any switch used in
connection with providing Cellular Services;
(iii) management or consulting Contract with
any Person (including any Affiliate of Corporation), whether
it is the party performing or receiving the benefit of the
services performed thereunder, including any Contracts
relating to the management or operation of the RSA;
(iv) Contract for the purchase or sale of
raw materials, commodities, merchandise, utilities, supplies,
or other materials or personal property, or for the furnishing
or receipt of services, that calls for performance over a
period of more than 90 days and involves more than the sum of
$10,000;
(v) agency, distributor, dealer,
representative, sales, marketing or advertising Contract that
is not terminable by it without penalty on notice of 60 days
or less;
(vi) Contract to lend or advance funds to,
make any investment in, or guarantee the Indebtedness or
obligations of, any Person (including any Affiliate of
Corporation and any customers, suppliers, lenders, officers,
directors, employees, stockholders, or others having business
relations with Corporation);
(vii) Contract obligating Corporation to
indemnify any current or former director, officer, employee,
agent or fiduciary;
(viii)collective bargaining agreement,
employment agreement, nondisclosure agreement, assignment
agreement, noncompetition agreement, or any other Contract
with any director, officer or employee of Corporation, other
than the Employee Benefit Plans;
(ix) Contract relating to capital
expenditures which involves a payment or payments in excess of
$10,000;
(x) Contract limiting its freedom to
engage in any line of business or to compete with any other
Person;
(xi) Contract obligating it to sell or
otherwise dispose of any substantial part of its assets to, or
to enter into a business combination or share exchange with,
any other Person, or to refrain from any such sale,
disposition, business combination or share exchange, other
than this Agreement; or
(xii) Contract not entered into in the
ordinary course of business that involves a payment or
payments of $10,000 or more and is not cancelable without
penalty within 60 days.
(b) True, correct and complete copies of all
Contracts identified in Schedule 3.14 have heretofore been
delivered to Century. Except as set forth in Schedule 3.14,
(i) none of the Contracts or commitments listed in Schedule
3.9, 3.14, or 3.28 or any other Schedule hereto (the "Subject
Contracts") will expire, be terminated or be subject to any
modification as a result of the consummation of the
transactions contemplated by this Agreement, (ii) Corporation
is not in default in any material respect under the terms of
any Subject Contract, and no event has occurred which, with
the passage of time or giving of notice, or both, would
constitute such a default by Corporation, and (iii) to the
best knowledge of Corporation, no other party to any Subject
Contract is in default in any material respect thereunder, and
no such event has occurred with respect to any such party. No
purchase order or commitment of Corporation not listed on
Schedule 3.14 is in excess of its ordinary business
requirements.
3.15 Conflicts. (a) Assuming the Stockholders duly
adopt this Agreement at the Stockholders Meeting, the
execution, delivery, and performance by Corporation of this
Agreement and each Closing Instrument to be executed and
delivered by Corporation does not and will not (i) conflict
with or result in a violation of any provision of the
Organizational Documents of Corporation, (ii) assuming receipt
of all Required Consents specified on Schedule 3.15, conflict
with or result in a violation of any provision of, or
constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with
or without the giving of notice or the passage of time or
both) to any right of termination, cancellation, or
acceleration under, any bond, debenture, note, mortgage,
indenture, lease, Contract, or other instrument or obligation
to which Corporation is a party or by which Corporation or any
of its respective properties may be bound, or the rules and
regulations of any Governmental Entity, (iii) result in the
creation or imposition of any Encumbrance upon the properties
of Corporation or (iv) assuming compliance with the matters
referred to in Sections 6.1 through 6.3, violate any
Applicable Law (including any state takeover or similar law or
regulation) binding upon Corporation, except for, in the case
of clauses (ii) and (iii), any such conflicts, violations,
defaults, rights or Encumbrances that individually or in the
aggregate would not materially interfere, interrupt, or
detract from the ability of the Corporation, taken as a whole,
to conduct its business, impair the ability of Corporation to
perform its obligations hereunder, or prevent the consummation
of the transactions contemplated hereunder.
(b) Without limiting the generality of the
foregoing, none of the Organizational Documents or Contracts
of the Corporation grant rights of "first refusal" or similar
rights to the Stockholders upon the transfer or change in
control of shares of Corporation of such entities or their
Affiliates, or include any similar provisions that otherwise
restrict any such transfer or change in control in any manner
except for the Shareholders Agreement which shall be cancelled
immediately prior to closing.
(c) No consent, notice, approval, order, or
authorization of, or declaration, filing, or registration
with, any Governmental Entity is required to be obtained or
made by Corporation in connection with the execution, delivery
or performance by Corporation and the Principal Stockholders
of this Agreement or their consummation of the transactions
contemplated hereby, other than (i) the filing by the
Surviving Corporation of the Articles of Merger with the
Mississippi Secretary of State in accordance with the MBCA or
(ii) as contemplated by Sections 6.1 through 6.3.
3.16 Permits, Tariffs and Cellular Operations. (a)
Schedule 3.16 identifies all FCC Licenses, State Licenses and
other Permits that have been issued to Corporation, which
represent all federal, state or local Permits necessary for
Corporation to provide Cellular Service in the RSA and to
otherwise own or lease and operate its properties and to
conduct its business as now conducted. Except as disclosed in
Schedule 3.16, the present use by Corporation of its
properties and the conduct of its business does not violate
any Permits. Except as disclosed in Schedule 3.16, all such
Permits are in full force and effect, have been legally and
validly issued, and will continue in full force and effect
after the Closing Date without the consent, approval or act
of, or the making of any filing with, any Governmental Entity
or other party, subject to the receipt of the approval and the
completion of the filings described in Sections 6.1(a) and (c)
and 8.2 hereof, respectively. Except as disclosed on Schedule
3.16, the Corporation is not in default under the terms of any
such Permit and the Corporation has not received written
notice of any default thereunder. None of the Governmental
Entities that have issued the Permits has notified Corporation
of its intent to modify, revoke, terminate or fail to renew
any such Permit now or in the future, and, to the best
knowledge of Corporation, no such action has been threatened.
(b) Without limiting the generality of paragraph
(a) above, except as disclosed on Schedule 3.16 the
Corporation is the sole holder of the FCC cellular frequency
block "A" operating license ("Operating License") for the RSA
and holds such Operating License free and clear of all
Encumbrances. The cellular base stations owned by and
licensed to the Corporation provide, in each instance, 32 Dbu
contour coverage to the RSA as reflected on the maps and
engineering furnished to Century. The expiration of the five-
year "fill-in" period specified in 47 C.F.R. 22.903 will occur
on April 23, 1995 for the RSA.
(c) Except as disclosed in Schedule 3.16, the
Corporation has duly and timely filed all applications,
reports or other instruments and taken all other actions that
are necessary to secure the Corporation's enjoyment to the
fullest extent permitted by law of all rights as a provider of
Cellular Service in the RSA, including without limitation duly
and timely filing with the FCC all applications necessary to
construct and operate cellular base station facilities in the
RSA ("Base Station Applications"). Each cellular base station
facility operated by the Corporation has been constructed in
all material respects in accordance with the Base Station
Applications. The FCC has not notified Corporation of its
intent to revoke or transfer to another operator any Operating
License upon the expiration of its initial ten-year term, and,
to the best knowledge of Corporation, no such action has been
threatened.
(d) Corporation has previously delivered to
Century true, correct and complete copies of the tariffs
containing, to the extent included therein, service
regulations, rates and charges for radio common carrier
services applicable on the date hereof, together with all FCC
records and applicable state certifications. No action to
change, alter, rescind or make obsolete any of such tariffs,
rates or charges is pending or, to the best knowledge of
Corporation, is threatened or under consideration other than
Proceedings in the ordinary course of business and those of
general applicability to the cellular industry.
(e) As of February 28, 1995 the Corporation had,
and as of the Closing Date the Corporation will have, an
aggregate of at least 2,800 active cellular customers, in each
case excluding those customers whose accounts have not been
paid in full prior to the 60th day following the date of the
respective invoices for services rendered.
3.17 Absence of Undisclosed Liabilities. The
Corporation has no outstanding claims, liabilities or
obligations of any nature, whether accrued, unaccrued,
absolute, contingent, asserted, unasserted, matured,
unmatured, known, unknown or otherwise, other than (i) those
reflected in the Balance Sheet (including any footnotes
thereto), (ii) those that arise out of any matter specifically
disclosed in any other Section of or Schedule to this Article
3, (iii) immaterial liabilities that have arisen in the
ordinary course of business since December 31, 1994 and (iv)
those that, either individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect
with respect to the Corporation.
3.18 Compliance With Laws. Without limiting the scope
of any representation or warranty made in this Article 3
concerning compliance with laws, the Corporation is and during
the last three years has been in compliance in all material
respects with the Communications Act and all other Applicable
Laws. At no time during the last three years has Corporation
been notified orally or in writing by any Governmental Entity
that it has been the subject of any federal, state or local
criminal investigation, or that it has materially violated any
Applicable Law (including those described in other Sections of
this Article 3).
3.19 Employee Benefit Plans. (a) Schedule 3.19
contains a true, correct and complete list of each Employee
Benefit Plan of the Corporation. Prior to the date hereof,
Corporation has delivered to Century correct and complete
copies of all relevant documents pertaining to the Employee
Benefit Plans of Corporation, including (i) the plan documents
and related trusts and summary plan descriptions, (ii) the
most recent determination letters received from the IRS, (iii)
all Form 5500 annual reports filed with respect to plan years
after 1989, (iv) all filings pursuant to Labor Regulations
2520.104-23 with respect to plan years after 1990, and (v) any
related insurance Contracts with respect to the plans.
(b) With respect to the Employee Benefit Plans,
except as set forth on Schedule 3.19:
(i) Each such plan and each related trust
or insurance contract is in material compliance with all
applicable provisions of ERISA and the Code;
(ii) Each Employee Benefit Plan listed on
Schedule 3.19 that is intended to be, or normally would
be, qualified under Section 401(a) of the Code is so
qualified in form and operation, and each trust forming
a part thereof is exempt from tax pursuant to Section
501(a) of the Code;
(iii) All contributions due and owing for
each Employee Benefit Plan for the plan year most
recently ended and for all prior years have been made or
reserved for;
(iv) There are no accumulated funding
deficiencies as defined in Section 412 of the Code
(whether or not waived) with respect to any Employee
Benefit Plan. Neither Corporation, nor any affiliate
thereof, has incurred any material liability under Title
IV of ERISA arising in connection with the termination
of, or a complete or partial withdrawal from, any
Employee Benefit Plan covered or previously covered by
Title IV of ERISA. Corporation and all affiliates
thereof, have paid and discharged promptly when due all
liabilities and obligations with respect to any Employee
Benefit Plan arising under ERISA or the Code of a
character which if unpaid or unperformed could
reasonably be expected to result in the imposition of an
Encumbrance against any of the assets of Corporation,
any Subsidiary, or any affiliate thereof;
(v) Nothing done or omitted to be done and
no transaction or holding of any asset under or in
connection with any Employee Benefit Plan has or will
cause, directly or indirectly, Corporation, or any
affiliate thereof, to incur any liability under Title I
of ERISA or any liability for any tax pursuant to
Section 4975 of the Code;
(vi) Neither the Corporation nor any
affiliate thereof has ever maintained or contributed to
a Multiemployer Plan or to an Employee Benefit Plan
subject to Title IV of ERISA or subject to the minimum
funding standards of ERISA and the Code, and none of the
Employee Benefit Plans is (a) Multiemployer Plan or (b)
a plan to which more than one employer makes
contributions, within the meaning of Sections 4063 and
4064 of ERISA;
(vii) Except as set forth on Schedule 3.19
neither the Corporation, nor any affiliate thereof, has
ever maintained or contributed to or been required to
contribute to any Employee Welfare Benefit Plan
providing medical, health, or life insurance or other
welfare type benefits for current or future retired or
terminated employees, their spouses, or their
dependents.
(viii)All required reports and descriptions,
including Form 5500 annual reports, summary annual
reports, summary plan descriptions, and reports required
by Labor Department Regulation Section 2520.104-23 have
been filed or distributed appropriately with respect to
the Employee Benefit Plans. The requirements of Part 6
of Subtitle B of Title I of ERISA and of Section 4980B
of the Code have been met with respect to each such
Employee Benefit Plan which is an Employee Welfare
Benefit Plan; and
(ix) No reportable event, as such term is
defined in Section 4043(B) of ERISA, has occurred with
respect to any of such Plans which are subject to
Section 4043(B) or ERISA other than those which might
arise solely as a result of the transactions
contemplated by this Agreement.
(x) The fair market value of the assets of
each Employee Benefit Plan exceeds the amount of benefit
liabilities for such plan, computed on a termination
basis utilizing PBGC factors;
(xi) Neither the Corporation, nor any
affiliate thereof, are liable nor is there any basis for
any such liability for an excise tax under Section 4980B
of the Code in connection with an Employee Benefit Plan
which is a welfare benefit plan;
(xii) No claim, lawsuit, arbitration or
other action or proceeding is pending or has been
threatened, asserted or instituted against the
Corporation, or any affiliate thereof, or any Employee
Benefit Plan, in connection with or arising out of,
directly or indirectly, the provisions of COBRA, and
there are no facts that exist which could give rise to
any such actions, suits or claims. Century shall be
notified promptly in writing of any such threatened or
pending claim arising between the date hereof and the
Closing;
(xiii) The Corporation agrees that it will
comply, and will cause all affiliates to comply, with
COBRA after the Closing with respect to all qualified
beneficiaries who had a qualifying event as of or prior
to the Closing, including any former employees of the
Corporation, or any affiliate thereof, who are hired by
Century, but who are entitled to elect COBRA coverage
under an Employee Benefit Plan due to a significant gap
in coverage, a preexisting condition or as otherwise may
be required by applicable law;
(xiv) The Corporation and Century agree
that Century is not intended to be and is not a
successor employer to the Corporation, or any affiliate
thereof, for any purpose, including with respect to
COBRA, and that no benefit plan sponsored or maintained
by Century is intended to be and no such plan shall be a
successor plan to any Employee Benefit Plan;
(xv) Schedule 3.19 includes a list of all
qualified beneficiaries under COBRA under any Employee
Benefit Plan who experienced a qualifying event under
such plan as of or prior to the Closing, and the
Corporation agrees to provide, with respect to each such
qualified beneficiary, his/her name, address, date of
qualifying event, COBRA premium payment history and
copies of all COBRA notices provided by or on behalf of
the Corporation;
(xvi) No Employee Benefit Plan has been
completely or partially terminated;
(xvii) Except as set forth on Schedule
3.19, consummation of the transaction contemplated in
this Agreement will not entitle any employee of the
Corporation, or any affiliate thereof, to severance pay
and will not increase, or accelerate the time of payment
or vesting of, any compensation due to any employee of
the Corporation, or any affiliate thereof, or under any
Employee Benefit Plan.
(c) For purposes of this Section only, an
"affiliate" of a Person means any other Person which, together
with such Person, would be treated as a single employer under
Section 414 of the Code.
3.20 Investment Company Act. Corporation is not an
"investment company" as defined under the Investment Company
Act of 1940, as amended, and the regulations promulgated
thereunder.
3.21 Remuneration, Severance Pay, and Other Benefits.
(a) Schedule 3.21 sets forth a true, correct and complete
list of each of the officers and directors of Corporation.
Corporation has delivered to Century a true, correct and
complete list of each employee of Corporation, together with a
list of the total cash compensation paid to each such person
for 1994 (showing bonuses separately), along with the current
wages or annualized salary of each such person for 1995.
(b) Schedule 3.21 sets forth a true, complete
and correct list of (i) each director, officer or employee of
Corporation who, as a result of any of the transactions
described in this Agreement, is or will become entitled to
receive any amount (whether in cash, property, securities or
otherwise) under any employment, severance, change in control,
or termination Contract, or under any other compensation
arrangement or Employee Benefit Plan, and (ii) the amount to
which each such person is or will become so entitled. Except
as set forth on Schedule 3.21, the Corporation has not or will
not have any payment or other obligation to any current or
former director, officer, employee or Affiliate of Corporation
by virtue of the transactions described in this Agreement, and
neither the consummation of the transactions contemplated
hereunder nor the occurrence of any event thereafter will
increase, or accelerate the time of payment or vesting of, any
amounts payable to any current or former director, officer,
employee or Affiliate of Corporation under any Employee
Benefit Plan or otherwise.
3.22 Labor Relations. The Corporation has not engaged
in any Unfair Labor Practice and there are no Unfair Labor
Practice charges or similar grievances pending or, to
Corporation's best knowledge, threatened in writing against
Corporation before the National Labor Relations Board or
otherwise. There are no pending or, to the best knowledge of
Corporation, threatened grievances against Corporation by the
Communications Workers of America labor union or any other
labor union, and there are no labor slowdowns, picketing,
stoppages or similar disturbances pending or, to the best
knowledge of Corporation, threatened in writing against
Corporation.
3.23 Product Liability Claims; Product Warranties.
There are no product liability claims pending or, to the best
knowledge of Corporation, threatened against Corporation.
Except as set forth in the form of customer service agreement
utilized by Corporation, a true, correct and complete copy of
which is attached hereto as Exhibit D, Corporation has not
given or offered any warranty covering any class or group of
products or services sold or distributed by Corporation.
3.24 Environmental Matters. (a) Corporation possesses
all Permits that are required under federal, state and local
laws and regulations relating to pollution or the protection
of the environment, including all laws and regulations
governing the generation, use, collection, treatment, storage,
transportation, recovery, removal, discharge or disposal of
all hazardous substances or wastes, as such laws and
regulations are constituted on the date hereof (collectively,
"Environmental Laws"), except for Permits the failure of which
to possess would not reasonably be expected to result in a
Material Adverse Effect with respect to Corporation.
Corporation is in compliance with all Environmental Laws,
including all laws and regulations imposing record-keeping,
maintenance, testing, storage, transportation, use,
generation, collection, treatment, recovery, removal,
discharge, disposal, inspection, registration, notification
and reporting requirements with respect to such hazardous
substances, hazardous wastes or any other materials, except
for any failures to comply that would not reasonably be
expected to result in a Material Adverse Effect with respect
to Corporation. For purposes of this Section 3.24, "hazardous
substances" and "hazardous wastes" are materials defined as
"hazardous substances", "hazardous wastes," or "hazardous
constituents" in (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections
9601-9675, as amended by the Superfund Amendments and
Reauthorization Act of 1986, and any amendments thereto and
regulations thereunder, all as constituted on the date hereof,
(ii) the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Sections 6901-6992, as amended by the Hazardous and
Solid Waste Amendments of 1984, and any amendments thereto and
regulations thereunder, all as constituted on the date hereof,
or (iii) any other Environmental Law, including, without
limitation, those that specifically regulate the use of
gasoline, diesel fuel or other petroleum hydrocarbons.
(b) The Corporation is not subject to any
Proceedings pursuant to, nor has received any written notice
of any violations of, any Environmental Law in the last 5
years.
(c) To the best knowledge of Corporation, at no
time has Corporation caused hazardous wastes or hazardous
substances (or any asbestos, poly-chlorinated biphenyls, urea
formaldehyde, fuel oil or other petroleum compounds) to be
treated, stored, disposed of, released, discharged or
deposited on, under or at premises owned, occupied, or
operated by Corporation, which materials require clean-up,
removal, response, remediation or other obligations of or by
Corporation under any Environmental Law.
(d) To the best knowledge of Corporation, there
are no disposal sites for hazardous substances or hazardous
wastes located on or under the real estate owned by
Corporation or operated by Corporation, and Corporation has
not disposed of any hazardous substances or hazardous wastes
on or under the real estate owned or operated by it.
Corporation has never disposed of any hazardous substances or
hazardous wastes off-site, or retained any Person to handle,
transport or dispose of any hazardous substances or hazardous
wastes either on-site or off-site.
3.25 Bank Accounts; Powers of Attorney. Schedule 3.25
hereto contains a correct and complete list of all (i)
accounts or deposits of Corporation with banks or other
financial institutions and a description of the nature and
purpose of such account or deposit, (ii) safe deposit boxes of
Corporation, (iii) persons authorized to sign or otherwise act
with respect to Corporation, and (iv) powers of attorney and
agency agreements for Corporation.
3.26 Taxes. Except as otherwise set forth in Schedule
3.26:
(a) Each Tax Return required to be filed by or
with respect to Corporation has been properly completed and
timely filed. As of the time of filing, each such Tax Return
correctly reflected the facts regarding the income, business,
assets, operations, activities, status or other matters of
Corporation or any other information required to be shown
thereon. No extension of time within which to file any Tax
Return has been filed, requested or granted.
(b) All Taxes owed by Corporation (whether or
not shown on any Tax Return) have been paid in full. No
written claim has been made by an authority in a jurisdiction
where Corporation does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction. There are no
Encumbrances on any of the assets of Corporation that arose in
connection with any failure (or alleged failure) to pay any
Tax when due. The unpaid Taxes of Corporation (i) do not
exceed the reserve for Tax liability set forth on the face of
the Balance Sheet and (ii) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of Corporation
in filing its Tax Returns. Corporation has withheld from its
employees (and timely paid to the appropriate Governmental
Entity) proper and accurate amounts for all periods in
compliance with all Tax withholding provisions of Applicable
Laws (including income, social security and employment Tax
withholding for all forms of compensation subject thereto).
(c) No audit, examination, investigation or
other Proceeding is presently being conducted or threatened by
the IRS or any other taxing authority; no Tax deficiencies or
additional liabilities of any sort have been proposed by any
Governmental Entity or representative thereof against
Corporation; and no agreement for extensions of time for
assessment of any amounts of Tax has been entered into by
Corporation. Schedule 3.26 lists all federal, state, and
local income Tax Returns filed with respect to Corporation for
taxable periods ended on or after December 31, 1991, indicates
those Tax Returns that have been audited, and indicates those
Tax Returns that currently are the subject of audit.
Corporation has delivered true, correct and complete copies of
each Tax Return listed on Schedule 3.26.
(d) No deferred gains or losses allocable to
Corporation will be recognized by virtue of consummating the
Merger.
(e) The Corporation is not a party to any tax
allocation, tax indemnity, tax payment or tax sharing
Contract.
(f) The Corporation (i) has not been a member of
an affiliated group filing a consolidated federal income Tax
Return and (ii) has no liability for the Taxes of any Person
under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or
successor, by Contract, or otherwise.
(g) The Corporation has in effect a valid S
Corporation election under the Code for all periods beginning
on or after January 1, 1991.
3.27 Securities Laws. (a) Except as otherwise noted on
Schedule 3.27 since January 1, 1992 the Corporation has not
offered or sold securities in violation of the Securities Act
or the regulations promulgated thereunder and all such offers
or sales of securities have been registered under the
Securities Act or were exempt from the registration
requirements thereof.
(b) None of the information furnished in writing
or to be furnished in writing to Century by Corporation or the
Principal Stockholders, or any Affiliate, officer, employee or
representative thereof, specifically for use in the
Information Statement will contain, as of the date of the
Information Statement, any untrue statement of a material fact
or will omit to state any material fact required to be stated
therein or necessary in order to make the statements contained
therein, in light of the circumstances under which they were
made, not misleading.
3.28 Intellectual Property. (a) Schedule 3.28 sets
forth a true, correct and complete list of all (i) trademarks,
service marks, trade names and corporate names and
registrations and applications for registration thereof, (ii)
patents, patent applications, patent disclosures and
inventions, (iii) copyrights and registrations and
applications for registration thereof, and (iv) computer
software, data and documentation (collectively, "Intellectual
Property") that is owned, used or licensed (as licensor or
licensee) by Corporation. Schedule 3.28 indicates, for all
Intellectual Property set forth thereon, which such property
is owned by Corporation and which is owned by other Persons,
and separately lists each Contract pursuant to which
Corporation has granted, or been granted, any licenses and
other similar rights with respect to any Intellectual
Property, together with a short description of the subject
matter on such licenses. Corporation owns all right, title
and interest in and to, or have the right to use pursuant to a
valid and binding license agreement, all Intellectual Property
specified on Schedule 3.28, which is the only Intellectual
Property necessary to operate the businesses of such entity as
presently conducted and in accordance with past practices. No
loss or expiration of any Intellectual Property is pending or,
reasonably foreseeable other than expirations by operation of
law. Corporation has taken all necessary and desirable
actions to maintain and protect the Intellectual Property that
it owns and uses. Corporation has no knowledge that the
owners of any Intellectual Property licensed to Corporation
have not taken all necessary and desirable actions to maintain
and protect the Intellectual Property which is subject to such
license.
(b) Corporation has not received written notice
of a claim of any Person pertaining to the Intellectual
Property or the rights of Corporation thereunder, and no
Proceedings are pending or, to the best knowledge of
Corporation, threatened that challenge the rights of
Corporation in respect thereof or that claim that any other
Person is infringing upon such Intellectual Property, and none
of the Intellectual Property or, as the case may be, the
rights granted to Corporation in respect thereof, infringes on
the rights of any Person or, to the best knowledge of
Corporation, is being infringed upon by any Person, and none
is subject to any outstanding order, decree, judgment,
stipulation, injunction, restriction or agreement restricting
the scope of the use by Corporation.
(c) To the best knowledge of Corporation, the
Corporation has not made use of any Intellectual Property
other than the rights under the Intellectual Property listed
on Schedule 3.28.
3.29 Interests in Customers and Suppliers. Neither
Corporation, Principal Stockholders, nor any officers,
directors or Affiliates thereof, possess any direct or
indirect material financial interest in, or is a director or
officer of, any Person who has a material relationship with
Corporation, as a customer, supplier, agent, advisor,
consultant, representative, lessor, lessee, lender, licensor,
or competitor except certain Principal Stockholders who are
shareholders, directors, and officers of Mercury
Communications Company ("Mercury"), the management company for
the Corporation pursuant to the RSA Management and
Construction Services Agreement dated as of January 1, 1994
(the "Management Contract").
3.30 Inventories. The inventories of Corporation are
(i) not known to be obsolete, (ii) in good, merchantable and
useable condition, (iii) reflected in the Balance Sheet in
accordance with GAAP, (iv) reflected in the books and records
of Corporation at the lower of cost or market value and (v) in
quantities that are not excessive, and are adequate in light
of present circumstances.
3.31 No Finder; Opinion of Financial Advisor. (a)
Corporation has neither paid nor become obligated, or will
upon Closing become obligated, to pay any fee or commission to
any broker, finder or intermediary for or on account of the
transactions contemplated hereby except for fees owed to
Columbia Capital Corporation for appraisal ($2,000) and
consulting ($2,000) which shall be paid by the Corporation
prior to Closing.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL
STOCKHOLDERS
4.1 Representations and Warranties. Each Principal
Stockholder hereby makes the following representations and
warranties to Century and Sub as of the date hereof:
(a) Each Principal Stockholder has the full
legal right, power, capacity and authority to execute, deliver
and perform this Agreement and all Closing Instruments to be
executed and delivered by him hereunder, in each case without
the consent or joinder of any other Person.
(b) This Agreement has been duly executed and
delivered by such Principal Stockholder and constitutes, and
each Closing Instrument, when executed and delivered by him,
will be duly executed and delivered by such Principal
Stockholder and will constitute, a valid and legally binding
obligation of such Principal Stockholder, enforceable against
him in accordance with its respective terms, except that such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally and (ii) equitable
principles that may limit the availability of certain
equitable remedies (such as specific performance) in certain
instances.
(c) Assuming the Stockholders duly adopt this
Agreement at the Stockholder's Meeting, the execution,
delivery, and performance by such Principal Stockholder of
this Agreement and each Closing Instrument to be executed and
delivered by such Principal Stockholder does not and will not
(i) conflict with or result in a violation of any provisions
of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with
or without the giving of notice or the passage of time or
both) to any right of termination, cancellation, or
acceleration under, any bond, debenture, note, mortgage,
indenture, lease, Contract, or other instrument or obligation
to which such Principal Stockholder is a party or by which he
or any of his Corporation Stock may be bound, (ii) result in
the creation of imposition of any Encumbrance upon the
Corporation Stock of such Principal Stockholder or
(iii) assuming compliance with the matters referred to in
Section 6.1 through 6.3, violate any Applicable Law (including
any state takeover or similar law or regulation) binding upon
him, in each case except for any such conflicts, violations,
defaults, rights or Encumbrances that individually or in the
aggregate would not materially impair the ability of such
Principal Stockholder to perform his obligations hereunder
(including his obligations under Article 10) or prevent the
consummation of the transactions contemplated hereunder.
(d) No consent, notice, approval, order, or
authorization of, or declaration, filing, or registration
with, any Governmental Entity is required to be obtained or
made by such Principal Stockholder in connection with his
execution, delivery or performance of this Agreement or his
consummation of the transactions contemplated hereby, other
than as contemplated hereunder, except for consents, notices,
approvals, orders, authorizations, declarations, filings and
registrations the failure of which to obtain or make
individually or in the aggregate would not materially impair
the ability of such Principal Stockholder to perform his
obligations hereunder (including his obligations under Article
10) or prevent the consummation of the transactions
contemplated hereunder.
(e) There are no Proceedings or, to the best
knowledge of such Principal Stockholder, Threatened
Proceedings asserted against him that, individually or in the
aggregate, could reasonably be expected to (i) impair in any
material respect the ability of such Principal Stockholder to
perform his obligations under this Agreement or (ii) prevent
the consummation of any of the transactions described in this
Agreement, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator having, or
which will have, any such effect.
(f) Such Principal Stockholder is neither a
party to nor is bound by (i) any stockholder agreement or
contract, voting trust, proxy or similar arrangement
restricting or governing his rights to vote or dispose of his
shares of Corporation Stock, except for the Shareholders
Agreement which shall be cancelled immediately prior to
closing, (ii) any loan or advance to Corporation or any
Contract relating to the making of any such loan or advance,
(iii) any loan, commitment or Contract obligating such
Principal Stockholder to repay any amounts to Corporation, or
(iv) any guarantee or other contingent liability in respect of
any Indebtedness or any other debt, liability or obligation of
Corporation except for the secured loans to Trustmark National
Bank.
(g) No Principal Stockholder (i) holds any
Options with respect to the capital stock of Corporation, or
(ii) has any material interest in any Contract or property
(real or personal), tangible or intangible, used in or
pertaining to the business of Corporation.
(h) The Principal Stockholders do not have a
present plan, intention, or arrangement to dispose of, or
cause the disposition of, any beneficial interest in any of
the shares of Century Common Stock to be delivered in
accordance with Section 2.9 hereof in a manner that would
cause the Merger to violate the continuity of shareholder
interest requirement set forth in Treasury Regulation Section
1.368-
1.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF CENTURY
Century and Sub hereby make the following
representations and warranties to Corporation and the
Stockholders as of the date hereof:
5.1 Organization of Century. Century is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Louisiana and has full corporate
power and authority to carry on the business in which it is
engaged and to own, lease and operate its properties. Century
and its subsidiaries have qualified and are authorized to do
business and are in good standing as foreign corporations in
each jurisdiction in which the character or location of its
properties or the nature of its activities makes such
qualification necessary, except where the failure to so
qualify would not have a Material Adverse Effect with respect
to Century.
5.2 Organization of Sub. Sub is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Mississippi. Sub has not engaged in any
business or incurred any liabilities since it was
incorporated, except as contemplated by this Agreement.
5.3 Authorization. Each of Century and Sub has full
corporate power and authority to execute and deliver this
Agreement and each Closing Instrument to be executed and
delivered by it and to consummate the transactions
contemplated hereby. The execution, delivery and performance
by each of Century and Sub of this Agreement and each Closing
Instrument to be executed and delivered by it have been duly
authorized by the respective Boards of Directors of Century
and Sub (or a duly authorized committee thereof) and by
Century, in its capacity as sole stockholder of Sub, and no
other corporate proceedings on the part of Century or Sub are
necessary to authorize the execution, delivery and performance
by them of this Agreement or any such Closing Instrument.
This Agreement has been duly executed and delivered by Century
and Sub and constitutes, and each Closing Instrument, when
executed and delivered by Century, will be duly executed and
delivered by Century and will constitute, a valid and legally
binding obligation of Century and Sub enforceable against them
in accordance with their respective terms, except that such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally and (ii) equitable
principles that may limit the availability of certain
equitable remedies (such as specific performance) in certain
instances.
5.4 Capital Stock. Century has authorized capital
consisting of (i) 100,000,000 shares of Century Common Stock,
of which 58,208,027 shares (and associated rights) are issued
and outstanding, and (ii) 2,000,000 shares of Preferred Stock,
$25.00 par value per share, of which 4,260 shares of Preferred
Stock, Series A, 13,902 shares of Preferred Stock, Series H,
and 72,545 shares of Preferred Stock, Series K are issued and
outstanding. All issued and outstanding shares of capital
stock of Century have been duly authorized and validly issued,
and are fully paid, nonassessable and free of any preemptive
or similar rights. Except as described in the Century
Exchange Act Reports, Century is not subject to any
outstanding Options. Except as indicated above or in the
Century Exchange Act Reports, there are no equity equivalents
in, interests in the ownership or earnings of, or other
similar rights binding upon Century. The Century Common Stock
to be delivered pursuant to Article 2, when issued and
delivered in accordance with the terms hereof, will be duly
authorized, validly issued, fully paid, nonassessable, and
free of any preemptive or similar rights. The authorized
capital stock of Sub consists of 1,000 shares of common stock,
$.01 par value per share, of which 1,000 shares are
outstanding and held directly by Century.
5.5 No Finder. Neither Century, Sub nor any party
acting on behalf of Century or Sub has paid or become
obligated, or will upon Closing become obligated, to pay any
fee or commission to any broker, finder or intermediary for or
on account of the transactions contemplated herein.
5.6 Registration Statement. The Registration
Statement will, when filed, comply as to form in all material
respects with the Securities Act and all regulations
promulgated thereunder. The Registration Statement, as of the
time it becomes effective, will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make
the statements contained therein, in light of the
circumstances under which they are made, not misleading. The
representations and warranties contained in this Section 5.6
shall not apply to statements or omissions in the Registration
Statement based upon information furnished in writing to
Century by Corporation or the Principal Stockholders, or any
representative or Affiliate thereof, specifically for use in
the Registration Statement.
5.7 Securities Laws. (a) Century has duly and timely
filed all Exchange Act Reports required to be filed by it
since January 1, 1992. As of their respective dates, the
Century Exchange Act Reports complied in all material respects
with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to
such reports, and none of the Century Exchange Act Reports
contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) Since January 1, 1992, neither Century nor
any of its subsidiaries has offered or sold securities in
violation of the Securities Act or the regulations promulgated
thereunder. All such offers or sales of securities have been
registered under the Securities Act or were exempt from the
registration requirements thereof.
5.8 Financial Statements. The consolidated balance
sheets, statements of income, statements of stockholders'
equity or statements of cash flows, whether audited or
unaudited, included in Century's annual report on Form 10-K
for the fiscal year ended December 31, 1994 filed with the SEC
and in any quarterly reports on Form 10-Q subsequently filed
with the SEC ("Century Financial Statements") (i) reflect only
actual bona fide transactions, (ii) have been prepared from
the books and records of Century in accordance with GAAP and
(iii) fairly present in all material respects Century's
consolidated financial position as of the respective dates
thereof in accordance with GAAP and its consolidated results
of operations and cash flows for the periods then ended in
accordance with GAAP, except, in the case of unaudited
financial statements included therein, as otherwise permitted
by Rule 10-01 of Regulation S-X promulgated by the SEC. All
unaudited interim financial statements included among the
Century Financial Statements reflect all adjustments (which
include only normal recurring adjustments made in conformity
with GAAP) that are necessary for a fair statement of the
consolidated results of operations of Century and its
subsidiaries for the periods presented therein.
5.9 Absence of Diluting Events. As of the Effective
Time, no Diluting Event shall have occurred after the date of
this Agreement, other than any Diluting Events as to which
Corporation and Century shall have mutually determined lawful,
appropriate, equitable and adequate adjustments under Section
2.10.
5.10 Conflicts. (a) The execution, delivery, and
performance by Century of this Agreement and each Closing
Instrument to be executed and delivered by Century does not
and will not (i) conflict with or result in a violation of any
provision of the Organizational Documents of Century, (ii)
conflict with or result in a violation of any provision of, or
constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with
or without the giving of notice or the passage of time or
both) to any right of termination, cancellation, or
acceleration under, any bond, debenture, note, mortgage,
indenture, lease, Contract, or other instrument or obligation
to which Century is a party or by which Century or any of its
properties may be bound, (iii) result in the creation or
imposition of any Encumbrance upon the properties of Century
or (iv) assuming compliance with the matters referred to in
Sections 6.1 through 6.3, violate any Applicable Law
(including any state takeover or similar law or regulation)
binding upon Century, except for, in the case of clauses (ii)
and (iii), any such conflicts, violations, defaults, rights or
Encumbrances that individually or in the aggregate would not
materially interfere, interrupt, or detract from the ability
of Century to conduct its business, impair the ability of
Century to perform its obligations hereunder, or prevent the
consummation of the transactions contemplated hereunder.
(b) No consent, notice, approval, order, or
authorization of, or declaration, filing, or registration
with, any Governmental Entity is required to be obtained or
made by Century in connection with the execution, delivery or
performance by Century of this Agreement or their consummation
of the transactions contemplated hereby, other than (i) the
filing by the Surviving Corporation of the Certificate of
Merger with the Mississippi Secretary of State in accordance
with the MBCA or (ii) as contemplated by Sections 6.1 through
6.3.
ARTICLE 6. PRE-CLOSING COVENANTS
The parties covenant to take the following actions
between the date hereof and the Effective Time:
6.1 Governmental Approvals. (a) The parties hereto
shall cooperate in good faith and take all actions necessary
or appropriate to expeditiously and diligently prosecute to a
favorable conclusion the joint applications filed on March 23,
1995 on FCC Form 490 seeking the FCC's approval of the change
in control of each FCC License listed on Schedule 3.16.
(b) The parties hereto shall cooperate in good
faith and take all actions necessary or appropriate to
expeditiously and diligently prosecute to a favorable
conclusion the HSR Notifications to be filed in connection
herewith not later than five business days subsequent to the
date hereof with the FTC and the DOJ pursuant to the HSR Act.
(c) The parties hereto shall cooperate in good
faith and take all actions necessary or appropriate to
expeditiously and diligently obtain the approval of the MPSC
to the Merger, if required.
(d) Each party agrees to promptly provide the
other parties with copies of all written communications,
letters, reports or other documents delivered to or received
from Governmental Entities in connection with the filings
contemplated by this Section, and copies of any written
memorandum relating to discussions with such Governmental
Entities with respect to such filings.
6.2 Registration Statement and Information Statement;
Stockholders Meeting; Comfort Letter. (a) As promptly as
practicable after the date hereof, but not later than 20 days
from the date hereof (provided that Corporation has fully and
completely cooperated), Century shall prepare and file with
the SEC the Registration Statement on Form S-4 to register the
issuance and sale of Century Common Stock to be issued under
Article 2 hereof (the "Exchange"). Century agrees that the
Registration Statement, when declared effective under the
Securities Act shall, subject to Corporation's compliance with
paragraph (b), contain all information required under the
Securities Act and the regulations promulgated thereunder to
register the Exchange. Century shall use its reasonable best
efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after the
filing thereof.
(b) As promptly as practicable after the date
hereof, Corporation shall prepare, and as promptly as
practicable after the effectiveness of the Registration
Statement, Corporation shall mail to the Stockholders, the
Information Statement with respect to the Stockholders
Meeting. Corporation agrees that the Information Statement,
as of the date of the Information Statement, shall contain all
information required under Parts A, C and D to form S-4.
(c) Prior to filing the Registration Statement,
Information Statement or any related materials, or any
amendment or supplement thereto, the parties hereto shall
exchange drafts of all such documents proposed to be filed and
permit the other parties the opportunity to comment thereon
and participate in the preparation of the Registration
Statement and Information Statement. Each of Corporation and
the Principal Stockholders agrees promptly to correct or
supplement any information provided by it in writing
specifically for use in the Registration Statement if and to
the extent that such information shall have become false or
misleading in any material respect. Century further agrees to
take all steps necessary to cause the Registration Statement
as so corrected to be filed with the SEC, as and to the extent
required by the Securities Act and the regulations promulgated
thereunder.
(d) Corporation shall take all action necessary
in accordance with the MBCA and its Organizational Documents
to duly call, give notice of, convene and hold the
Stockholders Meeting as promptly as practicable after the date
on which the Registration Statement shall be declared
effective (subject to all notice requirements of the MBCA,
Corporation's Organizational Documents and Instruction A(2) to
Form S-4 of the SEC) to consider and vote upon the adoption of
this Agreement. Unless between the date hereof and the date
of the Stockholders Meeting there shall have been a Material
Adverse Change with respect to Century, each of the Principal
Stockholders shall vote in favor of this Agreement at the
Stockholders Meeting, and shall cause each of its Affiliates
that it controls who hold voting rights with respect to the
Corporation Stock to similarly vote in favor of this
Agreement.
(e) Corporation shall use its reasonable best
efforts to cause to be delivered to Century a letter of its
independent public accountants, dated within two business days
before the date on which the Registration Statement shall
become effective and addressed to Century, in form and
substance reasonably satisfactory to Century and customary in
scope and substance for letters delivered by independent
public accountants in connection with registration statements
similar to the Registration Statement.
6.3 Stock Exchange Filings. Century shall use its
reasonable best efforts to list on the NYSE, subject to
official notice of issuance, the shares of Century Common
Stock to be issued to the Stockholders of Corporation pursuant
to this Agreement, effective on or before the Closing Date.
6.4 Third Party Consents. Corporation shall use its
reasonable best efforts to obtain the Required Consents and
each party hereto shall use its reasonable best efforts to
obtain any other necessary and appropriate consents,
approvals, orders, authorizations, filings and registrations
from Persons other than Governmental Entities that are
necessary to enable Century, Sub, Corporation and the
Principal Stockholders to effect the Merger as contemplated by
this Agreement and to otherwise consummate the transactions
contemplated hereby.
6.5 Cooperation and Best Efforts. Each party shall
cooperate with each other party hereto and use its reasonable
best efforts to (i) satisfy all requirements prescribed by
Applicable Law or the Permits for, and all conditions set
forth in this Agreement to, the consummation of the Merger and
(ii) effect the Merger in accordance with this Agreement at
the earliest practicable date.
6.6 Investigation of Business of Corporation. (a)
Corporation and the Principal Stockholders shall afford to the
officers, employees and authorized representatives of Century
and Sub (including their independent public accountants,
environmental consultants and attorneys) for a period of 60
days from the date hereof (the "Due Diligence Period") and
thereafter until Closing; complete access during normal
business hours to (i) the offices, operations, properties,
customers, suppliers, lenders, lessors, licensors, auditors
and business and financial records (including computer files,
retrieval programs and similar documentation, and including
all Permits and all FCC and MPSC records) of Corporation and
(ii) the respective employees of Corporation, in each case to
the extent Century or Sub shall deem necessary or desirable,
and shall furnish to Century, Sub or their respective
authorized representatives such additional information
concerning the respective operations, properties and business
of Corporation as shall be reasonably requested, including all
such information as shall be necessary to enable Century, Sub
or their authorized representatives to verify the accuracy of
the representations and warranties contained in Article 3, to
verify the accuracy of any financial statements of Corporation
and to determine whether the conditions set forth in Article 7
have been satisfied. Notwithstanding anything to the contrary
herein, Century and Sub agree that such investigation shall be
conducted in such manner as not to interfere unreasonably with
the operation of the business of Corporation. No
investigation made by Century, Sub or their respective
authorized representatives hereunder shall affect the
representations and warranties of Corporation and the
Principal Stockholders hereunder, subject to Section 10.4(c).
(b) Century and Sub shall hold, and will cause
their Affiliates, employees, officers, directors, agents and
representatives to hold, any non-public and proprietary
information obtained in connection with its review in
accordance with paragraph (a) in the strictest secrecy and
confidence (unless such information thereafter becomes
generally available to the public through no fault of any of
them, is otherwise available to them on a non-confidential
basis from another source, or has been developed independently
by them without violating any of their obligations hereunder).
Century and Sub shall use, and cause their Affiliates to use,
all such information solely for the purpose of consummating
the transactions contemplated by this Agreement pursuant to
the terms of this Agreement. In the event the transactions
contemplated by this Agreement are not consummated for any
reason pursuant to the terms of this Agreement, Century and
Sub shall return, and cause their Affiliates to return, any
copies or summaries of all such information in their
possession, and shall destroy, or cause their Affiliates to
destroy, all copies of any notes, analyses, compilations,
studies, calculations or other documents prepared by it or for
its internal use that include or are derived from the non-
public and proprietary information provided hereunder.
(c) If, during the Due Diligence Period, Century
becomes aware of matters to which it, in its sole discretion
finds objectionable, Century shall give notice to Corporation
of such objection and if such matters are not corrected to
Century's satisfaction, Century may give notice of termination
of this Agreement to Corporation. In the event Corporation
informs Century of its inability to so correct such matters,
Century may elect in lieu of termination to waive such
objection and proceed to Closing.
6.7 Preserve Accuracy of Representations and
Warranties; Notification of Changes. (a) Corporation shall
not, and shall cause its Affiliates that it controls not to,
commit or omit to do any act that could reasonably be expected
to result in a Material Adverse Effect with respect to any
Corporation and the Principal Stockholders shall not, and
shall cause their respective Affiliates that they control not
to, commit or omit to do any act that (i) would cause a breach
of any agreement, commitment or covenant made by it in this
Agreement or (ii) would cause any representation or warranty
made by it in this Agreement (including, with respect to
Corporation, the representations and warranties made by it in
Section 3.8) to become untrue, as if each such representation
and warranty were continuously made from and after the date
hereof. Each of Corporation and the Principal Stockholders
shall promptly notify Century in writing of (i) any event or
condition (including any Proceeding or Threatened Proceeding)
that could adversely affect its ability to perform any of its
agreements, commitments or covenants contained herein and (ii)
any event or condition (including any Proceeding or Threatened
Proceeding) that causes any representation or warranty made by
it in this Agreement to become untrue, as if each such
representation and warranty were continuously made from and
after the date hereof, and Corporation shall promptly notify
Century in writing (i) of any event or condition (including
any Proceeding or Threatened Proceeding) that could reasonably
be expected to result in a Material Adverse Effect with
respect to any Corporation or (ii) if it or any of its
representatives discovers any facts during the course of its
due diligence review that causes Corporation to believe that
any of the representations and warranties made by Century are
not correct in all material respects.
(b) Century and Sub shall not, and shall cause
their respective Affiliates not to, commit or omit to do any
act that (i) could reasonably be expected to result in a
Material Adverse Effect with respect to Century, (ii) would
cause a breach of any agreement, commitment or covenant of
Century or Sub contained in this Agreement or (iii) would
cause the representations and warranties of Century or Sub
contained in this Agreement to become untrue, as if each such
representation and warranty were continuously made from and
after the date hereof. Century shall promptly notify
Corporation in writing (i) of any event or condition
(including any Proceeding or Threatened Proceeding) that could
adversely affect the ability of Century or Sub to perform any
of their respective agreements, commitments or covenants
contained herein, (ii) of any event or condition (including
any Proceeding or Threatened Proceeding) that causes any
representation or warranty of Century or Sub contained in this
Agreement to become untrue, as if each such representation and
warranty were continuously made from and after the date
hereof, (iii) of any event or condition (including any
Proceeding or Threatened Proceeding) that could reasonably be
expected to result in a Material Adverse Effect with respect
to Century, or (iv) if it or any of its representatives
discovers any facts during the course of its due diligence
review that causes Century to believe that any of the
representations and warranties made by Corporation or the
Principal Stockholders are not correct in all material
respects.
(c) The delivery of any notice pursuant to this
Section shall not be deemed to (i) modify the representations
or warranties contained herein, (ii) modify the conditions set
forth in Article 7, or (iii) limit or otherwise affect the
remedies of the parties available hereunder, provided,
however, that if the Closing shall occur, then all matters
disclosed pursuant to this Section at or prior to the Closing
shall be deemed to be waived and no party shall be entitled to
make a claim thereon pursuant to the terms of this Agreement.
(d) Each party hereto agrees that, with respect
to the representations and warranties of such party contained
in this Agreement, such party shall have the continuing
obligation until the Closing to supplement or amend promptly
the Schedules hereto with respect to any matter hereafter
arising or discovered that, if existing or known at the date
of this Agreement, would have been required to be set forth or
described in the Schedules or in a new Schedule. For all
purposes of this Agreement, including without limitation for
purposes of determining whether the conditions set forth in
Article 7 have been fulfilled, the Schedules hereto shall be
deemed to include only that information contained therein on
the date of this Agreement and shall be deemed to exclude all
information contained in any supplement or amendment thereto,
provided, however, that if the Closing shall occur, then all
matters disclosed pursuant to any such supplement or amendment
or other notice at or prior to the Closing shall be deemed to
be waived and deemed included as part of the Schedules, and no
party shall be entitled to make a claim thereon pursuant to
the terms of this Agreement.
6.8 Conduct and Preservation of Business. Except as
otherwise contemplated hereby, Corporation shall, (i) conduct
its operations according to its ordinary course of business
consistent with past practice and in compliance with all
Applicable Laws and Permits, (ii) use its reasonable best
efforts to preserve, maintain and protect its properties, and
(iii) use its reasonable best efforts to preserve its business
organization, to maintain each Permit, to keep available the
services of its officers and employees and to maintain its
existing relationships with partners, suppliers, contractors,
customers, lessors, lessees, lenders, licensors, agents and
others having business relationships with it. Without
limiting the generality of the foregoing, Corporation shall,
(i) continue to market and advertise its services and products
in accordance with past practices, (ii) use its reasonable
best efforts to expeditiously and diligently resolve all
Proceedings, Threatened Proceedings and other claims
(including each of those described in the Schedules) as soon
as reasonably practicable, provided that it consults with
Century prior to settling any such matter, (iii) construct all
cell sites currently under construction in accordance with
sound business practices and (iv) otherwise make all capital
improvements in accordance with the Budget. The Corporation
shall (i) apply to the FCC for an extension of the five year
"fill-in" period beyond the April 23, 1995 expiration for any
unserved areas greater than 50 square miles and (ii) shall
use its best efforts to co-license the Durant cell site, such
cell site owned by Mississippi-34 Cellular Corporation to
serve the un-served area located in the southwest corner of
the RSA or in absence of such agreement, timely file a 401
modification with FCC.
6.9 Acquisition Proposals. For a period commencing on
the execution date hereof and ending on the earlier of the
termination of this Agreement or the Closing, except to the
extent that the Board of Directors of Corporation makes a
Fiduciary Determination (i) Corporation agrees that it shall
not solicit or encourage inquiries or proposals with respect
to, furnish any information relating to, participate in any
negotiations or discussions concerning, or consummate, any
Acquisition Proposal, and Corporation will notify Century
immediately if any such inquiries or proposals are received
by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated with,
Corporation, or any Principal Stockholder, or any of its
Affiliates, and shall instruct the directors, officers,
employees, representatives, financial advisors and agents of
Corporation to refrain from doing any of the above, and (ii)
each Principal Stockholder agrees that he shall not, and shall
cause each of his Affiliates that he controls not to, solicit
or encourage inquiries or proposals with respect to, furnish
any information relating to, participate in any negotiations
or discussions concerning, or consummate, any Acquisition
Proposal, and each will notify Century immediately if any such
inquiries or proposals are received by, any such information
is requested from, or any such negotiations or discussions are
sought to be initiated with, Corporation, or any Principal
Stockholder, or any of their respective Affiliates. Each of
Corporation and the Principal Stockholders shall, and shall
cause its respective financial advisors and Affiliates that it
controls to, immediately cease and terminate any existing or
prior existing activities, discussions, or negotiations with
any Persons conducted heretofore with respect to any
Acquisition Proposal and shall promptly request each such
Person who has heretofore entered into a confidentiality
agreement in connection with an Acquisition Proposal to return
to Corporation all confidential information heretofore
furnished to such Person by or on behalf of Corporation.
Subject to Section 9.2(b), nothing herein shall prohibit or
restrict the Board of Directors of Corporation, from taking
any action otherwise prohibited by this Section 6.9 to the
extent the Board of Directors of Corporation makes a Fiduciary
Determination.
6.10 Exchange of Information. For a period commencing
on the execution date hereof and ending on the earlier of the
termination of this Agreement or the Closing, (i) Century
shall promptly deliver to Corporation, a copy of Century's
Exchange Act Reports filed by it with the SEC, and (ii)
Corporation shall deliver to Century, within five days after
they are prepared, true and complete copies of all monthly
financial statements of Corporation prepared in the ordinary
course.
6.11 Public Announcements. Century and Sub on the one
hand, and Corporation and the Principal Stockholders, on the
other, shall consult with each other before issuing, and
provide each other with a reasonable opportunity to review and
comment upon, any press release or other public statement with
respect to this Agreement or the transactions contemplated
hereby, and shall not issue any such press release or public
statement prior to such consultation except where, in the
reasonable judgment of the disclosing party upon the advice of
outside counsel, disclosure is otherwise required by
Applicable Law, court or regulatory process or obligations
pursuant to any listing agreement with any national securities
exchange, provided, however, that in such event the disclosing
party uses its reasonable best efforts to provide the other
parties with a reasonable opportunity to review and comment
upon such disclosure before it is made.
6.12 Performance of Sub. Century shall cause Sub to
comply with all of its obligations hereunder and, subject to
the terms and conditions hereof, to consummate the Merger as
contemplated herein.
6.13 Prepayment. If and to the extent that Century
elects to prepay any Indebtedness on the Closing Date,
Corporation shall cooperate and assist in connection with
obtaining all required prepayment letters and in taking all
other steps as may be necessary to effect such prepayment and
to release any Encumbrances arising thereunder.
6.14 Rule 145. Prior to the date upon which the
Information Statement is mailed to Stockholders, Corporation
shall deliver to Century a letter identifying all persons who
were, at the time of the record date for the Stockholders
Meeting, affiliates of Corporation for purposes of Rule 145
promulgated under the Securities Act. Corporation shall
provide Century with such information and documents as Century
shall reasonably request for purposes of reviewing such
letter. Corporation shall use its reasonable best efforts to
cause each person who is identified in such letter as an
affiliate of Corporation to deliver to Century on or prior to
the Effective Time a written agreement in the form of Exhibit
D. The Principal Stockholders shall execute and deliver to
Century such a written agreement.
6.15 Contract Amendments. The Corporation shall use
its best efforts to amend the billing Contract with
International Telecommunications Data Systems, Inc. (the "ITDS
Contract") to delete, to the fullest extent possible,
liability of the Corporation for any termination fees.
ARTICLE 7. CONDITIONS TO CLOSING
7.1 Conditions Applicable to All Parties. The
obligations of Corporation, Century, and Sub to effect the
Merger are subject to the satisfaction (or written waiver by
Century and Corporation) on or prior to the Closing Date of
the following conditions:
(a) Stockholder Approval. This Agreement shall
have been duly adopted at the Stockholders Meeting by the
affirmative vote of the holders of a majority of the
outstanding voting power of Corporation.
(b) Registration Statement. The Registration
Statement shall have become effective under the Securities Act
and shall not be subject to any stop order or Proceedings
seeking a stop order.
(c) NYSE Listing. The Century Common Stock to
be issued in connection with the Merger shall have been
approved for listing, upon notice of issuance, by the NYSE.
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions
described in this Agreement shall be in effect, provided,
however, that any party asserting the foregoing as a condition
to its obligation to consummate the Merger shall have used its
reasonable best efforts to prevent the entry of any such
injunction or order and to appeal as promptly as possible any
such injunction or order.
(e) No Litigation. There shall not be pending
any Proceeding by any Governmental Entity or any other Person
before any court or other Governmental Entity that has a
reasonable likelihood of success, seeking to restrain, enjoin,
prohibit or otherwise make illegal the consummation of the
Merger or any of the other transactions contemplated by this
Agreement.
(f) Escrow Agreement. An Escrow Agreement,
containing terms and conditions substantially similar to those
contemplated hereunder, shall have been duly executed and
delivered by the Stockholders' Representative, the Escrow
Agent and Century.
(g) Tax-Free Reorganization. All conditions
required for treating the Merger for federal tax purposes as a
reorganization within the meaning of Section 368(a) of the
Code shall have been met.
7.2 Additional Conditions Applicable to Obligations of
Century and Sub. The obligations of Century and Sub to effect
the Merger are further subject to the satisfaction (or written
waiver by Century) on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Corporation and the
Principal Stockholders set forth in this Agreement shall be
true and correct in all material respects on and as of the
Closing Date as though made on and as of such date, except for
changes specifically contemplated and permitted by this
Agreement.
(b) No Material Adverse Change. Between the
date hereof and the Closing, there shall have been no Material
Adverse Change with respect to Corporation.
(c) Performance of Obligations. Corporation and
the Principal Stockholders shall have performed in all
material respects all obligations required to be performed by
Corporation and the Principal Stockholders, respectively,
under this Agreement at or prior to the Closing Date.
(d) Officers' Certificate. Corporation shall
have duly executed and delivered to Century a certificate,
dated the Closing Date, representing and certifying, in such
detail as Century may reasonably request, that (i) the
conditions set forth in this Section 7.2 have been fulfilled
and that neither Corporation nor the Principal Stockholders
are in breach of this Agreement and (ii) all information set
forth in the Calculation Certificate delivered by Corporation
under Section 2.8(a) was true and complete on the date thereof
and remains true and complete as of the Effective Time.
(e) Opinions of Counsel. Century shall have
received favorable opinions, each dated the Closing Date and
in form and substance satisfactory to Century and its counsel,
of (i) Lukas, McGowan, Nace & Gutierrez, FCC counsel to
Corporation, to the effects set forth in Exhibit E, and (ii)
an opinion of Brunini, Grantham, Grower & Hewer counsel to
Corporation, to the effects set forth in Exhibit F.
(f) Corporate Action. Corporation shall have
taken all corporate action necessary to approve the
transactions contemplated by this Agreement, and there shall
have been furnished to Century certified copies of resolutions
adopted by the Board of Directors and Stockholders of
Corporation approving this Agreement and such resolutions
shall be in form and substance reasonably satisfactory to
counsel for Century.
(g) Necessary Governmental Approvals. The
parties shall have (i) received final and nonappealable orders
in full force and effect from the FCC approving the change in
control of each FCC License listed on Schedule 3.16 and each
other transaction contemplated hereby, (ii) received
confirmation or notice that all waiting periods under the HSR
Act with respect to the Merger shall have terminated or
expired, with no outstanding requests for additional
information to be supplied in connection with the HSR
Notifications and no outstanding notice from either the FTC or
DOJ that further action will be taken by either of them with
respect to the Merger, (iii) received the approval of the MPSC
of the change in control of each State License listed on
Schedule 3.16 and (iv) received the approval, consent or
authorization of, or completed any filings or notifications
with, any other Governmental Entity that are required by law
to consummate the transactions contemplated hereby or are
necessary to prevent a Material Adverse Effect, and the terms
of all such orders, consents, approvals or authorizations of
the FCC, MPSC or any other Governmental Entity shall permit
the Merger to be consummated without imposing any material
adverse conditions with respect thereto or upon the operations
of Corporation.
(h) Necessary Third-Party Consents. Corporation
shall have received all the Required Consents and all other
consents, in form and substance reasonably satisfactory to
Century and its counsel, to the transactions contemplated
hereby from all parties to all Contracts, notes, bonds,
debentures, mortgages, indentures and other instruments or
obligations to which Corporation is a party or by which it is
affected and which requires such consent prior to the
Effective Time or are necessary to prevent the occurrence of a
Material Adverse Effect with respect to Corporation.
(i) Good Standing Certificates. Corporation
shall have delivered to Century a long-form certificate from
the Mississippi Secretary of State to the effect that
Corporation is incorporated under the laws of Mississippi, is
in good standing in Mississippi and has paid all franchise
taxes due under the laws of Mississippi and all such
certificates shall be dated within ten days of the Closing.
(j) Appraisal Rights. Immediately prior to the
Effective Time, the aggregate Corporation Stock held by all
holders of Dissenting Shares shall not exceed 10% of all of
such issued and outstanding stock.
(k) Escrow Agreement. An Escrow Agreement,
containing terms and conditions substantially similar to those
contemplated by Section 10.2, shall have been duly executed
and delivered by the Stockholders' Representative, the Escrow
Agent and Century.
(l) Resignations. Century shall have received
letters from each director and officer of Corporation,
pursuant to which each such person shall (i) resign from all
positions held with Corporation effective as of or prior to
the Closing Date and (ii) release Corporation from all claims
against it or its assets, whether arising under contract, the
securities law, tort law, equitable principles or otherwise,
and whether arising out of such person's association with
Corporation as an officer, director, employee or otherwise.
(m) Corporation Minute Books and Miscellaneous
Documents. Century shall have received all minute books and
stock record books relating to Corporation, and copies of any
other documents that Century may reasonably request.
(n) Indebtedness. Net Indebtedness of the
Corporation recertified as of the Closing shall not exceed the
estimated amount of Net Indebtedness contained in the
Calculation Certificate by more than $100,000.00.
(o) Amendments. (i) The Management Contract
shall be terminated prior to the closing, all termination fees
shall have been paid by Corporation and Century and Mercury
shall have agreed to their own acceptable Management Contract
and (ii) the ITDS Contract shall be amended prior to the
Closing to delete any reference to termination fees or shall
otherwise contain amendments acceptable to Century, in its
sole discretion, provided however that in the event
termination fees remain applicable Century agrees to be
responsible for one-half of such remaining fees to ITDS and
proceed to closing, with the other one-half being the
responsibility of the Corporation and factored into Net
Indebtedness at Closing.
7.3 Additional Conditions Applicable to Obligations of
Corporation. The obligation of Corporation to effect the
Merger is further subject to the satisfaction (or written
waiver by Corporation) on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Century and Sub set forth in
this Agreement shall be true and correct in all material
respects on and as of the Closing Date as though made on and
as of such date, except for changes specifically contemplated
and permitted by this Agreement.
(b) No Material Adverse Change. Between the
date hereof and the Closing, there shall have been no Material
Adverse Change with respect to Century.
(c) Performance of Obligations of Century and
Sub. Century and Sub shall have performed in all material
respects all obligations required to be performed by them
under this Agreement at or prior to the Closing Date.
(d) Certificate. Century shall have duly
executed and delivered to the Principal Stockholders a
certificate, dated the Closing Date, representing and
certifying, in such detail as the Principal Stockholders may
reasonably request, that the conditions set forth in this
Section 7.3 have been fulfilled and neither Century nor Sub is
in breach of this Agreement.
(e) Opinion of Counsel. Corporation shall have
received an opinion dated the Closing Date of Boles, Boles &
Ryan, special counsel to Century and Sub, substantially to the
effect of Exhibit H.
(f) Corporate Action. Century shall have taken
all corporate action necessary to approve the transactions
contemplated by this Agreement, and there shall have been
furnished to Corporation certified copies of resolutions
adopted by the Board of Directors of Century approving this
Agreement and the Merger, and copies of resolutions adopted by
Century, in its capacity as sole stockholder of Sub, adopting
this Agreement, and such resolutions shall be in form and
substance reasonably satisfactory to counsel for Corporation.
(g) Necessary Governmental Approvals. The
parties shall have (i) received orders in full force and
effect from the FCC approving the change in control of each
FCC License listed on Schedule 3.16 and each other transaction
contemplated hereby, (ii) received confirmation or notice that
all waiting periods under the HSR Act with respect to the
Merger shall have terminated or expired, with no outstanding
requests for additional information to be supplied in
connection with the HSR Notifications and no outstanding
notice from either the FTC or DOJ that further action will be
taken by either of them with respect to the Merger, (iii)
received the approval of the MPSC of the change in control of
each State License listed on Schedule 3.16 and (iv) received
the approval, consent or authorization of, or completed any
filings or notifications with, any other Governmental Entity
that are required by law to consummate the transactions
contemplated hereby or are necessary to prevent a Material
Adverse Effect with respect to Century, and the terms of all
such orders, consents, approvals or authorizations of the FCC,
MPSC or any other Governmental Entity shall permit the Merger
to be consummated without imposing any material adverse
conditions with respect thereto or upon the operations of
Century.
(h) Consents. Century shall have received all
consents, in form and substance satisfactory to Corporation
and its counsel, to the transactions contemplated hereby from
all parties to all contracts, notes, bonds, debentures,
mortgages, indentures and other instruments or obligations to
which Century or any of its subsidiaries is a party or by
which it is affected and which require such consent prior to
the Effective Time.
(i) Good Standing Certificates. Each of Century
and Sub shall have delivered to Corporation certificates,
dated within ten days of the Closing, from the Secretary of
State of Louisiana to the effect that Century is in good
standing in Louisiana and from the Secretary of State of
Mississippi to the effect that Sub is in good standing in
Mississippi.
ARTICLE 8. POST CLOSING COVENANTS
Century and the Stockholders covenant to take the
following actions after the Effective Time:
8.1 Further Assurances. Century and the Principal
Stockholders each agree to execute and deliver such other
documents, certificates, agreements and other instruments and
to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the
transactions contemplated by this Agreement.
8.2 Notification of Regulatory Authorities. Promptly
after the Effective Time, Century shall complete any necessary
or appropriate notifications of Governmental Entities
regarding consummation of the Merger, including without
limitation notifying the FCC and MPSC thereof.
8.3 Continuity of Interests. (a) The Stockholders
shall, by execution of the Letter of Transmittal agree to hold
as a group sufficient amounts of Century Stock for sufficient
duration to satisfy the continuity of shareholder interests
requirements of Section 368(a) of the Code, Treasury
Regulation Section 1.368.1 and all Applicable Laws. (b)
Century and the Stockholders covenant and agree that if either
take any action which causes a violation of the
continuity of shareholder interests requirements, the non-
violating party or parties shall be entitled to
indemnification to the extent of any Losses (as defined below).
ARTICLE 9. TERMINATION
9.1 Methods of Termination. Anything contained in
this Agreement to the contrary notwithstanding, this Agreement
may be terminated and the Merger abandoned at any time prior
to the Effective Time (notwithstanding any adoption of this
Agreement by the Stockholders of Corporation):
(a) by mutual written consent of Corporation and
Century; or
(b) by either Corporation or Century:
(i) upon ten days written notice from
either such party to the other following any
failure by the Stockholders to adopt this
Agreement at the Stockholders Meeting; or
(ii) if the Merger is not consummated upon
the first to occur of (A) the tenth day after
satisfaction or waiver of the conditions to
Closing contained in Article 7 or (B) July 31,
1995, provided that such date shall be extended if
the reason for a delay is that final FCC and SEC
approval has not been received and the party
asserting the extension has used its reasonable
best efforts to obtain FCC and SEC approval and
further provided that no party shall have the
right to terminate under (A) or (B) if any delay
in consummating the Merger is attributable to a
willful or material breach of this Agreement by
such party; or
(iii) if there shall be any Applicable Law
that makes consummation of the Merger illegal or
otherwise prohibited or a Governmental Entity
shall have issued an order, decree or ruling or
taken any other action permanently restraining or
enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and
such order, decree, ruling or other action shall
have become final and nonappealable, provided that
the party asserting the right to terminate under
this subsection shall have used its reasonable
best efforts to prevent the entry of any such
order, decree, ruling or other action; or
(c) by Corporation, if (i) any of the
representations and warranties of Century and Sub
contained in this Agreement shall not be true and
correct in any material respect, when made or at any
time prior to the Closing as if made at and as of such
time, (ii) Century or Sub shall have failed to fulfill
in any material respect any of its obligations under
this Agreement, (iii) Century shall have commenced, or
there shall be commenced against Century, any Proceeding
under any Applicable Law relating to bankruptcy,
insolvency, reorganization of relief of debtors seeking
to adjudicate Century bankrupt or insolvent, or (iv) the
Board of Directors of Corporation, upon receipt of an
unsolicited, bona fide Acquisition Proposal, makes a
Fiduciary Determination; provided, in the case of each
of clauses (i) and (ii), such misrepresentation, breach
of warranty, or failure (provided it can be cured) has
not been cured within 15 days of Century's receipt of a
notice from Corporation asserting such
misrepresentation, breach of warranty or failure and
asserting Corporation's right to terminate this
Agreement under this subsection in the absence of
curative action by Century within such 15-day period; or
(d) by Century if (i) any objection made by
Century during the Due Diligence Period is not cured or
waived, (ii) any of the representations and warranties
of Corporation and the Principal Stockholders contained
in this Agreement shall not be true and correct in any
material respect, when made or at any time prior to the
Closing as if made at and as of such time, (iii) either
Corporation or the Principal Stockholders shall have
failed to fulfill in any material respect any of its
obligations under this Agreement or (iv) Corporation or
any Principal Stockholder shall have commenced, or there
shall be commenced against, Corporation or any Principal
Stockholder, any Proceeding under any Applicable Law
relating to bankruptcy, insolvency, reorganization of
relief of debtors seeking to adjudicate Corporation or
any Principal Stockholder bankrupt or insolvent,
provided, in the case of each of clauses (i), (ii) and
(iii), such objection, misrepresentation, breach of
warranty, or failure (provided it can be cured) has not
been cured within 15 days of Corporation's receipt of a
notice from Century asserting such objection,
misrepresentation, breach of warranty or failure and
asserting Century's right to terminate this Agreement
under this subsection in the absence of curative action
by Corporation within such 15-day period.
9.2 Effect of Termination. (a) In the event of
termination of this Agreement pursuant to Article 9, written
notice thereof shall forthwith be given to the other parties
specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall become void and
have no effect and no party shall have liability hereunder to
any other party or any of their respective directors,
officers, employees, stockholders, representatives or
Affiliates, except that (i) the agreements contained in this
Section 9.2, in Sections 6.6(b) and 6.11, and in all sections
of Article 13 shall survive the termination hereof and (ii)
nothing contained in this Article 9 shall relieve any party
from liability for actual damages (excluding consequential
damages) incurred as a result of any material breach of the
representations, warranties, covenants and agreements made by
the breaching party in this Agreement or common law fraud.
(b) If Corporation terminates this Agreement
pursuant to Section 9.1(c)(iv), Corporation shall promptly
thereafter, and in no event later than 30 days after such
termination, pay to Century a fee, as liquidated damages,
equal to 5% of the value of the Aggregate Merger
Consideration, calculated in good faith as of the date of
termination, provided however that prior to such termination,
Century shall be given the right to match such acquisition
proposal for a period of five business days. Century's
receipt of notification of any Acquisition Proposal or any
other event or condition that results in termination of this
Agreement as a result of the Corporation Board of Directors
making a Fiduciary Determination shall not affect Century's
rights to match or in lieu thereof, to receive this
termination fee. In such event, this shall be the sole and
exclusive compensation and remedy of Century.
ARTICLE 10. INDEMNIFICATION
On and after the Closing Date Century, the Stockholders
and the other parties named below shall have the following
rights and obligations:
10.1 Indemnification. (a) Except as otherwise
provided in Section 10.4 hereof, Century and its subsidiaries
and each of their respective officers, directors, employees,
agents, Affiliates, successors and permitted assigns
(collectively, the "Century Indemnitees") shall be defended,
indemnified, held harmless, and reimbursed for, from and
against each and every demand, claim, action, loss (which
shall include any diminution in value of Corporation or any of
its assets), liability, judgment, damage, cost and expense
(including interest, penalties, and the reasonable fees,
disbursements and expenses of attorneys, accountants and other
professional advisors) (collectively, "Losses") imposed on or
incurred by the Century Indemnitees, directly or indirectly,
relating to, resulting from or arising out of (i) any
inaccuracy of any representation or warranty made by
Corporation or the Principal Stockholders in this Agreement
(including the representations and warranties made in any
Exhibit or Schedule hereto) or any Closing Instrument, (ii)
any breach of any covenant, agreement or other obligation of
Corporation or the Principal Stockholders under this Agreement
or any Closing Instrument or the Stockholders of any covenant
contained in the Letter of Transmittal, (iii) any claim of any
nature made by former stockholders of Corporation in their
capacity as stockholders (whether arising under the securities
laws, corporate law, tort law, equitable principles or
otherwise) that relate to any act or omission of Corporation
or the Subsidiaries prior to the Closing or to the
distribution of the Merger Consideration in accordance with
this Agreement, including the negotiation, execution,
delivery, announcement or performance of this Agreement and
the disbursement of funds in accordance with the Escrow
Agreement, provided that in no event will any Century
Indemnitee be entitled to be indemnified for Losses resulting
from any breach of a representation, warranty or covenant of
Century hereunder (in which event the Stockholders shall
continue to have the rights to indemnification and other
remedies provided hereunder), provided, however, that the
Stockholders shall have no liability under this Section
10.1(a) unless and until the aggregate of all Losses resulting
therefrom (other than those resulting from breaches of any
covenants, agreements or other obligations under Article 2)
exceeds $10,000, in which event the Stockholders shall be
liable only for all Losses in excess of such amount. Subject
to all of the procedures, limitations and conditions of this
Article 10, the Stockholders, acting through the Stockholders'
Representative, shall defend, indemnify, hold harmless and
reimburse the Century Indemnitees for, from and against all
Losses arising out of all claims under this Section 10.1(a).
(b) Except as otherwise provided in Section 10.4
hereof, Century shall defend and indemnify and hold harmless
the Stockholders and each of their respective successors,
heirs, executors, administrators, and personal representatives
(collectively, the "Stockholder Indemnitees"), and shall
reimburse the Stockholder Indemnitees, for, from and against
each and every Loss imposed on or incurred by the Stockholder
Indemnitees, directly or indirectly, relating to, resulting
from or arising out of (i) any inaccuracy of any
representation or warranty made by Century or Sub in this
Agreement (including the representations and warranties made
in any Exhibit or Schedule hereto) or any Closing Instrument
or (ii) any breach of any covenant, agreement or other
obligation of Century under this Agreement or any Closing
Instrument, provided, however, that Century shall have no
liability under this Section 10.1(b) unless and until the
aggregate of all Losses resulting therefrom (other than those
resulting from breaches of any covenants, agreements or other
obligations under Article 2) exceeds $10,000, in which event
Century shall be liable only for all Losses in excess of such
amount.
(c) for purposes of Section 10.1(a)(i), and
10.1(b)(i) the representations and warranties made by
Corporation or the Principal Stockholders shall not be deemed
to contain the qualifying phrases "to the best knowledge of
Corporation" or "to the best knowledge of such Principal
Stockholder" so as to render such representations and
warranties absolute and unqualified for purposes of
indemnification.
10.2 Escrow Agreement. (a) At the Closing,
Corporation, Principal Stockholders and Century shall deliver
the Escrow Agreement to Escrow Agent that entitles Century to
request indemnification payments under this Article 10 on the
terms and conditions set forth below.
(b) The Escrow Agreement shall obligate the
Escrow Agent to pay to Century the amount specified in any
disbursement request jointly executed by Century and the
Stockholders' Representative. If within 15 days prior to the
expiration of the Escrow Agreement's term (as it may be
extended pursuant to subsection (c) below) Century certifies
in writing to the Escrow Agent that a bona fide unresolved
claim under this Article 10 is pending (and delivers a copy of
such certification to the Stockholders' Representative) for an
amount in excess of $10,000 (minus any prior deductions from
this amount for resolved claims) for which a claim for
indemnification has been made in accordance with this Article
10 and which has been disputed by the Stockholders'
Representative, the Escrow Agreement shall further obligate
the Escrow Agent to hold the disputed amount. Century agrees
that it shall not instruct the Escrow Agent to hold in escrow
amounts in excess of the amount of indemnifiable Losses
reasonably expected to result from such unresolved claim.
(c) The maximum amount payable by the Escrow
Agent under the Escrow shall be 5% of the Aggregate Merger
Consideration. If there is no bona fide unresolved claim
under Article 10 pending, Escrow Agent shall release one-half
of the escrow amounts to the Stockholders on the first
anniversary of the Closing Date and one-half of the remaining
escrow amounts on the 18-month anniversary of the Closing
Date. The Escrow Agreement shall expire on the second
anniversary of the Closing Date unless extended pursuant to
Section 10.2(b) at which time all remaining Century Common
Stock shall be delivered to the Stockholders unless a bona
fide unresolved claim for indemnification of Century is
pending.
(d) The Escrow will provide that the Escrow
Agent will have no right or obligation to disburse funds to
any Person other than Century or the Stockholder's
Representative, and Century will take all such action as may
be necessary to permit it to act as agent and attorney-in-fact
for any other Century Indemnitee who has a claim under this
Article 10.
(e) In the event of a draw down from the Escrow,
the number of shares to be withdrawn shall be determined by
the Century Stock Price.
10.3 Notice and Defense of Claims. (a) A party
seeking indemnification hereunder (the "Indemnified Person")
shall give prompt written notice to the indemnifying person or
persons, or any successors thereto (the "Indemnifying
Person"), of any matter with respect to which the Indemnified
Person seeks to be indemnified (the "Indemnity Claim"), and,
for any such claim not arising out of the claim of a third
party, and if the Indemnified Person is a Century indemnitee,
concurrent notice to Escrow Agent shall also be given. Such
notice shall state the nature of the Indemnity Claim and, if
known, the amount of the Loss. If the Indemnity Claim arises
from a claim of a third party, the Indemnified Person shall
give such notice within a reasonable period of time after the
Indemnified Person has actual notice of such claim, and in the
event that a Proceeding is commenced, within 20 days after
receipt of written notice by the Indemnified Person thereof.
Notwithstanding anything herein to the contrary, the failure
of an Indemnified Person to give timely notice of an Indemnity
Claim shall not bar such Indemnity Claim except and to the
extent that the failure to give timely notice has materially
impaired the ability of the Indemnifying Person to defend the
Indemnity Claim.
(b) If the Indemnity Claim arises from the claim
or demand of a third party, the Indemnifying Person shall have
the right to assume its defense, including the hiring of
counsel and the payment of all associated fees and expenses.
The Indemnified Person shall have the right to employ separate
counsel with respect to such claim, and to participate (but
not control) in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the Indemnified
Person, provided, however, that if both the Indemnified Person
and the Indemnifying Person are named as parties and the
Indemnified Person shall in good faith determine that
representation by the same counsel will result in a
significant conflict of interest, then the fees and expenses
of such separate counsel shall be at the expense of the
Indemnifying Person if the Indemnifying Person is ultimately
held liable in connection with such claim. In the event that
the Indemnifying Person, within 30 days after notice of any
such claim, fails to assume the defense thereof, the
Indemnified Person shall have the right to undertake the
defense of such claim for the account of the Indemnifying
Person, subject to the right of the Indemnifying Person to
assume the defense of such claim at any time prior to the
final determination thereof, provided that the Indemnified
Person shall not settle or compromise such claim without the
prior written consent of the Indemnifying Person. Anything in
this Article 10 to the contrary notwithstanding, the
Indemnifying Person shall not, without the Indemnified
Person's prior consent, settle or compromise any claim or
consent to the entry of any judgment with respect to any claim
unless such settlement, compromise or judgment (i) includes as
an unconditional term thereof the release by the claimant or
the plaintiff of the Indemnified Person from all liability in
respect of such claim and (ii) does not impose any criminal
penalty or any other material adverse condition, obligation or
other equitable remedy on or with respect to the Indemnified
Person (and the Indemnifying Person may, without the
Indemnified Person's prior consent, settle or compromise any
claim or consent to the entry of any judgment so long as
clauses (i) and (ii) are satisfied). Except to the extent
otherwise provided in Section 10.4, all Losses of the Century
Indemnitees arising out of any such claim (subject to any
deductions in accordance with the provisions of Section
10.1(a)) shall be paid first from the Escrow and then from the
Stockholders to the extent of their Merger Consideration.
(c) If the Indemnity Claim does not arise from
the claim or demand of a third party, the Indemnifying Person
shall, within 15 days of its receipt of written notice of such
Indemnity Claim, notify the Indemnified Person in writing
whether or not it objects to such claim. If the Indemnifying
Person does not object (or if it does object and amounts
become due as set forth in the next sentence), all Losses
arising out of such claim (subject to any deductions in
accordance with the provisions of Section 10.1(a)) and (b)
shall be paid. If, on the other hand, the Indemnifying
Person does object to the Indemnity Claim and the parties are
unable to settle any such dispute, either the Indemnifying
Person or the Indemnified Person may, after complying with any
relevant provisions of this Agreement and the Escrow
Agreement, commence an action or proceeding to resolve such
dispute and determine any amounts due hereunder from the
Indemnifying Person, all of which shall become chargeable to
and payable by the Indemnifying Person in accordance with the
terms and conditions of this Article 10 immediately upon the
determination of such liability pursuant to such action or
proceeding.
(d) Notwithstanding anything to the contrary in
this Agreement or the Escrow Agreement, (i) all claims of the
Stockholder Indemnitees under Section 10.1(b) shall be pursued
and administered solely by the Stockholders' Representative,
(ii) upon a final determination that an indemnification
payment is payable under Section 10.1(b), such payment shall
be paid solely to the Stockholders' Representative (which
payment shall release Century from all further obligations
hereunder with respect to such claim only), (iii) all claims
of the Century Indemnitees under Section 10.1(a) shall be
defended and otherwise administered solely by the
Stockholders' Representative and (iv) upon a final
determination that an indemnification payment for Losses is
payable under Section 10.1(a), the Stockholders'
Representative shall promptly execute all instruments
necessary or appropriate in order for Century to receive
payment therefor under the Escrow Agreement and use its
reasonable best efforts to take all other action necessary to
ensure that Century shall receive such payment without the
necessity of obtaining any other consents, approvals or
signatures (which payment shall release the Stockholders from
all further obligations hereunder with respect to such claim
only).
10.4 Limitations. Notwithstanding anything to the
contrary herein:
(a) No party shall have liability under this
Article 10 unless written notice of an Indemnity Claim shall
have been given prior to the third anniversary of the Closing
Date, provided, however, that any of the Century Indemnitees
may give written notice of and may make a claim after such
third anniversary date for a period of time equal to the
applicable statute of limitations if such claim arises from
any inaccuracy of any representations, warranties, covenants
or agreements made by Corporation and/or the Stockholders in
Section 3.3, 3.10, 3.22, 3.23, 3.24, 3.26, 3.27, 3.31, 8.3
and Schedule 3.10, provided, however, that nothing in this
Section 10.4 shall modify the obligation of the Indemnified
Person to give the written notice specified in Section 10.3(a)
hereof and provided that Stockholders Representative may give
written notice of and may make a claim after such third
anniversary for a period of time equal to the applicable
statute of limitations if such claim arises from any
inaccuracy of any representations, warranties, covenants or
agreements made by Century in Section 5.4, 5.6, 5.7 and 8.3.
(b) No Stockholder shall have any liability
under this Article 10 for Losses arising out of any inaccuracy
of any representation or warranty made by the Principal
Stockholders in Article 4 or any breach of any covenant,
agreement or other obligation of the Principal Stockholders
hereunder or under any Closing Instrument, other than the
Principal Stockholder who made the specific representation,
warranty, covenant or agreement from which the Loss arises.
(c) The Century Indemnitees and Stockholders
will be reimbursed for all indemnifiable Losses solely in
accordance with the terms and conditions specified herein and
in the Escrow Agreement.
(d) In the absence of common law fraud, this
Article 10 shall serve as the sole and exclusive remedy of the
Century Indemnitees and the Stockholder Indemnitees for Losses
and for any other claims (other than those arising under
Article 2) in any way relating to this Agreement or any of the
other agreements or transactions contemplated hereby or
thereby, to the exclusion of all other statutory or common law
remedies.
10.5 Survival. (a) Notwithstanding anything herein to
the contrary, all indemnification rights hereunder may be
asserted and enforced by any Person otherwise entitled to
enforce indemnification rights hereunder regardless of (i) any
investigation, inquiry or examination made for or on behalf of
such Person (including the examination of any agreements or
other documents expressly furnished to such Person hereunder),
(ii) any reliance or lack of reliance upon the absence of any
event or condition giving rise to indemnification rights under
this Article by such Person, or (iii) the receipt of any
Closing Certificate, opinion or other instrument at Closing by
such Person.
(b) Except as otherwise contemplated in Section
10.4(a), all representations and warranties contained herein
or in any Closing Instrument shall survive the execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby for a period of three years.
ARTICLE 11. STOCKHOLDERS' REPRESENTATIVE
11.1 Designation. Subject to the terms and
conditions of this Article 11, the Stockholders'
Representative is designated by each of the Stockholders to
serve, and Century hereby acknowledges that the Stockholders'
Representative shall serve, as the sole representative of the
Stockholders from and after the Effective Time with respect to
the matters set forth in this Agreement and the Escrow
Agreement to be entered into at the Closing.
11.2 Authority. Each of the Stockholders, by
adoption of this Agreement by the Corporation Stockholders at
the Stockholders Meeting and by the execution of the Letter of
Transmittal, will, effective as of the Effective Time,
irrevocably appoint the Stockholders' Representative as the
agent, information and attorney-in-fact for such Corporation
Stockholder for all purposes of this Agreement and the Escrow
Agreement, including full power and authority on such
Corporation Stockholder's behalf (i) to take all actions which
the Stockholders' Representative considers necessary or
desirable in connection with the defense, pursuit or
settlement of any adjustments to the Aggregate Merger
Consideration pursuant to Article 2 and any claims for
indemnification pursuant to Article 10 hereof, including to
sue, defend, negotiate, settle, compromise and otherwise
handle any such adjustments to the Aggregate Merger
Consideration and any such claims for indemnification made by
or against, and other disputes with, Century pursuant to this
Agreement or any of the agreements or transactions
contemplated hereby, (ii) to engage and employ agents and
representatives (including accountants, legal counsel and
other professionals) and to incur such other expenses as he
shall deem necessary or prudent in connection with the
administration of the foregoing, (iii) to provide for all
expenses incurred in connection with the administration of the
foregoing to be paid by directing Escrow Agent and the
Stockholders to pay (or to reimburse the Stockholders'
Representative for) such expenses in the amounts determined by
applying the procedures specified in Section 11.6, (iv) to
disburse all indemnification payments received from Century
under Article 10 to the Stockholders in the amounts determined
by applying the procedures specified in Section 11.6, (v) upon
Century's reasonable request, to use his reasonable best
efforts to supply Century with all such information requested
by it in connection with making payments under Section 2.8(e),
(vi) to direct the Escrow Agent to disburse any funds
remaining in the Escrow Account (and any other remaining funds
delivered to the Escrow Agent pursuant to Articles 2 or 10)
upon termination of the Escrow Agreement in accordance with
its terms, (vii) to accept and receive notices pursuant to
this Agreement and the Escrow Agreement, (viii) to amend and
grant consents and waivers after the Closing under this
Agreement and Escrow Agreement, and (ix) to take all other
actions and exercise all other rights which the Stockholder
Representative (in his sole discretion) considers necessary or
appropriate in connection with this Agreement and the Escrow
Agreement. Each of the Stockholders will, by executing the
Letter of Transmittal, agree that such agency and proxy are
coupled with an interest, and are therefore irrevocable
without the consent of the Stockholders' Representative and
shall survive the death, incapacity, bankruptcy, dissolution
or liquidation of any Corporation Stockholder. All decisions
and acts by the Stockholders' Representative shall be binding
upon all of the Stockholders, and no Stockholder shall have
the right to object, dissent, protest or otherwise contest the
same.
11.3 Resignation. In the event that the Stockholders'
Representative shall resign or be unable to serve for any
reason, Wirt A. Yerger, III shall be deemed to be the
Stockholders' Representative for all purposes of this
Agreement and the Escrow Agreement.
11.4 Exculpation. Neither the Stockholders'
Representative nor any agent employed by him shall be liable
to any Corporation Stockholder relating to the performance of
his duties under this Agreement or the Escrow Agreement for
any errors in judgment, negligence, oversight, breach of duty
or otherwise except to the extent it is finally determined in
a court of competent jurisdiction that the actions taken or
not taken by the Stockholders' Representative constituted
fraud or were taken or not taken in bad faith. The
Stockholders' Representative shall be indemnified and held
harmless by the Stockholders, all in the amounts determined by
applying the procedures specified in Section 11.6, against all
expenses (including attorneys' fees), judgments, fines and
other amounts paid or incurred in connection with any action,
suit, proceeding or claim to which the Stockholders'
Representative is made a party by reason of the fact that he
was acting as the Stockholders' Representative pursuant to
this Agreement or the Escrow Agreement, provided, however,
that the Stockholders' Representative shall not be entitled to
indemnification hereunder to the extent it is finally
determined in a court of jurisdiction that the actions taken
or not taken by the Stockholders' Representative constituted
fraud or were taken or not taken in bad faith. The
Stockholders' Representative shall be protected in acting upon
any notice, statement or certificate believed by him to be
genuine and to have been furnished by the appropriate person
and in acting or refusing to act in good faith on any matter.
11.5 Acknowledgement. The parties acknowledge and
agree that the costs and expenses of administering the Escrow
Account, the Escrow Agreement or any other related instrument
shall be paid equally by (i) Century and (ii) the
Stockholders.
11.6 Allocation of Payments. Whenever the Corporation
Stockholders are entitled to receive any payments hereunder or
are obligated to make any payments hereunder (including those
specified in Sections 2.8, 11.2 and 11.4 and Article 10), each
Stockholder shall be entitled to receive or shall be obligated
to make such portion of any such payment that is equal to the
Stockholders pro-rata percentage interest held by such
stockholder as of the Effective Time, all in accordance with
this Agreement and the Escrow Agreement, as calculated by the
Stockholders' Representative, and in accordance with this
Agreement and the Escrow Agreement.
ARTICLE 12. COVENANTS WITH RESPECT TO TAXES
12.1 Tax Returns. The parties acknowledge that the
federal, state and local income Tax Returns for Corporation
for the year ending December 31, 1994 have been filed and,
prior to the Closing Date, such returns will not be filed for
the period from January 1, 1995 to the Closing Date (the "Stub
Period"). With respect thereto, the parties agree that
Corporation will, prepare and timely file (a) a U.S. Federal
income Tax Return for the Stub Period by September 15, 1996,
if not sooner filed, and; (b) all separate state and local
income Tax Returns, including all schedules, for similar
periods. Century shall cause the Corporation and Corporation
shall prepare and deliver to the Stockholders their K-1s for
the Stub Period no later than March 15, 1996. Payment of all
Taxes shall be made by Corporation directly to the taxing
authority. Copies of all such Federal and state returns shall
be provided to Century.
12.2 Tax Accruals. Corporation shall continue to
accrue liabilities for future tax expense of the Corporation
at rates which are representative of the Federal, state and
local Tax liabilities for the periods involved. To the extent
that such accruals are less than the actual Tax liability as
determined by the applicable income Tax Returns for 1994 and
the Stub Period, and such deficiencies represent permanent
differences in Tax liability, Stockholders shall be liable for
payment of Taxes due or shall reimburse Century as the case
may be. To the extent that such additional liabilities
represent timing differences, Century shall be liable for
payment of taxes due or payments to Stockholders.
12.3 Tax Audits and Amended Returns for Periods Prior
to Closing Date.
(a) Any income Tax or other Tax audits of
Corporation in process or arising prior to the Closing Date
shall be managed by the Stockholders' Representative.
(b) Any income Tax or other Tax audits of
Corporation arising after the Closing Date for federal, state
or local income or other taxes shall be managed by the
Stockholders' Representative for all periods ending on or
before the end of the Stub Period.
(c) The Stockholders Representative will give
Century prompt notice of any of the Tax audits referred to in
paragraphs (a) and (b) with respect to the Stub Period and all
prior years and keep Century appraised of any proposed
adjustments to tax liabilities previously reported.
(d) If any adjustment is made in a federal, state
or local Tax Return of Corporation resulting in a deficiency
which would have required a larger Tax payment by Corporation
if such adjustment had been included in the original return,
and such deficiency represents a permanent difference in Tax
liability the Stockholders shall be solely responsible for
such deficiency, including applicable interest and penalties
thereon. If the deficiency represents a timing difference in
Tax liability, Stockholders will pay to Century an amount
equal to the Tax liability net of the present value of future
Tax deductions discounted at 9%. Any penalties and interest
relating to timing differences shall be paid by the
Stockholders.
(e) If any adjustment is made in a federal, state
or local Tax Return resulting in a refund of credit, and such
adjustment does not affect the future Tax liabilities of
Corporation the refund or credit shall be retained by or paid
to the Stockholders. Any adjustment resulting in refunds or
credits which increase future Tax liabilities for Corporation
shall be reimbursed to Century at the discounted value (at 9%)
of such increased liabilities.
(f) The Stockholders and Century agree that the
Stockholders shall pay all legal and other costs for audits or
examinations with respect to the Stub Period and all prior
years and Century shall pay all legal and other costs for
audits or examinations of periods after the Stub Period.
12.4 Cooperation. In conjunction with the preparation
of any Tax Return or any audit under or by any taxing
authority for any period ending on or prior to the Closing
Date, the Stockholders' Representative will make and Century
will make available such records and documents in their
possession as may reasonably be requested by the other party
hereto or as may be legally requested by such taxing
authority. Century will cause Corporation to cooperate with
and assist the Stockholders' Representative, as may be
reasonably requested by the Stockholders' Representative, (i)
in the preparation of data necessary for the filing of any Tax
Return or any amended Tax Return for Corporation for any
period ending on or prior to Closing Date and (ii) in the
conduct of a Tax audit filed by Corporation for any period
ending on or prior to the Closing Date.
ARTICLE 13. MISCELLANEOUS
13.1 Notices. Any notice, communication, request,
reply, consent, advice or disclosure (hereinafter severally
and collectively called "notice") required or permitted to be
given or made by any party to another in connection with this
Agreement or the transactions herein contemplated must be in
writing and may be given or served (i) by depositing such
notice in the United States mail, postage prepaid and
registered or certified with return receipt requested, (ii)
by delivering such notice in person to the address of the
person or entity to be notified, (iii) by telecopying such
notice (provided a copy thereof is subsequently delivered in
one of the other manners specified herein), or (iv) by sending
such notice by a national commercial courier service for next
day delivery. Notice deposited in the mail in the manner
hereinabove described shall be upon receipt after such
deposit, and notice delivered in person, by telecopy or by
commercial courier shall be effective at the time of delivery
(subject, in the case of any telecopy, to compliance with the
above-stated delivery requirements). For purposes of notice,
the addresses of the parties shall, until changed as
hereinafter provided, be as follows:
If to Century or Sub:
Century Telephone Enterprises, Inc.
100 Century Park Drive
Monroe, Louisiana 71211-4065
Attention: David D. Cole
Telecopy: (318) 388-9562
with copies to:
Harvey P. Perry, Esq., Senior Vice President,
Secretary and General Counsel
Century Telephone Enterprises, Inc.
100 Century Park Drive
Monroe, Louisiana 71211-4065
Telecopy: (318) 388-9562
with copies to:
William R. Boles, Jr., Esq.
Boles, Boles & Ryan
1805 Tower Drive
Monroe, LA 71201
Telecopy: (318) 329-9150
If to Corporation:
Mississippi-6 Cellular Corporation
ATTN: W. M. Mounger, II
1410 Livingston Lane
Jackson, MS 39213-8003
Telecopy: (601) 362-2664
with copies to:
James T. Thomas, Esq.
Brunini, Grantham, Grower & Hewes
248 East Capitol Street, Suite 1400
Jackson, MS 39201
Telecopy: (601) 960-6902
with copies to the Stockholders' Representative
(at the address indicated below) and to:
David A. Bailey
807 Church Street
Port Gibson, MS 39150
Telecopy: (601)437-6860
or such substituted persons or addresses of which any of the
parties may give notice to the other in writing.
13.2 Expenses. Regardless of whether the transactions
contemplated by this Agreement are consummated, all expenses
and fees, including fees for legal, accounting, investment
banking and other advisory services, incurred in connection
with this Agreement and the transactions contemplated hereby
shall be borne by the party hereto incurring them, unless
otherwise specified or in any other Section hereof.
13.3 Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the
State of Louisiana, without regard to the principles of
conflict of laws.
13.4 Partial Invalidity. In case any one or more of
the provisions contained herein shall, for any reason, be held
to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or
unenforceable provision or provisions had never been contained
herein.
13.5 Successors and Assigns; Parties in Interest. This
Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors, heirs,
executors, administrators, personal representatives, and
permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder are assignable by
the parties hereto without the prior written consent of the
other parties, except for any assignments or transfers by
Century of its rights under Article 10 made in connection with
a disposition of any of the properties acquired by it
hereunder (which may be made freely without any such
consents). Nothing in this Agreement, expressed or implied,
is intended or shall be construed to confer upon any Person,
other than the parties and their respective successors, heirs,
executors, administrators, personal representatives, and
permitted assigns, any right, remedy or claim under or by
reason of this Agreement, except for the rights provided to
the Century Indemnitees and Stockholder Indemnitees pursuant
to Article 10 and the Escrow Agreement.
13.6 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an
original counterpart, and shall become a binding agreement
when each party shall have executed a counterpart.
13.7 Titles and Headings. Titles and headings to
Sections herein are inserted for convenience of reference only
and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
13.8 Entire Agreement. The Schedules and Exhibits
referred to in this Agreement shall be construed with, and are
an integral part of, this Agreement to the same extent as if
the same had been set forth verbatim herein. This Agreement
(including the Schedules and Exhibits hereto) contains the
entire understanding of the parties hereto with regard to the
subject matter contained herein.
13.8 Remedies. Subject to the limitations on remedies
contained in Section 10.4(d) and the rights of Century and
Corporation under Article 9, each party acknowledges that the
subject matter of this Agreement is unique and that no
adequate remedy of law would be available for breach of this
Agreement, and accordingly, each party agrees that any other
party or parties, as the case may be, shall be entitled to an
appropriate decree of specific performance or other equitable
remedies to enforce this Agreement (without any bond or other
security being required) and each party waives the defense in
any action or proceeding brought to enforce this Agreement
that there exists an adequate remedy at law.
13.9 No Waiver. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion
shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term
or any other term of this Agreement. No waiver of any breach
of this Agreement shall be held to constitute a waiver of any
other or subsequent breach. Notwithstanding the foregoing,
upon consummating the Merger each party shall be deemed to
have acknowledged that all conditions to its obligation to
consummate the Merger have been fulfilled or duly waived, and,
in the absence of common law fraud, to have waived any right
to subsequently assert that any such conditions were not
fulfilled or duly waived. Except as otherwise provided in the
foregoing sentence or in Section 6.7, any waiver must be in
writing.
13.10 Amendment. This Agreement may be amended by
action taken by Century, Sub, Corporation and the Principal
Stockholders at any time before or after approval of the
Merger by the Stockholders of Corporation but, after any such
approval, no amendment shall be made which decreases the
Aggregate Merger Consideration or changes the form thereof or
which adversely affects the rights of Stockholders hereunder
without the further approval of such Stockholders. This
Agreement may not be amended except by an instrument in
writing duly signed by or on behalf of all the parties hereto.
13.11 Litigation. If any action at law or in equity,
including an action for declaratory relief, is brought in
connection with this Agreement or a breach hereof, the
prevailing party shall be entitled to the full amount of all
reasonable expenses, including all court costs and actual
attorneys' fees paid or incurred in good faith, incurred in
connection with such action.
13.12 References. All references in this Agreement to
Articles, Sections, and other subsections or subdivisions
refer to the Articles, Sections, and other subsections or
subdivisions of this Agreement unless expressly provided
otherwise. The words "this Agreement", "herein", "hereof",
"hereby", "hereunder", and words of similar import refer to
this Agreement as a whole and not to any particular
subdivision unless expressly so limited. Whenever the words
"include", "includes", and "including" are used in this
Agreement, such words shall be deemed to be followed by the
words "without limitation". Each reference herein to a
Schedule or Exhibit refers to the information specifically set
forth therein, and all Schedules shall clearly indicate which
subsection, paragraph or item with respect to which the
information set forth thereon is provided. All pronouns used
in this Agreement shall be deemed to refer to the masculine,
feminine, neuter, singular and plural, as the identity of the
Person to whom reference is made may require.
* * * * * * * * * *
[All Signatures, Exhibits and Schedules to this
Agreement and Plan of Merger have been Intentionally
Omitted from this Information Statement.]
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
This First Amendment ("First Amendment") to the
Agreement and Plan of Merger dated April 18, 1995,
("Agreement"), dated as of this 14th day of June 1995 is by
and among Century Telephone Enterprises, Inc., a Louisiana
corporation ("Century"), Mississippi 6 Acquisition
Corporation, a Mississippi corporation and a wholly owned
subsidiary of Century ("Sub"), Mississippi-6 Cellular
Corporation, a Mississippi corporation ("Corporation"), and
the undersigned Principal Stockholders of the Corporation.
W I T N E S S E T H:
WHEREAS, the above referenced parties executed the
Agreement on April 18, 1995; and
WHEREAS, the parties have decided that Section 10.2(e)
and Article 12 thereof should be amended and restated by this
First Amendment and that the terms of the Escrow Agreement
contemplated by the Agreement should be agreed to.
NOW, THEREFORE, in consideration of the premises and the
mutual representations and warranties, covenants and
agreements contained in the Agreement and herein, and
intending to be legally bound hereby, Century, Sub,
Corporation and the Principal Stockholders hereby agree as
follows:
1. The parties agree to delete Section 10.2(e) of the
Agreement and insert the following in lieu thereof:
(e) In the event of a draw down from the Escrow,
the number of shares to be withdrawn (rounded to the
nearest whole number) shall be determined by dividing
the dollar amount of the draw down by the arithmetical
average of the per share closing prices of the Century
Common Stock as reported in the NYSE Composite
Transactions section of The Wall Street Journal for each
of the 20 trading days immediately preceding the trading
date on which the parties execute and deliver a written
disbursement request to the Escrow Agent relating to
such share withdrawal.
2. The parties agree to delete Article 12 of the
Agreement and insert the following in lieu thereof:
ARTICLE 12.
COVENANTS WITH RESPECT TO TAXES
12.1 Income Tax Returns. The parties acknowledge
that the federal, state and local income Tax Returns for
Corporation for the year ending December 31, 1994 have
been filed and, prior to the Closing Date, such returns
will not be filed for the period from January 1, 1995 to
the Closing Date (the "Stub Period"). With respect
thereto, the parties agree that Century will prepare and
timely file (a) a U. S. Federal income tax return for
the Stub Period by September 15, 1996, if not sooner
filed, and (b) all separate state and local income tax
returns, including all schedules, for similar periods.
Century shall cause Corporation and Corporation shall
prepare and deliver to the stockholders their K-1s for
the Stub Period no later than March 15, 1996. Copies of
all such federal and state returns shall be provided by
Century to the Stockholders' Representative.
12.2 Tax Accrual. Corporation shall continue to
accrue liabilities for Taxes in the future, other than
income taxes, at rates which are representative of the
federal, state and local Tax liabilities for the periods
involved. Payment of all Taxes, other than income
taxes, shall be made by the Corporation directly to the
financing authority.
12.3 Tax Audits and Amended Returns for Periods
Prior to Closing Date .
(a) Any income Tax or other Tax audits of
Corporation in process or arising prior to the Closing
Date shall be managed by the Stockholders'
Representative.
(b) Any income Tax or other Tax audits of
Corporation arising after the Closing Date for federal,
state or local income or other Taxes shall be managed by
the Stockholders' Representative for all periods ending
on or before the end of the Stub Period. All other
audits shall be managed by Century.
(c) Century will give Stockholders'
Representative prompt notice of any Tax audits referred
to in paragraph (b) with respect to the Stub Period and
all prior years. Stockholders' Representative will keep
Century appraised of any proposed adjustments to Tax
liabilities previously reported.
(d) The Stockholders and Century agree
that the Stockholders shall pay all legal and other
costs for audits or examinations with respect to the
Stub Period and all prior years, and Century shall pay
all legal and other costs for audits or examinations for
periods after the end of the Stub Period.
3. The parties agree to execute and deliver at the
Closing (as defined in the Agreement) an escrow agreement
substantially similar to the attached escrow agreement, which
shall constitute the Escrow Agreement defined in Section 1.1
of the Agreement and referred to in Section 10.2 of the
Agreement.
* * * * * * * * * *
[All Signatures and the Attachment to this
First Amendment have been Intentionally
Omitted from this Information Statement.]
<PAGE>
APPENDIX B
LIST OF MISSISSIPPI-6 SHAREHOLDERS AS OF THE RECORD DATE
This appendix sets forth the pro rata
ownership interest of each Mississippi-6 shareholder as of the
Record Date. Assuming that none of these Shareholders
transfers their shares (or their right to receive the Merger
Consideration) or perfect dissenters' rights in connection
with the Merger, the ownership interests listed
below will constitute each such shareholder's Pro Rata Share,
as defined in the attached Information Statement and
Prospectus.
<TABLE>
<CAPTION>
Shares of Stock
Shareholder Held of Record Ownership Percentage
_______________________ _______________ ____________________
<S> <C> <C>
Charles P. Adams and 14.63 1.46%
Rebecca H. Adams
Bruce G. Allbright, III 58.53 5.85
David A. Bailey 280.00 28.00
Dwight S. Bailey 47.07 4.71
Jo Ann Bailey 47.07 4.71
Lori A. Bailey 47.07 4.71
Scott P. Bailey 47.07 4.71
Hill Blalock 8.75 0.87
Mary Yerger Dunbar 8.75 0.87
E. B. Martin, Jr. 5.00 0.50
Robert G. Mounger 45.65 4.56
William M. Mounger, II 104.83 10.48
James A. Murrell, III 5.00 0.50
Willis B. Owings and 8.75 0.87
Joanne K. Owings
J. T. Thomas, III 2.93 0.29
James T. Thomas, IV 57.33 5.73
Sanford C. Thomas 24.75 2.47
William P. Thomas 24.75 2.47
Lonnie Whitaker 8.75 0.87
William M. Yandell, III 27.97 2.80
Frank M. Yerger 8.75 0.87
Wirt A. Yerger, III 116.60 11.66
________ ______
TOTAL 1,000.00 100%
======== ======
</TABLE>
<PAGE>
APPENDIX C
FORM OF ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Escrow Agreement") is entered
into on _______________, 1995 by Century Telephone
Enterprises, Inc., a Louisiana corporation ("Century"),
Mississippi-6 Cellular Corporation, a Mississippi corporation
("Corporation"), the undersigned Principal Stockholders of the
Corporation, David A. Bailey, as Stockholders' Representative
and as agent and attorney-in-fact on behalf of the Corporation
Shareholders, each of whom are made parties hereto as though
each were a signatory hereof, and Regions Bank of Louisiana,
Monroe, Louisiana ("Escrow Agent").
WHEREAS, pursuant to an Agreement and Plan of Merger
dated April 18, 1995, as amended (the "Agreement"), among
Century, one of Century's subsidiaries, Corporation and the
Principal Stockholders, Century and its subsidiary agreed to
acquire, as of the date hereof, control of all of the
outstanding shares of Corporation Stock in exchange for
Century Common Stock,
WHEREAS, pursuant to Section 10.2 of the Agreement, the
parties hereto desire to issue the Holdback Amount of Century
Common Stock, as adjusted in accordance with the Agreement or
for any Diluting Event, for the purpose of providing for
payment to Century and its affiliates of Indemnity Claims, if
any;
WHEREAS, the Corporation Shareholders have appointed the
Stockholders' Representative as their agent, among other
things, to execute this Escrow Agreement; and
WHEREAS, the parties hereto have agreed upon and wish to
set forth herein the terms and conditions governing the
escrow:
NOW, THEREFORE, it is agreed as follows:
1. Definitions.Unless the context otherwise requires,
capitalized terms used herein have the meanings set forth in
the Agreement.
2. Escrow Agent. Century and Stockholders'
Representative hereby designate and appoint Regions Bank of
Louisiana, Monroe, Louisiana, as Escrow Agent to serve in
accordance with the terms, conditions and provisions of this
Escrow Agreement, and Escrow Agent hereby accepts such
appointment, upon the terms, conditions and provisions
provided in this Escrow Agreement.
3. Escrow Shares. Contemporaneously with the
execution and delivery hereof, Century's subsidiary shall
deposit in escrow with the Escrow Agent and register in the
Escrow Agent's Nominee's name the Holdback Amount ("Escrow
Shares") to be adjusted for Post-Closing Price Adjustments as
provided for in Section 2.8 of the Agreement and Diluting
Events defined in Article 1 of the Agreement which occur after
the date hereof. Any additional shares of Century Common
Stock delivered to the Escrow Agent after the date hereof
under Section 2.8(e) of the Agreement shall be deemed to be
Escrow Shares and shall be held and disbursed in the same
manner as all other such shares hereunder. If the Escrow
Shares are converted into money or other property ("Escrow
Fund") in a merger or similar transaction or otherwise
("Conversion Transaction"), the Escrow Agent shall hold such
Escrow Fund subject to the terms hereof. The Escrow Shares
and the Escrow Fund shall collectively be referred to as the
"Escrow Amount".
4. Voting of Century Common Stock. The Stockholders'
Representative, after consultation with the Corporation
Shareholders, shall instruct Escrow Agent on how to vote the
Escrow Shares. Escrow Agent shall solicit instructions from
the Stockholders' Representative at appropriate times. If
Escrow Agent does not receive instructions from the
Stockholders' Representative with respect to the voting of any
Escrow Shares within five days after its request, it shall not
vote them.
5. Dividends; Interest. Cash dividends on Century
Common Stock received by the Escrow Agent shall be paid to the
Stockholders' Representative for distribution by him to the
Corporation Shareholders when received. At the end of each
calendar quarter and upon final termination of this Escrow
Agreement, other dividends and interest, if any, received by
the Escrow Agent shall be paid to the Stockholders'
Representative for distribution by him to the Corporation
Shareholders.
6. Investment of Escrow Fund. Except in connection
with Conversion Transactions (including tender or exchange
offers) or as otherwise expressly provided for herein, the
Escrow Agent shall have no power to dispose of the Escrow
Shares. Any other cash or property held in the Escrow Fund
shall be invested from time to time by the Escrow Agent
pursuant to the written instructions it may receive from
Stockholders' Representative and only in Permitted
Investments. The term "Permitted Investments" means the
following investments so long as they have maturities of
ninety (90) days or less: (A) obligations issued or
guaranteed by the United States or by any person controlled or
supervised by or acting as an instrumentality of the United
States pursuant to authority granted by Congress; (B)
obligations issued or guaranteed by any state or political
subdivision thereof rated either Aa or higher, or MIG 1 or
higher, by Moody's Investors Service, Inc. or AA or higher, or
an equivalent, by Standard & Poor's Corporation, both of New
York, New York, or their successors; (C) commercial or finance
paper which is rated either Prime-1 or higher or an equivalent
by Moody's Investors Service, Inc. or A-1 or higher or any
equivalent by Standard & Poor's Corporation, both of New York,
New York, or their successors; (D) certificates of deposit or
time deposits of banks or trust companies, organized under the
laws of the United States or any state, having a minimum
equity of $100,000,000; and money market mutual funds rated
AAA by the Standard and Poor's Rating Group. If Escrow Agent
does not receive instructions from Stockholders'
Representative as to some or all of the Escrow Fund, it shall
invest such Escrow Fund with respect to which it received no
instructions in short term direct obligations of the United
States.
7. Disbursements. The Escrow Shares or some portion
thereof shall, subject to the terms and conditions of this
Escrow Agreement, be paid over to Century or its
affiliates as provided in Sections 9 hereof with respect to an
Indemnity Claim pursuant to Article 10 of the Agreement.
8. Proceeds of Investments. The Escrow Agent may
liquidate any investments in the Escrow Fund at such time as
it shall deem necessary to make payments in accordance with
the provisions hereof.
9. Notice of Claims and Dispute Notices.
(a) The Escrow Agent shall deliver to Century the
amount specified in any disbursement request jointly
executed by Century and the Stockholders'
Representative.
(b) Otherwise, if Century believes it is entitled to
payment with respect to an Indemnity Claim, it may
deliver to Escrow Agent a notice ("Notice of Claim")
setting forth in reasonable detail the nature of the
Indemnity Claim and the amount at that time to which
Century believes it is or, with reasonable certainty,
will be entitled to be paid under the Agreement together
with proof that it has mailed a copy of the Notice of
Claim to the Stockholders' Representative no later than
the date such Notice of Claim was mailed to Escrow
Agent. The copy of the Notice of Claim to the
Stockholders' Representative must be by registered mail
or certified mail return receipt requested postage
prepaid. Century agrees that it shall not assert
Indemnity Claims which would reduce the Escrow Amount
distributable in accordance with Section 10 hereof in
excess of the amount of indemnifiable Losses reasonably
expected to result from such Indemnity Claim.
(c) If Escrow Agent has not received a notice from the
Stockholders' Representative ("Dispute Notice") stating
that he disputes the validity of the claim set forth in
Century's Notice of Claim or the amount thereof
("Disputed Amount"), within 31 days after receipt by
Escrow Agent of the Notice of Claim, Escrow Agent shall
return to Century the amount stated in Century's Notice
of Claim, and Corporation Stockholders shall be forever
barred and precluded from contesting in any manner or
forum whatsoever the return of the Escrow Amount to
Century pursuant to the Notice of Claim.
(d) If Escrow Agent has previously received a Dispute
Notice with respect to a Disputed Amount, then upon
receipt by the Escrow Agent of a notice (a "Resolution
Notice") from Century and the Stockholders'
Representative with respect to such Disputed Amount
specifying the amount of such Disputed Amount to which
Century is entitled, accompanied by (A) a written
agreement between Century and the Stockholders'
Representative with respect to such Disputed Amount or
(B) a certified copy of a final order of a court of
competent jurisdiction, the Escrow Agent shall return to
Century such amount, if any. Two years after the date
hereof, Escrow Agent shall distribute to Stockholders'
Representative the balance of the Escrow Amount, unless
an unresolved Notice of Claim exists, in which case the
balance of the Escrow Amount less the Disputed Amount
shall be distributed.
(e) In case any amount is due Century hereunder, such
amount shall be delivered to Century in shares of
Century Common Stock valued in the manner provided for
in Section 10.2(e) of the Agreement. If none or an
insufficient number of Century Common Stock are
available such amount shall be delivered to Century in
cash until the Escrow Amount has been reduced to zero.
(f) For purposes hereof, the term "Indemnity Claim"
shall include claims payable by the Shareholders to
Century under Sections 2.8(e) and Article 12 of the
Agreement.
10. Termination. This Escrow Agreement shall
terminate in three stages. On the first anniversary date
hereof, Escrow Agent shall distribute to the Stockholders'
Representative one-half of the Escrow Amount reduced by (i)
the amount of any Indemnity Claims paid prior thereto and (ii)
the amount of any Disputed Amount, if any. Eighteen months
after the date hereof, Escrow Agent shall distribute to
Stockholders' Representative one-half of the balance of the
Escrow Amount, less any Disputed Amount. The remainder of the
Escrow Amount will be distributed to the Stockholders'
Representative on the second anniversary of the date hereof
unless a Disputed Amount exists, in which case this Escrow
Agreement shall terminate upon resolution of such dispute in
accordance with Section 9. After payment, if any, to Century
upon resolution of the dispute, Escrow Agent shall distribute
to Stockholders' Representative the balance of the Escrow
Amount. Notwithstanding the above, this Escrow Agreement
shall also terminate when the Escrow Amount has been reduced
to zero. The Escrow Agent may request certification as to the
existence of a Disputed Amount prior to releasing any Escrow
Amount to the Stockholders' Representative.
11. Fees. Century and Corporation Stockholders
through their Stockholders' Representative shall pay the
Escrow Agent $3,000 for its services hereunder and shall
reimburse the Escrow Agent for all expenses, disbursements and
advances incurred or made by it in the performance of its
duties hereunder (including, without limitation, the
reasonable fees, expenses and disbursements of its counsel)
and indemnify and hold the Escrow Agent harmless from and
against any and all taxes, expenses (including reasonable
counsel fees), assessments, liabilities, claims, damages,
actions, suits or other charges incurred by or assessed
against if for any thing done or omitted by it in the
performance of its duties hereunder, except as a result of its
own gross negligence or willful misconduct. Each shall bear
1/2 of such fees and costs. The basic fee of $3,000 for two
years' service shall be paid prior to the Closing by Century
and Corporation and Corporation's $1,500 payment shall be a
liability taken into account in computing Net Indebtedness.
The Escrow Agent shall collect all other reimbursable expenses
from Century and the Stockholders' Representative. If the
Stockholders' Representative has not reimbursed the Escrow
Agent for its 1/2 of the reimbursable expenses within 30 days
of written notice to the Stockholders' Representative, the
Escrow Agent may liquidate or sell a sufficient portion of the
assets in the Escrow Account to reimburse such expenses. The
agreement contained in this Section 11 shall survive any
termination of the duties of the Escrow Agent hereunder.
12. Responsibilities of the Escrow Agent. The
acceptance by the Escrow Agent of its duties under this Escrow
Agreement is subject to the following terms and conditions,
which the parties to this Escrow Agreement hereby agree shall
govern and control with respect to its rights, duties,
liabilities and immunities:
(a) The Escrow Agent shall act hereunder as depository
only, and it shall not be responsible or liable in any
manner whatever for the sufficiency of any amount
deposited with it.
(b) The Escrow Agent shall provide Century and
Stockholders' Representative with quarterly reports of
the status of the Escrow Amount, and shall permit
Century and Stockholders' Representative to inspect and
obtain copies of the records of the Escrow Agent
regarding the Escrow Amount.
(c) The Escrow Agent shall be protected in acting upon
any written notice, request, waiver, consent, receipt or
other paper or document furnished to it, not only as to
its due execution and the validity and effectiveness of
its provisions but also as to the truth and
acceptability of any information contained therein which
the Escrow Agent believes in good faith to be genuine
and validly executed.
(d) The Escrow Agent shall have no responsibility as
to the validity, collectibility or value of the Escrow
Amount, or for investment losses related thereto,
provided the Escrow Amount have been invested in
accordance with Section 6 hereof.
(e) If the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions
from any of the undersigned with respect to the Escrow
Amount, which, in its opinion, are in conflict with any
of the provisions of this Escrow Agreement, it shall be
entitled to refrain from taking any action until it
shall be directed otherwise in writing by all of the
other parties hereto or by an order of a court of
competent jurisdiction.
(f) The Escrow Agent shall not be liable for any error
of judgment, or for any act done or step taken or
omitted by it in good faith, or for any mistake of fact
or law, or for anything which it may do or refrain from
doing in connection herewith, except such acts that are
a result of the Escrow Agent's negligence or misconduct.
(g) The Escrow Agent may consult with, and obtain
advise from, legal counsel in the event of any question
as to any of the provisions hereof or its duties
hereunder, and it shall incur no liability and shall be
fully protected in acting in good faith in accordance
with the opinion and instructions of such counsel.
(h) In the event of a dispute between the parties as
to the proper disposition of the Escrow Amount which
continues for ninety (90) days or more, the Escrow Agent
shall be entitled to submit the dispute to a court of
competent jurisdiction and shall thereupon be relieved
of any obligations or liability.
(i) Escrow Agent shall have no duties except those
which are expressly set forth herein, and it shall not
be bound by any notice of a claim, or demand with
respect thereto, or any waiver, modification, amendment,
termination or rescission of this Escrow Agreement,
unless in writing received by it, and, if its duties
herein are modified, unless it shall have given its
prior written consent thereto.
(j) The Escrow Agent will have no right or obligation
to disburse from the Escrow Amount to any Person other
than Century or the Stockholders' Representative, and
Century will take all such action as may be necessary to
permit it to act as agent and attorney-in-fact for any
other Century Indemnitee which has a claim under Article
10 of the Agreement.
13. Resignation of Escrow Agent. The Escrow Agent may
resign as escrow agent by notice to the other parties hereto
(the "Resignation Notice"). If, prior to the expiration of
sixty (60) business days after the delivery of the Resignation
Notice, the Escrow Agent shall not have received written
instructions from Century and Stockholders' Representative
designating a banking corporation or trust company organized
either under the laws of the United States or of any state as
successor escrow agent and consented to in writing by such
successor escrow agent, the Escrow Agent may apply to a court
of competent jurisdiction to appoint a successor escrow agent.
Alternatively, if the Escrow Agent shall have received such
written instructions, it shall promptly transfer the Escrow
Amount to such successor escrow agent. Upon the appointment
of a successor escrow agent and the transfer of the Escrow
Amount thereto, the duties of the Escrow Agent hereunder shall
terminate, and if termination occurs prior to the end of the
two year period, it shall reimburse Century and Stockholders'
Representative for their shares of the unearned fee.
14. Amendment and Termination. This Escrow Agreement
may be amended or cancelled by and upon written notice to the
Escrow Agent at any time given jointly by Century and
Stockholders' Representative, but the duties or
responsibilities of the Escrow Agent may not be modified
without its consent.
15. Notices. All notices, requests, demands and other
communications hereunder shall be given (and shall be deemed
to have been duly given) if given by hand delivery to, or by
certified or registered mail (postage prepaid), by telegram
(confirmed by certified or registered mail, postage prepaid)
or by telecopy (confirmed by confirmation sheet) addressed to:
(a) If to Century:
Century Telephone Enterprises, Inc.
100 Century Park Drive
Monroe, Louisiana 71211-4065
Attention: David D. Cole
Telecopy: (318) 388-9562
with copies to:
Harvey P. Perry, Esq., Senior Vice President,
Secretary and General Counsel
Century Telephone Enterprises, Inc.
100 Century Park Drive
Monroe, Louisiana 71211-4065
Telecopy: (318) 388-9562
with copies to:
William R. Boles, Jr., Esq.
Boles, Boles & Ryan
1805 Tower Drive
Monroe, Louisiana 71201
Telecopy: (318) 329-9150
(b) If to Corporation Shareholders:
David A. Bailey, Stockholders' Representative
807 Church Street
Port Gibson, MS 39150
Telecopy: (601) 437-6860
with copies to:
James T. Thomas, Esq.
Brunini, Grantham, Grower & Hewes
248 East Capitol Street, Suite 1400
Jackson, MS 39201
Telecopy: (601) 960-6902
or to such other person or address as such party shall furnish
to the other parties to this Escrow Agreement.
16. Parties in Interest. This Escrow Agreement shall
be binding upon and inure to the benefit of Century,
Stockholders' Representative and Corporation Shareholders and
shall not create any rights in any third party.
17. Execution by Escrow Agent. The execution of this
Escrow Agreement by the Escrow Agent shall evidence its
acceptance and agreement to the terms hereof.
18. Obligations of Stockholders' Representative. The
Stockholders' Representative agrees to disburse any amounts
received by him from the Escrow Agent hereunder to the
Corporation Shareholders in accordance with their pro rata
ownership interest in Corporation immediately prior to the
Effective Time. The Stockholders' Representative will
instruct Century's transfer agent to allocate any released
Escrow Shares among the Shareholders in a manner such that
each Shareholder receives a number of shares as nearly equal
as possible to his pro rata interest and such that no
fractional shares are issued.
19. Governing Law. This Escrow Agreement shall be
construed and interpreted in accordance with the law of
Louisiana applicable to contracts to be performed entirely in
Louisiana.
20. Counterparts. This Escrow Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original instrument and all of which together
shall constitute a single agreement.
* * * * * * * * *
[All Signature Blocks to this
Escrow Agreement have been Intentionally
Omitted from this Information Statement.]
<PAGE>
APPENDIX D
ARTICLE 13 OF THE MISSISSIPPI BUSINESS CORPORATION ACT
DISSENTERS RIGHTS
Section 79-4-13.01. Definitions.
In this article:
(1) "Corporation" means the issuer of the shares
held by a dissenter before the corporate
action, or the surviving or acquiring
corporation by merger or share exchange of
that issuer.
(2) "Dissenter" means a shareholder who is
entitled to dissent from corporate action
under Section 79-4-13.02 and who exercises
that right when and in the manner required
by Sections 79-4-13.20 through 79-4-13.28.
(3) "Fair value," with respect to a dissenter's
shares, means the value of the shares
immediately before the effectuation of the
corporate action to which the dissenter
objects, excluding any appreciation or
depreciation in anticipation of the
corporate action unless exclusion would be
inequitable.
(4) "Interest" means interest from the effective
date of the corporate action until the date
of payment, at the average rate currently
paid by the corporation on its principal
bank loans or, if none, at a rate that is
fair and equitable under all the
circumstances.
(5) "Record shareholder" means the person in
whose name shares are registered in the
records of a corporation or the beneficial
owner of shares to the extent of the rights
granted by a nominee certificate on file
with a corporation.
(6) "Beneficial shareholder" means the person
who is a beneficial owner of shares held in
a voting trust or by a nominee as the record
shareholder.
(7) "Shareholder" means the record shareholder
or the beneficial shareholder.
Section 79-4-13.02. Right to Dissent.
* (a) A shareholder is entitled to dissent from, and
obtain payment of the fair value of his shares in the event
of, any of the following corporate actions:
(1) Consummation of a plan of merger to which
the corporation is a party (i) if
shareholder approval is required for the
merger by Section 79-4-11.03 or the articles
of incorporation and the shareholder is
entitled to vote on the merger, or (ii) if
the corporation is a subsidiary that is
merged with its parent under Section 79-4-
11.04;
(2) Consummation of plan of share exchange to
which the corporation is a party as the
corporation whose shares will be acquired,
if the shareholder is entitled to vote on
the plan;
(3) Consummation of a sale or exchange of all,
or substantially all, of the property of the
corporation other than in the usual and
regular course of business, if the
shareholder is entitled to vote on the sale
or exchange, including a sale in
dissolution, but not including a sale
pursuant to court order or a sale for cash
pursuant to a plan by which all or
substantially all of the net proceeds of the
sale will be distributed to the shareholders
within one (1) year after the date of sale;
(4) An amendment of the articles of
incorporation that materially and adversely
affects rights in respect of a dissenter's
shares because it:
(i) Alters or abolishes a preferential
right of the shares;
(ii) Creates, alters or abolishes a right
in respect of redemption, including a
provision respecting a sinking fund
for the redemption or repurchase, of
the shares;
(iii) Alters or abolishes a preemptive right
of the holder of the shares to acquire
shares or other securities;
(iv) Excludes or limits the right of the
shares to vote on any matter, or to
cumulate votes, other than a
limitation by dilution through
issuance of shares or other securities
with similar voting rights; or
(v) Reduces the number of shares owned by
the shareholder to a fraction of a
share if the fractional share so
created is to be acquired for cash
under Section 79-4-6.04; or
(5) Any corporate action taken pursuant to a
shareholder vote to the extent the articles
of incorporation, bylaws or a resolution of
the board of directors provides that voting
or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(b) Nothing in subsection (a)(4) shall entitle a
shareholder of a corporation to dissent and obtain payment for
his shares as a result of an amendment of the articles of
incorporation exclusively for the purpose of either (i) making
such corporation subject to application of the Mississippi
Control Share Act, or (ii) making such act inapplicable to a
control share acquisition of such corporation.
(c) A shareholder entitled to dissent and obtain
payment for his shares under this article may not challenge
the corporate action creating his entitlement unless the
action is unlawful or fraudulent with respect to the
shareholder or the corporation.
Section 79-4-13.03. Dissent by Nominees and Beneficial
Owners.
(a) A record shareholder may assert dissenters' rights
as to fewer than all the shares registered in his name only if
he dissents with respect to all shares beneficially owned by
any one person and notifies the corporation in writing of the
name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under
this subsection are determined as if the shares as to which he
dissents and his other shares were registered in the names of
different shareholders.
(b) A beneficial shareholder may assert dissenters'
rights as to shares held on his behalf only if:
(1) He submits to the corporation the record
shareholder's written consent to the dissent
not later than the time the beneficial
shareholder asserts dissenters' rights; and
(2) He does so with respect to all shares of
which he is the beneficial shareholder or
over which he has power to direct the vote.
Section 79-4-13.20. Notice of Dissenters' Rights.
(a) If proposed corporate action creating dissenters'
rights under Section 79-4-13.02 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that
shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this
article.
(b) If corporate action creating dissenters' rights
under Section 79-4-13.02 is taken without a vote of
shareholders, the corporation shall notify in writing all
shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice
described in Section 79-4-13.22.
Section 79-4-13.21. Notice of Intent to Demand Payment.
(a) If proposed corporate action creating dissenters'
rights under Section 79-4-13.02 is submitted to a vote at a
shareholders' meeting, a shareholder who wishes to assert
dissenters' rights (1) must deliver to the corporation before
the vote is taken written notice of his intent to demand
payment for his shares if the proposed action is effectuated,
and (2) must not vote his shares in favor of the proposed
action.
(b) A shareholder who does not satisfy the requirement
of subsection (a) is not entitled to payment for his shares
under this article.
Section 79-4-13-22. Dissenters' Notice.
(a) If proposed corporate action creating dissenters'
rights under Section 79-4-13.02 is authorized at a
shareholders' meeting, the corporation shall deliver a written
dissenters' notice to all shareholders who satisfied the
requirements of Section 79-4-13.21.
(b) The dissenters' notice must be sent no later than
ten (10) days after the corporate action was taken, and must:
(1) State where the payment demand must be sent
and where and when certificates for
certificated shares must be deposited;
(2) Inform holders of uncertificated shares to
what extent transfer of the shares will be
restricted after the payment demand is
received;
(3) Supply a form for demanding payment that
includes the date of the first announcement
to news media or to shareholders of the
terms of the proposed corporate action and
requires that the person asserting
dissenters' rights certify whether or not he
acquired beneficial ownership of the shares
before that date;
(4) Set a date by which the corporation must
receive the payment demand, which date may
not be fewer than thirty (30) nor more than
sixty (60) days after the date the
subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this article.
Section 79-4-13.23. Duty to Demand Payment.
(a) A shareholder sent a dissenters' notice described
in Section 79-4-13.22 must demand payment, certify whether he
acquired beneficial ownership of the shares before the date
required to be set forth in the dissenter's notice pursuant to
Section 79-4-13.22(b)(3), and deposit his certificates in
accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits
his shares under subsection (a) retains all other rights of a
shareholder until these rights are cancelled or modified by
the taking of the proposed corporate action.
(c) A shareholder who does not demand payment or
deposit his share certificates where required, each by the
date set in the dissenters' notice, is not entitled to payment
for his shares under this article.
Section 79-4-13.24. Share restrictions.
(a) The corporation may restrict the transfer of
uncertificated shares from the date the demand for their
payment is received until the proposed corporate action is
taken or the restrictions released under Section 79-4-13-26.
(b) The person for who dissenters' rights are asserted
as to uncertificated shares retains all other rights of a
shareholder until these rights are cancelled or modified by
the taking of the proposed corporate action.
Section 79-4-13.25. Payment.
(a) Except as provided in Section 79-4-13.27, as soon
as the proposed corporate action is taken, or upon receipt of
a payment demand, the corporation shall pay each dissenter who
complied with Section 79-4-13.23 the amount the corporation
estimates to be the fair value of his shares, plus accrued
interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the
end of a fiscal year ending not more than
sixteen months before the date of payment,
an income statement for that year, a
statement of changes in shareholders' equity
for that year, and the latest available
interim financial statements, if any;
(2) A statement of the corporation's estimate of
the fair value of the shares;
(3) An explanation of how the interest was
calculated;
(4) A statement of the dissenters' right to
demand payment under Section 79-4-13.28; and
(5) A copy of this article.
Section 79-4-13.26. Failure to Take Action.
(a) If the corporation does not take the proposed
action within sixty days after the date set for demanding
payment and depositing share certificates, the corporation
shall return the deposited certificates and release the
transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and
releasing transfer restrictions, the corporation takes the
proposed action, it must send a new dissenters' notice under
Section 79-4-13.22 and repeat the payment demand procedure.
Section 79-4-13.27. After-Acquired Shares.
(a) A corporation may elect to withhold payment
required by Section 79-4-13.25 from a dissenter unless he was
the beneficial owner of the shares before the date set forth
in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of
the proposed corporate action.
(b) To the extent the corporation elects to withhold
payment under subsection (a), after taking the proposed
corporate action, it shall estimate the fair value of the
shares, plus accrued interest, and shall pay this amount to
each dissenter who agrees to accept it in full satisfaction of
his demand. The corporation shall send with its offer a
statement of its estimate of the fair value of the shares, an
explanation of how the interest was calculated and a statement
of the dissenter's right to demand payment under Section 79-4-
13.28.
Section 79-4-13.28. Procedure if Shareholder Dissatisfied
With Payment or Offer.
(a) A dissenter may notify the corporation in writing
of his own estimate of the fair value of his shares and amount
of interest due, and demand payment of his estimate (less any
payment under Section 79-4-13.25), or reject the corporation's
offer under Section 79-4-13.27 and demand payment of the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount paid
under Section 79-4-13.25 or offered under
Section 79-4-13.27 is less than the fair
value of his shares or that the interest due
is incorrectly calculated;
(2) The corporation fails to make payment under
Section 79-4-13.25 within sixty (60) days
after the date set for demanding payment; or
(3) The corporation, having failed to take the
proposed action, does not return the
deposited certificates or release the
transfer restrictions imposed on
uncertificated shares within sixty (60) days
after the date set for demanding payment.
(b) A dissenter waives his right to demand payment
under this section unless he notifies the corporation of his
demand in writing under subsection (a) within thirty (30) days
after the corporation made or offered payment for his shares.
Section 79-4-13.30. Court Action.
(a) If a demand for payment under Section 79-4-13.28
remains unsettled, the corporation shall commence a proceeding
within sixty (60) days after receiving the payment demand and
petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence
the proceeding within the 60-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in
the chancery court of the county where a corporation's
principal office (or, if none in this state, its registered
office) is located. If the corporation is a foreign
corporation without a registered office in this state, it
shall commence the proceeding in the county in this state
where the registered office of the domestic corporation merged
with or whose shares were acquired by the foreign corporation
was located.
(c) The corporation shall make all dissenters (whether
or not residents of this state) whose demands remain unsettled
parties to the proceeding as in an action against their shares
and all parties must be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or
by publication as provided by law.
(d) The jurisdiction of the court in which the
proceeding is commenced under subsection (b) is plenary and
exclusive. The court may appoint one or more persons as
appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers
described in the order appointing them, or in any amendment to
it. The dissenters are entitled to the same discovery rights
as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is
entitled to judgment (1) for the amount, if any, by which the
court finds the fair value of his shares, plus interest,
exceeds the amount paid by the corporation, or (2) for the
fair value, plus accrued interest, of his after-acquired
shares for which the corporation elected to withhold payment
under Section 79-4-13.27.
Section 79-4-13.31. Court Costs and Counsel Fees.
(a) The court in an appraisal proceeding commenced
under Section 79-4-13.30 shall determine all costs of the
proceeding, including the reasonable compensation and expenses
of appraisers appointed by the court. The court shall assess
the costs against the corporation, except that the court may
assess costs against all or some of the dissenters, in amounts
the court finds equitable, to the extent the court finds the
dissenters acted arbitrarily, vexatiously or not in good faith
in demanding payment under Section 79-4-13.28.
(b) The court may also assess the fees and expenses of
counsel and experts for the respective parties, in amounts the
court finds equitable:
(1) Against the corporation and in favor of any
or all dissenters if the court finds the
corporation did not substantially comply
with the requirements of Sections 79-4-13.20
through 79-4-13.28; or
(2) Against either the corporation or a
dissenter, in favor of any other party, if
the court finds that the party against whom
the fees and expenses are assessed acted
arbitrarily, vexatiously or not in good
faith with respect to the rights provided by
this article.
(c) If the court finds that the services of counsel
for any dissenter were of substantial benefit to other
dissenters similarly situated, and that the fees for those
services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid
out of the amounts awarded the dissenters who were benefitted.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 83 of the Louisiana Business Corporation Law
provides in part that a corporation may indemnify any
director, officer, employee or agent of the corporation
against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably
incurred by him in connection with any action, suit or
proceeding to which he is or was a party or is threatened to
be made a party (including any action by or in the right of
the corporation) if such action arises out of his acts on
behalf of the corporation and he acted in good faith not
opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reason-
able cause to believe his conduct was unlawful.
The indemnification provisions of the Louisiana Business
Corporation Law are not exclusive; however, no corporation may
indemnify any person for willful or intentional misconduct. A
corporation has the power to obtain and maintain insurance or
to create a form of self-insurance on behalf of any person who
is or was acting for the corporation, regardless of whether
the corporation has the legal authority to indemnify the
insured person against such liability.
Article II, Section 10 of Century's bylaws (the "Indem-
nification Bylaw") provides for mandatory indemnification for
current and former directors and officers of Century to the
full extent permitted by Louisiana law.
Century's Articles of Incorporation authorize it to
enter into contracts with directors and officers providing for
indemnification to the full extent permitted by law. Century
has entered into indemnification contracts providing
contracting directors or officers the procedural and
substantive rights to indemnification currently set forth in
the Indemnification Bylaw ("Indemnification Contracts"). The
right to indemnification provided by each Indemnification
Contract applies to all covered claims, whether such claims
arose before or after the effective date of the contract.
Century maintains an insurance policy covering the
liability of its directors and officers for actions taken in
their corporate capacities. The Indemnification Contracts
provide that, to the extent insurance is reasonably available,
Century will maintain comparable insurance coverage for each
contracting party as long as he or she serves as an officer or
director and thereafter for so long as he or she is subject to
possible personal liability for actions taken in such
capacities. The Indemnification Contracts also provide that
if Century does not maintain comparable insurance, it will
hold harmless and indemnify a contracting party to the full
extent of the coverage that would otherwise have been provided
for thereunder.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of Century pursuant to the
foregoing provisions, or otherwise, Century has been advised
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits
The exhibits to this Registration Statement are listed
in the exhibit index, which appears elsewhere herein and is
incorporated herein by reference.
(b) Financial Statement Schedules
Schedule I to Century's financial statements, which is
included in Century's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, is incorporated
herein by reference.
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date
of the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement; notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and
price represent no more than a 20% change in
the maximum aggregate offering price set
forth in the "Calculation of Registration
Fee" table in the effective registration
statement.
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) of this section do not apply if the
registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a
post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to
the Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to
be a new registration statement relating to the
securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes that
prior to any public reoffering of the securities registered
hereunder through use of a prospectus that is a part of this
registration statement, by any person or party that is deemed
to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form
with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the
other items of the applicable form.
(d) The registrant undertakes that any prospectus (i)
that is filed pursuant to paragraph (c) immediately preceding,
or (ii) that purports to meet the requirements of Section
10(a)(iii) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415,
will be filed as part of an amendment to the registration
statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by
a director, officer, or controlling person of the registrant
in the successful defense of any action, suit, or proceeding)
is asserted by such director, officer, or controlling person
in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(f) The undersigned registrant hereby undertakes to
respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11
or 13 of this Form S-4 within one business day of receipt of
such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the
effective date of this registration statement through the date
of responding to the request.
(g) The undersigned registrant hereby undertakes to
supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in
the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant has duly caused this Amendment No.
2 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Monroe, State of
Louisiana, on July 10, 1995.
CENTURY TELEPHONE ENTERPRISES, INC.
By: /s/ Harvey P. Perry
Harvey P. Perry
Senior Vice President,
Secretary, General Counsel
and Director
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities and on the dates
indicated.
<PAGE>
Signature Title Date
* Chairman of the Board July 10, 1995
Clarke M. Williams of Directors
* President, Chief July 10, 1995
Glen F. Post, III Executive Officer and
Vice Chairman of the
Board of Directors
* Senior Vice President July 10, 1995
R. Stewart Ewing, Jr. and Chief Financial
Officer
(Principal Financial
Officer)
* Controller July 10, 1995
Murray H. Greer (Principal Accounting
Officer)
* President-Telecommunications
W. Bruce Hanks Services and Director July 10, 1995
Senior Vice President,
/s/ Harvey P. Perry Secretary, General Counsel
Harvey P. Perry and Director July 10, 1995
* Director July 10, 1995
William R. Boles, Jr.
* Director July 10, 1995
Virginia Boulet
* Director July 10, 1995
Ernest Butler, Jr.
* Director July 10, 1995
Calvin Czeschin
* Director July 10, 1995
James B. Gardner
* Director July 10, 1995
R. L. Hargrove, Jr.
* Director July 10, 1995
Johnny Hebert
* Director July 10, 1995
F. Earl Hogan
* Director July 10, 1995
C. G. Melville
* Vice President-Telephone July 10, 1995
Jim D. Reppond Group and Director
* By: /s/ Harvey P. Perry
Harvey P. Perry
Attorney-in-fact
INDEX TO EXHIBITS
Exhibit No. Exhibit
2 Agreement and Plan of Merger dated as of April
18, 1995, as amended, by and among Century,
Mississippi 6 Acquisition Corporation,
Mississippi-6 Cellular Corporation
("Mississippi-6") and the
Principal Shareholders of Mississippi-6
(included in Appendix A to
the Information Statement and Prospectus
forming a part of this
Registration Statement).
Each of the exhibits and schedules to this
agreement have been omitted pursuant to
Regulation S-K, Item 601. Century hereby agrees
to furnish copies of these exhibits and schedules
to the Commission upon request.
4.1 Amended and Restated Articles of Incorporation of
Century dated May 23, 1995 (incorporated by
reference to Exhibit 4.1 of Century's
Registration Statement on Form S-8, Registration
No. 33-60061).
4.2 Bylaws of Century as amended through May 23, 1995
(incorporated by reference to Exhibit 4.2 of
Century's Registration Statement on Form
S-8, Registration No. 33-60061).
4.3 Amended and Restated Rights Agreement dated as of
November 17, 1986 between Century and MTrust Corp,
National Association, as Rights Agent
(incorporated by reference to Exhibit 4.1 to
Century's Current Report on Form 8-K dated
December 20, 1988), the Amendment thereto
dated March 26, 1990 (incorporated by reference
to Exhibit 4.1 to Century's Quarterly Report
on Form 10-Q for the quarter ended March
31, 1990) and the Second Amendment thereto
dated February 23, 1993 (incorporated by reference
to Exhibit 4.12 to Century's Annual Report
on Form 10-K for the year ended December 31, 1992).
Certain instruments with respect to Century's
long-term debt have been omitted pursuant to
Regulation S-K, Item 601. Century hereby
agrees to furnish copies of such instruments
to the Commission upon request.
5 Opinion of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.
23.1 Consent of KPMG Peat Marwick LLP.*
23.2 Consent of Breazeale, Saunders & O'Neil, Ltd.*
23.3 Consent of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P. (included in Exhibit 5).
24 Power of Attorney (included in the original
signature pages of this Registration Statement).
99 Form of Letter of Authorization.
* Filed by this Amendment No. 2 All other exhibits have been
previously filed.
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Century Telephone Enterprises, Inc.
We consent to the use of our report dated February 6, 1995,
incorporated herein by reference and to the references to our
firm under the headings "Information About Century - Selected
Consolidated Operating and Financial Data" and "Experts" in the
Prospectus. Our report refers to changes in the methods of
accounting for income taxes and postretirement benefits other
than pensions in 1992.
KPMG PEAT MARWICK LLP
Shreveport, Louisiana
July 7, 1995
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Mississippi-6 Cellular Corporation
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated March 3, 1995,
except for the second paragraph in note 11, as to which the date
is April 18, 1995, in the Registration Statement (No. 33-59203)
on Form S-4, as amended on July 10, 1995, to register shares of
Century Telephone Enterprises, Inc. stock issuable to
Mississippi-6 Cellular Corporation shareholders.
July 10, 1995
